##### Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 20-F





(Mark One)



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



| | For the fiscal year ended March 31, 2013
| | ----------------------------------------

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report
                        .

For the transition period from                      to



| | Commission file number 000-53776.
| | ---------------------------------





China
Metro-Rural Holdings Limited

(Exact name of Registrant as specified in its charter)





China Metro-Rural Holdings Limited

(Translation of Registrants name into English)





British Virgin
Islands

(Jurisdiction of incorporation or organization)





Suite 2204, 22/F, Sun Life Tower

The Gateway, 15 Canton Road

Tsimshatsui, Kowloon, Hong Kong

(Address of principal executive office)

Mr. Sio Kam Seng

Chief Executive Officer and Chairman of the Board

China Metro-Rural Holdings Limited

Suite 2204, 22/F, Sun Life Tower, The Gateway

15 Canton Road,
Tsimshatsui, Kowloon, Hong Kong

Telephone: (852) 2111 3815

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)



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##### Table of Contents

Securities registered or to be registered pursuant to Section 12(b) of the Act.



|                                             |  |                                            
|-------------------------------------------- |  | -------------------------------------------
|(Title of each class)                        |  | (Name of each exchange on which registered)
|Ordinary shares, par valueUS$0.001 per share |  | NYSE MKT                                   

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the Period
covered by the Annual Report.

As of March 31, 2013 there were 73,543,782 shares of the issuers ordinary shares,
$0.001 par value outstanding and 100,000 shares of the issuers preferred shares, $0.001 par value outstanding.

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. ̈  Yes    x  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ̈  Yes    x  No

NoteChecking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those
Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.x  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):



|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:



|             |  |                                                                                                          |  |          
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | ---------
|U.S. GAAP   ̈ |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board  x |  | Other  
 ̈

If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow. ̈  Item 17     ̈  Item 18

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). ̈  Yes    x  No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PAST
FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections
12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     ̈  Yes     ̈  No



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##### Table of Contents

TABLE OF CONTENTS



|                                                                                      |  |      |     | 
|------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                      |  | Page |    
|INTRODUCTION                                                                          |  |      | ii  | 
|                                                                                      | 
|PRESENTATION OF FINANCIAL INFORMATION                                                 |  |      | ii  | 
|                                                                                      | 
|CURRENCY TRANSLATION                                                                  |  |      | iii | 
|                                                                                      | 
|CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS                            |  |      | iii | 
|                                                                                      | 
|Item 1. Identity of Directors, Senior Management and Advisers                         |  |      | 1   | 
|                                                                                      | 
|Item 2. Offer Statistics and Expected Timetable                                       |  |      | 1   | 
|                                                                                      | 
|Item 3. Key Information                                                               |  |      | 1   | 
|                                                                                      | 
|Item 4. Information on the Company                                                    |  |      | 29  | 
|                                                                                      | 
|Item 4A. Unresolved Staff Comments                                                    |  |      | 67  | 
|                                                                                      | 
|Item 5. Operating and Financial Review and Prospects                                  |  |      | 67  | 
|                                                                                      | 
|Item 6. Directors, Senior Management and Employees                                    |  |      | 93  | 
|                                                                                      | 
|Item 7. Major Shareholders and Related Party Transactions                             |  |      | 100 | 
|                                                                                      | 
|Item 8. Financial Information                                                         |  |      | 106 | 
|                                                                                      | 
|Item 9. The Offer and Listing                                                         |  |      | 107 | 
|                                                                                      | 
|Item 10. Additional Information                                                       |  |      | 108 | 
|                                                                                      | 
|Item 11. Quantitative and Qualitative Disclosures About Market Risk                   |  |      | 129 | 
|                                                                                      | 
|Item 12. Description of Securities Other Than Equity Securities                       |  |      | 130 | 
|                                                                                      | 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              |  |      | 131 | 
|                                                                                      | 
|Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds |  |      | 131 | 
|                                                                                      | 
|Item 15. Controls and Procedures                                                      |  |      | 131 | 
|                                                                                      | 
|Item 16. [Reserved]                                                                   |  |      | 132 | 
|                                                                                      | 
|Item 16A. Audit Committee Financial Expert                                            |  |      | 132 | 
|                                                                                      | 
|Item 16B. Code of Business Conduct and Ethics                                         |  |      | 132 | 
|                                                                                      | 
|Item 16C. Principal Accountant Fees and Services                                      |  |      | 132 | 
|                                                                                      | 
|Item 16D. Exemptions From the Listing Standards for Audit Committees                  |  |      | 133 | 
|                                                                                      | 
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |  |      | 133 | 
|                                                                                      | 
|Item 16F. Change in Registrants Certifying Accountant                                |  |      | 133 | 
|                                                                                      | 
|Item 16G. Corporate Governance                                                        |  |      | 133 | 
|                                                                                      | 
|Item 16H. Mine Safety Disclosure                                                      |  |      | 134 | 
|                                                                                      | 
|Item 17. Financial Statements                                                         |  |      | 135 | 
|                                                                                      | 
|Item 18. Financial Statements                                                         |  |      | 135 | 
|                                                                                      | 
|Item 19. Exhibits                                                                     |  |      | 136 | 



i



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##### Table of Contents

INTRODUCTION

This Annual Report on Form 20-F relates to our ordinary shares, par value US$0.001 per share, which are traded on the NYSE MKT under the
ticker symbol CNR.

In this Annual Report, references to the Company or China Metro are to
China Metro-Rural Holdings Limited, a British Virgin Islands company, and/or, as the context requires, its primary subsidiaries: China Metro-Rural Limited, a limited company incorporated in the Cayman Islands and continued into the British Virgin
Islands and Man Sang International Limited, a Bermuda company listed on The Stock Exchange of Hong Kong Limited and/or, as the context requires, the subsidiaries of: China Metro-Rural Limited or Man Sang International Limited. References to
the Merger are to the merger of Creative Gains Limited, a British Virgin Islands company and a wholly-owned subsidiary of China Metro-Rural Holdings Limited that was acquired by China Metro-Rural Holdings Limited on December 1, 2009
solely for the purpose of entering into the Merger Agreement and effecting the Merger (Merger Sub) with and into China Metro-Rural Limited whereby the separate corporate existence of Merger Sub ceased and China Metro-Rural Limited
continues as the surviving company and a wholly-owned subsidiary of China Metro-Rural Holdings Limited. The Merger was completed on March 22, 2010. Prior to a name change on March 19, 2010, China Metro-Rural Holdings Limited was named Man
Sang International (B.V.I.) Limited, or MSBVI. On July 28, 2010, the Company declared a dividend to its shareholders which was satisfied by way of distribution in specie of the entire equity interest in Man Sang International Limited, or MSIL,
held by the Company, represented approximately 494 million ordinary shares of MSIL, or the Distribution, and was completed in August 2010. Subsequent to the Distribution, which is further discussed under Presentation of Financial
Information, the Company no longer holds any interests in MSIL and its subsidiaries.

PRESENTATION OF FINANCIAL INFORMATION

This is our fourth filing as a foreign private issuer on Form 20-F, and the fourth filing to include consolidated financial statements of
the Company on the basis of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) giving the effect to our redomiciling transaction and common control merger, as
described further below. The acquisition of equity interest of China Metro-Rural Limited, occurred during the year ended March 31, 2010, has been accounted for as a combination of entities under common control in a manner similar to pooling of
interests as both the Company and China Metro-Rural Limited were controlled by Mr. Cheng Chung Hing, Ricky immediately prior to and immediately after the Merger. On this basis, the consolidated financial statements of China Metro-Rural Holdings
Limited for periods prior to the Merger have been restated to include, to the extent of the equity interest of China Metro-Rural Limited held by Mr. Cheng Chung Hing, Ricky, the assets and liabilities and results of operations of China
Metro-Rural Limited for those periods as if China Metro-Rural Holdings Limited had owned China Metro-Rural Limited at the beginning of the financial period reported in the consolidated financial statements or when MSBVI and China Metro-Rural Limited
came under common control by Mr. Cheng Chung Hing, Ricky, whichever is later, and all assets and liabilities of China Metro-Rural Limited have been stated at historical carrying amounts. The acquisition by the Company of interest owned by all
the shareholders of China Metro, including Mr. Cheng, was treated as an equity transaction at the completion date of the Merger.

