Modern Land China : MAJOR TRANSACTION IN RELATION TO ACQUISITION OF 49% EQUITY INTEREST IN A PRC COMPANY HOLDING LAND PARCEL IN CHONGQING CITY

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult a stockbroker or their registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Modern Land (China) Co., Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale 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.

MODERN LAND (CHINA) CO., LIMITED

當 代 置 業（ 中 國 ）有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1107)

MAJOR TRANSACTION IN RELATION TO

ACQUISITION OF 49% EQUITY INTEREST IN

A PRC COMPANY HOLDING

LAND PARCEL IN CHONGQING CITY

A letter from the Board is set out on pages 5 to 13 of this circular.

31 March 2021

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DEFINITIONS

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

''Independent Third Party(ies)'' third party(ies) independent of the Company and are not connected persons (as defined under the Listing Rules) of the Company

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DEFINITIONS

In this circular, the English names of the PRC entities are translation of their Chinese names and are included herein for identification purpose only. In the event of any inconsistency, the Chinese names shall prevail.

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LETTER FROM THE BOARD

MODERN LAND (CHINA) CO., LIMITED 當 代 置 業（ 中 國 ）有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1107)

MAJOR TRANSACTION IN RELATION TO

ACQUISITION OF 49% EQUITY INTEREST IN

A PRC COMPANY HOLDING

LAND PARCEL IN CHONGQING CITY

INTRODUCTION

The Company refers to the Announcement. On 24 November 2020, Modern Green Development (an indirect wholly-owned subsidiary of the Company) (as purchaser) entered into the Equity Transfer Agreement with the Vendor II, whereby Modern Green Development agreed to acquire 49% equity interest of the Target Company II from the Vendor II at the Consideration of RMB274,647,450. The Target Company II indirectly holds the entire equity

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LETTER FROM THE BOARD

interest of the Project Company II, which currently holds the land use right of the Land Parcel II, all for residential use located at Bishan District, Chongqing City, the PRC, with an aggregate site area of approximately 198,120.78 square metres.

The purpose of this circular is to provide you with information in respect of, among others, (i) further details of the Equity Transfer Agreement; (ii) the financial information of the Group; (iii) the financial information of the Target Group I and the Target Group II; and (iv) the valuation report on the Land Parcels.

THE EQUITY TRANSFER AGREEMENT

The salient terms of the Equity Transfer Agreement are set out as follows:

Date

24 November 2020

Parties

1. Modern Green Development (an indirect wholly-owned subsidiary of the Company); and
2. the Vendor II

Subject assets to be acquired

As at the date of the Equity Transfer Agreement, the Target Company II had a registered capital of RMB50,000,000, which has been fully paid up. The equity interest of the Target Company II was held as to 51% by Konka and 49% by the Vendor II. Pursuant to the terms of the Equity Transfer Agreement, Modern Green Development agreed to acquire 49% equity interest of the Target Company II from the Vendor II at the Consideration of RMB274,647,450. The Target Company II indirectly holds the entire equity interest of the Project Company II, which currently holds the land use right of the Land Parcel II located at Bishan District, Chongqing City, the PRC with total site area of approximately 198,120.78 square metres, which is planned for residential use.

Consideration

The aggregate Consideration payable by Modern Green Development for the Acquisition is RMB274,647,450, which comprises three components namely, (i) RMB24,500,000 (being 49% of the registered capital of the Target Company II) to be paid to the Vendor II; (ii) RMB244,601,000 (being the shareholder's loan owed by the Project Company II to the Vendor

1. to be repaid to the Vendor II on behalf of the Project Company II; and (iii) an equity transfer premium (股權轉讓溢價) of RMB5,546,450 to be paid to the Vendor II. It was agreed after arm's length negotiations between the parties to the Equity Transfer Agreement on common commercial terms.

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LETTER FROM THE BOARD

Both the Target Company II and the Project Company II were newly established in September 2020 and had no other assets and liabilities other than registered capital of RMB50,000,000 by then. On 6 November 2020 (before the Equity Transfer Agreement was entered into), the Target Group entered into the land acquisition contract regarding the Land Parcel II whereby the Target Group II agreed to acquire the land use right of the Land Parcel II for the land acquisition price of RMB1,040 million, out of which RMB520 million was settled by the Target Group II in November 2020 and the remaining RMB520 million will be due in November 2021. In order to enable the Target Group II to settle the first instalment of the land acquisition price, each of the then equity holders of the Project Company II namely, the Vendor II and Konka, provided a shareholder's loan to the Project Company II in proportion to its equity interest in the Target Company II. Such shareholder's loans (together with accrued interest) amounted to RMB244,601,000 and RMB259,009,000, respectively as at 31 December 2020. In negotiating the terms of the Acquisition between the Group and the Vendor II, the parties agreed that the Group shall pay for 49% of the paid-up registered capital (RMB50,000,000 x 49%) as well as an equity transfer premium of RMB5,546,450 and repay on the Project Company II's behalf to the Vendor II the shareholder's loan of RMB244,601,000 owed by the Project Company II to the Vendor II.

While the Consideration is significantly higher than the net asset value attributable to

49% equity interest of the Target Group of approximately RMB24.5 million (RMB50 million x 49%) as at 31 December 2020, the net asset value of a newly acquired property development project including that of the Land Parcel II may not reflect the fair value of the Consideration for the Acquisition. The net asset value will increase when the project is completely developed and starts generating income from sales of properties to settle the liabilities of the Target Group II.

The Company targeted to acquire 100% equity interest of the Target Company in stages with a total consideration of approximately RMB1,078.5 million (before tax). On 24 November 2020 and 24 December 2020, the Company announced the acquisition of 49% and 18% equity interest of the Target Company II at the consideration of RMB274,647,450 and RMB256,652,550, respectively and plans to acquire the remaining 33% equity interest of the Target Company II within this year.

The total proposed consideration for acquiring 100% equity interest of the Target Company II of approximately RMB1,078.5 million (before tax) was determined by the estimated gross floor area of the Land Parcel II of 396,241.56 square metres, multiplied by RMB2,722 per square metre. The price per square metre of RMB2,722 was determined based on the prevailing market price of land in Bishan District, Chongqing City, the PRC. With reference to the three land transactions in Bishan District, Chongqing City in 2020, the price per square metre of floor area in respect of the said land transactions were within the range of approximately RMB3,000 and RMB3,800 per square metre, respectively. As the location and permitted uses of the comparable land parcels are similar to the Land Parcel II, it is fair to make a comparison between such land parcels and the Land Parcel II.

