Shenzhen Investment : Potential Discloseable Transaction Formation of Joint Venture

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(Incorporated in Hong Kong with limited liability)

The Board is pleased to announce that on 11 May 2017, Medos (a direct wholly-owned subsidiary of the Company) and Profit City (an indirect wholly-owned subsidiary of Road King) entered into the Cooperation Framework Agreement in relation to the formation of the JV Co (50:50) to participate in the tender for the Land, and if the JV Co's bid is successful, to engage in the development of the Land and the sale or lease and the management of the properties to be constructed on the Land.

Pursuant to the Cooperation Framework Agreement, each of Medos and Profit City has committed to provide shareholder's loan in the amount of HK$13 million to the JV Co principally to finance its payment of the deposit payable upon submission of the tender. The Cooperation Framework Agreement also sets out the preliminary agreement between Medos and Profit City with regard to, among other things, their obligation to finance the funding requirement of the JV Co should the JV Co be successful in the tender.

Based on the aggregate of the subscription money paid by Medos for its share in the JV Co and the amount of the shareholder's loan provided by Medos mentioned above, each of the applicable percentage ratio is less than 5%. As such, upon the entering into of the Cooperation Framework Agreement, the JV Transaction does not constitute a notifiable transaction of the Company. Should the JV Co be successful in the tender, in respect of the maximum amount of funds or financial assistance which Medos may be required to provide to the JV Co based on the currently estimated funding requirement of the JV Co to finance, among others, the payment of land premium and construction costs, one of the applicable percentage ratios is expected to be more than 5% but less than 25%, the JV Transaction is therefore expected to become a discloseable transaction of the Company upon the JV Co is notified of the success of its bid for the Land. Further announcement will be made by the Company as and when required pursuant to the Listing Rules.

The Board is pleased to announce that on 11 May 2017, Medos (a direct wholly-owned subsidiary of the Company) and Profit City (a wholly-owned subsidiary of Road King) entered into the Cooperation Framework Agreement in relation to the formation of the JV Co (50:50) to participate in the tender for the Land, and if the bid by the JV Co is successful, to engage in the development of the Land and the sale or lease and the management of the properties to be constructed on the Land.

Set out below is a summary of the principal terms of the Cooperation Framework Agreement:

11 May 2017

1. Medos; and

2. Profit City.

Profit City is an investment holding company and an indirect wholly-owned subsidiary of Road King. The Company is a substantial shareholder of Road King, holding approximately 27.16% of the issued share capital of Road King. Road King is principally engaged in investment in, and development, operation and management of, property development in the People's Republic of China, Hong Kong and elsewhere. To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, Profit City and its ultimate beneficial owner are third parties independent of the Company and the connected persons of the Company.

Unless Medos and Profit City agree otherwise, the scope of business of the JV Co is limited to the participation in the tender for the Land located at New Kowloon Inland Lot No.6567, Kai Tak Area 1K Site 1, Kai Tak, Kowloon, Hong Kong; and, if the JV's bid for the Land is successful, the development of the Land and the sale or lease and the management of the properties constructed on the Land.

Each of Medos and Profit City has agreed to subscribe for one share of the JV Co at HK$1.00. As at the date of this announcement, each of Medos and Profit City owns 50% of the issued share capital of the JV Co.

Each of Medos and Profit City has also committed to provide the JV Co shareholder's loan in the amount of HK$13 million principally to finance the deposit payable by the JV Co upon submission of the tender.

It is agreed that should the JV Co be successful in the tender, Medos and Profit City will provide the JV Co, pro rata to their shareholding in the JV Co, with funds and other financial assistance required by the JV Co to meet its funding needs and in such manner as agreed between them. Medos and Profit City have further agreed that the JV Co should meet its funding needs as much as possible by obtaining external financing; and Medos and Profit City will discuss and agree on the amount to be contributed by them after taking into account the external financing obtained by the JV Co.

If the bid for the Land by the JV Co is unsuccessful, the JV Co is required to repay to Medos and Profit City the shareholder's loans advanced by them as soon as possible.

The board of directors of JV Co shall comprise five directors. Medos and Profit City are entitled to nominate 3 directors of the JV Co and 2 directors of the JV Co, respectively.

The quorum of meetings of directors of the JV Co is two (including one director nominated by Medos and one director nominated by Profit City). The passing of resolutions of the board of directors of JV requires the approval by a majority of the directors present (including at least one director nominated by Medos and one director nominated by Power City).

The approval of both Medos and Profit City is required in respect of anything relating to change in shareholding, change in share capital structure (including increase in share capital and share buy-back), liquidation, and acquisition and/or disposal of material assets (including the Land) of the JV Co and/or its subsidiaries.

If Medos or Profit City intends to transfer any of its shares in the JV Co, the other party shall have first right of refusal to purchase such shares in the JV Co.

Medos and Profit City has agreed to enter into a shareholders agreement to provide for the detailed arrangements regarding, among others, the management, capital contribution, their rights and obligations as shareholders to be negotiated and agreed based on the preliminary understanding and agreement set out in the Cooperation Framework Agreement as soon as possible after the JV Co is informed of the success of its bid for the Land.

The Group is principally engaged in property development, property investment and property management. The Company believes that the property market in Hong Kong has a long-term development potential. Road King is an associate of the Company with experience in the development of property in Hong Kong. The acquisition of the Land with Road King through the JV Co can provide the Group with a good foundation for participating in the property market in Hong Kong in the future.

The Directors are of the view that the terms of the Cooperation Framework Agreement, which were determined based on arm's length negotiations between the parties thereto, are normal commercial terms, fair and reasonable; and consider that the entering into of the Cooperation Framework Agreement and the transactions contemplated thereunder is in the interests of the Company and the Shareholders as a whole.

Based on the aggregate amount of the subscription money paid by Medos for its share in the JV Co and the amount of the shareholder's loan provided by Medos mentioned above, each of the applicable percentage ratio is less than 5%. As such, upon the entering into of the Cooperation Framework Agreement, the JV Transaction does not constitute a notifiable transaction of the Company. Should the JV Co be successful in the tender, in respect of the maximum amount of funds or financial assistance which Medos may be required to provide to the JV Co based on the currently estimated funding requirement of the JV Co to finance, among others, the payment of land premium and construction costs, one of the applicable percentage ratios is expected to be more than 5% but less than 25%, the JV Transaction is

therefore expected to become a discloseable transaction of the Company upon the JV Co is notified of the success of its bid for the Land. Further announcement will be made by the Company as and when required pursuant to the Listing Rules.

In this announcement, the following expressions shall have the meanings set out below unless the context requires otherwise: