Sino-Ocean Land (Perpetual Finance) Limited · 2013. 10. 28. · generally are open for business in...
Transcript of Sino-Ocean Land (Perpetual Finance) Limited · 2013. 10. 28. · generally are open for business in...
Sino-Ocean Land (Perpetual Finance) Limited (Incorporated in British Virgin Island with limited liability)
The Board of Directors of Sino-Ocean Land (Perpetual Finance) Limited (the
“Company”) announces that Sino-Ocean Land Holdings Limited, the Company’s
parent company, has released a circular with notice of extraordinary general meeting
in relation to connected transactions and the circular as attached has been posted on
the websites of The Stock Exchange of Hong Kong Limited and Sino-Ocean Land
Holdings Limited.
By Order of the Board
Sino-Ocean Land (Perpetual Finance) Limited
SUM Pui Ying
Director
28 October 2013
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 stockbrokeror other registered dealer in securities, bank manager, solicitor, professional accountant or other professional advisor.
If you have sold or transferred all your shares in Sino-Ocean Land Holdings Limited, you should at once hand this circularto the purchaser or transferee or to the bank, a licensed securities dealer or other agent through whom the sale or transfer waseffected for transmission to the purchaser or transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for thecontents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liabilitywhatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
(Stock Code: 03377)
(1) CONNECTED TRANSACTIONS —SUBSCRIPTION OF NEW SHARES BY CONNECTED PERSONS
UNDER SPECIFIC MANDATE
(2) DISCLOSEABLE AND CONNECTED TRANSACTION —ACQUISITION OF REMAINING INTERESTS IN TWO PROJECTS
Financial adviser to the Company
Independent Financial Adviser tothe Independent Board Committee and the Independent Shareholders
Anglo Chinese Corporate Finance, Limited
A letter from the Board is set out on pages 7 to 34 of this circular and a letter from the Independent Board Committee is setout on pages 35 to 36 of this circular. A letter from the Independent Financial Adviser containing its advice to the IndependentBoard Committee and the Independent Shareholders is set out on pages 37 to 59 of this circular.
A notice convening the EGM of the Company to be held at Salon Room VI, 3/F, JW Marriott Hotel, Pacific Place, 88Queensway, Hong Kong on Tuesday, 19 November 2013 at 10:00 a.m. is set out on pages 82 to 84 of this circular. Whether ornot you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with theinstructions printed thereon and return it to the Company’s share registrar, Computershare Hong Kong Investor Services Limitedat 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not lessthan 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be). Completionand return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournmentthereof (as the case may be) if you so wish.
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
28 October 2013
LR14A.58(3)(b)
LR14A.59(1)
LR13.51AApp 1, Part B 1
Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . 35
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . 37
APPENDIX I — PROPERTY VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . 60
APPENDIX II — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
CONTENTS
— i —
In this circular, unless the context otherwise requires, the following terms shall have the
following meanings:
“Acquisition” the proposed acquisition of a 20% interests in the CBD
Project and approximately 10% interests in the Dalian Project
by the Company pursuant to the Master Acquisition
Agreement
“Acquisition Completion Date” the second Business Day following the date on which all
conditions precedent under the Master Acquisition Agreement
are fulfilled or waived or such other date as the parties may
agree
“Affiliate(s)” any person directly or indirectly controlling, controlled by or
under common control with the subject person, where
“control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract or otherwise, and includes (a)
ownership directly or indirectly of more than 50% of the
shares in issue or other equity interests of such person, (b)
possession directly or indirectly of more than 50% of the
voting power of such person or (c) the power directly or
indirectly to appoint a majority of the members of the board
of directors or similar governing body of such person
“Announcement” the announcement dated 27 September 2013 issued by the
Company in relation to, among others, the Subscription
Agreements and the Master Acquisition Agreement and the
transactions contemplated thereunder
“associate(s)” having the meaning ascribed to such term in the Listing Rules
“Board” the board of Directors
“Business Day” any day (excluding Saturday and Sunday) on which banks
generally are open for business in Hong Kong
“BVI” the British Virgin Islands
“CBD Interests” the shares in Target Company One and the corresponding
shareholder’s loan advanced by the Nan Fung Group to Target
Company One proposed to be transferred by the Vendor to the
Purchaser under the Master Acquisition Agreement
DEFINITIONS
— 1 —
“CBD Project” a commercial property development project located on the
land with a site area of approximately 11,000 square metres
located at Plot Z6, Guanghua Road, Chaoyang District,
Beijing, the PRC, of which, the Group effectively owns 80%
and the Nan Fung Group effectively owns 20% as at the Latest
Practicable Date
“China Life” China Life Insurance Company Limited (中國人壽保險股份有限公司), a joint stock limited liability company established
under the laws of the PRC, the shares of which are listed on
the Main Board of the Stock Exchange (Stock Code: 2628)
“China Life Group” China Life Insurance (Group) Company, a company
established under the laws of the PRC and the controlling
shareholder of China Life
“China Life Subscription” the subscription of 635,941,967 Shares by China Life
pursuant to the terms of the China Life Subscription
Agreement
“China Life Subscription
Agreement”
the subscription agreement dated 27 September 2013 entered
into between the Company and China Life
“Company” Sino-Ocean Land Holdings Limited, a company incorporated
in Hong Kong with limited liability, the Shares of which are
listed on the Main Board of the Stock Exchange
“Completion” completion of the China Life Subscription or the Nan Fung
Subscription (as the case may be) in accordance with the
terms and conditions as set out in the relevant Subscription
Agreement
“Completion Date” the second Business Day following the date on which all
conditions precedent under the relevant Subscription
Agreement are fulfilled or waived or such other date as the
Company and the relevant Subscriber may agree
“connected person(s)” having the meaning ascribed to such term in the Listing Rules
“Dalian Interests” the shares in Target Company Two, Target Company Three,
Target Company Four and Target Company Five and the
corresponding shareholder’s loan advanced by the Nan Fung
Group to each of them which are proposed to be transferred
by the Vendor to the Purchaser under the Master Acquisition
Agreement
DEFINITIONS
— 2 —
“Dalian Project” a residential and retail complex development project located
on the land with a site area of approximately 749,000 square
metres located at Plots A, B, C and E, Ocean Diamond Bay,
East of Gongxing Street and Dongbei Road, South of
Dongfang Road, Ganjingzi District, Dalian, Liaoning
Province, the PRC of which, the Group effectively owns
approximately 90% and the Nan Fung Group effectively owns
approximately 10% as at the Latest Practicable Date
“Director(s)” director(s) of the Company
“DTZ” DTZ Debenham Tie Leung Limited, an independent property
valuer
“EGM” an extraordinary general meeting of the Company to be
convened and held at Salon Room VI, 3/F, JW Marriott Hotel,
Pacific Place, 88 Queensway, Hong Kong at 10:00 a.m. on
Tuesday, 19 November 2013, for the purpose of considering
and, if thought fit, approving (i) each of the Subscription
Agreements and the transactions contemplated thereunder,
including the grant of the Specific Mandate for the allotment
and issue of the Subscription Shares; and (ii) the Master
Acquisition Agreement and the transaction contemplated
thereunder
“Executive” the Executive Director of the Corporate Finance Division of
the Securities and Futures Commission of Hong Kong or any
delegate of the Executive Director
“Fame Gain” Fame Gain Holdings Limited (名得控股有限公司), a company
incorporated in BVI and an indirect wholly-owned subsidiary
of the Company
“Group” the Company and its subsidiaries
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the People’s
Republic of China
“Independent Board Committee” an independent board committee of the Company comprising
Mr. Tsang Hing Lun, Mr. Gu Yunchang, Mr. Han Xiaojing and
Mr. Zhao Kang, each an independent non-executive Director
DEFINITIONS
— 3 —
“Independent Financial Adviser”
or “Anglo Chinese”
Anglo Chinese Corporate Finance, Limited, a corporation
licensed to carry out Type 1 (dealing in securities), Type 4
(advising on securities), Type 6 (advising on corporate
finance) and Type 9 (asset management) regulated activities
under the SFO and the independent financial adviser of the
Company to advise the Independent Board Committee and the
Independent Shareholders in relation to the reasonableness
and fairness of the terms of the Subscription Agreements and
the Master Acquisition Agreement and the transactions
contemplated thereunder
“Independent Shareholders” the Shareholders other than those who have a material interest
in the relevant resolution to be proposed at the EGM
“Latest Practicable Date” 23 October 2013, being the latest practicable date prior to the
printing of this circular for the purpose of ascertaining certain
information contained in this circular
“Listing Rules” the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
“Master Acquisition Agreement” the master acquisition agreement dated 27 September 2013
entered into between Fame Gain and Nan Fung China in
respect of the Acquisition
“Nan Fung China” Nan Fung Investment China Holdings Limited, a company
incorporated in the BVI and a member of the Nan Fung Group
“Nan Fung Group” a privately owned group of companies and business interests
under the control of the estate of Mr. Chen Din Hwa
(deceased) carrying on business under the trade name of “Nan
Fung” which, holds approximately 14.11% of the issued share
capital of the Company as at the Latest Practicable Date and
is a substantial shareholder of the Company, is principally
engaged in the business of property development, property
investment, construction, property management, investment
and financing and “a member of the Nan Fung Group” shall
mean any of them
“Nan Fung Subscription” the subscription of 686,611,211 Shares by Spring Glory
pursuant to the Nan Fung Subscription Agreement
“Nan Fung Subscription
Agreement”
the subscription agreement dated 27 September 2013 entered
into between the Company and Spring Glory
“Perpetual Convertible
Securities”
US$900 million (equivalent to approximately RMB5,508
million) perpetual subordinated convertible securities
callable 2015 issued by Sino-Ocean Land Capital Finance
Limited, a wholly-owned subsidiary of the Company, on 27
July 2010
DEFINITIONS
— 4 —
“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
“Purchaser” Fame Gain or its nominee(s) whom it has procured to
purchase the CBD Interests and the Dalian Interests
“RMB” Renminbi, the lawful currency of the PRC
“SFO” Securities and Futures Ordinance (Chapter 571 of the laws of
Hong Kong), as amended or supplemented from time to time
“Share(s)” ordinary share(s) in the capital of the Company with nominal
value of HK$0.80 each
“Shareholder(s)” holder(s) of Share(s)
“Specific Mandate” the mandate to allot and issue the Subscription Shares to be
sought at the EGM
“Spring Glory” Spring Glory Investment Limited (源榮投資有限公司), a
company incorporated in Hong Kong and a member of the
Nan Fung Group
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscriber(s)” China Life and Spring Glory
“Subscriber Warranties” the representations and warranties of each Subscriber set forth
in the relevant Subscription Agreement
“Subscription(s)” the China Life Subscription and the Nan Fung Subscription
“Subscription Agreement(s)” the China Life Subscription Agreement and the Nan Fung
Subscription Agreement
“Subscription Price” HK$4.74 per Subscription Share
“Subscription Shares” a total of 1,322,553,178 Shares to be subscribed for by the
Subscribers under the Subscription Agreements
“Super Goal” Super Goal Development Limited (崇高發展有限公司), a
company incorporated in Hong Kong and a wholly-owned
subsidiary of Target Company One
“substantial shareholder” having the meaning ascribed to such term in the Listing Rules
“Target Company One” Sturdy Talent Limited, a company incorporated in the BVI
and a member of the Nan Fung Group as at the Latest
Practicable Date
DEFINITIONS
— 5 —
“Target Company Two” Neo Vast Limited (新浩有限公司), a company incorporated in
the BVI, which is approximately 14.29% held by the Nan
Fung Group and is an indirect non-wholly owned subsidiary
of the Company as at the Latest Practicable Date
“Target Company Three” Hero Field Investments Limited (英域投資有限公司), a
company incorporated in the BVI which is approximately
14.29% held by the Nan Fung Group and is an indirect
non-wholly owned subsidiary of the Company as at the Latest
Practicable Date
“Target Company Four” Triumph Source Limited, a company incorporated in the BVI
which is approximately 10.00% held by the Nan Fung Group
and is an indirect non-wholly owned subsidiary of the
Company as at the Latest Practicable Date
“Target Company Five” Alpha Anchor Limited, a company incorporated in the BVI
which is approximately 10.00% held by the Nan Fung Group
and is an indirect non-wholly owned subsidiary of the
Company as at the Latest Practicable Date
“Target Companies” Target Company One, Target Company Two, Target Company
Three, Target Company Four and Target Company Five
“Takeovers Code” The Hong Kong Code on Takeovers and Mergers
“US$” US dollars, the lawful currency of the United States of
America
“US Dollar Equivalent” in respect of any amount, the US$ equivalent thereof
calculated based upon the average rate of the mid-exchange
rates quoted by The Hongkong and Shanghai Banking
Corporation and Bank of China (Hong Kong) Limited on one
Business Day before the Completion Date
“Vendor” Nan Fung China or its nominee(s) whom it has procured to
sell the CBD Interests and the Dalian Interests
“Warranties” the representations and warranties of the Company set forth in
the relevant Subscription Agreement
“%” per cent.
Unless otherwise specified, amounts denominated in US$ and HK$ have been translated, for
illustration purposes only, into RMB in this circular at a rate of RMB6.12 : US$1.00 and HK$1.27 :
RMB1.00, respectively.
DEFINITIONS
— 6 —
(Stock Code: 03377)
Executive Directors:
Mr. Li Ming
Mr. Chen Runfu
Mr. Wen Hai Cheng
Non-executive Directors:
Ms. Liu Hui
Mr. Yang Zheng
Mr. Cheung Vincent Sai Sing
Independent non-executive Directors:
Mr. Tsang Hing Lun
Mr. Gu Yunchang
Mr. Han Xiaojing
Mr. Zhao Kang
Registered Office:
Suite 601, One Pacific Place
88 Queensway
Hong Kong
Principal place of business:
31-33 Floor, Tower A
Ocean International Center
56 Dongsihuanzhonglu
Chaoyang District
Beijing
PRC
28 October 2013
To the Shareholders
Dear Sir or Madam,
(1) CONNECTED TRANSACTIONS —SUBSCRIPTION OF NEW SHARES BY CONNECTED PERSONS
UNDER SPECIFIC MANDATE
(2) DISCLOSEABLE AND CONNECTED TRANSACTION —ACQUISITION OF REMAINING INTERESTS IN TWO PROJECTS
INTRODUCTION
Reference is made to the Announcement and the announcement of the Company dated 21 October
2013 regarding delay in despatch of circular.
LETTER FROM THE BOARD
— 7 —
LR2.14
The purpose of this circular is (i) to provide the Shareholders with further information on the
Subscription Agreements and the Master Acquisition Agreement and the transactions contemplated
thereunder; (ii) to set out the recommendations of the Independent Board Committee regarding the
Subscription Agreements and the Master Acquisition Agreement and the transactions contemplated
thereunder; (iii) to set out the letter from Anglo Chinese, the Independent Financial Adviser to the
Independent Board Committee and the Independent Shareholders, in respect of the reasonableness and
fairness of the terms and conditions of the Subscription Agreements and the Master Acquisition
Agreement and the transactions contemplated thereunder; and (iv) to give the Shareholders a notice
of the EGM and other information in accordance with the requirements of the Listing Rules.
SUBSCRIPTION AGREEMENTS
China Life Subscription Agreement
Date:
27 September 2013
Issuer:
The Company
Subscriber:
China Life
The Subscription Shares:
China Life shall subscribe for 635,941,967 Shares, representing approximately 10.68% of the
existing issued share capital of the Company as at the Latest Practicable Date, and approximately
8.74% of the issued share capital of the Company as enlarged by the allotment and issue of the
Subscription Shares (assuming no other Shares will be issued prior to Completion).
The Subscription Price:
The Subscription Price is HK$4.74 per Share. The US Dollar Equivalent of the aggregate
Subscription Price of HK$3,014,364,924 (equivalent to RMB2,373,515,688) will be payable by China
Life in cash at completion of the China Life Subscription on the Completion Date.
LETTER FROM THE BOARD
— 8 —
LR14A.58(1)
LA14A.59(2)(a)/(d)
LR14A.59(2)(b)/(c)App1, Part B(10)
Conditions of the China Life Subscription:
(A) The obligation of China Life to complete the China Life Subscription is subject to the
fulfillment, prior to or simultaneously with Completion, of the following conditions, any
one or more of which may be waived by China Life (except that conditions (iii) and (iv)
cannot be waived):
(i) there not having come to the attention of China Life at any time prior to Completion
any breach of, or any event rendering any of the Warranties untrue, incorrect or
misleading;
(ii) the Company having performed and complied in all respects with all of its agreements
and obligations contained in the China Life Subscription Agreement that are required
to be performed or complied with by it on or before Completion;
(iii) the Independent Shareholders having approved the China Life Subscription
Agreement and the transaction contemplated thereunder (including, among other
things, the allotment and issue of the Subscription Shares under the China Life
Subscription Agreement) at the EGM;
(iv) the Listing Committee of the Stock Exchange having granted listing of and permission
to deal in the Subscription Shares under the China Life Subscription Agreement (and
such grant of listing and permission to deal not subsequently being revoked prior to
the delivery of definitive share certificate(s) representing the Subscription Shares);
(v) there not having occurred any material adverse change, or development (including the
introduction of any new law or change in existing laws and regulations (or the judicial
interpretation thereof) or any other similar event) (whether or not permanent)
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business affairs, trading position or prospects of any
member of the Group or the Group as a whole, whether or not arising in the ordinary
course of business; and
(vi) there not having occurred any developments which may render Completion by China
Life pursuant to the terms of the China Life Subscription Agreement unlawful, in
breach of regulations or impossible (including the introduction of any new law or
change in existing laws and regulations (or the judicial interpretation thereof) or any
other similar event) (whether or not permanent).
LETTER FROM THE BOARD
— 9 —
(B) The Company’s obligation to complete the allotment and issue of the Subscription Shares
under the China Life Subscription Agreement is subject to the fulfillment by China Life,
prior to or simultaneously with Completion, of the following conditions, any one or more
of which may be waived by the Company:
(i) the total amount of gross proceeds to be received by the Company pursuant to the
China Life Subscription Agreement and other subscription agreements approved by
the Independent Shareholders at the EGM shall be no less than HK$5.5 billion
(equivalent to approximately RMB4.3 billion);
(ii) there not having come to the attention of the Company at any time prior to Completion
any breach of, or any event rendering any of the Subscriber Warranties given by China
Life untrue, incorrect or misleading;
(iii) China Life having performed and complied in all respects with all of its agreements
and obligations contained in the China Life Subscription Agreement that are required
to be performed or complied with by it on or before Completion; and
(iv) China Life having duly executed the application letter for Shares in the agreed form
addressed to the Company for the Subscription Shares to be issued and allotted to it.
If the conditions set out above are not fulfilled or waived in accordance with the terms of the
China Life Subscription Agreement on or before 27 November 2013 or such later date as may be
agreed between the parties, the obligations and liabilities of the Company and China Life in relation
to the China Life Subscription will (subject to limited exceptions) be terminated, and, unless otherwise
agreed by the parties, neither the Company nor China Life will have any claim against the other (save
for those arising out of antecedent breach).
The minimum gross proceeds of HK$5.5 billion (equivalent to approximately RMB4.3 billion)
as stated in condition (B)(i) above was determined after taking into account of (i) the Company’s
financial position and cash resources as at 30 June 2013, the full redemption of the Perpetual
Convertible Securities during the period from June to September 2013 and the available cash and bank
balance of the Group after such redemption; (ii) the financing needs for potential new projects of the
Company located in first and second tier cities including Beijing, Shenzhen and Zhongshan and the
estimated land acquisition and project development costs to be incurred in 2013 and 2014; and (iii)
the requirement to maintain the similar level of the Company’s debt-to-equity ratio, after the full
redemption of the Perpetual Convertible Securities, which was given an equity accounting treatment
in line with the applicable accounting standards.
Each of the Company and China Life will use its reasonable endeavours to fulfill the conditions
set out above. As at the Latest Practicable Date, to the best of the Company’s knowledge after due
enquiries, none of the parties had any intention to waive any conditions under the China Life
Subscription Agreement and none of the conditions in the China Life Subscription Agreement had
been fulfilled. The Company would only consider waiving condition (B)(i) above if and only if either
the China Life Subscription or the Nan Fung Subscription is not approved at the EGM and there are
uncontrollable market conditions arises such as a substantial decrease in the market price of the Shares
LETTER FROM THE BOARD
— 10 —
compared to the price per Share under the China Life Subscriptions. Further, in considering whether
to waive the above conditions, the Company will carefully consider the reason(s) of the inability to
fulfill such condition, the materiality of such non-fulfillment and the impact it will have on the
Company and the transactions under the China Life Subscription Agreement, and the decision to waive
any condition will only be made if the Board considers that it is in the best interest of the Company
and the Shareholders as a whole. The China Life Subscription is not conditional on the Nan Fung
Subscription, however the Company intends to complete the Subscriptions simultaneously.
