zhongmin baihui retail group ltd....to: the shareholders of zhongmin baihui retail group ltd dear...

CIRCULAR DATED 9 MARCH 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ ITCAREFULLY. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULDCONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT, TAX ADVISER OROTHER PROFESSIONAL ADVISER IMMEDIATELY.

Unless otherwise stated, capitalised terms on this cover are defined in this Circular under the sectionentitled “Definitions”.

If you have sold or transferred all your ordinary shares in the capital of Zhongmin Baihui Retail Group Ltd.(the “Company”), you should immediately forward this Circular, the enclosed Notice of ExtraordinaryGeneral Meeting and the accompanying Proxy Form to the purchaser or the transferee, or to the bank,stockbroker or agent through whom the sale or the transfer was effected for onward transmission to thepurchaser or the transferee.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of anyof the statements made, opinions expressed or reports contained in this Circular.

ZHONGMIN BAIHUI RETAIL GROUP LTD.(Incorporated in the Republic of Singapore)

(Company Registration Number: 200411929C)

CIRCULAR TO SHAREHOLDERS

IN RELATION TO

THE PROPOSED ACQUISITION OF THE LEASED PREMISES OF THE CHENGNAN STOREWHICH CONSTITUTES AN INTERESTED PERSON TRANSACTION

IMPORTANT DATES AND TIMES:

Last date of time for lodgement of Proxy Form : 22 March 2017 at 10.00 a.m.

Date and time of Extraordinary General Meeting : 24 March 2017 at 10.00 a.m.

Place of Extraordinary General Meeting : Peach Garden65 Chulia Street#33-01, OCBC CentreSingapore 049513

PAGE

DEFINITIONS ...................................................................................................................................... 3

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS ...................................................... 7

LETTER TO SHAREHOLDERS .......................................................................................................... 8

1 INTRODUCTION........................................................................................................................ 8

2 THE PROPOSED ACQUISITION .............................................................................................. 9

3 RATIONALE OF THE PROPOSED ACQUISITION .................................................................. 16

4 FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION .................................................. 17

5 THE PROPOSED ACQUISITION AS AN INTERESTED PERSON TRANSACTION................ 18

6 RELATIVE FIGURES UNDER CHAPTER 10 OF THE LISTING MANUAL .............................. 19

7 INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS ................................ 20

8 ABSTENTION FROM VOTING .................................................................................................. 20

9 STATEMENT FROM AUDIT COMMITTEE ................................................................................ 20

10 EXTRAORDINARY GENERAL MEETING ................................................................................ 21

11 ACTION TO BE TAKEN BY SHAREHOLDERS ........................................................................ 21

12 DIRECTORS’ RESPONSIBILITY STATEMENT ........................................................................ 21

13 DOCUMENTS AVAILABLE FOR INSPECTION ........................................................................ 22

APPENDIX A – TOTAL RENTAL EXPENSES .................................................................................... 23

APPENDIX B – PROFILE OF INDEPENDENT VALUER.................................................................... 24

APPENDIX C – VALUATION REPORT .............................................................................................. 25

NOTICE OF EXTRAORDINARY GENERAL MEETING...................................................................... 57

PROXY FORM

CONTENTS

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For the purpose of this Circular, the following definitions apply throughout except where the contextotherwise requires or otherwise stated:

1st Supplemental Lease : The supplemental agreement to the Original Lease Agreement Agreement” entered into between QZM and Hui’an Hongyi on 25 November

2014

2nd Supplemental Lease : The supplemental agreement to (i) the Original Lease Agreement Agreement; and (ii) the 1st Supplemental Lease Agreement,

entered into between QZM and Hui’an Hongyi on 27 September2016, concurrently with the execution of the S&P Agreements

“Aggregate Consideration” : The aggregate consideration of RMB122,236,128 payable byQZM to Hui’an Hongyi for the purchase of the Premises

“Audit Committee” : The audit committee of the Company as at the date of thiscircular, comprising Mr Koh Lian Huat, Dr Ong Seh Hong andMs Xu Ruyu

“Board” : The board of Directors of the Company for the time being

“CDP” : The Central Depository (Pte) Limited

“Chengnan Store” : The department store currently operated by QZM at thePremises

“Circular” : This circular to Shareholders dated 9 March 2017

“Companies Act” : The Companies Act (Chapter 50) of Singapore, as amended,modified or supplemented from time to time

“Company” : Zhongmin Baihui Retail Group Ltd.

“controlling shareholder” : A person who:

(a) holds directly or indirectly 15% or more of the totalnumber of issued Shares excluding treasury shares in theCompany. The SGX-ST may determine that a person whosatisfies this is not a controlling shareholder; or

(b) in fact exercises control over the Company.

“Director” : A director of the Company as at the date of this Circular or atany or the relevant time (as the case may be), and “Directors”shall be construed accordingly

“EGM” or “Extraordinary General : The extraordinary general meeting of the Company to be Meeting” convened on 24 March 2017, notice of which is set out on

pages 57 and 58 of this Circular

“Fujian Hongyi” : Fujian Hongyi Real Estate Group Co., Ltd.(福建宏毅集团有限公司)

“FY” : Financial year ended or, as the case may be, ending 31December

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DEFINITIONS

“Group” : The Company and its subsidiaries

“Group NTA” : Has the meaning ascribed to it in Section 5.2 of this Circular

“Hui’an Hongyi” : Hui’an Hongyi Property Development Co., Ltd.(惠安宏毅置业发展有限公司)

“Hongyi Baihui Centre” : A middle to high-end commercial and leisure centre developedby Hui’an Hongyi and located at the junction of HuichongHighway and 324 National Road, Hui’an County, Quanzhou City,Fujian Province, the PRC

“Independent Valuer” : Quanzhou Real Estate Appraisal Co., Ltd. (泉州名城资产评估房地产估价有限公司) (comprising certified practising valuers SuMaosheng (Licence No. 3520140075) and Liang Lizheng(Licence No. 3520120014)), whose profile is annexed hereto asAppendix B

“Latest Practicable Date” : 28 February 2017, being the latest practicable date prior to theprinting of this Circular

“Lease Agreement” : The Original Lease Agreement, the 1st Supplemental LeaseAgreement and the 2nd Supplemental Lease Agreement

“Listing Manual” : The rules of the Listing Manual applicable to entities listed onthe SGX-ST Main Board, as amended, modified orsupplemented from time to time

“Notice of EGM” : Notice of the EGM set out on pages 57 and 58 of this Circular

“NTA” : Net tangible assets

“Original Lease Agreement” : The lease agreement entered into between QZM and Hui’anHongyi on 1 April 2013 in respect of the lease of the Premises

“PRC” : People’s Republic of China

“Premises” : Retail premises located within Hongyi Baihui Centre at Hui’anCounty, Quanxiu Street, Quanzhou City, Fujian Province, thePRC

“Property Operation Agreement” : The property operation agreement entered into between QZMand Hui’an Hongyi on 1 April 2013 in respect of the right tooperate designated areas within Hongyi Baihui Centre(excluding the leased Premises)

“Proposed Acquisition” : The proposed acquisition of the Premises by QZM from Hui’anHongyi in accordance with the terms and conditions of the S&PAgreements, further details of which are provided under Section1.1 of the Circular

“Relevant Reduction” : Has the meaning ascribed to it in Section 2.2(c) of this Circular

“S&P Agreements” : The five (5) sale and purchase agreements, each entered intobetween QZM and Hui’an Hongyi on 27 September 2016, inrespect of the Proposed Acquisition

DEFINITIONS

4

“SGX-ST” : The Singapore Exchange Securities Trading Limited

“Share” : An ordinary share in the share capital of the company, and“Shares” shall be construed accordingly.

“Shareholders” : Registered holders of Shares in the Register of Members,except that where the registered holder is the CDP, the term“Shareholders” shall, in relation to such Shares and where thecontext admits, mean the Depositors in the Depository Registerand whose Securities Accounts maintained with CDP arecredited with those Shares

“Substantial Shareholder” : A person who has an interest (directly or indirectly) in one ormore voting shares in the Company and the total votes attachedto that share, or those shares, is not less than 5% of the totalvotes attached to all the voting shares of the Company

“Supplemental S&P Agreement” : The supplemental agreement to the S&P Agreements, enteredinto between QZM and Hui’an Hongyi on 5 January 2017, inrespect of the Proposed Acquisition

“Valuation Report” : The valuation report dated 6 September 2016 issued by theIndependent Valuer in respect of the Premises, translated intothe English language by Elite Translations Asia, which isannexed hereto as Appendix C

“Quanzhou XJD” : Quanzhou Xinjiada Container Transport Co., Ltd.(泉州市新嘉达集装箱运输有限公司)

“Quanzhou ZMBH” : Quanzhou Zhongmin Baihui Shopping Co., Ltd.(泉州市中闽百汇购物有限公司)

“QZM” : Zhongmin Baihui (Quanzhou) Commercial Management Co.,Ltd., a wholly-owned subsidiary of the Company(中闽百汇（泉州）商贸管理有限公司)

Currencies, Units of Measurements and Others

“RMB” : Renminbi, the lawful currency of the PRC

“S$” and “cents” : Singapore dollar and cents respectively, the lawful currency ofthe Republic of Singapore

“sq m” : Square metre

“%” or “per cent” : Per centum or percentage

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meaningsascribed to them respectively in Section 81SF of the Securities and Futures Act (Chapter 289) ofSingapore. The term “subsidiary” shall have the meaning ascribed to it in Section 5 of the CompaniesAct.

Words importing the singular shall, where applicable, include the plural and vice versa. Words importingthe masculine gender shall, where applicable, include the feminine and neuter genders and vice versa.

References to persons shall, where applicable, include corporations and unincorporated associations.

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DEFINITIONS

Any reference in this Circular to any statute or enactment or the Listing Manual is a reference to thatstatute or enactment or the Listing Manual as for the time being amended or re-enacted. Any worddefined under the Companies Act or the Listing Manual or any amendment thereof, and used in thisCircular shall, where applicable, have the meaning ascribed to it under the Companies Act or the ListingManual or such amendment thereof, as the case may be, unless otherwise provided.

Any reference to a time of day in this Circular is made by reference to Singapore time unless otherwisestated.

Any discrepancies in the tables in this Circular between the sum of listed amounts and the totals thereofshown are due to rounding. Accordingly, figures shown as totals in certain tables may not be anaggregation of the figures that precede them.

DEFINITIONS

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All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as“seek”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” andsimilar expressions or future or conditional verbs such as “will”, “if”, “would”, “should”, “could”, “may” and“might”. These statements reflect the Company’s current expectations, beliefs, hopes, intentions orstrategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknownrisks and uncertainties. Accordingly, actual results may differ materially from those described in suchforward-looking statements. Shareholders should not place undue reliance on such forward-lookingstatements, and the Company assumes no obligation to update publicly or revise any forward-lookingstatement.

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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

ZHONGMIN BAIHUI RETAIL GROUP LTD.(Incorporated in the Republic of Singapore)(Company Registration No. 200411929C)

Directors Registered Office:

Lee Swee Keng (Executive Chairman) 143 Cecil Street Chen Kaitong (Chief Executive Officer and Executive Director) Level Ten GB BuildingSu Jianli (Deputy Chief Executive Officer and Executive Director) Singapore 069542Andrew Lim Kok-Kin (Executive Director)Su Caiye (Non-Executive Director)Dr Ong Seh Hong (Independent Director) Koh Lian Huat (Independent Director)Xu Ruyu (Independent Director)

9 March 2017

To: The Shareholders of Zhongmin Baihui Retail Group Ltd

Dear Sir/Madam

1 INTRODUCTION

1.1 The Proposed Acquisition

On 28 September 2016, the Company announced that its wholly-owned subsidiary, ZhongminBaihui (Quanzhou) Commercial Management Co., Ltd. (“QZM”) had on 27 September 2016entered into the S&P Agreements with Hui’an Hongyi Property Development Co., Ltd. (“Hui’anHongyi”), pursuant to which QZM shall purchase from Hui’an Hongyi certain premises (comprisingfive (5) levels (namely, the basement, first to fourth floor)) of the Hongyi Baihui Centre located atHuichong Highway, Hui’an County, Quanzhou City, Fujian Province, the PRC, with an aggregategross floor area of approximately 25,466 square meters (the “Premises”), for an aggregateconsideration of RMB122,236,128 (approximately S$24,877,608 at the exchange rate of S$1 :RMB4.9135 on 26 September 2016 being the close of the market date preceding the date of theS&P Agreements) (“Aggregate Consideration”) (the “Proposed Acquisition”).

On 6 January 2017, the Company further announced that QZM had on 5 January 2017 enteredinto the Supplemental S&P Agreement with Hui’an Hongyi, pursuant to which the due date of thefirst instalment of the Aggregate Consideration has been amended.

The Premises is currently leased to QZM for its operation of the Chengnan Store pursuant to alease agreement entered into between QZM with Hui’an Hongyi on 1 April 2013 (the “OriginalLease Agreement”), and amended pursuant to a supplemental lease agreement dated 25November 2014 (the “1st Supplemental Lease Agreement”). The tenure of the lease is for a periodof twenty (20) years. The Company had, through QZM, also entered into a property operationagreement with Hui’an Hongyi on 1 April 2013 (the “Property Operation Agreement”), pursuant towhich QZM was granted the right to operate designated areas within Hongyi Baihui Centre(excluding the leased Premises). The Original Lease Agreement and the Property OperationAgreement were previously approved by independent shareholders at an extraordinary generalmeeting held on 13 May 2013.

Please refer to Section 2 of this Circular for further information.

LETTER TO SHAREHOLDERS

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1.2 The Proposed Acquisition as an Interested Person Transaction

Mr Chen Kaitong, Mr Su Caiye and Mr Su Jianli are Directors of the Company and shareholderswith shareholding interests of 61.70%, 30.85% and 7.45% respectively in Quanzhou ZhongminBaihui Shopping Co., Ltd. (“Quanzhou ZMBH”), which in turn holds 30.0% shareholding in Hui’anHongyi. Pursuant to Section 7 of the Companies Act, Mr Chen Kaitong and Mr Su Caiye aredeemed to be interested in the 30.0% shareholding in Hui’an Hongyi. By virtue of their deemedinterest, Hui’an Hongyi is deemed as an associate of Mr Chen Kaitong and Mr Su Caiye, and aninterested person, whereas QZM is regarded as an entity-at-risk in respect of the ProposedAcquisition. Accordingly, the Proposed Acquisition constitutes an interested person transactionunder Chapter 9 of the Listing Manual. Please refer to Section 2.1 of the Circular for furtherinformation on the parties to the Proposed Acquisition.

In accordance with Rule 906(1) of the Listing Manual, the value of the Proposed Acquisitionexceeds 5.0% of the latest consolidated NTA of the Group. Accordingly, the Proposed Acquisition issubject to the approval of the Shareholders.

Please refer to Section of 5 this Circular for further information on the Proposed Acquisition as aninterested person transaction.

1.3 The Proposed Acquisition as a Discloseable Transaction

The Proposed Acquisition constitutes a discloseable transaction under Chapter 10 of the ListingManual.

In accordance with Rule 1010, as the relative figure computed on the basis set out in Rule 1006(c)exceeds 5% but does not exceed 20%, the Proposed Acquisition constitutes a discloseabletransaction.

Please refer to Section 6 of this Circular for further information on the Proposed Acquisition as adiscloseable transaction.

1.4 Purpose of this Circular

The purpose of this Circular is to provide Shareholders with information relating to, and thereasons for, the Proposed Acquisition and to seek their approval for the same at the EGM, inaccordance with Chapter 9 of the Listing Manual.

2 THE PROPOSED ACQUISITION

2.1 Information on the Parties

(a) QZM

QZM, a wholly-owned subsidiary of the Company, is principally engaged in the business ofownership, operation and management of a chain of department stores.

(b) Hui’an Hongyi

Hui’an Hongyi is a joint venture company incorporated in the PRC on 19 August 2011. As atthe date of this Circular, Hui’an Hongyi is jointly owned by Fujian Hongyi Real Estate GroupCo., Ltd. (福建宏毅集团) (“Fujian Hongyi”), Quanzhou Xinjiada Container Transport Co., Ltd(泉州市新嘉达集装箱运输有限公司) (“Quanzhou XJD”) and Quanzhou Zhongmin BaihuiShopping Co., Ltd. (“Quanzhou ZMBH”) with shareholding interests of 30.0%, 40.0% and30.0%, respectively. Hui’an Hongyi is engaged in the business of property development,operation and management.

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The shareholding structure of Hui’an Hongyi is set out as below:

(c) Fujian Hongyi

Fujian Hongyi, being a 30.0% shareholder of Hui’an Hongyi, is engaged in the business ofproperty development, operation and management. Fujian Hongyi was incorporated in thePRC. As at the date of this Circular, none of the directors, chief executives or controllingshareholders or their associates of the Company has any interest in Fujian Hongyi.

(d) Quanzhou XJD

Quanzhou XJD, being a 40.0% shareholder of Hui’an Hongyi, is engaged in the business oflogistics. Quanzhou XJD was incorporated in the PRC. As at the date of this Circular, noneof the directors, chief executives or controlling shareholders or their associates of theCompany has any interest in Quanzhou XJD.

(e) Quanzhou ZMBH

Quanzhou ZMBH, being a 30.0% shareholder of Hui’an Hongyi, is principally engaged in theownership and operation of a chain of department stores in Quanzhou and Zhangzhou,Fujian Province, the PRC. Quanzhou ZMBH was incorporated in the PRC on 22 March1999.

As at the Latest Practicable Date, the shareholders of Quanzhou ZMBH are three (3) of theCompany’s directors, namely Mr Chen Kaitong, Mr Su Caiye and Mr Su Jianli. The legalrepresentative and sole director of Quanzhou ZMBH is Mr Su Caiye.

As at the Latest Practicable Date, each of the three (3) directors’ shareholding interests inthe Company and Quanzhou ZMBH are set out as below:

Position in the Shareholding Shareholding Director Company (Company) (Quanzhou ZMBH)

Chen Kaitong Chief Executive Officer and Executive Director 24.25% 61.70%

Su Caiye Non-Executive Director 12.30% 30.85%

Su Jianli Deputy Chief Executive Officer 3.16% 7.45%and Executive Director

By virtue of Section 7 of the Companies Act, Mr Chen Kaitong and Mr Su Caiye shall bedeemed to have an interest in the 30.0% shareholding in Hui’an Hongyi.

In view of the above and pursuant to Chapter 9 of the Listing Manual, QZM is regarded asan entity-at-risk, whereas Hui’an Hongyi is deemed as an associate of Mr Chen Kaitong andMr Su Caiye, and an interested person in respect of the Proposed Acquisition. Accordingly,the Proposed Acquisition will constitute an interested person transaction.

30.0% 40.0%

7.45% 30.85% 61.70%

30.0%

Quanzhou XJDFu ian Hongyi j Quanzhou ZMBH

Chen Kaitong Su Caiye Su Jianli

Hui’an Hongyi


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2.2 Information on the Premises

(a) The Premises

The Premises consists of five (5) levels (i.e., the basement and the 1st to 4th floors) of theHongyi Baihui Centre, with an aggregate gross floor area of 25,465.86 sq m. The Premisesare currently leased to QZM for its operation of the Chengnan Store pursuant to the LeaseAgreement.

(b) Rental Charge and Facility Charge under the Original Lease Agreement

As disclosed in the Company’s shareholders circular dated 26 April 2013, the annual cost ofthe lease of the Premises under the Original Lease Agreement was RMB10,948,911 foreach of the first two (2) years, comprising a rental charge of RMB16.90 per sq m per monthand a facility charge of RMB19 per sq m per month, calculated based on the aggregate floorarea of the Premises of 25,415.3 sq m (being the estimated aggregate gross floor area ofthe Premises under the Original Lease Agreement).

The rental charge for the first two (2) years shall remain and the subsequent charge for theremainder of the lease period will be adjusted and will increase at a rate ranging between11.2% and 17.0% every two (2) years. The facility charge will remain for the entire 20-yearlease period. Accordingly, the annual costs of the lease of the Premises (comprising thevariable rental charge and the fixed facility charge) effectively increases by 8% every two (2)years.

(c) Adjustment to Rental Charge and Facility Charge pursuant to the 1st SupplementalLease Agreement

However, upon resurvey of the Premises upon completion of the construction of thePremises, pursuant to the 1st Supplemental Lease Agreement, the aggregate gross floorarea was amended to 25,465.86 sq m, and as the Group has not occupied the 4th floor (witha floor area of 4,555.98 sq m) since the commencement of the lease of the Premises1, thechargeable area is only 20,909.88 sq m. QZM and Hui’an Hongyi also agreed that the rentalcharge was also further reduced for eight (8) years of the lease of the Premises, with theinitial reduction rate of RMB5 per sq m per month for the first two (2) years, which shallincrease at a rate of 8% for every two (2) years (the “Relevant Reduction”). The facilitycharge remains at RMB19 per sq m per month throughout the 20-year lease period.

As such, the annual cost for each of the first two (2) years has been revised toRMB7,753,384, comprising a rental charge of RMB11.90 per sq m per month and a facilitycharge of RMB19 per sq m per month. Accordingly, pursuant to the 1st Supplemental LeaseAgreement, the effective increase in the annual costs of the lease of the Premises(comprising the variable rental charge and the fixed facility charge) shall be at 8% every two(2) years, save for the change in annual costs from Year 8 to Year 9 of the lease period whichshall be an increase of 20.3%, given that the Relevant Reduction would no longer applycommencing Year 9.

Please refer to Appendix A of this Circular for further information in relation to theadjustment to rental charge pursuant to the 1st Supplemental Lease Agreement.

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1 The estimated commencement date was stated as 1 January 2014 in the lease agreement dated 1 April 2013. However, theGroup commenced actual operations only on 28 November 2014 and the tenure of 20 years accordingly commenced on 28November 2014.

(d) Hongyi Baihui Centre

The Hongyi Baihui Centre is part of a mixed property development project developed byHui’an Hongyi. Designed as a middle to high-end commercial and leisure centre, the HongyiBaihui Centre has, amongst others, a department store, cinema complex, supermarket,electronic stores, food and beverage outlets and various retail stores.

The Hongyi Baihui Centre has an aggregate gross floor area of approximately 67,900 sq mand is located at the junction of Huichong Highway and 324 National Road, Hui’an County,Quanzhou City, Fujian Province, the PRC.

The term of the Property Operation Agreement was for a period of three (3) yearscommencing from 1 October 2013 to 30 September 2016. Accordingly, the PropertyOperation Agreement has expired as of 30 September 2016. The designated areas underthe Property Agreement are currently under the management of Hui’an Hongyi, and there isno conflict of interest with the operations of the Chengnan Store by QZM, considering suchrelevant areas are beyond the areas of the Premises.

2.3 Independent Valuation

In connection with the Proposed Acquisition, QZM has engaged an independentvaluer, Quanzhou Real Estate Appraisal Co., Ltd (泉州名城资产评估房地产估价有限公司)(comprising certified practising valuers Su Maosheng (Licence No. 3520140075) and LiangLizheng (Licence No. 3520120014)) (collectively, the “Independent Valuer”, whose profile isannexed hereto as Appendix B), to assess and determine the market value of the Premises.

Based on the Valuation Report (annexed hereto as Appendix C), the market value ofeach level of the Premises is as follows:

Level Area (sq m) Market Value (RMB)

Basement 1 6,574.12 29,984,600

1st floor 4,531.27 41,334,200

2nd floor 5,496.08 30,080,000

3rd floor 4,308.41 17,686,000

4th floor 4,555.98 18,702,300

Total 25,465.86 137,787,100

The Independent Valuer adopted the market value basis in arriving at the valuation of thePremises. Market value refers to the estimated amount for which the subject property shouldexchange on the date of valuation between a willing buyer and a willing seller in an arm’s lengthtransaction after marketing wherein the parties had each acted knowledgeably, prudently andwithout compulsion. Valuation of the subject property includes the valuation of the premises andvaluation of the land (including the initial purchase price of the land use right). The Valuation Reportwas prepared in accordance with the PRC national Code for Real Estate Appraisal《房地产估价规范》 (GB/T 50291-2015) and the Standard for Basic Terminology of Real EstateAppraisal 《房地产估价基本术语标准》 (GB/T 50899-2013). The comparable method has beenadopted by the Independent Valuer, wherein comparison is made between a certain number ofactual cases and the subject property to determine the valuation of the subject property afterconsidering the possible differences. Please refer to the Valuation Report at Appendix C for furtherdetails.


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2.4 Salient Terms of the Proposed Acquisition

(a) Aggregate Consideration

Pursuant to the S&P Agreements, the consideration for the sale and purchase of each levelof the Premises will be based on the individual floor area of each level and calculated at therate of RMB4,800 per square meter, details as follows:

Level Area (sq m) Consideration (RMB)

Basement 1 6,574.12 31,555,776

1st floor 4,531.27 21,750,096

2nd floor 5,496.08 26,381,184

3rd floor 4,308.41 20,680,368

4th floor 4,555.98 21,868,704

Total 25,465.86 122,236,128

Accordingly, the aggregate consideration payable by QZM to Hui’an Hongyi in respect of theProposed Acquisition is RMB122,236,128, calculated at RMB4,800 per square meter(approximately S$24,877,608 at the exchange rate of S$1 : RMB4.9135 on 26 September2016 being the close of the market date preceding the date of the S&P Agreements)(“Aggregate Consideration”).

In arriving at the Aggregate Consideration, the Group has considered certain relevantfactors, including:

(i) the price agreed under the S&P Agreements (namely RMB4,800 per square meter) islower than the average market price per square meter of the Premises based on theValuation Report (namely RMB5,411 per square meter); and

(ii) the rationale for the Proposed Acquisition as set out in Section 3 below.

In addition, the Company will be required to make payment of the requisite stamp duty feesand deed tax for real property transactions in the PRC, amounting to approximatelyRMB3,728,202.

The Company intends to use internal sources of funds to finance the Proposed Acquisition.

(b) Terms of Payment

Pursuant to the S&P Agreements and the Supplemental S&P Agreement, the AggregateConsideration will be paid by QZM to Hui’an Hongyi in three (3) instalments as follows:

Percentage of Payment Aggregate

Instalment Due date Consideration Amount (RMB)

1st instalment 31 March 20172 40% 48,894,451

2nd instalment 1 June 2017 40% 48,894,451

3rd instalment 31 March 2018 20% 24,447,226

Total 100% 122,236,128

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2 Pursuant to the Supplemental S&P Agreement, the payment due date for the 1st instalment has been amended from 31December 2016 to 31 March 2017. Please refer to the Company’s announcement dated 6 January 2017.

(c) Conditions Precedent

Pursuant to the S&P Agreements and the Supplemental S&P Agreement, the ProposedAcquisition is conditional upon the approval of the Shareholders having been obtained at anextraordinary general meeting of the Company. No regulatory approval is required in thePRC for the Proposed Acquisition.

(d) Other Salient Terms

(i) Completion. Completion shall take place within thirty (30) business days from the dateof full settlement of all payments due and outstanding under the S&P Agreements.Hui’an Hongyi shall assist QZM in the registration application for the transfer of thePremises within thirty (30) business days from the date of full settlement of allpayments due and outstanding under the S&P Agreements.

(ii) Termination by Hui’an Hongyi. In the event that any instalment mentioned in Section2.4(b) above remains unpaid by QZM for more than thirty (30) days and Hui’an Hongyihas given fifteen (15) days’ written notice thereof, Hui’an Hongyi shall have the optionto either (a) terminate the S&P Agreements3; or (b) continue the performance of theS&P Agreements, pursuant to which QZM shall be liable to pay liquidated damages of0.03%4 of the aggregate amount due and payable per day, until such amount has beenduly paid in full.

(iii) Termination by QZM. In the event that Hui’an Hongyi fails to handover the Premises inaccordance with the S&P Agreements for more than 180 days, QZM shall have theright to terminate the S&P Agreements. In that event, Hui’an Hongyi shall return allmonies paid to it by QZM within thirty (30) days of written notice from QZM, and shallbe liable to pay liquidated damages of 1% of the aggregate amount of the monieswhich had been paid to it by QZM. Where QZM elects to continue the performance ofthe S&P Agreements, Hui’an Hongyi shall be liable to pay liquidated damages of0.03% of the aggregate amount paid by QZM per day, such liquidated damages to becalculated from the day after the stipulated date of handover up to the actual date ofhandover.

2.5 2nd Supplemental Lease Agreement

QZM has also entered into, with Hui’an Hongyi, a second supplemental lease on 27 September2016 (“2nd Supplemental Lease Agreement”), pursuant to which the rental expenses payable byQZM will be reduced proportionally in accordance with the instalment payment plan throughout theinstalment period commencing from 1 April 2017 (being the date immediately after the firstinstalment payment due date) until 31 March 2018 (being the last instalment payment due date):-


14

3 In this regard, the Company wishes to clarify that in such event, Hui’an Hongyi shall have the option to terminate the S&PAgreements but shall not be entitled to any liquidated damages of 20% of the aggregate amount due and payable (as statedin paragraph 3.2.4(ii) of the Company’s announcement dated 28 September 2016).

4 In this regard, the Company wishes to clarify that in such event, the liquidated damages payable by the Company shall be0.03% of the aggregate amount due and payable per day until such amount has been duly paid in full, instead of 3.0% asstated in paragraph 3.2.4(ii) of the Company’s announcement dated 28 September 2016.

Total expenses

which Total rentalwould have expenses(1)

Monthly Monthly been payable to be rental facility for the stated payable for

charge which charge which instalment Percentage the instalmentwould have would have period of rental to period

been payable been payable pursuant be payable pursuant under the 1st under the 1st to the 1st pursuant to the 2nd

Supplemental Supplemental Supplemental to the 2nd SupplementalLease Lease Lease Supplemental Lease

Instalment No. of Agreement Agreement Agreement Lease Agreement period months (RMB) (RMB) (RMB) Agreement (RMB)

1 April 2 300,516.79(2) 397,287.72 1,395,609.02 60% 837,365.402017 – (taking into31 May account 40%

2017 of the Aggregate

Consideration will have been

paid by 31 March 2017)

1 June 7 300,516.79(2) 397,287.72 4,884,631.57 20% 976,926.302017 – (taking into

31 account 80%December of the

2017 Aggregate Consideration will have been paid by 1 June

2017)

1 January 3 300,516.79(2) 397,287.72 2,093,413.53 20% 418,682.702018 – (taking into

31 March account 80%2018 of the

Aggregate Consideration will have been paid by 1 June

2017)

After 1 – 300,516.79(2) 397,287.72 697,804.57 0% 0April 2018 (taking into

account 100% of the

Aggregate Consideration will have been

fully settled by 31 March

2018)

Total 12 2,232,974.40

15


Notes:

(1) The total rental expenses comprises both rental charges and facility charges and constitutes the total amountpayable by QZM under the instalment payment plan pursuant to the 2nd Supplemental Lease Agreement.

(2) Please refer to Appendix A of the Circular for information in relation to the computation of the total rental expensesunder the Original Lease Agreement and 1st Supplemental Lease Agreement. In particular, in respect of thecomputation of the monthly rental amounting to RMB300,516.79, please refer to the computation of the rental for“Year 3” and “Year 4” in Appendix A of this Circular.

The instalment payment plan (and the above corresponding reduction in rental expenses) wouldease the cash flow of the Company, as compared to full upfront payment of the AggregateConsideration.

3 RATIONALE OF THE PROPOSED ACQUISITION

The Hongyi Baihui Centre is strategically located adjacent to Luoyang Town Government, Hui’anCounty, Quanzhou City, Fujian Province, the PRC (福建省泉州市惠安县螺阳镇政府) and is locatedat the south of the town area of Hui’an County (惠安县城). Situated in a heavy human traffic areawith a strong economic strength and clear city development plans, the Hongyi Baihui Centre enjoysevident geographical advantages. In addition, there are also good prospects for retail sales inFujian Province, which is one of the richest provinces in the PRC.

The Group is principally engaged in the ownership, operation and management of the “中闽百汇”department stores in the PRC since 1997. The Group’s management team has extensive andsubstantial knowledge of and experience in the retail industry, as well as established businessrelationships with relevant contacts within the retail industry. The Group does not currently own theland use rights of any of its stores.

The Group has been operating the Chengnan Store at the Premises by virtue of the Original LeaseAgreement and 1st Supplemental Lease Agreement since 28 November 20145. The gross salesproceeds of the Chengnan Store increased approximately 22% year-on-year in FY2016.

Currently, QZM’s control, access and right over the operations and management of the Premisesare limited to the scope of the Lease Agreement, including (i) the specified lease period of 20years commencing from 28 November 2014; (ii) restriction against subletting the Premises in itsentirety; (iii) permission to sublet to other parties, subject to QZM remaining liable to fulfil all theobligations under the Lease Agreement; and (iv) restriction against structural modification of thePremises. The Proposed Acquisition will result in QZM having full title and ownership of thePremises, hence allowing the QZM to have full control, access and right over the operations andmanagement of the Premises, as well as all of the economic benefits of the Chengnan Store.

QZM has a right of first refusal in the event that Hui’an Hongyi wishes to sell the Premises. TheProposed Acquisition is accordingly pursuant to the exercise of such right by QZM, further toHui’an Hongyi’s intention to dispose of the Premises as a whole (and not part only). As such, eventhough the 4th floor is currently not occupied by QZM pursuant to the Lease Agreement, theproperty purchased pursuant to the Proposed Acquisition shall be inclusive of the 4th floor. Theusage of the 4th floor will be further deliberated by the Group further to QZM attaining full control,access and right over the operations and management of the Premises following completion of theProposed Acquisition.


16

5 The estimated commencement date was stated as 1 January 2014 in the Original Lease Agreement. However, the Groupcommenced actual operations only on 28 November 2014 and the tenure of 20 years accordingly commenced on 28November 2014.

Pursuant to the Original Lease Agreement and the 1st Supplemental Lease Agreement, the totalrental expenses payable by the Group for the 20-year lease will be approximately RMB249,682,551(please refer to Appendix A for the computation of such total rental expense). In contrast, theAggregate Consideration for the Proposed Acquisition is RMB122,236,128 for the remaining termof 32 years of the land use rights. Accordingly, the Proposed Acquisition would result in costsavings of about 51% for the Group, to gain full control, access and right over the Premises for alonger tenure.

In view of the above considerations, as well as the strategic location of the Hongyi Baihui Centreand good prospects for retail sales in Fujian Province, the Directors are confident that the Groupwill be able to continue to profitably operate the Chengnan Store.

4 FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION

The pro forma financial effects of the Proposed Acquisition are for illustration purposes only and donot reflect the actual financial position of the Group after completion of the Proposed Acquisition.The financial effects are based on the latest audited financial statements of the Group for thefinancial year ended 31 December 2015, not taking into account the corporate actions of theCompany, such as share buybacks and dividends paid, during 2016, and are prepared on thefollowing bases and assumptions:

(a) the Proposed Acquisition had been completed (i) for the purposes of the profit and lossaccount, on 1 January 2015, and (ii) for the purposes of the balance sheet, on 31 December2015, being the date to which the latest audited financial statements of the Group, weremade up to, respectively;

(b) the Proposed Acquisition was effected at the sale consideration of approximately RMB122.2million;

Before the After the Proposed Proposed

Acquisition Acquisition

Impact on Group EarningsNet profit after income tax interests (RMB’000) 52,644 59,630 (1)

Number of issued Shares excluding treasury shares (’000) 196,320 196,320Basic earnings per Share (RMB cents) 26.82 30.37

Impact on Group NTANTA (RMB’000) 107,845 111,784 (2)

Weighted average number of issued Shares (’000) 196,320 196,320NTA per Share (RMB cents) 54.93 56.94

Notes:-

(1) This is based on:-(i) the depreciation of the Premises amounting to RMB3,690,000 for FY2015;(ii) the reversal of rental for FY2015 and the step rental provision in the Lease

Agreement for the lease of the Premises for the years up to FY2015 amountingto RMB13,006,000;

(iii) the reversal of deferred tax assets arising from the step rental provision in theLease Agreement amounting to RMB1,313,000; and

(iv) the income tax of RMB1,043,000 on rental and depreciation.

(2) This is based on:-(i) the reversal of the step rental provision in the Lease Agreement amounting to

RMB5,252,000; and(ii) the reversal of deferred tax assets arising from the step rental provision in the

Lease Agreement amounting to RMB1,313,000.

17


5 THE PROPOSED ACQUISITION AS AN INTERESTED PERSON TRANSACTION

5.1 Interested Person Transaction under Chapter 9 of the Listing Manual

Chapter 9 of the Listing Manual governs transactions in which a listed company or any of itssubsidiaries or associated companies (known as the “entity at risk”) enters into or proposes toenter into with a party who is an interested person of the listed company. Under Chapter 9 of theListing Manual, an immediate announcement and subsequent shareholders’ approval is required inrespect of a transaction between an entity at risk and its interested persons if the value of thattransaction exceeds 5% of the latest audited NTA value.

As at the Latest Practicable Date, Mr Chen Kaitong and Mr Su Caiye, Directors of the Company,each hold 61.70% and 30.85% in the share capital of Quanzhou ZMBH. According to Section 7 ofthe Companies Act, Mr Chen Kaitong and Mr Su Caiye are deemed to have an interest in the30.0% shareholding of Hui’an Hongyi through Quanzhou ZMBH. As such, QZM, a wholly-ownedsubsidiary of the Company, is regarded as an entity-at risk, whereas Hui’an Hongyi is deemed asan associate of Mr Chen Kaitong and Mr Su Caiye, and an interested person. Accordingly, theProposed Acquisition would constitute an interested person transaction subject to Chapter 9 of theListing Manual.

5.2 Materiality Thresholds under Chapter 9 of the Listing Manual

In accordance with Rule 906(1), where the value of an interested person transaction is equal to orexceeds 5% of the Group’s latest audited net tangible assets, the approval of shareholders isrequired to be obtained either prior to the transaction being entered into, or if the transaction isexpressed to be conditional on such approval, prior to the completion of the transaction, as thecase may be.

Based on the audited financial statements of the Group for FY2015, the audited NTA of the Groupas at 31 December 2015 was RMB107,845,219 (“Group NTA”) and the Aggregate Considerationof the Proposed Acquisition to be paid by the Group to Hui’an Hongyi represents 113.34% of thelatest audited NTA of the Group as at 31 December 2015. As the value of the Proposed Acquisitionexceeds 5% of the Group’s NTA, for the purposes of Chapter 9 of the Listing Manual and inparticular Rule 906(1), the Transaction is therefore subject to the approval of the Shareholders.Accordingly, the Company will be convening the EGM to seek Shareholders’ approval for theProposed Acquisition.

5.3 Other Interested Person Transactions for the Financial Year Ended 31 December 2016

Other than the Proposed Acquisition and the execution of the Supplemental Lease Agreement, theCompany and its entities at risk have not entered into any other interested person transaction withHui’an Hongyi for the financial year ended 31 December 2016 and for the current financial year upto the Latest Practicable Date.

The total value of all interested person transactions entered into by the Company and its entities atrisk (excluding all transactions which are less than S$100,000 and the Proposed Acquisition) forthe financial year ended 31 December 2016 was approximately RMB21,965,131.