The Consideration of RMB274,647,450 in respect of the Acquisition represents approximately half of 49% of the total proposed consideration for acquiring 100% equity interest of the Target Company II of approximately RMB1,078.5 million (before tax). The

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LETTER FROM THE BOARD

Company also made reference to the total assets of the Project Company II. As at 31 October 2020, the Project Company II recorded total assets of approximately RMB522,004,998, which primarily comprised deposit paid for acquisition of the land use right of the Land Parcel II amounted to RMB520,000,000, being 50% of the total cost for the land use right of the Land Parcel II.

Considering that (i) the Consideration was negotiated between the parties to the Equity Transfer Agreement taking into account the current land market situation in Chongqing City;

1. the price per square metre of the Land Parcel II represents approximately 18% discount to the average of the three recent land transactions in Bishan District, Chongqing City in 2020 of approximately RMB3,310; and (iii) only half of the land acquisition price of the Land Parcel II was settled at the time when the Equity Transfer Agreement was entered into and the balance of the said land acquisition price will be payable by the Group, the Board considers that the Consideration is fair and reasonable.

The Consideration shall be payable by Modern Green Development in cash as described below:

1. on 28 September 2020, Modern Green Development paid RMB40,000,000 as earnest money (the ''Earnest Money'') to the bank account (the ''Joint Account'') jointly set up by Modern Green Development and the Vendor II, which was converted as part of the Consideration upon execution of the Equity Transfer Agreement;
2. within three (3) working days after the Vendor II has executed all necessary documents for registration of the 49% equity interest transfer and filed online registration at the administration for industry and commerce, Modern Green Development shall pay the remaining amount of the Consideration after deduction of the Earnest Money at RMB234,647,450 to the Joint Account;
3. within ten (10) working days after Modern Green Development has fully paid the Consideration to the Joint Account, the Vendor II shall complete the registration procedures of 49% equity interest transfer of the Target Company II with the administration of industry and commerce; and
4. on the day of the completion of the registration procedures of 49% equity interest transfer of the Target Company II with the administration of industry and commerce, the full amount of the Consideration shall be released from the Joint Account to the Vendor II.

The Consideration was paid in full and funded partly by internal resources of the Group and partly by financing from bank(s) and/or financial institution(s).

Completion

The completion of the Acquisition shall take place upon completion of the registration of 49% equity interest transfer of the Target Company II with the relevant administration of industry and commerce. Completion of the Acquisition took place on 19 January 2021.

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LETTER FROM THE BOARD

On 22 December 2020, the Group won the bidding for the 18% equity interest in the Target Company II through the public listing-for-sale process organised by Shanghai United Assets and Equity Exchange (上海聯合產權交易所). On 24 December 2020, the Group and Konka entered into the December Equity Transfer Agreement regarding the transfer of 18% equity interest in the Target Company II at the consideration of RMB256,652,550. Upon completion of the Further Acquisition prior to the Latest Practicable Date, the Target Company

1. is held by the Group and Konka as to 67% and 33%, respectively and the financial results of the Target Group II will be consolidated into the financial statements of the Group.

INFORMATION ABOUT THE PARTIES TO THE EQUITY TRANSFER AGREEMENT

The Company and Modern Green Development

The Company is a company incorporated in the Cayman Islands with limited liability and its Shares have been listed on the Main Board of the Stock Exchange. The Group is a property developer focused on the development on green, energy-saving and eco-friendly residences in the PRC.

Modern Green Development is a company established in the PRC with limited liability. It is an indirect wholly-owned subsidiary of the Company and is principally engaged in real estate development in the PRC as at the Latest Practicable Date.

The Vendor II

The Vendor II is a company established in the PRC with limited liability and is principally engaged in agricultural development, eco-agricultural tourism, construction and operation of cultural tourism projects, landscaping, planting and wholesale of flowers and seedling. According to public information, as at the Latest Practicable Date, the Vendor II is held as to 100% by Jiangxi Sanlukang Group Co., Ltd. (江西三陸康集團有限公司), which is in turn held as to 50% and 50% by two PRC individual merchants, Chen Junyao and Chen Xianglin, respectively. To the best of the Directors' knowledge, information and belief after having made all reasonable enquiries, the Vendor II and its ultimate beneficial owners are Independent Third Parties.

INFORMATION ABOUT THE TARGET COMPANY II, THE PROJECT COMPANY II AND THE LAND PARCEL II

The Target Company II

The Target Company II is a company established in the PRC with limited liability. As at the Latest Practicable Date, it had a registered capital of RMB50,000,000, which has been fully paid up. It is principally engaged in real estate development and operation and real estate lease operation in the PRC.

The Target Company II was established in September 2020 and has not yet generated any revenue or profit since its establishment. Based on the unaudited management accounts of the Target Company II, the total asset value and net asset value of the Target Company II as at 31 October 2020 were RMB50,000,000 and RMB50,000,000, respectively.

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LETTER FROM THE BOARD

The Project Company II

The entire equity interest of the Project Company II is indirectly held by the Target Company II. The Project Company II is a company established in the PRC with limited liability. As at the Latest Practicable Date, it had a registered capital of RMB50,000,000, which has been fully paid up. It is principally engaged in real estate development and operation and real estate lease operation in the PRC.

The Project Company II was established in September 2020 and has not yet generated any revenue since its establishment. Based on the unaudited management accounts of the Project Company II, the total asset value and net asset value of the Project Company II as at 31 October 2020 were approximately RMB522,004,998 and RMB47,906,399, respectively. The total assets of the Project Company II of approximately RMB522,004,998 as at 31 October 2020 primarily comprised deposit paid for acquisition of the land use right of the Land Parcel

1. amounted to RMB520,000,000, being 50% of the total cost for the land use right of the Land Parcel II.

The Project Company II currently holds the land use right of the Land Parcel II located at Bishan District, Chongqing City, the PRC with total site area of approximately 198,120.78 square metres, which is planned for residential use.

Please refer to Appendix V to this circular for the property valuation report of the Land Parcels.

Konka

Konka is a company established in the PRC with limited liability and its shares are listed on Shenzhen Stock Exchange (stock code: 000016/200016). Konka is principally engaged in the manufacture and sale of color televisions, mobile phones and consumer appliances as well as environmental protection and supply chain trading businesses. According to public information, the controlling shareholder of Konka is 華僑城集團有限公司 (Overseas Chinese Town Company Limited) (''OCT''), holding approximately 29.99% of the issued share capital of Konka as at 31 October 2020. OCT is in turn controlled by State-owned Assets Supervision and Administration Commission of the State Council of the PRC. To the best of the Directors' knowledge, information and belief after having made all reasonable enquiries, as at the Latest Practicable Date, Konka and its ultimate beneficial owners are Independent Third Parties.