Completion:
Completion of the China Life Subscription will take place on the Completion Date, being the
second Business Day following the date on which all conditions precedent in the China Life
Subscription Agreement as mentioned above are fulfilled or waived or such other date as the Company
and China Life may agree.
Restriction on disposal:
China Life has undertaken that it will not during the two-year period commencing on the
Completion Date, dispose of or otherwise create any options, rights, interests or encumbrances in
respect of, any of the 635,941,967 Shares subscribed under the China Life Subscription Agreement or
any beneficial or other interests therein, provided that China Life will not be prevented from
transferring such Shares to any of its wholly-owned subsidiaries (the “Permitted China LifeTransferees”) where:
(i) China Life shall only effect the proposed transfer to any Permitted China Life Transferee(s)
by giving a written notice to the Company with 14 Business Days in advance of the
proposed transfer date;
(ii) China Life will be responsible for ensuring that the Permitted China Life Transferees will
comply with the above restriction on disposal and undertake in writing to the Company that
they will be bound by the terms of the China Life Subscription Agreement as if they were
named as the subscriber therein; and
(iii) if at any time prior to the expiry of the two-year period commencing on the Completion
Date, any of the Permitted China Life Transferees ceases to be a wholly-owned subsidiary
of China Life, such Permitted China Life Transferee shall (and China Life shall procure that
it shall), before ceasing to be a wholly-owned subsidiary of China Life, fully and
effectively transfer its entire interest in any Subscription Shares to China Life.
Board representation:
Upon Completion, for so long as China Life directly or indirectly holds not less than 24% of the
total issued share capital of the Company, China Life will have the right to nominate (i) an executive
Director to the Board (in addition to the two non-executive Directors nominated by China Life to the
Board); and (ii) a member of senior management of the Company, subject to compliance with the
requirements for directors and senior management under the applicable laws, regulations, the Listing
LETTER FROM THE BOARD
— 11 —
Rules and the Takeovers Code. The Company will, subject to compliance with laws, regulations, the
Listing Rules, the Takeovers Code and the articles of association of the Company, procure such
persons nominated be appointed as a Director of the Board and a member of senior management of
the Company as soon as practicable. The shareholding of 24% that China Life shall maintain before
it can nominate the new executive Director and the senior management was a commercial decision
determined with reference to the existing shareholding structure of the Company prior to the
Subscriptions and based on arm’s length negotiations between the Company and China Life. Such
nomination rights of an executive Director and senior management are not in breach of the articles of
association of the Company.
The Directors consider that the right to nominate an executive Director and senior management
can help strengthen and diversify the composition of the Board and enhance oversight on the Board.
The Board is currently made up of Directors with backgrounds mainly from the property industry in
the PRC. Given that China Life is strong in areas of financing and fund-raising, with ample
knowledge, experiences and qualifications in the finance, insurance and banking sectors in the PRC,
the addition of an executive Director and senior management as nominated by China Life (if
appointed) who would be involved in the day-to-day management of the Company could greatly assist
the Board in those areas, and better equip the Board to manage the Company’s business, which is in
the best interest of the Company and the Shareholders as a whole.
The right to nominate an executive Director by China Life is the same right available to all
Shareholders as provided in the articles of association of the Company and thus the Directors do not
consider the granting of such right is a preferential treatment to China Life. The appointment of any
candidates nominated by China Life to the Board is still subject to compliance with the articles of
association of the Company, the applicable laws, regulations, the Listing Rules and the Takeovers
Code. In particular, pursuant to the Listing Rules and the articles of association of the Company, such
appointment of an executive Director will be subject to evaluation and recommendation of the
nomination committee of the Company according to its objective criteria, and subject to the approval
of the Board and re-election by the Shareholders at the first general meeting after appointment.
Further, such Director may also be removed by the Shareholders by ordinary resolution before his or
her term of office has expired. The appointment of senior management of the Company as nominated
by China Life would also be subject to the approval by the Board taking into account the suitability
of the candidate nominated. Shareholders other than the Nan Fung Group and China Life can also
nominate suitable candidates for Director and/or senior management for the Board’s consideration
should they so wish.
Undertaking with respect to repurchase of Shares:
The Company has undertaken to China Life that it shall not undertake any repurchase or
cancellation of Shares, if, purely based on the shareholding information of the Company as disclosed
in the disclosure of interests notices on the website of the Stock Exchange and the Company’s
calculation solely based on such information, such repurchase or cancellation of Shares would cause
the shareholding of China Life in the Company to exceed 30%, resulting in a mandatory general offer
obligation under the Takeovers Code.
LETTER FROM THE BOARD
— 12 —
Nan Fung Subscription Agreement
Date:
27 September 2013
Issuer:
The Company
Subscriber:
Spring Glory
The Subscription Shares:
Spring Glory shall subscribe for 686,611,211 Shares, representing approximately 11.53% of the
existing issued share capital of the Company as at the Latest Practicable Date, and approximately
9.43% of the issued share capital of the Company as enlarged by the allotment and issue of the
Subscription Shares (assuming no other Shares will be issued prior to Completion).
The Subscription Price:
The Subscription Price is HK$4.74 per Share. The US Dollar Equivalent of the aggregate
Subscription Price of HK$3,254,537,140 (equivalent to RMB2,562,627,669) will be payable by Spring
Glory in cash at completion of the Nan Fung Subscription on the Completion Date.
Conditions of the Nan Fung Subscription:
(A) The obligation of Spring Glory to complete the Nan Fung Subscription is subject to the
fulfillment, prior to or simultaneously with Completion, of the following conditions, any
one or more of which may be waived by Spring Glory (except that conditions (iii) to (v)
cannot be waived):
(i) there not having come to the attention of Spring Glory at any time prior to Completion
any breach of, or any event rendering any of the Warranties untrue, incorrect or
misleading;
(ii) the Company having performed and complied in all respects with all of its agreements
and obligations contained in the Nan Fung Subscription Agreement that are required
to be performed or complied with by it on or before Completion;
(iii) the Independent Shareholders having approved the Nan Fung Subscription Agreement
and the transaction contemplated thereunder (including, among other things, the
allotment and issue of the Subscription Shares under the Nan Fung Subscription
Agreement) at the EGM;
LETTER FROM THE BOARD
— 13 —
LR14A.58(1)LR14A.59(2)(a)/(d)
LA14A.59(2)(b)App1, Part B(10)
LR14A.59(2)(c)
(iv) the Listing Committee of the Stock Exchange having granted listing of and permission
to deal in the Subscription Shares under the Nan Fung Subscription Agreement (and
such grant of listing and permission to deal not subsequently being revoked prior to
the delivery of definitive share certificate(s) representing the Subscription Shares);
(v) the Acquisition pursuant to the Master Acquisition Agreement having been completed;
(vi) there not having occurred any material adverse change, or development (including the
introduction of any new law or change in existing laws and regulations (or the judicial
interpretation thereof) or any other similar event) (whether or not permanent)
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business affairs, trading position or prospects of any
member of the Group or the Group as a whole, whether or not arising in the ordinary
course of business; and
(vii) there not having occurred any developments which may render Completion by Spring
Glory pursuant to the terms of the Nan Fung Subscription Agreement unlawful, in
breach of regulations or impossible (including the introduction of any new law or
change in existing laws and regulations (or the judicial interpretation thereof) or any
other similar event) (whether or not permanent).
(B) The Company’s obligation to complete the allotment and issue of the Subscription Shares
under the Nan Fung Subscription Agreement is subject to the fulfillment by Spring Glory,
prior to or simultaneously with Completion, of the following conditions, any one or more
of which may be waived by the Company (except that condition (ii) cannot be waived):
(i) the total amount of gross proceeds to be received by the Company pursuant to the Nan
Fung Subscription Agreement and other subscription agreements approved by the
Independent Shareholders at the EGM shall be no less than HK$5.5 billion (equivalent
to approximately RMB4.3 billion);
(ii) the Acquisition pursuant to the Master Acquisition Agreement having been completed;
(iii) there not having come to the attention of the Company at any time prior to Completion
any breach of, or any event rendering any of the Subscriber Warranties given by
Spring Glory untrue, incorrect or misleading;
(iv) Spring Glory having performed and complied in all respects with all of its agreements
and obligations contained in the Nan Fung Subscription Agreement that are required
to be performed or complied with by it on or before Completion; and
(v) Spring Glory having duly executed the application letter for Shares in the agreed form
addressed to the Company for the Subscription Shares to be issued and allotted to it.
LETTER FROM THE BOARD
— 14 —
If the conditions set out above are not fulfilled or waived in accordance with the terms of the Nan
Fung Subscription Agreement on or before 27 November 2013 or such later date as may be agreed
between the parties, the obligations and liabilities of the Company and Spring Glory in relation to the
Nan Fung Subscription will (subject to limited exceptions) be terminated, and, unless otherwise
agreed by the parties, neither the Company nor Spring Glory will have any claim against the other
(save for those arising out of antecedent breach).
The minimum gross proceeds of HK$5.5 billion (equivalent to approximately RMB4.3 billion)
as stated in condition (B)(i) above was determined based on the reasons set out on page 10 of this
circular.
Each of the Company and Spring Glory will use its reasonable endeavours to fulfill the
conditions set out above. As at the Latest Practicable Date, to the best of the Company’s knowledge
and after due enquiries, none of the parties had any intention to waive any conditions under the Nan
Fung Subscription Agreement and none of the conditions in the Nan Fung Subscription Agreement had
been fulfilled. The Company would only consider waiving condition (B)(i) above if and only if either
the China Life Subscription or the Nan Fung Subscription is not approved at the EGM and there are
uncontrollable market conditions arises such as a substantial decrease in the market price of the Shares
compared to the price per Share under the Nan Fung Subscription. Further, in considering whether to
waive the above conditions, the Company will carefully consider the reason(s) of the inability to fulfill
such condition, the materiality of such non-fulfillment and the impact it will have on the Company and
the transactions under the Nan Fung Subscription Agreement, and the decision to waive any condition
will only be made if the Board considers that it is in the best interest of the Company and the
Shareholders as a whole. The Nan Fung Subscription is not conditional on the China Life Subscription,
however the Company intends to complete the Subscription simultaneously.
Completion:
Completion of the Nan Fung Subscription will take place on the Completion Date, being the
second Business Day following the date on which all conditions precedent in the Nan Fung
Subscription Agreement as mentioned above are fulfilled or waived or such other date as the Company
and Spring Glory may agree.
Restriction on disposal:
Spring Glory has undertaken that it will not during the two-year period commencing on the
Completion Date, dispose of or otherwise create any options, rights, interests or encumbrances in
respect of, any of the 686,611,211 Shares subscribed under the Nan Fung Subscription Agreement or
any beneficial or other interests therein, provided that Spring Glory will not be prevented from
transferring such Shares to any of its Affiliates (the “Permitted Nan Fung Transferees”) where:
(i) Spring Glory shall only effect the proposed transfer to any Permitted Nan Fung
Transferee(s) by giving a written notice to the Company with 14 Business Days in advance
of the proposed transfer date;
LETTER FROM THE BOARD
— 15 —
(ii) Spring Glory will be responsible for ensuring that the Permitted Nan Fung Transferees will
comply with the above restriction on disposal and undertake in writing to the Company that
they will be bound by the terms of the Nan Fung Subscription Agreement as if they were
named as the subscriber therein; and
(iii) if at any time prior to the expiry of the two-year period commencing on the Completion
Date, any of the Permitted Nan Fung Transferees ceases to be an Affiliate of Spring Glory,
such Permitted Nan Fung Transferee shall (and Spring Glory shall procure that it shall),
before ceasing to be an Affiliate of Spring Glory, fully and effectively transfer its entire
interest in any Subscription Shares to Spring Glory.
Board representation:
Upon Completion, for so long as Spring Glory together with its Affiliates hold no less than 16%
of the total issued share capital of the Company, Spring Glory will have the right to nominate an
executive Director to the Board (in addition to the non-executive Director nominated by the Nan Fung
Group to the Board), subject to compliance with the requirements for directors under the applicable
laws, regulations, the Listing Rules and the Takeovers Code. The Company will, subject to compliance
with laws, regulations, the Listing Rules, the Takeovers Code and the articles of association of the
Company, procure such person nominated be appointed as a Director of the Board as soon as
practicable. The shareholding of 16% that Spring Glory and its Affiliates shall maintain before it can
nominate the new executive Director was a commercial decision determined with reference to the
existing shareholding structure of the Company prior to the Subscriptions and based on arm’s length
negotiations between the Company and Spring Glory. Such nomination right of an executive Director
is not in breach of the articles of association of the Company.
The Directors consider that the right to nominate an executive Director can help strengthen and
diversify the composition of the Board and enhance oversight on the Board. The Board is currently
made up of Directors with backgrounds mainly from the property industry in the PRC, and the Nan
Fung Group is very experienced in developing high-end residential project in Hong Kong with well
managed site planning experience. The addition of an executive Director nominated by the Nan Fung
Group (if appointed) who would be involved in the day-to-day management of the Company could
greatly assist the Board by sharing his/her experience in high-end residential property projects in
Hong Kong.
LETTER FROM THE BOARD
— 16 —
The right to nominate an executive Director by Spring Glory is the same right available to all
Shareholders as provided in the articles of association of the Company and for the same reasons about
the nomination procedures and the retirement and appointment procedures as set out the in the section
“China Life Subscription Agreement — Board representation” above, the Directors do not consider
granting of such right is a preferential treatment to Spring Glory.
SPECIFIC MANDATE TO ISSUE THE SUBSCRIPTION SHARES
The Subscription Shares represent approximately 22.21% of the issued share capital of the
Company as at the Latest Practicable Date, and approximately 18.17% of the issued share capital of
the Company as enlarged by the allotment and issue of the Subscription Shares (assuming no other
Shares will be issued prior to Completion).
The Company will seek the Specific Mandate from the Independent Shareholders at the EGM for
the allotment and issue of the Subscription Shares.
The Subscription Price was determined with reference to the prevailing market price of the
Shares and was negotiated on an arm’s length basis between the Company and each of China Life and
Spring Glory respectively. The Subscription Price represents (i) a premium of approximately 1.72%
to the closing price of HK$4.66 per Share as quoted on the Stock Exchange on 27 September 2013,
being the date of the Subscription Agreements; (ii) a premium of approximately 1.41% to the average
closing price of HK$4.67 per Share as quoted on the Stock Exchange for the last five consecutive
trading days up to and including 27 September 2013; (iii) a premium of approximately 0.77% to the
average closing price of HK$4.70 per Share as quoted on the Stock Exchange for the last 20
consecutive trading days up to and including 27 September 2013; (iv) a discount of approximately
1.04% to the closing price of HK$4.79 per Share as quoted on the Stock Exchange as at the Latest
Practicable Date; and (v) a discount of approximately 38.91% to the net asset value of the Company
of HK$7.76 as at 30 June 2013.
APPLICATION FOR LISTING
Application will be made by the Company to the Stock Exchange for the listing of and
permission to deal in the Subscription Shares.
LETTER FROM THE BOARD
— 17 —
LR14A.59(2)(b)
EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY
Set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date;
and (ii) immediately after completion of the Subscriptions (assuming no other Shares will be issued
prior to Completion):
Name of ShareholdersShareholding as at the Latest
Practicable DateShareholding immediately aftercompletion of the Subscriptions
Number of Shares Approximate % Number of Shares Approximate %
China Life (Note i) 1,477,595,944 24.81% 2,113,537,911 29.04%
Mr. Chen Din Hwa
(deceased) (Note ii) 840,158,610 14.11% 1,526,769,821 20.98%
Other Public Shareholders 3,637,603,382 61.08% 3,637,603,382 49.98%
Total 5,955,357,936 100.00% 7,277,911,114 100.00%
Notes:
i. The 1,477,595,944 Shares were registered in the name of, and beneficially owned by, China Life. China Life Group was
interested in 68.37% of China Life and was deemed to be interested in these Shares by virtue of the SFO.
ii. Mr. Chen Din Hwa (deceased) held a long position in 840,158,610 Shares comprising 707,147,893 Shares and
133,010,717 Shares were beneficially owned by Spring Glory and Gavast Estates Limited respectively. Both Spring
Glory and Gavast Estates Limited were wholly-owned by Keymark Associates Limited. Keymark Associates Limited was
wholly-owned by Golden Anchor Holdings Limited. Golden Anchor Holdings Limited was wholly-owned by Nan Fung
Group Holdings Limited. Nan Fung Group Holdings Limited was wholly-owned by Nan Fung International Holdings
Limited. Nan Fung International Holdings Limited was wholly-owned by Chen’s Group International Limited, which in
turn was wholly-owned by the estate of Mr. Chen Din Hwa (deceased).
The Directors have taken into account the dilution impact to the public Shareholders pursuant to
the Subscriptions and are satisfied that upon completion of the Subscriptions, the Company can still
meet its public float requirement under the Listing Rules. Further, although upon completion of the
Subscriptions, the net asset value per Share and the earnings per Share will be diluted, for the reasons
as disclosed in the section headed “Reasons for the Subscriptions” below, the Subscriptions will bring
strategic benefits to the Company and improve the capital structure of the Company which will help
the Company maintain a stable and sustainable growth and enhance the value of the Company in the
long term.
EQUITY FUND-RAISING ACTIVITIES IN THE PAST TWELVE MONTHS
The Company has not conducted any equity fund-raising activities in the past twelve months
before the date of the Announcement.
LETTER FROM THE BOARD
— 18 —
REASONS FOR THE SUBSCRIPTIONS
Strengthen the financial position of the Company
Under prevailing market conditions, the Board believes that the Subscriptions will strengthen the
Company’s financial position and allow the Company to raise needed funds at a reasonable cost to
support the Group’s existing operations and enhance its flexibility to make further investments as and
when opportunities arise. The Subscriptions further optimizes the Group’s capital structure, which
could result in the improvement of the credit profile of the Company and lowering of the Group’s
future financing costs.
The Board believes that with greater support from the Company’s two largest Shareholders, it can
provide the Company with greater opportunities for property development projects and can benefit the
Company when it comes to both onshore and offshore external financing. The Board believes the
substantial increase in the shareholding in the Company by China Life (being one of the largest
state-owned enterprises in the PRC) and the Nan Fung Group (being a highly reputable property
developer in Hong Kong with strong and reputable financing background), can demonstrate to both
onshore and offshore banks that the Company has a strong and stable shareholding structure, which
the Board believes is conducive to enhancing the market image of the Company and providing greater
confidence to banks to provide the Company with the financing it needs on more favorable terms.
Strengthen the strategic relationship of the Shareholders
The Subscriptions would bring strategic value and business opportunities to the Company
through the development of closer ties with China Life and the Nan Fung Group. In particular, the
Board believes that the China Life Subscription would allow the Group to strengthen its strategic
cooperation with China Life in various areas. On 18 October 2013, the Company entered into a
non-legally binding memorandum of understanding (the “MOU”) with China Life Group for a period
of 5 years, in relation to exploring various potential areas of possible cooperation between the parties,
including but not limited to: (i) cooperation in strengthening the Company’s capital and debt structure;
(ii) cooperation in the real estate industry, whereby in the event China Life Group purchases
owner-occupied properties, projects developed by the Company would be firstly considered if China
Life Group’s requirements or needs are satisfied, and China Life Group and the Company shall further
explore the possibilities of cooperating in the construction of livelihood projects and urbanization
projects, and the joint investment and management of commercial real estate projects; and (iii)
cooperation in the elderly care industry, whereby the Company and China Life Group shall work
together to explore cooperation opportunities and share their experience in the elderly care industry.
The Directors believe that after the China Life Subscription, there will be greater opportunities
in the future where the Company can cooperate with China Life to enter into projects where the
Company can leverage on China Life’s expertise, experiences and reputation in financing negotiations
and give the Company greater bargaining power to obtain the best possible borrowing terms to meet
the financial needs for its future projects and help the Company reduce its finance costs.
LETTER FROM THE BOARD
— 19 —
LR14A.58(1)LR14A.59(13)
The Board believes that the Nan Fung Subscription will lead to greater strategic cooperation
between the Company and the Nan Fung Group in terms of the greater investment opportunities by the
Group in residential property development projects in Hong Kong and the PRC. With the Nan Fung
Group’s over 40 years of experience in real estate development in Hong Kong, in particular high-end
residential properties with well managed site planning, the Board believes that in respect of future
potential cooperation on a project level with the Nan Fung Group, the Company can leverage on the
Nan Fung Group’s experience in the residential property development and well-established
relationships with international designers and suppliers in the development of high-quality residential
properties in the PRC.
The Board believes that greater cooperation with China Life and the Nan Fung Group can
improve the Company’s market competitiveness and can develop a sustained long-term growth. The
Board believes that with China Life and the Nan Fung Group increasing their shareholding in the
Company from approximately 24.81% to 29.04% and from approximately 14.11% to 20.98%,
respectively, there would be greater alignment of interest between the China Life and the Company
and between the Nan Fung Group and the Company. China Life and the Nan Fung Group will have
greater incentive in achieving the sustained growth of the Group and enhancing Shareholders’ value
in the medium to long term by becoming more involved with the Company’s business, which can bring
about greater strategic value and provide more business opportunities for the Company.