On July 28, 2010, the Company announced its decision to distribute its entire equity interest in Man Sang International Limited, or MSIL, to the Companys shareholders, or Distribution. On
November 30, 2012, the Company disposed of its entire equity interest in China Focus City (H.K.) Holdings Limited (HK CFC) and, in effect, disposed of its entire equity interest in Qiqihar China Focus City Holdings (Group) Co., Ltd.
(Qiqihar CFC). In line with the accounting policies of the Company and its subsidiaries, or the Group, the results attributable to MSIL, HK CFC and Qiqihar CFC are shown as discontinued operations in the Groups consolidated
financial statements.



ii



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##### Table of Contents

The results of the continuing operations are presented in the consolidated income statement
for the three years ended March 31, 2013. However, discontinued operations are presented in the consolidated income statement for the same periods as a separate amount, comprising the total of the post-tax profit or loss of the discontinued
operations for the period together with any post-tax gain or loss recognized on the measurement to fair value less costs to sell, of the assets/disposal groups constituting discontinued operations. While contained in the consolidated financial
statements in this Annual Report, the statement of financial position as at March 31, 2013, 2012 and 2011 has not been revised for the discontinued operations.

Percentages and some amounts in this Annual Report have been rounded for ease of presentation. Any discrepancies between totals and the sums of the amounts listed are due to rounding.

CURRENCY TRANSLATION

In this Annual Report, unless otherwise specified or the context otherwise requires, all references to U.S. dollars, dollars or US$ are to the legal currency of
the United States and all references to H.K. dollars or HK$ are to the legal currency of Hong Kong. Unless otherwise noted, all translations from H.K. dollars to U.S. dollars were made at the rate of HK$7.8 to US$1.0,
representing the rate for U.S. dollars in New York for cable transfers in Hong Kong dollars as certified for custom purposes by Federal Reserve Bank of New York. On July 12, 2013, the noon buying rate in New York City for cable transfers in
H.K. dollars per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York was HK$7.7581 to US$1.00. We make no representation that the H.K. dollar or U.S. dollar amounts referred to in this Annual Report could
have been or could be converted into U.S. dollars or H.K. dollars, as the case may be, at any particular rate or at all. See Key InformationExchange Rate Information for more detailed information regarding the translation of
H.K. Dollars into U.S. dollars.

In addition, this Annual Report contains translations of Renminbi (RMB) amounts into
U.S. dollars at specified rates solely for the convenience the readers of this Annual Report. Unless otherwise noted, all translations from RMB to U.S. dollars were made at the rate of RMB6.35 to US$1.00. On July 12, 2013, the noon
buying rate in New York City for cable transfers in RMB per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York was RMB6.1373 to US$1.00. We make no representation that the RMB or U.S. dollar amounts
referred to in this Annual Report could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. See Key InformationExchange Rate Information for more detailed information
regarding the translation of RMB into U.S. dollars.

CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report which are not historical facts may constitute
forward-looking statements that involve risks and uncertainties. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Such statements are made in
reliance upon the safe harbor provisions of Section 27A of the Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. Actual results and trends may differ materially from historical
results or those projected in any such forward-looking statements depending on a variety of factors, including those described under Risk Factors beginning on page 7 of this Annual Report.

Our statements regarding market risks, including interest rate risk, foreign exchange rate risk, commodity risk, asset price risk, equity
market risk, inflation and deflation, are subject to uncertainty. For example, certain market risk disclosures are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain
of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated.

All forward-looking statements in this Annual Report are qualified in their entirety by this cautionary statement, and no person undertakes any obligation to update publicly any forward-looking statement
for any reason, except as required by law, even as new information becomes available or other events occur in the future. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.



iii



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##### Table of Contents

PART I



|Item 1. | Identity of Directors, Senior Management and Advisers
|------- | -----------------------------------------------------

Not Applicable.