REASONS FOR AND BENEFIT OF ENTERING INTO THE EQUITY TRANSFER AGREEMENT

The Group is a property developer focused on the development on green, energy-saving and eco-friendly residences in the PRC.

Aiming to achieve its 2021 strategic business targets, one of the measures taken by the Company is sticking to the investment strategy of ''5+15+M'' by stepping up presence in five city clusters, namely the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-HongKong-Macao Greater Bay Area, the middle reaches of the Yangtze River and Chengdu-Chongqing economic circle, paying active attention on well-developed first- and

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LETTER FROM THE BOARD

second-tier cities, such as Chongqing, Chengdu, Xi'an and Zhengzhou. Upon completion of the Target Company I Acquisitions, the Group holds 67% of the Target Company I, which through the Project Company I, holds the land use right of the Land Parcel I. Upon completion of the Acquisition and the Further Acquisition, the Group holds 67% of the Target Company II, which through the Project Company II, holds the land use right of the Land Parcel II. The Company plans to further acquire the remaining 33% equity interest of each of the Target Company I and the Target Company II, while Konka will cease to hold any equity interest in the respective companies and will not be involved in the development of the Land Parcels. The Land Parcel I and the Land Parcel II are next to each other. The Group proposes to develop the Land Parcels as a whole project through the Project Company I and the Project Company II. Bishan District is located at an important node of the Chengdu-Chongqing Economic Belt. It is an urban expansion area that is close to the centre city of Chongqing with a larger area and better basic conditions. Coupled with the existing schools and hospitals, eco-parks and railway station and the technology innovation center, national hi-tech zone and international airport to be constructed in the future, Bishan ushered in rapid development opportunities. The Land Parcels with total site area of approximately 331,455.58 square metres will be developed for residential use with supporting facilities and layout. The construction on the Land Parcel I commenced in October 2020 and is expected to complete in November 2022, and the construction on the Land Parcel II is expected to commence in March 2021 and is expected to complete in October 2023. The total development cost of approximately RMB1,180.19 million will be financed by internal resources of the Group and loans obtained from bank(s) and/or financial institution(s). In view of the location and the designated use of the Land Parcels, the Board considers that the Acquisition and the Further Acquisition, together with the Target Company I Acquisitions, offer a good opportunity for the Group to enhance its portfolio in the property market in Chongqing City, the PRC, which is in line with the Company's business objective, with a view to bringing more investment return for the Shareholders.

The Board is of the view that the terms of the Equity Transfer Agreement are on normal commercial terms after arm's length negotiations between the parties, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECT OF THE ACQUISITION

As at the Latest Practicable Date, completion of the Acquisition and the Further Acquisition took place. The Target Company II has become a 67%-owned subsidiary of the Company.

1. Assets and liabilities

As detailed in the unaudited pro forma statement of the consolidated assets and liabilities of the Enlarged Group in Appendix III to this circular, assuming the Target Company I Acquisitions, the Acquisition and the Further Acquisition were completed as at 31 December 2020, the unaudited pro forma consolidated assets of the Enlarged Group would have increased from approximately RMB81,912 million to RMB82,468 million, the unaudited pro forma consolidated liabilities of the Enlarged Group would have increased

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LETTER FROM THE BOARD

from approximately RMB70,934 million to RMB71,461 million and the net assets would have increased from approximately RMB10,978 million to RMB11,007 million as a result of the Acquisition.

2. Earnings

The companies comprising the Target Group I have become subsidiaries of the Company since 24 November 2020 and the financial results of the Target Group I has been consolidated into the consolidated financial statements of the Group since then. Meanwhile, the companies comprising the Target Group II have become subsidiaries of the Company as at the Latest Practicable Date and the financial results of the Target Group II has also been consolidated into the consolidated financial statements of the Group since then. While there is no immediate material impact on earnings of the Group, the Directors believe that the Acquisition would enhance the Group's business development.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratio(s) calculated in accordance with Rule

14.07 of the Listing Rules in respect of the Acquisition under the Equity Transfer Agreement is/are more than 5% but less than 25%, the entering into of the Equity Transfer Agreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under the Listing Rules.

References are made to the announcements of the Company dated 15 September 2020, 30 September 2020 and 24 November 2020 in relation to the Target Company I Acquisitions. The Vendor I and the Vendor II are held by the same ultimate beneficial owners. As the transactions contemplated under the Equity Transfer Agreement and the Target Company I Acquisitions are conducted within a 12-month period, the transactions shall be aggregated under Chapter 14 of the Listing Rules. As one or more of the applicable percentage ratio(s) calculated in accordance with Rule 14.07 of the Listing Rules in respect of the Acquisition under the Equity Transfer Agreement and the Target Company I Acquisitions on an aggregated basis is/are more than 25% but less than 100%, the entering into of the Equity Transfer Agreement and the Target Company I Acquisitions in aggregate constitute a major transaction of the Company and the Acquisition is thus subject to the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, Super Land owns 65.38% of the total number of issued Shares. On 24 November 2020, the Company received Super Land's written consent to the Acquisition and the entering into of the Equity Transfer Agreement. As (i) no Shareholder would be required to abstain from voting if the Company were to convene a general meeting for the approval of the Acquisition; and (ii) Super Land holds more than 50% of the voting rights that would be exercisable at such general meeting, Super Land's written consent is acceptable in lieu of holding a general meeting of the Company for approval of the Acquisition pursuant to Rule 14.44 of the Listing Rules.

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LETTER FROM THE BOARD

RECOMMENDATION

The Directors, including the independent non-executive Directors, are of the view that the terms of the Equity Transfer Agreement and the transactions contemplated thereunder are fair and reasonable and in the interest of the Group and the Shareholders as a whole. Accordingly, should a resolution be put at a general meeting of the Company for the Shareholders to consider the same, the Directors would recommend the Shareholders to vote in favour of such resolution.

FURTHER INFORMATION

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

Yours faithfully,

By order of the Board

Modern Land (China) Co., Limited

Zhang Peng

President and Executive Director

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1. FINANCIAL INFORMATION OF THE GROUP FOR THE THREE FINANCIAL YEARS ENDED 31 DECEMBER 2020

Financial information of the Group for the two years ended 31 December 2018 and 2019 are disclosed on pages 89 to 220 of the annual report of the Company for the year ended 31 December 2018 and pages 89 to 200 of the annual report of the Company for the year ended 31 December 2019, respectively, financial information of the Group for the year ended 31 December 2020 are disclosed in the annual results announcement of the Company for the year ended 31 December 2020, all of which are published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.modernland.hk. Quick links to the annual reports and annual results announcement of the Company are set out below:

Annual report of the Company for the year ended 31 December 2018:

https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0404/ltn20190404535.pdf

Annual report of the Company for the year ended 31 December 2019:

https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0511/2020051100568.pdf

Annual results announcement of the Company for the year ended 31 December 2020:

https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0317/2021031701252.pdf

1. INDEBTEDNESS 1. Borrowings

As at the close of business on 31 January 2021, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Enlarged Group had outstanding borrowings of approximately RMB28,936,842, details of which are set out as follows:

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2. Contingent liabilities and other guarantees

As at the close of business on 31 January 2021, the Enlarged Group's financial guarantees and contingent liabilities were as follows:

The Enlarged Group provided guarantees of approximately RMB15,208 million to banks in respect of mortgage loans provided by the banks to the customers for the purchase of properties developed by the Enlarged Group. These guarantees provided by the Enlarged Group for customers to the banks would be released upon receiving the building ownership certificates of the respective properties by the banks from the customers as a pledge for security to the mortgage loans granted.

III. WORKING CAPITAL

After taking into account the Enlarged Group's available resources, including internally generated funds, external borrowings and the presently available banking facilities, in the absence of unforeseen circumstances, the Directors are of the opinion that the Enlarged Group will have sufficient working capital to meet its present requirements for the next twelve months from the date of this circular.

IV. MATERIAL ADVERSE CHANGE

The Directors were not aware of any material adverse change to the financial or trading position of the Group since 31 December 2020, being the date to which the latest audited consolidated financial statements of the Company were published.

1. OUTLOOK AND PROSPECTS

Upon completion of the Acquisition, the Enlarged Group will continue to be principally engaged in real estate development, property investment, hotel operations, real estate agency services and other services in the PRC and the United States while the Target Group I will continue to be engaged in development of the Land Parcel I, which is located at Bishan District, Chongqing City, the PRC with total site area of approximately 133,334.8 square metres and planned for residential use, and the Target Group II will continue to be engaged in development of the Land Parcel II, which is located at Bishan District, Chongqing City, the PRC with total site area of approximately 198,120.78 square metres and planned for residential use.

The unaudited pro forma financial information of the Enlarged Group illustrating the financial impact of the Target Company I Acquisitions, the Acquisition and the Further Acquisition on the assets and liabilities of the Group is set out in Appendix III to this circular. The unaudited pro forma financial information of the Enlarged Group has been prepared for illustration purpose only, based on the judgments and assumptions of the Directors, and, due to its hypothetical nature, it may not give a true picture of the financial position of the Enlarged Group as at the date of completion of the Target Company I Acquisitions and the Acquisition or any future date.

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At the beginning of 2020, the COVID-19 outbreak casted a shadow over the economy in 2020. Shutdowns and suspension of sales caused significant impact to the capital-intensive real estate industry, which resulted in severe shock and suppression on supply side of production, demand side of market and operating side of corporate. The central government and several municipal governments introduced a series of policies to support the real estate industry, boosting the confidence of residential property buyers and conducive to stable development of the real estate market.

After the COVID-19 outbreak, comfortable living, safety and health, hygiene and epidemic prevention as well as quality properties would become the rigid needs of customers and new development trends of green and healthy in terms of building and community emerged. The Company will formulate strategic plan with a customer-based culture to enhance the competitiveness of green and healthy products in terms of R&D, design, construction and operation, which is a new way to survive and grow in the real estate industry. In the meantime, the Group will adhere to the core competitiveness of its green and healthy strategy, continuously improve its products and expand its scale of performance, and will also achieve precise investment through diversified investment and financing strategies with risk control measures. At the same time, the Group will consolidate its operation of whole-life cycle industrialized communities and continuously enhance its brand value, striving to become a leading green technology city operator in China. The Group will continue to exert its core competitiveness to ensure the achievement of its strategic business goals.

VI. OTHER INFORMATION

(a) Liquidity and financial resources

As at 31 December 2020, the Group's cash, restricted cash and bank balances were approximately RMB14,092.7 million.

As at 31 December 2020, the Group's total borrowings were approximately RMB24,593 million.

(b) Gearing ratio

As at 31 December 2020, the Group's net debt ratio (calculated by net borrowings divided by total equity) was approximately 95.7%.

1. Employee and remuneration policy

As at 31 December 2020, the Group had an aggregate of 2,387 employees. The Group recruited and promoted individual persons according to their strength and development potential. The Group determined the remuneration packages of all employees (including the Directors) with reference to individual performance and current market rate.

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(d) Material acquisitions by the Group

The Group has not entered into any material acquisitions after 31 December 2020, being the date to which the latest published audited accounts of the Company have been made up.

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The following is the text of a report set out on pages 18 to 34, received from the Target Company I's reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

ACCOUNTANTS' REPORT ON HISTORICAL FINANCIAL INFORMATION OF CHONGQING KONKA REAL ESTATE DEVELOPMENT CO., LTD TO THE DIRECTORS OF MODERN LAND (CHINA) CO., LIMITED

Introduction

We report on the historical financial information of Chongqing Konka Real Estate Development Co., Ltd (the ''Target Company I'') and its subsidiaries (collectively, the ''Target Group I'') set out on pages 20 to 34, which comprises the consolidated statements of financial position of the Target Group I as at 31 December 2019 and 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, for the period from 7 November 2019 (date of establishment) to 31 December 2019 and the year ended 31 December 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 20 to 34 forms an integral part of this report, which has been prepared for inclusion in the circular of Modern Land (China) Co., Limited (the ''Company'') dated 31 March 2021 (the ''Circular'') in connection with the acquisition of 49% equity interest in Chongqing Chengda Real Estate Development Co., Limited (the ''Target Company II'') by the Company (the ''Acquisition'').

Directors' responsibility for Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

The Underlying Financial Statements of the Target Group I as defined on page 20, on which the Historical Financial Information is based, were prepared by the directors of the Target Company I. The directors of the Target Company I are responsible for the preparation of the Underlying Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (''IASB''), and for such internal control as the directors of the Target Group I determine is necessary to enable the preparation of the Underlying Financial Statements that are free from material misstatement, whether due to fraud or error.

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

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Financial Information in Investment Circulars'' issued by the Hong Kong Institute of Certified Public Accountants (''HKICPA''). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

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

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

Opinion

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

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page 20 have been made.

