Auto Italia : MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF ADDITIONAL 27.49% EQUITY INTEREST IN DAKOTA RE II LIMITED INVOLVING ISSUE OF PROMISSORY NOTE

February 24, 2021 at 02:16 pm IST

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Auto Italia Holdings Limited, you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

AUTO ITALIA HOLDINGS LIMITED จ༺лછٰϞࠢʮ̡*

(Incorporated in Bermuda with limited liability)

(Stock Code: 720)

MAJOR TRANSACTION

IN RELATION TO THE ACQUISITION OF ADDITIONAL 27.49% EQUITY INTEREST IN

DAKOTA RE II LIMITED

INVOLVING ISSUE OF PROMISSORY NOTE

Capitalised terms used in this cover page shall have the meaning as those defined in this circular.

A letter from the Board is set out on pages 7 to 18 of this circular.

A notice convening the SGM of the Company to be held at United Conference Centre, 10th Floor, United Centre, 95 Queensway, Admiralty, Hong Kong on Thursday, 18 March 2021 at 2:00 p.m. is set out on pages SGM-1 to SGM-3 of this circular. A form of proxy for use at the meeting is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the share registrar and transfer office of the Company in Hong Kong, Tricor Standard Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the appointed time for holding of the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

PRECAUTIONARY MEASURES AND SPECIAL ARRANGEMENTS FOR THE SGM

Please refer to page 1 of this circular for measures being implemented at the SGM to try to prevent and control the spread of the novel coronavirus ("COVID-19"), including, without limitation:

•

all attendees being required to (a) undergo body temperature screening; and (b) wear surgical masks prior to admission to the SGM venue;

•

all attendees who are subject to health quarantine prescribed by the Hong Kong Government not being admitted to the SGM venue;

•

all attendees being required to wear surgical masks throughout the SGM; appropriate seating arrangement being implemented; and

• no distribution of corporate gift or refreshment.

The Company reminds attendees that they should carefully consider the risks of attending the SGM, taking into account their own personal circumstances. Furthermore, the Company would like to remind the Shareholders that physical attendance in person at the SGM is not necessary for the purpose of exercising their voting rights and strongly recommends that Shareholders appoint the chairman of the SGM as their proxy and submit their form of proxy as early as possible. Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.

For identification purpose only

25 February 2021

CONTENTS
Page
PRECAUTIONARY MEASURES FOR THE SGM ........................	1
DEFINITIONS ...................................................	2
LETTER FROM THE BOARD .......................................	7

NOTICE OF THE SGM ............................................

APPENDIX I	-	FINANCIAL INFORMATION OF THE GROUP ......	I-1
APPENDIX II	-	FINANCIAL INFORMATION OF THE TARGET
GROUP ....................................	II-1
APPENDIX III	-	MANAGEMENT DISCUSSION AND ANALYSIS OF
THE TARGET GROUP ........................	III-1
APPENDIX IV	-	UNAUDITED PRO FORMA FINANCIAL
INFORMATION OF THE ENLARGED GROUP ....	IV-1
APPENDIX V	-	VALUATION REPORT OF THE PROPERTY .........	V-1
APPENDIX VI	-	GENERAL INFORMATION ......................	VI-1
SGM-1

-i-

PRECAUTIONARY MEASURES FOR THE SGM

The health of our Shareholders, staff and stakeholders is of paramount importance to us. In view of the ongoing COVID-19 pandemic, the Company will implement the following precautionary measures at the SGM to protect attending Shareholders, staff and stakeholders from the risk of infection:

(i) Compulsory body temperature checks will be conducted for every Shareholder, proxy or other attendee at each entrance of the SGM venue. Any person with a body temperature of over 37.4 degrees Celsius may be denied entry into the SGM venue or be required to leave the SGM venue.
(ii) Each attendee may be asked whether (a) he/she has travelled outside of Hong Kong within the 14-day period immediately before the SGM; and (b) he/she is subject to any Hong Kong Government prescribed quarantine. Anyone who responds positively to any of these questions may be denied entry into the SGM venue or be required to leave the SGM venue.
(iii) Each attendee is required to wear a surgical face mask throughout the SGM and inside the SGM venue, and to maintain a safe distance between seats.
(iv) No refreshment will be served, and there will be no corporate gift.

In addition, the Company reminds all Shareholders that physical attendance in person at the SGM is not necessary for the purpose of exercising voting rights.

Shareholders may appoint the chairman of the SGM as their proxy to vote on the relevant resolution at the SGM instead of attending the SGM in person, by completing and return the proxy form attached to this circular.

Subject to the development of COVID-19, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate.

The proxy form is enclosed with this circular for Shareholders who opt to receive physical circulates. Alternatively, the proxy form can be downloaded from the Company's website (www.autoitalia.com.hk). If you are not a registered Shareholder (i.e. if your Shares are held via banks, brokers, custodians or Hong Kong Securities Clearing Company Limited), you should consult directly with your banks or brokers or custodians (as the case may be) to assist you in the appointment of proxy.

If any Shareholder has any question relating to the SGM, please contact Tricor Standard Limited, the Company's share registrar and transfer office in Hong Kong as follows:

Tricor Standard Limited

Level 54, Hopewell Centre

183 Queen's Road East

Hong Kong

Tel: +852 2980 1333

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

"Acquisition"

the acquisition of the Sale Shares by Elite Jumbo from the Vendor on the terms and subject to the conditions set forth in the Acquisition Agreement

"Acquisition Agreement"

the conditional sale and purchase agreement dated 24 December 2020 entered into between Elite Jumbo and the Vendor in relation to the Acquisition

"Announcement"

the announcement of the Company dated 24 December 2020 in relation to the Acquisition

"Board"

the board of Directors

"Business Day"

a day (other than a Saturday or Sunday, a general holiday as defined in the General Holidays Ordinance (Chapter 149 of the Laws of Hong Kong) or days on which Typhoon Signal No. 8 or higher is hoisted or a "black" rainstorm warning signal is given in Hong Kong at any time during 9:00 a.m. to 5:00 p.m.) on which licensed banks in Hong Kong are generally open for ordinary business and dealings in inter-bank deposits and payments can take place

"Company"

Auto Italia Holdings Limited (จ༺лછٰϞࠢʮ̡*), a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange (stock code: 720)

"Completion"

"Completion Date"

completion of the Acquisition in accordance with the terms and conditions of the Acquisition Agreement the fifth (5th) Business Day immediately following the date on which all the conditions (except for such conditions which may only be fulfilled at Completion) are fulfilled or waived (as the case maybe), or such other date as may be agreed between Elite Jumbo and the Vendor in writing

"Conditions"

the conditions precedent to the Acquisition as set out in the Acquisition Agreement

"connected person(s)"

has the meaning ascribed to it under the Listing Rules

For identification purpose only

"Consideration"

the total consideration of HK$53,500,000 payable by Elite Jumbo for the purpose of the Sale Shares under the Acquisition Agreement

"Dakota Capella"

Dakota Capella Limited, a company incorporated in the British Virgin Islands with limited liability, a direct wholly-owned subsidiary of the Target Company and a limited partner holding 92.75% of the entire issued share capital of Dakota LLP as at the Latest Practicable Date

"Dakota HK"

Dakota Capella (HK) Limited, a company incorporated in Hong Kong with limited liability and a direct wholly-owned subsidiary of the Target Company as at the Latest Practicable Date

"Dakota LLP"

Dakota Capella LLP, a limited liability partnership established under the laws of Northern Ireland, which was held as to 92.75% by Dakota Capella as at the Latest Practicable Date

"Director(s)"

the director(s) of the Company

"Elite Jumbo"

Elite Jumbo Limited (ᒺᘒϞࠢʮ̡), a company incorporated in the British Virgin Islands with limited liability and an indirect wholly-owned subsidiary of the Company as at the Latest Practicable Date

"Enlarged Group"

the Group as enlarged by the Target Group

"GBP"

British Pound(s) Sterling, the lawful currency of the United Kingdom

"Group"

the Company and its subsidiaries

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong"

the Hong Kong Special Administrative Region of the People's Republic of China

"Independent Third Party(ies)"

an individual or a company who is not connected with (within the meaning of the Listing Rules) any directors, chief executive or substantial shareholders of the Company, its subsidiaries or any of their respective associates

"Latest Practicable Date"

23 February 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

"Long Stop Date"

30 April 2021, or any such other date as the Vendor and Elite Jumbo may agree in writing

"Material Adverse Change"

an event, act or circumstance that has a material adverse effect on the business, affairs, trademarks, intellectual property rights, title to properties, results, operations, financial condition, tax position or prospects of the Target Group, or its assets (including its interests in the Property), or that may or would reasonably be expected to result in any of the necessary permits or approvals for the Property being revoked, withdrawn, terminated or suspended, excluding any such event, act or circumstance required to consummate the transactions contemplated by the Acquisition Agreement

"Mr. Cheung"

Mr. Cheung Wai (ੵࠨ), the sole shareholder of the Vendor

"NCS"

NCS (BVI) Holdings Limited, a company incorporated in the British Virgin Islands with limited liability which is wholly-owned by Mr. Cheung

"Partnership Agreement"

the limited liability partnership agreement dated 22 August 2017 entered into between Dakota Capella, Dakota Partners Limited, Frances Investments Limited and Dakota LLP in respect of their rights and obligations and the affairs of the Dakota LLP (as amended from time to time)

"Promissory Note"

the promissory note in the principal amount of HK$53,500,000 to be issued by Elite Jumbo to the Vendor to settle the Consideration

"Property"

the property known as Capella, 60 York Street, Glasgow, G2 8JX, United Kingdom

"Sale Shares"

2,749 shares of the Target Company with a par value of US$1.00 each registered in the name of the Vendor and beneficially owned by the Vendor, representing 27.49% of the entire issued share capital of the Target Company immediately before Completion

"SFO"

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

"SGM"

the special general meeting of the Company to be convened to consider, and if thought fit, pass the resolution to approve the Acquisition Agreement and the transactions contemplated thereunder, including any adjournments thereof

"Share(s)"

ordinary share(s) of HK$0.02 each in the share capital of the Company

"Shareholder(s)"

holder(s) of the Share(s)

"Shareholders' Agreement"

the shareholders agreement dated 18 August 2017 entered into among Elite Jumbo, the Vendor and other shareholders of the Target Company and the Target Company in respect of the affairs of the Target Company (as amended from time to time)

"sq.ft."

square foot (feet)

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

"Target Company"

"Target Group"

Dakota RE II Limited, a company incorporated in the British Virgin Islands with limited liability, which was held as to 27.49% by Elite Jumbo, 27.49% by the Vendor and approximately 45.02% by four other existing shareholders as at the Latest Practicable Date collectively, the Target Company, Dakota Capella, Dakota HK and Dakota LLP

"Transaction Documents"

the Acquisition Agreement, the Promissory Note and the documents referred to in it and any other agreements executed or to be executed in connection with the Acquisition Agreement or transactions contemplated in the Acquisition Agreement

DEFINITIONS
"US$"	United States Dollars, the lawful currency of the
United States of America
"Valuer"	Roma Appraisals Limited, an independent property
valuer
"Vendor"	Ever Bless Investments Limited (͑Сҳ༟Ϟࠢʮ̡ ),a
company incorporated in the British Virgin Islands
with limited liability
"%"	per cent.

Notes:Unless specified in this circular, amounts denominated in GBP and US$ have been converted, for the purpose of illustration only, into Hong Kong dollars at the rate of GBP1:HK$10.90 and US$1:HK$7.75, respectively. Such translations should not be construed as a representation that the amounts in question have been, could have been or could be, converted at any particular rate at all.

Certain amounts and percentage figures set out in this circular have been subject to rounding adjustments.

AUTO ITALIA HOLDINGS LIMITED จ༺лછٰϞࠢʮ̡*

(Incorporated in Bermuda with limited liability)

(Stock Code: 720)

Executive Directors:	Registered Office:
Mr. CHONG Tin Lung Benny	Victoria Place, 5th Floor
(Executive Chairman and Chief Executive Officer)	31 Victoria Street
Mr. LAM Chi Yan	Hamilton HM10
Mr. HUANG Zuie-Chin	Bermuda
Mr. NG Siu Wai
Principal Place of Business in
Independent Non-executive Directors:	Hong Kong:
Mr. KONG Kai Chuen Frankie	Unit C, Ground Floor
Mr. LEE Ben Tiong Leong	2 Yuen Shun Circuit
Mr. TO Chun Wai	Siu Lek Yuen
Shatin, Hong Kong
25 February 2021
To the Shareholders
Dear Sir or Madam,

MAJOR TRANSACTION

IN RELATION TO THE ACQUISITION OF ADDITIONAL 27.49% EQUITY INTEREST IN

DAKOTA RE II LIMITED

INVOLVING ISSUE OF PROMISSORY NOTE

INTRODUCTION

Reference is made to the Announcement in relation to, among other things, the Acquisition.

For identification purpose only

As set out in the Announcement, on 24 December 2020, Elite Jumbo (an indirect wholly-owned subsidiary of the Company) and the Vendor entered into the Acquisition Agreement, pursuant to which, among others, Elite Jumbo conditionally agreed to purchase and the Vendor conditionally agreed to sell the Sale Shares, representing 27.49% of the entire issued share capital of the Target Company, for the consideration of HK$53,500,000, which will be satisfied by way of issue of the Promissory Note by Elite Jumbo on the Completion Date.

The purpose of this circular is to provide you with, among other things, (i) further details of the Acquisition; (ii) financial information of the Group; (iii) financial information of the Target Group; (iv) unaudited pro forma financial information of the Enlarged Group; (v) the valuation report of the Property; and (vi) the notice convening the SGM.

THE ACQUISITION AGREEMENT

The principal terms of the Acquisition Agreement are set out below:

Date

24 December 2020

Parties

Purchaser: Elite Jumbo Limited, an indirect wholly-owned subsidiary of the Company

Vendor: Ever Bless Investments Limited

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

Assets to be acquired

Pursuant to the Acquisition Agreement, Elite Jumbo conditionally agreed to purchase and the Vendor conditionally agreed to sell the Sale Shares, representing 27.49% of the entire issued share capital of the Target Company, free from all encumbrances and together with all rights attaching or accruing to them at and from Completion including but not limited to all rights to any dividend or other distribution declared, made, paid or payable on or after the Completion Date.

Consideration

The Consideration is HK$53,500,000, which will be satisfied by way of issue of the Promissory Note by Elite Jumbo to the Vendor on the Completion Date.

The Consideration was arrived at after arm's length negotiations between Elite Jumbo and the Vendor with reference to, among other things, (i) the indicative market value of the Property, being GBP50 million (equivalent to approximately HK$545.0 million), as appraised by the Valuer as at 31 October 2020 (such value being the same as the market value of the Property as shown in the valuation report issued by the Valuer); (ii) unaudited consolidated net asset attributable to equity owner of the Target Company of approximately GBP18.7 million (equivalent to approximately HK$203.8 million) as at 30 September 2020; and (iii) the information as set out in the section headed "Reasons for and benefits of the Acquisition" below.

Details of the valuation report of the Property are set out on pages V-1 to V-6 of this circular.

Taking into consideration the factors set out above, the Directors are of the view that the Consideration and the terms and conditions of the Acquisition Agreement are fair and reasonable and in the interest of the Company and its Shareholders as a whole.

The Promissory Note

The principal terms of the Promissory Note are summarised as follows:

Issuer: Elite Jumbo

Noteholder: the Vendor

Principal amount: HK$53,500,000

Maturity date:

the date falling on the date of the third (3rd) anniversary of the date of issue of this Promissory Note or if such date is not a Business Day, the Business Day immediately following such date, or such other date as agreed by the Parties in writing (the "Maturity

Date").

Interest rate:

8% per annum on the principal amount outstanding from time to time, payable annually in arrears on the last Business Day of December each year, beginning with 31 December 2021, and on the Maturity Date and at such other times as may be specified in the Promissory Note.

Early redemption:

Elite Jumbo may redeem all or part of the Promissory Note at any time prior to the Maturity Date at 100% of the face value thereby redeemed but unpaid, by giving the noteholder not less than seven (7) days' prior written notice specifying the amount and date of prepayment without any penalty, prepayment or other fees.