Save as disclosed above, there are no other interested person transactions since the beginning ofthe financial year ended 31 December 2016 and for the current financial year up to the LatestPracticable Date.


18

6 RELATIVE FIGURES UNDER CHAPTER 10 OF THE LISTING MANUAL

The relative figures for the Proposed Acquisition computed on the applicable bases set out in Rule1006 of the Listing Manual are as follows:

Rule 1006 Relative Figures

(a)

(b)

(c)

(d)

(e)

Notes:

(1) This is based on the Aggregate Consideration of RMB122,236,128 and the Company’s market capitalization ofRMB1,379,404,197.60 (equivalent to approximate S$280,737,600.00 at the exchange rate of S$1 : RMB4.9135 on26 September 2016, being the market day preceding the date of the S&P Agreements).

(2) The abovementioned market capitalization is based on 196,320,000 issued shares in the capital of the Companyand the weighted average share of S$1.43 per share on 15 September 20166, being the market day preceding thedate of the S&P Agreements.

Accordingly, as the relative figure computed on the basis set out in Rule 1006(c) exceeds 5% butdoes not exceed 20%, the Proposed Acquisition will constitute a discloseable transaction underRule 1010 of the Listing Manual.

Not ApplicableAggregate volume or amount of proved and probablereserves to be disposed of, compared with the aggregateof the group’s proved and probable reserves

Not ApplicableNumber of equity securities issued as consideration forthe Transfer, compared with the number of equitysecurities previously issued

8.86%The aggregate value of the consideration given orreceived, compared with the Company’s marketcapitalisation based on the total number of issued sharesexcluding treasury shares

Not Applicable as thePremises will be usedby the Group for itsoperations and noprofits are attributableto the Premises.

Net profits attributable to the assets acquired or disposedof, compared with the Group’s net profits

Not ApplicableNet asset value of the assets to be disposed of,compared with the Group’s net asset value

19


6 15 September 2016, being the previous close date preceding the date of the S&P Agreements, has been used as thereference date for purposes of Rule 1006.

7 INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS

As at the Latest Practicable Date, the interests of Directors and substantial shareholders of theCompany in the Shares are as follows:

Direct Interest Deemed InterestNumber of Shares % Number of Shares %

DirectorsLee Swee Keng 48,241,000 24.87 – –Chen Kaitong 46,000,680 23.72 1,400,000 0.72Su Caiye 22,540,700 11.62 1,500,000 0.77Su Jianli 5,629,932 2.90 540,000 0.28Andrew Lim Kok-Kin – – – –Dr Ong Seh Hong – – – –Koh Lian Huat – – – –Xu Ruyu – – – –

Substantial Shareholders(other than Directors)Lim Kok Tong 18,577,588 9.58 2,200,000 1.13

Save as disclosed in this Circular, to the best of the knowledge of the Directors, none of theDirectors or controlling shareholders of the Company has any interest, direct or indirect, in theProposed Acquisition.

8 ABSTENTION FROM VOTING

Mr. Chen Kaitong, Mr. Su Caiye, Mr Su Jianli and each of their respective associates will abstainfrom voting on the Proposed Acquisition at the EGM. They will also not accept nominations to actas proxy, corporate representative or attorney, unless the shareholder(s) appointing them indicateclearly how votes are to be cast in respect of such resolution.

Notwithstanding Mr Su Jianli’s shareholding interest of 7.45% in Quanzhou ZMBH, Mr Su Jianli isnot deemed to have an interest in the 30.0% shareholding of Quanzhou ZMBH in Hui’an Hongyiunder Section 7 of the Companies Act. Hui’an Hongyi is similarly not deemed as an associate ofMr Su Jianli pursuant to Chapter 9 of the Listing Manual. Notwithstanding the foregoing, Mr SuJianli and his associates have voluntarily abstained from voting on the Proposed Acquisition at theEGM.

9 STATEMENT FROM AUDIT COMMITTEE

9.1 Statement from Audit Committee

The Audit Committee of the Company, comprises Mr Koh Lian Huat, Dr Ong Seh Hong and Ms XuRuyu, all of whom are independent non-executive directors of the Company. The Audit Committeehas considered, inter alia, the terms, rationale for, financial effects and benefits of the ProposedAcquisition, and is of the opinion that the Proposed Acquisition is on normal commercial terms andis not prejudicial to the interests of the Company and its minority shareholders.

9.2 Independent Directors’ Recommendation

Shareholders are urged to read carefully the principal terms and conditions of the ProposedAcquisition, the rationale for the Proposed Acquisition and the financial effects of the ProposedAcquisition as respectively set out in Sections 2, 3 and 4 of this Circular.


20

The Independent Directors have considered, inter alia, the terms, rationale for and benefits of theProposed Acquisition, as well as the financial effects of the Proposed Acquisition. The IndependentDirectors are of the view that the financial terms of the Proposed Acquisition are on normalcommercial terms and are not prejudicial to the interests of the Company and its minorityShareholders.

Accordingly, the Independent Directors recommend that minority Shareholders vote in favourof the Ordinary Resolution relating to the Proposed Acquisition at the EGM.

The Independent Directors further recommend that any individual Shareholder who may requirespecific advice to consult his stockbroker, bank manager, accountant or other professional adviser.

9.3 Opinion from Independent Financial Adviser Not Required

Based on Rule 921(4)(b)(ii) of the Listing Manual and the views of the of the Audit Committee ofthe Company as provided above, the Company is not required to appoint an independent financialadviser to advise the independent directors as to whether the Proposed Acquisition is on normalcommercial terms and is not prejudicial to the interests of the Company and its minorityshareholders.

10 EXTRAORDINARY GENERAL MEETING

The EGM, notice of which is set out on pages 57 and 58 of this Circular, will be held at PeachGarden, 65 Chulia Street, #33-01, OCBC Centre, Singapore 049513 on Friday, 24 March 2017 at10.00 a.m. for the purpose of considering and, if thought fit, passing with or without anymodifications, the ordinary resolution set out in the Notice of EGM.

11 ACTION TO BE TAKEN BY SHAREHOLDERS

11.1 Proxies

If a Shareholder is unable to attend the EGM and wishes to appoint a proxy to attend and vote onhis behalf, he should complete, sign and return the proxy form attached to this Circular inaccordance with the instructions printed thereon as soon as possible and, in any event, so as toreach the registered office of the Company at 143 Cecil Street, Level Ten, GB Building, Singapore069542 not less than 48 hours before the time fixed for the EGM. The completion and lodgement ofthe proxy form by a Shareholder will not prevent him from attending and voting at the EGM inperson if he so wishes.

11.2 Depositors

A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and tospeak and vote thereat unless his name appears on the Depository Register at least 72 hoursbefore the EGM.

12 DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the accuracy of theinformation given in this announcement and confirm after making all reasonable enquiries, that tothe best of their knowledge and belief, this Circular constitutes full and true disclosure of allmaterial facts about the Proposed Acquisition, the Company and its subsidiaries, and the Directorsare not aware of any facts the omission of which would make any statement in this Circularmisleading.

Where information in this Circular has been extracted from published or otherwise publicly availablesources or obtained from a named source, the sole responsibility of the Directors has been toensure that such information has been accurately and correctly extracted from those sources and/or reproduced in the Circular in its proper form and context.

21


13 DOCUMENTS AVAILABLE FOR INSPECTION

A copy of the S&P Agreements are available for inspection during normal business hours at theregistered office of the Company at 143 Cecil Street, Level Ten, GB Building, Singapore 069542during normal business hours for three (3) months from the date of the announcement.

Yours faithfully

For and on behalf of the Board of Directors ofZhongmin Baihui Retail Group Ltd

Lee Swee KengExecutive Chairman9 March 2017


22

Pursuant to the Original Lease Agreement and the 1st Supplemental Lease Agreement, the total rentalexpenses payable for the lease period of 20 years is as follows:

Original EffectiveBase Base

Rent Rate Reduction Rent Rate Monthly TotalTotal rent (per sq m (per sq m (per sq m Monthly Facility Monthly Totalpayable per per per Base Rent(1) Usage Rent per year

month)(2) month)(3) month) (A) (B) (A+B)

Year 1 16.90 5.00 11.90 248,827.57 397,287.72 646,115.29 7,753,383.50 Year 2 16.90 5.00 11.90 248,827.57 397,287.72 646,115.29 7,753,383.50 Year 3 19.77 5.40 14.37 300,516.79 397,287.72 697,804.51 8,373,654.17 Year 4 19.77 5.40 14.37 300,516.79 397,287.72 697,804.51 8,373,654.17 Year 5 22.87 5.83 17.04 356,341.15 397,287.72 753,628.87 9,043,546.50 Year 6 22.87 5.83 17.04 356,341.15 397,287.72 753,628.87 9,043,546.50 Year 7 26.22 6.30 19.93 416,631.47 397,287.72 813,919.19 9,767,030.27 Year 8 26.22 6.30 19.93 416,631.47 397,287.72 813,919.19 9,767,030.27 Year 9(4) 29.84 – 29.84 623,983.31 397,287.72 1,021,271.03 12,255,252.33 Year 10 29.84 – 29.84 623,983.31 397,287.72 1,021,271.03 12,255,252.33 Year 11 33.75 – 33.75 705,684.99 397,287.72 1,102,972.71 13,235,672.52 Year 12 33.75 – 33.75 705,684.99 397,287.72 1,102,972.71 13,235,672.52 Year 13 37.97 – 37.97 793,922.80 397,287.72 1,191,210.52 14,294,526.27 Year 14 37.97 – 37.97 793,922.80 397,287.72 1,191,210.52 14,294,526.27 Year 15 42.53 – 42.53 889,219.65 397,287.72 1,286,507.37 15,438,088.40 Year 16 42.53 – 42.53 889,219.65 397,287.72 1,286,507.37 15,438,088.40 Year 17 47.45 – 47.45 992,140.23 397,287.72 1,389,427.95 16,673,135.45 Year 18 47.45 – 47.45 992,140.23 397,287.72 1,389,427.95 16,673,135.45 Year 19 52.76 – 52.76 1,103,294.47 397,287.72 1,500,582.19 18,006,986.29 Year 20 52.76 – 52.76 1,103,294.47 397,287.72 1,500,582.19 18,006,986.29

Total 249,682,551.41

Notes:

(1) The monthly base rental charge, variable every two (2) years, is computed based on an aggregate floor area of 20,909.88sq m (where the floor area of the 4th floor of the Premises not occupied by QZM has been excluded).

(2) Pursuant to the Original Lease Agreement, the base rental charge shall be adjusted at a rate ranging between 11.2% and17.0% every two (2) years.

(3) Pursuant to the 1st Supplemental Lease Agreement, QZM and Hui’an Hongyi agree that the monthly base rental chargeablewill be reduced for eight (8) years of the lease of the Premises, with the initial reduction rate of RMB5 per sq m per monthfor the first two (2) years, which shall increase at a rate of 8% for every subsequent two (2) years.

(4) From Year 9 onwards, the base rent rate shall revert to the original base rent as agreed in the Original Lease Agreement,and no further reduction shall be applicable.

23

APPENDIX A – TOTAL RENTAL EXPENSES

(1) PROFILE OF QUANZHOU REAL ESTATE APPRAISAL CO., LTD. (泉州名城资产评估房地产估价有限公司)

Quanzhou Real Estate Appraisal Co., Ltd. (“QREA”) was established in June 2003 and is a full-service professional valuation company engaged in the business of, amongst other things, assetvaluation, real property valuation and land valuation.

QREA has provided professional valuation services to a broad clientele, which includesgovernmental departments of various levels in the PRC (such as the State-owned AssetsSupervision and Administration Commission, and the finance, transport and housing authorities),commercial banks, as well as distinguished companies within the Fujian province.

(2) PROFILE OF THE RELEVANT PROFESSIONALS

a. Liang Lizheng (Licence No. 3520120014)Designation: Business Manager

Liang Lizheng obtained his licences for valuation of property and land in 2011. Liang Lizhenghas had a long career in real estate valuation, and is typically a project leader for QREA’svaluation projects.

b. Su Maosheng (Licence No. 3520140075)Designation: Business Manager

Su Maosheng obtained his licence for land valuation in 2011 and his licence for propertyvaluation in 2013. Su Maosheng has had a long career in real estate valuation, and istypically a project leader for QREA’s valuation projects.

APPENDIX B – PROFILE OF INDEPENDENT VALUER

24

25

APPENDIX C – VALUATION REPORT

Real Estate Valuation Report

Project name: Appraisal of level B1 to 4 of retail premises Hongyi Baihui located

along Huichong Road and east of the Hui’an Luoyang government

building

Client: Zhongmin Baihui (Quanzhou) Commercial Management Co., Ltd.

Valuer: Quanzhou Real Estate Appraisal Co., Ltd.

Certified practicing valuers: Su Maosheng (licence no.: 3520140075)

Liang Lizheng (licence no.: 3520120014)

Date of issue: 6 September 2016

Report no.: Quanzhou Real Estate Appraisal (Real Estate) [2016] No. 140

Address: 5/F, Yuyuan Building, Xiangyuan Road, Quanzhou

Tel: 22211390 22211395 22211307

Fax: 22211325

26


Letter to Client

To Zhongmin Baihui (Quanzhou) Commercial Management Co., Ltd.,

In compliance with your request, we have assigned certified practicing valuers Su Maosheng (licence

no.: 3520140075) and Liang Lizheng (licence no.: 3520120014), and property valuer Huang Hongbai

to determine the valuation of the subject property.

Valuation objective: Provide reference information for the client’s proposed acquisition.

Subject property: Level B1 to 4 of retail premises Hongyi Baihui located along Huichong Road and

east of the Hui’an Luoyang government building. Valuation of the subject property includes the

valuation of the premises and valuation of the land (including the initial purchase price of the land use

right), but excludes appliances, furniture and other movable properties and other property rights. The

total construction area of the subject property is 25,465.86 m2 (the area of each level is: B1: 6,574.12

m2; level 1: 4,531.27 m2; level 2: 5,496.08 m2; level 3: 4,308.41 m2; and level 4: 4,555.98 m2). The

statutory and actual purpose of the subject property is as a retail premises. The subject property

comprises five levels from level B1 to 4. The subject property is constructed using reinforced concrete

and features dual-track escalators and cargo elevators. The owner of the subject property is Hui’an

Hongyi Property Development Co., Ltd.

Valuation date: 2 September 2016.

Valuation type: Market value.

Valuation method: Comparable method.

The value of the subject property was analysed, estimated and determined using the comparable

method performed in line with the objective and basis of the valuation based on the relevant

information provided by the client and obtained by us in accordance with the relevant laws and

regulations, policy documents and valuation standards. The subject property was valued at one

hundred and thirty-seven million seven hundred and eighty-seven thousand and one hundred renminbi

(RMB137.7871 million) as at the date of valuation.

Refer to the Valuation Result Summary Table for more details.

Special reminders: (1) The valuation results do not include the valuation of furniture, appliances and

other movable properties; (2) This valuation report is valid for a period of one year from the date of

issue or six months when there are significant changes to the real estate market; (3) Read the full

valuation report for more details.

Quanzhou Real Estate Appraisal Co., Ltd. (official seal)

Legal representative (signature or seal): (stamped)

(stamped)

27


6 September 2016

Valuation Result Summary Table

Table 1

Item Area (m2) Market Value (RMB) Market Price (RMB/m2)

Hui’an Hongyi Zhongmin

Baihui Shopping Mall

Level B1

6,574.12 29,984,600 4,561



Level 1

4,531.27 41,334,200 9,122



Level 2

5,496.08 30,080,000 5,473



Level 3

4,308.41 17,686,000 4,105



Level 4

4,555.98 18,702,300 4,105

Total 25,465.86 137,787,100 Average price 5,411

28


Content

Valuers’ Declaration

Assumptions and Limiting Conditions

Valuation Results Report

1. Client

2. Valuer

3. Valuation objective

4. Subject property

5. Date of valuation

6. Valuation type

7. Valuation principles

8. Basis of valuation

9. Method of valuation

10. Valuation results

11. Certified practicing valuers

12. Date of survey

13. Valuation period

Technical Report

1. Local conditions descriptions and analysis

2. Physical conditions descriptions and analysis

3. Property right descriptions and analysis

4. Market background and analysis

5. Maximum and optimal use analysis

6. Valuation process

7. Valuation result

Annexes

1. Copy of valuation agreement (brief)

2. Subject property location diagram

3. Subject property’s internal and external conditions and pictures of surroundings

4. Copy of subject property’s ownership certificate

5. Copy of valuer’s business licence

6. Copy of valuer’s qualification

7. Copies of certified practicing valuers’ licences

29


Valuers’ Declaration

We solemnly declare that:

1. The statements of fact contained in this valuation report are true and correct, and free of any

false records, misleading descriptions or major omissions.

2. The analyses, opinions and conclusions in this valuation report are limited by the reported

standard assumptions and limiting conditions, and are our personal, unbiased professional

analyses, opinions and conclusions.

3. We have no personal interest in the subject property and we have no personal interest or bias

with respect to the parties involved.

4. Our analyses, opinions and conclusions were developed, and this report has been prepared in

accordance with the requirements of the PRC national Code for Real Estate Appraisal (GB/T

50291-2015) and the Standard for Basic Terminology of Real Estate Appraisal (GB/T 50899-

2013).

5. Certified practicing valuer Liang Lizheng and property valuer Huang Hongbai surveyed the

subject property on 2 September 2016 and recorded their findings. Certified practicing valuer

Su Maosheng did not survey the subject property.

6. No one has provided significant professional assistance for the preparation of this valuation

report.

Certified Practicing Valuers

Table 2

Name Licence No. Signature Date

Su Maosheng 3520140075

(signed)

(stamped)

2016.9.6

Liang Lizheng 3520120014

(signed)

(stamped)

2016.9.6

30


Assumptions and Limiting Conditions

I. Various assumptions made during the valuation

(1) General assumptions

1. The title to the subject property is complete, free of any legal disputes and can be traded

legally in the open market.

2. At the date of valuation, the real estate market is open and equal trading market with willing

buyers and sellers.

3. The relevant information provided by the client is legal, true, correct and complete.

4. The certified practicing valuers have paid attention to property safety, environmental

pollution and other significant factors that may affect the valuation of the subject property.

With no reason to suspect any safety concerns and without any verification or check from a

professional organisation, the certified practicing valuers assumed that the subject property is

capable of fulfilling its purpose during its service life or the permited land use period.

5. The certified practicing valuers did not verify the copies of property right information

provided by the client with the relevant government authorities. With no reason to doubt the

legitimacy, truthfulness, correctness and completeness of the information, the certified

practicing valuers assumed that the information provided by the client is legal, true, correct

and complete.

6. The certified practicing valuers did not perform professional measurements of the subject

property’s construction area and have used dimensional data stated on document copies

provided by the client as a basis for the valuation.

(2) Assumptions of undetermined matters

1. As it was extremely difficult for the valuers to obtain information on the type of land use right,

capacity, building density and interior decoration for the three traded examples used for the

comparative method, the descriptions were based on the professional experience of the

certified practicing valuers.

2. Based on the survey findings of the certified practicing valuer, the subject property was

constructed in 2014. The year of construction of the subject property was determined based

on the survey findings.

(3) Assumptions that deviate from the facts

None.

(4) Assumptions on inconsistencies

None.

31


(5) Assumptions made due to lack of basis

None.

II. Limitations of the valuation report

1. This valuation report and its valuation results are only intended for the objective of this

valuation and shall not be used for any other purposes.

2. This valuation report and its valuation results are only intended for the client.

3. This valuation report is valid for a period of one year from the date of issue or six months

when there are significant changes to the real estate market.

4. This valuation report shall not be given to any organisation or individual other than a

competent valuation report review authority without the written consent of the valuer or

certified practicing valuers. The content of this valuation report cannot be disclosed to the

public partially or completely.

5. This valuation report is only valid with the official seal of the valuer and signatures of the

certified practicing valuers.

32


Valuation Results Report

I. Client

Name: Zhongmin Baihui (Quanzhou) Commercial Management Co., Ltd.

Address: 82 Tumen Street, Quanzhou (B1, 1-4/F, Kaiwei Building)

II. Valuer

Name: Quanzhou Real Estate Appraisal Co., Ltd.

Address: 5/F, Yuyuan Building, Xiangyuan Road, Quanzhou

Legal representative: Li Xia

Unified social credit code: 91350500751390847T

Qualifications:

1. Real Estate Valuer Certificate issued by the Ministry of Housing and Urban-Rural

Development of Fujian, class: 2, certificate no.: 352014049.

2. Land Valuation Agency Registration Certificate issued by the Ministry of Housing and

Urban-Rural Development of Fujian, licence: provincial, registration no.: B201635017.

III. Valuation objective

Provide reference information for the client’s proposed acquisition.

IV. Subject property

(1) Assets of subject property

Valuation of the subject property is based on the valuation of the retail premises and the

amortisation of the valuation of the land, and excludes the valuation of furniture and other

movable properties and other property rights.

(2) Subject property’s basic information

Name: Hongyi Zhongmin Baihui Shopping Mall.

Location: Level B1 to 4 of retail premises Hongyi Baihui located along Huichong Road and east

of the Hui’an Luoyang government building.

Size: The total construction area of the subject property is 25,465.86 m2 (the area of each level is:

B1: 6,574.12 m2; level 1: 4,531.27 m2; level 2: 5,496.08 m2; level 3: 4,308.41 m2; and level 4:

4,555.98 m2).

33


Purpose: The statutory and actual purpose of the subject property is as a retail premises.

Ownership: The owner of the subject property is Hui’an Hongyi Property Development Co., Ltd.

(3) Basic information of the land

Surroundings: South of piece of barren land, north of Huichong Road, east of Route G324, and

west of a bypass.

Land use period: The land use right expires on 18 February 2049. The balance of the land use

period is around 32 years.

Planning conditions: Unregistered.

Level of development: The subject property has full access to roads, water supply, drainage,

power, communication and other infrastructures.

(4) Basic information of the premises

Construction structure: Reinforced concrete.

Building layout: Level B1 to 4 are part of a shopping malls.

Facilities: The subject has access to firefighting, flood protection, lighting, communication and

other facilities.

Date of completion: The subject property was constructed in 2014.

Decorations:

Shopping mall: The entrances to the shopping mall featured automated tempered glass doors.

Level 1 to 4 were enclosed by hanging walls made of stone plates. As at the date of valuation, the

subject property was used as Hongyi Zhongmin Baihui Shopping Mall with polished tile flooring,

full height wooden cabinets as interior walls and asbestos ceiling. The subject property has toilets,

two dual-track escalators, fire escape and cargo elevators.

Floor height: The floor height of level B1 was 4.5 m and level 1-4 was 3.5 m.

Maintenance: The subject property has been used and maintained normally.

V. Date of valuation

For the objective of the valuation, the date of valuation was set as 2 September 2016, the same

day that the survey was conducted.

VI. Valuation type

(1) Valuation type: Market value.

34


(2) Definition

Market value refers to the estimated amount for which the subject property should exchange on

the date of valuation between a willing buyer and a willing seller in an arm’s length transaction

after marketing wherein the parties had each acted knowledgeably, prudently and without

compulsion. Valuation of the subject property includes the valuation of the premises and

valuation of the land (including the initial purchase price of the land use right).

VII. Valuation principles

1. Independent, objective and unbiased: The valuer is required to take a neutral stance and

determine a reasonable valuation or price that is unbiased to any party based on facts.

2. Legitimacy: The valuation or price of the subject property shall be based on legitimate

valuation results.

3. As at valuation date: The valuation results shall provide a valuation or price as at the date of

valuation that has been determined based on the objective of the valuation.

4. Substitute: The difference between the valuation or price of the subject property based on the

valuation results and similar properties of the same conditions shall be within a reasonable

range.

5. Maximum and optimal use: The valuation results shall provide a valuation or price of the

subject property at maximum and optimal use. Maximum and optimal use refers to the most

reasonable and possible use of the subject property legally, technically and financially to

realise maximum value for the subject project, including optimal use, scale and classification.

VIII. Basis of valuation

(1) Laws, regulations and policies which the valuation is based on

1. PRC Urban Real Estate Management Measures (revised on 30 August 2007 during the 29th

meeting of the Standing Committee of the 10th National People's Congress of People’s

Republic of China, and effective from the date of publication).

2. PRC Land Management Measures (revised on 28 August 2004 during the 11th meeting of the

Standing Committee of the 10th National People's Congress of People’s Republic of China,

and effective from the date of publication).

3. PRC Law on Property Rights (issued on 16 March 2007 during the 5th meeting of the 10th

National People's Congress of People’s Republic of China, and effective from 1 October

2007).

4. PRC Land Management Measures Implementation Regulations (issued on 24 December 1998

during the 12th meeting of the Standing Committee of the State Council, and effective from 1

January 1999).

(2) Technical standards used in the valuation

35


1. PRC national Code for Real Estate Appraisal (GB/T 50291-2015).

2. Standard for Basic Terminology of Real Estate Appraisal (GB/T 50899-2013).

(3) Basis of actions performed during the valuation

1. Valuation Services Agreement

2. Valuation Contract

(4) Information provided by the client

1. Relevant information provided by the client

(5) Relevant information collected by the valuers

1. Working papers prepared by the valuers based on survey findings, records and estimations.

2. Recent real estate market information in areas around the subject property.

3. Other relevant information that the valuer and valuers have obtained and collected.

IX. Method of valuation

The comparable method refers to the use of comparison between a certain number of actual cases

with the subject property to determine the valuation of the subject property after considering the

possible differences.

The formula is as follows:

Comparable value = price of comparable cases x trading conditions correction coefficient x

market conditions adjustment coefficient x regional conditions adjustment coefficient x physical

conditions adjustment coefficient x property right conditions adjustment coefficient.

X. Valuation results

The value of the subject property was analysed, estimated and determined using the comparable

method performed in line with the objective and basis of the valuation based on the relevant

information provided by the client and obtained by us in accordance with the relevant laws and

regulations, policy documents and valuation standards. The subject property was valued at one

hundred and thirty-seven million seven hundred and eighty-seven thousand and one hundred

renminbi (RMB137.7871 million) as at the date of valuation.