In the event the Company and China Life or the Nan Fung Group agree to enter into specific
projects, the Company will enter into individual agreements with China Life or the Nan Fung Group
(as the case may be), and such transactions will constitute connected transactions for the Company
under Chapter 14A of the Listing Rules. The Company will comply with the applicable announcement
and/or shareholders’ approval requirements in respect of such transactions.
As at the Latest Practicable Date, the Company has no intention in issuing any further Shares to
each of China Life and the Nan Fung Group upon Completion. Other than the CBD Project and Dalian
Project, the Group have also entered into joint venture with 中國人壽資產管理有限公司 (China Life
Insurance Asset Management Company Limited) and 國壽投資控股有限公司 (China Life Investment
Holdings Limited), both a subsidiary of China Life Group, in relation to commercial property
development projects located at Central Business District, East Third Ring Road, Chaoyang District,
Beijing, the PRC. As at the Latest Practicable Date, save as disclosed in this circular, the Group has
not engaged in any specific joint venture with China Life or the Nan Fung Group.
The Subscriptions are the most suitable fund-raising method to the Company at this current time
The Directors have considered various other means of financing, including debt financings by
way of bank borrowings or issue of bonds and equity financings by way of placement of new Shares
to independent investors or a rights issue or open offer.
LETTER FROM THE BOARD
— 20 —
Debt financings
As bank borrowing or issue of bonds will generate additional finance costs to the Group, increase
the gearing ratio of the Group and affect adversely the cash flow position of the Group, the Directors
preferred equity financing to debt financing to maintain its capital structure at an optimal and
sustainable level.
Alternative equity financings
The Directors have also considered alternative equity financings which would not affect the debt
position of the Group, including a private placement of Shares to independent third party investors or
a rights issue or open offer to existing Shareholders.
The Directors expected the amount of fund raised through a private placement is limited,
especially given the Subscription Price was at premium over market price of the Shares prior to the
Announcement, which might not be attractive to independent third party investors since they could
purchase Shares on market at a lower price. In addition, a private placement has a similar dilutive
effect as the Subscriptions, as far as the Independent Shareholders are concerned. Moreover, a private
placement to third party investors could not bring strategic value and business opportunities to the
Company through the development of closer ties with China Life and the Nan Fung Group as the
Subscriptions does.
As regards to a rights issue or open offer, which will give an opportunity to all Shareholders to
participate in the subscription for new Shares to be issued by the Company on a pro rata basis, the
Directors have considered such factors as (i) the extra underwriting fees and arrangement costs; (ii)
the price of a rights issue or open offer normally involving a substantial discount to market price; (iii)
longer timetable to complete; and (iv) the lack of certainty in the successful implementation of a rights
issue or open offer. On this basis, the Company consider other equity financing methods to be less
optimal than the Subscriptions for the Group to raise additional fund for the development of the
Group.
Taking into account of (i) the potential strategic benefits as a result of increasing the
shareholding of China Life and the Nan Fung Group as the two largest Shareholders of the Company,
and (ii) the pros and cons of other alternative financing methods which the Directors have considered,
the Board believes that the fund raising by way of the Subscriptions is currently the best available
option of financing for the Company, and is fair and reasonable and in the interests of the Company
and the Shareholders as a whole.
The Board considers that China Life and the Nan Fung Group are the most suitable parties for
the Subscriptions because of the following reasons: (i) as the Subscription Shares will be issued at a
premium with a two year lock-up period, if the Subscription Shares were to be open to the public, it
may be difficult for the investors to accept those terms; and (ii) by issuing Shares to the two major
Shareholders of the Company, the Company can create greater synergy between the Company and each
of China Life and the Nan Fung Group as explained above which can be beneficial to the Company’s
future development.
LETTER FROM THE BOARD
— 21 —
In light of (i) the Company’s target to complete the Acquisition under the Master Acquisition
Agreement by December 2013; (ii) the increased working capital requirements of the Company as
financial year-end approaches to pay for, among other things, outstanding payables and salaries and
bonus payments to the Group’s employees; (iii) the Company’s plan to replenish its land bank in the
short-term in order to satisfy its development needs over the next few years; and (iv) favourable
market conditions, the Company considers that it is opportune time to conduct the Subscriptions.
USE OF PROCEEDS
The gross proceeds of the Subscriptions will be approximately US$808 million (equivalent to
approximately RMB4,945 million). The net proceeds (after deducting all applicable costs and
expenses of the Subscriptions) of approximately US$804 million (equivalent to approximately
RMB4,920 million) (being a net subscription price of approximately HK$4.72 per Share) from the
Subscriptions where the Board intends to use approximately one-third of the net proceeds in an amount
of US$265 million (equivalent to approximately RMB1,622 million) to acquire the remaining interests
in the CBD Project and the Dalian Project; approximately one-third of the net proceeds in an amount
of US$269 million (equivalent to approximately RMB1,646 million) for financing new potential
projects; and approximately one-third of the net proceeds in an amount of US$270 million (equivalent
to approximately RMB1,652 million) for general working capital purposes of the Group, which
include payment of interests, taxes, selling and marketing and other administrative expenses. The
Board is of the view that it is more cost-efficient for these non-project specific expenses to be settled
by the net proceeds from the Subscriptions, instead of through proceeds from sales of properties
(which are generally used for further funding of the projects and repayment of bank borrowings in
respect of the projects) or bank borrowings (which are normally project-specific).
The gross proceeds of the Subscriptions will be used to strengthen the Company’s equity in the
long run as well as ensure the Company’s stable operation. The Company had paid the amount of
US$574 million (equivalent to approximately RMB3,513 million) for redemption of all the
outstanding balance of Perpetual Convertible Securities as at 30 June 2013, by the end of September
2013, which has resulted in reduced available cash on hand and limited the Company’s development
in new projects. As at 30 September 2013, the Company had cash on hand of approximately RMB13.9
billion (including restricted bank deposits of approximately RMB8.3 billion). As such, the gross
proceeds from the Subscriptions will help the Company in maintaining a healthy financial level
required for the Company’s future investment in new projects while maintaining a relatively stable
gearing ratio.
When determining what new projects to be invested into by using the proceeds from the
Subscriptions, the Board will consider and look for the following factors: (i) strategic focus on cities
which the Company have entered and created an established local network such as those in first and
second tier cities like Beijing, Shenzhen and Zhongshan where the Company can gain more quality
land reserves for property operations and for the long term business structure of the Company; (ii)
medium size projects with gross floor area of approximately 500,000 square metres to 800,000 square
metres, that can have a higher asset turnover with better return and liquidity; and (iii) focus on new
urbanization and redevelopment of old towns that can create passive demands through land bidding
or collaboration with local partners.
LETTER FROM THE BOARD
— 22 —
As at the Latest Practicable Date, the Company had not engaged in any negotiations, had not
signed any contracts, had not identified any targets for new projects and had not made any specific
plans for new projects.
The aggregate nominal value of the Subscription Shares will be HK$1,058,042,542 (equivalent
to RMB833,104,364). The Subscription Shares, when fully paid, will rank pari passu in all respects
among themselves and with the Shares in issue on the date of allotment and issue of the Subscription
Shares.
(2) DISCLOSEABLE AND CONNECTED TRANSACTION - MASTER ACQUISITION
AGREEMENT
Date:
27 September 2013
Parties:
Fame Gain and Nan Fung China
Subject matter:
Subject to the terms and conditions of the Master Acquisition Agreement, Nan Fung China agreed
to sell or to procure the sale of, and Fame Gain agreed to purchase or to procure the purchase of:
(i) in respect of the CBD Project, 1,000 ordinary shares of US$1.00 per share of Target
Company One, representing the entire issued share capital of Target Company One, together
with the corresponding shareholder’s loan advanced by the Nan Fung Group to Target
Company One, free from any claims, encumbrances and third parties’ rights together with
all rights accrued thereto on the Acquisition Completion Date; and
(ii) in respect of the Dalian Project, (i) 24,667,288 ordinary shares of Target Company Two,
representing approximately 14.29% of the entire issued share capital of Target Company
Two, (ii) 21,550,621 ordinary shares of Target Company Three, representing approximately
14.29% of the entire issued share capital of Target Company Three, (iii) 26,166,124
ordinary shares of Target Company Four, representing approximately 10.00% of the entire
issued share capital of Target Company Four, and (iv) 21,850,038 ordinary shares of Target
Company Five, representing approximately 10.00% of the entire issued share capital of
Target Company Five, together with the corresponding shareholder’s loan advanced by the
Nan Fung Group to each of them, free from any claims and encumbrances and third parties’
rights together with all rights accrued thereto on the Acquisition Completion Date.
LETTER FROM THE BOARD
— 23 —
LR14A.59(2)(a)/(d)
LR14A.58(1)
Consideration:
The total consideration payable by the Purchaser to the Vendor for the CBD Interests and the
Dalian Interests on the Acquisition Completion Date is US$314 million (equivalent to approximately
RMB1,922 million), of which US$154 million (equivalent to approximately RMB942 million) is
payable for the CBD Interests and US$160 million (equivalent to approximately RMB979 million) is
payable for the Dalian Interests, and will be satisfied in cash received from proceeds of the
Subscriptions and from bank borrowings in the amount of US$265 million (equivalent to
approximately RMB1,622 million) and US$49 million (equivalent to approximately RMB300 million),
respectively.
Signing of Individual Agreements:
The parties to the Master Acquisition Agreement shall as soon as practicable execute (or procure
the Vendor and the Purchaser to execute) all individual supplemental agreements (“IndividualAgreements”) desirable in respect of the Acquisition upon and subject to the terms and conditions of,
and provided that they do not contradict, the Master Acquisition Agreement.
Conditions precedent:
Completion of the Acquisition shall be conditional upon:
(i) each of the representations and warranties made by the Vendor in respect of the Acquisition
in the Master Acquisition Agreement and/or in any Individual Agreement shall have been
accurate in all respects as at the date on which they are said to be made and shall be
accurate in all respects;
(ii) each of the covenants and obligations made by the Vendor in respect of the Acquisition or
the Target Company One in the Master Acquisition Agreement and/or in any Individual
Agreement that are required to comply with or perform at or prior to the completion of the
Acquisition shall have been complied with or performed in all respects;
(iii) each party to the Master Acquisition Agreement and/or any Individual Agreement shall have
performed in all material respects all other obligations and covenants required to be
performed by it under the Master Acquisition Agreement and/or such Individual Agreement
prior to or as of the Acquisition Completion Date;
(iv) all actions necessary to authorize the execution, delivery and performance of the Master
Acquisition Agreement and any Individual Agreement by each party thereto and the
consummation of the Acquisition shall have been duly and validly taken by such party and
such party shall have full power and right to consummate the Acquisition on the terms
provided in the Master Acquisition Agreement and any Individual Agreement;
(v) the Company has complied with all disclosure requirements under the Listing Rules in
respect of the Master Acquisition Agreement and the Acquisition;
LETTER FROM THE BOARD
— 24 —
LR14A.59(2)(b)/(c)
(vi) the Independent Shareholders having approved the Master Acquisition Agreement and the
Acquisition in the EGM;
(vii) the subscription of Shares pursuant to the Nan Fung Subscription Agreement has been
completed;
(viii) since the date of the Master Acquisition Agreement, there has not been any change, event
or development that, individually or in the aggregate, has had a material adverse effect on
the condition, financial or otherwise, or on the earnings, business affairs, trading position
or prospects of the Target Company One and Super Goal as a whole, whether or not arising
in the ordinary course of business;
(ix) the Purchaser shall have completed all business, legal, financial, regulatory and tax due
diligence of the Target Company One and Super Goal to its satisfaction in its sole discretion
and opinion; and
(x) all such other third party consents as may be required in connection with the transactions
described herein being duly obtained by the Nan Fung Group to the reasonable satisfaction
of the Purchaser.
The parties shall (and Fame Gain and Nan Fung China shall procure the parties to the Individual
Agreements to) use all of their reasonable endeavours to satisfy the conditions set out above and all
other conditions (if any) contained in the Individual Agreements on or before 27 November 2013 or
such later date as may be agreed between the parties. The Purchaser may in its sole discretion waive
in writing in whole or in part all or any of the conditions precedents set out above (save for conditions
(v) and (vi)).
As at the Latest Practicable Date, the Purchaser had no intention to waive any conditions under
the Master Acquisition Agreement and none of the conditions in the Master Acquisition Agreement had
been fulfilled. In considering whether to waive the above conditions, the Company will carefully
consider the reason(s) of the inability to fulfill such condition, materiality of such non-fulfillment and
the impact it will have on the Company and the transactions under the Master Acquisition Agreement,
and the decision to waive any condition will only be made if the Board considers that it is in the best
interest of the Company and the Shareholders as a whole.
Completion:
Completion of the Acquisition shall take place on the Acquisition Completion Date, being second
Business Day following the date on which all conditions precedent are fulfilled or waived or at such
other date as the parties may agree.
LETTER FROM THE BOARD
— 25 —
REASONS FOR AND BENEFITS OF THE MASTER ACQUISITION AGREEMENT
As at the Latest Practicable Date, (i) the Group and the Nan Fung Group effectively owns an
interest of 80% and 20% in the CBD Project, respectively; and (ii) the Group and the Nan Fung Group
effectively owns an interest of approximately 90% and 10% in the Dalian Project, respectively.
Pursuant to the Acquisition, the Group will effectively acquire from the Nan Fung Group its 20%
interests in the CBD Project and approximately 10% interests in the Dalian Project, thereby obtaining
100% control of the CBD Project and the Dalian Project. The Master Acquisition Agreement will allow
the Group to consolidate its position in one of the Group’s key commercial properties in CBD area of
Beijing and one of the Group’s flagship projects in Dalian in PRC. The Acquisition would also
increase the Group’s interest in land bank, improve the efficiency of the decision-making process and
the implementation of plans in respect of the CBD Project and the Dalian Project, which is in the
interests of the Company and the Shareholders as a whole.
The basis for the consideration for the Acquisition was determined by reference to the market
value of the CBD Project and the Dalian Project, plus a discount to the market value decided after an
arm’s length negotiation between the Group and the Nan Fung Group.
Upon completion of the Acquisition, should there be any additional development costs in regards
to the CBD Project or the Dalian Project, the Company expects to fund such additional development
costs primarily with bank development loans with supplement of a small amount of shareholders
entrusted loans.
DIRECTORS’ CONFIRMATION
The Directors (including the independent non-executive Directors) are of the view that the
Subscription Agreements (including the Subscription Price) and the Master Acquisition Agreement
have been entered into on normal commercial terms that are fair and reasonable and is in the interests
of the Company and the Shareholders as a whole.
Mr. Cheung Vincent Sai Sing, a non-executive Director nominated by the Nan Fung Group,
having material interest in the Nan Fung Subscription and the Acquisition, has abstained from voting
on the Board resolutions for considering and approving the Nan Fung Subscription Agreement and the
Master Acquisition Agreement and has voluntarily abstained from voting on the Board resolution for
considering and approving the China Life Subscription Agreement. Ms. Liu Hui and Mr. Yang Zheng,
being non-executive Directors nominated by China Life, having material interest in the China Life
Subscription, have abstained from voting on the Board resolutions for considering and approving the
China Life Subscription Agreement and have voluntarily abstained from voting on the Board
resolutions for considering and approving the Nan Fung Subscription Agreement and the Master
Acquisition Agreement. Save as disclosed above, none of the Directors has a material interest in the
Subscriptions or the Acquisition or is required to abstain from voting on the Board resolutions for
considering and approving the Subscription Agreements, the Master Acquisition Agreement and the
transaction contemplated thereunder pursuant to the Listing Rules and/or the articles of association of
the Company.
LETTER FROM THE BOARD
— 26 —
LR14A.58(1)
LR14A.59(13)
LR14A.59(18)
INFORMATION ON THE GROUP
The Group is one of the leading property developers in Beijing and the Pan-Bohai Rim and
actively accomplishing the Group’s national strategic plan with a coastal and riparian focus. The
Group focuses on developing mid-to-high end residential properties, high-end office premises and
retail properties.
INFORMATION ON THE SUBSCRIBERS AND NAN FUNG CHINA
China Life is a state-owned enterprise in the PRC under the supervision of China Insurance
Regulatory Commission, Organization Department of the Central Committee of the Communist Party
of the PRC (中共中央組織部中國保險監督管理委員會). China Life is listed on the Stock Exchange,
the New York Stock Exchange and the Shanghai Stock Exchange, respectively. It is the largest
insurance company in the PRC and is ranked 111th of the “Fortune 500” companies in 2013. It is also
one of the largest institutional investors in the PRC.
Each of Spring Glory and Nan Fung China is an investment holding company and a member of
the Nan Fung Group, which is principally engaged in the business of property development, property
investment, construction, property management, investment and financing.
To the best knowledge, information and behalf of the Directors, having made all reasonable
enquiries, other than China Life and the Nan Fung Group being Shareholders of the Company, there
is no relationship between China Life and the Nan Fung Group and/or their associates.
INFORMATION ON THE TARGET COMPANIES
Corporate information of the Target Companies
Each of the Target Companies is an investment holding company.
Target Company One holds 100% issued share capital of Super Goal, a company incorporated in
Hong Kong and which in turn holds 20% registered capital of 北京天江通睿置業有限公司 (Beijing
Skyriver CBD Property Co., Ltd.), which in turn is the legal owner of the CBD Project.
Target Company Two is the registered and beneficial owner of the entire issued share capital of
Always Win Holdings Limited, which in turn holds 70% registered capital of 大連新悅置業有限公司(Dalian Xinyue Properties Co., Ltd.). Target Company Three is the registered and beneficial owner of
the entire issued share capital of Champion Central Investment Limited, which in turn holds 70%
registered capital of 大連廣宇置業有限公司 (Dalian Guangyu Properties Co., Ltd.). Target Company
Four is the registered and beneficial owner of the entire issued share capital of Leader United Holdings
Limited, which in turn holds 100% registered capital of 大連潤峰置業有限公司 (Dalian Runfeng
Properties Co., Ltd.) and 大連聖基置業有限公司 (Dalian Shengji Properties Co., Ltd.). Target
Company Five is the registered and beneficial owner of the entire issued share capital of Stay Smart
Limited, which in turn holds 100% registered capital of 大連永圖置業有限公司 (Dalian Yongtu
Properties Co., Ltd.) and 大連至遠置業有限公司 (Dalian Zhiyuan Properties Co., Ltd.).
LETTER FROM THE BOARD
— 27 —
LR14A.59(2)(a)
LR14A.59(2)(b)
大連新悅置業有限公司 (Dalian Xinyue Properties Co., Ltd.), 大連廣宇置業有限公司 (Dalian
Guangyu Properties Co., Ltd.), 大連潤峰置業有限公司 (Dalian Runfeng Properties Co., Ltd.), 大連聖基置業有限公司 (Dalian Shengji Properties Co., Ltd.), 大連永圖置業有限公司 (Dalian Yongtu
Properties Co., Ltd.) and 大連至遠置業有限公司 (Dalian Zhiyuan Properties Co., Ltd.) collectively
are the legal owners of the Dalian Project.
Pursuant to the Acquisition, the Group will effectively acquire from the Nan Fung Group its 20%
interests in the CBD Project and approximately 10% interests in the Dalian Project.
Details of the CBD Project and the Dalian Project are set out below:
Project name Location of project Project descriptionTotal GFA(planned)
CBD Project Plot Z6, Guanghua Road,
Chaoyang District, Beijing,
the PRC
Commercial
properties
Approximately
250,000 sq.m.
Dalian Project Plots A, B, C and E, Ocean
Diamond Bay,
East of Gongxing Street and
Dongbei Road,
South of Dongfang Road,
Ganjingzi District, Dalian,
Liaoning Province, the PRC
Residential and retail
complex
Approximately
2,100,000 sq.m.
As at the Latest Practicable Date, in relation to the CBD Project, the properties are generally
either vacant sites pending for development or are at an early stage of construction. The land use rights
of the properties have been granted for commercial use for 40 years and for composite use for 50
years, commencing on the issue date of the land grant contract. The land premium has been fully
settled and the application of state-owned land use rights certificate has been submitted, which is
expected to be obtained in the first quarter of 2014. The Directors expect construction on the
properties of the CBD Project to commence before 1 August 2014 and construction to be completed
before 1 August 2017. In order to obtain the relevant state-owned land use rights certificate in respect
of the CBD Project, the relevant procedures described in Note (4) to the section “Properties held by
the Group under or for development in the PRC” on page 66 of the Property Valuation Report in
Appendix I to this circular must be complied with. Based on the advice of the Company’s PRC legal
adviser, Grandall Law Firm (Beijing), on the basis of such procedures being complied with, there is
no legal impediment in obtaining the state-owned land use rights certificate.
