Discloseable Transaction – Acquisition of Knightlights Property International S.A.

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(Incorporated in Bermuda with limited liability)

On 5 May 2017 (London time), the Purchaser, being an indirect wholly-owned subsidiary of the Company, entered into the Agreement with the Seller to acquire the Sale Shares, representing the entire issued share capital of the Target Company. Completion took place immediately after signing of the Agreement.

The principal asset of the Target Company is the Target Property, which is a mixed use building located in 11 and 12 St James's Square and 14 to 17 Ormond Yard, London, UK.

After Completion, the Target Company has become an indirect wholly-owned subsidiary of the Company and the financial results, assets and liabilities of the Target Company will be included in the consolidated financial statements of the Group.

As one of the applicable percentage ratios in respect of the transaction contemplated under the Agreement exceeds 5% but is less than 25%, the Agreement and the Acquisition constitute a discloseable transaction of the Company and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

On 5 May 2017 (London time), the Purchaser entered into the Agreement with the Seller, pursuant to which the Purchaser agreed, among others, to acquire from the Seller the Sale Shares, representing the entire issued share capital of the Target Company. The principal terms of the Agreement are set out below:-

Save and except warranties in relation to the Seller's power and authority and the ownership of the Sale Shares and the Target Property, the Seller's liability in relation to most of the warranties and all tax indemnities given pursuant to the Agreement is limited to a nominal value only and in view of this the Purchaser has separately taken out certain title and warranty and indemnity insurance policies at the Purchaser's own cost.

Completion took place immediately after the signing of the Agreement on 5 May 2017 (London time). At Completion, the Completion Payment in the sum of GBP96,850,870 (equivalent to approximately HK$974,068,000) and the Shareholder Loan Amount shown in the Pro Forma Accounts in the sum of GBP77,073,357 (equivalent to approximately HK$775,158,000) were paid by the Purchaser. The Consideration and the Shareholder Loan Amount payable by the Purchaser under the Agreement have been or will be settled by internal resources and borrowing.

The Agreement was on normal commercial terms and the terms of the Agreement were arrived at after arm's length negotiations between the parties. The Consideration is determined by reference to the agreed property value of the Target Property of GBP174,990,000 (equivalent to approximately HK$1,759,944,000) and the face value of other assets and liabilities of the Target Company, other than deferred tax liabilities, deferred tax assets and Luxembourg tax liabilities. The Directors consider that the deferred tax liabilities of the Target Company will not be crystallised in the foreseeable future, exclusion of which in the Net Asset Value is reasonable; while the amount of deferred tax assets is similar to the amount of Luxembourg tax liabilities of the Target Company, the net financial effect of exclusion of both items will not be material to the Net Asset Value. The Directors have also taken into consideration a recent property valuation prepared by an independent property valuer with market value of the Target Property stated at GBP175,000,000 (equivalent to approximately HK$1,760,045,000). The Directors consider that the terms of the Agreement are fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole.

The Target Company is an investment holding company and the principal asset of the Target Company is the Target Property.

The Target Property is a mixed use building located in 11 and 12 St James's Square and 14 to 17 Ormond Yard, London, UK which is situated on a freehold land. The Target Property provides around 80,000 square feet grade A office accommodation arranged over lower ground, ground and 6 upper floors. The Target Property is fully multi-let with a current annual rental income of approximately GBP7,890,653 (equivalent to approximately HK$79,359,000).

A summary of the unaudited financial results of the Target Company for each of the two years ended 31 December 2015 and 2016 is set out below:-

As at 31 March 2017, the unaudited net asset of the Target Company was approximately GBP95,338,294 (equivalent to approximately HK$958,855,000).

The unaudited financial results of the Target Company for the year ended 31 December 2015 is prepared in accordance with IFRSs and the unaudited financial information of the Target Company for the year ended 31 December 2016 and the period ended 31 March 2017 are prepared on a consistent basis with that used in preparing the unaudited accounts of the Target Company for the year ended 31 December 2015.

The Company expects that there is no material principal difference between the accounting standards of the Company and the Target Company.

The Acquisition is in line with the principal business of the Group in relation to property leasing. The Target Property will be held as investment property for long term capital growth and rental purpose. It is expected that the Target Property can generate a stable and recurrent income to the Group. It also enables the Group to expand and widen its presence in the property market and benefit the business development of the Group in UK.