Very Substantial and Deemed Connected Transaction

Transcription

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 Gemini Investments (Holdings) Limited, you should at once hand
this circular and the accompanying form of proxy 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.
Gemini Investments (Holdings) Limited
盛洋投資（控股）有限公司
(Incorporated in Hong Kong with limited liability)
(Stock Code: 174)
VERY SUBSTANTIAL AND DEEMED CONNECTED
TRANSACTION IN RELATION TO CAPITAL
COMMITMENT INTO AN INVESTMENT FUND
Financial Adviser to
Independent Financial Adviser to the Independent Board
Committee and the Independent Shareholders
Capitalised terms used on this cover shall have the same meanings as those defined in this circular, unless the context
requires otherwise. A letter from the Board is set out on pages 6 to 34 of this circular. A letter from the Independent
Board Committee to the Independent Shareholders is set out on pages 35 to 36 of this circular. A letter from the
Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent
Shareholders is set out on pages 37 to 57 of this circular.
A notice convening the EGM to be held at 10:30 a.m. on Wednesday, 31 December 2014 at United Conference
Centre, 10/F., United Centre, 95 Queensway, Admiralty, Hong Kong is set out on pages EGM-1 to EGM-2 of this
circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in
accordance with the instructions printed thereon and return the same to the Company’s share registrar, Tricor Standard
Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not
less than 48 hours before the time appointed for the holding of the EGM (or any adjournment, 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 EGM (or
any adjourned meeting) should you so wish.
13 December 2014
CONTENTS
Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . 35
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . 37
Appendix I
— Financial Information of the Group . . . . . . . . . . . . . . I-1
Appendix II — Financial Information of the Fund
and the target group . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Appendix III — Unaudited Pro Forma Financial
Information of the Group ILLUSTRATING
THE EFFECT OF THE CAPITAL COMMITMENT . . . . . . . . . III-1
Appendix IV — Property Valuation Report ON THE PROPERTIES . . . IV-1
Appendix V
— General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EGM-1
—i—
DEFINITIONS
In this circular and appendices to it, unless the context otherwise requires, the following
expressions have the following meanings:
“Acquisition”
the acquisition of the entire equity interest in Target and
Shareholder’s Loan of Target Group under the Acquisition
Agreement
“Acquisition Agreement”
the share transfer agreement dated 5 November 2014 entered into
between the Fund SPV as purchaser and SOL HK as seller in
relation to the Acquisition
“Acquisition Completion”
completion of the Acquisition in accordance with the terms and
conditions as set out in the Acquisition Agreement
“associate(s)”
has the meaning ascribed to it under the Listing Rules
“Board”
the board of directors of the Company
“Bright Shining Group”
Bright Shining Group Limited, a company incorporated in the
British Virgin Islands with limited liability, which shall be wholly
owned by the Target prior to Acquisition Completion
“Business Day”
a day (excluding Saturday, Sunday and public holidays in Hong
Kong and the PRC) on which banks in Hong Kong and the PRC
are open for normal banking business
“Capital Commitment”
capital commitment by Chance Bright of (i) USD250 million to
the Fund under the Subscription Agreement and (ii) USD3.95
million to the General Partner under the Second GP Amendment
Agreement
“Chance Bright”
Chance Bright Limited, an exempted company incorporated in the
Cayman Islands with limited liability, a wholly-owned subsidiary
of the Company
“CCAH”
China Corporate Assets Holdings Limited, a company incorporated
in the British Virgin Islands and owned by a number of investors
in the PRC
“Company”
Gemini Investments (Holdings) Limited, a company incorporated
with limited liability under the Companies Ordinance (Chapter 622
of the Laws of Hong Kong) and whose shares are listed on the
Main Board of the Stock Exchange
“connected person(s)”
—1—
DEFINITIONS
“connected transaction(s)”
“controlling shareholder(s)”
“Director(s)”
director(s) of the Company
“EGM”
an extraordinary general meeting of the Company to be
convened to approve the Second GP Amendment Agreement, the
Subscription Agreement and the Capital Commitment
“Fame Gain”
Fame Gain Holdings Limited, a company incorporated under the
laws of the British Virgin Islands with limited liability and an
indirect wholly-owned subsidiary of Sino-Ocean Land
“First Amendment Agreement”
has the meaning ascribed to it in Section II(i) under the letter from
the Board of this circular
“First GP Amendment
Agreement”
has the meaning ascribed to it in Section II(i) under the letter from
“Framework Agreement”
the framework agreement dated 5 September 2011 entered into
among SOL HK, Chance Bright and KKR SPRE in relation to the
establishment and management of the Fund and the JV Entities
“Fund”
Sino Prosperity Real Estate Fund L.P., an exempted limited
partnership established on 20 July 2011 and registered under the
laws of the Cayman Islands
“Fund LPA”
the Third Amended and Restated Agreement of Exempted Limited
Partnership of the Fund dated 1 November 2011 entered into
among the General Partner and the limited partners of the Fund,
as amended by the First Amendment Agreement, the Second
Amendment Agreement and the Third Amendment Agreement
“Fund SPV”
Sino Prosperity Holdings Two Limited, an exempted company
incorporated in the Cayman Islands with limited liability and a
wholly-owned subsidiary of the Fund and the purchaser to the
Acquisition Agreement
“General Partner”
Sino Prosperity Real Estate (GP), L.P., an exempted limited
partnership established and registered under the laws of the
Cayman Islands, and acting as the general partner of the Fund
—2—
DEFINITIONS
“GP LPA”
the Amended and Restated Agreement of Exempted Limited
Partnership of the General Partner dated 5 September 2011 entered
into among the Ultimate General Partner and the limited partners
of the General Partner, as may be amended from time to time
“Group”
the Company and its subsidiaries
“HIBOR”
Hong Kong Inter-bank Offered Rate
“HKD” or “HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the People’s
Republic of China
“Independent Board Committee”
the committee of directors consisting of Mr. Law Tze Lun, Mr.
Lo Woon Bor, Henry and Mr. Zheng Yun, who are independent
non-executive Directors, formed to advise the Independent
Shareholders in respect of the Second GP Amendment Agreement,
the Subscription Agreement and the Capital Commitment
“Independent Financial Adviser”
or “Yu Ming”
Yu Ming Investment Management Limited, a corporation under the
SFO authorised to carry out regulated activities of Type 1 (dealing
in securities), Type 4 (advising on securities), Type 6 (advising
on corporate finance) and Type 9 (asset management), being the
independent financial adviser to the Independent Board Committee
and the Independent Shareholders in respect of the Second GP
Amendment Agreement, the Subscription Agreement and the
Capital Commitment
“Independent Third Party”
third party independent of and not connected with the Company or
its connected persons (as defined in the Listing Rules)
“Independent Shareholders”
the shareholders of the Company other than Sino-Ocean Land and
its associates who will abstain from voting on the resolution(s)
approving the Second GP Amendment Agreement, the Subscription
Agreement and the Capital Commitment
“Latest Practicable Date”
12 December 2014, being the latest practicable date prior to
printing of this circular for ascertaining information contained
therein
“JV Entities”
the Ultimate General Partner and the Management Company
“KKR CGF”
KKR China Growth Fund L.P., an exempted limited partnership
established and registered under the laws of the Cayman Islands
—3—
DEFINITIONS
“KKR SPRE”
KKR SPRE Holdings L.P., an exempted limited partnership
established and registered under the laws of the Cayman Islands
and an affiliate of KKR CGF
“Listing Rules”
the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
“Management Company”
Sino Prosperity Real Estate Advisor Limited, a company
incorporated under the laws of the Cayman Islands with limited
liability and is responsible for evaluating and monitoring the
Fund’s investments, providing day-to-day managerial and
administrative services to the Fund
“Max Great Holdings”
Max Great Holdings Limited, a company incorporated in the
British Virgin Islands with limited liability, which shall be wholly
owned by the Target prior to Acquisition Completion
“PRC”
the People’s Republic of China, which for the purpose of this
circular and unless the context suggests otherwise, shall exclude
Hong Kong, the Macau Special Administrative Region and Taiwan
“Properties”
has the meaning ascribed to it in Section VI(f) under the letter
from the Board of this circular
“Second Amendment Agreement” has the meaning ascribed to it in Section II(ii) under the letter
“Second GP Amendment
Agreement”
has the meaning ascribed to it in Section III under the letter from
“SFO”
Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong)
“Share(s)”
the ordinary share(s) in the share capital of the Company
“Shareholder”
holder of the ordinary shares of the Company
“Shareholder’s Loan of
Target Group”
the shareholder’s loan owed by certain members within the Target
Group to SOL HK and Fame Gain
“Sino-Ocean Land”
Sino-Ocean Land Holdings Limited, a company incorporated in
Hong Kong with limited liability under the Companies Ordinance
(Chapter 622 of the Laws of Hong Kong) and whose shares are
listed on the Main Board of the Stock Exchange (stock code: 3377)
“Sino-Ocean Land Group”
Sino-Ocean Land and its subsidiaries
—4—
DEFINITIONS
“SOL HK”
Sino-Ocean Land (Hong Kong) Limited, a company incorporated
with limited liability under the Companies Ordinance (Chapter
622 of the Laws of Hong Kong) and a wholly-owned subsidiary of
Sino-Ocean Land and is a substantial shareholder of the Company
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Subscription Agreement”
has the meaning ascribed to it in Section III under the letter from
“sq. m.”
square metres
“subsidiary(ies)”
“Target”
Metro Splendid Limited, a limited liability company incorporated
in the British Virgin Islands on 28 August 2009 and is wholly
owned by SOL HK
“Target Group”
the Target, Bright Shining Group, Max Great Holdings and their
respective subsidiaries
“Third Amendment Agreement”
has the meaning ascribed to it in Section II(iii) under the letter
“Ultimate General Partner”
Sino Prosperity Real Estate Limited, a company organised and
existing under the laws of the Cayman Islands and acting as the
general partner of the General Partner
“USD” or “US$”
United States dollars, the lawful currency of the United States of
America
“%”
per cent
Certain figures set out in this circular have been subject to rounding adjustments. Accordingly,
figures shown as the currency conversion or percentage equivalents may not be an arithmetic sum of
such figures.
Any discrepancy in any table between totals and sums of amounts listed in this circular is due
to rounding.
—5—
LETTER FROM THE BOARD
(Stock Code: 174)
Board of Directors
Executive Directors:
Mr. SUM Pui Ying (Chief Executive Officer)
Mr. LI Zhenyu (Chief Operating Officer)
Mr. LAI Kwok Hung, Alex
Registered office and principal
place of business:
Room 3902, 39th Floor
Tower One, Lippo Centre
No. 89 Queensway
Hong Kong
Non-executive Directors:
Mr. LI Ming (Honorary Chairman)
Mr. LI Hongbo
Independent non-executive Directors:
Mr. LAW Tze Lun
Mr. LO Woon Bor, Henry
Mr. ZHENG Yun
13 December 2014
Dear Sirs,
I.INTRODUCTION
The Company announced on 17 November 2014, among other things, that Chance Bright
(being a wholly-owned subsidiary of the Company) entered into the Subscription Agreement and
the Second GP Amendment Agreement, pursuant to which Chance Bright agreed to increase its
capital commitment to the Fund and the General Partner by USD250 million and USD3.95 million,
respectively.
The Fund is a jointly controlled and managed investment platform of the Group established to
invest in real estate projects in the PRC.
—6—
As (i) the highest applicable percentage ratio calculated with reference to Rule 14.07 of the
Listing Rules exceeds 100% and (ii) the Capital Commitment may be funded by the proceeds to be
raised from the issue of 1.3 billion convertible preference shares in the capital of the Company to a
wholly-owned subsidiary of Sino-Ocean Land, a controlling shareholder and a connected person of
the Company, the Capital Commitment constitutes a very substantial transaction and is expected to
constitute a deemed connected transaction for the Company under the Listing Rules.
The purpose of this circular is to provide you with, among other things, (i) details of the
Second GP Amendment Agreement, the Subscription Agreement and the Capital Commitment; (ii)
the letter from the Independent Board Committee setting out its recommendation to the Independent
Shareholders; (iii) the letter of advice from the Independent Financial Adviser to the Independent
Board Committee and the Independent Shareholders in relation to the Second GP Amendment
Agreement, the Subscription Agreement and the Capital Commitment; (iv) the financial information
of the Group and the Fund; (v) unaudited pro forma financial information of the Group illustrating
the effect of the capital commitment; (vi) the property valuation report on the Properties; and (vii) the
notice of EGM.
II.
RECENT RESTRUCTING OF THE FUND
The following chart sets forth the shareholding structure of the Fund immediately prior to the
execution of the First Amendment Agreement and the First GP Amendment Agreement:
SOL
100%
SOL HK
69.74%*
The Company
100%
Chance Bright
KKR SPRE
50%
50%
50%
Ultimate General
Partner
Management
Company
50%
General Partner
37.43%
1.07%
37.43%
Fund
24.07%
Other limited
partners
General partner
interest
Limited partner
interest
Equity interest
*
approximate percentage representing Sino-Ocean Land’s interest in the Company as at the Latest
Practicable Date
—7—
(i)
First Amendment Agreement and First GP Amendment Agreement
On 26 September 2014, SOL HK (through its wholly-owned subsidiary), the General
Partner, KKR SPRE and the then other limited partners of the Fund entered into a first
amendment agreement to amend the Fund LPA (the “First Amendment Agreement”), pursuant
to which KKR SPRE and the then other limited partners of the Fund withdrew as limited
partners of the Fund. Following the date of the First Amendment Agreement and before the
date of the Second Amendment Agreement (as defined below), SOL HK (through its whollyowned subsidiary) was the sole limited partner of the Fund.
In addition, on 26 September 2014, Chance Bright, the Ultimate General Partner, KKR
SPRE and CCAH entered into a first amendment agreement to amend the GP LPA (the “First
GP Amendment Agreement”) pursuant to which (i) KKR SPRE withdrew as a limited partner
of the General Partner and (ii) CCAH was admitted as a new limited partner of the General
Partner. As a result, Chance Bright and CCAH are the only two limited partners of the General
Partner each with a capital commitment to the General Partner of USD1.05 million, as at the
Latest Practicable Date.
Further, on 26 September 2014, KKR SPRE sold and transferred all its interests in the
JV Entities to CCAH. As a result, Chance Bright and CCAH co-own the JV Entities on an
equal basis.
—8—
The following chart sets forth the shareholding structure of the Fund immediately
following the execution of the First Amendment Agreement, the First GP Amendment
Agreement and completion of the aforesaid transfer of interests in the JV Entities:
SOL
100%
SOL HK
69.74%*
The Company
100%
Chance Bright
CCAH
50%
50%
Ultimate General
Partner
50%
Management
Company
50%
General Partner
2.78%
97.22%
Fund
General partner
interest
Limited partner
interest
Equity interest
*
Practicable Date
—9—
(ii)
Second Amendment Agreement
On 21 October 2014, the General Partner, SOL HK (through its wholly-owned
subsidiary), Chance Bright and CCAH entered into a second amendment agreement to amend
the Fund LPA (the “Second Amendment Agreement”), pursuant to which (i) SOL HK (through
its wholly-owned subsidiary) withdrew as limited partner of the Fund and (ii) Chance Bright
and CCAH were admitted as new limited partners of the Fund and each of Chance Bright and
CCAH made a capital commitment to the Fund of a nominal amount of USD100. As a result,
Chance Bright and CCAH are the only two limited partners of the Fund, as at the Latest
Practicable Date.
Despite the withdrawal of the subsidiary of SOL HK (being a wholly-owned subsidiary
of Sino-Ocean Land) as limited partner of the Fund, Sino-Ocean Land will continue to support
the Group through its direct interests in the Company and by introducing real estate projects in
the PRC for direct investment by the Group and/or indirect investment through the Fund by the
Group.
following the execution of the Second Amendment Agreement:
SOL
100%
SOL HK
69.74%*
The Company
100%
Chance Bright
CCAH
50%
50%
Ultimate General
Partner
Management
Company
50%
50%
General Partner
50%
50%
Fund
General partner
interest
Limited partner
interest
Equity interest
*
Practicable Date
— 10 —
(iii) Third Amendment Agreement
On 5 November 2014, the General Partner, Chance Bright and CCAH entered into a
third amendment agreement to amend the Fund LPA (the “Third Amendment Agreement”),
pursuant to which the following key terms have been agreed.
Term of the Fund
The end of the term of the Fund has been amended from the fifth anniversary of 5
September 2011 (being 5 September 2016) to the fifth anniversary of 5 November 2014
(being 5 November 2019), with an option of up to two one-year extensions in the sole
discretion of the General Partner.
Investment period of the Fund
The end of the investment period of the Fund has been amended from the third
anniversary of 5 September 2011 (being 5 September 2014) to the third anniversary of 5
November 2014 (being 5 November 2017).
(iv) CCAH’s investment in the Fund
On 5 November 2014, the Fund SPV and SOL HK entered into the Acquisition
Agreement at a total consideration of USD463 million. Further details are set out in Section VI
under letter from the Board of this circular.
On the same day, CCAH, as one of the limited partners of the Fund, entered into a
subscription agreement with the Fund and the General Partner, pursuant to which CCAH agreed
to increase its capital commitment to the Fund by USD250 million.
— 11 —
following the execution of the Third Amendment Agreement and CCAH’s investment into the
Fund:
SOL
100%
SOL HK
69.74%*
The Company
100%
Chance Bright
CCAH
50%
50%
Ultimate General
Partner
Management
Company
50%
50%
General Partner
0% (1)
100% (1)
Fund
100%
Fund SPV
General partner
interest
Limited partner
interest
Equity interest
*
Practicable Date
Note (1) Percentage (rounded to the nearest integer) representing capital commitments of (i) a nominal
amount of USD100 by Chance Bright; and (ii) USD250,000,100 by CCAH.
Hence, Chance Bright, a wholly-owned subsidiary of the Company, as another limited
partner of the Fund, opted and agreed to increase its capital commitment to the Fund by
the same amount so that its economic interests in the Fund will not be diluted and can be
maintained with CCAH on an equal basis. Further details are set out in Section III below.
— 12 —
III. COMPANY’S INVESTMENT IN THE GENERAL PARTNER AND THE FUND
On 17 November 2014 (after trading hours), the Ultimate General Partner, CCAH and
Chance Bright entered into a second amendment agreement to amend the GP LPA (the “Second
GP Amendment Agreement”), pursuant to which each of CCAH and Chance Bright agreed to
increase their respective capital commitments to the General Partner, from USD1.05 million, by
USD3.95 million, to USD5 million, as they wish to maintain their respective capital commitments
to the General Partner on an equal basis. Completion of the Second GP Amendment Agreement is
conditional upon the Independent Shareholders’ approval of the Capital Commitment at the EGM.
Pursuant to a subscription agreement dated 17 November 2014 entered into between the General
Partner and the Fund, the General Partner agreed to make a capital commitment to the Fund of USD10
million, representing around 2% of the total capital commitment to the Fund, so that its interest is
aligned with other limited partners of the Fund. Completion of such subscription agreement is also
conditional upon Independent Shareholders’ approval of the Capital Commitment at the EGM. The
Directors are of the view that this structure is in line with the market practice to align the interests of
the general partner and the limited partners and therefore, benefit the Fund’s fund raising ability.
On 17 November 2014 (after trading hours), the General Partner, the Fund and Chance Bright
entered into a subscription agreement (the “Subscription Agreement”), pursuant to which Chance
Bright agreed to increase its capital commitment to the Fund by USD250 million, which is conditional
upon the passing by the Independent Shareholders of the resolution(s) to approve the Subscription
Agreement and the Capital Commitment at the EGM.
The terms of the Second GP Amendment Agreement and the Subscription Agreement, including
the amount of the Capital Commitment, are determined after arms’ length negotiation between the
parties with reference to the capital requirement of the Fund and anticipated expenses of the JV
Entities, respectively.
The Company intends to fund the Capital Commitment from the proceeds to be raised from the
issue of 1.3 billion convertible preference shares in the capital of the Company to a wholly-owned
subsidiary of Sino-Ocean Land, details of which were set out in the Company’s joint announcement
with Sino-Ocean Land dated 26 October 2014 and the announcement and circular of the Company
dated 24 November 2014 and 27 November 2014 respectively. Should such issuance of convertible
preference shares not proceed, the Company intends to fund the Capital Commitment from its internal
resources or borrowings from Sino-Ocean Land Group.
If the Second GP Amendment Agreement, the Subscription Agreement and the Capital
Commitment are not approved at the EGM:
(a)
no additional capital commitment will be made to the General Partner by either Chance
Bright or CCAH such that Chance Bright and CCAH will maintain their interests
(including rights and benefits) in each of the General Partner and the JV Entities (being
the Ultimate General Partner and the Management Company) on an equal basis; and
(b)
no additional capital commitment by Chance Bright will be made to the Fund, and
Chance Bright will only maintain a USD100 capital commitment to the Fund.
— 13 —
In such event, the Board understands from CCAH that it intends to increase its capital
commitment to the Fund from USD250 million to at least USD463 million to enable the Fund SPV to
complete the Acquisition. As such, the economic interest of the Company in the Fund will be diluted
to nearly 0% (as CCAH’s capital commitment to the Fund will amount to at least USD463 million
but Chance Bright’s capital commitment to the Fund will only be at a nominal amount of USD100),
but its interest (including rights and benefits) in each of the General Partner and the JV Entities will
remain unchanged.
The following chart sets forth the shareholding structure of the Fund following the execution
of the Second GP Amendment Agreement and the Subscription Agreement (and after the Independent
Shareholders’ approval has been obtained):
SOL
100%
69.74%*
The Company
SOL HK
100%
Chance Bright
CCAH
50%
50%
Ultimate General
Partner
Management
Company
50%
50%
General Partner
49%
(2)
2% (2)
49% (2)
Fund
100%
Fund SPV
General partner
interest
Limited partner
interest
Equity interest
*
Note
Practicable Date
(2)
Percentage (rounded to the nearest integer) representing capital commitments of (i) USD10 million
by the General Partner; (ii) USD250,000,100 by Chance Bright and (iii) USD250,000,100 by CCAH.
— 14 —
IV.
ADDITIONAL INFORMATION ABOUT THE FUND
1.
Management of the Fund
The management and operation of the Fund (being an exempted limited partnership
registered under the laws of the Cayman Islands) shall be vested exclusively in the General
Partner, who shall have the power on behalf and in the name of the Fund to carry out any and
all of the purposes of the Fund and to perform all acts and enter into and perform all contracts
and other undertakings that it may deem necessary or advisable or incidental thereto. Without
limiting the foregoing, among other things, the General Partner is authorised and empowered
in the name of and on behalf of the Fund to make, own, manage, supervise and dispose of
investments of the Fund and to execute and deliver in the Fund’s name any and all instruments
necessary to effectuate such transactions. The limited partners of the Fund are passive investors
in the Fund and have no right to take part in the management or control of the Fund’s business
or to act for or bind the Fund.
2.
Management of the General Partner
The management and operation of the General Partner (being an exempted limited
partnership registered under the laws of the Cayman Islands) shall be vested exclusively in the
Ultimate General Partner, who shall have the power on behalf and in the name of the General
Partner to carry out any and all of the purposes of the General Partner and to perform all acts
and enter into and perform all contracts and other undertakings that it may deem necessary
or advisable or incidental thereto. The board of directors of the Ultimate General Partner
consists of four directors, two of which are appointed by Chance Bright and two of which are
appointed by CCAH. Resolutions shall be passed by simple majority votes. Through the board
representation, the Company can exert influence and exercise joint control over the Ultimate
General Partner, the General Partner and ultimately the Fund.
3.
Distribution policy
At the Fund level
The net proceeds received by the Fund from each investment will be apportioned
among the GeneralPartner and those limited partners who participated in such
investment based on their respective capital contributions to such investment, and
distributed as follows:
(a)
The portion of net proceeds so apportioned to the General Partner will be
distributed to the General Partner.
(b)
The portion of net proceeds so apportioned to each limited partner will be
(i)
First, to such limited partner until it receives distributions equal to all
capital contributions made by it to fund such investment, any previously
disposed investments and its share of investment expenses, management fees
and partnership expenses allocated to those investments.
— 15 —
(ii) Second, to such limited partners until it receives distributions equal to a
preferred return of 8% per annum, compounded annually, on the amounts
referred to in sub-paragraph (i) above.
(iii) Third, 100% to the General Partner until it receives distributions equal
to 20% of the sum of: (A) the distributions made to such limited partner
pursuant to sub-paragraph (ii) above; and (B) the distributions made to the
General Partner pursuant to this sub-paragraph (iii).
(iv) Thereafter, (A) 80% of any net proceeds remaining will be distributed to
such limited partner; and (B) 20% of any net proceeds remaining will be
The amount so distributed to the General Partner under (iii) and (iv) above is
referred to as its carried interest.
The net proceeds for distributions for each investment (or a portion thereof) are
determined by calculating the excess of:
(i)
the sum of (x) all cash received by the Fund (other than
contributions) in connection with such investment (or a portion
and (y) the fair value of such investment (or a portion thereof) that
of marketable securities that the General Partner determines (in
discretion) to distribute to the partners, over
capital
thereof)
consists
its sole
(ii) the Fund’s cash expenses paid or then due and payable and a reasonable
reserve (as determined by the General Partner in its sole discretion) for
accrued or anticipated expenses and contingent liabilities of the Fund.
Distribution of proceeds must be made within 90 days following the receipt of the
amount determined to be distributed, if any (as calculated above) for each investment.
Limited partners of the Fund shall be obligated to return amounts distributed to
them to fund partnership expenses, including indemnification obligations, provided that
such obligations shall terminate on the third anniversary of the date of such distribution
and will not exceed 20% of such limited partner’s capital commitment.
At the General Partner level
Carried interest distributions received by the General Partner from the Fund
pursuant to the terms of the Fund LPA shall be distributed to the limited partners of
the General Partner in proportion to their respective capital commitment to the General
Partner.
— 16 —
4.
Transfer of limited partnership interest
At the Fund level
A limited partner of the Fund may not sell, assign or otherwise transfer any
interest in the Fund without the prior written consent of the General Partner, which
consent may be granted or withheld in its sole discretion.
A limited partner of the General Partner may not sell, assign or otherwise transfer
any interest in the General Partner without the prior written consent of the Ultimate
General Partner, which consent may be granted or withheld in its sole discretion.
5.
Financial information of the Fund
Set out below is the financial information of the Fund extracted from the audited
consolidated financial statements of the Fund and its subsidiaries for the financial years ended
31 December 2013 and 31 December 2012, which have been prepared in accordance with the
International Financial Reporting Standards:
For the year ended
31 December
2013
USD
Loss from operation
Net profit/loss before taxation and extraordinary
items
Net profit/loss after taxation and
extraordinary items
50,017
2012
USD
509,062
(7,660,841)
45,983,854
(7,702,268)
46,034,602
As at
31 December
2013
USD
Total assets
Total liabilities
386,216
(346,092)
Net assets
40,124
For the year ended 31 December 2012, the Fund recorded a net profit of approximately
USD46 million, due to the sale of a number of property units from its then only invested
property project in the PRC.
For the year ended 31 December 2013, the Fund recorded a net loss of approximately
USD7.7 million, which was mainly attributed to the withholding tax incurred by the realisation
of such investment in early 2013.
— 17 —
V.
FINANCIAL EFFECTS OF THE CAPITAL COMMITMENT ON THE GROUP
As the Company holds 50% of the issued share capital of the JV Entities (being the Ultimate
General Partner and the Management Company), none of the Fund, the General Partner and the JV
Entities are subsidiaries of the Company, and the financial results of the Fund are not consolidated
to the Group. After drawdown of Capital Commitment by the Fund, the profit or loss of the Fund is
equity accounted-for by the Group as interests in joint ventures and share of result of joint ventures
disclosed in the consolidated statement of financial position and consolidated income statement of the
Group respectively. The net asset value of the Group is expected to remain unchanged as the increase
in interests in joint ventures is expected to be offset by the decrease in cash balances by, utilising,
possibly, the proceeds to be raised from the issue of 1.3 billion convertible preference shares in the
capital of the Company to fund the Capital Commitment.
VI.
INVESTMENT BY THE FUND
Since the Fund fully realised its then only invested property project in early 2013, the Fund
was dormant and did not make any investment until the entering into the Acquisition Agreement
by the Fund SPV on 5 November 2014. As such, the Fund is essentially a new fund after the recent
restructuring as set out in Section II above.
On 5 November 2014, the Fund SPV (as purchaser) entered into the Acquisition Agreement
with SOL HK (as seller) pursuant to which the Fund SPV has conditionally agreed to purchase, and
SOL HK has conditionally agreed to sell, the entire equity interest of the Target, and SOL HK shall
assign and procure Fame Gain to assign the Shareholder’s Loan of Target Group to the Fund SPV at
Acquisition Completion.
The Directors understood that the Fund has been in discussions with various parties and
is currently considering different investment opportunities of property projects that are in the
development stage or distressed and in special situations in the PRC. Save for the Acquisition
mentioned above, the Fund has not identified any suitable investment opportunities so far.
(a)Consideration
Subject to adjustment, the total consideration payable by the Fund SPV to SOL HK
for the Acquisition is USD463 million. The total consideration was determined after arm’s
length negotiations between the parties to the Acquisition Agreement with reference to, among
others, the valuation of projects held by the Target Group, unaudited financial statements of
Target Group as well as the principal amount of the Shareholder’s Loan of Target Group of
RMB2,603.3 million as at 30 September 2014.
Under the Acquisition Agreement, SOL HK has agreed to a comprehensive set of
warranties, including but not limited, to those in respect the unaudited financial statements of
the Target Group as at 30 September 2014. These warranties shall be true, accurate and not
misleading at the date of the Acquisition Agreement, at Acquisition Completion and at all times
before Acquisition Completion. SOL HK has further agreed to indemnify the Fund SPV for any
losses, expenses or claims resulting from any breach of warranties by SOL HK. In addition, the
Fund SPV has been conducting its own legal and financial due diligence on the Target Group,
the satisfactory result of which is one of the conditions precedent to Acquisition Completion.
— 18 —
(b)Payment
The total consideration of USD463 million for the Acquisition shall be paid in the
following manner:
(i)
the Fund SPV shall pay USD23.15 million (being 5% of the total consideration) upon
signing of the Acquisition Agreement;
(ii)
the Fund SPV shall pay USD208.35 million (being 45% of the total consideration) within
30 days after signing of the Acquisition Agreement; and
(iii) the Fund SPV shall pay USD231.50 million (being 50% of the total consideration) upon
Acquisition Completion.
(c)
Conditions precedent
Acquisition Completion is conditional upon certain conditions precedent having been
fulfilled or (if applicable) waived, which include, amongst others, (a) the due diligence results
on the Target Group and the Shareholder’s Loan of Target Group being satisfactory to the
Fund SPV; (b) an aggregate of at least USD463 million capital commitment to the Fund being
available for drawdown; (c) SOL HK having obtained all necessary consents, permissions and
authorisations to perform its obligations under the Acquisition Agreement and to duly assign
the Shareholder’s Loan of Target Group; and (d) the entry into the Acquisition Agreement by
the parties thereto not materially breaching any laws, rules, regulations or binding documents.
The Fund SPV may waive condition (a) above. SOL HK does not have the right to waive
any of the conditions precedent under the Acquisition Agreement.
Currently, the Fund SPV has no intention to waive any condition precedent.
If the conditions precedents are not fulfilled or (if applicable) waived on or before
31 December 2014 (or such other date as the parties may agree in writing), the Acquisition
Agreement shall terminate, without prejudice to the rights and interests accrued to the parties
prior to such termination. As at the Latest Practicable Date, none of the above conditions
precedent has been satisfied.
(d)
Acquisition Completion
Acquisition Completion will take place on the third Business Day after the fulfilment or
(if applicable) waiver of the conditions precedent set out in the Acquisition Agreement (or such
other date as may be agreed in writing by the Fund SPV and SOL HK).
(e)
Information on the Target and the Target Group
Based on the information provided by SOL HK, the Target is a company incorporated
in the British Virgin Islands on 28 August 2009 and is wholly owned by SOL HK. As at the
Latest Practicable Date, the Target Group held nine property projects located across seven cities
in the PRC, which are principally engaged in real estate development and property development
investment in the PRC. The Target also holds a business operation engaged in the provision of
upfitting and decoration services to the property projects.
— 19 —
Set out below is the group chart of the Target Group as if the reorganisation of the
Target Group, which comprise i) the reorganisation referred to in Note 1(b) (pages II-36 and
37) of the accountant’s report of Metro Splendid Limited; and ii) the acquisition of entire
equity interests of Bright Shining Group Limited and Max Great Holdings Limited by Metro
Splendid Limited, has been completed.
蔚都有限公司
(Metro Splendid Limited)
100%
100%
德佳（香港）投資有限公司
(Moral (HK) Investment Limited)
100%
大連鑫融置業有限公司
(Dalian Xinrong Property
Co., Ltd.) (Note 1)
100%
光耀集團有限公司
(Bright Shining Group Limited)
盛偉控股有限公司
(Max Great Holdings Limited)
100%
100%
100%
德富發展有限公司
(Moral Rich Development Limited)
大連宏澤置業有限公司
(Dalian Hong Ze Properties
Co., Ltd.) (Note 2)
德富管理有限公司
(Good Rich Management Limited)
100%
100%
65%
北京盛佳宏澤投資管理諮詢
有限公司
(Beijing Shengjia Hongze
Investment Management
Company Limited)
100%
北京遠匯置業有限公司
(Beijing Yuanhui Property
Development Company Limited)
100%
55%
遠洋地產鎮江有限公司
(Sino Ocean Land (Zhenjiang)
Limited) (Note 3)
青島遠佳置業有限公司
(Qingdao Yuan Jia Properties
Co., Ltd.) (Note 8)
80%
上海遠鑫置業有限公司
(Shanghai Yuan Xin Properties
Co., Ltd.) (Note 5)
100%
秦皇島遠豪房地產開發
有限公司
(Qinhuangdao Yuanhao Property
(Note 4)
遠洋裝飾工程股份有限公司
(Sino-Ocean Decoration
Engineering Company Limited)
(Note 10)
100%
100%
秦皇島市海洋置業房地產
開發有限公司
(Qinghuangdao Ocean Land
(Note 4)
撫順德創置業有限公司
(Fushun De Chmang Properties
Co., Ltd.) (Note 9)
上海遠正置業有限公司
(Shanghai Yuan Zhang
Properties Co., Ltd.) (Note 6)
70%
杭州遠洋萊福房地產開發
有限公司
(Hang Zhou Yuan Yang Lai
Fu Real Estate Development
Company Limited) (Note 7)
100%
秦皇島遠聯房地產開發
有限公司
(Qinhuangdao Yuanlian Property
(Note 4)
Notes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
has been operating the property development project — Ocean Holiday Manor (Dalian)
has been operating the property development project — Ocean TIMES (Dalian)
has been operating the property development project — Ocean Beach (Zhenjiang)
has been operating the property development project — Ocean Century (Qinhuangdao)
has been operating the property development project — BOND CASTLE and Dreaming Land
(Shanghai)
has been operating the property development project — Ocean Chanson Mansion (Shanghai)
has been operating the property development project — Grand Canal Milestone (Hangzhou))
has been operating the property development project — Ocean Honored Chateau (Qingdao)
has been operating the property development project — Ocean City (Fushun)
has been providing upfitting and decoration services to property projects.
(In the case of inconsistency between the translated English names of PRC Companies
and the official Chinese names, the Chinese shall prevail.)
— 20 —
(f)
Properties and other real estate related projects held by the Target Group
Set out below are details of the properties and other real estate related projects
(collectively, the “Properties”) directly or indirectly held by the Target Group as at the Latest
Practicable Date:
A.
Held by the Target
1.
遠洋時代城（大連）(Ocean TIMES (Dalian))
Ocean TIMES (Dalian) is a residential and commercial development
located at the opposite of Dalian University, southeast of Dahei Mountain, Dalian
Economic and Technological Development Zone, Dalian, the PRC. Ocean TIMES
(Dalian) was 100% held by the Target. Ocean TIMES (Dalian) was fully developed
in October 2013. As at 30 September 2014, total gross floor area already sold
and delivered to customers amounted to 449,777 sq.m. Being non-core business
of Sino-Ocean Land Group (the core business of which is being the development
in key economic regions in the PRC as disclosed in the announcement of SinoOcean Land dated 17 November 2014), certain full-developed portion remains
unsold. The Fund plans to review and repackage the sales plans after Acquisition
Completion, and enhances the sales accordingly.
Fully-developed
The gross floor area of the unsold portions of the fully developed Ocean
TIMES (Dalian) is summarised as follow, which includes gross floor area of
presold portions of 4,027 sq.m..
Gross Floor Area
(sq. m.)
Use
2.
Residential
Apartments
Retail
Car parks
10,632.45
9,661.41
5,841.81
47,677.00
Total:
73,812.67
遠洋假日養生莊園（大連）(Ocean Holiday Manor (Dalian))
Ocean Holiday Manor (Dalian) is mainly a residential development located
at the Golden Stone Beach in Dalian, the PRC. This project was 100% held by
the Target. Ocean Holiday Manor (Dalian) is being developed in four phases
into a composite development. As at 30 September 2014, phase 1 and 2 of Ocean
— 21 —
Holiday Manor (Dalian) were completed between 2012 and 2014, whereas phase 3
and 4 of Ocean Holiday Manor (Dalian) is under construction and is expected to
complete in 2017. Total gross floor area already sold and delivered to customers
amounted to 96,743 sq.m. Being non-core business of Sino-Ocean Land Group,
certain fully-developed portion remains unsold. The Fund plans to review and
repackage the sales plans after Acquisition Completion, and aims to enhance the
sales accordingly.
Fully-developed portion
The gross floor area of the unsold portions of the fully-developed portion
of Ocean Holiday Manor (Dalian) (phase 1 and 2) is summarised as follow, which
includes gross floor area of presold portions of 17,529 sq.m..
Gross Floor Area
(sq. m.)
Use
Residential
Townhouses
Retail
Car parks
15,979.04
16,734.91
10,117.88
10,060.49
Total:
52,892.32
Under-construction portion
The proposed gross floor area of the under-construction portion of Ocean
Holiday Manor (Dalian) (phase 3 and 4) is summarised as follows, which includes
gross floor area of presold portions of 8,809 sq.m..
Proposed
Gross Floor Area
(sq. m.)
Use
Residential
Townhouses
Retail
Car parks
Others
112,736.60
57,572.00
1,229.00
25,227.00
2,600.28
Total:
199,364.88
— 22 —
3.
遠洋 • 大河宸章（杭州）(Grand Canal Milestone (Hangzhou))
Grand Canal Milestone (Hangzhou) is a residential development located at
the intersection of Jiru Street and Xiaohe Road in Gongshu District, Hangzhou,
the PRC. This project was developed and 70% (1) held by the Target. As at 30
September 2014, Grand Canal Milestone (Hangzhou) consists of a fully-developed
portion, which was completed in 2013, and an under-construction portion, which
is expected to be completed in 2015. Total gross floor area already sold and
delivered to customers amounted to 14,649 sq.m. Being non-core business of SinoOcean Land Group, certain fully-developed portion remains unsold. The Fund
plans to review and repackage the sales plans after Acquisition Completion, and
aims to enhance the sales accordingly.
The gross floor area of the unsold portions of the fully-developed portion of
Grand Canal Milestone (Hangzhou) is summarised as follow, which includes the
Gross Floor Area
(sq. m.)
Use
Residential
Car parks
96,891.35
8,985.00
Total:
105,876.35
The proposed gross floor area of the under-construction portion of Grand
Canal Milestone (Hangzhou) is summarised as follows:
Proposed
Gross Floor Area
(sq. m.)
Use
Villa
Basement
23,623.00
22,379.00
Total:
46,002.00
Note:
(1)
The remaining 30% interest is attributable to 綠城房地產集團有限公司 (Greentown
Real Estate Group Co., Ltd △ )；
△
For identification purpose only
— 23 —
4.
遠洋 • 海世紀（秦皇島）(Ocean Century (Qinhuangdao))
Ocean Century (Qinhuangdao) (including Wan Hai Yi Hao (Qinhuangdao))
are a residential and commercial development located at the Haigang District in
Heibei, the PRC. Ocean Century (Qinhuangdao) was 100% owned by the Target.
As at 30 September 2014, Wan Hai Yi Hao (Qinhuangdao) was fully developed in
2011. As at 30 September 2014, Ocean Century (Qinhuangdao) consists of fullydeveloped portions which were completed between 2013 and 2014, an underconstruction portion which is expected to complete between 2014 and 2016 and
an undeveloped portion which is pending for construction. Total gross floor area
already sold and delivered to customers amounted to 160,708 sq.m. Being noncore business of Sino-Ocean Land Group, certain fully-developed portion remains
unsold. The Fund plans to review and repackage the sales plans after Acquisition
Completion, and aims to enhance the sales accordingly.
Fully-developed (Wan Hai Yi Hao (Qinhuangdao))
Wan Hai Yi Hao (Qinhuangdao) is summarised as follow, which includes the gross
floor area of presold portions of 1,425 sq.m..
Gross Floor Area
(sq. m.)
Use
Residential
Car park
1,192.26
6,982.70
Total:
8,174.96
Fully-developed portion (Ocean Century (Qinhuangdao))
Ocean Century (Qinhuangdao) is summarised as follow, which includes the gross
floor area of presold portions of 714 sq.m..
Gross Floor Area
(sq. m.)
Use
Retail
Resettlement
Resettlement
Resettlement
Resettlement
flats
retail
basement
car park
Total:
1,473.59
73,387.27
6,623.12
9,127.82
23,045.73
113,657.53
— 24 —
Under-construction portion (Ocean Century (Qinhuangdao))
Century (Qinhuangdao) is summarised as follows, which includes the gross floor
area of presold portions of 471,646 sq.m..
Proposed
Gross Floor Area
(sq. m.)
Use
Residential
Retail
Serviced apartment
Basement
Car park
645,177.24
25,774.11
69,454.72
25,502.68
42,063.77
Total:
807,972.52
Undeveloped portion (Ocean Century (Qinhuangdao))
The proposed gross floor area of the undeveloped portion of Ocean Century
(Qinhuangdao) is summarised as follows:
Proposed
Gross Floor Area
(sq. m.)
Use
5.
Residential
Retail
Basement
Car park
198,955.380
14,779.000
13,876.535
13,876.680
Total:
241,487.595
遠洋 • 香奈印象（上海）(Ocean Chanson Mansion (Shanghai))
Ocean Chanson Mansion (Shanghai) is a residential development located
at the Yanghang Town, Baoshan District, Shanghai, the PRC. Ocean Chanson
Mansion (Shanghai) was 100% held by the Target. As at 30 September 2014,
Ocean Chanson Mansion (Shanghai) consists of a fully-developed portion, which
was completed in 2014, and an under-construction portion, which is expected to be
completed in phases between 2014 and 2015. Total gross floor area already sold
and delivered to customers amounted to 72,354 sq.m. Being non-core business of
Sino-Ocean Land Group, certain fully-developed portion remains unsold. The Fund
— 25 —
Ocean Chanson Mansion (Shanghai) is summarised as follow, which includes the
Gross Floor Area
(sq. m.)
Use
Residential
Retail
Clubhouse
Ancillary
Car parks
5,491.49
1,649.98
2,665.87
2,540.00
28,423.00
Total:
40,770.34
Chanson Mansion (Shanghai) is summarised as follows, which includes the gross
floor area of presold portions of 109,842 sq.m..
Proposed
Gross Floor Area
(sq. m.)
Use
6.
Residential
Retail
Ancillary
Underground Ancillary
Car parks
171,909.25
7,289.55
819.98
1,758.00
19,099.00
Total:
200,875.78
遠洋 • 博堡 (BOND CASTLE) and 遠洋鴻郡（上海）(Dreaming Land
(Shanghai))
BOND CASTLE and Dreaming Land (Shanghai) are residential and villa
developments located at Meilan Lake of Baoshan District in Shanghai, the PRC.
The project was 100% held by the Target. As at 30 September 2014, BOND
CASTLE was completed in 2013. Total gross floor area already sold and delivered
to customers amounted to 1,602 sq.m and gross floor area of unsold portion is
22,459 sq.m, whereas Dreaming Land is under construction and is expected to be
— 26 —
completed in 2015 with a proposed gross floor area of 64,939 sq.m.. The gross
floor area of presold portions is 1,308 sq.m.. Being non-core business of SinoOcean Land Group, certain fully-developed portion remains unsold. The Fund
7.
遠洋香奈河畔（鎮江）(Ocean Beach (Zhenjiang))
Ocean Beach (Zhenjiang) is a residential and commercial development
located at the junction of Guantangqiao Road and Guyang Road in Zhenjiang,
Jiangsu Province, the PRC. Ocean Beach (Zhenjiang) was 55% (2) held by the
Target. Total gross floor area already sold and delivered to customers amounted
to 64,403 sq.m. As at 30 September 2014, Ocean Beach (Zhenjiang) consists of an
under-construction portion, which is expected to complete in phases between late
2014 and 2015, and an undeveloped portion, which is pending for construction.
Beach (Zhenjiang) is summarised as follow, which includes the gross floor area of
presold portions of 217,866 sq.m..
Proposed
Gross Floor Area
(sq. m.)
Use
Retail
Office
Villa
High-rise residential
Low-rise residential
Car parks
9,394.43
32,047.06
1,825.34
173,533.30
62,071.22
30,300.00
Total:
309,171.35
— 27 —
Undeveloped portion
The proposed gross floor area of the undeveloped portion of Ocean Beach
(Zhenjiang) is summarised as follows:
Proposed
Gross Floor Area
(sq. m.)
Use
Residential
Retail
308,389.11
9,037.00
Total:
317,426.11
Note:
8.
(2)
The remaining 45% interest is attributable to 鎮江市交通投資建設發展公司
(Zhenjiang Transportation Investment Construction Development Company △ )；
△
Sino-Ocean Decor
Sino-Ocean Decor is a company principally providing upfitting and
decoration services to real estate projects and is 80% (3) held by the Target.
The principal place of business of Sino-Ocean Decor is located at level 16,
Zhongguancun SOHO, No.8 North Haidian Second Street, Haidian District,
Beijing, the PRC.
Note:
B.
(3)
The remaining 20% interest is attributable to 北京同安迪諮詢有限公司 (Beijing
Tongandi Consultancy Co., Ltd △ )；and
△
Held by Bright Shining Group
遠洋公館（青島）(Ocean Honored Chateau (Qingdao))
Ocean Honored Chateau (Qingdao) is a residential development located at
the intersection of Yanerdao Road and Quanzhou Road, No. 23 Yanerdao Road,
Shinan District in Qingdao, the PRC. Ocean Honored Chateau (Qingdao) was
100% held by the Bright Shining Group. As at 30 September 2014, Ocean Honored
Chateau (Qingdao) is under construction and is expected to be completed in 2015.
— 28 —
Under-construction
Honored Chateau (Qingdao) is summarised as follows:
Proposed
Gross Floor Area
(sq. m.)
Use
C.
Residential
Service apartments
Retail
Kindergarten
Others
60,356.38
11,620.71
3,793.25
2,166.53
1,783.40
Total:
79,720.27
Held by Max Great Holdings
遠洋城（撫順）(Ocean City (Fushun))
Ocean City (Fushun) is mainly a residential development located at
the junction of Gaoshan Road and Jingyu Street in Fushun, PRC. Ocean City
(Fushun) was 65% (4) held by Max Great Holdings. Total gross floor area already
sold and delivered to customers amounted to 102,453 sq.m.. As at 30 September
2014, Ocean City (Fushun) consists of an under-construction portion with a total
proposed gross floor area of 703,070 sq. m, which is expected to be completed
between 2015 and 2016, and an undeveloped portion which is pending for
construction with a total developable gross floor area of 301,501 sq. m.
City (Fushun) is summarised as follows, which includes gross floor area of presold
portions of 109,544 sq.m..
Proposed
Gross Floor Area
(sq. m.)
Use
Residential
Retail
Resettlement flats
Others
Car park
539,022.57
35,043.45
92,023.00
24,135.00
12,846.00
Total:
703,070.02
Note:
(4)
The remaining 35% interest is attributable to 鞍山青創投資管理有限公司 (Anshen
Qingchuang Investment Management Co., Ltd △ ).
△
— 29 —
To the best of the Directors’ knowledge, information and belief and having
made all reasonable enquiries, each of the aforementioned minority interests’
owners and their beneficial owners is an Independent Third Party.
The Target Group intends to fund the development of Properties from its
pre-sale proceeds and from the sale proceeds of the developed property units.
After taking into account the internal resources available to the Fund and the
capital commitment which can be drawn down by the Fund (after the Independent
Shareholders’ approval on the Capital Commitment has been obtained), and in the
absence of unforeseeable circumstances, the Directors believe that the Fund will
have sufficient working capital and no further capital commitment shall be required
for at least the next 12 months following the date of this circular for the property
development of the Target Group. In case further working capital is required after
the 12-month-period following the date of the completion, the Directors understand
from the Fund that the Fund will raise more capital as required, including but not
limited to by (i) introducing more investors as limited partners of the Fund and (ii)
disposal of any properties of the Target Group to realise cash, to ensure sufficient
working capital.
VII. INFORMATION ON THE GROUP, THE COUNTERPARTIES AND THE FUND
The Company is a company incorporated under the laws of Hong Kong with limited liability,
the shares of which are listed on the Main Board of the Stock Exchange. The principal business of the
Company is investment holding. The Group has been principally engaged in properties and securities
investment, fund investment and management.
SOL HK is a company incorporated under the laws of Hong Kong and is a wholly-owned
subsidiary of Sino-Ocean Land whose shares are listed on the Main Board of the Stock Exchange.
SOL HK is a substantial shareholder of the Company. Sino-Ocean Land Group is one of the
leading property developers with developments in key economic regions in the PRC and actively
accomplishing the Sino-Ocean Land Group’s national strategic plan with a coastal and riparian focus.
The Sino-Ocean Land Group focuses on developing mid-to-high end residential properties, high-end
office premises and retail properties.
CCAH is a company incorporated in the British Virgin Islands and co-owned by a number of
investors in the PRC. The senior management of CCAH has years of experience in economic research,
corporate finance and asset management in the PRC. To the best of the Directors’ knowledge,
information and belief and having made all reasonable enquiries, each of CCAH and its beneficial
owners is an Independent Third Party.
— 30 —
VIII. REASONS FOR AND BENEFITS OF THE CAPITAL COMMITMENT
The Fund was established to invest in property projects in the PRC in 2011. After realignment
of senior management resources in 2013 (details of which can be found in the announcement of the
Company dated 9 August 2013) and introducing CCAH as a new partner into the Fund in 2014, the
Group intends to provide more resources, through investing into the Fund, in upgrading and enhancing
quality to property projects that are in development stage or distressed and special situation, in
addition to its existing strategy of direct investment in Hong Kong and overseas property projects, as
mentioned in the Company’s 2014 interim report.
The Directors are of the view that the Fund will serve as a convenient platform through which
the Group can tap into a larger pool of potential value-enhancing property acquisitions through its
participation in the Fund, as the Fund has higher fund raising flexibility by admitting new limited
partners such that the Group (indirectly through the Fund) may take advantage of timely market
opportunities.
The Directors consider the Acquisition to be a good starting point to implement this investment
strategy which the Directors believe the long-term development potential of the property projects can
be realised through proactive asset management and asset enhancement by the Fund. The Directors
understood that the Fund has been in discussions with various parties and is currently considering
different investment opportunities of property projects that are in the development stage or distressed
and in special situations (such as properties in foreclosure or any other situations where the Company
may consider suitable) in the PRC. As disclosed in page 30 of this circular, the principal business
of the Group is properties and securities investment, fund investment and management. Despite the
Company’s strategy to explore investment opportunities in Hong Kong and overseas property under
its property investment business, the Fund’s decision to enter into the Acquisition investing in the
PRC property market is in line with the Company’s fund investment and management business.
The Directors (including the independent non-executive Directors whose views have been
set out in the letter from the Independent Board Committee on pages 35 to 36 of this circular after
taking into account the advice of the Independent Financial Adviser) consider that the terms of
each of the Second GP Amendment Agreement and the Subscription Agreement which sets out the
amount of the Capital Commitment to the General Partner and to the Fund respectively are on normal
commercial terms and are fair and reasonable. Although the Fund is not a subsidiary of the Company,
the Company can still exert its influence on the Fund through its joint control as a general partner
of the Fund. Therefore, the Directors consider that the Capital Commitment is in the interests of the
Company and its Shareholders as a whole.
As (i) Mr. Li Ming, a non-executive director of Company and a director of Sino-Ocean Land,
and (ii) Mr. Sum Pui Ying, an executive director of the Company, are both directors of Grand Beauty
Management Limited (being a wholly-owned subsidiary of Sino-Ocean Land and the subscriber
of the 1.3 billion convertible preference shares), each of them was considered to have a potential
material conflict of interests in the Second GP Amendment Agreement, the Subscription Agreement
and the Capital Commitment and had abstained from voting at the Board meeting of the Company
which approved the Second GP Amendment Agreement, the Subscription Agreement and the Capital
Commitment. Save as aforesaid, none of the Directors had a material interest in the transactions in
the Capital Commitment, and none of them was required to abstain from voting on the relevant Board
resolution(s) to approve the Second GP Amendment Agreement, the Subscription Agreement and the
Capital Commitment.
— 31 —
IX. FINANCIAL ADVISER, INDEPENDENT BOARD COMMITTEE AND INDEPENDENT
FINANCIAL ADVISER
Anglo Chinese Corporate Finance, Limited has been appointed as the financial adviser to the
Company in relation to the Capital Commitment.
The Independent Board Committee comprising Mr. Law Tze Lun, Mr. Lo Woon Bor, Henry
and Mr. Zheng Yun, being all the independent non-executive Directors, has been formed to advise
the Independent Shareholders on matters in relation to the Second GP Amendment Agreement, the
Subscription Agreement and the Capital Commitment.
The Company has, with the approval of the Independent Board Committee, appointed Yu Ming
as the independent financial adviser in accordance with the requirements under the Listing Rules to
advise the Independent Board Committee and the Independent Shareholders on matters in relation to
the Second GP Amendment Agreement, the Subscription Agreement and the Capital Commitment.
X.
LISTING RULES IMPLICATIONS
As the Capital Commitment may be funded by the proceeds to be raised from the issue of 1.3
billion convertible preference shares in the capital of the Company to a wholly-owned subsidiary
of Sino-Ocean Land, a controlling shareholder and a connected person of the Company, the Capital
Commitment is expected to constitute a deemed connected transaction for the Company under the
Listing Rules.
As the highest applicable percentage ratio calculated with reference to Rule 14.07 of the
Listing Rules exceeds 100% in relation to the Capital Commitment, it constitutes a very substantial
transaction for the Company under the Listing Rules. The Company is subject to the reporting,
announcement and independent shareholders’ approval requirements under Chapter 14 and 14A of the
Listing Rules.
Sino-Ocean Land and its associates, which directly and indirectly held 312,504,625 Shares
(representing approximately 69.74% of the issued share capital of the Company) as at the Latest
Practicable Date, will abstain from voting in respect of the resolution(s) approving the Second GP
Amendment Agreement, the Subscription Agreement and the Capital Commitment at the EGM.
However, the Fund, the General Partner and the JV Entities (being the Ultimate General
Partner and the Management Company) are not subsidiaries of the Company and the Group has not
consolidated the financial results of the Fund, the General Partner and the JV Entities since their
establishment in 2011. The Acquisition is decided solely by the Fund, and Acquisition Completion
is not subject to the funding from the Capital Commitment. Therefore, the Acquisition does not
constitute a transaction for the Company under Chapter 14 of the Listing Rules, nor a connected
transaction for the Company under Chapter 14A of the Listing Rules.
— 32 —
XI.
THE EGM
A notice convening the EGM is set out on pages EGM-1 to EGM-2 of this circular. A proxy
form for use at the EGM is enclosed herewith. Whether or not you are able to attend the EGM, you
are requested to complete the enclosed form of proxy in accordance with the instructions printed
thereon and return the same to the Company’s share registrar, Tricor Standard Limited, at Level 22,
Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less
than 48 hours before the time appointed for the holding of the EGM (or any adjournment, 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 EGM (or any adjourned meeting) should you so wish.
XII. VOTING AT THE EGM AND THE BOARD MEETING
As (i) Mr. Li Ming, a non-executive director of Company and a director of Sino-Ocean Land,
and (ii) Mr. Sum Pui Ying, an executive director of the Company, are both directors of Grand Beauty
Management Limited (being a wholly-owned subsidiary of Sino-Ocean Land and the subscriber
of the 1.3 billion convertible preference shares), each of them was considered to have a potential
material conflict of interests in the Second GP Amendment Agreement, the Subscription Agreement
and the Capital Commitment and had abstained from voting at the Board meeting of the Company
which approved the Second GP Amendment Agreement, the Subscription Agreement and the Capital
Commitment. Save as aforesaid, none of the Directors had a material interest in the transactions in
the Capital Commitment, and none of them was required to abstain from voting on the relevant Board
resolution(s) to approve the Second GP Amendment Agreement, the Subscription Agreement and the
Capital Commitment.
Sino-Ocean Land and its associates, which directly and indirectly held 312,504,625 Shares
(representing approximately 69.74% of the issued share capital of the Company) as at the Latest
The proposed resolution(s) will be passed by way of ordinary resolution and voting will be
conducted by way of poll in accordance with the requirements of the Listing Rules. Other than SinoOcean Land and its associates, no Shareholder has any material interest in the Second GP Amendment
Agreement, the Subscription Agreement or the Capital Commitment or is required to abstain
from voting to approve the resolution(s) to be proposed at the EGM in respect of the Second GP
Amendment Agreement, the Subscription Agreement and the Capital Commitment.
If any Shareholder is materially interested in the Second GP Amendment Agreement, the
Subscription Agreement or the Capital Commitment, such Shareholder and his associates will be
required to abstain from voting in respect of the resolution(s) approving the Second GP Amendment
Agreement, the Subscription Agreement and the Capital Commitment of the EGM.
— 33 —
XIII.RECOMMENDATION
The Directors (including the independent non-executive Directors whose views have been set
out in the letter from the Independent Board Committee on pages 35 and 36 of this circular after
taking into account the advice of the Independent Financial Adviser) consider that the terms of each
of the Second GP Amendment Agreement and the Subscription Agreement and the amount of the
Capital Commitment are on normal commercial terms, fair and reasonable so far as the Independent
Shareholders are concerned, and the entering into the Second GP Amendment Agreement, the
Subscription Agreement, the Capital Commitment and all transactions contemplated thereunder are
in the ordinary and usual course of business of the Company and are in the interests of the Company
and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders
to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve the Second GP
Amendment Agreement, the Subscription Agreement and the Capital Commitment and all transactions
contemplated thereunder.
XIV.GENERAL
The register of members of the Company will be closed from Tuesday, 30 December 2014
to Wednesday, 31 December 2014, both days inclusive, during which period no transfer of Shares
will be registered. The record date will be Wednesday, 31 December 2014. In order to determine
the identity of Shareholders who are entitled to attend and vote at the EGM, all transfers of Shares
accompanied by the relevant share certificates must be lodged with the Company’s share registrar,
Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong by not
later than 4:30 p.m. on Monday, 29 December 2014.
XV. ADDITIONAL INFORMATION
Your attention is also drawn to the additional information set out in the appendices to this
circular and the notice of EGM.
Your attention is drawn to the letter from the Independent Board Committee set out on pages
35 to 36 of this circular which contains its recommendation to the Independent Shareholders as to
voting at the EGM and the letter from the Independent Financial Adviser set out on pages 37 to
57 of this circular which contains its advice to the Independent Board Committee and Independent
Shareholders in relation to the Second GP Amendment Agreement, Subscription Agreement and the
Capital Commitment.
Yours faithfully,
For and on behalf of the board of directors of
Lai Kwok Hung, Alex
Executive Director
— 34 —
Letter from the Independent Board Committee
The following is the text of a letter from the Independent Board Committee setting out
its recommendation to the Independent Shareholders in relation to the Second GP Amendment
Agreement, the Subscription Agreement, the Capital Commitment and the transactions contemplated
thereunder.
(Stock Code: 174)
13 December 2014
To the Independent Shareholders
Dear Sirs,
We refer to the circular of the Company dated 13 December 2014 (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 as members of the Independent Board Committee to consider the terms
of the Second GP Amendment Agreement, the Subscription Agreement and the Capital Commitment
contemplated thereunder, to advise you as to whether (1) each of the Second GP Amendment
Agreement and the Subscription Agreement was entered into in the ordinary and usual course of
business of the Group, (2) the terms of the Second GP Amendment Agreement and the Subscription
Agreement are fair and reasonable and on normal commercial terms, and (3) the Capital Commitment
is in the interests of the Company and the Shareholders as a whole, and to make recommendations to
the Independent Shareholders whether they should vote for or against the resolution(s) on the Second
GP Amendment Agreement, the Subscription Agreement and the Capital Commitment. Yu Ming has
been appointed as the Independent Financial Adviser to advise us and you in this regard.
We wish to draw your attention to the letter from the Board set out on pages 6 to 34 of the
Circular and the letter from the Independent Financial Adviser set out on pages 37 to 57 of the
Circular which contains its advice to us and Independent Shareholders in relation to the Second GP
Amendment Agreement, the Subscription Agreement and the Capital Commitment, and the additional
information set out in the appendices to the Circular.
— 35 —
Letter from the Independent Board Committee
Having taking into account, among other things, the principal factors and reasons considered
by, and the recommendation of, the Independent Financial Adviser as stated in its letter of advice,
we consider that the terms of each of the Second GP Amendment Agreement and the Subscription
Agreement and the amount of the Capital Commitment are on normal commercial terms, fair and
reasonable so far as the Independent Shareholders are concerned, and the entering into the Second GP
Amendment Agreement, the Subscription Agreement, the Capital Commitment and all transactions
contemplated thereunder are in the ordinary and usual course of business of the Company and are
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(s) to be proposed at the EGM
to approve the Second GP Amendment Agreement, the Subscription Agreement and the Capital
Commitment and all transactions contemplated thereunder.
Yours faithfully,
Independent Board Committee
Mr. LAW Tze Lun
Independent Non-executive Directors
— 36 —
Mr. ZHENG Yun
Letter from the Independent Financial Adviser
The following is the full text of a letter of advice from Yu Ming to the Independent Board
Committee in relation to the Second GP Amendment Agreement, the Subscription Agreement and the
Capital Commitment, which has been prepared for the purpose of inclusion in the circular.
13 December 2014
To the Independent Board Committee and the Independent Shareholders
Dear Sirs,
Very Substantial and Deemed Connected Transaction in relation to
Capital Commitment into an Investment Fund
INTRODUCTION
Reference is made to the announcement issued by the Company dated 17 November 2014
(the “Announcement”) in relation to, among others, the Second GP Amendment Agreement, the
Subscription Agreement and the Capital Commitment, details of which are set out in the letter from
the Board (“Letter from the Board”) contained in the circular of the Company to its shareholders
dated 13 December 2014 (the “Circular”), of which this letter forms part. Unless the context
otherwise requires, capitalised terms used in this letter shall have the same meanings as those defined
in the Circular.
On 17 November 2014, Chance Bright (being a wholly-owned subsidiary of the Company)
entered into the Second GP Amendment Agreement and the Subscription Agreement, pursuant to
which Chance Bright agreed to increase its capital commitment to the General Partner and the Fund
by USD3.95 million and USD250 million (together the “Capital Commitment”) respectively. The
Fund is a jointly controlled and managed investment platform of the Group established to invest in
real estate projects in the PRC.
As (i) the highest applicable percentage ratio calculated with reference to Rule 14.07 of the
Listing Rules exceeds 100%; and (ii) the Capital Commitment may be funded by the proceeds to
be raised from the issue of 1.3 billion convertible preference shares in the capital of the Company
(“CPS”) to a wholly-owned subsidiary of Sino-Ocean Land, a controlling shareholder and a connected
person of the Company, the Capital Commitment constitutes a very substantial transaction of the
Company and it is expected to constitute a deemed connected transaction for the Company under
the Listing Rules. Accordingly, the Capital Commitment is subject to reporting, announcement and
independent shareholders’ approval requirements under Chapter 14 and 14A of the Listing Rules.
— 37 —
Sino-Ocean Land and its associates, which directly and indirectly held 312,504,625 Shares,
representing approximately 69.74% of the issued share capital of the Company as at the Latest
The Independent Board Committee, comprising all independent non-executive Directors,
namely Mr. Law Tze Lun, Mr. Lo Woon Bor, Henry, and Mr. Zheng Yun, has been established to
advise the Independent Shareholders as to whether (1) each of the Second GP Amendment Agreement
and the Subscription Agreement was entered into in the ordinary and usual course of business of
the Group, (2) the terms of the Second GP Amendment Agreement and the Subscription Agreement
are fair and reasonable and on normal commercial terms, and (3) the Capital Commitment is in the
interests of the Company and the Shareholders as a whole, and to make recommendations to the
Independent Shareholders whether they should vote for or against the resolution(s) on the Second GP
Amendment Agreement, the Subscription Agreement and the Capital Commitment. We are appointed
as the independent financial adviser to advise the Independent Board Committee and the Independent
Shareholders in this regard.
BASIS OF OUR OPINION
In formulating our opinion, we have relied on the statements, information, opinions and
representations contained in the Circular and the statements, information, opinions and representations
provided to us by the Directors through management, officers and professional advisers of the
Company (“Relevant Information”). We have assumed that all Relevant Information provided to
us by the Directors for which they are solely responsible are, to the best of their knowledge, true,
complete and accurate at the time they were made and continue to be so on the date of this letter.
We have no reason to suspect that any Relevant Information has been withheld, nor are
we aware of any fact or circumstance which would render the Relevant Information provided and
presented to us untrue, inaccurate, incomplete or misleading. Having made all reasonable enquiries,
the Directors have further confirmed that, to the best of their knowledge, they believe there are
no other facts or representations the omission of which would make any statement in the Circular,
including this letter, misleading. We have not, however, carried out any independent verification on
the Relevant Information provided to us by the Directors, nor have we conducted any independent
investigation into the business and affairs of the Group.
Principal factors and reasons considered
In arriving at our recommendation in respect of the terms of the Second GP Amendment
Agreement and the Subscription Agreement and the Capital Commitment and the transactions
contemplated thereunder, we have taken into consideration of the following principal factors and
reasons:
— 38 —
I.
Background, reason and benefit of the Capital Commitment as proposed under the Second
GP Amendment Agreement and the Subscription Agreement
(a)
Background , reasons and benefit of the Capital Commitment
The Company is a company incorporated under the laws of Hong Kong with limited
liability, the shares of which are listed on the Main Board of the Stock Exchange. The principal
business of the Company is investment holding. The Group has been principally engaged in
properties and securities investment, fund investment and management.
SOL HK is a company incorporated under the laws of Hong Kong and is a whollyowned subsidiary of Sino-Ocean Land whose shares are listed on the Main Board of the Stock
Exchange. SOL HK is a substantial shareholder of the Company. Sino-Ocean Land Group
is one of the leading property developers with developments in key economic regions in the
PRC and actively accomplishing the Sino-Ocean Land Group’s national strategic plan with a
coastal and riparian focus. The Sino-Ocean Land Group focuses on developing mid-to-high end
residential properties, high-end office premises and retail properties.
CCAH is a company incorporated in the British Virgin Islands and co-owned by a
number of investors in the PRC. The senior management of CCAH has years of experience
in economic research, corporate finance and asset management in the PRC. To the best of the
Directors’ knowledge, information and belief and having made all reasonable enquiries, each of
CCAH and its beneficial owner is an Independent Third Party.
As stated in the Letter from the Board, the Fund was established to invest in property
projects in the PRC in 2011. After realignment of senior management resources in 2013 (details
can be found in the announcement of the Company dated 9 August 2013) and introducing
CCAH as a new partner into the Fund in 2014, the Group intends to provide more resources,
through investing into the Fund, in upgrading and enhancing quality to property projects
that are in development stage or distressed and special situation, in addition to its existing
strategy of direct investment in Hong Kong and overseas property projects, as mentioned in the
Company’s 2014 interim report.
The Directors are of the view that the Fund will serve as a convenient platform through
which the Group can tap into a larger pool of potential value-enhancing property acquisitions
through its participation in the Fund, as the Fund has higher fund raising flexibility by
admitting new limited partners such that the Group (indirectly through the Fund) may take
advantage of timely market opportunities.
The Directors consider the Acquisition to be a good starting point to implement this
investment strategy which the Directors believe the long-term development potential of the
property projects can be realized through proactive asset management and asset enhancement by
the Fund. The Directors understood that the Fund has been conducting discussions with various
parties and is currently considering different investment opportunities of property projects
that are in the development stage or distressed and special situations (such as properties in
foreclosure or any other situations where the Company may consider suitable) in the PRC.
As disclosed in page 30 of the Circular, the principal business of the Group is properties
— 39 —
and securities investment, fund investment and management. Despite the Company’s strategy
to explore investment opportunities in Hong Kong and overseas property under its property
investment business, the Fund’s decision to enter into the Acquisition investing in the PRC
property market is in line with the Company’s fund investment and management business.
The Directors consider that the terms of the Second GP Amendment Agreement and the
Subscription Agreement which sets out the amount of the Capital Commitment to the Fund are
on normal commercial terms and are fair and reasonable. Although the Fund is not a subsidiary
of the Company, the Company can still exert its influence on the Fund through its joint control
as a general partner of the Fund. Therefore, the Directors consider that the Capital Commitment
is in the interests of the Company and its Shareholders as a whole.
(b)
Financial information on the Group
A summary of financial information of the Group is extracted from the annual report of
the Company for year ended 31 December 2013 and interim report of the Company for the six
months ended 30 June 2014 (“Interim Report 2014”) in Table 1 below:
Table 1: Financial highlights of the Group
For the year ended
31 December
2012
2013
HK$’000
HK$’000
(audited)
(audited)
Turnover
(Loss)/Profit for the year/
period attributable to owners
of the Company
For the six months ended
30 June
2013
2014
HK$’000
HK$’000
(unaudited)
(unaudited)
50,545
186,676
110,415
61,734
6,645
39,153
58,158
(18,027)
As at 31 December
As at 30 June
2012
2013
2014
HK$’000
HK$’000
HK$’000
(audited)
(audited)
(unaudited)
Non-current assets
Current assets
(Current liabilities)
(Non-current liabilities) (Note)
Net current assets
Net assets
437,926
636,690
(78,688)
(503,374)
558,002
492,554
1,222,781
898,380
(576,394)
(1,000,162)
321,986
544,605
1,306,185
745,176
(48,041)
(1,494,972)
697,135
508,348
Note: For the year ended 31 December 2013 and the six month ended 30 June 2014, the non-current
liabilities of the Group include an unsecured and subordinated shareholder’s loan of HK$1,000
million with maturity date in 2023.
— 40 —
(i)
For the year ended 31 December 2013
For the year ended 31 December 2013, the Group recorded a total revenue of
approximately HK$186.7 million (2012: approximately HK$50.5 million), representing
an increase of approximately 269.7%. The rise in revenue was mainly due to increase in
sales of gold bullions and management fee income by approximately HK$119.6 million
and HK$15.8 million respectively. The Group recorded a profit attributable to owners of
the Company of approximately HK$39.2 million (2012: approximately HK$6.6 million).
The significant increase in profit attributable to owners of the Company in 2013 was
mainly as a result of (i) the gain on one-off disposal of a wholly-owned subsidiary of
the Company, which owned certain units in Shui On Plaza in Shanghai, of approximately
HK$45.7 million; and (ii) the share of profit of joint ventures of approximately HK$26.7
million, offset by (a) the increase in overall staff costs of approximately HK$19.6
million which mainly arose from the amortization of share options granted during the
year; and (b) decrease in fair value gain from financial instruments held for trading of
approximately HK$12.4 million.
As at 31 December 2013, the audited net current assets and net assets of the Group
amounted to approximately HK$322.0 million and approximately HK$544.6 million,
respectively.
(ii)
For the six months ended 30 June 2014
For the six months ended 30 June 2014, the Group recorded total revenue of
approximately HK$61.7 million (for the six months ended 30 June 2013: approximately
HK$110.4 million), representing a decrease of approximately 44.1%. The decrease in
revenue was mainly as a result of, among other things, decrease in sales of gold bullions
by approximately HK$51.1 million. The Group recorded a loss attributable to owners
of the Company of approximately HK$18.0 million (for the six months ended 30 June
2013: a profit of approximately HK$58.2 million). Such loss was mainly attributable to
the absence of an one-off gain of approximately HK$45.7 million from the disposal of a
subsidiary recorded for the first half of 2013, decrease in share of profit of joint ventures
of approximately HK$25.3 million, and an increase in finance cost of approximately
HK$9.8 million due to the interest expenses arising from the unsecured and subordinated
shareholder’s loan amounted to HK$1,000 million granted by a subsidiary of Sino-Ocean
Land in August 2013.
As at 30 June 2014, the unaudited net current assets and net assets of the Group
amounted to approximately HK$697.1 million and approximately HK$508.3 million
respectively.
— 41 —
II.
Terms of the Second GP Amendment Agreement and the Subscription Agreement
On 17 November 2014, the Ultimate General Partner, CCAH and Chance Bright entered into
a second amendment agreement to amend the GP LPA (the “Second GP Amendment Agreement”),
pursuant to which each of CCAH and Chance Bright agreed to increase their respective capital
commitments to the General Partner by USD3.95 million from USD1.05 million to USD5 million,
as they wish to maintain their respective capital commitments to the General Partner on an equal
basis. Completion of the Second GP Amendment Agreement is conditional upon the Independent
Shareholders’ approval of the Capital Commitment at the EGM. Pursuant to a subscription agreement
dated 17 November 2014 entered into between the General Partner and the Fund, the General Partner
agreed to make a capital commitment to the Fund of USD10 million, representing around 2% of the
total capital commitment to the Fund, so that its interest is aligned with other limited partners of the
Fund. Completion of such subscription agreement is also conditional upon Independent Shareholders’
approval of the Capital Agreement at the EGM. The Directors are of the view that this structure is in
line with the market practice to align the interests of the general partner and the limited partners and
therefore, benefit the Fund’s fund raising ability.
On 17 November 2014, the General Partner, the Fund and Chance Bright entered into a
subscription agreement (the “Subscription Agreement”), pursuant to which Chance Bright agreed
to increase its capital commitment to the Fund by USD250 million, which is conditional upon the
passing by the Independent Shareholders of the resolution(s) to approve the Subscription Agreement
and the Capital Commitment at the EGM.
The terms of the Second GP Amendment Agreement and the Subscription Agreement, including
the amount of the Capital Commitment, are determined after arms’ length negotiation between the
parties with reference to the capital requirement of the Fund and anticipated expenses of the JV
Entities respectively.
The Company intends to fund the Capital Commitment from the proceeds to be raised from
the issue of 1.3 billion CPS to a wholly-owned subsidiary of Sino-Ocean Land, details of which
were set out in the Company’s joint announcement with Sino-Ocean Land dated 26 October 2014
and the announcement and circular of the Company dated 24 November 2014 and 27 November
2014 respectively. Should such issuance of the CPS not proceeded, the Company intends to fund the
Capital Commitment from its internal resources or borrowings from Sino-Ocean Land Group.
If the Second GP Amendment Agreement, the Subscription Agreement and the Capital
Commitment are not approved at the EGM:
(a)
no additional capital commitment will be made to the General Partner by either Chance Bright
or CCAH such that Chance Bright and CCAH will maintain their interests (including rights and
benefits) in each of the General Partner and the JV Entities (being the Ultimate General Partner
and the Management Company) on an equal basis; and
(b)
no additional capital commitment will be made by Chance Bright to the Fund, and Chance
Bright will only maintain a USD100 capital commitment to the Fund.
— 42 —
In such event, the Board understands from CCAH that it intends to increase its capital
commitment to the Fund from USD250 million to at least USD463 million to enable the Fund SPV to
complete the Acquisition. As such, the economic interest of the Company in the Fund will be diluted
to nearly 0% (as CCAH’s capital commitment to the Fund will amount to at least USD463 million
but Chance Bright’s capital commitment to the Fund will only be at a nominal amount of USD100),
but its interests (including rights and benefits) in each of the General Partner and the JV Entities will
remain unchanged.
Our view
In respect of terms and structure of the Capital Commitment as proposed in the Second GP
Amendment Agreement and the Subscription Agreement, we noted that (i) the Fund is intended to
be jointly controlled by the Company and CCAH on equal basis at each level of the Fund, General
Partner and the Ultimate General Partner through general partnership or limited partnership interest
holding; (ii) the capital commitment of the additional USD3.95 million to be contributed by the
Company through Chance Bright to the General Partner and then to the Fund is in proportion to its
50% shareholding interest in the Ultimate General Partner and 50% limited partner interest at the
General Partner level; and (iii) the capital commitment of USD250 million to be contributed by the
Company through Chance Bright to the Fund will enable the Company to maintain its economic
interests to be the same as CCAH on an equitable basis, thus no unfair term is observed.
If the Capital Commitment is not approved to be made, the economic interests of the Company
at the Fund will be reduced while its interests in each of the General Partner and the JV Entities will
be maintained.
III. Management and policies of the Fund
(a)
Management of the Fund
The management and operation of the Fund (being an exempted limited partnership
registered under the laws of the Cayman Islands) shall be vested exclusively in the General
Partner, who shall have the power on behalf and in the name of the Fund to carry out any and
all of the purposes of the Fund and to perform all acts and enter into and perform all contracts
and other undertakings that it may deem necessary or advisable or incidental thereto. Without
limiting the foregoing, among other things, the General Partner is authorised and empowered
in the name of and on behalf of the Fund to make, own, manage, supervise and dispose of
investments of the Fund and to execute and deliver in the Fund’s name any and all instruments
necessary to effectuate such transactions. The limited partners of the Fund are passive investors
in the Fund and have no right to take part in the management or control of the Fund’s business
or to act for or bind the Fund.
— 43 —
(b)
Management of the General Partner
The management and operation of the General Partner (being an exempted limited
partnership registered under the laws of the Cayman Islands) shall be vested exclusively in the
Ultimate General Partner, who shall have the power on behalf and in the name of the General
Partner to carry out any and all of the purposes of the General Partner and to perform all acts
and enter into and perform all contracts and other undertakings that it may deem necessary
or advisable or incidental thereto. The board of directors of the Ultimate General Partner
consists of four directors, two of which are appointed by Chance Bright and two of which are
appointed by CCAH. Resolutions shall be passed by simple majority votes. Through the board
representation, the Company can exert influence and exercise joint control over the Ultimate
General Partner, the General Partner and ultimately the Fund.
(c)
Distribution policy
At the Fund level
The net proceeds received by the Fund from each investment will be apportioned
among the General Partner and those limited partners who participated in such investment
based on their respective capital contributions to such investment, and distributed as
follows:
•
The portion of net proceeds so apportioned to the General Partner will be
•
The portion of net proceeds so apportioned to each limited partner will be
(i) First, to such limited partner until it receives distributions equal to
all capital contributions made by it to fund such investment, any
previously disposed investments and its share of investment expenses,
management fees and partnership expenses allocated to those
investments.
(ii) Second, to such limited partners until it receives distributions equal
to a preferred return of 8% per annum, compounded annually, on the
amounts referred to in sub-paragraph (i) above.
(iii) Third, 100% to the General Partner until it receives distributions
equal to 20% of the sum of: (A) the distributions made to such limited
partner pursuant to sub-paragraph (ii) above; and (B) the distributions
made to the General Partner pursuant to this sub-paragraph (iii).
(iv) Thereafter, (A) 80% of any net proceeds remaining will be distributed
to such limited partner; and (B) 20% of any net proceeds remaining
will be distributed to the General Partner.
— 44 —
The amount so distributed to the General Partner under (iii) and (iv) above is
referred to as its carried interest.
The net proceeds for distributions of each investment (or a portion thereof) are
determined by calculating the excess of:
(i)
the sum of (x) all cash received by the Fund (other than
contributions) in connection with such investment (or a portion
and (y) the fair value of such investment (or a portion thereof) that
of marketable securities that the General Partner determines (in
discretion) to distribute to the partners, over
capital
thereof)
consists
its sole
(ii) the Fund’s cash expenses paid or then due and payable and a reasonable
reserve (as determined by the General Partner in its sole discretion) for
accrued or anticipated expenses and contingent liabilities of the Fund.
Distribution of proceeds must be made within 90 days following the receipt of the
amount determined to be distributed, if any (as calculated above) for each investment.
Limited partners of the Fund shall be obligated to return amounts distributed to
them to fund partnership expenses, including indemnification obligations, provided that
such obligations shall terminate on the third anniversary of the date of such distribution
and will not exceed 20% of such limited partner’s capital commitment.
Carried interest distributions received by the General Partner from the Fund
pursuant to the terms of the Fund LPA shall be distributed to the limited partners of
the General Partner in proportion to their respective capital commitment to the General
Partner.
(d)
Transfer of limited partnership interest
At the Fund level
A limited partner of the Fund may not sell, assign or otherwise transfer any
interest in the Fund without the prior written consent of the General Partner, which
consent may be granted or withheld in its sole discretion.
A limited partner of the General Partner may not sell, assign or otherwise transfer
any interest in the General Partner without the prior written consent of the Ultimate
General Partner, which consent may be granted or withheld in its sole discretion.
— 45 —
Our view
As the management and operation of the Fund shall be vested exclusively in the General
Partner, the management and operation of the General Partner shall be vested exclusively in
the Ultimate General Partner, and Board of the Ultimate General Partner is structured to be
represented on equal basis by the Company and CCAH, we consider Chance Bright would
be able to have proportionate management representation and control in line with its equity
interest in the Ultimate General Partner and such management structure is fair and equitable.
It is noted that the net proceeds from investments of the Fund would be firstly be
distributed to the General Partner and limited partners of the Fund participated in such
investment on a prorate basis with reference to their respective capital contributions, and then
distributed to the General Partner and limited partners on different scales and percentage.
We have reviewed distribution policy of other funds which the Company formed with
other third parties and noted that while the distribution scale amongst general partners and the
limited partners may be different as compared to the Fund which was a result of arm’s length
negotiations between the general partners and limited partners of each fund, the distribution
model of the Fund is not peculiar. In addition, each of the general partners and limited partners
will receive the distributions on the same scales amongst themselves within their respective
rank with reference to their capital contributions to the funds. Accordingly, we consider the
distribution policy fair and reasonable.
The interest transfer policy set out above reflects common terms of funds of this type
which enhances the management control of the General Partner and the Ultimate General
Partner.
Based on the management and policies of the Fund discussed above, and the fact that
the Capital Commitment, if made to the Fund, economic benefits/return of the Company
would be levelled up to be the same as CCAH and well protected through the management and
distribution mechanism of the Fund, we are of the view that relevant terms of the Fund are
normal commercial terms and fair and reasonable.
IV.
The Fund and its proposed investment
(a)
Information on the Fund
Since the Fund fully realised its only invested property project in early 2013, the
Fund was dormant and did not make any investment until the entering into the Acquisition
Agreement by the Fund SPV on 5 November 2014. As such, the Fund is essentially a new fund
after the recent restructuring as set out in Section II in the “Letter from the Board”.
The Directors understood that the Fund has been in discussions with various parties and
is currently considering different investment opportunities of property projects that are in the
development stage or distressed and in special situations in the PRC. Save for the Acquisition
mentioned above, the Fund has not identified any suitable investment opportunities so far.
— 46 —
Following paragraph sets out historical financial information of the Fund extracted from
the audited consolidated financial statements of the Fund and its subsidiaries for the financial
years ended 31 December 2013, 31 December 2012 and 31 December 2011 and for the eight
months ended 31 August 2014 and 31 August 2013 for reference:
Table-2
Period from
20 July 2011
(date of
establishment)
For the year ended
to
31 December
31 December
2013
2012
2011
USD
USD
USD
Loss from operation
For the eight months
ended 31 August
2014
2013
USD
USD
(50,017)
(509,062)
(1,507,604)
(40,124)
(8,250)
Net profit/(loss) before taxation
and extraordinary items
(7,660,841)
45,983,854
(1,371,895)
(40,124)
(7,619,074)
Net profit/loss after taxation
and extraordinary items
(7,702,268)
46,034,602
(1,381,216)
(40,124)
(7,660,501)
As at 31
December
2013
USD
As at 31
August
2014
USD
386,216
(346,092)
362,000
(362,000)
40,124
—
Total assets
Total liabilities
Net assets
For the year ended 31 December 2012, the Fund recorded net profit of approximately
USD46 million, due to the sale of a number of property units from its then only invested
property project in the PRC.
For the year ended 31 December 2013, the Fund recorded net loss of approximately
USD7.7 million, which was mainly attributed to the withholding tax incurred by the realisation
of such investment in early 2013. The Fund distributed a dividend of approximately HK$30.3
million to the Group, which represented a returned share capital of HK$2.7 million and a
distribution of HK$27.6 million.
(b)
Proposed investment by the Fund
On 5 November 2014, the Fund SPV (as purchaser) entered into the Acquisition
Agreement with SOL HK (as seller) pursuant to which the Fund SPV has conditionally agreed
to purchase, and SOL HK has conditionally agreed to sell, the entire equity interest of Target,
and SOL HK shall assign and procure Fame Gain to assign the Shareholder’s Loan of Target
Group to the Fund SPV at Acquisition Completion.
— 47 —
Subject to adjustment, the total consideration payable by the Fund SP to SOL HK for the
Acquisition is USD463 million (equivalent to approximately RMB2,824.0 million), which was
determined after arm’s length negotiations between the parties to the Acquisition Agreement
with reference to, among others, the valuation of projects held by Target Group, unaudited
financial statements of Target Group as well as the principal amount of the Shareholder’s Loan
of Target Group of RMB2,603.3 million as at 30 September 2014.
Under the Acquisition Agreement, SOL HK has agreed to a comprehensive set of
warranties, including but not limited to those in respect the unaudited financial statements of
the Target Group as at 30 September 2014. These warranties shall be true, accurate and not
misleading at the date of the Acquisition Agreement, at Acquisition Completion and at all times
before Acquisition Completion. SOL HK has further agreed to indemnify the Fund SPV for any
losses, expenses or claims resulting from any breach of warranties by SOL HK. In addition, the
Fund SPV has been conducting its own legal and financial due diligence on the Target Group, a
satisfactory result of which is one of the conditions precedent to Acquisition Completion.
(c)
Information on the Target and the Target Group
According to the “Letter from the Board”, the Target is a company incorporated in the
British Virgin Islands on 28 August 2009 and is wholly owned by SOL HK. As at the Latest
Practicable Date, the Target Group held nine property projects located across seven cities in
the PRC, which are principally engaged in real estate development and property development
investment in the PRC. The Target also holds a business operation engaged in the provision of
upfitting and decoration services to the property projects.
(d)
Financial information of the Target Group
Brief summary on the financial information of the Target Group for the nine months
ended 30 September 2013 and 2014 as extracted from the Appendix II — Financial Information
of the Fund and the Target Group to the Circular is as follows (details of the financial
information of the Target Group are set out in Appendix II to the Circular):
Table-3
For the nine months ended
30 September
2014
2013
RMB’000
RMB’000
Revenue
Gross Profit
Net profit/(loss) attributable to owners of the Target
— 48 —
4,466,721
2,448,827
19,923
306,057
(143,829)
73,175
As at
30 September
2014
RMB’000
Total assets
Total liabilities
28,141,222
27,522,131
Net assets
619,091
The Target Group recorded revenue of approximately RMB4,467 million for the nine
months ended 30 September 2014 (nine months ended 30 September 2013: approximately
RMB2,449 million). Increase in revenue was mainly due to the increased delivered of property
units from Ocean Chanson Mansion (Shanghai) and Grand Canal Milestone (Hongzhou) and the
expansion of Sino-Ocean Decor during the period.
For the nine months ended 30 September 2014, the Target Group recorded gross profit of
approximately RMB20 million (nine months ended 30 September 2013: approximately RMB306
million). Decrease in gross profit was mainly due to inflated construction cost and the delivery
of property units from high land cost projects, including Ocean Chanson Mansion (Shanghai)
and Grand Canal Milestone (Hongzhou) during the period.
The Target Group recorded loss attributable to owners of Target of approximately
RMB143.8 million during the nine months ended 30 September 2014 (nine months ended 30
September 2013: profit of approximately RMB73.2 million). The loss was mainly due to the
decrease in gross profit of the projects as explained above.
(e)
Information on the Properties
A brief summary of the Properties held by the Target Group as at the Latest Practicable
Date is set out in Table-4 below. Shareholders are recommended to refer to detailed information
of the Properties as set out in the “Letter from the Board” and Appendix IV to the Circular.
— 49 —
Table-4
Project name
Project
(attributable interest) location
Project
description
Project status
(GFA in sq.m.)
Valuation
attributable
to the
Target
Expected
Group
completion
(RMB’
date
million)
Held by Target
1
Ocean Times (Dalian) Opposite Dalian university, Residential and Unsold developed
(100%)
southeast of Dahei
Commercial
GFA: 73,812.67
Mountain, Dalian Economic
and Technological
Development Zone, Dalian
Completed
260
2
Ocean Holiday Manor Golden Stone Beach, Dalian
(Dalian) (100%)
Completed
826
Residential
Unsold developed
GFA: 52,892.32
Under-construction 2017
GFA: 199,364.88
3
4
Grand Canal Milestone Intersection of Jiru Street and Residential
(Hangzhou) (70%)
Xiaohe Road in Gongshu
(Note 1)
District, Hangzhou,
Zhejiang
Ocean Century and
Wan Hai Yi Hao
(Qinhuangdao)
(100%)
Haigang District,
Qinhuangdao, Hebei
Completed
Unsold developed
GFA: 105,876.35
Under-construction
GFA: 46,002.00
3,017
2015
Residential and Unsold developed
Completed
Commercial
GFA: 121,832.49
4,802
GFA: 807,972.52
Pending for
N/A
development
GFA: 241,487.595
5
6
Ocean Chanson
Yanghang Town,
Residential
Mansion (Shanghai) Baoshan District, Shanghai
(100%)
Bond Castle and
Dreaming Land
(Shanghai) (100%)
Meilan Lake of Baoshan
District, Shanghai
Unsold developed
GFA: 40,770.34
2,995
GFA: 200,875.78
Residential and Unsold developed
Villa
GFA: 22,459
Under-construction
GFA: 64,939
— 50 —
Completed
Completed
2015
3,010
Project name
Project
(attributable interest) location
Project
description
Project status
(GFA in sq.m.)
Valuation
attributable
to the
Target
Expected
Group
completion
(RMB’
date
million)
7
Ocean Beach
(Zhenjiang) (55%)
(Note 2)
The junction of Guantangqiao Residential and Under-construction 2015
Road and Guyang Road,
Commercial
GFA: 309,171.35
Runzhou District,
Zhenjiang, Jiangsu Province
Pending for
N/A
development
GFA: 317,426.11
8
Sino-Ocean Decor
(80%) (Note 3)
Level 16, Zhongguancun
SOHO, No. 8 North
Haidian Second Street,
Haidian District, Beijing
Upfitting and
decoration
718.85
N/A
N/A
N/A
Under-construction
GFA: 79,720.27
2015
2,009
GFA: 703,070.02
856.05
9
Ocean Honored
Chateau (Qingdao)
(100%)
Intersection of Yanerdao Road Residential
and Quanzhou Road,
No. 23 Yanerdao Road,
Shinan District, Qingdao
10 Ocean City (Fushun)
(65%) (Note 4)
Residential
The junction of Gaoshan
Road and Jingyu Street,
Shuncheng District, Fushun,
Liaoning
Total
Pending for
development
GFA: 301,501
N/A
18,493.9
Notes:
(i)
The remaining 30% interest is attributable to 綠城房地產集團有限公司 (Greentown Real Estate
Group Co., Ltd  );
(ii)
The remaining 45% interest is attributable to 鎮江市交通投資建設發展公司 (Zhenjiang
Transportation Investment Construction Development Company  );
(iii)
The remaining 20% interest is attributable to 北京同安迪諮詢有限公司 (Beijing Tongandi
Consultancy Co., Ltd  );
(iv)
The remaining 35% interest is attributable to 鞍山青創投資管理有限公司 (Anshan Qingchuang
Investment Management Co., Ltd  ); and
(v)
To the best of the Directors’ knowledge, information and belief and having made all reasonable
enquiries, each of the aforementioned minority interests’ owners and their beneficial owners is an
Independent Third Party.

For identification purpose only.
— 51 —
(f)
Valuation of the Properties
Based on the valuation report prepared by DTZ Debenham Tie Leung Limited (the
“Valuer”) on the Properties as at 30 September 2014 as set out in Appendix IV to the Circular
(the “Valuation Report”), it is noted that the aggregate valuation of the Properties held by
the Target Group amounts to RMB20,836.0 million, of which attributable interest to SOL HK
amounts to RMB18,493.9 million.
We have discussed with the Valuer on the basis, assumptions and methodology of the
Valuation Report and noted that the Valuer had provided the market value of the Properties
using the direct comparison approach by making reference to comparable sale evidences as
available on the market.
The Valuer also stated in the Valuation Report that, given the nature of the property,
mostly being residential units, ancillary retail podium units and car parking spaces, sales
activities are frequent and thus sales evidence are readily available, the direct comparison
approach is considered appropriate and in line with market practice.
(g)
Consideration of the Acquisition
Subject to adjustment, total consideration payable by the Fund SPV to SOL HK for the
Acquisition is USD463 million (equivalent to approximately RMB2,824.3 million), which was
determined after arm’s length negotiations between the parties to the Acquisition Agreement
with reference to, among others, the valuation of projects held by the Target Group, unaudited
financial statements of Target Group as well as the principal amount of Shareholder’s Loan of
Target Group of RMB2,603.3 million as at 30 September 2014.
We understand from the Directors that subject to completion of the Acquisition, the
Shareholder’s Loan of Target Group will be assigned to the Fund SPV on a dollar to dollar
basis.
The implied consideration for the net asset value of the Target Group is approximately
RMB221 million (“Implied NAV Consideration”), which is calculated by deducting the
Shareholder’s Loan of Target Group of RMB2,603.3 million from the consideration of USD463
million (equivalent to approximately RMB2,824.3 million).
Based on the unaudited management account of the Target Group as at 30 September
2014, the net asset value of the Target Group is RMB619.1 million (which reflected the
carrying value of the Properties at RMB20,816.2 million and Shareholder’s Loan of Target
Group of RMB2,603.3 million), and net asset value of the Target Group attributable to SOL
HK is RMB208.0 million (“NAV Carrying Amount”).
Based on the NAV Carrying Amount of RMB208 million as at 30 September 2014 and
the Implied NAV Consideration of RMB221 million, the Implied NAV Consideration represents
a premium of approximately 6.25% or RMB13 million over the NAV Carrying Amount as
disclosed in the announcement of Sino-Ocean Land dated 5 November 2014.
— 52 —
The net asset value of the Target Group attributable to SOL HK after adjustment of
the valuation gain of the Properties attributable to SOL HK of RMB100.4 million (which
represents the sum of the valuation gain or loss, where appropriate, of each of the Properties
attributable to SOL HK) amounts to approximately RMB308.4 million as at 30 September 2014
(“Adjusted NAV”). Based on the Implied NAV Consideration of RMB221 million, the Implied
NAV Consideration represents a discount of approximately 28.3% or RMB87.4 million to the
Adjusted NAV of the Target Group attributable to SOL HK.
Although the Acquisition does not constitute a transaction to the Company under the
Listing Rules, considering the intended use of the Capital Commitment, if were to be made to
the Fund, is for the Fund to complete the Acquisition from SOL HK of the Target, which held
the Properties, we had compiled a comparable table on consideration paid by other listed issuers
in property acquisitions based on a limited research we carried out on a best effort basis using
the following selection criteria: (i) acquisition of PRC properties by companies listed on the
Stock Exchange in the past three months from 18 August 2014 to 17 November 2014 (being the
date of the Announcement) (“Research Period”); and (ii) the valuation of the subject property
or the calculation of the adjusted net asset value of the target company taking into account the
valuation of the subject property(ies) was demonstrated in the circular of relevant transactions.
Transactions for acquiring property assets (i) which located in non-mainland PRC areas, such
as Hong Kong or overseas; or (ii) which located in mainland PRC areas, but relevant circular
has not set out valuation of subject property or calculation of adjusted net asset value of target
companies after taking into account valuation of the subject properties, are excluded in order
to make the comparable transactions more relevant and representative, and calculations more
accurate. We have identified and made references to 8 comparable transactions (“Comparable
Transactions”) which meet the aforesaid criteria, and consider these Comparable Transactions
exhaustive and representative. We have compared the considerations paid by listed companies
for these Comparable Transactions with the valuation of relevant PRC properties or net asset
value (“NAV”) or adjusted NAV of target companies holding relevant PRC properties. We did
not expand the Research Period to a longer course as we consider reasonable number of samples
are identified and recent transactions are more relevant for consideration as they closely
reflect market conditions and dynamics, including relevant administrative policies, of the PRC
property sector. Brief Summary of relevant information of the Comparable Transactions are set
out in Table-5 below:
Table-5
Stock
code
Company name
Date of
circular
Property type
& location
1
1223
Symphony Holdings Limited#
25-Aug-14
Commercial property in
Beijing and Shenyang
2
978
China Merchants Land Limited#
25-Aug-14
Commercial and residential
property in Guangzhou,
Foshan and Chongqing
— 53 —
Consideration
(million)
Discount of
Adjusted consideration
NAV/
to adjusted
Valuation of
NAV/
property* valuation of
(million)
property
HK$482
HK$482
0.0%
RMB1,213
RMB1,213
0.0%
Stock
code
Company name
Date of
circular
Property type
& location
Consideration
(million)
Discount of
Adjusted consideration
NAV/
to adjusted
Valuation of
NAV/
property* valuation of
(million)
property
3
841
Asia Cassava Resources Holdings 15-Sep-14
Limited#
Hotel in Shandong
HK$164
HK$226
27.4%
4
607
Fullshare Holdings Limited
(Formerly known as Warderly
International Holdings
Limited)
25-Sep-14
Land in Nanjing
RMB500
RMB688
27.3%
5
980
Lianhua Supermarket Holdings
Co., Ltd#
20-Oct-14
Commercial property
in Zhejiang
RMB898
RMB903
0.6%
6
152
Shenzhen International Holdings
Limited#
22-Oct-14
Land in Shenzhen
RMB3,567
RMB6,188*
42.4%
7
404
Hsin Chong Construction Group
Limited#
4-Nov-14
Land in Foshan
HK$7,688
HK$10,685
28.0%
8
207
COFCO Land Holdings Limited#
5-Nov-14
Six mixed-use complex
property projects in
Beijing, Shenyang,
Shanghai, Tianjin and
Yantai
HK$11,464
HK$20,001
42.7%
#
The Acquisition
28.3%
Highest Discount
42.7%
Lowest Discount
0.0%
Average Discount
21.1%
Relevant Comparable Transactions constitute connected transactions of relevant listed issuers.
Source: website of Stock Exchange of Hong Kong Limited
A total of 8 Comparable Transactions were identified during the Research Period, and it
is noted that considerations paid by relevant companies for the Comparable Transactions were
either equal to or at a discount from 1% to 42.7% to the valuation or adjusted NAV of relevant
PRC properties, with average discount of 21.1%. The discount of 28.3% represented by the
Implied NAV Consideration to the Adjusted NAV of the Target Group attributable to SOL HK
is within the range of and above the average of the discount paid by listed companies for the
Comparable Transactions.
Our view
Having considered that: (i) the Fund is essentially a new fund after fully realised its
invested property project in early 2013 and was dormant and did not make any investment
until the entering into the Acquisition Agreement; (ii) the proposed investment by the Fund
is to acquire the Properties held by the Target Group through the Acquisition; (iii) the
— 54 —
Adjusted NAV of the Target Group attributable to SOL HK after taking into account of the
valuation of the Properties is RMB308.4 million, (iv) the Shareholder’s Loan of Target Group
will be assigned to the Fund SPV on a dollar to dollar basis; and (v) the consideration of
the Acquisition represents a discount of 28.3% to the Adjusted NAV of the Target Group
attributable to SOL HK after taking into account of the Shareholder’s Loan of Target Group
and valuation of the Properties, which is in line with market Comparable Transactions, we
consider the proposed investment by the Fund to acquire the Target Group (which in turn held
the Properties) through the Acquisition at the consideration of USD463 million (equivalent to
approximately RMB2,824.0 million) fair and reasonable so far as the Independent Shareholders
are concerned and in the interests of the Company and the Shareholders as a whole.
V.
Possible Financial Effects of the Second GP Amendment Agreement and the Subscription
Agreement
As the Company holds 50% of the issued share capital of the JV Entities (being the Ultimate
General Partner and the Management Company), the Fund, the General Partner and the JV Entities are
not subsidiaries of the Company, and the financial results of the Fund will not be consolidated into
the Group but accounted for on equity basis.
(i)
Effects on net asset value and earnings
According to the Interim Report 2014, the unaudited net asset value of the Group was
approximately HK$508.3 million as at 30 June 2014.
Assuming the Capital Commitment (as proposed under the Second GP Amendment
Agreement and the Subscription Agreement) and the CPS are approved by the Shareholders,
after drawdown of the Capital Commitment by the Fund, the profit or loss of the Fund is equity
accounted for by the Group as interest in joint venture, and the net asset value of the Group is
expected to remain unchanged as the increase in interest in joint venture of USD253.95 million
(equivalent to approximately HK$1,969.97 million) is expected to be offset by the decrease in
bank balances and short-term deposits to the same amount.
Accordingly, the Capital Commitment will have no immediate material impact on the net
asset value of the Group as well as consolidated earnings of the Group.
(ii)
Effects on gearing
With reference to the Interim Report 2014, the interest-bearing borrowings and
gearing ratio of the Group was approximately HK$1,495.0 million and approximately 0.73
times (calculated based on interest-bearing borrowings over total assets) as at 30 June 2014
respectively.
If the Capital Commitment were to be funded by the proceeds from the issue of 1.3
billion CPS to a wholly-owned subsidiary of Sino-Ocean Land, there will be no immediate
financial effect on the gearing of the Group.
— 55 —
RECOMMENDATION
Having considered the principal factors analysed above, in particular that:
(i)
the Fund is intended to be jointly controlled by the Company and CCAH on equal basis
at each level of the Fund, General Partner and the Ultimate General Partner through
general partnership or limited partnership interest holding;
(ii) the Capital Commitment, if were to be made, will be contributed by Chance Bright
to the General Partner and the Fund which will enable the Company to maintain its
economic interests to be levelled up to be the same as CCAH on an equitable basis and
in proportion to its equity interest in the Ultimate General Partner;
(iii) the management and operation of the Fund shall be vested exclusively in the General
Partner, the management and operation of the General Partner shall be vested exclusively
in the Ultimate General Partner, and board of the Ultimate General Partner is structured
to be represented on equal basis by the Company and CCAH, which enable Chance
Bright to have proportionate management representation and control in line with its
equity interest in the Ultimate General Partner;
(iv) proceeds from investments of the Fund would be firstly be distributed to the General
Partner and limited partners of the Fund participated in such investment on a prorate
basis with reference to their respective capital contributions, and then distributed to
the General Partner and limited partners on different scales and percentage, and such
distribution model of the Fund is not peculiar;
(v)
the fact that the Capital Commitment, if made to the Fund, and economic benefits/return
for the Company would be levelled up to be the same as CCAH and well protected
through the management and distribution mechanism of the Fund, which is fair and
reasonable;
(vi) the proposed investment by the Fund is to acquire the Target Group (which held the
Properties) through the Acquisition, and the Implied NAV Consideration represents a
discount of 28.3% to the Adjusted NAV of the Target Group after taking into account
of the valuation of the Properties and assignment of the Shareholder’s Loan of Target
Group, which is within the range and above the average of the discounts as presented by
the Comparable Transactions; and
(vii) the Capital Commitment will have no immediate material impact on the net asset value,
earnings as well as gearing ratio of the Group if it were to be funded by the proceeds
from the CPS,
— 56 —
we concur with the Directors that the Capital Commitment could allow the Company to build
up a portfolio of properties (developed and developing) and land reserve through the Fund to
capture long-term development potential of the property market in the PRC through proactive
asset management and asset enhancement by the Fund and that the terms of each of the Second
GP Amendment Agreement and the Subscription Agreement and the amount of the Capital
Commitment are on normal commercial terms, fair and reasonable so far as the Independent
Shareholders are concerned, and the entering into the Second GP Amendment Agreement,
the Subscription Agreement and the Capital Commitment and all transactions contemplated
thereunder are in the ordinary and usual course of business of the Company and are in the
interests of the Company and the Shareholders as a whole.
Accordingly, we recommend the Independent Board Committee to advise the Independent
Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve
the Second GP Amendment Agreement, the Subscription Agreement, the Capital Commitment and all
transactions contemplated thereunder.
Yours faithfully,
For and on behalf of
YU MING INVESTMENT MANAGEMENT LIMITED
Warren Lee
Managing Director
— 57 —
APPENDIX I
I.
FINANCIAL INFORMATION OF THE GROUP
Details of the financial information of the Group for the three financial years ended 31
December 2011, 2012 and 2013, and the six months ended 30 June 2014 are disclosed in the
following documents which have been published on the website of the Stock Exchange (www.hkex.
com.hk) and the website of the Company (www.geminiinvestments.com.hk), and which can be
accessed by the direct hyperlinks below:
(1) annual report of the Company for the year ended 31 December 2011:
http://www.hkexnews.hk/listedco/listconews/SEHK/2012/0326/LTN20120326054.pdf
(4) interim report of the Company for the six months ended 30 June 2014:
II.
STATEMENT OF INDEBTEDNESS
As at 31 October 2014, being the latest practicable date for the purpose of preparing this
indebtedness statement, the Group had (i) an unsecured 10-year loan from Grand Beauty Management
Limited, an indirect wholly-owned subsidiary of Sino-Ocean Land, of HK$1 billion; (ii) unsecured
bank borrowing of approximately HK$500 million which was wholly repayable in 2017; and (iii)
unsecured loan provided by Sino-Ocean Land Limited, a fellow subsidiary of the Company, of
approximately HK$26.5 million.
Save as aforesaid, apart from intra-group liabilities and normal trade and other payables in
the ordinary course of business of the Group, as at 31 October 2014, the Group did not have any
debt securities issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar
indebtedness, liabilities under acceptance or accepted credits, debentures, mortgages, charges, hire
purchase or finance lease commitments, guarantees or other material contingent liabilities.
III. WORKING CAPITAL
The Directors are of the opinion that, after taking into account (i) the internal resources
available to the Group; (ii) the presently available banking and other facilities; and (iii) the estimated
net proceeds from the issue of 1.3 billion convertible preference shares in the capital of the Company,
and in the absence of unforeseeable circumstances, the Group will have sufficient working capital to
satisfy its present requirements for at least the next 12 months following the date of this circular.
— I-1 —
APPENDIX I
IV.
FINANCIAL AND TRADING PROSPECTS
Following completion of the Capital Commitment, the Group continues to engage in its four
existing business segments, namely property investments, securities investments, fund investments
and fund management business.
In respect of the property investments segment, the Group will continue to follow its stated
acquisition strategy to invest in high quality income-generating properties in Hong Kong or prime
cities in overseas property markets and focus on its properties investment portfolio in order to
enhance a stable rental income stream and capture potential capital appreciation when investment
opportunities arise.
In respect of the securities investments segment, the Group will continue to follow its cautious
approach of pursuing steady return as well as risk minimization, despite the high volatility of global
capital market.
In respect of the fund investments segment, the Group will continue to actively monitor
the performance of the investment funds and assess the necessity of redemption as a result of
unsatisfactory performance or any liquidity demand when better investment opportunities arise.
In respect of the fund management business, the Group will continue to explore investment
opportunities through jointly managed fund as general partner for property projects in the PRC or
other countries where investment opportunities arise.
Looking ahead, the Directors stay optimistic about the future development of the Group in
particular with the support from the largest shareholder, Sino-Ocean Land. The Directors expect
that the Group would have sufficient funds for its existing requirement. As part of its business plan
and proactive but prudent investment strategy, the Group will continue to identify and consider
other sound investment opportunities which could be of long term benefit to the Group and the
Shareholders.
MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP
Set out below is the management discussion and analysis and other pertaining information on
the Company for the six months ended 30 June 2014 and each of the years ended 31 December 2013,
2012 and 2011 extracted (and modified as appropriate) from the Company’s interim report for the six
months ended 30 June 2014 and annual reports for each of the three years ended 31 December 2013,
2012 and 2011.
(1)
For the six months ended 30 June 2014
Review of results and operation
For the six months ended 30 June 2014 (the “Interim Period”), the Group recorded
total revenue of approximately HK$61,734,000 (for the six months ended 30 June 2013:
approximately HK$110,415,000). The decrease in revenue was mainly as a result of, among
other things, decrease in sales of gold bullions by approximately HK$51,116,000.
The Group recorded a loss attributable to owners of the Company of approximately
HK$18,027,000 (for the six months ended 30 June 2013: a profit of approximately
HK$58,158,000). Consequently, the Group recorded basic losses per share of approximately
— I-2 —
APPENDIX I
4.1 HK cents for the six months ended 30 June 2014, versus basic earnings per share of
approximately 13.1 HK cents for the six months ended 30 June 2013. The decrease in basic
earnings per share was mainly attributable to the absence of an one-off gain of approximately
HK$45,667,000 from the disposal of a subsidiary recorded for the first half of 2013, decrease in
gain from share of results of joint ventures of approximately HK$25,336,000, and an increase
in finance cost of approximately HK$9,812,000 for the six months ended 30 June 2014 due to
the interest expenses arising from the unsecured and subordinated shareholder’s loan amounted
to HK$1,000 million (“Sino-Ocean Land Loan”) granted by a subsidiary of Sino-Ocean Land,
the controlling shareholder of the Company, in August 2013.
Set out below is the Group’s revenue breakdown for the six months ended 30 June 2013
and 2014:
Rental revenue
Dividend income
Sales of gold bullions
Management fee income
For six months
ended
30 June 2014
(unaudited)
HKD’000
For six months
ended
30 June 2013
(unaudited)
HKD’000
5,039
108
44,514
12,073
6,719
2,783
95,630
5,283
61,734
110,415
Liquidity, financial resources and capital structure
Total assets and net asset value of the Group as at 30 June 2014 were approximately
HK$2,051,361,000 (31 December 2013: approximately HK$2,121,161,000) and approximately
HK$508,348,000 (31 December 2013: approximately HK$544,605,000), respectively.
As at 30 June 2014, the Group had total cash resources (including bank balances
and cash and short-term bank deposits) of approximately HK$640,399,000 (31 December
2013: approximately HK$715,343,000) and a current ratio (current assets divided by current
liabilities) at 15.51 times (31 December 2013: 1.56 times). Increase in current ratio was mainly
due to the decrease in short-term borrowings, as the Group renewed an existing bank loan
facility on 23 January 2014 of HK$500,000,000, which was originally repayable within 2014,
for a further three-year term. The Group adopts a prudent funding and treasury policy with
regard to its overall business operations.
A bank borrowing of HK$494,833,000 (31 December 2013: HK$498,833,000 under
current liabilities) was extended during the period, which is unsecured, wholly repayable in
2017 (31 December 2013: in 2014) and bearing interest at floating rate. The average interest
rate for the bank borrowing as at 30 June 2014 is 2.49% (31 December 2013: 2.45%) per
annum. The bank borrowing is guaranteed by Sino-Ocean Land, the ultimate holding company
of the Group.
— I-3 —
APPENDIX I
As at 31 December 2013, to an entrusted loan of HK$50,876,000 in the PRC was
provided by Sino-Ocean Land Limited, a fellow subsidiary of the Group, which was unsecured
and bearing interest at fixed rate. The entrusted loan has been wholly repaid in February 2014.
At 31 December 2013 and 30 June 2014, the borrowing amounted to HK$1,000 million
under non-current liabilities represent a loan provided by Grand Beauty Management Limited,
an indirect wholly-owned subsidiary of Sino-Ocean Land. The amount due is unsecured, wholly
repayable in 2023 and interest bearing at the rate of three-month HIBOR plus 1.5% to 3.75%
per annum. On 21 May 2014, a waiver was granted for loan interest payable for the period from
1 January 2014 to 31 December 2014 as continued support to the Group for the implementation
of its investment strategy. The total amount of interest being waived for the period ended 30
June 2014 amounted to approximately HK$9,338,000 is regarded as capital contribution to the
Group and recorded in the condensed consolidated statement of changes in equity.
The Group’s net gearing ratio (total net debt divided by total shareholders’ equity),
which was computed by dividing the total borrowings less cash resources by total shareholders’
equity, increased slightly from 1.53 times as at 31 December 2013 to 1.68 times as at 30 June
2014.
Comments on segment information
Property investments
As at 30 June 2014, the Group’s investment properties comprised A-grade office
premises in Hong Kong and residential units in New York. Total rental income for the six
months ended 30 June 2014 amounted to approximately HK$5,039,000 (for the six months
ended 30 June 2013: approximately HK$6,719,000). Decrease in rental income was mainly
due to no rental income generated from PRC properties during the Interim Period as the Group
disposed of the entire issued share capital of a wholly-owned subsidiary, which owned certain
units in Shui On Plaza in Shanghai, the PRC, in the first half of 2013, though additional rental
income was generated by the office premise in prime location in Hong Kong acquired in June
2013.
In May 2014, our Group acquired 10 residential condominiums in the heart of
Manhattan’s financial district of New York for a total cash consideration of approximately
US$12,897,000. Details of such acquisition were disclosed in the announcement of the
Company dated 24 May 2014. In July 2014, our Group further entered into a sale and purchase
agreement with an independent third party for the purchase of 1 more residential unit in the
same condominium in New York as mentioned above for a total consideration of approximately
US$1,145,000. The acquisition was completed in August 2014.
— I-4 —
APPENDIX I
Securities and other investments
Securities and other investment portfolio formed part of our Group’s cash management
activities, and the management of our Group is pleased to maintain a scalable investment
portfolio with proper diversification to avoid the fluctuation of any single market.
Our Group recognised a total revenue from securities and other investments for the
Interim Period of approximately HK$44,622,000 (for the six months ended 30 June 2013:
approximately HK$98,413,000). Decrease in revenue was mainly due to decrease in sales of
gold bullions amounting to approximately HK$51,116,000. A loss from changes in fair value of
financial instruments held for trading of approximately HK$2,643,000 was recognised during
the Interim Period, as a result of the volatile market condition (for the six months ended 30
June 2013: a loss of approximately HK$7,648,000).
Fund investments
The carrying value of our fund investment portfolio as at 30 June 2014 amounted to
approximately HK$820,729,000 (31 December 2013: approximately HK$871,433,000). Fund
investments will enable our Group to diversify its investment risk through efficient access to a
wider variety of investment channels to which our Group may not have direct access. It is our
Group’s objective to grow its investment return by adopting a proactive but prudent approach
in its investments. No revenue or gain has yet been recognised from fund investments for the
Interim Period. Apart from other movement, decrease in fair value of fund investments was
mainly because an amount of HK$30,704,000 was charged to other comprehensive income for
the Interim Period as a result of a decrease in fair value of fund investments (for the period
ended 30 June 2013: Nil).
Fund Management
Revenue from fund management business of approximately HK$12,073,000 was recorded
during the Interim Period (for the six months ended 30 June 2013: HK$5,283,000). Increase in
revenue from fund management business resulted from more service fee received from our fund
management business.
Our Group recognised a gain of approximately HK$1,056,000 from share of results of
joint ventures for the Interim Period (for the six months ended 30 June 2013: HK$26,392,000).
Decrease in gain from share of results of joint ventures was mainly because our Group had
recognised dividend distribution from Sino Prosperity Real Estate Fund L.P., on disposal of its
interest in a property development project in Dalian, during the first half of 2013.
— I-5 —
APPENDIX I
Employee and remuneration policy
As at 30 June 2014, the total number of staff employed was 17 (31 December 2013:
16). During the Interim Period, taking into account the amortisation of share options of
approximately HK$3,192,000 (for the six months ended 30 June 2013: Nil), the level of
our overall staff cost was about HK$8,627,000 (for the six months ended 30 June 2013:
HK$3,470,000).
With a view to encouraging and rewarding contribution made by our staff, our Group
has adopted a share option scheme and believes that this will be an effective tool for achieving
this purpose. Our Group recruits and promotes individuals based on their performance and
development potentials in the positions offered. When formulating staff salary and benefit
policies, our Group gives primary consideration to their individual performance and prevailing
salary levels in the market.
Exchange rate exposure
During the Interim Period, our Group’s assets and liabilities were mainly denominated in
HKD, USD, Renminbi (“RMB”) and Australian Dollar (“AUD”). In the view of the potential
RMB and AUD exchange rate fluctuations, our Group will closely monitor the foreign currency
exchange risk exposure and will regularly review if any related hedging should be necessary.
Pledge of assets
As at 30 June 2014, our Group did not have any pledged assets.
Contingent liabilities
As at 30 June 2014, our Group had no significant contingent liabilities.
Material acquisitions and disposals
In January 2014, our Group made an investment in a direct interest in a property
development project in Melbourne, Australia, for a total consideration of approximately
AUD14,286,000, which gives a guaranteed pre-tax return of 8% per annum to control the risk
exposure of our Group.
In May 2014, our Group acquired 10 residential condominiums located in the heart of
Manhattan’s financial district, New York, for an aggregate consideration of approximately
US$12,897,000, which is expected to generate an annual rental yield of approximately 3.1%.
— I-6 —
APPENDIX I
(2)
During 2013, our Group recorded a total revenue of approximately HK$186,676,000
(2012: approximately HK$50,545,000). The rise in revenue was mainly due to increase in
sales of gold bullions and management fee income by approximately HK$119,568,000 and
HK$15,790,000, respectively.
The following table sets forth our Group’s revenue breakdown for 2013 and 2012:
Rental revenue
Dividend income
Sales of gold bullions
Management fee income
2013
HKD’000
2012
HKD’000
11,130
5,327
151,508
18,711
11,855
3,829
31,940
2,921
186,676
50,545
During 2013, our Group recorded a profit attributable to owners of the Company of
approximately HK$39,153,000 (2012: approximately HK$6,645,000). Consequently, our Group
recorded basic earnings per share of 8.79 HK cents in 2013 versus 1.49 HK cents in 2012.
Significant increase in profit attributable to owners of the Company in 2013 was mainly as a
result of the gain on disposal of a wholly-owned subsidiary of the Company of approximately
HK$45,667,000 and the share of results of joint ventures of approximately HK$26,714,000,
offset by the increase in overall staff costs, taking into account of the share-based compensation
cost, of approximately HK$19,579,000 which mainly arose from the amortization of share
options granted during 2013 and decrease in gain arising from changes in fair value of financial
instruments held for trading of approximately HK$12,377,000.
Total assets and net asset value of our Group as at 31 December 2013 were
approximately HK$2,121,161,000 (2012: approximately HK$1,074,616,000) and approximately
HK$544,605,000 (2012: approximately HK$492,554,000), respectively.
On 15 August 2013, our Group entered into the Sino-Ocean Land Loan. Such loan will
definitely support our future business development.
As at 31 December 2013, our Group had total cash resources (including bank balances
and cash and short-term bank deposits) of approximately HK$715,343,000 (2012: approximately
HK$399,244,000) and the current ratio was 1.56 times (2012: 8.10 times). As at 23 January
2014, an existing bank loan facility of HK$500,000,000 of our Group has been renewed prior
to the date of its expiry for a further three-year term. We are confident that we have ample
— I-7 —
APPENDIX I
financial resources to support our business expansion when appropriate. The Group adopts a
prudent funding and treasury policy with regard to its overall business operations.
A bank borrowing of HK$498,833,000 (2012: HK$496,833,000 under non-current
liabilities), which is unsecured, wholly repayable in 2014 and bearing interest at floating rates.
The average interest rate for the bank borrowing as at 31 December 2013 is 2.45% (2012:
2.26%) per annum. The bank borrowing is guaranteed by Sino-Ocean Land, the ultimate
holding company of the Group.
An entrusted loan of HK$50,876,000 (2012: HK$61,664,000) in the PRC provided
by Sino-Ocean Land Limited, a fellow subsidiary of the Group, which is unsecured, wholly
repayable within one year and bearing interest at fixed rates as at 31 December 2013. The
average interest rate for the entrusted loan as at 31 December 2013 is 7.34% (2012: 7.34%) per
annum.
In terms of net gearing ratio, calculated as total borrowings less cash resources divided
by total shareholders’ equity, our Group’s net gearing ratio increased from 0.32 times to
1.53 times as at 31 December 2013, which was attributable mainly to the utilisation of cash
resources from the Sino-Ocean Land Loan.
Investment properties provide a steady and reliable income and cash flow for our Group
in addition to the possible capital gains from appreciation in value. Total rental income for
2013 decreased slightly by 6% to approximately HK$11,130,000, while a revaluation gain on
the investment properties of approximately HK$334,000 was recorded (2012: approximately
HK$465,000).
On 8 February 2013, the Company entered into a sale and purchase agreement with
an independent third party in connection with the disposal of the entire issued share capital
in a wholly-owned subsidiary of our Group, which owned certain units in Shui On Plaza in
Shanghai (the “Disposal”), with a gross floor area of approximately 27,717 square feet for a
total consideration of approximately RMB138,311,000 and recognised a gain of approximately
HK$45,667,000. Details of the Disposal were set out in the announcement and the circular of
the Company dated 8 February 2013 and 8 March 2013, respectively.
On 13 June 2013, our Group entered into a sale and purchase agreement with an
independent third party for the acquisition of an office premise with a gross floor area of
approximately 2,412 square feet in Tower Two Lippo Centre, Hong Kong for a consideration of
approximately HK$59,818,000.
As at 31 December 2013, all our investment properties are A-grade office premises in
Hong Kong with a total gross floor area of 16,009 square feet.
— I-8 —
APPENDIX I
Security investment portfolio formed part of our Group’s cash management activities,
and the management of our Group is pleased to maintain a scalable investment portfolio with
proper diversification to avoid the fluctuation of any single market.
Our Group recognised a total revenue for the year of approximately HK$156,835,000
(2012: approximately HK$35,769,000) from securities and other investment which comprises
dividend income of approximately HK$5,327,000 (2012: approximately HK$3,829,000)
and sales of gold bullions of approximately HK$151,508,000 (2012: approximately
HK$31,940,000). Moreover, our Group recorded a gain from changes in fair value of financial
instruments held for trading of approximately HK$8,895,000, which include a realised gain
of about HK$4,544,000 (2012: about HK$7,181,000) and an unrealised gain of approximately
HK$4,351,000 (2012: approximately HK$14,091,000).
The carrying value of our Group’s portfolio of securities and other investments as
at 31 December 2013 amounted to approximately HK$206,568,000 (2012: approximately
HK$259,703,000). Decrease in the aforesaid carrying value was mainly because we realised
profit in last quarter of 2013, so as to reduce our exposure on securities investment.
Subsequent to the year end, on 24 January 2014, our Group entered into a conditional
subscription agreement with an independent third party to invest a minority interest with a
fixed pre-tax 8% return per annum in a property development project in Melbourne Australia,
for an aggregate consideration of about HK$97,700,000.
Fund investments
The carrying value of our fund investment portfolio as at 31 December 2013 amounted
to approximately HK$871,433,000 (2012: approximately HK$10,559,000). During 2013, our
Group has further invested in several investment funds (the “New Investment Funds”), with
aggregate carrying value amounted to about HK$856,221,000 as at 31 December 2013. Such
fund investments will enable our Group to diversify its investment risk and further enhance the
rate of return through efficient access to a wider variety of investment channels to which our
Group may not have direct access at the material time. It is our Group’s objective to grow its
investment return by adopting a proactive but prudent approach in its investments. No revenue
has yet been recognised from fund investments segment during 2013. Changes in fair value
of fund investments, which were recorded as available-for-sale investments, of approximately
HK$9,868,000 was recognised in other comprehensive income in 2013.
Fund Management
Revenue from fund management business of approximately HK$18,711,000 was recorded
during 2013 (2012: approximately HK$2,921,000). Increase in revenue from fund management
business was due to our Group starting to receive revenue from this business segment only
from last quarter of 2012.
— I-9 —
APPENDIX I
Our Group recognised a gain of approximately HK$26,714,000 from share of result
of joint ventures, which was mainly from dividend distribution from Sino Prosperity Real
Estate Fund L.P., on disposal of its interest in a property development project in Dalian, at a
consideration of approximately US$103,318,000 in March 2013.
As at 31 December 2013, the total number of staff employed was 16 (2012: 24). The
decrease in the headcount was due to the fact that, after the Disposal during 2013, the scope
of our PRC business was further narrowed and accordingly the headcount in our PRC region
was reduced. During 2013, taking into account the expense arising from the amortisation of
share options, the level of our overall staff cost increased from about HK$7,838,000 to about
HK$27,417,000 in 2013.
With a view to encouraging and rewarding contribution made by our staff, our Group
has adopted a share option scheme (the “Scheme”) and believes that this will be an effective
tool. During 2013, our Group granted 35,400,000 share options under the Scheme to executive
and non-executive directors and certain other employees of the Group. Our Group recruits
and promotes individuals based on their performance and development potentials in the
positions offered. When formulating staff salary and benefit policies, our Group gives primary
consideration to their individual performance and prevailing salary levels in the market.
During 2013, our Group’s assets and liabilities were mainly denominated in HKD, USD,
RMB and Japanese Yan (“JPY”). In the view of the potential RMB and JPY exchange rate
fluctuations, our Group will closely monitor the foreign currency exchange risk exposure and
will regularly review if any related hedging should be necessary.
Pledge of assets
As at 31 December 2013, our Group did not have any pledged assets.
As at 31 December 2013, our Group had no significant contingent liabilities.
In May 2013, our Group disposed of a subsidiary which owned certain units in Shui
On Plaza in Shanghai for a price of approximately RMB138,311,000. Such disposal reflected
our Group’s seizing opportunities to realise its property portfolio at good market prices and
provided funding for our Group towards other capital projects to capture opportunities with
higher return.
— I-10 —
APPENDIX I
Our Group has invested in several investments funds during 2013 with an aggregate
carrying value of approximately HK$856,221,000 as at 31 December 2013. The investment
scope of these funds mainly covers the areas of listed and unlisted securities, derivative
contracts, foreign exchange and commodities, and real estates and related investments in
developed countries, primarily in the United States of America, Europe and Australia. Those
investments funds are well managed by investment professionals with experiences and expertise
in capital market, real estate and private equity.
In January 2014, our Group has invested in a minority interest in a property development
project in Melbourne, Australia, for a total consideration of approximately HK$97,701,000.
Such investment has a guaranteed pre-tax return of 8% per annum which enable the Group to
control its investment risk exposure.
(3)
(2011: approximately HK$67,363,000) and a profit attributable to owners of the Company
of approximately HK$6,645,000 (2011: a loss of approximately HK$18,699,000). A profit
recorded in our Group during the financial year ended 31 December 2012 was mainly due to
the gain arising from changes in the fair value of financial instruments held for trading of
approximately HK$21,272,000 and rental income on investment properties of approximately
HK$11,855,000, offset by the finance costs of approximately HK$16,682,000 from our
borrowings. Consequently, our Group recorded earnings per share of 1.49 HK cents in 2012
versus losses per share of 4.20 HK cents in 2011.
As at 31 December 2012, the cash and cash equivalents of our Group amounted to
approximately HK$399,244,000 (2011: approximately HK$274,489,000). The larger amount
of cash level as at the end of 2012 was due to disposal of some of our securities investment
in order to crystalise our gain. The Group adopts a prudent funding and treasury policy with
regard to its overall business operations.
The borrowing of the Group under current liabilities represents an entrusted loan in
the PRC provided by Sino-Ocean Land Limited, a fellow subsidiary of the Group, which is
unsecured, wholly repayable in May 2013 and bearing interest at fixed rates. The average
interest rate for the entrusted loan as at 31 December 2012 is 7.34% (2011: Nil) per annum.
The borrowing of the Group and the Company under non-current liabilities represents
bank borrowing, which is unsecured, wholly repayable in 2014 and bearing interest at floating
rates. The average interest rate for the bank borrowing as at 31 December 2012 is 2.26%
(2011: 2.69%) per annum. The bank borrowing is guaranteed by Sino-Ocean Land, the
ultimate holding company of the Group. The net gearing ratio (total net debt divided by total
shareholders’ equity) of our Group as at 31 December 2012 was 0.32 times (2011: 0.46 times).
— I-11 —
APPENDIX I
Total assets and net current assets of our Group as at 31 December 2012 were
approximately HK$1,074,616,000 (2011: approximately HK$1,183,908,000) and approximately
HK$558,002,000 (2011: approximately HK$618,965,000) respectively. The current ratio of our
Group as at 31 December 2012 was approximately 8.1 times (2011: approximately 4.2 times).
The net asset value of our Group as at 31 December 2012 was approximately HK$492,554,000
(31 December 2011: approximately HK$488,124,000).
With our improvement in financial strength, together with the resources on hand, our
Group is ready for deploying our resources to capture opportunities in 2013.
Total rental income for 2012 amounted to approximately HK$11,855,000 (2011:
approximately HK$12,272,000), representing a decrease of approximately HK$417,000. The
decrease was attributed to our Group’s disposal of the shares of a non-wholly owned subsidiary
of the Company, Klendo Limited, which held certain units in Novel Building in Shanghai in
2011, while the newly acquired investment properties were mostly completed in the second
quarter 2012 and hence their actual contribution towards rental income will only be reflected in
the second half of 2012.
Subsequent to the year end, on 8 February 2013, the Company entered into a sale and
purchase agreement with an independent third party to dispose of the entire issued share capital
in a directly wholly-owned subsidiary of the Company, Trendex Investment Limited, which held
Units 1501-1512 on the 15th floor of Shui On Plaza in Shanghai, PRC as mentioned above, at
an aggregate consideration of approximately RMB138,000,000 (equivalent to approximately
HK$171,000,000) (subject to adjustments under the sale and purchase agreement). Subject
to fulfillment (or, where applicable, waiver) of the conditions under the sale and purchase
agreement, the disposal is expected to be completed within twelve months from the date of the
sale and purchase agreement.
Our Group will remain focus on this business segment and will continue to keep
searching for good property investment opportunities.
Our Group recognised a total revenue for 2012 of about HK$35,769,000 (2011:
about HK$55,091,000) from securities investment which included dividend income about
HK$3,829,000 (2011: about HK$600,000) and revenue from sales of gold bullions about
HK$31,940,000 (2011: about HK$54,491,000). On the other hand, gain from the trading of
our financial instruments held for trading for 2012 was about HK$7,181,000 (2011: about
HK$13,776,000). Our Group also recorded an unrealised holding gain of approximately
HK$14,091,000 (2011: a loss of approximately HK$5,581,000) from the fair value changes of
our remaining securities portfolio during 2012.
— I-12 —
APPENDIX I
The market value of our investment portfolio as at 31 December 2012 amounted to
approximately HK$270,262,000 (2011: HK$559,809,000). The decrease in our total investment
portfolio was mainly because our Group reduced its exposure on the US Treasury Bill in
view that the return (including the coupon) from the US Treasury Bill during 2012 was not as
attractive as the case in the last quarter of 2011. The management of our Group is pleased to
maintain a scalable investment portfolio with proper diversification to avoid the fluctuation of
any single market. With about HK$399,244,000 in cash and bank balances as at 31 December
2012, we believe that we have the capacity to upsize our investment portfolio when market
opportunity arises.
As at 31 December 2012, the total number of staff employed was 24 (2011: 19). The
increase in the total number of staff was in line with our target to make steady growth of the
core business segments of our Group.
Our Group recruits and promotes individuals based on their performance and development
potentials in the positions offered. When formulating staff salary and benefit policies, our
Group gives primary consideration to their individual performance and prevailing salary levels
in the market. With a view to encouraging and rewarding contribution made by our staff, our
Group has adopted a share option scheme and believes that this will be an effective tool for
achieving this purpose.
During 2012, our Group’s assets and liabilities were mainly denominated in HKD,
USD and RMB. As HKD is pegged with USD and our RMB exposure mainly comes from our
investment properties in the PRC, while RMB remains stable against USD, the Board does
not consider that our Group is exposed to any significant foreign currency exchange risk. The
Board will closely monitor the foreign currency exchange risk exposure and will regularly
review if any related hedging should be necessary.
Pledge of assets
As at 31 December 2012, our Group pledged equity securities listed on the Hong
Kong Stock Exchange and New York Stock Exchange with market value of approximately
HK$65,905,000 (2011: Nil) and bank balances of approximately HK$21,210,000 (2011: Nil) to
a bank to secure credit facilities granted to the Group. None of the credit facilities was utilised
by the Group as at 31 December 2012.
— I-13 —
APPENDIX I
Considering that the rental income growth of our property in the PRC has been lagging
behind the market growth, and given that the commercial property market is getting better in
the PRC, the Company entered into a sale and purchase agreement to dispose of its directly
wholly-owned subsidiary which held our property in the PRC, Shui On Plaza, in February 2013
in order to help provide funding to our Group to support future property-related investments
and to capture property investment opportunities with higher return.
Fund management business began to crystalise in 2012, including the result from the
Fund, through a share of result on joint venture. Revenue from fund management business
increased to HK$2,921,000 (2011: Nil) and share of profit from joint venture increased to
HK$2,184,000 (2011: HK$1,006,000). Our Group anticipates that fund management business
will continue to grow. Moreover, our Group has a positive view on the longterm outlook for
the PRC and believes that the PRC market offers ample investment opportunities. Therefore our
Group will continuously endeavor to seek for other property-related investment opportunities in
the PRC so as to further broaden its income base.
(4)
(2010: approximately HK$18,727,000) and a loss attributable to owners of the Company of
approximately HK$18,699,000 (2010: approximately HK$29,490,000). A loss was recorded
mainly due to the one-off loss of approximately HK$27,994,000 (excluding approximately
HK$12,689,000 recognised from the reclassification from translation reserve upon disposal)
arising from the restructuring cost of our Group to clean up investment properties with
relatively low return. In addition, our Group recorded a one-off expense for employee
share option of approximately HK$5,579,000 and the relevant one-off professional fee of
approximately HK$2,156,000 incurred in connection with the two aforesaid transactions in
2011. As a result, our Group recorded a loss per share of 4.20 HK cents in 2011 versus a loss
per share of 5.76 HK cents in 2010.
Nevertheless, excluding the above one-off items, a profit before taxation of
approximately HK$6,513,000 and a profit attributable to owners of the Company of
approximately HK$4,341,000 would be recorded in 2011 from our continuing operation.
Therefore, the management remains optimistic towards our existing operation.
As at 31 December 2011, the cash and short term bank deposits of our Group amounted
to approximately HK$274,489,000 (2010: approximately HK$128,471,000). The Group adopts a
prudent funding and treasury policy with regard to its overall business operations.
— I-14 —
APPENDIX I
Our Group obtained a 3-year HK$500,000,000 term loan facility from a commercial
bank in Hong Kong in August 2011 and bearing interest at floating rates. The average interest
rate for the Group and the Company as at 31st December, 2011 is 2.69% per annum. As at
31 December 2011, our Group had a total bank borrowing of HK$500,000,000. The principal
amount of the bank loan of HK$500,000,000 is repayable in 2014. Apart from this bank
borrowing, our Group did not have any other interest bearing debt as at 31 December 2011. As
at 31 December 2011, the gearing ratio of our Group was 0.46 (2010: nil).
As at 31 December 2011, total assets and net current assets of our Group were
approximately HK$1,183,908,000 (2010: approximately HK$538,062,000) and HK$618,965,000
(2010: approximately HK$212,073,000) respectively. The current ratio of our Group was
approximately 4.2 times (2010: approximately 15.8 times). The net asset value of our
Group as at 31 December 2011 was approximately HK$488,124,000 (2010: approximately
HK$501,140,000).
With all these resources on hand, our Group is ready for rapid business expansion in
2012.
Total rental income for 2011 amounted to approximately HK$12,272,000 (2010:
approximately HK$17,801,000), representing a decrease of approximately HK$5,529,000.
During 2011, our Group disposed the shares of a non-wholly owned subsidiary of the Company,
Klendo Limited, which held the Novel Building in Shanghai. After such disposal, there remains
one investment property held by us in Shanghai, which constituted the sole investment property
held by the Group as at 31 December 2011.
During 2011, our Group recorded a revaluation gain from the Shui On Plaza of
approximately HK$722,000 and such movement was recorded on the consolidated statement of
comprehensive income.
On 29 November 2011, our Group entered into a sale and purchase agreement with an
independent third party for the acquisition of several units with a total gross floor area of
approximately 3,203 square feet in Tower Two, Lippo Centre, No. 89 Queensway, Hong Kong
at a consideration of HK$64,600,000. The acquisition is expected to complete in the first half
of 2012. A purchase deposit of HK$9,690,000 has already been paid and is recognised as noncurrent assets in the consolidated statement of financial position.
Subsequent to the year end, on 23 February 2012, our Group entered into another sale
and purchase agreement with an independent third party for the acquisition of two units with a
total gross floor area of approximately 2,930 square feet in China Merchants Tower, Shun Tak
Centre, 168-200 Connaught Road Central, Hong Kong at a consideration of HK$42,485,000.
The acquisition is expected to complete in the first half of 2012.
— I-15 —
APPENDIX I
Subject to completion of the above acquisitions, these newly added investment properties
will start contributing rental income to our Group in 2012.
Gain from the trading of our financial assets for 2011 was about HK$11,932,000
(2010: about HK$2,030,000). On the other hand, our Group recorded a loss of approximately
HK$3,850,000 (2010: gain of HK$7,425,000) from the fair value changes of our securities
portfolio during 2011. Therefore the securities investment segment generates a net gain of
HK$8,082,000 in 2011.
The market value of our investment portfolio as at 31 December 2011 amounted to
approximately HK$559,809,000 (2010: HK$85,563,000). With about HK$274,489,000 in cash
and bank balances as at 31 December 2011, we believe that we have the capacity to upsize our
investment portfolio when market opportunity arises.
As at 31 December 2011, the total number of staff employed by our Group was 19 (2010:
10). The increase in the total number of staff was in line with our Group’s growing business
in the second half of 2011. Staff cost, including expense recorded for employee share option,
of the on-going operation was approximately HK$8,348,000 for 2011 (2010: approximately
HK$8,428,000), being controlled at a reasonable level.
Our Group recruits and promotes individuals based on their performance and development
potentials in the positions offered. When formulating staff salary and benefit policies, our
Group gives primary consideration to their individual performance and prevailing salary levels
in the market. With a view to encouraging and rewarding contribution made by our staff, our
Group has adopted a share option scheme during 2011 and believes that this scheme will be an
effective tool for achieving this purpose.
During 2011, our Group’s assets and liabilities were mainly denominated in HKD,
USD and RMB. As HKD is pegged with USD and our RMB exposure mainly comes from our
investment in the PRC, while RMB is appreciating against USD, the Board does not consider
that our Group is exposed to any significant foreign currency exchange risk. The Board will
closely monitor the foreign currency exchange risk exposure and will regularly review if any
related hedging should be necessary.
Pledge of assets
assets.