LETTER FROM THE BOARD
— 28 —
As at the Latest Practicable Date, in relation to the Dalian Project, Plots A and B have been
issued with state-owned land use rights certificates and are currently being developed, of which the
property located on Plots A1, A2, A3, B1 and B2 have been pre-sold. With regards to Plots C and E,
the Notifications of Confirmation of Successful Bid have been issued and part of the required land
premium and related fees have been paid, but developments have not yet begun and the remaining land
grant contracts, state-owned land use rights certificates and planning permits for construction use of
land are expected to be obtained in the first half of 2014. The Directors expect construction to be
completed on Plots A and B (except Plots A4, A5 and B4) in 2014 and 2015, respectively and with
regards to the remaining Plots, the Directors expect construction to commence in the second half of
2014 and to be completed at the end of 2017. Based on the advice of the Company’s PRC legal adviser,
Grandall Law Firm (Beijing), on the basis that the relevant procedures of applying for state-owned
land use rights certificates described in Note (13) to the section “Properties held by the Group under
or for development in the PRC” on page 75 of the Valuation Report in Appendix I to this circular, are
complied with, there will be no legal impediment in obtaining the land use rights certificates of Plots
C and E.
The shareholding structure of the Target Companies before the Acquisition Completion Date are
as follows:
Target Company One
100%
100%
20%
100%
80%
Nan Fung China
(BVI)Company
遠洋地產有限公司(Sino-Ocean
Land Limited)
(PRC)
北京天江通睿置業有限公司(Beijing Skyriver CBD Property Co., Ltd.)
(PRC)
CBD Project
Target Company One
(BVI)
Super Goal
(HK)
LETTER FROM THE BOARD
— 29 —
The
shar
ehol
ding
stru
ctur
eof
the
Tar
get
Com
pani
esbe
fore
the
Acq
uisi
tion
Com
plet
ion
Dat
ear
eas
foll
ows
(con
tinu
ed):
Tar
get
Com
pan
yT
wo,
Tar
get
Com
pan
yT
hre
e,T
arge
tC
omp
any
Fou
ran
dT
arge
tC
omp
any
Fiv
e
100%
100%
100%
100%
10
0%
10%
90%
10%
85
.71
%1
4.2
9%
90%
14.2
9%
85.7
1%
100%
100%
10
0%
10
0%
10
0%
10
0%
70
%3
0%
100%
100%
100%
100%
70
%3
0%
Sta
y S
mar
t
Lim
ited
(HK
)
Lea
der
Un
ited
Ho
ldin
gs
Lim
ited
(HK
)
Alw
ays
Win
Ho
ldin
gs
Lim
ited
(HK
)
Ch
amp
ion
Cen
tral
Inv
estm
ent
Lim
ited
(HK
)
Tar
get
Co
mp
any
Fiv
e
(BV
I)
Tar
get
Co
mp
any
Four
(BV
I)
Tar
get
Co
mp
any
Tw
o
(BV
I)
Tar
get
Co
mp
any
Thre
e
(BV
I)
Su
per
b J
oy
Lim
ited
(BV
I)
Ch
eer
Mo
tio
n
Lim
ited
(BV
I)
Tre
asu
re S
ou
rce
Gro
up
Ltd
.
(BV
I)
Th
e C
om
pan
yN
an F
un
g
Ch
ina
(BV
I)
Ach
iev
e R
ay
Lim
ited
(BV
I)
Neo
Lin
kag
e
Lim
ited
(BV
I)
北京市天麟房
地產開發有限公司
(Bei
jin
g T
ian
lin
Rea
l E
stat
eD
evel
op
men
tC
o.,
Ltd
.)(P
RC
)
北京遠坤房
地產開發有限公司
(Bei
jin
g Y
uan
ku
n
Rea
l E
stat
e D
evel
op
men
tC
o.,
Ltd
.)
(PR
C)
大連新悅置業
有限公司
(Dal
ian
Xin
yu
e
Pro
per
ties
Co
.,
Ltd
.)
(PR
C)
大連至遠置業
有限公司
(Dal
ian
Zh
iyu
an
Pro
per
ties
Co
.,
Ltd
.)
(PR
C)
大連永圖置業
有限公司
(Dal
ian
Yo
ng
tu
Pro
per
ties
Co
.,
Ltd
.)
(PR
C)
大連聖基置業
有限公司
(Dal
ian
Sh
eng
ji
Pro
per
ties
Co
.,
Ltd
.)
(PR
C)
大連潤峰置業
有限公司
(Dal
ian
Ru
nfe
ng
Pro
per
ties
Co
.,
Ltd
.)
(PR
C)
大連廣宇置業
有限公司
(Dal
ian
Gu
ang
yu
Pro
per
ties
Co
.,
Ltd
.)
(PR
C)
Dal
ian
Pro
ject
-Plo
t
A1/A2/A3/A4/A5
Dal
ian
Pro
ject
-Plo
t
E2/E4/E6
Dal
ian
Pro
ject
-Plo
t
E1/E3/E5
Dal
ian
Pro
ject
-Plo
t
C1/C2/C3
Dal
ian
Pro
ject
-Plo
t
C1/C5
Dal
ian
Pro
ject
-Plo
t
B1/B2/B3/B4/B5
LETTER FROM THE BOARD
— 30 —
Financial information of the Target Companies
Based on the unaudited consolidated accounts of the Target Companies prepared in accordance
with Hong Kong Financial Reporting Standards, the unaudited consolidated net assets or liabilities and
profit or loss of the Target Companies for the years ended 31 December 2011 and 2012 and the six
months ended 30 June 2013 are as follows:
For the financial year ended 31 December 2011:
Unauditedconsolidated
net assets/(liabilities)
(approx.
RMB thousand)
Unauditedconsolidated
profit/(loss) beforetaxation and
extraordinary items(approx.
RMB thousand)
Unauditedconsolidated
profit/(loss) aftertaxation and
extraordinary items(approx.
RMB thousand)
Target Company One (75) (65) (65)
Target Company Two 1,725,300 706 706
Target Company Three 1,506,172 (2,781) (2,781)
Target Company Four 2,614,725 (215) (215)
Target Company Five 2,183,417 (193) (193)
For the financial year ended 31 December 2012:
Unauditedconsolidated
net assets/(liabilities)
(approx.
RMB thousand)
Unauditedconsolidated loss
before taxation andextraordinary items
(approx.
RMB thousand)
Unauditedconsolidated loss
after taxation andextraordinary items
(approx.
RMB thousand)
Target Company One (2,414) (2,339) (2,339)
Target Company Two 1,710,170 (19,897) (19,897)
Target Company Three 1,483,649 (22,524) (22,524)
Target Company Four 2,614,708 (17) (17)
Target Company Five 2,183,398 (19) (19)
LETTER FROM THE BOARD
— 31 —
For the six months ended 30 June 2013:
Unauditedconsolidated
net assets/(liabilities)
(approx.
RMB thousand)
Unauditedconsolidated loss
before taxation andextraordinary items
(approx.
RMB thousand)
Unauditedconsolidated loss
after taxation andextraordinary items
(approx.
RMB thousand)
Target Company One (4,150) (1,775) (1,775)
Target Company Two 1,702,211 (2,811) (2,811)
Target Company Three 1,480,411 (3,237) (3,237)
Target Company Four 2,614,706 (3) (3)
Target Company Five 2,183,362 (35) (35)
As at the Latest Practicable Date, the Nan Fung Group had advanced approximately HK$896
million (equivalent to approximately RMB706 million) as shareholder’s loan to Target Company One
and the Nan Fung Group had not advanced any shareholders’ loan to any of Target Company Two,
Target Company Three, Target Company Four or Target Company Five.
The original investment costs paid by the Vendor in relation to each of the CBD Project and the
Dalian Project amounts to approximately US$128 million (equivalent to approximately RMB783
million) and US$142 million (equivalent to approximately RMB869 million), respectively. As at 30
June 2013, the book value of the CBD Project and the Dalian Project amounts to RMB3,922 million
and RMB7,981 million, respectively. According to DTZ, as at 31 August 2013, the market value or the
valuation of the CBD Project and the Dalian Project amounts to RMB6,300 million and RMB11,850
million, respectively, as such the consideration represents a discount of 25.26% and 17.43%,
respectively.
IMPLICATIONS UNDER THE TAKEOVERS CODE
After completion of the Subscriptions, each of China Life and the Nan Fung Group will hold
more than 20% of the issued share capital of the Company as enlarged by the allotment and issue of
the Subscription Shares. Therefore, China Life and the Nan Fung Group may be considered as parties
“acting in concert” by virtue of being associated companies of the Company under the Takeovers
Code. In this regard, the Executive has confirmed that the presumed concert party relationship
between China Life and the Nan Fung Group in respect of the Company pursuant to class (1) of the
definition of acting in concert under the Takeovers Code which would arise as a result of the
completion of the Subscription(s) is rebutted and no mandatory general offer will be triggered on the
part of China Life or the Nan Fung Group as a result of the Subscriptions even though their aggregate
shareholding increases by more than 2%.
LETTER FROM THE BOARD
— 32 —
LR14A.59(14)
LISTING RULES IMPLICATIONS
As at the Latest Practicable Date, China Life held 1,477,595,944 Shares, representing
approximately 24.81% of the issued share capital of the Company and is a substantial shareholder of
the Company and therefore a connected person of the Company. As at the Latest Practicable Date, the
Nan Fung Group held 840,158,610 Shares, representing approximately 14.11% of the issued share
capital of the Company and is a substantial shareholder of the Company and therefore, Spring Glory,
being a member of the Nan Fung Group, is a connected person of the Company. Accordingly, each of
the Subscriptions constitutes a non-exempt connected transaction of the Company under the Listing
Rules and is subject to the reporting, announcement and independent shareholders’ approval
requirements pursuant to Chapter 14A of the Listing Rules.
Nan Fung China, being a member of the Nan Fung Group, is a connected person of the Company.
As one or more of the applicable percentage ratios of the Acquisition is more than 5% but are all less
than 25%, the Acquisition constitutes a discloseable and connected transaction of the Company under
the Listing Rules and is subject to the reporting, announcement and independent shareholders’
approval requirements pursuant to Chapter 14A of the Listing Rules.
EGM
A notice convening the EGM to be held on Tuesday, 19 November 2013 at 10:00 a.m. at Salon
Room VI, 3/F, JW Marriott Hotel, Pacific Place, 88 Queensway, Hong Kong is set out on pages 82 to
84 of this circular for the purpose of considering and, if thought fit, approve (i) each of the
Subscription Agreements and the transactions contemplated thereunder, including the grant of the
Specific Mandate for the allotment and issue of the Subscription Shares; and (ii) the Master
Acquisition Agreement and the transactions contemplated thereunder.
A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able
to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with
the instructions printed thereon and return it to the Company’s share registrar, Computershare Hong
Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai,
Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof (as the case may be). Completion and return of the
form of proxy will not preclude you from attending and voting in person at the meeting or any
adjournment thereof (as the case may be) if you so wish.
China Life and its associates, being connected persons of the Company and having material
interests in the China Life Subscription, and the Nan Fung Group and its associates, being connected
persons of the Company and having material interests in the Nan Fung Subscription and the
Acquisition (which are different from those of the Independent Shareholders), will abstain from voting
at the EGM on all three resolutions in this regard. As at the Latest Practicable Date, (i) China Life and
its associates held and controlled the voting rights of 1,477,595,944 Shares, representing
approximately 24.81% of the issued share capital of the Company; and (ii) the Nan Fung Group and
its associates held and controlled the voting rights of 840,158,610 Shares, representing approximately
14.11% of the issued share capital of the Company. The results of the voting will be announced in
accordance with Rule 2.07C of the Listing Rules after the EGM.
LETTER FROM THE BOARD
— 33 —
LR14A.59(2)(d)LR14A.59(2)(f)
LR2.17(1)LR14A.59(5)
To the best knowledge, information and belief of the Directors having made all reasonable
enquiries, other than China Life and the Nan Fung Group and their respective associates, there is no
connected person of the Company, any Shareholders or their respective associates with a material
interest in the relevant transactions under the Subscription Agreements and the Master Acquisition
Agreement required to abstain from voting at the EGM.
INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER
The Independent Board Committee has been established to advise the Independent Shareholders
as to whether the terms of the transactions contemplated under the Subscription Agreements and the
Master Acquisition Agreement are fair and reasonable and in the interests of the Company and the
Shareholders as a whole.
Anglo Chinese, the Independent Financial Adviser, has been appointed to advise the Independent
Board Committee and the Independent Shareholders in the same regard.
RECOMMENDATION
Based on the above, the Directors (including the independent non-executive Directors) consider
that the Subscription Agreements and the Master Acquisition Agreement are on normal commercial
terms, and the entering of the Subscription Agreements and the Master Acquisition Agreement are in
the ordinary and usual course of business of the Company, fair and reasonable and in the interests of
the Company and the Shareholders as a whole. Accordingly, the Directors recommend all the
Independent Shareholders to vote in favour of the ordinary resolutions as set out in the notice of the
EGM.
ADDITIONAL INFORMATION
Your attention is also drawn to the additional information set out in the appendices to this
circular and the notice of the EGM.
Yours faithfully,
By order of the Board
Sino-Ocean Land Holdings LimitedLi Ming
Chairman
LETTER FROM THE BOARD
— 34 —
The following is the text of the letter from the Independent Board Committee setting out its
recommendation to the Independent Shareholders in connection with the Subscription Agreements and
the Master Acquisition Agreement and the transactions contemplated thereunder for inclusion in this
circular.
(Stock Code: 03377)
28 October 2013
To the Independent Shareholders
Dear Sir or Madam,
(1) CONNECTED TRANSACTIONS —SUBSCRIPTION OF NEW SHARES BY CONNECTED PERSONS
UNDER SPECIFIC MANDATE
(2) AND CONNECTED TRANSACTION —ACQUISITION OF REMAINING INTERESTS IN TWO PROJECTS
We have been appointed to form the Independent Board Committee to consider and advise the
Independent Shareholders as to our opinion on, the terms of the Subscription Agreements and the
Master Acquisition Agreement and the transactions contemplated thereunder, the details of which are
set out in the circular issued by the Company to the Shareholders dated 28 October 2013 (the
“Circular”), of which this letter forms part. Terms defined in the Circular will have the same
meanings when used herein unless the context otherwise requires.
We wish to draw the attention of the Independent Shareholders to the letter from the Board and
letter of advice from Anglo Chinese, the Independent Financial Adviser, set out on pages 7 to 34 and
pages 37 to 59 of the Circular, respectively.
Having taken into account the principal factors and reasons considered by Anglo Chinese, its
conclusion and advice, we concur with the view of the Independent Financial Adviser and consider
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
— 35 —
LR14A.38(3)(c)LA14A.59(7)
that the Subscription Agreements and the Master Acquisition Agreement are on normal commercial
terms, and the entering of the Subscription Agreements and the Master Acquisition Agreement are in
the ordinary and usual course of business of the Company, fair and reasonable and in the interests of
the Company and the Independent Shareholders as a whole.
Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary
resolutions to be proposed at the EGM to approve the Subscription Agreements and the Master
Acquisition Agreement and the transactions contemplated thereunder.
Yours faithfully,
Independent Board Committee ofSino-Ocean Land Holdings Limited
Tsang Hing LunGu YunchangHan Xiaojing
Zhao KangIndependent non-executive Directors
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
— 36 —
The following is the text of the letter from Anglo Chinese to the Independent Board Committee
and the Independent Shareholders, prepared for the purpose of inclusion in this circular.
To the Independent Board Committee
and the Independent Shareholders
28 October 2013
Dear Sirs,
(1) CONNECTED TRANSACTIONS —SUBSCRIPTION OF NEW SHARES BY CONNECTED PERSONS
UNDER SPECIFIC MANDATE
(2) DISCLOSEABLE AND CONNECTED TRANSACTION —ACQUISITION OF REMAINING INTERESTS IN TWO PROJECTS
INTRODUCTION
We refer to our appointment as the independent financial adviser to advise the Independent Board
Committee and the Independent Shareholders in respect of the Subscription Agreements and the
Master Acquisition Agreement and the transactions contemplated thereunder. Details of which,
amongst other things, are set out in the letter from the Board contained in the circular of the Company
dated 28 October 2013, of which this letter forms part. Terms defined in this circular shall have the
same meanings when used in this letter unless the context requires otherwise.
Reference is made to the Announcement. On 27 September 2013, the Company entered into the
Subscription Agreements with each of China Life and Spring Glory (a member of the Nan Fung
Group), pursuant to which the China Life and Spring Glory conditionally agreed to subscribe for, and
the Company conditionally agreed to allot and issue, a total of 635,941,967 Shares and 686,611,211
Shares, respectively, at the Subscription Price of HK$4.74 per Share. The Subscription Shares are
subject to a lock-up period of two years commencing from the Completion Date.
On 27 September 2013, Fame Gain (an indirect wholly-owned subsidiary of the Company) and
Nan Fung China (a member of the Nan Fung Group) entered into the Master Acquisition Agreement,
pursuant to which Nan Fung China agreed to sell or procure the sale of, and Fame Gain agreed to
purchase or procure the purchase of, 20% interests of the CBD Project and approximately 10%
interests in the Dalian Project.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 37 —
App1, Part B5(3)LR14A.59(8)
As at the Latest Practicable Date, China Life holds 1,477,595,944 Shares, representing
approximately 24.81% of the issued share capital of the Company and is a substantial shareholder of
the Company and therefore a connected person of the Company. As at the Latest Practicable Date, the
Nan Fung Group holds 840,158,610 Shares, representing approximately 14.11% of the issued share
capital of the Company and is a substantial shareholder of the Company and therefore, Spring Glory,
being a member of the Nan Fung Group, is a connected person of the Company. Accordingly, each of
the Subscriptions constitutes a non-exempt connected transaction of the Company under the Listing
Rules and is subject to the reporting, announcement and independent shareholders’ approval
requirements pursuant to Chapter 14A of the Listing Rules.
Nan Fung China, being a member of the Nan Fung Group, is a connected person of the Company.
As one or more of the applicable percentage ratios of the Acquisition is more than 5% but are all less
than 25%, the Acquisition constitutes a discloseable and connected transaction of the Company under
the Listing Rules and is subject to the reporting, announcement and independent shareholders’
approval requirements pursuant to Chapter 14A of the Listing Rules.
An Independent Board Committee comprising all independent non-executive Directors has been
formed to advise the Independent Shareholders in respect of the Subscription Agreements, the Master
Acquisition Agreement and the transactions contemplated thereunder.
Votes of the Independent Shareholders at the EGM shall be taken by poll. China Life, the Nan
Fung Group and their respective associates, being connected persons of the Company and having
material interests in the China Life Subscription, the Nan Fung Subscription and the Acquisition,
respectively, will abstain from voting at the EGM on all three resolutions. Save for the approval from
the Independent Shareholders at the EGM, the Subscription Agreements and the Master Acquisition
Agreement are also subject to the conditions precedent as set out on pages 9 to 11, 13 to 15 and 24
to 25 of this circular.
BASIS OF OUR OPINION
In formulating our opinion, we consider that we have reviewed sufficient and relevant
information and documents and have taken reasonable steps as required under Rule 13.80 of the
Listing Rules including the notes thereto to reach an informed view and to provide a reasonable basis
for our recommendation. We have relied on the information, statements, opinion and representations
contained or referred to in this circular and all information and representations which have been
provided by the Directors, for which they are solely and wholly responsible, are true and accurate at
the time when they were made and continue to be so at the date hereof. We have also assumed that
all statements of belief, opinion and intention of the Directors as set out in the letter from the Board
contained in this circular were reasonably made after due and careful inquiry. We have also sought and
obtained confirmation from the Company that no material facts have been omitted from the
information provided and referred to in this circular.
The Directors confirmed that they have provided us with all currently available information and
documents which are available under present circumstances to enable us to reach an informed view
and we have relied on the accuracy of the information contained in this circular so as to provide a
reasonable basis of our opinion. We have no reason to suspect that any material facts or information,
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 38 —
which is known to the Company, have been omitted or withheld from the information supplied or
opinions expressed in this circular nor to doubt the truth and accuracy of the information and facts,
or the reasonableness of the opinions expressed by the Company and the Directors which have been
provided to us. We have not, however, carried out any independent verification on the information
provided to us by the Directors, nor have we conducted any form of independent in-depth investigation
into the business and affairs or the prospects of the Company, China Life, the Nan Fung Group and
the Target Companies or any of their respective subsidiaries or associates.
Apart from normal professional fees for our services to the Company in connection with this
appointment, no arrangement exists whereby we will receive any benefits from the Company or any
of its associates.
PRINCIPLE FACTORS AND REASONS CONSIDERED
I. THE SUBSCRIPTION AGREEMENTS
In formulating and giving our opinion to the Independent Board Committee and the Independent
Shareholders in respect of the Subscription Agreements and the transactions contemplated thereunder,
we have taken into account the following principal factors:
1. Background of and reasons for the Subscription Agreements
Business and financial information of the Group
The Group is one of the leading property developers in Beijing and the Pan-Bohai Rim and
actively accomplishing its national strategic plan with a coastal and riparian focus. It focuses on
developing mid-to-high end residential properties, high-end office premises and retail properties.
