DISCLOSEABLE TRANSACTION: ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (Incorporated in Bermuda with limited liability) (Stock Code: 988) DISCLOSEABLE TRANSACTION: ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY THE ACQUISITION On 22 October 2015 (after trading hours), the Vendor, an Independent Third Party, entered into the Agreement with the Purchaser, a wholly-owned subsidiary of the Company, pursuant to which the Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire, the Sale Share, representing the entire issued share capital of the Target Company, at a total consideration of HK$150 million. The Target Company, through its wholly-owned subsidiaries, holds 39% equity interests in Mongolia Logistics, which is principally engaged in transportation business related to the construction and operation of storage facilities, international logistics and freight forwarding business, container loading, devanning, repair and cleaning, warehousing, cargo transportation, customs declaration, declaration and inspection agent in Inner Mongolia, and import and export trade and domestic trade. LISTING RULES IMPLICATION As one or more of the relevant percentage ratios under the Listing Rules in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules. The Acquisition is subject to the reporting and announcement requirements but is exempted from shareholders approval requirement under Chapter 14 of the Listing Rules. 1

2 THE AGREEMENT Date 22 October 2015 Parties The Vendor: The Purchaser: Mr. Qi Tie Han City Joint Investments Limited To the best of the Directors knowledge, information and belief having made all reasonable enquiries, the Vendor is an Independent Third Party. The Purchaser is a company incorporated in the British Virgin Islands with limited liability. It is a wholly-owned subsidiary of the Company and is principally engaged in investment holding. Assets to be acquired The Sale Share which represents the entire issued share capital of the Target Company. Consideration The Consideration for the Acquisition is HK$150 million, which shall be payable by the Purchaser to the Vendor in cash on the Completion Date. The Consideration has been arrived at after arm s length negotiations between the parties to the Agreement with reference to the valuation of 100% equity interests in Mongolia Logistics prepared by the Valuer of HK$506 million under the discounted cashflow approach as at 31 August The Consideration represents a discount of approximately 23.99% to the value of 39% equity interests of Mongolia Logistics under the abovemention valuation. Further details of the valuation are set out in the section headed Valuation below. Conditions precedent of the Agreement Completion is conditional upon the satisfaction of all of the following conditions: (a) the Purchaser being satisfied with the results of the due diligence review of the assets, indebtedness, operational and financial aspects of the Target Group; 2

3 (b) the Vendor and the Target Company having obtained all necessary consents and approvals relating to the Acquisition; (c) the Purchaser having obtained all necessary consents and approvals relating to the Acquisition; (d) the Purchaser having obtained the Valuation Report (in the form and substance satisfactory to the Purchaser) from the Valuer with the valuation of 100% equity interests in Mongolia Logistics under the discounted cash flow approach being not less than HK$500 million; (e) the warranties given by the Vendor in favour of the Purchaser remaining true and accurate and not misleading from the date of the Agreement up to the Completion Date; and (f) there has not been any material adverse change to the financial conditions, business, assets or operations of the Target Group since the date of the Agreement. The Purchaser is entitled to waive by written notice conditions (a), (e) and (f) set out above. Other conditions precedent are not capable of being waived by either party to the Agreement. In the event that the above conditions are not fulfilled or waived (as the case may be) on or before 31 December 2015 (or such other date that may be agreed by both parties in writing), the Agreement shall cease and determine and neither party shall have any obligations and liabilities towards each other thereunder save for any antecedent breaches of the terms thereof. Completion Subject to the fulfillment or waiver (as the case may be) of the above conditions, Completion shall take place at 4:00 p.m. on the Completion Date. INFORMATION OF THE TARGET GROUP The Target Company is incorporated in the British Virgin Islands with limited liability and principally engaged in investment holding. The Target Company holds the entire equity interests in Shanghai Industrial, a company incorporated in Hong Kong with limited liability and principally engaged in investment holding. Shanghai Industrial holds the entire equity interests in Boshu Shanghai, a company established in the PRC with limited liability and principally engaged in investment holding, which in turn holds 39% equity interests in Mongolia Logistics. 3