As at 31 December 2011 and 31 December 2010, our Group did not have any pledged
— I-16 —
APPENDIX I
During 2011, the Group disposed of one of our investment properties in Shanghai, Novel
Building, at a consideration of HK$137,000,000. The transaction was completed in July 2011.
The disposal not only enabled the Group to restructure our property investment portfolio to
clean up investment properties with low returns, but also helped recoup cash to the Group to
support its future property-related investments and to capture property investment opportunities
which may arise in the property market of the PRC and Hong Kong in 2012.
In order to expand our foothold in the property investment sector and to capture property
investment opportunities that may arise from the turbulent real estate market in the PRC, in the
second half of 2011, the Group established a property investment fund, the Fund, with SOL
HK and KKR SPRE, which will act as one of the vehicles for the Group to invest in certain
property investment projects in the PRC and to expand the Group’s revenue source from our
existing property investment segment. The Board believes that through participation in the
Fund, the Group can leverage the expertise of Sino-Ocean Land in the property development
sector in the PRC and the fund management experience of KKR SPRE to generate higher
returns from property investment projects. The Board expects that the Fund will start to
contribute profits to the Group in 2012.
The Group believes that scarcity in the supply of Grade-A offices in Hong Kong will
continue in 2012. Therefore, we believe that the return of the commercial property market in
Hong Kong will remain healthy in the long run. As a result, the Group entered into agreements
to acquire certain units with a total gross floor area of approximately 3,203 square feet in
Tower Two, Lippo Centre, No. 89 Queensway, Hong Kong in November 2011, and a total gross
floor area of approximately 2,930 square feet in China Merchants Tower, Shun Tak Centre,
168-200 Connaught Road Central, Hong Kong in February 2012. The Group considers that
these investment properties would generate stable rental income and provide potential capital
appreciation for the Group. Completion of the acquisition of these units is expected to be in the
first half of 2012.
— I-17 —
APPENDIX II
FINANCIAL INFORMATION OF THE FUND and the target group
Words and expressions that are not expressly defined in this appendix shall bear the same
meanings as that defined in this circular.
The following is the text of a report, prepared for the purpose of incorporation in this circular,
received from KPMG, Certified Public Accountants, Hong Kong.
8th Floor
Prince’s Building
10 Chater Road
Central
Hong Kong
13 December 2014
The Board of Directors
Dear Sirs,
INTRODUCTION
We set out below our report on the financial information relating to Sino Prosperity Real
Estate Fund L.P., (the “Fund”) comprising the consolidated statements of financial position of the
Fund as at 31 December 2011, 2012 and 2013 and 31 August 2014 and the consolidated statements
of comprehensive income, the consolidated statements of changes in equity and the consolidated
cash flow statements of the Fund for the period from 20 July 2011 (the date of establishment) to 31
December 2011, years ended 31 December 2012 and 2013 and the eight months ended 31 August 2014
(the “Relevant Periods”), together with the explanatory notes thereto (the “Financial Information”),
for inclusion in the circular of the Company dated 13 December 2014 (the “Circular”) in connection
with the proposed capital commitment to the Fund by the Company.
The Fund was incorporated in the Cayman Islands on 20 July 2011 and registered as an
exempted limited partnership.
As at the date of this report, the Fund has direct and indirect interests in the entities as set
out in note 1 of Section B. The entities comprising the Fund have adopted 31 December as their
financial year end date. The financial statements of these entities were prepared in accordance
with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting
Standards Board (“IASB”).
The General Partner of the Fund has prepared the consolidated financial statements of the
Fund for the Relevant Periods (the “Underlying Financial Statements”) in accordance with IFRSs
issued by IASB. The Underlying Financial Statements for the period from 20 July 2011 (the date of
establishment) to 31 December 2011, years ended 31 December 2012 and 2013 and the eight months
ended 31 August 2014 were audited by us under separate terms of engagement with the Fund in
accordance with International Standards on Auditing issued by International Auditing and Assurance
Standards Board.
— II-1 —
APPENDIX II
The Financial Information has been prepared by the General Partner of the Fund for inclusion
in the Circular based on the Underlying Financial Statements, with no adjustments made thereon
and in accordance with the applicable disclosure provisions of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).
GENERAL PARTNER’S RESPONSIBILITY FOR THE FINANCIAL INFORMATION
The General Partner of the Fund is responsible for the preparation of the Financial Information
that gives a true and fair view in accordance with IFRSs issued by the IASB and the applicable
disclosure provisions of the Listing Rules, and for such internal control as the General Partner of the
Fund determine is necessary to enable the preparation of the Financial Information that is free from
material misstatement, whether due to fraud or error.
REPORTING ACCOUNTANTS’ RESPONSIBILITY
Our responsibility is to form an opinion on the Financial Information based on our procedures
performed in accordance with Auditing Guideline “Prospectuses and the Reporting Accountant”
(Statement 3.340) issued by the HKICPA. We have not audited any financial statements of the Fund
or the other entities comprising the Fund in respect of any period subsequent to 31 August 2014.
OPINION
In our opinion, the Financial Information gives, for the purpose of this report and on the basis
of preparation set out in Section B below, a true and fair view of the state of affairs of the Fund as at
31 December 2011, 2012 and 2013 and 31 August 2014 and the Fund’s consolidated results and cash
flows for the Relevant Periods then ended.
CORRESPONDING FINANCIAL INFORMATION
For the purpose of this report, we have also reviewed the unaudited corresponding interim
financial information of the Fund comprising the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated cash flow statement for the
eight months ended 31 August 2013, together with the notes thereon (the “Corresponding Financial
Information”), for which the General Partner of the Fund is responsible, in accordance with
International Standard on Review Engagements 2410 “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity” issued by the International Auditing and
Assurance Standards Board (the “IAASB”).
The General Partner of the Fund is responsible for the preparation of the Corresponding
Financial Information in accordance with the same basis adopted in respect of the Financial
Information. Our responsibility is to express a conclusion on the Corresponding Financial Information
based on our review.
— II-2 —
APPENDIX II
A review consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International 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 on the
Corresponding Financial Information.
Based on our review, for the purpose of this report, nothing has come to our attention that
causes us to believe that the Corresponding Financial Information is not prepared, in all material
respects, in accordance with the same basis adopted in respect of the Financial Information.
A
FINANCIAL INFORMATION
1
Consolidated statements of comprehensive income
(Expressed in United States dollars)
Period from
20 July
2011
(date of
establishment)
to
Section B 31 December
Note
2011
Year ended 31 December
Eight months ended
31 August
2012
2013
2013
(Unaudited)
2014
Bank interest income
Foreign exchange loss
Administrative expenses
68
(5)
(1,507,667)
345
(180)
(509,227)
251
(381)
(49,887)
240
(382)
(8,108)
25
(22)
(40,127)
Loss from operation
(1,507,604)
(509,062)
(50,017)
(8,250)
(40,124)
Share of profit/(loss) of a joint
venture
Loss on disposal of interests in a
joint venture
4
135,709
46,492,916
(3,437,326)
(3,437,326)
—
4
—
—
(4,173,498)
(4,173,498)
—
(Loss)/profit for the period/year
3
(1,371,895)
45,983,854
(7,660,841)
(7,619,074)
(40,124)
— II-3 —
APPENDIX II
Period from
20 July
2011
(date of
establishment)
to
Section B 31 December
Note
2011
Eight months ended
31 August
2012
2013
2013
(Unaudited)
2014
(9,321)
50,748
33,937
33,937
—
Reclassification adjustment for
amount transferred to profit or
loss:
— Realisation of exchange reserve
upon disposal of interests in
a joint venture
—
—
(75,364)
(75,364)
—
Total comprehensive income for
the period/year
(1,381,216)
46,034,602
(7,702,268)
(7,660,501)
(40,124)
Other comprehensive income for
the period/year (after tax)
Item that may be reclassified to
profit or loss:
— Exchange differences on
translation of the financial
statements for a joint venture
4
The accompanying notes form part of the Financial Information.
— II-4 —
APPENDIX II
2
Consolidated statements of financial position
Section B
Note
At 31 December
At 31 August
2011
2012
2013
2014
4
64,426,388
110,970,052
—
—
7
8
9
—
3,592,845
13,799,692
3,600
—
248,714
—
—
386,216
—
—
362,000
17,392,537
252,314
386,216
362,000
408,738
2,571
226,104
16,537,728
25,000
290,322
—
—
278,658
—
346,092
—
—
—
—
362,000
—
—
—
—
17,200,141
568,980
346,092
362,000
192,396
(316,666)
40,124
—
64,618,784
110,653,386
40,124
—
66,000,000
(1,381,216)
66,000,000
44,653,386
143,045
(102,921)
143,045
(143,045)
64,618,784
110,653,386
40,124
—
Non-current asset
Interests in a joint venture
Current assets
Receivables
Amount due from a limited partner
Cash at bank and in hand
Current liabilities
Payables and accrued charges
Amount due to the ultimate general partner
Amount due to the general partner
Amounts due to limited partners
Amount due to a related company
10
8
8
8
8
Net current assets/(liabilities)
NET ASSETS
CAPITAL AND RESERVES
Partnership capital
Reserves
11(b)
TOTAL EQUITY
— II-5 —
APPENDIX II
3
Consolidated statements of changes in equity
Section B
Note
At 20 July 2011 (date of establishment)
Partnership
capital
(Accumulated
losses)/
Exchange
retained
reserve
profits
Total
equity
—
—
—
—
66,000,000
—
—
66,000,000
Loss for the period
Other comprehensive income
—
—
—
(9,321)
(1,371,895)
—
(1,371,895)
(9,321)
Total comprehensive income
—
(9,321)
(1,371,895)
(1,381,216)
At 31 December 2011
66,000,000
(9,321)
(1,371,895)
64,618,784
At 1 January 2012
66,000,000
(9,321)
(1,371,895)
64,618,784
Profit for the year
—
—
—
50,748
45,983,854
—
45,983,854
50,748
—
50,748
45,983,854
46,034,602
At 31 December 2012
66,000,000
41,427
44,611,959
110,653,386
At 1 January 2013
66,000,000
41,427
44,611,959
110,653,386
Loss for the year
—
—
—
(41,427)
(7,660,841)
—
(7,660,841)
(41,427)
—
(41,427)
(7,660,841)
(7,702,268)
Capital contributions during the period
11(b)
Changes in equity for the period from
20 July 2011 to 31 December 2011:
Changes in equity for 2012:
Changes in equity for 2013:
Return of partnership capital
11(b)
(65,856,955)
—
—
(65,856,955)
Distributions to partners
11(b)
—
—
(37,054,039)
(37,054,039)
143,045
—
(102,921)
40,124
At 31 December 2013
— II-6 —
APPENDIX II
Section B
Note
At 1 January 2014
Partnership
capital
(Accumulated
losses)/
Exchange
retained
reserve
profits
Total
equity
143,045
—
(102,921)
40,124
—
—
(40,124)
(40,124)
At 31 August 2014
143,045
—
(143,045)
—
At 1 January 2013
66,000,000
41,427
44,611,959
110,653,386
Loss for the period
—
—
—
(41,427)
(7,619,074)
—
(7,619,074)
(41,427)
—
(41,427)
(7,619,074)
(7,660,501)
Change in equity for the eight months ended
31 August 2014:
Loss and total comprehensive income for the
period
Changes in equity for the eight months ended
31 August 2013 (Unaudited):
Return of partnership capital (Unaudited)
11(b)
(65,856,955)
—
—
(65,856,955)
Distributions to partners (Unaudited)
11(b)
—
—
(37,054,039)
(37,054,039)
143,045
—
(61,154)
81,891
At 31 August 2013 (Unaudited)
— II-7 —
APPENDIX II
4
Consolidated cash flow statements
Period from
20 July 2011
(date of
establishment)
to
31 December
2011
Eight months ended
31 August
2012
2013
2013
(Unaudited)
2014
(1,371,895)
45,983,854
(7,660,841)
(7,619,074)
(40,124)
(68)
(135,709)
(345)
(46,492,916)
(251)
3,437,326
(240)
3,437,326
(25)
—
—
—
4,173,498
4,173,498
—
(1,507,672)
(509,407)
(50,268)
(8,490)
(40,149)
(Increase)/decrease in receivables
—
Increase/(decrease) in accrued charges
408,738
(Increase)/decrease in amount due from a
limited partner
(3,592,845)
Increase/(decrease) in amount due to the
ultimate general partner
2,571
Increase/(decrease) in amount due to the general
partner
226,104
Increase/(decrease) in amounts due to limited
partners
16,537,728
Increase/(decrease) in amount due to a related
company
25,000
(3,600)
(118,416)
3,600
55,770
3,600
145,590
—
15,908
3,592,845
—
—
—
(2,571)
—
16,758
—
(226,104)
—
—
—
(16,259,070)
(278,658)
(278,658)
—
(25,000)
—
—
—
(13,551,323)
(269,556)
(121,200)
(24,241)
Operating activities
Adjustments for:
Interest income
Share of (profit)/loss of a joint venture
Loss on disposal of interests in a joint
venture
Operating loss before changes in working
capital
Net cash generated from/(used in) operating
activities
12,099,624
— II-8 —
APPENDIX II
Period from
20 July 2011
(date of
establishment)
to
31 December
2011
Eight months ended
31 August
2012
2013
2013
(Unaudited)
2014
(4,653,045)
(59,646,955)
68
—
—
345
—
—
251
—
—
240
—
—
25
—
—
103,317,801
103,317,801
—
(64,299,932)
345
103,318,052
103,318,041
25
Capital injections from partners
Capital returned to partners
Distributions to partners
66,000,000
—
—
—
—
—
—
(65,856,955)
(37,054,039)
—
(65,856,955)
(37,054,039)
—
—
—
Net cash generated from/(used in) financing
activities
66,000,000
—
(102,910,994) (102,910,994)
—
Net increase/(decrease) in cash and cash
equivalents
13,799,692
(13,550,978)
137,502
285,847
(24,216)
—
13,799,692
248,714
248,714
386,216
13,799,692
248,714
386,216
534,561
362,000
Investing activities
Payment for acquisition of a joint venture
Loan to a joint venture
Interest received
Proceeds from disposal of interests in a joint
venture
Net cash (used in)/generated from investing
activities
Financing activities
Cash and cash equivalents at the beginning of
the period/year
Cash and cash equivalents at the end of the
period/year
— II-9 —
APPENDIX II
B
NOTES TO THE FINANCIAL INFORMATION
(Expressed in United States dollars unless otherwise indicated)
1
General information
(a)Background
Sino Prosperity Real Estate Fund L.P. (the “Fund”) is an exempted limited partnership established
in the Cayman Islands on 20 July 2011. The Fund has its registered office in the Cayman Islands at c/o
Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman
Islands and its principal office at Room 3902, 39/F, Lippo Centre Tower One, 89 Queensway, Hong
Kong.
The General Partner of the Fund is Sino Prosperity Real Estate (GP), L.P. (“General Partner”).
The Fund comprises of the entities, namely Sino Prosperity Holdings One, Sino Prosperity
Holdings Two Limited and Prime Great Holdings Limited. Particulars of the subsidiaries of the Fund
included in the preparation of the Financial Information are as follows:
Proportion of
ownership interest
Place and date
of incorporation/
establishment
Particulars of issued
and paid up capital
Sino Prosperity Holdings One
Cayman Islands
20 July 2011
Sino Prosperity Holdings
Two Limited
Prime Great Holdings Limited
Name of subsidiaries
the Fund’s
effective
interest
Held by the
Fund
Principal activity
1 ordinary share
of $0.01 each
100%
100%
Investment holding
British Virgin Islands
11 July 2012
1 ordinary share
of $1 each
100%
100%
Investment holding
18 June 2012
1 ordinary share
of $1 each
100%
—
Inactive
The basis of preparation and presentation for the Financial Information of the Fund are disclosed
in note 2(b).
(b)
Proposed capital commitment to the Fund
On 17 November 2014 (after trading hours), the Company announced its proposal to increase
its capital commitment to the Fund and Sino Prosperity Real Estate (GP), L.P. (the “General Partner”)
by USD250 million and USD3.95 million, pursuant to the Subscription Agreement and the Second GP
Amendment Agreement respectively entered into by a wholly-owned subsidiary of the Company.
The capital commitment may be funded by the proceeds to be raised from the issue of 1.3 billion
convertible preference shares in the capital of the Company to Grand Beauty Management Limited,
a wholly-owned subsidiary of Sino-Ocean Land Holdings Limited, a controlling shareholder and a
connected person of the Company.
— II-10 —
APPENDIX II
2
Significant accounting policies
(a)
Statement of compliance
The consolidated financial statements have been prepared in accordance with the International
Financial Reporting Standards (“IFRSs”), which collective term includes International Accounting
Standards (“IASs”) and related interpretation issued by the International Accounting Standards Board
(“IASB”). Further details of the significant accounting policies adopted are set out in Section B.
The IASB has issued a number of new IFRSs and amendments to IFRSs. For the purpose of
preparing this Financial Information, the Fund has adopted all applicable new IFRSs and amendments to
IFRSs to the Relevant Periods, except for any new standards or interpretations that are not yet effective
for the Relevant Periods. The revised and new accounting standards and interpretations issued but not
yet effective for the accounting periods for the Relevant Periods are set out in note 17.
The Financial Information also complied with the applicable disclosure requirements of the Hong
Kong Companies Ordinance, which for the Relevant Periods continue to be those of the predecessor
Companies Ordinance (Cap. 32) in accordance with transitional and saving arrangements for Part 9 of the
new Hong Kong Companies Ordinance (Cap. 622), “Accounts and Audit”, which are set out in sections
76 to 87 of Schedule 11 to that Ordinance. The Financial Information also complied with the applicable
disclosure provisions of the Listing Rules.
The accounting policies set out below have been applied consistently to all periods presented in
the Financial Information.
The Corresponding Financial Information for the eight months ended 31 August 2013 has been
prepared in accordance with the same basis and accounting policies adopted in respect of the Financial
Information.
(b)
Basis of preparation and presentation
The Financial Information comprises the Fund and its subsidiaries and has been prepared on a
consolidated basis.
Intra-group balances and transactions, and any unrealised profit or loss arising from intragroup transactions, are eliminated in preparing the Financial Information of the Fund. Unrealised losses
resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the
extent that there is no evidence of impairment.
There were no transactions between the Fund and the Company during the Relevant Periods.
(c)
Basis of measurement
The Financial Information is presented in United States Dollars, rounded to the nearest thousand
unless otherwise indicated. The measurement basis used in the preparation of the Financial Information
is the historical cost basis.
— II-11 —
APPENDIX II
(d)
Use of estimates and judgements
The preparation of Financial Information in conformity with IFRSs requires management to make
judgements, estimates and assumptions that affect the application of policies and reported amounts of
assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future periods if the revision affects both current
and future periods.
Judgements made by management in the application of IFRSs that have significant effect on the
Financial Information and major sources of estimation uncertainty are discussed in note 16.
(e)
Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Fund. The Fund 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. When assessing whether the Fund has power, only substantive
rights (held by the Fund and other parties) are considered.
An investment in a subsidiary is consolidated into the Financial Information from the date that
control commences until the date that control ceases. Intra-group balances, transactions and cash flows
and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the
Financial Information. Unrealised losses resulting from intra-group transactions are eliminated in the
same way as unrealised gains but only to the extent that there is no evidence of impairment.
Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly
to the Fund, and in respect of which the Fund has not agreed any additional terms with the holders of
those interests which would result in the Fund as a whole having a contractual obligation in respect of
those interests that meets the definition of a financial liability. For each business combination, the Fund
can elect to measure any non-controlling interests either at fair value or at the non-controlling interests
proportionate share of the subsidiary’s net identifiable assets.
Non-controlling interests are presented in the consolidated statement of financial position within
equity, separately from equity attributable to the partners of the Fund. Non-controlling interests in the
results of the Fund are presented on the face of the consolidated income statement and the consolidated
statement of comprehensive income as an allocation of the total profit or loss and total comprehensive
income for the year between non-controlling interests and the partners of the Fund. Loans from holders
of non-controlling interests and other contractual obligations towards these holders are presented as
financial liabilities in the consolidated statement of financial position in accordance with note 2(i).
Changes in the Fund’s interests in a subsidiary that do not result in a loss of control are
accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and
non-controlling interests within consolidated equity to reflect the change in relative interests, but no
adjustments are made to goodwill and no gain or loss is recognised.
When the Fund loses control of a subsidiary, it is accounted for as a disposal of the entire
interest in that subsidiary, with a resulting gain or loss being recognised in profit or loss.
— II-12 —
APPENDIX II
(f)
Joint venture
A joint venture is an arrangement whereby the Fund and other parties contractually agree to share
control of the arrangement, and have rights to the net assets of the arrangement.
An investment in a joint venture is accounted for in the consolidated financial statements under
the equity method. Under the equity method, the investment is initially recorded at cost, adjusted for any
excess of the Fund’s share of the acquisition-date fair values of the investee’s identifiable net assets over
the cost of the investment (if any). Thereafter, the investment is adjusted for the post-acquisition change
in the Fund’s share of the investee’s net assets and any impairment loss relating to the investment
(see note 2(g)). Any acquisition-date excess over cost, the Fund’s share of the post-acquisition, posttax results of the investees and any impairment losses for the year are recognised in the consolidated
income statement, whereas the Fund’s share of the post-acquisition post-tax items of the investees’ other
comprehensive income is recognised in the consolidated statement of comprehensive income.
When the Fund’s share of losses exceeds its interest in the joint venture, the Fund’s interest
is reduced to nil and recognition of further losses is discontinued except to the extent that the Fund
has incurred legal or constructive obligations or made payments on behalf of the investee. For these
purposes, the Fund’s interest is the carrying amount of the investment under the equity method together
with the Fund’s long-term interests that in substance form part of the Fund’s net investment in the joint
venture.
Unrealised profits and losses resulting from transactions between the Fund and its joint venture
are eliminated to the extent of the Fund’s interest in the investee, except where unrealised losses provide
evidence of an impairment of the asset transferred, in which case they are recognised immediately in
profit or loss.
If an investment in an associate becomes an investment in a joint venture or vice versa, retained
interest is not remeasured. Instead, the investment continues to be accounted for under the equity
method.
In all other cases, when the Fund ceases to have joint control over a joint venture, it is accounted
for as a disposal of the entire interest in that investee, with a resulting gain or loss being recognised
in profit or loss. Any interest retained in that former investee at the date when joint control is lost is
recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial
asset.
(g)
Impairment of assets
Internal and external sources of information are reviewed at the end of each reporting period
to identify indications that the interest in a joint venture and interest in a subsidiary (except for those
classified as held for sale) may be impaired or an impairment loss previously recognised no longer exists
or may have decreased.
If any such indication exists, the asset’s recoverable amount is estimated.
(i)
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its 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. Where an asset does not generate cash inflows
largely independent of those from other assets, the recoverable amount is determined for the
smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).
— II-13 —
APPENDIX II
(ii)
Recognition of impairment losses
An impairment loss is recognised in profit or loss if the carrying amount of an asset, or
the cash-generating unit to which it belongs, exceeds its recoverable amount.
(iii)
Reversals of impairment losses
An impairment loss is reversed if there has been a favourable change in the estimates
used to determine the recoverable amount.
A reversal of impairment loss is limited to the asset’s carrying amount that would have
been determined had no impairment loss been recognised in prior years. Reversals of impairment
losses are credited to profit or loss in the period in which the reversals are recognised.
(h)Receivables
Receivables are initially recognised at fair value and thereafter at amortised cost using the
effective interest method, less allowance for impairment of doubtful debts, except where the receivables
are interest-free loans made to related parties without any fixed repayment terms or the effect of
discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for
impairment of doubtful debts.
Impairment losses for bad and doubtful debts are recognised when there is objective evidence of
impairment and are measured as the difference between the carrying amount of the financial asset and
the estimated future cash flows, discounted at the asset’s original effective interest rate where the effect
of discounting is material. Objective evidence of impairment includes observable data that comes to the
attention of the Fund about events that have an impact on the asset’s estimated future cash flows such as
significant financial difficulty of the debtor.
Impairment losses for trade debtors included within receivables whose recovery is considered
doubtful but not remote are recorded using an allowance account. When the Fund is satisfied that
recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and
any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of
amounts previously charged to the allowance account are reversed against the allowance account. Other
changes in the allowance account and subsequent recoveries of amounts previously written off directly
are recognised in profit or loss.
(i)Payables
Payables are initially recognised at fair value and are subsequently stated at amortised cost unless
the effect of discounting would be immaterial, in which case they are stated at cost.
(j)
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and
other financial institutions, and short-term, highly liquid investments that are readily convertible into
known amounts of cash and which are subject to an insignificant risk of changes in value, having been
within three months of maturity at acquisition.
— II-14 —
APPENDIX II
(k)
Income tax
Income tax for the period comprises current tax and movements in deferred tax assets and
liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or
loss except to the extent that they relate to items recognised in other comprehensive income or directly
in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or
directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the period, using tax rates
enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in
respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences
respectively, being the differences between the carrying amounts of assets and liabilities for financial
reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused
tax credits. Apart from differences which arise on initial recognition of assets and liabilities, all deferred
tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will
be available against which the asset can be utilised, are recognised.
The amount of deferred tax recognised is measured based on the expected manner of realisation
or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively
enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.
(l)
Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or amount when the Fund has a 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 expenditure 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 of economic benefits 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 of economic benefits is remote.
(m)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Provided it
is probable that the economic benefits will flow to the Fund and the revenue and costs, if applicable,
can be measured reliably, interest income is recognised in profit or loss as it accrues using the effective
interest method.
(n)
Translation of foreign currencies
Foreign currency transactions during the period are translated at the foreign exchange rates ruling
at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated
at the foreign exchange rates ruling at the end of the reporting period. Exchange gains and losses are
recognised in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated using the foreign exchange rates ruling at the transaction dates.
— II-15 —
APPENDIX II
The results of foreign operations are translated into United States dollars (“USD”) at the
exchange rates approximating the foreign exchange rates ruling at the dates of the transactions.
Statement of financial position items are translated at the closing foreign exchange rates at the end of the
reporting period. The resulting exchange difference are recognised in other comprehensive income and
accumulated separately in equity in the exchange reserve.
On disposal of a foreign operation, the cumulative amount of the exchange differences relating to
that foreign operation is reclassified from equity to profit or loss when the profit or loss on disposal is
recognised.
(o)
Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of an
asset which necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalised as part of the cost of that asset. Other borrowing costs are expensed in the period in which
they are incurred.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when
expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are
necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing
costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset
for its intended use or sale are interrupted or complete.
(p)
Related parties
(a)
(b)
A person, or a close member of that person’s family, is related to the Fund if that person:
(i)
has control or joint control over the Fund;
(ii)
has significant influence over the Fund; or
(iii)
is a member of the key management personnel of the Fund or the Fund’s parent.
An entity is related to the Fund if any of the following conditions applies:
(i)
The entity and the Fund 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 a joint venture of the other entity (or an associate or
a 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 Fund or an entity related to the Fund.
(vi)
The entity is controlled or jointly controlled by a person identified in (a) above.
— II-16 —
APPENDIX II
(vii)
A person identified in (a)(i) above 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).
Close family members of a person are those family members who may be expected
to influence, or be influenced by, that person in their dealings with the entity.
(q)
Segment reporting
Operating segments, and the amounts of each segment item reported in the Financial Information,
are identified from the financial information provided regularly to the Fund’s General Partner for
the purposes of allocating resources to, and assessing the performance of, the Fund’ business and
geographical locations.
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.
No analysis of the Fund’s turnover, other income and contribution to operating profit for the
Relevant Periods set out by operating segment is provided as the Fund has only one single operating
segment, and all of the revenue and other income, results and assets of the Fund are attributable to its
project investment in the People’s Republic of China (“PRC”).
3
(Loss)/profit for the period/year is arrived at after charging/(crediting):
Eight months ended
31 August
Auditors’ remuneration
Legal and professional fees
Management fee expenses
Bank interest income
2011
2012
2013
2013
(Unaudited)
2014
35,989
1,458,718
—
(68)
47,637
451,898
—
(345)
47,218
119,783
130,939
(251)
23,748
7,126
—
(240)
—
40,012
—
(25)
— II-17 —
APPENDIX II
4
Interests in a joint venture
At 31 December
Investment at cost
Share of post acquisition reserves
Share of exchange reserve
Loan to a joint venture
At 31 August
2011
2012
2013
2014
4,653,045
135,709
(9,321)
4,653,045
46,628,625
41,427
—
—
—
—
—
—
4,779,433
59,646,955
51,323,097
59,646,955
—
—
—
—
64,426,388
110,970,052
—
—
On 5 September 2011, the Fund entered into an agreement with Sino-Ocean Land (Hong Kong) Limited
in relation to the acquisition of 49% equity interests in Great Wise Investment Ltd. (“Acquisition”). Great Wise
Investment Ltd. (“Great Wise”) is engaged in investment holding and held 100% equity interests in a subsidiary,
*
大連匯洋置業有限公司 (Dalian Hui Yang Properties Co., Ltd. ) (“Dalian Hui Yang”). Dalian Hui Yang is a
company incorporated in PRC and engaged in property development in Dalian, PRC.
Particulars of the joint venture held by the Fund at 31 December 2011 and 31 December 2012 are as
follows:—
Proportion of
ownership interest
Name of joint venture
Great Wise Investment Ltd.
Place and date
of incorporation/
establishment
Particulars of issued
and paid up capital
2 January 2008
1 ordinary share of $0.01 each
The Fund’s
effective
interest
Held by a
subsidiary
Principal activity
49%
49%
Investment holding
On 8 March 2013, the Fund disposed all of its equity interests in a joint venture, Great Wise, and the
relevant portion of outstanding shareholder’s loan for a sale consideration of RMB649 million (equivalent to
US$103,317,801). The Fund recognised a loss of disposal of interests in a joint venture of US$4,173,498.
Summary of financial information on the joint venture – the Fund’s effective interest as at 31 December
2011 and 31 December 2012:—
At 31 December
*
2011
2012
Non-current assets
Current assets
Non-current liabilities
Current liabilities
441,867
255,784,235
(223,334,999)
(34,217,334)
210
155,639,460
—
(110,422,237)
Net (liabilities)/ assets
(1,326,231)
45,217,433
— II-18 —
APPENDIX II
2011
2012
Period from
1 January
2013 to
8 March
2013
846,131
(710,422)
64,296,732
(17,803,816)
2,036,017
(5,473,343)
135,709
46,492,916
(3,437,326)
Years ended 31 December
Income
Expenses
Profit/(loss) for the year/period
The Fund’s share of profit of Great Wise for the period from 5 September 2011 to 31 December 2011
was $135,709. Had the Acquisition occurred on 1 January 2011, the Fund’s share of losses from Great Wise
would have been $886,107.
Loan to a joint venture at 31 December 2011 and 31 December 2012 was unsecured, interest-free and
classified as “non-current” as it was not expected to be recoverable within one year.
5
Income tax
(i)
Cayman Islands
Under the current laws of the Cayman Islands, the entities that are incorporated in the Cayman
Islands are not subject to tax on income or capital gains.
(ii)
Hong Kong
No provision for Hong Kong Profits Tax has been made in the financial statements as the Fund
had no estimated assessable profit arising in Hong Kong for the Relevant Periods.
For the purpose of the Financial Information, the General Partner of the Fund determined that the
Fund can control the quantum and timing of distribution of profits of their investment in joint venture,
and therefore deferred tax liabilities are only provided to the extent that such profits are expected to be
distributed in the foreseeable future.
6
General Partner’s remuneration
Remuneration payable to the General Partner during the Relevant Periods is disclosed pursuant to section
78 of Schedule 11 to the new Hong Kong Companies Ordinance (Cap. 622), with reference to section 161 of the
predecessor Hong Kong Companies Ordinance (Cap. 32) is as follows:
Eight months ended
31 August
2011
2012
2013
2013
(Unaudited)
2014
General Partner’s fees
Salaries, allowances and benefits in kind
Discretionary bonuses
Retirement scheme contributions
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
—
—
—
—
—
— II-19 —
APPENDIX II
7Receivables
At 31 December
Prepayments
At 31 August
2011
2012
2013
2014
—
3,600
—
—
At 31 December 2012, all of the receivables are expected to be recovered or recognised as expense
within one year.
8
Amounts due from/(to) the ultimate general partner, the General Partner, limited partners and a
related company
The amounts due from/(to) the ultimate general partner, the General Partner, limited partners and a
related company are unsecured, interest-free and recoverable/(repayable) on demand.
9
At 31 December
At 31 August
2011
2012
2013
2014
13,799,692
248,714
386,216
362,000
The carrying amounts of cash at bank and in hand were denominated in the following currencies:
At 31 December
HK$
United States dollars (US$)
10
At 31 August
2011
2012
2013
2014
—
13,799,692
—
248,714
3,644
382,572
3,645
358,355
13,799,692
248,714
386,216
362,000
All of the payables and accrued charges are expected to be settled within one year or are repayable on
demand.
— II-20 —
APPENDIX II
11
Partnership capital
(a)
Statement of financial position of the Fund
At 31 December
2011
2012
2013
2014
64,300,200
64,392,026
27,723
48,493
3,592,845
13,799,517
—
248,583
—
383,945
—
359,772
17,392,362
248,583
383,945
359,772
362,599
226,104
16,537,728
25,000
250,847
—
278,658
—
325,975
—
—
—
362,000
—
—
—
17,151,431
529,505
325,975
362,000
240,931
(280,922)
57,970
(2,228)
NET ASSETS
64,541,131
64,111,104
85,693
46,265
CAPITAL AND RESERVES
Partnership capital
Reserves
66,000,000
(1,458,869)
66,000,000
(1,888,896)
143,045
(57,352)
143,045
(96,780)
TOTAL EQUITY
64,541,131
64,111,104
85,693
46,265
General
partner
Limited
partners
Total
At 20 July 2011 (date of establishment)
Contributions during the period
—
705,882
—
65,294,118
—
66,000,000
At 31 December 2011, 1 January 2012 and 31 December 2012
705,882
65,294,118
66,000,000
705,882
(704,352)
65,294,118
(65,152,603)
66,000,000
(65,856,955)
1,530
141,515
143,045
Note
Non-current asset
Interests in subsidiaries
Current assets
Amount due from a limited partner
8
Current liabilities
Amount due to the general partner
Amounts due to limited partners
Amount due to a related company
8
8
8
Net current assets/(liabilities)
(b)
At 31 August
Partnership capital
At 1 January 2013
Capital returned
At 31 December 2013 and 31 August 2014
— II-21 —
APPENDIX II
The Limited Partnership Agreement limits the liability of each limited partner to its committed
capital contribution amount, which is in accordance with the Cayman Islands Law.
Additional contributions will be paid in increments determined by the General Partner.
In general, no limited partner may withdraw or transfer its interest in the Partnership without
obtaining the prior written consent of the General Partner.
During the period ended 31 December 2011, the Fund made a call on capital amounting to
US$66,000,000 and the existing partners contributed to the Fund pursuant to the terms of the Limited
Partnership Agreement.
During the year ended 31 December 2013, the Fund paid distributions to the General Partner and
limited partners pursuant to the terms specified in the Limited Partnership Agreement. The distributions
of US$37,054,039 were calculated based on the net proceeds from the disposal of the interests in a joint
venture of US$102,910,994 (after expenses of approximately US$406,807), less the capital contribution
returned to the partners of US$65,856,955.
Profit/(loss) attributable to the General Partner of the Fund includes an amount of US$1,458,869
(loss), US$430,027 (loss), US$1,831,544 (profit) and US$39,428 (loss) for the period ended 31
December 2011, years ended 31 December 2012 and 2013 and eights months ended 31 August 2014
which have been dealt with in the financial statements of the Fund.
12
Earnings per share
No earnings per share information is presented as its inclusion, for the purpose of the Financial
Information, is not considered meaningful.
13
Financial risk management and fair values of financial instruments
Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the
Fund’s business. The Fund’s exposure to these risks and the financial risk management policies and practices
used by the Fund to manage these risks are described below.
(a)
Credit risk
The Fund did not hold any assets which are exposed to significant credit risk.
(b)
Liquidity risk
The Fund’s policy is to regularly monitor its liquidity requirements to ensure that it maintains
adequate funding from its group companies to meet its liquidity requirements in the short and longer
terms.
(c)
Interest rate risk
At the end of each reporting period, the Fund did not have any assets and/or liabilities which
would expose the Fund to significant interest rate risk.
(d)
Foreign currency risk
The Fund has no significant exposure to foreign currency risk as substantially all of the Fund’s
transactions are denominated in United States dollars.
— II-22 —
APPENDIX II
(e)
Fair value measurement
All financial instruments are carried at amounts not materially different from their fair values as
at 31 December 2011, 2012 and 2013 and 31 August 2014.
14
Material related party transactions
In addition to the transactions and balances disclosed elsewhere in this Financial Information, the Fund
entered into the following material related party transactions during the Relevant Periods:
Management fee expenses recharged
by a related company
Eight months ended 31 August
2011
2012
2013
2013
(Unaudited)
2014
—
—
130,939
—
—
Note: In the opinion of the Fund, this transaction was carried out on normal commercial terms and in
the ordinary course of business.
15
Immediate controlling party
At the end of each reporting period, the immediate controlling party, which is also the General Partner,
of the Fund is Sino Prosperity Real Estate (GP), L.P., which is established in the Cayman Islands.
16
Accounting judgement and estimates
Key sources of estimation uncertainty
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The selection of critical accounting policies, the judgements and other uncertainties
affecting application of those policies and the sensitivity of reported results to changes in conditions
and assumptions are factors to be considered when reviewing the Financial Information. The principal
accounting policies are set forth in note 2. The Fund believes the following critical accounting policies
involve the significant judgements and estimates used in the preparation of the Financial Information.
(a)
Impairment losses on interest in a joint venture
Interest in a joint venture is reviewed periodically to assess whether impairment losses exist. The
Fund makes judgements as to whether there is any objective evidence that the interest in a joint venture
is impaired. If the Fund as determined, based on their judgement, that objective evidence of impairment
exists, expected future cash flows are estimated based on historical loss experience for assets with credit
risk characteristics similar to those of the Fund. Historical loss experience is adjusted on the basis of
the current observable data. Management reviews the methodology and assumptions used in estimating
future cash flows regularly to reduce any difference between loss estimates and actual loss experience.
— II-23 —
APPENDIX II
17
Possible impact of amendments, new standards and interpretations issued but not yet effective for
the Relevant Periods
Up to the date of issue of these financial statements, the IASB has issued a number of amendments and
new standards which are not yet effective for the Relevant Periods and which have not been adopted in these
financial statements. These include the following which may be relevant to the Fund.
Effective for
accounting periods
beginning on or after
Amendments to IFRS 11, Accounting for acquisitions
of interests in joint operations
1 January 2016
Amendments to IAS 16 and IAS 38, Clarification
of acceptable methods of depreciation and amortization
1 January 2016
IFRS 15, Revenue from contracts with customers
1 January 2017
IFRS 9, Financial instruments
1 January 2018
The Fund is in the process of making an assessment of what the impact of these amendments and new
standards is expected to be in the period of initial application. So far, it has concluded that the adoption of them
is unlikely to result in a restatement of the Fund’s results of operations and financial position.
18
Information on financial statements of the subsidiaries of the Fund
The financial statements of the subsidiaries of the Fund, which were subject to audit during the Relevant
Periods, were prepared in accordance with IFRSs. The auditors of these financial statements are indicated below:
19
Name of subsidiaries
Financial period
Auditors
Sino Prosperity Holdings One
Period ended 31 December 2011,
years ended 31 December 2012 and 2013,
and period ended 31 August 2014
KPMG
Sino Prosperity Holdings Two Limited
year ended 31 December 2013,
KPMG
Prime Great Holdings Limited
year ended 31 December 2013,
KPMG
Subsequent events
Save as disclosed in note 1(b), there were no material events affecting the Fund subsequent to 31 August
2014 and at the date of approval of the Financial Information.
— II-24 —
APPENDIX II
C
SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Fund or any of its subsidiaries in
respect of any period subsequent to 31 August 2014.
Yours faithfully
KPMG
Certified Public Accountants
Hong Kong
— II-25 —
APPENDIX II
MANAGEMENT DISCUSSION AND ANALYSIS OF THE FUND
Set out below is the management discussion and analysis on the Fund for the period from 20
July 2011 (date of establishment) to 31 December 2011, the two years ended 31 December 2013 and
the period from 1 January 2014 to 31 August 2014 ( the “Relevant Periods”).
Business Review
On 5 September, 2011, the Fund has acquired 49% equity interests in a joint venture, Great
Wise Investment Ltd (“Great Wise”) which in turn held 100% equity interests in a subsidiary, 大
連匯洋置業有限公司 (Dalian Hui Yang Properties Co., Ltd.*) (“Dalian Hui Yang”). Dalian Hui
Yang engaged in property development in Dalian, the PRC. For the year ended 31 December 2012,
the Fund shared of post-acquisition reserves of the joint venture of US$46,492,916. On 8 March
2013, the Fund has disposed all of its equity interests in Great Wise and the relevant portion of
outstanding loan due from Great Wise to Sino-Ocean Land (Hong Kong) Limited at an aggregate
sale consideration of US$103,317,801. The Group recognized a loss of disposal of interests in joint
venture of US$4,173,498 for the year ended 31 December 2013.
Revenue
During the Relevant Periods, the Fund had no revenue.
During the period from 20 July to 31 December 2011 and the year ended 31 December 2012,
the Fund recorded administrative expenses of approximately US$1.5 million and US$0.5 million
respectively which mainly represented the legal and professional fees.
Save as the aforesaid during the Relevant Periods, the Fund recorded insignificant
administrative expenses which mainly represented the office expenses.
Share of results of a joint venture
During the period from 20 July to 31 December 2011 and the year ended 31 December 2012,
the Fund recorded share of profit of a joint venture of approximately US$0.1 million and US$46.5
million respectively.
During the year ended 31 December 2013, the Fund recorded share of loss of a joint venture
of approximately US$3.4 million, which was mainly attributed to the withholding tax incurred based
on the total units actual sold upon the realisation of the Fund’s investment in early 2013. During the
period from 1st January to 31 August 2014, the share of result of the joint venture was nil.
* For identification purpose only
— II-26 —
APPENDIX II
Taxation
There was no income tax expense for the Fund as the Fund had no assessable profits for the
Relevant Periods.
The Fund recorded a loss of approximately US$1.4 million, US$7.7 million and US$0.04
million respectively for the period from 20 July 2011 to 31 December 2011, year ended 31 December
2013 and the period from 1 January to 31 August 2014 and profit of approximately US$46.0 million
for the year ended 31 December 2012.
Liquidity and capital resources
As at 31 December 2011 and 2012, the Fund had interest in a joint venture of approximately
US$64.4 million and US$111.0 million respectively.
The Fund mainly financed its operations by capital contributed by general partner and limited
partners. As at 31 December 2011 and 2012, the balance of capital contributed by general partner and
limited partners were approximately US$66.0 million and US$66.0 million respectively.
Gearing ratio
As at 31 December 2011, 2012, 2013 and 31 August 2014, the gearing ratios of the Fund
calculated as a percentage of the Fund’s total liabilities to the Fund’s total assets, were approximately
21%, 1%, 90% and 100 % respectively.
Securities and guarantees
As at 31 December 2011, 2012, 2013 and 31 August 2014, the Fund had not made any pledge
of or created any security over its assets and had not provided any corporate guarantee.
As at 31 December 2011, 2012, 2013 and 31 August 2014, the Fund did not have any
contingent liability.
Capital commitment
As at 31 December 2011, 2012, 2013 and 31 August 2014, the Fund did not have any capital
commitment.
Exchange rate risk
As substantially all the Fund’s transactions are denominated in United States dollars, the Fund
is not subject to significant foreign exposure to currency risk.
— II-27 —
APPENDIX II
Interest rate risk
As at 31 December 2011, 2012, 2013 and 31 August 2014, the Fund did not hold any assets
and/or liabilities which were exposed to significant interest rate risk.
Credit risk
During the Relevant Periods, the Fund’s credit risk is primarily attributable to the loan to a
joint venture. The Fund monitors these credit risks on an ongoing basis.
Staff and remuneration policy
Employees are remunerated according to their qualifications and experience, job nature and
performance, under the pay scales aligned with market conditions. During the Relevant Periods, the
Fund had also provided other benefits such as medical, insurance cover and retirement schemes to the
employees.
As at 31 December 2011, 2012, 2013 and 31 August 2014, the number of employees of the
Fund was 0, 5, 3 and 0 respectively.
— II-28 —
APPENDIX II
METRO SPLENDID LIMITED
Accountant’s Report
The following is the text of a report received from PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, for the purpose of incorporation in this circular.
13 December 2014
The Directors
Dear Sirs,
We report on the financial information of Metro Splendid Limited (the “Target”) and its
subsidiaries (together, the “Target Group”), which comprises the combined balance sheets of the
Target as at 31 December 2011, 2012 and 2013, and the combined income statements, the combined
statements of comprehensive income, the combined statements of changes in equity and the combined
cash flow statements of the Target for each of the years ended 31 December 2011, 2012 and 2013
(the “Relevant Periods”) and a summary of significant accounting policies and other explanatory
information. This financial information has been prepared by the directors of Gemini Investments
(Holdings) Limited (the “Company”) and is set out in Sections I to III below for inclusion in
Appendix II to the circular of the Company dated 13 December 2014 (the “Circular”) in connection
with the proposed acquisition of the Target by the Company (the “Transaction”).
The Target was incorporated in the British Virgin Islands on 28 August 2009 as a limited
liability company. Pursuant to a group reorganization as described in Note 1 (b) of Section II headed
“Reorganization” below, which was completed on 31 October 2014, the Target became the holding
company of the subsidiaries now comprising the Target Group (the “Reorganization”).
As at the date of this report, the Target has direct and indirect interests in the subsidiaries as
set out in Note 8 of Section II below. All of these companies are private companies or, if incorporated
or established outside Hong Kong, have substantially the same characteristics as a Hong Kong
incorporated private company.
No audited financial statements have been prepared by the Target as it has not involved in any
significant business transactions since its date of incorporation, other than the Reorganization. The
audited financial statements of the other companies now comprising the Target Group as at the date
of this report for which there are statutory audit requirements have been prepared in accordance with
the relevant accounting principles generally accepted in their place of incorporation. The details of
the statutory auditors of these companies are set out in Note 8 of Section II below.
— II-29 —
APPENDIX II
The directors of the Target are responsible for the preparation of the combined financial
statements of the Target and its subsidiaries now comprising the Target Group for the Relevant
Periods that give a true and fair view in accordance with Hong Kong Financial Reporting Standards
(“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”)
(the “Underlying Financial Statements”), and for such internal control as the directors determine is
necessary to enable the preparation of the Underlying Financial Statements that are free from material
misstatement, whether due to fraud or error. We have audited the Underlying Financial Statements in
accordance with Hong Kong Standards on Auditing (the “HKSAs”) issued by the HKICPA pursuant
to separate terms of engagement.
The financial information has been prepared based on the Underlying Financial Statements,
with no adjustment made thereon, and on the basis set out in Note 2 of Section II below.
Directors’ Responsibility for the Financial Information
The directors of the Company are responsible for the preparation of the financial information
that gives a true and fair view in accordance with the basis of presentation set out in Note 2 of
Section II below and in accordance with HKFRSs and accounting policies adopted by the Company
and its subsidiaries (together, the “Group”) as set out in the interim report of the Company for the six
months ended 30 June 2014.
Reporting Accountant’s Responsibility
Our responsibility is to express an opinion on the financial information and to report our
opinion to you. We carried out our procedures in accordance with the Auditing Guideline 3.340
“Prospectuses and the Reporting Accountant” issued by the HKICPA.
Opinion
In our opinion, the financial information gives, for the purpose of this report and presented on
the basis set out in Note 2 of Section II below, a true and fair view of the combined state of affairs of
the Target Group as at 31 December 2011, 2012 and 2013 and of the Target Group’s combined results
and cash flows for the Relevant Periods then ended.
— II-30 —
APPENDIX II
I.
The following is the combined financial information of the Target Group prepared by the
directors of the Company as at 31 December 2011, 2012 and 2013 for each of the years ended 31
December 2011, 2012 and 2013 (the “Financial Information”).
As at 31 December 2011, 2012 and 2013, the Target had amounts due from the immediate
holding company of RMB8, investment in subsidiaries of RMB1, an amount due to a subsidiary of
RMB1 and share capital of RMB8. Except for this, it had no other assets, liabilities or distributable
reserves as at those dates.
1.
Combined Balance Sheets
As at 31 December
Note
ASSETS
Non-current assets
Property, plant and equipment
Trade and other receivables
Deferred income tax assets
7
13
20
Current assets
Prepayments for land use rights
Properties under development
Inventories at cost
Amounts due from customers for contract work
Completed properties held for sale
Restricted bank deposits
Total assets
— II-31 —
12
11
15
14
13
16
17
2011
RMB’000
2012
RMB’000
2013
RMB’000
15,407
6,391
32,398
15,602
7,319
68,876
11,755
5,247
119,670
54,196
91,797
136,672
189,890
14,082,298
4,127
103,499
41,929
2,937,873
197,925
674,433
—
15,414,602
4,244
174,012
1,750,069
3,851,690
611,197
1,661,309
—
17,845,171
4,221
536,972
2,129,109
3,443,275
493,270
1,328,957
18,231,974
23,467,123
25,780,975
18,286,170
23,558,920
25,917,647
APPENDIX II
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
678,132
22,234
678,132
208,045
678,132
399,887
700,366
886,177
1,078,019
Non-controlling interests
284,000
297,805
316,209
Total equity
984,366
1,183,982
1,394,228
1,385,000
1,789,220
1,825,850
1,385,000
1,789,220
1,825,850
9,045,516
4,651,551
2,161,746
57,991
3,492,182
11,736,399
5,273,086
84,051
8,822,779
6,215,314
7,478,332
181,144
15,916,804
20,585,718
22,697,569
Total liabilities
17,301,804
22,374,938
24,523,419
Total equity and liabilities
18,286,170
23,558,920
25,917,647
Net current assets
2,315,170
2,881,405
3,083,406
Total assets less current liabilities
2,369,366
2,973,202
3,220,078
Note
EQUITY
Combined capital
Retained earnings
18
LIABILITIES
Borrowings
19
Current liabilities
Borrowings
Trade and other payables
Advances receipts from customers
Income tax payable
19
21
22
— II-32 —
APPENDIX II
2.
Combined Income Statements
Note
6
25
Revenue
Cost of sales
2,122,440
(1,948,541)
3,737,092
(3,218,784)
4,860,160
(4,272,196)
173,899
518,308
587,964
24,753
681
(121,075)
(64,392)
32,342
(190)
(129,007)
(91,323)
19,341
690
(156,373)
(86,807)
13,866
330,130
364,815
(9,889)
(9,035)
(35,596)
3,977
321,095
329,219
(24,438)
(121,479)
(102,254)
Profit/(loss) for the year
(20,461)
199,616
226,965
Attributable to:
Owners of the Target
(39,303)
18,842
185,811
13,805
205,217
21,748
(20,461)
199,616
226,965
Gross profit
23
24
25
25
Interest and other income
Other gains/(losses) – net
Selling and marketing expenses
Operating profit
27
Finance costs
Profit before income tax
28
Income tax expense
3.
2011
2012
2013
RMB’000
RMB’000
RMB’000
Combined Statements of Comprehensive Income
Note
2011
2012
2013
RMB’000
RMB’000
RMB’000
(20,461)
199,616
226,965
Other comprehensive income for the year
—
—
—
Total comprehensive income for the year
(20,461)
199,616
226,965
Total comprehensive income attributable to:
— Owners of the Target
— Non-controlling interests
(39,303)
18,842
185,811
13,805
205,217
21,748
(20,461)
199,616
226,965
— II-33 —
APPENDIX II
4.
Combined Statements of Changes in Equity
Total
RMB’000
Noncontrolling
interests
RMB’000
Total equity
RMB’000
61,537
(39,303)
413,826
(39,303)
70,460
18,842
484,286
(20,461)
—
(39,303)
(39,303)
18,842
(20,461)
325,843
—
325,843
—
325,843
—
—
—
194,698
194,698
Total contributions by and
distributions to owners of
the Target
325,843
—
325,843
194,698
520,541
Total transactions with
owners of the Target
325,843
—
325,843
194,698
520,541
Balance at 31 December 2011
678,132
22,234
700,366
284,000
984,366
Balance at 1 January 2012
Profit for the year
678,132
—
22,234
185,811
700,366
185,811
284,000
13,805
984,366
199,616
—
185,811
185,811
13,805
199,616
678,132
208,045
886,177
297,805
1,183,982
Profit for the year
678,132
—
208,045
205,217
886,177
205,217
297,805
21,748
1,183,982
226,965
—
205,217
205,217
21,748
226,965
—
(13,375)
(13,375)
(3,344)
(16,719)
distributions to owners of
the Target
—
(13,375)
(13,375)
(3,344)
(16,719)
Total transactions with
owners of the Target
—
(13,375)
(13,375)
(3,344)
(16,719)
678,132
399,887
1,078,019
316,209
1,394,228
Note
Transactions with owners of
the Target
Contribution from shareholders
Contribution from noncontrolling interests
Transactions with owners of
the Target
Dividends relating to 2013
Combined
capital
RMB’000
Retained
earnings
RMB’000
352,289
—
— II-34 —
APPENDIX II
5.
Combined Cash Flow Statements
Note
Cash flows from operating activities
Cash (used in)/generated from operations
Interest paid
Income tax paid
29
Net cash (used in)/generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Entrusted loans advanced
Proceeds from entrusted loans
Interest received
7
29
32(d)
32(d)
32(d)
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Dividend payment
Capital injection from shareholders
Capital injection from non-controlling interests
Net cash generated from/(used in) financing activities
2011
RMB’000
2012
RMB’000
2013
RMB’000
(5,540,530)
(678,473)
(134,596)
6,064,859
(581,102)
(185,730)
(4,962,361)
(579,765)
(143,108)
(6,353,599)
5,298,027
(5,685,234)
(9,188)
1,101
(910,410)
97,410
20,313
(4,568)
724
(2,092,770)
2,905,770
28,807
(1,268)
861
(250,000)
250,000
2,781
(800,774)
837,963
2,374
21,171,247
(14,371,731)
(41,740)
325,843
194,698
6,547,282
(11,696,396)
—
—
—
13,832,035
(8,464,808)
(16,719)
—
—
7,278,317
(5,149,114)
5,350,508
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
17
123,944
550,489
986,876
674,433
(332,352)
1,661,309
Cash and cash equivalents at end of the year
17
674,433
1,661,309
1,328,957
— II-35 —
APPENDIX II
II.
1.
Group structure, reorganization and principal activities
(a)
General information
Metro Splendid Limited (the “Target”) was incorporated with limited liability in the British
Virgin Islands on 28 August 2009. The address of its registered office is P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands.
The Target, being an investment holding company and its subsidiaries (collectively referred to
as the “Target Group”) are principally engaged in property development and upfitting services in the
People’s Republic of China (the “PRC”). At the date of this report and during the Relevant Periods, the
ultimate holding company of the Target Group is Sino-Ocean Land Holding Limited (the “SOLH”), a
company incorporated in Hong Kong with its shares listed on the Main Board of The Stock Exchange of
Hong Kong Limited.
The combined financial statements are presented in Renminbi (“RMB”), unless otherwise stated.
(b)Reorganization
Prior to the Reorganization and during the Relevant Periods, the property development and the
upfitting services of the Target Group were conducted through nine real estate project companies and
one decoration company, respectively, all of which were incorporated in the PRC. At the date of this
report, the Target indirectly holds these ten companies through three investment holding companies. The
Target Group was ultimately controlled by the SOLH during the Relevant Periods.
Moral (HK) Investment Limited, a wholly-owned subsidiary of the Target, is the holding
company of Dalian Hongze Property Development Company Limited (“Dalian Hongze”) and Dalian
Xinrong Property Development Company Limited. Blue Team Trading Limited (“Blue Team”), another
wholly-owned subsidiary of the Target, has indirectly held the entire equity interest of Dalian Yuanjia
Industrial Park Development Company Limited (“Dalian Yuanjia”) during the Relevant Periods through
Dynamic Linkage Limited, a holding company (collectively referred to as the “Blue Team Group”).
Pursuant to the Reorganization in preparation for the proposed acquisition, the Target acquired all other
companies now comprising the Target Group from the SOLH’s subsidiaries and disposed of the Blue
Team Group to a subsidiary of the SOLH. The major steps undertaken to effect the Reorganization were
as follows:
(i)
On 20 October 2014, Dalian Hongze set up a wholly-owned subsidiary, Beijing Shengjia Hongze
Investment Management Company Limited (“Beijing Hongze”).
(ii)
On 27 October 2014, Beijing Hongze acquired the entire equity interest in Beijing Yuanhui
Property Development Company Limited (“Beijing Yuanhui”) from Beijing Yuankun Real Estate
Development Company Limited (“Beijing Yuankun”), which was indirectly controlled by the
SOLH. Beijing Yuanhui held a 55% equity interest in Sino-Ocean Land (Zhenjiang) Company
Limited during the Relevant Periods. Prior to and shortly after this acquisition, Beijing Yuanhui
completed a series of transactions and became the holding company of seven subsidiaries of the
Target Group, details of which are set out in (iii) to (vi) below.
(iii)
On 23 October 2014, Beijing Yuanhui acquired the entire equity interest of Qinhuangdao Ocean
Land Development Company Limited (“Qinhuangdao Ocean Land”) from Beijing Yuankun.
Qinhuangdao Ocean Land held the entire equity interest in Qinhuangdao Yuanlian Property
Development Company Limited and Qinhuangdao Yuanhao Property Development Company
Limited.
— II-36 —
APPENDIX II
(iv)
On 29 October 2014, Beijing Yuanhui acquired the entire equity interest of Shanghai Yuanzheng
Property Development Company Limited from Sino-Ocean Land (Shanghai) Company Limited,
which was indirectly controlled by the SOLH.
(v)
On 29 October 2014 and 31 October 2014, Beijing Yuanhui acquired the entire equity interest
of Shanghai Yuanxin Property Development Company Limited and Sino-Ocean Decoration
Engineering Company Limited, respectively, from Beijing Yuanqian Property Development
Company Limited, which was indirectly controlled by the SOLH.
(vi)
On 31 October 2014, Beijing Yuanhui acquired a 70% equity interest of Hangzhou Yuan Yang
Lai Fu Real Estate Development Company Limited from Sino-Ocean Land Limited, a whollyowned subsidiary of the SOLH.
(vii)
On 21 October 2014, the Target disposed of the entire equity interest of the Blue Team Group to
Sino-Ocean Land (Hong Kong) Limited, an immediate shareholder of the Target and a whollyowned subsidiary of the SOLH.
As at the date of this report, the Target has direct and indirect interests in the subsidiaries, which are set
out in Note 8 below.
2.
Basis of presentation
Prior to and following the Reorganization, all the businesses carried out by the companies comprising
the Target Group are ultimately controlled by the SOLH. Accordingly, the Reorganization has been accounted
for as business combinations under common control using merger accounting.
For the purpose of this report, the combined Financial Information of the Target Group has been
prepared using the principles of merger accounting, as prescribed in Hong Kong Accounting Guidance 5
“Merger Accounting for Common Control Combinations” issue by the HKICPA. Accordingly, the Target
Group’s combined balance sheets as at 31 December 2011, 2012 and 2013, and its combined income statements,
combined statements of comprehensive income, combined statements of changes in equity and combined cash
flow statements for the Relevant Periods have been prepared using the financial information of the companies
now comprising the Target Group as if the current group structure had been in existence since 1 January 2011,
or since their respective dates of incorporation/establishment.
The financial information of the Blue Team Group has been included in the combined Financial
Information of the Target Group as they are being disposed of subsequent to 31 December 2013.
3.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of the Financial Information are set out
below. These policies have been consistently applied to all the relevant years presented, unless otherwise stated.
3.1
Basis of preparation
The Financial Information has been prepared in accordance with Hong Kong Financial Reporting
Standards (“HKFRS”). They have been prepared under the historical cost convention.
The preparation of the Financial Information in conformity with HKFRS requires the use of
certain critical accounting estimates. It also requires management to exercise its judgment in the process
of applying the Company’s accounting policies. The areas involving a higher degree of judgment
or complexity, or areas where assumptions and estimates are significant to the combined financial
statements, are disclosed in Note 5.
— II-37 —
APPENDIX II
As at 31 December 2013, the Target Group’s total liabilities exceeded total equity exclusive
of non-controlling interest by 23 times and the Target Group’s gearing ratio was 87%, which created
doubt about the Target Group’s ability to continue as a going concern. The directors of the Target have
prepared cash flow projections by taking into account the financial resources available to the Target
Group, mainly including cash generated from operating activities. Moreover, other borrowings from
a fellow subsidiary amounting to RMB6,752,013,000 (see Note 19(b)) were replaced by long term
entrusted loans as a result of an agreement reached between the Target Group and a subsidiary of SOLH
after 31 December 2013 (see Note 33). Taking these into account, the directors of the Company believe
that the Target Group will have sufficient financial resources for its operations in the next twelve
months from 31 December 2013. Consequently the directors of the Company have prepared the Financial
Information on a going concern basis.
3.2
New and amended standards and interpretations not yet adopted
The following new standard has been issued but is not effective for the financial year beginning
1 January 2014 and has not been early adopted:
HKFRS 9, “Financial instruments”, addresses the classification, measurement and recognition
of financial assets and financial liabilities. HKFRS 9 was issued in November 2009 and October 2010
and amended in July 2014. It replaces the whole of HKAS 39. HKFRS 9 has three financial asset
classification categories for investments in debt instruments: amortized cost, fair value through other
comprehensive income (“OCI”) and fair value through profit or loss. Classification is driven by the
entity’s business model for managing the debt instruments and their contractual cash flow characteristics.
Investments in equity instruments are always measured at fair value. However, management can make
an irrevocable election to present changes in fair value in OCI, provided the instrument is not held for
trading. If the equity instrument is held for trading, changes in fair value are presented in profit or loss.
For financial liabilities there are two classification categories: amortized cost and fair value through
profit or loss. Where non-derivative financial liabilities are designated at fair value through profit or
loss, the changes in the fair value due to changes in the liability’s own credit risk are recognized in
OCI, unless such changes in fair value would create an accounting mismatch in profit or loss, in which
case, all fair value movements are recognized in profit or loss. There is no subsequent recycling of the
amounts in OCI to profit or loss. For financial liabilities held for trading (including derivative financial
liabilities), all changes in fair value are presented in profit or loss.
HKFRS 9 introduces a new model for the recognition of impairment losses – the expected credit
losses (ECL) model, which constitutes a change from the incurred loss model in HKAS 39. HKFRS 9
contains a “three stage” approach, which is based on the change in credit quality of financial assets since
initial recognition. Assets move through the three stages as credit quality changes and the stages dictate
how an entity measures impairment losses and applies the effective interest rate method. The new rules
mean that on initial recognition of a non-credit impaired financial asset carried at amortised cost a day1 loss equal to the 12-month ECL is recognised in profit or loss. In the case of accounts receivables
this day-1 loss will be equal to their lifetime ECL. Where there is a significant increase in credit risk,
impairment is measured using lifetime ECL rather than 12-month ECL.
HKFRS 9 applies to all hedging relationships, with the exception of portfolio fair value hedges of
interest rate risk. The new guidance better aligns hedge accounting with the risk management activities
of an entity and provides relief from the more “rule-based” approach of HKAS39.
The amendment is effective for annual periods beginning on or after 1 January 2018. Earlier
application is permitted. Entities applying the standard before 1 February 2015 continue to have the
option to apply the standard in phases. Therefore the Target Group is yet to assess HKFRS 9’s full
impact.
— II-38 —
APPENDIX II
HKFRS 15, “Revenue from contracts with customers”, is based on the principle that revenue
is recognized when control of a good or service transfers to the customer. HKFRS 15 was issued in
July 2014. It replaces the separate models for goods, services and construction contracts under current
HKFRS. HKFRS 15 is a single model that distinguishes between performance obligations satisfied at
a point in time and those are satisfied over time. The criteria are provided to determine when a good
or service transfers over time. But not all the criteria are intuitive and might change practice in some
industries such as real estate and construction. If the criteria are not met, indicators of control are used
to determine when revenue is recognized.
application is permitted. The Target Group is yet to assess HKFRS 15’s full impact.
3.3Subsidiaries
3.3.1Consolidation
A subsidiary is an entity (including a structured entity) over which the Target Group has
control. The Target Group controls an entity when the Target Group is exposed to, 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. Subsidiaries are consolidated from the date on which control is
transferred to the Target Group. They are deconsolidated from the date that control ceases.
(a)
Business combinations under common control
The combined financial information incorporate the financial statements of the
combining entities or businesses in which the common control combination occurs as if
they had been combined from the date when the combining entities or businesses first
came under the control of the controlling party.
The net assets of the combining entities or businesses are combined using the
existing book values from the controlling parties’ perspective. No amount is recognized
in combination for goodwill or excess of acquirers’ interest in the net fair value of
acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of
common control combination, to the extent of the continuation of the controlling party’s
interest.
The combined income statement includes the results of each of the combining
entities or businesses from the earliest date presented or since the date when the
combining entities or businesses first came under the common control, where there is a
shorter period, regardless of the date of the common control combination.
The comparative amounts in the combined financial information are presented as
if the entities or businesses had been combined at the previous balance sheet date or when
they first came under common control, whichever is shorter.
A uniform set of accounting policies is adopted by those entities. All intra-group
transactions, balances and unrealized gains on transactions between combining entities or
businesses are eliminated on combination.
Transaction costs, including professional fees, registration fees, costs of
furnishing information to shareholders, costs or losses incurred in combining operations
of the previously separate businesses, etc., incurred in relation to the common control
combination that is to be accounted for by using merger accounting is recognized as an
expense in the period in which it is incurred.
— II-39 —
APPENDIX II
(b)
Business combinations not under common control
The Target Group applies the acquisition method to account for business
combinations with parties that are not under common control. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred,
the liabilities incurred to the former owners of the acquiree and the equity interests issued
by the Target Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Target Group recognizes
any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either
at fair value or at the non-controlling interest’s proportionate share of the recognized
amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying
value of the acquirer’s previously held equity interest in the acquiree is re-measured to
fair value at the acquisition date; any gains or losses arising from such re-measurement
are recognized in profit or loss.
Any contingent consideration to be transferred by the Target Group is recognized
at fair value at the acquisition date. Subsequent changes to the fair value of the contingent
consideration that is deemed to be an asset or liability is recognized in accordance
with HKAS 39 either in profit or loss or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not remeasured, and its subsequent
settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of any previous equity interest
in the acquiree over the fair value of the identifiable net assets acquired is recorded as
goodwill. If the total of consideration transferred, non-controlling interest recognized
and previously held interest measured is less than the fair value of the net assets of the
subsidiary acquired in the case of a bargain purchase, the difference is recognized directly
in the income statement.
Intra-group transactions, balances and unrealized gains on transactions between
group companies are eliminated. Unrealized losses are also eliminated. When necessary,
amounts reported by subsidiaries have been adjusted to conform with the Target Group’s
accounting policies.
(c)
Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control
are accounted for as equity transactions – that is, as transactions with the owners of
the subsidiary in their capacity as owners. The difference between fair value of any
consideration paid and the relevant share acquired of the carrying amount of net assets
of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling
interests are also recorded in equity.
— II-40 —
APPENDIX II
(d)
Disposal of subsidiaries
When the Target Group ceases to have control, any retained interest in the entity
is remeasured to its fair value at the date when control is lost, with the change in carrying
amount recognized in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate, joint venture
or financial asset. In addition, any amounts previously recognized in other comprehensive
income in respect of that entity are accounted for as if the Target Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously
recognized in other comprehensive income are reclassified to profit or loss.
3.3.2 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct
attributable costs of investment. The results of subsidiaries are accounted for by the company on
the basis of dividend received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a
dividend from these investments if the dividend exceeds the total comprehensive income of the
subsidiary in the period the dividend is declared or if the carrying amount of the investment
in the separate financial statements exceeds the carrying amount in the combined financial
information of the investee’s net assets including goodwill.
3.4
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the executive
committee that makes strategic decisions.
3.5
Foreign currency translation
(a)
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 combined financial statements are presented in Renminbi
(“RMB”), which is the Company’s functional and the Target Group’s presentation currency.
(b)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the
exchange rates prevailing at the date of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the combined income statement.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents
are presented in the income statement within “finance income or cost”. All other foreign
exchange gains and losses are presented in the income statement within “other gains/(losses) –
net”.
— II-41 —
APPENDIX II
Changes in the fair value of monetary securities denominated in foreign currency
classified as available-for-sale are analyzed between translation differences resulting from
changes in the amortized cost of the security and other changes in the carrying amount of the
security. Translation differences related to changes in amortized cost are recognized in profit or
loss, and other changes in carrying amount are recognized in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities, such as equity
instruments held at fair value through profit or loss, are recognized in profit or loss as part of the
fair value gain or loss. Translation differences on non-monetary items such as equities classified
as available-for-sale financial assets are included in other comprehensive income.
(c)
Group companies
The results and financial position of all the group entities (none of which has the currency
of a hyperinflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:
3.6
(i)
assets and liabilities for each balance sheet presented are translated at the closing
rate at the date of that balance sheet;
(ii)
income and expenses for each income statement are translated at average exchange
rates(unless this average is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the transactions); and
(iii)
all resulting exchange differences are recognized in other comprehensive income.
Property, plant and equipment are stated at historical cost less accumulated depreciation and
accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to
the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Target Group and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognized. All other repairs and maintenance are charged to the combined income statement
during the financial period in which they are incurred.
Depreciation on property, plant and equipment is calculated using the straight-line method to
allocate their cost to their residual values over their estimated useful lives, as follows:
Buildings
Machineries
Vehicles
Office equipment
Electronic equipment
25-50
8
8
5
3
years
years
years
years
years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated recoverable amount (Note 3.7).
Gains and losses on disposals are determined by comparing proceeds with carrying amounts.
These are recognized within “other gains/(losses) — net”, in the combined income statement.
— II-42 —
APPENDIX II
3.7
Impairment of non-financial assets
Assets that have an indefinite useful life or are not yet available for use are not subject to
amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other
than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each
reporting date.
3.8
Financial assets
3.8.1Classification
The Target Group classifies its financial assets into financial assets at fair value through
profit or loss, loans and receivables, and available-for-sale financial assets. The classification
depends on the purpose for which the financial assets were acquired. Management determines
the classification of its financial assets at initial recognition and re-evaluates this designation at
every reporting date.
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for
trading. A financial asset is classified in this category if acquired principally for the
purpose of selling in the short term. Derivatives are also categorized as held for trading
unless they are designated as hedges. Assets in this category are classified as current
assets if expected to be settled within 12 months; otherwise, they are classified as noncurrent.
(b)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are included in
current assets, except for those with maturities greater than 12 months after the end of the
reporting period, which are classified as non-current assets. The Target Group’s loans and
receivables comprise “trade and other receivables”, “restricted bank deposit” and “cash
and cash equivalents” in the balance sheet (Note 3.11 and 3.12).
(c)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated
in this category or not classified in any of the other categories. They are included in
non-current assets unless the investment matures or management intends to dispose of it
within 12 months of the end of the reporting period.
3.8.2 Recognition and measurement
Regular way purchases and sales of financial assets are recognized on trade-date, the
date on which the Target Group commits to purchase or sell the asset. Investments are initially
recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially
— II-43 —
APPENDIX II
recognized at fair value, and transaction costs are expensed in the combined income statement.
Financial assets are derecognized when the rights to receive cash flows from the investments
have expired or have been transferred and the Target Group has transferred substantially all
risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at
fair value. Loans and receivables are subsequently carried at amortized cost using the effective
interest method.
Gains or losses arising from changes in the fair value of the “financial assets at fair value
through profit or loss” category are presented in the income statement within “other gains/(losses)
– net” in the period in which they arise. Dividend income from financial assets at fair value
through profit or loss is recognized in the income statement as part of other income when the
Target Group’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as availablefor-sale are recognized in other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments recognized in equity are included in the combined income statement as part of
“other gains/(losses) – net”.
Interest on available-for-sale securities calculated using the effective interest method are
recognized in the combined income statement as part of other income. Dividends on availablefor-sale equity instruments are recognized in the combined income statement as part of other
income when the Target Group’s right to receive payments is established.
3.9
Impairment of financial assets
(a)
Assets carried at amortized cost
The Target Group assesses at the end of each reporting period whether there is objective
evidence that a financial asset or group of financial assets is impaired. A financial asset or
a group of financial assets is impaired and impairment losses are incurred only if there is
objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be reliably
estimated.
Evidence of impairment may include indications that the debtors or a group of debtors
is experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganization, and
where observable data indicate that there is a measurable decrease in the estimated future cash
flows, such as changes in arrears or economic conditions that correlate with defaults.
For loans and receivables category, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate. The carrying amount of the asset is reduced and the amount of
the loss is recognized in the combined income statement. If a loan or held-to-maturity investment
has a variable interest rate, the discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract. As a practical expedient, the Target Group
may measure impairment on the basis of an instrument’s fair value using an observable market
price.
— II-44 —
APPENDIX II
If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognized (such as an
improvement in the debtor’s credit rating), the reversal of the previously recognized impairment
loss is recognized in the combined income statement.
(b)
Assets classified as available-for-sale
The Target Group assesses at the end of each reporting period whether there is objective
evidence that a financial asset or a group of financial assets is impaired. For debt securities, the
Target Group uses the criteria referred to (a) above. In the case of equity investments classified
as available-for-sale, a significant or prolonged decline in the fair value of the security below its
cost is also evidence that the assets are impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss — measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously
recognized in profit or loss — is removed from equity and recognized in the combined income
statement. Impairment losses recognized in the combined income statement on equity instruments
are not reversed through the combined income statement. If, in a subsequent period, the fair value
of a debt instrument classified as available-for-sale increases and the increase can be objectively
related to an event occurring after the impairment loss was recognized in profit or loss, the
impairment loss is reversed through the combined income statement.
3.10Inventories
(a)
Properties under development are stated at the lower of cost and net realizable value.
Net realizable value is determined by reference to estimated sales proceeds of the properties
sold in the ordinary course of business less costs to complete development and estimated selling
expenses.
Development costs of properties comprises land use rights, construction costs, borrowing
costs and professional fees as incurred during the development period. On completion, all
development costs of the properties are transferred to completed properties held for sale.
(b)
Completed properties held for sale are completed properties remaining unsold at the
balance sheet date and are stated at the lower of cost and net realizable values. Cost comprises
development costs attributable to the unsold properties. Net realizable values is determined
by reference to the sale proceeds of properties sold in the ordinary course of business, less
applicable variable selling expenses, or by management estimates based on prevailing marketing
conditions.
3.11
Trade receivables are amounts due from customers for merchandise sold or services performed
in the ordinary course of business. If collection of trade and other receivables is expected in one year or
less (or in the normal operating cycle of the business if longer), they are classified as current assets. If
not, they are presented as non-current assets.
Trade and other receivables are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method, less provision for impairment.
— II-45 —
APPENDIX II
3.12
In the combined cash flow statement, cash and cash equivalents includes cash in hand, deposits
held at call with banks, other short-term highly liquid investments with original maturities of three
months or less.
3.13
Combined capital
As the financial information has been prepared on a combined basis, the combined capital in the
combined financial information represents the parent’s net investment in the Target Group.
3.14
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating cycle of the business if longer). If
not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest method.
3.15
Borrowings and Borrowing costs
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings
are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs)
and the redemption value is recognized in the income statement over the period of the borrowings 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 balance sheet date.
General and specific 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 added to 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 capitalization. All other borrowing costs are recognized in profit or loss in the period
in which they are incurred.
3.16
Current and deferred income tax
The tax expense for the year comprises current and deferred income tax. Tax is recognized in the
income statement, except to the extent that it relates to items recognized in other comprehensive income
or directly in equity. In this case the tax is also recognized in other comprehensive income or directly in
equity, respectively.
3.16.1 Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the balance sheet date in the country where the Target’s subsidiaries
operate and generate taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is subject to interpretation
and establishes provisions where appropriate on the basis of amounts expected to be paid to the
tax authorities.
— II-46 —
APPENDIX II
3.16.2 Deferred income tax
Deferred income tax is recognized, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the combined
financial statements. However, deferred tax liabilities are not recognized if they arise from the
initial recognition of goodwill, the deferred income tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related deferred income tax
asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax liabilities are provided on taxable temporary differences arising
from investments in subsidiaries, except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Target Group and it is probable that the
temporary difference will not reverse in the foreseeable future. Generally the Target Group is
unable to control the reversal of the temporary difference for associates. Only where there is an
agreement in place that gives the Target Group the ability to control the reversal of the temporary
difference not recognized.
Deferred income tax assets are recognized on deductible temporary differences arising
from investments in subsidiaries only to the extent that it is probable the temporary difference
will reverse in the future and there is sufficient taxable profit available against which the
temporary difference can be utilized.
3.16.3 Offsetting
Deferred income tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and when the deferred income taxes
assets and liabilities relate to income taxes levied by the same taxation authority on either the
taxable entity or different taxable entities where there is an intention to settle the balances on a
net basis.
3.17
Employee benefits
(a)
Employee leave entitlements
Employee entitlements to annual leave are recognized when they accrue to employees. A
provision is made for the estimated liability for annual leave as a result of services rendered by
employee up to the balance sheet date. Employee entitlements to sick leave and maternity leave
are not recognized until the time of leave.
(b)
Bonus entitlements
Expected costs of bonus payments are recognized as liabilities when constructive
obligations are present, as a result of services rendered by employees and reliable estimations of
the obligations can be made.
— II-47 —
APPENDIX II
(c)
Retirement benefits
In accordance with the rules and regulations in the PRC, the PRC based employees of
the Target Group participate in various defined contribution retirement plans organized by the
relevant municipal and provincial governments in the PRC under which the Target Group and the
PRC based employees are required to make monthly contributions to these plans calculated as a
percentage of the employees’ salaries.
The municipal and provincial governments undertake to assume the retirement benefit
obligations of all existing and future retired PRC based employees payable under the plans
described above. Other than the monthly contributions, the Target Group has no further obligation
for the payment of retirement and other post retirement benefits of its employees. The assets of
these plans are held separately from those of the Target Group in independently administrated
funds managed by the PRC government.
The Target Group’s contributions to the defined contribution retirement schemes are
expensed as incurred.
3.18Provisions
Provisions are recognized when the Target Group has a present legal or constructive obligation as
a result of past events; it is probable that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required
in settlement is determined by considering the class of obligations as a whole. A provision is recognized
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to
settle the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage of time is
recognized as interest expense.
3.19
Financial guarantee liabilities
Financial guarantee liabilities are recognized in respect of the financial guarantee provided by the
Target Group to the property purchasers.
Financial guarantee liabilities are recognized initially at fair value plus transaction costs that
are directly attributable to the issue of the financial guarantee liabilities. After initial recognition, such
contracts are measured at the higher of the present value of the best estimate of the expenditure required
to settle the present obligation and the amount initially recognized less cumulative amortization.
Financial guarantee liabilities are derecognized from the balance sheet when, and only when, the
obligation specified in the contract is discharged or cancelled or expired.
3.20
Contract work
Contract costs are recognized when incurred.
When the outcome of a contract cannot be estimated reliably, contract revenue is recognized
only to the extent of contract costs incurred that are likely to be recoverable by reference to the stage of
completion.
— II-48 —
APPENDIX II
When the outcome of a contract can be estimated reliably and it is probable that the contract will
be profitable, contract revenue is recognized over the period of the contract. When it is probable that
total contract costs will exceed total contract revenue, the expected losses are recognized as expense
immediately.
The Target Group uses the “percentage of completion method” to determine the appropriate
amount to be recognized in a given period. Depending on the nature of contracts, the stage of completion
is measured by reference to (a) the proportion of contract costs incurred for work performed to date to
estimated total contract costs; (b) the amount of work certified by site engineers; or (c) completion of
physical proportion of the contract work. Costs incurred in the year in connection with future activity on
a contract are excluded from contract costs in determining the stage of completion. They are presented
as inventories, prepayments or other assets, depending on their nature.
Contract work-in-progress is valued at the cost price of the work done, plus a part of the
expected profit upon completion of the project in proportion to the progress made and less progress
receivables and provisions. Provisions are recognized for expected losses on contract work-in-progress,
as soon as they are foreseen, and deducted from the cost price. The cost price includes direct project
costs, consisting of direct payroll costs, materials, costs of subcontracted work, other direct costs, rental
charges and maintenance costs for the equipment used. The progress of a project is determined on the
basis mentioned in preceding paragraph. Profits are not recognized unless a reliable estimate can be
made of the result on completion of the project. The balance of the value of contract work-in-progress
and progress receivables is determined on a project by project basis.
The Target Group presents as an asset the “amounts due from customers for contract work” for
all contracts in progress for which costs incurred plus recognized profits exceed progress receivables.
Progress receivables not yet paid by customers and retention are included within “trade and other
receivables”.
3.21
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the Target Group’s activities. Revenue is shown, net of returns,
discounts and after eliminating sales within the Target Group.
The Target Group recognizes revenue when the amount of revenue can be reliably measured, it is
probable that future economic benefits will flow to the entity and when specific criteria have been met
for each of the Target Group’s activities as described below. The Target Group bases its estimates on
historical results, the type of transaction and the specifics of each arrangement.
(a)
Sale of properties
Revenue from sales of properties is recognized when the risks and rewards of the
properties transferred to the purchaser, which is when the construction of the relevant properties
have been completed and properties have been delivered to the purchaser pursuant to the
sale agreements, and collectability of related receivables is reasonably assured. Deposits and
instalments received on properties sold prior to the date of revenue recognition are included
in current liabilities, and are separately stated in the balance sheet as advances receipts from
customers.
(b)
Revenue from upfitting contracts
Revenue from individual upfitting contract is recognized, over the period of the contracts,
when the outcome of the contracts can be estimated reliably and it is probable that these contracts
will be profitable.
— II-49 —
APPENDIX II
When the outcome of a contract cannot be estimated reliably, contract revenue is
recognized only to the extent of contract costs incurred that are likely to be recoverable.
The Target Group uses the “percentage of completion method” to determine the
appropriate amount to be recognized in a given period. Depending on the nature of contracts,
the stage of completion is measured by reference to the proportion of contract costs incurred for
work performed to date to estimated total contract costs.
(c)
Interest income
Interest income is recognized using the effective interest method. When a loan and
receivable is impaired, the Target Group reduces the carrying amount to its recoverable amount,
being the estimated future cash flow discounted at the original effective interest rate of the
instrument, and continues unwinding the discount as interest income.
4.
Financial risk management
4.1
Financial risk factors
The Target Group’s activities expose it to a variety of financial risks: market risk (including
foreign exchange risk, cash flow interest rate risk and fair value interest rate risk), credit risk and
liquidity risk. The Target Group’s overall risk management program focuses on the unpredictability
of financial markets and seeks to minimize potential adverse effects on the Target Group’s financial
performance. The board of directors reviews and approves policies for managing each of these risks and
they are summarized below.
(a)
Market risk
(i)
Foreign exchange risk
The operations and majority of the Target Group’s customers are located in the
PRC with most of the assets/liabilities and transactions denominated and settled in RMB.
As the commercial transactions settled in foreign currencies are not material, the directors
of the Target are of the view that the Target Group’s exposure to foreign exchange risk
would be immaterial.
(ii)
Cash flow and fair value interest rate risk
As the Target Group has no significant interest-bearing assets, the Target Group’s
income and operating cash flows are substantially independent of changes in market
interest rates.
The Target Group’s interest rate risk arises from long-term borrowings with
prevailing market interest rates. Such risk is partly offset by cash at banks held at
prevailing market interest rates. During the Relevant Periods, the Target Group’s
borrowings at prevailing market interest rates were denominated in RMB.
The Target Group currently does not utilize any derivative contracts to hedge its
exposure to interest rate risk. However, management will consider hedging significant
interest rate exposure should the need arise.
The directors of the Target consider that the fluctuation in interest rate has no
material impact on the Group’s post-tax profit for the Relevant Periods as most of interest
expenses were capitalized.
— II-50 —
APPENDIX II
(b)
Credit risk
Credit risk arises from restricted bank deposits, cash and cash equivalents, trade and other
receivables. The carrying amounts of restricted bank deposits, cash and cash equivalents, trade
and other receivables, represent the Target Group’s maximum exposure to credit risk in relation
to its financial assets.
To manage such exposure, the Target Group has policies in place to ensure that sales
are made to purchasers with appropriate financial strengths and credit history, at the same
time appropriate percentages of down payments are made. Deposits are placed with banks with
appropriate credit ratings. Monitoring procedures are also in place to ensure that follow-up
action is taken to recover overdue debts. In addition, the Target Group reviews and assesses the
recoverable amount of each individual trade receivables on a regular basis to ensure that adequate
impairment losses are made for irrecoverable amounts. The Target Group has no significant
concentration of credit risk, with exposure spread over a number of counterparties and customers.
Credit risk arises from restricted bank deposits is limited, as all counterparties are banks
with appropriate credit rankings.
The Target Group has provided guarantees to banks in favor of certain customers to
secure their repayment obligations to banks, for their purchases of property units. If a customer
defaults on the payment of its mortgage during the term of the guarantee, banks holding the
mortgage may demand the Target Group to repay the outstanding amount together with any
accrued interest thereon. Under such circumstances, the Target Group is able to sell the property
to recover any amounts paid by the Target Group to banks. The directors of the Target consider
that the Group’s exposure to credit risk in this regard is minimal.
(c)
Liquidity risk
Cash flow forecast by the Target Group and the Target Group monitors rolling forecasts
of the Target Group’s liquidity requirements to ensure it has sufficient cash to meet operational
needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at
all times so that the group does not breach borrowing limits or covenants (where applicable) on
any of its borrowing facilities. Such forecast takes into consideration the Target Group’s debt
financing plans, covenant compliance, compliance with internal balance sheet ratio targets.
As at 31 December 2011, 2012 and 2013, the Target Group held cash and cash equivalents
of RMB674,433,000, RMB1,661,309,000 and RMB1,328,957,000 (Note 17) and trade and other
receivables of RMB2,944,264,000, RMB3,859,009,000 and RMB3,448,522,000 (Note 13) that are
expected to readily generate cash inflows for managing liquidity risk.
— II-51 —
APPENDIX II
The table below analyzes the Target Group’s non-derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet date to the
contractual maturity date. The amount disclosed in the table is the contractual undiscounted cash
flows.
At 31 December 2011
Borrowings
At 31 December 2012
Borrowings
At 31 December 2013
Borrowings
4.2
Less than
1 year
RMB’000
Between
1 and 2
years
RMB’000
Between
2 and 5
years
RMB’000
Total
RMB’000
9,884,820
4,565,626
108,193
—
1,470,866
—
11,463,879
4,565,626
14,450,446
108,193
1,470,866
16,029,505
4,053,259
11,605,122
1,509,396
—
414,005
—
5,976,660
11,605,122
15,658,381
1,509,396
414,005
17,581,782
9,273,268
5,921,316
403,323
—
1,660,742
—
11,337,333
5,921,316
15,194,584
403,323
1,660,742
17,258,649
Capital risk management
The Target Group’s objectives when managing capital are to safeguard the Target Group’s
ability to continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Target Group may adjust the amount of
dividends paid to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Target Group monitors capital on the basis of the
gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total
borrowings (including current and non-current borrowings as shown in the combined balance sheet) less
cash and cash equivalents. Total capital is calculated as “equity” as shown in the combined balance sheet
plus net debt.
— II-52 —
APPENDIX II
The gearing ratios at 31 December 2011, 2012 and 2013 were as follows.
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
10,430,516
(674,433)
5,281,402
(1,661,309)
10,648,629
(1,328,957)
Net debt
Total equity
9,756,083
984,366
3,620,093
1,183,982
9,319,672
1,394,228
Total capital
10,740,449
4,804,075
10,713,900
Gearing ratio
91%
75%
87%
Total borrowings (Note 19)
Less: cash and cash equivalents (Note 17)
As at respective balance sheet dates, the Target Group has gearing ratio of over 70%, which
created doubt about the Target Group’s ability to continue as a going concern. The directors of the Target
Group have prepared cash flow projections by taking into account the financial resources available to the
Target Group which mainly includes cash generated from operating activities. In addition, subsequent to
31 December 2013, borrowings from a fellow subsidiary amounting to RMB6,752,013,000 were replaced
by long term entrusted loans (see Note 33). On this basis, the directors of the Company believe that
the Target Group will have sufficient financial resources for its operations at least for the next twelve
months from 31 December 2013.
5.
Critical accounting estimates and judgements
Estimates and judgments are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Target Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
(a)
Income taxes and land appreciation tax (“LAT”)
The Target Group is primarily subject to various PRC taxes, as it is principally engaged in
property development in the PRC. Significant judgment is required in determining the provision for
income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Target recognizes liabilities for anticipated tax
audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such differences will impact the
income tax and deferred income tax provisions in the period in which such determination is made.
The implementation and settlement of LAT varies among various tax jurisdictions in cities
of the PRC. LAT is levied at progressive rates ranging from 30% to 60% on the appreciation of land
value, being the proceeds from sales of properties less deductible expenditures including land use rights,
borrowing costs, business taxes, property development and other related expenditures. These taxes are
incurred upon transfer of property ownership.
— II-53 —
APPENDIX II
Significant judgment is required in determining the extent of land appreciation and its related
taxes. The Target Group recognized LAT based on management’s best estimates according to the
understanding of the tax rules. The final tax outcome could be different from the amounts that were
initially recorded, and these differences will impact the combined income statement in the periods in
which such taxes are finalized with local tax authorities.
(b)
Deferred income tax
Deferred income tax assets relating to certain temporary differences and tax losses are recognized
when management considers it probable that future taxable profit will be available against which the
temporary differences or tax losses can be utilized. The outcome of their actual utilization may be
different.
(c) Estimations for total properties construction cost
The Target Group estimates properties construction cost upon recognition of respective costs
of sales. Such estimates are substantiated by detailed budgetary information as developed by the
management, and will be assessed periodically, as the constructions progress. Should these estimates
depart from their actual finalized costs, such differences would affect the accuracy of costs of sales
recognized.
(d)
Revenue recognition
The Target Group has recognized revenue from the sale of properties held for sale as disclosed
in Note 3.21. The assessment of when an entity has transferred the significant risks and rewards of
ownership to buyers requires the examination of the circumstances of the transaction. In most cases,
the transfer of risks and rewards of ownership coincides with the date when the equitable interest in the
property vests to the buyer, upon release of the respective property to the purchaser.
As disclosed in Note 30, the Target Group provided guarantees in respect of mortgage facilities
granted by certain banks relating to the mortgage loans arranged for certain purchasers of the Target
Group’s properties. These guarantees will expire when relevant property ownership certificates are
lodged with the banks by the purchasers. In order to obtain mortgages, the purchasers would have settled
certain percentage of the total contract amount in accordance with related PRC regulations upon delivery
of the properties. The directors of the Target are of the opinion that such settlements provide sufficient
evidence of the purchasers’ commitment to honour contractual obligation of the bank loans. In addition,
based on past experiences, there were no significant defaults of mortgage facilities by the purchasers
resulted in the bank guarantees provided. Accordingly, the directors believe that significant risks and
rewards associated to the ownership of the properties have been transferred to the purchasers.
(e)
Construction contracts
Revenue from individual upfitting contract is recognized under the percentage of completion
method which requires estimation made by management. Because of the nature of the activity undertaken
in upfitting services, the date at which the contract activity is entered into and the date when the activity
is completed sometimes fall into different accounting periods.
The Target Group reviews and revises the estimates of both contract revenue and contract costs
in each contract budget as the contract progresses and regularly reviews the progress of the contracts.
The Target Group also monitors the progress payments from customers against the contract terms, and
periodically evaluates the creditworthiness of the customers. If circumstances arise which make it likely
that a customer would default on all or part of its payments or otherwise fail to fulfil its performance
obligations under the contract terms, the Target Group will reassess the outcome of the relevant contract
— II-54 —
APPENDIX II
and may revise the relevant estimates. The revision will be reflected in the combined income statement
in the period in which the circumstances that give rise to the revision become known by the Target
Group.
(f)
Estimated impairment of assets
The Target Group tests at least annually whether assets have suffered any impairment in
accordance with the accounting policies stated in Note 3.7. Assets are also reviewed for impairment,
whenever events or changes in circumstances that may cause the carrying amounts of the assets to exceed
their recoverable amounts. The recoverable amount of an asset or a cash generating unit is determined as
the higher of cash generating unit’s fair value less cost to sell and its value-in-use which requires the use
of assumptions and estimates.
6.
Segment information
Management has determined the operating segments based on the reports reviewed by the chief operating
committee (the “Committee”) that are used to make strategic decisions. The Committee considers the business’
performance from a product perspective and has categorized its business into property development and upfitting
services.
The Committee assesses the performance of the operating segments based on a measure of operating
profit. This measurement basis excludes the effects of non-recurring expenditure from the operating segments.
Finance costs and corporate finance income are not included in the result for each operating segment that is
reviewed by the Committee, as they are driven by activities of the central treasury function, which manages
the cash position of the Target Group. Other information provided to the Committee, except as noted below, is
measured in a manner consistent with that in the financial statements.
Total segment assets exclude corporate cash and cash equivalents and deferred income tax assets, both
of which are managed on a central basis. Total segment liabilities exclude borrowings and deferred income tax
liabilities, both of which are managed on a central basis as well. These are part of the reconciliation to total
balance sheet assets and liabilities.
Transactions between segments are carried out at arm’s length. The revenue from external parties
reported to the Committee is measured in a manner consistent with that in the combined income statement.
Turnover consists of sales from property development and contract revenue as derived from upfitting
services, which are as follows:
Property development
Contract revenue
— II-55 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
131,169
1,991,271
1,505,336
2,231,756
2,808,096
2,052,064
APPENDIX II
The segment information for the years ended 31 December 2011, 2012 and 2013 is as follows:
Total
RMB’000
Intercompany
elimination
RMB’000
RMB’000
2,051,681
(60,410)
2,182,850
(60,410)
—
—
2,182,850
(60,410)
131,169
1,991,271
2,122,440
—
2,122,440
(94,935)
(1,244)
12,097
1,540
—
111,657
(1,530)
(36,535)
2,450
25,062
16,722
(2,774)
(24,438)
3,990
25,062
(2,856)
—
—
—
—
13,866
(2,774)
(24,438)
3,990
25,062
Total revenue
Inter-segment revenue
1,505,336
—
2,247,272
(15,516)
3,752,608
(15,516)
—
—
3,752,608
(15,516)
Revenue (from external customers)
1,505,336
2,231,756
3,737,092
—
3,737,092
180,027
(1,710)
(83,153)
5,052
—
157,181
(1,941)
(38,326)
2,280
46,691
337,208
(3,651)
(121,479)
7,332
46,691
(7,078)
—
—
—
—
330,130
(3,651)
(121,479)
7,332
46,691
Total revenue
2,808,096
—
2,053,361
(1,297)
4,861,457
(1,297)
—
—
4,861,457
(1,297)
2,808,096
2,052,064
4,860,160
—
4,860,160
210,916
(2,041)
(74,706)
6,449
—
150,995
(2,166)
(27,548)
2,131
33,027
361,911
(4,207)
(102,254)
8,580
33,027
2,904
—
—
—
—
364,815
(4,207)
(102,254)
8,580
33,027
Property
development
RMB’000
Upfitting
services
RMB’000
Total revenue
131,169
—
Segment operating profit
Depreciation (Note 25)
Income tax expense (Note 28)
Finance income
Impairment losses
Total
Year ended 31 December 2011
Finance income
Impairment losses
Finance income
Impairment losses
— II-56 —
APPENDIX II
RMB’000
InterCompany
elimination
RMB’000
RMB’000
1,242,370
21,604,324
(3,350,552)
18,253,772
4,351
4,837
9,188
—
9,188
7,303,985
826,401
8,130,386
(1,259,098)
6,871,288
Total segment assets
Additions to non-current assets (other than
financial instruments and deferred income
tax assets)
24,526,430
2,350,401
26,876,831
(3,386,787)
23,490,044
1,747
2,821
4,568
—
4,568
Total segment liabilities
16,682,203
1,650,915
18,333,118
(1,239,582)
17,093,536
tax assets)
26,215,848
2,325,352
28,541,200
(2,743,223)
25,797,977
873
395
1,268
—
1,268
12,912,812
1,169,693
14,082,505
(207,715)
13,874,790
Property
development
RMB’000
Upfitting
services
RMB’000
20,361,954
Total
Total
As at 31 December 2011
tax assets)
A reconciliation of segment operating profit to profit before income tax is provided as follows:
2011
RMB’000
2012
RMB’000
2013
RMB’000
Finance costs (Note 27)
13,866
(9,889)
330,130
(9,035)
364,815
(35,596)
3,977
321,095
329,219
— II-57 —
APPENDIX II
Reportable and other segments’ assets and liabilities are reconciled to total assets and liabilities as
follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Deferred income tax assets (Note 20)
18,253,772
32,398
23,490,044
68,876
25,797,977
119,670
Total assets per combined balance sheet
18,286,170
23,558,920
25,917,647
6,871,288
9,045,516
1,385,000
17,093,536
3,492,182
1,789,220
13,874,790
8,822,779
1,825,850
17,301,804
22,374,938
24,523,419
Current borrowings (Note 19)
Non-current borrowings (Note 19)
Total liabilities per combined balance sheet
The Target is incorporated in the British Virgin Islands, with most of its major subsidiaries domiciled
in the PRC. All revenues from external customers of the Target Group are derived in the PRC for the Relevant
Periods.
As at 31 December 2011, 2012 and 2013, all the total non-current assets other than financial instruments
and deferred income tax assets of the Target Group were located in the PRC.
For the years ended 31 December 2011, the Target Group had a single customer with the transaction
value over 10% of the total external sales, which was Beijing Linlian Property Company Limited, a joint venture
of the ultimate holding company.
For the years ended 31 December 2012 and 2013, the Target Group did not have any single customer
with the transaction value over 10% of the total external sales.
— II-58 —
APPENDIX II
7.
Buildings
RMB’000
Machineries
RMB’000
Vehicles
RMB’000
Office
equipment
RMB’000
Electronic
equipment
RMB’000
Total
RMB’000
Opening net book amount
Additions
Disposals
Depreciation charge (Note 25)
2,538
—
—
(57)
1,375
—
—
(105)
3,615
2,671
(417)
(959)
316
2,542
(24)
(288)
1,875
3,975
(285)
(1,365)
9,719
9,188
(726)
(2,774)
Closing net book amount
2,481
1,270
4,910
2,546
4,200
15,407
At 31 December 2011
Cost
Accumulated depreciation
3,010
(529)
1,565
(295)
7,510
(2,600)
3,163
(617)
7,906
(3,706)
23,154
(7,747)
Net book amount
2,481
1,270
4,910
2,546
4,200
15,407
Additions
Disposals
2,481
—
—
(57)
1,270
52
—
(99)
4,910
1,365
—
(1,109)
2,546
279
(636)
(471)
4,200
2,872
(86)
(1,915)
15,407
4,568
(722)
(3,651)
2,424
1,223
5,166
1,718
5,071
15,602
At 31 December 2012
Cost
3,010
(586)
1,617
(394)
8,875
(3,709)
2,805
(1,087)
10,606
(5,535)
26,913
(11,311)
Net book amount
2,424
1,223
5,166
1,718
5,071
15,602
Additions
Disposals
2,424
—
—
(57)
1,223
203
(304)
5,166
138
(414)
(1,333)
1,718
402
(200)
(501)
5,071
525
(294)
(2,012)
15,602
1,268
(908)
(4,207)
2,367
1,122
3,557
1,419
3,290
11,755
At 31 December 2013
Cost
3,010
(643)
1,820
(698)
8,559
(5,002)
2,947
(1,528)
10,837
(7,547)
27,173
(15,418)
Net book amount
2,367
1,122
3,557
1,419
3,290
11,755
All depreciation expense has been charged in “administrative expenses” for the years ended 31 December
2011, 2012 and 2013.
— II-59 —
APPENDIX II
8.
Particulars of subsidiaries
As at the date of this report, the Target has direct and indirect interests in the subsidiaries as follows, all
of which are unlisted:
Name
Establishment/
Place and date of
incorporation and
type of legal entity
Statutory auditor
for the years ended
2011, 2012 and 2013
Registered
and fully
paid capital
‘000
Effective
interests
held —
directly
held
(%)
BDO Certified Public
Accountants
—
100%
Investment
holding
Principal
activities
(1)
Moral (HK) Investment Limited
德佳（香港）投資有限公司
Hong Kong/
27 August 2009/
Limited company
(2)
Dalian Hongze Property
Development Company Limited
大連宏澤置業有限公司
The PRC/
PricewaterhouseCoopers
26 November 2009/
Zhong Tian LLP
Limited company
USD138,630
100%
Property
development
(3)
Dalian Xinrong Property
大連鑫融置業有限公司
The PRC/
26 November 2009/
Zhong Tian LLP
Limited company
USD120,000
100%
Property
development
(4)
Beijing Shengjia Hongze Investment
Management Company Limited
北京盛佳宏澤投資管理諮詢
有限公司
The PRC/
20 October 2014/
Limited company
RMB100,000
100%
Investment
holding
(5)
Beijing Yuanhui Property
北京遠滙置業有限公司
The PRC/
Zhongyong Liqin
10 November 2010/
Certified Public
Limited company
Accountants
RMB30,000
100%
Investment
holding
(6)
Sino-Ocean Decoration
Engineering Company Limited
“
( Sino-Ocean Decoration”)
遠洋裝飾工程股份有限公司
The PRC/
5 May 1998/
Limited company
Zhongyong Liqin
Certified Public
Accountants
RMB100,000
80%
Renovation
services
(7)
Qinhuangdao Ocean Land
秦皇島海洋置業房地產開發
有限公司
The PRC/
4 October 1996/
Limited company
Zhongyong Liqin
Certified Public
Accountants
RMB100,000
100%
Property
development
(8)
Qinhuangdao Yuanlian Property
秦皇島市遠聯房地產開發
有限公司
The PRC/
27 October 2012/
Limited company
Zhongyong Liqin
Certified Public
Accountants
RMB5,000
100%
Property
development
(9)
Qinghuangdao Yuanhao Property
秦皇島市遠豪房地產開發
有限公司
The PRC/
27 October 2012/
Limited company
Zhongyong Liqin
Certified Public
Accountants
RMB5,000
100%
Property
development
NA
— II-60 —
APPENDIX II
Name
Establishment/
Place and date of
incorporation and
Statutory auditor
for the years ended
2011, 2012 and 2013
Registered
and fully
paid capital
‘000
Effective
interests
held —
directly
held
(%)
RMB500,000
70%
Property
development
Principal
activities
(10)
Hangzhou Yuan Yang Lai Fu Real
Estate Development Company
Limited “
( Hangzhou Lai Fu”)
杭州遠洋萊福房地產開發有限公司
The PRC/
Zhongyong Liqin
27 December 2007/
Certified Public
Limited company
Accountants
(11)
Shanghai Yuanzheng Property
上海遠正置業有限公司
The PRC/
23 February 2011/
Limited company
Zhongyong Liqin
Certified Public
Accountants
RMB20,000
100%
Property
development
(12)
Shanghai Yuanxin Property
上海遠鑫置業有限公司
The PRC/
7 September 2010/
Limited company
Zhongyong Liqin
Certified Public
Accountants
RMB20,000
100%
Property
development
(13)
Sino-Ocean Zhenjiang
Company Limited
遠洋地產鎮江有限公司
The PRC/
Zhongyong Liqin
17 December 2010/
Certified Public
Limited company
Accountants
RMB50,000
55%
Property
development
The English names of the PRC companies referred to above in this note represent management’s best
efforts in translating the Chinese names of those companies as no English names have been registered or
available.
The profit or loss attributable to non-controlling interests during the Relevant Periods were mainly from
Hangzhou Lai Fu and Sino-Ocean Decoration, which were as follows:
2011
RMB’000
Hangzhou Lai Fu
(3,994)
22,335
2012
RMB’000
(3,124)
20,345
2013
RMB’000
(3,274)
17,369
As at 31 December 2011,2012 and 2013, the accumulated non-controlling interests were mainly from
Hangzhou Lai Fu and Sino-Ocean Decoration, which were as follows:
Hangzhou Lai Fu
2011
RMB’000
2012
RMB’000
2013
RMB’000
143,713
118,718
140,589
139,063
137,315
153,088
The profit or loss attributable to non-controlling interests and the accumulated non-controlling interests
in respect of other subsidiaries are not material during the Relevant Periods.
— II-61 —
APPENDIX II
As at 31 December 2011, 2012 and 2013, cash and short-term deposits held by Hangzhou Lai Fu and
Sino-Ocean Decoration in aggregate amounted to RMB212,319,000, RMB1,001,699,000 and RMB362,316,000
are held in China and are subject to local exchange control regulations. These local exchange control regulations
provide for restrictions on exporting capital from the country, other than through normal dividends.
Set out below are the summarized financial information for each subsidiary that has non-controlling
interests that are material to the Target Group.
Summarized balance sheet
Hangzhou Lai Fu
As at 31 December
2011
RMB’000
Current
Assets
Liabilities
2012
RMB’000
2013
RMB’000
3,375,876
4,115,706
4,712,498
(2,874,434) (3,372,964) (4,268,858)
Total current net assets
501,442
742,742
443,640
Non-current
Assets
Liabilities
7,601
(30,000)
10,888
(285,001)
14,075
—
Total non-current net assets/(liabilities)
(22,399)
(274,113)
14,075
Net assets
479,043
468,629
457,715
As at 31 December
2011
RMB’000
Current
Assets
Liabilities
2012
RMB’000
2013
RMB’000
1,227,099
2,329,559
2,325,080
(976,401) (1,990,915) (1,903,843)
250,698
338,644
421,237
Non-current
Assets
Liabilities
25,836
—
39,613
—
43,866
—
Total non-current net assets
25,836
39,613
43,866
276,534
378,257
465,103
Net assets
— II-62 —
APPENDIX II
Summarized income statement
Hangzhou Lai Fu
2011
RMB’000
2012
RMB’000
2013
RMB’000
Revenue
Profit/(loss) before income tax
Income tax income/(expense)
Post-tax loss
—
(20,300)
6,986
(13,314)
—
—
(13,885)
3,471
(10,414)
—
—
(14,248)
3,334
(10,914)
—
(13,314)
(10,414)
(10,914)
(3,994)
(3,124)
(3,274)
Total comprehensive income allocated to non-controlling interests
Dividends paid to non-controlling interests
—
—
—
Revenue
Income tax expense
Post-tax profit/(loss)
Total comprehensive income allocated to non-controlling interests
— II-63 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
2,051,681
148,208
(36,535)
111,673
—
2,247,272
140,049
(38,326)
101,723
—
2,053,361
114,394
(27,548)
86,846
—
111,673
101,723
86,846
22,335
20,345
17,369
—
—
3,344
APPENDIX II
Summarized cash flows
Hangzhou Lai Fu
2011
RMB’000
2012
RMB’000
2013
RMB’000
Cash generated from/(used in) operations
Interest paid
Income tax paid
454,697
(249,174)
(6,986)
1,116,947
(261,177)
(10,042)
(175,705)
(308,024)
(28,422)
Net cash generated from/(used in) operating activities
Net cash used in investing activities
Net cash (used in)/generated from financing activities
198,537
(15)
(120,000)
845,728
(5)
(901,500)
(512,151)
(19)
534,737
Net increase/(decrease) in cash and cash equivalents
Exchange losses on cash and cash equivalents
Cash and cash equivalents at end of year
78,522
(55,777)
22,567
1,482
—
80,004
—
24,227
—
80,004
24,227
46,794
2011
RMB’000
2012
RMB’000
2013
RMB’000
Interest paid
Income tax paid
(145,479)
(8,449)
(36,535)
716,820
(13,584)
(65,091)
Net cash (used in)/generated from operating activities
Net cash (used in)/generated from financing activities
(190,463)
(2,697)
(70,000)
638,145 (1,055,844)
(2,988)
(255)
210,000
394,149
Net (decrease)/increase in cash and cash equivalents
(263,160)
845,157
(661,950)
Exchange losses on cash and cash equivalents
395,475
—
132,315
—
977,472
—
Cash and cash equivalents at end
of year
132,315
977,472
315,522
The information above is before eliminations of intra-group balances.
— II-64 —
(975,278)
(52,398)
(28,168)
APPENDIX II
9.
Financial instruments by category
Loans and
receivables
RMB’000
Assets
Trade and other receivables excluding prepayments
Cash and cash equivalents (Note 17)
2,624,835
197,925
674,433
3,497,193
2,979,499
611,197
1,661,309
5,252,005
2,699,294
493,270
1,328,957
4,521,521
Financial
liabilities at
amortized cost
RMB’000
Liabilities
Borrowings (Note 19)
Trade and other payables excluding tax payables and prepayments
10,430,516
4,565,626
14,996,142
5,281,402
11,605,122
16,886,524
10,648,629
5,921,316
16,569,945
— II-65 —
APPENDIX II
10.
Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to historical information about counterparty default rates:
As at 31 December
Counterparties without external credit rating
Trade receivables that are neither past due nor impaired
2011
RMB’000
2012
RMB’000
2013
RMB’000
915,654
360,798
1,230,462
201,217
1,345,604
385,999
All bank deposits are with reputable corporate banks. None of the bank deposits is considered as exposed
to major credit risk.
None of the financial assets that are fully performing has been renegotiated in the Relevant Periods.
11.
2011
RMB’000
At beginning of the year
Additions
Transfer from prepayments for land use rights
Disposal
Transfer to completed properties held for sale
At end of the year
Properties under development comprises:
Land use rights
Construction costs and capitalized expenditure
Interest capitalized
1,567,163
7,537,682
4,977,453
—
—
2012
RMB’000
2013
RMB’000
14,082,298 15,414,602
4,015,371
5,008,115
189,890
—
—
—
(2,872,957) (2,577,546)
14,082,298
15,414,602
17,845,171
9,528,173
3,502,190
1,051,935
8,672,741
5,190,845
1,551,016
8,381,439
7,420,377
2,043,355
14,082,298
15,414,602
17,845,171
Land use rights are analyzed as follows:
As at 31 December
In the PRC held on:
Leases of over 50 years
Leases within 50 years
— II-66 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
8,315,999
1,212,174
7,855,841
816,900
7,863,320
518,119
9,528,173
8,672,741
8,381,439
APPENDIX II
Properties under development are all located in the PRC.
As at 31 December 2011, 2012 and 2013, properties under development of approximately
RMB4,428,161,000, RMB10,608,807,000 and RMB11,509,089,000 respectively were pledged as collateral for
the Target Group’s borrowings (Note 19).
All properties under development are expected to be completed within the normal operating cycle of the
Target Group, in which RMB8,419,538,000 is expected to be completed and available for sale more than twelve
months after 31 December 2013.
12.
As at 31 December
Deposits to local land authorities
2011
RMB’000
2012
RMB’000
2013
RMB’000
189,890
—
—
The prepayments were paid to local land authorities for land use rights as at 31 December 2011. Since
the title of the land was transferred to the Target Group in 2012, the land had been used to develop properties
held for sale.
13.
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Trade receivables
Less: provision for impairment
915,654
(28,036)
1,230,462
(74,727)
1,345,604
(107,934)
Trade receivables – net (a)
Tax prepayments for advances receipts from customers
Entrusted loans to a fellow subsidiary (b)
Notes receivables
Receivables from government (c)
Amounts due from fellow subsidiaries (d)
Other prepayments
Other receivables
887,618
207,282
813,000
—
19,332
850,840
112,147
54,045
1,155,735
429,803
—
—
20,850
1,740,683
449,707
62,231
1,237,670
640,451
—
5,570
83,136
1,331,186
108,777
41,732
Less: non-current portion
2,944,264
(6,391)
3,859,009
(7,319)
3,448,522
(5,247)
Current portion
2,937,873
3,851,690
3,443,275
The carrying amounts of trade and other receivables approximate their respective fair values as at 31
December 2011, 2012 and 2013.
— II-67 —
APPENDIX II
(a)
Trade receivables
Proceeds from services and sales rendered are to be received in accordance with the term of
respective agreement. An ageing analysis of trade receivables at the respective balance sheet dates is as
follows:
As at 31 December
Within 6 months
Between 6 months to 1 year
Between 1 year to 2 years
Between 2 years to 3 years
Over 3 years
2011
RMB’000
2012
RMB’000
2013
RMB’000
872,704
35,770
7,180
—
—
397,706
232,483
597,930
2,343
—
403,377
261,404
311,874
367,930
1,019
915,654
1,230,462
1,345,604
(i)
As at 31 December 2011, 2012 and 2013, trade receivables of RMB526,820,000,
RMB954,518,000 and RMB851,671,000 were past due but not impaired. These related to
a number of independent customers from provision of the upfitting services, all of whom
have no significant financial difficulty or recent history of default.
(ii)
As at 31 December 2011, 2012 and 2013, trade receivables of RMB28,036,000,
RMB74,727,000 and RMB107,934,000 were impaired. The individually impaired
receivables were related to receivables from provision of upfitting services.
Movements on the provision for impairment of trade receivables are as follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
At 1 January
Provision for receivable impairment
(2,974)
(25,062)
(28,036)
(46,691)
(74,727)
(33,207)
At end of year
(28,036)
(74,727)
(107,934)
(b)
Entrusted loans to a fellow subsidiary are unsecured, bearing interest rate at 5.49% per annum for
the year ended 31 December 2011, which was received in 2012.
(c)
As at 31 December 2011, 2012 and 2013, receivables from government represented some deposits
paid to government in respect of the properties development.
(d)
Amounts due from fellow subsidiaries are interest free and repayable on demand.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable
mentioned above. The carrying amounts of the Target Group’s trade and other receivables are mainly
denominated in RMB.
— II-68 —
APPENDIX II
14.
All completed properties held for sale are located in the PRC on lease between 40 to 70 years, and
are stated at cost less accumulated amortization of land use rights for the years ended 2011, 2012 and 2013,
respectively.
As at 31 December
Completed properties held for sale comprised
Land use rights
2011
RMB’000
2012
RMB’000
2013
RMB’000
2,303
37,550
2,076
655,721
1,008,274
86,074
634,589
1,412,807
81,713
41,929
1,750,069
2,129,109
In the PRC held on:
15.
2011
RMB’000
2012
RMB’000
2013
RMB’000
2,303
—
540,829
114,892
489,910
144,679
2,303
655,721
634,589
As at 31 December
2011
RMB’000
Contract cost incurred plus recognized profit
Less: progress receivables
2012
RMB’000
2013
RMB’000
3,474,251
5,269,718
9,433,545
(3,370,752) (5,095,706) (8,896,573)
Contract work-in-progress
103,499
174,012
536,972
Representing:
103,499
174,012
536,972
Contract revenue recognized as revenue in the year
— II-69 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
1,991,271
2,231,756
2,052,064
APPENDIX II
16.
Restricted bank deposits mainly represent guaranteed deposits for the mortgage loan facilities granted
by the banks to the purchasers of the Target Group’s properties, as well as for projects co-developed with third
parties. The balances also include guaranteed deposits placed in the banks, as guaranteed funds of construction
projects to meet certain local authorities’ requirements.
17.
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Short-term bank deposits
619,703
54,730
1,661,309
—
1,328,957
—
674,433
1,661,309
1,328,957
Denominated in:
— RMB
— USD
674,431
2
1,661,307
2
1,166,426
162,531
674,433
1,661,309
1,328,957
The effective interest rates on short-term bank deposits ranged from 0.12% to 3.55% per annum in 2011.
The Target Group’s cash and cash equivalents are deposited with banks in the PRC and Hong Kong,
respectively. The conversion of the RMB denominated balances into foreign currencies is subject to the rules
and regulations of foreign exchange control promulgated by the PRC Government.
18.
Combined capital
As mentioned in Note 2 above, the Financial Information has been prepared as if the current group
structure had been in existence throughout each of the years ended 31 December 2011, 2012 and 2013, or since
the respective dates of incorporation/establishment of the combining companies, or since the date when the
combining companies first came under the control of SOLH, whichever is a shorter period. Combined capital
as at 31 December 2011, 2012 and 2013 represents the combined equities of the companies now comprising the
Target Group after the elimination of intra-group investments.
— II-70 —
APPENDIX II
19.Borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Non-current
Bank borrowings (a)
Other borrowings (b)
1,385,000
—
1,789,220
—
1,825,850
—
Total non-current borrowings
1,385,000
1,789,220
1,825,850
Current
Current portion of long-term bank borrowings (a)
Short-term bank borrowings (a)
Short-term other borrowings (b)
—
150,000
8,895,516
260,000
340,000
2,892,182
1,032,500
734,150
7,056,129
Total current borrowings
9,045,516
3,492,182
8,822,779
10,430,516
5,281,402
10,648,629
Total borrowings
(a)
As at 31 December 2011, 2012 and 2013, bank borrowings amounting to RMB1,385,000,000,
RMB1,989,220,000 and RMB2,858,350,000 were secured by properties under development (Note
11).
(b)
Other borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Borrowings from a fellow subsidiary (i)
Borrowings from a non-controlling interest (ii)
8,623,984
271,532
2,620,650
271,532
6,752,013
304,116
8,895,516
—
2,892,182
—
7,056,129
—
Current portion
8,895,516
2,892,182
7,056,129
(i)
The balances represented the entrusted loans from Sino-Ocean Land Limited (the
“SOLL”), a wholly-owned subsidiary of the SOLH, which are unsecured, bear interest
rate from 3.5% to 15% and are wholly repayable within one year. After the balance sheet
date, these borrowings were fully replaced by long term entrusted loans which are not
repayable within one year (see Note 33).
(ii)
The balances represented the loans from a non-controlling interest, which are unsecured,
bear interests rate from 12% to 15% and are wholly repayable within one year.
— II-71 —
APPENDIX II
(c)
The maturities of the Target Group’s total borrowings at respective balance sheet dates are set
out as follows:
As at 31 December
2011
Bank
and other
borrowings
RMB’000
2012
Bank
and other
borrowings
RMB’000
2013
Bank
and other
borrowings
RMB’000
9,045,516
—
1,385,000
3,492,182
1,410,220
379,000
8,822,779
274,850
1,551,000
10,430,516
5,281,402
10,648,629
Total borrowings
— Within 1 year
— Between 1 and 2 years
Bank borrowings
As at 31 December
Wholly repayable within 5 years
2011
RMB’000
2012
RMB’000
2013
RMB’000
1,535,000
2,389,220
3,592,500
Other borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
8,895,516
2,892,182
7,056,129
(d)
All the Target Group’s borrowings are denominated in RMB.
(e)
The weighted average effective interest rates at the respective balance sheet dates are set out as
follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Bank borrowings
7.69%
7.72%
7.12%
Other borrowings
8.23%
11.08%
11.20%
— II-72 —
APPENDIX II
(f)
The exposure of the Target Group’s borrowings to interest-rate changes and the contractual
repricing dates are as follows:
As at 31 December
Within 6 months
Between 6 and 12 months
Between 1 and 5 years
(g)
20.
2011
RMB’000
2012
RMB’000
2013
RMB’000
10,430,516
—
—
4,842,402
439,000
—
8,674,779
1,479,850
494,000
10,430,516
5,281,402
10,648,629
The carrying amounts of borrowings approximate their respective fair values as at 31 December
2011, 2012 and 2013, as the discounting rate approximates the market rate. The fair values are
based on cash flows discounted using a rate based on the borrowing rate of 7.69%, 7.72% and
7.12% for the years ended 31 December 2011, 2012 and 2013, respectively, and are within level
2 of the fair value hierarchy.
The analysis of deferred income tax assets is as follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Deferred income tax assets:
— to be recovered after more than 12 months
— to be recovered within 12 months
7,496
24,902
23,747
45,129
51,327
68,343
Total
32,398
68,876
119,670
The gross movement on the deferred income tax account is as follows:
2011
RMB’000
2012
RMB’000
2013
RMB’000
Recognized in the income statement (Note 28)
(2,914)
(29,484)
(32,398)
(36,478)
(68,876)
(50,794)
At end of the year
(32,398)
(68,876)
(119,670)
— II-73 —
APPENDIX II
The movement in deferred income tax assets during the years ended 31 December 2011, 2012 and 2013,
without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Recognition
of expenses
RMB’000
Recognition
of financial
guarantee
liabilities
RMB’000
Tax losses
RMB’000
Total
RMB’000
At 1 January 2011
Credited to income statement
—
11,353
—
1,944
2,914
16,187
2,914
29,484
At 31 December 2011
11,353
1,944
19,101
32,398
At 1 January 2012
Credited/(charged) to income statement
11,353
42,105
1,944
2,571
19,101
(8,198)
32,398
36,478
At 31 December 2012
53,458
4,515
10,903
68,876
At 1 January 2013
53,458
28,748
4,515
4,347
10,903
17,699
68,876
50,794
At 31 December 2013
82,206
8,862
28,602
119,670
Deferred income tax assets are recognized for tax losses carry-forwards to the extent that the realization
of the related benefit through the future profits is probable. These tax losses are going to expire within five
years. For the years ended 31 December 2011, 2012 and 2013, the Target Group did not recognize deferred
income tax assets of RMB11,875,000, RMB27,200,000 and RMB37,867,000 in respect of losses amounting to
RMB47,500,000, RMB108,800,000 and RMB151,468,000 that can be carried forward against future taxable
income.
As at 31 December 2011, 2012 and 2013, deferred income tax liabilities of approximately
RMB6,970,000, RMB9,581,000 and RMB18,594,000 have not been recognized for the withholding tax that
would be payable on the undistributed earnings of certain subsidiaries, as such earnings are to be permanently
reinvested. Undistributed earnings amounted to approximately RMB139,407,000, RMB191,627,000 and
RMB371,876,000 at 31 December 2011, 2012 and 2013.
— II-74 —
APPENDIX II
21.
As at 31 December
Trade payables
Accrued expenses
Amounts due to a shareholder (a)
Amounts due to fellow subsidiaries (a)
Amounts due to non-controlling interests (a)
Prepayment from government
Other taxes payable
Financial guarantee liabilities (b)
Other payables
2011
RMB’000
2012
RMB’000
2013
RMB’000
928,111
26,260
2,573,089
475,612
310,262
—
85,925
7,775
244,517
1,608,529
54,367
2,557,292
6,681,519
329,762
—
131,277
18,060
355,593
2,072,528
756,510
2,017,866
327,159
289,762
80,000
213,998
35,446
422,045
4,651,551
11,736,399
6,215,314
The carrying amounts of trade payables and other payables approximate their fair values.
(a)
Amounts due to a shareholder, fellow subsidiaries and non-controlling interests are unsecured,
interest free, and repayable on demand.
(b)
The financial guarantee liabilities given for purchasers of the Target Group’s properties as set out
in Note 30 is as follows:
2011
RMB’000
Addition
Derecognition
At end of the year
(c)
2012
RMB’000
2013
RMB’000
—
10,650
(2,875)
7,775
18,369
(8,084)
18,060
21,076
(3,690)
7,775
18,060
35,446
An ageing analysis of the trade payables is as follows:
As at 31 December
Within 6 months
Between 6 months to 12 months
Between 1 year to 2 years
Between 2 years to 3 years
Over 3 years
22.
2011
RMB’000
2012
RMB’000
2013
RMB’000
641,085
230,154
43,564
7,392
5,916
877,624
533,688
161,183
23,720
12,314
1,141,272
634,971
233,334
45,515
17,436
928,111
1,608,529
2,072,528
These represent amounts received from customers for sale of properties, where the risks and rewards of
the properties sold had not yet been transferred as at year-end.
— II-75 —
APPENDIX II
23.
Interest income from entrusted loans
Others
24.
2011
RMB’000
2012
RMB’000
2013
RMB’000
20,313
4,440
28,807
3,535
2,781
16,560
24,753
32,342
19,341
Other gains/(losses) — net
2011
RMB’000
Gains/(losses) on disposal of property, plant and equipment
Other gains/(losses)
25.
2012
RMB’000
2013
RMB’000
375
306
2
(192)
(47)
737
681
(190)
690
Expenses by nature
Expenses by nature comprised cost of sales, selling and marketing expenses and administrative expenses
as follows:
Cost of properties and land use rights sold:
— Land use rights
— Capitalized interest
— Construction related cost
Cost of upfitting services rendered
Employee benefit expense (Note 26)
Consultancy fee
Advertising and marketing
Business taxes and other levies
Impairment losses (a)
Others
(a)
2011
RMB’000
2012
RMB’000
2013
RMB’000
3,372
10,797
81,281
1,774,285
21,896
1,827
2,774
108,507
75,300
25,062
28,907
285,645
32,447
820,820
1,914,715
23,476
2,661
3,651
111,825
157,538
46,691
39,645
453,848
62,757
1,775,642
1,753,140
36,074
2,531
4,207
130,196
227,393
33,027
36,561
2,134,008
3,439,114
4,515,376
Impairment losses for the year represents provision made for trade and other receivables.
— II-76 —
APPENDIX II
26.
Employee benefits expense
The employee benefits expense of the Target Group, including its directors’ emoluments is as follows:
Salaries, wages and bonuses
Retirement benefits contribution
Other allowances and benefits
Less: capitalized in properties under development
2011
RMB’000
2012
RMB’000
2013
RMB’000
97,647
59
12,067
127,038
1,266
19,877
122,890
418
20,906
109,773
(87,877)
148,181
(124,705)
144,214
(108,140)
21,896
23,476
36,074
The Target Group’s employees participate in various retirement benefit plans organized by the
relevant municipal and provincial government in the PRC under which the Target Group was required to make
monthly contributions at rates ranging from 10% to 20%, depending on the applicable local regulations, of the
employees’ salary for the years ended 31 December 2011, 2012 and 2013.
Two directors of the Company, Mr. Sum Pui Ying and Mr. Li Zhenyu, are also directors of the Target.
These two directors have not received any remunerations from the Target Group during the Relevant Periods.
27.
Finance costs
Interest expense:
— Bank borrowings
— Other borrowings
Less: interest capitalized
2011
RMB’000
2012
RMB’000
2013
RMB’000
30,338
650,938
(671,387)
197,447
427,114
(615,526)
195,441
390,890
(550,735)
9,889
9,035
35,596
The interest capitalization rate for the years ended 31 December 2011, 2012 and 2013 is 8.22%, 10.12%
and 9.90%, respectively.
— II-77 —
APPENDIX II
28.
Income tax expense
Majority of the group entities are subjected to PRC enterprise income tax, which has been provided
based on the statutory income tax rate of 25% of the assessable income of each of these group entities for the
years ended 31 December 2011, 2012 and 2013. Other group entities are mainly subject to Hong Kong profits
tax.
The amount of income tax expense charged to the income statement represents:
2011
RMB’000
Current income tax:
— PRC enterprise income tax
— PRC land appreciation tax
Deferred income tax (Note 20)
2012
RMB’000
2013
RMB’000
51,164
2,758
(29,484)
129,763
28,194
(36,478)
128,220
24,828
(50,794)
24,438
121,479
102,254
Taxation on the Target Group’s profit before tax differs from the theoretical amount that would arise
using the enacted tax rate of the home country of the Target Group as follows:
2011
RMB’000
2012
RMB’000
2013
RMB’000
3,977
321,095
329,219
Tax calculated at a tax rate of 25%
Effect of higher tax rate for appreciation of land in the PRC
Income not subject to tax
Expenses not deductible for tax purposes
Tax losses not recognized
Utilization of previously unrecognized tax losses
994
2,069
(517)
15,999
7,803
(1,910)
80,274
21,146
—
4,734
15,325
—
Income tax expense
24,438
121,479
— II-78 —
82,305
18,621
(1,050)
924
10,667
(9,213)
102,254
APPENDIX II
29.
Cash used in operations
2011
RMB’000
Adjustments for:
— Income tax expense (Note 28)
— Depreciation (Note 7)
— Interest income (Note 23)
— Gains/(losses) on sale of property, plant and equipment
(Note 24)
— Impairment losses (Note 25)
— Finance costs (Note 27)
2012
RMB’000
2013
RMB’000
(20,461)
199,616
226,965
24,438
2,774
(20,313)
121,479
3,651
(28,807)
102,254
4,207
(2,781)
375
25,062
9,889
2
46,691
9,035
(47)
33,027
35,596
Changes in working capital (excluding the effects of acquisition and
exchange differences on combination):
— Completed properties held for sale
85,916
— Properties under development
(12,515,136)
— Inventories, at cost
80
— Amounts due from customers for contract work
(126)
— Trade and other receivables
(1,292,867)
— Trade and other payables
1,243,113
— Prepayments for land use rights
5,176,451
— Advances receipts form customers
1,925,192
— Restricted bank deposits
(184,917)
(5,540,530)
(1,624,142)
(833,221)
117
(70,513)
(1,731,855)
7,084,848
189,890
3,111,340
(413,272)
(379,040)
(1,938,231)
(23)
(362,960)
516,584
(5,521,085)
—
2,205,246
117,927
6,064,859
(4,962,361)
In the combined cash flow statement, proceeds from sale of property, plant and equipment comprise:
Net book amount (Note 7)
Gains/(losses) on disposal of property, plant and equipment
(Note 24)
Proceeds from disposal of property, plant and equipment
— II-79 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
726
722
908
375
2
1,101
724
(47)
861
APPENDIX II
30.
Financial guarantees
The Target Group had the following financial guarantees as 31 December 2011, 2012 and 2013:
As at 31 December
Guarantees in respect of mortgage facilities for certain purchasers
2011
RMB’000
2012
RMB’000
2013
RMB’000
193,831
568,852
1,325,220
As at 31 December 2011, 2012 and 2013, the Target Group provided guarantees in respect of mortgage
facilities granted by certain banks relating to the mortgage loans arranged for certain purchasers of the Target
Group’s properties. Pursuant to the terms of the guarantees, upon default in mortgage payments by these
purchasers, the Target Group is responsible to repay the outstanding mortgage principals together with accrued
interest and penalty owed by the defaulted purchasers to the banks and the Target Group is entitled to take over
the legal title and possession of the related properties. The Target Group’s guarantee period starts from the
dates of grant of the relevant mortgage loans and ends when the property purchasers obtain the “property title
certificate” which is then pledged with the banks.
31.
Capital commitments
Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Land use rights
—
2,453,795
106,627
5,527,659
—
2,343,205
Contracted but not provided for
2,453,795
5,634,286
2,343,205
— II-80 —
APPENDIX II
32.
Related party transactions
Save as disclosed in Note 13, Note 19 and Note 21, the following is a summary of significant related
party balances and transactions entered into in the ordinary course of business between the Target Group and its
related parties during the years ended 31 December 2011, 2012 and 2013:
(a)
Provision of services
Provision of services (i):
— Fellow subsidiaries
— Joint ventures of the ultimate holding company
— An associate of the ultimate holding company
(i)
(b)
2011
RMB’000
2012
RMB’000
2013
RMB’000
511,784
236,035
678
831,836
88,359
1,665
631,003
18,526
1,224
748,497
921,860
650,753
Provision of services mainly represent upfitting services, the terms of which are entered
into with related parties in accordance with the terms of agreement.
Key management compensation
Salaries and other short-term employee benefits
— II-81 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
12,527
15,685
9,343
APPENDIX II
(c)
Balances arising from provision of services
As at 31 December
Receivables from related parties (i):
— Fellow subsidiaries
— Joint ventures of the ultimate holding company
— An associate of the ultimate holding company
2011
RMB’000
2012
RMB’000
2013
RMB’000
90,110
6,804
34
272,302
5,270
1,199
306,921
7,151
615
96,948
278,771
314,687
As at 31 December
Advances receipts from related parties:
— A joint venture of the ultimate holding company
(i)
(d)
2011
RMB’000
2012
RMB’000
2013
RMB’000
8,218
—
38
Provision of services mainly represent upfitting services, the terms of which are entered
into with related parties in accordance with the terms of agreement.
Loans to related parties
2011
RMB’000
Fellow subsidiaries:
At 1 January
Loans advanced during year
Loans repayments received
Interest charged
Interest received
2012
RMB’000
—
813,000
910,410
2,092,770
(97,410) (2,905,770)
(20,313)
(28,807)
20,313
28,807
At 31 December (Note 13(b))
— II-82 —
813,000
—
2013
RMB’000
—
250,000
(250,000)
(2,781)
2,781
—
APPENDIX II
(e)
Loans from related parties
2011
RMB’000
A fellow subsidiary:
At 1 January
Repayments during year
Interest charged
Interest paid
2013
RMB’000
7,730,800
8,623,984
2,620,650
3,888,150
4,158,900 10,702,461
(2,994,966) (10,162,234) (6,571,098)
636,807
416,652
355,009
(636,807)
(416,652)
(355,009)
At 31 December (Note 19(b)(i))
(f)
2012
RMB’000
8,623,984
2,620,650
6,752,013
Amounts due to related parties
2011
RMB’000
2012
RMB’000
A shareholder:
At 1 January
Amounts advanced during year
—
2,573,089
—
2,573,089
2,557,292
—
1,115,217
(15,797) (1,654,643)
At 31 December (Note 21(a))
2,573,089
2,557,292
At 1 January
4,850,570
114,122
(4,489,080)
— II-83 —
475,612
2013
RMB’000
2,017,866
475,612
6,681,519
6,276,975
5,065,324
(71,068) (11,419,684)
6,681,519
327,159
APPENDIX II
(g)
Amounts due from related parties
2011
RMB’000
33.
2012
RMB’000
2013
RMB’000
At 1 January
3,011
850,840
(3,011)
850,840
1,740,683
1,460,211
1,224,989
(570,368) (1,634,486)
At 31 December (Note 13(d))
850,840
1,740,683
1,331,186
Events after balance sheet date
(i)
In September 2014, the Target Group entered into a new entrusted loan facility agreement with a
fellow subsidiary under which other borrowings amounting to RMB6,752,013,000 were replaced
by long term entrusted loans which are repayable within five years, unsecured and bore interest
rates from 3.5% to 12% per annum.
(ii)
On 21 October 2014, the Target disposed of the entire equity interest of the Blue Team Group to
Sino-Ocean Land (Hong Kong) Limited, an immediate shareholder of the Target and a whollyowned subsidiary of the SOLH at consideration of RMB1 (Note 1(b)). The disposal has been
accounted for as a deemed distribution and the difference between the net asset value of the Blue
Team Group as at date of disposal and the consideration is being charged to equity.
Details of assets and liabilities derecognized in the Target Group’s combined financial
information at date of disposal are as follows:
RMB’000
57
286,397
123,530
913
(419,599)
Net amount recognized in the Target Group’s equity
— II-84 —
(8,702)
APPENDIX II
III. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Target or any of its subsidiaries in
respect of any period subsequent to 31 December 2013 up to the date of this report. Save as disclosed
in this report, no dividend or distribution has been declared or made by the Target or any of its
subsidiaries in respect of any period subsequent to 31 December 2013.
Yours faithfully,
Hong Kong
— II-85 —
APPENDIX II
MANAGEMENT DISCUSSION AND ANALYSIS OF METRO SPLENDID LIMITED
Set out below is the management discussion and analysis on Metro Splendid Limited and its
subsidiaries (the “Group”) for the years ended 31 December 2011, 2012 and 2013, (the “Relevant
Periods”).
Business Review
Metro Splendid Limited (the “Company”) was incorporated with limited liability in the British
Virgin Islands on 28th August 2009. The Company, being an investment holding company and the
Group is principally engaged in property development and upfitting and decoration business.
After Reorganization as disclosed in Note 1 (b) aforesaid, as at 31st October, 2014, the
Company indirectly holds one upfitting service company Sino-Ocean Decor, and seven property
development projects in Pan-Bohai Rim, Yangtze River Delta and other regions in the People’s
Republic of China (the “PRC”) namely Ocean Beach (Zhenjiang), Ocean Century (Qinhuangdao),
Grand Canal Milestone (Hangzhou), Ocean Chanson Mansion (Shanghai), BOND CASTLE and
Dreaming Land (Shanghai), Ocean Holiday Manor (Dalian) and Ocean TIMES (Dalian).
Moral (HK) Investment Limited, a wholly-owned subsidiary of the Company, has been the
holding company of Dalian Hongze Property Development Company Limited (“Dalian Hongze”) and
Dalian Xinrong Property Development Company Limited (“Dalian Xinrong”). On 20th October 2014,
Dalian Hongze set up a wholly-owned subsidiary, Beijing Shengjia Hongze Investment Management
Company Limited (“Beijing Hongze”). On 27th October 2014, Beijing Hongze acquired the 100%
equity interest in Beijing Yuanhui Property Development Company Limited (“Beijing Yuanhui”) from
a fellow subsidiary of Sino-Ocean Land Holdings Limited.
After Reorganization as disclosed in Note 1 (b) aforesaid, as at 31st October, 2014, Beijing
Yuanhui directly holds 55% equity interest in Sino-Ocean Land (Zhenjiang) Company Limited (“SinoOcean Zhenjiang”); 100% equity interest in Shanghai Yuanxin Property Development Company
Limited (“Shanghai Yuanxin”); 100% equity interest in Shanghai Yuanzheng Property Development
Company Limited (“Shanghai Yuanzheng”); 70% equity interest in Hangzhou Yuan Yang Lai Fu
Real Estate Development Company Limited (“Hangzhou Yuan Yang”); 100% equity interest in
Qinhuangdao Ocean Land Development Company Limited (“Qinhuangdao Ocean”) and 80% equity
interest in Sino-Ocean Decoration Engineering Company Limited (“Sino-Ocean Decoration”)
respectively. Qinhuangdao Ocean directly holds 100% equity interest in Qinhuangdao Yuanlian
Property Development Company Limited (“Qinhuangdao Yuanlian”) and 100% equity interest in
Qinghuangdao Yuanhao Property Development Company Limited (“Qinhuangdao Yuanhao”).
Ocean TIMES (Dalian)
Dalian Hongze principally engaged in property development in Dalian, the PRC and has been
operating the property development project-Ocean TIMES (Dalian). It is located at the university
quarter in the Dalian Economic and Technological Development Zone in Dalian. The project has been
completed with residential and commercial properties.
— II-86 —
APPENDIX II
Ocean Holiday Manor (Dalian)
Dalian Xinrong principally engaged in property development in Dalian, the PRC and has been
operating the property development project-Ocean Holiday Manor (Dalian). It is close to the west end
of Putaogou, Jinshi Beach, Tianjin. The project is planned to be residential properties and is expected
to be completed in 2017.
Grand Canal Milestone (Hangzhou)
Hangzhou Yuan Yang principally engaged in property development in Hangzhou, the PRC and
has been operating the property development project-Grand Canal Milestone (Hangzhou). It is located
at the west end of Gongchen Bridge and adjacent to the Beijing-Hangzhou Grand Canal at Gongshu
District of Hangzhou Province. The project is planned to be developed into residential properties. The
project is expected to be completed in 2015.
Ocean Century (Qinhuangdao)
Qinhuangdao Ocean, Qinhuangdao Yuanlian and Qinhuangdao Yuanhao principally engaged in
property development in Qinhuangdao, the PRC and have been operating the property development
project-Ocean Century (Qinhuangdao) (including Wan Hai Yi Hao (Qinhuangdao). It is located at
Haigang District of Qinghuangdao, Hebei. The project is planned to be developed into residential and
commercial properties. While Wan Hai Yi Hao (Qinhuangdao) was completed in 2011 and certain
portions of Ocean Century (Qinhuangdao) was completed between 2013 and 2014, the rest of the
project is expected to be developed in phases.