Tabularised below is a summary of the consolidated financial results of the Group as extracted
from the Company’s annual report 2012 and interim report 2013:
Consolidated IncomeStatement
For the six monthsended 30 June
For the yearended 31 December
2013 2012 Change 2012 2011 Change
RMB’000 RMB’000 % RMB’000 RMB’000 %
(unaudited) (unaudited) (audited) (audited)
Revenue 9,097,781 6,758,766 35% 28,657,796 19,896,946 44%
Gross profit 2,187,484 2,057,922 6% 7,699,196 6,257,751 23%
Gross profit margin 24% 30% 27% 31%
Profit attributable owners
of the Company 1,417,056 1,206,489 17% 3,796,032 2,570,657 48%
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 39 —
As at30 June As at 31 December
Consolidated Balance Sheet 2013 2012 2011 Change
RMB’000 RMB’000 RMB’000 %
(unaudited) (audited) (audited)
Total assets 132,358,421 128,304,576 110,285,445 16%
Total equity 40,294,096 42,046,238 38,757,164 8%
Net asset value attributable to
owners of the Company 36,382,316 38,260,437 35,268,424 8%
Total borrowings 32,745,081 32,393,047 33,587,466 -4%
Cash and cash equivalents 7,469,765 10,747,479 8,647,794 24%
Gearing ratio (net debt/total capital) 39% 34% 39%
For the year ended 31 December 2012, the Group recorded revenue of approximately RMB28,658
million and profit attributable to owners of the Company of approximately RMB3,796 million,
representing year-on-year increases of approximately 44% and 48% respectively. For the six months
ended 30 June 2013, the Group recorded revenue of approximately RMB9,098 million and profit
attributable to owners of the Company of approximately RMB1,417 million, representing year-on-year
increases of approximately 35% and 17% respectively.
Business of China Life
China Life is a state-owned enterprise in the PRC under the supervision of China Insurance
Regulatory Commission, Organization Department of the Central Committee of the Communist Party
of the PRC (中共中央組織部中國保險監督管理委員會). China Life is listed on the Stock Exchange,
the New York Stock Exchange and the Shanghai Stock Exchange respectively. It is the largest
insurance company in the PRC and is ranked 111th of the “Fortune 500” companies in 2013. It is also
one of the largest institutional investors in the PRC. As at the Latest Practicable Date, China Life
holds 1,477,595,944 Shares, representing approximately 24.81% of the issued share capital of the
Company and is a substantial shareholder of the Company.
Business of the Nan Fung Group
Each of Spring Glory and Nan Fung China is an investment holding company and a member of
the Nan Fung Group, which is principally engaged in the business of property development, property
investment, construction, property management, investment and financing. As at the Latest Practicable
Date, the Nan Fung Group holds 840,158,610 Shares, representing approximately 14.11% of the issued
share capital of the Company.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 40 —
2. Principal terms of the Subscription Agreements
On 27 September 2013, the Company entered into the Subscription Agreements with each of
China Life and Spring Glory, pursuant to which the China Life and Spring Glory conditionally agreed
to subscribe for, and the Company conditionally agreed to allot and issue, a total of 635,941,967
Shares and 686,611,211 Shares, respectively, at the Subscription Price of HK$4.74 per Share.
Conditions precedent
Completion of the China Life Subscription and the Nan Fung Subscription is conditional upon
the fulfilment or waiver of their respective conditions. For details, please pages 9 to 11 and pages 13
to 15 of the circular. Independent Shareholders should be noted that the Nan Fung Subscription is
conditional on the completion of the Acquisition and such condition could not be waived. In addition,
both China Life Subscription and Nan Fung Subscription are conditional on the total amount of gross
proceeds to be received by the Company pursuant to the Subscription Agreements no less than HK$5.5
billion, but such condition can be waived by the Company. The China Life Subscription and the Nan
Fung Subscription are not conditional on each other, however the Company intends to complete the
Subscriptions simultaneously.
Restriction on disposal
The Subscription Shares are subject to a lock-up period of two years commencing from the
Completion Date. For details, please pages 11 and 15 to 16 of the circular. The lock-up arrangement
indicated that two largest Shareholders are strategic investors who will participate in the long term
development of the Company and we are of the view that such arrangement is fair and reasonable and
in the interests of the Company and the Independent Shareholders as a whole.
Board representation
Upon completion of the Subscriptions, for so long as China Life and the Nan Fung Group directly
or indirectly holds not less than a specific percentage of the total issued share capital of the Company
as stipulated under the Subscription Agreements, each of them shall have the right to nominate one
additional executive Director to the Board and China Life shall also have the right to nominate a
member of senior management of the Company, details of which are set out on pages 11 to 12 and 16
to 17 of the circular.
We consider it is not unusual for major shareholders of a company to have nomination rights of
board members and senior management and such Board representation arrangement is in line with the
increase of shareholding of China Life and the Nan Fung Group. Such nomination rights arrangement
can further strengthen and diversify the composition of the Board and enhance oversight on the Board
based on their various industry experience, expertise and knowledge background. Such nomination
rights arrangement is also in line with the strategic rationale of the Subscriptions since the executive
Directors and senior management as nominated by China Life and the Nan Fung Group, if appointed,
would be involved in the day-to-day management of the Company and serve as the tie connecting each
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 41 —
of the two largest Shareholders with the Company and hence bring strategic benefits to the Company
through cooperation in various areas such as financing, pension and other healthcare services and new
commercial and residential property development projects. The appointment of any candidate
nominated by China Life and the Nan Fung Group to the Board is still subject to compliance with the
articles of association of the Company, the applicable laws, regulations, the Listing Rules and the
Takeovers Code. The appointment of senior management of the Company as nominated by China Life
would also be subject to the approval by the Board taking into account the suitability of the candidate
nominated. Such nomination right arrangement is not in breach of the articles of association of the
Company and Shareholders other than the Nan Fung Group and China Life can also nominate suitable
candidates for Director and/or senior management for the Board’s consideration should they so wish.
Based on above, we consider such nomination rights arrangement is fair and reasonable and in the
interest of the Company and the Shareholders as a whole, and would not be providing any preferential
treatment for China Life and the Nan Fung Group.
3. Evaluation of the Subscription Price
Basis of the Subscription Price
The Subscription Price was determined with reference to prevailing market price of the Shares
and has been arrived at after arm’s length negotiations between the Company and each of China Life
and the Nan Fung Group respectively. We consider such basis fair and reasonable.
Price comparison of the Subscription Price
The Subscription Price of HK$4.74 per Share represents:
(a) a discount of approximately 1.04% to the closing price of HK$4.79 per Share as quoted on
the Stock Exchange on the Latest Practicable Date;
(b) a premium of approximately 1.72% over the closing price of HK$4.66 per Share as quoted
on the Stock Exchange on 27 September 2013 (the “Last Trading Day”), being the last full
trading day of the Shares on the Stock Exchange prior to the publication of the
Announcement;
(c) a premium of approximately 1.41% over the average closing price of HK$4.674 per Share
as quoted on the Stock Exchange for the last 5 trading days up to and including the Last
Trading Day;
(d) a premium of approximately 0.49% over the average closing price of HK$4.717 per Share
as quoted on the Stock Exchange for the last 10 trading days up to and including the Last
Trading Day;
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 42 —
(e) a premium of approximately 2.13% over the average closing price of HK$4.641 per Share
as quoted on the Stock Exchange for the last 30 trading days up to and including the Last
Trading Day;
(f) a premium of approximately 7.90% over the average closing price of HK$4.393 per Share
as quoted on the Stock Exchange for the last 60 trading days up to and including the Last
Trading Day;
(g) a discount of approximately 41.91% to the net asset value per Share of approximately
HK$8.16 as at 31 December 2012 (based on a total of 5,955,357,936 Shares as at the Latest
Practicable Date, the Group’s audited net asset value attributable to the owners of the
Company of approximately RMB38,260 million as at 31 December 2012 and an exchange
rate of HK$1.27 to RMB1); and
(h) a discount of approximately 38.91% to the net asset value per Share of approximately
HK$7.76 as at 30 June 2013 (based on a total of 5,955,357,936 Shares as at the Latest
Practicable Date, the Group’s unaudited net asset value attributable to the owners of the
Company of approximately RMB36,382 million as at 30 June 2013 and an exchange rate of
HK$1.27 to RMB1).
We noted the Subscription Price represents significant discount to the Company’s net asset value
per Share as at 31 December 2012 and 30 June 2013, but Subscription Price was determined with
reference to prevailing market price of the Shares which presents the market view on the value of the
Shares. The shares of most listed property companies are traded at discount to their net asset value
as shown in the our analysis below under the section headed “Comparable company analysis” and most
of the recent comparable new shares issuances were issued at discount to closing price of shares prior
to the relevant announcements as shown in our analysis below under the section headed “Comparable
companies issuing new shares to connected persons under specific mandates”. Therefore, we consider
the Subscription Price is fair and reasonable and in line with market practice.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 43 —
Analysis of historical Share price performance
The chart below illustrates the movement of the daily closing prices of the Shares and the Hang
Seng Index, during the period from 2 January 2013 up to and including the Latest Practicable Date (the
“Review Period”):
Historical Share price performance
0
1
2
3
4
5
6
7
2/1/
2013
2/2/
2013
2/3/
2013
2/4/
2013
2/5/
2013
2/6/
2013
2/7/
2013
2/8/
2013
2/9/
2013
2/10
/201
3
(HK$)
Closing price of the Shares Hang Seng Index (rebased)
The Subscription Price
Source: Bloomberg
As shown in the chart above, the price performance of the Shares is broadly in line with that of
the Hang Seng Index during the Review Period. During the Review Period, the closing prices of the
Shares ranged from HK$3.83 per Share to HK$6.26 per share and the average closing price was
approximately HK$4.87 per Share. We noted that the Share price increased to above the Subscription
Price after the Announcement, which was influenced by the overall market sentiment as well as the
investors’ reaction to the contents of the Announcement. As the Subscription Price of HK$4.74 per
Share lies within the range of the closing prices of the Shares during the Review Period, we are of the
view that the Subscription Price is fair and reasonable.
Comparable company analysis
The Group is principally engaged in developing mid-to-high end residential properties, high-end
office premises and retail properties in the PRC and the market capitalisation of the Company was
approximately HK$28,524 million as at the Latest Practicable Date. Consolidated net asset value
attributable to owners of the Company was approximately RMB38,260 million as at 31 December
2012 and the net asset value per Share was approximately HK$8.16 (based on a total of 5,955,357,936
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 44 —
Shares as at the Latest Practicable Date and an exchange rate of HK$1.27 to RMB1). Profit
attributable to owners of the Company was approximately RMB3,796 million for the year ended 31
December 2012 and earnings per Share was approximately HK$0.81 (based on a total of 5,955,357,936
Shares as at the Latest Practicable Date and an exchange rate of HK$1.27 to RMB1).
To assess the fairness and reasonableness of the Subscription Price, we have searched for
companies listed on the Stock Exchange, which are mainly engaged in real estate development in the
PRC with market capitalisation as at the Latest Practicable Date within the range of HK$14 billion to
HK$43 billion, being the range of 50% to 150% of the market capitalisation of the Company as at the
Latest Practicable Date. To the best of our knowledge and as far as we are aware of, there are 14
companies which is an exhaustive list of real estate companies based on the criteria mentioned above,
which we considered comparable to the Company in terms of their size, business and geographical
location and form a representative sample.
As real estate development is an asset based business, we have used price to book ratio implied
by the closing prices of the comparable companies on the Latest Practicable Date, which we consider
appropriate for this comparison purpose. As the Company has been profitable, we also use price to
earnings ratio implied by the closing prices of the comparable companies on the Latest Practicable
Date for this comparison purpose.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 45 —
Based on the Subscription Price of HK$4.74 per Share, net asset value per Share of
approximately HK$8.16 as at 31 December 2012, and earnings per Share of approximately HK$0.81,
the implied price to book ratio is approximately 0.58 times and the implied price to earnings ratio is
approximately 5.86 times. Such valuation ratios are within the range of those comparable companies
as tabularised below:
Company nameGeographicallocation
Stockcode
Marketcapitalisation
Price tobook ratio
Price toearnings
ratio
(HK$ million) (times) (times)
Guangzhou R&F
Properties Co Ltd
PRC 2777 40,924 1.21 5.84
New World China Land
Ltd
PRC 917 34,498 0.63 7.47
SOHO China Ltd PRC 410 32,665 0.84 2.42
Greentown China Holdings
Ltd
PRC 3900 32,359 1.20 5.24
Agile Property Holdings
Ltd
PRC 3383 31,612 0.97 4.96
Franshion Properties China
Ltd
PRC 817 24,461 0.85 7.24
China Overseas Grand
Oceans Group Ltd
PRC and
Hong Kong
81 20,768 2.61 8.65
Yuexiu Property Co Ltd PRC,
Hong Kong
and overseas
123 20,116 0.71 6.36
Shui On Land Ltd PRC 272 20,724 0.52 8.02
Poly Property Group Co
Ltd
PRC and
Hong Kong
119 17,092 0.63 6.50
Shenzhen Investment Ltd PRC 604 16,543 0.94 7.67
Hopson Development
Holdings Ltd
PRC 754 21,217 0.50 7.11
Sunac China Holdings Ltd PRC 1918 16,861 1.39 5.08
KWG Property Holding
Ltd
PRC 1813 14,350 0.74 4.68
Maximum 40,924 2.61 8.65
Minimum 14,350 0.50 2.42
Average 24,585 0.98 6.23
Median 20,993 0.84 6.43
The Subscriptions 0.58 5.86
Source: Bloomberg
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 46 —
As both the implied price to book ratio and price to earnings ratio of the Subscriptions are within
the range of such ratios of comparable companies, we consider that the pricing of Subscriptions is in
line with market practice, fair and reasonable and the entering of the Subscriptions is in the interest
of the Group and the Shareholders as a whole. We have also analysed the financial impacts to the
Group before and after the completion of the Subscription Agreements under the section headed
“POSSIBLE FINANCIAL EFFECTS” below.
Comparable companies issuing new shares to connected persons under specific mandates
In assessing the fairness and reasonableness of the Subscription Price, we have also identified
an exhaustive list of companies listed on the Stock Exchange which announced the issuance of new
shares to connected persons for cash under specific mandates during the period from 1 January 2013
to the Latest Practicable Date. We are of the view that they represent a fair and representative sample
for the purpose of comparing the Subscription Price to their respective subscription prices.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 47 —
For each of the nine identified companies issuing new shares, we compared the premium or
discount of its subscription price to (a) the closing price on the last trading day (the “LTD”), (b) the
5-day average closing price, and (c) the 10-day average closing price, prior to and including the LTD
before the release of the respective announcement, summarised in the following table:
Announcement date Company Stock code
Premium/(discount) of the
subscriptionprice over/to theclosing price on
the LTD
Premium/(discount) of the
subscriptionprice over/to the
5-day averageclosing priceprior to and
including theLTD
Premium/(discount) of the
subscriptionprice over/to the
10-day averageclosing priceprior to and
including theLTD
(Approx.) (Approx.) (Approx.)
22 October 2013 Beautiful ChinaHoldings CompanyLimited
706 (22.48%) (22.72%) (23.43%)
2 October 2013 New Times EnergyCorporation Limited
166 1.67% 0.66% 0.16%
30 September 2013 Guangzhou ShipyardInternationalCompany Limited
317 (5.32%) (5.62%) (6.04%)
18 August 2013 Gemdale Propertiesand InvestmentCorporation Limited
535 (9.43%) (6.61%) (6.43%)
2 June 2013 Yunbo Digital SynergyGroup Limited
8050 (15.09%) (26.71%) (18.24%)
24 May 2013 WinteamPharmaceuticalGroup Limited
570 (19.06%) (18.42%) (12.43%)
22 April 2013 Great China PropertiesHoldings Limited
21 (18.67%) (19.95%) (20.26%)
24 January 2013 China Bio-MedRegenerationTechnology Limited
8158 (1.20%) (2.94%) (1.20%)
23 January 2013 Jun Yang Solar PowerInvestments Limited
397 4.46%) (5.66%) (1.83%)
Maximum 1.67% 0.66% 0.16%Minimum (22.48%) (26.71%) (23.43%)
Average (10.45%) (12.00%) (9.97%)Median (9.43%) (6.61%) (6.43%)
The Subscriptions 1.72% 1.41% 0.49%
Source: www.hkexnews.com
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 48 —
As shown in the table above, we note that the premium of the Subscription Price to the closing
price on the Last Trading Day and the 5-day and 10-day average closing prices prior to and including
the Last Trading Day are higher than those of the comparable new shares issuances above. We are of
the view that the Subscription Price is fair and reasonable.
4. Use of proceeds and reasons for the entering into of the Subscription Agreements
As at 30 June 2013, the Company had cash on hand of approximately RMB13.1 billion (including
restricted bank deposits of approximately RMB5.6 billion), and the Company paid approximately
US$574 million for redemption of all the outstanding balance of Perpetual Convertible Securities as
at 30 June 2013 by the end of September 2013, which resulted in reduced available cash on hand and
limited the Company’s development in new projects. As at 30 September 2013, the Company had cash
on hand of approximately RMB13.9 billion (including restricted bank deposits of approximately
RMB8.3 billion). The Board intends to use approximately one-third of the net proceeds of
approximately US$804 million from the Subscriptions to satisfy the consideration of the Acquisition,
approximately one-third of the net proceeds for financing other new projects and approximately
one-third of the net proceeds for general working capital purposes of the Group including payment of
interests, taxes, selling and marketing and other administrative expenses. Although the Company has
not engaged in any negotiations, signed any contracts or identified any targets for new projects as at
the Latest Practicable Date, the Company has set clear criteria for determining new projects to be
invested in terms of location, size and type, details of which has been set out on page 22 of the
circular. The Company intends to complete the Acquisition under the Master Acquisition Agreement
by December 2013 and plans to replenish its land bank in the short-term in order to satisfy its
development needs over the next few years. Taken into account of the increased working capital
requirements of the Company for the payment of, among other things, outstanding payables and
salaries and bonus payments to the Group’s employees as financial year-end approaches and current
favourable market conditions, we concur with the Company that it is an appropriate timing to conduct
the Subscriptions. We are in the view that the proceeds from the Subscriptions will strengthen the
Company’s equity in the long run, ensure the Company’s stable operation, and help the Company
maintaining a healthy financial structure for the Company’s future investment projects.
Under prevailing market conditions, the Board believes that the Subscriptions will strengthen the
Company’s financial position and allow the Company to raise necessary funds at a reasonable cost to
support the Group’s existing operations and enhance its flexibility to make further investments as and
when opportunities arise. The Subscriptions further optimise the Group’s capital structure, which
could result in the improvement of the credit profile of the Company and lowering of the Group’s
future financing costs. The Subscriptions would bring strategic value and business opportunities to the
Company through the development of closer ties with China Life and the Nan Fung Group. Upon
completion of the Subscriptions, China Life and the Nan Fung Group will increase their shareholding
in the Company and there would be greater alignment of interest between the Company and each of
China Life and the Nan Fung Group and hence China Life and the Nan Fung Group will have greater
incentive in achieving the sustained growth of the Group and enhancing Shareholders’ value in the
medium to long term. In particular, the Board believes that the China Life Subscription would allow
the Group to strengthen its strategic cooperation with China Life in various areas including financing,
capital markets, commercial property development, pension and other healthcare services where
Company can leverage on China Life’s expertise, experiences and reputation in financing negotiations,
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 49 —
have greater bargaining power to obtain the best possible borrowing terms to meet the financial needs
for its future projects and reduce its finance costs. The Nan Fung Subscription will give a greater
strategic cooperation between the Company and the Nan Fung Group in terms of the greater
investment opportunities by the Group in residential property development projects by leveraging on
the Nan Fung Group’s over 40 years of experience in real estate development in Hong Kong, in
particular high-end residential properties with well managed site planning, and well-established
relationships with international designers and suppliers in the development of high-quality residential
properties in the PRC. On 18 October 2013, the Company entered into a non-legally binding
memorandum of understanding with China Life Group for a period of 5 years in relation to explore
various potential areas of possible cooperation between the parties, including but not limited to: (i)
cooperation in strengthening the Company’s capital and debt structure; (ii) cooperation in the real
estate industry; and (iii) cooperation in the elderly care industry. In addition to the CBD Project and
the Dalian Project, the Group have also entered into joint ventures with two subsidiaries of China Life
Group in relation to commercial property development projects located at Central Business District
(“CBD”) area in Beijing. We believe the Subscriptions could enhance the cooperation of the Company
with China Life and the Nan Fung Group and hence improve the Company’s market competitiveness
and maintain a sustainable long-term growth. Having considered the above, we are of the view that
the entering into the Subscription Agreements is in the interests of the Company and the Independent
Shareholders as a whole.
5. Alternative fund raising methods available
We understand from the Company that apart from the Subscriptions, the Company has also
considered various other means of financing, including debt financings by way of bank borrowings or
issue of bonds and equity financings by way of placement of new Shares to independent investors or
a rights issue or open offer.
Debt financings
As bank borrowing or issue of bonds will generate additional finance costs to the Group, increase
the gearing ratio of the Group and affect adversely the cash flow position of the Group, the Company
preferred equity financing to debt financing to maintain its capital structure at an optimal and
sustainable level.
Alternative equity financings
The Directors have also considered alternative equity financings which would not affect the debt
position of the Group, including a private placement of Shares to independent third party investors or
a rights issue or open offer to existing Shareholders.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 50 —
The Company expected the amount of fund raised through a private placement is limited,
especially given the Subscription Price was at premium over market price of the Shares prior to the
Announcement and the Subscription Shares are subject to a two year lock-up period, which might not
be attractive to independent third party investors since they could purchase Shares on market at a
lower price. In addition, a private placement has a similar dilutive effect as the Subscriptions, as far
as the Independent Shareholders are concerned. Moreover, a private placement to third party investors
could not bring strategic value and business opportunities to the Company through the development
of closer ties with China Life and the Nan Fung Group as the Subscriptions do.
As regards a rights issue or open offer, which will give an opportunity to all Shareholders to
participate in the subscription for new Shares to be issued by the Company on a pro rata basis, the
Company has considered such factors as (a) the extra underwriting fees and arrangement costs; (b) the
price of a rights issue or open offer normally involving a substantial discount to market price; (c)
longer timetable to complete; and (d) the lack of certainty in the successful implementation of a rights
issue or open offer. On this basis, the Company consider other equity financing methods to be less
optimal than the Subscriptions for the Group to raise additional fund for the development of the
Group.
Taking into account (i) potential strategic benefits as a result of increasing the shareholding of
China Life and the Nan Fung Group as the two largest shareholders of the Company, (ii) the financial
position and future business plan of the Company; and (iii) the pros and cons of other alternative
financing methods, as discussed above, we are of the view that the fund raising by way of the
Subscriptions is currently the best available option of financing for the Company, and is fair and
reasonable and in the interests of the Company and the Shareholders as a whole.
6. Changes in shareholding structure of the Company
Assuming there is no change in the issued share capital of, and the shareholding in, the Company
from the Latest Practicable Date other than the allotment and issue of the Subscription Shares under
the Subscription Agreements, immediately after completion of the Subscriptions, China Life and the
Nan Fung Group will be respectively interested in 29.04% and 20.98% of the issued share capital of
the Company while the shareholding of the public Shareholders would be decreased from 61.08% to
49.98%, and the Company can still meet its public float requirement under the Listing Rules.
Further details of the potential change in shareholding structure of the Company are illustrated
on page 18 in this circular. Public Shareholders will face dilution impact upon completion of the
Subscriptions, which we have also analysed under the section headed “POSSIBLE FINANCIAL
EFFECTS” below, but in exchange, the Subscriptions will improve the capital structure of the
Company and bring strategic benefits to the Company through closer cooperation with two major
Shareholders, which will help the Company maintain stable and sustainable growth and enhance the
value of the Company in the long term. Based on the above, we are of the view that the Subscriptions
are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 51 —
II. MASTER ACQUISITION AGREEMENT
In formulating and giving our opinion to the Independent Board Committee and the Independent
Shareholders in respect of the Master Acquisition Agreement and the transactions contemplated
thereunder, we have taken into account the following principal factors:
1. Business and financial information of the Target Companies
Each of the Target Companies is an investment holding company. As at the Latest Practicable
Date, the Group and the Nan Fung Group effectively owned an interests of 80% and 20% in the CBD
Project, respectively; and the Group and the Nan Fung Group effectively owned an interests of
approximately 90% and 10% in the Dalian Project, respectively. As at 30 June 2013, the book value
of the CBD Project and the Dalian Project amounts to RMB3,922 million and RMB7,981 million,
respectively. As at the Latest Practicable Date, the total investment costs paid by the Vendor in relation
to the CBD Project and the Dalian Project amounts to approximately USD270 million, and the Nan
Fung Group had advanced shareholder’s loan of approximately HK$896 million (equivalent to
approximately RMB706 million) to Target Company One.
Based on the unaudited consolidated accounts of the Target Companies prepared in accordance
with Hong Kong Financial Reporting Standards, none of the Target Companies recorded revenue and
profit for the years ended 31 December 2011 and 2012 and the six months ended 30 June 2013, and
the combined net asset value of the Target Companies attributable to the Nan Fung Group was
approximately RMB930 million as at 30 June 2013. For further details of the Target Companies and
the CBD Project and the Dalian Project, please refer to pages 27 to 32 of the circular and Appendix
I to the circular.
The unaudited adjusted combined net asset value of the Target Companies attributable to the Nan
Fung Group as at 30 June, 2013 was approximately RMB2,736 million, which is derived from the sum
of (i) the combined net asset value of the Target Companies attributable to the Nan Fung Group of
approximately RMB930 million as at 30 June 2013; (ii) the increase in value of the CBD Project and
the Dalian Project attributable to the Nan Fung Group of approximately RMB1,099 million; and (iii)
the shareholder’s loan advanced to Target Company One by the Nan Fung Group of approximately
HK$896 million (equivalent to approximately RMB706 million).
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 52 —
2. Overview of property industry in Beijing and Dalian
Gross Domestic Product (“GDP”) and GDP per
capita of Beijing from 2008 to 2012
1,111.5 1,215.31,411.4
1,625.21,787.9
64,491 66,94073,856
81,65887,475
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2008 2009 2010 2011 2012
GDP (RMB billion, left) GDP per capita (RMB, right)
Source: Beijing Municipal Bureau of Statistics (北京市統計局) (http://www.bjstats.gov.cn)
Beijing office overall average rent
200.46
217.07
227.75
237.51
253.89256.69 258.50
170
180
190
200
210
220
230
240
250
260
270
3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013
(RM
B per
squar
e m
eter
per
month
)
Source: Colliers International Beijing
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 53 —
As shown in the above charts, Beijing, being the capital and one of the first tier cities in the PRC,
has recorded a gradually growing trend for its GDP and GDP per capita during the last five years. The
overall average net effective rent of Beijing offices represented a fast growth since the third quarter
of 2011 and the CBD area maintained top two of the most expensive office submarkets in Beijing
during such period.
GDP and GDP per capita of Dalian from 2008 to 2012
385.8441.8
515.8
615.0700.3
63,198
71,833
87,96291,287
102,216
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
0
20,000
40,000
60,000
80,000
100,000
120,000
2008 2009 2010 2011 2012
GDP (RMB billion, left) GDP per capita (RMB, right)
Source: Dalian Municipal Bureau of Statistics (大連市統計局) (http://www.stats.dl.gov.cn)
Average selling price of residential properties
of Dalian from 2008 to 2012
5,6176,174
6,760
7,9297,584
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2008 2009 2010 2011 2012
(RMB)
Source: Dalian Municipal Bureau of Statistics (大連市統計局) (http://www.stats.dl.gov.cn)
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 54 —
As shown in the above charts, Dalian, being one of the major second tier cities in the PRC, has
recorded a gradually growing trend for its GDP and GDP per capita during the last five years. The
selling price of residential properties of Dalian from 2008 to 2011 maintained a stable growth with a
drop down in 2012 which was influenced by the tightening policy on property industry by the PRC
government.
Despite the global financial crisis and economic downturn that started in 2008, the PRC’s
economy has continued to sustain a comparatively high rate of growth with momentum seen in the
property market. It is generally expected that the PRC government will continue to maintain an
economic policy that will allow sustainable growth in the domestic consumption and local economy.
3. Principal terms of the Master Acquisition Agreement
On 27 September 2013, Fame Gain (an indirect wholly-owned subsidiary of the Company) and
Nan Fung China (a member of the Nan Fung Group) entered into the Master Acquisition Agreement,
pursuant to which Nan Fung China agreed to sell or procure the sale of, and Fame Gain agreed to
purchase or procure the purchase of, 20% interests of the CBD Project and approximately 10%
interests in the Dalian Project.
The consideration
The total consideration payable by the Purchaser to the Vendor for the CBD Interests and the
Dalian Interests on the Acquisition Completion Date is USD314 million in cash, of which USD154
million is payable for the CBD Interests and USD160 million is payable for the Dalian Interests. The
Company intends to satisfy the consideration by part of the proceeds of the Subscriptions and bank
borrowings in the amount of US$265 million and US$49 million, respectively.
The consideration of the Acquisition was determined by reference to the market value of the CBD
Project and the Dalian Project after an arm’s length negotiation between the Group and the Nan Fung
Group. The consideration effectively represents a discount of approximately 29.82% to the unaudited
adjusted net asset value of the Target Companies attributable to the Nan Fung Group.
In accordance with the valuation report set out in Appendix I to the circular, the market value
of the CBD Project and the Dalian Project in their existing states as at 31 August 2013 was estimated
at RMB6,300 million and RMB11,850 million respectively by DTZ, and hence the market value of the
CBD Project and the Dalian Project attributable to the Nan Fung Group as at 31 August 2013 was
estimated at RMB1,260 million and RMB1,185 million.
In assessing the consideration for the CBD Interests and the Dalian Interests, we have reviewed
the valuation report on the methodology of, and the bases and assumptions adopted for, the valuation
of the CBD Project and the Dalian Project. The valuation was carried out on the assumption that the
relevant title certificates had been obtained and all land premium and related fees for the grant of the
title certificates had been fully settled. Although certain land plots of the CBD Project and the Dalian
Project have not yet obtained the state-owned land use rights certificates, according to the legal
opinion by the Group’s PRC legal adviser, there will be no legal impediment in obtaining such
outstanding state-owned land use rights certificates on the basis of compliance with the relevant
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 55 —
procedures and the Company expects such outstanding state-owned land use rights certificates to be
obtained in the first half of 2014. Therefore we consider such assumption is reasonable and the
valuation based on such assumption is valid. For the purpose of valuation, DTZ has principally
adopted the direct comparison approach by making reference to comparable sales evidence as
available in the relevant market, and adjusted with the development costs expended and other costs
that will be expended to complete the development to arrive at the final value of the CBD Project and
the Dalian Project in their existing states. We are of the view that the methodology adopted by DTZ
is a reasonable approach in deriving the open market values of the CBD Project and the Dalian Project.
Shareholders are advised to make reference to the valuation report as set forth in the Appendix I to
the circular.
As shown from the above, the consideration of USD314 million represents a discount of
approximately 29.82% to unaudited adjusted combined net asset value of the Target Companies
attributable to the Nan Fung Group as at 30 June 2013 of approximately RMB2,736 million, which we
consider is fair and reasonable and in the interests of the Group and the Shareholders as a whole.
Conditions precedent
Completion of the Acquisition is conditional upon the fulfilment or waiver of all of its
conditions. For details, please pages 24 to 25 of the circular. Independent Shareholders should be
noted that the Acquisition is conditional on the completion of the Nan Fung Subscription but such
condition could be waived by the Purchaser.
4. Reasons for the Master Acquisition Agreement
Pursuant to the Acquisition, the Group will effectively acquire from the Nan Fung Group its 20%
interest in the CBD Project and approximately 10% interests in the Dalian Project, thereby obtaining
100% control of the CBD Project and the Dalian Project. The Master Acquisition Agreement will allow
the Group to consolidate its position in one of the Group’s key commercial properties in CBD, Beijing
and one of the Group’s flagship projects in Dalian in PRC. As analysed in the section “Overview of
property industry in Beijing and Dalian” above, both Beijing and Dalian are leading cities in the PRC
with steady growth of GDP, and it is expected the commercial properties in Beijing especially the CBD
area and the residential properties in Dalian will maintain their gradually growth trends. The
Acquisition will enable the Group to enjoy the growth of property sector in Beijing and Dalian through
the development of the CBD Project and the Dalian Project. The Acquisition would also increase the
Group’s interest in land bank, improve the efficiency of the decision-making process and the
implementation of plans in respect of the CBD Project and the Dalian Project, which is in the interests
of the Company and the Shareholders as a whole. Having considered the above, we are of the view
that the entering into the Master Acquisition Agreement is in the interests of the Company and the
Independent Shareholders as a whole.
5. Discussion
Since the Nan Fung Subscription is conditional on the completion of the Acquisition and such
condition could not be waived, the combination of the Nan Fung Subscription and the Acquisition is
actually an assets swap for the Company, exchanging 686,611,211 Shares at HK$4.74 per Share for
the CBD Interests and the Dalian Interests and cash of approximately USD106 million.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 56 —
Reference is made to “Analysis of historical Share price performance” section above, we note
that the closing price of the Shares have been traded consistently at a discount to the underlying net
asset value per Share for all time during the Review Period.
Although the price to book discount represented by the Subscription Price of approximately
38.91% is higher than 29.82% as represented by the consideration of the Acquisition, we are of view
that the Subscription Price is referenced to the prevailing market price, which includes a valuation
over a basket of assets held by the Company, and the consideration of the Acquisition is referenced
to the valuation report by DTZ taken into account of the outlook of the CBD Project and the Dalian
Project. We are of the opinion that it is fair and reasonable.
We have also analysed the financial impacts to the Group before and after the completion of the
Subscription Agreements and the Master Acquisition Agreement under the section headed “POSSIBLE
FINANCIAL EFFECTS” below.
POSSIBLE FINANCIAL EFFECTS
The following analysis is based on the Company’s annual report 2012 and interim report 2013
and the unaudited consolidated financial statements of the Target Companies. As at the Latest
Practicable Date, Target Company Two, Target Company Three, Target Company Four and Target
Company Five are non wholly-owned subsidiaries of the Company and the accounts of such companies
have already been consolidated into the accounts of the Group. Upon completion of the Acquisition,
all Target Companies will become wholly-owned subsidiaries of the Company and the accounts of
Target Company One will also be consolidated into the accounts of the Group.
Effects on net asset value
According to the Company’s interim report 2013, the audited consolidated net asset value
attributable to owners of the Company was approximately RMB36,382 million as at 30 June 2013, and
the net asset value per Share was approximately RMB6.11. Upon completion of the Subscriptions, the
consolidated net asset value attributable to owner of the Company will be improved roughly by the
net proceeds from the Subscriptions of approximately USD804 million.
Assuming there is no change in the issued share capital of, and the shareholding in, the Company
from the Latest Practicable Date other than the issue of Shares pursuant to the Subscription
Agreements, net asset value per Share would decrease to approximately RMB5.67, representing a
decrease of approximately 7%.
As the consideration of the Acquisition represents a discount to the unaudited adjusted combined
net asset value of the Target Companies attributable to the Nan Fung Group, we are of the view that
Acquisition will improve the consolidated net asset value attributable to owners of the Company.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 57 —
Effects on earnings
The Group recorded profit attributable to owners of the Company of approximately RMB3,796
million and basic earnings per share attributable to owners of the Company of approximately
RMB0.64 for the year ended 31 December 2012. The Subscriptions would not have any impact on the
profitability of the Group.
Assuming there is no change in the issued share capital of, and the shareholding in, the Company
from the Latest Practicable Date other than the issue of Shares pursuant to the Subscription
Agreements, earnings per Share attributable to owners of the Company would be diluted to
approximately RMB0.52, representing a dilution of approximately 18%.
As the Target Companies are investment holding companies and the CBD Project and the Dalian
Project remains under development, no immediate contribution to the Group’s earning is expected
upon completion of the Acquisition.
Effects on gearing and working capital
As at 30 June 2013, the Group’s total borrowings was approximately RMB32,745 million and the
gearing ratio, calculated as net debt divided by total capital, was approximately 39%. Upon
completion of the Subscriptions, the gearing ratio of the Group would be reduced to approximately
31%. Upon completion of the Acquisition, the Group will incur a net cash outflow of approximately
USD314 million, being the consideration of the Acquisition. The current liabilities of approximately
HK$896 million of Target Company One as at 30 June 2013 will also be consolidated into the net debts
of the Group’s accounts. The estimated gearing ratio will slightly increase to 41% after completion of
the Acquisition. We are of the view that the impact on the gearing ratio of the Group is insignificant.
The Group had cash and cash equivalents of approximately RMB7,470 million (not including
restricted bank deposits of approximately RMB5,645 million) and working capital of approximately
RMB50,370 million as at 30 June 2013. Upon completion of the Subscriptions, the liquidity of the
Group will be improved as the Subscriptions will raise net proceeds of approximately USD804
million. We are of the view that entering into the Subscription Agreements will enhance the cash
position and working capital position of the Group. Given the consideration of the Acquisition is
USD314 million and the committed capital expenditures of the CBD Project and the Dalian Project
have already been included in the financial statements of the Group as at 30 June 2013, we are of the
view that the Acquisition will not have significant adverse impact on the working capital position and
the normal operation of the Group following the Acquisition.
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 58 —
RECOMMENDATION
We have considered the above principal factors and reasons and particularly (i) the strategic
rationale of the Subscription Agreements and the Master Acquisition Agreement; (ii) the terms and the
consideration as discussed above; and (iii) the possible financial effects to the Group. The net asset
value per Share and the earnings per Share will be diluted upon completion of the Subscriptions, but
in exchange, the Subscriptions will improve the capital structure of the Company and bring strategic
benefits to the Company through closer cooperation with two major Shareholders, which will help the
Company maintain stable and sustainable growth and enhance the value of the Company in the long
term. Based on the above principal factors and reasons, we consider that the Subscription Agreements
and the Master Acquisition Agreement are on normal commercial terms, and the entering of the
Subscription Agreements and the Master Acquisition Agreement is in the ordinary and usual course of
business of the Company, fair and reasonable and in the interest of the Company and the Independent
Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the
Independent Shareholders to vote in favour of the resolutions to be proposed at the EGM to approve
the Subscription Agreements and the Master Acquisition Agreement and the transactions contemplated
thereunder.
Yours faithfully,
for and on behalf of
Anglo Chinese Corporate Finance, LimitedMichael Fok
Director
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
— 59 —
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 of the
Company as at 31 August 2013.
16th Floor
Jardine House
1 Connaught Place
Central
Hong Kong
28 October 2013
The Directors
Sino-Ocean Land Holdings Limited
Unit 601, One Pacific Place
88 Queensway
Hong Kong
Dear Sirs,
Instructions, Purpose and Date of Valuation
In accordance with your instructions for us to value certain properties in which Sino-Ocean Land
Holdings Limited (referred to as the “Company”) and its subsidiaries (together referred to as the
“Group”) have interests in the People’s Republic of China (the “PRC”) and intend to acquire the
remaining interests of the corresponding project companies (as more particularly described in the
attached valuation certificates), we confirm that we have inspected the properties, made relevant
enquiries and obtained such further information as we consider necessary for the purpose of providing
you with our opinion of the values of such properties as at 31 August 2013.
Definition of Market Value
Our valuation of the each of the properties represents its market value which in accordance with
The HKIS Valuation Standards (2012 Edition) issued 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 wherein the parties had each acted knowledgeably, prudently and without compulsion”.
APPENDIX I PROPERTY VALUATION REPORT
— 60 —
LR14A.59(6)App1, Part B 5(3)R5.03
R5.06(8)R5.07
Valuation Basis and Assumption
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.
Our valuations exclude any 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.
The properties are generally either vacant sites pending for development or at the early stage of
construction. The Group is currently the majority stakeholder of the project companies of the
properties and is intending to acquire the remaining interests of the project companies. To facilitate
the transaction, we are specifically instructed to carry out the valuations on the assumption that the
relevant title certificates had been obtained and all land premium and related fees for the grant of the
title certificates had been fully settled.
In the course of our valuation of the properties in the PRC, we have assumed that, unless
otherwise stated, 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 and advice given by the regarding the title to each of the properties and
the interests of the Group in the properties. In valuing the properties, we have assumed that the 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.
In respect of the properties situated in the PRC, the status of titles and grant of major certificates
approvals and licences, in accordance with the information provided by the Group are set out in the
notes of the respective valuation certificate.
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
In valuing the properties, we have used Direct Comparison Approach by making reference to
comparable sales evidence as available in the relevant market.
In respect of Property No. 2 part of which is under development, our valuation is carried out on
the basis that the property will be developed and completed in accordance with the Group’s latest
development proposals provided to us. We have assumed that all consents, approvals and licences from
relevant government authorities for the development proposal have been obtained without onerous
APPENDIX I PROPERTY VALUATION REPORT
— 61 —
R5.05
R5.06(1)(t)
conditions or delays. We have also assumed that the design and construction of the developments are
in compliance with the local planning and other relevant regulations and have been or will be approved
by the relevant authorities. In valuing the property, we have used Direct Comparison Approach by
making reference to comparable sales evidence as available in the relevant market so as to assess the
market value when completed of the property. The market value 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, we have also taken into account the
development costs expended and the costs that will be expended to complete the development.
Source of Information
We have been provided by the Group with extracts of documents in relation to the titles to the
properties. 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 considerable extent on the information given
by the Group. We have been provided by the Group with extracts of documents in relation to the titles
to the properties. In the course of our valuation, we have relied to a very considerable extent on the
information given to us by the Group and its legal adviser, 國浩律師(北京)事務所 (Grandall Law Firm
(Beijing)), regarding the title to each of the properties and the interests of the Group in the properties.
We have also accepted advice given to us on such matters as planning approvals or statutory notices,
easements, tenure, identification of land and buildings, proposed development scheme, development
costs and time schedules, completion dates of buildings, number of units, particulars of occupancy,
site and floor areas, interests attributable to the Group and all other relevant matters.
Dimensions, measurements and areas included in the valuation certificates are based on the
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 Group which is material to the valuations.
We were also advised by the Group that no material facts have been omitted from the information
provided.
Title investigation
We have been provided with extracts of documents relating to the titles of the properties in the
PRC, but 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 copies
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 Group and its legal adviser regarding the Group’s interests
in the PRC properties.
APPENDIX I PROPERTY VALUATION REPORT
— 62 —
Site Inspection
Our valuers, Angie Ge, Yuhong Shi and Mary Liu, Registered China Real Estate Appraisers,
inspected the exterior and, wherever possible, the interior of each of the properties between 12
September 2013 and 13 September 2013. However, no structural survey has been made, but in the
course of our valuation, we did not note any serious defects. We are, however, not able to report that
the properties are free of rot, infestation or any other structural defects. No tests were carried out to
any of the services. Moreover, 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.
Unless otherwise stated, we have not been able to carry out detailed 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 sums stated in our valuations are in Renminbi, the official currency
of the PRC.
We enclose herewith a summary of our valuations and our valuation certificates.
Yours faithfully,
for and on behalf of
DTZ Debenham Tie Leung LimitedAndrew K.F. Chan
Registered Professional Surveyor (General Practice)
Registered China Real Estate Appraiser
MSc, MHKIS, MRICS
Senior Director, Valuation & Advisory Services
Note: Mr. Andrew K.F. Chan is a Registered Professional Surveyor who has over 26 years’ of experience in the valuation of
properties in the PRC.
APPENDIX I PROPERTY VALUATION REPORT
— 63 —
R5.06(7)
PN12-4.2
SUMMARY OF VALUATIONS
Properties held by the Group under or for development in the PRC
Property
Market value inexisting stateassuming full
good title as at31 August 2013
Attributableinterest tothe Group
Market value inexisting stateassuming full
good title as at31 August 2013attributable to
the Group(RMB) (%) (RMB)
1. A piece of land known as Plot Z6,
Guanghua Road,
Chaoyang District,
Beijing,
the PRC
6,300,000,000 80 5,040,000,000
2. Plots A, B, C and E,
Ocean Diamond Bay,
East of Gongxing Street and
Dongbei Road,
South of Dongfang Road,
Ganjingzi District,
Dalian,
Liaoning Province,
the PRC
11,850,000,000 90 10,665,000,000
Total: 18,150,000,000 15,705,000,000
Notes:-
The properties are generally either vacant sites pending for development or at the early stage of construction. The Group is
currently the majority stakeholder of the project companies of the properties and is intending to acquire the remaining interests
of the project companies. To facilitate the transaction, we are specifically instructed to carry out the valuations on the
assumption that the relevant title certificates had been obtained and all land premium and related fees for the grant of the title
certificates had been fully settled.
APPENDIX I PROPERTY VALUATION REPORT
— 64 —
R5.06(1)(t)
VALUATION CERTIFICATE
Properties held by the Group under or for development in the PRC
Property Description and tenureParticulars ofoccupancy
Market value inexisting stateassuming full
good title as at31 August 2013
1. A piece of land
known as Z6,
Guanghua Road,
Chaoyang District,
Beijing,
the PRC
The property comprises a piece of land with a
total site area of approximately 11,007 sq m.
The property is situated in the CBD of Beijing
where numerous commercial and financial
institutions are located. As the capital city of
the mainland, the Beijing CBD has attracted
both domestic and international corporations and
professionals to establish their headquarters.
Supply of prime office premises has been tight
in the past few years. Grade A office rents have
been climbing whilst vacancy rates have
maintained at low levels.
As advised by the Company, a composite project
with ancillary facilities is planned to be
developed on the site with a total planned gross
floor area of approximately 250,300 sq m.
The details of the planned gross floor areas are
summarized as follows:
Use Approximateplanned gross
floor area(sq m)
Aboveground
Office 141,000
Retail 10,000
Hotel 45,000
Basement
Retail 8,650
Car parking spaces 28,500
Ancillary facilities 17,150
Total 250,300
The land use rights of the property have been
granted for commercial use of 40 years and 50
years for composite use, commencing from the
issue date of Grant Contract of Land Use
Rights.
The property is
currently a
vacant land
pending for
construction.
RMB6,300,000,000
(80% interest
attributable to
the Group :
RMB5,040,000,000)
(see Note (1) below)
APPENDIX I PROPERTY VALUATION REPORT
— 65 —
R5.06(1)
R5.06(4)R5.06(5)(a)
R5.10
Notes:-
(1) As advised by the Group, the State-owned Land Use Rights Certificates of the property have not been obtained
yet. However, the Grant Contract of Land Use Rights has been issued to the property and all land premium have
been paid. On the basis that all valid title certificates been issued to the property, all land premium and related
fees for the grant of the title certificates, costs of public utilities and ancillary infrastructure fees been fully
settled, the market value in existing state as at 31 August 2013 would be RMB6,300,000,000 (80% interest
attributable to the Group: RMB5,040,000,000).
(2) Pursuant to Grant Contract of Land Use Rights No. (2012) 0254 dated 30 August 2012, the land use rights of the
property with a site area of approximately 11,007 sq m have been contracted to be granted to the consortium of
遠洋地產有限公司, 香港上海滙豐銀行有限公司 and 崇高發展有限公司 (Sino-Ocean Land Limited, The
Hongkong and Shanghai Banking Corporation Limited and Super Goal Development Limited), and the details are
summarized as follows:-
(i) Lot No. : No. (2012)0254
(ii) Location : CBD, Guanghua Road, Chaoyang District, Beijing
(iii) Site area : 11,007 sq m
(iv) Usage : commercial and composite
(v) Land use term : 40 years for commercial, 50 years for composite, commencing from
the issue date of Grant Contract of Land Use Rights
(vi) Land grant fee : RMB3,807,030,000
(vii) Building covenant : Commencement before 1 August 2014
Construction completed before 1 August 2017
Pursuant to a Supplemental Agreement dated 27 August 2013, the grantee of the Grant Contract of Land Use
Rights No. (2012) 0254 has been changed to 北京天江通睿置業有限公司 (Beijing Skyriver CBD Property Co.,
Ltd.).
(3) According to Business Licence No. 110000450226944, 北京天江通睿置業有限公司 (Beijing Skyriver CBD
Property Co., Ltd.) was established with a registered capital of RMB3,923,144,415 as a limited company on 23
January 2013.
(4) We have been provided with and relied on a legal opinion on the property prepared by the Group’s PRC legal
adviser, which contains, inter alia, the following information:
(i) The consortium of 遠洋地產有限公司, 香港上海滙豐銀行有限公司 and 崇高發展有限公司 (Sino-Ocean
Land Limited, The Hongkong and Shanghai Banking Corporation Limited and Super Goal Development
Limited) has legally obtained the Notification of Confirmation of Successful Bid of the property, signed the
Grant Contract of Land Use Rights pursuant to the Notification of Confirmation of Successful Bid, lawfully
set up the project company, settled the land premium and related costs of the property, and signed the
relevant supplemental agreement pursuant to the Grant Contract of Land Use Rights.
(ii) Upon obtaining the State-owned Land Use Rights Certificate, the project company shall be in possession
of the proper legal land use rights of the property.
(iii) On the basis of compliance with the abovementioned procedures, there is no legal impediment for the
project company to obtain the State-owned Land Use Rights Certificate of the property.
APPENDIX I PROPERTY VALUATION REPORT
— 66 —
PN12-5.1
PN12-5.2(b)
PN12-16
PN12-7PN12-8.2
(5) The status of title and grant of major approvals and licences in accordance with the information provided to us
by the Group are as follows:
State-owned Land Use Rights Certificate No
Grant Contract of Land Use Rights Yes
Business Licence Yes
As advised by the Company, the land premium has been fully settled and the Company has submitted the
application of State-owned Land Use Rights Certificate which is expected to be obtained in the first quarter of
2014.
APPENDIX I PROPERTY VALUATION REPORT
— 67 —
VALUATION CERTIFICATE
Property Description and tenure
Particulars of
occupancy
Market value in
existing state
assuming full
good title as at
31 August 2013
2. Plots A, B, C and
E, Ocean Diamond
Bay,
East of Gongxing
Street and Dongbei
Road, South of
Dongfang Road,
Ganjingzi District,
Dalian,
Liaoning Province,
the PRC
The property comprises four plots namely A, B,
C and E.
Plots A, B and E are altogether planned to be
developed in seven phases:
• Phase 1 (Plots A1, A2, A3, B1 and B2)
• Phase 2 (Plots B3 and B5)
• Phase 4 (Plot B4)
• Phase 5 (Plots E1 to E4)
• Phase 6 (Plots E5 and E6)
• Phase 7 (Plot A5) and
• Phase 9 (Plot A4)
Plot C was vacant.
The site areas of the property are set out below:
Plot Site area
(sq m)
A 197,319.0
B 175,903.3
C 196,400.0
E 179,000.0
Total 748,622.3
The property as a famous scenic spot is situated
in Ganjingzi district with sea view.
The district is being converted from previous
industrial use to mixed land use with a focus on
cultural, recreational, tourist and resort
developments. The subject development is the
first mixed land use project sold by the local
government in 2010. Infrastructure facilities are
yet to be developed. It is about 30-40 minutes’
driving distance from the Dalian railway station.
As at the date
of valuation,
Phases 1 and 2
were under
construction and
scheduled for
completion in
2014 and 2015
respectively.
The remaining
phases were
vacant pending
for construction.
RMB11,850,000,000
(90% interest
attributable to
the Group:
RMB10,665,000,000)
(See Note (1) below)
APPENDIX I PROPERTY VALUATION REPORT
— 68 —
R5.06(3)
R5.06(4)R5.06(5)(a)R5.10
Property Description and tenure
Particulars of
occupancy
Market value in
existing state
assuming full
good title as at
31 August 2013
2. Cont’d According to the information provided by the
Company, the development schemes of the
various plots are summarized as follows:
Use Proposed
gross floor area
(sq m)
Plot A
Residential 225,448.00
Apartment 86,935.00
Office 176,760.00
Hotel 55,311.00
Commercial 13,374.00
Ancillary 3,483.34
Basement 166,817.62
Sub-total : 728,128.96
Plot B
Residential 283,957.00
Apartment —
Office —
Hotel —
Commercial 42,130.00
Ancillary 3,776.00
Basement 116,132.63
Sub-total : 445,995.63
Plot C
Residential 236,880.00
Apartment 29,400.00
Office 80,000.00
Hotel —
Commercial 78,600.00
Ancillary 3,170.00
Basement 113,060.00
Sub-total : 541,110.00
— —
APPENDIX I PROPERTY VALUATION REPORT
— 69 —
R5.06(4)R5.06(5)(a)R5.10
Property Description and tenure
Particulars of
occupancy
Market value in
existing state
assuming full
good title as at
31 August 2013
2. Cont’dUse Proposed
gross floor area
(sq m)
Plot E
Residential 132,878.00
Apartment 102,380.00
Office 35,000.00
Hotel —
Commercial 13,851.60
Ancillary 1,700.00
Basement 97,344.00
Sub-total : 383,153.60
Overall (Plots A, B, C and E)
Residential 879,163.00
Apartment 218,715.00
Office 291,760.00
Hotel 55,311.00
Commercial 147,955.60
Ancillary 12,129.34
Basement 493,354.25
Total : 2,098,388.19
The land use rights of Plots A and B have been
granted for terms due to expire on 30 May 2081
for residential use and due to expire on 30 May
2051 for commercial use.
We have not been provided with any title
documents relating to the land use rights of
Plots C and E.
— —
Notes:-
(1) Portions of the property, being Plots A and B, have been issued with State-owned Land Use Rights Certificates.
The other portions, being Plots C and E, of the property have been issued with Notifications of Confirmation of
Successful Bid and part of the required land premium and related fees has been paid. However, these plots have
not been issued with any Grant Contracts of Land Use Rights or State-owned Land Use Rights Certificates and
APPENDIX I PROPERTY VALUATION REPORT
— 70 —
R5.06(4)R5.06(5)(a)R5.10
PN12-5.1
the remaining land premium is yet payable. However, on the assumption that all valid title certificates been issued
to these plots, all land premium and related fees for the grant of the title certificates been fully settled, the market
value of the whole property in existing state as at 31 August 2013 would be RMB11,850,000,000 (90% interest
attributable to the Group: RMB10,665,000,000).
(2) Pursuant to 5 State-owned Land Use Rights Certificates, the land use rights of Plot A of the property, comprising
a total site area of 197,319 sq m, have been vested in 大連新悅置業有限公司 (Dalian Xinyue Properties Co., Ltd.).
The details are as follows:
Certificate No. Plot Site area Use Expiry date
(sq m)
201204035 A1 49,118.90 Residential 30 May 2081
201204038 A2 46,369.20 Residential 30 May 2081
201204039 A3 34,076.70 Residential 30 May 2081
201204048 A4 31,433.10 Commercial 30 May 2051
201204049 A5 36,321.10 Commercial 30 May 2051
Total 197,319.00
Pursuant to 5 State-owned Land Use Rights Certificates, the land use rights of Plot B of the property, comprising
a total site area of 175,903.30 sq m, have been vested in 大連廣宇置業有限公司 (Dalian Guangyu Properties Co.,
Ltd.). The details are as follows:
Certificate No. Plot Site area Use Expiry date
(sq m)
201204037 B1 31,977.60 Residential 30 May 2081
201204036 B2 43,639.10 Residential 30 May 2081
201204051 B3 28,296.40 Residential 30 May 2081
201204047 B4 36,009.50 Commercial 30 May 2051
201204050 B5 35,980.70 Residential 30 May 2081
Total 175,903.30
(3) Pursuant to Grant Contract of Land Use Rights No. 21020112011A010 dated 9 August 2011, the land use rights
of Plot A, in which the property is located thereon, with a site area of approximately 197,319 sq m have been
contracted to be granted to 大連新悅置業有限公司 (Dalian Xinyue Properties Co., Ltd.) at a consideration of
RMB2,246,240,000. Construction should be completed before 29 September 2014.
Pursuant to Grant Contract of Land Use Rights No. 21020112011A009 dated 9 August 2011, the land use rights
of Plot B, in which the property is located thereon, with a site area of approximately 175,903.3 sq m have been
contracted to be granted to 大連廣宇置業有限公司 (Dalian Guangyu Properties Co., Ltd.) at a consideration of
RMB1,972,160,000. Construction should be completed before 29 September 2014.
APPENDIX I PROPERTY VALUATION REPORT
— 71 —
PN12-5.2(a)
PN12-5.2(b)PN12-16
(4) According to Sales Confirmation of Plot C issued by 大連市國土資源和房產管理局 (Dalian State-owned Land
Resources and Housing Bureau), the site of a parcel of land with a site area of 196,400.00 sq m have been
confirmed to have been successfully tendered to 大連潤峰置業有限公司 (Dalian Runfeng Properties Co., Ltd.) and
大連聖基置業有限公司 (Dalian Shengji Properties Co., Ltd.) at a consideration of RMB2,382,730,000. The details
are as follows:
Plot Use Site area Plot ratio Gross floor area
(sq m) (sq m)
C1 Residential 41,500.00 1.8 74,700.00
C2 Residential 52,800.00 1.8 95,040.00
C3 Residential, Commercial 34,400.00 2.6 89,440.00
C4 Commercial 31,400.00 2.9 91,060.00
C5 Commercial 36,300.00 2.9 105,270.00
Total 196,400.00 2.32 455,510.00
According to Sales Confirmation of Plot E issued by 大連市國土資源和房產管理局 (Dalian State-owned Land
Resources and Housing Bureau), the site of a parcel of land with a site area of 179,000.00 sq m have been
confirmed to have been successfully tendered to 大連永圖置業有限公司 (Dalian Yongtu Properties Co., Ltd.) and
大連至遠置業有限公司 (Dalian Zhiyuan Properties Co., Ltd.) at a consideration of RMB1,983,420,000. The
details are as follows:
Plot Use Site area Plot ratio Gross floor area
(sq m) (sq m)
E1 Residential 32,100.00 1.8 57,780.00
E2 Residential 31,800.00 1.8 57,240.00
E3 Residential, Commercial 29,100.00 2.6 75,660.00
E4 Residential, Commercial 24,800.00 2.6 64,480.00
E5 Commercial 34,400.00 2.4 82,560.00
E6 Commercial 26,800.00 2.4 64,320.00
Total 179,000.00 2.25 402,040.00
(5) According to 3 Planning Permits for Construction Use of Land issued by 大連市規劃局 (Dalian Planning Bureau),
the construction site of three parcels of land with a total site area of 269,300.00 sq m is in compliance with the
urban planning requirements. The details are as follows:
Permit No. Plot Issue date Site area
(sq m)
210211201200012 A1, A2, A3 1 April 2012 129,500.00
210211201200013 B1, B2 1 April 2012 75,600.00
210211201300038 B3, B5 4 July 2013 64,200.00
Total 269,300.00
APPENDIX I PROPERTY VALUATION REPORT
— 72 —
(6) According to 3 Planning Permits for Construction Works issued by 大連市規劃局 (Dalian Planning Bureau), the
construction works of the property, with a total gross floor area of 669,172.00 sq m, are in compliance with the
construction works requirements and have been approved. The details are as follows:
Permit No. Plot Issue date Gross floor area
(sq m)
210211201200029 A1, A2, A3 30 May 2012 325,946.00
210211201200030 B1, B2 30 May 2012 186,372.00
210211201300043 B3, B5 25 July 2013 156,854.00
Total 669,172.00
(7) According to 8 Permits for Commencement of Construction Works issued by 大連市城鄉建設委員會 (Dalian
Urban and Rural Construction Committee), the construction works of the development are permitted to commence
with a total gross floor area of 664,844.00 sq m with details as follows:-
Permit No. Plot Issue date Gross floor area
(sq m)
210200201206290801 A1-1~15 29 June 2012 120,503.00
210200201206292301 A2-1~17 29 June 2012 138,448.00
210200201209182801 A3-1~15 18 September 2012 66,995.00
210200201206290901 B1-1~15 29 June 2012 59,130.00
210200201207062001 B2-1~17 6 July 2012 127,242.00
210200201309021901 B3-1~B3-6, B3-D1,
B3-S2, B3-S3
2 September 2013 58,699.00
210200201309022001 B5-1, 2, 5, 6, 9,
S1~S4, D1
2 September 2013 54,402.96
210200201309022101 B5-3, B5-4, B5-7,
B5-8, B5-D1
2 September 2013 39,424.04
Total 664,844.00
(8) According to 3 Pre-sale Permits, the permitted pre-sale area of portions of the property is 364,815.00 sq m with
details as follows:-
Permit No. Plot Issue date Gross floor area
(sq m)
20120053 A1, A2 19 July 2012 190,266.00
20120073 A3 26 September 2012 40,156.00
20120052 B1, B2 19 July 2012 134,393.00
Total 364,815.00
(9) According to the information provided by the Company, the expended construction cost for Phases 1 and 2 of the
property as at 31 August 2013 was approximately RMB1,956,000,000. The estimated total construction cost for
Phases 1 and 2 of the property was approximately RMB3,465,000,000. In the course of our valuation, such costs
have been taken into account.
APPENDIX I PROPERTY VALUATION REPORT
— 73 —
(10) The market value when completed of Phases 1 and 2 of the property as at 31 August 2013 was approximately
RMB8,860,000,000.
(11) According to Business Licence No. 210200400005173, 大連新悅置業有限公司 (Dalian Xinyue Properties Co.,
Ltd.) was established with a registered capital of USD241,000,000 (equivalent to RMB1,474,920,000) as a limited
company on 16 November 2010.
According to Business Licence No. 210200400005296, 大連廣宇置業有限公司 (Dalian Guangyu Properties Co.,
Ltd.) was established with a registered capital of USD213,200,000 (equivalent to RMB1,304,784,000) as a limited
company on 16 November 2010.
According to Business Licence No. 210200400005181, 大連潤峰置業有限公司 (Dalian Runfeng Properties Co.,
Ltd.) was established with a registered capital of USD64,650,000 (equivalent to RMB395,658,000) as a limited
company on 16 November 2010.
According to Business Licence No. 210200400005315, 大連聖基置業有限公司 (Dalian Shengji Properties Co.,
Ltd.) was established with a registered capital of USD114,545,000 (equivalent to RMB701,015,400) as a limited
company on 16 November 2010.