4 Mongolia Logistics is also beneficially owned as to 41% and 20% by a State-owned enterprise in the PRC and an Independent Third Party respectively. To the best of the Directors knowledge, information and belief having made all reasonable enquiries, such State-owned enterprise is an Independent Third Party. The Group is currently in the process of negotiating with such Independent Third Party in relation to the possible acquisition of its 20% equity interests in Mongolia Logistics. If such possible acquisition materialise, it will constitute a notifiable transaction on the part of the Company. The Company will make an announcement in relation to such possible acquisition as and when required pursuant to the Listing Rules. Mongolia Logistics is a company established in the PRC with limited liability and principally engaged in transportation business related to the construction and operation of storage facilities, international logistics and freight forwarding business, container loading, devanning, repair and cleaning, warehousing, cargo transportation, customs declaration and declaration and inspection agent in Inner Mongolia, and import and export trade and domestic trade. The Land As at the date of this announcement, the principal asset of Mongolia Logistics is a parcel of land located at (East of the yellow straight line and West of Haigong Railway, Hainan District, Wuhai City, Inner Mongolia Autonomous Region, the PRC*) with an aggregate GFA of approximately 500,000 sq. m.. The Land is specified for storage/warehouse purposes with land use right of up to 20 May The Land is currently being developed into a logistics centre with zones designated for railway, storage and trading and business services. FINANCIAL INFORMATION OF THE TARGET GROUP As the Target Company was only incorporated in January 2015, set out below is a summary of the unaudited financial information of the Target Company for the the eight months ended 31 August 2015: For the eight months ended 31 August 2015 HK$ 000 Turnover Profit before tax Profit after tax Net assets 388 4

5 As Shanghai Industrial was only incorporated in March 2014, set out below is a summary of the unaudited financial information of Shanghai Industrial for the year ended 31 December 2014 and the eight months ended 31 August 2015: For the year ended 31 December 2014 HK$ 000 For the eight months ended 31 August 2015 HK$ 000 Turnover Profit before tax Profit after tax Net assets As Boshu Shanghai was only incorporated in June 2014, set out below is a summary of the unaudited financial information of Boshu Shanghai for the year ended 31 December 2014 and the eight months ended 31 August 2015: For the year ended 31 December 2014 HK$ 000 For the eight months ended 31 August 2015 HK$ 000 Turnover Profit before tax Profit after tax Net assets Set out below is a summary of the unaudited financial information of Mongolia Logistics for each of the years ended 31 December 2013 and 31 December 2014 and the eight months ended 31 August 2015: For the year ended 31 December 2013 For the year ended 31 December 2014 For the eight months ended 31 August 2015 HK$ 000 HK$ 000 HK$ 000 Turnover 153,360 52, Profit/(loss) before tax 6,279 (1,795) (1,773) Profit/(loss) after tax 4,678 (1,795) (1,773) Net assets 50,537 47,499 44,416 5

6 Structure of the Target Group The following charts show the group structure of the Target Group (i) as at the date of this announcement; and (ii) immediately after Completion: As at the date of this announcement Vendor 100% Target Company 100% Shanghai Industrial 100% Boshu Shanghai 39% Mongolia Logistics 6

7 Immediately after Completion Purchaser 100% Target Company 100% Shanghai Industrial 100% Boshu Shanghai 39% Mongolia Logistics 7