KPMG

Certified Public Accountants

8th Floor, Prince's Building 10 Chater Road

Central, Hong Kong

29 March 2021

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HISTORICAL FINANCIAL INFORMATION

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

The consolidated financial statements of the Target Group I for the Relevant Periods, on which the Historical Financial Information is based, were audited by KPMG Huazhen LLP in accordance with Hong Kong Standards on Auditing issued by the HKICPA (''Underlying Financial Statements'').

Consolidated statements of profit or loss and other comprehensive income

(Expressed in Renminbi ''RMB'')

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

(Expressed in Renminbi)

1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

Chongqing Konka Real Estate Development Co., Ltd (the ''Target Company I'') was established in Chongqing of the People's Republic of China (''PRC'') on 7 November 2019 with limited liability under the Company law of the PRC.

Target Company I and its subsidiaries (collectively, ''the Target Group I'') are mainly involved in the business of property development.

The Historical Financial Information has been prepared in accordance with all applicable International Financial Reporting Standards (''IFRSs'') which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board (''IASB'') . Further details of the significant accounting policies adopted are set out in Note 2.

The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this Historical Financial Information, the Target Group I has adopted all applicable new and revised IFRSs to the Relevant Periods, except for any new standards or interpretations that are not yet effective for the year ended 31 December 2020. The revised and new accounting standards and interpretations issued but not yet effective for the year ended 31 December 2020 are set out in Note 12.

The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Stock Exchange'').

The accounting policies set out below have been applied consistently to all periods presented in the Historical Financial Information.

As at the date of this report, the Target Company I has direct or indirect interests in the following subsidiaries, both of which are private companies:

Note: No audited statutory financial statements have been prepared.

All companies comprising the Target Group I have adopted 31 December as their financial year end date.

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2 SIGNIFICANT ACCOUNTING POLICIES

1. Going concern

As at 31 December 2020, the Target Group I has not yet generated revenue, and is dependent on financial support for business continuance. The Historical Financial Information has been prepared on a going concern basis as Modern Land (China) Co., Limited (the ''Company'') has undertaken to provide the necessary financial support to the Target Group I. Accordingly, the Target Group I will be able to meet its financial obligations for the foreseeable future.

1. Basis of measurement

The Historical Financial Information is presented in Renminbi (''RMB''), rounded to the nearest thousand. The measurement basis used in the preparation of the financial statements is the historical cost basis.

1. Use of estimates and judgements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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

Judgements made by management in the application of IFRSs that have significant effect on the consolidated financial statements and major sources of estimation uncertainty are discussed in Note 9.

1. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Target Company I and its subsidiaries. Control is achieved when the Target Company I:

. has power over the investee;

. is exposed, or has rights, to variable returns from its involvement with the investee; and

. has the ability to use its power to affect its returns.

The Target Group I 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.

When the Target Group I has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Target Group I considers all relevant facts and circumstances in assessing whether or not the Target Group I's voting rights in an investee are sufficient to give it power, including:

. the size of the Target Group I's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

. potential voting rights held by the Target Group I, other vote holders or other parties;

. rights arising from other contractual arrangements; and

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. any additional facts and circumstances that indicate that the Target Group I has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

Consolidation of a subsidiary begins when the Target Group I obtains control over the subsidiary and ceases when the Target Group I 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 Target Group I gains control until the date when the Target Group I ceases to control the subsidiary.

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

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

1. Properties under development for sale

Properties under development for sale which are intended to be sold in the ordinary course of business upon completion of development are classified as current assets, and carried at the lower of cost and net realisable value. Costs include the related land cost, development expenditure incurred and, where appropriate, borrowing costs capitalised. Net realisable value represents the estimated selling price less estimated costs of completion and costs to be incurred in selling the property.

Properties under development for sale are transferred to properties held for sale upon completion.

1. Other receivables

A receivable is recognised when the Target Group I has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due.

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses as determined below:

The loss allowance is measured at an amount equal to lifetime expected credit losses (ECLs), which are those losses that are expected to occur over the expected life of the receivables. The loss allowance is estimated using a provision matrix based on the Target Group I's historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the reporting date.

ECLs are remeasured at each reporting date with any changes recognised as an impairment gain or loss in profit or loss. The Target Group I recognises an impairment gain or loss with a corresponding adjustment to the carrying amount of other receivables through a loss allowance account.

The gross carrying amount of other receivable is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Target Group I determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

1. Bank balances
   Bank balances represent cash at bank.

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1. Trade and other payables

Other payables are initially recognised at fair value. Subsequent to initial recognition, trade and other payables are stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

1. Borrowings cost

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

1. Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. Apart from differences which arise on initial recognition of assets and liabilities, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

1. Provisions and contingent liabilities

Provisions are recognised when the company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

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1. Related parties
2. 1. A person, or a close member of that person's family, is related to the Target Group I if that person:
   2. 1. has control or joint control over the Target Group I;
      2. has significant influence over the Target Group I; or
      3. is a member of the key management personnel of the Target Group I or the Target Group I's parent.
   3. An entity is related to the Target Group I if any of the following conditions applies:
   4. 1. The entity and the Target Group I are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
      2. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
      3. Both entities are joint ventures of the same third party.
      4. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
      5. The entity is a post-employment benefit plan for the benefit of employees of either the Target Group I or an entity related to the Target Group I.
      6. The entity is controlled or jointly controlled by a person identified in (a).
      7. A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
      8. The entity, or any member of a group of which it is a part, provides key management personnel services to the Target Group I or to the Target Group I's parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

3 FINANCE COSTS

For the period from 7 November 2019 (date of

establishment) to 31 December

20202019

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1. The land use right included in properties under development for sale are located in the PRC with lease terms of 50 years. The carrying amount of land use right included in properties under development for sale is RMB620,520,000.
2. As at 31 December 2020, the whole balance of properties under development for sale are expected to be completed after twelve months from the end of the reporting period.

As at 31 December 2019 and 2020, amounts due to related parties represent the advances received from related parties which are unsecured, interest-free and with no fixed terms of repayment, except for the amounts due to former immediate holding company and amounts due to former minority shareholder carrying 8% interest rate per annum and due on 24 November 2020 and 24 November 2021 respectively.

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6 CAPITAL

1. Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Target Group I's consolidated equity is set out in the consolidated statement of changes in equity. Details of the changes in the Target Company I's individual components of equity between the beginning and the end of the Relevant Periods are set out below:

(b) Paid-in capital

As at 31 December 2019 and 2020, the registered and paid-in capital of the Target Company I was RMB50,000,000.

1. Capital management

The shareholder of the Target Group I actively and regularly reviews and manages its capital return and safety. As part of this review, the shareholder of the Target Group I considers whether the Target Group I will be able to repay its debts when they fall due and provides financial support to the Target Group I when needed.

7 FINANCIAL RISK MANAGEMENT AND FAIR VALUES

Exposure to liquidity risk mainly arises from payables when they fall due. The Target Group I is not exposed to significant interest rate risk and currency risk as it has capitalised all borrowing costs during the course of carrying out property development activities, and no transactions and balances are in foreign currency. The Target Group I's exposure to the liquidity risk and the financial risk management policies and practices used by the Target Group I to manage such risk are described below.

1. Liquidity risk

The Target Group I is responsible for its own cash management, including raising of loans from related parties to cover expected cash demands.

The Target Group I's policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short term.

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The following table shows the remaining contractual maturities at the end of the reporting period of the Target Group I's financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Target Group I can be required to pay:

(b) Fair values

The directors of the Target Group I consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated statements of financial position approximate their respective fair values at the end of each reporting period.

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8 MATERIAL RELATED PARTY TRANSACTIONS

1. Material related party transactions during the Relevant Periods are as follows:

For the period from 7 November 2019 (date of

establishment) to 31 December

20202019

1. Balances with related parties as at the end of each Reporting Period are as follows:

9 CRITICAL ACCOUNTING JUDGEMENTS IN APPLYING THE TARGET GROUP I'S ACCOUNTING POLICIES

1. Provision for properties under development for sale

As explained in Note 2(e), the Target Group I's properties under development for sale are stated at the lower of cost and net realisable value. Based on the latest market information, the Target Group I makes estimates of the market price of land based on prevailing market conditions.

If there is an increase in costs to completion or a decrease in net sales value, the net realisable value will decrease and this may result in provision for properties under development for sale. Such provision requires the use of judgement and estimates. Where the expectation is different from the original estimate, the carrying value and provision for properties under development for sale in the periods in which such estimate is changed will be adjusted accordingly.

In addition, given the volatility of the PRC property market and the unique nature of individual properties, the actual outcomes in terms of costs and revenue may be higher or lower than that estimated at the end of the reporting period. Any increase or decrease in the provision would affect profit or loss in future years.

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1. Income tax expense

Deferred tax assets of approximately RMB610,000 (2019: RMB545,000) mainly in relation to tax losses have been recognised at 31 December 2020. The realisability of the deferred tax assets mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future. The directors of the Target Company I determine the deferred tax assets based on the enacted or substantially enacted tax rates and the best knowledge of profit projections of the Target Group I for coming years during which the deferred tax assets are expected to be utilised. The directors of the Target Company I have reviewed the assumptions and profit projections at the end of the reporting period. In cases where the actual future profits generated are more or less than expected, an additional recognition or a reversal of deferred tax assets may arise, which would be recognised in the profit or loss for the period in which such a recognition or reversal takes place.

At 31 December 2019, the directors consider the immediate holding company of the Target Group I to be Konka Group Co., Ltd and the ultimate holding company of the Target Company I to be Overseas Chinese Town Group Company Limited (''華僑城集團有限公司''). These entities were both established in the PRC. Konka Group Co., Ltd. is a company listed on the Main Board of the Shenzhen Stock Exchange of which the financial statements are available for public use.

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At 31 December 2020, the directors consider the immediate holding company of the Target Group I to be Modern Green Real Estate (Xi'an) Co., Ltd., which is established in the PRC and does not produce financial statements available for public use and the ultimate holding company to be the Company, a listed company on the Main Board of The Hong Kong Stock Exchange Limited, of which the financial statements are available for public use.

12 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ACCOUNTING PERIOD ENDED 31 DECEMBER 2020

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, and a new standard, IFRS 17, Insurance Contracts, which are not yet effective for the year ended 31 December 2020 and which have not been adopted in these financial statements. These developments include the following which may be relevant to the group.

The Target Group I is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Historical financial statements.

SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company I and its subsidiaries in respect of any period subsequent to 31 December 2020.

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The following is the text of a report set out on pages 35 to 50, received from the Target Company II's reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

ACCOUNTANTS' REPORT ON HISTORICAL FINANCIAL INFORMATION OF CHONGQING CHENGDA REAL ESTATE DEVELOPMENT CO., LTD TO THE DIRECTORS OF MODERN LAND (CHINA) CO., LIMITED

Introduction

We report on the historical financial information of Chongqing Chengda Real Estate Development Co., Ltd (the ''Target Company II'') and its subsidiaries (collectively, the ''Target Group II'') set out on pages 37 to 50, which comprises the consolidated statement of financial position of the Target Group II as at 31 December 2020, 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 period from 14 September 2020 (date of establishment) to 31 December 2020 (the ''Relevant Period''), and a summary of significant accounting policies and other explanatory information (together, the ''Historical Financial Information''). The Historical Financial Information set out on pages 37 to 50 forms an integral part of this report, which has been prepared for inclusion in the circular of Modern Land (China) Co., Limited (the ''Company'') dated 31 March 2021 (the ''Circular'') in connection with the acquisition of 49% equity interest in the Target Group II by the Company (the ''Acquisition'').

Directors' responsibility for Historical Financial Information

The directors of the Company are responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

The Underlying Financial Statements of the Target Group II as defined on page 37, on which the Historical Financial Information is based, were prepared by the directors of the Target Company II. The directors of the Target Company II are responsible for the preparation of the Underlying Financial Statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (''IASB''), and for such internal control as the directors of the Target Company II determine is necessary to enable the preparation of the Underlying Financial Statements that are free from material misstatement, whether due to fraud or error.

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

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Financial Information in Investment Circulars'' issued by the Hong Kong Institute of Certified Public Accountants (''HKICPA''). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

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

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

Opinion

In our opinion, the Historical Financial Information gives, for the purpose of the accountants' report, a true and fair view of the Target Group II's financial position as at 31 December 2020 and of the Target Group II's financial performance and cash flows for the Relevant Period in accordance with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements as defined on page 37 have been made.

KPMG

Certified Public Accountants

8th Floor, Prince's Building 10 Chater Road

Central, Hong Kong

29 March 2021

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HISTORICAL FINANCIAL INFORMATION

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

The consolidated financial statements of the Target Group II for the Relevant Periods, on which the Historical Financial Information is based, were audited by KPMG Huazhen LLP in accordance with Hong Kong Standards on Auditing issued by the HKICPA (''Underlying Financial Statements'').

Consolidated statement of profit or loss and other comprehensive income

(Expressed in Renminbi)

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NOTES TO THE HISTORICAL FINANCIAL INFORMATION

(Expressed in Renminbi)

1 BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION

Chongqing Chengda Real Estate Development Co., Ltd (the ''Target Company II'') was established in Chongqing of the People's Republic of China (''PRC'') on 14 September 2020 with limited liability under the Company law of the PRC.

