Tai United : (1) VERY SUBSTANTIAL ACQUISITION OF SHOPPING MALL BUSINESSES IN THE PRC AND (2) NOTICE OF SGM

March 26, 2021 at 05:45 pm IST

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your Shares in Tai United Holdings Limited, you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for 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.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

(Incorporated in Bermuda with limited liability)

(Stock Code: 718)

(1) VERY SUBSTANTIAL ACQUISITION

OF SHOPPING MALL BUSINESSES IN THE PRC

AND

(2) NOTICE OF SGM

Precautionary measures for the SGM

Please take special note of page 28 of this circular and special note to the notice of SGM for measures to be taken at the SGM to reduce the risk of coronavirus disease (COVID-19) spreading.

A letter from the Board is set out on pages 6 to 29 of this circular.

A notice convening the SGM to be held at 10:30 a.m., on Wednesday, 21 April 2021, at Regus Conference Centre, 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong is set out on pages SGM-1 to SGM-3 of this circular. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong, as soon as possible but in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof. 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 should you so wish.

26 March 2021

CONTENTS

Page

DEFINITIONS ........................................................ 1

LETTER FROM THE BOARD ........................................... 6

APPENDIX I

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

APPENDIX IIAPPENDIX IIIAPPENDIX IVAPPENDIX VAPPENDIX VIAPPENDIX VIIAPPENDIX VIII

- FINANCIAL INFORMATION OF
THE JINZHOU TARGET GROUP ................. II-1
- FINANCIAL INFORMATION OF
THE GUANGZHOU TARGET GROUP ............. III-1
- ACCOUNTANTS' REPORT OF
THE JINZHOU TARGET GROUP ................. IV-1
- ACCOUNTANTS' REPORT OF
THE GUANGZHOU TARGET GROUP ............. V-1
- UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE ENLARGED GROUP .................... VI-1
- PROPERTY VALUATION OF

THE JINZHOU TARGET GROUP

AND THE GUANGZHOU TARGET GROUP ......... VII-1

- GENERAL INFORMATION ........................ VIII-1

NOTICE OF THE SGM ................................................ SGM-1

-i-

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

"Acquisitions"	the Jinzhou Acquisition and the Guangzhou Acquisition
"Announcement"	the announcement of the Company dated 24 December
2020 in relation to, among other things, the Acquisitions
"associates"	shall have the meaning as defined under the Listing Rules
"Board"	the board of Directors
"Business Day"	a day on which commercial banks in Hong Kong and the
PRC are open for transaction of normal banking business
"BVI"	the British Virgin Islands
"Company"	Tai United Holdings Limited (Stock Code: 718), a
company incorporated in Bermuda with limited liability,
the shares of which are listed on the Main Board of the
Stock Exchange

"Completion"

the completion of the Jinzhou Acquisition and Guangzhou Acquisition

the

"Consideration"

the total consideration payable by the Purchaser under the Share Purchase Agreements for the Acquisitions

"Decision"

the decision of the Stock Exchange dated 18 September 2020 to suspend the trading of the shares of the Company under Rule 6.01(3) of the Listing Rules as the Company has not maintained a sufficient level of operations as required under Rule 13.24 of the Listing Rules to warrant the continued listing of its shares

"Deposit"

a deposit of RMB100,000,000 (equivalent to approximately HK$118,256,000) paid on the date of the Jinzhou Share Purchase Agreement, refundable in accordance with the terms of the Jinzhou Share Purchase Agreement

"Director(s)"

the director(s) of the Company

"Enlarged Group"

the Group as enlarged by the Acquisitions to include the Jinzhou Target Group and the Guangzhou Target Group

"Group"

the Company and its subsidiaries from time to time

"Guangzhou Acquisition"

the acquisition of the Guangzhou Target Group through acquiring the entire issued share capital in Superb Power on the terms and conditions of the Guangzhou Share Purchase Agreement

"Guangzhou Share Purchase

Agreement"

the conditional share purchase agreement for the sale and purchase of the entire issued share capital of Superb Power

"Guangzhou Shopping Mall"

Phases 1 and 2 of the Guangzhou First Tunnel Shopping Mall in Guangzhou, the PRC

"Guangzhou Target Company"

Guangzhou Rongzhi Public Facilities Investment Co., Ltd.** ᄿψፄ౽ʮ΍ண݄ҳ༟Ϟࠢʮ̡, a company established in the PRC which holds the operating rights of the Guangzhou Shopping Mall

"Guangzhou Target Group"

Superb Power and its wholly-owned including Guangzhou Target Companysubsidiaries,"HK$"

Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong"

Hong Kong Special Administrative Region of the PRC

"Independent Third party(ies)"

(to the best of the Directors' knowledge, information and belief having made all reasonable enquiries) third party(ies) independent of the Company and its connected persons within the meaning of the Listing Rules

"Jinzhou Acquisition"

the acquisition of the Jinzhou Target Group through acquiring the entire issued share capital in Sky Build on the terms and conditions of the Jinzhou Share Purchase Agreement

"Jinzhou Share Purchase

Agreement"

the conditional share purchase agreement for the sale and purchase of the entire issued share capital of Sky Build

"Jinzhou Shopping Mall"

Jinzhou First Tunnel Shopping Mall in Jinzhou, the PRC

"Jinzhou Target Company"

Jinzhou Jiachi Public Facilities Management Co., Ltd.** ᎀψྗཱུʮ΍ண݄၍ଣϞࠢʮ̡, a company established in the PRC which holds the operating rights of the Jinzhou Shopping Mall

"Jinzhou Target Group"

Sky Build and its wholly-owned subsidiaries, including Jinzhou Target Company

"Latest Practicable Date"

24 March 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

"Long Stop Date"

30 June 2021 or such other date as the parties may agree

"Mr. Dai"

Mr. Dai Yongge, who and whose associates are together the controlling shareholders of China Dili Group, the shares of which are listed on the Main Board of the Stock Exchange with stock code 1387

"PRC"

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

"Purchaser"

Tai United Properties Company Limited, a company incorporated in the BVI, a wholly-owned subsidiary of the Company

"Related Party Advances"

the current account balances of the Guangzhou Target Company due from members of the Seller's Group for the amount of approximately RMB1,489,000,000 (equivalent to approximately HK$1,760,838,000) as at 30 September 2020

"Reporting Accountants" or

"Elite Partners"

Elite Partners CPA Limited, the reporting accountants engaged by the Company for the purpose of the Acquisitions

"Reporting Period"

the financial years ended 31 December 2017, 2018 and 2019 and the stub period of nine months ended 30 September 2020

"Renminbi" or "RMB"

Renminbi, the lawful currency of the PRC

"Review"

the request made by the Company on 23 September 2020 pursuant to Rules 2B.06(1) and 2B.08(1) of the Listing Rules for the Decision to be referred to the Listing Committee for a review by the Listing Committee

DEFINITIONS
"Seller"	Stone Wealth Limited, a company incorporated in the
BVI, which is wholly-owned by its ultimate beneficial
owner, Mr. Dai
"Seller's Group"	Mr. Dai and companies controlled by him, excluding the
Guangzhou Target Group and Jinzhou Target Group
"SFO"	Securities and Futures Ordinance (Cap. 571 of the Laws
of Hong Kong), as amended, supplemented or otherwise
modified from time to time
"SGM"	the special general meeting of the Company at which,
among others, the terms of the Share Purchase Agreements
will be considered, and if thought fit, approved by the
Shareholders
"Share(s)"	ordinary share(s) of HK$0.05 each in the share capital of
the Company
"Share Purchase Agreements"	the Jinzhou Share Purchase Agreement and the Guangzhou
Share Purchase Agreement
"Shareholder(s)"	holder(s) of the Shares
"Sky Build"	Sky Build Limited, a company incorporated in the BVI,
which is the indirect sole shareholder of the Jinzhou
Target Company
"sq.m"	square metres
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Superb Power"	Superb Power Enterprises Limited, a company
incorporated in the BVI, which is the indirect sole
shareholder of the Guangzhou Target Company
"UK"	United Kingdom
"%"	per cent
-4-

The shareholding of the respective Shareholder in the Company as disclosed in this circular refers to the percentage shareholding of such Shareholder to the total issued share capital of the Company.

In this circular, unless the context otherwise requires, the terms "associate(s)", "connected person(s)", "subsidiary(ies)", "controlling shareholder(s)", "Listing Committee" and "substantial shareholder(s)" shall have the meanings given to such terms in the Listing Rules, as modified by the Stock Exchange from time to time.

For the purpose of this circular, unless the context otherwise requires, conversion of Hong Kong dollars into Renminbi is based on the approximate exchange rate of HK$1 to RMB0.84562. Such exchange rate is for the purpose of illustration only and does not constitute a representation that any amounts in Hong Kong dollars or Renminbi have been, could have been or may be converted at such or any other rate or at all.

Certain amounts and percentage figures set out in this circular have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables and the currency conversion or percentage equivalents may not be an arithmetic sum of such figures.

The English names of the PRC entities marked with "**" are direct transliterations of their Chinese names and are included in this circular for identification purpose only, and should not be regarded as their official English translation. In the event of any inconsistency, the Chinese name prevails.

(Incorporated in Bermuda with limited liability)

(Stock Code: 718)

Executive Directors:	Registered Office:
Mr. Kwong Kai Sing Benny (Chief Executive Officer)	Clarendon House
Mr. Chen Weisong	2 Church Street
Mr. Chow Chi Wah Vincent	Hamilton HM11
Mr. Wang Hongfang	Bermuda
Independent non-executive Directors:	Head Office and Principal Place
Dr. Gao Bin	of Business in Hong Kong:
Ms. Liu Yan	Room 2902, 29th Floor
Mr. Tang King Shing	China United Centre
28 Marble Road
North Point
Hong Kong
26 March 2021
To the Shareholders
Dear Sir or Madam,

(1) VERY SUBSTANTIAL ACQUISITION

OF SHOPPING MALL BUSINESSES IN THE PRC

AND

(2) NOTICE OF SGM

A. INTRODUCTION

Reference is made to the announcement of the Company dated 24 December 2020 in relation to, among others, the Acquisitions.

On 24 December 2020 (after trading hours), the Purchaser (a wholly-owned subsidiary of the Company) entered into the Jinzhou Share Purchase Agreement and the Guangzhou Share Purchase Agreement with the Seller for the acquisitions of shopping mall businesses in Jinzhou and Guangzhou in the PRC, respectively.

In respect of the Jinzhou Acquisition, the base consideration payable is RMB554,000,000 (equivalent to approximately HK$655,141,000) (subject to completion adjustment, if any). In respect of the Guangzhou Acquisition, the repayment obligations of the Related Party Advances in the amount of RMB1,437,000,000 (equivalent to approximately HK$1,699,345,000) would be novated to the Company upon completion of the Guangzhou Acquisition as base consideration (subject to completion adjustment, if any). Please refer to the section "B. The Acquisitions" for details regarding the terms of the Acquisitions.

After Completion, the Jinzhou Shopping Mall and the Guangzhou Shopping Mall will be held as investment properties by the Enlarged Group and the results of the Jinzhou Target Group and the Guangzhou Target Group would be consolidated into the accounts and under the property investment segment of the Enlarged Group.

As some of the applicable percentage ratios (as defined under the Listing Rules) on an aggregated basis exceed 100%, the Acquisitions constitute a very substantial acquisition of the Company under the Listing Rules and are therefore subject to the approval by the Shareholders at the SGM. The Stock Exchange has determined that the Acquisitions do not constitute a reverse takeover of the Company.

The purpose of this circular is to provide you with: (i) further details on the Acquisitions; (ii) financial information of the Jinzhou Target Group and the Guangzhou Target Group; (iii) pro-forma financial information of the Enlarged Group; (iv) property valuation reports on the Jinzhou Target Group and the Guangzhou Target Group; and (v) a notice of the SGM.

Reference is also made to the announcement of the Company dated 8 February 2021 in relation to update(s) on the Decision. As stated in the said announcement, the Stock Exchange has conditionally agreed that upon the Completion, the Company would be able to satisfy the requirements under Rule 13.24 of the Listing Rules.

B. THE ACQUISITIONS

Background

The Jinzhou Shopping Mall is a single-storey underground mall located in Zhongyang Avenue in Jinzhou city, stretching across the core business district in Jinzhou. Sky Build indirectly holds the entire equity interest in the Jinzhou Target Company, which in turn holds the operating rights of the Jinzhou Shopping Mall.

The Guangzhou Shopping Mall is a two-storey underground mall located in the Guangzhou Railway Station commercial centre, junction of Zhanqian Road and Zhannan Road in Yuexiu District and has two phases which are adjacent to each other. Superb Power indirectly holds the entire equity interest in the Guangzhou Target Company, which in turn holds the operating rights of the Guangzhou Shopping Mall.

(I) Jinzhou Share Purchase Agreement

Date: 24 December 2020

Parties:

(i) Tai United Properties Company Limited, a wholly-owned subsidiary of the Company, as purchaser;
(ii) the Company;
(iii) Stone Wealth Limited, as seller; and
(iv) Mr. Dai Yongge (as guarantor for the Seller's obligations)

Subject matter

100% issued share capital of Sky Build. Sky Build indirectly holds the entire equity interest in Jinzhou Target Company, which in turn holds the operating rights of the Jinzhou Shopping Mall.

Consideration

The consideration payable is RMB554,000,000 (equivalent to approximately HK$655,141,000), of which (i) a refundable deposit of RMB100,000,000 (equivalent to approximately HK$118,256,000) was paid on the date of the Jinzhou Share Purchase Agreement, and (ii) RMB454,000,000 (equivalent to approximately HK$536,884,000) will be settled at completion of the Jinzhou Acquisition by the Purchaser via bank transfer. As disclosed in the Announcement, the base consideration payable at Completion for the Jinzhou Acquisition, being RMB554,000,000, is subject to completion adjustment on a dollar-to-dollar basis for any shortfall, in the event that the audited reassessed net asset value of the Jinzhou Target Group as at 30 September 2020 as shown in the accountants' report of the Jinzhou Target Group is less than the unaudited reassessed net asset value of the Jinzhou Target Company as at 30 September 2020 of RMB554,202,000 by 5% or more. The audited reassessed net asset value of the Jinzhou Target Group as at 30 September 2020 as shown in "Appendix IV - Accountants' Report on the Jinzhou Target Group" of this circular is RMB552,813,000. As the difference in the audited and unaudited reassessed net asset value of the Jinzhou Target Group is less than 5%, there will not be any consideration adjustment at Completion. The consideration represents a slight premium to the audited reassessed net asset value of the Jinzhou Target Group as at 30 September 2020 but given that the Jinzhou Acquisition is an imminent remedy for enhancing the operations of the Group and it is expected to bring the benefits as detailed in the section headed "G. Reasons for and benefits of the Acquisition" of this circular, the Directors consider the consideration for the Jinzhou Acquisition to be reasonable.

In the event that the conditions precedent are not satisfied nor waived (if waivable by the relevant party) by the Long Stop Date, the Deposit paid will be fully refunded by the Seller within seven Business Days. If the conditions precedent are satisfied or waived (if waivable by the relevant party) but the Jinzhou Acquisition does not complete due to the default on the part of the Purchaser and/or the Company, the Deposit paid will be forfeited by the Seller. On the other hand, if the conditions precedent are satisfied or waived (if waivable by the relevant party) but the Jinzhou Acquisition does not complete due to the default on the part of the Seller, the Deposit paid will be fully refunded by the Seller within seven Business Days and an additional amount of RMB100,000,000 (equivalent to approximately HK$118,256,000) will also be payable by the Seller.

Basis of consideration

The consideration was arrived at after arm's length negotiations between the parties, taking into account among others, (i) the unaudited reassessed net asset value of the Jinzhou Target Company as at 30 September 2020 of RMB554,202,000 (with reference to the preliminary property valuation amount of the Jinzhou Target Company of RMB715,000,000(1), as appraised by an independent professional valuer, subject to final audit by the reporting accountants of the Company in relation to the Acquisitions); (ii) the expected enhancement in the level of operations of the Group and the revenue and profits contribution by the Jinzhou Target Group for consolidation into the Group upon Completion; and (iii) the opportunity for the Group to extend its property investment business into commercial retail properties in the PRC.

Note:

(1) The final property valuation amount of the Jinzhou Target Company as at 30 September 2020 was

RMB699,000,000, which took into account, amongst other factors, further site inspections and updated tenancy agreements with lower rental rates.

(II) Guangzhou Share Purchase Agreement

Date: 24 December 2020

Parties:	(i)	Tai United Properties Company Limited, a wholly-owned
subsidiary of the Company, as purchaser;
(ii)	the Company;

(iii) Stone Wealth Limited, as seller; and
(iv) Mr. Dai Yongge (as guarantor for the Seller's obligations)

Subject matter

100% issued share capital of Superb Power. Superb Power indirectly holds the entire equity interest in Guangzhou Target Company, which in turn holds the operating rights of the Guangzhou Shopping Mall.

Consideration

The Guangzhou Target Company has Related Party Advances of approximately RMB1,482,000,000 (equivalent to approximately HK$1,752,560,000) as at 30 September 2020, the repayment obligations of which in the amount of RMB1,437,000,000 (equivalent to approximately HK$1,699,345,000) would be novated to the Company upon completion of the Guangzhou Acquisition as consideration for the Guangzhou Acquisition, and the remaining balance of RMB45,000,000 (equivalent to approximately HK$53,215,000) would be settled by the Seller prior to the completion of the Guangzhou Acquisition. No other consideration is payable by the Purchaser at completion of the Guangzhou Acquisition. As disclosed in the Announcement, the base consideration for the Guangzhou Acquisition, being RMB1,437,000,000, is subject to completion adjustment on a dollar-to-dollar basis for any shortfall, in the event that the audited reassessed net asset value of the Guangzhou Target Group as at 30 September 2020 as shown in the accountants' report of the Guangzhou Target Group is less than the unaudited reassessed net asset value of the Guangzhou Target Company as at 30 September 2020 of RMB1,437,486,000 by 5% or more. The audited reassessed net value of the Guangzhou Target Group as at 30 September 2020 as shown in "Appendix V - Accountants' Report on the Guangzhou Target Group" of this circular is RMB1,422,529,000. As the difference in the audited and unaudited reassessed net asset value of the Guangzhou Target Group is less than 5%, there will not be any consideration adjustment at Completion. The consideration represents a slight premium to the audited reassessed net asset value of the Guangzhou Target Company as at 30 September 2020 but given that the Guangzhou Acquisition is an imminent remedy for enhancing the operations of the Group and it is expected to bring the benefit as detailed in the section headed "G. Reasons for and benefits of the Acquisition" of this circular, the Directors consider the consideration for the Guangzhou Acquisition to be reasonable.