8 REASONS FOR AND BENEFITS OF THE ACQUISITION The Group is principally engaged in the business of coke processing and the manufacture of relevant chemicals, trading of commodities, extraction and sales of oil and property investment. As stated in the annual report of the Company for the year ended 31 December 2014, the Group will continue to explore new mergers and acquisitions opportunities while realigning its existing asset portfolio and cost structures, including certain asset disposals, to enhance sustainable profitability in the long run. The Group has initiated reviews on the possibilities of diversifying into the logistics warehousing business. Under the PRC Government s policies of encouraging the expansion of domestic consumption, the logistics industry is expected to undergo rapid market integration and development. In 2014, the total value of turnover in the PRC s logistics industry reached RMB210 trillion (equivalent to approximately HK$256 trillion), an increase of approximately 8% from The Board is of the view that the rapid growth in the logistics industry provides an optimum opportunity for the Group to diversify and broaden its business base. The Board considers that the Acquisition represents a good opportunity for the Group to engage in the logistics industry in the PRC. In view of the above, the Board considers that the Acquisition is on normal commercial terms, and that the terms of the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole. VALUATION According to the Valuation Report, the market value (the Valuation ) of 100% equity interests in Mongolia Logistics as at 31 August 2015, prepared on a discounted cash flow approach, amounts to HK$506 million. In this respect, the Valuation constitutes a profit forecast for the purpose of Rule of the Listing Rules (the Profit Forecast ) and, accordingly, the requirements under Rules 14.60A and of the Listing Rules are applicable to the Acquisition. For the purpose of complying with Rule of the Listing Rules, the principal assumptions upon which the Profit Forecast is based are as follows: (a) (b) Mongolia Logistics will be operated and developed as planned by the management of the Company, the management of Mongolia Logistics and/or their respective representative(s) (the Management ); the Valuation was mainly based on the projections of the future cash flows as provided by the Management. The projections outlined in the financial information provided are reasonable, reflecting market conditions and economic fundamentals, and will be materialised; 8

9 (c) (d) (e) (f) (g) (h) the Valuation was made with reference to the unaudited management accounts of Mongolia Logistics as at 31 August 2015; all relevant legal approvals and business certificates or licenses to operate the business in the localities in which Mongolia Logistics operates or intends to operate would be officially obtained and renewable upon expiry; there will be sufficient supply of technical staff in the industry in which Mongolia Logistics operates, and Mongolia Logistics will retain competent management, key personnel and technical staff to support its ongoing operations and developments; there will be no major change in the current taxation laws in the localities in which Mongolia Logistics operates or intends to operate and that the rates of tax payable shall remain unchanged and that all applicable laws and regulations will be complied with; there will be no major change in the political, legal, economic or financial conditions in the localities in which Mongolia Logistics operates or intends to operate, which would adversely affect the revenues attributable to and profitability of Mongolia Logistics; and interest rates and exchange rates in the localities for the operation of Mongolia Logistics will not differ materially from those presently prevailing. The Board has reviewed the principal assumptions upon which the Profit Forecast was based on and are of the view that the Profit Forecast was made after due care and enquiry. Zenith CPA, the reporting accountant of the Company, has also reviewed the calculations of the discounted cash flow approach upon which the Valuation prepared by the Valuer was based on. A letter from the Board and a letter from Zenith CPA are included in the appendices to this announcement for the purpose of Rules 14.60A and of the Listing Rules. The following are the qualifications of the experts who have given their opinion and advice included in this announcement: Name Roma Appraisals Limited Zenith CPA Qualification Professional valuer Certified Public Accountants 9

10 As at the date of this announcement, each of the Valuer and Zenith CPA does not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate person(s) to subscribe for securities in any member of the Group. Each of the Valuer and Zenith CPA has given and has not withdrawn its consent to the publication of this announcement with inclusion of its opinion and advice and all references to its name in the form and context in which it appears in this announcement. LISTING RULES IMPLICATION As one or more of the relevant percentage ratios under the Listing Rules in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction on the part of the Company under Chapter 14 of the Listing Rules. The Acquisition is subject to the reporting and announcement requirements but exempted from shareholders approval requirement under Chapter 14 of the Listing Rules. DEFINITIONS In this announcement, the following expressions shall, unless the context requires otherwise, have the following meanings: Acquisition the acquisition of the Sale Share by the Purchaser from the Vendor pursuant to the terms of the Agreement Agreement the conditional sale and purchase agreement dated 22 October 2015 and entered into between the Vendor and the Purchaser in relation to the Acquisition associate(s) Board Boshu Shanghai Business Day has the meaning ascribed thereto under the Listing Rules board of Directors (Boshu (Shanghai) Trading Limited Company*), a company established in the PRC with limited liability on 9 June 2014 a day (other than a Saturday, a Sunday or public holiday) on which licensed banks in the PRC are generally open for business throughout their normal business hours 10