Ocean Chanson Mansion (Shanghai)
Shanghai Yuanzheng principally engaged in property development in Shanghai, the PRC
and has been operating the property development project-Ocean Chanson Mansion (Shanghai). It is
located at Yanghang Town of Baoshan District, Shanghai. The project is planned to be developed as
residential properties and is expected to be completed between 2014 and 2015.
BOND CASTLE (Shanghai) and Dreaming Land (Shanghai)
Shanghai Yuanxin principally engaged in property development in Shanghai, the PRC and has
been operating the property development project BOND CASTLE (Shanghai) and Dreaming Land
(Shanghai). It is located at Meilan Lake of Baoshan District, Shanghai. The project is planned to be
a high-end residential properties and villa. While BOND CASTLE (Shanghai) has completed in 2013,
Dreaming Land (Shanghai) is expected to be completed in 2015.
Ocean Beach (Zhenjiang)
Sino-Ocean Zhenjiang principally engaged in property development in Zhenjiang, the PRC and
has been operating the property development project-Ocean Beach (Zhenjiang). It is located at East
of Guantangqiao Road, South of Guyang Road, Zhenjiang City of Jiangsu Province. The project is
planned to be developed into residential and commercial properties. While the under-construction
portion of the project is expected to be completed between late 2014 and 2015, the undeveloped
portion is still pending for construction.
— II-87 —
APPENDIX II
Sino-Ocean Decor
Sino-Ocean Decoration principally engaged in upfitting and decoration business in the PRC and
has been operating as a key architectural decor enterprises over the PRC regions with its large-scale
ability on construction, organization and experienced management.
(1)
Revenue
For the year ended 31 December 2013, the Group recorded total revenue of
approximately RMB4,860 million (2012: approximately RMB3,737 million). The increase in
revenue was mainly due to increased delivery of property units from Ocean TIMES (Dalian),
Ocean Beach (Zhenjiang) and Ocean Century (Qinhuangdao).
Cost of sales
The cost of sales of increased from approximately RMB3,219 million in 2012 to
approximately RMB4,272 million in 2013, which was in line with the growth in revenue.
Gross profit
Gross profit for the year was approximately RMB588 million (2012: approximately
RMB518 million) with gross profit margin of 12% (2012: 14%). Decrease in gross profit
margin was mainly due to inflated construction cost and delivery of property units from high
land cost projects, e.g. Ocean TIMES (Dalian).
Selling and marketing expenses, mainly represented the advertisement and marketing
fees, increased to approximately RMB156 million for the year (2012: approximately RMB129
million) which was mainly due to more sales and marketing activities launched during 2013.
The Group recorded insignificant administrative expenses which mainly represented the office
expenses for both years ended 31 December 2013 and 2012.
Taxation
Despite the increase in gross profit and profit for the year, taxation decreased from
approximately RMB121 million in 2012 to approximately RMB102 million in 2013 as a result
of utilisation of tax losses of approximately RMB37 million.
Profit for the year
Considering the above mentioned financial performance indicators, profit for the year
increased by 13.5% to approximately RMB227 million in 2013, compared to approximately
RMB200 million in 2012.
— II-88 —
APPENDIX II
Liquidity and capital structure
As at 31 December 2013, the Group’s total borrowings were denominated in RMB and
amounted to approximately RMB10,649 million (as at 31 December 2012: approximately
RMB5,281 million) in which 17% (as at 31 December 2012: 34%) and 83% (as at 31 December
2012: 66%) of the Group’s total borrowings were matured more than one year and within one
year respectively. Bank borrowings carried weighted average effective interest rate of around
7.1% in 2013 (2012: around 7.7%).
As at 31 December 2013, the Group held cash and cash equivalents of approximately
RMB1,329 million (as at 31 December 2012: approximately RMB1,661 million). Cash and cash
equivalents are mainly comprised of RMB and USD.
Gearing ratio
As at 31 December 2013, the gearing ratio of the Group, was approximately 87% (as at
31 December 2012: approximately 75%). The ratio was calculated as net debt divided by total
capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital
is calculated as total equity plus net debt.
As at 31 December 2013, properties under development of approximately RMB11,509
million (as at 31 December 2012: approximately RMB10,609 million) was pledged as collateral
for the Group’s borrowings in the purpose for the property development.
The Group did not have any contingent liabilities as at 31 December 2013 (as at 31
December 2012: nil).
Capital commitment
The Group entered into certain agreements in respect of land acquisition and property
development. As at 31 December 2013, the Group’s capital expenditures contracted but
not yet incurred amounted to approximately RMB2,343 million (as at 31 December 2012:
approximately RMB5,634 million).
Exchange rate risk
The operations and majority of the Group’s customers are located in the PRC with most
of the assets or liabilities and transactions denominated and settled in RMB. As the commercial
transactions settled in foreign currencies were not material, and the exposure to foreign
exchange risk would be immaterial.
— II-89 —
APPENDIX II
Interest rate risk
During the year ended 31 December 2013, the Group’s interest rate risk arose from
borrowings with prevailing market interest rates. Such risk was partly offset by cash at banks
held at prevailing market interest rates. The Group’s borrowings at prevailing market interest
rates were denominated in RMB.
Credit risk
During the year ended 31 December 2013, the credit risk of the Group mainly arises
from restricted bank deposits, cash and cash equivalents, trade and other receivables. To
manage such exposure, the Group monitors and assesses these credit risks on an ongoing basis.
The Group’s employees were remunerated according to their qualifications and
experience, job nature and performance, under the pay scales aligned with market conditions. In
accordance with the rules and regulations in the PRC, the PRC based employees of the Group
participate in various defined contribution retirement plans organized by the relevant municipal
and provincial governments in the PRC under which the Group and the PRC based employees
are required to make monthly contributions to these plans calculated as a percentage of the
employees’ salaries.
As at 31 December 2013, the number of employees of the Group was 913 (as at 31
December 2012: 793).
(2)
Revenue
approximately RMB3,737 million (2011: approximately RMB2,122 million). The increase in
revenue was mainly due to increased delivery of property units from Ocean TIMES (Dalian)
and Ocean Holiday Manor (Dalian).
Cost of sales
The cost of sales of increased from approximately RMB1,949 million in 2011 to
approximately RMB3,219 million in 2012, which was in line with the growth in revenue.
Gross profit
Gross profit for the year was approximately RMB518 million (2011: approximately
RMB174 million), representing an increase of 198% compared to the gross profit of 2011 with
gross profit margin of 14% (2011: 8%). The increase in gross profit and gross profit margin
were due to the delivery of high end projects in Dalian with relatively higher profit margin,
including Ocean Holiday Manor (Dalian).
— II-90 —
APPENDIX II
fees, increased slightly from approximately RMB121 million in 2011 to approximately RMB129
million in 2012. The Group recorded insignificant administrative expenses which mainly
represented the office expenses for both years ended 31 December 2012 and 2011.
Taxation
Consistent with the increase in gross profit and profit for the year, taxation increased
from approximately RMB24 million in 2011 to approximately RMB121 million in 2012.
Profit for the year
Considering the above mentioned financial performance indicators, the Group recognised
profit of approximately RMB200 million in 2012, compared to loss of approximately RMB20
million in 2011.
As at 31 December 2012, the Group’s total borrowings were denominated in RMB
and amounted to approximately RMB5,281 million (as at 31 December 2011: approximately
RMB10,431 million) in which 34% (as at 31 December 2011: 13% ) and 66% (as at 31
December 2011: 87%) of the Group’s total borrowings were matured more than one year and
within one year respectively. Bank borrowings carried weighted average effective interest rate
around 7.7% in 2012 (as at 31 December 2011: around 7.7%).
RMB1,661 million (as at 31 December 2011: approximately RMB674 million). Cash and cash
equivalents are mainly comprised of RMB and USD.
Gearing ratio
As at 31 December 2012, the gearing ratio of the Group was approximately 75% (as at
31 December 2011: approximately 91%). The ratio was calculated as net debt divided by total
capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital
is calculated as total equity plus net debt.
million (as at 31 December 2011: approximately RMB4,428 million) was pledged as collateral
for the Group’s borrowings in the purpose for the property development.
— II-91 —
APPENDIX II
The Group did not have any contingent liabilities as at 31 December 2012 (as at 31
December 2011: nil).
Capital commitment
not yet incurred amounted to approximately RMB5,634 million (as at 31 December 2011:
approximately RMB2,454 million).
Exchange rate risk
Interest rate risk
During the year ended 31 December 2012, the Group’s interest rate risk arose from
Credit risk
December 2011: 653).
— II-92 —
APPENDIX II
(3)
Revenue
approximately RMB2,122 million which mainly generated from Ocean Century (Qinhuangdao)
and Sino-Ocean Decor.
Cost of sales
For the year ended 31 December 2011, the cost of sale, amounted to approximately
RMB1,949 million, was mainly aroused from Ocean Century (Qinhuangdao) and Sino-Ocean
Decor.
Gross profit
For the year ended 31 December 2011, gross profit was approximately RMB174 million
with gross profit margin of approximately 8%.
For the year ended 31 December 2011, selling and marketing expenses mainly
represented the advertisement and marketing fees of approximately RMB121 million. The
Group recorded insignificant administrative expenses which mainly represented the office
expenses.
Taxation
For the year ended 31 December 2011, the Group recorded income tax expenses of
approximately RMB24 million.
Loss for the year
Considering the above mentioned financial performance indicators, the Group recorded a
loss of approximately RMB20 million in 2011.
As at 31 December 2011, the Group’s total borrowings were denominated in RMB
and amounted to approximately RMB10,431 million, in which 13% and 87% of the Group’s
total borrowings were matured more than one year and within one year respectively. Bank
borrowings carried weighted average effective interest rate around 7.7% in 2011.
RMB674 million. Cash and cash equivalents are mainly comprised of RMB and USD.
— II-93 —
APPENDIX II
Gearing ratio
As at 31 December 2011, the gearing ratio of the Group was approximately 91%.
The ratio was calculated as net debt divided by total capital. Net debt is calculated as total
borrowings less cash and cash equivalents. Total capital is calculated as total equity plus net
debt.
million was pledged as collateral for the Group’s borrowings in the purpose for the property
development.
The Group did not have any contingent liabilities as at 31 December 2011.
Capital commitment
development. As at 31 December 2011, the Group’s capital expenditures contracted but not yet
incurred amounted to approximately RMB2,454 million.
Exchange rate risk
Interest rate risk
During the year ended 31 December 2011, the Group’s interest rate risk aroused from
Credit risk
— II-94 —
APPENDIX II
As at 31 December 2011, the number of employees of the Group was 653.
— II-95 —
APPENDIX II
Max Great Holdings Limited
For the years ended 31 December 2011, 2012 and 2013
13 December 2014
The Directors
Dear Sirs,
We report on the financial information of Max Great Holdings Limited (“Max Great Holdings”)
and its subsidiaries (together, the “Max Great Holdings Group”), which comprises the consolidated
balance sheets of Max Great Holdings as at 31 December 2011, 2012 and 2013, and the consolidated
income statements, the consolidated statements of comprehensive income, the consolidated statements
of changes in equity and the consolidated cash flow statements of Max Great Holdings for each of the
years ended 31 December 2011, 2012 and 2013 (the “Relevant Periods”) and a summary of significant
accounting policies and other explanatory information. This financial information has been prepared
by the directors of Gemini Investments (Holdings) Limited (the “Company”) and is set out in Sections
I to III below for inclusion in Appendix II to the circular of the Company dated 13 December 2014
(the “Circular”) in connection with the proposed acquisition of Max Great Holdings by the Company.
Max Great Holdings was incorporated in the British Virgin Islands on 4 January 2008 as a
limited liability company.
As at the date of this report, Max Great Holdings has direct and indirect interests in the
subsidiaries as set out in Note 6 of Section II below. All of these companies are private companies
or, if incorporated or established outside Hong Kong, have substantially the same characteristics as a
Hong Kong incorporated private company.
No audited financial statements have been prepared by Max Great Holdings as it has not
involved in any significant business transactions since its date of incorporation. The audited financial
statements of the other companies comprising Max Great Holdings Group as at the date of this report
for which there are statutory audit requirements have been prepared in accordance with the relevant
accounting principles generally accepted in their place of incorporation. The details of the statutory
auditors of these companies are set out in Note 6 of Section II below.
The directors of Max Great Holdings during the Relevant Periods are responsible for the
— II-96 —
APPENDIX II
preparation of the consolidated financial statements of Max Great Holdings for the Relevant
Periods that give a true and fair view in accordance with Hong Kong Financial Reporting Standards
(“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”)
(the “Underlying Financial Statements”), and for such internal control as the directors determine is
necessary to enable the preparation of the Underlying Financial Statements that are free from material
misstatement, whether due to fraud or error. We have audited the Underlying Financial Statements in
accordance with Hong Kong Standards on Auditing (the “HKSAs”) issued by the HKICPA pursuant
to separate terms of engagement.
The financial information has been prepared based on the audited consolidated financial
statements of Max Great Holdings with no adjustment made thereon.
that gives a true and fair view in accordance with HKFRSs and accounting policies adopted by the
Company and its subsidiaries (together, the “Group”) as set out in the interim report of the Company
for the six months ended 30 June 2014.
Opinion
In our opinion, the financial information gives, for the purpose of this report, a true and fair
view of the state of affairs of Max Great Holdings Group as at 31 December 2011, 2012 and 2013
and of Max Great Holdings Group’s results and cash flows for the Relevant Periods then ended.
— II-97 —
APPENDIX II
I.
The following is the consolidated financial information of Max Great Holdings Group prepared
by the directors of the Company as at 31 December 2011, 2012 and 2013, and for each of the years
ended 31 December 2011, 2012 and 2013 (the “Financial Information”).
As at 31 December 2011, 2012 and 2013, Max Great Holdings had amounts due from the
immediate holding company of RMB 8, investment in subsidiaries of RMB 1, an amount due to a
subsidiary of RMB 1 and share capital of RMB 8. Except for this, it had no other assets, liabilities or
distributable reserves as at those dates.
1.
Consolidated Balance Sheets
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
295
—
744
5,255
501
11,741
295
5,999
12,242
285,070
—
—
391
—
1,387
282,967
482,918
—
57,201
108,090
50,883
118,745
873,362
47,421
124,825
103,556
204,201
286,848
982,059
1,472,110
287,143
988,058
1,484,352
—
(6,124)
—
(16,242)
—
7,212
(6,124)
(16,242)
7,212
59,936
130,236
141,953
Total equity
53,812
113,994
149,165
Note
ASSETS
Non-current assets
15
Current assets
Other receivables
9
8
11
10
12
13
Total assets
EQUITY
Share capital
(Accumulated losses)/retained earnings
— II-98 —
APPENDIX II
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
—
200,000
—
—
200,000
—
233,331
—
—
65,000
348,747
456,575
3,742
113,000
571,888
430,678
19,621
233,331
874,064
1,135,187
Total liabilities
233,331
874,064
1,335,187
287,143
988,058
1,484,352
Net current assets
53,517
107,995
336,923
53,812
113,994
349,165
Note
LIABILITIES
Borrowings
14
Current liabilities
Borrowings
Income tax payable
14
16
17
— II-99 —
APPENDIX II
2.
Consolidated Income Statements
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
—
—
—
477,763
(422,892)
—
—
54,871
11
(881)
(1,045)
(68)
217
(192)
(20,776)
(107)
990
1,381
(10,127)
(56)
(1,983)
(20,858)
47,059
—
—
—
(1,983)
(20,858)
47,059
—
5,255
(11,888)
(1,983)
(15,603)
35,171
Attributable to:
Owners of Max Great Holdings
(1,919)
(64)
(10,118)
(5,485)
23,454
11,717
(1,983)
(15,603)
35,171
Note
Revenue
Cost of sales
20
Gross profit/(loss)
18
19
20
20
Other (losses)/gains – net
Operating profit/(loss)
22
Finance costs
23
Income tax expense
— II-100 —
APPENDIX II
3.
Consolidated Statements of Comprehensive Income
2011
RMB’000
2012
RMB’000
2013
RMB’000
(1,983)
(15,603)
35,171
—
—
—
(1,983)
(15,603)
35,171
Total comprehensive income attributable to:
— Owners of Max Great Holdings
(1,919)
(64)
(10,118)
(5,485)
23,454
11,717
(1,983)
(15,603)
35,171
Note
— II-101 —
APPENDIX II
4.
Consolidated Statements of Changes in Equity
Note
(Accumulated
losses)/
Share
retained
capital
earnings
RMB’000
RMB’000
Total
RMB’000
Noncontrolling
interests
RMB’000
Total
equity
RMB’000
Loss for the year
—
—
(4,205)
(1,919)
(4,205)
(1,919)
—
(64)
(4,205)
(1,983)
Transactions with owners of Max
Great Holdings
Contribution from non-controlling
interests
—
(1,919)
(1,919)
(64)
(1,983)
—
—
—
60,000
60,000
distributions to owners of Max
Great Holdings
—
—
—
60,000
60,000
Total transactions with owners of
Max Great Holdings
—
—
—
60,000
60,000
—
(6,124)
(6,124)
59,936
53,812
Loss for the year
—
—
(6,124)
(10,118)
(6,124)
(10,118)
59,936
(5,485)
53,812
(15,603)
Transactions with owners of Max
Great Holdings
Contribution from non-controlling
interests
—
(10,118)
(10,118)
(5,485)
(15,603)
—
—
—
75,785
75,785
distributions to owners of Max
Great Holdings
—
—
—
75,785
75,785
Total transactions with owners of
Max Great Holdings
—
—
—
75,785
75,785
—
(16,242)
(16,242)
130,236
113,994
Profit for the year
—
—
(16,242)
23,454
(16,242)
23,454
130,236
11,717
113,994
35,171
—
23,454
23,454
11,717
35,171
—
7,212
7,212
141,953
149,165
— II-102 —
APPENDIX II
5.
Consolidated Cash Flow Statements
2011
RMB’000
2012
RMB’000
2013
RMB’000
(58,637)
—
—
(83,881)
(167)
(6,625)
(73,282)
(7,754)
(13,643)
(58,637)
(90,673)
(94,679)
Purchases of property, plant and equipment
(318)
(616)
(3)
(318)
(616)
(3)
Capital injection from non-controlling interests
—
—
60,000
95,000
(30,000)
75,785
503,900
(255,900)
—
Net cash generated from financing activities
60,000
140,785
248,000
1,045
342
49,496
1,387
153,318
50,883
1,387
50,883
204,201
Note
Interest paid
Income tax paid
24
22
Net cash used in operating activities
Increase in cash and cash equivalents
— II-103 —
13
APPENDIX II
II.
1.
Group information
Max Great Holdings Limited (“Max Great Holdings”) was incorporated with limited liability in the
British Virgin Islands on 4 January 2008. The address of its registered office is P.O. Box 957, Offshore
Max Great Holdings, being an investment holding company and its subsidiaries (collectively referred to
as the “Max Great Holdings Group”) are principally engaged in property development in the People’s Republic
of China (the “PRC”).
The consolidated financial statements are presented in Renminbi(“RMB”), unless otherwise stated.
Sino-Ocean Land Holdings Limited (the “SOLH”) is the ultimate holding company of Max Great
Holdings Group during the Relevant Periods and up to the date of this report.
2.
The preparation of the Financial Information in conformity with HKFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying the
Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the Financial Information, are disclosed in Note 5.
3.
3.1
and amended in July 2014. It replaces the whole of IAS/HKAS 39. HKFRS 9 has three financial asset
classification categories for investments in debt instruments: amortised cost, fair value through other
For financial liabilities there are two classification categories: amortised cost and fair value through
loss, the changes in the fair value due to changes in the liability’s own credit risk are recognised in
case, all fair value movements are recognised in profit or loss. There is no subsequent recycling of the
— II-104 —
APPENDIX II
losses (ECL) model, which constitutes a change from the incurred loss model in HKAS 39. HKFRS
9 contains a “three stage” approach, which is based on the change in credit quality of financial assets
since initial recognition. Assets move through the three stages as credit quality changes and the stages
dictate how an entity measures impairment losses and applies the effective interest rate method. The new
rules mean that on initial recognition of a non-credit impaired financial asset carried at amortised cost a
day-1 loss equal to the 12-month ECL is recognised in profit or loss. In the case of accounts receivables
of an entity and provides relief from the more “rule-based” approach of IAS/HKAS39.
option to apply the standard in phases. Therefore Max Great Holdings Group is yet to assess HKFRS 9’s
full impact.
application is permitted. Max Great Holdings Group is yet to assess HKFRS 15’s full impact.
3.2Subsidiaries
3.2.1Consolidation
A subsidiary is an entity (including a structured entity) over which Max Great Holdings
Group has control. Max Great Holdings Group controls an entity when Max Great Holdings
Group is exposed to, 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. Subsidiaries are
consolidated from the date on which control is transferred to Max Great Holdings Group. They
are deconsolidated from the date that control ceases.
— II-105 —
APPENDIX II
(a)
Business combinations
Max Great Holdings Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a subsidiary is the
fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by Max Great Holdings Group. The consideration
transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date. Max Great Holdings Group recognizes any non-controlling
interests in the acquiree on an acquisition-by-acquisition basis, either at fair value or at
the non-controlling interests’ proportionate share of the recognized amounts of acquiree’s
identifiable net assets.
Any contingent consideration to be transferred by Max Great Holdings Group is
recognized at fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability is recognized in
accordance with HKAS 39 either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not remeasured, and its
subsequent settlement is accounted for within equity.
interests in the acquiree and the acquisition-date fair value of any previous equity interest
goodwill. If the total of consideration transferred, non-controlling interests recognized
amounts reported by subsidiaries have been adjusted to conform with Max Great Holdings
Group’s accounting policies.
(b)
— II-106 —
APPENDIX II
(c)
When Max Great Holdings Group ceases to have control, any retained interest in
the entity is remeasured to its fair value at the date when control is lost, with the change
in carrying amount recognized in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognized
in other comprehensive income in respect of that entity are accounted for as if Max Great
Holdings Group had directly disposed of the related assets or liabilities. This may mean
that amounts previously recognized in other comprehensive income are reclassified to
profit or loss.
in the separate financial statements exceeds the carrying amount in the consolidated financial
statements of the investee’s net assets including goodwill.
3.3
(a)
Items included in the financial statements of each of Max Great Holdings Group’s
entities are measured using the currency of the primary economic environment in which the
entity operates (the “functional currency”).The consolidated financial statements are presented
in Renminbi (“RMB”), which is the Company’s functional and Max Great Holdings Group’s
presentation currency.
(b)
currencies are recognized in the consolidated income statement.
net”.
— II-107 —
APPENDIX II
(c)
Group companies
3.4
(i)
(ii)
rates(unless this average is not a reasonable approximation of the cumulative
(iii)
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow
to Max Great Holdings Group and the cost of the item can be measured reliably. The carrying amount
of the replaced part is derecognized. All other repairs and maintenance are charged to the consolidated
income statement during the financial period in which they are incurred.
Vehicles
Office equipment
8 years
5 years
3 years
These are recognized within “other gains/(losses) — net”, in the consolidated income statement.
3.5
— II-108 —
APPENDIX II
reporting date.
3.6
Financial assets
3.6.1Classification
Max Great Holdings Group classifies its financial assets into financial assets at fair
value through profit or loss, loans and receivables, and available-for-sale financial assets. The
classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition and re-evaluates this
designation at every reporting date.
(a)
(b)
reporting period, which are classified as non-current assets. Max Great Holdings Group’s
loans and receivables comprise “trade and other receivables”, “restricted bank deposit”
and “cash and cash equivalents” in the balance sheet (Note 3.9 and 3.10).
(c)
Regular way purchases and sales of financial assets are recognized on trade-date, the
date on which Max Great Holdings Group commits to purchase or sell the asset. Investments
are initially recognized at fair value plus transaction costs for all financial assets not carried at
fair value through profit or loss. Financial assets carried at fair value through profit or loss are
initially recognized at fair value, and transaction costs are expensed in the consolidated income
statement. Financial assets are derecognized when the rights to receive cash flows from the
investments have expired or have been transferred and Max Great Holdings Group has transferred
substantially all risks and rewards of ownership. Available-for-sale financial assets are
subsequently carried at fair value. Loans and receivables are subsequently carried at amortized
cost using the effective interest method.
— II-109 —
APPENDIX II
through profit or loss is recognized in the income statement as part of other income when Max
Great Holdings Group’s right to receive payments is established.
value adjustments recognized in equity are included in the consolidated income statement as part
of “other gains/(losses) – net”.
Interests on available-for-sale securities calculated using the effective interest method are
recognized in the consolidated income statement as part of other income. Dividends on availablefor-sale equity instruments are recognized in the consolidated income statement as part of other
income when Max Great Holdings Group’s right to receive payments is established.
3.7
(a)
Max Great Holdings Group assesses at the end of each reporting period whether there
is objective evidence that a financial asset or group of financial assets is impaired. A financial
asset or a group of financial assets is impaired and impairment losses are incurred only if there is
estimated.
original effective interest rate. The carrying amount of the asset is reduced and the amount
of the loss is recognized in the consolidated income statement. If a loan or held-to-maturity
investment has a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate determined under the contract. As a practical expedient, Max Great
Holdings Group may measure impairment on the basis of an instrument’s fair value using an
observable market price.
loss is recognized in the consolidated income statement.
— II-110 —
APPENDIX II
(b)
Max Great Holdings Group assesses at the end of each reporting period whether there
is objective evidence that a financial asset or a group of financial assets is impaired. For debt
securities, Max Great Holdings Group uses the criteria referred to (a) above. In the case of equity
investments classified as available-for-sale, a significant or prolonged decline in the fair value
of the security below its cost is also evidence that the assets are impaired. If any such evidence
exists for available-for-sale financial assets, the cumulative loss — measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial
asset previously recognized in profit or loss — is removed from equity and recognized in the
consolidated income statement. Impairment losses recognized in the combined income statement
on equity instruments are not reversed through the consolidated income statement. If, in a
subsequent period, the fair value of a debt instrument classified as available-for-sale increases
and the increase can be objectively related to an event occurring after the impairment loss was
recognized in profit or loss, the impairment loss is reversed through the consolidated income
statement.
3.8Inventories
(a)
expenses.
(b)
conditions.
3.9
Other receivables
If collection of other receivables is expected in one year or less (or in the normal operating cycle
of the business if longer), they are classified as current assets. If not, they are presented as non-current
assets.
Other receivables are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest method, less provision for impairment.
3.10
In the consolidated cash flow statement, cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short-term highly liquid investments with original maturities of
three months or less.
— II-111 —
APPENDIX II
3.11
Share capital
Ordinary shares are classified as equity. Incremental cost directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
3.12
Trade payables
3.13
Borrowings are classified as current liabilities unless Max Great Holdings Group has an
unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
3.14
substantively enacted at the balance sheet date in the country where Max Great Holdings’s
subsidiaries operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, deferred tax liabilities are not recognized if they
— II-112 —
APPENDIX II
arise from the initial recognition of goodwill, the deferred income tax is not accounted for if
it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit
or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantively enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax liability is settled.
from investments in subsidiaries, except for deferred income tax liability where the timing of
the reversal of the temporary difference is controlled by Max Great Holdings Group and it is
probable that the temporary difference will not reverse in the foreseeable future. Generally Max
Great Holdings Group is unable to control the reversal of the temporary difference for associates.
Only where there is an agreement in place that gives Max Great Holdings Group the ability to
control the reversal of the temporary difference not recognized.
3.14.3Offsetting
net basis.
3.15
Employee benefits
(a)
(b)
Bonus entitlements
(c)
Retirement benefits
In accordance with the rules and regulations in the PRC, the PRC based employees of
Max Great Holdings Group participate in various defined contribution retirement plans organized
by the relevant municipal and provincial governments in the PRC under which Max Great
Holdings Group and the PRC based employees are required to make monthly contributions to
these plans calculated as a percentage of the employees’ salaries.
— II-113 —
APPENDIX II
described above. Other than the monthly contributions, Max Great Holdings Group has no further
obligation for the payment of retirement and other post retirement benefits of its employees.
The assets of these plans are held separately from those of Max Great Holdings Group in
independently administrated funds managed by the PRC government.
Max Great Holdings Group’s contributions to the defined contribution retirement schemes
are expensed as incurred.
3.16Provisions
Provisions are recognized when Max Great Holdings Group has a present legal or constructive
obligation as a result of past events; it is probable that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated. Provisions are not recognized for future
operating losses.
3.17
Revenue recognition
and services in the ordinary course of Max Great Holdings Group’s activities. Revenue is shown, net of
returns, discounts and after eliminating sales within Max Great Holdings Group.
Max Great Holdings Group recognizes revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity and when specific criteria
have been met for each of Max Great Holdings Group’s activities as described below. Max Great
Holdings Group bases its estimates on historical results, the type of transaction and the specifics of each
arrangement.
(a)
Sale of properties
customers.
(b)
Interest income
receivable is impaired, Max Great Holdings Group reduces the carrying amount to its recoverable
amount, being the estimated future cash flow discounted at the original effective interest rate of
the instrument, and continues unwinding the discount as interest income.
— II-114 —
APPENDIX II
4.
4.1
Max Great Holdings
(including foreign exchange
risk and liquidity risk. Max
unpredictability of financial
Holdings Group’s financial
managing each of these risks
(a)
Group’s activities expose it to a variety of financial risks: market risk
risk, cash flow interest rate risk and fair value interest rate risk), credit
Great Holdings Group’s overall risk management program focuses on the
markets and seeks to minimize potential adverse effects on Max Great
performance. The board of directors reviews and approves policies for
and they are summarized below.
Market risk
(i)
The operations and majority of Max Great Holdings Group’s customers are located
in the PRC with most of the assets/liabilities and transactions denominated and settled
in RMB. As the commercial transactions settled in foreign currencies are not material,
the directors of Max Great Holdings are of the view that Max Great Holdings Group’s
exposure to foreign exchange risk would be immaterial.
(ii)
As Max Great Holdings Group has no significant interest-bearing assets, Max
Great Holdings Group’s income and operating cash flows are substantially independent of
changes in market interest rates.
Max Great Holdings Group’s interest rate risk arises from long-term borrowings
with prevailing market interest rates. Such risk is partly offset by cash at banks held
at prevailing market interest rates. During the Relevant Periods, Max Great Holdings
Group’s borrowings at prevailing market interest rates were denominated in RMB.
Max Great Holdings Group currently does not utilize any derivative contracts
to hedge its exposure to interest rate risk. However, management will consider hedging
significant interest rate exposure should the need arise.
The directors of Max Great Holdings consider that the fluctuation in interest rate
has no material impact on Max Great Holdings Group’s post-tax profit for the Relevant
Periods as most of interest expenses were capitalized.
(b)
Credit risk
Credit risk arises from restricted bank deposits, cash and cash equivalents, trade and other
receivables. The carrying amounts of restricted bank deposits, cash and cash equivalents, other
receivables, represent Max Great Holdings Group’s maximum exposure to credit risk in relation
to its financial assets.
To manage such exposure, Max Great Holdings Group has policies in place to ensure
that sales are made to purchasers with appropriate financial strengths and credit history, at the
same time appropriate percentages of down payments are made. Deposits are placed with banks
with appropriate credit ratings. Monitoring procedures are also in place to ensure that followup action is taken to recover overdue debts. In addition, Max Great Holdings Group reviews and
assesses the recoverable amount of each individual receivable on a regular basis to ensure that
adequate impairment losses are made for irrecoverable amounts. Max Great Holdings Group has
no significant concentration of credit risk, with exposure spread over a number of counterparties
and customers.
— II-115 —
APPENDIX II
Credit risk arises from restricted bank deposits is limited, as all counterparties are banks
with appropriate credit rankings.
(c)
Liquidity risk
Cash flow forecast by Max Great Holdings Group and Max Great Holdings Group
monitors rolling forecasts of Max Great Holdings Group’s liquidity requirements to ensure
it has sufficient cash to meet operational needs while maintaining sufficient headroom on its
undrawn committed borrowing facilities at all times so that the group does not breach borrowing
limits or covenants (where applicable) on any of its borrowing facilities. Such forecast takes
into consideration Max Great Holdings Group’s debt financing plans, covenant compliance,
compliance with internal balance sheet ratio targets.
As at 31 December 2011, 2012 and 2013, Max Great Holdings Group held cash and
cash equivalents of RMB 1,387,000, RMB 50,883,000 and RMB 204,201,000 (Note 13) and
other receivables of RMB 391,000, RMB 57,201,000 and RMB 124,825,000 (Note 10) that are
expected to readily generate cash inflows for managing liquidity risk.
The table below analyzes Max Great Holdings Group’s non-derivative financial liabilities
into relevant maturity groupings based on the remaining period at the balance sheet date to the
flows.
At 31 December 2011
Borrowings
Trade and other payables excluding statutory
liabilities
At 31 December 2012
Borrowings
liabilities
At 31 December 2013
Borrowings
liabilities
— II-116 —
Less than
1 year
RMB’000
Between
1 and 2
years
RMB’000
Total
RMB’000
—
—
—
233,331
—
233,331
233,331
—
233,331
68,330
—
68,330
346,089
—
346,089
414,419
—
414,419
137,040
213,870
350,910
568,693
—
568,693
705,733
213,870
919,603
APPENDIX II
4.2
Max Great Holdings Group’s objectives when managing capital are to safeguard Max Great
Holdings Group’s ability to continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, Max Great Holdings Group may adjust the
amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, Max Great Holdings Group monitors capital on the basis
of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated
as total borrowings (including current and non-current borrowings as shown in the consolidated balance
sheet) less cash and cash equivalents. Total capital is calculated as “equity” as shown in the consolidated
balance sheet plus net debt.
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
(1,387)
65,000
(50,883)
313,000
(204,201)
Net debt
Total equity
(1,387)
53,812
14,117
113,994
108,799
149,165
Total capital
52,425
128,111
257,964
Gearing ratio
NA
11%
42%
— II-117 —
APPENDIX II
5.
Max Great Holdings Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
(a)
Max Great Holdings Group is primarily subject to various PRC taxes, as it is principally engaged
in property development in the PRC. Significant judgment is required in determining the provision for
income taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain during the ordinary course of business. Max Great Holdings recognizes liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the income tax and deferred income tax provisions in the period in which such determination
is made.
Significant judgment is required in determining the extent of land appreciation and its related
taxes. Max Great Holdings Group recognized LAT based on management’s best estimates according to
the understanding of the tax rules. The final tax outcome could be different from the amounts that were
initially recorded, and these differences will impact the consolidated income statement in the periods in
(b)
Deferred income tax
different.
(c)
Estimations for total properties construction cost
Max Great Holdings Group estimates properties construction cost upon recognition of respective
costs of sales. Such estimates are substantiated by detailed budgetary information as developed by the
recognized.
(d)
Revenue recognition
Max Great Holdings Group has recognized revenue from the sale of properties held for sale
as disclosed in Note 3.17. The assessment of when an entity has transferred the significant risks and
rewards of ownership to buyers requires the examination of the circumstances of the transaction. In most
cases, the transfer of risks and rewards of ownership coincides with the date when the equitable interest
in the property vests to the buyer, upon release of the respective property to the purchaser.
— II-118 —
APPENDIX II
(f)
Max Great Holdings Group tests at least annually whether assets have suffered any impairment
in accordance with the accounting policies stated in Note 3.5. Assets are also reviewed for impairment,
6.
Particulars of the subsidiaries of Max Great Holdings Group as at 31 December 2011, 2012 and 2013 are
as follows, all of which are unlisted:
Name
Establishment/
Place and date
of incorporation and
(1)
Good Rich Management Limited
德富管理有限公司
Hong Kong/
4 January 2008/
Limited company
(2)
Fushun Dechuang Property
The PRC/
20 June 2011/
(“Fushun Dechuang”)
Limited company
撫順德創置業有限公司
Statutory auditor
for the years ended
2011, 2012 and 2013
Registered
and fully
paid capital
RMB’000
Effective
interests
held —
directly
held
(%)
Accountants
—
100%
387,953
65%
Zhong Tian LLP
Principal
activities
Investment
holding
Property
development
available.
The profit or loss attributable to non-controlling interests during the Relevant Periods was from Fushun
Dechuang, which was as follows:
2011
RMB’000
Fushun Dechuang
(64)
2012
RMB’000
(5,485)
2013
RMB’000
11,717
As at 31 December 2011, 2012 and 2013, cash and cash equivalents held by Fushun Dechuang in
aggregate amounted to RMB 1,386,000, RMB50,853,000 and RMB204,174,000 are held in China and are subject
to local exchange control regulations. These local exchange control regulations provide for restrictions on
exporting capital from the country, other than through normal dividends.
— II-119 —
APPENDIX II
Set out below are the summarized financial information for Fushun Dechuang:
Summarized balance sheet
Fushun Dechuang
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Current
Assets
Liabilities
286,847
(13,828)
982,032
(615,928)
1,472,084
(878,747)
273,019
366,104
593,337
Non-current
Assets
Liabilities
295
—
5,999
—
12,242
(200,000)
Total non-current net assets/(liabilities)
295
5,999
(187,758)
273,314
372,103
Net assets
405,579
Summarized income statement
Fushun Dechuang
2011
RMB’000
2012
RMB’000
2013
RMB’000
Revenue
Income tax income/(expense)
Post-tax profit/(loss)
—
(184)
—
(184)
—
—
(20,925)
5,255
(15,670)
—
477,763
45,364
(11,888)
33,476
—
(184)
(15,670)
33,476
(64)
(5,485)
11,717
Total comprehensive income allocated to non-controlling
interests
— II-120 —
—
—
—
APPENDIX II
Summarized cash flows
Fushun Dechuang
2011
RMB’000
2013
RMB’000
Interest paid
Income tax paid
(58,296)
—
—
(83,910)
(167)
(6,625)
(73,279)
(7,754)
(13,643)
Net cash used in operating activities
(58,296)
(318)
60,000
(90,702)
(616)
140,785
(94,676)
(3)
248,000
1,386
49,467
153,321
—
1,386
50,853
1,386
50,853
204,174
Net increase in cash and cash equivalents
Cash and cash equivalents at end of year
7.
2012
RMB’000
Loans and
receivables
RMB’000
Assets
Other receivables excluding prepayments
391
—
1,387
1,778
20,897
108,090
50,883
179,870
79,171
103,556
204,201
386,928
— II-121 —
APPENDIX II
Financial
liabilities at
amortized cost
RMB’000
Liabilities
Trade and other payables excluding tax payables
—
233,331
233,331
65,000
346,089
411,089
313,000
568,693
881,693
8.
2011
RMB’000
2012
RMB’000
Additions
Transfer from prepayments for land use rights
Transfer to completed properties held for sale
—
—
—
—
—
291,504
191,414
—
482,918
669,075
164,222
(442,853)
At end of the year
—
482,918
873,362
Land use rights
—
—
—
196,267
286,484
167
294,459
572,051
6,852
—
482,918
873,362
— II-122 —
2013
RMB’000
APPENDIX II
As at 31 December
In the PRC held on:
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
196,267
294,459
As at 31 December 2013, properties under development of approximately RMB 127,846,000 was pledged
as collateral for Max Great Holdings Group’s borrowings (Note 14).
All properties under development are expected to be completed within the normal operating cycle of
Max Great Holdings Group, in which RMB 470,445,000 is expected to be completed and available for sale more
than twelve months after 31 December 2013.
9.
As at 31 December
Deposits to local land authorities
2011
RMB’000
2012
RMB’000
2013
RMB’000
285,070
282,967
118,745
The prepayments were paid to local land authorities for land use rights as at 31 December 2011, 2012
and 2013, respectively. Once the title of the land is transferred to Max Great Holdings Group, the land will be
used to develop properties held for sale.
10.
Other receivables
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Tax prepayments for advances receipts from customers
Receivables from government (a)
Others
—
—
391
36,304
16,120
4,777
45,654
59,790
19,381
391
—
57,201
—
124,825
—
Current portion
391
57,201
124,825
The carrying amounts of other receivables approximate their respective fair values as at 31 December
2011, 2012 and 2013.
(a)
Receivables from government represent some deposits paid to government in respect of the
properties development.
mentioned above. The carrying amounts of Max Great Holdings Group’s other receivables are mainly
denominated in RMB.
— II-123 —
APPENDIX II
11.
All completed properties held for sale are located in the PRC on lease between 40 to 70 years, and
are stated at cost less accumulated amortization of land use rights for the years ended 2011, 2012 and 2013,
respectively.
As at 31 December
Completed properties held for sale comprised
Land use rights
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
—
—
—
—
—
12,391
34,953
77
—
—
47,421
In the PRC held on:
12.
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
—
12,391
Restricted bank deposits mainly represent guaranteed deposits for projects co-developed with third
parties. The balances also include guaranteed deposits placed in the banks, as guaranteed funds of construction
projects to meet certain local authorities’ requirements.
13.
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
1,387
50,883
204,201
1,387
50,883
204,201
Denominated in:
— RMB
— USD
1,378
9
50,132
751
203,472
729
1,387
50,883
204,201
Max Great Holdings Group’s cash and cash equivalents denominated are deposited with banks in the
PRC and Hong Kong, respectively. The conversion of the RMB denominated balances into foreign currencies,
which are placed within the PRC, is subject to the rules and regulations of foreign exchange control promulgated
by the PRC Government.
— II-124 —
APPENDIX II
14.Borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Non-current
Bank borrowings (a)
—
—
200,000
—
—
200,000
Current
Short-term bank borrowings (b)
Short-term other borrowings (c)
—
—
—
65,000
50,000
63,000
—
65,000
113,000
Total borrowings
—
65,000
313,000
(a)
As at 31 December 2013, bank borrowings amounting to RMB 200,000,000 was secured by
properties under development (Note 8) and guaranteed by a fellow subsidiary, bearing the interest
rate at 7.38% per annum and wholly repayable in December 2015.
(b)
As at 31 December 2013, bank borrowings amounting to RMB 50,000,000 were secured by
properties under development (Note 8), bearing the interest rate at 6.12% per annum and has
been repaid in 2014.
(c)
Other borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Borrowings from a fellow subsidiary (i)
—
65,000
63,000
—
—
—
Current portion
—
65,000
63,000
(i)
As at 31 December 2012 and 2013, the balances represented loans from a fellow
subsidiary, which bear interest rate at 5.38% and 15%, respectively, without collateral and
were wholly repayable within one year.
— II-125 —
APPENDIX II
(d)
The maturities of Max Great Holdings Group’s total borrowings at respective balance sheet dates
are set out as follows:
As at 31 December
Total borrowings
— Within 1 year
2011
Bank and
other
borrowings
RMB’000
2012
Bank and
other
borrowings
RMB’000
2013
Bank and
other
borrowings
RMB’000
—
—
65,000
—
113,000
200,000
—
65,000
313,000
Bank borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
—
250,000
Other borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
65,000
63,000
(e)
All of the Max Great Holdings Group’s borrowings are denominated in RMB.
(f)
follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Bank borrowings
—
—
6.12%
Other borrowings
—
5.38%
15%
— II-126 —
APPENDIX II
(g)
The exposure of Max Great Holdings Group’s borrowings to interest-rate changes and the
contractual repricing dates are as follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
65,000
313,000
Within 6 months
(h)
15.
2012 and 2013, as the discounting rate approximate the market rate. The fair values are based
on cash flows discounted using a rate based on the borrowing rate of 7.72% and 6.12%, for the
years ended 31 December 2012 and 2013, respectively, and are within level 2 of the fair value
hierarchy.
The analysis of deferred income tax assets is as follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Deferred income tax assets:
— to be recovered after more than 12 months
— to be recovered within 12 months
—
—
—
5,255
11,741
—
Total income tax assets
—
5,525
11,741
The gross movement on the deferred income tax account is as follows:
2011
RMB’000
2012
RMB’000
2013
RMB’000
Recognized in the income statement (Note 23)
—
—
—
5,255
5,255
6,486
At end of the year
—
5,255
11,741
— II-127 —
APPENDIX II
The movement in deferred income tax assets during the years ended 31 December 2011, 2012 and 2013,
without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Recognition
of expenses
RMB’000
Tax losses
RMB’000
Total
RMB’000
At 1 January 2011
—
—
—
—
—
—
At 31 December 2011
—
—
—
At 1 January 2012
—
—
—
5,255
—
5,255
At 31 December 2012
—
5,255
5,255
5,255
(5,255)
5,255
6,486
At 1 January 2013
Credited/(charged) to income statement
—
11,741
At 31 December 2013
11,741
—
11,741
As at 31 December 2013, deferred income tax liabilities of RMB 515,000 has not been recognized for
the withholding tax that would be payable on the undistributed earnings of Fushun Dechuang, as such earnings
are to be permanently reinvested. Undistributed earnings totalled RMB 10,309,000 at 31 December 2013.
16.
As at 31 December
Trade payables
Accrued expenses
Amounts due to an immediate holding company (a)
Amounts due to fellow subsidiaries (a)
Other taxes payable
Other payables
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
527
219,504
13,300
—
—
43,081
11,726
258,136
26,560
2,658
6,586
119,338
44,249
256,440
147,769
3,195
897
233,331
348,747
571,888
— II-128 —
APPENDIX II
(a)
Amounts due to an immediate holding company and fellow subsidiaries are unsecured, interest
free, and repayable on demand.
(b)
As at 31 December
Within 6 months
17.
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
43,081
119,338
These represent amounts received from customers for sale of properties, where the risks and rewards of
the properties sold had not yet been transferred as at year-end.
18.
Interest income
19.
2011
RMB’000
2012
RMB’000
2013
RMB’000
11
217
990
Other gains/(losses) mainly represented exchange gains/(losses).
20.
Expenses by nature
as follows:
Cost of properties and land use rights sold:
— Land use rights
— Capitalized interest
— Construction related cost
Employee benefit expense
(Note 21)
Consultancy fee
Depreciation
Business taxes and other levies
Others
— II-129 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
—
—
—
—
—
58,362
992
336,078
139
10
24
390
—
550
856
89
167
16,810
—
2,961
1,005
47
246
6,034
27,460
2,851
1,113
20,883
433,075
APPENDIX II
21.
The employee benefits expense of Max Great Holdings Group, including its directors’ emoluments is as
follows:
Less: capitalized in assets
2011
RMB’000
2012
RMB’000
2013
RMB’000
1,378
305
4,577
869
4,560
1,288
1,683
(1,544)
5,446
(4,590)
5,848
(4,843)
139
856
1,005
Max Great Holdings Group’s employees participate in various retirement benefit plans organized by the
relevant municipal and provincial government in the PRC under which Max Great Holdings Group was required
to make monthly contributions at rates ranging from 10% to 20%, depending on the applicable local regulations,
of the employees’ salary for the years ended 31 December 2011, 2012 and 2013.
Two directors of the Company, Mr. Sum Pui Ying and Mr. Li Zhenyu, are also directors of Max Great
Holdings. These two directors have not received any remunerations from Max Great Holdings Group during the
Relevant Periods.
22.
Finance costs
2011
RMB’000
Interest expense:
— Bank borrowings
—
—
—
—
2012
RMB’000
—
167
(167)
—
2013
RMB’000
2,516
5,238
(7,754)
—
The interest capitalization rate for the years ended 31 December 2012 and 2013 is 5.38% and 9.98%,
respectively.
— II-130 —
APPENDIX II
23.
Income tax expense
tax.
The amount of income tax expense charged to the income statement represents:
2011
RMB’000
Current income tax:
— PRC enterprise income tax
— PRC land appreciation tax
Deferred income tax (Note 15)
2012
RMB’000
2013
RMB’000
—
—
—
—
—
(5,255)
17,707
667
(6,486)
—
(5,255)
11,888
Taxation on Max Great Holdings Group’s profit before tax differs from the theoretical amount that
would arise using the enacted tax rate of the home country of Max Great Holdings Group as follows:
2011
RMB’000
Effect of higher tax rate for the appreciation of land in the PRC
Utilization of previously unrecognized tax losses
Income tax expense
— II-131 —
2012
RMB’000
2013
RMB’000
(1,983)
(20,858)
47,059
(496)
—
457
39
—
(5,215)
—
(55)
15
—
—
11,765
500
(384)
46
—
(39)
—
(5,255)
11,888
APPENDIX II
24.
2011
RMB’000
Adjustments for:
— Income tax expense (Note 23)
— Depreciation
(1,983)
—
24
Changes in working capital (excluding the effects of acquisition
and exchange differences on combination):
— Prepayments for land use rights
— Completed properties held for sale
— Advance receipts from customers
— Restricted bank deposits
25.
2012
RMB’000
2013
RMB’000
(15,603)
35,171
(5,255)
167
11,888
246
(285,070)
—
—
(392)
228,784
—
—
2,103
—
(482,751)
(46,443)
115,416
456,575
(108,090)
164,222
(47,344)
(383,759)
(55,484)
223,141
(25,897)
4,534
(58,637)
(83,881)
(73,282)
Capital commitments
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Land use rights
113,549
21,069
1,627
242,753
—
399,992
Contracted but not provided for
134,618
244,380
399,992
— II-132 —
APPENDIX II
26.
Save as disclosed in Note 14 and Note 16, the following is a summary of significant related party
balances and transactions entered into in the ordinary course of business between Max Great Holdings Group
and its related parties during the years ended 31 December 2011, 2012 and 2013:
(a)
Loans from a related party
2011
RMB’000
(b)
2012
RMB’000
At 1 January
Interest charged
Interest paid
—
—
—
—
—
—
95,000
(30,000)
167
(167)
At 31 December
(Note 14(c))
—
65,000
2013
RMB’000
65,000
253,900
(255,900)
5,238
(5,238)
63,000
Amounts due to related parties
2011
RMB’000
2012
RMB’000
An immediate holding company:
At 1 January
—
219,504
—
219,504
38,632
—
258,136
8
(1,704)
219,504
258,136
256,440
At 1 January
—
31,604
(18,304)
13,300
292,800
(279,540)
26,560
623,436
(502,227)
13,300
— II-133 —
26,560
2013
RMB’000
147,769
APPENDIX II
27.
In September 2014, Max Great Holdings Group entered into a new entrusted loan facility agreement with
a fellow subsidiary under which certain long term entrusted loans were obtained by the Group. Such loans are to
be repayable within five years, unsecured and bearing interest rate at 15% per annum.
No audited financial statements have been prepared by Max Great Holdings or any of its
subsidiaries in respect of any period subsequent to 31 December 2013 up to the date of this report.
Save as disclosed in this report, no dividend or distribution has been declared or made by Max Great
Holdings or any of its subsidiaries in respect of any period subsequent to 31 December 2013.
Yours faithfully,
Hong Kong
— II-134 —
APPENDIX II
MANAGEMENT DISCUSSION AND ANALYSIS OF MAX GREAT (HOLDING) LIMITED
Set out below is the management discussion and analysis on Max Great (Holding) Limited and
its subsidiaries (the “Group”) for the years ended 31st December 2011, 2012 and 2013.
Business Review
Max Great Holdings Limited held 100% equity interests in Good Rich Management Limited
which directly holds 65% equity interests in a subsidiary, Fushun Dechuang Property Development
Company Limited 撫順德創置業有限公司 (“Fushun Dechuang”). Fushun Dechuang principally
engaged in property development in Fushun, the PRC and has been operating the property
development project-Ocean City (Fushun). It is located at Jiangjungou, Shuncheng District, Fushun
City of Liaoning Province. The project is planned to be developed into a mixed use complex with
retail, residential, serviced apartment and car parking spaces. The project is expected to be completed
in 2019.
(1)
Revenue
For the year ended 31 December 2013, the Group recorded the revenue of approximately
RMB478 million (2012: nil). The revenue was solely generated from the delivery of Ocean City
(Fushun) project during 2013.
Cost of sales
For the year ended 31 December 2013, the Group recorded the revenue of approximately
RMB423 million (2012: nil). The cost of sales was solely generated from the delivery of Ocean
City (Fushun) project during 2013 and was in line with the growth of revenue.
Gross Profit
For the year ended 31 December 2013, the Group recorded gross profit of approximately
RMB55 million (2012: Nil), with a gross profit margin of approximately 12% (2012: nil). The
gross profit was solely generated from the delivery of Ocean City (Fushun) project.
fees, decreased from approximately RMB21 million in 2012 to approximately RMB10 million
in 2013 which was mainly due to more sales and marketing activities launched during 2012 to
promote the Ocean City (Fushun) project before its first delivery in 2013. The Group recorded
insignificant administrative expenses which mainly represented the office expenses.
— II-135 —
APPENDIX II
Taxation
For the year ended 31 December 2013, the Group recorded income tax expense of
approximately RMB12 million (2012: tax credit of approximately RMB5 million), mainly as a
result of realization of profit from the delivery from the Ocean City (Fushun) project.
Profit/loss for the year
Considering the above mentioned financial performance indicators, the Group recorded
operating profit which led to a profit of approximately RMB35 million in 2013, compared to
loss of approximately RMB16 million in 2012.
amounted to approximately RMB313 million (as at 31 December 2012: approximately RMB65
million), in which 64% (as at 31 December 2012: nil) and 36% (as at 31 December 2012:
100%) of the Group’s total borrowing were matured more than one year and within one year
respectively. Bank borrowings carried weighted average effective interest rate of around 7.1%
in 2013 (2012: nil).
RMB204 million (as at 31 December 2012: approximately RMB51 million). Cash and cash
equivalents are mainly RMB.
Gearing ratio
As at 31 December 2013, the gearing ratios of the Group was approximately 42% (as at
31 December 2012: approximately 11%).Net debt was calculated as total borrowings less cash
and cash equivalents. Total capital was calculated as total equity plus net debt.
As at 31 December 2013, properties under development of approximately RMB128
million, was pledged as collateral for the Fushun Dechuang’s borrowings in the purpose for the
property development.
As at 31 December 2013, Max Great Holdings Limited and Good Rich Management
Limited were pledged for bank borrowing to Sino-Ocean Land Holdings Limited. The pledge is
expected to be released before 31 December 2014.
As at 31 December 2013, the Group did not have any contingent liabilities.
— II-136 —
APPENDIX II
Capital commitment
The Group entered into certain agreements in respect to land acquisition and property
incurred amounted to approximately RMB400 million (as at 31 December 2012: approximately
RMB244 million).
Exchange rate risk
The operations and majority of the Group’s customers were located in the PRC with most
transactions settled in foreign currencies are not material, and the exposure to foreign exchange
risk would be immaterial.
Interest rate risk
During year ended 31 December 2013, the Group’s interest rate risk arose from
Credit risk
During year ended 31 December 2013, the credit risk of the Group mainly arose from
restricted bank deposits, cash and cash equivalents and other receivables. To manage such
exposure, the Group monitors and assesses these credit risks on an ongoing basis.
December 2012: 31).
— II-137 —
APPENDIX II
(2)
Revenue
No revenue generated during year ended 31 December 2012 (2011: Nil) was mainly due
to there is no delivery of the Group’s project - Ocean City (Fushun) project during the year.
fees, increased from approximately RMB1 million in 2011 to approximately RMB21 million
in 2012 which was mainly due to more sales and marketing activities launched during 2012
to promote the Ocean City (Fushun) project. The Group recorded insignificant administrative
expenses which mainly represented the office expenses.
Taxation
For the year ended 31 December 2012, the Group recorded income tax credit of
approximately RMB5 million (2011: nil).
Loss for the year
Considering the above mentioned financial performance indicators, as there is no delivery
of the Group’s project during the year, the Group recorded loss of approximately RMB16
million in 2012 (2011: approximately RMB2 million).
amounted to approximately RMB65 million (as at 31 December 2011: nil) , in which 100% of
the Group’s total borrowing were matured within one year.
RMB51 million (as at 31 December 2011: approximately RMB1 million). Cash and cash
equivalents are mainly RMB.
Gearing ratio
As at 31 December 2012, the gearing ratios of the Group was approximately 11% (as
at 31 December 2011: nil). Net debt was calculated as total borrowings less cash and cash
equivalents. Total capital was calculated as total equity plus net debt.
— II-138 —
APPENDIX II
As at 31 December 2012, the Group did not have any securities and guarantees.
Capital commitment
incurred amounted to approximately RMB244 million (as at 31 December 2011: approximately
RMB135 million).
Exchange rate risk
Interest rate risk
Credit risk
restricted bank deposits, cash and cash equivalents and other receivables. To manage such
exposure, the Group monitors and assesses these credit risks on an ongoing basis.
December 2011: 25).
— II-139 —
APPENDIX II
(3)
Revenue
No revenue generated during year ended 31 December 2011 was mainly due to there is
no delivery of the Group’s project - Ocean City (Fushun) project during the year.
Selling and marketing expenses mainly represented the advertisement and marketing fees.
Loss for the year
Considering the above mentioned financial performance indicators, as there is no delivery
of the Group’s project during the year, the Group recorded loss of approximately RMB2 million
in 2011.
As at 31 December 2011, the Group did not have any borrowings.
RMB1 million. Cash and cash equivalents are mainly RMB.
Capital commitment
incurred amounted to approximately RMB135 million.
Exchange rate risk
— II-140 —
APPENDIX II
Credit risk
During 2011, the credit risk of the Group mainly arose from cash and cash equivalents
and other receivables. To manage such exposure, the Group monitors and assesses these credit
risks on an ongoing basis.
— II-141 —
APPENDIX II
Bright Shining Group Limited
For the years ended 31 December 2011, 2012 and 2013
13 December 2014
The Directors
Dear Sirs,
We report on the financial information of Bright Shining Group Limited (“Bright Shining”) and
its subsidiaries (together, the “Bright Shining Group”), which comprises the combined balance sheets
of Bright Shining as at 31 December 2011, 2012 and 2013, and the combined income statements, the
combined statements of comprehensive income, the combined statements of changes in equity and
the combined cash flow statements of the Bright Shining for each of the years ended 31 December
2011, 2012 and 2013 (the “Relevant Periods”) and a summary of significant accounting policies
and other explanatory information. This financial information has been prepared by the directors of
Gemini Investments (Holdings) Limited (the “Company”) and is set out in Sections I to III below for
inclusion in Appendix II to the circular of the Company dated 13 December 2014 (the “Circular”) in
connection with the proposed acquisition of Bright Shining by the Company (the “Transaction”).
Bright Shining was incorporated in the British Virgin Islands on 8 January 2008 as a limited
liability company. Pursuant to a group reorganization as described in Note 1(b) of Section II headed
“Reorganization” below, which was completed on 21 October 2014, Bright Shining became the
holding company of the subsidiaries now comprising the Bright Shining Group (the “Reorganization”).
As at the date of this report, Bright Shining has direct and indirect interests in the subsidiaries
as set out in Note 6 of Section II below. All of these companies are private companies or, if
incorporated or established outside Hong Kong, have substantially the same characteristics as a Hong
Kong incorporated private company.
— II-142 —
APPENDIX II
No audited financial statements have been prepared by Bright Shining as it has not involved
in any significant business transactions since its date of incorporation, other than the Reorganization.
The audited financial statements of the other companies now comprising Bright Shining Group as
at the date of this report for which there are statutory audit requirements have been prepared in
accordance with the relevant accounting principles generally accepted in their place of incorporation.
The details of the statutory auditors of these companies are set out in Note 6 of Section II.
The directors of Bright Shining are responsible for the preparation of the combined financial
statements of Bright Shining and its subsidiaries now comprising the Bright Shining Group for the
Relevant Periods that give a true and fair view in accordance with Hong Kong Financial Reporting
Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”) (the “Underlying Financial Statements”), and for such internal control as the directors
determine is necessary to enable the preparation of the Underlying Financial Statements that are free
from material misstatement, whether due to fraud or error. We have audited the Underlying Financial
Statements in accordance with Hong Kong Standards on Auditing (the “HKSAs”) issued by the
HKICPA pursuant to separate terms of engagement.
The financial information has been prepared based on the Underlying Financial Statements,
with no adjustment made thereon, and on the basis set out in Note 2 of Section II below.
that gives a true and fair view in accordance with the basis of presentation set out in Note 2 of
Section II below and in accordance with HKFRSs and accounting policies adopted by the Company
and its subsidiaries (together, the “Group”) as set out in the interim report of the Company for the six
months ended 30 June 2014.
Opinion
In our opinion, the financial information gives, for the purpose of this report and presented on
the basis set out in Note 2 of Section II below, a true and fair view of the combined state of affairs of
the Bright Shining Group as at 31 December 2011, 2012 and 2013 and of the Bright Shining Group’s
combined results and cash flows for the Relevant Periods then ended.
— II-143 —
APPENDIX II
I.
The following is the combined financial information of the Bright Shining Group prepared
by the directors of the Company as at 31 December 2011, 2012 and 2013, and for each of the years
ended 31 December 2011, 2012 and 2013 (the “Financial Information”).
As at 31 December 2011, 2012 and 2013, Bright Shining had amounts due from the immediate
holding company of RMB8, investment in subsidiaries of RMB1, an amount due to a subsidiary of
RMB1 and share capital of RMB8. Except for this, it had no other assets, liabilities or distributable
reserves as at those dates.
1.
Combined Balance Sheets
Note
ASSETS
Non-current assets
As at 31 December
2011
2012
2013
RMB’000
RMB’000
RMB’000
1,243
957
807
1,243
957
807
1,769,680
1
333
2,008,530
5
1,332
2,178,827
54
2,256
1,770,014
2,009,867
2,181,137
1,771,257
2,010,824
2,181,944
EQUITY
Combined capital
Accumulated losses
—
(3,232)
—
(6,721)
—
(17,540)
19,824
19,797
19,463
Total equity
16,592
13,076
1,923
—
178,808
53,808
—
178,808
53,808
969,500
785,165
125,000
1,693,940
1,395,434
730,779
1,754,665
1,818,940
2,126,213
Total liabilities
1,754,665
1,997,748
2,180,021
1,771,257
2,010,824
2,181,944
Net current assets
15,349
190,927
54,924
16,592
191,884
55,731
Current assets
Other receivables
8
9
10
Total assets
LIABILITIES
Borrowings
11
Current liabilities
Borrowings
11
12
— II-144 —
APPENDIX II
2.
Combined Income Statements
2011
RMB’000
2012
RMB’000
2013
RMB’000
13
1,297
(1,816)
(7)
35
(2,621)
(846)
(84)
18
5
(11,167)
(9)
(513)
(3,516)
(11,153)
—
—
—
(513)
(3,516)
(11,153)
—
—
—
Loss for the year
(513)
(3,516)
(11,153)
Attributable to:
Owners of Bright Shining
(459)
(54)
(3,489)
(27)
(10,819)
(334)
(513)
(3,516)
(11,153)
Note
13
14
15
15
Operating loss
17
Finance costs
Loss before income tax
18
Income tax expense
— II-145 —
APPENDIX II
3.
Combined Statements of Comprehensive Income
2011
RMB’000
2012
RMB’000
2013
RMB’000
(513)
(3,516)
(11,153)
—
—
—
(513)
(3,516)
(11,153)
attributable to:
— Owners of Bright Shining
(459)
(54)
(3,489)
(27)
(10,819)
(334)
(513)
(3,516)
(11,153)
Note
Loss for the year
— II-146 —
APPENDIX II
4.
Combined Statements of Changes in Equity
Note
Combined Accumulated
capital
losses
RMB’000
RMB’000
Total
RMB’000
Noncontrolling
interests
RMB’000
Total
equity
RMB’000
Loss for the year
—
—
(2,773)
(459)
(2,773)
(459)
19,878
(54)
17,105
(513)
—
(459)
(459)
(54)
(513)
—
(3,232)
(3,232)
19,824
16,592
Loss for the year
—
—
(3,232)
(3,489)
(3,232)
(3,489)
19,824
(27)
16,592
(3,516)
—
(3,489)
(3,489)
(27)
(3,516)
—
(6,721)
(6,721)
19,797
13,076
Loss for the year
—
—
(6,721)
(10,819)
(6,721)
(10,819)
19,797
(334)
13,076
(11,153)
—
(10,819)
(10,819)
(334)
(11,153)
—
(17,540)
(17,540)
19,463
1,923
— II-147 —
APPENDIX II
5.
Combined Cash Flow Statements
Note
Interest paid
Net cash (used in)/generated from operating
activities
Net cash generated from/
(used in) financing activities
19
2011
RMB’000
2012
RMB’000
2013
RMB’000
92,041
(101,993)
704,391
(37,700)
(1,117,741)
(26,769)
(9,952)
666,691
(1,144,510)
1,203,730
(1,193,730)
1,553,808
(2,219,500)
1,270,434
(125,000)
10,000
(665,692)
1,145,434
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of the
year
48
999
924
285
333
1,332
333
1,332
2,256
— II-148 —
APPENDIX II
II.
1.
Group structure, reorganization and principal activities
(a)
General information
Bright Shining Group Limited (“Bright Shining”) was incorporated with limited liability in the
British Virgin Islands on 8 January 2008. The address of its registered office is P.O. Box 957, Offshore
Bright Shining, being an investment holding company and its subsidiaries (collectively referred to
as the “Bright Shining Group”) are principally engaged in property development in the People’s Republic
of China (the “PRC”). At the date of the report and during the Relevant Periods, the ultimate holding
company of Bright Shining is Sino-Ocean Land Holding Limited (the “SOLH”), a company incorporated
in Hong Kong with its shares listed on the Main Board of The Stock Exchange of Hong Kong Limited.
The combined financial statements are presented in Renminbi (“RMB”), unless otherwise stated.
(b)Reorganization
During the Relevant Periods, the property development business of the Bright Shining Group
was conducted by Qingdao Yuanjia Property Development Company Limited (the “Qingdao Yuanjia”), a
company incorporated in the PRC. At the date of this report, the Bright Shining indirectly holds Qingdao
Yuanjia through an intermediate investment holding company. The Bright Shining Group was ultimately
controlled by the SOLH during the Relevant Periods.
During the Relevant Periods, although the Bright Shining held 97% of the equity interest in
Qingdao Yuanjia, the Bright Shining did not have the power to control the financial and operating
policies of Qingdao Yuanjia. Pursuant to the Reorganization, the Bright Shining acquired an 80% voting
rights of Qingdao Yuanjia from Sino-Ocean Land Limited (the “SOLL”), a wholly-owned subsidiary of
the SOLH and therefore upon completion of the Reorganization, Qingdao Yuanjia became a subsidiary
of the Bright Shining.
2.
Basis of presentation
Prior to and following the Reorganization, all the business of the Bright Shining Group is ultimately
controlled by SOLH. Accordingly, the Reorganization has been accounted for as a business combination under
common control using merger accounting.
For the purpose of this report, the combined Financial Information of the Bright Shining Group has
been prepared using the principles of merger accounting, as prescribed in Hong Kong Accounting Guidance 5
“Merger Accounting for Common Control Combinations” issue by the HKICPA. Accordingly, Bright Shining
Group’s combined balance sheets as at 31 December 2011, 2012 and 2013, and its combined income statements,
combined statements of comprehensive income, combined statements of changes in equity and combined cash
flow statements for the Relevant Periods have been prepared using the financial information of the companies
now comprising the Bright Shining Group as if the current group structure had been in existence since 1 January
2011.
— II-149 —
APPENDIX II
3.
3.1
The preparation of the Financial Information in conformity with HKFRS requires the use of
certain critical accounting estimates. It also requires management to exercise its judgment in the process
of applying the Company’s accounting policies. The areas involving a higher degree of judgment
or complexity, or areas where assumptions and estimates are significant to the combined financial
statements, are disclosed in Note 5.
As at 31 December 2013, the Bright Shining Group’s gearing ratio is 100%, which created doubt
about Bright Shining Group’s ability to continue as a going concern. The directors of the Bright Shining
have prepared cash flow projections by taking into account the financial resources available to the Bright
Shining Group, mainly including cash generated from operating activities. Moreover, other borrowings
from a fellow subsidiary amounting to RMB1,170,434,000 (see Note 11) were replaced by long term
entrusted loans as a result of an agreement reached between the Bright Shining Group and a subsidiary
of SOLH after 31 December 2013 (see Note 22). Taking these into account, the directors of the Company
believe that the Bright Shining Group will have sufficient financial resources for its operations in the
next twelve months from 31 December 2013. Consequently the directors of the Company have prepared
the Financial Information on a going concern basis.
3.2
and amended in July 2014. It replaces the whole of HKAS 39. HKFRS 9 has three financial asset
classification categories for investments in debt instruments: amortised cost, fair value through other
For financial liabilities there are two classification categories: amortised cost and fair value through
loss, the changes in the fair value due to changes in the liability’s own credit risk are recognised in
case, all fair value movements are recognised in profit or loss. There is no subsequent recycling of the
losses (ECL) model, which constitutes a change from the incurred loss model in HKAS 39. HKFRS 9
contains a “three stage” approach, which is based on the change in credit quality of financial assets since
initial recognition. Assets move through the three stages as credit quality changes and the stages dictate
how an entity measures impairment losses and applies the effective interest rate method. The new rules
mean that on initial recognition of a non-credit impaired financial asset carried at amortised cost a day1 loss equal to the 12-month ECL is recognised in profit or loss. In the case of accounts receivables
— II-150 —
APPENDIX II
of an entity and provides relief from the more “rule-based” approach of HKAS39.
option to apply the standard in phases. Therefore the Bright Shining Group is yet to assess HKFRS 9’s
full impact.
application is permitted. The Bright Shining Group is yet to assess HKFRS 15’s full impact.
3.3Subsidiaries
3.3.1Consolidation
A subsidiary is an entity (including a structured entity) over which the Bright Shining
Group has control. The Bright Shining Group controls an entity when the Bright Shining
Group is exposed to, 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. Subsidiaries are
consolidated from the date on which control is transferred to the Bright Shining Group. They are
deconsolidated from the date that control ceases.