Basis of consideration

The consideration was arrived at after arm's length negotiations between the parties, taking into account among others, (i) the unaudited reassessed net asset value of the Guangzhou Target Company as at 30 September 2020 of RMB1,437,486,000 (with reference to the preliminary property valuation amount of the Guangzhou Target Company as at 30 September 2020 of RMB2,030,000,000(1), as appraised by an independent professional valuer subject to final audit by the reporting accountants of the Company in relation to the Acquisitions; (ii) the taking up by the Company of the Related Party Advances of the Guangzhou Target Company in the amount of approximately RMB1,437,000,000; (iii) the expected enhancement in the level of operations of the Group and the revenue and profits contribution by the Guangzhou Target Group for consolidationinto the Group upon the completion; and (iv) the opportunity for the Group to extend its property investment business into commercial retail properties in the PRC.

Note:

(1) The final property valuation amount of the Guangzhou Target Company as at 30 September 2020 was

RMB1,994,000,000, which took into account, amongst other factors, further site inspection and updated tenancy agreements with lower rental rates.

Conditions Precedent

Completion of each of the Jinzhou Acquisition and the Guangzhou Acquisition is conditional on the satisfaction (or waiver, if applicable) of the following conditions precedent on or before the Long Stop Date:

(a) approval having been obtained from the Shareholders at the SGM of the Jinzhou Share Purchase Agreement or the Guangzhou Share Purchase Agreement (as the case may be) and the transactions contemplated thereunder;
(b) all necessary approvals, licenses, authorisations, consents, waivers or notifications necessary from governmental or regulatory authorities having been obtained and remaining in effect;
(c) the Company having carried out due diligence to its satisfaction and having obtained a legal opinion from its PRC legal adviser the contents of which being satisfactory to the Company;
(d) the representations and warranties provided by the Seller under the Jinzhou Share Purchase Agreement or the Guangzhou Share Purchase Agreement (as the case may be) remaining true, accurate and not misleading as at completion of the Jinzhou Acquisition or the Guangzhou Acquisition (as the case may be) and as if repeated at all times between the date of the Jinzhou Share Purchase Agreement or the Guangzhou Share Purchase Agreement (as the case may be) and completion of the Jinzhou Acquisition or the Guangzhou Acquisition (as the case may be);
(e) the representations and warranties provided by the Purchaser under the Jinzhou Share Purchase agreement or the Guangzhou Share Purchase Agreement (as the case may be) remaining true, accurate and not misleading as at completion of the Jinzhou Acquisition or the Guangzhou Acquisition (as the case may be) and as if repeated at all times between the date of the Jinzhou Share Purchase Agreement or the Guangzhou Share Purchase Agreement (as the case may be) and completion of the Jinzhou Acquisition or the Guangzhou Acquisition (as the case may be);

(f) the reporting accountants of the Company having completed the audit of and issued an unqualified opinion on (i) the accountants' report of the Jinzhou Target Group or the Guangzhou Target Group, as the case may be, for the Reporting Period, and (ii) pro-forma consolidated statement of profit or loss, consolidated statement of financial position and consolidated cash flow statement of the Enlarged Group, the contents of which being satisfactory to the Company;
(g) the independent professional valuer of the Company having completed the valuation of properties and issued property valuation report of the Jinzhou Target Group or the Guangzhou Target Group, as the case may be, in accordance with the requirements of the Listing Rules and the contents of which being satisfactory to the Company; and
(h) (in respect of the Jinzhou Acquisition) the completion of the Guangzhou Acquisition and (in respect of the Guangzhou Acquisition) the completion of the Jinzhou Acquisition.

If any of the conditions precedent is not fulfilled or waived by the Purchaser or the Company (in respect of conditions (b), (c), (d) and (h)) or by the Seller (in respect of condition (e)) on or before the Long Stop Date (or such later date to be agreed between the parties to the Share Purchase Agreements in writing), the Share Purchase Agreements shall lapse and no party shall have any claim against the other, except for antecedent breaches. For conditions which are waivable, the Purchaser, the Company or the Seller (as the case may be) may waive such conditions where the impact of doing so is immaterial and will not affect the substance of the Acquisitions. Conditions (a), (f), (g) are not waivable by the parties. As at the date of this circular, conditions (b) to (g) have been fulfilled and the parties are not aware of any circumstances which may render the remaining conditions above not fulfilled on or before Completion.

The Company considers each of the Jinzhou Target Group and the Guangzhou Target Group to be beneficial to the Group in their own right, providing additional sources of revenue and other income to the Enlarged Group. As such, the parties have agreed to leave open the possibility for the Company to proceed ahead with one of the Jinzhou Acquisition or the Guangzhou Acquisition, if the other acquisition fails to materialize. Should this situation arise, the Company intends to proceed accordingly, subject to any material changes in the Group's own circumstances before completion. Nonetheless, the Company expects to proceed with both Acquisitions, which will enhance the levels of the operations of the Enlarged Group.

Completion

Completion is expected to take place no later than the seventh Business Day after the date on which all conditions precedent under the Share Purchase Agreements are satisfied or waived, as the case may be, unless otherwise agreed by the parties.

Upon completion of the Jinzhou Acquisition, Sky Build (and other members of the Jinzhou Target Group) would become wholly-owned subsidiaries of the Company and the results of the Jinzhou Target Group would be consolidated into the accounts of the Group.

Upon completion of the Guangzhou Acquisition, Superb Power (and other members of the Guangzhou Target Group) would become wholly-owned subsidiaries of the Company and the results of the Guangzhou Target Group would also be consolidated into the accounts of the Group. As a result of the novation of part of the Related Party Advances, there will also be an amount due to the Guangzhou Target Company by the Company for approximately RMB1,437,000,000 (equivalent to approximately HK$1,699,345,000) arising from the Guangzhou Acquisition.

C. INFORMATION OF THE GROUP

The Company and its subsidiaries are principally engaged in the businesses of property investment, medical equipment trading, mining and exploration of natural resources, financial services and asset management. The Purchaser is an investment holding company.

D. INFORMATION OF THE SELLER

The Seller is an investment holding company incorporated in the BVI, and is wholly-owned by its ultimate beneficial owner, Mr. Dai. Each of Mr. Dai and the Seller are Independent Third Parties and has no other business relationship with the Company and its connected persons.

E. INFORMATION OF THE JINZHOU TARGET GROUP

The Jinzhou Target Group comprises Sky Build and its wholly-owned subsidiaries, including Jinzhou Target Company, which holds the operating rights of the Jinzhou Shopping Mall. Sky Build is an investment holding company. Details of the Jinzhou Shopping Mall are set out below:

DescriptionLeaseable floor area and sold floor area

(sq.m.)

Gross floor area (sq.m.)

Nature of shops

Jinzhou First Tunnel

Shopping Mall (ᎀψήɓɽ༸)

38,809 and 1,956

40,765

Retailers and wholesalers of apparels, cosmetics, accessories, household goods and food and beverages, including chain stores

The Jinzhou Shopping Mall is a single-storey underground mall located in Zhongyang Avenue in Jinzhou city, stretching across the core business district in Jinzhou. The mall first opened in 2013 and currently has over 700 tenants of leased shop and venue spaces. As at 31 December 2020, the occupancy rate (being the leased areas divided by the leasable floor area) was approximately 84%. The Jinzhou Shopping Mall Business is sustained by the flow of shoppers and customers in the core business district in Jinzhou and the neighbouring residential areas.

The operating model of the Jinzhou Target Group is the leasing of shop spaces to retailers and wholesalers of apparels, cosmetics, accessories, household goods and food and beverage and other common areas to businesses for marketing and promotional activities, and primarily derives its revenue from rental income and the provision of property management services to tenants of the Jinzhou Shopping Mall, including mall security, maintenance and repair, management of open areas for pop-up promotional events and the supervision of external contractors. The promotion the Jinzhou Shopping Mall and sourcing of tenants are carried out through enquiries and negotiations with brand agencies and prospective tenants, market research through site visits to the surrounding city areas and mainstream media promotion.

The Jinzhou Target Company has entered into individual agreements for the leasing of shop and venue spaces to its tenants and the provision of property management services. Fixed rents are chargeable in general, which are subject to negotiations upon renewal and property management fees per sq.m. of leased or sold floor areas are chargeable under the agreements. Such agreements have a contract term of one to two years in general, upon the expiry of which the majority will be renewed. For the three financial years ended 31 December 2019, the average renewal rate was approximately 96%.

Based on the accountants' report of Jinzhou Target Group set out in Appendix II, the key financial information of the Jinzhou Target Group for the three financial years ended 31

December 2019 and the nine months ended 30 September 2020 is as follows:

For the
nine
months
For the financial year ended	ended 30
31 December	September
2017 2018 2019	2020
(RMB'000) (RMB'000) (RMB'000)	(RMB'000)

Revenue Other income - Revenue from property management and relevant services

23,064 6,950

23,633 8,487

23,436 16,110

8,033 5,032

6,934

8,436

8,016 4,806

Net profit before taxation and excluding changes in fair value of investment properties Changes in fair value of investment properties

Net profit before taxation(Note) Net profit after taxation(Note)

21,872 22,000 43,872 38,372

23,813

23,263 15,063

6,037 29,850 28,341

(12,124) (7,883) 11,139 7,180 14,170 9,151

Note: Having reflected the valuation gain/loss on investment properties less deferred tax liability arising from such valuation gain where applicable.

For the financial years ended 31 December 2017, 2018, 2019 and the nine months ended 30

September 2020, the Jinzhou Target Group recorded net profits of RMB38.4 million, RMB28.4 million, RMB14.2 million and RMB9.2 million, respectively. In particular, the decrease in net profit of the Jinzhou Target Group during FY2019 as compared to FY2018 was primarily due to valuation losses incurred on investment properties in 2019. The decrease in net profit of the Jinzhou Target Group during 9M2020 as compared to 9M2019 was primarily attributable to (i) rental and management fee concessions provided to the shopping mall tenants in 2020, due to the effects of the COVID-19 pandemic on the retail and shopping industry and (ii) further valuation losses on investment properties.

The audited net asset value of the Jinzhou Target Group as at 30 September 2020 was approximately RMB552.8 million, whereas the net current liabilities were RMB461.9 million, RMB460.8 million, RMB456.8 million and RMB98.1 million as at 31 December 2017, 2018, 2019 and 30 September 2020, respectively. Due to delays from the COVID-19 pandemic, renovation and refurbishment upgrades for part of the Jinzhou Shopping Mall are currently scheduled to complete in the second or third quarter of 2021. The mall will remain in operations during renovation and refurbishment.

Please refer to sections headed "Financial Information of the Jinzhou Target Group" and "Accountants' Report of the Jinzhou Target Group" set out in Appendix II and IV respectively to this circular for further financial information of the Jinzhou Target Group for the Reporting Period. As at the Latest Practicable Date, there has been no material change in the financial results, financial position and the operations of the Jinzhou Target Group since the end of the Reporting Period.

F. INFORMATION OF THE GUANGZHOU TARGET GROUP

the Guangzhou Target Group comprises Superb Power and its wholly-owned subsidiaries, including Guangzhou Target Company, which holds the operating rights of the Guangzhou Shopping Mall. Superb Power is an investment holding company. Details of the Guangzhou Shopping Mall are set out below.

Description

Leaseable floor area and sold floor area(1)

(sq.m.)

Gross floor area (sq.m.)

Nature of shops

Guangzhou First Tunnel

Shopping Mall (ᄿψήɓɽ༸),

43,022 and 45,160

89,415

Phases 1 and 2

Retailers and wholesalers of apparels, accessories, household appliances, food and beverages, accessories market and fitness gym

Note:

(1) The difference in gross floor area and leasable and sold floor area represent the shopping mall management's office area.

The Guangzhou Shopping Mall is a two-storey underground mall located in the Guangzhou

Railway Station commercial centre, junction of Zhanqian Road and Zhannan Road in Yuexiu District and has two phases which are adjacent to each other. The mall is part of a reputable circle of shopping malls in Guangzhou city which target at, in addition to local shoppers, overseas buyers for retail and wholesale products for shipment overseas. Phase 1 of the mall has gained its popularity among shoppers since it first opened in 2006, following which Phase 2 of the mall opened in 2016. The mall currently has over 270 tenants of leased shop and venue spaces and around 1,000 shop owners to which shop spaces had been sold. As at 31 December 2020, the occupancy rates (being the leased areas divided by the leasable floor area) were approximately 82% and 76% for Phases 1 and 2, respectively.

The operating model of the Guangzhou Target Group is the leasing of shop spaces to retailers and wholesalers of apparels, accessories, household appliances and food and beverage and other common areas to businesses for marketing and promotional activities, and primarily derives its revenue from rental income and the provision of property management services to tenants of the Guangzhou Shopping Mall, including mall security, maintenance and repair, management of open areas for pop-up promotional events and the supervision of external contractors. The promotion of the Guangzhou Shopping Mail and sourcing of tenants are carried out through mainstream media promotion, interviews and enquiries with brand agencies and prospective tenants, as well as periodic visits to neighbouring shopping centres and department stores.

The Guangzhou Target Company has entered into individual agreements for the leasing of shop and venue spaces to its tenants and the provision of property management services to the tenants and shop owners. Fixed rents are chargeable in general, which are subject to negotiations upon renewal and property management fees per sq.m. of leased or sold floor areas are chargeable under the agreements. Such agreements have a contract term of one to two years in general, upon the expiry of which the majority will be renewed. For the three financial years ended 31 December 2019, the average renewal rates were approximately 100% and 67% for Phases 1 and 2, respectively.

As Phase 1 of the Guangzhou shopping Mall has gained popularity among shoppers throughout the years since its opening in 2006, the shops located there are more established and reputable within the locality, compared with the newer shops located in Phase 2, which opened in 2016. In addition, construction works in the immediate surrounding vicinity of the Guangzhou Shopping Mall in 2019 had a greater impact on the flow of shopping mall visitors visiting the newer and less established shops in Phase 2. For these reasons, Phase 1 of the Guangzhou Shopping Mall has historically had higher renewal and occupancy rates as compared with Phase 2.

Based on the accountants' report of the Guangzhou Target Group set out in Appendix III, the key financial information of the Guangzhou Target Group for the three financial years ended

31 December 2019 and the nine months ended 30 September 2020 is as follows:

For the
nine
months
For the financial year ended	ended 30
31 December	September
2017 2018 2019	2020
(RMB'000) (RMB'000) (RMB'000)	(RMB'000)

Revenue Other income - Revenue from property management and relevant services

14,106 120,291

12,477 179,435

14,115 4,265

141,465 89,106

37,449

37,994

41,097 14,587

Net profit before taxation and excluding changes in fair value of investment properties Changes in fair value of investment properties

29,805

28,432

32,635 7,157

Net profit before taxation(Note) Net profit after taxation(Note)

43,746 73,551 62,614

32,000 60,432 52,455

(1,000) (6,000) 31,635 1,157 31,885 2,657

Note: Having reflected the valuation gain/loss on investment properties less deferred tax liability arising from such valuation gain where applicable.

For the financial years ended 31 December 2017, 2018, 2019 and the nine months ended 30

September 2020, the Guangzhou Target Group recorded net profits of RMB62.6 million, RMB52.5 million, RMB31.9 million and RMB2.7 million, respectively. In particular, the decrease in net profit of the Guangzhou Target Group during FY2019 as compared to FY2018 was primarily due to (i) valuation losses incurred on investment properties in 2019 compared to valuation gains made in 2018 and (ii) a decrease in interest income from amounts due from fellow subsidiaries in 2019. The decrease in net profit of the Guangzhou Target Group during 9M2020 as compared to 9M2019 was primarily attributable to (i) rental and management fee concessions provided to the shopping mall tenants in 2020, due to the effects of the COVID-19 pandemic on the retail and shopping industry and (ii) further valuation losses on investment properties.

As at 30 September 2020, the audited net asset value of the Guangzhou Target Group was approximately RMB1,422.5 million, whereas net current liabilities were RMB188.0 million.

Please refer to the sections headed "Financial Information of the Guangzhou Target Group" and "Accountants' Report of the Guangzhou Target Group" set out in Appendix III and V, respectively, to this circular for further financial information of the Guangzhou Target Group for the Reporting Period. As at the Latest Practicable Date, there has been no material change in the financial results, financial positions and the operations of the Guangzhou Target Group since the end of the Reporting Period.

External bank loans

The Guangzhou Target Company first obtained external bank loans in 2016 and the principal amount of such bank loans were approximately RMB2,398.5 million, RMB1,380.0 million, RMB1,370.0 million and RMB1,370.0 million as at 31 December 2017, 2018 and 2019 and 30 September 2020, respectively, which were interest-bearing at the interest rates of 7% to 7.5% per annum. The bank interest expenses were RMB80.3 million, RMB148.2 million, RMB97.7 million and RMB73.3 million for the financial year ended 31 December 2017, 2018 and 2019 and the nine months ended 30 September 2020, respectively, with pledges over all equity interest of the Guangzhou Target Company as security in favour of the Bank of Jinzhou Co., Ltd., Shanghai Road Branch. The proceeds of such bank loans have not been used in the acquisition of the Jinzhou Target Company nor the Guangzhou Target Company or their operations, but have instead been used to finance business projects of other members of the Seller's Group as intra-group current account arrangement and hence, resulting in the Related Party Advances, which are inclusive of interest passed on at the same interest rate as applicable to the bank loans. The amount of Related Party Advances were approximately RMB2,575.4 million, RMB2,751.2 million, RMB1,835.2 million and RMB1,482.4 million for the financial years ended 31 December 2017, 2018 and 2019 and the nine months ended 30 September 2020, respectively. The interest income arising from such Related Party Advances were RMB82.8 million, RMB139.9 million, RMB99.4 million and RMB74.2 million for the financial years ended 31 December 2017, 2018 and 2019 and the nine months ended 30 September 2020, respectively. Mr. Dai, being the ultimate owner of members of the Seller's Group, including the Guangzhou Target Group, has provided among others, guarantees in favour of the bank.

Mr. Dai has also provided a pre-completion undertaking under the Guangzhou Share Purchase Agreement in favour of the Purchaser that he shall enter into negotiations with the bank for among others, (i) an extension of the bank loans of the Guangzhou Target Company until the Company obtains refinancing; and (ii) an expansion of the purpose of the bank loans to encompass the financing of business projects of other members of the Seller's Group and acquisition financing of the Company for the Guangzhou Target Company. As at the Latest Practicable Date, the Guangzhou Target Company and Bank of Jinzhou Co., Ltd., Shanghai Road Branch have reached an agreement in principle (subject to the bank's internal approval) to renew the said bank loans of the Guangzhou Target Company for 18 months, with continuing pledges in favour of the bank over all equity interest of the Guangzhou Target Company and guarantees by Mr. Dai. Based on information provided by the Seller and Mr. Dai, it is expected that the Guangzhou Target Company and Bank of Jinzhou Co., Ltd. will formally enter into an agreement upon finalizing the renewal of such loans. According to Jingtian & Gongcheng, the PRC legal adviser to the Company in respect of the Acquisitions, the historical usage of the proceeds of thebank loans by the Seller's Group contrary to the intended purpose of the bank loans may result in among others, repayment obligations becoming immediately due and demand for repayment by the bank, termination of the loan agreement(s) and enforcement of the equity pledge over the Guangzhou Target Company and the guarantees of Mr. Dai. In the event of enforcement, the Company will seek to protect its equity interest of the Guangzhou Target Company, and will consider repaying such loans with (i) proceeds from its disposal receivable of a hotel in Hangzhou, the PRC, of which approximately RMB800 million was received in February 2021, and/or (ii) proceeds from the potential disposal of real estate properties held in the United Kingdom. In addition, Mr. Dai has provided an indemnity under the Guangzhou Share Purchase Agreement for any losses or damages of the Company, the Purchaser or the Guangzhou Target Group which may arise from the historical usage of the proceeds of the bank loans by the Seller's Group.

Refinancing plans

After Completion, the Company expects to refinance the outstanding bank loans of the Guangzhou Target Company upon which the guarantee by Mr. Dai will be released. As for the refinancing plan of the Company, subject to property market conditions, the Company will consider repayment of the outstanding bank loans of the Guangzhou Target Company by among others, proceeds from potential disposal, if any, of real estate properties held in the United Kingdom and by obtaining refinancing bank loans.

Net current liabilities of the Jinzhou Target Group and the Guangzhou Target Group

As at 30 September 2020, the Jinzhou Target Group and the Guangzhou Target Group recorded net current liabilities of RMB98.1 million and RMB188.0 million, respectively. Nonetheless, the Directors believe that the Completion will not adversely affect the financial position of the Enlarged Group and that it will remain in a net current asset position, taking into account the aforementioned RMB800 million in proceeds from disposal receivable received in February 2021, which were not factored into the unaudited pro forma financial information of the Enlarged Group, and assuming the successful extension of the bank loans of the Guangzhou Target Company, upon which such bank loans will be re-categorized as non-current liabilities.

G. REASONS FOR AND BENEFITS OF THE ACQUISITIONS

The Acquisitions are an imminent remedy for the enhancement of the operations of the Group

Since 2019, the Group has experienced diminishing revenue and operations across various of its business segments and against the on-going global pandemic and its impact on economies, the management of the Group considers that a diversified business strategy instead of organic growth is key in remedying the low level of operations of the Group and turning around its financial performance. The Board has therefore looked to acquiring businesses with a material level of operations and which would provide sustainable sources of revenue to the Group in the short term, such as the Jinzhou Shopping Mall and the Guangzhou Shopping Mall.

The Jinzhou Shopping Mall and the Guangzhou Shopping Mall have a track record of operations as the malls commenced businesses in 2013 and 2006, respectively. The Jinzhou Target Company and the Guangzhou Target Company engage in day-to-day shopping mall operations, including the leasing of shop and venue spaces and providing property management services. After the Acquisitions, the continuous day-to-day operations of the two shopping malls would materially enhance the level of operations of the Enlarged Group.

The Jinzhou Target Group and the Guangzhou Target Group are expected to provide the Enlarged Group with readily available, secured and stable source of revenue and other income. For the financial years ended 31 December 2017, 2018, 2019 and the nine months ended 30 September 2020, the Jinzhou Target Group and the Guangzhou Target Group generated a combined revenue of RMB37.2 million, RMB45.1 million, RMB37.6 million and RMB20.4 million, respectively, and revenue from property management and relevant service over the same periods amounted to RMB44.4 million, RMB46.4 million, RMB49.1 million and RMB19.4 million, respectively. The individual agreements with the tenants and shop owners are of fixed term and generally provide for fixed rents, with some of the agreements providing for rental payment upfront for a certain period or on annual basis. The Acquisitions are considered as an imminent remedy for the enhancement of the Group's level of operations as upon Completion, the results of Jinzhou Target Group and the Guangzhou Target Group would be consolidated into the results of the Group. After Completion, the two shopping malls are expected to continue to bring readily available revenue to the Enlarged Group going forward.

The profits generating nature of the two shopping malls would offer, not only new profits, but growth drivers compared to the Group's businesses which have been down-sized or ceased to be in operations. For the financial years ended 31 December 2017, 2018 and 2019 and the nine months ended 30 September 2020, the audited combined net profits after tax of the Jinzhou Target Group and the Guangzhou Target Group was approximately RMB101.0 million, RMB80.8 million, RMB46.1 million and RMB11.8 million respectively.

The shopping mall businesses are suitable targets as they are primarily property investment by nature which is aligned with the business strategy of the Group, and can facilitate the Enlarged Group's expansion into other property-related business areas

The shopping mall businesses of the Jinzhou Target Company and the Guangzhou Target Company primarily involve, among others, the leasing of shops and venue spaces and the provision of property management services. They share similar business, operating and income models with the Group's existing property investment segment in the following manner:

Shopping mall businesses

Business models:

• Property investment in the shopping malls
• Operating and property management of the two shopping malls

Operating models:

• Leasing of shop spaces to retailers and wholesalers of apparels, cosmetics, accessories, household goods and food and beverage and other common areas to businesses for marketing and promotion activities
• Providing property management services including mall security, maintenance and repair, management of open areas for pop-up promotional events and supervising external contractors

Income models:

• Primarily fixed rental income from shop tenants
Group's property investment segment
- • Property investment in various type of properties (currently, residential properties)
- • Leasing of residential houses to tenants and tourists
- • Providing property management services including concierge services, security, maintenance and repair, property management of common areas and liaising with external real estate advisers locally based
- • Fixed rental income from tenants and tourists
• Property management fee income from shop tenants and shop owners

• Service fee chargeable on properties

Given the common characteristics exhibit by the business, operating and income models of the Jinzhou Target Company and the Guangzhou Target Company, the Company considers the Acquisitions to be a natural extension of its property investment business into commercial retail properties.

The Company has in the past been investing in various types of commercial and residential properties in Hong Kong, PRC and overseas, including hotels, offices and luxury residential properties for rental income and capital appreciation and the Group currently still holds premium residential real estate in central London, the United Kingdom within close proximity of the Buckingham Palace for lease to tenants and high-end tourists. As disclosed in the interim report of the Company for the six months ended 30 June 2020, the Company is still identifying suitable real estate project(s) for acquisition, both locally and abroad with primary focus on commercial or residential properties in the PRC and Hong Kong, with an aim to generate stable cash flow to the Group as well as to be benefited from the capital appreciation. The Acquisitions are therefore considered aligned with the Company's existing business strategies related to its property investment business (to expand its property portfolio) and there would be no fundamental change in principal business of the Company resulting from the Acquisitions. The Acquisitions are also consistent with the Group's resources as the consideration will be fully settled using the Group's internal resources.

Future business and development plans of the shopping mall businesses

Due to the effects of COVID-19 pandemic on the retail and shopping industry, the Jinzhou Target Group and the Guangzhou Target Group have provided certain rental and management fee concessions to its shopping mall tenants. There are no concrete plans to offer any further concessions, upon the eventual subsidence of the COVID-19 pandemic over the course of 2021. As such, it is expected that the revenue and other income from the shopping mall businesses will increase over time.

In addition, as certain renovation and refurbishment upgrades for part of the Jinzhou Shopping Mall are currently scheduled to complete in the second or third quarter of 2021, rent free periods have been offered to affected tenants. Nonetheless, upon the completion of such works, the Jinzhou Target Group intends to increase rental and property management rates in order to reflect the upgrade in the location quality of the Jinzhou Shopping Mall.

For the Guangzhou Shopping Mall, plans to increase the flow of shoppers and customers amid the effects of COVID-19 pandemic and the growth of e-commerce include the introduction of more internationally recognized brands with higher-end products as shopping mall tenants, increasing the variety of tenants in terms of product offerings, which include introducing a designated zone for e-commerce merchants, and improving the existing catering facilities. Going forward, the Guangzhou Target Group may also consider increasing rental rates for shops located in Phase 2 of the Guangzhou Shopping Mall, as lower rates were initially provided to attract tenants for the first few years upon its opening in 2016.

Other property-related business expansion

Going forward, the acquisitions of the Jinzhou Shopping Mall and the Guangzhou Shopping Mall will enable the Enlarged Group to potentially expand into other property-related business areas that would complement the operations of the shopping mall businesses, including property management, building and decorative materials supply. The supply of building and other decorative materials can be used for the refurbishment and renovation work of the shop spaces and common areas of the Jinzhou Shopping Mall and Guangzhou Shopping Mall. The Group believes that the ability to maintain and improve the condition of its shopping mall properties and thereby increasing their value would be in the long-term interests and benefit of the Group and its Shareholders as a whole.

The Group's management possess relevant expertise and experience

The management of the Group has in-depth experience in property investment, including investments in other types of commercial properties, such as hotels and offices, and residential properties, and in working with a range of customers and clients including corporate and individual tenants and tenants who are tourists and/or business travellers. The relevant experience of the Group's directors and management personnel in property investment was acquired and accumulated over property investment projects of the Group over the years in, (a) a hotel in Hangzhou, the PRC; (b) a prime office building in Hammersmith Grove in central London, the United Kingdom; (c) Buckingham Gate, which is an investment in luxurious residential houses and apartments in central London. Furthermore, the Chief Executive Officer and Executive Director of the Company, Mr. Kwong Kai Sing Benny is, in particular, highly experienced in property investment and has a wealth of relevant knowledge and industry experience in respect of property investment in Hong Kong and overseas. Mr. Kwong has over 32 years of experience in property investment, having been appointed to senior management and directorship positions in multiple listed issuers in Hong Kong and London in property investment and related businesses.

The shopping mall businesses of the Jinzhou Target Company and the Guangzhou Target Company are therefore not entirely new businesses for the existing management personnel of the Group and instead, they can leverage on their existing expertise acquired over the years in property investment in different property types and geographical locations in managing the acquired businesses going forward. For example, their skills and experience in sourcing and managing tenants, negotiation of rents and terms of leases are relevant to the future managementof the acquired businesses. In respect of the day-to-day operations of the two shopping malls, the Group would delegate such activities to the existing operation teams of the Jinzhou Target Company and Guangzhou Target Company, comprising skilled and experienced staff who would continue to carry out such daily operational activities after the Acquisitions. The Group's management personnel would supervise and monitor such activities on a high-level basis to ensure that the shopping malls would continue to be operated in an efficient manner.

In light of the reasons and benefits of the Acquisitions set out above, the Directors are of the view that the terms of the Acquisitions which have been reached after arm's length negotiations among the parties, are fair and reasonable, on normal commercial terms, and in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole, taking into account among other things, the future business prospects of the Enlarged Group.

H. EXISTING BUSINESSES AND PROSPECTS OF THE ENLARGED GROUP

Upon Completion, the Enlarged Group has made, or expects to make, the following adjustments to its existing businesses:

Property investment: As the pandemic continues to weigh on the UK real estate market as a result of decline in tourism and repeated lockdown measures and as part of the refinancing plans in respect of the external bank loans of Guangzhou Target Company, the Enlarged Group plans to relaunch for sale the Group's investment properties in London, the UK situated on the southern side of Buckingham Gate. Subject to the funding needs and financial position of the Enlarged Group following completion, the Company may consider suitable real estate projects for acquisition if and when the opportunities arise.

Commodity trading business: The Enlarged Group has already resolved to cease its commodity trading business in May 2020, due to the extreme volatility in oil prices since 2019.

Mining and exploitation of natural resources: The Enlarged Group will also not actively pursue any mining of natural resources operations (which did not record any revenue for the financial year ending 31 December 2020), in part due to the logistical difficulties and rising mining costs amid the pandemic.

Medical equipment trading: The Enlarged Group will continue its medical equipment trading business in China under the medical equipment trading segment, where demand is expected to moderately increase along with aging population and rising health concerns among population in China, and market competition continues to be keen.

Financial services and asset management: The Enlarged Group will maintain its status quo regarding its securities investments operations as no disposal or addition in investment portfolio is anticipated, and will closely monitor the market with regards to re-entering the financial services and distressed debt assets management markets, if any.

For the trading prospects of the Enlarged Group, please refer to the section headed "D. Trading Prospects of the Enlarged Group" for details. As at the Latest Practicable Date, save as disclosed in the circular, the Company has not identified any business opportunities for acquisition, nor have resolved to dispose any of its current businesses. Nonetheless, the Enlarged Group will continue to explore other merger and acquisition opportunities.

I. IMPLICATIONS UNDER THE LISTING RULES

J. FINANCIAL EFFECT OF THE ACQUISITIONS

Upon completion of the Acquisitions, the Jinzhou Target Group and the Guangzhou Target Group will become wholly-owned subsidiaries of the Company and the financial results of the Jinzhou Target Group and the Guangzhou Target Group will be consolidated into the accounts of the Group. Please refer to Appendix VI to this circular for more information on the basis of preparation of the unaudited pro forma consolidated financial information of the Enlarged Group.

Earnings

As set out in the Accountants' Report on historical financial information of the Jinzhou Target Group in Appendix IV to this circular, the revenue of the Jinzhou Target Group for the year ended 31 December 2019 was RMB23.4 million. The net profit after taxation of the Jinzhou Target Group across the same period was RMB14.2 million.

As set out in the Accountants' Report on historical financial information of the Guangzhou Target Group in Appendix V to this circular, the revenue of the Guangzhou Target Group for the year ended 31 December 2019 was RMB14.1 million. The net profit after taxation of the Guangzhou Target Group across the same period was RMB31.9 million.

Accordingly, based on the unaudited pro forma financial information as set out in Appendix VI to this circular, assuming that Completion had taken place on 31 December 2019, the revenue of the Enlarged Group for the financial year ended 31 December 2019 would have increased from HK$25.9 million to HK$68.5 million on a pro forma basis, and the loss of the Enlarged Group would have decreased from HK$246.8 million to HK$201.9 million on a pro forma basis.

Assets and Liabilities

Based on the unaudited pro forma financial information as set out in Appendix VI to this circular, assuming that the Completion had taken place on 30 June 2020, the total assets of the Enlarged Group would have increased from approximately HK$2,479.1 million to approximately HK$5,003.0 million on a pro forma basis, the total liabilities of the Enlarged Group would have increased from approximately HK$508.8 million to approximately HK$3,040.0 million on a pro forma basis, and the net assets of the Enlarged Group would have increased from HK$1,970.3 million to HK$1,963.0 million on a pro forma basis.

K. SGM

A notice of the SGM to be held at 10:30 a.m., on Wednesday, 21 April 2021 at Regus Conference Centre, 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong is set out on pages SGM-1 to SGM-3 of this circular for the purpose of considering and, if thought fit, to approve, among others, the Acquisitions and transactions contemplated thereunder.

A form of proxy for use at the SGM is enclosed. 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 Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the proxy form shall not preclude you from attending, and voting in person at the SGM or any adjournment thereof if you so desire and, in such event, the instrument appointing a proxy will be deemed to be revoked.

L. CLOSURE OF REGISTER OF MEMBERS

In order to determine the list of shareholders who will be entitled to attend and vote at the SGM, the register of members of the Company will be closed for registration of transfer of Shares from Friday, 16 April 2021 to Wednesday, 21 April 2021 (both days inclusive) during which period no transfer of Shares will be effected. Shareholders whose names appear on the register of members of the Company on Wednesday, 21 April 2021 shall be entitled to attend and vote at the SGM. In order for the Shareholders to qualify for attending and voting at the SGM, all transfer documents, accompanied by the relevant Share certificates, should be lodged for registration with Tricor Tengis Limited, the Company's branch share registrar and transfer office in Hong Kong, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong on or before 4:30 p.m., Thursday, 15 April 2021.

M. PRECAUTIONARY MEASURES FOR SGM

In view of the ongoing coronavirus disease (COVID-19) epidemic and recent development for prevention and control of its spread, the Company will implement the following preventive measures at the SGM to prevent attending Shareholders, staff and other stakeholders from the risk of infection:

i. compulsory body temperature check will be conducted on every attendee at the entrance of the SGM venue;
ii. every attendee to enter the SGM venue is required to wear surgical face mask at all times until after they have left the venue (please note that no masks will be provided at the SGM venue and attendees should bring their own masks);
iii. no refreshments, beverage or souvenirs will be provided; and
iv. appropriate distancing and spacing in line with the guidance from the Hong Kong Government will be maintained and as such, the Company may limited the number of attendees at the SGM as may be necessary to avoid over-crowding.

In order to ensure the safety of the attendees at the SGM, the Company reserves the rights to deny entry into or require any person to leave the SGM venue if such person:

i. refuses to comply with any of the above precautionary measures;
ii. is having a body temperature of over 37.2 degree Celsius;
iii. is subject to any quarantine prescribed by Hong Kong Government or has close contact with any person under quarantine; or
iv. has any flu-like symptoms.

Shareholders are strongly recommended to consider appointing the chairman of the SGM as their proxy to vote on the resolutions for them, instead of attending the SGM in person.

N. VOTING AT THE SGM AND THE BOARD MEETINGS

Voting at the SGM will be conducted by poll.

To the best of the knowledge, information and belief of the Directors, no Shareholder has a material interest in the Acquisitions and as such, no Shareholder is required to abstain from voting at the SGM.