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------

Not Applicable.



|Item 3. | Key Information
|------- | ---------------

A. Selected Financial
Data

The acquisition of equity interest of China Metro-Rural Limited, occurred during the year ended March 31, 2010,
has been accounted for as a combination of entities under common control in a manner similar to pooling of interests as both the Company and China Metro-Rural Limited were controlled by Mr. Cheng Chung Hing, Ricky immediately prior to and
immediately after the Merger. On this basis, the consolidated financial statements of China Metro-Rural Holdings Limited for periods prior to the Merger have been restated to include, to the extent of the equity interest of China Metro-Rural Limited
held by Mr. Cheng Chung Hing, Ricky, the assets and liabilities and results of operations of China Metro-Rural Limited for those periods as if China Metro-Rural Holdings Limited had been the holding company of China Metro-Rural Limited at the
beginning of the financial period reported in the consolidated financial statements or when the Company and China Metro-Rural Limited came under common control by Mr. Cheng Chung Hing, Ricky, whichever is later, and all assets and liabilities
of China Metro-Rural Limited have been stated at historical carrying amounts. The acquisition by the Company of interest owned by all the shareholders of China Metro, including Mr. Cheng, was treated as an equity transaction at the completion
date of the Merger.

On July 28, 2010, the Company declared a dividend to its shareholders which was satisfied by way of
distribution in specie of the entire equity interest in Man Sang International Limited, or MSIL, held by the Company, represented approximately 494 million ordinary shares of MSIL, or the Distribution, and was completed in August 2010. Upon the
completion of the Distribution, the Group no longer held any interests in MSIL and has discontinued its pearls and real estate businesses, or Man Sang Discontinued Operations, which was previously operated through MSIL. The summary of consolidated
income statement re-presents the results of continuing operations, where the results of MSIL are accounted for as discontinued operations net of taxation for all years presented.

On November 30, 2012, the Company disposed of the entire equity interest in HK CFC and, in effect, disposed of the entire equity
interest in Qiqihar CFC, which currently represented the Companys entire rural-urban migration and city re-development business. Upon the disposal of HK CFC and Qiqihar CFC, the Group has discontinued its rural-urban migration and city
re-development business in Qiqihar, or Qiqihar Discontinued Operations. The summary of consolidated income statement re-presents the results of continuing operations, where the results of HK CFC and Qiqihar CFC are accounted for as discontinued
operations net of taxation for all years presented.

The selected consolidated statements of operation data of the Group
presents the results for the five years ended March 31, 2013, 2012, 2011, 2010 and 2009 on the basis of International Financial Reporting Standards as issued by the International Accounting Standards Board. The Companys historical results
do not necessarily indicate results expected for any future periods. The selected consolidated financial data below should be read in conjunction with our consolidated financial statements and notes thereto, Item 5. Operating and Financial
Review and Prospects below, and the other information contained in this Form 20-F.



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##### Table of Contents

The selected consolidated income statements of the Group for the years ended March 31,
2013, 2012 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected consolidated income statements of the Group for the years ended March 31, 2010 and 2009 have been
derived from our audited consolidated financial statements included in Exhibit 99.6 to the Companys Form 6-K furnished to the Securities and Exchange Commission, or SEC, on January 18, 2011.