Conditions precedent

The obligation of Elite Jumbo to complete the purchase of the Sale Shares at Completion is subject to the fulfilment or, if applicable, waiver of the Conditions summarized below:

(a) Elite Jumbo and the Company having obtained all necessary approvals (including but not limited to Shareholders' approval) that may be required under the applicable laws (including but not limited to the Listing Rules) for and/or in connection with the transactions contemplated under the Transaction Documents;
(b) each of the parties to the Shareholders' Agreement (other than Elite Jumbo) having executed a deed to waive all transfer restrictions and pre-emptive rights under the Shareholders' Agreement with respect to, and acknowledge and consent to, the Acquisition;
(c) each of the parties to the Partnership Agreement having executed a deed to approve and consent to the Acquisition, and waive all rights and remedies under the Partnership Agreement or otherwise as a result of or in connection with the Acquisition and the indirect change of control over Dakota LLP;
(d) as of the Completion Date:
- (i) the representations, warranties and undertakings given by the Vendor under the Acquisition Agreement remaining true and accurate and not misleading in any respect as of the Completion Date;
- (ii) the Vendor having performed and complied in all respects with all covenants, agreements and obligations contained in the Transaction Documents to which it is a party that are required to be performed or complied with by it on or before Completion; and
- (iii) there having been delivered to Elite Jumbo a certificate confirming that each of the Conditions (except for those Conditions specifically subject to the satisfaction of the Purchaser) has been satisfied;

(e) no notice, order, judgement, action or proceeding of any court, arbitrator, governmental authority, statutory or regulatory body having been served, issued or made which restrains, prohibits or makes unlawful any transaction contemplated by the Acquisition Agreement or which may materially and adversely affect the right of Elite Jumbo to own the legal and beneficial title to the Sale Shares and (through the Target Group) interests in the Property, in each case free from encumbrances, following the Completion Date or affixes additional conditions unacceptable to Elite Jumbo to the operations or shareholding of the Target Group; and
(f) (i) no Material Adverse Change having occurred; and (ii) there being no change in the applicable laws which may result in Material Adverse Change to the Target Group.

The Vendor shall use its best endeavours to ensure the satisfaction of the Conditions as soon as possible after the date of the Acquisition Agreement but in any event no later than the Long Stop Date.

Elite Jumbo may in its sole and absolute discretion, at any time by notice in writing to the Vendor, waive in whole or in part and conditionally or unconditionally any of the above Conditions (except for Condition (a) which may not be waived).

If the Conditions are not satisfied or waived (if applicable) by the Long Stop Date,

Elite Jumbo shall have the right to serve notice of termination of the Acquisition Agreement, provided however that (a) the surviving provisions in the Acquisition Agreement shall continue in force following the termination; and (b) the termination of the Acquisition Agreement shall be without prejudice to the rights of Elite Jumbo accrued prior to such termination.

As at the Latest Practicable Date, save for Conditions (b) and (c) which have been fulfilled, none of the other Conditions had been fulfilled or waived (as applicable).

Completion

Completion will take place at 11:00 a.m. on the Completion Date (or such other time as Elite Jumbo and the Vendor may agree in writing).

THE SHAREHOLDING STRUCTURE OF THE TARGET GROUP

As at the Latest Practicable Date, Elite Jumbo holds 27.49% of the entire issued share capital of the Target Company and the Target Company is accounted for as an associated corporation of the Company. Upon Completion, Elite Jumbo will hold 54.98% of the entire issued share capital of the Target Company and the Target Company will become an indirect non-wholly owned subsidiary of the Company and accordingly, the assets, liabilities and financial results of the Target Group will be consolidated into the consolidated financial statements of the Group.

The following diagrams illustrate the shareholding structure of the Target Group

(i) as at the Latest Practicable Date and immediately prior to Completion; and
(ii) immediately following Completion (assuming no other changes in the shareholding structure of the Target Group):
- (i) Shareholding structure of the Target Group as at the Latest Practicable Date and immediately prior to Completion
  The Company
  100%(Note)

Elite Jumbo

The Vendor

Other existing shareholders

27.49%

45.02%

92.75%

Dakota LLP

Note:

Elite Jumbo is an indirect wholly-owned subsidiary of the Company.

(ii) Shareholding structure of the Target Group immediately after Completion

The Company

100%(Note)

Elite Jumbo

Other existing shareholders

54.98%45.02%

Target Company

100%

Dakota Capella

Dakota HK

92.75%

Dakota LLP

Note:

Elite Jumbo is an indirect wholly-owned subsidiary of the Company.

INFORMATION ON THE GROUP

The Group is principally engaged in the import, marketing, distribution and provision of after-sales service of branded cars (including Italian "Maserati") in Hong Kong and Macau, the provision of financing, property investment and life sciences investment.

Elite Jumbo is a company incorporated in the British Virgin Islands with limited liability, and is an indirect wholly-owned subsidiary of the Company. Elite Jumbo is principally engaged in investment holding and directly held 27.49% equity interest in the Target Company as at the Latest Practicable Date.

INFORMATION ON THE VENDOR

The Vendor is a company incorporated in the British Virgin Islands with limited liability and is principally engaged in investment holding business. The Vendor is wholly-owned by Mr. Cheung. Mr. Cheung is principally engaged in the Hong Kong registered LED manufacturing business and also possesses a wide spectrum of financial and investment expertise with more than 20 years of experience.

INFORMATION ON THE TARGET GROUP

The Target Company is a company incorporated in the British Virgin Islands with limited liability. The Target Company, through its wholly-owned subsidiary, Dakota Capella, indirectly holds 92.75% interest in Dakota LLP, which is in turn the registered owner of the Property. The Target Group's principal business is the holding and operation of the Property.

As at the Latest Practicable Date, the Target Company was held as to 27.49% by Elite Jumbo, 27.49% by the Vendor and approximately 45.02% by four other shareholders (each holding approximately 7.82% to approximately 15.63% of the issued share capital of the Target Company).

Set forth below is certain audited consolidated financial information of the Target Group for the two years ended 31 August 2019 and 2020 and for the two months ended 31 October 2020 prepared on the basis consistent with the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants:

For the year ended	For the year ended	For the two months ended
31 August 2019	31 August 2020	31 October 2020

GBP'000	HK$'000	GBP'000	HK$'000	GBP'000	HK$'000
Revenue	3,000	32,700	2,922	31,850	443	4,829
Profit/(loss)
before taxation	4,544	49,530	833	9,080	(2,858)	(31,152)
Profit/(loss)
after taxation	4,545	49,541	833	9,080	(2,858)	(31,152)

As at 31 October 2020, the audited consolidated net asset value of the Target Group attributable to its equity owner amounted to approximately GBP19.1 million (equivalent to approximately HK$208.2 million).

For further details about the Target Group, please refer to "Appendix II - Financial Information of the Target Group" and "Appendix III - Management Discussion and Analysis on the Target Group" to this circular.

INFORMATION OF THE PROPERTY

The Property is known as Capella, 60 York Street, Glasgow, G2 8JX, United Kingdom, which comprises the entire block of and the land occupied by Capella Building, a steel framed with glazed external finish Grade-A 11-storey office building completed in 2009. The Property has a site area of approximately 17,425 sq.ft. and a total net internal area of approximately 115,300 sq.ft., including approximately 111,248 sq.ft. for office use and approximately 3,536 sq.ft. for retail use.

The Property is located at a prime location within Glasgow's International Financial Services District, and the surrounding of the Property is predominated by office developments. The Glasgow Central Station is within 5-minute walking distance and the Glasgow International Airport is about 15-minute driving distance from the Property.

REASONS FOR AND BENEFITS OF THE ACQUISITION

One of the Group's principal business segments is property investment. In view of the prime location of the Property, the economic development in Glasgow and the historical stable share of rental income derived from the Group's investment in the Property, the Board considers the Acquisition to be a good investment opportunity which can bring long-term enhancement of value to our Shareholders and an initiative to expand the stable income stream generated from the Property's rental revenue. Upon Completion, Elite Jumbo will hold 54.98% of the entire issued share capital in the Target Company and the Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results will be consolidated into the financial results of the Group. As the Company will hold a controlling stake of the Target Company upon Completion, the Board believes that the Acquisition will enable the Group to exercise more effective control over the business and operations of the Target Company, enjoy a larger share of potential return in the Target Company and improve the performance of the Group. It is noted that the Target Group recorded net loss for the two months ended 31 October 2020, which was mainly attributable to the decrease in fair value of the Property from GBP53 million as at 31 August 2020 to GBP50 million as at 31 October 2020 as a result of the adverse effect of the outbreak of COVID-19 pandemic. As the Board also noted from the tenancy schedules of the Property that the rental income of the Target Company remained stable in the past three years despite the COVID-19 pandemic, the Board is of the view that the impact of COVID-19 pandemic on the valuation of the Property is only a short term effect and the Acquisition will create greater value for the Group and the Shareholders in the long term perspective. The Board also considered that the Consideration, which had been arrived at after taking into account the valuation of the Property as at 31 October 2020, is fair and reasonable.

The Company considers that the settlement of the Consideration by the issuance of the Promissory Note would allow the Group to retain more cash for general working capital and future business expansion of the Group after the Acquisition, which is in the interest of the Company and its Shareholders as a whole.

Taking into consideration the reasons for and benefits of the Acquisition to the Company, the Directors are of the view that the terms and conditions of the Acquisition Agreement and the transactions contemplated therein (including the Consideration) and the Promissory Note, which have been reached after arm's length negotiations among the parties, are on normal commercial terms, fair and reasonable, and the Acquisition is in the interests of the Company and its Shareholders as a whole.

EFFECTS ON EARNINGS AND ASSETS AND LIABILITIES OF THE GROUP

Upon Completion, the Target Company will become an indirect non-wholly owned subsidiary of the Company and its financial results, assets and liabilities will be consolidated into the consolidated financial statements of the Group. It is expected that the Acquisition will have the following financial effects on the Group:

Assets and Liabilities

As illustrated in the unaudited pro forma financial information as set out in Appendix IV to this circular, assuming that completion of the Acquisition had taken place on 30 June 2020, the total assets of the Enlarged Group as at 30 June 2020 would increase from approximately HK$634 million (as extracted from the unaudited consolidated financial statements of the Company in its interim report for six months ended 30 June 2020) to approximately HK$1,115 million on a pro forma basis, and the total liabilities of the Enlarged Group as at 30 June 2020 would increase from approximately HK$191 million (as extracted from the unaudited consolidated financial statements of the Company in its interim report for six months ended 30 June 2020) to approximately HK$582 million on a pro forma basis. The net assets of the Enlarged Group would increase from approximately HK$443 million to approximately HK$533 million on a pro forma basis.

Earnings

Based on the audited consolidated financial information of the Target Company for the three years ended 31 August 2020 and two months ended 31 October 2020 as set out in Appendix II to this circular, the consolidated revenue of the Target Group was approximately GBP3.1 million, GBP3.0 million, GBP2.9 million and GBP0.4 million respectively. The consolidated profit after taxation of the Target Group was approximately GBP4.0 million, GBP4.5 million and GBP0.8 million, for the three years ended 31 August 2020 respectively and the consolidated loss after taxation of the Target Group was approximately GBP2.9 million, for the two months ended 31 October 2020.

In view of the economic development in Glasgow, the historical stable share of rental income derived from the Group's investment in the Property and the tenancy schedule of the Property effective as of 31 October 2020, it is anticipated that the Acquisition will contribute positively to the Enlarged Group's financial performance and trading prospects in the future.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under Rule 14.07 of the Listing Rules) in respect of the Acquisition exceeds 25% but all of them are less than 100%, the Acquisition constitutes a major transaction of the Company, and is subject to the reporting, announcement, circular and Shareholders' approval requirements pursuant to Chapter 14 of the Listing Rules.

GENERAL

A SGM will be convened for the Shareholders to consider, and if thought fit, approve, among other things, the Acquisition Agreement and the transactions contemplated thereunder.

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, as at the Latest Practicable Date, (i) the Vendor held 227,480,000 Shares, representing approximately 4.30% of the total issued share capital of the Company; and (ii) Mr. Cheung, being the sole shareholder of the Vendor, owned the entire issued share capital of NCS, which in turn held 4,000,000 Shares, representing approximately 0.08% of the total issued share capital of the Company. Accordingly, the Vendor and its associates (including NCS) are required to abstain from voting on the resolution approving the Acquisition Agreement and the transactions contemplated thereunder at the SGM. Save as disclosed, to the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, no other Shareholder has a material interest in the Acquisition and is required to abstain from voting on the resolution to approve the Acquisition Agreement and the transactions contemplated thereunder at the SGM.

A notice convening the SGM is set out on pages SGM-1 to SGM-3 of this circular. The resolution proposed at the SGM will be voted on by poll as required under Rule 13.39(4) of the Listing Rules. The ordinary resolution will be passed if not less than half of the votes cast by the Shareholders, present and voting in person or by proxy at the SGM, are in favour of the ordinary resolution. An announcement on the poll results will be made by the Company after the SGM in the manner prescribed under Rule 13.39(5) of the Listing Rules.

Whether or not you intend to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the share registrar and transfer office of the Company in Hong Kong, Tricor Standard Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, as soon as possible but in any event not less than 48 hours before the appointed time for holding of the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending or voting in person at the SGM or any adjournment thereof (as the case may be) should you so wish.

CLOSURE OF REGISTER OF MEMBERS

In order to determine the entitlement of the Shareholders to attend and vote that the SGM (or at any adjournment thereof), the register of members of the Company will be closed from Tuesday, 16 March 2021 to Thursday, 18 March 2021 (both dates inclusive), during which period no transfer of shares will be effected. In order to be entitled to attend and vote at the SGM, all transfer documents together with the relevant share certificates must be lodged for registration with the Company's share registrar and transfer office in Hong Kong, Tricor Standard Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, no later than 4:30 p.m. on Monday, 15 March 2021.

RECOMMENDATION

The Directors consider that the terms of the Acquisition Agreement and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Acquisition Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

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

By order of the Board Auto Italia Holdings Limited

CHONG Tin Lung Benny Executive Director and Chief Executive Officer

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for each of the three years ended 31 December 2019 (the "Audited Financial Statements") and the unaudited consolidated financial statements of the Group for the six months ended 30 June 2020 (the "Interim Financial Statements") are disclosed in the following documents which have been published on the respective websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.autoitalia.com.hk), and are accessible via the following hyperlinks:

• the annual report of the Company for the year ended 31 December 2017 published on 17 April 2018 (the "2017 Annual Report") (pages 58 to 143):
https://www1.hkexnews.hk/listedco/listconews/sehk/2018/0417/ltn20180417603.pdf
http://www.autoitalia.com.hk/res/2018-04-17/ew0720_AR.pdf
• the annual report of the Company for the year ended 31 December 2018 published on 16 April 2019 (the "2018 Annual Report") (pages 68 to 164):
https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0416/ltn20190416619.pdf
http://www.autoitalia.com.hk/res/2019-04-16/ew0720_Annual%20Report.pdf
• the annual report of the Company for the year ended 31 December 2019 published on 16 April 2020 (the "2019 Annual Report") (pages 66 to 158):
https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0416/2020041600658.pdf
http://www.autoitalia.com.hk/res/2020-04-16/Annual%20Report%20(E).pdf
• the interim report of the Company for the six months ended 30 June 2020 published on 9 September 2020 (the "2020 Interim Report") (pages 24 to 50):
https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0909/2020090900408.pdf
http://www.autoitalia.com.hk/res/2020-09-09/ew0720.pdf

The Audited Financial Statements and the Interim Financial Statements (but not any other part of the 2017 Annual Report, the 2018 Annual Report, the 2019 Annual Report and the 2020 Interim Report) are incorporated by reference into this circular and form part of this circular.

2. INDEBTEDNESS

At the close of business on 31 December 2020, the Group and the Target Group had the following indebtedness:

(a) borrowings of approximately HK$347,334,000 which are secured by pledged deposits, vehicles and properties and unguaranteed;
(b) corporate bonds of HK$60,000,000 which are unsecured and unguaranteed;
(c) loan from a non-controlling member of a subsidiary of approximately HK$4,677,000 which is unsecured and unguaranteed; and
(d) lease liabilities of approximately HK$16,816,000 which are secured by rental deposits and unguaranteed.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, at the close of business on 31 December 2020, the Group and the Target Group did not have any banking facilities or any outstanding or authorised but unissued debt securities, term loans, other borrowings or indebtedness in the nature of borrowing, acceptance credits, other recognised lease liabilities, lease commitments, mortgages, charges, guarantees or material contingent liabilities.