The Target Company II and its subsidiaries (collectively, ''the Target Group II'') is mainly involved in the business of property development.

The Historical Financial Information has been prepared in accordance with all applicable International Financial Reporting Standards (''IFRSs'') which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board (''IASB''). Further details of the significant accounting policies adopted are set out in Note 2.

The IASB has issued a number of new and revised IFRSs. For the purpose of preparing this Historical Financial Information, the Target Group II has adopted all applicable new and revised IFRSs to the Relevant Period, except for any new standards or interpretations that are not yet effective for the accounting period ended 31 December 2020. The revised and new accounting standards and interpretations issued but not yet effective for the accounting period ended 31 December 2020 are set out in Note 12.

The Historical Financial Information also complies with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ''Stock Exchange'').

The accounting policies set out below have been applied consistently throughout the period presented in the Historical Financial Information.

As at the date of this report, the Target Company II has direct or indirect interests in the following subsidiaries, both of which are private companies:

Note: No audited statutory financial statements have been prepared.

All companies comprising the Target Group II have adopted 31 December as their financial year end date.

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2 SIGNIFICANT ACCOUNTING POLICIES

1. Going concern

As at 31 December 2020, the Target Group II has not yet generated revenue, and is dependent on financial support for business continuance. As disclosed in Note 13, subsequently in January 2021, the Target Company II has become a non-wholly owned subsidiary of the Company. The Historical Financial Information has been prepared on a going concern basis as the Company has undertaken to provide the necessary financial support to the Target Group II. Accordingly, the Target Group II will be able to meet its financial obligations for the foreseeable future.

1. Basis of measurement

The Historical Financial Information is presented in Renminbi (''RMB''), rounded to the nearest thousand. The measurement basis used in the preparation of the financial statements is the historical cost basis.

1. Use of estimates and judgements

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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

Judgements made by management in the application of IFRSs that have significant effect on the consolidated financial statement and major sources of estimation uncertainty are discussed in Note 9.

1. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Target Company II and its subsidiaries. Control is achieved when the Target Company II:

. has power over the investee;

. is exposed, or has rights, to variable returns from its involvement with the investee; and

. has the ability to use its power to affect its returns.

The Target Group II 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.

When the Target Group II has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Target Group II considers all relevant facts and circumstances in assessing whether or not the Target Group II's voting rights in an investee are sufficient to give it power, including:

. the size of the Target Group II's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

. potential voting rights held by the Target Group II, other vote holders or other parties;

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. rights arising from other contractual arrangements; and

. any additional facts and circumstances that indicate that the Target Group II has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

Consolidation of a subsidiary begins when the Target Group II obtains control over the subsidiary and ceases when the Target Group II 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 Target Group II gains control until the date when the Target Group II ceases to control the subsidiary.

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

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

1. Properties under development for sale

Properties under development for sale which are intended to be sold in the ordinary course of business upon completion of development are classified as current assets, and carried at the lower of cost and net realisable value. Costs include the related land cost, development expenditure incurred and, where appropriate, borrowing costs capitalised. Net realisable value represents the estimated selling price less estimated costs of completion and costs to be incurred in selling the property.

Properties under development for sale are transferred to properties held for sale upon completion.

1. Bank balances
   Bank balances represent cash at bank.
2. Trade and other payables

Other payables are initially recognised at fair value. Subsequent to initial recognition, trade and other payables are stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

1. Borrowings cost

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

1. Income tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

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Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. Apart from differences which arise on initial recognition of assets and liabilities, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period. Deferred tax assets and liabilities are not discounted.

1. Provisions and contingent liabilities

Provisions are recognised when the Target Group II has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

1. Related parties
2. 1. A person, or a close member of that person's family, is related to the Target Group II if that person:
   2. 1. has control or joint control over the Target Group II;
      2. has significant influence over the Target Group II; or
      3. is a member of the key management personnel of the Target Group II or the Target Group II's parent.
   3. An entity is related to the Target Group II if any of the following conditions applies:
   4. 1. The entity and the Target Group II are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
      2. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
      3. Both entities are joint ventures of the same third party.
      4. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
      5. The entity is a post-employment benefit plan for the benefit of employees of either the Target Group II or an entity related to the Target Group II.
      6. The entity is controlled or jointly controlled by a person identified in (a).
      7. A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

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1. The entity, or any member of a group of which it is a part, provides key management personnel services to the Target Group II or to the Target Group II's parent.

The land use right included in properties under development for sale are located in the PRC with lease terms of 50 years.

As at 31 December 2020, the whole balance of properties under development for sale are expected to be completed after twelve months from the end of the reporting period.

As disclosed in Note 5 (a), as at 31 December 2020, the Target Group II is yet to settle the total consideration for acquisition of the land use right and title of the land use right is to be obtained upon settlement of the total consideration.

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1. Pursuant to the land acquisition contract dated 6 November 2020, total consideration for acquisition of the land use right is RMB1,040,000,000, out of which RMB520,000,000 has been settled in 2020 by the Target Group II and the remaining RMB520,000,000 are due on 6 November 2021 and carries an interest rate of 4.35% per annum.
2. As at 31 December 2020, the balance of other payables represent deposits from the Company for acquisition of the equity interest in Target Company II per terms of the relevant equity transfer agreement to settle the amounts due to a shareholder of the Target Company II.
3. As at 31 December 2020, amounts due to a shareholder are unsecured, carry 8% interest rate per annum and due on 9 October 2021.

6 CAPITAL

1. Movements in components of equity

The reconciliation between the opening and closing balances of each component of the Target Group II's consolidated equity is set out in the consolidated statement of changes in equity. Details of the changes in the Target Company II's individual components of equity between the beginning and the end of the Relevant Periods are set out below:

As at 31 December 2020, the registered capital and paid-in capital of the Target Company II was RMB50,000,000.

1. Capital management

The shareholder of the Target Group II actively and regularly reviews and manages its capital return and safety. As part of this review, the shareholder of the Target Group II considers whether the Target Group

1. will be able to repay its debts when they fall due and provides financial support to the Target Group II when needed.

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7 FINANCIAL RISK MANAGEMENT AND FAIR VALUES

Exposure to liquidity risk mainly arises from payables when they fall due. The Target Group II is not exposed to significant interest rate risk and currency risk as it has capitalised all borrowing costs during the course of carrying out property development activities, and no transactions and balances are in foreign currency. The Target Group II's exposure to the liquidity risk and the financial risk management policies and practices used by the Target Group II to manage such risk are described below.

