PDF《中国东方集团控股有限公司*》

75 branches across the Canzhou City and nearby areas. The proceeds raised from the private subscription will be used in enhancing the capital, capital adequacy ratio level, risk tolerance capability and overall competence of the Bank of Cangzhou. To the best of the Directors'

knowledge, information and belief, have made all reasonable enquiries, Bank of Cangzhou and its respective ultimate beneficial owners are Independent Third Parties of the Group.

3 The following is the financial information of the Bank of Cangzhou as extracted from its audited financial statements prepared in accordance with the PRC GAAP for the year ended

31 December

2015 and

2014 respectively: For the financial year ended

31 December

2015 RMB'

000 For the financial year ended

31 December

2014 RMB'

000 Net profit before taxation 978,364 862,435 Net profit after taxation 724,603 649,130 Based on the extracted audited financial statements, the net asset value of the Bank of Cangzhou as at

31 December

2015 was approximately RMB4.8 billion. REASONS FOR AND BENEFITS OF THE INVESTMENT IN SHARES AGREEMENT WITH BANK OF CANGZHOU The Group is principally engaged in the manufacturing and sales of steel products, trading of steel products and iron ore and real estate business. The Board considers that (i) the Investment will be financed by the Group'

s internal financial resources, and is expecting the Investment will bring along the Group with positive effect on the financial performance and operating cash flow. In addition, it would let the Group further strengthen its cooperation relationship with the Bank of Cangzhou and achieve a complementary strategy;

(ii) the Investment provides a reasonable return to the Group;

and (iii) the risks with the Investment is acceptable. The terms including the Consideration for the Investment was negotiated on an arm'

s length basis. Having considered these factors, the Directors, including the Independent Non-executive Directors but other than Mr. Ondra OTRADOVEC (Non-Executive Director of the Company, Mr. Otradovec ) and Mr. WONG Man Chung, Francis (Independent Non-Executive Director of the Company, Mr. Wong ), consider that the terms of the Investment under the Investment in Shares Agreement (including the Consideration) are on normal commercial terms, fair and reasonable and are in the interests of the Company and its Shareholders as a whole. DISAGREEMENT WITH THE INVESTMENT Mr. Otradovec and Mr. Wong, after due consideration of all the following factors, including but not limited to (a) the risk and reward of the Investment;

(b) the Company'

s financial performance and cash flow status;

and (c) the possible cancellation of listing of the Company by the Stock Exchange if the public float issue is not remedied by

27 January

2017 pursuant to the announcement of Stock Exchange dated

27 July 2016, do not consider the Investment is in the interests of the Company and its Shareholders as a whole.

4 Considering the disagreement proposed by Mr. Otradovec and Mr. Wong, the Company'

s related project team carried out further due diligence and evaluation work in varies areas of the Investment. Further review was conducted in the management meeting of the Company and finally submitted the Investment for the review of the Board. The Directors, including the Independent Non-executive Directors but other than Mr. Otradovec and Mr. Wong, considered that (a) the risk and reward of the Investment is reasonable. According to the Prospectus, the return on equity of Bank of Cangzhou for the year ended