None of the Directors was in any way materially interested in the Acquisitions and accordingly, none of the Directors abstained from voting on the relevant Board resolution(s) in the Board meeting.

O. RECOMMENDATIONS

The Directors recommends that the Shareholders to vote in favour of the resolutions to be proposed at the SGM to approve the Acquisitions.

P. FURTHER INFORMATION

Your attention is drawn to other sections of and appendices to this circular, which contain further information on the Group, the Jinzhou Target Group, the Guangzhou Target Group, the Enlarged Group and other information required to be disclosed under the Listing Rules.

Q. WARNING

The Acquisitions are subject to a number of conditions including approvals by the Shareholders at the SGM and the approval from the Stock Exchange, which may or may not be fulfilled. In the event that any of the conditions to the Completion is not fulfilled, the Share Purchase Agreements will not become unconditional and the Acquisitions will not proceed.

SHAREHOLDERS OF THE COMPANY AND POTENTIAL INVESTORS SHOULD EXERCISE CAUTION WHEN THEY DEAL OR CONTEMPLATE DEALING IN THE SHARES OR ANY OTHER SECURITIES OF THE COMPANY.

Yours faithfully,

For and on behalf of the Board of

Tai United Holdings Limited

Kwong Kai Sing Benny Chief Executive Officer

A. SUMMARY OF FINANCIAL RESULTS

Financial information of the Group for each of the years ended 31 December 2017, 2018 and 2019 and the six months ended 30 June 2020 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.irasia.com/listco/hk/taiunited/index.htm):

• annual report of the Company for the year ended 31 December 2017 published on 27 April 2018 (pages 72-250) (https://www1.hkexnews.hk/listedco/listconews/sehk/2018/0427/ltn201804272182.pdf);
• announcement of the Company dated 4 September 2018 in relation to the 2017 Annual Report of the Company (https://www1.hkexnews.hk/listedco/listconews/sehk/2018/0904/ltn201809041560.pdf);
• annual report of the Company for the year ended 31 December 2018 published on 29 April 2019 (pages 69-258) (https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0429/ltn201904292249.pdf)
• annual report of the Company for the year ended 31 December 2019 published on 28 April 2020 (pages 72-230) (https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0428/2020042802616.pdf);
• supplemental announcement in relation to the annual report for the year ended 31 December 2019 published on 13 August 2020 (http://www1.hkexnews.hk/listedco/listconews/sehk/2020/0813/2020081301344.pdf); and
• interim report of the Company for the six months ended 30 June 2020 published on 24 September 2020 (pages 21-56) (https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0924/2020092400626.pdf).

B. INDEBTEDNESS STATEMENT

As at the close of business on 31 January 2021, being the latest practicable date prior to the printing of this circular for the purposes of ascertaining the information contained in this indebtedness statement, the Enlarged Group had total borrowings amounting to approximately HK$1,887,849,000 and lease liabilities amounting to approximately HK$6,064,000, details of which are as follows:

As at
31 January
2021
HK$'000
The Group
Unsecured bank borrowings(1)(2)	1,206
Secured bank borrowings(2)(3)	234,149
Unsecured lease liabilities(1)	6,064
The Jinzhou Target Group and the Guangzhou Target Group
Secured and guaranteed bank borrowings(4)	1,652,494
Total	1,893,913
Notes:

1. Such balances were not covered by any guarantees as at 31 January 2021
2. Such bank borrowings will mature within one year from 31 January 2021.
3. Secured by certain properties located in the United Kingdom held by the Group.
4. Secured by the operating right of a shopping mall held by the Seller's Group and a pledge on equity interest in the Guangzhou Target Company.

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Enlarged Group did not, as at the close of business on 31 January 2021, have any outstanding loan capital issued, outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, finance lease, hire purchase commitments, guarantees or other material contingent liabilities.

C. WORKING CAPITAL

The Directors, after due and careful enquiries, are of the opinion that, in the absence of unforeseen circumstances and after taking into account the expected completion of the Acquisitions, the cash flow generated from the operating activities, the financial resources available to the Enlarged Group including internally generated funds and the available credit facilities, the Enlarged Group will have sufficient working capital for at least the next twelve months from the date of this circular.

D. TRADING PROSPECTS OF THE ENLARGED GROUP

The Group has experienced diminishing revenue and operations across various of its business segments and against pandemic and its impact on economies, the management of the Group considers that a diversified business strategy instead of organic growth is key in remedying the low level of operations of the Group and turning around its financial performance. Upon completion of the Acquisitions, the Enlarged Group is expected to benefit from the advantages in integrating the shopping mall businesses of the Jinzhou Target Group and the Guangzhou Target Group. The Directors believe that the Acquisitions will provide steady operating profits and cash flow, with an imminent remedy for the enhancement of the levels of the operations of the Enlarged Group. The Board believes that the Acquisitions present good opportunities for the Enlarged Group in terms of growth and diversification.

Economic recovery and potential expansion into property-related businesses

The global economy is estimated to grow at record speed by research institutes, international organizations, and market participants, conditional on a successful deployment of effective COVID-19 vaccines and continued accommodative fiscal, financial and monetary conditions. China has been, and continues to be, a fundamental driving force of merger and acquisition activity, and is currently the only major economy that has recovered quickly from the COVID-19 pandemic. In addition to the acquisitions of the Jinzhou Shopping Mall Business and Guangzhou Shopping Mall Business, the Directors will continue to divert their efforts in exploring more merger and acquisition opportunities in businesses that have benefited from the economic rebound in China.

In particular, the Acquisitions will allow the Enlarged Group to potentially expand into other property-related business areas that would complement the operations of the shopping mall businesses (including property management, upgrade, renovation and maintenance of shop spaces and common areas) such as building and decorative materials supply. Such businesses, if expanded into, are expected to provide ready supply of flooring, ceiling or other building and decorative materials to and generate potential synergies with the Jinzhou Shopping Mall and the Guangzhou Shopping Mall.

Existing businesses

As the pandemic continues to weigh on the UK real estate market as a result of decline in tourism and repeated lockdown measures and as part of the refinancing plans in respect of the external bank loans of Guangzhou Target Company, the Enlarged Group plans to relaunch for sale the Group's investment properties in London, the United Kingdom situated on the southern side of Buckingham Gate. In addition, the Group has resolved to cease its commodity trading business in May 2020, due to the extreme volatility in oil prices since 2019. The Enlarged Group will also not actively pursue any mining of natural resources operations (which did not record any revenue for the financial year ending 31 December 2020), in part due to the logistical difficulties and rising mining costs amid the pandemic. Furthermore, the Enlarged Group will continue its medical equipment trading business in China under the medical equipment trading segment, where demand is expected to moderately increase along with ageing population and rising health concerns among population in China, and market competition continues to be keen. Finally, the Enlarged Group will maintain its status quo regarding its securities investments operations as no disposal or addition in investment portfolio is anticipated, and will closely monitor the market with regards to re-entering the financial services and distressed debt assets management markets, if any.

Upon completion of the Jinzhou Acquisition, Tai United Properties Company Limited (a wholly-owned subsidiary of the Company) will become the sole shareholder of the Jinzhou Target Company and taking up the control and operations of the Jinzhou Shopping Mall. The following discussions and analyses relate to the results of operations and financial condition of the Jinzhou Target Group as at and for the years ended 31 December 2017, 2018 and 2019 and the nine months ended 30 September 2020 ("FY2017 ", " FY2018 ", " FY2019 " and " 9M2020", respectively). You should read the following discussion and analyses in conjunction with the Accountants' Report on the Jinzhou Target Group and the accompanying notes set out in Appendix IV to this circular.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE JINZHOU TARGET GROUP

Business Review

The Jinzhou Target Group is principally engaged in the leasing and management of the business operations of the Jinzhou Shopping Mall, a single storey underground mall located in Zhongyang Avenue in Jinzhou city, stretching across the core business district in Jinzhou. The mall has a gross floor area of 40,765 sq.m., and currently has over 700 tenants of leased shop and venue spaces.

Results of Operations

Revenue

Revenue of the Jinzhou Target Group comprises rental income from tenants of the shop and venue spaces of the Jinzhou Shopping Mall which are held as investment properties. The following table sets out the breakdown of revenue for the years/periods indicated:

Nine months ended

Year ended 31 December 30 September 2017 2018 2019 2019 2020

RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 (audited) (audited) (audited) (unaudited) (audited)

Rental income

23,064

23,633

23,436

17,307

16,110

Revenue slightly increased by 2.5% from RMB23.1 million in FY2017 to RMB23.6 million in FY2018, and slightly decreased by 0.8% to RMB23.4 million in 2019. Revenue decreased by 6.9% from RMB17.3 million in 9M2019 to RMB16.1 million in 9M2020.

The increase in revenue from FY2017 to FY2018 was primarily attributable to increases in the occupancy rates and the average rental rates of the Jinzhou Shopping Mall, and the decrease in revenue from FY2018 to FY2019 was mainly attributable to a slight decrease in the average rental rates, whilst occupancy rates remained stable. The decrease in revenue from the nine months ended 30 September 2019 ("9M2019") to 9M2020 was mainly attributable to rental concessions provided to the shopping mall tenants in 2020, due to the effects of the COVID-19 pandemic on the retail and shopping industry, whilst occupancy rates remained stable.

Other income

Other income of the Jinzhou Target Group is primarily comprised of revenue from property management and relevant services, with contribution from bank interest income and sundry income.

Nine months ended
Year ended 31 December	30 September
2017 2018 2019	2019 2020
RMB'000 RMB'000 RMB'000	RMB'000 RMB'000
(audited) (audited) (audited)	(unaudited) (audited)

Bank interest income	8	39	4	1	10
Revenue from property
management and
relevant service	6,934	8,436	8,016	5,951	4,806
Sundry income	8	12	13	7	216
Total	6,950	8,487	8,033	5,959	5,032

The increase in other income from RMB7.0 million in FY2017 to RMB8.5 million in FY2018 was primarily attributable to the increase in revenue from the provision of property management services and other relevant services, mainly due to utility expenses of the shopping mall tenants being booked under property management fees from FY2018 onwards, with a corresponding increase in the operating expenses of the Jinzhou Target Group. The decrease in other income from FY2018 to FY2019 was primarily attributable to a decrease in revenue from property management and relevant service due to the renovation of a portion of the Jinzhou Shopping Mall in 2019. The decrease in other income from RMB6.0 million in 9M2019 to RMB5.0 million in 9M2020 was primarily due to property management fee concessions provided to the shopping mall tenants in 2020, in light of the effects of the COVID-19 pandemic on the retail and shopping industry and in line with rental concessions.

Valuation Gain/Losses on Investment Properties

Valuation gains on investment properties for the Jinzhou Target Group for FY2017 and FY2018 was RMB22.0 million and RMB6.0 million, respectively. The Jinzhou Target Group incurred valuation losses on investment properties of RMB12.1 million for FY2019, primarily due to cash used in the additions to investment properties and a slight decrease in the rental rates charged to the shopping mall tenants during the year. The Jinzhou Target Group incurred further valuation losses on investment properties of RMB7.9 million for 9M2020, primarily due to the rental concessions provided to shopping mall tenants in light of the effects of the COVID-19 pandemic during the period.

Net asset value

The net asset value of the Jinzhou Target Group as at 31 December 2017, 2018, 2019 and 30 September 2020 was RMB177.6 million, RMB188.2 million, RMB196.2 million and RMB552.8 million. The increase in net asset value over the Reporting Period was primarily due to the net profit and total income generated by the Jinzhou Target Group through its business operations over such period and the capitalization of the amount due to the immediate holding company into the capital and reserves of the Jinzhou Target Group.

Income Tax

No provisions for profit tax in Hong Kong were made, as the Jinzhou Target Group did not earn any income subject to profit tax in Hong Kong during the Reporting Period. Pursuant to the Enterprise Income Tax Law ("EIT") of the PRC, the main operating companies of the Jinzhou Target Group were subject to the PRC EIT at a rate of 25% during the Reporting Period.

Income tax expenses of the Jinzhou Target Group was RMB5.5 million and RMB1.5 million for FY2017 and FY2018, respectively. The Jinzhou Target Group recorded income tax credit of RMB3.0 million and RMB2.0 million for FY2019 and 9M2020, respectively. The income tax expenses (credit) represents the deferred tax arising from the revaluation of investment properties.

Net profit for the year/period

As a result of the foregoing, the Jinzhou Target Group recorded net profits of RMB38.4 million, RMB28.3 million, RMB14.2 million and RMB9.2 million for FY2017, FY2018, FY2019 and 9M2020, respectively.

Net current liabilities

The current assets of the Jinzhou Target Group comprise of (i) other receivables, deposits and prepayments, (ii) amounts due from fellow subsidiaries of the Seller's Group and (iii) bank balances and cash, and the current liabilities of the Jinzhou Target Group comprise of (i) accrued liabilities and other payables, (ii) amounts due to fellow subsidiaries, (iii) amount due to Guangzhou Target Company, (iv) amount due to the immediate holding company and (v) amount due to the ultimate controlling party.

The net current liabilities of the Jinzhou Target Group decreased from RMB461.9 million as at 31 December 2017 to RMB460.8 million as at 31 December 2018, primarily due to an increase in the amounts due from fellow subsidiaries, partially offset by an increase in the amount due to the immediate holding company.

The net current liabilities of the Jinzhou Target Group further decreased from RMB460.8 million as at 31 December 2018 to RMB456.8 million as at 31 December 2019, primarily due to a decrease in both the amount due to fellow subsidiaries and accrued liabilities and other payables, such as construction and other payables, partially offset by a decrease in the amounts due from fellow subsidiaries.

The net current liabilities of the Group further decreased from RMB456.8 million as at 31 December 2019 to RMB98.1 million as at 30 September 2020, primarily due to the capitalization of amount due to the immediate holding company and a decrease in the accrued liabilities and other payables, partially offset by a further decrease in the amounts due from fellow subsidiaries.

Liquidity and Financial Resources

The Jinzhou Target Group financed working capital and capital expenditures principally through cash generated from operations. As at 30 September 2020, cash and cash equivalents of the Jinzhou Target Group amounted to RMB0.8 million.

Cash inflows from operations of the Jinzhou Target Group were primarily generated through the rental and other income from the operation of the Jinzhou Shopping Mall Business, and cash outflows were primarily due to capital expenditures and renovation costs incurred for the Jinzhou Shopping Mall. Net cash generated from operating activities in FY2017, FY2018, FY2019 and 9M2020 was RMB21.0 million, RMB10.2 million, RMB16.8 million and RMB3.6 million, respectively.

Net cash used in investing activities in FY2017, FY2018, FY2019 and 9M2020 was RMB16.6 million, RMB6.2 million, RMB19.7 million and RMB5.7 million, which primarily reflected (i) advances to fellow subsidiaries throughout the period and (ii) additions to investment properties from FY2018 onwards.

Net cash used in financing activities in FY2017 and FY2018 was RMB2.1 million and RMB11.8 million, respectively, which was primarily due to repayments made to fellow subsidiaries, whereas net cash generated from financing activities in FY2019 and 9M2020 was RMB3.8 million and RMB0.8 million, respectively, which was primarily due to advances made by fellow subsidiaries.

Gearing Ratio

Gearing ratio is calculated based on the total interest-bearing borrowings of the Jinzhou Target Group over its total equity. As such, the gearing ratio of the Jinzhou Target Group was zero throughout the Track Record Period, as it did not incur any interest-bearing borrowings during this period.

Charges on Group Assets

Throughout the Track Record Period, no assets were pledged to secure borrowing facilities for the Jinzhou Target Group.

Significant Investments

As at 31 December 2017, 2018, 2019 and 30 September 2020, the Jinzhou Target Group did not have any material equity investments.

Employees and remuneration

The number of employees of the Jinzhou Target Group as at 31 December 2017, 2018, 2019 and 30 September 2020 was 22, 21, 27 and 27, respectively. The Jinzhou Target Group's employees are remunerated according to their job nature, individual performance, market trends with built-in merit components. The Jinzhou Target Group provides regular training to its employees on their technical, management and hospitality skills. Other benefits include medical and retirement schemes.

Contingent Liabilities

As at 30 September 2020, the Jinzhou Target Group did not have any contingent liabilities.

Commitments

As at 30 September 2020, the Jinzhou Target Group did not have any outstanding commitments.

Acquisitions or dispositions

During the Track Record Period, the Jinzhou Target Group did not carry out any material acquisitions or dispositions of subsidiaries, associates and joint ventures.

Financial Risk Management

For FY2017, FY2018, FY2019 and 9M2020, the Jinzhou Target Group was mainly exposed to interest rate, credit and liquidity risks arising in the normal course of business. For details of the exposure of such risks and the relevant risk management policies and practices adopted by the Jinzhou Target Group, please refer to Note 28(b) of the Accountant's Report on the Jinzhou Target Group as set out in Appendix IV to this circular.

As the operations of the Jinzhou Target Group were principally based in the PRC for FY2017, FY2018, FY2019 and 9M2020, the principal assets and liabilities of the Jinzhou Target Group were denominated in Renminbi and therefore the Jinzhou Target Group considered that it did not have any material exposure to fluctuations in exchange rate and no hedging measures were taken.

Upon completion of the Guangzhou Acquisition, Tai United Properties Company Limited (a wholly-owned subsidiary of the Company) will become the sole shareholder of the Guangzhou Target Company and taking up the control and operations of the Guangzhou Shopping Mall. The following discussions and analyses relate to the results of operations and financial condition of the Guangzhou Target Group as at and for the years ended 31 December 2017, 2018 and 2019 and the nine months ended 30 September 2020 ("FY2017 ", " FY2018 ", " FY2019" and "9M2020", respectively). You should read the following discussion and analyses in conjunction with the Accountants' Report on the Guangzhou Target Group and the accompanying notes set out in Appendix V to this circular.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE GUANGZHOU TARGET GROUP

Business Review

The Guangzhou Shopping Mall is principally engaged in the leasing and management of the business operations of the Guangzhou Shopping Mall, a two-storey underground mall located in the Guangzhou Railway Station commercial centre, junction of Zhanqian Road and Zhannan Road in Yuexiu District and has two phases which are adjacent to each other. It has a total gross floor area of 89,415 sq.m..