According to Business Licence No. 210200400005165, 大連永圖置業有限公司 (Dalian Yongtu Properties Co.,
Ltd.) was established with a registered capital of USD79,500,000 (equivalent to RMB486,540,000) as a limited
company on 16 November 2010.
According to Business Licence No. 210200400005307, 大連至遠置業有限公司 (Dalian Zhiyuan Properties Co.,
Ltd.) was established with a registered capital of USD69,754,000 (equivalent to RMB426,894,480) as a limited
company on 16 November 2010.
(12) We have been provided with and relied on a legal opinion on the property prepared by the Group’s PRC legal
adviser, which contains, inter alia, the following information:
(i) 大連新悅置業有限公司 (Dalian Xinyue Properties Co., Ltd.) and 大連廣宇置業有限公司 (Dalian Guangyu
Properties Co.,Ltd.) are in possession of the proper legal land use rights of Plots A and B respectively.
(ii) 大連潤峰置業有限公司 (Dalian Runfeng Properties Co., Ltd.), 大連聖基置業有限公司 (Dalian Shengji
Properties Co., Ltd.), 大連永圖置業有限公司 (Dalian Yongtu Properties Co., Ltd.) and 大連至遠置業有限公司 (Dalian Zhiyuan Properties Co., Ltd.) have legally obtained the Notification of Confirmation of
Successful Bid of Plots C and E respectively. The four companies have settled part of the contracted land
grant fees. The legal relationship for the grant of land use rights of Plots C and E is established. The four
companies are identified as the parties to be granted with the respective land use rights of Plots C and E.
On the basis that the project company will lawfully undergo the process of applying for State-owned Land
Use Rights Certificates, Planning Permits for Construction Use of Land, Planning Permits for Construction
Works, Permit for Commencement of Construction Works and Building Ownership Certificate, there will
be no legal impediment in obtaining the ownership of Plots C and E.
(iii) However, the four companies should proceed to sign the Grant Contract of Land Use Rights and settle all
land grant fees. Upon obtaining the State-owned Land Use Rights Certificate, the companies shall be in
possession of the respective proper legal land use rights of Plots C and E.
APPENDIX I PROPERTY VALUATION REPORT
— 74 —
PN12-7PN12-8.2
(13) The status of title and grant of major approvals and licences in accordance with the information provided to us
by the Group are as follows:
State-owned Land Use Rights Certificate Yes (Plots A and B)
Grant Contract of Land Use Rights Yes (Plots A and B)
Sales Confirmation Yes (Plots C and E)
Planning Permit for Construction Use of Land Yes (Parts of Plots A and B)
Planning Permit for Construction Works Yes (Parts of Plots A and B)
Permit for Commencement of Construction Works Yes (Parts of Plots A and B)
Pre-sale Permit Yes (Parts of Plots A and B)
Business Licence Yes
As advised by the Company, the project companies have obtained the Notification of Confirmation of Successful
Bid of Plots C and E and settled part of the contracted land grant fees. In order to obtain the relevant State-owned
Land Use Rights Certificates, the project companies will have to comply with the following outstanding
procedures, namely settle the balance of the contracted land grant fees, which the Company expects to settle for
Plot E by early 2014 and for Plot C during the first half of 2014, sign the Grant Contracts of Land Use Rights,
apply for planning approvals and Planning Permits for Construction Use of Land, pay deed tax, obtain proof of
deed tax payments and apply for State-owned Land Use Rights Certificates, which the Company expects to do so
at the beginning of 2014. Pursuant to the Company’s schedule, the remaining State-owned Land Use Rights
Certificates and Planning Permits for Construction Use of Land are expected to be obtained in the first half of 2014
whilst the Planning Permits for Construction Works and Permits for Commencement of Construction Works are
planned to be obtained in the second half of 2014.
APPENDIX I PROPERTY VALUATION REPORT
— 75 —
1. RESPONSIBILITY STATEMENT
This circular, for which the Directors collectively and individually accept full responsibility,
includes particulars given in compliance with the Listing Rules for the purpose of giving information
with regard to the Group. The Directors having made all reasonable enquires, confirm that to the best
of their knowledge and belief the information contained in this circular is accurate and complete in
all material respects and not misleading or deceptive, and there are no other matters the omission of
which would make any statement herein or this circular misleading.
2. DISCLOSURE OF INTERESTS
(a) Directors and chief executive
As at the Latest Practicable Date, the interests and short position of each Director and the chief
executive of the Company in the Shares which were required to be notified to the Company and the
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, recorded in the register required
to be kept by the Company pursuant to section 352 of the SFO or as otherwise notified to the Company
and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed
Companies in Appendix 10 to the Listing Rules were as follows:
Long position in the Shares and the underlying Shares of equity derivatives of the Company
Name of DirectorNature ofinterest
No. of ordinaryshares held
No. ofunderlying
Sharescomprised inshare options
(Note i)
Restrictedshares
(Note ii)
Percentagein the
Company’sissued share
capital
Mr. Li Ming Founder ofdiscretionary trust
127,951,178(Note iii)
— — 2.149%
Beneficiary oftrust
1,920,680(Note iv)
— — 0.032%
Beneficial owner 3,000,000 10,560,000 2,905,930 0.276%
Mr. Chen Runfu Beneficial owner 454,832 4,320,000 514,268 0.089%
Mr. Wen Haicheng Beneficial owner 121,657 1,730,000 943,058 0.047%
Ms. Liu Hui Beneficial owner 51,000 400,000 69,000 0.009%
Mr. Yang Zheng Beneficial owner — 400,000 60,000 0.008%
Mr. Cheung Vincent Sai Sing Beneficial owner — 400,000 60,000 0.008%
Mr. Tsang Hing Lun Beneficial owner 151,000 800,000 69,000 0.017%
APPENDIX II GENERAL INFORMATION
— 76 —
App1, Part B 2
App1, Part B38(1)(a)/(b)/(c)
Name of DirectorNature ofinterest
No. of ordinaryshares held
No. ofunderlying
Sharescomprised inshare options
(Note i)
Restrictedshares
(Note ii)
Percentagein the
Company’sissued share
capital
Mr. Gu Yunchang Beneficial owner 151,000 800,000 69,000 0.017%
Mr. Han Xiaojing Beneficial owner 151,000 800,000 69,000 0.017%
Mr. Zhao Kang Beneficial owner 151,000 800,000 69,000 0.017%
Notes:
i. The share options were granted pursuant to the share option scheme of the Company.
ii. The restricted shares were granted pursuant to the restricted share award scheme of the Company.
iii. The 127,951,178 Shares were held by a discretionary trust of which Mr. Li Ming is the founder.
iv. The 1,920,680 Shares were held by a discretionary trust of which Mr. Li Ming, his spouse and his son are the
beneficiaries.
Long positions in the shares and the underlying shares of equity derivatives of associated
corporation(s)
Name of DirectorName of associatedcorporation
Nature ofinterest
No. ofordinary shares
of associatedcorporation
held
No. ofunderlying
shares ofassociated
corporationcomprised inshare options
Approximatepercentage of
total issuedshare capital of
associatedcorporation
Mr. LI Ming Gemini Investments
(Holdings) Limited
Beneficial
owner
— 4,000,000 0.898%
Mr. WEN Haicheng Gemini Investments
(Holdings) Limited
Beneficial
owner
70,000 — 0.016%
Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief
executive and any other person had any long or short positions in the Shares, underlying Shares or
debentures of the Company or any of its associated corporations (defined in the SFO) as recorded in
the register required to be kept under section 352 of the SFO.
APPENDIX II GENERAL INFORMATION
— 77 —
(b) Substantial Shareholders
As at the Latest Practicable Date, so far as was known to the Directors or the chief executive,
persons having interests and short positions in 5% or more in the Shares, underlying Shares and
debentures of the Company which would fall to be disclosed to the Company under the provisions of
Divisions 2 and 3 of Part XV of the SFO, and required to be recorded in the register of interests and
short positions required to be kept by the Company pursuant to section 336 of the SFO were as
follows:
Name of Shareholder CapacityLong/shortposition
Number ofShares held Percentage
China Life Group (Note i) Interest of controlled
corporation
Long 1,477,595,944 24.81%
Chen Din Hwa (deceased)
(Note ii)
Interest of controlled
corporation/Family interest
Long 840,158,610 14.11%
HSBC Trustee (Guernsey)
Limited (Note iii)
Interest of controlled
corporation
Long 411,284,187 6.91%
Notes:
i. The 1,477,595,944 Shares were registered in the name of, and beneficially owned by, China Life. China Life Group was
interested in 68.37% of China Life.
ii. Mr. Chen Din Hwa (deceased) held a long position in 840,158,610 Shares comprising 707,147,893 Shares and
133,010,717 Shares were beneficially owned by Spring Glory and Gavast Estates Limited respectively. Both Spring
Glory and Gavast Estates Limited were wholly-owned by Keymark Associates Limited. Keymark Associates Limited was
wholly-owned by Golden Anchor Holdings Limited. Golden Anchor Holdings Limited was wholly-owned by Nan Fung
Group Holdings Limited. Nan Fung Group Holdings Limited was wholly-owned by Nan Fung International Holdings
Limited. Nan Fung International Holdings Limited was wholly-owned by Chen’s Group International Limited, which in
turn was wholly-owned by the estate of Mr. Chen Din Hwa (deceased).
iii. The 362,411,187 Shares and 48,873,000 Shares were registered in the name of, and beneficially owned by Crystal Will
Holdings Limited and Grand Wave Enterprises Limited respectively. Crystal Will Holdings Limited was wholly-owned
by Wharf China Development Limited. Wharf China Development Limited was wholly-owned by Wharf China Holdings
Limited. Wharf China Holdings Limited was wholly-owned by The Wharf (Holdings) Limited. Grand Wave Enterprises
Limited was wholly-owned by Smart Bridge Investments Limited. Smart Bridge Investments Limited was wholly-owned
by Wharf Hong Kong Limited. Wharf Hong Kong Limited was wholly-owned by The Wharf (Holdings) Limited. WF
Investment Partners Limited was interested in 42.98% of The Wharf (Holdings) Limited. WF Investment Partners
Limited was wholly-owned by Wheelock Investments Limited. Wheelock Investments Limited was wholly-owned by
Wheelock and Company Limited. HSBC Trustee (Guernsey) Limited was interested in 48.98% of Wheelock and
Company Limited. HSBC Trustee (Guernsey) Limited was deemed to be interested in these shares by virtue of the SFO.
APPENDIX II GENERAL INFORMATION
— 78 —
App1, Part B 34
3. DIRECTORS’ INTERESTS IN ASSETS OF THE GROUP
As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any
assets which had been, since 31 December 2012, being the latest published audited accounts of the
Company were made up, acquired or disposed of by or leased to any member of the Group, or are
proposed to be acquired or disposed of by or leased to any member of the Group.
4. DIRECTORS’ INTERESTS IN CONTRACTS OF THE GROUP
As at the Latest Practicable Date, none of the Directors was materially interested in any contract
or arrangement subsisting as at the date of this circular and which is significant in relation to the
business of the Group.
5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS
As at the Latest Practicable Date, none of the Directors or their respective associates had any
business or interest in a business which competes or is likely to compete, either directly or indirectly,
with the business of the Group.
6. SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors has entered or proposed to enter into a
service contract with any member of the Group which will not expire or is not determinable by the
employer within one year without payment of compensation (other than statutory compensation).
7. LITIGATION
As at the Latest Practicable Date, neither the Company nor any member of the Group was
engaged in any litigation or arbitration of material importance and no litigation or claim of material
importance was known to the Directors to be pending or threatened by or against the Company or any
member of the Group.
8. MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors were not aware of any material adverse change
in the financial or trading position of the Group since 31 December 2012, being the date of the latest
published audited financial statements of the Company.
APPENDIX II GENERAL INFORMATION
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App1, Part B40(1)/(2)
LR14A.59(11)
App1, Part B 39
App1, Part B 32
9. EXPERTS
The following are the qualifications of the experts who have given opinion or advice which are
contained in this circular:
Name Qualifications
Anglo Chinese A corporation licensed to carry out Type 1 (dealing in
securities), Type 4 (advising on securities), Type 6 (advising
on corporate finance) and Type 9 (asset management)
regulated activities under the SFO
DTZ Property valuer
Grandall Law Firm (Beijing) PRC legal adviser to the Company
Each of Anglo Chinese, DTZ and Grandall Law Firm (Beijing) have given and has not withdrawn
its written consent to the issue of this circular with the inclusion herein of its letter or its name in the
form and context in which they respectively appear.
As at the Latest Practicable Date, each of Anglo Chinese, DTZ and Grandall Law Firm (Beijing)
did not have any shareholding in any member of the Group or the right (whether legally enforceable
or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
As at the Latest Practicable Date, each of Anglo Chinese, DTZ and Grandall Law Firm (Beijing)
did not have any direct or indirect interests in any assets which have been, since 31 December 2012
(the date to which the latest published audited financial statements of the Company were made up),
acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired
or disposed of by or leased to any member of the Group.
10. MISCELLANEOUS
(a) The registered office of the Company is at Suite 601, One Pacific Place, 88 Queensway,
Hong Kong. The principal place of business of the Company is 31-33 Floor, Tower A,
Ocean International Center, 56 Dongsihuanzhonglu, Chaoyang District, Beijing, the PRC.
(b) The company secretary of the Company is Mr. Sum Pui Ying, who is a fellow member of
the Hong Kong Institute of Certified Public Accountant and the Chartered Association of
Certified Accountants.
(c) The Company’s share registrar and transfer office is Computershare Hong Kong Investor
Services Limited, which is situated at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wanchai, Hong Kong.
(d) The English version of this circular shall prevail over the Chinese version in case of any
discrepancy.
APPENDIX II GENERAL INFORMATION
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App1, Part B5(1)/(2)/(3)
11. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection at the registered office of the
Company at Suite 601, One Pacific Place, 88 Queensway, Hong Kong during normal business hours
of the Company on any business day, from the date of this circular up to and including the date of the
EGM:
(a) the Subscription Agreements;
(b) the Master Acquisition Agreement;
(c) the letter from the Independent Board Committee, the text of which is set out under the
section headed “Letter from the Independent Board Committee” of this circular;
(d) the letter from Anglo Chinese, the Independent Financial Adviser, the text of which is set
out under the section headed “Letter from the Independent Financial Adviser” of this
circular;
(e) the property valuation report issued by DTZ, the text of which is set out in Appendix I to
this circular; and
(f) the consent letters from Anglo Chinese, DTZ and Grandall Law Firm (Beijing) referred to
in the paragraph headed “Experts” in this appendix.
APPENDIX II GENERAL INFORMATION
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App1, Part B 43(2)(a)/(c)
(Stock Code: 03377)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that the extraordinary general meeting (the “Meeting”) of
Sino-Ocean Land Holdings Limited (the “Company”) will be held at Salon Room VI, 3/F, JW Marriott
Hotel, Pacific Place, 88 Queensway, Hong Kong on Tuesday, 19 November 2013 at 10:00 a.m. for the
purpose of considering and, if thought fit, passing with or without modifications or amendments, the
following resolutions as ordinary resolutions of the Company to be taken by way of poll:
ORDINARY RESOLUTIONS
1. “THAT
(a) the subscription agreement dated 27 September 2013 (the “China Life SubscriptionAgreement”) and entered into between the Company and China Life Insurance Company
Limited (中國人壽保險股份有限公司) (“China Life”) in connection with the subscription
of 635,941,967 shares of HK$0.80 each in the issued share capital of the Company (the
“China Life Subscription Shares”) (a copy of which has been produced at the Meeting
marked “A” and signed by the chairman of the Meeting for the purpose of identification)
and the transactions contemplated thereunder be and are hereby approved, confirmed and
ratified in all respects;
(b) any one director of the Company (“Director”) be and is hereby authorized to do such acts
and things, to sign and execute such other documents and to take such steps as he in his
discretion consider necessary, appropriate, desirable or expedient to carry out or give effect
to or otherwise in connection with or in relation to the China Life Subscription Agreement
and the transactions contemplated thereunder; and
(c) the board of Directors be and is hereby authorized to allot and issue the China Life
Subscription Shares upon and subject to the terms and conditions of the China Life
Subscription Agreement.”
2. “THAT
(a) the subscription agreement dated 27 September 2013 (the “Nan Fung SubscriptionAgreement”) and entered into between the Company and Spring Glory Investment Limited
NOTICE OF EGM
— 82 —
(“Nan Fung”) in connection with the subscription of 686,611,211 shares of HK$0.80 each
in the issued share capital of the Company (the “Nan Fung Subscription Shares”) (a copy
of which has been produced at the Meeting marked “B” and signed by the chairman of the
Meeting for the purpose of identification) and the transactions contemplated thereunder be
and are hereby approved, confirmed and ratified in all respects;
(b) any one Director be and is hereby authorized to do such acts and things, to sign and execute
such other documents and to take such steps as he in his discretion consider necessary,
appropriate, desirable or expedient to carry out or give effect to or otherwise in connection
with or in relation to the Nan Fung Subscription Agreement and the transactions
contemplated thereunder; and
(c) the board of Directors be and is hereby authorized to allot and issue the Nan Fung
Subscription Shares upon and subject to the terms and conditions of the Nan Fung
Subscription Agreement.”
3. “THAT
(a) the master acquisition agreement dated 27 September 2013 (the “Master Acquisition
Agreement”) and entered into between Fame Gain Holdings Limited and Nan Fung
Investment China Holdings Limited in connection with the proposed transfer of a 20%
interests in a commercial property development project located on the land with a site area
of approximately 11,000 square metres located at Plot Z6, Guanghua Road, Chaoyang
District, Beijing, the PRC and an approximately 10% interests in a residential property
development project located on the land with a site area of approximately 749,000 square
metres located at Plots A, B, C and E, Ocean Diamond Bay, East of Gongxing Street and
Dongbei Road, South of Dongfang Road, Ganjingzi District, Dalian, Liaoning Province, the
PRC (a copy of which has been produced at the Meeting marked “C” and signed by the
chairman of the Meeting for the purpose of identification) and the transactions
contemplated thereunder be and are hereby approved, confirmed and ratified in all respects;
and
(b) any one Director be and is hereby authorized to do such acts and things, to sign and execute
such other documents and to take such steps as he in his discretion consider necessary,
appropriate, desirable or expedient to carry out or give effect to or otherwise in connection
with or in relation to the Master Acquisition Agreement and the transactions contemplated
thereunder.”
By order of the Board
Sino-Ocean Land Holdings LimitedLi Ming
Chairman
Hong Kong, 28 October 2013
NOTICE OF EGM
— 83 —
Registered Office:
Suite 601, One Pacific Place
88 Queensway
Hong Kong
Notes:
1. A member entitled to attend and vote at the Meeting may appoint one or more proxies to attend
and, on a poll, to vote in his stead. A proxy need not be a member of the Company but must be
present in person to represent the member.
2. The instrument appointing a proxy shall be in writing under hand of the appointer or of his/her
attorney duly authorized in writing or, if the appointer is a corporation, either under its common
seal or under the hand of an officer, attorney or other person authorized to sign the same.
3. In the case of joint holders of any share, any one of such holders may vote at the Meeting, either
personally or by proxy, in respect of such share as if he were solely entitled thereto. However,
if more than one of such joint holders is present at the Meeting, personally or by proxy, the vote
of the joint holder whose name stands first in the register of members of the Company and who
tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of
the other joint holder(s).
4. In order to be valid, the form of proxy duly completed and signed in accordance with the
instructions printed on it together with the power of attorney or other authority, if any, under
which it is signed, or a notarially certified copy of it must be deposited at the office of the
Company’s share registrar, Computershare Hong Kong Investor Services Limited at 17M Floor,
Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any
event not less than 48 hours before the time appointed for holding of the Meeting or any
adjournment thereof.
5. Completion and return of the form of proxy will not preclude members from attending and voting
in person at the Meeting or at any adjournment thereof (as the case may be) if the members so
wish.
6. The register of members of the Company will be closed from Friday, 15 November 2013 to
Tuesday, 19 November 2013 (both days inclusive), during which period no transfer of shares will
be registered. In order to be entitled to attend the Meeting, all transfer documents together with
relevant share certificates must be lodged with the Company’s share registrar, Computershare
Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183
Queen’s Road East, Wanchai, Hong Kong, for registration not later than 4:30 p.m. on Thursday,
14 November 2013.
7. As at the date hereof, the board of Directors of the Company comprises three executive
Directors, namely, Mr. Li Ming, Mr. Chen Runfu and Mr. Wei Haicheng; three non-executive
Directors, namely, Ms. Liu Hui, Mr. Yang Zheng and Mr. Cheung Vincent Sai Sing; and four
independent non-executive Directors, namely, Mr. Tsang Hing Lun, Mr. Gu Yunchang, Mr. Han
Xiaojing and Mr. Zhao Kang.
NOTICE OF EGM
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