XI. Certified practicing valuers

36


Certified Practicing Valuers

Table 4

Name Licence No. Signature Date

Su Maosheng 3520140075

(signed)

(stamped)

2016.9.6

Liang Lizheng 3520120014

(signed)

(stamped)

2016.9.6

XII. Date of survey

2 September 2016

XIII. Valuation period

2 September 2016 to 6 September 2016.

Quanzhou Real Estate Appraisal Co., Ltd. (official seal)

Legal representative (signature or seal):

6 September 2016

37


Technical Report

I. Local conditions descriptions and analysis

Subject Property’s Local Conditions Descriptions and Analysis Table

Table 5

Factor Description Analysis

Location

Address

Zhongmin Baihui Shopping Mall along

Huichong Road and east of the Hui’an

Luoyang government building

Located in class III

Hui’an commercial

district, good location

Position

(location/land

class)

Subject property is located in Luoyang,

Hui’an, east of Luoyang government

building, and northeast of the intersection

between Huichong Road and Route G324

Proximity to

amenities

Around 200 m away from Luoyang

government building, around 600 m away

from Hui’an Guanghai Secondary School and

around 1,000 m away from Hui’an Passenger

Transport South Station

Street

conditions

Along major roads, roads on two sides, same

elevation as shops and roadsGood street conditions

Level Level B1 and 1 to 4 Good level

Direction Faces south and north

No significant effect

on the valuation of the

shopping mall

Transport

access

Road

conditionsAll neighbouring roads are for transportation

Good transport access,

easy to park vehicles

Accessible

transport tools

Many bus routes, including Hui’an Line 3

and Hui’an Line 11, pass the area, subject

property is around 50 m way from the nearest

bus stop; accessible by taxi as well

Transport

restrictionsNo transport restrictions on the roads

Convenience

of parking

Many parking spaces around the shopping

mall, easy to load and unload goods

38


External

facilities

Infrastructures Full access to roads, water, drainage, power,

communication and other infrastructure

Good infrastructure

and access to public

utilities

Public utilities

Near Luoyang government building, Hui’an

Chengnang Experimental Primary School,

Hui’an Guanghai Secondary School, service

network points of Agricultural Bank of

China, World Trade Hotel, and various

restaurants, apparel shops, retailers and

convenience stores.

Surroundings

Natural

environment

Surrounding areas are clean, slight air and

noise pollutions

Relatively good

environment

Human

environment

Neighbouring real estates are mainly small

commercial and residential districts, ordinary

human environment

Sceneries No mountains or water bodies, ordinary

scenery

Street and road type Transportation Relatively good

Level of commercial

prosperity

Located in a district commercial centre with

heavy car traffic and relatively good human

traffic flow

Relatively good level

of prosperity

39


II. Physical conditions descriptions and analysis

Subject Property’s Physical Conditions Descriptions and Analysis Table

Table 6

Land

conditions


Name

Zhongmin Baihui Shopping Mall along

Huichong Road and east of the Hui’an

Luoyang government building

/

Surroundings

South of piece of barren land, north of

Huichong Road, east of Route G324, and

west of a bypass

Relatively good location

Land size 36,851.1 /

Shape Rectangular Regular

Terrain Level ground Even and good for

construction

Topography Slightly higher than the roads Good topography

Geology High bearing capacity Can satisfy the

building’s needs

Level of

development

“Five accesses” available (water, drainage,

roads, power and communication)

Full range to

infrastructure

Building

conditions

Name Hongyi Zhongmin Baihui Shopping Mall /

Size

Total construction area of 25,465.86 m2 (the

area of each level is: B1: 6,574.12 m2; level

1: 4,531.27 m2; level 2: 5,496.08 m2; level

3: 4,308.41 m2; and level 4: 4,555.98 m2)

Ordinary size

Facilities Access to firefighting, flood protection,

lighting, communication and other facilities Full range of facilities

Decorations

The entrances to the shopping mall featured

automated tempered glass doors. Level 1 to

4 were enclosed by hanging walls made of

stone plates. As at the date of valuation, the

subject property was used as Hongyi

Zhongmin Baihui Shopping Mall with

polished tile flooring, full height wooden

cabinets as interior walls and asbestos

Satisfy the needs

40


ceiling. The subject property has toilets,

two dual-track escalators, fire escape and

cargo elevators.

Floor height floor height of level B1 was 4.5 m and level

1-4 was 3.5 m Satisfy the needs

Space layout Features independent toilets, reasonable

functional division Good space layout

Function Shopping mall Satisfy the needs

Construction

quality Relatively good Relatively good

Appearance Hanging exterior walls made of stone plates Satisfy the needs

Structure Reinforced concrete Intact building,

relatively good

maintenance, can

support normal use,

building has an

economic service life

balance of 58 years

Use and

maintenance

conditions

Normal use and maintenance

Recency Constructed in 2014, residue ratio of 98%

Property

management Manage by Baihui

Relatively good

management

Shopping mall

shape Rectangular Regular shape

Width and

depth Moderate width and depth Satisfy the needs

41


III. Property right descriptions and analysis

Subject Property’s Property Right Descriptions and Analysis Table

Table 7


Permitted land purpose Commercial and residential Consistent with actual purpose

Permitted property purpose Shopping mall Consistent with actual purpose

Planning conditions / Compliance with planning

conditions

Land owner State

Consistent with property owner

and land use right owner

Property owner Hui’an Hongyi Property

Development Co., Ltd.

Land use right owner Hui’an Hongyi Property

Development Co., Ltd.

Land use period Balance of 32 years

Land use period balance is

shorter than the property’s

service life

Land use right type Transfer /

Sharing None /

Usufruct or collaterals None /

Lease or occupancy Own use Property valuation not affected

by lease agreements

Overdue taxes None /

Seizure or other restrictions None /

Property right clarity None Clear property rights

IV. Market background and analysis

(1) Local economic and social development overview

In the first half of 2016, Hui’an achieved a gross domestic product (GDP) of RMB27.457 billion, based

on comparable prices (same below), a growth of 9.0% year-on-year. In terms of industries, the value of

primary industries increased by RMB945 million, a growth of 0.9%; the value of secondary industries

increased by RMB18.761 billion, a growth of 9.5%; and the value of tertiary industries increased by

RMB7.751 billion, a growth of 8.8%. Secondary and tertiary industries accounted for 72.8% and 26.8%

of the province’s economic growth respectively, driving an economic growth of 6.6 and 2.4 percentage

points.

42


In the first half of 2016, Hui’an achieved an industrial added value of RMB15.854 billion, a growth of

9.3% year-on-year. Of which, the added value of medium industries and above was RMB14.901 billion,

a growth of 10.0% and a drop of 0.1 percentage point compared to the first quarter. In terms of

company size, the province’s 73 companies with annual product value of at least RMB100 million

realised a total product value of RMB39.391 billion, a growth of 5.2% year-on-year and accounting for

74.3% of the province’s industry output. The province achieved a concluded fixed asset investment

value of (excluding agriculture) RMB11.966 billion, a growth of 14.1% year-on-year and a drop of 4.8

percentage points compared to the first quarter. In terms of industries, investments in primary industries

was RMB420 million, a growth of RMB420 million year-on-year. Investments in secondary industries

was RMB4.39 billion, a growth of 29.3%. Of which, investments in the manufacturing industry was

RMB2.93 billion, a drop of 8.6% year-on-year. The real drivers behind the rapid investment growth in

secondary industries were the power, thermal power, gas and water production and supply industries

which saw a total investment of RMB1.46 billion, a growth of 727.1% year-on-year. Investments in

tertiary industries was RMB5.72 billion, a drop of 2.9% year-on-year, mainly because there has been

significant decline in investments in water conservancy, environment and utilities management, which

dropped by 18.1% year-on year. Tertiary industries achieved added value of RMB7.751 billion, a

growth of 8.8% year-on-year, and increase of 3.4 percentage point year-on-year. Tertiary industries

accounted for 26.8% of the province’s economic growth, an increase of 11.8 percentage points year-on-

year.

In the first half of 2016, the income of Hui’an’s residents has been increasing steadily and there is

increased consumer demands. In the first half of the year, the average disposable income of the

province’s residents was RMB14,759, a growth of 8.8% year-on-year. After deducting pricing factors,

the actual growth was 7.2%, an increase of 0.2 percentage points year-on-year. Supported by the steady

increase in the residents’ income, consumer demand has improved further. In the first half of the year,

the province achieved a total retail sales of RMB8.209 billion, a growth of 7.0% year-on-year. The

growth marked an increase of 4.7% and 2.3 percentage points year-on-year. Consumer goods prices

have increased gently, while industrial goods prices have shrunk slightly year-on-year. In the first half

of the year, consumer spending increased by 1.5% year-on-year. The increase was 0.1 percentage points

higher than the first quarter.

Currently, the domestic and foreign market environments remained complex and harsh. There was still

great downward economic pressure and these factors cannot be ignored. The market needs further

injection of new market development ideas and a stronger push towards a structural reform. On one

hand, there is a need to accelerate economic transformation and upgrade to provide sustained support

for industries; on the other, effective domestic demand has to be expanded further to develop new areas

of economic growths and increase the confidence of investors to provide stable and healthy growth of

the province’s economy. With the introduction of deeper reforms and effectives from macroeconomic

policies, ensure that the overall economy is stable and continue to improve.

43


(2) Overall local real estate market conditions

According to statistics from the Lanfang data centre, in the first half of 2016, 1,740 new properties

(residential and non-residential) were traded in Hui’an. The total area traded was 155,126.75 m2. Of

which, 1,276 residential properties were traded, with a total traded area of 138,987.92 m2; and 464 non-

residential properties were traded, with a total traded area of 16,138.83 m2. In Hui’an’s trading data for

the first half of 2016, the biggest transaction involved the 193 properties from the employees’ dormitory

project of Dali Group in Zhishan, with a total traded area of 28,782.95 m2; the second biggest

transaction involved 166 properties from the Yuzhou Plaza project in Luoyang, with a total traded area

of 21,147.53 m2; and the third biggest transaction involved 164 properties from the Jinjian

Shijilingyuan project in Luocheng, with a total traded area of 9,585.42 m2.

From the trends of the month transaction volumes in Hui’an for the first half of 2016, property trades

have been stable and the volume have been relatively small. Most transactions involved properties in

Luocheng and Luoyang, with one of them being the provincial centre of Hui’an and the other being

Hui’an’s new area of development. The two areas made up most of the properties that were traded in

Hui’an, showing that they were the preferred areas for Hui’an’s residents. As a result of the slowdown

in the overall economy and the real estate industry, the real estate market remained relatively weak and

this was expected to persist for a period of time.

(3) Conditions of similar real estate markets

The subject property is located at Hongyi Zhongmin Baihui Shopping Mall which is east of the Hui’an

Luoyang government building and along Huichong Road. Based on the valuers’ survey, the city area of

Hui’an has Yonghui Supermarket, Darunfa Shopping Mall and Daoneijia Shopping Mall. There were

relatively few large shopping malls in the area and the different shopping malls were located quite far

from each other. The subject property, Hongyi Zhongmin Baihui Shopping Mall is located in the

eastern side of Hui’an city area and is surrounded by relative good resident groups. The subject

property is near roads and has clear transport access advantages. A full range of facilities are available

nearby and the shopping mall can help direct regional consumers and drive the retail segment in the

eastern area of Hui’an’s city area.

V. Maximum and optimal use analysis

Maximum and optimal use refers to the most reasonable and possible use of the subject property legally,

technically and financially to realise maximum value for the subject project, including optimal use,

scale and classification.

1. Legally possible. For each type of potential use, check whether it is legally possible. Otherwise, it

should be disqualified.

2. Technically possible. For each type of legally possible use, check whether it is technically feasible,

including considerations on whether the performance of the construction materials or construction

techniques can satisfy the requirements. Otherwise, it should be disqualified.

44


3. Financially possible. For each type of legally and technically possible use, check whether it is

financially feasible. A use is only financially possible if the income is higher than the costs.

Otherwise, it should be disqualified.

4. Whether maximum value is achieved. From the financially possible uses, choose the one that can

achieve the maximum value for the subject project to ensure maximum and optimal use.

The subject property’s permitted purpose was as a shopping mall and actual use was as a shopping mall.

The subject property’s neighbouring buildings were mostly used for residential and commercial

purposes. Considering that it is legally, technically and financially feasible, the statutory use of the

subject property was the most beneficial. Therefore, in this report, valuation is performed while trying

to maintain the subject property’s current purpose and conditions.

VI. Analysis of suitability of valuation method

The main real estate valuation methods are comparable method, income method, cost method and

hypothesised development method.

(1) Analysis of theoretically suitable valuation method

The comparable method is suitable for when a relatively large number of properties that are similar to

the subject property has been traded, such trades have happened frequently and there are sufficient

comparable properties. These applies to the subject property, so the comparable method is more suitable.

Income method is suitable for income properties. The income method is suitable for subject properties

that are income properties.

The cost method is suitable for newly and recently developed properties, such as properties that can be

redeveloped, properties that are being developed and properties that are about to be developed. The cost

method is suitable for subject properties that can be redeveloped.

(2) Analysis of valuation methods that have not been adopted

The income method is theoretically applicable, but it was hard to collect information on the operation of

large shopping malls that are similar to the subject property and financial information of such shopping

malls. The income value of non-real estate portion of operating properties is hard to segregate, so the

income method was not used for the valuation.

The cost method is theoretically applicable, but the cost method only analyse the value of a property

based on the costs a property from the purchase of land to completion, and cannot reflect the value of

the property’s location and property rights. Therefore, the cost method was not used for the valuation.

The hypothesised development method is theoretically not applicable. The subject property has been

built into a real estate that can support sustained use, so the hypothesised development method cannot

be used for the valuation.

(3) Analysis of the valuation method that has been adopted

45


The subject property’s purpose is as a shopping mall. It is for commercial purposes just like retail

storefronts and is very similar in terms of operation and revenue. Hui’an’s market for similar second-

hand retailer storefronts is relatively mature and in the area, there is a relatively high number of recent

trading information on storefronts that are similar to the subject target. Therefore, the comparable

method can be used to assess the value of a standard storefront on each level of the subject property.

(4) Technical valuation routes

Comparable method: Select three actual recent transactions involving properties that are similar to the

subject property and adjust the basis of comparison such as assets and secondary interior renovation

before comparing them with the subject property and determining the valuation of the subject property

based on the traded prices.

VII. Valuation process

The subject property is a shopping mall that covers a large area. The valuers’ survey showed that the

subject property was mainly surrounded shops along the streets. For the valuation of the subject

property, the standard store area on each level was set as 50 m2.

Using the standard store area as a valuation standard, the valuation of the subject property was

determined after considering factors such as distance from streets, purpose, area and level.

(1) Comparable method

The formula of the comparable method is as follows:

Comparable value = price of comparable cases x trading conditions correction coefficient x market

conditions adjustment coefficient x regional conditions adjustment coefficient x physical conditions

adjustment coefficient x property right conditions adjustment coefficient.

1. Selection of comparable transactions

The valuers studied and analysed the real estate market of the same supply-demand circle as the subject

property and collected actual transactions involving properties that are similar to the subject property.

Through comparison and screening, the valuers chose three transactions involving similar properties as

basis of comparison. The details were as follows:

Basic Conditions of Comparable Properties

Table 8

Item Comparable property A Comparable property B Comparable property C

Name Storefront at Dongsheng

Market Storefront at Jinxiu Garden

Storefront at

Dongnannanyuan

Location Hui’an Luocheng

Dongsheng Market

Jinxiu Garden behind

provincial hospital along

Zhongshan Road North,

Hui’an

Dongnannanyuan along

Dongnan Street, Hui’an

46


Land type Transfer Transfer Transfer

Land class Hui’an Luocheng class I

commercial district

Hui’an Luocheng class I

commercial district

Hui’an Luocheng class I

commercial district

Purpose Storefront Storefront Storefront

Structure Reinforced concrete Reinforced concrete Reinforced concrete

Space layout Reasonable functional

division

Reasonable functional

division

Reasonable functional

division

Level Level 1 Level 1 Level 1

Recency Constructed in 2000, residue

ratio of 75%

Constructed in 2004, residue

ratio of 80%

Constructed in 2005, residue

ratio of 80%

Total traded price

(RMB10,000) 42.00 35.00 48.00

Construction area (m2) 36.23 31 38

Traded unit price

(RMB/m2) 11593 11290 12632

Traded date March 2016 April 2016 April 2016

Payment method One-time One-time One-time

Source of information Market study and survey Market study and survey Market study and survey

Remarks (costs covered)

Simple decoration, taxes

paid by buyer and seller

individually



individually



individually

2. Creation of basis of comparison

(1) Synchronising scope of assets

Valuation of the subject property is based on the valuation of the retail premises and the amortisation of

the valuation of the land, and excludes the valuation of furniture and other movable properties and other

property rights.

(2) Synchronising payment method

The payment method of the subject property and comparable properties was one-time payment, so no

adjustment is required.

(3) Synchronising tax payment

In accordance with the relevant national regulations, taxes that must be paid for property trades include:

business tax and extras, income tax, value added tax for the land, deed tax, stamp duty and service fees.

The taxes for the comparable properties were paid by the buyer and seller individually, so their traded

prices reflect market prices and no adjustment is required.

(4) Synchronising unit price

Prices of the subject property and comparable properties were stated in RMB/m2 with the currency

being renminbi and unit being dollar. Areas were presented as construction area in square metres, so no

adjustment is required.

(5) Synchronising land use type

47


The land use right for the subject property and comparable properties A, B and C were obtained through

transfer, so no adjustment is required.

(6) Effects of lease agreements

The comparable properties were on short leases, so in this valuation, the effects of lease agreements on

their valuation were not considered.

Comparison Basis Table

Table 9

Item Comparable property A Comparable property B Comparable property C

Traded unit price

(RMB/m2) 11,593 11,290 12,632

Synchronised assets

(RMB/m2) 0 0 0

Synchronised tax payment

(RMB/m2) 0 0 0

Comparable price

(RMB/m2) 11,593 11,290 12,632

3. Trading conditions correction

Depending on whether the valuation of the properties is affected be difference between normal and

actual trading conditions, unit prices can be adjusted by percentage. All three comparable properties

were traded under normal conditions, so the correction coefficient for the comparable properties is

100/100.

4. Market conditions adjustment

The traded dates of the comparable properties were March, April and April 2016 respectively, and were

close to the time of valuation. During this period, the market for similar properties in the area was stable,

so no adjustment is required. The correction coefficient for the comparable properties is 100/100.

5. Regional conditions adjustment

The locations of the comparable properties were compared with the location of the subject property to

derive the following results. Factors for which the comparable properties are better than the subject

property are described as good, better and slightly better depending on how much better the factors are;

factors for which the comparable properties are worse than the subject property are described as bad,

worse and slightly worse depending on how much worse the factors are; factors for which the

comparable properties are about the same as the subject property are described as similar. These are

then adjusted based on percentage.

48


Regional Conditions Adjustment Table

Table 10

Item

Comparable property A Comparable property B Comparable property C

Description and

analysis

Comparison

result

Description and

analysis

Comparison

result

Description and

analysis

Comparison

result

Level of

commercial

prosperity

Located in a

district commercial

centre with heavy

car traffic and

relatively good

human traffic flow,

high level of

commercial

prosperity

Similar

Located in a district

commercial centre

with heavy car

traffic and relatively

good human traffic

flow, high level of

commercial

prosperity

Similar

Located in a

district

commercial centre

with heavy car

traffic and

relatively good

human traffic

flow, high level of

commercial

prosperity

Similar

Location

Located at

Hui’an’s city area,

around 500 m away

from Hui’an

Dongmen

Passenger

Transport

Terminal, around

700 m away from

Hui’an government

building, around

800 m away from

Keshan Park

Similar

Located at Hui’an’s

city area, around

1,200 m away from

Hui’an Bus Station,

around 600 m away

from Hui’an

government

building, next to

Hui’an Provincial

Hospital

Similar

Located at

Hui’an’s city area,

around 400 m

away from Hui’an

Dongmen

Passenger

Transport

Terminal, around

700m away from

Hui’an

government

building, around

800 m away from

Keshan Park

Similar

Located in

Hui’an’s class I

commercial

district, good

location

Located in Hui’an’s

class I commercial

district, good

location

Located in

Hui’an’s class I

commercial

district, good

location

Transport

access

Property is along

Jianshe Street

North, which is a

general road; many

bus routes

including Hui’an

Line 13, 1, 7 and 9;

area accessible by

taxi; no transport

restrictions for

roads, temporary

Similar

Property is along

Zhongshan Street

North, which is a

general road; many

bus routes including

Hui’an Line 10, 2, 7

and 6; area

accessible by taxi;

no transport

restrictions for

roads, temporary

Similar

Property is along

Jianshe Street

North, which is a

general road;

many bus routes

including Hui’an

Line 13, 1, 7 and

9; area accessible

by taxi; no

transport

restrictions for

Similar

49


parking near

storefront, easy to

load and unload

goods

parking near

storefront, easy to

load and unload

goods

roads, temporary

parking near

storefront, easy to

load and unload

goods

Good transport

access, easy to park

vehicles

Good transport

access, easy to park

vehicles

Good transport

access, easy to

park vehicles

External

facilities

Full access to

roads, water,

drainage, power,

communication and

other

infrastructure; near

Dongsheng

Market, Hailong

Furniture Mall,

Hui’an No. 1

Secondary School,

service network

points of

Agricultural Bank

of China, World

Trade Hotel, and

various restaurants,

apparel shops,

retailers and

convenience stores.

Similar

Full access to roads,

water, drainage,

power,

communication and

other infrastructure;

near Zhongshan

Street North

Commercial Street,

Guomei Appliances,

Hui’an

Experimental

Primary School,

service network

points of

Agricultural Bank

of China, World

Trade Hotel, and

various restaurants,

apparel shops,

retailers and

convenience stores.

Similar

Full access to

roads, water,

drainage, power,

communication

and other

infrastructure;

near Dongsheng

Market, Hailong

Furniture Mall,

Hui’an No. 1

Secondary

School, service

network points of

Agricultural Bank

of China, World

Trade Hotel, and

various

restaurants,

apparel shops,

retailers and

convenience

stores.

Similar

Good infrastructure

and access to

public utilities

Good infrastructure

and access to public

utilities

Good

infrastructure and

access to public

utilities

Surroundings

Surrounding areas

are clean, slight air

and noise

pollutions Similar

Surrounding areas

are clean, slight air

and noise pollutions Similar

Surrounding areas

are clean, slight

air and noise

pollutions Similar

Relatively good

environment

Relatively good

environment

Relatively good

environment

Street

conditions

Along living road,

faces the streets on

one side, even

elevation between

storefront and

roads

Similar

Along living road,

faces the streets on

one side, even

elevation between

storefront and roads

Similar

Along living road,

faces the streets

on one side, even

elevation between

storefront and

roads

Similar

50


Relatively good

street conditions

Relatively good

street conditions

Relatively good

street conditions

Street and

road type

Living Similar

Living Similar

Living Similar

Relatively good Relatively good Relatively good

Level Level 1

Similar Level 1

Similar Level 1

Similar Good Good Good

Regional Conditions Adjustment Coefficients Table

Table 11

Item


Comparison

results

Adjustment

value

Comparison

results

Adjustment

value

Comparison

results

Adjustment

value

Level of

commercial

prosperity

Similar 0 Similar 0 Similar 0

Location Similar 0 Similar 0 Similar 0

Transport access Similar 0 Similar 0 Similar 0

External facilities Similar 0 Similar 0 Similar 0

Surroundings Similar 0 Similar 0 Similar 0

Street conditions Similar 0 Similar 0 Similar 0

Street and road

type Similar 0 Similar 0 Similar 0

Level Similar 0 Similar 0 Similar 0

Total adjustment

value 100 100 100

Note: The weightage of their effects on the valuation of the subject property has been considered for the

sub-adjustment values above.

6. Physical conditions adjustment

The physical conditions of the comparable properties were compared with the physical conditions of the

subject property to derive the following results. Factors for which the comparable properties are better

than the subject property are described as good, better and slightly better depending on how much better

the factors are; factors for which the comparable properties are worse than the subject property are

described as bad, worse and slightly worse depending on how much worse the factors are; factors for

which the comparable properties are about the same as the subject property are described as similar.

These are then adjusted based on percentage.

51


Physical Conditions Adjustment Table

Table 12

Item


Description and

analysis

Comparison

result

Description and

analysis

Comparison

result

Description and

analysis

Comparison

result

Structure

Reinforced

concrete Similar

Reinforced

concrete Similar

Reinforced

concrete Similar

Satisfy the needs Satisfy the

needs

Satisfy the

needs

Construction area

(m2)

36.23 Similar

31 Similar

38 Similar

Moderate Moderate Moderate

Recency

Constructed in

2000, residue ratio

of 75% Worse

Constructed in

2004, residue

ratio of 80% Slightly worse

Constructed in

2005, residue

ratio of 80% Slightly worse

Older Slightly older Slightly older

Space layout

Features

independent

toilets, reasonable

functional division Similar

Features

independent

toilets,

reasonable

functional

division

Similar

Features

independent

toilets,

reasonable

functional

division

Similar

Good space layout Good space

layout

Good space

layout

Floor height 4 m

Similar 4 m

Similar 4 m

Similar Better Better Better

Storefront shape Rectangular

Similar Rectangular

Similar Rectangular

Similar Regular Regular Regular

Width and depth

Moderate width

and depth Similar

Moderate width

and depth Similar

Moderate width

and depth Similar

Better Better Better

Facilities

Full access to

firefighting, flood

protection,

lighting,

ventilation,

communication

and other facilities

Similar

Full access to

firefighting,

flood protection,

lighting,

ventilation,

communication

and other

facilities

Similar

Full access to

firefighting,

flood protection,

lighting,

ventilation,

communication

and other

facilities

Similar

Full access Full access Full access

52


Physical Conditions Adjustment Coefficients Table

Table 13

Item


Comparison

results

Adjustment

value

Comparison

results

Adjustment

value

Comparison

results

Adjustment

value

Structure Similar 0 Similar 0 Similar 0

Construction area Similar 0 Similar 0 Similar 0

Receny Worse -4 Slightly worse -2 Slightly worse -2

Space layout Similar 0 Similar 0 Similar 0

Floor height Similar 0 Similar 0 Similar 0

Storefront shape Similar 0 Similar 0 Similar 0

Width and depth Similar 0 Similar 0 Similar 0

Facilities Similar 0 Similar 0 Similar 0

Total adjustment

value 96 98 98



7. Property right conditions adjustment

The Property right conditions of the comparable properties were compared with the Property right

conditions of the subject property to derive the following results. Factors for which the comparable

properties are better than the subject property are described as good, better and slightly better depending

on how much better the factors are; factors for which the comparable properties are worse than the

subject property are described as bad, worse and slightly worse depending on how much worse the

factors are; factors for which the comparable properties are about the same as the subject property are

described as similar. These are then adjusted based on percentage.