3. SUFFICIENCY OF WORKING CAPITAL

Taking into account the effect of the Acquisition and the financial resources available to the Enlarged Group, including without limitation, the existing bank balances and cash, internally generated funds and available credit facilities, the Directors are of the opinion that the Enlarged Group will have sufficient working capital to satisfy its requirements for at least the next 12 months from the date of this circular in the absence of unforeseeable circumstances.

4. MATERIAL ADVERSE CHANGE

References are made to the profit warning announcements of the Company dated 21 July 2020 and 24 July 2020 and the interim results announcement of the Company dated 27 August 2020 regarding the unaudited interim results of the Group for the six months ended 30 June 2020 (the "Period"). As disclosed in the Announcements, the Group recorded an unaudited net loss of approximately HK$8 million for the Period, as compared to an unaudited net profit of approximately HK$11.2 million in the corresponding period in 2019. Such loss was primarily attributable to the decline in revenue of the Car Division and Financial Investments and Services Division of the Group due to uncertain economic environment and weak market sentiment owing to continuing social unrest and the outbreak of the novel coronavirus (COVID-19) pandemic.

As at the Latest Practicable Date, save as disclosed above, there was no other material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest published audited financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

Despite the uncertainties of the Hong Kong property market brought by the unexpected outbreak of COVID-19 pandemic in early 2020 and the prolonged Sino-US trade dispute, the Group's property investment business has been relatively unscathed, and has recorded a consistent rental income from leasing Company-owned properties and the Group's indirect investment in the Property. Upon Completion, property investment will remain as part of the Enlarged Group's principal business segments. It is expected that by holding a controlling stake of the Target Company, the Acquisition will enable the Group to exercise more effective control over the business and operations of the Target Company, and enjoy a larger share of potential return in the Target Company. The Board is positive that together with the long-term income stream generated from the Property's rental revenue, the revenue and cash flow contributed by the Group's various property investment projects in the coming few years, and the development of the Group's other existing businesses, the Group's performance will be further improved, thus assuring continuing financial prospects in these unprecedented times.

Looking forward, the Group will continue to explore different business opportunities, including but not limited to life sciences and healthcare industry, while taking into account the overall macroeconomic conditions and risks. The Group will also prudently manage its financial position in this challenging economic environment to maintain sustainable growth and generate greater return for the Shareholders.

The following is the text of a report set out on pages II-1 to II-38, received from the Company's reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

ACCOUNTANTS' REPORT ON HISTORICAL FINANCIAL INFORMATION OF DAKOTA RE II LIMITED AND ITS SUBSIDIARIES TO THE DIRECTORS OF AUTO ITALIA HOLDINGS LIMITED

Introduction

We report on the historical financial information of Dakota RE II Limited (the "Target Company") and its subsidiaries (together, the "Target Group") set out on pages II-4 to II-38, which comprises the consolidated statements of financial position of the Target Group as at 31 August 2018, 31 August 2019, 31 August 2020 and 31 October 2020 and the consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in equity and the consolidated statements of cash flows of the Target Group for each of the three years ended 31 August 2020 and the two months ended 31 October 2020 (the "Relevant Periods") and a summary of significant a c c o u n t i n g p o l i c i e s a n d o t h e r e x p l a n a t o r y i n f o r m a t i o n ( t o g e t h e r, t h e "Historical Financial Information"). The Historical Financial Information set out on pages II-4 to II-38 forms an integral part of this report, which has been prepared for inclusion in the circular of Auto Italia Holdings Limited (the "Company") dated 25 February 2021 (the "Circular") in connection with the proposed acquisition of additional 27.49% equity interest in the Target Company.

Directors' Responsibility for the Historical Financial Information

The directors of the Target Company are responsible for the preparation of the Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in note 1 to the Historical Financial Information, and for such internal control as the directors of the Target Company determine is necessary to enable the preparation of the Historical Financial Information that is free from material misstatement, whether due to fraud or error.

The directors of the Company are responsible for the contents of this Circular in which the Historical Financial Information of the Target Group is included, and such information is prepared based on accounting policies materially consistent with those of the Company.

Reporting Accountants' Responsibility

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

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants' judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountants consider internal control relevant to the entity's preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in note 1 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the Historical Financial Information.

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

Opinion

In our opinion, the Historical Financial Information gives, for the purposes of the accountants' report, a true and fair view of the Target Group's financial position as at 31 August 2018, 31 August 2019, 31 August 2020 and 31 October 2020 and of the Target Group's financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation set out in note 1 to the Historical Financial Information.

Review of Stub Period Comparative Financial Information

We have reviewed the stub period comparative financial information of the Target Group which comprises the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the two months ended 31 October 2019 and other

explanatory information (the "Stub Period Comparative Financial Information"). The directors of the Target Company are responsible for the preparation of the Stub Period Comparative Financial Information in accordance with the basis of preparation set out in note 1 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub Period Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410

"Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the Stub Period Comparative Financial Information, for the purposes of the accountants' report, is not prepared, in all material respects, in accordance with the basis of preparation set out in note 1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Companies (Winding Up and Miscellaneous Provisions) Ordinance

Adjustments

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

Dividends

We refer to note 10 to the Historical Financial Information which contains information about dividends declared and paid by the Target Company in respect of the Relevant Periods.

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong

25 February 2021

HISTORICAL FINANCIAL INFORMATION OF THE TARGET GROUP

Preparation of Historical Financial Information

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

The consolidated financial statements of the Target Group for the Relevant Periods, on which the Historical Financial Information is based, have been prepared in accordance with the accounting policies which conform with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the HKICPA and were audited by us in accordance with Hong Kong Standards of Auditing issued by the HKICPA ("Underlying Financial Statements").

The Historical Financial Information is presented in British Pound ("GBP"), which is also the functional currency of the Target Company, and all values are rounded to nearest thousand (GBP'000) except when otherwise indicated.

FINANCIAL INFORMATION OF THE TARGET GROUP

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Two months ended

NOTES


Revenue	5	3,124	3,000
Property related expenses	(539)	(449)
Gross profit	2,585	2,551
Other expenses, gains and losses	6	2,570	3,000
Administrative expenses	(235)	(129)
Finance costs	7	(898)	(878)
Profit (loss) before taxation	8	4,022	4,544
Income tax (expense) credit	9	(2)	1
Profit (loss) and total comprehensive
income (expense) for the year/period	4,020	4,545
Profit (loss) and total comprehensive
income (expense) for the year/period
attributable to:
Owners of the Target Company	3,815	4,308
Non-controlling interests	205	237
4,020	4,545
- II-5 -

Year ended 31 August
2018 2019	2020	2019	2020
GBP'000 GBP'000	GBP'000	GBP'000	GBP'000
(unaudited)
2,922	432	443
(659)	(93)	(94)
2,263	339	349
(349)	(1)	(2,999)
(210)	(14)	(73)
(871)	(147)	(135)
833	177	(2,858)
-	-	-
833	177	(2,858)
863	181	(2,641)
(30)	(4)	(217)
833	177	(2,858)

31 October

FINANCIAL INFORMATION OF THE TARGET GROUP

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at
31 October
NOTES	2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
NON-CURRENT ASSETS
Investment properties	12	49,000	52,000	53,000	50,000
CURRENT ASSETS
Accounts receivables,
prepayments and
other receivables	13	769	992	1,916	2,511
Bank balances and cash	14	2,122	2,723	1,276	967
2,891	3,715	3,192	3,478
CURRENT LIABILITIES
Other payables and accruals	15	1,314	930	1,076	1,129
Amount due to a director	16	11	23	-	-
Bank and other borrowings	17	457	457	-	-
Loan from a non-controlling
member of a subsidiary	18	-	-	766	779
Tax payable	2	1	1	1
1,784	1,411	1,843	1,909
NET CURRENT ASSETS	1,107	2,304	1,349	1,569
TOTAL ASSETS LESS CURRENT
LIABILITIES	50,107	54,304	54,349	51,569
NON-CURRENT LIABILITIES
Bank and other borrowings	17	25,024	24,565	31,632	31,710
Loan from a non-controlling
member of a subsidiary	18	1,067	1,178	-	-
26,091	25,743	31,632	31,710
NET ASSETS	24,016	28,561	22,717	19,859
CAPITAL AND RESERVES
Share capital	19	8	8	8	8
Reserves	23,248	27,556	21,742	19,101
Equity attributable to
the owners of the
Target Company	23,256	27,564	21,750	19,109
Non-controlling interests	760	997	967	750
TOTAL EQUITY	24,016	28,561	22,717	19,859
- II-6 -

As at 31 August

FINANCIAL INFORMATION OF THE TARGET GROUP

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Attributable to owners of the Target Company

Non-
Share	Share	Retained	controlling
capital	premium	profits	Total	interests	Total
GBP'000	GBP'000	GBP'000	GBP'000	GBP'000	GBP'000
At 1 September 2017	8	19,748	(315)	19,441	555	19,996
Profit and total comprehensive
income for the year	-	-	3,815	3,815	205	4,020
At 31 August 2018	8	19,748	3,500	23,256	760	24,016
Profit and total comprehensive
income for the year	-	-	4,308	4,308	237	4,545
At 31 August 2019	8	19,748	7,808	27,564	997	28,561
Profit (loss) and total comprehensive
income for the year	-	-	863	863	(30)	833
Dividend paid (note 10)	-	(6,677)	-	(6,677)	-	(6,677)
At 31 August 2020	8	13,071	8,671	21,750	967	22,717
Loss and total comprehensive expense
for the period	-	-	(2,641)	(2,641)	(217)	(2,858)
At 31 October 2020	8	13,071	6,030	19,109	750	19,859
At 1 September 2019 (audited)	8	19,748	7,808	27,564	997	28,561
Profit (loss) and total comprehensive
income (expense) for the period	-	-	181	181	(4)	177
At 31 October 2019 (unaudited)	8	19,748	7,989	27,745	993	28,738
- II-7 -

FINANCIAL INFORMATION OF THE TARGET GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year ended 31 AugustTwo months ended

31 October

2018

2019

2020

2019

2020

GBP'000

GBP'000 (unaudited)

GBP'000

OPERATING ACTIVITIES Profit (loss) before taxation Adjustments for:

Interest expense

Fair value change of investment properties

4,022

4,544

898 (2,570)

833 871 (782)

177

(2,858)

878 (3,000)

147 135

- 3,000

Operating cash flows before movements in working capital

Decrease (increase) in accounts receivables, prepayments and other receivables Increase (decrease) in amount due to a director

Increase (decrease) in other payables and accruals

CASH GENERATED FROM (USED IN)

OPERATING ACTIVITIES AND NET CASH FROM (USED IN) OPERATING ACTIVITIES

2,350

2,422

922

324 277

(223)

(924)

(768) (595)

(23)

880

(384)

146

(15)

3,276

1,827

121

(459)

(265)INVESTING ACTIVITY Additions to investment properties

(218)

CASH USED IN INVESTING ACTIVITY

(218)

FINANCIAL INFORMATION OF THE TARGET GROUP

Two months ended

31 October
2018	2019	2020	2019	2020
GBP'000	GBP'000	GBP'000	GBP'000	GBP'000
(unaudited)
FINANCING ACTIVITIES
Dividend paid	-	-	(6,677)	-	-
Interest paid	(698)	(769)	(856)	(191)	(44)
(456)	(457)	(24,927)	(120)	-
-	-	(522)	-	-
-	-	31,632	-	-
(1,154)	(1,226)	(1,350)	(311)	(44)
2,122	601	(1,447)	(770)	(309)
-	2,122	2,723	2,723	1,276
2,122	2,723	1,276	1,953	967
- II-9 -

Year ended 31 August

Repayments of bank and other borrowings Repayments of loan from a non-controlling member of a subsidiary

New bank and other borrowings raised

NET CASH USED IN FINANCING

ACTIVITIES

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT

BEGINNING OF THE YEAR/PERIODCASH AND CASH EQUIVALENTS AT END

OF THE YEAR/PERIOD, REPRESENTING BANK BALANCES AND CASH

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. GENERAL AND BASIS OF PREPARATION OF HISTORICAL FINANCIAL INFORMATION

The Target Company is incorporated in the British Virgin Islands with limited liability on 2 March 2017. The address of the registered office of the Target Company is located at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG 1110, British Virgin Islands. The shareholders of the Target Company are Elite Jumbo Limited, Ever Bless Investments Limited, Best Cosmic Limited, limited companies incorporated in the British Virgin Islands (the "BVI"), New Praise Holdings Limited, Lofty Virtue Limited, limited companies incorporated in Seychelles and Neo Summit Limited, a limited company incorporated in Samoa which holds 27.49%, 27.49%, 15.63%, 7.83%, 10.78% and 10.78% equity interests of the Target Company respectively.

The principal activity of the Target Company is investment holding. The principal activities of the subsidiaries of the Target Company are set out in note 23 to the Historical Financial Information.

The Historical Financial Information has been prepared based on the accounting policies set out in note 3 which conform with HKFRSs issued by the HKICPA. For the purpose of preparation of the Historical Financial Information, information is considered material if such information is reasonably expected to influence decisions made by primary users. In addition, the Historical Financial Information includes applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance.

2. ADOPTION OF NEW AND AMENDMENTS TO HKFRSs

For the purpose of preparing and presenting the Historical Financial Information for the Relevant Periods, the Target Group has consistently applied Hong Kong Accounting Standards ("HKAS"), HKFRSs, amendments and interpretations issued by the HKICPA throughout the Relevant Periods except that the Target Group adopted HKFRS 9 Financial Instruments ("HKFRS 9") on 1 September 2018 based on the specific transitional provision and applied HKAS 39 Financial Instruments: Recognition and Measurement ("HKAS 39") prior to 1 September 2018.

HKFRS 9

During the year ended 31 August 2019, the Target Group has applied HKFRS 9 and the related

consequential amendments to other HKFRS Standards. HKFRS 9 introduces new requirements for (1) the

classification and measurement of financial assets and financial liabilities, (2) expected credit losses

("ECL") for financial assets and financial guarantee contracts and (3) general hedge accounting.

The Target Group has applied HKFRS 9 in accordance with the transition provisions set out in

HKFRS 9, i.e. applied the classification and measurement requirements (including impairment under

ECL model) retrospectively to instruments that have not been derecognised at 1 September 2018 (date of

initial application) and has not applied the requirements to instruments that have already been

derecognised at 1 September 2018. The difference between carrying amounts at 31 August 2018 and the

carrying amounts at 1 September 2018 are recognised in the opening retained profits and other

components of equity, without restating comparative information.

Accordingly, certain comparative information may not be comparable as comparative

information was prepared under HKAS 39.

Accounting policies resulting from application of HKFRS 9 are disclosed in Note 3.

Summary of effects arising from initial application of HKFRS 9

As a result of the changes in the entity's accounting policies above, the Target Group assessed that

the application of HKFRS 9 do not have a material impact on the classification and measurement in

opening statement of financial position.

Impairment under ECL model

The Target Group applied the HKFRS 9 simplified approach to measure ECL which uses a lifetime

ECL for its accounts receivables and lease incentives. The ECL on these assets are assessed individually

by reference to historical default rates of debtors and are adjusted for forward-looking information that is

available without undue cost or effort.

FINANCIAL INFORMATION OF THE TARGET GROUP

ECL for other financial assets at amortised cost, including other receivables and bank balances are assessed on 12-month ECL ("12m ECL") basis as there had been no significant increase in credit risk since initial recognition.

At 1 September 2018, there was no additional credit loss allowance being recognised against retained profits as the amount involved is insignificant.

For the years ended 31 August 2019 and 2020 and the two months ended 31 October 2020, the application of HKFRS 9 has no material impact to the total assets, profit or loss or net cash flows for respective year/period.

New and revised HKFRSs in issue but not yet effective

The Target Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 17	Insurance Contracts and related Amendments1
Amendments to HKFRS 3	Reference to the Conceptual Framework3
Amendments to HKFRS 9, HKAS 39,	Interest Rate Benchmark Reform - Phase 24
HKFRS 7, HKFRS 4 and HKFRS 16
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an Investor and
HKAS 28	its Associate or Joint Venture2
Amendments to HKAS 1	Classification of Liabilities as Current or Non-current
and related amendments to Hong Kong
Interpretation 5 (2020)1
Amendments to HKAS 16	Property, Plant and Equipment - Proceeds before
Intended Use3
Amendments to HKAS 37	Onerous Contracts - Cost of Fulfilling a Contract3
Amendments to HKFRSs	Annual improvements to HKFRSs 2018 - 2020 Cycle3

1	Effective for annual periods beginning on or after 1 January 2023
2	Effective for annual periods beginning on or after a date to be determined
3	Effective for annual periods beginning on or after 1 January 2022
4	Effective for annual periods beginning on or after 1 January 2021

Except for the amendments to HKFRSs mentioned below, the directors of the Target Company anticipate that the application of all other new and amendments to HKFRSs will have no material impact on the consolidated financial statements of the Target Group in the foreseeable future.

Amendments to HKAS 1 "Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)"

The amendments provide clarification and additional guidance on the assessment of right to defer settlement for at least twelve months from reporting date for classification of liabilities as current or non-current, which:

• specify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. Specifically, the amendments clarify that:
- (i) the classification should not be affected by management intentions or expectations to settle the liability within 12 months; and
- (ii) if the right is conditional on the compliance with covenants, the right exists if the conditions are met at the end of the reporting period, even if the lender does not test compliance until a later date; and
• clarify that if a liability has terms that could, at the option of the counterparty, result in its settlement by the transfer of the entity's own equity instruments, these terms do not affect its classification as current or non-current only if the entity recognises the option separately as an equity instrument applying HKAS 32 "Financial Instruments: Presentation".

In addition, Hong Kong Interpretation 5 was revised as a consequence of the Amendments to HKAS 1 to align the corresponding wordings with no change in conclusion.

Based on the Target Group's outstanding liabilities as at 31 October 2020, the application of the amendments will not result in reclassification of the Target Group's liabilities.

3. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information has been prepared on the historical cost basis except for investment properties that are measured at fair value at the end of each reporting period, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Target Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in the Historical Financial Information is determined on such a basis, except for share-based payment transactions that are accounted for in HKFRS 2 "Share-based Payment", leasing transactions that are accordance with HKFRS 16 "Lease" ("HKFRS 16"), and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 "Inventories" or value in use for the purposes of investment assessment in HKAS 36 "Impairment of Assets".

A fair value measurement of a non-financial asset takes into account a market participant's, ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For investment properties which are transacted at fair value and a valuation technique that unobservable inputs are to be used to measure fair value in subsequent periods, the valuation technique is calibrated so that the results of the valuation technique equal the transaction price.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

The principal accounting policies are set out below.

Basis of consolidation

The Historical Financial Information incorporates the financial statements of the Target Company and entities controlled by the Target Company and its subsidiaries. Control is achieved when the Target Company:

• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The Target Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Target Group obtains control over the subsidiary and ceases when the Target Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statements of profit or loss and other comprehensive income from the date the Target Group gains control until the date when the Target Group ceases to control the subsidiary.

Profit or loss is attributed to the owners of the Target Company and to the non-controlling interests.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Target Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Target Group are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are presented separately from the Target Group's equity therein, which represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant subsidiaries upon liquidation.

Leases

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For contracts entered into or modified or arising from business combinations on or after the date of initial application, the Target Group assesses whether a contract is or contains a lease based on the definition under HKFRS 16 at inception, modification date or acquisition date, as appropriate. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

The Target Group as a lessor

Classification and measurement of leases

Leases for which the Target Group is a lessor are classified as finance or operating leases.

Whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease.

Rental income which is derived from the Target Group's ordinary course of business is presented as revenue.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise.

Borrowing costs

Borrowing costs not directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are recognised in profit or loss in the period in which they are incurred.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

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

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

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Target Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

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

For the purposes of measuring deferred tax for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale, except for freehold land, which is always presumed to be recovered entirely through sale.

Current and deferred tax are recognised in profit or loss.

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at fair value, adjusted to exclude any prepaid or accrued operating lease income.

Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period, to the net carrying amount on initial recognition.

Financial assets

Classification and subsequent measurement of financial assets (upon application of HKFRS 9 in accordance with transitions in note 3)

Financial assets that meet the following conditions and are subsequently measured at amortised cost:

• The financial asset is held within a business model whose objective is to collect contractual cash flows; and
• The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(i) Amortised cost and interest income

Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit-impaired.

Impairment of financial assets (upon application of HKFRS 9 in accordance with transitions in note 3)

The Target Group performs impairment assessment under ECL model on financial assets (including other receivables and bank balances) and other item such as lease receivables which are subject to impairment assessment under HKFRS 9. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12m ECL represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date.

Assessments are done based on the Target Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Target Group always recognises lifetime ECL for lease receivables.

For all other instruments, the Target Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, in which case the Target Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

(i) Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Target Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Target Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether the credit risk has increased significantly:

• an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;
• significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;
• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in debtor's ability to meet its debt obligations;
• an actual or expected significant deterioration in the operating results of the debtor; and
• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Target Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Target Group has reasonable and supportable information that demonstrates otherwise.

The Target Group regularly monitors the effectiveness of the criteria used to identify whether there has been significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

(ii) Definition of default

For internal credit risk management, the Target Group considers an event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Target Group, in full (without taking into account any collaterals held by the Target Group).

Irrespective of the above, the Target Group considers that default has occurred when a financial asset is more than 90 days past due unless the Target Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred.

Evidence that a financial asset is credit-impaired includes observable data about the following events:

• significant financial difficulty of the issuer or the borrower;
• a breach of contract, such as a default or past due event;

APPENDIX II	FINANCIAL INFORMATION OF THE TARGET GROUP
•	the lender(s) of the borrower, for economic or contractual reasons relating to the
borrower's financial difficulty, having granted to the borrower a concession(s) that the
lender(s) would not otherwise consider; and
•	it is becoming probable that the borrower will enter bankruptcy or other financial
reorganisation.

(iv) Write-off policy

The Target Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings.

Financial assets written off may still be subject to enforcement activities under the Target Group's recovery procedures, taking into account legal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognised in profit or loss.

(v) Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data and forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.

Generally, the ECL is the difference between all contractual cash flows that are due to the Target Group in accordance with the contract and the cash flows that the Target Group expects to receive, discounted at the effective interest rate determined at initial recognition. For a lease receivable, the cash flows used for determining the ECL is consistent with the cash flows used in measuring the lease receivable in accordance with HKFRS 16.

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortised cost of the financial asset.

The Target Group recognises an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount.

Classification and subsequent measurement of financial assets (before application of HKFRS 9 on 1 September 2018)

The Target Group's financial assets are classified into "loans and receivables", and the classification of which depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including accounts receivables and other receivables and bank balances) are measured at amortised cost using the effective interest method, less any identified impairment losses.

Interest income is recognised by applying the effective interest rate, except for short term receivables where the recognition of interest would be immaterial.

Impairment of financial assets (before application of HKFRS 9 on 1 September 2018)

Loans and receivables are assessed for indicators of impairment at the end of each reporting period. Loans and receivables are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

For loans and receivables, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or
• breach of contract, such as default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of the estimated future cash flows, discounted at the financial asset's original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment directly for all financial assets. If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Financial liabilities at amortised cost

Financial liabilities (including other payables and accruals, amount due to a director, bank and other borrowings and loan from a non-controlling member of a subsidiary) are subsequently measured at amortised cost, using the effective interest method.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Target Company are recognised at the proceeds received, net of direct issue costs.

Derecognition

The Target Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received is recognised in profit or loss.

The Target Group derecognises financial liabilities when, and only when, the Target Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

4. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Target Group's accounting policies, which are described in note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgement in applying accounting policies

The following is the critical judgement, apart from those involving estimations (see below), that the directors of the Target Company have made in the process of applying the Target Group's accounting policies and that have the most significant effect on the amounts recognised in the Historical Financial Information.

Deferred taxation on investment properties

For the purposes of measuring deferred tax arising from investment properties that are measured using the fair value model, the directors of the Target Company have reviewed the Target Group's investment property portfolios and concluded that the Target Group's investment properties are not held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time. Therefore, in determining the Target Group's deferred taxation on investment properties, the directors of the Target Company have determined that the presumption that the carrying amounts of investment properties measured using the fair value model are recovered entirely through sale is not rebutted as it is always presumed to be recovered entirely through sale for freehold land.

Key sources of estimation uncertainty

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

Valuation of investment properties

Investment properties are stated at fair value based on the valuation performed by independent professional valuers. The determination of the fair value involves certain assumptions of market conditions which are set out in note 12.

In relying on the valuation report, the directors of the Target Company have exercised their judgement and are satisfied that the method of valuation is reflective of the current market conditions. Whilst the Target Group considers valuations of the Target Group's investment properties are the best estimates, the ongoing COVID-19 pandemic has resulted in greater market volatility depending on how the COVID-19 pandemic may progress and evolve, which have led to higher degree of uncertainties in respect of the valuations during the two months ended 31 October 2020 since the second lockdown of the United Kingdom due to COVID-19. Changes to these assumptions, including the potential risk of any market violation, policy, geopolitical and social changes or other unexpected incidents as a result of change in macroeconomic environment, travel restrictions implemented by many countries, increased complexity in international trade tensions geopolitics, changes in policy direction and/or mortgage requirements, or other unexpected incidents would result in changes in the fair values of the Target Group's investment properties and the corresponding adjustments to the amount of gain or loss reported in the consolidated statements of profit or loss and other comprehensive income.

The carrying amounts of the Target Group's investment properties at 31 August 2018, 31 August 2019, 31 August 2020 and 31 October 2020 are disclosed in note 12.

5. REVENUE AND SEGMENT INFORMATION

The Target Group's operating activities are attributable to a single operating segment focusing on property investment. The directors of the Target Company, being the chief operating decision maker ("CODM"), regularly review revenue analysis of the investment properties for the assessment of performance of the Target Group. The CODM reviews the overall results of the Target Group as a whole to make decisions about resources allocation. No other discrete financial information is provided other than the Target Group's results and financial position as a whole. Accordingly, only entity-wide disclosures, major customers and geographic information are presented.

Revenue represents the rental income received from operating leases during the Relevant Periods, which falls outside the scope of HKFRS 15 "Revenue from Contracts with Customers".

All of the Target Group's revenue are from customers based in the United Kingdom.

Revenue attributed from customers that accounted for 10% or more of the Target Group's total revenue during the Relevant Periods is as follows:

Two months ended
Year ended 31 August	31 October
2018 2019 2020	2019 2020
GBP'000 GBP'000 GBP'000	GBP'000 GBP'000
(unaudited)

Customer A	1,267	971	939	158	156
Customer B	970	970	1,004	162	111
Customer C	N/A	568	568	95	95

All of the Target Group's non-current assets are located in the United Kingdom.

6. OTHER EXPENSES, GAINS AND LOSSES

Two months ended
Year ended 31 August	31 October
2018 2019 2020	2019 2020
GBP'000 GBP'000 GBP'000	GBP'000 GBP'000
(unaudited)

Exchange gain (loss)	-	-	2	(1)	1
Expenses related to refinancing (note)	-	-	(738)	-	-
Loss on derecognition of bank
borrowing	-	-	(395)	-	-
Fair value change of investment
properties	2,570	3,000	782	-	(3,000)
2,570	3,000	(349)	(1)	(2,999)

Note:

The amount mainly included professional fees and property valuation and survey fees incurred in application of new loan during the year ended 31 August 2020.

7. FINANCE COSTS
Two months endedYear ended 31 August 2018 2019 2020
31 October 2019 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(unaudited)
Interest on loan from a non-controlling member of a subsidiary
Interests on bank and other borrowings
103 795
111 767
110 761
19 13
128 122
898
878
871
147 135

8. PROFIT (LOSS) BEFORE TAXATION

Two months ended
Year ended 31 August	31 October
2018 2019 2020	2019 2020
GBP'000 GBP'000 GBP'000	GBP'000 GBP'000
(unaudited)

Profit/(loss) before taxation has been arrived at after charging:

Auditor's remuneration Directors' remuneration Property management fee

10	11	11	-	-
-	-	-	-	-
443	435	435	73	73

No remuneration was paid or is payable to certain directors in respect of their services during the

Relevant Periods. Certain directors received remuneration from respective holding companies of shareholders of the Target Company. The directors are of the opinion that the services provided to the Target Group only occupy an insignificant amount of their time and therefore it is concluded that those directors are not remunerated for such services.

During the Relevant Periods, no emoluments were paid by the Target Group to the directors of the Target Company, chief executives and employees, as an inducement to join or upon joining the Target Group or as compensation for loss in office. None of the directors of the Target Company waived any emoluments during the Relevant Periods.

9. INCOME TAX EXPENSE (CREDIT)

The tax charge (credit) comprises:

Two months endedYear ended 31 August 2018 2019 2020

31 October 2019 2020

GBP'000 GBP'000 GBP'000 GBP'000 GBP'000

(unaudited)

Current tax:

United Kingdom	-	-	-	-	-
Hong Kong	2	(1)	-	-	-
2	(1)	-	-	-

Current income tax is derived from the assessable income of the Target Group's operations in Hong Kong during the year/period. Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for the Relevant Periods.

The tax charge (credit) for the year/period can be reconciled to the profit (loss) before taxation per the consolidated statements of profit or loss and other comprehensive income as follows:

Two months ended
Year ended 31 August	31 October
2018 2019 2020	2019 2020
GBP'000 GBP'000 GBP'000	GBP'000 GBP'000
(unaudited)

Profit (loss) before taxation	4,022	4,544	833	177	(2,858)
Tax charge (credit) at Hong Kong
Profits Tax rate of 16.5%	663	750	137	29	(472)
Tax effect of income not taxable for tax
purposes	(620)	(706)	(333)	(36)	(23)
Tax effect of expenses not deductible
for tax purposes	-	-	-	-	495
Utilisation of tax losses previously not
recognised	(41)	(45)	-	-	-
Tax effect of tax losses not recognised	-	-	196	7	-
Tax charge (credit) for the year/period	2	(1)	-	-	-

At the end of the year ended 31 August 2018, 31 August 2019, 31 August 2020, two months ended 31 October 2019 and 31 October 2020, the Target Group has unused tax losses of approximately GBP432,000, GBP159,000, GBP1,347,000, GBP201,000 and GBP1,347,000 available for offset against future profits respectively. No deferred tax asset has been recognised due to the unpredictability of future profit streams. The tax losses may be carried forward indefinitely.

10. DIVIDENDS

No dividend was paid or declared by the Target Company in respect of the Relevant Periods except that a dividend of GBP6,677,000 was paid during the year ended 31 August 2020.

11. EARNINGS PER SHARE

No earnings per share information is presented as its inclusion, for the purpose of this report, is considered not meaningful.

12.	INVESTMENT PROPERTIES
GBP'000
FAIR VALUE
At 1 September 2017	46,430
Increase in fair value recognised in profit or loss
- Unrealised gain	2,570
At 31 August 2018	49,000
Increase in fair value recognised in profit or loss
- Unrealised gain	3,000
At 31 August 2019	52,000
Additions	218
Increase in fair value recognised in profit or loss
- Unrealised gain	782
At 31 August 2020	53,000
Decrease in fair value recognised in profit or loss
- Unrealised loss	(3,000)
At 31 October 2020	50,000

All of the Target Group's property interests held under operating leases to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

The fair values at 31 August 2018, 31 August 2019, 31 August 2020 and 31 October 2020 have been arrived at based on a valuation carried out at those dates by Roma Appraisals Limited, an independent professional valuer not connected to the Target Group whose address is 22/F, China Overseas Building, 139 Hennessy Road, Wanchai, Hong Kong. The fair values of investment properties are estimated using income approach by taking into account the term income of the property derived from the existing leases and/or achievable in the existing market with due allowance for the reversionary income potential of the leases, which have been then capitalised to determine the market value at an appropriate capitalisation rate.

In estimating the fair value of the properties, the highest and best use of the properties is their current use. The fair values of investment properties have been adjusted to exclude prepaid or accrued operating lease income to avoid double counting.

FINANCIAL INFORMATION OF THE TARGET GROUP

The following table gives information about how the fair values of the investment properties are determined (in particular, the valuation techniques and inputs used), as well as the fair value hierarchy into which the fair value measurements are categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.

Fair value hierarchy

Valuation

technique(s) and key input(s)Significant unobservable input(s)

Commercial properties in the United Kingdom

31 August 2018: GBP49,000,000
31 August 2019: GBP52,000,000
31 August 2020: GBP53,000,000
31 October 2020: GBP50,000,000

Level 3

Income approach.

The key inputs are term yield and reversionary yield.

Term yield, taking into account the capitalisation of rental income potential, nature of the property, and prevailing market condition, of

31 August 2018: 5.75%
31 August 2019: 5.75%
31 August 2020: 5.75%
31 October 2020: 6.0%

Reversionary yield, taking in account the potential leasing of vacant property unit, of

31 August 2018: 6.0%
31 August 2019: 6.0%
31 August 2020: 6.0%
31 October 2020: 6.25%Fair values of the investment properties would increase/decrease if term yield and reversionary yield decrease/increase with other variables held constant.

There were no transfer into or out of Level 3 during the Relevant Periods.

All of the Target Group's investment properties have been pledged to secure the credit facilities granted to the Target Group.

13.

ACCOUNTS RECEIVABLES, PREPAYMENTS AND OTHER RECEIVABLES

As at
31 October
2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
Accounts receivables	-	138	510	1,009
Lease incentives	274	634	1,306	1,328
Prepayments	102	78	79	108
Other receivables	393	142	21	66
769	992	1,916	2,511
Accounts receivables represent lease receivables.

As at 31 August

The following is an aged analysis of accounts receivables, presented based on rental demand notices, at the end of each reporting period:

As at
As at 31 August	31 October
2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
Within 30 days	-	19	-	776
30 - 90 days	-	119	284	-
Over 90 days	-	-	226	233
-	138	510	1,009

No credit period was granted to tenants of rental of premises.

The accounts receivables past due over 90 days are not considered as in default in view of the credit qualities of debtors and management's historical experience on the settlement patterns.

Details of impairment assessment for the Relevant Periods are set out in note 21.

14. BANK BALANCES AND CASH

Included in bank balances and cash are the following amounts denominated in a currency other than

functional currency of the relevant group entities:
As at
As at 31 August	31 October
2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
United States dollars ("USD ")	-	-	3	3
As at
As at 31 August	31 October
2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
966	726	677	902
348	204	399	227
1,314	930	1,076	1,129

Lease payments received in advance Other payables and accruals

15. OTHER PAYABLES AND ACCRUALS
16. AMOUNT DUE TO A DIRECTOR
The amount is unsecured, non-interest bearing and repayable on demand.

17. BANK AND OTHER BORROWINGS

As atAs at 31 August

31 October

Bank borrowing - secured Other borrowing - secured

2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
25,481	25,022	-	-
-	-	31,632	31,710
25,481	25,022	31,632	31,710

GBP'000 GBP'000

Bank borrowing	Other borrowing
As at 31	As at As at
August	31 August 31 October
2018	2020 2020
GBP'000 GBP'000

2019

Carrying amount repayable:

Within one year

Within a period of more than one year but not exceeding two years

Within a period of more than two years but not exceeding five years

457 457 24,567

457 24,565

- -

31,632 31,710

25,481

25,022

31,632 31,710

Less: Amount shown under current liabilities

(457)

Amounts shown under non-current liabilities

25,024

24,565

31,632

31,710

The bank borrowing as at 31 August 2018 and 31 August 2019 was interest bearing at 3.03% per annum and pledged by the Target Group's investment properties as disclosed in note 12. The original maturity date was 23 August 2021 but early repaid in full on 29 May 2020.

The other borrowing as at 31 August 2020 and 31 October 2020 is interest bearing at 2.3% per annum and pledged by the Target Group's investment properties as disclosed in note 12. The other borrowing is repayable in full at maturity date on 28 May 2023.

18. LOAN FROM A NON-CONTROLLING MEMBER OF A SUBSIDIARY

The amount is unsecured, interest bearing at 10% per annum and repayable at maturity date on 21 August 2021. During the year ended 31 August 2020, partial repayment of GBP522,000 was made by the Target Group. The loan is classified as a non-current liability at 31 August 2018 and 31 August 2019 and a current liability at 31 August 2020 and 31 October 2020.

19. SHARE CAPITAL
Number of shares
Amount GBP'000
Ordinary shares of USD1 each
Authorised:
At 1 September 2017, 31 August 2018, 31 August 2019, 31
August 2020 and 31 October 2020 50,000 39
Issued and fully paid:
At 1 September 2017, 31 August 2018, 31 August 2019, 31
August 2020 and 31 October 2020 9,999 8
20. CAPITAL RISK MANAGEMENT
The Target Group maintains a capital base to cover risks inherent in its business. The primary objectives of the Target Group's capital management are to ensure that the Target Group has sufficient capital, represented by share capital and reserves, to support its operations and to maximise shareholders' value.
The Target Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Target Group may adjust the amount of dividend payment to the shareholders and return capital to the shareholders. The Target Group will consider raising shareholders' loan and bank and other loan when the need arises. The Target Group was not subjected to any externally imposed capital requirement during the Relevant Periods.

21. FINANCIAL INSTRUMENTS

Categories of financial instruments

As at

2018

As at 31 August 2019

2020

31 October 2020

GBP'000

Financial assets Loan and receivables

(including cash and cash equivalents) Amortised cost

2,515 -

- 2,865

1,297 1,033

Financial liabilities Amortised cost

26,907

26,427

32,797 32,716

Financial risk management objectives and policies

The Target Group's financial instruments include other receivables, bank balances, other payables and accruals, amount due to a director, bank and other borrowings and loan from a non-controlling member of a subsidiary. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner.

Market risk

The Target Group's activities expose it primarily to the market risk at changes in interest rates and foreign exchange rates.

Interest rate risk

The Target Group is exposed to fair value interest rate risk in relation to its fixed-rate bank and other borrowings and loan from a non-controlling member of a subsidiary.

The Target Group is also exposed to cash flow interest rate risk in relation to variable-rate bank balances. No sensitivity analysis has been presented for bank balances as the effect is insignificant.

The Target Group does not have other interest rate hedging policy. However, the management monitors interest rate exposure and will consider hedging significant interest rate exposure should the need arise.

Currency risk

The functional currency of the Target Company is GBP in which most of the transactions are denominated. No sensitivity analysis has been presented for bank balances denominated in USD (note 14) as the effect is insignificant.

The Target Group currently does not have a foreign currency hedging policy. However, the management monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arises.

Liquidity risk

In the management of liquidity risk, the Target Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Target Group's operations and seeks continuous financial support from the shareholders so as to enable the Target Group to meet its liabilities when they fall due. In the opinion of directors of the Target Company, the Target Group does not have significant liquidity risk.

The following table details the Target Group's remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Target Group can be required to pay.

Repayable

Weighted average interest rateon demand/ less than 1 year GBP'000

1 - 5 years

GBP'000

Total undiscounted cash flow GBP'000

Carrying amount GBP'000

At 31 August 2018

Other payables and accruals Amount due to a director Loan from a non-controlling member of a subsidiary - fixed rate

N/A N/A

348 11

- -

348 348

11 11

Bank borrowing - fixed rate

10% 3.03%

- 471

1,417 27,353

1,417 1,067

27,824 25,481

830

28,770

29,600 26,907

At 31 August 2019

Other payables and accruals Amount due to a director Loan from a non-controlling member of a subsidiary - fixed rate

N/A N/A

204 23

- -

204 204

23 23

Bank borrowing - fixed rate

10% 3.03%

- 471

1,422 26,061

1,422 1,178

26,532 25,022

698

27,483

28,181 26,427

At 31 August 2020

Other payables and accruals Loan from a non-controlling member of a subsidiary - fixed rate

N/A

399

399 399

Other borrowing - fixed rate

10% 2.3%

840 -

− 33,665

840 766

33,665 31,632

1,239

33,665

34,904 32,797

At 31 October 2020

Other payables and accruals Loan from a non-controlling member of a subsidiary - fixed rate

N/A

227

227 227

Other borrowing - fixed rate

10% 2.3%

841 -

- 33,620

841 779

33,620 31,710

1,068

33,620

34,688 32,716

Credit risk (before application of HKFRS 9 on 1 September 2018)

At 31 August 2018, financial assets whose carrying amounts best represent the maximum exposure to credit risk.

In order to minimum the credit risk, the Target Group reviews recoverable amount of the accounts receivables periodically to ensure that adequate impairment losses has been made for irrecoverable amounts. The Target Group will internally assess the credit quality of the potential tenants before accepting any new tenants, no credit period is granted to tenants.

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

Credit risk and impairment assessment (upon application of HKFRS 9 on 1 September 2018)

The Target Group's maximum exposure to credit risk which will cause a financial loss to the

Target Group due to failure to discharge obligations by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated statements of financial position.

Accounts receivables and lease incentives

The Target Group's credit risk is primarily attributable to its accounts receivables and lease incentives. In order to minimise the credit risk, the management of the Target Group will internally assess the credit quality of the potential tenants before accepting any new tenants, no credit period is granted to tenants. In addition, the Target Group reviews the recoverable amount of each individual debt at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Target Company consider that the Target Group's credit risk is significantly reduced.

The Target Group has concentration of credit risk as 100%, 97% and 98% of the total accounts receivables was due from the Target Group's five largest customers as at 31 August 2019 and 2020 and 31 October 2020 respectively.

As part of the Target Group's credit risk management, the Target Group assessed the ECL of account receivable and lease incentives for each of the debtors individually. No impairment allowance for the accounts receivables and lease incentives was provided since the loss given default and exposure at default are not significant due to the low probability of default of those receivables based on historical credit loss experience. The directors of the Target Company have also considered reasonable and supportable best information available without undue cost or effort including historical evidences and forward looking information, such as, but not limited to, subsequent settlements, and concluded that there is no event of default occurs.

Other receivables

Regarding other receivables, the ECL on these assets are assessed individually for debtors on the recoverability based on historical settlement records, past experience, and also quantitative and qualitative information that is reasonable and supportive forward-looking information. The management of the Target Group believes that there is no material credit risk inherent in the Target Group's outstanding balance of other receivables. The Target Group performs impairment assessment under 12m ECL model in accordance with HKFRS 9. The Target Group assessed the ECL for other receivables was insignificant due to the exposure over the other receivables was insignificant. Thus no loss allowance was recognised.

Bank balances

The Target Group only transacts with reputable banks with high credit ratings assigned by international credit-rating agencies and therefore the management of the Target Group considers the risk of default is low. The Target Group uses 12m ECL to perform the assessment under ECL model in accordance with HKFRS 9 on balances individually based on the average loss rate by reference to credit ratings assigned by international credit-rating agencies. The Target Group assessed the ECL for bank balances was insignificant.

The Target Group's internal credit risk grading assessment comprises the following categories:

Accounts	Other financial
receivables and	assets at amortised
Internal credit rating	Description	lease incentives	cost
Low risk	The counterparty has a low risk of	Lifetime ECL - not	12m ECL
default and does not have any	credit-impaired
past-due amounts
Watch list	Debtor frequently repays after due	Lifetime ECL - not	12m ECL
dates but usually settle in full	credit-impaired
Doubtful	There have been significant increases	Lifetime ECL - not	Lifetime ECL - not
in credit risk since initial recognition	credit-impaired	credit-impaired
through information developed
internally or external resources
Loss	There is evidence indicating the asset	Lifetime ECL -	Lifetime ECL -
is credit-impaired	credit-impaired	credit-impaired
Write-off	There is evidence indicating that the	Amount is written	Amount is written
debtor is in severe financial	off	off
difficulty and the Target Group has
no realistic prospect of recovery

The tables below detail the credit risk exposures of the Target Group's financial assets, accounts receivables and lease incentives which are subject to ECL assessment:

NotesExternal credit ratingInternal credit rating

12-month or lifetime ECLAs at 31 August 2019 Gross carrying amounts GBP'000

As at

31 August 2020 31 October 2020

Gross carrying amounts GBP'000

Financial assets at amortised cost

Other receivables

13 N/A
Low risk
12m ECL
142
21 66
(not credit-impaired)Bank balances
14 A1-A2

N/A

12m ECL

2,723

1,276 967

(not credit-impaired)Other items

Accounts receivables

N/A

Watch listLifetime ECL

138

495 986

N/A

Doubtful

(not credit-impaired) Lifetime ECL

15 23

(not credit-impaired)Lease incentives

N/A

Watch listLifetime ECL

634

1,180 1,204

N/A

Doubtful

(not credit-impaired) Lifetime ECL

126 124

(not credit-impaired)

Fair value measurements

The fair value of other financial assets and liabilities are determined in accordance with discounted cash flow analysis using prices or rates from observable current market transactions as inputs.

The directors of the Target Company considers that the carrying amounts of the other financial assets and liabilities, recorded at amortised cost in the Historical Financial Information, are approximate to their fair values.

22. RELATED PARTY TRANSACTIONS
Compensation of key management personnel
The key management personnel includes solely the directors of the Target Company. No director of the Target Company or key management personnel received remuneration from the Target Group for
their services provided to the Target Group as disclosed in note 8.
23. PARTICULARS OF SUBSIDIARIES
During the Relevant Periods and as at the date of this report, the Target Company has direct and indirect ownership interests in the following subsidiaries:

Ownership interest and voting power held by the Target Company as atName of subsidiaryPlace and date of incorporationClass of sharesIssued share capital

31 August 2018

31 August 2019

31 August 2020

31 Octoberdate of

2020 this report Principal activities

Dakota Capella Limited* (note a)

British Virgin Islands 27 February 2017

Ordinary

USD1

100%

100% Investment holdingDakota Capella (HK) Limited* (note b)
Hong Kong 7 June 2017
Ordinary
HK$1
100%
100%
100%
100%
100% Investment holdingDakota Capella LLP (note c)United Kingdom 6 June 2017

PartnershipGBP8,000,000

92.75%

92.75% Property investment

Directly held by the Target Company

Dakota Capella Limited and Dakota Capella (HK) Limited are limited liability companies while Dakota Capella LLP is a limited liability partnership. All of them have adopted 31 August as their financial year end date.

Notes:

(a) No audited financial statements of Dakota Capella Limited have been prepared since the date of incorporation as it is incorporated in a jurisdiction where there is no statutory audit requirements.
(b) The statutory financial statements of Dakota Capella (HK) Limited for each of the years ended 31 August 2018 and 31 August 2019 were prepared in accordance with HKFRSs issued by the HKICPA and were audited by Pricewaterhouse Coopers, certified public accountants registered in Hong Kong. No statutory financial statements of Dakota Capella (HK) Limited have been prepared for the year ended 31 August 2020 as the financial statements have not yet been due to issue.
(c) The statutory financial statements of Dakota Capella LLP for each of the years ended 31 August 2018 and 31 August 2019 were prepared in accordance with United Kingdom Generally Accepted Accounting Practice issued by the United Kingdom Financial Reporting Council and were audited by Grant Thornton (NI) LLP, Chartered Accountants and Statutory Auditors in the United Kingdom. No statutory financial statements of Dakota Capella LLP have been prepared for the year ended 31 August 2020 as the financial statements have not yet been due to issue.

FINANCIAL INFORMATION OF THE TARGET GROUP

The table below shows details of non-wholly-owned subsidiary of the Target Group that have material non-controlling interests:

Name of subsidiaryPlace of incorporation and principal place of businessProportion of ownership interests and voting rights held by non-controlling interestsProfit (loss) allocated to non-controlling interests

As atAs at 31 August

2018

2019

2020

31 October 2020

Year ended 31 August 2018 2019 2020

GBP'000 GBP'000 GBP'000

Accumulated non-controlling interests

Two months ended

31 October 2019 2020

As at 31 August 2018 2019

2020

As at 31 October 2020

GBP'000 GBP'000

GBP'000

Dakota Capella LLPUnited Kingdom

7.25%

205

237

(30)

(4)

(217)

760

997

967

750

Summarised financial information in respect of Dakota Capella LLP that has material non-controlling interests is set out below. The summarised financial information below represents amounts before intra group eliminations.

As at
As at 31 August	31 October
2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
Current assets	2,890	3,667	3,164	3,464
Non-current assets	49,000	52,000	53,000	50,000
Current liabilities	(1,805)	(1,395)	(1,862)	(1,945)
Non-current liabilities	(39,609)	(40,519)	(40,962)	(41,179)
Equity attributable to owners of
Dakota Capella LLP	10,476	13,753	13,340	10,340
Non-controlling interests of
Dakota Capella LLP	760	997	967	750

FINANCIAL INFORMATION OF THE TARGET GROUP

Two months ended

Year ended 31 August	31 October
2018 2019 2020	2019 2020
GBP'000 GBP'000 GBP'000	GBP'000 GBP'000

Revenue	3,124	3,000	2,922	432	443
2,570	3,000	782	-	(3,000)
(2,877)	(2,725)	(4,115)	(482)	(444)
2,817	3,275	(411)	(50)	(3,001)
2,612	3,038	(381)	(46)	(2,784)
205	237	(30)	(4)	(217)
2,817	3,275	(411)	(50)	(3,001)

Fair value change of investment properties

Expenses

Profit (loss) for the year/periodProfit (loss) attributable to owners of Dakota Capella LLP

Profit (loss) attributable to the non-controlling interests of Dakota Capella LLP

Net cash inflow (outflow) from operating activities

Net cash outflow from investing activitiesNet cash outflow from financing activities

Net cash inflow (outflow)

Two months ended
Year ended 31 August	31 October
2018 2019 2020	2019 2020
GBP'000 GBP'000 GBP'000	GBP'000 GBP'000

3,276	1,777	140	(433)	(248)
-	-	(218)	-	-
(1,154)	(1,226)	(1,350)	(311)	(44)
2,122	551	(1,428)	(744)	(292)
- II-35 -

24. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Target Company's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Target Group's consolidated statements of cash flows as cash flows from financing activities.

Loan from
a non-
Bank and	controlling
other	member of a
borrowings	subsidiary	Total
GBP'000	GBP'000	GBP'000
At 1 September 2017	25,840	964	26,804
Financing cash flows
- Repayments of bank and other borrowings	(456)	-	(456)
- Interest paid	(698)	-	(698)
Interest on bank and other borrowings	795	-	795
Interest on loan from a non-controlling
member of a subsidiary	-	103	103
At 31 August 2018	25,481	1,067	26,548
Financing cash flows
- Repayments of bank and other borrowings	(457)	-	(457)
- Interest paid	(769)	-	(769)
Interest on bank and other borrowings	767	-	767
Interest on loan from a non-controlling
member of a subsidiary	-	111	111
At 31 August 2019	25,022	1,178	26,200
Financing cash flows
- Repayment of bank and other borrowings	(24,927)	-	(24,927)
- Repayment of loan from a non-controlling
member of a subsidiary	-	(522)	(522)
- New bank and other borrowings raised	31,632	-	31,632
- Interest paid	(856)	-	(856)
Interest on bank and other borrowings	761	-	761
Interest on loan from a non-controlling
member of a subsidiary	-	110	110
At 31 August 2020	31,632	766	32,398
Financing cash flows
- Interest paid	(44)	-	(44)
Interest on bank and other borrowings	122	-	122
Interest on loan from a non-controlling
member of a subsidiary	-	13	13
At 31 October 2020	31,710	779	32,489
At 1 September 2019	25,022	1,178	26,200
Financing cash flows
- Repayments of bank and other borrowings	(120)	-	(120)
- Interest paid	(191)	-	(191)
Interest on bank and other borrowings	128	-	128
Interest on loan from a non-controlling
member of a subsidiary	-	19	19
At 31 October 2019 (unaudited)	24,839	1,197	26,036

FINANCIAL INFORMATION OF THE TARGET GROUP

25.

STATEMENT OF FINANCIAL POSITION OF THE TARGET COMPANYAs at 31 AugustAs at 31 October

2018	2019	2020	2020
GBP'000	GBP'000	GBP'000	GBP'000
Non-current assets
Unlisted investments in subsidiaries	1,692	1,692	1,692	2,554
Amounts due from subsidiaries	18,645	19,209	13,079	12,266
20,337	20,901	14,771	14,820
Capital and reserves
Share capital	8	8	8	8
Reserves	20,329	20,893	14,763	14,812
20,337	20,901	14,771	14,820
Movement in the Target Company's reserves
Share	Retained
premium	profits	Total
GBP'000	GBP'000	GBP'000
At 1 September 2017	19,748	-	19,748
Profit for the year	-	581	581
At 31 August 2018	19,748	581	20,329
Profit for the year	-	564	564
At 31 August 2019	19,748	1,145	20,893
Profit for the year	-	547	547
Dividend paid (note 10)	(6,677)	-	(6,677)
At 31 August 2020	13,071	1,692	14,763
Profit for the period	-	49	49
At 31 October 2020	13,071	1,741	14,812

FINANCIAL INFORMATION OF THE TARGET GROUP

26. OPERATING LEASING ARRANGEMENTS
The Target Group as lessor
All of the properties held by the Target Group for rental purposes have committed lessees for the next 4 to 9 years.
Undiscounted lease payments receivable on leases are as follows:
2018
As at 31 August 2019
As at
2020
31 October 2020
GBP'000
GBP'000
GBP'000
GBP'000
Within one year
- In the second year
- In the third year
- In the fourth year
- In the fifth year After five years
2,876
2,876
2,876
2,947 2,947
2,876
2,947 2,947
2,876
2,876
2,947 2,947
2,876
2,876
2,947 2,889
2,876
2,876
2,281 2,176
9,887
7,011
6,543 6,215
24,267
21,391
20,612 20,121
27. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements of the Target Group, the Company or any of its subsidiaries have been prepared in respect of any period subsequent to 31 October 2020.

Set out below is the management discussion and analysis on the Target Group for the three years ended 31 August 2020 and the two months ended 31 October 2020 (the "Track Record Period"). The following financial information relates to the financial information of the Target Group as set out in Appendix II to this circular.

Financial and business review

Based on the tenancy schedule of the Property effective as of 31 October 2020, approximately 93% of the total net internal area had been leased out. Based on the existing leases as of 31 October 2020 (the unit rental of which ranges from about GBP14 to GBP29), the total annual rental income attributable to the Property would amount to about GBP2.9 million.

Revenue

Revenue of the Target Group was generated primarily from the tenancy of the Property. For the three years ended 31 August 2020 and the two months ended 31 October 2020, the revenue of the Target Group amounted to approximately GBP3.1 million, GBP3.0 million, GBP2.9 million and GBP0.4 million respectively. The Target Group recorded a similar level of revenue throughout the Track Record Period.

Other expenses, gains/(losses), net

Other expenses, gains/(losses), net of the Target Group mainly include changes in fair value of the Property. Other gains amounted to approximately GBP2.6 million and GBP3.0 million for the years ended 31 August 2018 and 31 August 2019, respectively and other expenses and losses amounted to approximately GBP0.3 million and GBP3.0 million for the year ended 31 August 2020 and two months ended 31 October 2020, respectively.

The changes were mainly caused by changes in fair value of the Property during the Track Record Period and refinancing expenses and loss on derecognition of bank borrowing of approximately GBP1.1 million in relation to a new loan incurred for the year ended 31

August 2020.

Administrative expenses

Administrative expenses of the Target Group for the three years ended 31 August 2020 and the two months ended 31 October 2020 amounted to approximately GBP0.2 million, GBP0.1 million, GBP0.2 million and GBP0.1 million respectively, which mainly represented loan arrangement fee, and expenses incurred on legal and professional services. The decrease of administrative fees for the year ended 31 August 2019 was primarily attributable to the decrease in expenses incurred on loans during the year ended 31 August 2018. The increase of administrative fees for the year ended 31 August 2020 was driven by the increase in loan arrangement fees for a loan during the year ended 31

August 2020. There is no material changes of administrative fees for the two months ended 31 October 2020.

Finance costs

Finance costs of the Target Group represent interest expenses incurred from borrowings of the Target Group during the Track Record Period. The finance costs for the three years ended 31 August 2020 and the two months ended 31 October 2020 were approximately GBP0.9 million, GBP0.9 million, GBP0.9 million and GBP0.1 million, respectively.

As a result of the forgoing factors, the Target Group recorded profit of approximately GBP4.0 million, GBP4.5 million and GBP0.8 million for the three years ended 31 August 2020, respectively and loss of approximately GBP2.9 million for the two months ended 31 October 2020.

Segmental information

During the Track Record Period, the Target Group carried on a single business in a single geographical location, which is the holding and operation of the Property in Glasgow. All of the Target Group's revenue was generated in Glasgow and all of its assets were located in Glasgow. Accordingly, there was only one single reportable and operating segment.

Liquidity, financial resources, gearing and capital structure

The Target Group generally finances its daily operations primarily by rental income generated from the tenancy of the Property and bank and other borrowings, including a non-controlling member of a subsidiary. The principal cash inflows of the Target Group come from rental income from tenants.

As at 31 August 2018, 2019 and 2020 and 31 October 2020, the total current assets of the Target Group were approximately GBP2.9 million, GBP3.7 million, GBP3.2 million and GBP3.5 million respectively, which mainly represented bank balances and cash, trade and other debtors.

As at 31 August 2018, 2019 and 2020 and 31 October 2020, the total current liabilities of the Target Group were approximately GBP1.8 million, GBP1.4 million, GBP1.8 million and GBP1.9 million respectively, which mainly represented deferred income and bank and other borrowings.

The current ratio of the Target Company, calculated as current assets divided by current liabilities, 31 August 2018, 2019 and 2020 and 31 October 2020 was approximately 1.62, 2.63, 1.73 and 1.82 respectively.

Cash and Bank Balances

The bank balances and cash were denominated in GBP and were approximately GBP2.1 million, GBP2.7 million, GBP1.3 million and GBP1.0 million as at 31 August 2018, 2019 and 2020 and 31 October 2020, respectively. The decrease in cash and cash equivalents as at 31 August 2020 was due to the declaration and payment of dividend to the shareholders of the Target Company totally amounting to GBP6.7 million and repayment of the loan from a non-controlling member of a subsidiary amounting to GBP0.5 million during the year ended 31 August 2020.

Borrowings

As at 31 August 2018, 2019 and 2020 and 31 October 2020, the loan balances of the Target Group were approximately GBP26.5 million, GBP26.2 million, GBP32.4 million and GBP32.5 million respectively, of which approximately GBP26.1 million, GBP25.7 million, GBP31.6 million and GBP31.7 million were repayable more than one year. All loan balance was at a fixed interest rate.

Gearing Ratio

The gearing ratio of the Target Group as at 31 August 2018, 2019 and 2020 and 31 October 2020, which was calculated on the basis of the amount of total debts divided by the total equity attributable to owners of the Target Company was approximately 114.2%, 95.1%, 149.0% and 170.0% respectively.

Foreign exchange risks and hedging arrangement

During the Track Record Period, all business transactions, assets and liabilities of the Target Group were denominated in GBP. Therefore, the Target Group was not exposed to any material foreign currency exchange risks.

The Target Group did not have any formal hedging policies and no financial instrument was used for hedging purposes during the Track Record Period.

Employees and remuneration policy

The Target Group did not have any employee during the Track Record Period.

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

Save for the Property, the Target Group had not held any significant investments during the Track Record Period. The Target Group also did not carry out any material acquisitions and disposals of subsidiaries and associated companies during the Track Record Period.

Charges on assets and contingent liabilities

As at 31 August 2018, 2019 and 2020 and 31 October 2020, the Property had been charged by the Target Company as a security for bank loan facilities to the Target Company with outstanding loan balance in the amount of GBP25.5 million, GBP25.0 million, GBP31.6 million and GBP31.7 million respectively.

As at 31 August 2018, 2019 and 2020 and 31 October 2020, the Target Group did not have any material contingent liabilities.

Future plans for material investments and acquisitions of material capital assets

The Target Group did not have any future plans for material investment and acquisition of material capital assets.

BASIS OF PREPARATION OF THE UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

In connection with the Acquisition, the unaudited pro forma financial information of the Enlarged Group (the "Unaudited Pro Forma Financial Information") has been prepared to illustrate the effect of the Acquisition on the Group's financial position as at 30 June 2020.

The Unaudited Pro Forma Financial Information of the Enlarged Group has been prepared by the Directors in accordance with paragraph 29 of Chapter 4 of the Listing Rules and is solely for the purpose to illustrate the assets and liabilities of the Enlarged Group as if the Acquisition had been completed on 30 June 2020.

The unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group is prepared based on (i) the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2020 which has been extracted from the published interim report of the Company for the six months ended 30 June 2020; and (ii) information about the consolidated assets and liabilities of the Target Group as at 31 October 2020, which have been extracted from the accountants' reports set out in Appendix II to this Circular, after making certain pro forma adjustments resulting from the Acquisition.

The Unaudited Pro Forma Financial Information of the Enlarged Group is prepared based on the aforesaid historical data after giving effect to the pro forma adjustments described in the accompanying notes. Narrative description of the pro forma adjustments of the Acquisition that are (i) directly attributable to the Acquisition; and (ii) factually supportable, is summarised in the accompanying notes.

The Unaudited Pro Forma Financial Information of the Enlarged Group has been prepared by the Directors based on certain assumptions, estimates and uncertainties for illustrative purposes only and because of its hypothetical nature, the Unaudited Pro Forma Financial Information of the Enlarged Group may not purport to predict what the assets and liabilities of the Enlarged Group with the Acquisition would have been upon completion of the Acquisition at any future dates.

The Unaudited Pro Forma Financial Information of the Enlarged Group should be read in conjunction with the historical financial information of the Group as set out in Appendix I to this Circular, and the financial information of the Target Group as set out in Appendix II to this Circular and other financial information included elsewhere in this Circular.

UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

Non-current assets

Investment properties Property, plant and equipment Right-of-use assets

Goodwill

Investments in associates Rental deposits

Current assets

Inventories

Trade and other receivables Loan receivables

Tax recoverable Pledged bank deposits Bank balances and cashCurrent liabilities

Trade and other payables Contract liabilities

Tax payable

Bank and other borrowings Loan from a non-controlling member of a subsidiary Lease liabilities

Net current assets

The TargetThe Group as at 30 June 2020

Group as at 31 October 2020

HK$'000 Note (i)

HK$'000 Note (ii)

56,000 502,000

Pro forma adjustments

HK$'000 Note (iii)

Unaudited pro forma total for the

Enlarged

HK$'000 Note (iv)

Group HK$'000

3,448

1,942 563,390

10,037 - 10,037

27,050 - 27,050

2,480 - 2,480

307,576

(59,570) 248,006

6,180 - 6,180

409,323 502,000 857,143

93,409 11,921

- 93,409

25,210 37,131

26,599 - 26,599

167 - 167

44,021 - 44,021

48,350 9,709

(1,942) 56,117

224,467 34,919 257,444

14,462 11,335 25,797

15,766 - 15,766

- 10 10

1,776 - 1,776

- 22,243

7,821 7,821

- 22,243

54,247 19,166 73,413

170,220 15,753

184,031

Trade assets less current liabilities 579,543 517,753

1,041,174

The TargetThe Group as at 30 June 2020

Group as at 31 October 2020

Unaudited pro forma total for the

EnlargedPro forma adjustments

HK$'000 Note (i)

HK$'000 Note (ii)HK$'000 Note (iii)HK$'000 Note (iv)

Group HK$'000

Non-current liabilities

Bank and other borrowings Deferred taxation

Lease liabilities

130,000 936 5,576

318,368 - -

53,500

501,868 936 5,576

136,512 318,368 508,380

Net assets 443,031 199,385 532,794

Notes to the Unaudited Pro Forma Financial Information of the Enlarged Group

Notes:

(i) The assets and liabilities of the Group are extracted from the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2020 as set out in the published interim report of the Company for the six months ended 30 June 2020.
(ii) The adjustments represent the inclusion of the consolidated assets and liabilities of the Target Group as at 31 October 2020 as extracted from the accountants' report on historical financial information of the Target Group as set out in Appendix II to this Circular, which has been prepared in accordance with accounting policies of the Group, with certain adjustments being made to be in line with presentation of the financial information of the Group where appropriate, and translated to Hong Kong Dollars ("HK$'') at Great British Pound ("GBP") 1 to HK$10.04 at 31 October 2020. No representation is made that any amount in GBP could be or could have been converted to HK$ at the relevant date at that rate or at all.
(iii) On 24 December 2020, Elite Jumbo Limited ("Elite Jumbo"), a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with Ever Bless Investments Limited in relation to the Acquisition at a consideration of HK$53,500,000 by way of issue of promissory note which is repayable three years after the date of issuance.
Before the Acquisition, Elite Jumbo directly held 27.49% of the entire issued share capital of the Target Company and the Target Company is accounted for as an associate. The carrying amount of interest in Elite Jumbo at 30 June 2020 was HK$59,570,000. Upon the completion of Acquisition, Elite Jumbo will hold 54.98% of the entire issued share capital of the Target Company and the Target Company will become an indirect non-wholly owned subsidiary of the Company, the assets, liabilities and financial results of the Target Group will be consolidated into the consolidated financial statements of the Group.

Under HKFRSs, the acquisition of the Target Group is accounted for as acquisition of assets and liabilities as the Target Group proposed to be acquired by the Company does not constitute a business.

For the purpose of this unaudited pro forma financial information, it is assumed the pro forma fair value of the Target Group's identifiable assets and liabilities approximate their respective carrying amounts as at 31 October 2020 and no additional liabilities arise from the acquisition. Upon the completion of the Acquisition, the fair values of the identifiable assets and liabilities of the Target Group will have to be reassessed. The fair values of the identifiable assets and liabilities of the Target Group at the date of Completion of the Acquisition may be different from the pro forma fair value of the identifiable assets and liabilities used in the preparation of this unaudited pro forma financial information. Accordingly, the final amount of the identifiable assets and liabilities at the date of Completion may be different from the amounts stated herein. The difference of HK$3,448,000 between (i) consideration of HK$53,500,000 and carrying amount of interest in an associate of HK$59,570,000, and (ii) the fair value of the Target Group's identifiable assets and liabilities of HK$199,385,000 less 45.02% non-controlling interests of HK$89,763,000, will be allocated to the investment properties.

(iv) This adjustment represents estimated acquisition-related costs of approximately HK$1,942,000 directly attributable to the Acquisition.
(v) No other adjustments have been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions entered into by the Enlarged Group subsequent to 30 June 2020.

REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report on the unaudited pro forma financial information of the Enlarged Group, received from the Company's reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Auto Italia Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Auto Italia Holdings Limited (the "Company") and its subsidiaries (hereinafter collectively referred to as the "Group") by the directors of the Company (the "Directors") for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of assets and liabilities as at 30 June 2020 and related notes as set out on pages IV-1 to IV-4 of the circular issued by the Company dated 25 February 2021 (the "Circular"). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on pages IV- 1 to IV-4 of the Circular.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisition of additional 27.49% equity interest in Dakota RE II Limited on the Group's financial position as at 30 June 2020 as if the transaction had taken place at 30 June 2020. As part of this process, information about the Group's financial position has been extracted by the Directors from the Group's financial statements for the six months ended 30 June 2020, on which a review report has been published.

Directors' Responsibilities for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and with reference to Accounting Guideline 7 "Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars" (" AG 7 ") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA").

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the "Code of Ethics for Professional Accountants" issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 "Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements" issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants' Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 "Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus" issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the unaudited pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 June 2020 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and
• the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants' judgment, having regard to the reporting accountants' understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

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

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong,

25 February 2021

The following is the text of a valuation report set out on pages V-1 to V-6, received from Roma Appraisals Limited, an independent property valuer, in connection with their valuation as of 31 January 2021 of the Property, for the purpose of incorporation in this circular.

22/F, China Overseas Building

139 Hennessy Road, Wan Chai, Hong Kong

Tel (852) 2529 6878 Fax (852) 2529 6806

E-mailinfo@romagroup.comhttp://www.romagroup.com

25 February 2021

The Board of Directors

Auto Italia Holdings Limited Unit C, Ground Floor

2 Yuen Shun Circuit Siu Lek Yuen, Shatin Hong Kong

Dear Sirs,

Re: Property valuation of Capella Building, 60 York Street, Glasgow, G2 8JX, the United Kingdom

INSTRUCTIONS, PURPOSE AND VALUATION DATE

In accordance with your instructions for us to assess the market value of the property interest to be acquired by Auto Italia Holdings Limited (the "Company") and/ or its subsidiaries (together with the Company referred to as the "Group") situated in the United Kingdom (the "UK"), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 31 January 2021 (the "Valuation Date") for public disclosure purpose.

VALUATION BASIS

Our valuation of the property interest is our opinion on the basis of market value which defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion".

VALUATION STANDARDS

Our valuation is prepared in accordance with the RICS Valuation - Global Standards published by the Royal Institution of Chartered Surveyors, HKIS Valuation Standards 2020 published by the Hong Kong Institute of Surveyors and the International Valuation Standards published by the International Valuation Standards Council; and the requirements set out in Chapter 5 of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited published by the Stock Exchange of Hong Kong Limited.

VALUATION METHODOLOGY

We have valued the property by the Term and Reversion Approach, an income approach commonly adopted for income generating property, by taking into account of the term income, which is the passing rental income from the existing leases; and the reversionary income, which is the potential reversionary rental income as achievable in the market after the existing lease term expired. The term income is capitalized over the existing lease terms to determine the term value; and the revisionary income is capitalized after the expiration of the existing lease terms and adjusted to present value to determine the reversionary value. The market value is arrived at the summation of the term value and reversionary value.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumptions that the owner sells the property in the market in its existing state without the benefit of deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to affect the value of the property. No account has been taken of any option or right of pre-emption concerning or affecting the sale of the property. No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, we have assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value. We assumed the property has complied with all the necessary planning and building regulations as applicable.

SOURCE OF INFORMATION

In the course of our valuation, we have relied to a very considerable extent on the information provided by the Group and have accepted advice given to us on matters such as identification of the property, occupation particulars, floor areas, building age and all other relevant matters which can affect the value of the property. All documents have been used for reference only. We have no reason to doubt the truth and accuracy of the information provided to us.

We have also been advised that no material facts have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view, and have no reason to suspect that any material information has been withheld.

TITLE INVESTIGATION

We have carried out title searches at the Registers of Scotland. However, we have not scrutinized all the original documents to verify ownership or to ascertain the existence of any lease amendments which may not appear on the copies handed to us. We assume no liability for any existing or potential legal matters, if any, in relation to the title of the property interest.

INSPECTION AND INVESTIGATIONS

The property was inspected in November 2019 by Mr. Alex Ma, MRICS, who has over 7 years of property and fixed asset valuation and consultancy experience in the UK, Hong Kong, China, the Asia-Pacific and America regions, etc.. We are not, however, able to conduct recent physical re-inspection due to the outbreak of COVID-19 pandemic for this valuation. As confirmed by the Group and our research, there is no material change to the physical attributes or the surrounding environment of the property during the period between our last inspection and the Valuation Date which might significantly affect our valuation opinion.

In the course of our inspection, we have inspected the exterior and the interior of the property where possible. No structural survey has been made in respect of the property. During the course of our inspection, we did not notice any serious defects. We are not able to report that the property is free from rot, infestation or any other structural defects. No test was carried out on any of the building services. We have not carried out any land investigation or environmental surveys during the inspection but we did not notice and have not been advised of any evidence of environmental concerns such as existing/potential contamination or other hazard, etc., and have therefore we assumed none of such exists. We have not carried out on-site measurement to verify the floor areas of the property but we have assumed that the floor areas shown on the documents handed to us are correct. Except as otherwise stated, all dimensions, measurements and areas included in this valuation report are based on information contained in the documents provided to us by the Group and are therefore approximations.

CURRENCY

Unless otherwise stated, all monetary amounts stated in our valuation is in Pound Sterling ("GBP"), the lawful currency of the UK.

Our Valuation Certificate is attached herewith.

Yours faithfully,

For and on behalf of Roma Appraisals Limited

Frank F Wong

BA (Business Admin in Acct/Econ) MSc (Real Est) MRICS Registered Valuer MAusIMM ACIPHE Director

Note:

Mr. Frank F. Wong is a Chartered Surveyor, Registered Valuer, Member of the Australasian Institute of Mining & Metallurgy and Associate of Chartered Institute of Plumbing and Heating Engineering with over 21 years of valuation, transaction advisory and project consultancy experience of properties in Hong Kong and 13 years of experience in valuation of properties in the PRC as well as relevant experience in the Asia-Pacific region, Australia and Oceania-Papua New Guinea, Thailand, France, Germany, Poland,

United Kingdom, United States, Abu Dhabi (UAE), Ukraine and Jordan.

VALUATION REPORT OF THE PROPERTY

VALUATION CERTIFICATE

Property interest to be acquired by the Group for investment in the UK

Property

Description and TenureParticulars of Occupancy

Market Value in Existing State as at 31 January 2021

Capella Building, 60 York Street, Glasgow G2 8JX, The United Kingdom

Notes:

The property comprises the entire block of and the land occupied by Capella Building, a steel framed with glazed external finish Grade-A 11-storey office building completed in 2009.

As per the information provided by the Group, Capella Building has a total Net Internal Area ("NIA") of approximately 114,784 sq.ft. for office and retail uses, including approximately 111,248 sq.ft. for office use (G/F - 10/F) and approximately 3,536 sq.ft. for retail use (G/F & Mezzanine). In addition, a reception foyer and common ancillary facilities with a total floor area of approximately 2,194 sq.ft. are arranged on the ground floor, and 44 car-parking spaces are provided in the basement. The property has a site area of approximately 17,425 sq.ft. and the site coverage is circa 76%.

The tenure of the property is heritable (equivalent to English freehold).

As per the tenancy schedule of the property as effective at the Valuation Date provided by the Group, circa 93.0% of the total NIA is subject to various tenancy agreements at a total rent of circa GBP2,900,000 p.a. with the latest expiry date in February 2030.

GBP50,000,000 (Fifty Million Pounds)

50.99% Interest to be attributable to

the Group after acquisition:

GBP25,497,000 (Twenty-Five Million

Four Hundred

Ninety-Seven Thousand Pounds)

Pursuant to the title information record obtained from Registers of Scotland (title number: GLA182069), the material information is summarized as below:

i.	The registered proprietor of the property is Dakota Capella LLP. Date of registration is 1
September 2017 and the consideration was GBP43,500,000 exclusive of VAT;
ii.	The property is subject to a Standard Security* by Dakota Capella LLP to CBRE Loan Services
Limited. Date of registration is 3 June 2020; and
iii.	The tenure of the property is heritable.
*	Standard security is equivalent to English legal mortgage, a statutory form of charge over heritable
property in Scotland.

2. As advised by the Group, Dakota Capella LLP, the registered proprietor of the property, is an indirectly owned associate of the Company. Prior to the acquisition, the Group owns 25.50% interest of the property and after the acquisition, the Group will own 50.99% interest of the property.
3. The property is situated on York Street within the Central Business District area of Glasgow. The surrounding of the property is predominated by office developments. The Glasgow Central Station is within 5-minutes walking distance and the Glasgow International Airport is about 15-minutes driving distance from the property.
4. Pursuant to the latest Glasgow City Development Plan adopted in March 2017 by Glasgow City Council, the property is subject to planning policies "CDP1 Place Making Principal", "CDP2 Sustainable Spatial Strategy" and "IPG3 Economic Development". The property is situated within the "Central Conservation Area"; not situated within the "Green Belt" area; and not designated as a "Listed Building".
5. In the course of our valuation, we have analyzed the relevant office market and considered the rental of offices with similar features in terms of locational and physical attributes. The unit rents of the offices considered are ranged from GBP25 to GBP30 p.a. per sq.ft. on NIA basis. Adjustments were made to reflect the differences of the attributes between the comparable offices and the property. The adopted unit market rent is circa GBP27 p.a. per sq.ft. which is consistent with the market.

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(a) Directors and chief executives' interests and short positions in the Shares, underlying Shares and debentures of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the

Directors or chief executives of the Company in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register of the Company referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") set out in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

(i) Interest in the shares (other than share options) of the Company

Approximate percentage of the Company's

Number oftotal issued

Name of Director	Capacity	Shares	shares (%)
(Note 2)
Mr. CHONG Tin	Beneficial owner	51,891,000(L)	0.98%
Lung Benny
Mr. LAM Chi Yan	Beneficial owner	18,700,000(L)	0.35%
- VI-1 -

GENERAL INFORMATION

(ii) Interest in the share options of the Company
Name of DirectorNumber of share Date of grant options held (DD/MM/YY)
Mr. CHONG Tin Lung Benny
300,000,000 27/07/2020
Exercise Period (DD/MM/YY)Exercise price
(HK$)Approximate percentage of the Company's total issued shares (%)
(Note 2)
27/07/2021 to 26/07/2025
0.1754 5.67%Mr. HUANG Zuie-Chin
300,000,000 27/07/2020
27/07/2021 to 26/07/2025
0.1754 5.67%Mr. NG Siu Wai
240,000,000 27/07/2020
27/07/2021 to 26/07/2025
0.1754 4.53%
(iii) Interest in the shares of associated corporations of the Company - Chime Biologics Limited ("Chime Biologics") (Note 3)

Name of Director

Approximate percentage of the total issued shares of the

Number ofCapacity

Sharesrelevant company (%)

Mr. HUANG

Zuie-Chin (Note 4)

Interest in controlled corporation

3,068,194 (L)

Notes:

(1) The letter "L" denotes the person's long position in such shares.
(2) Based on 5,292,515,390 Shares in issue as at the Latest Practicable Date.

1.30%

(3) Rainbow Surplus Investments Limited (an indirect wholly-owned subsidiary of the Company) holds 51,847,997 Series A preferred shares of Chime Biologics, which represent 11.82% of the entire issued share capital in Chime Biologics and 25.6% of the class of the Series A preferred shares of Chime Biologics. Chime Biologics is accounted for as an associated corporation of the Company.
(4) As at the Latest Practicable Date, (i) AIJ Holdings Inc. ("AIJ") (an entity which is solely owned by Mr. HUANG Zuie-Chin) held 2,068,194 ordinary shares in Chime Biologics, which represents about (a) 0.88% of the issued ordinary shares in Chime Biologics, or (b) 0.47% of the issued shares capital in Chime Biologics (comprising of both ordinary shares and series A preferred shares of Chime Biologics); and (ii) AIJ is further entitled to 1,000,000 new ordinary shares in the form of restricted stock units under a share incentive plan adopted by Chime Biologics, which have not yet been vested and such 1,000,000 underlying ordinary shares represents about (a) 0.42% of the issued ordinary shares in Chime Biologics, or (b) 0.23% of the issued shares capital in Chime Biologics (comprising of both ordinary shares and series A preferred shares of Chime Biologics).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interest or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code to be notified to the Company and the Stock Exchange.

As at the Latest Practicable Date, except for Mr. CHONG Tin Lung Benny is the founder and chairman of VMS Investment Group Limited, none of the Directors was a director or employee of a company which has an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

(b) Substantial shareholders' and other persons' interests in the shares and underlying Shares of the Company

As at the Latest Practicable Date, so far as the Directors were aware of, the persons (other than a Director or chief executive of the Company) who had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO, or which were required to be recorded in the register of the Company required to be kept under section 336 of the SFO, were as follows:

Approximate percentage of

Name

Capacity/Nature of Interest

Number of Shares held/interestedthe Company's total issued share capital (%)

Gustavo International Limited

Beneficial owner

304,725,000(L) 5.76%

("Gustavo") (Note 2)

Maini Investments Limited

("Maini") (Note 2)

Interest in controlled corporation

304,725,000(L) 5.76%

VMS Investment Group Limited

("VMSIG") (Note 2)

Beneficial owner and interest in controlled corporation

1,519,016,472(L) 28.70%Ms. MAK Siu Hang Viola

(Note 2)

Interest in controlled corporation

1,519,016,472(L) 28.70%

Notes:

(1) The letter "L" denotes the person's long position in such shares.
(2) Based on 5,292,515,390 Shares in issue as at the Latest Practicable Date.
(3) As at the Latest Practicable Date, VMSIG and parties acting in concert with it were interested in an aggregate of 1,519,016,472 Shares, of which 1,214,291,472 Shares were held by VMSIG and 304,725,000 Shares were held by Gustavo (a company wholly-owned by Maini, which in turn is wholly-owned by VMSIG). VMSIG is wholly-owned by Ms. MAK Siu Hang Viola.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any interests or short positions owned by any persons (other than the Directors or chief executives of the Company) in the Shares, underlying Shares or debentures of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO, or which were required to be recorded in the register of the Company required to be kept under section 336 of the SFO.

3. COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors were aware of, none of the Directors or their respective close associates had any interest in any business which competes or is likely to compete, or is in conflict or is likely to be in conflict, either directly or indirectly, with the businesses of the Enlarged Group.

4. DIRECTORS' SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors or proposed Directors had any existing or proposed service contract with any member of the Group which will not expire or is not determinable by the Group within one year without payment of compensation (other than statutory compensation).

5. DIRECTORS' INTERESTS IN CONTRACTS OF SIGNIFICANCE AND ASSETS
As at the Latest Practicable Date:
- (a) none of the Directors had any direct or indirect interest in any asset which has been, since 31 December 2019, being 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 Enlarged Group, or are proposed to be acquired or disposed of, by or leased to any member of the Enlarged Group; and
- (b) there was no contract or arrangement subsisting in which a Director was materially interested and which was significant in relation to the business of the Enlarged Group.
6. LITIGATION
On 31 December 2020, Auto Italia (Hong Kong) Limited ("Auto Italia HK") (a wholly-owned subsidiary of the Company) as plaintiff commenced legal proceedings (the "Proceedings") in the High Court of Hong Kong (High Court Action Number: HCA2200/2020) against Maserati S.p.A. ("Maserati") as defendant, by the filing of a Writ of Summons, pursuant to which Auto Italia HK claims against Maserati for wrongful purported termination of dealership agreement in reliance on a purported "Importership and Distributorship Agreement" allegedly signed on 1 October 2018. Further details of the Proceedings are set out in the Company's announcement dated 31 December 2020.
As at the Latest Practicable Date, the business operation and financial position of the Group have not been affected by the Proceedings; and the Company was still a distributor of Maserati generating revenue from such distributorship and being supplied with products from Maserati despite the Proceedings. The Company will make further announcement(s) as and when appropriate to keep the shareholders and potential investors informed of any material developments in connection with the Proceedings.

Save as disclosed above, as at the Latest Practicable Date, to the best of the knowledge, information and belief of the Directors, none of the members of the Enlarged Group was engaged in any litigation or claim of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened against any member of the Enlarged Group.

7. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business carried on or intended to be carried on by the Enlarged Group) had been entered into by members of the Enlarged Group within two years preceding the Latest Practicable Date and which are, or may be, material to the Enlarged Group:

(a) the subscription agreement dated 29 January 2020 entered into by and among Rainbow Surplus Investments Limited (੹ޮҳ༟Ϟࠢʮ̡ ) (" Rainbow Surplus") (an indirect wholly-owned subsidiary of the Company), Ideal View Limited ("Ideal View"), Chime Biologics, JHL Biotech, Inc. (ఃੰ€කਟછٰٰ ΅Ϟࠢʮ̡), Chime Biologics (Hong Kong) Limited (ཻੰ͛يᔼᖹ€࠰ಥϞࠢ ʮ̡) (formerly known as JHL Biotech (Hong Kong) Limited (ఃੰྪ͛يᔼᖹ €࠰ಥϞࠢʮ̡)) ("JHL HK"), Jianheli (Wuhan) Biopharmaceutical Co., Ltd.* (਄Ⴚɢ€؛ဏ͛يᔼᖹϞࠢʮ̡ ) (" Jianheli") and Chime Biologics (Wuhan) Co., Ltd.* (ཻੰ€؛ဏ͛يᔼᖹϞࠢʮ̡) (formerly known as Xikang (Wuhan) Biopharmaceutical Co., Ltd.* (ఃੰ€؛ဏ͛يᔼᖹϞࠢʮ̡)) ("JHL Wuhan"), in relation to the subscription of an aggregate of 202,531,237 Series A preferred shares of Chime Biologics (in which 51,847,997 Series A preferred shares of Chime Biologics were subscribed by Rainbow Surplus) at the subscription price of approximately US$0.617 per Series A preferred share;
(b) the shareholders agreement dated 4 February 2020 and entered into by and among Chime Biologics, JHL HK, Jianheli, JHL Wuhan, Ideal View, Rainbow Surplus and certain holders of ordinary shares of Chime Biologics; and
(c) the Acquisition Agreement.

8. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given opinion

contained in this circular:
Name	Qualification
Roma Appraisals Limited	Independent property valuer
Deloitte Touche Tohmatsu	Certified public accountants
- VI-6 -

For identification purpose only

As at the Latest Practicable Date, none of the experts above had any shareholding in any member of the Enlarged Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group, or had any interest, either direct or indirect, in any assets which had been since 31 December 2019 (being the date to which the latest published audited consolidated financial statements of the Company were made up) acquired or disposed of by or leased to any member of the Enlarged Group, or were proposed to be acquired or disposed of by or leased to any member of the Enlarged Group.

The above experts have all given and have not withdrawn their respective written consents to the issue of this circular with the inclusion therein of their letters, opinions, reports and/or advices (as the case may be) and/or references to their names, opinions, reports and/or letters (as the case may be) in the form and context in which they respectively appear.

9. GENERAL
- (a) The registered office of the Company is located at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM10, Bermuda.
- (b) The principal place of business of the Company in Hong Kong is located at Unit C, Ground Floor, 2 Yuen Shun Circuit, Siu Lek Yuen, Shatin, Hong Kong.
- (c) The Company's share registrar and transfer office in Hong Kong is Tricor Standard Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong.
- (d) The company secretary of the Company is Ms. KWONG Yin Ping Yvonne, who is the vice president of SWCS Corporate Services Group (Hong Kong) Limited, and holds a bachelor degree in accounting from the Hong Kong Polytechnic University. She is a fellow member of both The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute.
- (e) In the event of any inconsistency, the English text of this circular and the accompanying form of proxy shall prevail over the Chinese text.
10. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection at the principal place of business of the Company in Hong Kong at Unit C, Ground Floor, 2 Yuen Shun Circuit, Siu Lek Yuen, Shatin, Hong Kong from 10:00 a.m. to 5:00 p.m. (except Saturday, Sunday and public holidays) during the period from the date of this circular up to and including the date of the SGM:
- (a) the memorandum of association and bye-laws of the Company;
- (b) the annual reports of the Company for each of the three years ended 31 December 2019 and the interim report of the Company for the six months ended 30 June 2020;

(c) the accountants' report prepared by Deloitte Touche Tohmatsu in respect of the Target Group, the text of which is set out in Appendix II to this circular;
(d) the report prepared by Deloitte Touche Tohmatsu on the unaudited pro forma financial information of the Enlarged Group, the text of which is set out in Appendix IV to this circular;
(e) the valuation report issued by Roma Appraisals Limited in respect of the Property as set out in Appendix V to this circular;
(f) the material contracts referred to in the paragraph headed "7. Material Contracts" in this appendix;
(g) the written consents of the experts referred to under the section headed "8. Experts and Consents" in this appendix; and
(h) this circular.

AUTO ITALIA HOLDINGS LIMITED จ༺лછٰϞࠢʮ̡*

(Incorporated in Bermuda with limited liability)

(Stock Code: 720)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the special general meeting (the "SGM") of Auto Italia Holdings Limited (the "Company") will be held at United Conference Centre, 10th Floor, United Centre, 95 Queensway, Admiralty, Hong Kong on Thursday, 18 March 2021 at 2:00 p.m., for the purposes of considering and, if thought fit, passing the following ordinary resolution with or without modifications:

ORDINARY RESOLUTION

1. "THAT:

(a) the sale and purchase agreement (the "Acquisition Agreement") (copy of each has been tabled at the meeting marked "A" and signed by the chairman of the meeting for identification purpose) dated 24 December 2020 entered into between Elite Jumbo Limited and Ever Bless Investments Limited in relation to the acquisition of certain shares representing 27.49% of the entire issued share capital of the of Dakota RE II Limited (the "Acquisition") and the transactions contemplated thereunder, be and are hereby approved, ratified and confirmed; and
(b) any one director of the Company ("Director(s)") be and is authorised to do all such things, to sign, execute and deliver (including under seal where applicable) all such documents and deeds, and take all such actions as he may consider necessary, appropriate, expedient or desirable to implement and/or give effect to the Acquisition Agreement and the transactions contemplated thereunder and all other matters incidental thereto and/or in connection with the Acquisition, including (without limitation), the approval of any variation, amendment or the granting of waiver in connection therewith which, are, in the opinion of the Directors, not fundamental to the transaction contemplated thereby and are in the interests of the Company and its shareholders as a whole."

By order of the Board Auto Italia Holdings Limited

CHONG Tin Lung Benny Executive Director and Chief Executive Officer

Hong Kong, 25 February 2021

For identification purpose only

Registered office:

Victoria Place, 5th Floor 31 Victoria Street Hamilton HM10 Bermuda

Principal place of business in Hong Kong: Unit C, Ground Floor

2 Yuen Shun Circuit Siu Lek Yuen, Shatin Hong Kong

Notes:

1. Any member of the Company entitled to attend and vote at the SGM may appoint another person as his/her proxy to attend and vote in his/her stead. A proxy need not be a member of the Company but must attend the SGM in person to represent him/her. A member who is the holder of two or more shares may appoint more than one proxy to attend on the same occasion.
2. In the case of joint holders of shares in the Company, any one of such persons may vote at the SGM, either personally or by proxy, in respect of such share of the Company as if he/she was solely entitled thereto; but if more than one of such joint holders be present at the SGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
3. In order to be valid, the form of proxy duly completed and signed in accordance with the instructions printed thereon together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be delivered to the Company's share registrar and transfer office in Hong Kong, Tricor Standard Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, not less than 48 hours before the time appointed for holding the SGM (i.e. not later than 4:30 p.m. on Monday, 15 March 2021 (Hong Kong time)) or any adjournment thereof (as the case may be).
4. Completion and return of the form of proxy will not preclude a member of the Company from attending the and voting in person at the SGM and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
5. The register of members will be closed from Tuesday, 16 March 2021 to Thursday, 18 March 2021 (both dates inclusive), during which period no transfer of shares will be effected. In order to be entitled to attend and vote at the SGM, all transfer documents together with the relevant share certificates must be lodged for registration with the Company's share registrar and transfer office in Hong Kong, Tricor Standard Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, no later than 4:30
p.m. on Monday, 15 March 2021.
6. Pursuant to Rule 13.39(4) of the Listing Rules, the resolution set out in this notice will be determined by way of poll at the SGM.
7. The Chinese version of this notice is for reference only. Should there be any discrepancies, the English version shall prevail.
8. If typhoon signal No. 8 or above, or a "black" rainstorm warning is hoisted on the date of the SGM, the SGM will be postponed. The Company will post an announcement on the website of the Stock Exchange atwww.hkexnews.hkand the Company's website at www.autoitalia.com.hk to notify Shareholders of the date, time and place of the rescheduled meeting.

9. In view of the COVID-19 pandemic, the Company will implement precautionary measures at the SGM. Shareholders are advised to read page 1 of the circular of the Company dated 25 February 2021 for details of the precautionary measures. Subject to the development of COVID-19 pandemic, the Company may implement further changes and precautionary measures and may issue further announcement on such measures as appropriate. In light of the continuing risks posed by the COVID-19 pandemic, Shareholders may consider to appoint the chairman of the SGM as their proxy to vote on the relevant resolution at the SGM instead of attending the SGM in person.
10. As at the date hereof, the Board comprises of Mr. CHONG Tin Lung Benny (Executive Chairman and Chief Executive Officer), Mr. LAM Chi Yan, Mr. HUANG Zuie-Chin and Mr. NG Siu Wai, all of whom are Executive Directors; and Mr. KONG Kai Chuen Frankie, Mr. LEE Ben Tiong Leong and Mr. TO Chun Wai, all of whom are Independent Non-executive Directors.

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Auto Italia Holdings Limited published this content on 24 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2021 08:45:08 UTC.

Market Closed - Hong Kong S.E. Other stock markets 01:38:25 30/05/2024 pm IST			5-day change	1st Jan Change
0.15 ^HKD	0.00%		+1.35%	+1.35%

03/05	Planetree International Development Unit Sells Stake in Auto Italia	MT
22/04	Auto Italia Holdings Limited Announces Change of Principal Place of Business in Hong Kong	CI

Planetree International Development Unit Sells Stake in Auto Italia	03/05	MT
Auto Italia Holdings Limited Announces Change of Principal Place of Business in Hong Kong	22/04	CI
Auto Italia Holdings Limited Reports Earnings Results for the Full Year Ended December 31, 2023	22/03	CI
Auto Italia Flags Wider Loss in 2023	15/03	MT
Auto Italia Holdings Limited Provides Earnings Guidance for the Year Ended 31 December 2023	15/03	CI
Auto Italia Arm Raises Stake in UK Subsidiary	09/23/09	MT
Auto Italia Holdings Limited Reports Earnings Results for the Half Year Ended June 30, 2023	29/23/29	CI
Auto Italia Expects to Widen H1 Loss	22/23/22	MT
Auto Italia Holdings Limited Provides Consolidated Earnings Guidance for the Six Months Ended 30 June 2023	21/23/21	CI
Auto Italia Holdings Limited Announces Resignation of Executive Directors	27/23/27	CI
Auto Italia's Loss Widens in 2022	03/23/03	MT
Auto Italia Holdings Limited Reports Earnings Results for the Full Year Ended December 31, 2022	30/23/30	CI
Auto Italia Holdings Warns of Wider 2022 Loss	14/23/14	MT
Auto Italia Holdings Limited Provides Earnings Guidance for the Year Ended 31 December 2022	13/23/13	CI
Auto Italia Holdings Limited Appoints Li Shaofeng as Executive Director	28/23/28	CI
Auto Italia Unit in Talks for Electric Vehicle Collaboration in US, Europe	20/23/20	MT
Auto Italia Unit to Acquire 51% Stake in Wuhan Junyi Cars for 10.2 Million Yuan	29/22/29	MT
Auto Italia Holdings Limited Reports Earnings Results for the Half Year Ended June 30, 2022	26/22/26	CI
Auto Italia Holdings Limited Proposes Unaudited Consolidated Earnings Guidance for the Six Months Ended 30 June 2022	08/22/08	CI
Auto Italia Holdings Limited Reports Earnings Results for the Full Year Ended December 31, 2021	31/22/31	CI
Auto Italia Holdings Limited Provides Earnings Guidance for the Year Ending December 31, 2021	11/22/11	CI
Auto Italia Holdings Limited Reports Earnings Results for the Six Months Ended 30 June 2021	26/21/26	CI
Auto Italia Holdings Limited Announces Executive Changes	11/21/11	CI
Auto Italia Holdings Limited Announces Change of Principal Place of Business in Hong Kong	23/21/23	CI
Auto Italia Holdings Limited Reports Earnings Results for the Full Year Ended December 31, 2020	30/21/30	CI

	1st Jan change	Capi.
AUTO ITALIA HOLDINGS LIMITED	+1.35%	10Cr
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DLF LIMITED	+10.41%	2.43TCr
CHINA OVERSEAS LAND & INVESTMENT LTD.	+9.59%	2.15TCr
MITSUBISHI ESTATE CO., LTD.	+31.16%	2.05TCr
EMAAR PROPERTIES	-3.54%	1.8TCr
POLY DEVELOPMENTS AND HOLDINGS GROUP CO., LTD.	+3.23%	1.71TCr
MACROTECH DEVELOPERS LIMITED	+28.88%	1.54TCr

Auto Italia Holdings Limited

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BMG066391019

Real Estate Development & Operations

Auto Italia : MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF ADDITIONAL 27.49% EQUITY INTEREST IN DAKOTA RE II LIMITED INVOLVING ISSUE OF PROMISSORY NOTE

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