(a)
Business combination under common control
The combined financial information incorporate the financial statements of the
combining entities or businesses in which the common control combination occurs as if
they had been combined from the date when the combining entities or businesses first
came under the control of the controlling party.
The net assets of the combining entities or businesses are combined using the
existing book values from the controlling parties’ perspective. No amount is recognized
in consideration for goodwill or excess of acquirers’ interest in the net fair value of
acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of
common control combination, to the extent of the continuation of the controlling party’s
interest.
The combined income statement includes the results of each of the combining
entities or businesses from the earliest date presented or since the date when the
combining entities or businesses first came under the common control, where there is a
shorter period, regardless of the date of the common control combination.
The comparative amounts in the combined financial information are presented as
if the entities or businesses had been combined at the previous balance sheet date or when
they first came under common control, whichever is shorter.
— II-151 —
APPENDIX II
A uniform set of accounting policies is adopted by those entities. All intra-group
transactions, balances and unrealized gains on transactions between combining entities or
businesses are eliminated on combination.
Transaction costs, including professional fees, registration fees, costs of
furnishing information to shareholders, costs or losses incurred in combining operations
of the previously separate businesses, etc., incurred in relation to the common control
combination that is to be accounted for by using merger accounting is recognized as an
expense in the period in which it is incurred.
(b)
Business combinations not under common control
Bright Shining Group applies the acquisition method to account for business
combinations with parties that are not under common control. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred,
the liabilities incurred to the former owners of the acquiree and the equity interests issued
by the Bright Shining Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date. Bright Shining Group
recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition
basis, either at fair value or at the non-controlling interest’s proportionate share of the
recognized amounts of acquiree’s identifiable net assets.
Any contingent consideration to be transferred by the Bright Shining Group is
recognized at fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability is recognized in
accordance with HKAS 39 either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not remeasured, and its
subsequent settlement is accounted for within equity.
interest in the acquiree and the acquisition-date fair value of any previous equity interest
goodwill. If the total of consideration transferred, non-controlling interest recognized
amounts reported by subsidiaries have been adjusted to conform with the Bright Shining
Group’s accounting policies.
— II-152 —
APPENDIX II
(c)
(d)
When the Bright Shining Group ceases to have control, any retained interest in the
entity is remeasured to its fair value at the date when control is lost, with the change in
carrying amount recognized in profit or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained interest as an associate,
joint venture or financial asset. In addition, any amounts previously recognized in other
comprehensive income in respect of that entity are accounted for as if the Bright Shining
Group had directly disposed of the related assets or liabilities. This may mean that
amounts previously recognized in other comprehensive income are reclassified to profit or
loss.
in the separate financial statements exceeds the carrying amount in the combined financial
information of the investee’s net assets including goodwill.
3.4
(a)
Items included in the financial statements of each of the Bright Shining Group’s
entities are measured using the currency of the primary economic environment in which the
entity operates (the “functional currency”). The combined financial statements are presented
in Renminbi (“RMB”), which is the Company’s functional and the Bright Shining Group’s
presentation currency.
(b)
currencies are recognized in the combined income statement.
net”.
— II-153 —
APPENDIX II
(c)
Group companies
3.5
(i)
(ii)
rates (unless this average is not a reasonable approximation of the cumulative
(iii)
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Bright Shining Group and the cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognized. All other repairs and maintenance are charged to the combined income
statement during the financial period in which they are incurred.
Machineries
Vehicles
Office equipment
8
8
5
3
years
years
years
years
These are recognized within “other gains/(losses) — net”, in the combined income statement.
— II-154 —
APPENDIX II
3.6
reporting date.
3.7
Financial assets
3.7.1Classification
The Bright Shining Group classifies its financial assets into financial assets at fair
value through profit or loss, loans and receivables, and available-for-sale financial assets. The
classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition and re-evaluates this
designation at every reporting date.
(a)
(b)
reporting period, which are classified as non-current assets. The Bright Shining Group’s
loans and receivables comprise “other receivables” and “cash and cash equivalents” in the
balance sheet (Note 3.10 and 3.11).
(c)
Regular way purchases and sales of financial assets are recognized on trade-date, the date
on which the Bright Shining Group commits to purchase or sell the asset. Investments are initially
recognized at fair value plus transaction costs for all financial assets not carried at fair value
through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognized at fair value, and transaction costs are expensed in the combined income statement.
— II-155 —
APPENDIX II
Financial assets are derecognized when the rights to receive cash flows from the investments
have expired or have been transferred and the Bright Shining Group has transferred substantially
all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at
fair value. Loans and receivables are subsequently carried at amortized cost using the effective
interest method.
through profit or loss is recognized in the income statement as part of other income when the
Bright Shining Group’s right to receive payments is established.
value adjustments recognized in equity are included in the combined income statement as part of
“other gains/(losses) – net”.
Interests on available-for-sale securities calculated using the effective interest method are
recognized in the combined income statement as part of other income. Dividends on availablefor-sale equity instruments are recognized in the combined income statement as part of other
income when the Bright Shining Group’s right to receive payments is established.
3.8
(a)
The Bright Shining Group assesses at the end of each reporting period whether there
is objective evidence that a financial asset or group of financial assets is impaired. A financial
asset or a group of financial assets is impaired and impairment losses are incurred only if there is
estimated.
original effective interest rate. The carrying amount of the asset is reduced and the amount of
the loss is recognized in the combined income statement. If a loan or held-to-maturity investment
has a variable interest rate, the discount rate for measuring any impairment loss is the current
effective interest rate determined under the contract. As a practical expedient, the Bright Shining
Group may measure impairment on the basis of an instrument’s fair value using an observable
market price.
loss is recognized in the combined income statement.
— II-156 —
APPENDIX II
(b)
The Bright Shining Group assesses at the end of each reporting period whether there
is objective evidence that a financial asset or a group of financial assets is impaired. For debt
securities, the Bright Shining Group uses the criteria referred to (a) above. In the case of equity
investments classified as available-for-sale, a significant or prolonged decline in the fair value
of the security below its cost is also evidence that the assets are impaired. If any such evidence
exists for available-for-sale financial assets, the cumulative loss — measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial
asset previously recognized in profit or loss — is removed from equity and recognized in the
combined income statement. Impairment losses recognized in the combined income statement on
equity instruments are not reversed through the combined income statement. If, in a subsequent
period, the fair value of a debt instrument classified as available-for-sale increases and the
increase can be objectively related to an event occurring after the impairment loss was recognized
in profit or loss, the impairment loss is reversed through the combined income statement.
3.9Inventories
(a)
expenses.
(b)
conditions.
3.10
Other receivables
If collection of other receivables is expected in one year or less (or in the normal operating cycle
of the business if longer), they are classified as current assets. If not, they are presented as non-current
assets.
Other receivables are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest method, less provision for impairment.
3.11
In the combined cash flow statement, cash and cash equivalents includes cash in hand, deposits
held at call with banks, other short-term highly liquid investments with original maturities of three
months or less.
— II-157 —
APPENDIX II
3.12
Combined capital
As the financial information has been prepared on a combined basis, the combined capital in the
combined financial information represents the parent’s net investment in the Bright Shining Group.
3.13
Trade payables
3.14
Borrowings are classified as current liabilities unless the Bright Shining Group has an
unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
3.15
substantively enacted at the balance sheet date in the country where the Bright Shining’s
subsidiaries operate and generate taxable income. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
— II-158 —
APPENDIX II
arising between the tax bases of assets and liabilities and their carrying amounts in the combined
financial statements. However, deferred tax liabilities are not recognized if they arise from the
initial recognition of goodwill, the deferred income tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related deferred income tax
asset is realized or the deferred income tax liability is settled.
from investments in subsidiaries, except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Bright Shining Group and it is probable
that the temporary difference will not reverse in the foreseeable future. Generally the Bright
Shining Group is unable to control the reversal of the temporary difference for associates. Only
where there is an agreement in place that gives the Bright Shining Group the ability to control
the reversal of the temporary difference not recognized.
3.15.3 Offsetting
net basis.
3.16
Employee benefits
(a)
(b)
Bonus entitlements
— II-159 —
APPENDIX II
(c)
Retirement benefits
In accordance with the rules and regulations in the PRC, the PRC based employees of the
Bright Shining Group participate in various defined contribution retirement plans organized by
the relevant municipal and provincial governments in the PRC under which the Bright Shining
Group and the PRC based employees are required to make monthly contributions to these plans
calculated as a percentage of the employees’ salaries.
described above. Other than the monthly contributions, the Bright Shining Group has no further
obligation for the payment of retirement and other post retirement benefits of its employees. The
assets of these plans are held separately from those of the Bright Shining Group in independently
administrated funds managed by the PRC government.
The Bright Shining Group’s contributions to the defined contribution retirement schemes
are expensed as incurred.
3.17Provisions
Provisions are recognized when the Bright Shining Group has a present legal or constructive
obligation as a result of past events; it is probable that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated. Provisions are not recognized for future
operating losses.
3.18
Revenue recognition
and services in the ordinary course of the Bright Shining Group’s activities. Revenue is shown, net of
returns, discounts and after eliminating sales within the Bright Shining Group.
The Bright Shining Group recognizes revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity and when specific criteria
have been met for each of the Bright Shining Group’s activities as described below. The Bright
Shining Group bases its estimates on historical results, the type of transaction and the specifics of each
arrangement.
(a)
Sale of properties
customers.
— II-160 —
APPENDIX II
(b)
Interest income
receivable is impaired, the Bright Shining Group reduces the carrying amount to its recoverable
amount, being the estimated future cash flow discounted at the original effective interest rate of
the instrument, and continues unwinding the discount as interest income.
4.
4.1
The Bright Shining Group’s activities expose it to a variety of financial risks: market risk
(including foreign exchange risk, cash flow interest rate risk and fair value interest rate risk), credit
risk and liquidity risk. The Bright Shining Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the Bright
Shining Group’s financial performance. The board of directors reviews and approves policies for
managing each of these risks and they are summarized below.
(a)
Market risk
(i)
The operations and majority of the Bright Shining Group’s customers are located
in the PRC with most of the assets/liabilities and transactions denominated and settled in
RMB. As the commercial transactions settled in foreign currencies are not material, the
directors of the Bright Shining are of the view that the Bright Shining Group’s exposure
to foreign exchange risk would be immaterial.
(ii)
As the Bright Shining Group has no significant interest-bearing assets, the Bright
Shining Group’s income and operating cash flows are substantially independent of
changes in market interest rates.
The Bright Shining Group’s interest rate risk arises from long-term borrowings
with prevailing market interest rates. Such risk is partly offset by cash at banks held at
prevailing market interest rates. During the Relevant Periods, the Bright Shining Group’s
borrowings at prevailing market interest rates were denominated in RMB.
The Bright Shining Group currently does not utilize any derivative contracts to
hedge its exposure to interest rate risk. However, management will consider hedging
significant interest rate exposure should the need arise.
The directors of the Bright Shining consider that the fluctuation in interest rate
has no material impact on the Group’s post-tax profit for the Relevant Periods as most of
interest expenses were capitalized.
— II-161 —
APPENDIX II
(b)
Credit risk
Credit risk arises from cash and cash equivalents, other receivables. The carrying amounts
of cash and cash equivalents, other receivables, represent the Bright Shining Group’s maximum
exposure to credit risk in relation to its financial assets.
To manage such exposure, the Bright Shining Group has policies in place to ensure that
sales are made to purchasers with appropriate financial strengths and credit history, at the same
time appropriate percentages of down payments are made. Deposits are placed with banks with
appropriate credit ratings. Monitoring procedures are also in place to ensure that follow-up action
is taken to recover overdue debts. In addition, the Bright Shining Group reviews and assesses
the recoverable amount of each individual trade receivables on a regular basis to ensure that
adequate impairment losses are made for irrecoverable amounts. The Bright Shining Group has
no significant concentration of credit risk, with exposure spread over a number of counterparties
and customers.
(c)
Liquidity risk
Cash flow forecast by the Bright Shining Group and the Bright Shining Group monitors
rolling forecasts of the Bright Shining Group’s liquidity requirements to ensure it has sufficient
cash to meet operational needs while maintaining sufficient headroom on its undrawn committed
borrowing facilities at all times so that the group does not breach borrowing limits or covenants
(where applicable) on any of its borrowing facilities. Such forecast takes into consideration the
Bright Shining Group’s debt financing plans, covenant compliance, compliance with internal
balance sheet ratio Targets.
As at 31 December 2011, 2012 and 2013, the Bright Shining Group held cash and cash
equivalents of RMB333,000, RMB1,332,000 and RMB2,256,000 (Note 10) and other receivables
of RMB1,000, RMB5,000 and RMB54,000 (Note 9) that are expected to readily generate cash
inflows for managing liquidity risk.
The table below analyzes the Bright Shining Group’s non-derivative financial liabilities
— II-162 —
APPENDIX II
into relevant maturity groupings based on the remaining period at the balance sheet date to the
flows.
At 31 December 2011
Borrowings
At 31 December 2012
Borrowings
At 31 December 2013
Borrowings
4.2
Less than
1 year
RMB’000
Between
1 and
2 years
RMB’000
Between
2 and
5 years
RMB’000
Total
RMB’000
1,040,661
785,165
—
—
—
—
1,040,661
785,165
1,825,826
—
—
1,825,826
148,305
1,693,940
189,113
—
—
—
337,418
1,693,940
1,842,245
189,113
—
2,031,358
1,457,616
730,779
55,210
—
—
—
1,512,826
730,779
2,188,395
55,210
—
2,243,605
The Bright Shining Group’s objectives when managing capital are to safeguard the Bright
Shining Group’s ability to continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Bright Shining Group may adjust the
amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Bright Shining Group monitors capital on the basis of
the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as
total borrowings (including current and non-current borrowings as shown in the combined balance sheet)
less cash and cash equivalents. Total capital is calculated as “equity” as shown in the combined balance
sheet plus net debt.
— II-163 —
APPENDIX II
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
969,500
(333)
303,808
(1,332)
1,449,242
(2,256)
Net debt
Total equity
969,167
16,592
302,476
13,076
1,446,986
1,923
Total capital
985,759
315,552
1,448,909
Gearing ratio
98%
96%
100%
As at respective balance sheet dates, Bright Shining has gearing ratio of over 95%, which created
doubt about the Bright Shining Group’s ability to continue as a going concern. The directors of Bright
Shining have prepared cash flow projections by taking into account the financial resources available
to Bright Shining Group which mainly includes cash generated from operating activities. In addition,
subsequent to 31 December 2013, borrowings from a fellow subsidiary amounting to RMB1,170,434,000
were replaced by long term entrusted loans (see Note 22). On this basis, the directors of the Company
believe that Bright Shining Group will have sufficient financial resources for its operations at least for
the next twelve months from 31 December 2013.
5.
The Bright Shining Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
(a)
The Bright Shining Group is primarily subject to various PRC taxes, as it is principally engaged
in property development in the PRC. Significant judgment is required in determining the provision for
income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Bright Shining recognizes liabilities for anticipated
tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome
of these matters is different from the amounts that were initially recorded, such differences will impact
the income tax and deferred income tax provisions in the period in which such determination is made.
— II-164 —
APPENDIX II
Significant judgment is required in determining the extent of land
taxes. The Bright Shining Group recognized LAT based on management’s
the understanding of the tax rules. The final tax outcome could be different
initially recorded, and these differences will impact the combined income
(b)
appreciation and its related
best estimates according to
from the amounts that were
statement in the periods in
Deferred income tax
different.
(c)
Estimations for total properties construction cost
The Bright Shining Group estimates properties construction cost upon recognition of respective
costs of sales. Such estimates are substantiated by detailed budgetary information as developed by the
recognized.
(d)
The Bright Shining Group tests at least annually whether assets have suffered any impairment
in accordance with the accounting policies stated in Note 3.6. Assets are also reviewed for impairment,
6
As at the date of this report, the Bright Shining has direct and indirect interests in the subsidiaries as
follows, all of which are unlisted:
Name
Establishment/
Place and date of
incorporation and
Statutory auditor
for the years ended
2011, 2012 and 2013
(1)
Moral Rich Development Limited
德富發展有限公司
Hong Kong/
23 January 2008/
Limited company
Accountants
(2)
Qingdao Yuanjia
青島遠佳置業有限公司
The PRC/
7 April 2010/
Limited company
Zhong Tian LLP
Registered
and fully
paid
capital
RMB’000
Effective
interests
held —
directly Principal
held activities
(%)
—
100%
666,670
97%
Investment
holding
Property
development
available.
— II-165 —
APPENDIX II
7.
Loans and
receivables
RMB’000
Assets
1
333
334
5
1,332
1,337
54
2,256
2,310
— II-166 —
APPENDIX II
Financial
liabilities at
amortized cost
RMB’000
Liabilities
969,500
785,165
1,754,665
303,808
1,693,940
1,997,748
1,449,242
730,779
2,180,021
— II-167 —
APPENDIX II
8.
2011
RMB’000
2012
RMB’000
2013
RMB’000
Additions
1,621,048
148,632
1,769,680
238,850
2,008,530
170,297
At end of the year
1,769,680
2,008,530
2,178,827
Land use rights
1,607,322
57,118
105,240
1,607,322
258,268
142,940
1,607,322
401,796
169,709
1,769,680
2,008,530
2,178,827
As at 31 December
In the PRC held on:
2011
RMB’000
2012
RMB’000
2013
RMB’000
1,228,959
378,363
1,228,959
378,363
1,228,959
378,363
1,607,322
1,607,322
1,607,322
As at 31 December 2012 and 2013, properties under development of approximately RMB1,607,322,000
were pledged as collateral for the Bright Shining Group’s borrowings (Note 11).
— II-168 —
APPENDIX II
9.
Other receivables
The carrying amounts of other receivables approximate their respective fair values as at 31 December
2011, 2012 and 2013.
mentioned above. The carrying amounts of the Bright Shining Group’s other receivables are mainly denominated
in RMB.
10.
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
333
1,332
2,256
Denominated in:
— RMB
333
1,332
2,256
The Bright Shining Group’s cash and cash equivalents denominated are deposited with banks in the PRC
and Hong Kong, respectively. The conversion of the RMB denominated balances into foreign currencies, which
are placed within the PRC, is subject to the rules and regulations of foreign exchange control promulgated by
the PRC Government.
11Borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Non-current
Bank borrowings (a)
—
178,808
53,808
—
178,808
53,808
Current
Current portion of long-term bank borrowings (a)
Short-term other borrowings (b)
—
969,500
125,000
—
225,000
1,170,434
969,500
125,000
1,395,434
Total borrowings
969,500
303,808
1,449,242
(a)
As at 31 December 2012 and 2013, bank borrowings amounting to RMB303,808,000 and
RMB278,808,000, respectively, were secured by properties under development, bearing interest
rate at 8% per annum and wholly repayable no later than June 2015 (Note 8).
(b)
The balances represented the entrusted loans from the SOLL, a fellow subsidiary, which are
unsecured bear interest rate from 3.5% to 10% per annum and are wholly repayable within one
year. Subsequent to 31 December 2013, these borrowings were replaced by long term entrusted
loans which are due after one year (Note 22).
— II-169 —
APPENDIX II
(c)
The maturities of the Bright Shining Group’s total borrowings at respective balance sheet dates
are set out as follows:
As at 31 December
Total borrowings
— Within 1 year
2011
Bank and
other
borrowings
RMB’000
2012
Bank and
other
borrowings
RMB’000
2013
Bank and
other
borrowings
RMB’000
969,500
—
125,000
178,808
1,395,434
53,808
969,500
303,808
1,449,242
Bank borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
—
303,808
278,808
Other borrowings
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
969,500
—
1,170,434
(d)
All of the Bright Shining Group’s borrowings are denominated in RMB.
(e)
follows:
As at 31 December
2011
RMB’000
2012
RMB’000
2013
RMB’000
Bank borrowings
—
8%
8%
Other borrowings
10.03%
7.32%
3.5%
— II-170 —
APPENDIX II
(f)
The exposure of the Bright Shining Group’s borrowings to interest-rate changes and the
contractual repricing dates are as follows:
As at 31 December
Within 6 months
Between 6 and 12 months
(g)
12.
2011
RMB’000
2012
RMB’000
2013
RMB’000
969,500
—
—
303,808
1,170,434
278,808
969,500
303,808
1,449,242
2011, 2012 and 2013, as the discounting rate approximates the market rate. The fair values are
based on cash flows discounted using a rate based on the borrowing rate of 7.72%, 8% and 8%
for the years ended 31 December 2011, 2012 and 2013, respectively, and are within level 2 of the
fair value hierarchy.
As at 31 December
Trade payables
Amounts due to a fellow subsidiary (a)
Deposits due to suppliers
Other payables
2011
RMB’000
2012
RMB’000
2013
RMB’000
5,381
776,732
510
2,542
68,953
1,612,730
10,120
2,137
71,206
646,833
10,602
2,138
785,165
1,693,940
730,779
(a)
Amounts due to a fellow subsidiary are unsecured, interest free, and repayable on demand.
(b)
As at 31 December
Within 6 months
— II-171 —
2011
RMB’000
2012
RMB’000
2013
RMB’000
5,381
68,953
71,206
APPENDIX II
13.
Interest and other income are interest income from cash at bank during the Relevant Periods.
14.
Other gains/(losses) mainly represented exchange gains/(losses).
15.
Expenses by nature
as follows:
Employee benefit expense (Note 16)
Others
16.
2011
RMB’000
2012
RMB’000
2013
RMB’000
810
835
178
370
275
285
930
10,061
185
1,823
930
11,176
The employee benefits expense of the Bright Shining Group, including its directors’ emoluments is as
follows:
Less: capitalized in properties under development
2011
RMB’000
2012
RMB’000
2013
RMB’000
4,537
727
2,086
823
4,842
1,171
5,264
2,909
6,013
(4,454)
(2,539)
(5,083)
810
370
930
The Bright Shining Group’s employees participate in various retirement benefit plans organized by the
relevant municipal and provincial government in the PRC under which the Bright Shining Group was required to
make monthly contributions at rates ranging from 10% to 20%, depending on the applicable local regulations, of
the employees’ salary for the years ended 31 December 2011, 2012 and 2013.
Two directors of the Company, Mr. Sum Pui Ying and Mr. Li Zhenyu, are also directors of Bright
Shining, who have not received any remunerations from the Bright Shining Group during the Relevant Periods.
— II-172 —
APPENDIX II
17.
Finance costs
2011
RMB’000
Interest expense:
— Bank borrowings
—
101,993
(101,993)
—
2012
RMB’000
7,961
29,739
(37,700)
2013
RMB’000
24,276
2,493
(26,769)
—
—
The interest capitalization rate for the years ended 31 December 2011, 2012 and 2013 is 10.03%, 7.51%
and 6.85%, respectively.
18.
Income tax expense
tax.
Taxation on the Bright Shining Group’s profit/(loss) before tax differs from the theoretical amount that
would arise using the enacted tax rate of the home country of the Bright Shining Group as follows:
2011
RMB’000
2012
RMB’000
2013
RMB’000
Loss before income tax
(513)
(3,516)
(11,153)
(128)
(324)
—
452
(879)
—
657
222
(2,788)
—
2
2,786
Income tax expense
—
— II-173 —
—
—
APPENDIX II
19.
2011
RMB’000
Loss for the year
Changes in working capital (excluding the effects of
acquisition and exchange differences on combination):
20.
2012
RMB’000
2013
RMB’000
(513)
(3,516)
(11,153)
(46,503)
58,008
81,049
(200,864)
(4)
908,775
(143,378)
(49)
(963,161)
92,041
704,391
(1,117,741)
Capital commitments
As at 31 December
21.
2011
RMB’000
2012
RMB’000
2013
RMB’000
11,752
243,640
182,475
Save as disclosed in Note 11 and Note 12, the following is a summary of significant related party
balances and transactions entered into in the ordinary course of business between Bright Shining Group and its
related parties during the years ended 31 December 2011, 2012 and 2013:
(a)
Loans from a related party
At 1 January
Interest charged
Interest paid
At 31 December (Note 11(b))
2011
RMB’000
2012
RMB’000
2013
RMB’000
959,500
1,203,730
(1,193,730)
101,993
(101,993)
969,500
1,225,000
(2,194,500)
29,739
(29,739)
—
1,170,434
—
2,493
(2,493)
969,500
— II-174 —
—
1,170,434
APPENDIX II
(b)
Amounts due to a related party
2011
RMB’000
22
2012
RMB’000
2013
RMB’000
1,612,730
193,655
(1,159,552)
At 1 January
644,202
134,581
(2,051)
776,732
2,288,334
(1,452,336)
At 31 December (Note 12)
776,732
1,612,730
646,833
In September 2014, Bright Shining Group entered into a new entrusted loan facility agreement with a
fellow subsidiary under which other borrowings amounting to RMB1,170,434,000 were replaced by long term
entrusted loans to be repayable within five years, unsecured and bore interest rate at 3.5% per annum.
No audited financial statements have been prepared by Bright Shining or any of its subsidiaries in respect of any
period subsequent to 31 December 2013 up to the date of this report. Save as disclosed in this report, no dividend or
distribution has been declared or made by Bright Shining or any of its subsidiaries in respect of any period subsequent
to 31 December 2013.
Yours faithfully,
Hong Kong
— II-175 —
APPENDIX II
MANAGEMENT DISCUSSION AND ANALYSIS OF BRIGHT SHINING GROUP LIMITED
Set out below is the management discussion and analysis on Bright Shining Group Limited and
its subsidiaries (the “Group”) for the years ended 31 December 2011, 2012 and 2013.
Business Review
Bright Shining Group Limited held 100% equity interests in Moral Rich Development Limited
which directly holds 97% equity interests in a subsidiary, Qingdao Yuanjia Development Company
Limited (“Qingdao Yuanjia”). Qingdao Yuanjia principally engaged in property development in
Qingdao, the PRC and has been operating the property development project-Ocean Honored Chateau
(Qingdao). It is located at No. 23 Yanerdao Road, Shinan District, Qingdao of Shandong Province.
The project is planned to be developed into a mixed complex retail, residential, serviced apartment
and car parking spaces. The project is expected to be completed in 2015.
(1)
Revenue
No revenue generated during year ended 31 December 2013 (2012: Nil) was mainly due
to there is no delivery of the Group’s project - Ocean Honored Chateau Qingdao project during
the year.
fees, increased from approximately RMB0.8 million in 2012 to approximately RMB11.2 million
in 2013, which was mainly due to increase in spending on promoting the Ocean Honored
Chateau Qingdao project which expected to start the pre-sales on the early 2015. The Group
recorded insignificant administrative expenses which mainly represented the office expenses.
Taxation
There was no income tax expense for the Group as the Group had no assessable profit
during 2013 (2012: nil).
Loss for the year
a loss of approximately RMB11.2 million during 2013 (2012: approximately RMB3.5 million).
Increase in loss was mainly due to the increase in operating loss in 2013 when the Group had
no revenue generated during the year.
— II-176 —
APPENDIX II
amounted to approximately RMB1,449.2 million (as at 31 December 2012: approximately 303.8
million) , in which 4% (as at 31 December 2012: 59%) and 96% (as at 31 December 2012:
respectively. Bank borrowings carried weighted average effective interest rate of around 8% in
2013 (as at 31 December 2012: around 8%).
RMB2.3 million (as at 31 December 2012: approximately RMB1.3 million). Cash and cash
equivalents are all comprised of RMB.
Gearing ratio
31 December 2012: approximately 96%). Net debt was calculated as total borrowings less cash
million (as at 31 December 2012: approximately RMB1,607 million), was pledged as collateral
for the Group’s borrowings in the purpose of the property development.
As at 31 December 2013, Bright Shining Group Limited and Moral Rich Development
Limited were pledged for bank borrowing to Sino-Ocean Land Holdings Limited. The pledge is
expected to be released before 31 December 2014.
Capital commitment
not yet incurred amounted to approximately RMB182.5 million (as at 31 December 2012:
approximately RMB243.6 million).
Exchange rate risk
— II-177 —
APPENDIX II
Interest rate risk
Credit risk
cash and cash equivalents and other receivables. To manage such exposure, the Group monitors
and assesses these credit risks on an ongoing basis.
December 2012: 17).
(2)
Revenue
No revenue generated during year ended 31 December 2012 (2011: Nil) because there is
no delivery of the Group’s project – Ocean Honored Chateau Qingdao project during the year.
fees, decreased from approximately RMB1.8 million in 2011 to approximately RMB0.8 million
in 2012, which were mainly due to decrease in the employee bonus and marketing expenses
during the year. The Group recorded insignificant administrative expenses which mainly
represented the office expenses.
Taxation
during 2012 (2011: Nil)
— II-178 —
APPENDIX II
Loss for the year
a loss of approximately RMB3.5 million during 2012 (2011: approximately RMB0.5 million).
Increase in loss was mainly due to the increase in operating loss in 2012 when the Group has
no revenue generated during the year.
amounted to approximately RMB303.8 million (as at 31 December 2011: approximately 969.5
million) , in which 59% (as at 31 December 2011: nil) and 41% (as at 31 December 2011:
respectively. Bank borrowings carried weighted average effective interest rate of around 8% in
2012.
RMB1.3 million (as at 31 December 2011: approximately RMB0.3 million). Cash and cash
equivalents are all comprised of RMB.
Gearing ratio
31 December 2011: approximately 98%). Net debt was calculated as total borrowings less cash
million, was pledged as collateral for the Group’s borrowings in the purpose of the property
development.
Capital commitment
not yet incurred amounted to approximately RMB243.6 million (as at 31 December 2011:
approximately RMB11.8 million).
— II-179 —
APPENDIX II
Exchange rate risk
Interest rate risk
During 2012, the Group’s interest rate risk arose from borrowings with prevailing market
interest rates. Such risk was partly offset by cash at banks held at prevailing market interest
rates. The Group’s borrowings at prevailing market interest rates were denominated in RMB.
Credit risk
December 2011: 21).
(3)
Revenue
No revenue generated during 2011, because there is no delivery of the Group’s project –
Ocean Honored Chateau Qingdao project during the year.
Selling and marketing expenses of approximately RMB1.8 million, mainly represented
the advertisement and marketing fees. The Group recorded insignificant administrative expenses
which mainly represented the office expenses.
— II-180 —
APPENDIX II
Taxation
during 2011.
Loss for the year
a loss of approximately RMB0.5 million during 2011, as a result of operating loss recognized
while no revenue generated during the year.
amounted to approximately RMB969.5 million , in which 100% of the Group’s total borrowing
were matured within one year.
RMB0.3 million. Cash and cash equivalents are all comprised of RMB.
Gearing ratio
As at 31 December 2011, the gearing ratios of the Group was approximately 98%. Net
debt was calculated as total borrowings less cash and cash equivalents. Total capital was
calculated as total equity plus net debt.
Capital commitment
incurred amounted to approximately RMB11.8 million.
— II-181 —
APPENDIX II
Exchange rate risk
Interest rate risk
During 2011, the Group’s interest rate risk arose from borrowings with prevailing market
interest rates. Such risk was partly offset by cash at banks held at prevailing market interest
rates. The Group’s borrowings at prevailing market interest rates were denominated in RMB.
Credit risk
— II-182 —
APPENDIX II
Target group
Unaudited financial highlight of the target group as at 31 September
2014
The following is the unaudited financial highlight prepared by the directors of the Company, for
the purpose of illustration in this circular. The unaudited consolidated statement of financial position,
consolidated income statement and consolidated statement of comprehensive income of the Target
Group are prepared as if the reorganisation of the Target Group, which comprise i) the Reorganisation
as disclosed in Note 1(b) (page II-36 & 37) of the accountant’s report of Metro Splendid Limited; and
ii) the acquisition of entire equity interests of Bright Shining Group Limited and Max Great Holdings
Limited by Metro Splendid Limited, has been completed as at 30 September 2014.
I.
The following is the unaudited consolidated financial information of the Target Group prepared
by the directors of the Company as at 30 September 2014.
Consolidated Statement of financial Position
ASSETS
Non-current assets
Current assets
Inventories at cost
Amounts due from customers
for contract work
Completed properties held
for sale
Total assets
As at
30 September
2014
Metro Splendid
RMB’000
(Audited)
Bright Shining
RMB’000
(Audited)
Max Great
RMB’000
(Audited)
Combine
adjustment
RMB’000
(Unaudited)
(note 1)
Combined
RMB’000
(Unaudited)
Combined
RMB’000
(Unaudited)
11,755
5,247
119,670
807
—
—
501
—
11,741
—
—
—
13,063
5,247
131,411
12,534
2,361
128,243
136,672
807
12,242
—
149,721
143,138
—
17,845,171
4,221
—
2,178,827
—
118,745
873,362
—
—
(485)
—
118,745
20,896,875
4,221
100,489
19,979,385
8,786
536,972
—
—
—
536,972
634,421
2,129,109
3,443,275
493,270
1,328,957
—
54
2,256
47,421
124,825
103,556
204,201
—
(485)
—
—
2,176,530
3,567,669
596,826
1,535,414
2,050,405
4,057,988
1,016,907
149,703
(note 2)
25,780,975
2,181,137
1,472,110
(970)
29,433,252
27,998,084
25,917,647
2,181,944
1,484,352
(970)
29,582,973
28,141,222
Note 1:T he combined adjustment represented elimination of inter-company transactions related to the upfitting
services provided by Sino-Ocean Decor to other subsidiaries within the Target Group.
Note 2:T he decrease in cash and cash equivalents was mainly due to the operating expenses of the Target Group
for the development of property projects.
— II-183 —
APPENDIX II
As at
30 September
2014
Metro Splendid
RMB’000
(Audited)
Bright Shining
RMB’000
(Audited)
Max Great
RMB’000
(Audited)
Combine
adjustment
RMB’000
(Unaudited)
Combined
RMB’000
(Unaudited)
Combined
RMB’000
(Unaudited)
678,132
399,887
—
(17,540)
—
7,212
—
(485)
678,132
389,074
83,911
124,097
1,078,019
(17,540)
7,212
(485)
1,067,206
208,008
316,209
19,463
141,953
—
477,625
411,083
Total equity
1,394,228
1,923
149,165
(485)
1,544,831
619,091
LIABILITIES
Borrowings
1,825,850
53,808
200,000
—
2,079,658
11,557,859
1,825,850
53,808
200,000
—
2,079,658
11,557,859
8,822,779
6,215,314
1,395,434
730,779
113,000
571,888
—
(485)
10,331,213
7,517,496
1,246,000
7,081,932
7,478,332
181,144
—
—
430,678
19,621
—
—
7,909,010
200,765
7,477,807
158,533
22,697,569
2,126,213
1,135,187
(485)
25,958,484
15,964,272
Total liabilities
24,523,419
2,180,021
1,335,187
(485)
28,038,142
27,522,131
25,917,647
2,181,944
1,484,352
(970)
29,582,973
28,141,222
Net current assets
3,083,406
54,924
336,923
(485)
3,474,768
12,033,812
Total assets less current
liabilities
3,220,078
55,731
349,165
(485)
3,624,489
12,176,950
EQUITY
Combined capital (Note 3)
Retained earnings (Note 4)
Current liabilities
Borrowings
Advances receipts from
customers
Income tax payable
Note 3: The decrease in combined capital from RMB678 million in 31 December 2013 to RMB84 million in
30 September 2014 was mainly due to the impact of merger accounting adopted by Metro Splendid
Limited for the year ended 31 December 2013.
Note 4: The decrease in retained earnings from RMB389 million in 31 December 2013 to RMB124 million in
30 September 2014 was mainly due to i) the impact of merger accounting adopted by Metro Splendid
Limited for the year ended 31 December 2013; and ii) the loss of approximately RMB144 million
incurred by the Target Group for the nine month ended 30 September 2014.
— II-184 —
APPENDIX II
Consolidated Income Statements
Nine month ended
30 September
2013
2014
RMB’000
RMB’000
(Unaudited)
(Unaudited)
Revenue
Cost of sales
2,448,827
(2,142,770)
Gross profit
4,466,721
(4,446,798)
306,057
19,923
18,148
937
(111,137)
(37,894)
35,888
(351)
(92,638)
(48,851)
Operating profit/(loss)
176,111
(86,029)
Finance costs
(21,632)
(65,084)
154,479
(151,113)
Income tax expense
(61,600)
(3,283)
Profit/(loss) for the period
92,879
(154,396)
Attributable to:
Owners of the Target
73,175
19,704
(143,829)
(10,567)
92,879
(154,396)
— II-185 —
APPENDIX II
Consolidated Statements of Comprehensive Income
Nine month ended
30 September
2013
2014
RMB’000
RMB’000
(Unaudited)
(Unaudited)
Profit/(loss) for the period
92,879
Other comprehensive income for the period
—
(154,396)
—
Total comprehensive income/(expense) for the period
92,879
(154,396)
Total comprehensive income/(expense) attributable to:
— Owners of the Target
73,175
19,704
(143,829)
(10,567)
92,879
(154,396)
— II-186 —
APPENDIX II
MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP
Set out below is the management discussion and analysis of the Target Group for the nine
months ended 30 September 2014. The unaudited consolidated statement of financial position,
consolidated income statement and consolidated statement of comprehensive income of the Target
Group are prepared as if the reorganisation of the Target Group has been completed as at 30
September 2014 as follow:
Targeted reorganization:
Targeted reorganisation comprises of the Reorganisation as disclosed in Note 1(b) (page II-36 & 37)
of the accountant’s report of Metro Splendid Limited and the acquisition of entire equity interests of Bright
Shining Group Limited and Max Great Holdings Limited by Metro Splendid Limited.
Business Review
The Target Group indirectly holds, through the Target, Bright Shining Holdings Limited
and Max Great Holdings Limited, a company which principally provide upfitting and decoration
services to real estate projects, namely Sino-Ocean Decor, and nine property development
projects, namely Ocean Beach (Zhenjiang), Ocean Century (Qinhuangdao), Grand Canal
Milestone (Hangzhou), Ocean Chanson Mansion (Shanghai), BOND CASTLE and Dreaming
Land (Shanghai), Ocean Holiday Manor (Dalian), Ocean TIMES (Dalian), Ocean City (Fushun)
and Ocean Honored Chateau (Qingdao), in Pan-Bohai Rim, Yangtze River Delta and other
regions in the People’s Republic of China (the “PRC”). Details of the projects are set below.
Held by the Target
1.
Dalian Hongze principally engaged in property development in Dalian, the PRC and has
been operating the property development project-Ocean TIMES (Dalian). It is located at the
university quarter in the Dalian Economic and Technological Development Zone in Dalian. The
project has been completed with commercial and residential properties.
2.
Ocean Holiday Manor (Dalian)
Dalian Xinrong principally engaged in property development in Dalian, the PRC and has
been operating the property development project-Ocean Holiday Manor (Dalian). It is close
to the west end of Putaogou, Jinshi Beach, Tianjin. The project is planned to be a residential
properties and is expected to be completed in 2017.
— II-187 —
APPENDIX II
3.
Hangzhou Yuan Yang principally engaged in property development in Hangzhou,
the PRC and has been operating the property development project-Grand Canal Milestone
(Hangzhou). It is located at the west end of Gongchen Bridge and adjacent to the BeijingHangzhou Grand Canal at Gongshu District of Hangzhou Province. The project is planned to be
developed into residential properties. The project is expected to be completed in 2015.
4.
Qinhuangdao Ocean, Qinhuangdao Yuanlian and Qinhuangdao Yuanhao principally
engaged in property development in Qinhuangdao, the PRC and have been operating the
property development project-Ocean Century (Qinhuangdao) (including Wan Hai Yi Hao
(Qinhuangdao)). It is located at Haigang District of Qinghuangdao, Hebei. The project is
planned to be developed into residential and commercial properties. While Wan Hai Yi Hao
(Qinhuangdao) was completed in 2011 and certain portions of Ocean Century (Qinhuangdao)
was completed between 2013 and 2014, the rest of the project is expected to be developed in
phases.
5.
Shanghai Yuanzheng principally engaged in property development in Shanghai, the PRC
and has been operating the property development project-Ocean Chanson Mansion (Shanghai).
It is located at Yanghang Town of Baoshan District, Shanghai. The project is planned to be
developed as residential properties and is expected to be completed between 2014 and 2015.
6.
BOND CASTLE (Shanghai) and Dreaming Land (Shanghai)
Shanghai Yuanxin principally engaged in property development in Shanghai, the PRC
and has been operating the property development project BOND CASTLE (Shanghai) and
Dreaming Land (Shanghai). It is located at Meilan Lake of Baoshan District, Shanghai. The
project is planned to be a highend residential properties and villa. While BOND CASTLE
(Shanghai) has completed in 2013, Dreaming Land (Shanghai) is expected to be completed in
2015.
7.
Sino-Ocean Zhenjiang principally engaged in property development in Zhenjiang, the
PRC and has been operating the property development project-Ocean Beach (Zhenjiang). It
is located at East of Guantangqiao Road, South of Guyang Road, Zhenjiang City of Jiangsu
Province. The project is planned to be developed into residential and commercial properties.
While the under-construction portion of the project is expected to be completed between late
2014 and 2015, the undeveloped portion is still pending for construction.
— II-188 —
APPENDIX II
8.
Sino-Ocean Decor
Sino-Ocean Decoration principally engaged in upfitting and decoration business in the
PRC and has been operating as a key architectural decor enterprises over the PRC regions with
its large-scale ability on construction, organization and experienced management.
1.
Ocean Honored Chateau (Qingdao)
Qingdao Yuanjia principally engaged in property development in Qingdao, the PRC and
has been operating the property development project-Ocean Honored Chateau (Qingdao). It is
located at No. 23 Yanerdao Road, Shinan District, Qingdao of Shandong Province. The project
is planned to be developed into a mixed complex with retail, residential, serviced apartment
and car parking spaces. The project is expected to be completed in 2015.
2.
Ocean City (Fushun)
Fushun principally engaged in property development in Fushun, the PRC and has been
operating the property development project-Ocean City (Fushun). It is located at Jiangjungou,
Shuncheng District, Fushun City of Liaoning Province. The project is planned to be developed
into a mixed use complex with retail, residential, serviced apartment and car parking spaces.
The project is expected to be completed in 2019.
Financial Result
Revenue
The Target Group recorded revenue of approximately RMB4,467 million for the nine
months ended 30 September 2014 (nine months ended 30 September 2013: approximately
RMB2,449 million). Increase in revenue was mainly due to the increased delivered of property
units from Ocean Chanson Mansion (Shanghai) and Grand Canal Milestone (Hangzhou) and the
expansion of Sino-Ocean Decor during the period.
Cost of sales
For the nine months ended 30 September 2014, the cost of sales was approximately
RMB4,447 million (nine months ended 30 September 2013: approximately RMB2,143 million).
Increase in cost of sales was mainly due to the delivery of property units from high land cost
projects, including Ocean Chanson Mansion (Shanghai) and Grand Canal Milestone (Hangzhou).
— II-189 —
APPENDIX II
Gross Profit
For the nine months ended 30 September 2014, the Target Group recorded gross profit of
million). Decrease in gross profit was mainly due to inflated construction cost and the delivery
of property units from high land cost projects, including Ocean Chanson Mansion (Shanghai)
and Grand Canal Milestone (Hangzhou) during the period.
Selling and marketing expenses mainly represented the advertisement and marketing
fees. For the nine months ended 30 September 2014, the Target Group recorded the selling and
marketing expenses of approximately RMB93 million (nine months period ended 30 September
2013: approximately RMB111 million). Decrease in selling and marketing expenses was mainly
due to cost control measures related to property development projects during the period.
Administrative expenses mainly represented the staff salaries and office expenses. For the
nine months ended 30 September 2014, the Target Group recorded the administrative expenses
of approximately RMB49 million (nine months ended 30 September 2013: approximately
RMB38 million). Increase in administrative expenses was mainly due to business expansion of
Sino-Ocean Decor, which led to the increase in the number of employee and inflated labor cost.
Finance Cost
Finance cost mainly represented interest expense incurred by Sino Ocean Decor. For
the nine months ended 30 September 2014, the Target Group recorded the finance cost of
million). Increase in finance cost was mainly due to increase in total borrowings during the
period.
Taxation
For the nine months ended 30 September 2014, the Target Group recorded taxation of
million). Decrease in taxation was mainly due to decrease in operating profit during the period
as explained above.
Loss/profit for the period
The Target Group recorded loss of approximately RMB154 million during the
nine months ended 30 September 2014 (nine months ended 30 September 2013: profit of
approximately RMB93 million). Decrease in profit was mainly due to decrease in operating
profit during the period as explained above.
— II-190 —
APPENDIX II
Liquidity and capital resources
Financial position
As at 30 September 2014, the Target Group’s total borrowings were denominated in
RMB and amounted to approximately RMB12,804 million, 90% and 10% of which were
matured more than one year and within one year respectively. Bank borrowings carried
weighted average effective interest rate which ranged from 6.12% to 7.72% during the nine
months ended 30 September 2014.
As at 30 September 2014, the Target Group held cash and cash equivalents of
approximately RMB150 million. Cash and cash equivalents are mainly comprised of RMB and
USD.
Gearing ratio
As at 30 September 2014, the gearing ratio of the Target Group, calculated as net debt
divided by total capital, was approximately 95%. Net debt was calculated as total borrowings
less cash and cash equivalents. Total capital was calculated as total equity plus net debt.
As at 30 September 2014, properties under development of approximately RMB6,873
million was pledged as collateral for the Target Group’s borrowings for the purpose of property
development.
As at 30 September 2014, Max Great Holdings Limited, Good Rich Management
Limited, Bright Shining Group and Moral Rich Development Limited were pledged for bank
borrowing to Sino-Ocean Land Holdings Limited. The pledge is expected to be released before
31 December 2014.
As at 30 September 2014, the Target Group did not have any contingent liabilities.
Capital commitment
The Target Group entered into certain agreements in respect of land acquisition and
property development. As at 30 September 2014 the Target Group’s capital expenditures
contracted but not yet incurred amounted to approximately RMB2,441 million.
Exchange rate risk
The
with most
amount of
the Target
operations and majority of the Target Group’s customers are located in the PRC
of the assets or liabilities and transactions denominated and settled in RMB. As the
the transactions settled in foreign currencies were not material to the Target Group,
Groups’ exposure to foreign exchange risk is immaterial.
— II-191 —
APPENDIX II
Interest rate risk
During the nine months ended 30 September 2014, the Target Group’s interest rate risk
mainly aroused from borrowings with prevailing market interest rates. Such risk was partly
offset by cash at banks held at prevailing market interest rates. During the nine months ended
30 September 2014, the Target Group’s borrowings at prevailing market interest rates were
denominated in RMB.
Credit risk
During the nine months ended 30 September 2014, the credit risk of the Target Group
mainly aroused from restricted bank deposits, cash and cash equivalents, trade and other
receivables. To manage such exposure, the Target Group monitors and assesses these credit
The Target Group’s employees were remunerated according to their qualifications and
participate in various defined contribution retirement plans organised by the relevant municipal
and provincial governments in the PRC under which the Target Group and the PRC based
employees are required to make monthly contributions to these plans calculated as a percentage
of the employees’ salaries. As at 30 September 2014, the Target Group has 968 employees.
— II-192 —
Appendix III
I.
Unaudited Pro Forma Financial Information of
the Group ILLUSTRATING the Effect OF THE CAPITAL COMMITMENT
INTRODUCTION OF THE Unaudited pro forma financial information
of the Group Illustrating the effect of the capital commitment
Pursuant to (i) the second amendment agreement dated 17 November 2014 entered between
Sino Prosperity Real Estate Limited (the “Ultimate General Partner”), a joint venture of the Group,
Chance Bright Limited (“Chance Bright”), a subsidiary of the Company and China Corporate Assets
Holdings Limited (“CCAH”) to the amended and restated agreement of exempted limited partnership
of Sino Prosperity Real Estate (GP), L.P. (the “General Partner”) dated 5 September 2011 (the
“Second GP Amendment Agreement”); and (ii) the subscription agreement dated 17 November 2014
entered into among Chance Bright, Sino Prosperity Real Estate Fund L.P. (the “Fund”) and the
General Partner in relation to the increase in capital commitment (the “Subscription Agreement”)
as described in the announcement of the Company dated 17 November 2014, the Group agreed to
increase its capital commitment to the General Partner and the Fund by US$3.95 million and US$250
million, respectively (the “Capital Commitment”).
The unaudited pro forma financial information of the Group illustrating the effect of the capital
commitment (the “Unaudited Pro Forma Financial Information”) comprising (a) the unaudited pro
forma consolidated statement of financial position of the Group as at 30 June 2014; (b) the unaudited
— III-1 —
Appendix III
pro forma consolidated income statement for the year ended 31 December 2013; and (c) the unaudited
pro forma consolidated statement of cash flows for the year ended 31 December 2013, which have
been prepared in accordance with Rule 4.29 of the Listing Rules for the purpose of illustrating the
financial impact of the Capital Commitment on the financial position of the Group as if the increase
in the Capital Commitment had taken place on 30 June 2014 and the results and cash flows of the
Group for the year ended 31 December 2013 as if the increase in the Capital Commitment had taken
place on 1 January 2013.
The Unaudited Pro Forma Financial Information has been prepared based on (i) the unaudited
condensed consolidated statement of financial position of the Group as at 30 June 2014 as extracted
from the published interim report of the Group for the six months ended 30 June 2014; (ii) the audited
consolidated income statement of the Group for the financial year ended 31 December 2013 and the
audited consolidated statement of cash flows of the Group for the financial year ended 31 December
2013, which have been extracted from the published annual report of the Group for the financial year
ended 31 December 2013, after making pro forma adjustments as summarised in the accompanying
notes that are directly attributable to the increase in the Capital Commitment, factually supportable
and clearly identified as to those have/have no continuing effect on the Group.
The accompanying Unaudited Pro Forma Information has been prepared by the directors of the
Company for illustrative purpose only and is based on certain assumptions, estimates, uncertainties
and other currently available information. Accordingly, and because of its nature, the Unaudited Pro
Forma Financial Information may not give a true picture of the financial position, income statement or
cash flows of the Group following the completion of the Capital Commitment. Further, the Unaudited
Pro Forma Financial Information does not purport to predict the Group’s future financial position,
income statement or cash flows.
The Unaudited Pro Forma Financial Information should be read in conjunction with the
historical financial information of the Group as set out in Appendix I and other financial information
included elsewhere in this circular.
— III-2 —
Appendix III
(a)
Unaudited Pro Forma Consolidated Statement of Financial Position of the Group
Unaudited
consolidated
statement
of financial
position
of the Group
as at 30
June 2014
HK$’000
(Note 1)
Non-current Assets
Investment properties
Interests in joint ventures
Available-for-sale investments
424,581
4,299
4,166
873,139
Current Assets
Deposits, prepayments and other receivable
Amount due from immediate holding company
Amount due from joint venture
Financial instruments held for trading
Other investment
Bank balances and cash
Pro forma
adjustment
HK$’000
(Note 2)
1,969,974
Unaudited
pro forma
consolidated
statement
of financial
position
of the
Group
as at 30
June 2014
HK$’000
424,581
4,299
1,974,140
873,139
1,306,185
3,276,159
31,490
2,910
1,423
53,474
15,480
137,241
503,158
31,490
2,910
1,423
53,474
15,480
—
(1,329,575)
(137,241)
(1,832,733)
745,176
(1,224,798)
20,715
219
27,062
45
20,715
219
27,062
45
48,041
48,041
697,135
(1,272,839)
2,003,320
2,003,320
Capital and Reserves
Share capital
Reserves
176,003
332,345
176,003
332,345
Total Equity
508,348
508,348
Non-Current Liability
Borrowings
1,494,972
1,494,972
Total Equity and Non-Current Liability
2,003,320
2,003,320
Current Liabilities
Other payables and accrued charges
Taxation payable
Amount due to a fellow subsidiary
Borrowings
Net Current Assets/(Liabilities)
Total Assets Less Current Liabilities
— III-3 —
Appendix III
(b)
Unaudited Pro Forma Income Statement of the Group
Audited
consolidated
income
statement of
the Group for
the year ended
31 December
2013
HK$’000
(Note 1)
Sales proceeds from disposal of financial
instruments held for trading
Pro forma
adjustment
HK$’000
(Note 2)
Unaudited
pro forma
consolidated
income
statement
of the Group
HK$’000
1,276,435
1,276,435
186,676
(159,363)
2,057
(13,475)
(13,942)
(409)
(14,238)
186,676
(159,363)
2,057
(13,475)
(13,942)
(409)
(14,238)
8,895
8,895
334
334
33,963
33,963
11,704
11,704
45,667
26,714
(25,048)
45,667
26,714
(25,048)
Income tax
43,868
(4,715)
43,868
(4,715)
Profit for the year
39,153
39,153
Profit for the tear attributable to:
Owners of the Company
39,153
39,153
8.79
8.75
8.79
8.75
Turnover
Changes in inventories of gold bullions
Other income
Staff costs
Share-based compensation
Depreciation
Other expenses
Gain arising from changes in fair value of
financial instruments held for trading
investment properties
Gain on disposal of a subsidiary
— Excluding the translation reserve
— Reclassification from translation reserve
upon disposal of the subsidiary
Share of results of joint ventures
Finance costs
Earnings per share for profit attributable
to owners of the Company
— basic (HK cents)
— diluted (HK cents)
— III-4 —
Appendix III
(c)
Unaudited Pro Forma Consolidated Statement of Cash Flows of the Group
Audited
consolidated
statement of
cash flows of
the Group for
the year ended
31 December
2013
HK$’000
(Note 1)
Adjustments for:
Depreciation
financial instruments held for trading
Share-based compensation
Share of results of joint ventures
investment properties
Finance costs
Interest income from bank deposits
Gain on disposal of a subsidiary
— excluding translation reserve
— reclassification from translation reserve
upon disposal of a subsidiary
Pro forma
adjustment
HK$’000
(Note 2)
Unaudited
pro forma
consolidated
statement
of cash flows
of the Group
HK$’000
43,868
43,868
409
409
(8,895)
13,942
(26,714)
(8,895)
13,942
(26,714)
(334)
25,048
(2,021)
(334)
25,048
(2,021)
(33,963)
(33,963)
(11,704)
(11,704)
Operating cash flows before working capital
changes
Increase in deposits and prepayments
Decrease in financial instruments held for
trading
Decrease in other investment
Increase in other payables and accrued charges
(364)
(3,523)
(364)
(3,523)
10,046
52,783
6,980
10,046
52,783
6,980
Cash generated from operations
Profits tax outside Hong Kong paid
65,922
(1,105)
65,922
(1,105)
Net cash generated from operating activities
64,817
64,817
— III-5 —
Appendix III
Audited
consolidated
statement of
cash flows of
the Group for
the year ended
31 December
2013
HK$’000
(Note 1)
Pro forma
adjustment
HK$’000
(Note 2)
Unaudited
pro forma
consolidated
statement
of cash flows
of the Group
HK$’000
Consideration paid for acquiring investment
properties
Purchase of property, plant and equipment
Repayment from joint ventures
Advance to a fellow subsidiary
Acquisition of available-for-sale investments
Capital refund from a joint venture
Distribution from a joint venture
Investment in a joint venture
Proceeds from disposal of a subsidiary
Interest received
(65,566)
(4,118)
678
(869)
(851,006)
2,746
27,573
—
172,487
2,021
(716,054)
(2,686,028)
1,000,000
(12,719)
(20)
(20,050)
1,000,000
(12,719)
(20)
(20,050)
967,211
967,211
Net increase/(decrease) in cash and
cash equivalents
315,974
(1,654,000)
Cash and cash equivalents at beginning
of the year
Effect of foreign exchange rate changes
399,244
125
399,244
125
715,343
(1,254,631)
Analysis of the balances of cash and cash
equivalents
Bank balances and cash
424,693
290,650
New loan raised
Repayment of loan
Repayment obligation under finance lease
Interest paid
715,343
— III-6 —
(1,969,974)
(424,693)
(1,545,281)
(65,566)
(4,118)
678
(869)
(851,006)
2,746
27,573
(1,969,974)
172,487
2,021
—
(1,254,631)
(1,254,631)
Appendix III
(d)
Notes to the Unaudited Pro Forma Financial Information to the Group
1.
The unaudited consolidated statement of financial position of the Group as at 30
June 2014 are extracted without adjustment from the published interim report of
the Group for the six months ended 30 June 2014 whereas the audited consolidated
income statement and audited consolidated statement of cash flows of the Group
for the year ended 31 December 2013 are extracted without adjustment from the
published annual report of the Company for the year ended 31 December 2013.
2.
The adjustment represents the increase in the Capital Commitment of the Group to
the General Partner and the Fund as if the Capital Commitment were made on 1
January 2013 or 30 June 2014 is as follows:
HK$’000
Capital Commitment to the General Partner (note (a))
Capital Commitment to the Fund (note (b))
30,641
1,939,333
1,969,974
(a)
Pursuant to the Second GP Amendment Agreement, the Group agreed
to increase its capital commitment by US$3.95 million (equivalent to
approximately HK$31 million) to subscribe the limited partner interests in
the General Partner.
(b)
Pursuant to the Subscription Agreement, the Group agreed to increase
its capital commitment by US$250 million (equivalent to approximately
HK$1,939 million) to subscribe the limited partner interests in the Fund.
(c)
The Company intends to fund the Capital Commitment from its internal
resources or borrowings or the proceeds to be raised from the issue of 1.3
billion convertible preference shares (“Convertible Preference Shares”) of
the Company to Grand Beauty Management Limited, an indirect whollyowned subsidiary of Sino-Ocean Land Holdings Limited, the ultimate parent
of the Company. The subscription price per convertible preference share
is HK$3.0 and payable in cash by Grand Beauty Management Limited.
The total subscription amount of the Convertible Preference Shares is
HK$3,900,000,000. The estimated net proceeds from the issue of the
Convertible Preference Shares (after deducting the estimated expenses
incidental thereto) is approximately HK$3,899,000,000. The issuance of the
Convertible Preference Shares is subject to the approval of the independent
shareholders of the Company at the extraordinary general meeting on 23
December 2014. Details of the Convertible Preference Shares were set out
in the Company’s joint announcement with Sino-Ocean Land Holdings
Limited, the Company’s announcement and the Company’s circular dated 26
October 2014, 24 November 2014 and 27 November 2014 respectively.
If the Company funds the Capital Commitment by utilising the net proceeds
of the Convertible Preference Shares of HK$3,899,000,000, the cash
and cash equivalents disclosed in the unaudited pro forma consolidated
statement of financial position of the Group as at 30 June 2014 and the
unaudited pro forma consolidated statement of cash flows of the Group for
the year ended 31 December 2013 would be increased by HK$3,899,000,000
to approximately HK$2,569,425,000 and HK$2,644,369,000 respectively.
Also, the net current assets, the total assets less current liabilities and the
total equity disclosed in the unaudited pro forma consolidated statement of
financial position of the Group as at 30 June 2014 would be increased by
HK$3,899,000,000 to approximately HK$2,626,161,000, HK$5,902,320,000
and HK$4,407,348,000 respectively.
— III-7 —
Appendix III
The following is the text of a report from BDO Limited, the independent reporting accountants,
in respect of the unaudited pro forma financial information of the Group illustrating the effect of the
capital commitment as set out in this appendix and prepared for the sole purpose of inclusion in this
circular. Words and expressions that are not expressly defined in this appendix shall bear the same
meaning as that defined in this circular.
The Board of Directors
Suite 3902, 39/F,
Lippo Centre Tower One,
89 Queensway
Hong Kong
Dear Sirs
We have completed our assurance engagement to report on the compilation of unaudited pro
forma financial information of Gemini Investments (Holdings) Limited (the “Company”) and its
subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company
(the “Directors”) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma consolidated statement of financial position as at 30 June 2014,
the unaudited pro forma consolidated income statement for the year ended 31 December 2013 and
unaudited pro forma consolidated statement of cash flows for the year ended 31 December 2013, and
related notes as set out on pages III-3 to III-7 of the circular (the “Circular”) issued by the Company
dated 13 December 2014 (the “Unaudited Pro Forma Financial Information”). The applicable criteria
on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are
described on pages III-1 to III-2 of the Circular.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact in respect of the increase in the Group’s capital commitment amounted to
US$250 million and US$3.95 million to Sino Prosperity Real Estate Fund LP (the “Fund”) and Sino
Prosperity Real Estate (GP), L.P. (“General Partner”) (collectively known as “Capital Commitment”),
respectively, which are the wholly owned subsidiaries of Sino Prosperity Real Estate Limited (the
“Ultimate General Partner”), a joint venture of the Group on the Group’s financial position as at 30
June 2014 and the Group’s income statement and cash flows for the year ended 31 December 2013 as
if the Capital Commitment had taken place at 30 June 2014 and 1 January 2013, respectively. As part
of this process, information about the Group’s financial position has been extracted by the Directors
— III-8 —
Appendix III
from the Group’s unaudited interim financial statements for the six months ended 30 June 2014 which
was published on 1 August 2014 and information about the Group’s income statement and cash flows
has been extracted by the Directors from the Group’s consolidated financial statements for the year
ended 31 December 2013, on which an audit report was published on 28 February 2014.
Directors’ responsibility for the Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial Information
in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7
Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars (“AG 7”) issued
by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).
Reporting accountant’s responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing
Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do
not accept any responsibility for any reports previously given by us on any financial information used
in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to
whom those reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information Included in a Prospectus issued by the HKICPA. This standard requires that the reporting
accountants comply with ethical requirements and plan and perform procedures to obtain reasonable
assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information
in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any reports
or opinions on any historical financial information used in compiling the Unaudited Pro Forma
Financial Information, nor have we, in the course of this engagement, performed an audit or review of
the financial information used in compiling the Unaudited Pro Forma Financial Information.
The purpose of the Unaudited Pro Forma Financial Information included in the Circular is
solely to illustrate the impact of a significant event or transaction on unadjusted financial information
of the Group as if the event had occurred or 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 Capital Commitment at 30 June 2014 or 1 January 2013 would have been as
presented.
— III-9 —
Appendix III
A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial
Information has been properly compiled on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the Directors in the compilation of the
Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant
effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence
about whether:
•
The related unaudited pro forma adjustments give appropriate effect to those criteria; and
•
The Unaudited Pro Forma Financial Information reflects the proper application of those
adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountant’s judgement, having regard to the
reporting accountant’s understanding of the nature of the Group, the event or transaction in respect
of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma
Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion:
(a)
the Unaudited Pro Forma Financial Information has been properly compiled on the basis
stated;
(b)
such basis is consistent with the accounting policies of the Group; and
(c)
the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Yours faithfully,
BDO Limited
Chow Tak Sing, Peter
Practising Certificate Number: P04659
Hong Kong, 13 December 2014
— III-10 —
Appendix IVProperty Valuation report oN THE PROPERTIES
The following is the text of a letter, summary of valuations and valuation certificates prepared
for the purpose of incorporation in this circular received from DTZ Debenham Tie Leung Limited,
an independent property valuer, in connection with its opinion of value of the property interests to
be acquired by the Fund. Words and expressions that are not expressly defined in this appendix shall
bear the same meaning as that defined in this circular.
16th Floor
Jardine House
1 Connaught Place
Central
Hong Kong
13 December 2014
The Directors
Room 3902, 39/F, Lippo Centre Tower 1
89 Queensway
Hong Kong
Sino Prosperity Real Estate Fund L.P.
PO Box 309,
Ugland House,
Grand Cayman,
KY1-1104, Cayman Islands
Dear Sirs,
Re: Portfolio Valuation
Instructions, Purpose &
Date of Valuation
In accordance with the instructions from Gemini Investments (Holdings)
Limited (the “Company”) and Sino Prosperity Real Estate Fund L.P. for
us to value the properties set out in this letter in which Sino-Ocean Land
Holdings Limited (“Sino-Ocean Land”) and its subsidiaries (hereinafter
together referred to as the “Sino-Ocean Land Group”) have interests in
the People’s Republic of China (the “PRC”), we confirm that we have
inspected the properties, made relevant enquiries and obtained such
further information as we consider necessary to provide you with our
opinion of the values of such properties as at 30 September 2014 (the
“date of valuation”).
Basis of Valuation
Our valuation of each of the properties represents its market value
which in accordance with The HKIS Valuation Standards (2012 Edition)
published by the Hong Kong Institute of Surveyors is defined as “the
estimated amount for which an asset or liability should exchange on
the date of valuation between a willing buyer and a willing seller in an
arm’s-length transaction after proper marketing and where the parties had
each acted knowledgeably, prudently and without compulsion”.
— IV-1 —
Appendix IV
Valuation Assumptions
Property Valuation report oN THE PROPERTIES
Our valuations exclude an estimated price inflated or deflated by special
terms or circumstances such as atypical financing, sale and leaseback
arrangement, special considerations or concessions granted by anyone
associated with the sale, or any element of special value.
In valuing the properties, we have complied with the requirements set out
in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of
Securities published by The Stock Exchange of the Hong Kong Limited
and The HKIS Valuation Standards (2012 Edition) published by the Hong
Kong Institute of Surveyors.
Unless otherwise stated, in the course of our valuation of the properties
in the PRC, we have assumed that the transferable land use rights of
the properties for their respective terms at nominal annual land use fees
have been granted and that any premium payable has already been fully
paid. We have relied on the information regarding the title to each of
the properties and the interests of the Sino-Ocean Land Group in the
properties. In valuing the properties, we have assumed that the SinoOcean Land Group has an enforceable title to each of the properties and
has free and uninterrupted rights to use, occupy or assign the properties
for the whole of the respective unexpired land use term as granted.
No allowance has been made in our valuations for any charges,
mortgages or amounts owing on the properties nor for any expenses or
taxation which may be incurred in effecting a sale. Unless otherwise
stated, it is assumed that the properties are free from encumbrances,
restrictions and outgoings of an onerous nature which could affect their
values.
Method of Valuation
We have mainly adopted Direct Comparison Approach by making
reference to comparable sale evidences as available on the market.
Regarding the properties which are currently held by the Sino-Ocean
Land Group under development, we have valued on the basis that each
property will be developed and completed in accordance with the SinoOcean Land Group’s latest development proposals provided to us. We
have assumed that all consents, approvals and licences from relevant
government authorities for the development proposals have been obtained
without onerous conditions or delays. We have also assumed that the
design and construction of the development are in compliance with
the local planning regulations and have been approved by the relevant
authorities. The development value of the property when completed
represents our opinion of the aggregate value of the development
assuming it would have been completed at the date of valuation. In
arriving at the final value of the property in existing state, we have also
taken into account the construction costs expended and the costs that will
be expended to reflect the quality of the completed development.
Given the nature of the properties, mostly being residential units,
ancillary retail podium units and car parking spaces, sales activities are
frequent and thus sales evidence are readily available, Direct Comparison
Approach is therefore used in the valuations which is in line with the
market practice.
— IV-2 —
Appendix IV
Source of Information
We have not been provided by the Sino-Ocean Land Group with any title
documents of the properties. However, we have been provided by the
Sino-Ocean Land Group with fundamental information for carrying out
the valuations. However, we have not inspected the original documents
to ascertain any amendments which may not appear on the copies handed
to us.
In the course of our valuation, we have relied to a very considerable
extent on the information given to us by the Sino-Ocean Land Group
or the Company’s legal adviser, Fenxun Law Office ( 奮迅律師事務
所 ) regarding the title to each of the properties and the interests of the
Sino-Ocean Land Group in the properties in respect of the properties
in the PRC and have accepted advice given by the Sino-Ocean Land
Group on such matters as planning approvals or statutory notices,
easements, tenure, identification of land and buildings, completion date
of buildings, number of units, particulars of occupancy, development
scheme, construction costs, tenancy details, site and floor areas, interest
attributable to the Sino-Ocean Land Group and all other relevant matters.
Dimensions, measurements and areas included in the valuations are based
on information provided to us and are therefore only approximations. We
have had no reason to doubt the truth and accuracy of the information
provided to us by the Sino-Ocean Land Group which is material to the
valuations. We were also advised by the Sino-Ocean Land Group that no
material facts have been omitted from the information provided.
Title Investigation
We have not been provided with any title documents relating to the titles
of the properties in the PRC, and no searches have been made in respect
of the properties. We have not searched the original documents to verify
ownership or to ascertain any amendment which may not appear on the
information handed to us. We are also unable to ascertain the title of the
properties in the PRC and we have therefore relied on the advice given
by the Sino-Ocean Land Group regarding the Sino-Ocean Land Group’s
interests in the properties.
— IV-3 —
Appendix IV
Site Inspection
Delly Chen, Zien Ding, David Zhu, Huiqiu Yin, Kevin Xu, Amy
Zhang, Chelsea Liu and Jeffery Wang, ranking from Assistant Valuer
to Manager, inspected the exterior and, whenever possible, the interior
of the properties between October and November 2014. However, we
have not carried out any soil investigations to determine the suitability
of the soil conditions and the services etc. for any future development.
Our valuations are prepared on the assumption that these aspects are
satisfactory and that no extraordinary expenses or delays will be incurred
during the construction period. Moreover, no structural survey has been
made, but in the course of our inspection, we did not note any serious
defects. We are, however, not able to report that the properties are free
of rot, infestation or other structural defects. No test was carried out on
any of the services. Our valuations are prepared on the assumption that
these aspects are satisfactory.
Unless otherwise stated, we have not been able to carry out on-site
measurements to verify the site and floor areas of the properties and we
have assumed that the areas shown on the documents handed to us are
correct.
Currency
Unless otherwise stated, all money amounts indicated herein our
valuations are in Renminbi (“RMB”) which is the official currency of the
PRC.
We enclose herewith a summary of valuations and our valuation certificates.
Yours faithfully,
For and on behalf of
DTZ Debenham Tie Leung Limited
Andrew K.F. Chan
Registered Professional Surveyor (General Practice Division)
Registered China Real Estate Appraiser
MSc, MHKIS
Senior Director, Valuation & Advisory Services
Note: Mr. Andrew K.F. Chan is a Registered Professional Surveyor who has over 27 years’ of experience in the
valuation of properties in the PRC.