Results of Operations

Revenue

Revenue of the Guangzhou Target Group comprises (i) sale of operating rights of shop spaces and (ii) rental income from tenants of the shop and venue spaces of the Guangzhou Shopping Mall which are held as investment properties. The following table sets out the breakdown of revenue for the years/periods indicated:

Nine months ended
Year ended 31 December	30 September
2017 2018 2019	2019 2020
RMB'000 RMB'000 RMB'000	RMB'000 RMB'000
(audited) (audited) (audited)	(unaudited) (audited)

Revenue

- Sale of operating

rights	-	8,972	-	-	-
- Leases	14,106	12,477	14,115	10,051	4,265
Total	14,106	21,449	14,115	10,051	4,265
- III-1 -

Revenue increased by 52.1% from RMB14.1 million in FY2017 to RMB21.4 million in FY2018, and decreased by 34.2% to RMB14.1 million in 2019. Revenue decreased by 57.6% from RMB10.1 million for the nine months ended 30 September 2019 ("9M2019") to RMB4.3 million in 9M2020.

The increase in revenue from FY2017 to FY2018 was primarily due to the sale of operating rights of certain shop spaces of the Guangzhou Shopping Mall premises to certain tenants, partially offset by a decrease in the rental income receivable due to such sale. Under the contracts entered into with certain tenants prior to the Reporting Period, the operating rights of the shop spaces would be sold to them after an initial rent period of five years. There is no intention for the Guangzhou Target Group to enter into contracts after the Completion with tenants to provide for future sale of operating rights in the Guangzhou Shopping Mall, and the last sale of operating rights under pre-existing contracts with tenants is due to take place in 2021.

The revenue from leases increased from FY2018 to FY2019 primarily due to an increase in the rental rates, whilst occupancy rates remained relatively stable. The decrease in revenue from 9M2019 to 9M2020 was mainly attributable to rental concessions provided to the shopping mall tenants due to the effects of the COVID-19 pandemic on the retail and shopping industry, whilst occupancy rates remained relatively stable.

Other income

Other income of the Guangzhou Target Group represents (i) interest income from bank and other deposits and amounts due from fellow subsidiaries; (ii) revenue from property management and relevant services; and (iii) sundry income.

Nine months ended
Year ended 31 December	30 September
2017 2018 2019	2019 2020
RMB'000 RMB'000 RMB'000	RMB'000 RMB'000
(audited) (audited) (audited)	(unaudited) (audited)

Interest income from:

- bank and other
deposits
- amounts due from fellow subsidiaries Revenue from property management and relevant service Sundry income

1 82,841

282 139,593

16 99,413

76,782 74,228

37,449 -

37,994 1,562

41,097 939

30,596 14,587 900 280

Total

120,291

179,435 141,465

108,287 89,106

Other income of the Guangzhou Target Group increased by 49.2% from RMB120.3 million in FY2017 to RMB179.4 million in FY2018, primarily due to an increase in the interest income from amount due from fellow subsidiaries. Other income decreased by 21.2% from RMB179.4 million in FY2018 to RMB141.5 million in FY2019, primarily due to a decrease in the interest income from fellow subsidiaries, partially offset by an increase in the revenue from property management and relevant services. Other income decreased by 17.7% from RMB108.3 million in 9M2019 to RMB89.1 million in 9M2020, primarily due to property management fee concessions provided to the shopping mall tenants and shop owners due to the COVID-19 pandemic.

Revenue from property management and relevant service

Revenue from property management income and relevant service of the Guangzhou Target Group in FY2017, FY2018, FY2019, 9M2019 and 9M2020 was RMB37.5 million, RMB38.0 million, RMB41.1 million, RMB30.6 million and RMB14.6 million, respectively. The slight increase in revenue between FY2017 and FY2019 was primarily attributable to an increase in the property management fees charged and the occupancy rate of the Guangzhou Shopping Mall over the period. The decrease in revenue from 9M2019 to 9M2020 was primarily due to property management fee concessions provided to the shopping mall tenants and shop owners due to the COVID-19 pandemic.

Valuation Gain/Losses on Investment Properties

Valuation gains on investment properties for the Guangzhou Target Group for FY2017 and FY2018 was RMB43.7 million and RMB32.0 million. the Guangzhou Target Group incurred valuation losses on investment properties of RMB1.0 million for FY2019, primarily due to construction works in the immediate surrounding vicinity of the Guangzhou Shopping Mall during the year, which impacted the flow of shopping mall visitors. the Guangzhou Target Group incurred further valuation losses on investment properties of RMB6.0 million for 9M2020, primarily due to the rental concessions provided to shopping mall tenants in light of the effects of the COVID-19 pandemic during the period.

Finance costs

Finance costs for the Guangzhou Target Group consisted of interest expenses on interest-bearing loans throughout the Track Record Period. Finance costs for FY2017, FY2018, FY2019 and 9M2020 were RMB80.3 million, RMB148.2 million, RMB97.7 million and RMB73.3 million, respectively.

Net asset value

The net asset value of the Guangzhou Target Group as at 31 December 2017, 2018, 2019 and 30 September 2020 was RMB1,029.4 million, RMB1,065.0 million, RMB1,091.1 million and RMB1,422.5 million, respectively. The increase in net asset value over the Reporting Period was primarily due to the net profit and total income generated by the Guangzhou Target Group through its business operations over such period and the capitalization of amounts due to the fellow subsidiaries, immediate and ultimate holding companies into the capital and reserves of the Guangzhou Target Group.

Income Tax

No provisions for profit tax in Hong Kong were made, as the Guangzhou Target Group did not earn any income subject to profit tax in Hong Kong during the Reporting Period. Pursuant to the Enterprise Income Tax Law ("EIT") of the PRC, the main operating companies of the Guangzhou Target Group were subject to the PRC EIT at a rate of 25% during the Reporting Period.

Income tax expenses of the Guangzhou Target Group was RMB10.9 million and RMB8.0 million for FY2017 and FY2018, respectively. the Guangzhou Target Group recorded income tax credit of RMB0.3 million and RMB1.5 million for FY2019 and 9M2020, respectively. The income tax expenses (credit) represent the deferred tax arising from the revaluation of investment properties.

Profit for the year/period

As a result of the foregoing, the Guangzhou Target Group recorded net profits of RMB62.6 million, RMB52.5 million, RMB31.9 million and RMB2.7 million for FY2017, FY2018, FY2019 and 9M2020, respectively.

Net current assets and liabilities

The current assets of the Guangzhou Target Group comprise of (i) inventories, (ii) accounts receivable; (iii) other receivables, deposits and prepayments, (iv) amount due from the immediate holding company; (v) amounts due from fellow subsidiaries of the Seller's Group and (vi) bank balances and cash, and the current liabilities of the Guangzhou Target Group comprise of (i) accrued liabilities and other payables, (ii) amounts due to fellow subsidiaries, (iii) amount due to the immediate holding company; (iv) amount due to the ultimate controlling party; and (v) current borrowings.

The net current assets of the Guangzhou Target Group decreased from RMB817.4 million as at 31 December 2017 to RMB809.3 million as at 31 December 2018, primarily due to an increase in the amounts due to fellow subsidiaries, partially offset by an increase in the amounts due from fellow subsidiaries, business operation income and the repayment of certain secured and guaranteed bank borrowings in 2018.

The net current assets of the Guangzhou Target Group increase from RMB809.3 million as at 31 December 2018 to RMB815.9 million as at 31 December 2019, primarily due to business operation income and a decrease in the amounts due to fellow subsidiaries, partially offset by a similar decrease in the amounts due from fellow subsidiaries.

the Guangzhou Target Group recorded net current liabilities of RMB188.0 million as at 30 September 2020, compared to net current assets of RMB815.9 million as at 31 December 2019, primarily due to certain bank borrowings then becoming payable within one year and, which the bank has since agreed in principle to extend for an additional 18 months.

Liquidity and Financial Resources

the Guangzhou Target Group financed working capital and capital expenditures principally through cash generated from operations and financing activities. As at 30 September 2020, cash and cash equivalents of the Guangzhou Target Group amounted to RMB3.6 million.

Cash inflows from operations of the Guangzhou Target Group were primarily generated through (i) revenue and other income from the operation of the Guangzhou Shopping Mall Business and (ii) finance costs, and cash outflows were primarily due to capital expenditures and renovation costs incurred for the Guangzhou Shopping Mall. Net cash generated from operating activities in FY2017, FY2018, FY2019 and 9M2020 was RMB53.0 million, RMB13.2 million, RMB20.9 million and RMB4.0 million, respectively.

Net cash used in investing activities in FY2017, FY2018, FY2019 and 9M2020 was RMB1,460.7 million, RMB35.5 million, RMB2.5 million and RMB6.4 million, which primarily reflected advances to fellow subsidiaries throughout the period. In particular, the cash advances to fellow subsidiaries in FY2017 was primarily funded through bank borrowings, as described below.

Net cash from financing activities in FY2017 and FY2018 was RMB1,410.4 million and RMB13.4 million, respectively. In FY2019, the Guangzhou Target Group had RMB15.9 million in net cash used in financing activities. In 9M2020, the Guangzhou Target Group had approximately RMB2,000 in net cash from financing activities. Such financing activities primarily comprised (i) advances from fellow subsidiaries and proceeds throughout the period and (ii) proceeds from bank borrowings raised in 2017, which were subsequently in the process of being repaid throughout the Track Record Period.

Gearing Ratio

Gearing ratio is calculated based on the total interest-bearing borrowings of the Guangzhou Target Group over its total equity. The gearing ratio as at 31 December 2017, 2018, 2019 and 30 September 2020 was 233.0%, 129.6%, 125.6% and 96.3%, respectively.

Charges on Group Assets

Throughout the Reporting Period, the equity interest of the Guangzhou Target Company was pledged for external bank loans, the principal amount of such bank loans being approximately RMB1,380,000,000, RMB1,370,000,000 and RMB1,370,000,000 as at 31 December 2018, 2019 and 30 September 2020, respectively. Save for the above, no other assets were pledged to secure borrowing facilities for the Guangzhou Target Group during the Track Record Period.

Significant Investments

As at 31 December 2017, 2018, 2019 and 30 September 2020, the Guangzhou Target Group did not have any material equity investments.

Employees and remuneration

The number of employees of the Guangzhou Target Group as at 31 December 2017, 2018, 2019 and 30 September 2020 was 89, 89, 75 and 75, respectively. the Guangzhou Target Group's employees are remunerated according to their job nature, individual performance, market trends with built-in merit components. the Guangzhou Target Group provides regular training to its employees on their technical, management and hospitality skills. Other benefits include medical and retirement schemes.

Contingent Liabilities

As at 30 September 2020, the Guangzhou Target Group did not have any contingent liabilities.

Commitments

As at 30 September 2020, the Guangzhou Target Group did not have any outstanding commitments.

Acquisitions or dispositions

During the Track Record Period, the Guangzhou Target Group did not carry out any material acquisitions or dispositions of subsidiaries, associates and joint ventures.

Financial Risk Management

For FY2017, FY2018, FY2019 and 9M2020, the Guangzhou Target Group was mainly exposed to interest rate, credit and liquidity risks arising in the normal course of business. For details of the exposure of such risks and the relevant risk management policies and practices adopted by the Guangzhou Target Group, please refer to Note 34(b) of the Accountant's Report on the Guangzhou Target Group as set out in Appendix V to this circular.

As the operations of the Guangzhou Target Group were principally based in the PRC for FY2017, FY2018, FY2019 and 9M2020, the principal assets and liabilities of the Guangzhou Target Group were denominated in Renminbi and therefore the Guangzhou Target Group considered that it did not have any material exposure to fluctuations in exchange rate and no hedging measures were taken.

The following is the text of a report set out on pages IV-1 to IV-44, received from Elite Partners CPA Limited, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, for the purpose of incorporation in this circular.

ACCOUNTANT'S REPORT ON HISTORICAL FINANCIAL INFORMATION OF SKY BUILD LIMITED

TO THE DIRECTORS OF TAI UNITED HOLDINGS LIMITED

Introduction

We report on the historical financial information of Sky Build Limited ("Sky Build") and its subsidiaries (together, "Jinzhou Target Group") set out on pages IV-1 to IV-44, which comprises the consolidated statements of financial position of the Jinzhou Target Group at 31 December 2017, 2018 and 2019, and 30 September 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 Jinzhou Target Group for each of the three years ended 31 December 2019 and the nine months ended 30 September 2020 (the "Relevant Periods") and a summary of significant accounting policies and other explanatory information (together, the "Historical Financial Information"). The Historical Financial Information set out on pages IV-1 to IV-44 forms an integral part of this report, which has been prepared for inclusion in the circular of Tai United Holdings Limited (the "Company") dated 26 March 2021 (the "Circular") in connection with the very substantial acquisition of shopping mall businesses in the PRC by the Company.

Directors' responsibility for the Historical Financial Information

The directors of the 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 2 to the Historical Financial Information, and for such internal control as the directors of the 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 Jinzhou 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 (the "HKICPA"). This standard requires that we comply with ethical standards andplan 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 2 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the sole director of Sky Build, as well as evaluating the overall presentation of the Historical Financial Information, which the directors of the Company have reviewed, and consider to be reasonable.

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 Jinzhou Target Group's financial position at 31 December 2017, 2018 and 2019 and 30 September 2020 and of the Jinzhou Target Group's financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation set out in Note 2 to the Historical Financial Information.

Material uncertainty related to going concern

We draw attention to Note 2 to the Historical Financial Information, which indicates that as of 30 September 2020, the Jinzhou Target Group's current liabilities exceeded its current assets by approximately RMB98,142,000. These conditions, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt on the Jinzhou Target Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Review of interim comparative financial information

We have reviewed the interim comparative financial information of the Jinzhou 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 nine months ended 30 September 2019 and other explanatory information (the "Interim Comparative Financial Information"). The directors of the Company are responsible for the preparation of the Interim Comparative Financial Information in accordance with the basis ofpreparation set out in Note 2 to the Historical Financial Information. Our responsibility is to express a conclusion on the Interim Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2400 "Engagements to Review Historical Financial Statements" 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 Interim 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 2 to the Historical Financial Information.

Report on Matters under the rules governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provision) Ordinance

Adjustments

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

Dividends

We refer to Note 14 to the Historical Financial Information which contains information about the dividends paid by the Jinzhou Target Group in respect of the Relevant Periods.

Yours faithfully,

Elite Partners CPA Limited Certified Public Accountants Leung Man Kin

Practicing Certificate Number: P07174

Hong Kong, 26 March 2021

HISTORICAL FINANCIAL INFORMATION OF THE JINZHOU 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 financial statements of the Jinzhou 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 ("HKFRS") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and were audited by Elite Partners CPA Limited in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the "Underlying Financial Statements").

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

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME

Revenue

Leases Other income

Other gains and losses Employee benefits expenses Other operating expenses Changes in fair value of investment properties

OFPROFITOR

Year ended 31 December 2017 2018

Notes

LOSSANDOTHER

Nine months ended

30 September 2019 2019

RMB'000 (audited)RMB'000 (audited)RMB'000 RMB'000 (audited) (unaudited)

6 8 9

2020

RMB'000 (audited)

23,064

23,633

23,436

17,307 16,110
6,950
8,487
8,033 -
5,959 5,032

(355)

(1,632)

(1,380)

(1,612)

(1,156) (1,235)
(6,155)
(6,994)
(6,594)
(4,722) (4,844)
22,000
6,037
(12,124)
(3,175) (7,883)Profit before tax

Income tax (expense) credit

43,872

29,850

(5,500) (1,509)
11,139 3,031
- 14,213 7,180
- 794 1,971
  Profit for the year/periodOther comprehensive income
  (expense):
  Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations
  Other comprehensive income
  (expense) for the year/period
  11
38,372 28,341
14,170
- 15,007 9,151
24,497
(17,755)
(6,137)
- (11,554) 6,805
  24,497
  (17,755)
  (6,137)
- (11,554) 6,805
Total comprehensive income for the year/period
62,869 10,586

8,033

3,453 15,956

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2017 2018

Notes

RMB'000 RMB'000

2019

As at 30 September 2020

RMB'000

Non-current assets Property, plant and equipment Investment properties

16 17

139 691,000

69 702,000

703,000 699,000

691,139

Current assets Other receivables, deposits and prepayments Amounts due from fellow subsidiaries Bank balances and cash

702,069

19 20 21

703,071 699,080

1,420 686,977 8,900

1,481 724,713 1,155

1,535 1,299

717,331

2,092 791

697,297

727,349

720,958 2,090

Current liabilities Accrued liabilities and other payables Amounts due to fellow subsidiaries

Amount due to

Guangzhou Target

Company Amount due to the immediate holding company

Amount due to the ultimate controlling party

22 23

69,890 99,771

56,281 87,955

49,900 38,170

65,172

989,528

1,043,834

62,062

1,062,601

1,159,219

1,188,106

1,177,715

100,232

Net current liabilities

(461,922)

(460,757)

(456,757)

(98,142)

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

As at

As at 31 December 30 September 2017 2018 2019 2020

Notes
229,217	241,312	246,314	600,938
Non-current liabilities
Deferred tax liabilities	18	51,618	53,127	50,096	48,125
Net assets	177,599	188,185	196,218	552,813
Capital and reserves
Share capital	24	1	1	1	1
Reserves	177,598	188,184	196,217	552,812
Total equity	177,599	188,185	196,218	552,813
- IV-7 -

RMB'000 RMB'000 RMB'000 RMB'000

Total assets less current liabilities

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

STATEMENTS OF FINANCIAL POSITION OF SKY BUILDAs at 31 December 2017 2018

Notes

RMB'000 RMB'000

2019

As at 30 September 2020

RMB'000

Non-current assets Investment in a subsidiary

Current assets Amount due from a subsidiary

340,554

Current liabilities Amount due to the immediate holding company

Amount due to the ultimate controlling party

Net current (liabilities)

assets

(49)

(57)

(63) 340,554

Total assets less current liabilities

(49)

(57)

(63) 340,554

Net (liabilities) assets

(49)

(57)

(63) 340,554

Capital and reserves Share capital Reserves

1 (50)

1 (58)

(64) 340,553

Total equity

(49)

(57)

(63) 340,554

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

At 1 January 2017

Profit for the year Exchange differences on translation of foreign operations

Other comprehensive income for the yearTotal comprehensive income for the year

At 31 December 2017

Profit for the year Exchange differences on translation of foreign operations

Other comprehensive expense for the yearTotal comprehensive income for the year

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other
capital
Share Translation contribution
capital reserves reserve	earnings	Total
RMB'000 RMB'000 RMB'000	RMB'000	RMB'000
(Note)
124,064	114,730
38,372	38,372
-	24,497
-	24,497
38,372	62,869
162,436	177,599
28,341	28,341
-	(17,755)
-	(17,755)
28,341	10,586

Retained

1 -

(9,335)

24,497

15,162

(17,755)

- -

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

At 31 December 2018

Profit for the year Exchange differences on translation of foreign operations

Other comprehensive expense for the yearTotal comprehensive income for the year

At 31 December 2019

Profit for the period Exchange differences on translation of foreign operationsOther comprehensive expense for the period

Total comprehensive income for the periodCapitalisation of amount due to the immediate holding company

At 30 September 2020

Share Translation contribution
capital reserves reserve	earnings	Total
RMB'000 RMB'000 RMB'000	RMB'000	RMB'000
(Note)
190,777	188,185
14,170	14,170
-	(6,137)
-	(6,137)
14,170	8,033
204,947	196,218
9,151	9,151
-	6,805
-	6,805
9,151	15,956
-	340,639
214,098	552,813

Retained

1 -

(2,593)

(6,137)

(8,730)

6,805

Other capital

- -

- 340,639

(1,925) 340,639

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

Other capital


1	(2,593)	-
-	-	-
-	(11,554)	-
-	(11,554)	-
-	(11,554)	-
At 30 September 2019
(unaudited)	1	(14,147)	-

At 1 January 2019

(audited)

Profit for the period Exchange differences on translation of foreign operationsOther comprehensive expense for the period

Total comprehensive income for the period

Share Translation contribution	Retained
capital reserves reserve	earnings	Total
RMB'000 RMB'000 RMB'000	RMB'000	RMB'000
(Note)
190,777	188,185
15,007	15,007
-	(11,554)
-	(11,554)
15,007	3,453
205,784	191,638

Note: The other capital contribution reserve represents the capitalisation of the amount due to the immediate holding company.