1. Liquidity risk

The Target Group II is responsible for its own cash management, including raising of loans from related parties to cover expected cash demands.

The Target Group II's policy is to regularly monitor its liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short term.

The following table shows the remaining contractual maturities at the end of the reporting period of the Target Group II's financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates) and the earliest date the Target Group II can be required to pay:

(b) Fair values

The directors of the Target Group II consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated statements of financial position approximate their respective fair values at the end of reporting period.

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8 MATERIAL RELATED PARTY TRANSACTIONS

1. Material related party transactions during the Relevant Period are as follows:

For the period from 14 September 2020 (date of establishment) to 31 December 2020

RMB'000

1. Balances with related parties as at the reporting period are as follows:

At 31 December 2020

RMB'000

9 CRITICAL ACCOUNTING JUDGEMENTS IN APPLYING THE TARGET GROUP II'S ACCOUNTING POLICIES

Provision for properties under development for sale

As explained in Note 2(e), the Target Group II's properties under development for sale are stated at the lower of cost and net realisable value. Based on the latest market information, the Target Group II makes estimates of the market price of land based on prevailing market conditions.

If there is an increase in costs to completion or a decrease in net sales value, the net realisable value will decrease and this may result in provision for properties under development for sale. Such provision requires the use of judgement and estimates. Where the expectation is different from the original estimate, the carrying value and provision for properties under development for sale in the periods in which such estimate is changed will be adjusted accordingly.

In addition, given the volatility of the PRC property market and the unique nature of individual properties, the actual outcomes in terms of costs and revenue may be higher or lower than that estimated at the end of the reporting period. Any increase or decrease in the provision would affect profit or loss in future years.

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11 IMMEDIATE AND ULTIMATE HOLDING COMPANIES

At 31 December 2020, the directors consider the immediate holding company of the Target Company II to be Konka Group Co., Ltd and the ultimate holding company of the Target Company II to be Overseas Chinese Town Group Company Limited (''華僑城集團有限公司''). These entities were both established in the PRC. Konka Group Co., Ltd. is a company listed on the main board of the Shenzhen Stock Exchange of which the financial statements are available for public use.

12 POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE ACCOUNTING PERIOD ENDED 31 DECEMBER 2020

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, and a new standard, IFRS 17, Insurance Contracts, which are not yet effective for the accounting period ended 31 December 2020 and which have not been adopted in these financial statements. These developments include the following which may be relevant to the group.

The Target Group II is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the Historical financial statements.

13 SUBSEQUENT EVENTS

In January 2021, the Acquisition was completed and the Target Group II became a non-wholly owned subsidiary of the Company thereupon.

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SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by the Target Company II and its subsidiaries in respect of any period subsequent to 31 December 2020.

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(A) REPORT FROM THE REPORTING ACCOUNTANTS

The following is the text of a report received from the reporting accountants, KPMG, Certified Public Accountants, Hong Kong, in respect of the Group's pro forma financial information for the purpose in this circular.

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

TO THE DIRECTORS OF MODERN LAND (CHINA) CO., LIMITED

We have completed our assurance engagement to report on the compilation of pro forma financial information of Modern Land (China) Co., Limited (the ''Company'') and its subsidiaries (collectively the ''Group'') by the directors of the Company (the ''Directors'') for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 31 December 2020 and related notes as set out in Part B of Appendix III to the circular dated 31 March 2021 (the ''Circular'') issued by the Company. The applicable criteria on the basis of which the Directors have compiled the pro forma financial information are described in Part B of Appendix III to the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the acquisition of 49% equity interest in Chongqing Chengda Real Estate Co., Ltd. (the ''Target Company II'') (the ''Acquisition'') and the acquisition of 18% equity interest in the Target Company II (the ''Further Acquisition'') on the Group's financial position as at 31 December 2020 as if the Acquisition and the Further Acquisition had taken place at 31 December 2020. As part of this process, information about the Group's financial position as at 31 December 2020 has been extracted by the Directors from the published announcement of annual results of the Group for the year ended 31 December 2020.

Directors' Responsibilities for the Pro Forma Financial Information

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

(''HKICPA'').

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Our Independence and Quality Control

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

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

Reporting Accountants' Responsibilities

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

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

HKICPA.

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

The purpose of pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on the unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the events or transactions at 31 December 2020 would have been as presented.

A reasonable assurance engagement to report on whether the pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the

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compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

. the related pro forma adjustments give appropriate effect to those criteria; and

. the pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

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

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

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

Opinion

In our opinion:

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

KPMG

Certified Public Accountants

8th Floor, Prince's Building 10 Chater Road

Central, Hong Kong

29 March 2021

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1. UNAUDITED PRO FORMA FINANCIAL INFORMATION
2. 1. Introduction to the unaudited pro forma financial information

The following is the unaudited pro forma financial information of the Enlarged Group, being the Group together with the Target Company II, as if the Acquisition and the Further Acquisition had been completed on 31 December 2020 for the unaudited pro forma consolidated statement of assets and liabilities. Details of the Acquisition and the Further Acquisition are set out in the section headed ''Letter from the Board'' contained in this Circular.

As at 31 December 2020, the Company has prepaid for consideration associated with the Further Acquisition. The unaudited pro forma financial information of the Enlarged Group has been prepared by the directors of the Company in accordance with Paragraph

4.29 of the Listing Rules, for the purpose of illustrating the effect of the Acquisition pursuant to the terms of the equity transfer agreement signed by Modern Green Development Co., Ltd. (an indirect wholly-owned subsidiary of the Company) for acquisition of 49% equity interest in Target Company II, (the ''Equity Transfer Agreement'') along with the completion of the Further Acquisition, subsequent to which Target Company II would become a non-wholly owned subsidiary of the Company. Because of its hypothetical nature, the unaudited pro forma financial information may not give a true picture of the financial position of the Enlarged Group had the Acquisition been completed as of the specified date or any future date.

The unaudited pro forma financial information of the Enlarged Group is based upon the consolidated statement of financial position of the Group as at 31 December 2020, which has been extracted from the Group's published announcement of annual results for the year ended 31 December 2020, and adjusted on a pro forma basis to reflect the effect of the Acquisition and the Further Acquisition. These pro forma adjustments are (i) directly attributable to the Acquisition and the Further Acquisition and not relating to other future events and decision and (ii) factually supportable based on the terms of the Equity Transfer Agreements.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the historical financial information of the Group set out in the published announcement of annual results of the Group for the year ended 31 December 2020 and other financial information included elsewhere in this Circular.

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