53


Property Right Adjustment Table

Table 14

Item


Description

and analysis

Comparison

result

Description

and analysis

Comparison

result

Description

and analysis Comparison result

Land use right

period

Ordinary

balance Similar

Ordinary

balance Similar

Ordinary

balance Similar

Ordinary Ordinary Ordinary

Planning

conditions

High capacity

and building

density Similar

High capacity

and building

density Similar

High capacity

and building

density Similar

Better Better Better

Other rights

Not use as

collateral or for

mortgage Similar

Not use as

collateral or for

mortgage Similar

Not use as

collateral or for

mortgage Similar

Good Good Good

Property Right Adjustment Coefficients Table

Table 15

Item


Comparison

results

Adjustment

value

Comparison

results

Adjustment

value

Comparison

results Adjustment value

Land use right

period Similar 0 Similar 0 Similar 0

Construction area Similar 0 Similar 0 Similar 0

Planning conditions Worse 0 Slightly worse 0 Slightly worse 0

Total adjustment

value 100 100 100



8. Comparable unit price

Comparable unit price = standard comparable unit price x trading conditions correction coefficient x

market conditions adjustment coefficient x regional conditions adjustment coefficient x physical

conditions adjustment coefficient x property right conditions adjustment coefficient.

54


Comparable Unit Price Calculation Table

Table 16

Adjustment Comparable property A Comparable property B Comparable property C

Standard comparable unit price

(RMB/m2) 11,593 11,290 12,632

Trading conditions correction

coefficient 100/100 100/100 100/100

Market conditions adjustment

coefficient

100/100 100/100 100/100

Regional conditions adjustment

coefficient

100/100 100/100 100/100

Physical conditions adjustment

coefficient 1000/96 1000/98 100/988

Property right conditions

adjustment coefficient 100/100 100/100 100/100

Comparable unit price

(RMB/m2) 12,076 11,520 12,890

As the deviation between the corrected comparable unit prices was relatively small, a simple average is

taken for the valuation:

Unit price of comparable properties = (12,076 + 11,520 + 12,890)/3 = 12,162 (RMB/m2)

(2) Determination of market value

Using the unit price of the standard level 1 storefront as the valuation standard, the market value of the

subject property was determined after factoring in street depth correction, purpose correction, size

correction and level correction. The breakdown is as follows

Table 17

Correction Table 1

Street depth

correction coefficient

description

The subject property is a shopping mall with high overall street depth that has an effect on the valuation

of the premises. Therefore, a street depth correction coefficient of -10% was used in the valuation.

Purpose correction

coefficient

description

The subject property is a shopping mall and has a significant different purpose than the comparable

properties as standard storefronts of shopping malls have relatively more restrictions. Therefore, a

purpose correction coefficient of -5% was used in the valuation.

Size correction

coefficient

description

The subject property is a shopping mall that is large in size and high in overall value. These have great

impact during trades. Therefore, a size correction coefficient of -10% was used in the valuation

Item

Level 1

storefront unit

price

Street depth

correction

coefficient

Purpose

correction

coefficient

Size correction

coefficient

Level 1 shopping mall

unit price

12,162 -10% -5% -10% 9,122

55


Table 18

Correction Table 2

Item Level correction Corrected market unit price

Hui’an Hongyi Zhongmin Baihui

Shopping Mall Level B1 -50% 4,561


Shopping Mall Level 2 -40% 5,473





Market Value Table

Table 19

Item Construction area (m2) Market value (RMB10,000) Market unit price (RMB/m2)


Baihui Shopping Mall Level

B1

6,574.12 2,998.46 4,561


Baihui Shopping Mall Level 1 4,531.27 4,133.42 9,122







25,465.86 13,778.71 Average price 5,411

VIII. Valuation result

The value of the subject property was analysed, estimated and determined using the comparable method

performed in line with the objective and basis of the valuation based on the relevant information

provided by the client and obtained by us in accordance with the relevant laws and regulations, policy

documents and valuation standards. The subject property was valued at one hundred and thirty-seven

million seven hundred and eighty-seven thousand and one hundred renminbi (RMB137.7871 million)

as at the date of valuation.

56


Annexes

I. Copy of valuation agreement (brief)

II. Subject property location diagram

III. Subject property’s internal and external conditions and pictures of surroundings

IV. Copy of subject property’s ownership certificate

V. Copy of valuer’s business licence

VI. Copy of valuer’s qualification

VII. Copies of certified practicing valuers’ licences

NOTICE OF EXTRAORDINARY GENERAL MEETING

57

ZHONGMIN BAIHUI RETAIL GROUP LTD.(Company Registration No. 200411929C)

(Incorporated in the Republic of Singapore on 17 September 2004)


NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting (the “EGM”) of Zhongmin BaihuiRetail Group Ltd. (the “Company”) will be held at Peach Garden, 65 Chulia Street, #33-01, OCBCCentre, Singapore 049513 on 24 March 2017 at 10.00 a.m., for the purpose of considering and, if thoughtfit, passing with or without any modifications, the following ordinary resolution:

ORDINARY RESOLUTION

THE PROPOSED ACQUISITION OF RETAIL PREMISES OF THE CHENGNAN STORE IN HUI’ANCOUNTY, QUANZHOU CITY, FUJIAN PROVINCE (AN INTERESTED PERSON TRANSACTION ASDEFINED UNDER CHAPTER 9 OF THE LISTING MANUAL)

THAT:-

(a) approval be and is hereby given for the Company, through its wholly-owned subsidiary, ZhongminBaihui (Quanzhou) Commercial Management Co., Ltd. to enter into and give effect to the ProposedAcquisition; and

(b) the Directors be and are hereby authorised to do all such acts and things as they may considernecessary, desirable or expedient to give effect to the Proposed Acquisition contemplated underthe S&P Agreements, including without limitation to the foregoing, to negotiate, sign, execute anddeliver all documents, approve any amendments, alteration or modification to any document(including the S&P Agreements) and to affix the Common Seal of the Company to any suchdocuments, if required.

By Order of the Board

Chia Foon YeowCompany Secretary9 March 2017

Notes:

1. Except for a member who is a Relevant Intermediary as defined under Section 181(6) of the Companies Act (Chapter 50) ofSingapore (the “Act”), a member of the Company entitled to attend and vote at the Extraordinary General Meeting is entitledto appoint not more than two proxies to attend and vote in his stead. A member of the Company, which is a corporation, isentitled to appoint its authorised representative or proxy to vote on its behalf.

2. Pursuant to Section 181(1C) of the Act, a member who is a Relevant Intermediary is entitled to appoint more than twoproxies to attend, speak and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to adifferent share or shares held by such member. Where such member appoints more than two proxies, the number of classof shares in relation to which each proxy has been appointed shall be specified in the proxy form.

3. Where a member appoints more than one proxy, he shall specify the proportion of the shareholding to be represented byeach proxy in the instrument appointing the proxies.

4. If the member is a corporation, the instrument appointing the proxy must be under its common seal or the hand of itsattorney or a duly authorised officer.

5. The Proxy Form is attached and must be deposited at the office of the Company’s Share Registrar, Boardroom Corporate &Advisory Services Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, not less than 48 hoursbefore the time fixed for holding the Extraordinary General Meeting in order for the proxy to be entitled to attend and vote atthe Extraordinary General Meeting.

6. A Depositor’s name must appear on the Depository Register maintained at The Central Depository (Pte) Limited 72 hoursbefore the time fixed for holding the Extraordinary General Meeting in order for the Depositor to be entitled to attend andvote at the Extraordinary General Meeting.

PERSONAL DATA PRIVACY

Where a member of the Company submits an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and voteat the Extraordinary General Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, useand disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administrationby the Company (or its agents) of proxies and representatives appointed for the Extraordinary General Meeting (including anyadjournment thereof) and the preparation and compilation of the attendance lists, proxy lists, minutes and other documents relatingto the Extraordinary General Meeting (including any adjournment thereof), and in order for the Company (or its agents) to complywith any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where themember discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), themember has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by theCompany (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that themember will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of themember’s breach of warranty.


58

ZHONGMIN BAIHUI RETAIL GROUP LTD.(Incorporated in the Republic of Singapore)(Company Registration No.:200411929C)

PROXY FORMEXTRAORDINARY GENERAL MEETING

I/We, (Name)

of (Address)

being a member/members* of ZHONGMIN BAIHUI RETAIL GROUP LTD. (the “Company”) herebyappoint:

Name Address NRIC/Passport No. Proportion of Shareholding (%)

and/or (delete as appropriate)

Name Address NRIC/Passport No. Proportion of Shareholding (%)

as my/our proxy/proxies to vote for me/us on my/our behalf, at the Extraordinary General Meeting(“EGM”) of the Company, to be held at Peach Garden, 65 Chulia Street, #33-01, OCBC Centre,Singapore 049513 on Friday, 24 March 2017 at 10.00 a.m., and at any adjournment thereof. I/We directmy/our proxy/proxies to vote for or against the Resolution to be proposed at the EGM as indicatedhereunder. If no specific direction as to voting is given or in the event of any other matter arising at theEGM and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/theirdiscretion.

No. of Votes No. of Votes

Ordinary Resolution: For* Against*

To approve the Proposed Acquisition

*Please indicate your vote “For” or “Against” with a tick (�) within the box provided.

Dated this day of 2017.

Signature(s) of Shareholder(s) or Common Seal of Corporate Shareholder

IMPORTATNT: PLEASE READ NOTES OVERLEAF

IMPORTANT1. This Circular is also forwarded to investors who have

used their CPF monies to buy shares in theCompany at the request of their CPF ApprovedNominees, and is sent solely for their informationonly.

2. This Proxy Form is therefore not valid for use by CPFinvestors and shall be ineffective for all intents andpurposes if used or purported to be used by them.

�

TOTAL NUMBER OF SHARES IN :

(a) CDP Register

(b) Register of Members

Notes

1. Except for a member who is a Relevant Intermediary as defined under Section 181(6) of the Companies Act (Chapter 50) ofSingapore (the “Act”), a member of the Company entitled to attend and vote at the Extraordinary General Meeting is entitledto appoint not more than two proxies to attend and vote in his stead. A member of the Company, which is a corporation, isentitled to appoint its authorised representative or proxy to vote on its behalf.

2. Pursuant to Section 181(1C) of the Act, a member who is a Relevant Intermediary is entitled to appoint more than twoproxies to attend, speak and vote at the Meeting, but each proxy must be appointed to exercise the rights attached to adifferent share or shares held by such member. Where such member appoints more than two proxies, the number of classof shares in relation to which each proxy has been appointed shall be specified in the proxy form.

3. Where a member appoints more than one proxy, he shall specify the proportion of the shareholding to be represented byeach proxy in the instrument appointing the proxies. If no proportion is specified, the Company shall be entitled to treat thefirst named proxy as representing the entire shareholding and any second named proxy as an alternate to the first named orat the Company’s option to treat this proxy form as invalid.

4. A proxy need not be a member of the Company.

5. Please insert the total number of shares held by you. If you have shares entered against your name in the DepositoryRegister (as defined in Section 81SF of the Securities and Futures Act (Chapter 289) of Singapore), you should insert thatnumber of shares. If you have shares registered in your name in the Register of Members of the Company, you shouldinsert that number of shares. If you have shares entered against your name in the Depository Register and registered inyour name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, thisproxy form will be deemed to relate to all the shares held by you.

6. This proxy form must be deposited at the office of the Company’s Share Registrar, Boardroom Corporate & AdvisoryServices Pte. Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, not less than 48 hours before thetime set for the Meeting.

7. This proxy form must be under the hand of the appointor or of his attorney duly authorised in writing. Where this proxy formis executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a dulyauthorised officer.

8. Where this proxy form is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifiedcopy thereof must (failing previous registration with the Company) be lodged with this proxy form, failing which this proxyform shall be treated as invalid.

General

The Company shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the trueintentions of the appointor are not ascertainable from the instructions of the appointor specified on the instrument of proxy. Inaddition, in the case of Shares entered in the Depository Register, the Company may reject an instrument of proxy if the member,being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 72 hours before thetime appointed for holding the meeting, as certified by The Central Depository (Pte) Limited to the Company.

Personal Data Privacy

By submitting an instrument appointing a proxy(ies) and/or representative(s), the member accepts and agrees to the personal dataprivacy terms set out in the Notice of Extraordinary General Meeting dated 9 March 2017.

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