11 Company Completion Completion Date connected person(s) Consideration Director(s) GFA Group Hong Kong Independent Third Party(ies) Land Listing Rules Loudong General Nice Resources (China) Holdings Limited, a company incorporated in Bermuda and the issued Shares of which are listed on the Stock Exchange completion of the Acquisition in accordance with the terms and conditions of the Agreement the date falling on the second Business Day after the date of fulfillment of the conditions precedent as set out in the Agreement (or such other date that may be agreed by both parties in writing) has the meaning ascribed thereto under the Listing Rules the total consideration for the acquisition of the Sale Share director(s) of the Company gross floor area the Company and its subsidiaries the Hong Kong Special Administrative Region of the People s Republic of China person(s) who is/are independent of and not connected with the Directors, chief executive and substantial shareholders of the Company or any of its subsidiaries, or any of their respective associates the parcel of land located at (East of the yellow straight line and West of Haigong Railway, Hainan District, Wuhai City, Inner Mongolia Autonomous Region, the PRC*) with an aggregate GFA of approximately 500,000 sq. m. the Rules Governing the Listing of Securities on the Stock Exchange 11

12 Mongolia Logistics PRC Purchaser Sale Share Shanghai Industrial Share(s) Shareholder(s) Stock Exchange Target Company Target Group Valuation Report Valuer (Inner Mongolia Euraasian Continent Bridge Logistics Limited Liability Company*), a company established in the PRC with limited liability on 2 September 2005 the People s Republic of China which, for the purposes of this announcement, excludes Hong Kong, the Macau Special Administrative Region of the People s Republic of China and Taiwan City Joint Investments Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company the one share of the Target Company, representing the entire issued share capital of the Target Company Shanghai Industrial Commodities Trading Limited, a company incorporated in Hong Kong with limited liability on 13 March 2014 ordinary share(s) of par value of HK$0.01 each in the issued share capital of the Company holder(s) of the Share(s) The Stock Exchange of Hong Kong Limited Wealth Delight International Holdings Limited, a company incorporated in the British Virgin Islands with limited liability on 8 January 2015 the Target Company, Shanghai Industrial, Boshu Shanghai and Mongolia Logistics the valuation report of Mongolia Logistics dated 22 October 2015 on the valuation of 100% equity interests in Mongolia Logistics as at 31 August 2015 under the discounted cash flow approach prepared by the Valuer Roma Appraisals Limited, an independent professional valuer 12

13 Vendor Zenith CPA HK$ RMB sq. m. Mr. Qi Tie Han Zenith CPA Limited, a professional firm of Certified Public Accountants Hong Kong dollar(s), the lawful currency of Hong Kong Renminbi, the lawful currency of the PRC square metre(s) % per cent. Hong Kong, 22 October 2015 By Order of the Board Loudong General Nice Resources (China) Holdings Limited Lau Yu Executive Director As at the date of this announcement, the Board comprises five executive Directors, namely Mr. Cai Sui Xin, Mr. Zhao Cheng Shu, Mr. Lau Yu, Mr. Ng Tze For and Ms. Li Xiao Juan; and three independent non-executive Directors, namely Ms. Choy So Yuk, Mr. Gao Wen Ping and Mr. Leung Yuen Wing. For illustration purposes only and unless otherwise stated, all amounts denominated in RMB in this announcement has been translated into HK$ at the exchange rate of HK$1 = RMB0.82. For reference purposes only, the Chinese names of the PRC entities and addresses have been translated into English in this announcement. In the event of any discrepancies between the Chinese names of these PRC entities and addresses and their respective English translations, the Chinese version shall prevail. * For identification purposes only 13