|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------- | ---------- | - | ---- | --- | ---------- | ---- |  | --- | ---------- | - |  | ---- | ---------- | - |  | --- | ---------- | -
|                                                                                                                                     |  | For the years ended March 31,                   |           
|                                                                                                                                     |  | 2013                                            |            |   | 2012 |     |            | 2011 |  |     | 2010       |   |  | 2009 |           
|                                                                                                                                     |  | (HK$ in thousands, except for number of shares) |           
|Income Statements Data:                                                                                                              |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Continuing Operations:                                                                                                               |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Revenue                                                                                                                              |  |                                                 | 284,759    |   |      |     | 765,872    |      |  |     | 581,573    |   |  |      | 337,659    |   |  |     | 1,044      |  
|Cost of sales                                                                                                                        |  |                                                 | (217,955   | ) |      |     | (467,195   | )    |  |     | (352,265   | ) |  |      | (209,415   | ) |  |     | (664       | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Gross profit                                                                                                                         |  |                                                 | 66,804     |   |      |     | 298,677    |      |  |     | 229,308    |   |  |      | 128,244    |   |  |     | 380        |  
|Other income, net                                                                                                                    |  |                                                 | 67,535     |   |      |     | 61,363     |      |  |     | 68,234     |   |  |      | 36,154     |   |  |     | 1,276      |  
|Other (losses)/gains, net                                                                                                            |  |                                                 | (69,617    | ) |      |     | 6,828      |      |  |     | 120,456    |   |  |      | 155,485    |   |  |     | 139,093    |  
|Selling expenses                                                                                                                     |  |                                                 | (32,254    | ) |      |     | (24,212    | )    |  |     | (22,436    | ) |  |      | (8,276     | ) |  |     | (10,890    | )
|Administrative expenses                                                                                                              |  |                                                 | (112,504   | ) |      |     | (117,922   | )    |  |     | (64,748    | ) |  |      | (59,676    | ) |  |     | (31,496    | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Operating (loss)/profit                                                                                                              |  |                                                 | (80,036    | ) |      |     | 224,734    |      |  |     | 330,814    |   |  |      | 251,931    |   |  |     | 98,363     |  
|Finance income/(costs)net                                                                                                           |  |                                                 | 4,384      |   |      |     | 389        |      |  |     | (3,124     | ) |  |      | 365        |   |  |     | 1,879      |  
|Share of loss of an associate                                                                                                        |  |                                                 | (1,606     | ) |      |     | (2,456     | )    |  |     | (386       | ) |  |      |           |   |  |     |           |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|(Loss)/profit before income tax                                                                                                      |  |                                                 | (77,258    | ) |      |     | 222,667    |      |  |     | 327,304    |   |  |      | 252,296    |   |  |     | 100,242    |  
|Income tax expenses                                                                                                                  |  |                                                 | (35,746    | ) |      |     | (90,202    | )    |  |     | (124,630   | ) |  |      | (86,558    | ) |  |     | (26,724    | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|(Loss)/profit for the year from continuing operation                                                                                 |  |                                                 | (113,004   | ) |      |     | 132,465    |      |  |     | 202,674    |   |  |      | 165,738    |   |  |     | 73,518     |  
|Discontinued operations:                                                                                                             |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Profit/(loss) for the year from discontinued operations, net of tax                                                                  |  |                                                 | 17,532     |   |      |     | 98,594     |      |  |     | 29,878     |   |  |      | (24,189    | ) |  |     | (140,336   | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|(Loss)/profit for the year                                                                                                           |  |                                                 | (95,742    | ) |      |     | 231,059    |      |  |     | 232,552    |   |  |      | 141,549    |   |  |     | (66,818    | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Attributable to:                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Equity holders of the Company                                                                                                        |  |                                                 | (101,104   | ) |      |     | 208,986    |      |  |     | 227,346    |   |  |      | 171,408    |   |  |     | 42,540     |  
|Non-controlling interests                                                                                                            |  |                                                 | 5,632      |   |      |     | 22,073     |      |  |     | 5,206      |   |  |      | (29,859    | ) |  |     | (109,358   | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|                                                                                                                                     |  |                                                 | (95,742    | ) |      |     | 231,059    |      |  |     | 232,552    |   |  |      | 141,549    |   |  |     | (66,818    | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|(Loss)/earnings per share from continuing and discontinued operations attributable to equity holders of the Company during the
year: |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Basic (loss)/earnings per share                                                                                                      |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|From continuing operation                                                                                                            |  | HK$                                             | (1.61      | ) |      | HK$ | 1.56       |      |  | HK$ | 3.17       |   |  | HK$  | 2.60       |   |  | HK$ | 1.16       |  
|From discontinued operations                                                                                                         |  | HK$                                             | 0.24       |   |      | HK$ | 1.40       |      |  | HK$ | 0.37       |   |  | HK$  | 0.08       |   |  | HK$ | (0.49      | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|                                                                                                                                     |  | HK$                                             | (1.37      | ) |      | HK$ | 2.96       |      |  | HK$ | 3.54       |   |  | HK$  | 2.68       |   |  | HK$ | 0.67       |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Diluted (loss)/earnings per share                                                                                                    |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|From continuing operation                                                                                                            |  | HK$                                             | (1.61      | ) |      | HK$ | 1.56       |      |  | HK$ | 3.17       |   |  | HK$  | 2.60       |   |  | HK$ | 1.16       |  
|From discontinued operations                                                                                                         |  | HK$                                             | 0.24       |   |      | HK$ | 1.40       |      |  | HK$ | 0.37       |   |  | HK$  | 0.08       |   |  | HK$ | (0.49      | )
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|                                                                                                                                     |  | HK$                                             | (1.37      | ) |      | HK$ | 2.96       |      |  | HK$ | 3.54       |   |  | HK$  | 2.68       |   |  | HK$ | 0.67       |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Shares used in computation of:                                                                                                       |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Basic (loss)/earnings per share                                                                                                      |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|From continuing operation                                                                                                            |  |                                                 | 73,544,000 |   |      |     | 70,536,000 |      |  |     | 64,126,000 |   |  |      | 63,834,000 |   |  |     | 63,826,000 |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|From discontinued operations                                                                                                         |  |                                                 | 73,544,000 |   |      |     | 70,536,000 |      |  |     | 64,126,000 |   |  |      | 63,834,000 |   |  |     | 63,826,000 |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|Diluted (loss)/earnings per share                                                                                                    |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|From continuing operation                                                                                                            |  |                                                 | 73,544,000 |   |      |     | 70,536,000 |      |  |     | 64,126,000 |   |  |      | 63,834,000 |   |  |     | 63,826,000 |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|From discontinued operations                                                                                                         |  |                                                 | 73,544,000 |   |      |     | 70,536,000 |      |  |     | 64,126,000 |   |  |      | 63,834,000 |   |  |     | 63,826,000 |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  
|                                                                                                                                     |  |                                                 |            |   |     
|DividendNon-cash (HK$000)                                                                                                          |  |                                                 |           |   |      |     |           |      |  |     | 466,474    |   |  |      |           |   |  |     |           |  
|                                                                                                                                     |  |                                                 |            |   |      |     |            |      |  |     |            |   |  |      |            |   |  |     |            |  



