Polytec Asset : SCHEME DOCUMENT RELATING TO (1) PROPOSED PRIVATIZATION OF POLYTEC ASSET HOLDINGS LIMITED BY INTELLINSIGHT HOLDINGS LIMITED BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 86 OF THE COMPANIES ACT; AND (2) PROPOSED WITHDRAWAL OF LISTING

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in the Company, you should at once hand this Scheme Document and the accompanying forms of proxy to the purchaser or transferee or to the licensed securities dealer or registered securities institution or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Scheme Document, 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 Scheme Document.

SCHEME DOCUMENT RELATING TO

1. PROPOSED PRIVATIZATION OF POLYTEC ASSET HOLDINGS LIMITED BY INTELLINSIGHT HOLDINGS LIMITED

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 86 OF THE COMPANIES ACT; AND

(2) PROPOSED WITHDRAWAL OF LISTING

Joint Financial Advisers to Intellinsight Holdings Limited

SOMERLEY CAPITAL LIMITED

Independent Financial Adviser to the Independent Board Committee

This Scheme Document is being issued jointly by the Offeror and the Company. The actions to be taken by the Shareholders are set out in Part II of this Scheme Document. Notices convening the Court Meeting to be held at 10:00 a.m. on Monday, 10 May 2021, and the EGM to be held at 11:00 a.m. on Monday, 10 May 2021 (or as soon as after the Court Meeting has been concluded or adjourned) are set out in Appendix VI and Appendix VII to this Scheme Document respectively. Whether or not you are able to attend the Court Meeting and/or the EGM or any adjournment thereof, you are strongly urged to complete and sign the enclosed pink form of proxy in respect of the Court Meeting and the enclosed white form of proxy in respect of the EGM, in accordance with the instructions printed thereon, and return them to the Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong as soon as possible but in any event not later than the respective times and dates as stated in the relevant form of proxy or Part II of this Scheme Document. If the pink form of proxy in respect of the Court Meeting is not so lodged, it may also be handed to the Chairman of the Court Meeting at the Court Meeting (who shall have absolute discretion whether or not to accept it).

Unless the context requires otherwise, capitalized terms used in this Scheme Document take the meanings ascribed to them in Part I of this Scheme Document under the section headed "Definitions". This Scheme Document comprises also (1) a letter from the Board regarding the Proposal as set out in Part IV of this Scheme Document; (2) a letter from the Independent Board Committee, containing its advice to the Independent Shareholders regarding the Proposal, as set out in Part V of this Scheme Document; (3) a letter from Rainbow Capital, the independent financial adviser to the Independent Board Committee, containing its advice to the Independent Board Committee regarding the Proposal, as set out in Part VI of this Scheme Document; and (4) an Explanatory Statement regarding the Proposal as set out in Part VII of this Scheme Document. The English language text of this Scheme Document shall prevail over the Chinese language text for the purpose of interpretation.

PRECAUTIONARY MEASURES FOR THE COURT MEETING AND EGM

Please see page 31 of this Scheme Document for measures being taken to try to prevent and control the spread of the novel coronavirus ("COVID-19") at

the Court Meeting and EGM, including:

• Compulsory temperature checks
• Compulsory wearing of surgical face masks
• No distribution of refreshments

Any person who does not comply with the precautionary measures may be denied entry into the Court Meeting and EGM venue. In order to facilitate the prevention and control of the coronavirus disease, and to safeguard the health and safety of the Shareholders, the Company strongly advises the Shareholders, particularly the Shareholders who are unwell and or subject to quarantine in relation to COVID-19, that they may appoint any person (including Chairman of the relevant meeting) as a proxy to vote on the resolutions, instead of attending the Court Meeting and EGM in person. Physical attendance in the Court Meeting or the EGM by a Shareholder is not necessary for the purpose of exercising voting rights.

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

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All references in this Scheme Document to times and dates are references to Hong Kong times and dates, except as otherwise specified, and references to the expected date of the court hearing of the petition to sanction the Scheme and to confirm the reduction of the number of issued Shares in the share capital of the Company, and the Effective Date, are the relevant dates in the Cayman Islands. For reference only, Cayman Islands time is 13 hours behind Hong Kong time as at the Latest Practicable Date.

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ACTIONS TO BE TAKEN BY THE SHAREHOLDERS

For the purpose of determining the entitlements of the Scheme Shareholders to attend and vote at the Court Meeting and of the Shareholders to attend and vote at the EGM, the register of members of the Company in respect of the Shares will be closed from Tuesday, 4 May 2021 to Monday, 10 May 2021 (both dates inclusive) and during such period, no registration of transfer of the Shares will be effected. In order to qualify to attend and vote at the Court Meeting and the EGM, all transfers of the Shares accompanied by the relevant share certificates must be lodged with the Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong on or before 4:30 p.m. on Monday, 3 May 2021.

A pink form of proxy for use at the Court Meeting and a white form of proxy for use at the EGM are enclosed with copies of this Scheme Document sent to the relevant Registered Owners.

The register of members of the Company will be closed during such period for the purposes of determining the entitlement of the Scheme Shareholders to attend and vote at the Court Meeting and the entitlement of the Shareholders to attend and vote at the EGM. This book close period is not for determining entitlements under the Proposal.

Whether or not you are able to attend the Court Meeting and/or the EGM, we strongly urge you to complete and sign the enclosed pink form of proxy in respect of the Court Meeting and the enclosed white form of proxy in respect of the EGM, in accordance with the instructions printed thereon, and to lodge them at the office of the Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong. In order to be valid, the pink form of proxy for use at the Court Meeting should be lodged not later than 10:00 a.m., Saturday, 8 May 2021 or be handed to the Chairman of the Court Meeting at the Court Meeting (who shall have absolute discretion whether or not to accept it), and the white form of proxy for use at the EGM should be lodged not later than 11:00 a.m., Saturday, 8 May 2021. The completion and return of the relevant form of proxy for the Court Meeting and/or the EGM will not preclude you from attending and voting in person at the relevant meeting. In such event, the returned form of proxy will be deemed to have been revoked.

If you do not appoint a proxy and you do not attend and vote at the Court Meeting and/or the EGM, you will still be bound by the outcome of the Court Meeting and the EGM if, among other things, the relevant resolutions are passed by the requisite majorities of Scheme Shareholders, Independent Shareholders or Shareholders. We wish to remind you that physical attendance in person at the Court Meeting and EGM is not necessary for the purpose of exercising your voting rights. We strongly advise you, particularly if you are unwell or subject to quarantine in relation to COVID-19, that you may appoint any person as a proxy to vote on the resolutions, instead of attending the Court Meeting and EGM in person.

Voting at the Court Meeting and the EGM will be taken by poll.

The Company will make an announcement in relation to the results of the Court Meeting and the EGM not later than 7:00 p.m. on Monday, 10 May 2021. The Company will make further announcements of the results of the hearing of the petition to, among other things, sanction the Scheme by the Grand Court and, if the Scheme is sanctioned, the Effective Date and the date of withdrawal of the listing of the Shares on the Stock Exchange in accordance with the requirements of the Takeovers Code and the Listing Rules.

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ACTIONS TO BE TAKEN BY PERSONS HOLDING SHARES THROUGH TRUST OR CCASS

The Company will not recognize any person as holding any Shares through any trust. If you are a Beneficial Owner whose Shares are held upon trust by, and registered in the name of, a Registered Owner (other than HKSCC Nominees Limited), you should contact the Registered Owner and provide the Registered Owner with instructions in relation to the manner in which your Shares should be voted at the Court Meeting and/or the EGM. Such instructions should be given in advance of the aforementioned latest time for the lodgment of forms of proxy in respect of the Court Meeting and the EGM in order to provide the Registered Owner with sufficient time to accurately complete and submit his, her or its proxy. To the extent that any Registered Owner requires instructions from any Beneficial Owner in advance of the aforementioned latest time for the lodgment of forms of proxy in respect of the Court Meeting and/or the EGM, any such Beneficial Owner should comply with the requirements of the Registered Owner.

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited, you must, unless you are an Investor Participant, contact your broker, custodian, nominee or other relevant person who is, or has, in turn, deposited such Shares with other CCASS Participant, regarding voting instructions to be given to such persons if you wish to vote at the Court Meeting and/or the EGM. You should contact your broker, custodian, nominee or other relevant person in advance of the latest time for the lodgment of forms of proxy in respect of the Court Meeting and/or the EGM, in order to provide such person with sufficient time to provide HKSCC Nominees Limited with instructions in relation to the manner in which the Shares of the Beneficial Owner should be voted at the Court Meeting and/or the EGM. In accordance with the direction from the Grand Court, for the purpose of calculating the "majority in number", HKSCC Nominees Limited shall be permitted to vote once for and once against the Scheme in accordance with instructions received from CCASS Participants (as defined under the General Rules of CCASS). The number of votes cast in favour of the Scheme and the number of CCASS Participants on whose instructions they are cast and the number of votes cast against the Scheme and the number of CCASS Participants on whose instructions they are cast will be disclosed to the Grand Court and may be taken into account in deciding whether or not the Grand Court should exercise its discretion to sanction the Scheme.

If you are a Beneficial Owner whose Shares are deposited in CCASS, you may also elect to become a Shareholder of record, and thereby have the right to attend and vote at the Court Meeting and the EGM. You can become a Shareholder of record by withdrawing your Shares from CCASS and becoming a Registered Owner of such Shares. For withdrawal of Shares from CCASS and registration thereof, you will be required to pay to CCASS a withdrawal fee per board lot withdrawn, a registration fee for each share certificate issued, stamp duty on each transfer instrument and, if your Shares are held through a financial intermediary, any other relevant fees charged by your financial intermediary. You should contact your broker, custodian, nominee or other relevant person in advance of the latest time for lodging transfers of the Shares into your name so as to qualify to attend and vote at the Court Meeting and the EGM, in order to provide such broker, custodian, nominee or other relevant person with sufficient time to withdraw the Shares from CCASS and register them in your name.

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EXERCISE YOUR RIGHT TO VOTE

IF YOU ARE A SHAREHOLDER OR A BENEFICIAL OWNER, THE COMPANY AND THE OFFEROR STRONGLY ENCOURAGE YOU TO EXERCISE YOUR RIGHT TO VOTE OR GIVE INSTRUCTIONS TO THE RELEVANT REGISTERED OWNER TO VOTE IN PERSON OR BY PROXY AT THE COURT MEETING AND AT THE EGM. IF YOU KEEP ANY SHARES IN A SHARE LENDING PROGRAMME, WE URGE YOU TO RECALL ANY OUTSTANDING SHARES ON LOAN TO AVOID MARKET PARTICIPANTS USING BORROWED SHARES TO VOTE.

IF YOU ARE A BENEFICIAL OWNER WHOSE SHARES ARE DEPOSITED IN CCASS, WE ENCOURAGE YOU TO PROVIDE HKSCC NOMINEES LIMITED WITH INSTRUCTIONS OR MAKE ARRANGEMENTS WITH HKSCC NOMINEES LIMITED IN RELATION TO THE MANNER IN WHICH THOSE SHARES SHOULD BE VOTED AT THE COURT MEETING AND THE EGM WITHOUT DELAY (AS DETAILED IN THE SECTION "ACTIONS TO BE TAKEN BY PERSONS HOLDING SHARES THROUGH TRUST OR CCASS" ABOVE). IF YOU ARE AN INDIVIDUAL SHAREHOLDER WHO WISHES TO ATTEND AND VOTE AT THE COURT MEETING AND/OR THE EGM AND FOR YOUR VOTES TO BE COUNTED INDIVIDUALLY FOR THE PURPOSE OF CALCULATING THE "MAJORITY IN NUMBER" REQUIREMENT AT THE COURT MEETING AND/OR THE NUMBER OF VOTES FOR PASSING THE RESPECTIVE RESOLUTIONS AT THE EGM, YOU SHOULD WITHDRAW YOUR SHARES FROM CCASS AND BECOME A REGISTERED OWNER OF SUCH SHARES.

IF YOU ARE A REGISTERED OWNER HOLDING SHARES ON BEHALF OF BENEFICIAL OWNERS, WE SHOULD BE GRATEFUL IF YOU WOULD INFORM THE RELEVANT BENEFICIAL OWNERS ABOUT THE IMPORTANCE OF EXERCISING THEIR VOTE.

IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU ARE ENCOURAGED TO CONSULT YOUR LICENSED SECURITIES DEALER, BANK MANAGER, SOLICITOR, PROFESSIONAL ACCOUNTANT OR OTHER PROFESSIONAL ADVISER.

NOTICE TO OVERSEAS SHAREHOLDERS

The making of the Proposal to persons with a registered address in jurisdictions outside Hong Kong may be prohibited or affected by the laws of the relevant jurisdictions. Overseas Shareholders who are citizens or residents or nationals of jurisdictions outside Hong Kong should inform themselves about and observe any applicable legal requirements. It is the responsibility of any such person who wishes to accept the Offers to satisfy himself/herself/itself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required or the compliance with other necessary formalities or legal requirements and the payment of any transfer or other taxes or other required payments due in respect of such jurisdiction. The Company, the Offeror, BOCI, Somerley, Rainbow Capital and any other person involved in the Proposal shall be entitled to be fully indemnified and held harmless by such person for any taxes as such person may be required to pay.

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PAST PERFORMANCE AND FORWARD-LOOKING STATEMENTS

The performance and the results of operations of the Group contained in this document are historical in nature and past performance is not a guarantee of the future results of the Group. This document may contain forward-looking statements and opinions that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements and opinions and you should not place undue reliance on such forward-looking statements and opinions. Subject to the requirements of applicable laws, rules and regulations, including the Takeovers Code, none of the Offeror, the Company, BOCI, Somerley, any of their respective directors, officers, employees, agents, affiliates or advisers or any other person involved in the Proposal assumes any obligation to correct or update the forward-looking statements or opinions contained in this document.

Shareholders may obtain free copies of this Scheme Document at the websites maintained by the SFC at www.sfc.hk, by the Stock Exchange at www.hkexnews.hk or by the Company at www.polytecasset.com.

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The following timetable takes into account the procedures of the Grand Court for the Scheme. The expected timetable is indicative only and is subject to change. Further announcement(s) will be made if there is any change to the following expected timetable.

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Shareholders should note that the above timetable is subject to change. Further announcement(s) will be made in the event that there is any change.

Notes:

1. The register of members of the Company will be closed during such period for the purposes of determining the entitlement of the Scheme Shareholders to attend and vote at the Court Meeting and the entitlement of the Shareholders to attend and vote at the EGM. This book close period is not for determining entitlements under the Proposal.
2. The pink form of proxy in respect of the Court Meeting and the white form of proxy in respect of the EGM should be completed and signed in accordance with the instructions respectively printed on them and should be lodged with the Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, as soon as possible but in any event not later than the respective times and dates stated above or, in the case of the pink form of proxy for use at the Court Meeting, they may be handed to the Chairman of the Court Meeting at the Court Meeting (who shall have absolute discretion whether or not to accept it). Completion and return of the relevant form of proxy for the Court Meeting and/or the EGM will not preclude a Scheme Shareholder, an Independent Shareholder or a Shareholder, from attending the meeting and voting in person. In such event, the relevant form of proxy returned will be deemed to have been revoked.

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1. Please see the notice of the Court Meeting set out in Appendix VI to this Scheme Document and the notice of the EGM set out in Appendix VII to this Scheme Document. If a tropical cyclone warning signal No. 8 or above is or is expected to be hoisted, the Government of Hong Kong has announced or is expected to issue an announcement on "extreme conditions" caused by super typhoons or a black rainstorm warning signal is or is expected to be in force at any time after 7:00 a.m. on the date of the Court Meeting and the EGM, the Court Meeting and the EGM will be postponed or adjourned. The Company will post an announcement on the respective websites of the Stock Exchange and the Company to notify the Scheme Shareholders and Shareholders (as the case may be) of the date, time and venue of the rescheduled meetings.
2. The register will be closed as from such date and on such date for the purpose of determining the Scheme Shareholders who are qualified for entitlement under the Scheme.
3. When all the Scheme Conditions (other than delivery of the order for registration) are satisfied or waived (as applicable), the order sanctioning the Scheme may be delivered to the Registrar of Companies in the Cayman
   Islands at which point it may become effective and binding on the Offeror, the Company and all the Scheme Shareholders. The Effective Date would be earlier than the date of announcement of the Effective Date and the withdrawal of listing of the Shares on the Stock Exchange due to the timing difference between Hong Kong and
   Cayman Islands.
4. If all the Scheme Conditions are fulfilled (or waived as applicable), the Offeror will implement the Proposal to cancel and extinguish the Scheme Shares and the Company will apply to the Stock Exchange for the withdrawal of listing of the Shares on the Stock Exchange.
5. Cheques for the cash entitlements to the Scheme Shareholders will be despatched within 7 business days (as defined under the Takeovers Code) by ordinary post at the risk of the recipients to their registered addresses shown in the register of members of the Company at the Scheme Record Time on the Scheme Record Date.

All references in this Scheme Document to times and dates are references to Hong Kong times and dates, except as otherwise specified, and references to the expected date of the court hearing of the petition to sanction the Scheme and to confirm the reduction of the number of issued Shares in the share capital of the Company, and the Effective Date, are the relevant dates in the Cayman Islands. For reference only, Cayman Islands time is 13 hours behind Hong Kong time as at the Latest Practicable Date.

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POLYTEC ASSET HOLDINGS LIMITED

保 利 達 資 產 控 股 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 208)

1. PROPOSED PRIVATIZATION OF POLYTEC ASSET HOLDINGS LIMITED BY INTELLINSIGHT HOLDINGS LIMITED

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 86 OF THE COMPANIES ACT; AND

1. PROPOSED WITHDRAWAL OF LISTING

1. INTRODUCTION

On 17 January 2021, the Offeror requested the Board to put forward the Proposal, which will involve the cancellation and extinguishment of the Scheme Shares, the payment of the

Cancellation Price of HK$1.50 per Scheme Share to Scheme Shareholders, and the withdrawal of the listing of the Shares on the Stock Exchange. The Proposal will be carried out by way of the Scheme.

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The purpose of this Scheme Document is to provide you with further information regarding the Proposal and the expected timetable and to give you notices of the Court Meeting and the EGM (together with proxy forms in relation thereto). Your attention is also drawn to the letter from the Independent Board Committee set out in Part V of this Scheme Document, the letter from Rainbow Capital set out in Part VI of this Scheme Document, the Explanatory Statement set out in Part VII of this Scheme Document, the terms of the Scheme set out in Appendix V to this Scheme Document, the property valuation report from Vigers in respect of the property interests of the Group in Hong Kong set out in Appendix III to this Scheme Document and the property valuation report from Cushman & Wakefield in respect of the property interests of the Group in the PRC and Macau set out in Appendix IV to this Scheme Document.

2. THE SCHEME

Under the Scheme, the Scheme Shares will be cancelled and extinguished and, in consideration thereof, each Scheme Shareholder will be entitled to receive the Cancellation Price in cash for each Scheme Share cancelled and extinguished.

The total consideration payable to the Scheme Shareholders for the Scheme Shares cancelled and extinguished will be paid by the Offeror in cash.

The Cancellation Price will not be increased, and the Offeror does not reserve the right to do so.

As at the Latest Practicable Date, the Company has not declared any dividend which remains unpaid and the Company does not intend to declare and/or pay any dividend during the Offer Period.

The Cancellation Price of HK$1.50 per Scheme Share cancelled and extinguished represents:

• a premium of approximately 2.04% over the closing price of HK$1.47 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
• a premium of approximately 61.29% over the closing price of HK$0.93 per Share as quoted on the Stock Exchange on the Last Trading Day;
• a premium of approximately 63.22% over the average closing price of HK$0.919 per
  Share based on the daily closing prices as quoted on the Stock Exchange for the 10 trading days up to and including the Last Trading Day;
• a premium of approximately 72.55% over the average closing price of approximately HK$0.8693 per Share based on the daily closing prices as quoted on the Stock Exchange for the 30 trading days up to and including the Last Trading Day;
• a premium of approximately 94.23% over the average closing price of approximately HK$0.7723 per Share based on the daily closing prices as quoted on the Stock Exchange for the 60 trading days up to and including the Last Trading Day;
• a premium of approximately 104.14% over the average closing price of approximately HK$0.7348 per Share based on the daily closing prices as quoted on the Stock Exchange for the 90 trading days up to and including the Last Trading Day;

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• a premium of approximately 105.82% over the average closing price of approximately HK$0.7288 per Share based on the daily closing prices as quoted on the Stock Exchange for the 120 trading days up to and including the Last Trading Day;
• a premium of approximately 99.12% over the average closing price of approximately HK$0.7533 per Share based on the daily closing prices as quoted on the Stock Exchange for the 180 trading days up to and including the Last Trading Day;
• a discount of approximately 52.43% to the audited consolidated total equity attributable to equity shareholders of the Company of approximately HK$3.1530 per Share as at 31
  December 2019, calculated based on the audited consolidated total equity attributable to equity shareholders of the Company of approximately HK$13,996,134,000 as at 31 December 2019 and the 4,438,967,838 Shares in issue as at the Latest Practicable Date;
• a discount of approximately 53.02% to the audited consolidated total equity attributable to equity shareholders of the Company of approximately HK$3.1926 per Share as at 31 December 2020, calculated based on the audited consolidated total equity attributable to equity shareholders of the Company of approximately HK$14,171,642,000 as at 31 December 2020 and the 4,438,967,838 Shares in issue as at the Latest Practicable
  Date;
• a discount of approximately 54.61% to the adjusted unaudited consolidated net asset value of the Group of approximately HK$3.3049 per share, which took into account
  (i) the audited consolidated total equity attributable to the equity shareholders of the Company as at 31 December 2020 and (ii) the valuation of the Group's property interests as at 31 January 2021, as detailed in Appendix I to this Scheme Document; and
• a discount of approximately 51.65% to the unaudited consolidated total equity attributable to equity shareholders of the Company of approximately HK$3.1026 per Share as at 30 June 2020, calculated based on the total equity attributable to equity shareholders of the Company of approximately HK$13,772,436,000 as at 30 June 2020 and the 4,438,967,838 Shares in issue as at the Latest Practicable Date.

The Cancellation Price has been determined on an arm's length basis after taking into account, among other things, the recent and historical market prices of the Shares, publicly available financial information of the Company, and other privatization transactions in Hong Kong in recent years.

Highest and lowest prices of the Shares

During the three years up to and including the Last Trading Day, the highest closing price of the Shares as quoted on the Stock Exchange was HK$1.16 per Share on 2 May 2019 and 3 May 2019, and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.58 per Share on 5 March 2018.

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The Scheme Conditions

The implementation of the Proposal is, and the Scheme will become effective and binding on the Offeror, the Company and the Scheme Shareholders, subject to the fulfilment or waiver (as applicable) of the following Scheme Conditions:

1. the approval of the Scheme (by way of poll) by a majority in number of the Scheme
   Shareholders representing not less than 75% in value of the Shares held by the Scheme
   Shareholders present and voting either in person or by proxy at the Court Meeting;
2. (i) the Scheme is approved (by way of poll) by the Independent Shareholders holding at least 75% of the votes attaching to the Shares held by the Independent Shareholders that are voted either in person or by proxy at the Court Meeting; and (ii) the number of votes cast (by way of poll) by the Independent Shareholders present and voting either in person or by proxy at the Court Meeting against the resolution to approve the Scheme at the Court Meeting is not more than 10% of the votes attaching to all Shares held by all the Independent Shareholders;
3. (i) the passing of a special resolution by a majority of not less than three-fourths of the votes cast by the Shareholders present and voting in person or by proxy at the EGM to approve and give effect to the reduction of the number of issued Shares in the share capital of the Company by cancelling and extinguishing the Scheme Shares, (ii) the passing of a special resolution by a majority of not less than three-fourths of the votes cast by the Shareholders present and voting in person or by proxy at the EGM to approve the withdrawal of listing of the Shares subsequent to the Scheme becoming effective, and (iii) the passing of an ordinary resolution by a simple majority of the votes cast by the Shareholders present and voting in person or by proxy at the EGM to immediately thereafter increase the number of issued Shares in the share capital of the Company to the amount prior to the cancellation and extinguishment of the Scheme Shares and apply the reserve created as a result of the aforesaid cancellation and extinguishment of the Scheme Shares to pay up in full at par such number of new Shares as is equal to the number of Scheme Shares cancelled and extinguished as a result of the Scheme, credited as fully paid, for issuance to the Offeror;
4. the Grand Court's sanction of the Scheme (with or without modifications) and its confirmation of the reduction of the number of issued Shares in the share capital of the Company, and the delivery to the Registrar of Companies in the Cayman Islands of a copy of the order of the Grand Court for registration;
5. compliance, to the extent necessary, with the procedural requirements and conditions, if any, under Sections 15 and 16 of the Companies Act in relation to the reduction of the number of issued Shares in the share capital of the Company referred to in paragraph (c)(i) above;
6. all authorizations, registrations, filings, rulings, consents, opinions, permissions and approvals in connection with the Proposal required before the Scheme becoming effective having been obtained from, given by or made with (as the case may be) the governments and/or government bodies, regulatory bodies, courts or institutions, in the
   Cayman Islands, Hong Kong and any other relevant jurisdictions;

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1. all authorizations, registrations, filings, rulings, consents, opinions, permissions and approvals in connection with the Proposal required before the Scheme becoming effective remaining in full force and effect without variation, and all necessary statutory or regulatory obligations in all relevant jurisdictions in connection with the Proposal having been complied with and no requirement having been imposed by any governments and/or government bodies, regulatory bodies, courts or institutions which is not expressly provided for, or is in addition to requirements expressly provided for, in relevant laws, rules, regulations or codes in connection with the Proposal or any matters, documents (including circulars) or things relating thereto, in each aforesaid case up to and at the time when the Scheme becomes effective;
2. all necessary consents which may be required for the implementation of the Proposal under any existing contractual obligations of the Company being obtained or waived by the relevant party(ies), where any failure to obtain such consent or waiver would have a material adverse effect on the business of the Group;
3. no government, governmental, quasi-governmental, statutory or regulatory body, court or agency in any jurisdiction having taken or instituted any action, proceeding, suit, investigation or enquiry or enacted, made or proposed, and there not continuing to be outstanding, any statute, regulation, demand or order that would make the Proposal or its implementation in accordance with its terms void, unenforceable, illegal or impracticable (or which would impose any material and adverse conditions or obligations with respect to the Proposal or its implementation in accordance with its terms) from the Announcement Date up to and at the time when the Scheme becomes effective, other than such actions, proceedings, suits, investigations or enquiries as would not have a material adverse effect on the legal ability of the Offeror to proceed with the Proposal;
4. there being no provision of any arrangement, agreement, licence or other instrument to which any member of the Group is a party or by or to which any of them is or are or may be bound, entitled or subject which as a consequence of the implementation of the Proposal could or might reasonably result in, to an extent which is material in the context of the Group taken as a whole from the Announcement Date up to and at the time when the Scheme becomes effective:
5. 1. any monies borrowed by or other indebtedness (actual or contingent) of any member of the Group being repayable or being capable of being declared payable prior to their stated maturity;
   2. the creation of any mortgage, charge or other security interest over the whole or any material part of the business, property or assets of any member of the Group or any such security (whether arising or having arisen) becoming enforceable; and
   3. any such arrangement, agreement, licence, permit, franchise or other instrument being terminated or adversely modified or any material action being taken or any material obligation arising thereunder; and

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1. each member of the Group remaining solvent and not being subject to any insolvency or bankruptcy proceedings or likewise and no liquidator, receiver or other person carrying out any similar function having been appointed anywhere in the world in respect of the whole or any substantial part of the assets and undertakings of any member of the Group from the Announcement Date up to and at the time when the Scheme becomes effective.

The Offeror reserves the right to waive Scheme Conditions (f) to (k) either in whole or in part, either generally or in respect of any particular matter. Scheme Conditions (a) to (e) cannot be waived in any event. Pursuant to Note 2 to Rule 30.1 of the Takeovers Code, the Offeror may only invoke any or all of the Scheme Conditions as a basis for not proceeding with the Proposal if the circumstances which give rise to the right to invoke any such Scheme Condition are of material significance to the Offeror in the context of the Proposal. The Company has no right to waive any of the Scheme Conditions. All of the Scheme Conditions will have to be fulfilled or waived, as applicable, on or before the Long Stop Date, failing which the Scheme will lapse. When the Scheme Conditions are satisfied or waived (as applicable), the Scheme will become effective and binding on the Offeror, the Company and all the Scheme Shareholders.

Assuming that the Scheme Conditions are satisfied or validly waived (as applicable), it is expected that the Scheme will become effective on Friday, 21 May 2021 (Cayman Islands Time). A detailed timetable is set out in Part III of this Scheme Document.

In respect of Scheme Conditions (f) to (h), apart from Scheme Condition (d) and the approval from each of the board of the Offeror and the Company in respect of the implementation of the Proposal, the directors of the Offeror and the Company are not currently aware of any other authorizations or consents which are required. As at the Latest Practicable Date, the approvals from each of the board of the Offeror and the Company in respect of the implementation of the Proposal have been obtained. None of the above Scheme Conditions have been fulfilled or waived as at the Latest Practicable Date.

If the Scheme is approved, the share capital of the Company will, on the Effective Date, be reduced by cancelling and extinguishing the Scheme Shares. Upon such reduction, the share capital of the Company will be increased to its former amount by the issuance at par to the Offeror, credited as fully paid, of the aggregate number of Shares as is equal to the number of Scheme Shares cancelled and extinguished. The reserve created in the Company's books of account as a result of the capital reduction will be applied in paying up in full at par the new Shares so allotted and issued, credited as fully paid, to the Offeror.

Shareholders and potential investors of the Company should be aware that the implementation of the Proposal is subject to the Scheme Conditions being fulfilled or waived, as applicable, and thus the Proposal may or may not be implemented and the Scheme may or may not become effective. Shareholders and potential investors of the Company should therefore exercise caution when dealing in the securities of the Company. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers.

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3. REASONS FOR AND BENEFITS OF THE PROPOSAL

The Proposal represents a good opportunity for the Scheme Shareholders to realise their investment with a substantial premium against the backdrop of low liquidity

The Offeror considers that the Proposal will provide the Scheme Shareholders with an opportunity to realise their investment in the Company at a price above the prevailing market price of the Shares.

The Cancellation Price, being HK$1.50 per Scheme Share, represents a premium of approximately 61.29% over the closing price of HK$0.93 per Share as quoted on the Stock Exchange on the Last Trading Day. It also represents a premium of approximately 72.55%, 94.23%, 104.14%, 105.82% and 99.12% over the average closing price of approximately HK$0.8693, HK$0.7723, HK$0.7348, HK$0.7288 and HK$0.7533 per Share based on the daily closing prices as quoted on the Stock Exchange for the 30, 60, 90, 120 and 180 trading days up to and including the Last Trading Day, respectively.

During the three years up to and including the Last Trading Day, the lowest and highest closing prices per Share as quoted on the Stock Exchange were HK$0.58 and HK$1.16, respectively. The Cancellation Price represents a premium of approximately 158.62% to the lowest closing price and a premium of approximately 29.31% to the highest closing price in the above period.

The liquidity of the Shares has been at a relatively low level over a long period of time. For the one year up to and including the Last Trading Day, the average daily trading volume of the Shares was approximately 1,443,000 Shares, representing only approximately 0.03% of the issued Shares as of the Last Trading Day and the average daily turnover was approximately HK$1,043,000. The low trading liquidity of the Shares makes it difficult for Shareholders to execute significant on-market disposals without adversely affecting the market price of the Shares.

The Proposal is intended to provide the Scheme Shareholders with an opportunity to realise their entire investment in the Company for cash at a substantial premium over market prices of the Shares without having to suffer any illiquidity discount.

Costs and expenses of maintaining the Company's listing status

The Company has not in recent years conducted any equity fund raising activities, being primary benefit of a listing status. Continued listing of the Shares is not expected to provide any meaningful benefit to the Company in the near term.

The listing of the Company involves administrative, compliance and other listing-related costs and expenses. If the Proposal is successful, these costs and expenses would be eliminated and thus allow the Offeror and the Company to allocate more resources for the development of the business of the Group.

Furthermore, following the implementation of the Proposal, the Company can be relieved from market expectations and share price fluctuation as a publicly listed company. The management of the Company can also utilise the resources which would otherwise go towards administrative, compliance and other listing-related matters of the Company on the business operations of the Group.

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The Proposal will enable the Group to execute its strategies more efficiently and effectively

The principal activities of the Group are property investment and development, oil exploration and production, manufacturing of ice, provision of cold storage services and financial investments. In order to achieve long-term commercial development and maintain competitiveness, the Group needs to assess its strategies and implement appropriate changes to its business model if necessary. Following the implementation of the Proposal, the Group will be in a better position to execute its business strategies more efficiently and effectively as a private entity. With the Company becoming an unlisted wholly-owned subsidiary of the Offeror, the Offeror considers that it will help improving the Company's operational efficiency and achieve economies of scale, for example through resources sharing with the Offeror such as sharing of expertise, hence achieving cost savings.

1. TOTAL CONSIDERATION AND FINANCIAL RESOURCES
   The Proposal will involve the cancellation and extinguishment of the Scheme Shares at the
   Cancellation Price of HK$1.50 per Scheme Share cancelled and extinguished. As at the Latest Practicable Date, there are 4,438,967,838 Shares in issue of which the Offeror holds an aggregate of 2,615,636,918 Shares (representing approximately 58.92% of the issued share capital of the Company), and there are 1,823,330,920 Scheme Shares in issue. There are no outstanding options, warrants, derivatives or other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) issued by the Company that carry a right to subscribe for or which are convertible into Shares.
   On the assumption that there will be no change in the shareholding structure of the Company before completion of the Proposal and based on the Cancellation Price of HK$1.50 per Scheme Share and a total of 1,823,330,920 Scheme Shares, the total consideration required for the Scheme is approximately HK$2,735 million.
   The Offeror intends to finance the implementation of the Scheme through available loan facilities. BOCI, one of the joint financial advisers to the Offeror, is satisfied that sufficient financial resources are available to the Offeror for discharging its obligations in respect of the full implementation of the Scheme.
2. SHAREHOLDING STRUCTURE OF THE COMPANY
   As at the Latest Practicable Date, the total authorized share capital of the Company is HK$1,050,000,000. The authorized share capital of the Company for its ordinary shares is HK$1,000,000,000 divided into 10,000,000,000 Shares at a par value of HK$0.10 each and the authorized share capital of the Company for its preference shares is HK$50,000,000 divided into 5,000,000,000 shares at a par value of HK$0.01 each. The Company has 4,438,967,838
   Shares in issue and no preference shares in issue.

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The table below sets out the simplified shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) on the basis that the Scheme becomes effective:

Notes:

1. All percentages in the above table are approximations. The percentages may not add up to the relevant total or sub-total percentage due to rounding.
2. Each of Mr. Yeung Kwok Kwong, Ms. Wong Yuk Ching and Ms. Chio Koc Ieng is an executive Director and is deemed to be a party acting in concert with the Offeror under Class (6) of the definition of "acting in concert" under the Takeovers Code.
3. Mr. Lai Ka Fai is a non-executive Director and a director of the Offeror and is deemed to be a party acting in concert with the Offeror under Class (2) and Class (6) of the definition of "acting in concert" under the
   Takeovers Code.
4. Ms. Or Pui Ying, Peranza is a non-executive Director and the daughter of Mr. Or Wai Sheun and is deemed to be a party acting in concert with the Offeror under Class (6) and Class (8) of the definition of "acting in concert" under the Takeovers Code.
5. Mr. Or Pui Kwan is the son of Mr. Or Wai Sheun and is deemed to be a party acting in concert with the Offeror under Class (8) of the definition of "acting in concert" under the Takeovers Code.

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As at the Latest Practicable Date, there are no options, warrants or convertible securities in respect of the Shares held, controlled or directed by the Offeror and the Offeror Concert Parties, or outstanding derivatives in respect of the Shares entered into by the Offeror and the Offeror Concert Parties. The Company does not have in issue any warrants, options, derivatives, convertible securities or other securities convertible into Shares as at the Latest Practicable Date.

6. FINANCIAL INFORMATION OF THE GROUP

Based on the published consolidated audited financial statements of the Company, the profit before and after taxation and total comprehensive income attributable to equity shareholders of the Company for the three years ended 31 December 2020 and the total equity attributable to equity shareholders of the Company as at 31 December 2018, 2019 and 2020 are as follows:

7. INFORMATION ON THE COMPANY AND THE OFFEROR'S INTENTION REGARDING THE COMPANY

The Company was incorporated in the Cayman Islands with limited liability. The Shares have been listed on the Main Board of the Stock Exchange since 9 September 1998 with the stock code 208. The Group is principally engaged in property investment and development, oil exploration and production, manufacturing of ice, provision of cold storage services and financial investments.

Following implementation of the Proposal, the Offeror intends that the Company would continue carrying on its current business and does not intend to make any major changes to the current operations, or discontinue the employment of the employees of the Company nor do they have plans to redeploy any of the fixed assets of the Company after implementation of the Proposal. The Offeror will continue to monitor the Group's performance and assess and implement appropriate strategies for the Group and its business.

The Board is aware that following the implementation of the Proposal, the Offeror intends that the Company would continue carrying on its current business and does not intend to make any major changes to the current operations, or discontinue the employment of the employees of the Company nor do they have plans to redeploy any of the fixed assets of the Company after implementation of the Proposal. The Board is aware that the Offeror will continue to monitor the Group's performance and assess and implement appropriate strategies for the Group and its business.

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1. INFORMATION ON THE OFFEROR
   The Offeror was incorporated in British Virgin Islands with limited liability and is principally engaged in investment holding.
   The Offeror is ultimately wholly owned by Mr. Or Wai Sheun, an executive Director.
   As at the Latest Practicable Date, the Offeror held 2,615,636,918 Shares (representing approximately 58.92% of the issued share capital of the Company).
2. INDEPENDENT BOARD COMMITTEE
   The Independent Board Committee, comprising Mr. Liu Kwong Sang, Dr. Tsui Wai Ling,
   Carlye, and Prof. Dr. Teo Geok Tien Maurice, each an independent non-executive Director, has been established by the Board to make a recommendation to the Independent Shareholders as to whether or not the terms of the Proposal are fair and reasonable and as to voting. Ms. Or Pui Ying, Peranza, a non-executive Director, is the daughter of Mr. Or Wai Sheun, the ultimate beneficial owner of the Offeror. Mr. Lai Ka Fai, a non-executive Director, is a director of the Offeror. They are therefore not considered to be independent for the purpose of Rule 2.8 of the Takeovers Code and are excluded from members of the Independent Board Committee.
   The Independent Board Committee has given its recommendation as set out in Part V of this Scheme Document after taking into account the advice of Rainbow Capital. The Independent
   Shareholders are reminded to carefully read this Scheme Document, including the letter of advice from the Independent Financial Adviser to the Independent Board Committee set out in
   Part VI of this Scheme Document, before making a decision.
3. INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT BOARD COMMITTEE
   Rainbow Capital has been appointed as the independent financial adviser to advise the Independent Board Committee in connection with the Proposal. The appointment of Rainbow Capital as the independent financial adviser has been approved by the Independent Board
   Committee.
   The full text of the letter from Rainbow Capital is set out in Part VI of this Scheme Document.
4. WITHDRAWAL OF LISTING OF THE SHARES
   Upon the Scheme becoming effective, the Scheme Shares will be cancelled and extinguished and the share certificates for the Scheme Shares will thereafter cease to have effect as documents or evidence of title. The Company will apply to the Stock Exchange for the withdrawal of the listing of the Shares on the Stock Exchange pursuant to Rule 6.15(2) of the Listing Rules. The Shareholders will be notified of the last day for dealing in the Shares and the date on which the Scheme and the withdrawal of the listing of the Shares on the Stock Exchange will become effective. A detailed timetable of the Scheme is set out in Part III of this Scheme Document, which contains, inter alia, further details of the Proposal.
   The listing of the Shares on the Stock Exchange will not be withdrawn if the Scheme does not become effective.

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1. IF THE SCHEME IS NOT APPROVED OR OTHERWISE LAPSES
   Subject to the requirements of the Takeovers Code, the Scheme will lapse if any of the Scheme
   Conditions has not been fulfilled or waived, as applicable, on or before the Long Stop Date.
   If the Scheme is not approved or otherwise lapses, there are restrictions under the Takeovers Code on making subsequent offers, to the effect that neither the Offeror nor any person who acted in concert with it in the course of the Proposal (nor any person who is subsequently acting in concert with any of them) may, within 12 months from the date on which the Scheme is not approved or otherwise lapses, announce an offer or possible offer for the Company, except with the consent of the Executive.
2. OVERSEAS SHAREHOLDERS
   The making and implementation of the Scheme to Scheme Shareholders who are not resident in Hong Kong may be subject to the laws of the relevant jurisdictions in which such Scheme
   Shareholders are located. Such Scheme Shareholders should inform themselves about and observe any applicable legal, tax or regulatory requirements. It is the responsibility of any Overseas Shareholders wishing to take any action in relation to the Proposal to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such jurisdiction.
   Any acceptance by Overseas Shareholders will be deemed to constitute a representation and warranty from such persons to the Company, the Offeror and their respective advisers, that those laws and regulatory requirements have been complied with. If such Overseas Shareholders are in doubt as to their positions, they should consult their professional advisers.
   As at the Latest Practicable Date, to the Company's best knowledge, there were 2 Shareholders whose addresses as shown in the register of members of the Company were situated in the
   United Kingdom (the "United Kingdom Shareholders"), 18 Shareholders whose addresses as shown in the register of members of the Company were situated in the PRC (the "PRC Shareholders"), 4 Shareholders whose addresses as shown in the register of members of the Company were situated in Canada (the "Canada Shareholders"), 2 Shareholders whose addresses as shown in the register of members of the Company were situated in Australia (the "Australia Shareholders"), 2 Shareholders whose addresses as shown in the register of members of the Company were situated in Singapore (the "Singapore Shareholders") and a Shareholder whose address as shown in the register of members of the Company was situated in Macau (the "Macau Shareholder"). The Company has made an enquiry with its legal advisers in the United Kingdom (the "United Kingdom Legal Advisers"), its legal advisers in the PRC (the "PRC Legal Advisers"), its legal advisers in Canada (the "Canada Legal Advisers"), its legal advisers in Australia (the "Australia Legal Advisers"), its legal advisers in Singapore (the "Singapore Legal Advisers") and its legal advisers in Macau (the "Macau Legal Advisers") as to whether there are any legal restrictions or requirements of the relevant body or stock exchange under the laws of the United Kingdom, the PRC, Canada, Australia, Singapore and Macau with respect to extending the Scheme and despatching the Scheme Document to the United Kingdom Shareholders, the PRC Shareholders, the Canada Shareholders, the
   Australia Shareholders, the Singapore Shareholders and the Macau Shareholder, respectively.

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The United Kingdom Legal Advisers, the PRC Legal Advisers, the Canada Legal Advisers, the Singapore Legal Advisers and the Macau Legal Advisers advised that there is no restriction or requirement (including but not limited to registration requirement) under the laws or regulations of the United Kingdom, the PRC, Canada, Singapore and Macau (as the case may be) for extending the Scheme and despatching the Scheme Document to the United Kingdom Shareholders, the PRC Shareholders, the Canada Shareholders, the Singapore Shareholders or the Macau Shareholder (as the case may be), and the Australia Legal Advisers advised that there are such restrictions or requirements (including but not limited to additional disclosure requirements) under the laws or regulations of Australia for extending the Scheme and despatching the Scheme Document to the Australia Shareholders which were addressed by way of a relief application to the Australian Securities & Investments Commission for exemptions from these requirements under sections 926A(2) and 1020F(1)(a) of the Corporations Act 2001 (Cth) and which was granted by the Australian Securities & Investments Commission on 9 April 2021. Therefore, the Scheme will be extended to the United Kingdom Shareholders, the PRC Shareholders, the Canada Shareholders, the Australia Shareholders, the Singapore Shareholders and the Macau Shareholder and the Company will not apply for the waivers required by the Executive pursuant to Note 3 to Rule 8 of the Takeovers Code in respect of extending the Scheme and despatching the Scheme Document to the United Kingdom Shareholders, the PRC Shareholders, the Canada Shareholders, the Australia Shareholders, the Singapore Shareholders and the Macau Shareholder.

1. TAX AND INDEPENDENT ADVICE
   Your attention is drawn to the paragraph headed "21. Taxation" as set out in Part VII of this
   Scheme Document.
   Scheme Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting the Proposal. It is emphasised that none of the Offeror, the Offeror Concert Parties and the Company or any of their respective directors, officers or associates or any other person involved in the Proposal accepts responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Proposal.
2. SCHEME SHARES, COURT MEETING, AND EGM
   As at the Latest Practicable Date, the Offeror holds an aggregate of 2,615,636,918 Shares representing approximately 58.92% of the total number of issued Shares in the share capital of the Company. Such 2,615,636,918 Shares will not constitute Scheme Shares and will not be voted on the Scheme at the Court Meeting.
   The Offeror will undertake to the Grand Court that it will be bound by the Scheme, so as to ensure that it will comply with and be subject to the terms and conditions of the Scheme.
   Each of Mr. Yeung Kwok Kwong, Ms. Wong Yuk Ching and Ms. Chio Koc Ieng is an executive Director. Given each of them is presumed to be acting in concert with the Offeror under Class (6) of the definition of "acting in concert" under the Takeovers Code, each of them will be required to abstain from voting at the Court Meeting for the purpose of the
   Takeovers Code. Each of them is not an Independent Shareholder but is qualified as a Scheme
   Shareholder.

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Ms. Or Pui Ying, Peranza, a non-executive Director and the daughter of Mr. Or Wai Sheun, is presumed to be acting in concert with the Offeror under Class (6) and Class (8) of the definition of "acting in concert" under the Takeovers Code. She will be required to abstain from voting at the Court Meeting for the purpose of the Takeovers Code. She is not an Independent Shareholder but is qualified as a Scheme Shareholder.

Mr. Or Pui Kwan is the son of Mr. Or Wai Sheun and is presumed to be acting in concert with the Offeror under Class (8) of the definition of "acting in concert" under the Takeovers Code. He will be required to abstain from voting at the Court Meeting for the purpose of the Takeovers Code. He is not an Independent Shareholder but is qualified as a Scheme Shareholder.

Mr. Lai Ka Fai, a non-executive Director and a director of the Offeror, is presumed to be acting in concert with the Offeror under Class (2) and Class (6) of the definition of "acting in concert" under the Takeovers Code. He will be required to abstain from voting at the Court Meeting for the purpose of the Takeovers Code. He is not an Independent Shareholder but is qualified as a Scheme Shareholder.

Each of BOCI and Somerley is presumed to be acting in concert with the Offeror under class

1. of the definition of "acting in concert" in the Takeovers Code. As at the Latest Practicable Date, no Shares are owned, controlled or directed by each of BOCI and Somerley.

All Shareholders will be entitled to attend the EGM and vote on, among other things, (i) a special resolution to approve and give effect to the reduction of the number of issued Shares in the share capital of the Company by cancelling and extinguishing the Scheme Shares,

1. a special resolution to approve the withdrawal of listing of the Shares subsequent to the Scheme becoming effective, and (iii) an ordinary resolution to immediately thereafter increase the number of issued Shares in the share capital of the Company to the amount prior to the cancellation and extinguishment of the Scheme Shares and apply the reserve created as a result of the aforesaid cancellation and extinguishment of the Scheme Shares to pay up in full at par such number of new Shares as is equal to the number of Scheme Shares cancelled and extinguished as a result of the Scheme, credited as fully paid, for issuance to the Offeror.

The Offeror has undertaken that if the Scheme is approved at the Court Meeting, it will cast the votes in respect of those Shares held by it in favour of the resolutions to be proposed at the EGM.

16. COSTS OF THE SCHEME

In light of the recommendation of the Independent Board Committee as set out in Part V of this Scheme Document and the recommendation of Rainbow Capital as set out in Part VI of this Scheme Document, Rule 2.3 of the Takeovers Code is not applicable. The Offeror and the Company have agreed that all costs, charges and expenses of the advisers and counsels appointed by the Company, including Rainbow Capital, will be borne by the Company, all costs, charges and expenses of the advisers and counsels appointed by the Offeror will be borne by the Offeror, and other costs, charges and expenses of the Proposal incurred by each of the Offeror and the Company will be borne by them respectively.

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17. GENERAL

The Offeror has appointed BOCI and Somerley as its joint financial advisers in connection with the Proposal.

There are no arrangements (whether by way of option, indemnity or otherwise) in relation to shares of the Offeror or the Company which might be material to the Proposal (see Note 8 to Rule 22 of the Takeovers Code).

There are no agreements or arrangements to which the Offeror is a party which relate to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Proposal.

The Offeror and the Offeror Concert Parties have not borrowed or lent any Shares or any other securities of the Company as at the Latest Practicable Date.

Other than the Cancellation Price, the Offeror or the Offeror Concert Parties have not paid and will not pay any other consideration, compensation or benefit in whatever form to the Scheme

Shareholders or persons acting in concert with them in relation to the Scheme Shares.

As at the Latest Practicable Date, there are no options, warrants or convertible securities in respect of the Shares held, controlled or directed by the Offeror and the Offeror Concert Parties, or outstanding derivatives in respect of the Shares entered into by the Offeror and the Offeror Concert Parties. No irrevocable commitment to vote for or against the Proposal has been received by the Offeror, as at the Latest Practicable Date.

As at the Latest Practicable Date, there is no understanding, arrangement or agreement or special deal between (i) any Scheme Shareholders and persons acting in concert with them; and (ii)(a) the Offeror and the Offeror Concert Parties or (b) the Company, its subsidiaries or associated companies.

Save for the following, none of the Offeror or the Offeror Concert Parties had any dealings in the relevant securities of the Company during the Relevant Period.

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1. Distribution in Specie

On 30 October 2020, Kowloon Development Company Limited ("KDC") distributed 3,141,605,560 Shares via Marble King International Limited (a wholly-owned subsidiary of KDC) as special dividend to the qualifying shareholders of KDC in proportion to their respective shareholdings in KDC on the basis for every 1 ordinary share of KDC held for 2.67 Shares (the "Distribution in Specie"). Details of the Shares involved with respect to the Offeror and the Offeror Concert Parties in connection with such distribution are as follows:

Notes:

1. Prior to the Distribution in Specie, Mr. Or Wai Sheun, through its controlled corporations (including
   KDC), held 3,225,446,444 Shares. 3,141,605,560 Shares were distributed in connection with the Distribution in Specie, in which the Offeror received 2,218,897,156 Shares, resulting in an overall decrease of 922,708,404 Shares ultimately held by Mr. Or Wai Sheun.
2. Following the Distribution in Specie, the undistributed 736,122 Shares were disposed of by the Offeror through its controlled corporations of which 735,000 Shares were disposed of at a consideration of HK$0.65 per Share and of which 1,122 Shares were disposed of at a consideration of HK$0.62 per Share.
3. Each of Mr. Yeung Kwok Kwong, Ms. Wong Yuk Ching and Ms. Chio Koc Ieng is an executive
   Director and is deemed to be a party acting in concert with the Offeror under Class (6) of the definition of "acting in concert" under the Takeovers Code. The number of Shares held by them was increased by 480,600 Shares, 3,123,900 Shares and 600,750 Shares respectively due to the
   Distribution in Specie.
4. Mr. Lai Ka Fai is a non-executive Director and a director of the Offeror and is deemed to be a party acting in concert with the Offeror under Class (2) and Class (6) of the definition of "acting in concert" under the Takeovers Code. The number of Shares held by him was increased by 2,005,170
   Shares due to the Distribution in Specie.
5. Mr. Or Pui Kwan is the son of Mr. Or Wai Sheun and is deemed to be a party acting in concert with the Offeror under Class (8) of the definition of "acting in concert" under the Takeovers Code. The number of Shares held by him was increased by 116,145 Shares due to the Distribution in Specie.

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2. Acquisitions by the Offeror in cash:

Note: In accordance with the provisions of Note 4 to paragraph 4 of Schedule I to the Takeovers Code, (i) acquisitions of Shares during the Offer Period and in the one month period prior to the publication of the Announcement on 21 January 2021 (i.e. from 21 December 2020 onwards) as shown in the table above were not aggregated; (ii) acquisitions of Shares in the period from 21 November 2020 to 20 December 2020 as shown in the table above were aggregated on a daily basis; and (iii) acquisitions of Shares in the period falling on or before 20 November 2020 as shown in the table above were aggregated on a weekly basis. As set out in the paragraph headed "10. Documents Available for Inspection" in Appendix II to this Scheme Document, the full list of dealings is available for inspection at the addresses and during the period stated therein.

18. COURT MEETING AND EGM

In accordance with the direction of the Grand Court, the Court Meeting will be held for the purpose of considering and, if thought fit, passing the resolution to approve the Scheme (with or without modification(s)).

Scheme Shareholders whose names appear on the register of members of the Company as at the Scheme Court Meeting Record Date will be entitled to attend and vote on the Scheme at the Court Meeting in person or by proxy. At the Court Meeting, Scheme Shareholders present and voting either in person or by proxy will be entitled to vote their Scheme Shares in favour of the Scheme or against it.

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The Scheme is conditional upon, amongst other things, approval by a majority in number of the Scheme Shareholders representing not less than 75% in value of the Scheme Shares present and voting in person or by proxy at the Court Meeting. In addition, the Scheme must be approved (by way of poll) by Independent Shareholders holding at least 75% of the votes attaching to the Scheme Shares held by Independent Shareholders that are voting either in person or by proxy at the Court Meeting; provided that the number of votes cast (by way of poll) by Independent Shareholders present and voting either in person or by proxy at the Court Meeting against the resolution to approve the Scheme at the Court Meeting is not more than 10% of the votes attaching to all Scheme Shares held by all the Independent Shareholders.

In accordance with the Companies Act, the "75% in value" requirement will be met if the total value of the Shares being voted in favour of the Scheme is at least 75% of the total value of the Shares voted at the Court Meeting. In accordance with the Companies Act, the "majority in number" requirement will be met if the number of the Scheme Shareholders voting in favour of the Scheme exceeds the number of the Scheme Shareholders voting against the Scheme. For the purpose of calculating the "majority in number" requirement, the number of the Scheme Shareholders, present and voting in person or by proxy, will be counted. For the purpose of the Takeovers Code, only the number of Scheme Shares from an Independent Shareholder being so voted will count towards the "75% in value" requirement as Shareholders who are not Independent Shareholders will be required to abstain from voting at the Court Meeting in accordance with the Takeovers Code.

In accordance with the direction from the Grand Court, for the purpose of calculating the "majority in number", HKSCC Nominees Limited shall be permitted to vote once for and once against the Scheme in accordance with the instructions received by it from the Investor Participants and other CCASS Participants. For the purpose of the headcount test, if HKSCC Nominees Limited receives an instruction to vote both for and against the Scheme, it will counted as one Shareholder under "for" and as one shareholder under "against". The number of votes cast in favour of the Scheme and the number of CCASS Participants on whose instructions they are cast and the number of votes cast against the Scheme and the number of CCASS Participants on whose instructions they are cast will be disclosed to the Grand Court and may be taken into account in deciding whether or not the Grand Court should exercise its discretion to sanction the Scheme.

The EGM will be held as soon as after the Court Meeting has been concluded or adjourned for the purpose of considering and, if thought fit, passing resolutions to approve, among other things, the reduction of the number of issued Shares in the share capital of the Company by cancelling and extinguishing all Scheme Shares. All Shareholders will be entitled to attend and vote in person or by proxy on such resolutions at the EGM.

At the EGM, a poll will be taken, and each Shareholder present and voting either in person or by proxy, will be entitled to vote all of his/her/its Shares in favour of (or against) the special resolutions and/or the ordinary resolution. Alternatively, such Shareholder may vote some of their Shares in favour of the special resolutions and/or the ordinary resolution and any or all of the balance of their Shares against the special resolutions and/or the ordinary resolution (and vice versa). At the relevant EGM, the special and ordinary resolutions will be put to the vote by way of poll as required under Rule 13.39(4) of the Listing Rules.

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Announcement(s) will be made by the Company and the Offeror in relation to the results of the Court Meeting and the EGM in accordance with Rule 19.1 of the Takeovers Code to the extent applicable. Information on the number of votes cast for and the number of votes cast against the Scheme, and the number of CCASS Participants on whose instructions they are cast will be included in such announcement(s).

Notices of the Court Meeting and the EGM are set out in Appendix VI and Appendix VII to this Scheme Document.

19. PRECAUTIONARY MEASURES AT THE COURT MEETING AND EGM

In view of the ongoing COVID-19 and requirements for its effective prevention and control, the Company will implement the following precautionary measures at the Court Meeting and EGM to protect the Shareholders, staff and other stakeholders from the risk of infection:

1. compulsory body temperature checks will be conducted for all attendees at the entrance of the Court Meeting and EGM venue. Any person with a body temperature of over
   37.4 degrees Celsius may be denied entry into the Court Meeting and EGM venue or be required to leave;
2. all attendees are required to wear surgical face masks inside the Court Meeting and EGM venue at all times, and to maintain a safe distance between seats; and
3. no refreshments will be served.

To the extent permitted under law, the Company reserves the right to deny entry into the Court Meeting and EGM venue or require any person to leave in order to ensure the safety of the attendees at the Court Meeting and EGM.

Pursuant to the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation (Cap. 599G) (the "Regulation"), group gatherings of more than a designated number of persons as prescribed under the Regulation for shareholders' meetings are required to be accommodated in separate rooms or partitioned areas. The Company will comply with the relevant requirements under the Regulation as and when appropriate at the time of the Court Meeting and EGM.

Furthermore, the Company wishes to remind the Shareholders that physical attendance in person at the Court Meeting and EGM is not necessary for the purpose of exercising their voting rights. The Company wishes to strongly advise the Shareholders, particularly Shareholders who are unwell or subject to quarantine in relation to COVID-19, that they may appoint any person as a proxy to vote on the resolutions, instead of attending the Court Meeting and EGM in person.

The Company will keep the Shareholders informed by way of further announcement if there are any material updates on the Regulation which would affect the Court Meeting and EGM.

20. ACTIONS TO BE TAKEN BY THE SHAREHOLDERS

Your attention is drawn to the section headed "Actions to be taken - Actions to be taken by the

Shareholders" set out in Part II of this Scheme Document.

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1. RECOMMENDATIONS
   Rainbow Capital has been appointed as the independent financial adviser to advise the Independent Board Committee in connection with the Proposal. The appointment of Rainbow Capital as the independent financial adviser has been approved by the Independent Board Committee. The text of the letter of advice from Rainbow Capital containing its recommendation and the principal factors and reasons that it has taken into consideration in arriving at its recommendation is set out in Part VI of this Scheme Document. We would advise you to read this letter and the letter of advice from Rainbow Capital carefully before you take any action in respect of the Proposal.
   The Independent Board Committee has considered the terms of the Proposal and taken into account the advice of Rainbow Capital, in particular the factors, reasons and recommendation as set out in the letter from Rainbow Capital in Part VI of this Scheme Document. The Independent Board Committee's recommendation is set out in Part V of this Scheme
   Document.
   As at the Latest Practicable Date, the Offeror is a company ultimately wholly-owned by Mr.
   Or Wai Sheun, an executive Director. Mr. Or Wai Sheun will abstain from voting at meetings of the Board in relation to the Proposal given that he has a material interest in the Proposal. Ms. Or Pui Ying, Peranza and Mr. Lai Ka Fai will also abstain from voting at meetings of the Board in relation to the Proposal. The Directors (excluding the members of the Independent Board Committee) believe that the terms of the Proposal are fair and reasonable and in the interests of the Scheme Shareholders.
2. FURTHER INFORMATION
   You are urged to read carefully the letter from the Independent Board Committee, the letter from Rainbow Capital, the Explanatory Statement, the Scheme of Arrangement and the notices of the Court Meeting and the EGM contained in this Scheme Document and the other appendices to this Scheme Document.

Yours faithfully,

By Order of the Board of

Polytec Asset Holdings Limited

Yeung Kwok Kwong

Executive Director

* For identification purpose only

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POLYTEC ASSET HOLDINGS LIMITED

保 利 達 資 產 控 股 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 208)

16 April 2021

To the Independent Shareholders

Dear Sir or Madam,

1. PROPOSED PRIVATIZATION OF POLYTEC ASSET HOLDINGS LIMITED BY INTELLINSIGHT HOLDINGS LIMITED

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 86 OF THE COMPANIES ACT; AND

(2) PROPOSED WITHDRAWAL OF LISTING

We refer to the scheme document (the "Scheme Document") dated 16 April 2021 jointly issued by the Company and the Offeror in relation to the Proposal, of which this letter forms part. Unless the context requires otherwise, terms used in this letter shall have the same meaning as given to them in the Scheme Document.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders in respect of the Proposal.

Rainbow Capital has been appointed, with our approval, as the independent financial adviser in respect of the Proposal.

We wish to draw your attention to (a) the letter from the Board as set out in Part IV of the Scheme Document; (b) the letter from Rainbow Capital as set out in Part VI of the Scheme Document which sets out the factors and reasons taken into account by Rainbow Capital in arriving at its recommendations; and (c) the Explanatory Statement as set out in Part VII of the Scheme Document.

Having considered the terms of the Proposal and having taken into account the advice of Rainbow Capital, in particular the factors, reasons and recommendations as set out in the letter from Rainbow Capital, we consider the terms of the Proposal are fair and reasonable so far as the Independent Shareholders are concerned.

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Accordingly, we recommend:

1. the Independent Shareholders to vote in favour of the resolution to approve the Scheme at the Court Meeting; and
2. the Shareholders to vote at the EGM in favour of (i) a special resolution to approve and give effect to the reduction of the number of issued Shares in the share capital of the Company by cancelling and extinguishing the Scheme Shares, (ii) a special resolution to approve the withdrawal of listing of the Shares subsequent to the Scheme becoming effective, and (iii) an ordinary resolution to immediately thereafter increase the number of issued Shares in the share capital of the Company to the amount prior to the cancellation and extinguishment of the Scheme Shares and apply the reserve created as a result of the aforesaid cancellation and extinguishment of the Scheme Shares to pay up in full at par such number of new Shares as is equal to the number of Scheme Shares cancelled and extinguished as a result of the Scheme, credited as fully paid, for issuance to the Offeror.

* For identification purpose only

- 34 -

The following is the full text of a letter of advice from Rainbow Capital, the independent financial adviser to the Independent Board Committee in respect of the Proposal, which has been prepared for the purpose of inclusion in this Scheme Document.

Rainbow Capital (HK) Limited

16 April 2021

To the Independent Board Committee

Polytec Asset Holdings Limited

23rd Floor, Pioneer Centre

750 Nathan Road

Kowloon

Hong Kong

Dear Sir or Madam,

PROPOSED PRIVATIZATION OF

POLYTEC ASSET HOLDINGS LIMITED

BY INTELLINSIGHT HOLDINGS LIMITED

BY WAY OF A SCHEME OF ARRANGEMENT

UNDER SECTION 86 OF THE COMPANIES ACT

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee in connection with the Proposal, details of which are set out in the Announcement and the Scheme Document dated 16 April 2021 jointly issued by the Company and the Offeror in relation to the Proposal, of which this letter forms part. Unless the context otherwise requires, capitalized terms used in this letter shall have the same meaning as defined in this Scheme Document.

On 17 January 2021, the Offeror requested the Board to put forward the Proposal, which will involve the cancellation and extinguishment of the Scheme Shares, the payment of the Cancellation Price of HK$1.50 per Scheme Share to the Scheme Shareholders, and the withdrawal of the listing of the Shares on the Stock Exchange. The Proposal will be carried out by way of the Scheme.

The Independent Board Committee consists of all independent non-executive Directors, namely Mr. Liu Kwong Sang, Dr. Tsui Wai Ling, Carlye, and Prof. Dr. Teo Geok Tien Maurice. Ms. Or Pui Ying, Peranza, a non-executive Director, is the daughter of Mr. Or Wai Sheun, the ultimate beneficial owner of the Offeror. Mr. Lai Ka Fai, a non-executive Director, is a director of the Offeror. They are therefore not considered to be independent for the purpose of Rule 2.8 of the Takeovers Code and are not members of the Independent Board Committee. The Independent Board Committee has been established to advise the Independent Shareholders as to whether or not the terms of the Proposal are fair and reasonable and as to voting in respect of the Proposal at the Court Meeting and the EGM. We, Rainbow Capital, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee in this regard and such appointment has been approved by the Independent Board Committee in accordance with Rule 2.1 of the Takeovers Code.

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We are not associated with the Company, the Offeror, their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them. Apart from normal professional fees paid or payable to us in connection with this engagement, no other arrangement exists whereby we will receive any fees or benefits from the Company, the Offeror, their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them. Accordingly, we are considered eligible to give an independent advice to the Independent Board Committee.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (i) the information and facts contained or referred to in this Scheme Document; (ii) the information supplied by the Directors and the management of the Group; (iii) the opinions expressed by and the representations of the Directors and the management of the Group; and (iv) our review of the relevant public information. We have assumed that all the information provided and representations and opinions expressed to us or contained or referred to in this Scheme Document were true and accurate in all material respects as at the date thereof and may be relied upon. We have also assumed that all statements contained and representations made or referred to in this Scheme Document are true at the time they were made and continue to be true as at the Latest Practicable Date and all such statements of belief, opinions and intentions of the Directors and the management of the Group and those as set out or referred to in this Scheme Document were reasonably made after due and careful enquiry. We have no reason to doubt the truth and accuracy of such information and representations provided to us by the Directors and the management of the Group. We have also sought and received confirmation from the Directors that no material facts have been withheld or omitted from the information provided and referred to in this Scheme Document and that all information or representations provided to us by the Directors and the management of the Group are true and accurate in all material respects and not misleading in any material respect at the time they were made and continue to be so until the Latest Practicable Date.

The Independent Shareholders will be informed by the Company and us as soon as possible if there is any material change to the information disclosed in this Scheme Document during the Offer Period, in which case we will consider whether it is necessary to revise our opinion and inform the Independent Board Committee and the Independent Shareholders accordingly.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in this Scheme Document so as to provide a reasonable basis for our recommendation. We have not, however, carried out any independent verification of the information provided, representations made or opinion expressed by the Directors and the management of the Group, nor have we conducted any form of in- depth investigation into the businesses, affairs, operations, financial position or future prospects of the Company or any of their respective subsidiaries and associates.

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PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL

Subject to the fulfilment (or waiver as applicable) of the Scheme Conditions on or before the Long Stop Date, the proposed privatization of the Company will be implemented by way of the Scheme.

1. Principal terms of the Scheme
   Under the Scheme, the Scheme Shares will be cancelled and extinguished and, in consideration thereof, each Scheme Shareholder will be entitled to receive the following Cancellation Price in cash for each Scheme Share cancelled and extinguished:
   For each Scheme Share.......................................................................................HK$1.50 in cash
   On the assumption that there will be no change in the shareholding structure of the Company before completion of the Proposal and based on the Cancellation Price of HK$1.50 per Scheme Share and 1,823,330,920 Scheme Shares in issue as at the Latest Practicable Date, the amount of cash payable to the Scheme Shareholders under the Proposal would be approximately
   HK$2,735 million. Based on the Cancellation Price and 4,438,967,838 Shares in issue as at the Latest Practicable Date, the Proposal valued the Company at approximately HK$6,658 million.
   Independent Shareholders should note that as stated in the "Letter from the Board" in this Scheme Document, the Cancellation Price will not be increased and the Offeror does not reserve the right to do so. The Company does not intend to declare and/or pay any dividend during the Offer Period. If the Scheme is not approved or otherwise lapses, neither the Offeror nor any person who acted in concert with it in the course of the Proposal (nor any person who is subsequently acting in concert with any of them) may, within 12 months from the date on which the Scheme is not approved or otherwise lapses, announce an offer or possible offer for the Company, except with the consent of the Executive.
2. Scheme Conditions of the Proposal
   The implementation of the Proposal is, and the Scheme will become effective and binding on the Offeror, the Company and the Scheme Shareholders, subject to the fulfilment or waiver (as applicable) of, among other things, the following Scheme Conditions:
3. 1. the approval of the Scheme (by way of poll) by a majority in number of the Scheme
      Shareholders representing not less than 75% in value of the Shares held by the Scheme
      Shareholders present and voting either in person or by proxy at the Court Meeting;
   2. (i) the Scheme is approved (by way of poll) by the Independent Shareholders holding at least 75% of the votes attaching to the Shares held by the Independent Shareholders that are voted either in person or by proxy at the Court Meeting; and (ii) the number of votes cast (by way of poll) by the Independent Shareholders present and voting either in person or by proxy at the Court Meeting against the resolution to approve the Scheme at the Court Meeting is not more than 10% of the votes attaching to all Shares held by all the Independent Shareholders;

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1. (i) the passing of a special resolution by a majority of not less than three-fourths of the votes cast by the Shareholders present and voting in person or by proxy at the EGM to approve and give effect to the reduction of the number of issued Shares in the share capital of the Company by cancelling and extinguishing the Scheme Shares; (ii) the passing of a special resolution by a majority of not less than three-fourths of the votes cast by the Shareholders present and voting in person or by proxy at the EGM to approve the withdrawal of listing of the Shares subsequent to the Scheme becoming effective; and (iii) the passing of an ordinary resolution by a simple majority of the votes cast by the Shareholders present and voting in person or by proxy at the EGM to immediately thereafter increase the number of issued Shares in the share capital of the Company to the amount prior to the cancellation and extinguishment of the Scheme Shares and apply the reserve created as a result of the aforesaid cancellation and extinguishment of the Scheme Shares to pay up in full at par such number of new Shares as is equal to the number of Scheme Shares cancelled and extinguished as a result of the Scheme, credited as fully paid, for issuance to the Offeror;
2. the Grand Court's sanction of the Scheme (with or without modifications) and its confirmation of the reduction of the number of issued Shares in the share capital of the Company, and the delivery to the Registrar of Companies in the Cayman Islands of a copy of the order of the Grand Court for registration; and
3. compliance, to the extent necessary, with the procedural requirements and conditions, if any, under Sections 15 and 16 of the Companies Act in relation to the reduction of the number of issued Shares in the share capital of the Company referred to in paragraph (c)(i) above.

For details of other Scheme Conditions, please refer to the section headed "2. The Scheme - The Scheme Conditions" in the "Explanatory Statement" in this Scheme Document.

The Offeror reserves the right to waive the Scheme Conditions (except for the Scheme Conditions in paragraphs (a) to (e) above) either in whole or in part, either generally or in respect of any particular matter. The Company does not have the right to waive any of the Scheme Conditions. All of the Scheme Conditions will have to be fulfilled or waived, as applicable, on or before the Long Stop Date, failing which the Scheme will lapse.

Pursuant to Note 2 to Rule 30.1 of the Takeovers Code, the Offeror may only invoke any or all of the Scheme Conditions as a basis for not proceeding with the Proposal if the circumstances which give rise to the right to invoke any such Scheme Condition are of material significance to the Offeror in the context of the Proposal.

3. Expected timetable of the Proposal

The indicative timetable for the Proposal is set out in "Expected Timetable" in this Scheme Document. Based on the indicative timetable, the cheques for cash entitlements under the Scheme will be despatched to the Scheme Shareholders on or before Tuesday, 1 June 2021 if the Scheme becomes effective. Further announcement will be made by the Offeror and the

Company if there is any change to the timetable.

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PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion and recommendation with regard to the Proposal, we have taken into account the following principal factors and reasons:

1. Background information of the Group

The Group is principally engaged in (a) property development (the "Property Business") and investment; (b) manufacturing of ice and provision of cold storage services (the "Ice and Cold Storage Business"); (c) oil exploration and production (the "Oil Business"); and (d) financial investments (the "Financial Investment Business"). For the year ended 31 December 2020, the Property Business, the Ice and Cold Storage Business, the Oil Business and the Financial Investment Business accounted for approximately 69.6%, 16.2%, 4.7% and 9.5% of total revenue of the Group, respectively.

1. Property Business
   The Group currently holds 80% interests in the development of two properties (the "Properties") located at Lotes T+T1 and Lote P of Novos Aterros da Areia Preta in Macau, being the La Marina and the Pearl Horizon development projects, respectively, under two co-investment agreements entered into with two wholly-owned subsidiaries (the "Related Companies") of Polytec Holdings International Limited ("Polytec Holdings"), the then ultimate holding company of the Company. Polytec Holdings was ultimately wholly-owned by Mr. Or Wai Sheun, an executive Director and a controlling
   Shareholder, as at the Latest Practicable Date. The Related Companies are the registered owners of the Properties. Pursuant to the co-investment agreements, the Group will provide funding to cover any shortfall in the funding of the property development projects which is subject to an aggregate maximum amount and will in turn receive distributions from the property development projects according to the formulae set out in the co-investment agreements. According to the Group's accounting policies, the Group's interests in property development are stated at fair value. In addition, the Group are interested in certain commercial and residential properties in Macau and Hong Kong, which are held for sale and are stated as the lower of cost and net realizable value according to the Group's accounting policies. In 2018, the Group acquired 50% interest in a joint venture company which held a property development project in Zhongshan.
   Revenue generated from the Property Business comprises sales of properties and distribution from interests in property development. For the three years ended 31 December 2020, revenue generated from the Property Business amounted to approximately HK$1,400.0 million, HK$724.5 million and HK$500.3 million, representing approximately 87.9%, 79.9% and 69.6% of total revenue of the Group, respectively.
   Details of the Group's property interests are set out below:

- 39 -

1. The La Marina development project (the "La Marina Project")
   The La Marina Project comprises a number of high-end residential blocks with retail shops and car parking spaces with a total gross floor area ("GFA") of 182,000 square metres ("sq.m."). Construction works were completed and the occupation permit was obtained in July 2017 with pre-sold units gradually delivered to the buyers since late December 2017. For the four years ended 31 December 2020, distributions of HK$500 million, HK$1,400 million, HK$720 million and HK$500 million were made to the Company in relation to the La
   Marina Project. As advised by the Directors, the amount of distributions is determined based on the sales proceeds from the La Marina Project and the cash flow position of the property owner which may fluctuate from time to time. As at 31 December 2020, the carrying amount of the Group's interest in the La Marina Project amounted to approximately HK$3.8 billion.
   As disclosed in the annual report of the Company for the year ended 31 December 2019 (the "2019 Annual Report"), the income to be received from the Group's interest in the La Marina Project is expected to make an important contribution to the Group's results in the next two years.
2. The Pearl Horizon development project (the "Lote P Project")
   Under the related land concession, the construction of the Lote P Project has to be completed on or before 25 December 2015 (the "Expiry Date").
   In September 2013, the Government of Macau Special Administrative Region (the "Macau Government") promulgated the Macau New Land Law (the "New Land Law") which came into effect in March 2014. The New Land Law provides that the Macau Government will be entitled to reclaim the land of any property development that is not completed or fails to fulfil the conditions stated in the land concession by the stipulated expiry date without any compensation to the property owner.
   As a result of the delay by the Macau Government in granting the requisite approvals and permits for the development of the Lote P Project, the Lote P Project could not commence until August 2014. As a result, the construction work of the Lote P Project could not be completed by the Expiry Date and all construction work is currently suspended.
   On 23 May 2018, the Tribunal de Ultima Instancia (the Court of Final Appeal) of Macau rejected the application of final appeal by the registered owner (the "Owner") of the property of the Lote P Project for invalidating the decision made by the Chief Executive of Macau to terminate the land concession of the
   Lote P Project. On 30 March 2020, an unfavourable judgement was issued by the
   Tribunal Administrative (the Administrative Court) in Macau for the civil claim filed by the Owner against the Macau Government to seek compensation for losses and damage on the Lote P Project on 29 November 2018. In this regard, a petition for appeal (the "Petition") was submitted to the Court of Second Instance in Macau on 29 May 2020. However, an application for the withdrawal of the
   Petition was submitted by the Owner on 11 September 2020. The application was accepted by the Court of Second Instance and the aforesaid civil claim was therefore terminated. The Lote P Project was reclaimed by the Macau Government without any compensation to the Owner and therefore will not proceed.

- 40 -

Pursuant to the co-investment agreement for the development of the Lote P Project, in the event that the Owner fails to complete the Lote P Project, Polytec Holdings will be required to indemnify the Group in respect of any loss suffered. Therefore, any loss to the Group due to the repossession of the land of the Lote P Project by the Macau Government will be indemnified by Polytec Holdings (the "Indemnity"). Polytec Holdings has agreed to pay the Indemnity in the amount of approximately HK$8.4 billion, together with interest charged at a prevailing market rate per annum, to the Group in the proportion of 20%, 40% and 40% of the amount of the Indemnity (plus all interest accrued up to each year end date) in cash by the end of 2021, 2022 and 2023, respectively.

The Indemnity has been accounted for in the equity attributable to the Shareholders as at 31 December 2020. The carrying amount of the Group's interest in the Lote P Project in the form of the Indemnity receivable from Polytec Holdings amounted to approximately HK$8.4 billion as at 31 December 2020.

1. The Zhongshan property development project
   The Group is engaged in a property development project (the "Zhongshan Project") in Zhongshan through its 50% interest in Smart Rising Limited ("Smart Rising"), a joint venture company incorporated in British Virgin Islands. Details of the Zhongshan Project are set out below:

• Zhongshan Project
• attributable to the
• Group as at
• 31 January 2021

- 41 -

1. Properties held for sale
   For the three years ended 31 December 2020, revenue generated from sales of properties amounted to nil, HK$4.5 million and HK$280,000, respectively. As at
   31 December 2020, the Group's properties held for sale comprised the following:

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1. Property investment
   The Group generates rental income primarily from The Macau Square through its
   50% interest in South Bay Centre Company Limited ("South Bay"), a joint venture company incorporated in Macau. For the three years ended 31 December 2020, (i) the
   Group's share of gross rental income generated from The Macau Square amounted to approximately HK$76 million, HK$77 million and HK$77 million; and (ii) the Group's share of profit of South Bay amounted to approximately HK$111.6 million, HK$77.2 million and HK$30.2 million, respectively. As stated in the annual results announcement of the Company for the year ended 31 December 2020 (the "2020 Annual Results"), the rental income generated from the Group's investment properties in Macau is expected to remain stable in 2021 as the COVID-19 outbreak is seen to be largely under control.
   Particulars of the Group's investment properties are summarized below:

Jose Lobo Nos. 2-16A,

Avenida do Infante D.

Henrique Nos. 43-53A and

Avenida Doutor Mario

Soares Nos. 81-113, Macau

Average occupancy rates of The Macau Square remained at high levels for the three years ended 31 December 2020, as set out below:

Source: Provided by the Company

1. Ice and Cold Storage Business
   The Group is one of the largest ice making distributors in Hong Kong. For the three years ended 31 December 2020, revenue generated from the Ice and Cold Storage Business amounted to approximately HK$117.8 million, HK$113.8 million and HK$116.1 million, representing approximately 7.4%, 12.5% and 16.2% of total revenue, respectively.

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1. Oil Business
   The Group is engaged in oil production and exploration in Kazakhstan. For the three years ended 31 December 2020, revenue generated from the Oil Business amounted to approximately HK$75.1 million, HK$61.5 million and HK$33.6 million, with loss after tax of approximately HK$15.9 million, HK$285.4 million and HK$71.7 million, respectively. The significant increase in loss after tax for the year ended 31
   December 2019 as compared to the previous year was mainly due to the impairment loss of approximately HK$231.6 million made for the Group's oil production and exploitation assets in Kazakhstan based on the assessment of the prevailing oil market and its development plan. The loss after tax of approximately HK$71.7 million for the year ended 31 December 2020 was mainly attributable to the full write-off of the remaining value of the Group's oil production and exploitation assets in the amount of approximately HK$59.5 million due to the weak global demand for oil and low oil prices in the short- to medium-term.
   As at 31 December 2020, the oil production assets (included in property, plant and equipment) and oil exploitation assets were fully depreciated and impaired. As disclosed in the interim report of the Company for the six months ended 30 June 2020 (the "2020 Interim Report") and the 2020 Annual Results, given the Oil Business has been adversely affected by the major suspension of world economic activities caused by the COVID-19 outbreak and is not expected to recover in the short term, the Group intends to terminate the oilfield operation in Kazakhstan which will no longer have significant impact on the Group's overall results in the future. As at the Latest Practicable Date, no concrete plan has been formulated for such termination.
2. Financial Investment Business
   The Group commenced to engage in equity and debt investments in August 2019.
   For the two years ended 31 December 2020, revenue generated from the Financial Investment Business amounted to approximately HK$7.0 million and HK$68.5 million, respectively. The significant increase in revenue generated from the Financial Investment Business for the year ended 31 December 2020 was primarily due to (i) the net income from equity and debt investments recognized on a full year basis in 2020 as the Financial Investment Business was commenced in August 2019; and (ii) the increase in equity and debt investments (classified as other financial assets) from approximately HK$176.5 million as at 31 December 2019 to approximately HK$467.8 million as at 31
   December 2020.

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2. Industry overview and outlook

Currently, the Group is principally engaged in (a) property development in Macau through its

80% interests in the La Marina Project; (b) property investment in Macau primarily through its 50% interest in South Bay which holds The Macau Square; and (c) property development in Zhongshan through its 50% interest in Smart Rising which holds the Zhongshan Project. For the year ended 31 December 2020, revenue generated from the La Marina Project amounted to HK$500 million, representing approximately 69.6% of total revenue, and the Group's share of gross rental income generated from The Macau Square amounted to approximately HK$77 million, representing approximately 93% of the Group's total share of gross rental income generated from its interests in investment properties. As at the Latest Practicable Date, the site drainage work of the Zhongshan Project was completed and the overall planning and design work was underway.

Property development and investment is the primary business of the Group. Set out below summarizes the overview and outlook of the property market in Macau and Zhongshan:

1. Macau
2. 1. Economic growth
      The Group's current principal operation is located in Macau. Accordingly, the Group's financial performance is affected by the local economic activities. The following table sets out Macau's (1) real gross domestic product ("GDP") growth; and (2) growth in private consumption expenditure in real terms for the years indicated:

Source: Government of Macao Special Administrative Region Statistics and Census Service ("DSEC") (https://www.dsec.gov.mo/en-US/Statistic?id=901)

As shown in the table above, the economic growth in Macau was decelerating between 2017 and 2019. Due to the decrease in investment and exports of services, Macau's real GDP shrank by 2.6% in 2019. The economic growth deteriorated in 2020 as a result of the COVID-19 outbreak. Although no widespread transmission of the virus was observed within the city, the real GDP declined by 56.3% in 2020 as compared to the previous year.

Private consumption expenditure in real terms recorded a negative growth of 16.3% in 2020 after three consecutive years of growth during 2017 to 2019.

- 45 -

1. Sale of residential properties
   The Group's revenue for the three years ended 31 December 2020 was primarily generated from distributions made from its interest in the La Marina Project.
   The table below sets out (1) the number of residential units sold; (2) the average selling price of residential units; and (3) the total transaction value of sale and purchase of residential units in Macau for the years indicated:

Source: DSEC (https://www.dsec.gov.mo/en-US/Statistic?id=601)

MOP: Macau Pataca

As shown in the table above, the number of residential units sold decreased by approximately 23.5% from 10,822 in 2018 to 8,277 in 2019. It further decreased by approximately 21.7% to 6,483 in 2020 as compared to the previous year.

The average selling price of residential units in Macau has recorded a downward trend since 2018 from MOP108,427 per sq.m. in 2018 to MOP107,522 per sq.m. in 2019 and further to MOP105,064 per sq.m. in 2020.

As a result of the decrease in the number of residential units sold and the average selling price, total transaction value of residential units has exhibited a downward trend since 2018. Total transaction value of residential units contracted by approximately 15.9% to approximately MOP42,957 million in 2020 from approximately MOP51,049 million in 2019.

1. Commercial leasing
   The income from the Group's property investment business in Macau is mainly derived from the leasing of office and retail properties as well as car parking spaces at The Macau Square.

- 46 -

According to the news release (the "News Release") dated 13 January 2021 issued by Jones Lang LaSalle ("JLL"), an international real estate services provider, as a result of the economic downturn and the pandemic, the demand for office spaces was weak. According to JLL Macau Office Index, the rental values for the overall office market and Grade A office fell by approximately 7.3% and 1.8%, respectively, in 2020. The overall office vacancy rate rose to 10% at the end of 2020 from 7% at the end of 2019. (Source: https://www.jll.com.mo/en/newsroom/ jll-retail-rental-bottomed-out)

The table below sets out (1) total retail sales; and (2) total spending of visitors (excluding gaming expenses) in Macau for the years indicated:

Source: DSEC (https://www.dsec.gov.mo/en-US/Statistic?id=503 and https://www.dsec.gov.mo/ en-US/Statistic?id=401)

Due to the significant decrease of total visitor arrivals and therefore total spending of visitors, total retail sales decreased by approximately 41.5% from approximately MOP77,187 million in 2019 to approximately MOP45,192 million in 2020. According to JLL Macau Retail Index, the overall retail rental values fell by approximately 27.8% in 2020 as compared to 2019. As stated in the News Release, the current vacancy rate and future supply of retail properties have reached a high level in the recent year.

1. Overall comment
   The Macau's economy has been adversely affected by the COVID-19 outbreak in 2020, resulting in an adjustment in price levels in the overall property market in Macau, although the COVID-19 pandemic has been largely under control locally.
   As disclosed in the 2020 Interim Report, the COVID-19 pandemic is expected to last for a period of time and the economy will be unlikely to recover soon.
   Total residential sales transaction value in Macau contracted significantly in 2019 and 2020. According to the News Release issued by JLL, while the uncertainty caused by the COVID-19 pandemic will gradually disappear, it takes time for the market to recover. JLL expected that the residential sales transaction volume in
   Macau will remain stable in 2021.

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As for the commercial leasing markets, the rental values for the overall office and retail markets in Macau dropped by approximately 7.3% and 27.8% in 2020, respectively, with an increase in vacancy rates of office and retail properties. While the impact of the COVID-19 pandemic on the office leasing market is moderate, JLL expected that retail rents will face pressure in the short term given the current high vacancy rate and future supply of retail properties in Macau. Notwithstanding the above, JLL expected that the retail property market in Macau will recover once economic activities and inbound and outbound tourisms resume normal when the pandemic is contained following the roll-out of COVID-19 vaccines.

1. Zhongshan
2. 1. Economic growth
      The Group carries out its PRC property development business through its 50% interest in the Zhongshan Project, which is affected by the PRC economy. The table below sets out Zhongshan's real GDP growth for the years indicated:

Source: Zhongshan Municipal Statistics Bureau (http://stats.zs.gov.cn/zwgk/tjxx/tjnj/)

Zhongshan's real GDP grew by 1.2% and 1.5% in 2019 and 2020, respectively, decelerating from 6.6% and 5.9% in 2017 and 2018, respectively. According to a report "The Greater Bay Area: the path ahead" issued by JLL in June 2020 (Source:https://www.jll.com.hk/en/trends-and-insights/research/gba- whitepaper-2020), after completion of the construction of the Shenzhen- Zhongshan Bridge, the connection between Shenzhen and Zhongshan will be strengthened and some manufacturing enterprises in Shenzhen may consider moving their factories to Zhongshan, which will also promote the migration of the working population, accelerating the urbanization of Zhongshan. It is expected that the property market in Zhongshan will benefit from the steady development of the Greater Bay Area.

3. Financial information of the Group

1. Financial performance
   Set out below are the consolidated income statements of the Company for the three years ended 31 December 2020 ("FY2018", "FY2019" and "FY2020", respectively), as extracted from the 2019 Annual Report and the 2020 Annual Results:

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Excluding revaluation changes of the joint venture's investment properties net of tax and fair value changes on interests in property development

- 49 -

1. FY2019 compared to FY2018
   The Property Business is the primary business of the Group, accounting for approximately 87.9% and 79.9% of total revenue for FY2018 and FY2019, respectively.
   Revenue of the Group decreased by approximately 43.1% from approximately HK$1,592.9 million for FY2018 to approximately HK$906.9 million for FY2019, primarily attributable to the decrease in revenue generated from the Property
   Business by approximately 48.3% from HK$1,400 million for FY2018 to HK$724.5 million for FY2019. This was mainly due to the decrease in the net income distributions from the Group's interest in the La Marina Project. Due to weakening demand, revenue generated from the Ice and Cold Storage Business decreased by approximately 3.4% from approximately HK$117.8 million for FY2018 to approximately HK$113.8 million for FY2019. As for the Oil Business, revenue decreased by approximately 18.0% from approximately HK$75.1 million for FY2018 to approximately HK$61.5 million for FY2019. The Group commenced its engagement in financial investment activities in August 2019 with total revenue of approximately HK$7.0 million from its fixed-income (bonds) and equity (blue-chip stocks) investments recognized in FY2019.
   Profit from operations decreased by approximately 52.7% from approximately HK$1,564.1 million for FY2018 to approximately HK$740.4 million for FY2019, primarily attributable to (1) the decrease in revenue as mentioned above; and (2) the impairment loss of approximately HK$231.6 million made for the Group's oil production and exploitation assets in Kazakhstan based on the assessment of the prevailing oil market and its development plan. This was partially offset by (1) the decrease in selling and distribution expenses, administrative expenses and other operating expenses by approximately HK$14.1 million; (2) the increase in other net income by approximately HK$5.6 million mainly due to the increase in bank and other interest income; and (3) the increase in fair value changes on interests in property development by approximately HK$82.1 million.
   Profit attributable to the Shareholders decreased by approximately 56.3% from approximately HK$1,618.5 million for FY2018 to approximately HK$707.3 million for FY2019, primarily attributable to (1) the decrease in the net income distributions from the Group's interest in the La Marina Project; (2) the impairment loss made for the Group's oil production and exploitation assets in
   Kazakhstan; and (3) the decrease in share of profits less losses of joint ventures by approximately 36.9% from approximately HK$111.6 million for FY2018 to approximately HK$70.4 million for FY2019, mainly due to the decrease in share of revaluation gain of The Macau Square by approximately HK$37.5 million. Accordingly, earnings per Share decreased from approximately 36.46 HK cents for FY2018 to approximately 15.93 HK cents for FY2019.
   For the same reasons stated above, the Group's underlying profit attributable to the Shareholders, which excludes revaluation changes of the joint venture's investment properties and fair value changes on interests in property development, decreased by approximately 68.1% from approximately HK$1,402.7 million for FY2018 to approximately HK$446.9 million for FY2019.

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Total dividends declared for FY2018 and FY2019 were 9.50 HK cents and 7.30 HK cents, respectively.

1. FY2020 compared to FY2019
   The Property Business accounted for approximately 79.9% and 69.6% of total revenue for FY2019 and FY2020, respectively.
   Revenue of the Group decreased by approximately 20.8% from approximately HK$906.9 million for FY2019 to approximately HK$718.5 million for FY2020, primarily attributable to (1) the decrease in revenue generated from the Property
   Business by approximately 30.9% from approximately HK$724.5 million for FY2019 to approximately HK$500.3 million for FY2020 mainly due to the decrease in the net income distributions from the Group's interest in the La Marina Project; and (2) the decrease in revenue generated from the Oil Business by approximately 45.5% from approximately HK$61.5 million for FY2019 to approximately HK$33.6 million for FY2020 due to the weak demand for oil and lower oil prices. This was partially offset by the increase in revenue by approximately HK$61.5 million generated from the Financial Investment Business which commenced in August 2019. Revenue generated from the Ice and Cold Storage Business increased slightly by approximately 2.0% from approximately HK$113.8 million for FY2019 to approximately HK$116.1 million for FY2020.
   Profit from operations decreased by approximately 34.1% from approximately HK$740.4 million for FY2019 to approximately HK$488.2 million for FY2020, primarily attributable to (1) the decrease in revenue as mentioned above; and
   (2) the change in fair value of interests in property development from a gain of approximately HK$252.3 million for FY2019 to a loss of approximately HK$50.6 million for FY2020 due to the decline in the overall property price in Macau caused by the COVID-19 pandemic. This was partially offset by (1) the full write-off of the remaining value of the Group's oil production and exploitation assets in the amount of approximately HK$59.5 million for FY2020 due to the weak global demand for oil and low oil prices in the short- to medium-term as compared to that of approximately HK$231.6 million for FY2019; (2) the increase in other net income by approximately HK$25.7 million mainly due to the net effect of the increase in bank and other interest income, the fund received from the Employment Support Scheme under the Anti-epidemic Fund set out by the government and the provision for loss allowance of debt investments; and (3) the decrease in selling and distribution expenses and administrative expenses by approximately HK$20.1 million.

The decrease in profit attributable to the Shareholders by approximately 39.4% from approximately HK$707.3 million for FY2019 to approximately HK$429.0 million for FY2020 was primarily attributable to the decrease in profit from operations as mentioned above and the change in share of profits less losses of joint ventures from a profit of approximately HK$70.4 million for FY2019 to a loss of approximately HK$1.8 million for FY2020 mainly due to (1) the decrease in the revaluation change of The Macau Square from a gain of approximately HK$8.2 million for FY2019 to a loss of approximately HK$41.2 million for FY2020; and (2) the increase in share of loss of Smart Rising by approximately

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HK$25.2 million. This was partially offset by the decrease in finance costs by approximately HK$20.9 million. Accordingly, earnings per Share decreased from approximately 15.93 HK cents for FY2019 to approximately 9.66 HK cents for FY2020.

Excluding revaluation changes of the joint venture's investment properties net of tax and fair value changes on interests in property development, the Group's underlying profit attributable to the Shareholders increased by approximately 16.5% from approximately HK$446.9 million for FY2019 to approximately HK$520.8 million for FY2020.

Dividends declared for FY2019 and FY2020 were 7.30 HK cents and 1.40 HK cents, respectively.

1. Financial position
   Set out below are the consolidated statements of financial position of the Company as at 31 December 2018, 2019 and 2020, as extracted from the 2019 Annual Report and the
   2020 Annual Results:

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Notes:

1. Being current assets divided by current liabilities
2. Being the sum of bank loans and amounts due to immediate holding company and a related company less the sum of amount due from a related company and cash and bank balances and divided by total equity attributable to the Shareholders

As at 31 December 2020, total assets and total liabilities of the Group amounted to approximately HK$16.3 billion and HK$2.1 billion, respectively. As at 31 December 2020, interests in property development and interest in joint ventures accounted for approximately 91.8% of the Group's total assets whereas bank loans accounted for approximately 87.5% of the Group's total liabilities.

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1. Property, plant and equipment
   Property, plant and equipment, with a carrying amount of approximately
   HK$102.8 million as at 31 December 2020, represented the leasehold land and buildings held for the Ice and Cold Storage Business, oil production assets arising from oil exploration and production activities and other assets. Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses.
   As at 31 December 2020, the oil production assets were fully depreciated and impaired.
2. Oil exploitation assets
   Oil exploitation assets, which were fully depreciated and impaired as at 31
   December 2020, represented the capitalized costs incurred for the acquisition and maintenance of the exploitation rights of the Group's oil exploration and production activities. Oil exploitation assets are stated at cost less accumulated amortisation and impairment losses.
3. Interests in property development
   As at 31 December 2020, interests in property development amounted to approximately HK$12.2 billion, of which approximately HK$3.8 billion and HK$8.4 billion represented the Group's 80% interests in the La Marina Project and the Lote P Project in the form of the Indemnity receivable from Polytec Holdings, respectively. Interests in property development are classified as investments measured at fair value through profit or loss.
4. Interests in joint ventures
   Among the interests in joint ventures of approximately HK$2.7 billion as at 31 December 2020, approximately HK$1.5 billion and HK$1.2 billion represented the Group's 50% interests in South Bay and Smart Rising which held The Macau
   Square and the Zhongshan Project, respectively. Interests in joint ventures are accounted for using the equity method in the consolidated financial statements of the Company.
5. Other financial assets
   The Group started to engage in equity and debt investments in August 2019. Other financial assets of approximately HK$467.8 million as at 31 December 2020 represented listed and unlisted debt securities measured at amortized cost and listed equity securities measured at fair value through profit or loss.
6. Inventories
   Inventories of approximately HK$85.5 million as at 31 December 2020 mainly represented the properties held for sale, crude oil and consumables.

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1. 1. Equity attributable to the Shareholders
      Based on the audited equity attributable to the Shareholders of approximately HK$14.2 billion as at 31 December 2020 and 4,438,967,838 Shares in issue as at the Latest Practicable Date, the net asset value ("NAV") per Share was approximately HK$3.1926.
   2. Liquidity and indebtedness position
      The Group was financially healthy given its net current assets of approximately
      HK$3.3 billion with a current ratio of approximately 3.3 as at 31 December 2020. As at 31 December 2020, the Group had (1) cash and bank balances of approximately HK$146.0 million; (2) amount due from a related company of HK$220 million which was arisen from the distributions from the Group's interests in property development; (3) bank loans of approximately HK$1.8 billion which were secured by the Group's leasehold land and buildings and South
      Bay's investment properties and interest bearing at prevailing market rates; and (4) amount due to a related company of approximately HK$124.2 million which was unsecured and interest bearing at prevailing market rates, resulting in a gearing ratio of approximately 11.1%. The gearing ratios of the Comparable Companies (as defined below) as at their latest year or period end ranged from approximately 6.8% to approximately 90.0% with an average and median of approximately 40.5% and 32.6%, respectively. The Group's gearing is within the industry range. We consider that the Group continued to maintain a sound financial position.
2. Overall comment
   The Group has been focusing on property development in Macau since the change of the management in 2004. As a result, the revenue and profit of the Group are to a large extent driven by the Property Business. While the performance of the Ice and Cold Storage Business and the Financial Investment Business remains relatively stable, the Group intends to terminate the Oil Business due to weak global demand for oil and low oil prices as stated in the 2020 Interim Report and the 2020 Annual Results. As a result, the financial performance and growth of the Group will be largely dependent on those of the Property Business. Following completion of the La Marina Project in 2017, the
   Company has currently no property development projects in the pipeline in Macau.
   Although the Lote P Project will not proceed as a result of the reclamation by the Macau Government without any compensation paid to the Owner due to the New Land Law, Polytec Holdings has agreed to provide the Indemnity to the Group which has been accounted for in the consolidated financial statements of the Group.
   For the three years ended 31 December 2020, the Property Business accounted for approximately 87.9%, 79.9% and 69.6% of the Group's total revenue, respectively, and contributed most of the Group's total segment results. Particularly, the La Marina Project contributed 100%, 99.4% and 99.9% of the Group's revenue generated from the Property Business for the same periods, respectively. As disclosed in the 2019 Annual Report, the income to be received from the Group's interest in the La Marina Project is expected to make an important contribution to the Group's results in the next two years.
   As a result, the financial performance of the Property Business in the short term will largely hinge on the sales of the La Marina Project.

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Taking into account (i) the Group currently has only one property development project (i.e. the La Marina Project) in Macau which is available for sale and is expected to make an important contribution to the Group's results in the short term as stated in the 2019 Annual Report; (ii) the number of residential units sold and average selling price of residential units in Macau contracted in 2019 and 2020; and (iii) while it takes time for the market to recover from the COVID-19 pandemic, JLL expects that the residential sales transaction volume in Macau will remain stable in 2021, we consider that the growth potential of the Group's Property Business in Macau may be limited in the short term.

As regards the Group's property investment business, the average occupancy rates of the retail and office portions of The Macau Square reached 98% and 88% in 2020, respectively. Given (i) the high occupancy rate of The Macau Square in general; (ii) the lack of new investment properties in the coming years; (iii) the negative impact of the COVID-19 pandemic on the rental values for the overall office and retail markets in Macau in 2020; (iv) JLL expected the retail rents will face pressure in the short term given the current high vacancy rate and future supply of retail properties in Macau; and

1. the rental income generated from the Group's investment properties in Macau is expected to remain stable in 2021 as stated in the 2020 Annual Results, we consider that the growth of the Group's property investment business may be limited in the near term.

As at the Latest Practicable Date, the site drainage work of the Zhongshan Project was completed and the overall planning and design work was underway. No planning or other regulatory consent has been obtained for the Zhongshan Project and its detailed development schemes are yet to be approved and finalized. Given the Zhongshan Project is in the initial stage of development, its impact on the financial performance of the Group is uncertain in the medium to longer term.

4. Reasons for and benefits of the Proposal

As set out in the Explanatory Statement, the Proposal represents an opportunity for the Scheme

Shareholders to realize their investments in the Shares for cash at a significant premium over the prevailing market prices prior to the publication of the Announcement without having to suffer any illiquidity discount.

The premiums of the Cancellation Price of HK$1.50 per Scheme Share over the closing price of the Shares on the Last Trading Day and the averages of the closing prices of the Shares for 10, 30, 60, 90, 120 and 180 trading days up to and including the Last Trading Day are significant, in the range of approximately 61.29% to 105.82%, as set out in the section headed "7. Evaluation of the Cancellation Price - (a) Share price performance" below. The Cancellation Price represents premiums of approximately 158.62% and 29.31% over the lowest and highest closing prices of the Shares during the three-year period up to and including the Last Trading Day, respectively. Driven by the Announcement, the Share price surged by approximately 55.9% from HK$0.93 on the Last Trading Day to HK$1.45 on 22 January 2021, being the first trading day following the publication of the Announcement and closed at HK$1.47 as at the Latest Practicable Date.

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It was stated in the Explanatory Statement that the liquidity of the Shares has been at a relatively low level over a long period of time. During the one-year period up to and including the Last Trading Day, the average daily trading volume of the Shares was approximately 1,443,000 Shares, representing only approximately 0.03% of the issued Shares on the Last Trading Day. Given the thin liquidity of the Shares as illustrated in our analysis set out in the section headed "6. Trading volume of the Shares" below, we concur with the Directors that the Proposal allows the Scheme Shareholders to dispose of their Shares, particularly for those Scheme Shareholders holding a significant number of Shares, without having to suffer significant illiquidity discount or adversely affecting the market prices of the Shares.

Moreover, as disclosed in the Explanatory Statement, with the Proposal being implemented, the Group is no longer required to incur administrative, compliance and other listing-related costs and expenses for maintaining the Company's listing status which the Directors consider not justified given that the Company has not in the past 14 years conducted any equity fund raising activities, being the primary benefits of a listing status.

Furthermore, through the implementation of the Proposal, the Group will be in a better position to implement its business strategies more efficiently and effectively as a private entity so as to achieve cost savings, for example through resources sharing with the Offeror as stated in the Explanatory Statement.

Based on the aforesaid, we concur with the Directors that (i) the Proposal provides an opportunity for the Scheme Shareholders to dispose of their Shares at a price significantly above the then market prices prior to the issue of the Announcement; (ii) the prevailing Share prices subsequent to the publication of the Announcement may not be sustainable if the Scheme is not approved or otherwise lapses; and (iii) the Proposal allows the Group to

1. reallocate the resources, which would otherwise be utilized as administrative, compliance and other listing-related costs and expenses for maintaining the listing status of the Company, to the business development of the Group; and (b) execute its strategies more efficiently and effectively as a private entity under the current business environment.

5. Valuation of the property interests and the adjusted NAV of the Group

1. Valuation of the property interests
   The valuation of the Group's property interests in (i) Macau and the PRC; and (ii) Hong Kong as at 31 January 2021 was conducted by Cushman & Wakefield and Vigers (the "Valuer(s)"), respectively, each of which an independent valuer.
   We have conducted an interview with each of the Valuers to enquire its experience in valuing similar property interests in Macau, the PRC and/or Hong Kong and its independence. We have also reviewed the terms of engagement of the Valuers, in particular to their scope of work. We noted that the scope of work of the Valuers is appropriate to form the opinion required to be given and there are no limitations on the scope of work which might adversely impact on the degree of assurance given by the Valuers in the valuation reports set out in Appendix III and IV to this Scheme Document (the "Valuation Reports").

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As set out in the Valuation Reports, the total market value of the property interests in existing state attributable to the Group as at 31 January 2021 was approximately HK$7.8 billion, as set out below:

Notes:

1. Interest in property development, representing the Group's interest in the La Marina Project, was valued at approximately HK$2.4 billion as at 31 January 2021, accounting for approximately 30.5% of the total appraised value (the "Appraised Value") of the property interests attributable to the Group as at 31 January 2021.
   In valuing the Group's interest in the La Marina Project, the Valuer has adopted the market comparison method (the "Market Comparison Method") by making reference to comparable sales evidences as available in the market subject to appropriate adjustments including but not limited to time, location and physical characteristics between the subject properties and the comparable properties, or where appropriate, the investment method (the "Investment Method") by considering the capitalized rental derived from existing tenancies with due provision of the reversionary rental potential.

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1. Investment properties, representing the Group's interest in The Macau Square, were valued at approximately HK$1.7 billion as at 31 January 2021, accounting for approximately 21.4% of the
   Appraised Value. These properties were valued using the Investment Method.
2. Properties held for future development represent the Group's interest in the Zhongshan Project and were valued at approximately RMB2.6 billion (equivalent to approximately HK$3.1 billion) as at 31 January 2021, accounting for approximately 39.9% of the Appraised Value.
   In arriving at the valuation of the properties, the Valuer has adopted the Market Comparison Method assuming sale with the benefit of vacant possession and by making reference to comparable land sales evidence in Zhongshan with due adjustments made to reflect factors including but not limited to time, location, age and other characteristics between the subject properties and the comparable land.
3. It represents the Group's self-owned ice making factories and cold storages located at Yau Tong, Tai
   Po, Aberdeen and Tuen Mun in Hong Kong, which were valued at approximately HK$338.5 million in aggregate as at 31 January 2021, accounting for approximately 4.4% of the Appraised Value.
   These properties were valued by the Market Comparison Method with reference to comparable transactions of industrial units in the locality subject to appropriate adjustments including but not limited to location, size, time of transaction, age and the peculiarity of the properties in terms of their uniqueness, restriction on uses under the government lease and sea fronting.
4. Properties held for sale, comprising commercial and residential properties held for sales, were valued at approximately HK$298.7 million in aggregate as at 31 January 2021, representing approximately 3.8% of the Appraised Value. The Valuers valued these properties by adopting the
   Market Comparison Method.

As stated in the Valuation Reports, the valuation is conducted in compliance with the standards and guidelines set out in the HKIS Valuation Standards 2020 published by the Hong Kong Institute of Surveyors, Rule 11 of the Takeovers Code and Chapter 5 and Practice Note 12 of the Listing Rules. We have reviewed and discussed the property valuation with the Valuers regarding the methodology, basis and assumptions adopted in arriving at the values of the property interests. In particular, we have discussed with the Valuers to assess whether the approaches are appropriate for each type of properties stated above. We have also reviewed the valuation methodologies adopted for different types of properties of certain property companies and noted that the methodologies adopted in the Valuation Reports are usual. Taking into account the nature of the properties and that the valuation is conducted in accordance with the aforesaid requirements, we consider that the methodologies and basis adopted by the Valuers for determining the values of the property interests are appropriate.

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1. Adjusted NAV of the Group
   Some of the Group's property interests (including its property, plant and equipment, inventories and interest in the Zhongshan Project held by a joint venture) were stated at cost basis in accordance with Hong Kong Financial Reporting Standards. We consider that the appraised value of all property interests held by the Group is more appropriate in assessing the net asset backing of the Group. For this purpose, we have reviewed the adjusted NAV of the Group (the "Adjusted NAV"), based on the audited equity attributable to the Shareholders as at 31 December 2020 and the adjustments set out in
   Appendix I to this Scheme Document and the table below, including the net revaluation surplus arising from property valuation, net of estimated deferred tax:

Notes:

1. Represents the net revaluation surplus (the "Revaluation Surplus") arising from the net excess of the market value of the property interests held by the Group (including joint ventures) in existing state attributable to the Group as at 31 January 2021, as appraised by the Valuers, over their corresponding book values attributable to the Shareholders as at 31 December 2020, after adjusting for relevant interests not attributable to the Group.
2. Represents net deferred tax (the "Deferred Tax") on temporary differences between the market values of the property interests and the corresponding tax base used in computation of taxable profit.
   Deferred Tax is only determined for the surplus or deficit of completed properties for sales and properties held for future development. Deferred tax is calculated at tax rates of 12% for Macau corporate tax and 25% for PRC corporate income tax, while land appreciation tax is estimated at progressive rates ranging from 30% to 60% of appreciation value with certain allowable deductions according to the relevant PRC tax laws and regulations.
3. Based on 4,438,967,838 Shares in issue as at the Latest Practicable Date.

As shown above, the Cancellation Price of HK$1.50 per Scheme Share represents a discount of approximately 54.61% to the Adjusted NAV of approximately HK$3.3049 per Share. We have reviewed the computation of the Adjusted NAV per Share prepared by the management of the Group and discussed the computation in respect of the Revaluation Surplus and the Deferred Tax with the management of the Group. We therefore consider that the calculation of the Adjusted NAV to be appropriate. Further analysis in this regard is set out in the section headed "7. Evaluation of the Cancellation Price - (e) Privatization Precedents" below.

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6. Trading volume of the Shares

The following table sets out the average daily trading volume of the Shares for each month or period and the percentages of such average daily trading volume to the total issued Shares and the public float during the period from 1 January 2019 to the Latest Practicable Date:

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Source: Bloomberg and the website of the Stock Exchange

Notes:

1. Based on the number of total issued Shares as at each month end or the Latest Practicable Date.
2. Based on the number of Shares held by the public as calculated by deducting the Shares held by the Offeror and the Offeror Concert Parties from the number of total issued Shares as at each month end or the Latest Practicable Date.

As illustrated above, the average daily trading volume of the Shares during the above period ranged from approximately 0.0045% to 0.4959% of the total issued Shares and from approximately 0.0157% to 1.2273% of the issued Shares held by the public. Since the publication of the Announcement, there has been a surge in trading volume of the Shares, reflecting the market reaction to the Proposal and the Offeror's on-market purchase of the Shares. Since 21 January 2021, the date of the Announcement, and up to the Latest Practicable Date, the Offeror has purchased a total of 225,720,000 Shares, representing approximately 5.08% of total Shares in issue as at the Latest Practicable Date.

As illustrated in the above table, the trading of the Shares was not active. Given the thin liquidity of the Shares in general, it may be difficult for the Scheme Shareholders to dispose of a significant number of Shares without exerting downward pressure on the Share prices. The Proposal represents an opportunity for the Scheme Shareholders to exit at the fixed Cancellation Price which is substantially above the market prices prior to the issue of the Announcement.

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Source: Bloomberg

As shown in chart 1 above, the Shares were traded below the Cancellation Price at all times during the Review Period. Chart 2 above illustrates the performance of the Shares compared to that of the Hang Seng Index. The performance of the Shares generally lagged behind the Hang Seng Index during the Review Period.

From 3 January 2011 to the Last Trading Day (the "Pre-AnnouncementPeriod"), the closing prices of the Shares fluctuated between HK$0.455 and HK$1.41 with an average of approximately HK$0.87. The Share price dropped from HK$1.41 on 19 January 2011 to HK$0.51 on 4 October 2011. It then exhibited an upward trend and reached a high of HK$1.32 on 14 March 2014.

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Following the publication of (i) the annual results of the Group for the three years ended 31 December 2015 on 26 March 2014, 18 March 2015 and 23 March 2016, respectively; (ii) the announcement on 23 November 2015 that the Lote P Project could not be completed before the Expiry Date and an application (the "Application") had been made to the Macau Government for an extension of the Expiry Date; and (iii) the announcement on 4 December 2015 that the Macau Government had declined the Application, the Share price decreased from HK$1.31 on 26 March 2014 to HK$0.455 on 29 July 2016.

The Share price was then on an upward trend and reached a high of HK$1.15 on 28 May 2019 subsequent to the announcements of (i) a positive profit alert for the two years ended 31 December 2018 on 12 March 2018 and 28 February 2019, respectively; and (ii) the acquisition of property projects in Zhongshan and Zhuhai on 22 June 2018, notwithstanding the rejection by the Tribunal de Ultima Instancia (the Court of Final Appeal) of Macau of the application made by the Owner for invalidating the decision made by the Chief Executive of Macau to terminate the land concession of the Lote P Project on 23 May 2018.

After the termination of the acquisition of the property project in Zhuhai on 6 January 2020 and the publication of the profit warning announcements on 27 February 2020 and 5 August 2020, the Share price reached a low of HK$0.63 on 2 November 2020 from HK$1.15 on 28 May 2019 before closing at HK$0.93 on the Last Trading Day.

During the Pre-Announcement Period, the Hang Seng Index reached the highest of 33,154 points on 26 January 2018 from 23,436 points on 3 January 2011. The Hang Seng Index was then on a downward trend and dropped to 28,574 points on the Last Trading Day, representing a decrease of approximately 13.8% from the peak. During the Pre-Announcement Period, the Hang Seng Index increased by approximately 21.9% while the closing prices of the Shares decreased by approximately 25.0%.

During the Pre-Announcement Period, the highest closing price of the Shares was HK$1.41 on 19 January 2011 (about ten years ago) which represented a discount of 6.0% to the Cancellation Price. The lowest closing price of the Shares during the Pre- Announcement Period was HK$0.455 on 29 July 2016 which represented a discount of approximately 69.7% to the Cancellation Price.

Immediately after the publication of the Announcement, the Share price rose to HK$1.45 on 22 January 2021, representing an increase of approximately 55.9% from HK$0.93 on the Last Trading Day. From 22 January 2021 to the Latest Practicable Date, the Shares closed between HK$1.45 and HK$1.48, representing discounts between 3.3% and 1.3% to the Cancellation Price. The Shares closed at HK$1.47 as at the Latest Practicable Date.

We are of the view that the aforesaid surge in the Share price was driven by the Announcement, in particular, the Cancellation Price of HK$1.50 per Scheme Share. Scheme Shareholders should note that the Shares were closed below the Cancellation Price at all times during the Pre-Announcement Period and the prevailing Share prices may not be sustained if the Scheme is not approved or otherwise lapses.

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The Cancellation Price of HK$1.50 per Scheme Share represents:

1. a premium of approximately 61.29% over the closing price of HK$0.93 per Share as quoted on the Stock Exchange on the Last Trading Day;
2. a premium of approximately 63.22% over the average closing price of HK$0.919 per Share based on the daily closing prices as quoted on the Stock Exchange for the 10 trading days up to and including the Last Trading Day;
3. a premium of approximately 72.55% over the average closing price of approximately HK$0.8693 per Share based on the daily closing prices as quoted on the Stock Exchange for the 30 trading days up to and including the Last
   Trading Day;
4. a premium of approximately 94.23% over the average closing price of approximately HK$0.7723 per Share based on the daily closing prices as quoted on the Stock Exchange for the 60 trading days up to and including the Last
   Trading Day;
5. a premium of approximately 104.14% over the average closing price of approximately HK$0.7348 per Share based on the daily closing prices as quoted on the Stock Exchange for the 90 trading days up to and including the Last
   Trading Day;
6. a premium of approximately 105.82% over the average closing price of approximately HK$0.7288 per Share based on the daily closing prices as quoted on the Stock Exchange for the 120 trading days up to and including the Last
   Trading Day;
7. a premium of approximately 99.12% over the average closing price of approximately HK$0.7533 per Share based on the daily closing prices as quoted on the Stock Exchange for the 180 trading days up to and including the Last
   Trading Day;
8. a premium of approximately 76.47% over the average closing price of HK$0.85 per Share based on the daily closing prices as quoted on the Stock Exchange for the 360 trading days up to and including the Last Trading Day;
9. a premium of approximately 2.04% over the closing price of HK$1.47 per Share as quoted on the Stock Exchange as at the Latest Practicable Date;
10. a discount of approximately 53.02% to the NAV per Share of approximately HK$3.1926, calculated based on the audited equity attributable to the Shareholders of approximately HK$14.2 billion as at 31 December 2020 and 4,438,967,838 Shares in issue as at the Latest Practicable Date; and
11. a discount of approximately 54.61% to the Adjusted NAV per Share of approximately of HK$3.3049.

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1. Comparable Companies
   The Property Business is the primary business of the Group, accounting for approximately 87.9%, 79.9% and 69.6% of total revenue for FY2018, FY2019 and FY2020, respectively. In particular, the La Marina Project, which is located in Macau, contributed approximately 87.9%, 79.4% and 69.6% of total revenue for FY2018, FY2019 and FY2020, respectively.
   Given the Group is primarily engaged in the Property Business and has over 50% of its revenue generated from Macau, in assessing the fairness and reasonableness of the
   Cancellation Price, we have identified an exhaustive list of companies listed on the Stock
   Exchange which (i) are principally engaged in property development and investment; and (ii) generated over 50% of their revenue from Macau in their latest financial year. Based on these criteria, we identified two companies, namely Shun Tak Holdings Limited (stock code: 242) ("Shun Tak") and Emperor International Holdings Limited (stock code: 163) ("Emperor International") (collectively, the "Macau Companies").
   We consider the Macau Companies are analogous to the Company as they are engaged in the same sector as the Group does and have the majority of the revenue derived from Macau.
   Given (i) the small sample size of the Macau Companies identified; and (ii) the Group has property interests in Zhongshan and Hong Kong in addition to Macau, we have further researched, on an exhaustive basis, companies listed on the Stock Exchange which (i) are principally engaged in property development and investment; (ii) have properties interests located in Macau; (iii) generated over 50% of their revenue from Hong Kong, the PRC and/or Macau in their latest financial year; and (iv) have market capitalization within HK$8,000 million as at the Latest Practicable Date, being approximately 200% of the market capitalization of the Company of approximately HK$4,128.2 million on the Last Trading Day. Based on these criteria, we identified three additional companies, namely Tomson Group Limited (stock code: 258) ("Tomson"), CSI Properties Limited (stock code: 497) ("CSI") and Cheuk Nang (Holdings) Limited (stock code: 131) ("Cheuk Nang") (collectively, the "PRC/HK Companies") (together with the Macau Companies, the "Comparable Companies").
   We consider that the Comparable Companies are representative and appropriate for comparison purpose as (i) they are principally engaged in property-related business; (ii) they have property interests located in Macau, being the primary place of operation of the Group; (iii) they have exposure to the markets in Hong Kong and the PRC in terms of revenue contribution or the locations of their property interests whereas the Group also holds property interests in Zhongshan and Hong Kong; and (iv) their sizes are generally comparable to that of the Company in terms of market capitalization.

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The table below illustrates, among other things, (i) the price-to-earnings multiples ("P/E(s)"); (ii) the price-to-book multiples ("P/B(s)"); and (iii) the discounts of share price to NAV per share, of the Comparable Companies based on their respective NAV per share as derived from their respective latest published financial statements and the closing share prices of the Comparable Companies as at the Latest Practicable Date:

Source: Bloomberg and the website of the Stock Exchange

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Notes:

1. Based on (i) the Cancellation Price of HK$1.50 per Scheme Share; (ii) 4,438,967,838 Shares in issue as at the Latest Practicable Date; and (iii) the profit attributable to the Shareholders of approximately HK$429.0 million for FY2020.
2. Based on (i) the Cancellation Price of HK$1.50 per Scheme Share; (ii) 4,438,967,838 Shares in issue as at the Latest Practicable Date; and (iii) the equity attributable to the Shareholders of approximately HK$14.2 billion as at 31 December 2020.
3. Being the sum of bank loans, notes and/or amounts due to related parties less the sum of amount due from related parties and cash and bank balances and divided by total equity attributable to the shareholders.
4. The companies incurred a net loss for the last twelve months based on the latest published interim and annual reports as at the Latest Practicable Date.

P/E and P/B are the two most commonly used benchmarks in valuing a company. P/E is usually adopted for judging valuations for companies which are profit making. P/B, on the other hand, is typically applied for valuing companies which hold relatively liquid assets on their balance sheets and their book values approximate their fair market values such as property companies and banks. Given (i) interests in property development and cash and bank balances, whose carrying amounts approximate their fair values, constituted over 75% of the Group's total assets as at 31 December 2020; and (ii) the unstable earnings of the Group for the three years ended 31 December 2020, we consider the valuation methodology using P/B is more appropriate in valuing the Group.

The P/B as implied by the Cancellation Price was approximately 0.47 time which was higher than those of the Comparable Companies as at the Latest Practicable Date. The Cancellation Price represents a discount of approximately 53.02% to the audited NAV of the Group per Share as at 31 December 2020, which was lower than those of the Comparable Companies. On the other hand, for general reference only, the P/E as implied by the Cancellation Price was approximately 15.52 times which was lower than those of the Comparable Companies as at the Latest Practicable Date.

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1. Dividend yield
   Based on the interim dividend of HK$0.014 per Share for 2020H1 and the final dividend of HK$0.06 per Share for FY2019, the dividend yields as implied by the closing Share price on the Last Trading Day of HK$0.93 per Share and the Cancellation Price of HK$1.50 per Scheme Share were approximately 7.96% and 4.93%, respectively. We have compared the above dividend yields to those of the Comparable Companies as illustrated below:

Source: Bloomberg and website of the Stock Exchange

Note:

The dividend yields are calculated based on the total dividends per share in the preceding twelve months (excluding any special dividend) and the closing share prices of the Comparable Companies on the Last Trading Day.

As shown above, the dividend yields of the Comparable Companies ranged from approximately 2.07% to approximately 7.50%, with an average and median of approximately 4.75% and 4.39%, on the Last Trading Day, respectively. The dividend yields of the Company as implied by the closing Share price on the Last Trading Day was approximately 7.96% which was slightly above the highest of the dividend yields of the Comparable Companies. The dividend yield of the Company as implied by the Cancellation Price was approximately 4.93% which was within the range of those of the Comparable Companies.

If the Scheme becomes effective and the Proposal is implemented, the Scheme Shareholders who place a high priority on dividend income would have the opportunity to re-invest the proceeds in other companies that have similar or higher historical dividend yields.

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1. Comparison of Share prices with NAV of the Group per Share
   We have compared the closing Share prices, for a period of approximately three years prior to the Last Trading Day, against the then latest NAV of the Group per Share, as stated in the relevant annual or interim results announcements of the Company, as follows:

Source: Bloomberg and the website of the Stock Exchange

Notes:

1. Each period commenced from the time after the Company released its annual or interim results announcement.
2. Based on the NAV of the Group disclosed in the Company's annual or interim results announcements.

As shown in the table above, the Shares were traded at discounts to the underlying NAV of the Group per Share at all times from 28 March 2018 to the Last Trading Day, being a period of approximately three years, with discounts ranging from approximately 62.52% to approximately 79.69%, indicating that the Shareholders could not realize their investments in the Shares at the entire underlying NAV of the Group per Share on the market.

The approximately 53.02% discount of the Cancellation Price to the audited NAV of the Group per Share of approximately HK$3.1926 as at 31 December 2020 was lower than the historical discounts of the market prices to the NAV of the Group per Share as set out above and those of the Comparable Companies as set out in the section headed "7. Evaluation of the Cancellation Price - (b) Comparable Companies" above.

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1. Privatization Precedents
   We have, on an exhaustive basis, reviewed a list of privatization precedents, involving companies listed on the Stock Exchange and engaged in property development and investment, which were announced since 1 January 2011, being approximately 10 years prior to the date of the Announcement, and up to the Latest Practicable Date (the "Privatization Precedents") and successful as identified from the website of the Stock Exchange. Based on the aforesaid criteria, we identified 11 Privatization Precedents.
   Given (i) the Privatization Precedents are selected from a 10-year period of time which is of a reasonable length to obtain a sufficiently sized sample for comparison purpose; and (ii) the listed issuers involved in the Privatization Precedents have engaged in the same sector as the Group does, we consider that the Privatization Precedents are fair, representative and meaningful.
   The table below illustrates (i) the premiums/discounts of the offer/cancellation prices offered by the Privatization Precedents over/to the prevailing share prices prior to the issue of the relevant privatization announcements as well as the NAV and the adjusted
   NAV per share of the Privatization Precedents; and (ii) the P/Es and P/Bs implied by the offer/cancellation prices under the Privatization Precedents:

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