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWSYear ended 31 December 2017 2018 2019

RMB'000 RMB'000 RMB'000 (audited) (audited) (audited)

Nine months ended

30 September 2019 2020

RMB'000 RMB'000 (unaudited) (audited)OPERATING ACTIVITIES Profit before tax Adjustments for: Changes in fair value of investment properties Depreciation of property, plant and equipment

Loss on disposal of property, plant and equipment Interest income

43,872

(22,000)

(8)

29,850

(6,037)

(39)

11,139

12,124

(4)

14,213 7,180
3,175 7,883

5 -

6 -

(1) (10)Operating cash flows before movements in working capital

Decrease (increase) in other receivables, deposits and prepayments

Decrease in accrued liabilities and other payables

21,944

2,756

(3,697)

23,853

(61)

(13,609)

23,273

(54)

(6,381)

17,392 15,059

284 236

(5,865) (11,730)Cash generated from operations

Interest received

21,003 8

10,183 39

16,838 4

11,811 3,565

1 10

Net cash from operating activities

21,011

10,222

16,842

11,812 3,575

Nine months ended

Year ended 31 December 30 September 2017 2018 2019 2019 2020

RMB'000 RMB'000 RMB'000 RMB'000 RMB'000

(audited) (audited) (audited) (unaudited) (audited)INVESTING ACTIVITIES Advances to fellow subsidiaries Repayment from fellow subsidiaries

(16,596)

(1,185)

(10,500) (10,500)

(1,800)

3,951

894

Acquisition of property, plant and equipment

(2)

(9)

(16)

(5)

(15)

Additions to investment properties

(4,963)

(13,124)

(4,175) (3,883)Net cash used in investing activities
(16,598)
(6,157)
(19,689)
(13,786) (5,698)FINANCING ACTIVITIES Advance from the ultimate controlling party Repayments to fellow subsidiaries Advances from fellow subsidiaries

(2,138)

(11,816)

6 - 3,778

6 -

8 -

3,778 814

Net cash (used in) from financing activities

(2,131)

(11,810)

3,784

3,784 822

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at

1 January

2,282 6,618

(7,745)

8,900

937 1,155

1,810 (1,301)

1,155 2,092

Cash and cash equivalents at

31 December/30 September, represented by bank balances and cash

8,900

1,155

2,092

2,965 791

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Sky Build Limited ("Sky Build") was incorporated in the British Virgin Islands (the "BVI") on 30 September 2009. The address of the Sky Build's registered office is P.O. Box 957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands.

Stone Wealth Limited is the immediate holding company of Sky Build. In the opinion of the sole director of Sky Build, the ultimate holding company of Sky Build is Apex Assure Limited, a company incorporated in the BVI with limited liability, and Mr. Dai Yongge, who is the sole director of Sky Build, is the ultimate controlling party of Sky Build.

Sky Build is an investment holding company. The principal activity of the Jinzhou Target Group is the development, lease and management of underground shopping mall in the People's Republic of China (the "PRC").

No statutory financial statements of Sky Build have been prepared since its date of incorporation as it is incorporated in the jurisdiction where there are no statutory audit requirements.

The Historical Financial Information is presented in RMB, which is the functional currency of the subsidiary carrying on the principal activities of the Jinzhou Target Group. Sky Build and its overseas subsidiaries' functional currency is Hong Kong dollar ("HKD"). Since the Jinzhou Target Group's operations are conducted in the PRC, the Jinzhou Target Group has adopted RMB as its presentation currency.

2. BASIS OF PREPARATION OF HISTORICAL FINANCIAL INFORMATION

The Historical Financial Information for the Relevant Periods has been prepared in accordance with the accounting policies set out in Note 4 which conform with HKFRSs issued by the HKICPA.

Going Concern Basis

As of 30 September 2020, the Jinzhou Target Group's current liabilities exceeded its current assets by

approximately RMB98,142,000. These conditions indicate the existence of a material uncertainty which may cast

significant doubt on the Jinzhou Target Group's ability to continue as a going concern. Therefore, the Jinzhou

Target Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Historical Financial Information has been prepared on a going concern basis, the validity of which

depends upon the financial support of the ultimate controlling party of Sky Build, at a level sufficient to finance

the working capital requirements of the Jinzhou Target Group. The ultimate controlling party has agreed to

provide adequate funds for the Jinzhou Target Group to meet its liabilities as they fall due. The sole director of

Sky Build is therefore of the opinion that it is appropriate to prepare the Historical Financial Information on a

going concern basis. Should the Jinzhou Target Group be unable to continue as a going concern, adjustments

would have to be made to the Historical Financial Information to adjust the value of the Jinzhou Target Group's

assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify

non-current assets and non-current liabilities as current assets and current liabilities, respectively. The effect of

these adjustments has not been reflected in the Historical Financial Information.

3. ADOPTION OF NEW AND AMENDMENTS TO HKFRSs

For the purpose of preparing and presenting the Historical Financial Information for the Relevant Periods, the Jinzhou Target Group has consistently applied the accounting policies which conform with HKFRSs, which are effective for the accounting period beginning on 1 January 2020 throughout the Relevant Periods, including HKFRS 9 Financial Instruments, HKFRS 15 Revenue from Contracts with Customers and HKFRS 16 Leases.

New and amendments to HKFRSs in issue but not yet effective:

The Jinzhou 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 the related Amendments1
Amendment to HKFRS 16	Covid-19-Related Rent Concessions2
Amendments to HKFRS 3	Reference to the Conceptual Framework3
Amendments to HKFRS 9,	Interest Rate Benchmark Reform - Phase 24
HKAS 39, HKFRS 7,
HKFRS 4 and HKFRS 16
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an Investor and its Associate
HKAS 28	or Joint Venture5
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 1 June 2020
3	Effective for annual periods beginning on or after 1 January 2022
4	Effective for annual periods beginning on or after 1 January 2021
5	Effective for annual periods beginning on or after a date to be determined

The sole director of Sky Build anticipates that the application of all the above new and amendments to HKFRSs will have no material impact on the Jinzhou Target Group's consolidated financial statements in the foreseeable future.

4. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information has been prepared in accordance with accounting policies which conform with HKFRSs. 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.

The Historical Financial Information have been prepared on the historical cost basis except for the investment properties which are measured at fair value at the end of each reporting period, as explained in the accounting policies set out 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 these consolidated financial statements is determined on such a basis, except for leasing transactions that are accounted for in accordance with 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 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 the investment properties which are transacted at fair value and a valuation technique that unobservable inputs is to be used to measure fair value in subsequent periods, the valuation technique is calibrated so that at initial recognition the results of the valuation technique equals 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 consolidated financial statements incorporate the financial statements of the Sky Build and entities controlled by Sky Build and its subsidiaries. Control is achieved when the Sky Build:

• 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 Jinzhou 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 Jinzhou Target Group obtains control over the subsidiary and ceases when the Jinzhou 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 statement of profit or loss and other comprehensive income from the date the Jinzhou Target Group gains control until the date when the Jinzhou Target Group ceases to control the subsidiary.

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

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

Revenue from contracts with customers

The Jinzhou Target Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation is transferred to the customer.

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

• the customer simultaneously receives and consumes the benefits provided by the Jinzhou Target Group's performance as the Jinzhou Target Group performs;
• The Jinzhou Target Group's performance creates or enhances an asset that the customer controls as the Jinzhou Target Group performs; or
• The Jinzhou Target Group's performance does not create an asset with an alternative use to the Jinzhou Target Group and the Jinzhou Target Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

A contract liability represents the Jinzhou Target Group's obligation to transfer goods or services to a customer for which the Jinzhou Target Group has received consideration (or an amount of consideration is due) from the customer.

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 Jinzhou 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 Jinzhou Target Group as a lessee

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-lease components, the Jinzhou Target Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Non-lease components are separated from lease component on the basis of their relative stand-alone prices.

Short-term leases and leases of low-value assets

The Jinzhou Target Group applies the short-term lease recognition exemption to leases of office equipment that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the recognition exemption for lease of low-value assets. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis or another systematic basis over the lease term.

Right-of-use assets

The cost of right-of-use asset includes:

• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, less any lease incentives received;
• any initial direct costs incurred by the Jinzhou Target Group; and
• an estimate of costs to be incurred by the Jinzhou Target Group in dismantling and removing the underlying assets, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

Except for those that are classified as investment properties and measured under fair value model, right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

Right-of-use assets in which the Jinzhou Target Group is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term are depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Jinzhou Target Group presents right-of-use assets that do not meet the definition of properties under development, completed properties held for sale and investment properties as a separate line item on the consolidated statement of financial position. The right-of-use assets that meet the definition of properties under development, completed properties held for sale and investment properties are presented within "properties under development", "completed properties held for sale" and "investment properties".

Refundable rental deposits

Refundable rental deposits paid are accounted under HKFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

Lease liabilities

At the commencement date of a lease, the Jinzhou Target Group recognises and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Jinzhou Target Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Jinzhou Target Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever:

• the lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment; or
• the lease payments change due to changes in market rental rates following a market rent review, in which cases the related lease liability is remeasured by discounting the revised lease payments using the initial discount rate.

The Jinzhou Target Group presents lease liabilities as a separate line item on the consolidated statements of financial position.

Lease modifications

The Jinzhou Target Group accounts for a lease modification as a separate lease if:

• the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
• the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Jinzhou Target Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Jinzhou Target Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant right-of-use asset. When the modified contract contains a lease component and one or more additional lease or non-lease components, the Jinzhou Target Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Jinzhou Target Group as a lessor

Classification and measurement of leases

Leases for which the Jinzhou 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. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and such costs are recognised as an expense on a straight-line basis over the lease term except for investment properties measured under fair value model.

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

Refundable rental deposits

Refundable rental deposits received are accounted for under HKFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments.

Sublease

When the Jinzhou Target Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

Lease modification

The Jinzhou Target Group accounts for a modification to an operating lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.

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.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Jinzhou Target Group's operations are translated into the presentation currency of the Jinzhou Target Group (i.e. Renminbi) using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of translation reserve.

On the disposal of a foreign operation (that is, a disposal of the Jinzhou Target Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of Sky Build are reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that does not result in the Jinzhou Target Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Jinzhou Target Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

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

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. 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 deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, except where the Jinzhou 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 rates (and tax laws) that have been enacted or substantively enacted by the end of each reporting period.

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

For the purposes of measuring deferred tax liabilities or deferred tax assets 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.

For the purposes of measuring deferred tax for leasing transactions in which the Jinzhou Target Group recognises the right-of-use assets and the related lease liabilities, the Jinzhou Target Group first determines whether the tax deductions are attributable to the right-of-use assets or the lease liabilities.

For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Jinzhou Target Group applies HKAS 12 Income Taxes requirements to right-of-use assets and lease liabilities separately. Temporary differences relating to right-of-use assets and lease liabilities are not recognised at initial recognition and over the lease terms due to application of the initial recognition exemption. Temporary differences arising from subsequent revision to the carrying amounts of right-of-use assets and lease liabilities, resulting from remeasurement of lease liabilities and lease modifications, that are not subject to initial recognition exemption are recognised on the date of remeasurement or modification.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the same taxation authority.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Government grants

Government grants are not recognised until there is reasonable assurance that the Jinzhou Target Group will comply with the conditions attaching to them and that the grants will be received.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Jinzhou Target Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Employee benefits

Retirement benefit costs and termination benefits

The Jinzhou Target Group participates in state-managed retirement benefit schemes, which are defined contribution schemes, pursuant to which the Jinzhou Target Group pays a fixed percentage of its qualifying staff's wages as contributions to the plans. Payments to such retirement benefit schemes are recognised as an expense when employees have rendered service entitling them to the contributions.

Short-term employee benefits

Short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognised as an expense unless another HKFRS requires or permits the inclusion of the benefit in the cost of an asset.

A liability is recognised for benefits accruing to employees (such as wages and salaries) after deducting any amount already paid.

Property, plant and equipment

Property, plant and equipment, including properties held for use in the production or supply of goods or services, or for administrative purposes other than construction in progress, are stated in the consolidated statements of financial position at cost less accumulated depreciation and accumulated impairment losses, if any.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Costs include any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and, for qualifying assets, borrowing costs capitalised in accordance with the Jinzhou Target Group's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Depreciation is recognised so as to write off the cost of items of property, plant and equipment other than construction in progress less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include leased properties which are being recognised as right-of-use assets upon application of HKFRS 16 and subleased by the Jinzhou Target Group under operating leases.

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

Gains or losses arising from changes in the fair value of investment property 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.

Impairment of property, plant and equipment and right-of-use assets

At the end of each reporting period, the Jinzhou Target Group reviews the carrying amounts of its property, plant and equipment and right-of-use assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset is estimated in order to determine the extent of the impairment loss (if any).

The recoverable amount of property, plant and equipment and right-of-use assets are estimated individually. When it is not possible to estimate the recoverable amount individually, the Jinzhou Target Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In addition, the Jinzhou Target Group assesses whether there is indication that corporate assets may be impaired. If such indication exists, corporate assets are also allocated to individual cash-generating units, when a reasonable and consistent basis of allocation can be identified, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Impairment loss, if any, for assets capitalised as contract costs is recognised to the extent the carrying amounts exceeds the remaining amount of consideration that the Jinzhou Target Group expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services that have not been recognised as expenses. The assets capitalised as contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. For corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis to a cash-generating unit, the Jinzhou Target Group compares the carrying amount of a group of cash-generating units, including the carrying amounts of the corporate assets or portion of corporate assets allocated to that group of cash-generating units, with the recoverable amount of the group of cash-generating units. In allocating the impairment loss, the impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit or the group of cash-generating units. The carrying amount of an asset is not reduced below the highest of its fair value less costs of disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit or a group of cash-generating units) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit or a group of cash-generating units) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Provisions

Provisions are recognised when the Jinzhou Target Group has a present obligation as a result of a past event, and it is probable that the Jinzhou Target Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Jinzhou Target Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

Financial assets and financial liabilities are initially measured at fair value except for accounts receivables arising from contracts with customers which are initially measured in accordance with HKFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets or financial liabilities at fair value through profit or loss ("FVTPL")) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in profit or loss.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash receipts and 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 asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Financial assets

Classification and subsequent measurement of financial

Financial assets that meet the following conditions 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.

Financial assets that meet the following conditions are subsequently measured at fair value through other comprehensive income ("FVTOCI"):

• the financial asset is held within a business model whose objective is achieved by both selling and collecting 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.

All other financial assets are subsequently measured at FVTPL, except that at the date of initial application of HKFRS 9/initial recognition of a financial asset, the Jinzhou Target Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if that equity investment is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which HKFRS 3 Business Combinations applies.

A financial asset is held for trading if:

• it has been acquired principally for the purpose of selling in the near term; or
• on initial recognition it is a part of a portfolio of identified financial instruments that the Jinzhou Target Group manages together and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.

In addition, the Jinzhou Target Group may irrevocably designate a financial asset that are required to be measured at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

(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.

(ii) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or designated as FVTOCI are measured at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset and is included in the "other gains and losses" line item.

Impairment of financial assets and other items subject to impairment assessment under HKFRS 9

The Jinzhou Target Group performs impairment assessment under expected credit loss ("ECL") model on financial assets (including accounts receivable (including lease receivables), other receivables, bank balances and cash and other financial assets) and financial guarantee contracts which are subject to impairment 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, 12-month ECL ("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. Assessment 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 Jinzhou Target Group always recognises lifetime ECL for accounts receivable. The ECL on these assets are assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings.

For all other instruments, the Jinzhou Target Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Jinzhou 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 has increased significantly since initial recognition, the Jinzhou 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 Jinzhou 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 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 the debtor's ability to meet its debt obligations;
• an actual or expected significant deterioration in the operating results of the debtor;

• 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 Jinzhou 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 Jinzhou Target Group has reasonable and supportable information that demonstrates otherwise.

Despite the aforegoing, the Jinzhou Target Group assumes that the credit risk on a debt instrument has not increased significantly since initial recognition if the debt instrument is determined to have low credit risk at the reporting date. A debt instrument is determined to have low credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Jinzhou Target Group considers a debt instrument to have low credit risk when it has an internal or external credit rating of 'investment grade' as per globally understood definitions.