— IV-4 —
Appendix IV
SUMMARY OF VALUATIONS
Property
Market value in
existing state as at
30 September 2014
(RMB)
Interest
attributable to
the Sino-Ocean
Land Group
(%)
Market value in
existing state
attributable to
the Sino-Ocean
Land Group as at
30 September 2014
(RMB)
Group I – Properties held by the Sino-Ocean Land Group under development in the PRC
1.
The remaining portions of
Phases 1 and 2 of Ocean Beach
(Zhenjiang)（遠洋 • 香奈河畔（鎮江））,
East of Guantangqiao Road,
South of Guyang Road,
Zhenjiang City,
Jiangsu Province,
the PRC
911,000,000
55
501,050,000
2.
The portions of Ocean Century (Qinhuangdao)
（遠洋 • 海世紀（秦皇島））
under development,
Qinhuangdao,
Hebei Province,
the PRC
4,124,000,000
100
4,124,000,000
3.
Phase 2 of Grand Canal Milestone (Hangzhou)
（遠洋 • 大河宸章（杭州））,
Gongshu District,
Hangzhou,
Zhejiang Province,
the PRC
1,350,000,000
70
945,000,000
4.
Phases 2 and 3 of Ocean Chanson
Mansion (Shanghai)
（遠洋 • 香奈印象（上海））,
Yangtai Road,
Lvlong Road,
Planned Meipu Road,
Yanghang Town,
Baoshan District, Shanghai,
the PRC
2,590,000,000
100
2,590,000,000
— IV-5 —
Appendix IV
Property
Market value in
30 September 2014
(RMB)
Interest
attributable to
the Sino-Ocean
Land Group
(%)
Market value in
existing state
attributable to
the Sino-Ocean
Land Group as at
30 September 2014
(RMB)
5.
DREAMING LAND (Shanghai)
（遠洋 • 鴻郡（上海））,
Fuyuan Road Lane 885,
Baoshan District,
Shanghai,
the PRC
1,650,000,000
100
1,650,000,000
6.
Ocean Honored Chateau (Qingdao)
（遠洋公館（青島））,
No. 23 Yanerdao Road,
Shinan District, Qingdao,
Shandong Province,
the PRC
2,009,000,000
100
2,009,000,000
7.
Phases 3 and 4 of Ocean Holiday Manor (Dalian)
（遠洋假日養生庄園（大連））,
Jinshi IT Industrial Park,
Dalian Economic and Technological Area,
Liaoning Province,
the PRC
437,000,000
100
437,000,000
8.
Phases 1 and 2 of Ocean City (Fushun)
（遠洋城（撫順））,
Jiangjungou,
Shuncheng District,
Fushun City,
Liaoning Province,
the PRC
1,026,000,000
65
666,900,000
Sub-total of Group I:
14,097,000,000
— IV-6 —
12,922,950,000
Appendix IV
Property
Market value in
30 September 2014
(RMB)
Interest
attributable to
the Sino-Ocean
Land Group
(%)
Market value in
existing state
attributable to
the Sino-Ocean
Land Group as at
30 September 2014
(RMB)
Group II – Properties held by the Sino-Ocean Land Group for development in the PRC
9.
Phase 3 of Ocean Beach (Zhenjiang)
（遠洋 • 香奈河畔（鎮江））,
East of Guantangqiao Road,
South of Guyang Road,
Zhenjiang City,
Jiangsu Province,
the PRC
396,000,000
55
217,800,000
10.
The undeveloped land portions of
（遠洋 • 海世紀（秦皇島））,
Qinhuangdao,
Hebei Province,
the PRC
616,000,000
100
616,000,000
11.
Phases 3 and 4 of Ocean City (Fushun)
（遠洋城（撫順））
Jiangjungou,
Shuncheng District,
Fushun City,
Liaoning Province,
the PRC
291,000,000
65
189,150,000
Sub-total of Group II:
1,303,000,000
— IV-7 —
1,022,950,000
Appendix IV
Property
Market value in
30 September 2014
(RMB)
Interest
attributable to
the Sino-Ocean
Land Group
(%)
Market value in
existing state
attributable to
the Sino-Ocean
Land Group as at
30 September 2014
(RMB)
Group III – Properties held by the Sino-Ocean Land Group for sale in the PRC
12.
13.
The unsold completed portions of
Qinhuangdao,
Hebei Province,
the PRC
The unsold portions of Wan Hai Yi Hao
(Qinhuangdao)（灣海 1 號（秦皇島））
Qinhuangdao,
Hebei Province,
the PRC
14.
The unsold portions of Grand Canal Milestone
(Hangzhou)
Gongshu District,
Hangzhou,
Zhejiang Province,
the PRC
15.
The unsold portions of Phase 1 of
Yangtai Road,
Lvlong Road,
Planned Meipu Road,
Yanghang Town,
Baoshan District,
Shanghai,
the PRC
32,000,000
100
32,000,000
30,000,000
100
30,000,000
2,960,000,000
70
2,072,000,000
405,000,000
100
405,000,000
— IV-8 —
Appendix IV
Property
16.
The unsold portions of BOND CASTLE
(Shanghai)
（遠洋 • 博堡（上海））,
Fuyuan Road Lane 885,
Baoshan District,
Shanghai,
the PRC
17.
The unsold portions of Phases 1 and 2 of Ocean
Holiday Manor (Dalian)
Jinshi IT Industrial Park,
Dalian Economic and Technological Area,
Liaoning Province,
the PRC
18.
The unsold portions of Ocean TIMES (Dalian)（遠
洋時代城（大連））,
East of No. 8 Road, University Town,
Dalian Development Area,
Dalian,
Liaoning Province,
the PRC
Sub-total of Group III:
Grand total:
Market value in
30 September 2014
(RMB)
Interest
attributable to
the Sino-Ocean
Land Group
(%)
Market value in
existing state
attributable to
the Sino-Ocean
Land Group as at
30 September 2014
(RMB)
1,360,000,000
100
1,360,000,000
389,000,000
100
389,000,000
260,000,000
100
260,000,000
5,436,000,000
4,548,000,000
20,836,000,000
18,493,900,000
— IV-9 —
Appendix IV
VALUATION CERTIFICATE
Group I – Properties held by the Sino-Ocean Land Group under development in the PRC
Property
1.
The remaining portions of
Phases 1 and 2 of Ocean Beach
(Zhenjiang)
East of
Guantangqiao Road,
South of
Guyang Road, Zhenjiang City,
Jiangsu Province,
the PRC
Particulars of
occupancy
Description and tenure
The property comprises the remaining portions
of Phases 1 and 2 of a mixed use development
being erected over two pieces of land with a
total site area of approximately 193,569.9 sq m.
The property is close to the Nanshan scenic
resort, which is a famous tourism attraction in
Zhenjiang. The property is characterized by
tourism.
The property is planned to be developed into
a mixed use development to comprise retail,
office, villa, high-rise residential and low-rise
residential and 790 car parking spaces.
According to the information provided by the
Sino-Ocean Land Group, the proposed gross
floor area of the property is as follows:
Use
Proposed
Gross Floor Area
(sq m)
Retail
Office
Villa
High-rise residential
Low-rise residential
Car park
9,394.43
32,047.06
1,825.34
173,533.30
62,071.22
30,300.00
Total:
309,171.35
The land use rights of the property have been
granted for terms due to expire on
29 September 2079 for residential use.
— IV-10 —
As at the date
of valuation, the
property was under
construction and the
whole development
is scheduled to be
completed in phases
between late 2014 and
2015.
Market value in
30 September 2014
RMB911,000,000
(55% interest
attributable to
the Sino-Ocean
Land Group:
RMB501,050,000)
Appendix IV
Notes:
(1)
According to 2 State-owned Land Use Rights Certificates issued by Zhenjiang Land Resources Bureau, the land
use rights of the property with the total site area of approximately 193,569.90 sq m have been vested in 遠洋
*
地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited ) for a term due to expire on 29 September 2079 for
residential use. The details are as follows:
Certificate
No.
(2)
Site Area
(sq m)
(2011) 10915
(2011) 12105
74,694.20
118,875.70
Total
193,569.90
Use
Land Use
Term Expiry
Issue Date
Residential
Residential
29 September 2079
29 September 2079
2 November 2011
28 November 2011
Details of Land Transfer Contract No. 2010-YYZJFHZ 003 entered into between 鎮江市交通投資建設發展公司
(Zhenjiang Transportation Investment Construction Development Company *) (the “Transferor”) and 遠洋地產鎮
*
江有限公司 (Sino Ocean Land (Zhenjiang) Limited ) (the “Transferee”) on 10 December 2010 are summarized
below:
(i)
(ii)
(iii)
(iv)
(v)
Location
Site Area
Use
Consideration
Land Use Term
:
:
:
:
:
Zone of Guantang, Zhenjiang
328,319.50 sq m
Residential
RMB1,400,000/mu
40 years for commercial, 70 years for residential
(3)
According to Planning Permit for Construction Land No. 321100201100051 dated 25 October 2011, the proposed
construction land use of parts of the property complies with the town planning requirements and permission for
construction of a total gross site area of 78,885 sq m has been granted to 遠洋地產鎮江有限公司 (Sino Ocean
Land (Zhenjiang) Limited *).
(4)
According to Planning Permit for Construction Land No. 321100201200038 dated 21 November 2012, the
proposed construction land use of parts of the property complies with the town planning requirements and
permission for construction of a total gross site area of 118,900 sq m has been granted to 遠洋地產鎮江有限公
*
司 (Sino Ocean Land (Zhenjiang) Limited ).
(5)
According to 57 Planning Permit for Construction Works by Zhenjiang Planning Bureau, the proposed
construction works of the property comply with the town planning requirements and the permitted construction
scale is 411,866.90 sq m. The details are as follows:
Permit No.
Gross Floor Area
(sq m)
321100201100525
321100201100528
321100201100529
321100201100530
321100201100531
321100201100532
321100201100533
321100201100534
321100201100535
321100201100515
321100201100516
*
1,433.60
1,433.60
1,433.60
1,433.60
1,433.60
4,077.60
4,771.20
2,696.00
4,520.10
5,297.10
5,294.10
— IV-11 —
Issue Date
29
29
29
29
29
29
29
29
29
29
29
August
August
August
August
August
August
August
August
August
August
August
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
Appendix IV
Permit No.
Gross Floor Area
(sq m)
321100201100517
321100201100518
321100201100519
321100201100520
321100201100522
321100201100523
321100201100524
321100201100526
321100201100527
321100201300098
321100201300101
321100201300102
321100201300103
321100201300104
321100201300105
321100201300106
321100201300107
321100201300108
321100201300088
321100201300089
321100201300090
321100201300091
321100201300092
321100201300093
321100201300094
321100201300095
321100201300096
321100201300097
321100201300099
321100201200459
321100201200460
321100201200461
321100201200462
321100201200463
321100201200464
321100201200465
321100201200466
321100201200467
321100201200452
321100201200453
321100201200454
321100201200455
321100201200456
321100201200457
321100201200458
321100201300100
4,103.80
4,588.10
5,665.90
5,708.50
8,440.50
8,447.50
8,437.60
1,654.80
26,997.00
9,087.26
2,970.29
2,970.29
2,970.29
2,970.29
2,970.29
10,327.33
3,374.05
3,515.09
3,374.05
8,383.89
4,218.03
3,915.84
2,970.29
2,970.29
9,166.48
4,997.42
1,869.39
3,397.69
3,397.69
3,518.17
3,376.14
9,402.84
3,389.61
3,389.61
3,389.61
10,825.35
5,265.47
21,996.90
22,878.78
25,380.01
12,992.59
29,455.29
2,073.70
20,365.35
11,051.02
25,432.42
Total
411,866.90
— IV-12 —
Issue Date
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
29
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
29
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
March 2013
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
December 2012
March 2013
Appendix IV
(6)
According to 8 Permits for Commencement of Construction Works, the proposed construction works of the
property complies with the construction works commencement conditions and the permitted total gross floor
area is 479,647.07 sq m. The details are as follows:
Permit No.
(7)
Gross Floor Area
(sq m)
Issue Date
Construction period
3211002011121300001A
7,339.20
13 December 2011
From 25 November 2011 to
16 September 2012
3211002011113000001A
33,201.49
30 November 2011
16 September 2012
3211002011113000002A
48,120.57
30 November 2011
9 October 2012
3211002012010600001A
27,882.29
6 January 2012
9 October 2012
3211002012081000001A
59,104.42
10 August 2012
From 1 August 2012 to
1 October 2013
3211002012122600001A
113,145.72
26 December 2012
From 1 January 2013 to
30 September 2014
3211002013030700001A
75,604.72
7 March 2013
From 1 December 2012 to
30 June 2015
3211002013052100001A
115,248.66
21 May 2013
From 1 May 2013 to
30 June 2015
Total
479,647.07
According to 27 Commodity Housing Pre-sale Permits issued by Zhenjiang State-owned Land Resources and
Housing Bureau, 58 units with a total gross floor area of 365,308.61 sq m including residential units and retail
units are permitted for pre-sale with details as follows:
Permit No.
Issue Date
20110148
20120004
20120017
20120029
20120061
20120095
20120098
20120105
20120110
20130024
20130029
20130118
20120111
20130015
20130019
20130023
20130040
20130050
20130054
20130063
20130064
20130081
20130093
20130101
20130128
20140015
20140040
16 December 2011
10 February 2012
26 April 2012
29 May 2012
17 August 2012
23 November 2012
4 December 2012
21 December 2012
27 December 2012
12 April 2013
19 April 2013
22 November 2013
27 December 2012
22 March 2013
29 March 2013
12 April 2013
23 May 2013
19 June 2013
29 June 2013
26 July 2013
2 August 2013
18 September 2013
18 October 2013
25 October 2013
16 December 2013
28 February 2014
4 June 2014
Total
Pre-sale Area
(sq m)
Unit No.
34,838.22
10,419.47
16,780.70
4,244.24
1,438.24
6,919.33
1,656.15
2,176.79
19,304.43
7,640.33
4,152.85
24,406.73
85,202.39
5,853.36
2,926.68
5,925.60
21,949.92
5,534.64
10,856.34
20,616.02
2,597.88
6,824.09
5,641.56
9,202.56
8,400.69
20,359.22
19,440.18
9, 10, 12, 16, 18, 21, 23
5, 6, 22
2, 3, 7, 8, 15, 17
11
1
20
28
31
25, 26
27
32
29, 30
36, 37, 38, 39
30, 31
29
26, 27
35
7, 23
32
11, 22, 28, 33
18
5, 6, 21
10, 17
19
12
2, 3, 9, 15, 16, 20
1, 8
365,308.61
— IV-13 —
Appendix IV
(8)
According to 22 Registered Books of Construction Works for Completion and Acceptance issued by Zhenjiang
State-owned Land Resources and Housing Bureau, a total gross floor area of 112,366.94 sq m are accepted with
inspection with details as follows:
Permit No.
Issue Date
13-189#
13-190#
13-191#
13-192#
13-193#
13-194#
13-195#
13-196#
13-197#
13-198#
13-199#
13-200#
13-201#
13-202#
13-203#
13-204#
13-205#
13-206#
13-207#
14-156#
14-160#
14-161#
30
30
30
30
30
30
30
30
30
30
30
30
30
30
30
30
30
30
30
25
30
30
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
August 2013
June 2014
June 2014
June 2014
Total
Gross Floor Area
(sq m)
1,467.84
1,467.84
1,467.84
1,467.84
1,467.84
4,139.06
4,722.91
2,745.94
4,496.85
5,430.50
5,430.50
4,161.20
4,566.77
5,717.82
5,717.82
8,555.68
8,545.39
8,550.57
1,658.73
8,440.00
11,074.00
11,074.00
Unit No.
1#
2#
3#
5#
6#
7#
8#
9#
10#
11#
12#
15#
16#
17#
18#
21#
22#
23#
28#
20#
26#
25#
112,366.94
(9)
According to the information provided by the Sino-Ocean Land Group, portions of the property with a total
gross floor area of approximately 217,866 sq m had been presold at a total consideration of RMB1,249,142,712.
We have included such portions in our valuation and taken into account such amount.
(10)
The development value of the property when completed as at 30 September 2014 was approximately
RMB1,703,000,000.
(11)
According to the information provided by the Sino-Ocean Land Group, the expended construction cost as at 30
September 2014 was approximately RMB679,000,000. The estimated total construction cost was approximately
RMB1,217,000,000. In the course of our valuation, we have allowed for such costs.
(12)
According to the Sino-Ocean Land Group, the Sino-Ocean Land Group holds a 55% attributable interest in the
property.
(13)
We have been provided with a legal opinion on the property prepared by the Company’s PRC legal adviser,
which contains, inter alia, the following information:
(i)
*
*
遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited ) has obtained the land use rights of the
property and is the legal land user of the property. Full land premium was paid for the land use rights of
granted land and State-owned Land Use Rights Certificates have been obtained. According to its Stateowned Land Use Rights Certificate, 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *) has
the rights to occupy, use, lease or otherwise dispose of the land use rights of the property within the land
use term;
— IV-14 —
Appendix IV
(14)
(ii)
The project under construction by 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *)
mentioned above has been legally approved by relevant government departments without being repealed,
modified and abolished. 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *) has been
entitled to develop the project in compliance with the relevant permits;
(iii)
*
遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited ) is entitled to pre-sell the property under
construction within the pre-sale limit in compliance with Pre-sale Permit;
(iv)
Parts of the property are subject to a mortgage in favour of Industrial Bank Zhenjiang branch for a
consideration of RMB500,000,000; and
(v)
As confirmed by 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *), except for the
mortgage mentioned above, the land use rights and projects under construction mentioned above are not
subject to any foreclosure, mortgage or restriction of other rights.
The status of the title and grant of major approvals in accordance with the information provided by the SinoOcean Land Group are as follows:
State-owned Land Use Rights Certificate
Land Transfer Contract
Planning Permit for Construction Land
Planning Permit for Construction Works
Commencement Permit for Construction Works
Pre-sale Permit
Construction Works for Completion and Acceptance
*
— IV-15 —
Yes
Yes
Yes
Yes
Yes
Yes (part)
Yes (part)
Appendix IV
Property
2.
The portions of Ocean Century
(Qinhuangdao)
（遠洋 • 海世紀（秦皇島））
under development, Qinhuangdao,
Hebei Province,
the PRC
Particulars of
occupancy
The property comprises portions of an enlarged
reconstruction project being developed in
phases.
As at the date of
valuation, the property
under construction
and is scheduled to be
The property is close to the seaside and close to completed in phases
the Olympic Sporting Center.
between 2014 and
The environment is good. The property is 5
2016.
km away from the center of Harbor District
where the commercial atmosphere is yet to be
developed.
The property is planned to be developed into a
mixed use development to comprise residential,
retail, serviced apartment and car parking
spaces.
Proposed
Gross Floor Area
(sq m)
Use
Residential
Retail
Serviced apartment
Basement
Car park
645,177.24
25,774.11
69,454.72
25,502.68
42,063.77
Total:
807,972.52
granted for terms due to expire on 14 November
2052 for commercial and financial use and 14
November 2082 for residential use.
— IV-16 —
Market value in
30 September 2014
RMB4,124,000,000
(100% interest
attributable
to the Sino-Ocean
Land Group:
RMB4,124,000,000)
Appendix IV
Notes:
(1)
Pursuant to 5 State-owned Land Use Rights Certificates, the land use rights of parts of the reconstruction
project, comprising a total site area of 232,153.51 sq m, have been vested in 秦皇島市海洋置業房地產開發有限
*
公司 (Qinhuangdao Ocean Land Development Company Limited ). The details are as follows:
Certificate No.
Site area
(sq m)
Use
Expiry date
2012158
95,413.52
Residential/Retail
Retail: 14 November 2052
Residential: 14 November 2082
2012147
33,009.61
Residential/Retail
2012148
9,603.58
Residential/Retail
2013001
69,442.41
Residential/Retail
2013153
24,684.39
Residential
Allocated State-owned land
Total
(2)
*
232,153.51
The salient points of Grant Contract for State-owned Land Use Rights and Supplementary Contract of Grant
Contract of State-owned Land Use Rights entered into between Qinhuangdao Municipal Land Resources
Administration Bureau (the “Grantor”) and 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land
Development Company Limited *) (the “Grantee”) on 14 November 2012 are summarized below:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
:
:
:
:
:
(vii)
Site Area
Use
Land Premium
Land Use Term
Permitted Gross
Floor Area
Building covenant
Plot No. 5-1 West Baitaling Village reconstruction project,
West Side Wentan Road, Haigang District
95,413.52 sq m
RMB552,070,534
40 years for commercial use, 70 years for residential use
< 236,283 sq m
:
To complete construction by 14 November 2016
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Permitted Gross Floor Area
Building covenant
:
:
:
:
:
:
East Side Wentan Road, Haigang District
57,694 sq m (including 33,009.61 sq m granted land)
RMB190,996,339
< 82,524 sq m
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
East Side Wentan Road and North Side Hebei Avenue, Haigang
District
9,603.58 sq m
RMB55,567,110
< 24,008 sq m
— IV-17 —
Appendix IV
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
Site Area
Use
Land Premium
Land Use Term
Permitted Gross
Floor Area
Building covenant
:
:
:
:
:
West Side Jingwen Road, Haigang District
69,442.41 sq m
RMB401,799,539
< 173,606 sq m
:
(vii)
(3)
According to Planning Permit for Construction Land No. 130302200902021 dated 3 July 2009, the proposed
construction land use of portion of the reconstruction project complies with the town planning requirements and
permission for construction of a total gross site area of 621,435.97 sq m has been granted to 秦皇島市海洋置業
*
房地產開發有限公司 (Qinhuangdao Ocean Land Development Company Limited ).
(4)
According to three Planning Permits for Construction Works, the construction works of the property, with a total
gross floor area of 842,147 sq m, are in compliance with the construction works requirements and have been
approved. The details are as follows:
Permit No.
(5)
Gross Floor Area
(sq m)
130302201103063
8 September 2011
Phase 1 in Plot No. 5 of old city reconstruction
project in west Haigang District
391,915
130302201103076
30 September 2011
Plot No. 4-1 of old city reconstruction project in
west Haigang District
302,363
130302201303020
9 May 2013
Phase 1 in Plot No. 3-3 of old city reconstruction
147,869
Total:
842,147
According to 5 Commencement Permits for Construction Works issued by the Qinhuangdao Construction
Bureau, parts of the reconstruction project have been permitted for the construction of various buildings with a
total gross floor area of 626.698.13 sq m. The details are as follows:
Permit No.
*
Issue Date Building
Issue Date
Building
Gross Floor Area
(sq m)
130301S11109-02-01 30 September 2011 Phase 1 in Plot No. 4-1 of old city
reconstruction project in west Haigang
District (Building Nos. 3, 5 and 8-12 and car
park in Block North and South)
198,167.97
130301S11109-03-01 30 September 2011 Phase 1 in Plot No. 4-1 of old city
District (Building Nos. 1, 6 and 8-11)
104,194.47
130301S11108-02-01 15 September 2011 Phase 1 in Plot No. 5 of old city reconstruction
project in west Haigang District (Building
Nos. 1, 6 and 8-11)
194,286.20
— IV-18 —
Appendix IV
Permit No.
Issue Date
Gross Floor Area
(sq m)
Building
130301S13054-02-01 4 July 2013
Phase 1 in Plot No. 3-3 of old city
District (Building Nos. 38-40 and No. D-3
car park)
92,220.85
130301S13054-03-01 4 July 2013
District (Building Nos. 43 and 46)
37,828.64
Total
(6)
626,698.13
According to 10 Pre-sale Permits, the area of portions of the reconstruction project permitted for pre-sale is
545,775.51 sq m with details as follows:
Gross Floor Area
(sq m)
Permit No.
Plot
Issue Date
201378
Phase 1 Plot No. 3-3 (Building No. 38)
24 September 2013
23,436.16
201366
Phase 1 Plot No. 3-3 (Building No. 46)
29 August 2013
17,459.72
201359
Phase 1 Plot No. 3-3 (Building Nos. 39-40)
15 August 2013
45,415.32
2011072
Plot No. 4-1 (Building Nos. 13, 15, 16, 17
and 19)
27 December 2011
5,390.54
2011066
Plot No. 4-1 (Building Nos. 1, 2, 3, 5, 6 and 7)
10 November 2011
139,361.46
2012018
Plot No. 4-1 (car park of North Block)
18 May 2012
2011065
Phase 1 in Plot No. 5 (Building Nos. 1-6, 8-12 and
15-19)
10 November 2011
2012019
Car park in Blocks A, B, C1 and C2 (Building Nos. 31- 18 May 2012
33 in Zone C2, car parks in Zones A, B and C1)
7,345.53
2014051
No. 4-1 (Building #8)
29 August 2014
9,628.08
2013102
Plot No. 4-1 (Building No. 9, car park of
South Block)
13 December 2013
Total
7,280.40
267,672.18
22,786.12
545,775.51
(7)
According to the information provided by the Sino-Ocean Land Group, portions of the property with a total gross
floor area of approximately 471,646.42 sq m had been presold at a total consideration of RMB3,200,252,948.
(8)
RMB5,873,000,000.
(9)
September 2014 was approximately RMB1,575,000,000. The estimated total construction cost was approximately
(10)
property.
— IV-19 —
Appendix IV
(11)
(12)
(i)
秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company Limited *) has
obtained the land use rights of the property and is the legal land user of the property. Full land premium
was paid for the land use rights of granted land and State-owned Land Use Rights Certificates have been
obtained. According to its Grant Contract of Land Use Rights, Supplementary Contract of Grant Contract
of Grant Contract of Land Use Rights and State-owned Land Use Rights Certificate, 秦皇島市海洋置
業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company Limited *) has the rights to
occupy, use, lease or otherwise dispose of the land use rights of the property within the land use term;
(ii)
The project under construction by 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land
Development Company Limited *) mentioned above has been legally approved by relevant government
departments without being repealed, modified and abolished. 秦皇島市海洋置業房地產開發有限公司
(Qinhuangdao Ocean Land Development Company Limited *) has been entitled to develop the project in
compliance with the relevant permits;
(iii)
秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company Limited *) is
entitled to pre-sell the property under construction within the pre-sale limit in compliance with Pre-sale
Permit;
(iv)
Parts of the property are subject to a mortgage in favour of Postal Savings Bank of China Hebei Province
branch for a consideration of RMB400,000,000; and
(v)
As confirmed by 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development
Company Limited *), except for the mortgage mentioned above, the land use rights and projects under
construction mentioned above are not subject to any foreclosure, mortgage or restriction of other rights.
Grant Contract for State-owned Land Use Rights
Pre-sale Permit
*
— IV-20 —
Yes
Yes
Yes
Yes
Yes
Yes (part)
Appendix IV
Property
3.
Particulars of
occupancy
Phase 2 of Grand Canal
Milestone (Hangzhou)
Gongshu District,
Hangzhou,
Zhejiang Province,
the PRC
The property comprises Phase 2 of a residential
development being erected over a piece of land
with a site area of 34,116 sq m.
The property is on the edge of the Great Canal.
The environment is good. The accessibility of
the property is good. The locality is reachable
by taxies and buses.
As at the date of
was under construction
and scheduled to be
completed in 2015.
Market value in
30 September 2014
RMB1,350,000,000
(70% interest attributable to
the Sino-Ocean
Land Group:
RMB945,000,000)
villa development with car parking spaces.
Proposed
Gross Floor Area
(sq m)
Use
Villa
Basement
23,623.00
22,379.00
Total:
46,002.00
granted for terms due to expire on 30 May 2081
for residential use and 30 May 2051 for public
services and amenities.
Notes:
(1)
According to State-owned Land Use Rights Certificate No. (2011) 100047 issued by Hangzhou Land Resources
Bureau on 8 June 2011, the land use rights of part of the property having a site area of 34,116 sq m have been
vested in 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate Development Company
Limited *) for a term due to expire on 30 May 2081 for residential use and 30 May 2051 for public services and
amenities.
(2)
The salient points of Grant Contract for State-owned Land Use Rights HTHZ (2007) No. 133 entered into
between Hangzhou Municipal Land Resources Administration Bureau (the “Grantor”) and 遠洋地產有限公
*
*
司 (Sino Ocean Land Limited ) and 北京萊福建设有限公司 (Beijing Life Builder Co., Ltd. ) (collectively the
“Grantee”) on 6 November 2007 are summarized below:
*
(i)
(ii)
Location
Site Area
:
:
(iii)
(iv)
Use
Land Premium
:
:
Junction of Xiaohe Road and Jiru Road
89,002 sq m (Lot A: 34,116 sq m, Lot B: 50,953 sq m, Lot B1:
3,933 sq m)
Residential, Public facilities and Commercial and Finance
RMB1,224,300,090
— IV-21 —
Appendix IV
(v)
Land Use Term
:
70 years for residential use and 40 years for commercial use
commencing on the handover date of the land
Additionally, according to a supplementary agreement of the Grant Contract, the Grantee was changed into 杭州
遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate Development Company Limited *) on
26 February 2008.
(3)
According to Planning Permit for Construction Land No. 330100200900136 dated 20 March 2009, the proposed
construction land use of the property complies with the town planning requirements and permission for
construction of a total gross site area of 85,069 sq m has been granted to 杭州遠洋萊福房地產開發有限公司
(Hang Zhou Yuan Yang Lai Fu Real Estate Development Company Limited *).
(4)
According to Planning Permit for Construction Works No. 330100201400288 dated 22 August 2014, the
proposed construction works of the residential, communal and ancillary facilities of the development with the
town planning requirements and the permitted construction scale is 46,095.53 sq m.
(5)
(6)
Permit No.
Plot
(2011)0089
(2011)0097
(2013)0057
(2013)000069
Plot
Plot
Plot
Plot
Issue Date
B
B
B
B
(Building
(Building
(Building
(Building
B-11#, B-2# B-6#)
B-8#)
3#, 7#)
4#)
Gross Floor Area
(sq m)
7 November 2011
28 November 2011
13 May 2013
30 June 2013
42,042.15
18,494.54
26,065.43
12,578.69
Total
99,180.81
According to 2 Construction Works Completion Examination Certificates issued by Hangzhou Urban and Rural
Construction Committee, the development in which the property constitutes part therein, with a total gross floor
area of 157,038.59 sq m, was completed. The details are as follows:
Permit No.
Issue Date
310006201311230102
310006201311230103
30 December 2013
30 December 2013
Total
Pre-sale Area
(sq m)
53,979.39
103,059.20
157,038.59
(7)
RMB2,199,000,000.
(8)
RMB446,000,000. In the course of our valuation, we have allowed for such costs.
(9)
property.
*
— IV-22 —
Appendix IV
(10)
(11)
(i)
杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate Development Company
Limited *) has obtained the land use rights of the property and is the legal land user of the property.
Full land premium was paid for the land use rights of granted land and State-owned Land Use Rights
Certificates have been obtained. According to its Grant Contract of Land Use Rights and State-owned
Land Use Rights Certificate, 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real
Estate Development Company Limited *) has the rights to occupy, use, lease or otherwise dispose of the
land use rights of the property within the land use term;
(ii)
The project under construction by 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu
Real Estate Development Company Limited *) mentioned above has been legally approved by relevant
government departments without being repealed, modified and abolished. 杭州遠洋萊福房地產開發有限
*
公司 (Hang Zhou Yuan Yang Lai Fu Real Estate Development Company Limited ) has been entitled to
develop the project in compliance with the relevant permits;
(iii)
Limited *) is entitled to pre-sell the property under construction within the pre-sale limit in compliance
with Pre-sale Permit; and
(iv)
As confirmed by 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate
Development Company Limited *), the land use rights and projects under construction mentioned above
are not subject to any foreclosure, mortgage or restriction of other rights.
Construction Works Completion Examination Certificate
Pre-sale Permit
— IV-23 —
Yes
Yes
Yes
Yes
Yes
Yes
Appendix IV
Property
4.
Phases 2 and 3 of
Ocean Chanson Mansion
(Shanghai)
Yangtai Road,
Lvlong Road,
Planned
Meipu Road,
Yanghang Town, Baoshan District,
Shanghai,
the PRC
Particulars of
occupancy
Ocean Chanson Mansion (Shanghai) is
erected on a piece of land with a total site
area of approximately 137,708.2 sq m and is
being developed in phases into a residential
development with car parking spaces.
Ocean Chanson Mansion (Shanghai) is situated
in the sub-urban area of Baoshan District in
Shanghai with several bus lines and subway
access. The property is rather far away from the
city centre and the commercial atmosphere is
yet to be developed.
As at the date of
and scheduled to be
completed in phases
between 2014 and
2015.
Market value in
30 September 2014
RMB2,590,000,000
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB2,590,000,000)
The property comprises the portions of
Ocean Chanson Mansion (Shanghai) under
development.
Proposed
Gross Floor Area
(sq m)
Use
Residential
Retail
Ancillary
Underground Ancillary
Car park
171,909.25
7,289.55
819.98
1,758.00
19,099.00
Total:
200,875.78
granted for a term due to expire on 28 March
2081 for residential use.
Notes:
(1)
*
According to Shanghai Certificate of Real Estate Ownership No. (2014) 026751 issued by Shanghai Planning,
Land & Resources Administration Bureau and Shanghai Housing Security & Administration Bureau on 30 June
2014, the land use rights of the development in which the property constitutes part therein, having a site area
of 137,708 sq m, have been vested in 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) for a
term of 70 years commencing on 29 March 2011 for residential use.
— IV-24 —
Appendix IV
(2)
The salient points of Grant Contract for Shanghai Certificate of Real Estate Ownership No. (2011)(013) entered
into between Shanghai Baoshan District Planning and Land Resources Administration Bureau (the “Grantor”)
and 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) (the “Grantee”) on 9 March 2011 are
summarized below:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
Site Area
Use
Land Premium
Land Use Term
Permitted Gross
Floor Area
:
:
:
:
:
East to Yangtai Road, South to Lvlong Road, West to Planned Meipu
Road, Yanghang Town, Baoshan District, Shanghai
137,708.2 sq m
Residential
RMB3,133,770,000
70 years commencing on the handover date of the land
275,416.4 sq m
(3)
According to Planning Permit for Construction Land No. (2011) EA31011320111131 dated 21 July 2011, the
proposed construction land use of the property complies with the town planning requirements and permission
for construction of a total gross site area of 368,314 sq m (including a net site area of 137,708.2 sq m) has been
granted to 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *).
(4)
According to 6 Planning Permits for Construction Works issued by Shanghai Baoshan Planning and Land
Resources Administration Bureau, the proposed construction works of the development comply with the town
planning requirements and the permitted 228,191.84 sq m. The details are as follows:
Permit No.
Issue Date
Gross Floor Area
(sq m)
Building
(2013)FA31011320112500 22 December 2011
Residential Building Nos. 6, 8, 9, 10 and
12 and Basement Car Parks of Phase 2
39,094.98
(2013)FA31011320134960 29 July 2013
Residential Building Nos. 13 and 20 and
Basement Car Park No. 5
36,618.81
(2013)FA31011320134981 13 July 2013
Residential Building Nos. 8, 10 and 12 and
43,080.71
(2013)FA31011320135376 28 November 2013 Residential Building Nos. 2, 4 and 7
43,570.77
(2013)FA31011320135680 28 November 2013 Basement Car Park No. 6
19,272.82
(2013)FA31011320135682 28 November 2013 Residential Building Nos. 1, 3 and 5
46,553.75
Total
(5)
According to 7 Commencement Permits for Construction Works, the proposed construction works of the
development comply with the construction works commencement conditions. The details are as follows:
Permit No.
Issue Date
Building
1101BS0071D02
1101BS0071D03
1101BS0071D07
1101BS0071D08
1101BS0071D09
1101BS0071D10
1101BS0071D11
12 January 2012
13 January 2012
5 September 2013
17 September 2013
29 October 2013
20 January 2014
24 January 2014
Residential Building Nos. 8, 10 and 12
Residential and ancillary Building No. 1
Plot A
Residential Building Nos. 1, 5 and 7
Gross Floor Area
(sq m)
37,682.23
31,302.59
36,618.81
7,792.37
5,398.48
90,124.52
19,272.82
Total
*
228,191.84
— IV-25 —
228,191.82
Appendix IV
(6)
According to 4 Commodity Housing Pre-sale Permits issued by Shanghai Baoshan Housing Security and
Administration Bureau, a total gross floor area of 136,541.97 sq m including residential units and retail units are
permitted for pre-sale with details as follows:
Permit No.
Issue Date
(2013)0000602
(2013)0000496
(2013)0000367
(2014)0000440
25
17
22
27
November 2013
October 2013
August 2013
August 2014
Total
Pre-sale Area
(sq m)
32,287.11
34,199.19
29,346.48
40,709.19
136,541.97
(7)
gross floor area of approximately 109,842 sq m had been presold at a total consideration of RMB2,148,810,432.
(8)
RMB3,898,000,000.
(9)
(10)
property.
(11)
*
(i)
上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) has obtained the land use rights
of the property and is the legal land user of the property. Full land premium was paid for the land use
rights of granted land and State-owned Land Use Rights Certificates have been obtained. According to
its Grant Contract of Land Use Rights and State-owned Land Use Rights Certificate, 上海遠正置業有
限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) has the rights to occupy, use, lease or otherwise
dispose of the land use rights of the property within the land use term;
(ii)
The project under construction by 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *)
modified and abolished. 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) has been
(iii)
*
上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. ) is entitled to pre-sell the property
under construction within the pre-sale limit in compliance with Pre-sale Permit;
(iv)
Parts of the property are subject to four mortgages in favour of China Everbright Bank Shanghai branch
and China Citic Bank Shanghai branch for a consideration of RMB1,870,000,000; and
(v)
As confirmed by 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *), except for the
— IV-26 —
Appendix IV
(12)
Certificate of Real Estate Ownership
Commodity Housing Pre-sale Permit
— IV-27 —
Yes
Yes
Yes
Yes
Yes
Yes (part)
Appendix IV
Property
5.
Particulars of
occupancy
DREAMING LAND
(Shanghai)
（遠洋 • 鴻郡（上海））,
Fuyuan Road
Lane 885,
Baoshan District, Shanghai,
the PRC
The property comprises villa residential development
being erected over a piece of land with a site area of
107,324.9 sq m.
As at the date of
and scheduled to be
The property is situated in the sub-urban area of Baoshan completed in 2015.
District in Shanghai with several bus lines and subway
access. The environment is quite good and is surrounded
by Meilan Lake and Golf Course.
Market value in
30 September 2014
RMB1,650,000,000
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB1,650,000,000)
The property is planned to be developed into a villa
According to the information provided by the SinoOcean Land Group, the proposed gross floor area of the
property is 64,939 sq m.
The land use rights of the property have been granted for
a term due to expire on 2 October 2080 for residential
use.
Notes:
(1)
Land & Resources Administration Bureau and Shanghai Housing Security & Administration Bureau on 1 April
2011, the land use rights of part of the property having a site area of 107,824.9 sq m have been vested in 上海
*
遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. ) for a term due to expire on 2 October 2080 for
residential use.
(2)
The salient points of Grant Contract for Shanghai Certificate of Real Estate Ownership No. (2010)(30) entered
into between Shanghai Baoshan District Planning and Land Resources Administration Bureau (the “Grantor”)
and 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) (the “Grantee”) on 29 September 2010
are summarized below:
(3)
*
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
Site Area
Use
Land Premium
Land Use Term
Permitted Gross
Floor Area
:
:
:
:
:
East to Meilan Lake Golf Course, South to Meilan Lake Golf Course,
West to Wuyuan Road, North to Shinian Village Xiaoli Town
107,824.9 sq m
Residential
RMB1,377,300,000
70 years commencing on the handover date of the land
64,694.94 sq m
According to Planning Permit for Construction Land No. (2011)EA31011320110464 dated 6 April 2011, the
proposed construction land use of the property complies with the town planning requirements and permission for
construction of a total gross site area of 107,824.9 sq m has been granted to 上海遠鑫置業有限公司 (Shanghai
Yuan Xin Properties Co., Ltd. *).
— IV-28 —
Appendix IV
(4)
According to Planning Permit for Construction Works No. (2014)FA31011320144801 dated 20 June 2014,
the proposed construction works of the residential portion of the development comply with the town planning
requirements and the permitted construction scale are 71,547.75 sq m.
(5)
According to Pre-sale Permits No. (2014)0000635 dated 10 November 2014, the area of portions of the
reconstruction project permitted for pre-sale is 53,146 sq m.
(6)
development comply with the construction works commencement conditions. The details are as follows:
Gross Floor Area
(sq m)
Permit No.
Issue Date
Building
1101BS0071D03
310113201103071319
2 July 2012
Pile Foundation of Basement 3#
0
1101BS0071D04
310113201103071319
2 July 2012
Pile Foundation of Basement 2#
0
1101BS0071D05
310113201103071319
12 August 2014
Residential Building Nos. 1-15, No.18,
No.21, No.24, Nos.39-52, Nos. 58-61,
Nos. 58-61 and Basement Car park 1
Total
71,547.75
71,547.75
(7)
RMB2,889,000,000.
(8)
(9)
property.
(10)
*
(i)
上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) has obtained the land use rights of the
property and is the legal land user of the property. Full land premium was paid for the land use rights
of granted land and State-owned Land Use Rights Certificates have been obtained. According to its
Grant Contract of Land Use Rights and State-owned Land Use Rights Certificate, 上海遠鑫置業有限公
司 (Shanghai Yuan Xin Properties Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of
the land use rights of the property within the land use term;
(ii)
The project under construction by 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *)
modified and abolished. 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) has been
(iii)
*
上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. ) is entitled to pre-sell the property
— IV-29 —
Appendix IV
(11)
(iv)
Parts of the property are subject to two mortgages in favour of Agricultural Bank of China Shanghai
branch and Industrial Bank Wujiaochang sub-branch for a consideration of RMB1,600,000,000; and
(v)
As confirmed by 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *), except for the
Pre-sale Permit
— IV-30 —
Yes
Yes
Yes
Yes
Yes
Yes
Appendix IV
Property
6.
Ocean Honored
Chateau (Qingdao)
（遠洋公館（青島）,
No. 23
Yanerdao Road,
Shinan District, Qingdao,
Shandong Province,
the PRC
Particulars of
occupancy
Particulars of occupancy
The property comprises a composite
development being erected over two pieces of
land with a total site area of approximately
42,463.10 sq m.
The property abuts to Yanerdao Street on the
northwest, Jiangxi Road on the northeast, and
Gutian Road on the south. It is about 5 minutes’
walk from Shinan CBD to the property. Nearby
developments mainly consist of residential,
commercial buildings, municipal facilities such
as Hongkong Garden, Huanhai Garden, Xutai
Garden, Lvdao Garden, Mykal Shopping Center,
Jusco Supermarket, Jianlian Hospital, No. 57
Middle School and so on.
The property is planned to be developed into
a mixed use development to comprise retail,
residential, serviced apartment and 399 car
parking spaces.
Use
Proposed
Gross Floor Area
(sq m)
Residential
Service apartment
Retail
Kindergarten
Others
60,356.38
11,620.71
3,793.25
2,166.53
1,783.40
Total:
79,720.27
granted for terms due to expire on 11 March
2050 for commercial use and 11 March 2080 for
residential use.
— IV-31 —
As at the date of
and scheduled to be
completed in 2015.
Market value in
30 September 2014
RMB2,009,000,000
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB2,009,000,000)
Appendix IV
Notes:
(1)
According to State-owned Land Use Rights Certificate No. 201066480 issued by Qingdao Municipal Land
Resources and Housing Administration Bureau on 14 June 2012, the land use rights of parts of the property
having a site area of 32,467.29 sq m have been vested in 青島遠佳置業有限公司 (Qingdao Yuan Jia Properties
Co., Ltd *) for a term due to expire on 11 March 2080 for residential use.
According to State-owned Land Use Rights Certificate No. 201233219 issued by Qingdao Municipal Land
Resources and Housing Administration Bureau on 13 June 2012, the land use rights of parts of the property
having a site area of 9,995.81 sq m have been vested in 青島遠佳置業有限公司 (Qingdao Yuan Jia Properties
Co., Ltd *) for a term due to expire on 11 March 2050 for commercial use.
(2)
The salient points of Grant Contract for State-owned Land Use Rights No. Qingdao-01-2010-0046 entered into
between Qingdao Municipal Land Resources and Housing Administration Bureau (the “Grantor”) and 北京遠坤
*
房地產開發有限公司 (Beijing Yuankun Real Estate Development Co., Ltd. ) (the “Grantee”) on 26 March 2010
are summarized below:
(i)
(ii)
(iii)
(iv)
(v)
Location
Site Area
Use
Land Premium
Land Use Term
:
:
:
:
:
(vi)
Permitted Gross Floor
Area
:
No. 5 Quanzhou Road, Shinan District
42,463.10 sq m
RMB1,560,507,000
40 years commencing on the handover date of the commercial land
70 years commencing on the handover date of the residential
land
80,025.50 sq m
According to Modification Agreement No. Qingdao-03-2010-0029 dated 4 May 2010, the Grantee of the main
contract (No. Qingdao-01-2010-0046) has been changed to 青島遠佳置業有限公司 (Qingdao Yuan Jia Properties
Co., Ltd *).
(3)
construction of a total gross site area of 42,463.10 sq m has been granted to 青島遠佳置業有限公司 (Qingdao
Yuan Jia Properties Co., Ltd *).
(4)
According to Planning Permit for Construction Works No. 370200201101065 dated 9 September 2011, the
proposed construction works of the residential, retail and ancillary facilities of the development comply with the
town planning requirements and the permitted construction scale is 79,977.09 sq m aboveground and 56,347 sq
m underground.
(5)
According to Commencement Permit for Construction Works No. 370200201203150301 dated 15 March 2012,
the proposed construction works of parts of the property comply with the construction works commencement
conditions and the total permitted gross floor area is 81,527.72 sq m. The permitted construction period was
granted from 15 March 2012 to 11 July 2014.
According to Commencement Permit for Construction Works No. 370200201203150501 dated 15 March 2012,
the proposed construction works of parts of the property comply with the construction works commencement
conditions and the total permitted gross floor area is 54,796.37 sq m. The permitted construction period was
granted from 15 March 2012 to 9 May 2014.
(6)
According to Pre-sale Permits No. (2014)033 dated 20 May 2014, the area of portions of the reconstruction
project permitted for pre-sale is 29,327.08 sq m.
(7)
RMB3,303,000,000.
*
— IV-32 —
Appendix IV
(8)
(9)
property.
(10)
(11)
(i)
青島遠佳置業有限公司 (Qingdao Yuan Jia Properties Co., Ltd *) has obtained the land use rights of the
granted land and State-owned Land Use Rights Certificates have been obtained. According to its Grant
Contract of Land Use Rights and State-owned Land Use Rights Certificate, 青島遠佳置業有限公司
(Qingdao Yuan Jia Properties Co., Ltd *) has the rights to occupy, use, lease or otherwise dispose of the
(ii)
The project under construction by 青島遠佳置業有限公司 (Qingdao Yuan Jia Properties Co., Ltd *)
modified and abolished. 青島遠佳置業有限公司 (Qingdao Yuan Jia Properties Co., Ltd *) has been
(iii)
青島遠佳置業有限公司 (Qingdao Yuan Jia Properties Co., Ltd *) is entitled to pre-sell the property under
(iv)
Parts of the property are subject to a mortgage in favour of Bank of China Qingdao Donghai Road subbranch for a consideration of RMB500,000,000; and
(v)
As confirmed by 青島遠佳置業有限公司 (Qingdao Yuan Jia Properties Co., Ltd *) except for the
Pre-sale Permit
*
— IV-33 —
Yes
Yes
Yes
Yes
Yes
Yes
Appendix IV
Property
7.
Phases 3 and 4 of Ocean Holiday
Manor (Dalian)
Jinshi IT
Industrial Park,
Dalian Economic and Technological
Area,
Liaoning Province,
the PRC
Particulars of
occupancy
Ocean Holiday Manor (Dalian) is erected
on two pieces of land with a total site
area of approximately 461,300 sq m and is
being developed in phases into a composite
As at the date of
and scheduled to be
completed in 2017.
The property is situated in the northwest of
Jinshitan area. The property abuts Guanggu Road
on the south, Project Xintianjiayuan
（心田佳苑）on the north, and the mountains
on the east and west.
Developments in the vicinity mainly comprise
residential and townhouses, such as Project Gold
Pearl（金石明珠）, Boee Brilliant Villas’ Hill（保
億麗景山）, Jinshi Beach Holiday Park
（金石灘度假公园）interspersed with a few retail
facilities. The property is situated in Jinshitan
Scenic Spot. The environment is good. Business
types mainly include F&B and entertainment.
The property comprises the portions of Ocean
Holiday Manor (Dalian) under development.
Use
Proposed
Gross Floor Area
(sq m)
Residential
Townhouse
Retail
Car park
Others
112,736.60
57,572.00
1,229.00
25,227.00
2,600.28
Total:
199,364.88
— IV-34 —
Market value in
30 September 2014
RMB437,000,000
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB437,000,000)
Appendix IV
Notes:
(1)
(2)
According to 2 State-owned Land Use Rights Certificates issued by Dalian State-owned Land Resources and
Housing Bureau Jinzhou New District Branch, the land use rights of the property with the total site area of
approximately 461,300 sq m have been vested in 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *)
for terms due to expire on 25 March 2060 for residential use. The details are as follows:
Certificate
No.
Site Area
(sq m)
(2011) 0016
(2011) 0012
80,273
381,027
Total
461,300
Issue Date
Residential
Residential
23 March 2011
28 February 2011
The salient points of Grant Contracts for State-owned Land Use Rights entered into between Dalian State-owned
Land Resources and Housing Bureau (the “Grantor”) and 大連鑫融置業有限公司 (Dalian Xinrong Property Co.,
Ltd.) (the “Grantee”) on 26 March 2010 are summarized below:
Use
(3)
Use
Site Area
(sq m)
Land
Premium
(RMB)
Permitted Gross
Floor Area
(sq m)
Residential
81,131
86,730,000
64,904.8
Residential
381,027
407,300,000
304,821.6
Total
462,158
494,030,000
369,726.40
Land Use Term
50 years commencing on the
handover date of the land
proposed construction land use of portions of the development, in which the property constitutes part therein,
complies with the town planning requirements and permission for construction of a total gross site area of
81,131 sq m has been granted to 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *).
381,027 sq m has been granted to 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *).
(4)
According to 2 Planning Permits for Construction Works, the proposed construction works of the property
comply with the town planning requirements and the permitted construction scale is 53,137.05 sq m. The details
are as follows:
Permit No.
*
Gross Floor Area
(sq m)
210213201310054
210213201310085
27,272.56
25,864.49
Total
53,137.05
— IV-35 —
Issue Date
25 April 2013
14 June 2013
Appendix IV
(5)
property comply with the construction works commencement conditions and the total permitted gross floor area
is 53,137.05 sq m. The details are as follows:
Permit No.
(6)
Gross Floor Area
(sq m)
Issue Date
Construction Period
210206201307310101
27,272.56
31 July 2013
From 31 July 2013 to
31 July 2014
210206201308271901
25,864.49
27 August 2013
From 26 August 2013 to
30 June 2015
Total
53,137.05
According to 3 Pre-sale Permits issued by Dalian Jinzhou New District State-owned Land Resources and
Housing Bureau, 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) was permitted for pre-sale of
portions of the property with details as follows:
Permit No.
Pre-sale Area (sq m)
2013043
2013050
2014046
27,252.70
8,564.72
8,553.74
Total
44,371.16
Issue Date
23 August 2013
3 September 2013
25 June 2014
(7)
gross floor area of approximately 8,809.34 sq m had been presold at a total consideration of RMB72,074,825.
(8)
RMB1,398,000,000.
(9)
(10)
property.
(11)
*
(i)
大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) has obtained the land use rights of the
Contract of Land Use Rights and State-owned Land Use Rights Certificate, 大連鑫融置業有限公司
(Dalian Xinrong Property Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of the land
use rights of the property within the land use term;
(ii)
The project under construction by 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *)
modified and abolished. 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) has been entitled
to develop the project in compliance with the relevant permits;
— IV-36 —
Appendix IV
(12)
(iii)
大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) is entitled to pre-sell the property under
(iv)
Parts of the property are subject to a mortgage in favour of Bank of China Dalian Development Zone
(v)
As confirmed by 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *), except for the mortgage
mentioned above, the land use rights and projects under construction mentioned above are not subject to
any foreclosure, mortgage or restriction of other rights.
Pre-sale Permit
*
— IV-37 —
Yes
Yes
Yes
Yes (part)
Yes (part)
Yes (part)
Appendix IV
Property
8.
Phases 1 and 2 of
Ocean City (Fushun)
（遠洋城（撫順））,
Jiangjungou,
Shuncheng District,
Fushun City,
Liaoning Province,
the PRC
Particulars of
occupancy
Phases 1 and 2 of Ocean City (Fushun) are
erected on five pieces of land with a total
site area of approximately 622,412 sq m
Ocean City (Fushun) is located in Jiangjungou
which is located in the valley and enjoys scenic
views.
Use
Proposed
Gross Floor Area
(sq m)
Residential
Retail
Resettlement flats
Others
Car park
539,022.57
35,043.45
92,023.00
24,135.00
12,846.00
Total:
703,070.02
granted for various terms (see Note (1) below)).
— IV-38 —
As at the date of
and scheduled to be
completed in phases
between 2015 and
2016.
Market value in
30 September 2014
RMB1,026,000,000
(65% interest attributable
to
the Sino-Ocean
Land Group:
RMB666,900,000)
Appendix IV
Notes:
(1)
According to 5 Certificates for the Use of State-owned Land dated 14 May 2012, 24 July 2013, 9 August 2013,
issued by the People’s Government of Fushun, the land use rights of four parcels of land with a total site area of
622,412 sq m has been vested in 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *) with details
as follows:
Site Area
(sq m)
Certificate No.
Land Use and Expiry Date
(2012)0171
Residential: 31 August 2081
Commercial: 31 August 2051
145,724
14 May 2012
(2012)0170
166,882
14 May 2012
(2014)0001
Residential: 15 May 2083 Commercial:
15 May 2053
31,483
25 April 2014
161,076
24 July 2013
117,247
9 August 2013
(2013)0154
(2013)0189
Residential: 29 January 2083
Commercial: 29 January 2053
Issue Date
622,412
(2)
According to five Grant Contracts of Land Use Rights, the property with a total site area of approximately
623,350 sq m have been contracted to be granted to 撫順德創置業有限公司 (Fushun De Chuang Properties Co.,
Ltd. *) :
Contract No.
*
Site Area
(sq m)
Plot Ratio
2113022009a0024
145,724
2.2
2113022009a0024
31,483
2.2
2113022009a0024
166,882
2.2
2113022009a0024
162,014
2.2
2113022012A1901
117,247
1.8
Total
623,350
Land Use Term
(year)
Land Premium
(RMB)
Residential: 70
Commercial: 40
Residential: 70
Commercial: 40
Residential: 70
Commercial: 40
Residential: 70
Commercial: 40
Residential: 70
Commercial: 40
76,505,100
42,228,600
112,213,100
85,057,400
77,390,000
393,394,200
— IV-39 —
Appendix IV
(3)
(4)
(5)
According to 5 Planning Permits for Construction Land issued by Fushun Planning Bureau, the construction
with a total site area of 622,412 sq m are in compliance with the planning requirement with details as follows:
Site Area
(sq m)
Certificate No.
Issue Date
21040020120011
21040020120012
20140020130067
21040020130030
21040020130029
4 May 2012
4 May 2012
27 November 2013
24 May 2013
24 May 2013
145,724
166,882
31,483
161,076
117,247
Total
622,412
According to 3 Planning Permits for Construction Works issued by Fushun Planning Bureau, the construction
works of the property with a total planned gross floor area of 432,035 sq m are in compliance with the planning
requirement with details as follows:
Gross Floor Area
(sq m)
Certificate No.
Issue Date
21040020120015
21040020120023
21040020130034
8 June 2012
16 August 2012
25 September 2013
132,434
138,349
161,252
Total
432,035
development comply with the construction works commencement conditions and the total permitted gross floor
area is 428,509 sq m. The details are as follows:
Certificate No.
Issue Date
210400201206201401
210400201206201501
210400201208312701
210400201310183501
201400201312100301
20
20
31
18
10
June 2012
June 2012
August 2013
October 2013
December 2013
Total
— IV-40 —
Gross Floor Area
(sq m)
96,373
36,061
134,823
70,272
90,980
428,509
Appendix IV
(6)
Permit No.
Plot
Issue Date
XK2012124
XK2012123
XK2013247
XK2013246
XK2013245
XK2013244
XK2013243
XK2013242
XK2013241
XK2013099
XK2013098
XK2013097
XK2013096
XK2012181
XK2012180
XK2012179
XK2012178
XK2012177
XK2012176
XK2012175
XK2012174
XK2012173
XK2012172
XK2012194
XK2012093
XK2012092
XK2012191
XK2012190
XK2012089
XK2012088
XK2012125
XK2012171
XK2012170
XK2012169
XK2012168
XK2012167
XK2012166
XK2012165
XK2012164
XK2012163
XK2012162
XK2013095
XK2012122
XK2012121
XK2012120
XK2012119
XK2012118
A2#, phase 1
A1#, phase 1
69, site 3-1
68, site 3-1
67, site 3-1
66, site 3-1
65, site 3-1
64, site 3-1
63, site 3-1
62, phase 1
60, phase 1
59, phase 1
58, phase 1
57#, site 3-1
56#, site 3-1
55#, site 3-1
54#, site 3-1
53#, site 3-1
52#, site 3-1
51#, site 3-1
50#, site 3-1
49#, site 3-1
48#, site 3-1
8#, phase 1
7#, phase 1
6#, phase 1
4#, phase 1
3#, phase 1
2#, phase 1
1#, phase 1
A3#, phase 1
47#, site 3-1
46#, site 3-1
45#, site 3-1
44#, site 3-1
43#, site 3-1
42#, site 3-1
41#, site 3-1
40#, site 3-1
39#, site 3-1
38#, site 3-1
37#, phase 1
36#, phase 1
35#, phase 1
34#, phase 1
33#, phase 1
32#, phase 1
21 June 2012
21 June 2012
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
6 May 2013
6 May 2013
6 May 2013
6 May 2013
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
11 September 2012
6 May 2013
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
— IV-41 —
Gross Floor Area
(sq m)
2,772.70
622.79
2,094.54
738.41
1,488.85
2,119.13
1,514.94
1,419.02
1,419.02
2,482.74
2,482.74
2,482.74
1,254.34
1,755.10
2,236.47
2,236.47
4,101.16
4,101.16
2,694.70
2,694.70
2,092.00
3,665.46
3,665.46
4,102.63
5,412.77
3,249.92
3,274.70
2,242.77
3,274.70
3,274.70
996.27
3,665.46
3,665.46
7,983.32
4,101.16
4,101.16
3,665.46
3,665.46
5,088.93
3,665.46
5,423.65
3,382.68
3,273.66
5,413.01
4,062.32
4,062.32
3,249.96
Appendix IV
Permit No.
Plot
Issue Date
XK2012117
XK2012116
XK2012115
XK2012114
XK2012113
XK2012112
XK2012111
XK2012110
XK2012109
XK2012108
XK2012107
XK2012106
XK2012105
XK2012104
XK2012103
XK2012102
XK2012101
XK2012100
XK2012099
XK2012098
XK2012097
XK2012096
XK2012095
XK2012126
XK2013267
XK2013266
XK2013265
XK2013264
XK2013263
XK2013262
XK2013261
XK2013260
XK2013259
XK2013258
XK2013257
XK2013256
XK2013255
XK2013254
XK2013253
XK2013252
XK2013251
XK2013250
XK2013249
XK2013248
XK2013268
XK2014146
XK2014147
XK2014148
XK2014149
XK2014052
31#, phase 1
30#, phase 1
29#, phase 1
28#, phase 1
27#, phase 1
26#, phase 1
25#, phase 1
24#, phase 1
23#, phase 1
22#, phase 1
21#, phase 1
20#, phase 1
19#, phase 1
18#, phase 1
17#, phase 1
16#, phase 1
15#, phase 1
14#, phase 1
13#, phase 1
12#, phase 1
11#, phase 1
10#, phase 1
9#, phase 1
A4#, phase 1
53, site 4
52, site 4
51, site 4
50, site 4
49, site 4
48, site 4
47, site 4
45, site 4
44, site 4
43, site 4
42, site 4
41, site 4
40, site 4
39, site 4
38, site 4
37, site 4
36, site 4
35, site 4
34, site 4
33, site 4
54, site 4
3, site 4
4, site 4
5, site 4
6, site 4
21, site 4
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
21 June 2012
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
25 October 2013
29 July 2014
29 July 2014
29 July 2014
29 July 2014
6 June 2014
— IV-42 —
Gross Floor Area
(sq m)
3,249.96
2,196.29
2,698.83
2,462.02
2,698.83
2,123.60
3,243.94
1,073.44
3,273.66
1,073.44
2,698.82
2,698.82
2,698.68
5,425.50
6,752.44
6,752.44
2,084.96
3,279.68
2,725.12
2,755.16
2,755.16
2,755.16
4,102.63
1,232.62
3,145.64
3,270.21
3,208.33
3,204.40
3,247.98
3,212.32
2,486.77
3,478.03
1,981.28
2,615.18
3,140.17
3,478.03
2,458.08
2,128.26
2,417.40
3,478.03
2,417.40
2,195.66
5,448.80
3,478.03
4,532.94
3,343.30
3,315.23
3,264.50
3,771.07
3,091.65
Appendix IV
Permit No.
Plot
XK2014053
XK2014054
XK2014055
XK2014056
22,
23,
24,
25,
site
site
site
site
Issue Date
4
4
4
4
6
6
6
6
June
June
June
June
Gross Floor Area
(sq m)
2014
2014
2014
2014
3,154.62
3,339.35
3,264.76
3,120.48
Total
(7)
313,931.67
According to 41 Construction Works Completion Examination Certificates issued by Fushun Urban and Rural
Construction Committee, the development in which the property constitutes part therein, with a total gross floor
area of 160,038.59 sq m, was completed. The details are as follows:
Permit No.
(2013)fw230
(2013)fw234
(2013)fw235
(2013)fw236
(2013)fw254
(2013)fw255
(2013)fw256
(2013)fw257
(2013)fw237
(2013)fw238
(2013)fw246
(2013)fw247
(2013)fw248
(2013)fw249
(2013)fw250
(2013)fw251
(2013)fw252
(2013)fw253
(2013)fw239
(2013)fw240
(2013)fw241
(2013)fw242
(2013)fw243
(2013)fw244
(2013)fw245
(2013)fw219
(2013)fw220
(2013)fw221
(2013)fw222
(2013)fw223
(2013)fw224
(2013)fw225
(2013)fw226
(2013)fw227
(2013)fw228
(2013)fw231
Issue Date
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
27
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
December
— IV-43 —
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
Location
30#, C District
34#, C District
35#, C District
36#, C District
A1#, C District
A2#, C District
A3#, C District
A4#, C District
A10#, C District
A11#, C District
1#, D District
2#, D District
3#, D District
4#, D District
6#, D District
7#, D District
8#, D District
9#, D District
10#, F District
11#, F District
12#, F District
13#, F District
14#, F District
15#, F District
18#, F District
19#, C District
20#, C District
21#, C District
22#, C District
23#, C District
24#, C District
25#, C District
26#, C District
27#, C District
28#, C District
31#, C District
Appendix IV
Permit No.
Issue Date
(2013)fw232
(2013)fw233
(2013)fw229
(2014)fw091
(2014)fw092
27 December
27 December
27 December
28 September
28 September
2013
2013
2013
2013
2013
Location
32#,
33#,
29#,
16#,
17#,
C District
C District
C District
F District
F District
(8)
(9)
RMB3,178,000,000.
(10)
(11)
property.
(12)
(13)
(i)
撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *) has obtained the land use rights of the
Contract of Land Use Rights and State-owned Land Use Rights Certificate, 撫順德創置業有限公司
(Fushun De Chuang Properties Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of the
(ii)
The project under construction by 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *)
modified and abolished. 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *) has been
(iii)
撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *) is entitled to pre-sell the property
(iv)
Parts of the property are subject to a mortgage in favour of China Merchants Bank Shenyang branch for
a consideration of RMB400,000,000; and
(v)
As confirmed by 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *), except for the
Construction Works Completion Certificate
Pre-sale Permit
— IV-44 —
Yes
Yes
Yes
Yes
Yes
Yes
(part)
(part)
(part)
(part)
Appendix IV
Group II – Properties held by the Sino-Ocean Land Group for development in the PRC
Property
9.
Phase 3 of
East of Guantangqiao Road, South of
Guyang Road, Zhenjiang City,
Jiangsu Province,
the PRC
Particulars of
occupancy
The property comprises a piece of land
with a total site area of approximately
62,338.20 sq m.
The property is close to the Nanshan scenic
resort, which is a famous tourism attraction in
Zhenjiang. The property is characterized by
tourism.
Market value in
30 September 2014
As at the date of
RMB396,000,000
was vacant.
to
the Sino-Ocean
Land Group:
RMB217,800,000)
composite residential development to comprise
residential and retail uses.
Use
Proposed
Gross Floor Area
(sq m)
Residential
Retail
308,389.11
9,037.00
Total:
317,426.11
granted for a term 70 years due to expire on 29
September 2079 for residential use, 50 years due
to expire on 29 September 2059 for ancillary
use and 40 years due to expire on 29 September
2049 for commercial use.
Notes:
(1)
*
According to State-owned Land Use Rights Certificate No. (2012) 6085 issued by Zhenjiang Land Resources
Bureau on 11 June 2012, the land use rights of part of the property having a site area of 62,338.20 sq m have
been vested in 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *) for terms due to expire on 29
September 2079 for residential uses, due to expire on 29 September 2049 for commercial uses and due to expire
on 29 September 2059 for ancillary uses.
— IV-45 —
Appendix IV
(2)
Details of Land Transfer Contract No. 2010-YYZJFHZ 003 entered into between 鎮江市交通投資建設發展公司
(Zhenjiang Transportation Investment Construction Development Company *) (the “Transferor”) and 遠洋地產鎮
*
江有限公司 (Sino Ocean Land (Zhenjiang) Limited ) (the “Transferee”) on 10 December 2010 are summarized
below:
(i)
(ii)
(iii)
(iv)
(v)
Location
Site Area
Use
Consideration
Land Use Term
:
:
:
:
:
Zone of Guantang, Zhenjiang
328,319.50 sq m
Residential
RMB1,400,000/mu
40 years for commercial, 70 years for residential
(3)
According to Planning Permit for Construction Land No. 321100201300039 dated 17 October 2013, the proposed
construction land use of part of the property complies with the town planning requirements and permission for
construction of a total gross site area of 106,800 sq m has been granted to 遠洋地產鎮江有限公司 (Sino Ocean
Land (Zhenjiang) Limited *).
(4)
According to 5 Planning Permits for Construction Works issued by Zhenjiang Planning Bureau, the proposed
construction works of the property comply with the town planning requirements and the permitted construction
scale is 58,035.40 sq m. The details are as follows:
Permit No.
Gross Floor Area
(sq m)
321100201400071
321100201400072
321100201400073
321100201400074
321100201400075
11,857.20
11,036.40
11,460.20
11,234.20
12,447.40
Total
58,035.40
Issue Date
25
25
25
25
25
February
February
February
February
February
2014
2014
2014
2014
2014
(5)
property.
(6)
*
(i)
遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *) has obtained the land use rights of the
Contract of Land Use Rights and State-owned Land Use Rights Certificate, 遠洋地產鎮江有限公司 (Sino
Ocean Land (Zhenjiang) Limited *) has the rights to occupy, use, lease or otherwise dispose of the land
(ii)
The project to be developed by 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *) as
modified and abolished. 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *) has been
entitled to develop the project in compliance with the certificates;
(iii)
Parts of the property are subject to a mortgage in favour of Industrial Bank Zhenjiang branch for a
consideration of RMB500,000,000; and
— IV-46 —
Appendix IV
(iv)
(7)
As confirmed by 遠洋地產鎮江有限公司 (Sino Ocean Land (Zhenjiang) Limited *), except for the
mortgage mentioned above, the land use rights and project is not subject to any foreclosure, mortgage or
restriction of other rights.
Land Transfer Contract
(8)
*
Yes
Yes
Yes (part)
Yes (part)
The development cost is yet to be estimated yet as the design of the project is still at primitive stage.
— IV-47 —
Appendix IV
Property
10.
The undeveloped
land portions of
Qinhuangdao,
Hebei Province,
the PRC
Particulars of
occupancy
The property comprises parts of the undeveloped As at the date of
land portions of an enlarged reconstruction
project being developed in phases.
was undeveloped
land pending for
The property is close to the seaside and close to development.
the Olympic Sporting Center. The environment
is good. The property is 5 km away from the
center of Harbor District where the commercial
atmosphere is yet to be developed.
mixed use development to comprise residential,
retail, serviced apartment and car parking
spaces.
Use
Proposed
Gross Floor Area
(sq m)
Residential
Retail
Basement
Car park
198,955.380
14,779.000
13,876.535
13,876.680
Total:
241,487.595
The property also comprises another
developable gross floor area of 20,025.28
sq m.
— IV-48 —
Market value in
30 September 2014
RMB616,000,000
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB616,000,000)
Appendix IV
Notes:
(1)
project, comprising a total site area of 118,774.18 sq m of which the subject property constitutes part therein,
have been vested in 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company
Limited *). The details are as follows:
Certificate No.