14 APPENDIX I LETTER FROM THE BOARD 22 October 2015 The Stock Exchange of Hong Kong Limited 11th Floor, One International Finance Centre 1 Harbour View Street Hong Kong Dear Sirs, We refer to the announcement of the Company dated 22 October 2015 (the Announcement ) of which this letter forms part. Unless the context otherwise requires, terms defined in the Announcement shall have the same meanings when used herein. We refer to the valuation report dated 22 October 2015 (the Valuation Report ) issued by Roma Appraisals Limited (the Valuer ) regarding the valuation (the Valuation ) of 100% equity interests in Mongolia Logistics as at 31 August 2015, which constitutes a profit forecast (the Profit Forecast ) as defined under Rule of the Listing Rules. We have discussed with the Valuer about different aspects including the bases and assumptions based upon which the Valuation has been prepared, and reviewed the Valuation for which the Valuer is responsible. We have also considered the report dated 22 October 2015 from Zenith CPA regarding whether the Profit Forecast, so far as the accounting policies and calculations are concerned, have been properly complied with the bases and assumptions as set out in the Valuation Report. We have noted that the Profit Forecast in the Valuation are mathematically accurate and is presented on a basis consistent in all material aspects with the accounting policies currently adopted by the Company. We hereby confirm that pursuant to the Valuation Report, the Profit Forecast has been made after due and careful enquiry of the Board. Yours faithfully, For and on behalf of the Board Loudong General Nice Resources (China) Holdings Limited Ng Tze For Director 14

15 APPENDIX II LETTER FROM ZENITH CPA Our Ref: BC/EC/L0008/ October 2015 The Board of Directors Loudong General Nice Resources (China) Holdings Limited Unit B, 12/F Lippo Leighton Tower 103 Leighton Road Causeway Bay Hong Kong Dear Sirs, We have performed the work described below, in respect of the arithmetical accuracy of the calculations of the discounted cash flow forecast (hereinafter referred to as the Underlying Forecast ) underlying the appraisal value of 100% equity interest in Inner Mongolia Eurasian Continent Bridge Logistics Limited Liability Company (the Valuation ) dated 22 October 2015 prepared by Roma Appraisals Limited for inclusion in the announcement for a discloseable transaction of Loudong General Nice Resources (China) Holdings Limited (the Company ) dated 22 October The Underlying Forecast is regarded by The Stock Exchange of Hong Kong Limited as a profit forecast under paragraph of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). RESPECTIVE RESPONSIBILITIES OF DIRECTORS OF THE COMPANY AND REPORTING ACCOUNTANTS It is solely the responsibility of the directors of the Company to prepare the Underlying Forecast. The Underlying Forecast has been prepared using a set of assumptions (the Assumptions ), the completeness, reasonableness and validity of which are the sole responsibility of the directors. It is our responsibility to draw a conclusion, based on our work, on the arithmetical accuracy of the calculations of the Underlying Forecast and to present our conclusion solely to you, as a body, for the purpose of reporting under paragraph 14.62(2) of the Listing Rules and for no other purpose. We are not reporting on the appropriateness and validity of the bases and Assumptions on which the Underlying Forecast are based and our work does not constitute any valuation of the Valuation. The Underlying Forecast does not involve the adoption of 15

16 accounting policies. The Assumptions used in the preparation of the Underlying Forecast include hypothetical assumptions about future events and management actions that may or may not occur. Even if the events and actions anticipated do occur, actual results are still likely to be different from the Underlying Forecast and the variation may be material. We have not reviewed, considered or conducted any work on the completeness, reasonableness and the validity of the Assumptions and thus express no opinion whatsoever thereon. Our work is more limited than for a reasonable assurance engagement, and that therefore less assurance is obtained than in a reasonable assurance engagement. We also accept no responsibility to any other person in respect of, arising out of, or in connection with our work. BASIS OF CONCLUSION We conducted our work in accordance with Hong Kong Standards on Assurance Engagements 3000 (Revised) Assurance Engagements Other Than Audits or Reviews of Historical Financial Information issued by the Hong Kong Institute of Certified Public Accountants. Our work consisted primarily of checking the arithmetical accuracy of the calculations and the Underlying Forecast prepared based on the Assumptions made by the directors of the Company. Our work has been undertaken solely to assist the directors in evaluating whether the Underlying Forecast, so far as the arithmetical accuracy of the calculations is concerned, has been properly compiled in accordance with the Assumptions made by the directors of the Company. Our work does not constitute any valuation of the Valuation. CONCLUSION Based on our work described above, nothing has come to our attention that causes us to believe that the Underlying Forecast, so far as the arithmetical accuracy of the calculations of the Underlying Forecast is concerned, has not been properly compiled on the basis of the Assumptions made by the directors of the Company. Yours faithfully, Zenith CPA Limited Certified Public Accountants Cheng Po Yuen Practising Certificate Number: P04887 Hong Kong 22 October