The Jinzhou Target Group regularly monitors the effectiveness of the criteria used to identify whether there has been a 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 Jinzhou 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 Jinzhou Target Group, in full (without taking into account any collaterals held by the Jinzhou Target Group).

Irrespective of the above, the Jinzhou Target Group considers that default has occurred when a financial asset is more than 90 days past due unless the Jinzhou 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 of default 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:

(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
(c) 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; or
(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.

(iv) Write-off policy

The Jinzhou 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 Jinzhou 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 adjusted by 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 Jinzhou Target Group in accordance with the contract and the cash flows that the Jinzhou Target Group expects to receive, discounted at the effective interest rate determined at initial recognition.

Where ECL is measured on a collective basis or cater for cases where evidence at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:

• Nature of financial instruments;
• Past-due status;
• Nature, size and industry of debtors; and
• External credit ratings where available.

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

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 Jinzhou Target Group recognises an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of accounts receivable and other non-trade receivables where the corresponding adjustment is recognised through a loss allowance account.

Derecognition of financial assets

The Jinzhou Target Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Jinzhou Target Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Jinzhou Target Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Jinzhou Target Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Jinzhou Target Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

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 and receivable is recognised in profit or loss.

Financial liabilities and equity

Classification as debt or equity

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

Equity instruments

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

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

Financial liabilities at amortised cost

Financial liabilities including borrowings and other payables are subsequently measured at amortised cost, using the effective interest method.

Offsetting a financial asset and a financial liability

A financial asset and a financial liability are offset and the net amount presented in the consolidated statements of financial position when, and only when, the Jinzhou Target Group currently has a legally enforceable right to set off the recognised amounts; and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Derecognition of financial liabilities

The Jinzhou Target Group derecognises financial liabilities when, and only when, the Jinzhou 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.

5. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Jinzhou Target Group's accounting policies, which are described in Note 4, the sole director of Sky Build is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying 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 which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revisions affects both current and future periods.

Critical judgement in applying accounting policies

The following is the critical judgements, apart from those involving estimations (see below), that the sole director of Sky Build has made in the process of applying the Jinzhou 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

The Jinzhou Target Group recognises deferred tax in respect of the changes in fair value of the investment properties based on directors' best estimate assuming future tax consequences through usage of such properties for rental purpose, rather than through sale. The final tax outcome could be different from the deferred tax liabilities recognised in the Historical Financial Information should the investment properties are subsequently disposed of by the Jinzhou Target Group, rather than consumed substantially all of the economic benefits embodied in the investment properties by leasing over time. In the event the investment properties are being disposed of, the Jinzhou Target Group may be liable to higher tax upon disposal considering the impact of land appreciation tax.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of each 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

As at 31 December 2017, 2018, 2019 and 30 September 2020, the Jinzhou Target Group's investment properties are stated at fair value of approximately RMB691,000,000, RMB702,000,000, RMB703,000,000 and RMB699,000,000 based on the valuations performed by independent qualified professional valuers. In determining the fair values, the valuers have made reference to market evidence of transaction prices for similar properties in the same location and conditions and where appropriate by capitalisation of rental income from properties.

In relying on the valuations, the management of the Jinzhou Target Group has exercised their judgments and is satisfied that the valuation technique used is reflective of the current market conditions. Details of the investment properties are disclosed in Note 17.

6. REVENUE

Nine months endedYear ended 31 December

30 September

2017	2018	2019	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(audited)	(audited)	(audited)	(unaudited)	(audited)
Rental income from investment
properties that is fixed	23,064	23,633	23,436	17,307	16,110

7. SEGMENT REPORTING

Information reported to the Jinzhou Target Group's senior executive management, being the chief operating decision maker, for the purposes of resource allocation and assessment focuses on revenue analysis by products and services. No other discrete financial information is provided other than the Jinzhou Target Group's results and financial position as a whole. Accordingly, only entity-wide disclosures and major customers are presented.

The Jinzhou Target Group's operation is located in the PRC, therefore no geographical segment reporting is presented.

Information about major customers

For the years ended 31 December 2017, 2018, 2019 and nine months ended 30 September 2019 and 2020, no single customer contributes 10% or more of the total revenue of the Jinzhou Target Group.

8.	OTHER INCOME
2017	2018	2019	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(audited)	(audited)	(audited)	(unaudited)	(audited)
Bank Interest income	8	39	4	1	10
Revenue from property management
and relevant service	6,934	8,436	8,016	5,951	4,806
Sundry income	8	12	13	7	216
6,950	8,487	8,033	5,959	5,032
9.	OTHER GAINS AND LOSSES
Net foreign exchange (losses) gains

Nine months ended

Year ended 31 December

30 September

Nine months endedYear ended 31 December

30 September

2017	2018	2019	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(audited)	(audited)	(audited)	(unaudited)	(audited)
(355)	67	-	-	-

10. INCOME TAX EXPENSE (CREDIT)

Nine months endedYear ended 31 December

30 September

2017	2018	2019	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(audited)	(audited)	(audited)	(unaudited)	(audited)
Current tax
- PRC Enterprise Income Tax
("EIT ")	-	-	-	-	-
Deferred tax	5,500	1,509	(3,031)	(794)	(1,971)
5,500	1,509	(3,031)	(794)	(1,971)

No provision for Hong Kong Profits Tax has been made as the Jinzhou Target Group did not earn any income subject to Hong Kong Profits Tax during the Relevant Periods.

EIT

Pursuant to the Enterprise Income Tax Law of the PRC, the Jinzhou Target Group's main operating companies were subject to PRC EIT at a rate of 25% during the Relevant Periods.

The income tax expense (credit) for the Relevant Periods can be reconciled to the profit before tax per the consolidated statements of profit or loss and other comprehensive income are as follows:

Nine months ended

Year ended 31 December 30 September

2017

2018

2019 2019

2020

RMB'000 (audited)

RMB'000 RMB'000 (audited) (unaudited)

RMB'000 (audited)

Profit before tax

43,872

29,850

11,139

14,213 7,180

Tax at the applicable PRC

EIT rate of 25%

Tax effect of expenses not deductible for tax purposes Tax effect of income not taxable for tax purposes Utilisation of tax losses previously not recognised

10,968 1,391

7,463 1,620

2,785 1,127

3,553 1,795

104 104

(5,116)

(5,016)

(5,252)

(3,737)

(3,840)

(1,743)

(2,558)

(1,691)

(714)

(30)Income tax expense (credit) for the year/period

5,500

1,509

(3,031)

(794)

(1,971)

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

11. PROFIT FOR THE YEAR/PERIOD
Profit for the year/period has been arrived at after charging
(crediting):
Directors' emoluments (Note 12) Other staff costs:
- - Salaries, allowances and benefits in kind
- - Retirement benefit scheme contributions
Year ended 31 DecemberNine months ended
30 September
2017
2018
2019
2019
2020
RMB'000 (audited)
RMB'000 (audited)
RMB'000 (audited)
RMB'000 (unaudited)
RMB'000 (audited)
-
-
-
-
-
1,269
1,087
1,313
969 1,038
363
293
299
186 197
Total staff costs
1,632
1,380
1,612
1,155 1,235
Depreciation of property, plant and equipment
Expenses related to short-term lease Gross rental income from investment properties less direct operating expenses
12. DIRECTOR'S REMUNERATION

Mr. Dai Yougge Fees

Other emoluments

Salaries, allowances and benefits in kind

Retirement benefit scheme contributions

80 14

79 31

(23,064)

(23,633)

Year ended 31 December

6 55

5 6

53 46

(23,436)

(17,307)

(16,110)

Nine months ended

30 September

2017	2018	2019	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(audited)	(audited)	(audited)	(unaudited)	(audited)
-	-	-	-	-
-	-	-	-	-
-	-	-	-	-
-	-	-	-	-

The director's emoluments shown above was for his services in connection with the management of the affairs of the Jinzhou Target Group.

13. EMPLOYEES' REMUNERATION

The five highest paid employees of the Jinzhou Target Group during the Relevant Periods included 5 employees for the years ended 31 December 2017, 2018 and 2019, and for the nine months ended 30 September 2019 (unaudited) and 2020 are as follows:

Nine months endedYear ended 31 December

30 September

Salaries, allowances and benefits in

2017	2018	2019	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
(audited)	(audited)	(audited)	(unaudited)	(audited)
kind	393	347	387	290	276
Retirement benefit scheme
contributions	53	46	46	34	34
Total	446	393	433	324	310

The number of the five highest paid employees whose remuneration fell within the following bands is as follows:

No. of employees

Six months ended

14.

HKD nil to HKD1,000,000

DIVIDENDS

Year ended 31 December	30 June
2017 2018 2019	2019	2020
(audited) (audited) (audited)	(unaudited)	(audited)
5	5

No dividend was paid or proposed for ordinary shareholders of Sky Build during the Relevant Periods.

15. EARNINGS PER SHARE

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

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

16.	PROPERTY, PLANT AND EQUIPMENT
Office equipment
RMB'000
Cost
At 1 January 2017	1,089
Addition	2
At 31 December 2017	1,091
Addition	9
At 31 December 2018	1,100
Addition	16
Disposal	(161)
At 31 December 2019	955
Addition	15
At 30 September 2020	970
Accumulated depreciation
At 1 January 2017	872
Provided for the year	80
At 31 December 2017	952
Provided for the year	79
At 31 December 2018	1,031
Provided for the year	6
Eliminated on disposals	(153)
At 31 December 2019	884
Provided for the period	6
At 30 September 2020	890
Carrying values
At 30 September 2020	80
At 31 December 2019	71
At 31 December 2018	69
At 31 December 2017	139

The above items of property, plant and equipment are depreciated, after taking into account of their estimated residual values, on a straight-line method, at the following rates per annum:

Office equipment

20%

17. INVESTMENT PROPERTIES

During the Relevant Periods, the Jinzhou Target Group leases out various shop and venue spaces under operating leases with rentals payable monthly. The leases typically run for an initial period of 1 to 2 years. The annual lease payment are fixed.

The Jinzhou Target Group is not exposed to foreign currency risk as a result of the lease arrangements as all leases are denominated in RMB, which functional currencies of ᎀψྗཱུʮ΍ண݄၍ଣϞࠢʮ̡ ("Jinzhou Target Company"). The lease contracts do not contain residual value guarantee or lessee's option to purchase the property at the end of lease term.

For the years ended 31 December 2017, 2018, 2019 and nine months ended 30 September 2020, the total cash inflow for leases are RMB24,309,000, RMB22,733,000, RMB24,340,000 and RMB5,600,000 respectively.

Investment properties RMB'000

Fair value

At 1 January 2017 669,000

Changes in fair value recognised in profit or loss 22,000

At 31 December 2017 691,000

Addition 4,963

Changes in fair value recognised in profit or loss 6,037

At 31 December 2018 702,000

Addition 13,124

Changes in fair value recognised in profit or loss (12,124)

At 31 December 2019 703,000

Addition 3,883

Changes in fair value recognised in profit or loss (7,883)At 30 September 2020

699,000

2017

As at 31 December 2018

2019

As at 30 September 2020

RMB'000

Unrealised losses on investment properties revaluation included in profit or loss

22,000

6,037

(12,124)

(7,883)The fair value of the Jinzhou Target Group's investment properties as at 31 December 2017, 2018 and 2019 and 30 September 2020 has been arrived at on the basis of a valuation carried out on the respective dates by Norton Appraisals Limited, an independent qualified professional valuer not connected to the Jinzhou Target Group.

In determining the fair value of the investment properties, the Jinzhou Target Group engages the independent qualified professional valuer to perform the valuation. The management of the Jinzhou Target Group works closely with them to establish the appropriate valuation techniques and inputs to the model and explain the cause of fluctuations in the fair value of the investment properties to the sole director of the Jinzhou Target Group.

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

There has been no change from the valuation technique used during the years ended 31 December 2017, 2018, 2019 and 30 September 2020. In estimating the fair values of the investment properties for disclosure purpose, the highest and the best use of the investment properties is their current use. The fair values of certain investment properties have been adjusted to exclude prepaid or accrued operating lease income to avoid double counting.

The following table presents the fair value of the Jinzhou Target Group's investment properties measured at the end of each reporting period on a recurring basis, categorised into the level 3 fair value hierarchy as defined in HKFRS 13. The level into which a fair value measurement is classified is determined with reference to the observability and significance of the inputs used in the valuation technique as follows:

Valuation
Investment properties	technique
Shopping Mall in the	Income
PRC	capitalisation
approach

Significant unobservable input(s)

Capitalisation rate, taking into account the capitalisation of rental, income potential, nature of property, and prevailing market condition, of 4.0%, 4.0%, 4.0%, 4.0%,as at 31 December 2017, 2018, 2019 and 30 September 2020.

Relationship of unobservable inputs to fair value

The higher the capitalisation rate, the lower the fair value.

Monthly market rent, taking into account the differences in location, and individual factor, such as frontage and size, between the comparables and the property.

A significant increase in the market rent used result in significant increase in fair value, and vice versa.

Reversionary yield is the rate taking into account the capitalisation of rental income potential, nature of the property and prevailing market condition. Market rent per square foot is the market rent taking into account the direct comparable market transactions to the related properties.

In estimating the fair value of investment properties, the highest and best use of the investment properties is their current use.

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

18.

DEFERRED TAXATION

For the presentation purposes of the consolidated statements of financial position, certain deferred taxation assets

(liabilities) have been offset. The following is an analysis of the deferred taxation balances for financial reporting purposes:

Deferred tax assets Deferred tax liabilities

RMB'000

- (51,618)

As at 31 December

2018

RMB'000

2017

(51,618)

As at
30 September
2019	2020
RMB'000	RMB'000
-	-
(53,127)	(50,096)	(48,125)
(53,127)	(50,096)	(48,125)

The components of deferred tax assets (liabilities) recognised in the consolidated statements of financial position and the movements during the Relevant Periods were as follows:

Revaluation of
investment
properties
RMB'000
At 1 January 2017	46,118
Charged to profit or loss	5,500
At 31 December 2017	51,618
Charged to profit or loss	1,509
At 31 December 2018	53,127
Charged to profit or loss	(3,031)
At 31 December 2019	50,096
Charged to profit or loss	(1,971)
At 30 September 2020	48,125

As at 31 December 2017, 2018, 2019 and 30 September 2020, the Jinzhou Target Group has estimated unused tax losses of approximately RMB27,544,000, RMB18,485,000, RMB10,681,000 and RMB10,563,000 available to offset against future profits respectively. No deferred tax assets have been recognised in respect of the tax losses because the management is of the view that it is not probable that the individual subsidiaries concerned can generate profits to utilise the tax losses before the tax losses become expired. The unrecognised tax losses of RMB27,544,000, RMB18,485,000, RMB10,681,000 and RMB10,563,000 as at 31 December 2017, 2018, 2019 and 30 September 2020 will expire from 2017 to 2020.

19. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS
As at
2017
As at 31 December 2018
2019
30 September 2020
RMB'000
RMB'000
RMB'000
RMB'000
Other receivables Deposits
Other tax prepayments (Note)
207 300 913
225 400 856
288 477
400 400
847 422
1,420
1,481
1,535 1,299
Note:
Other tax prepayments mainly represent prepayment of value-added tax.
20. AMOUNTS DUE FROM FELLOW SUBSIDIARIES
The amounts are unsecured, interest free and repayable on demand.

21. BANK BALANCES AND CASH

Bank balances carry interest at market rates which range from 0.3% to 0.35% during the Relevant Periods.

The bank balances, including time deposits with original maturities less than 3 months, carry interest at prevailing market rates per annum.

During the Relevant Periods, the Jinzhou Target Group performed impairment assessment on bank balances and concluded that the probability of defaults of the counterparty banks are insignificant and accordingly, no allowance for credit losses is provided.

23. AMOUNTS DUE TO FELLOW SUBSIDIARIES/GUANGZHOU TARGET COMPANY/THE IMMEDIATE HOLDING COMPANY/THE ULTIMATE CONTROLLING PARTY

22.


Construction payables	47,923
Receipt in advance	19,243
Other tax payable	66
Other payables	98
Deposits received from customers	2,560
69,890

ACCRUED LIABILITIES AND OTHER PAYABLES
As at
As at 31 December	30 September
2017	2018	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000
35,584	28,442	28,979
17,873	18,524	6,441
43	51	44
63	65	60
2,718	2,818	2,646
56,281	49,900	38,170

The amounts are unsecured, interest free and repayable on demand.

24. SHARE CAPITAL

As at

2017

As at 31 December 2018

2019

30 September 2020

RMB'000

Authorised: 50,000 ordinary shares at United States

Dollar ("US$") 1 each

343

343 343

Issued and fully paid: 1 ordinary share at US$1 each

1 1

25. OPERATING LEASES

The Jinzhou Target Group as lessor

Nine months endedYear ended 31 December

30 September

2017

2018

2019

2020

RMB'000 (audited)

RMB'000 (unaudited)

RMB'000 (audited)

Property rental income, net of negligible outgoings under operating leases during the year

23,064

23,633

23,436

17,307

16,110

At the end of each Relevant Periods, the Jinzhou Target Group had contracted with tenants for the following future minimum lease payments:

As at
As at 31 December	30 September
2017	2018	2019	2020
RMB'000	RMB'000	RMB'000	RMB'000
Within one year	19,084	18,297	19,570	1,646
In the second to fifth year
inclusive	-	-	53	-
19,084	18,297	19,623	1,646

Property rental income represents rentals receivable by the Jinzhou Target Group. Leases are negotiated for a term ranging from 1 to 2 years with fixed rentals.

26. RELATED PARTY DISCLOSURES
Compensation of key management personnel
The remuneration of the sole director of Sky Build, being the key management personnel, are set out in
Note 12.
27. CAPITAL RISK MANAGEMENT
The Jinzhou Target Group manages its capital to ensure that entities in the Jinzhou Target Group will be able to continue as a going concern while maximising the return to shareholders, to support the Jinzhou Target Group's stability and growth, and to strengthen the Jinzhou Target Group's financial management capability.
The capital structure of the Jinzhou Target Group consists of net debts, net of bank balances and cash and equity attributable to owner of Sky Build, comprising issued share capital and other reserves.
The sole director actively and regularly reviews its capital structure and make adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Jinzhou Target Group may adjust the dividend payables to shareholders, issue new shares or raise and repay debts. The Jinzhou Target Group's capital management objectives, policies or processes were unchanged during the Relevant Periods.

28. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments
As at
2017
As at 31 December 2018
2019
30 September 2020
RMB'000
RMB'000
RMB'000
RMB'000
Financial assets Amortised cost
696,084
726,093
719,711 1,268
Financial liabilities Amortised cost
1,137,350
1,167,472
1,156,322 91,101
(b) Financial risk management objectives and policies
The Jinzhou Target Group's major financial instruments include other receivables, amounts due from fellow subsidiaries, bank balances and cash, other payables, amounts due to fellow subsidiaries/ultimate holding company/ultimate controlling party. The risks associated with these financial instruments include market risk (interest rate risk), credit risk and liquidity risk. 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 on a timely and effective manner.
Market risk
Interest rate risk

The Jinzhou Target Group is also exposed to cash flow interest rate risk in relation to variable-rate bank balances as disclosed in Note 21.

The Jinzhou Target Group manages its interest rate exposures by assessing the potential impact arising from any interest rate movements based on interest rate level and outlook.

No sensitivity analysis presented for the Jinzhou Target Group's exposure to variable-rate bank balances as the management considers that the exposure to these risks for bank balances are insignificant.

Credit risk and impairment assessment

Credit risk refers to the risk that the Jinzhou Target Group's counterparties default on their contractual obligations resulting in financial losses to the Jinzhou Target Group. The Jinzhou Target Group's credit risk exposures are primarily attributable to accounts receivable, other receivables, bank balances and cash. The Jinzhou Target Group does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

The Jinzhou Target Group performed impairment assessment for financial assets under ECL model. Information about the Jinzhou Target Group's credit risk management, maximum credit risk exposures and the related impairment assessment, if applicable, are summarised as below:

Other receivables

For other receivables, the sole director of Sky Build makes periodic individual assessment on the recoverability of other receivables based on historical settlement records, past experience, and also quantitative and qualitative information that is reasonable and supportive forward-looking information. The Jinzhou Target Group also actively monitors the outstanding amounts owed by eachdebtor and uses internal credit rating to assess whether credit risk has increased significantly since initial recognition.

Amount due from fellow subsidiaries

In determining the ECL for amount due from fellow subsidiaries, the management considers the probability of default is negligible as fellow subsidiaries has the financial capacity to meet its contractual cash flow obligations in the near term, and conduced that the credit risk is insignificant. Accordingly, no loss allowance was made in the financial statements.

Bank balances and cash

Bank balances and cash are mainly placed with state-owned financial institutions and reputable banks which are all high-credit-quality financial institutions, therefore the Jinzhou Target Group's credit risk on liquid funds is limited.

Liquidity risk

Liquidity risk is the risk that the Jinzhou Target Group will not be able to meet its financial obligations as they fall due. The Jinzhou Target Group's policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from banks to meet its liquidity requirements in the short and longer term.

Ultimate responsibility for liquidity risk management rests with the sole director, which has established an appropriate liquidity risk management framework for the management of the Jinzhou Target Group's short-, medium- and long- term funding and liquidity management requirements. The Jinzhou Target Group manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The remaining contractual maturities at as at 31 December 2017, 2018, 2019 and 30 September 2020 of the Jinzhou Target Group's financial liabilities, which are based on contractual undiscounted cash flows and the earliest date that the Jinzhou Target Group can be required to pay, are within one year or on demand.

29. RETIREMENT BENEFIT SCHEMES

The Jinzhou Target Group has retirement plans covering a substantial portion of its employees. The principal plans are defined contribution plans.

The Jinzhou Target Group's subsidiary in the PRC, in compliance with the applicable regulations of respective jurisdictions, participated in various pension schemes operated by the relevant municipal and provincial governments. This subsidiary is required to make defined contributions to these schemes at a fixed percentage of their covered payroll. The Jinzhou Target Group has no other obligations for the payment of its staff's retirement and other post-retirement benefits other than the contributions described above.

The total contributions in respect of the year ended 31 December 2017, 2018, 2019 and the nine months ended 30 September 2019 and 2020 charged to consolidated statement of profit or loss and other comprehensive income amount to RMB363,000, RMB293,000, RMB299,000, RMB186,000 and RMB197,000 respectively.

30. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Jinzhou Target Group'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 Jinzhou Target Group's consolidated statement of cash flows from financing activities:

Amount due to	Amount due to	Amount due to
Amounts due	Guangzhou	immediate	ultimate
to fellow	Target	holding	controlling
subsidiaries	Company	company	party
RMB'000	RMB'000	RMB'000	RMB'000
At 1 January 2017	101,909	-	1,064,455	25
Financing cash flows	(2,138)	-	-	7
Non-cash transactions
Foreign exchange translation	-	-	(74,927)	(2)
At 31 December 2017	99,771	-	989,528	30
Financing cash flows	(11,816)	-	-	6
Non-cash transactions
Foreign exchange translation	-	-	54,306	-
At 31 December 2018	87,955	-	1,043,834	36
Financing cash flows	3,778	-	-	6
Non-cash transactions
Offset to amounts due from fellow
subsidiaries	(26,561)	-	-	-
Foreign exchange translation	-	-	18,767	-
At 31 December 2019	65,172	-	1,062,601	42
Financing cash flows	814	-	-	8
Non-cash transactions
Offset to amounts due from fellow
subsidiaries	(3,924)	-	(701,199)	-
Capitalisation to equity	-	-	(340,590)	(49)
Transfer	(62,062)	62,062	-	-
Foreign exchange translation	-	-	(20,812)	(1)
At 30 September 2020	-	62,062	-	-
At 1 January 2019	87,955	-	1,043,834	36
Financing cash flows	3,778	-	-	6
Non-cash transactions
Offset to amounts due from fellow
subsidiaries	(15,030)	-	-	-
Foreign exchange translation	-	-	35,336	1
At 30 September 2019 (unaudited)	76,703	-	1,079,170	43
- IV-43 -

APPENDIX IVACCOUNTANTS' REPORT OF THE JINZHOU TARGET GROUP

31. INTERESTS IN SUBSIDIARIES
Details of Sky Build's subsidiaries as at 31 December 2017, 2018, 2019 and 30 September 2020 are as follows:
Name of subsidiaryIssued and fully paid
Place of share capital/ incorporation or registered establishment/ and paid-up
operation
capitalEffective equity interest attributable to Sky BuildAs at 31 December 2017 2018
Principal activities
As at 30
2019
September 2020
New Full LimitedJinzhou Target Company*Hong Kong
Hong Kong
Dollar (HKD) 1
The PRC
USD49,800,000
100%
100%
- 100% 100% Investment holding
  100%
  100%
- 100% 100% Development, lease and management of underground shopping mall
*Established as a wholly foreign owned enterprise in the PRC.
32. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Jinzhou Target Group, Sky Build or any of its subsidiaries have been prepared in respect of any period subsequent to 30 September 2020.

The following is the text of a report set out on pages V-1 to V-49, received from Elite Partners CPA Limited, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, for the purpose of incorporation in this circular.

ACCOUNTANT'S REPORT ON HISTORICAL FINANCIAL INFORMATION OF SUPERB POWER ENTERPRISES LIMITED

TO THE DIRECTORS OF TAI UNITED HOLDINGS LIMITED

Introduction

We report on the historical financial information of Superb Power Enterprises Limited ("Superb Power") and its subsidiaries (together, the "Guangzhou Target Group") set out on pages V-1 to V-49, which comprises the consolidated statements of financial position of the Guangzhou Target Group at 31 December 2017, 2018 and 2019, and 30 September 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 Guangzhou Target Group for each of the three years ended 31 December 2019 and the nine months ended 30 September 2020 (the "Relevant Periods") and a summary of significant accounting policies and other explanatory information (together, the "Historical Financial Information"). The Historical Financial Information set out on pages V-1 to V-49 forms an integral part of this report, which has been prepared for inclusion in the circular of Tai United Holdings Limited (the "Company") dated 26 March 2021 (the "Circular") in connection with the very substantial acquisition of shopping mall businesses in the PRC by the Company.

Directors' responsibility for the Historical Financial Information

The directors of the Company are responsible for the contents of this Circular in which the Historical Financial Information of the Guangzhou 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 (the "HKICPA"). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

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

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 Guangzhou Target Group's financial position at 31 December 2017, 2018 and 2019 and 30 September 2020 and of the Guangzhou Target Group's financial performance and cash flows for the Relevant Periods in accordance with the basis of preparation set out in Note 2 to the Historical Financial Information.

Material uncertainty related to going concern

We draw attention to Note 2 to the Historical Financial Information, which indicates that as of 30 September 2020, the Guangzhou Target Group's current liabilities exceeded its current assets by approximately RMB188,011,000. These conditions, along with other matters as set forth in Note 2, indicate the existence of a material uncertainty which may cast significant doubt on the Guangzhou Target Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Review of interim comparative financial information

We have reviewed the interim comparative financial information of the Guangzhou 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 nine months ended 30 September 2019 and other explanatory information (the "Interim Comparative Financial Information"). The Directors of the Company are responsible for the preparation of the Interim Comparative Financial Information in accordance with the basis of preparation set out in Note 2 to the Historical Financial Information. Our responsibility is to express a conclusion on the Interim Comparative Financial Information based on our review. We conducted our review in accordance with Hong Kong Standard on Review Engagements 2400 "Engagements to Review Historical Financial Statements" 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 Interim 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 2 to the Historical Financial Information.

Report on Matters under the rules governing the Listing of Securities on the Stock Exchange and the Companies (Winding Up and Miscellaneous Provision) Ordinance

Adjustments

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

Dividends

We refer to Note 14 to the Historical Financial Information which contains information about the dividends paid by the Guangzhou Target Group in respect of the Relevant Periods.

Yours faithfully,

Elite Partners CPA Limited Certified Public Accountants Leung Man Kin

Practicing Certificate Number: P07174

Hong Kong, 26 March 2021

HISTORICAL FINANCIAL INFORMATION OF GUANGZHOU 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 financial statements of the Guangzhou 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 Hong Kong Institute of Certified Public Accountants (the "HKICPA") and were audited by Elite Partners CPA Limited in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the "Underlying Financial Statements").

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

APPENDIX VACCOUNTANTS' REPORT OF THE GUANGZHOU TARGET GROUPCONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes

Revenue 6

Contracts with customers

Leases

Total

Other income 8 Employee benefits expenses

Other operating expenses Changes in fair value of investment properties

Finance costs 9

Profit before tax

Income tax (expense) credit 10

Profit for the year/period 11

Other comprehensive income

(expense):

Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations

Other comprehensive income

(expense) for the year/periodTotal comprehensive income for the year/period

RMB'000 (audited)

- 14,106 14,106 120,291 (8,031) (16,221)

43,746 (80,340)

(10,937) (7,977) 250

23,178

73,551

85,792 35,655

23,178

62,614 52,455 31,885

Year ended 31 December
2017 2018	2019	2020
RMB'000	RMB'000
(unaudited)	(audited)
-	-
10,051	4,265
10,051	4,265
108,287	89,106
(5,675)	(4,987)
(12,085)	(7,970)
(1,000)	(6,000)
(73,422)	(73,257)
26,156	1,157
250	1,500
26,406	2,657
(10,933)	6,439
(10,933)	6,439
15,473	9,096

30 September

RMB'000 (audited)

8,972

12,477 14,115
21,449 14,115
179,435 141,465
- (8,401) (7,335)
- (15,838) (17,946)

32,000 (1,000) (148,213) (97,664)

60,432 31,635

(16,800) (5,806)
(16,800) (5,806)

Nine months ended

2019

RMB'000 (audited)

26,079

APPENDIX VACCOUNTANTS' REPORT OF THE GUANGZHOU TARGET GROUPCONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2017 2018

Notes

RMB'000 RMB'000

2019

As at 30 September 2020

RMB'000

Non-current assets Property, plant and equipment Investment properties

16 17

677 1,969,000

450 2,001,000

651

480

2,000,000 1,994,000
1,969,677
2,001,450
2,000,651 1,994,480

Current assets Inventories Accounts receivable Other receivables,

deposits and

prepayments Amount due from the

immediate holding

company

Amount due from

Jinzhou Target

Company Amounts due from

fellow subsidiaries Bank balances and cash

19 20

91 1,303

63 1,143

24,983

62 55

1,089 771

11,244

102,436

23 24

11,228 11,445

108,058

110,001

- 2,575,385 2,943

- 2,751,169 3,423

- 1,835,202 5,988

62,062 1,482,441 3,571

2,707,141

2,875,100

Current liabilities Accrued liabilities and other payables Amounts due to fellow subsidiaries

Amount due to the immediate holding company

Amount due to the ultimate controlling party

Borrowings - current

25 26

317,601 288,968
553,570 1,756,763

1,963,570

1,560,345

315,829 801,720

378,356

28 29

41 1,018,500

56 20,000

30,000 1,370,000

1,889,752 2,065,829

1,147,671 1,748,356

APPENDIX VACCOUNTANTS' REPORT OF THE GUANGZHOU TARGET GROUPAs at

As at 31 December 30 September 2017 2018 2019 2020

Notes
817,389	809,271	815,899	(188,011)
Total assets less current
liabilities	2,787,066	2,810,721	2,816,550	1,806,469
Non-current liabilities
Deferred tax liabilities	18	377,690	385,690	385,440	383,940
Borrowings	29	1,380,000	1,360,000	1,340,000	-
1,757,690	1,745,690	1,725,440	383,940
Net assets	1,029,376	1,065,031	1,091,110	1,422,529
Capital and reserves
Share capital	30	1	1	1	1
Reserves	1,029,375	1,065,030	1,091,109	1,422,528
Total equity	1,029,376	1,065,031	1,091,110	1,422,529
- V-7 -

RMB'000 RMB'000 RMB'000 RMB'000

Net current assets

(liabilities)

APPENDIX VACCOUNTANTS' REPORT OF THE GUANGZHOU TARGET GROUPSTATEMENTS OF FINANCIAL POSITION OF SUPERB POWERAs at 31 December 2017 2018

Notes

RMB'000 RMB'000

2019

As at 30 September 2020

RMB'000

Non-current assets Investment in a subsidiary

Current liabilities Amount due from a subsidiary

322,197

Current liabilities Amount due to the immediate holding company

Amount due to the ultimate controlling party

Net current (liabilities)

assets

(54)

(62)

(69) 322,197

Total assets less current liabilities

(54)

(62)

(69) 322,197

Net liabilities

(54)

(62)

(69) 322,197

Capital and reserves Share capital Reserves

1 (55)

1 (63)

(70) 322,196

Total equity

(54)

(62)

(69) 322,197

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Tai United Holdings Limited published this content on 26 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2021 12:14:05 UTC.

Market Closed - Hong Kong S.E. Other stock markets 01:38:03 28/03/2024 pm IST			5-day change	1st Jan Change
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23/04	Pang Da Yong signed an agreement to acquire Wide Flourish Investments Limited from Tai United Holdings Limited for £50 million.	CI
27/03	Tai United Holdings Limited Announces Delay in Publication of Audited Consolidated Annual Results for the Year Ended 31 December 2023	CI

Pang Da Yong signed an agreement to acquire Wide Flourish Investments Limited from Tai United Holdings Limited for £50 million.	23/04	CI
Tai United Holdings Limited Announces Delay in Publication of Audited Consolidated Annual Results for the Year Ended 31 December 2023	27/03	CI
Tai United Holdings Limited Reports Earnings Results for the Half Year Ended June 30, 2023	30/23/30	CI
Tai United Expects Significantly Higher H1 Loss	29/23/29	MT
Tai United Holdings Limited Announces Executive Changes with Effect from August 4, 2023	04/23/04	CI
Tai United Holdings Limited Announces Board and Committee Changes	07/23/07	CI
Tai United Holdings Limited Announces Retirement of Xiao Yiqun as Non-Executive Director	27/23/27	CI
Tai United Holdings Limited Auditor Raises 'Going Concern' Doubt	28/23/28	CI
Tai United Holdings Limited Reports Earnings Results for the Full Year Ended December 31, 2022	14/23/14	CI
Tai United Expects Surge in 2022 Pre-Tax Loss	13/23/13	MT
Tai United Holdings Limited Reports Earnings Results for the Half Year Ended June 30, 2022	30/22/30	CI
Tai United Forecasts Wider H1 Loss	17/22/17	MT
Tai United Holdings Limited Provides Consolidated Earnings Guidance for the Six Months Ended June 30, 2022	16/22/16	CI
Tai United Holdings Limited Announces Resignation of Chen Weisong as Executive Director	15/22/15	CI
Tai United Holdings Limited Announces Change of Address of Head Office and Principal Place of Business in Hong Kong	13/22/13	CI
Tai United Holdings Limited Auditor Raises 'Going Concern' Doubt	28/22/28	CI
Tai United Holdings Limited Reports Earnings Results for the Full Year Ended December 31, 2021	31/22/31	CI
Tai United Sees Wider Loss in 2021	14/22/14	MT
Tai United Holdings Limited Provides Earnings Outlook for the Year 2021	14/22/14	CI
Tai United Holdings Limited Announces Management Changes, Effective 31 January 2022	27/22/27	CI
Tai United Holdings Limited Announces Executive Changes, Effective 31 January 2022	27/22/27	CI
Tai United Holdings Limited Announces Resignation of Chow Chi Wah Vincent as Executive Director	30/21/30	CI
Tai United to Buy Chinese Shopping Mall for $58 Million	28/21/28	MT
Tai United Holdings Limited signed an agreement to acquire Anyang Shopping Mall from Dai Yongge for CNY 370 million.	27/21/27	CI
Tai United Holdings Limited Announces Change of Company Secretary	24/21/24	CI

	1st Jan change	Capi.
TAI UNITED HOLDINGS LIMITED	-25.00%	20.14M
FERGUSON PLC	+6.57%	41.53B
REECE LIMITED	+15.94%	11.13B
BEACON ROOFING SUPPLY, INC.	+11.54%	6.17B
BOISE CASCADE COMPANY	+6.13%	5.42B
CHIN HIN GROUP	+85.84%	2.47B
BLUELINX HOLDINGS INC.	-9.20%	891M
YUASA TRADING CO., LTD.	+18.35%	750M
ADENTRA INC.	+20.93%	636M
DOMAN BUILDING MATERIALS GROUP LTD.	-13.39%	459M

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