*
Use
Expiry date
2012157
29,306.490
Residential/Retail
2013001
69,442.41
Residential/Retail
2012156
20,025.28
Residential/Retail
Total
(2)
Site area
(sq m)
118,774.18
Development Company Limited *) ( the “Grantee”) on 14 November 2012 are summarized below:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
West Side Wentan Road and North Side Hebei Avenue, Haigang
District
29,306.49 sq m
RMB169,569,780
< 73,266 sq m
Dao Nan Area, West Baitaling Village reconstruction project,
South Side Hebei Avenue, Haigang District
20,025.28 sq m
RMB115,867,930
< 50,063 sq m
West Side Jingwen Road, Haigang District
69,442.41 sq m
RMB401,799,539
< 173,606 sq m
— IV-49 —
Appendix IV
(3)
*
According to Planning Permit for Construction Land No. 2007(037) dated 30 April 2007, the proposed
construction land use of portion of the property complies with the town planning requirements and permission
for construction of a total gross site area of 31,433.22 sq m has been granted to 秦皇島市海洋置業房地產開發
*
有限公司 (Qinhuangdao Ocean Land Development Company Limited ).
(4)
According to a Commencement Permit for Construction Works issued by the Qinhuangdao Construction Bureau,
parts of the reconstruction project have been permitted for the construction of various buildings with a total
gross floor area of 197,569.3 sq m. The details are as follows:
Permit No.
Issue Date
Building
130301S11108-03-01
20 September 2011 Phase 2 in Plot No. 5 of old city
District (Building Nos. 12-19, Zone A
car park, Zone B car park, Phase 1 in
Zone C1 car park, Concierge room and
Building Nos. 25-26 and 31-33 in Zone
C2)
Gross Floor Area
(sq m)
197,569.3
(5)
property.
(6)
*
(i)
was paid for the land use rights of granted land and State-owned Land Use Rights Certificates have
been obtained. According to its Grant Contract of Land Use Rights and State-owned Land Use Rights
Certificate, 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company
Limited *) has the right to occupy, use, lease or otherwise dispose of the land use rights of the property
within the land use term;
(ii)
The project to be developed by 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land
Development Company Limited *) as mentioned above has been legally approved by relevant government
compliance with the certificates; and
(iii)
Company Limited *), the land use rights and project is not subject to any foreclosure, mortgage or
— IV-50 —
Appendix IV
(7)
(8)
Yes
Yes
Yes
No
Yes (part)
— IV-51 —
Appendix IV
11.
Market value in
30 September 2014
Particulars of
occupancy
Property
Phases 3 and 4 of
Ocean City (Fushun)
( 遠洋城 ( 撫順 )),
Jiangjungou,
Shuncheng District,
Fushun City,
Liaoning Province,
the PRC
The property comprises two pieces of land with a total
site area of approximately 137,046 sq m subject to a
total developable gross floor area of 301,501.2 sq m for
residential and commercial uses.
Ocean City (Fushun) is located in Jiangjungou which is
located in the valley and enjoys scenic views.
As at the date of
was undeveloped
land pending for
development.
RMB291,000,000
to
the Sino-Ocean
Land Group:
RMB189,150,000)
The land use rights of the property have been granted
for terms of 70 years for residential use and 40 years for
commercial use commencing on the date of handover.
Notes:
(1)
According to 2 Grant Contracts of Land Use Rights, the property with a total site area of 137,046 sq m have
been contracted to be granted to 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *) :
Contract No.
Site Area
(sq m)
Plot Ratio
2113022009a0024
82,507
2.2
2113022009a0024
54,539
2.2
Total
Land Use Term
(year)
Residential:
Commercial:
Residential:
Commercial:
137,046
70
40
70
40
Land Premium
(RMB)
43,316,200
28,633,000
71,949,200
As advised by the Sino-Ocean Land Group, the land premium had been fully settled.
(2)
property.
(3)
*
(i)
*
撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. ) has legally signed Grant Contract of
Land Use Rights. Full land premium was paid for the land use rights of granted land. Upon obtaining
the State-owned Land Use Rights Certificates, 撫順德創置業有限公司 (Fushun De Chuang Properties
Co., Ltd. *) shall be in possession of the proper legal land use rights of the property;
(ii)
There is no legal obstacle for 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *) to obtain
the relevant State-owned Land Use Rights Certificates; and
(iii)
As confirmed by 撫順德創置業有限公司 (Fushun De Chuang Properties Co., Ltd. *), the property is not
— IV-52 —
Appendix IV
(4)
Grant Contracts of Land Use Right
Yes
No
(5)
As advised by the Sino-Ocean Land Group, the land premium has been fully settled and its is expected to obtain
the State-owned Land Use Rights Certificates in late 2015.
(6)
— IV-53 —
Appendix IV
Group III – Properties held by the Sino-Ocean Land Group for sale in the PRC
12.
Particulars of
occupancy
Property
The unsold completed portions of
( 遠洋 • 海世紀
( 秦皇島 )), Qinhuangdao,
Hebei Province,
the PRC
The property comprises the unsold units
of the completed portions of an enlarged
reconstruction project being developed in
phases. The subject portions were completed
between 2013 and 2014.
Market value in
30 September 2014
As at the date of
RMB32,000,000
was vacant.
(100% interest
attributable to
the Sino-Ocean
Land Group:
The property is close to the seaside and close to
RMB32,000,000)
the Olympic Sporting Center. The environment
is good. The property is 5 km away from the
center of Harbor District where the commercial
atmosphere is yet to be developed.
Sino-Ocean Land Group, the gross floor areas
of the property are summarized as follows:
Gross Floor Area
(sq m)
Use
Retail
Resettlement flats
Resettlement retail
Resettlement basement
Resettlement car park
Total:
1,473.59
73,387.27
6,623.12
9,127.82
23,045.73
113,657.53
— IV-54 —
Appendix IV
Notes:
(1)
project, comprising a total site area of 175,617.75 sq m, have been vested in 秦皇島市海洋置業房地產開發有限
*
公司 (Qinhuangdao Ocean Land Development Company Limited ). The details are as follows:
Certificate
No.
(2)
*
Site Area
(sq m)
Use
Expiry date
2012143
14,361.750
Residential/Retail
2012147
33,009.610
Residential/Retail
2012149
4,095.950
Residential/Retail
2013153
2013152
24,684.390
99,466.050
Residential
Residential
Total
175,617.75
Development Company Limited *) (the “Grantee”) on 14 November 2012 are summarized below:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
(i)
Location
:
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Site Area
Use
Land Premium
Land Use Term
Building covenant
:
:
:
:
:
:
Plot No. 3-4 West Baitaling Village reconstruction project, North
Side Hebei Avenue, Haigang District
14,361.75 sq m
RMB83,098,276
< 35,904 sq m
Plot No. 4-1 West Baitaling Village reconstruction project, East
Side Wentan Road, Haigang District
RMB190,996,339
< 82,524 sq m
Plot No. 4-3/4-4 West Baitaling Village reconstruction project,
East Side Wentan Road, Haigang District
RMB23,699,506
< 10,239 sq m
— IV-55 —
Appendix IV
(3)
*
(4)
According to three Planning Permits for Construction Works, the construction works of the property, with a total
gross floor area of 521,808 sq m, are in compliance with the construction works requirements and have been
approved. The details are as follows:
Permit No.
(5)
Building
Gross Floor Area
(sq m)
130302201203049
29 November 2012
3-4 retail in Plot No. 3 of old city
reconstruction project in west
Haigang District
130302201103076
30 September 2011
Plot No. 4-1 of old city reconstruction
302,363
130302201003113
26 September 2010
Resettlement flats in the New
Ocean Town of West Baitaling
reconstruction project
209,813
Total:
521,808
9,632
According to 5 Commencement Permits for Construction Works issued by the Qinhuangdao Construction
Bureau, parts of the reconstruction project have been permitted for the construction of various buildings with a
total gross floor area of 521,253.99 sq m. The details are as follows:
Permit No.
*
Issue Date
Issue Date
Building
Gross Floor Area
(sq m)
130301S12110-02-01
30 November 2012
3-4 retail in Plot No. 3 of old city
reconstruction project in west
Harbour District
130301S11109-02-01
30 September 2011
reconstruction project in west Harbor
District (Building No. 3, 5 and 8-12
and car park in Block North and
South)
198,167.97
130301S11109-03-01
30 September 2011
reconstruction project in west Harbor
District (Building Nos. 1, 6 and 8-11)
104,194.47
130301S10120-04-01
29 September 2010
Section 2 in Resettlement flats of the
New Ocean Town of West Baitaling
reconstruction project (Building
No.13 – 41)
89,239.63
130301S10120-03-01
29 September 2010
Section 1 in Resettlement flats of the
New Ocean Town of West Baitaling
reconstruction project (Building No.1
– 13 and car park)
120,019.92
Total:
521,253.99
— IV-56 —
9,632
Appendix IV
(6)
Gross Floor Area
(sq m)
Permit No.
Plot
Issue Date
2012091
3-4 retail of Plot No. 3
10 December 2012
9,328.29
2011072
Plot No. 4-1
(Building Nos. 13, 15, 16, 17 and 19)
27 December 2011
5,390.54
2011066
Plot No. 4-1
(Building Nos. 1, 2, 3, 5, 6 and 7)
10 November 2011
139,361.46
2012018
Plot No. 4-1
(car park of North Block)
18 May 2012
7,280.40
2012019
Car park in Blocks A, B, C1 and C2
(Building Nos. 31-33 in Zone C2, car parks in
Zone A, B and C1)
18 May 2012
7,345.53
2014051
No. 4-1 (Building #8)
Plot No. 4-1
29 August 2014
9,628.08
2013102
(Building No. 9, car park of South Block)
13 December 2013
Total
22,786.12
201,120.42
(7)
According to the Real Estate Survey Report dated 28 October 2013, the total gross floor area of Block No. 3-4
retail is 9,355.69 sq m.
According to the Real Estate Survey Report dated 25 October 2011, the total gross floor area of Building
Nos. 1-3 and 5-7 in No. 4-1 of old city reconstruction project in west Haigang District is 139,421.46
sq m.
According to the Real Estate Survey Report dated 9 December 2011, the total gross floor area of Building Nos.
13, 15-17 and 19 in No. 4-1 of old city reconstruction project in west Haigang District is 6,297.57 sq m.
(8)
According to Construction Works Completion Examination Certificate 2013(85) issued by Qinhuangdao
Government Service Centre on 31 December 2013, Plot No. 3-4 West Baitaling Village reconstruction project
has been completed.
(9)
gross floor area of approximately 713.85 sq m had been presold at a total consideration of RMB14,277,863. We
have included such portions in our valuation and taken into account such amount.
(10)
property.
— IV-57 —
Appendix IV
(11)
(12)
(i)
Limited *) has the rights to occupy, use, lease or otherwise dispose of the land use rights of the property
(ii)
The project developed by 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land
compliance with the relevant permits;
(iii)
秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company Limited *) is
entitled to pre-sell the property within the pre-sale limit in compliance with Pre-sale Permit; and
(iv)
Company Limited *), the land use rights mentioned above are not subject to any foreclosure, mortgage or
Pre-sale Permit
Real Estate Survey Report
*
— IV-58 —
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes (part)
Appendix IV
13.
Particulars of
occupancy
Property
The unsold portions of
Wan Hai Yi Hao (Qinhuangdao)
( 灣海 1 號
( 秦皇島 ))
Qinhuangdao,
Hebei Province,
the PRC
The property comprises the unsold units of
the completed portions of a residential project
completed in 2011.
The property is nearby the Xin’ao Sea World,
which is a famous tourism attraction in
Qinhuangdao. The environment is good. The
property is close to seaside, which is only 10
minutes walk.
Market value in
30 September 2014
As at the date of
RMB30,000,000
was vacant.
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB30,000,000)
Use
Gross Floor Area
(sq m)
Residential
Car park
1,192.26
6,982.70
Total:
8,174.96
The land use rights of the property have
been granted for a term due to expire on 22
September 2072 for residential use.
Notes:
(1)
Pursuant to State-owned Land Use Rights Certificate No. 2009032, the land use rights of the property,
comprising a total site area of 28,471.65 sq m, have been vested in 秦皇島市海洋置業房地產開發有限公司
(Qinhuangdao Ocean Land Development Company Limited *) for a term due to expire on 22 September 2072 for
residential use.
(2)
According to Planning Permit for Construction Land No. 2007(037) dated 30 April 2007, the proposed
construction land use of portions of the property complies with the town planning requirements and permission
for construction of a total gross site area of 31,433.22 sq m has been granted to 秦皇島市海洋置業房地產開發
*
有限公司 (Qinhuangdao Ocean land Development Company Limited ).
(3)
According to Pre-sale Permit No. 2007039 dated 27 August 2007, the permitted pre-sale area of Wan Hai Yi
Hao (Qinhuangdao) is 162,589 sq m.
(4)
According to Construction Works Completion Examination Certificate No. 2011(35) issued by Qinhuangdao
Government Service Centre on 18 May 2011, the total gross floor area of Building Nos. 1-5 and Car Park in
Wan Hai Yi Hao (Qinhuangdao) is 173,021 sq m.
*
— IV-59 —
Appendix IV
(5)
According to the
with a total gross
presold at a total
into account such
(6)
property.
(7)
(8)
information provided by the Sino-Ocean Land Group, portions of residential of the property
floor area of approximately 1,192.26 sq m and 232.40 sq m of 7 car parking spaces had been
consideration of RMB8,216,945. We have included such portions in our valuation and taken
amount.
(i)
Limited *) has the rights to occupy, use, lease or otherwise dispose of the land use rights of the property
(ii)
The project developed by 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development
Company Limited *) as mentioned above has been legally approved by relevant government departments
without being repealed, modified and abolished. 秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao
Ocean Land Development Company Limited *) has been entitled to develop the project in compliance
with the relevant permits;
(iii)
*
秦皇島市海洋置業房地產開發有限公司 (Qinhuangdao Ocean Land Development Company Limited ) is
entitled to pre-sell the property within the pre-sale limit in compliance with Pre-sale Permit; and
(iv)
Company Limited *), the land use rights mentioned above are not subject to any foreclosure, mortgage or
Pre-sale Permit
*
— IV-60 —
Yes
Yes
Yes
Yes
Appendix IV
14.
Particulars of
occupancy
Market value in
30 September 2014
Property
( 遠洋 • 大河宸章 ( 杭州 )),
Gongshu District,
Hangzhou,
Zhejiang Province,
the PRC
The property comprises the unsold units of the As at the date of
RMB2,960,000,000
completed portions of a residential development valuation, the property
completed in 2013.
was vacant.
to
The property is on the edge of the Great Canal.
the Sino-Ocean
The environment is good. The accessibility of
Land Group:
the property is good. The locality is reachable
RMB2,072,000,000)
by taxies and buses.
Gross Floor Area
(sq m)
Use
Residential
Car park
96,891.35
8,985.00
Total:
105,876.35
granted for terms due to expire on 30 May 2081
for residential use and 30 May 2051 for public
services and amenities.
Notes:
(1)
According to State-owned Land Use Rights Certificate No. (2011) 100046 issued by Hangzhou Land Resources
Bureau on 8 June 2011, the land use rights of part of the property having a site area of 50,953 sq m have been
vested in 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate Development Company
Limited *) for a term due to expire on 30 May 2081 for residential use.
(2)
The salient points of Grant Contract for State-owned Land Use Rights HTHZ (2007) No. 133 entered into
between Hangzhou Municipal Land Resources Administration Bureau (the “Grantor”) and 遠洋地產有限公
*
*
司 (Sino Ocean Land Limited ) and 北京萊福建設有限公司 (Beijing Life Builder Co., Ltd. ) (collectively the
“Grantee”) on 6 November 2007 are summarized below:
(i)
(ii)
(iii)
(iv)
(v)
*
Location
Site Area
Use
Land Premium
Land Use Term
:
:
:
:
:
Junction of Xiaohe Road and Jiru Road
89,002 sq m (Lot A: 34,116 sq m, Lot B: 50,953 sq m, Lot B1: 3,933 sq m)
Residential, Public facilities and Commercial and Finance
RMB1,224,300,090
70 years for residential use and 40 years for commercial use commencing
on the handover date of the land
Additionally, according to a supplementary agreement of the Grant Contract, the Grantee was changed into 杭州
*
遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate Development Company Limited ) on
26 February 2012.
— IV-61 —
Appendix IV
(3)
According to Planning Permit for Construction Land No. 330100200900136 dated 20 March 2009, the proposed
construction of a total gross site area of 85,069 sq m has been granted to 杭州遠洋萊福房地產開發有限公司
(Hang Zhou Yuan Yang Lai Fu Real Estate Development Company Limited *).
(4)
According to Planning Permit for Construction Works No. 330100201100306 dated 12 August 2011, the
proposed construction works of the residential, communal and ancillary facilities of the development with the
town planning requirements and the permitted construction scale is 160,038.59 sq m.
(5)
According to Commencement Permit for Construction Works No. 330100201108260101 dated 26 August 2011,
the proposed construction works of residential, communal and ancillary facilities of the development comply
with the construction works commencement conditions and the total permitted gross floor area is 160,038.59 sq
m. The permitted construction period was granted from 9 March 2011 to 29 September 2013.
(6)
According to Completion and Acceptance Certificates for Construction Works No. 31000620131230102 issued
by Hangzhou Municipal Construction Committee on 24 December 2013, portions of the property comprising a
gross floor area of 53,979.39 sq m have been completed.
According to Completion and Acceptance Certificates for Construction Works No. 31000620131230103 issued
by Hangzhou Municipal Construction Committee on 24 December 2013, portions of the property comprising a
gross floor area of 106,059.2 sq m have been completed.
(7)
gross floor area of approximately 68,888 sq m including 266 car parking spaces had been presold at a total
consideration of RMB1,896,208,846. We have included such portions in our valuation and taken into account
such amount.
(8)
According to the information provided by the Sino-Ocean Land Group, an outstanding amount of
RMB49,400,000 was payable as at 30 September 2014. In the course of our valuation, we have allowed for such
cost.
(9)
property.
(10)
*
(i)
*
Limited ) has obtained the land use rights of the property and is the legal land user of the property.
Full land premium was paid for the land use rights of granted land and State-owned Land Use Rights
Certificates have been obtained. According to its Grant Contract of Land Use Rights and State-owned
Land Use Rights Certificate, 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real
Estate Development Company Limited *) has the rights to occupy, use, lease or otherwise dispose of the
(ii)
The project developed by 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate
departments without being repealed, modified and abolished. 杭州遠洋萊福房地產開發有限公司 (Hang
Zhou Yuan Yang Lai Fu Real Estate Development Company Limited *) has been entitled to develop the
project in compliance with the relevant permits;
— IV-62 —
Appendix IV
(11)
(iii)
Limited *) is entitled to pre-sell the property within the pre-sale limit in compliance with Pre-sale Permit;
and
(iv)
As confirmed by 杭州遠洋萊福房地產開發有限公司 (Hang Zhou Yuan Yang Lai Fu Real Estate
Development Company Limited*), the land use rights mentioned above are not subject to any foreclosure,
mortgage or restriction of other rights.
Completion and Acceptance Certificates for Construction Works
*
— IV-63 —
Yes
Yes
Yes
Yes
Yes
Yes
Appendix IV
Property
15.
Phase 1 of Ocean Chanson Mansion
(Shanghai)
Yangtai Road,
Lvlong Road,
Planned Meipu Road,
Yanghang Town, Baoshan District,
Shanghai,
the PRC
Particulars of
occupancy
Ocean Chanson Mansion (Shanghai) is
erected on a piece of land with a total site
area of approximately 137,708.2 sq m and is
being developed in phases into a residential
Ocean Chanson Mansion (Shanghai) is situated
in the sub-urban area of Baoshan District in
Shanghai with several bus lines and subway
access. The property is rather far away from the
city centre and the commercial atmosphere is
yet to be developed.
Market value in
30 September 2014
As at the date of
RMB405,000,000
was vacant.
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB405,000,000)
The property comprises the unsold units
of the completed portions of the composite
development completed in 2014.
Use
Gross Floor Area
(sq m)
Residential
Retail
Clubhouse
Ancillary
Car park
5,491.49
1,649.98
2,665.87
2,540.00
28,423.00
Total:
40,770.34
granted for a term due to expire on 28 March
Notes:
(1)
*
Land & Resources Administration Bureau and Shanghai Housing Security & Administration Bureau on 30 June
2014, the building ownership of the property with a total gross floor area of 97,705.66 sq m has been vested in
*
上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. ). The land use rights of the development in
which the property constitutes part therein, having a site area of 137,708 sq m, have been granted for a term of
70 years commencing on 29 March 2011 for residential use.
— IV-64 —
Appendix IV
(2)
Permit No.
Plot
Issue Date
(2012)0000273
(2012)0000505
(2012)0000606
23#, 25-29#, 31#, 32#
5-13#, 15-19#
53#, 55#, 56#, 61#, 62#, 66-68#
14 July 2012
20 November 2012
29 October 2014
Gross Floor Area
(sq m)
39,600.71
58,197.55
38,612.87
Total
136,411.13
(3)
gross floor area of approximately 1,605 sq m had been presold at a total consideration of RMB39,436,328. We
(4)
property.
(5)
(6)
(i)
上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) has obtained the land use rights
and building ownership of the property and is the legal land user of the property. Full land premium
was paid for the land use rights of granted land and Shanghai Certificate of Real Estate Ownership has
been obtained. According to its Shanghai Certificate of Real Estate Ownership, 上海遠正置業有限公司
(Shanghai Yuan Zheng Properties Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of
the real estate ownership of the property within the land use term;
(ii)
The project developed by 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) as
modified and abolished. 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) has been
(iii)
上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *) is entitled to pre-sell the property
within the pre-sale limit in compliance with Pre-sale Permit;
(iv)
Parts of the property are subject to 4 mortgages in favour of China Everbright Bank Shanghai branch and
China Citic Bank Shanghai branch for a consideration of RMB1,870,000,000; and
(v)
As confirmed by 上海遠正置業有限公司 (Shanghai Yuan Zheng Properties Co., Ltd. *), except for the
mortgage mentioned above, the property is not subject to any foreclosure, mortgage or restriction of
other rights.
Pre-sale Permit
*
Yes
Yes
— IV-65 —
Appendix IV
Property
16.
Particulars of
occupancy
BOND CASTLE
(Shanghai)
（遠洋 • 博堡（上海））,
Fuyuan Road
Lane 885,
Baoshan District,
Shanghai,
the PRC
The property comprises the unsold units of a
villa development completed in 2013.
The property is situated in the sub-urban area
of Baoshan District in Shanghai with several
bus lines and subway access. The environment
is quite good and is surrounded by Meilan Lake
and Golf Course.
Market value in
30 September 2014
As at the date of
RMB1,360,000,000
was vacant.
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB1,360,000,000)
Sino-Ocean Land Group, the gross floor area of
the property is 22,459.34 sq m.
granted for a term due to expire on 2 October
Notes:
(1)
Land & Resources Administration Bureau and Shanghai Housing Security & Administration Bureau on 20 May
2013, the building ownership of the development in which the property constitutes part therein, with a total
gross floor area of 49,761.31 sq m (including a total underground area of 24,705.77 sq m) has been vested in
*
上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. ). The land use rights of the development in
which the property constitutes part therein, having a site area of 43,326 sq m, have been granted for a term of
70 years commencing on 3 October 2010 for residential use.
(2)
(3)
*
Gross Floor Area
(sq m)
Permit No.
Plot
Issue Date
(2011)00001415
(2011)0000128
5-13, 15-20, 22, 23, 25, 30, 32, 33, 35, 36
1-3, 26-29, 31
21 December 2011
28 November 2011
33,560.86
15,122.66
Total
48,683.52
gross floor area of approximately 1,308 sq m had been presold at a total consideration of RMB70,600,000. We
— IV-66 —
Appendix IV
(4)
property.
(5)
(6)
(i)
上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) has obtained the land use rights
and building ownership of the property and is the legal land user of the property. Full land premium
was paid for the land use rights of granted land and Shanghai Certificate of Real Estate Ownership has
been obtained. According to its Shanghai Certificate of Real Estate Ownership, 上海遠鑫置業有限公司
(Shanghai Yuan Xin Properties Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of
the real estate ownership of the property within the land use term;
(ii)
The project developed by 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) as
modified and abolished. 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) has been
(iii)
上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *) is entitled to pre-sell the property
within the pre-sale limit in compliance with Pre-sale Permit;
(iv)
Parts of the property are subject to a mortgage in favour of Bank of China Shanghai Putuo sub-branch
for a consideration of RMB400,000,000; and
(v)
As confirmed by 上海遠鑫置業有限公司 (Shanghai Yuan Xin Properties Co., Ltd. *), except for the
mortgage mentioned above, the property is not subject to any foreclosure, mortgage or restriction of
other rights.
Pre-sale Permit
*
Yes
Yes
— IV-67 —
Appendix IV
Property
17.
The unsold portions of Phases 1 and 2
of Ocean Holiday Manor (Dalian)
（遠洋假日
養生莊園（大連））,
Jinshi IT
Industrial Park, Dalian Economic and
Technological Area,
Liaoning Province,
the PRC
Particulars of
occupancy
Ocean Holiday Manor (Dalian) is erected
on two pieces of land with a total site
area of approximately 461,300 sq m and is
The property comprises the unsold units of the
completed portions of an enlarged composite
development being developed in phases. The
subject portions were completed between 2012
and 2014.
The property is situated in the northwest of
Jinshitan area. The property abuts Guanggu
Road on the south, Project Xintianjiayuan（心
田佳苑）on the north, and the mountains on the
east and west.
Developments in the vicinity mainly comprise
residential and townhouses, such as Project
Gold Pearl（金石明珠）, Boee Brilliant Villas’
Hill（保億麗景山）, Jinshi Beach Holiday Park
（金石灘度假公園）interspersed with a few retail
facilities. The property is situated in Jinshitan
Scenic Spot. The environment is good. Business
types mainly include F&B and entertainment.
Use
Gross Floor Area
(sq m)
Residential
Townhouse
Retail
Car park
15,979.04
16,734.91
10,117.88
10,060.49
Total:
52,892.32
— IV-68 —
Market value in
30 September 2014
As at the date of
RMB389,000,000
was vacant.
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB389,000,000)
Appendix IV
Notes:
(1)
According to 2 State-owned Land Use Rights Certificates issued by Dalian State-owned Land Resources and
Housing Bureau Jinzhou New District Branch, the land use rights of the property with the total site area of
approximately 461,300 sq m have been vested in 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd.)
for terms due to expire on 25 March 2060 for residential use. The details are as follows:
Site area
(sq m)
Certificate No.
(2)
(2011) 0016
(2011) 0012
80,273
381,027
Total
461,300
Use
Issue Date
Residential
Residential
23 March 2011
28 February 2011
The salient points of Grant Contracts for State-owned Land Use Rights entered into between Dalian State-owned
Land Resources and Housing Bureau (the “Grantor”) and 大連鑫融置業有限公司 (Dalian Xinrong Property Co.,
Ltd.) (the “Grantee”) on 26 March 2010 are summarized below:
Use
Site Area
(sq m)
Land
Premium
(RMB)
Permitted
Gross Floor
Area
(sq m)
Residential
81,131
86,730,000
64,904.8
Residential
381,027
407,300,000
304,821.6
Total
462,158
494,030,000
369,726.40
Land Use Term
(3)
81,131 sq m has been granted to 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd.).
381,027 sq m has been granted to 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd.).
— IV-69 —
Appendix IV
(4)
(5)
According to 4 Planning Permits for Construction Works, the proposed construction works of the property
comply with the town planning requirements and the permitted construction scale is 192,441.48 sq m. The
details are as follows:
Permit No.
Gross Floor Area
(sq m)
Issue Date
210213201310084
210213201110118
210213201110049
210213201110048
37,353.98
73,463.18
33,274.41
48,349.91
14 June 2013
22 July 2011
14 April 2011
14 April 2011
Total
192,441.48
property comply with the construction works commencement conditions and the total permitted gross floor area
is 192,534.93 sq m. The details are as follows:
Gross Floor Area
(sq m)
Permit No.
Construction period
30 September 2013
30 September 2013
From 10 May 2011 to
30 May 2012
30 June 2012
From 10 May 2011 to
30 May 2012
30 June 2012
210206201207311801
24,306.97
31 July 2012
210206201207311901
13,047.01
4 September 2014
210206201105171501
48,349.91
17 May 2011
210206201108240501
30,292.86
24 August 2011
210206201105311101
33,274.41
31 May 2011
210206201108240601
43,170.32
24 August 2011
Total
(6)
Issue Date
192,441.48
According to 5 Pre-sale Permits issued by Dalian Jinzhou New District State-owned Land Resources and
Housing Bureau, 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd.) was permitted for pre-sale of
portions of the property with details as follows:
Permit No.
Pre-sale Area
(sq m)
Issue Date
2011036
2011083
2011055
2012043
2013027
73,568.31
28,170.20
40,522.23
24,149.22
7,018.79
14 June 2011
18 November 2011
30 August 2011
24 August 2012
21 June 2013
Total
173,428.75
— IV-70 —
Appendix IV
(7)
According to Certificate of Construction Works Completion Examination Nos. 2013-034 and 2013-035 dated 6
May 2013, parts of the development with a total gross floor area of 146,887.28 sq m were completed.
(8)
(9)
property.
(10)
(11)
(i)
大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) has obtained the land use rights of the
Contract of Land Use Rights and State-owned Land Use Rights Certificate, 大連鑫融置業有限公司
(Dalian Xinrong Property Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of the land
(ii)
The project developed by 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) as mentioned
above has been legally approved by relevant government departments without being repealed, modified
and abolished. 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) has been entitled to develop
the project in compliance with the relevant permits;
(iii)
大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *) is entitled to pre-sell the property within
the pre-sale limit in compliance with Pre-sale Permit;
(iv)
Parts of the property are subject to a mortgage in favour of Bank of China Dalian Development Zone
(v)
As confirmed by 大連鑫融置業有限公司 (Dalian Xinrong Property Co., Ltd. *), except for the mortgage
mentioned above, the property is not subject to any foreclosure, mortgage or restriction of other rights.
Pre-sale Permit
Certificate of Construction Works Completion Examination
*
— IV-71 —
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Appendix IV
Property
18.
Particulars of
occupancy
（遠洋時代城（大連））,
East of No. 8 Road, University Town,
Dalian Development Area,
Dalian, Liaoning Province,
the PRC
The property comprises the unsold units of a
composite development completed in 2013.
The property is situated on the east of Dalian
University and abuts Dayao Bay highway on
the east. Developments in the vicinity are
mainly residential in nature, such as Zhiyushan,
Zhiyunshan, Lanshanzhuzuo, interspersed with a
few retail facilities.
Market value in
30 September 2014
As at the date of
RMB260,000,000
was vacant.
(100% interest
attributable to
the Sino-Ocean
Land Group:
RMB260,000,000)
The property is approximately 8.6 km to the
central business district of Dalian Development
Area. The property is served by public bus
routes.
Gross Floor Area
(sq m)
Use
Residential
Apartment
Retail
Car park
10,632.45
9,661.41
5,841.81
47,677.00
Total:
73,812.67
granted for terms of 50 years due to expire on
24 March 2060 for residential use and 40 years
due to expire on 24 March 2050 for commercial
use.
Notes:
(1)
According to State-owned Land Use Rights Certificate No. (2010) 0709 issued by Dalian State-owned Land
Resources and Housing Bureau Development Area Branch on 25 August 2010, the land use rights of the
development in which the property constitutes part therein, having a site area of 272,210 sq m have been vested
in 大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *) for terms of 50 years due to expire on 24
March 2060 for residential use and 40 years due to expire on 24 March 2050 for commercial use.
(2)
The salient points of Grant Contract for State-owned Land Use Rights No. (2010)028 entered into between
Dalian State-owned Land Resources and Housing Bureau (the “Grantor”) and 大連宏澤置業有限公司 (Dalian
Hong Ze Properties Co., Ltd. *) (the “Grantee”) on 25 March 2010 are summarized below:
(i)
(ii)
(iii)
(iv)
(v)
*
Location
Site Area
Use
Land Premium
Land Use Term
:
:
:
:
:
East of No. 8 Road, University City
272,210 sq m
Residential and commercial
RMB479,650,000
40 years and 50 years commencing on the handover date of the
land
— IV-72 —
Appendix IV
(3)
According to Planning Permit for Construction Land No. 210213201010100 dated 16 August 2010, the proposed
construction land use of the development in which the property constitutes part therein complies with the town
planning requirements and permission for construction of a total gross site area of 272,210 sq m has been
granted to 大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *) .
(4)
According to 6 Planning Permits for Construction Works, the proposed construction works of the residential,
retail, car park, communal and ancillary facilities of the development in which the property constitutes part
therein comply with the town planning requirements. The details are as follows:
Gross Floor Area
(sq m)
Certificate No.
Issue Date
210213201010110
210213201010111
210213201110093
210213201110094
210213201110207
210213201110214
25 September 2010
25 September 2010
15 June 2011
15 June 2011
18 November 2011
1 December 2011
260,502.67
30,474.34
138,952.13
27,361.26
115,370.12
4,016.00
Total
(5)
576,676.52
residential, retail, car park, communal and ancillary facilities of the development in which the property
constitutes part therein comply with the construction works commencement conditions and the total permitted
gross floor area is 572,660.52 sq m. The details are as follows:
Gross Floor Area
(sq m)
Certificate No.
Issue Date
210206201012067201
6 December 2010
92,533.47
15 September 2010 to
30 October 2011
210206201012067001
6 December 2010
35,222.91
29 October 2010 to
30 November 2011
210206201103230901
23 March 2011
71,244.57
10 March 2011 to
30 November 2011
210206201103230801
23 March 2011
91,976.06
10 March 2011 to
1 September 2012
210206201108040401
4 August 2011
27,361.26
20 July 2011 to
30 September 2012
210206201109151201
15 September 2011
102,184.2
25 August 2011 to
31 May 2013
210206201109151101
15 September 2011
36,767.93
25 August 2011 to
31 May 2013
210206201203200701
20 March 2012
53,560.35
10 March 2012 to
30 June 2013
210206201203200801
20 March 2012
61,809.77
10 March 2012 to
30 June 2013
Total
*
572,660.52
— IV-73 —
Construction period
Appendix IV
(6)
According to 16 Commodity Housing Pre-sale Permits issued by Dalian Jinzhou New District State-owned Land
Resources and Housing Bureau, 76 units with a total gross floor area of 472,339.07 sq m including residential
units and retail units are permitted for pre-sale with details as follows:
Certificate No.
Issue Date
2010012
2010013
2011020
2011028
2011035
2011052
2011061
2011074
2011081
2012007
2012034
2012028
2012066
2012051
2012025
2012020
14 December 2010
14 December 2010
23 April 2011
27 May 2011
24 June 2011
25 August 2011
16 September 2011
14 October 2011
11 November 2011
20 March 2012
4 July 2012
8 June 2012
14 November 2012
25 September 2012
23 May 2012
23 May 2012
Total
(7)
*
Pre-sale Area
(sq m)
Unit No.
36,539.83
5,530.16
18,177.97
20,817.70
61,078.88
22,255.07
50,122.24
45,924.56
39,571.54
16,015.22
20,591.92
12,564.18
48,052.20
29,197.11
26,876.78
19,023.71
14
10
3
3
7
5
4
6
6
2
3
2
6
2
1
2
472,339.07
76
According to 10 Dalian Real Estate Surveying Reports, the areas are as follows:
Report No.
Gross Floor Area
(sq m)
(2012)118
(2012)152
(2012)161
(2012)213
(2013)023
(2013)076
(2013)141
(2013)149-1
(2013)149-2
(2014)059
57,904.92
12,468.73
27,018.05
71,639.86
30,241.82
110,429.83
138,484.67
14,026.83
100,215.15
185.72
Total
562,615.58
— IV-74 —
Appendix IV
(8)
According to 7 Construction Works Completion Examination Certificates issued by Dalian Jinzhou New District
Construction Project Completion Inspection and Acceptance for the Record Department, the development in
which the property constitutes part therein, with a total gross floor area of 448,220.48 sq m, was completed. The
details are as follows:
Certificate No.
Issue Date
2013-050
2013-121
2014-057
2014-007
2014-056
2014-015
2014-043
31 May 2013
17 December 2013
30 April 2014
9 January 2014
28 April 2014
22 January 2014
31 March 2014
Total
Gross Floor Area
(sq m)
66,359.84
30,242.76
15,003.48
125,794.51
138,486.4
45,315.44
27,018.05
448,220.48
(9)
gross floor area of approximately 4,021.83 sq m and spaces had been presold at a total consideration of
RMB23,527,383. We have included such portions in our valuation and taken into account such amount.
(10)
property.
(11)
*
(i)
大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *) has obtained the land use rights of the
property and is the legal land user of the property. Full land premium was paid for the land use rights
of granted land and State-owned Land Use Rights Certificates have been obtained. According to its
Grant Contract of Land Use Rights and State-owned Land Use Rights Certificate, 大連宏澤置業有限公
司 (Dalian Hong Ze Properties Co., Ltd. *) has the rights to occupy, use, lease or otherwise dispose of the
(ii)
The project developed by 大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *) as mentioned
above has been legally approved by relevant government departments without being repealed, modified
and abolished. 大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *) has been entitled to
develop the project in compliance with the relevant permits;
(iii)
大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *) is entitled to pre-sell the property within
the pre-sale limit in compliance with Pre-sale Permit; and
(iv)
As confirmed by 大連宏澤置業有限公司 (Dalian Hong Ze Properties Co., Ltd. *), the property is not
— IV-75 —
Appendix IV
(12)
State-owned Land Use Rights Certificatef
Pre-sale Permit
Real Estate Surveying Report
— IV-76 —
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
APPENDIX V
1.
GENERAL INFORMATION
Responsibility statement
This circular, for which the Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Listing Rules for the purpose of giving information
with regard to the 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.
Directors’ interests in securities
As at the Latest Practicable Date, the interests and short positions of the Directors and the
chief executive of the Company in the shares or underlying shares and debentures of the Company
and its associated corporations (within the meaning of Part XV of the SFO) which were required
(i) 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 in which he was taken or deemed to have under
such provisions of the SFO); (ii) pursuant to section 352 of the SFO, to be entered in the register
maintained by the Company referred to therein; or (iii) pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules, to be
notified to the Company and the Stock Exchange were as follows:
Long position in the underlying shares of equity derivatives of the Company
Under the share option scheme of the Company dated 23 June 2011, share options were
granted to the following Directors which entitled them to subscribe for the Shares. Accordingly,
they were regarded as interested in the underlying Shares. Details of the share options of the
Company held by them as at the Latest Practicable Date were as follow:
Name of
Directors
Number of
Shares over
which options
are exercisable
as at the Latest
Practicable Date
Exercise price
per Ordinary
Share
HK$
Approximate
percentage of
interest in the
issued share
capital of the
Company as
at the Latest
Practicable
Date
4,000,000 (L)
0.96
0.893%
Capacity
Date of grant
Exercise period
LI Ming
Beneficial
Owner
9 August 2013
9 August 2013 —
22 June 2021
SUM Pui Ying
Beneficial
Owner
26 August 2011 26 August 2011 —
22 June 2021
2,000,000 (L)
1.40
0.446%
9 August 2013
16,000,000(L)
(Note 1)
0.96
3.571%
9 August 2013 —
22 June 2021
Total:
18,000,000 (L)
— V-1 —
4.017%
APPENDIX V
GENERAL INFORMATION
Name of
Directors
LI Zhenyu
Exercise period
Number of
Shares over
which options
are exercisable
as at the Latest
Practicable Date
Exercise price
per Ordinary
Share
HK$
Approximate
percentage of
interest in the
issued share
capital of the
Company as
at the Latest
Practicable
Date
Capacity
Date of grant
Beneficial
Owner
26 August 2011 26 August 2011 —
22 June 2021
4,000,000 (L)
1.40
0.893%
9 August 2013
3,000,000 (L)
0.96
0.669%
9 August 2013 —
22 June 2021
Total:
7,000,000 (L)
LI Hongbo
1.562%
Beneficial
Owner
9 August 2013
9 August 2013 —
22 June 2021
2,000,000 (L)
0.96
0.446%
LAI Kwok Hung, Beneficial
Alex
Owner
9 August 2013
9 August 2013 —
22 June 2021
3,000,000 (L)
0.96
0.669%
Notes:
1.
These share options were granted to Mr. Sum Pui Ying pursuant to the terms of the Service
Contract (as defined in the paragraph headed “Directors’ service contracts” in this appendix).
Share options granted to Mr. Sum Pui Ying to subscribe for a total of 4,000,000 Shares had
already been vested following the approval of the Service Contract by the Shareholders on
16 September 2013. The share options to subscribe for the remaining 12,000,000 Shares (the
“Remaining Options”) shall be vested on the basis that one third of the Remaining Options
will be vested on the first, second and third anniversaries of 9 August 2013 (being the date of
commencement of the term of the Service Contract), such that the Remaining Options will be
fully vested on 9 August 2016, provided however that all those Remaining Options, to the extent
not yet vested in accordance with the above schedule, shall become vested immediately if (i)
the Service Contract is terminated by the Company without cause by payment of termination
compensation to Mr. Sum Pui Ying or (ii) the employment of Mr. Sum Pui Ying under the
Service Contract lapses automatically by reason of his not being re-elected as a Director at any
general meeting of the Company. As the first anniversary of 9 August 2013 has already passed,
a further 4,000,000 shares options have been vested. Therefore, as at the Latest Practicable Date,
a total of 8,000,000 share options were vested in Mr. Sum Pui Ying pursuant to the terms of the
Service Contract.
2.
The letter “L” denotes a long position in the Shares.
— V-2 —
APPENDIX V
GENERAL INFORMATION
Long position in the shares of associated corporation(s) of the Company
As at the Latest Practicable Date, the interests of the Directors in the shares of SinoOcean Land (being the associated corporation of the Company) were as follow:
Approximate
percentage of interest
in the issued share
capital of Sino-Ocean
Number of shares in Land as at the Latest
Sino-Ocean Land
Practicable Date
Name of
Directors
Capacity
LI Ming
Beneficial Owner
3,127,000 (L)
0.042%
Founder of
discretionary trust
127,951,178 (L)
(Note 1)
1.711%
3,808,300 (L)
(Note 2)
0.051%
Beneficiary of trust
Total:
134,886,478 (L)
1.804%
SUM Pui Ying
Beneficial Owner
1,621,000 (L)
0.022%
LI Zhenyu
Beneficial Owner
386,400 (L)
0.005%
LI Hongbo
Beneficial Owner
300 (L)
negligible
Notes:
1.
The 127,951,178 shares in Sino-Ocean Land are held by a discretionary trust of which Mr. LI
Ming is a founder.
2.
The 3,808,300 shares in Sino-Ocean Land are held by a discretionary trust of which Mr. LI Ming,
his spouse and his son are the beneficiaries.
3.
The letter “L” denotes a long position in the shares in Sino-Ocean Land.
Long position in the underlying shares of equity derivatives of associated corporation(s) of
the Company
Sino-Ocean Land has adopted two schemes for the benefits of eligible directors and
employees of the Sino-Ocean Land Group in order to provide an incentive for directors and
employees of the Sino-Ocean Land Group.
— V-3 —
APPENDIX V
GENERAL INFORMATION
One of the schemes is the restricted share award scheme adopted by Sino-Ocean Land on
22 March 2010 (the “Adoption Date”) as an incentive to retain and encourage the employees
of the Sino-Ocean Land Group for the continual operation and development of the Sino-Ocean
Land Group. Pursuant to the restricted share award scheme, shares up to 3% of the issued share
capital of Sino-Ocean Land as at the Adoption Date shall be purchased by the trustee from
the market out of cash contributed by the Sino-Ocean Land Group and be held in trust for the
relevant selected employees until such shares are vested with the relevant selected employees
in accordance with the provisions of the restricted share award scheme.
The other scheme is the share option scheme of Sino-Ocean Land, which is valid and
effective for a period of 10 years until 27 September 2017, unless it is terminated earlier in
accordance with the provisions of such share option scheme. This scheme was adopted for the
purpose of providing an incentive for employees of the Sino-Ocean Land Group to work with
commitment towards enhancing the value of Sino-Ocean Land and to compensate employees of
the Sino-Ocean Land Group for their contribution based on their individual performance. Under
the share option scheme of Sino-Ocean Land, share options may be granted to eligible directors
and employees of Sino-Ocean Land Group to subscribe for new shares in Sino-Ocean Land.
In respect of the restricted share award scheme of Sino-Ocean Land, the following
Directors were granted certain share awards under the restricted share award scheme and
were accordingly regarded as having an interest in the shares of Sino-Ocean Land (being the
associated corporation of the Company) pursuant to the provisions of the SFO. Details of share
awards held by them as at the Latest Practicable Date were as follows:
Name of
Directors
LI Ming
Capacity
Date of grant
Beneficial
Owner
18 March 2013
18 March 2014
SUM Pui Ying Beneficial
Owner
18 March 2013
18 March 2014
— V-4 —
Number of shares
in Sino-Ocean
Land awarded
but not yet vested
as at the Latest
Practicable Date
Approximate
percentage of
interest in
the issued share
capital of
Sino-Ocean Land
as at the Latest
Practicable Date
1,157,400 (L)
3,109,000 (L)
0.015%
0.042%
Total:
4,266,400 (L)
0.057%
389,700 (L)
1,047,000 (L)
0.005%
0.014%
Total:
1,436,700 (L)
0.019%
APPENDIX V
Name of
Directors
LI Zhenyu
LI Hongbo
GENERAL INFORMATION
Capacity
Date of grant
Beneficial
Owner
18 March 2013
18 March 2014
Beneficial
Owner
18 March 2013
18 March 2014
Number of shares
in Sino-Ocean
Land awarded
but not yet vested
as at the Latest
Practicable Date
Approximate
percentage of
interest in
the issued share
capital of
Sino-Ocean Land
as at the Latest
Practicable Date
97,200 (L)
196,000 (L)
0.001%
0.003%
Total:
293,200 (L)
0.004%
141,300 (L)
147,000 (L)
0.002%
0.002%
Total:
288,300 (L)
0.004%
Note: The letter “L” denotes a long position in the shares in Sino-Ocean Land.
Regarding the share option scheme adopted by Sino-Ocean Land, the following Directors
had been granted share options to subscribe for shares in Sino-Ocean Land and were accordingly
regarded as interested in the underlying shares of Sino-Ocean Land (being the associated
corporation of the Company) pursuant to the provisions of the SFO. Details of the share options
of Sino-Ocean Land held by them as at the Latest Practicable Date were as follows:
Name of
Directors
LI Ming
Capacity
Beneficial
Owner
Date of grant of
share options
Exercise
period
(Note 2)
12 January 2012
(Note 1)
— V-5 —
Number of
shares in SinoOcean Land over
which options
are exercisable
as at the Latest
Practicable Date
6,280,000 (L)
Approximate
percentage
of interest of
such share
options held as
at the Latest
Practicable Date
relative to the
issued share
capital of SinoOcean Land as
Exercise price
at the Latest
per share
Practicable
HK$
Date
3.57
0.084%
APPENDIX V
GENERAL INFORMATION
Name of
Directors
Approximate
percentage
of interest of
such share
options held as
at the Latest
Practicable Date
relative to the
issued share
capital of SinoOcean Land as
Exercise price
at the Latest
per share
Practicable
HK$
Date
Capacity
Date of grant of
share options
Exercise
period
(Note 2)
Number of
shares in SinoOcean Land over
which options
are exercisable
as at the Latest
Practicable Date
SUM Pui Ying
Beneficial
Owner
12 January 2012
(Note 1)
2,330,000 (L)
3.57
0.031%
LI Zhenyu
Beneficial
Owner
12 January 2012
(Note 1)
781,000 (L)
3.57
0.010%
LI Hongbo
Beneficial
Owner
12 January 2012
(Note 1)
363,000 (L)
3.57
0.005%
Notes:
1.
Exercisable from 12 January 2013 to 11 January 2017.
2.
All the above share options of Sino-Ocean Land granted are exercisable within a five-year period
in which 40% of the options become exercisable 1 year from the grant date; 70% of the options
become exercisable 2 years from the grant date; and all options become exercisable 3 years from
the grant date.
3.
The letter “L” denotes a long position in the shares in Sino-Ocean Land.
As at the Latest Practicable Date, save as disclosed above, none of the Directors and
chief executive of the Company had any interests or short positions in the shares, underlying
shares or debentures of the Company or any of its associated corporations (within the meaning
of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock
Exchange pursuant to the provisions of Divisions 7 and 8 of Part XV of the SFO (including
interests or short positions which they were taken or deemed to have under such provisions of
the SFO); or (ii) pursuant to section 352 of Part XV of the SFO, to be entered in the register
referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors
of Listed Issuers contained in Appendix 10 to the Listing Rules to be notified to the Company
and the Stock Exchange.
— V-6 —
APPENDIX V
3.
GENERAL INFORMATION
Substantial shareholders’ interest in securities
As at the Latest Practicable Date, so far as is known to the Directors, the following persons,
other than a Director or chief executive of the Company, had interests or short positions in the Shares
and/or underlying Shares which would fall to be disclosed to the Company under the provisions of
Divisions 2 and 3 of Part XV of the SFO.
Nature of
interest/capacity
Name
Number of
Shares/
underlying
Shares
Approximate
percentage of
the issued share
capital of the
Company
as at the Latest
Practicable Date
Sino-Ocean Land
Interest of controlled
corporations (Note 2)
1,612,504,625 (L)
359.85%
Shine Wind
Development Limited
1,612,504,625 (L)
359.85%
Faith Ocean
International Limited
1,612,504,625 (L)
359.85%
Sino-Ocean Land (Hong
Kong) Limited
1,612,504,625 (L)
359.85%
Grand Beauty
Management Limited
Beneficial owner
312,504,625 (L)
69.74%
Beneficial owner
1,300,000,000 (L)
(Note 1)
290.11%
Total:
1,612,504,625 (L)
359.85%
Notes:
1.
These shares represent the 1.3 billion underlying Shares which may be allotted and issued to Grand
Beauty Management Limited, a wholly-owned subsidiary of Sino-Ocean Land, upon exercise in full the
conversion rights attaching to the 1.3 billion convertible preference shares to be issued by the Company.
2.
Grand Beauty Management Limited was wholly owned by SOL HK. SOL HK was wholly owned by
Faith Ocean International Limited which was in turn wholly owned by Shine Wind Development Limited.
Shine Wind Development Limited was wholly owned by Sino-Ocean Land. In view of their respective
direct or indirect 100% shareholding interest in Grand Beauty Management Limited, each of SOL HK,
Faith Ocean International Limited, Shine Wind Development Limited and Sino-Ocean Land was deemed
under the SFO to be interested in the 1,612,504,625 Shares in which Grand Beauty Management Limited
was interested.
3.
The letter “L” denotes a long position in the Shares.
— V-7 —
APPENDIX V
GENERAL INFORMATION
Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief
executive of the Company was aware of any other person (other than a Director or chief executive
of the Company) or corporation which had an interest or short position in the Shares or underlying
Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of
Part XV of the SFO.
4.
Directors’ service contracts
Mr. Sum Pui Ying and the Company entered into a director’s service contract on 15 August
2013 (the “Service Contract”) for a fixed term of three years. Mr. Sum is entitled to a fixed salary
of HK$3,000,000 per annum and an annual bonus equivalent to 5% of the audited consolidated net
profit after tax of the Group for the immediate preceding financial year of the Company with such
annual bonus to accrue on a daily basis. The terms of the service contract also provided for the
grant of share options to Mr. Sum to subscribe for a total of 16,000,000 Shares at an exercise price
of HK$0.96 per Ordinary Share subject to the terms and conditions of the Company’s share option
scheme dated 23 June 2011 and the terms and conditions of the offer letter issued by the Company
to Mr. Sum for the grant of such share options. The Service Contract may be terminated by the
Company without cause before expiration of its fixed term provided that the Company shall pay
to Mr. Sum a termination compensation which is equivalent to the higher of: (a) the emoluments
(comprising salary and annual bonus) payable by the Company to Mr. Sum for the remainder of the
term; or (b) one year’s emoluments (comprising salary and annual bonus) payable by the Company to
Mr. Sum. If Mr. Sum ceases to be a Director by reason of his not being re-elected as a Director at the
annual general meeting of the Company held next after the commencement of his employment or at
any general meeting of the Company at which he is to retire by rotation, in addition to his entitlement
to fixed salary and annual bonus calculated up to the date of such termination, Mr. Sum is also
entitled to a termination compensation payable by the Company which is equivalent to the higher of:
(a) the emoluments (comprising salary and annual bonus) payable by the Company to Mr. Sum for the
remainder of the term; or (b) one year’s emoluments (comprising salary and annual bonus) payable
by the Company to Mr. Sum. Details of the Service Contract are set out in the announcement of the
Company dated 9 August 2013 and the circular of the Company dated 23 August 2013.
Save for the above, 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 Group which is
not determinable by the Group within one year without payment of compensation, other than statutory
compensation.
— V-8 —
APPENDIX V
5.
GENERAL INFORMATION
Competing interests
As at the Latest Practicable Date, none of the Directors and their respective 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.
6.
Directors’ interest in assets/contracts and other interests
As at the Latest Practicable Date:
(a)
none of the Directors was materially interested in any contract or arrangement subsisting
as at the Latest Practicable Date which is significant in relation to the business of the
Group; and
(b)
none of the Directors had any direct or indirect interest in any assets which had
been, since 31 December 2013 (being the date to which the latest published audited
consolidated financial statements of the Group were made up), acquired, disposed of by,
or leased to any member of the Group, or were proposed to be acquired, disposed of by,
or leased to any member of the Group.
7.LITIGATION
As at the Latest Practicable Date, no member of the Group was engaged in any litigation or
claims of material importance and there is no litigation or claims of material importance known to the
Directors to be pending or threatened against any member of the Group.
8.
Material adverse change
As at the Latest Practicable Date, save for the loss incurred attributable to the Shareholders
of approximately HK$18,027,000 for the six months ended 30 June 2014 as disclosed in the 2014
interim report of the Company, the Directors were not aware of any material adverse change in the
financial or trading position of the Group since 31 December 2013, being the date to which the latest
published audited consolidated financial statements of the Group were made up.
9.
MATERIAL CONTRACTS
Save as disclosed below, there are no material contracts (not being contracts entered into in the
ordinary course of business) which have been entered into by any member of the Group within the
two years immediately preceding the date of this circular:
(i)
the agreement dated 8 February 2013 entered into between the Company as vendor and
Pacific Sunrise Holdings Limited as purchaser in relation to the sale and purchase of
the Company’s entire shareholding interest in Trendex Investment Limited at a total
consideration of RMB138,310,795 (subject to adjustment as further disclosed in the
announcement of the Company dated 8 February 2013 and the circular of the Company
dated 8 March 2013);
— V-9 —
APPENDIX V
GENERAL INFORMATION
(ii) the application form dated 13 June 2013 submitted to Somerley Asset Management
Limited by Sunray City Investments Limited (an indirect wholly-owned subsidiary of
the Company) for the subscription of 500,000 participating redeemable preference shares
of GlobalActive Fund Limited at an aggregate subscription price of HK$200,000,000
(details of which are set out in the announcement of the Company dated 5 April 2013
and the circular of the Company dated 26 April 2013);
(iii) the agreement for sale and purchase dated 13 June 2013 entered into between Precise
Bloom Limited (an indirect wholly-owned subsidiary of the Company) as the purchaser
and Cheer Master Holdings Limited as the vendor in relation to the sale and purchase of
the property comprising Unit 3604B on 36th Floor, Tower Two, Lippo Centre, No. 89
Queensway, Hong Kong at a total consideration of HK$59,817,600 (details of which are
set out in the announcement of the Company dated 13 June 2013);
(iv) the tenancy agreement dated 30 July 2013 entered into between 遠洋地產有限公司 (Sino
Ocean Land Limited *) 北京房地產經營管理分公司 (Sino-Ocean Land Limited Beijing
Property Operating Management Branch*) as the landlord and 盛洋（北京）投資顧問有
限公司 (Gemini (Beijing) Investment Consulting Co., Ltd.*) (an indirect wholly-owned
subsidiary of the Company) as the tenant in respect of the lease of Unit 2306, 23rd
Floor, Tower A, Sino-Ocean International Centre, No. 56 Middle East 4th Ring Road,
Chaoyang District, Beijing, the PRC*) for a term of 2 years and 4 months commencing
from 1 August 2013 and expiring on 30 November 2015 (details of which are set out in
the announcement of the Company dated 30 July 2013);
(v)
the Service Contract, details of which are set out in the paragraph headed “Directors’
Service Contracts” of this appendix, the announcement of the Company dated 9 August
2013 and the circular of the Company dated 23 August 2013;
(vi) the loan agreement dated 15 August 2013 entered into between the Company as
borrower and Grand Beauty Management Limited (an indirect wholly-owned subsidiary
of Sino-Ocean Land) as lender for the loan amount of HK$1,000,000,000 for a terms
of 120 months commencing from the date of the loan agreement. On 21 May 2014,
Grand Beauty Management Limited granted a waiver of the interest on the loan for the
period from 1 January 2014 to 31 December 2014 (details of which are set out in the
announcements of the Company dated 15 August 2013 and 21 May 2014);
(vii) the application form dated 30 August 2013 submitted to DBS Bank Ltd., Hong Kong
Branch by Fame Gate Developments Limited, an indirect wholly-owned subsidiary of the
Company, for the subscription of 30,000 participating redeemable preference shares of
Neutron A, which is a sub-fund of Neutron Fund Limited, at an aggregate subscription
price of HK$30,000,000 (details of which are set out in the announcement of the
Company dated 27 September 2013 and the circular of the Company dated 21 October
2013);
*
— V-10 —
APPENDIX V
GENERAL INFORMATION
(viii) the subsequent subscription form dated 27 September 2013 submitted to DBS Bank Ltd.,
Hong Kong Branch by Fame Gate Developments Limited (an indirect wholly-owned
subsidiary of the Company) for the subscription of an additional 70,404 participating
redeemable preference shares of Neutron A, which is a sub-fund of Neutron Fund
Limited, at an aggregate subscription price of HK$70,000,000 (details of which are set
out in the announcement of the Company dated 27 September 2013 and the circular of
the Company dated 21 October 2013);
(ix) the application form dated 27 September 2013 submitted to DBS Bank Ltd., Hong Kong
Branch by Fame Gate Developments Limited (an indirect wholly-owned subsidiary of the
Company) for the subscription of 100,000 participating redeemable preference shares of
Neutron B, which is a sub-fund of Neutron Fund Limited, at an aggregate subscription
price of HK$100,000,000 (details of which are set out in the announcement of the
Company dated 27 September 2013 and the circular of the Company dated 21 October
2013);
(x)
the subscription agreement dated 27 September 2013 submitted to DBS Bank Ltd.,
Hong Kong Branch by Glorious Field Investments Limited (an indirect wholly-owned
subsidiary of the Company) for the subscription of 125,000 non-redeemable, non-voting
participating shares of Neutron Private Equity Fund Limited at an aggregate subscription
price of US$12,500,000 (equivalent to approximately HK$96,900,000) (details of which
are set out in the announcements of the Company dated 27 September 2013 and the
circular of the Company dated 21 October 2013);
(xi) the subscription agreement dated 11 November 2013 submitted to DBS Bank Ltd., Hong
Kong Branch by Swift Boom Investments Limited (an indirect wholly-owned subsidiary
of the Company) for the subscription of the 450,000 non-redeemable, non-voting
participating shares of Neutron Property Fund Limited, at an aggregate subscription price
of US$45,000,000 (details of which are set out in the announcement of the Company
dated 11 November 2013 and the circular of the Company dated 2 December 2013);
(xii) the loan facility agreement dated 23 January 2014 entered into among the Company as a
borrower, Sino-Ocean Land as the guarantor and DBS Bank Ltd., Hong Kong Branch as
a lender, for a renewal of term loan facility in the principal amount of HK$500,000,000
for a term of 36 months after the date of the loan facility agreement (details of which
are set out in the announcements of the Company dated 1 August 2011 and 23 January
2014);
(xiii) the subscription agreement dated 24 January 2014 entered into among P0006 A’Beckett
Pty Ltd., as trustee, Gemini Overseas Investments Limited (an indirect wholly-owned
subsidiary of the Company) as subscriber and ICD Land Pty. Ltd. as a subscriber in
relation to, among other things, the investment in certain ordinary shares in the capital
of P0006 A’Beckett Pty Ltd. and certain unites in A’Beckett Street Trust, at a total
consideration of AUD14,285,714 (equivalent to approximately HK$97.7 million) (details
of which are set out in the announcement of the Company dated 24 January 2014.)
— V-11 —
APPENDIX V
GENERAL INFORMATION
(xiv) the agreement dated 24 May 2014 (Hong Kong time) entered into between the Grandeur
New Global II LLC (an indirect wholly-owned subsidiary of the Company), as purchaser
and 15 William (NY) Owner, LLC, as vendor, in relation to the acquisition of units
26C, 32G, 28D, 29C and 30D of 15 William Street, New York, the U.S., at a total
consideration of US$5,381,173 (equivalent to approximately HK$41.7 million) (details of
which are set out in the announcement of the Company dated 24 May 2014);
(xv) the agreement dated 24 May 2014 (Hong Kong time) entered into between the Shine
Victory II LLC (an indirect wholly-owned subsidiary of the Company), as purchaser and
15 William (NY) Owner, LLC, as vendor, in relation to the acquisition of units 31F, 32F,
33E, 34G and 35E of 15 William Street, New York, the U.S. at a total consideration of
US$7,515,715 (equivalent to approximately HK$58.3 million) (details of which are set
out in the announcement of the Company dated 24 May 2014);
(xvi) the subscription agreement dated 26 October 2014 (as supplemented by a supplemental
agreement thereto dated 24 November 2014) entered into between the Company, as
issuer and Grand Beauty Management Limited, an indirect wholly-owned subsidiary of
Sino-Ocean Land, as subscriber in relation to the subscription of 1,300,000,000 new nonvoting convertible preference shares in the capital of the Company at a total subscription
amount of HK$3,900,000,000 (details of which are set out in the Company’s joint
announcement with Sino-Ocean Land dated 26 October 2014 and the Company’s circular
dated 27 November 2014) and its supplemental agreement dated 24 November 2014
(details of which are set out in the announcements of the Company dated 13 November
2014, 24 November 2014 and the circular of the Company dated 27 November 2014);
and
(xvii)the agreements referred to in (i)-(iii), (v)-(vii) and (ix)-(x) in the paragraph headed
“Relevant documents of the Fund” in this appendix.
10.
RELEVANT DOCUMENTS Of the Fund
The material contracts referred to in the paragraph headed “Material contracts” above and the
other relevant documents referred to in this paragraph will be available for inspection (further details
of which are set out in the paragraph headed “Documents available for inspection” below):
(i)
the Framework Agreement;
(ii)
the GP LPA;
(iii) the Fund LPA;
(iv) the First Amendment Agreement;
(v)
the First GP Amendment Agreement;
(vi) the Second Amendment Agreement;
(vii) the Third Amendment Agreement;
(viii) the Acquisition Agreement;
(ix) the Second GP Amendment Agreement; and
(x)
the Subscription Agreement.
— V-12 —
APPENDIX V
11.
GENERAL INFORMATION
Expert AND CONSENT
The following is the qualifications of each of the experts who has given its opinion or advice
which is contained in this circular:
Name
Qualifications
Yu Ming
A licensed corporation under the SFO authorised to
carry out regulated activities of Type 1 (dealing in
securities), Type 4 (advising on securities), Type 6
(advising on corporate finance) and Type 9 (asset
management), which is the independent financial
adviser to the Independent Board Committee and the
Independent Shareholders
KPMG
BDO Limited (“BDO”)
PricewaterhouseCoopers (“PwC”)
DTZ Debenham Tie Leung Limited
(“DTZ”)
Independent valuer
FenXun Partners
Registered law firm in the PRC
As at the Latest Practicable Date, each of the experts named above (i) had no shareholding in
any member of the Group and did not have any right, whether legally enforceable or not, to subscribe
for or to nominate persons to subscribe for securities in any member of the Group; (ii) had no direct
or indirect interest in any assets which had been, since 31 December 2013 (being the date to which
the latest published audited consolidated financial statements of the Group were made up), acquired,
disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed
of by, or leased to any member of the Group; and (iii) has given and has not withdrawn its written
consent to the issue of this circular with the inclusion of its letter and the reference to its name
included herein in the form and context in which it appears.
12.General
(a)
The registered office and head office of the Company is Room 3902, 39th Floor, Tower
One, Lippo Centre, No. 89 Queensway, Hong Kong.
(b)
The share registrar and transfer office of the Company in Hong Kong is Tricor Standard
Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(c)
The company secretary of the Company is Ms. YUE Pui Kwan, who is an associate
member of The Institute of Chartered Secretaries and Administrators and an associate
member of The Hong Kong Institute of Company Secretaries.
— V-13 —
APPENDIX V
(d)
13.
GENERAL INFORMATION
In case of inconsistency, the English text of this circular shall prevail over its Chinese
text.
Documents available for inspection
Copies of the following documents will be available for inspection during normal business
hours at Room 3902, 39th Floor, Tower One, Lippo Centre, No. 89 Queensway, Hong Kong up to and
including the date which is 14 days from the date of this circular:
(a)
the articles of association of the Company currently in force;
(b)
the annual reports of the Company for the three years ended 31 December 2011, 2012
and 2013 and the interim report of the Company for the six months ended 30 June 2014;
(c)
the Accountant’s Report on the Fund prepared by KPMG, the text of which is set out in
Appendix II to this circular;
(d)
the Accountant’s Report on the Target Group prepared by PwC, the text of which is set
out in Appendix II to this Circular;
(e)
the report on the unaudited pro forma financial information of the Group illustrating
the effect of the Capital Commitment issued by BDO, the text of which is set out in
Appendix III to this circular;
(f)
the property valuation report on the Properties from DTZ, the texts of which are set out
in Appendix IV to this circular;
(g)
the material contracts and other relevant documents referred to in the paragraph
headed “Material contracts” and “Relevant Documents of the Fund” respectively in
this appendix, and the Service Contract referred to in the paragraph headed “Directors’
Service Contracts” in this appendix;
(h)
the letter from the Independent Board Committee to the Independent Shareholders, the
text of which is set out on pages 35 to 36 of this circular;
(i)
the letter from the Independent Financial Adviser to the Independent Board Committee
and the Independent Shareholders, the text of which is set out on pages 37 to 57 of this
circular;
(j)
the written consent of each expert referred to in the paragraph headed “Expert and
consent” in this appendix; and
(k)
this circular.
* For identification purpose only
— V-14 —
NOTICE OF EGM
(Stock Code: 174)
Notice of Extraordinary General Meeting
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “Meeting”) of
Gemini Investments (Holdings) Limited (the “Company”) will be held at United Conference Centre,
10/F., United Centre, 95 Queensway, Admiralty, Hong Kong on Wednesday, 31 December 2014 at
10:30 a.m. to consider and, if thought fit, pass the following ordinary resolution of the Company:
Ordinary Resolution
Words and expressions that are not expressly defined in this notice shall bear the same meaning
as that defined in the circular dated 13 December 2014 published by the Company.
“THAT:
(a)
the Second GP Amendment Agreement and all transactions contemplated thereunder, be and are
hereby approved, ratified and confirmed;
(b)
the Subscription Agreement and all transactions contemplated thereunder, be and are hereby
approved, ratified and confirmed;
(c)
the Capital Commitment by Chance Bright of (i) USD250 million to the Fund under the
Subscription Agreement and (ii) USD3.95 million to the General Partner under the Second GP
Amendment Agreement be and is hereby approved, ratified and confirmed; and
— EGM-1 —
NOTICE OF EGM
(d)
any one director of the Company be and is hereby authorised to do all such acts and things,
negotiate, approve, agree, sign, initial, ratify and/or execute all documents and take all steps
as he may consider necessary, desirable or expedient to implement and/or give effect to the
Second GP Amendment Agreement, the Subscription Agreement, the Capital Commitment and
all transactions contemplated thereunder.”
Yours faithfully,
By order of the Board
LAI Kwok Hung, Alex
Executive Director
Hong Kong, 13 December 2014
Notes:
(a)
A member entitled to attend and vote at the Meeting may appoint a proxy or, if holding two or more shares,
more than one proxy to attend, and speak and vote at, the Meeting or any adjournment thereof (as the case may
be) on his behalf. If a member appoints more than one proxy, he must specify the number of shares each proxy
is appointed to represent. A proxy need not be a member of the Company.
(b)
To be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is
signed, or a notarially certified copy thereof must be deposited at the Company’s share registrar, Tricor Standard
Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the
time fixed for holding the Meeting or adjournment thereof (as the case may be).
(c)
The register of members of the Company will be closed from Tuesday, 30 December 2014 to Wednesday, 31
December 2014 both days inclusive, during which period no transfer of shares will be registered. The record
date will be Wednesday, 31 December 2014. In order to determine the identity of shareholder(s) who is entitled
to attend and vote at the Meeting, all transfers accompanied by the relevant share certificates must be lodged
with the Company’s share registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road
East, Hong Kong not later than 4:30 p.m. on Monday, 29 December 2014.
(d)
Where there are joint registered holders of any share, any one of such persons may vote at any Meeting, either
personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of
such joint holders be present at any Meeting personally or by proxy, that one of the said persons so present
whose name stands first on the register of members of the Company in respect of such share(s) shall alone be
entitled to vote in respect thereof.
As at the date of this notice, the directors of the Company are as follow:
Executive Directors:
Mr. SUM Pui Ying
Mr. LI Zhenyu
Mr. LAI Kwok Hung, Alex
Non-executive Directors:
Mr. LI Ming
Mr. LI Hongbo
— EGM-2 —
Independent non-executive Directors:
Mr. LAW Tze Lun
Mr. ZHENG Yun

Very Substantial and Deemed Connected Transaction

Transcription

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