2



---

##### Table of Contents

The following table sets forth selected statements of financial position data of the Group
as of the dates indicated. The selected consolidated statements of financial position data of the Group as of March 31, 2013 and 2012 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report.
The selected consolidated statements of financial position data of the Group as of March 31, 2011 have been derived from our audited consolidated financial statements included in the Companys Form 20-F filed to SEC on July 11, 2011.
The selected consolidated statements of financial position data of the Group as of March 31, 2010 and 2009 have been derived from our audited consolidated financial statements included in Exhibit 99.6 to the Companys Form 6-K furnished to
SEC on January 18, 2011.



|                                                                                                            |  |                                                 |            |  |      |  |            |      |  |  |            |  |  |      |            |  |  |  |           | 
|----------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- |  |  | ---- | ---------- |  |  |  | --------- | 
|                                                                                                            |  | As of March 31,                                 |           
|                                                                                                            |  | 2013                                            |            |  | 2012 |  |            | 2011 |  |  | 2010       |  |  | 2009 |           
|                                                                                                            |  | (HK$ in thousands, except for number of shares) |           
|Statements of Financial Position Data:                                                                      |  |                                                 |            |  |      |  |            |      |  |  |            |  |  |      |            |  |  |  |           | 
|Total non-current assets                                                                                    |  |                                                 | 934,448    |  |      |  | 903,966    |      |  |  | 855,083    |  |  |      | 1,481,913  |  |  |  | 1,213,858 | 
|Total current assets                                                                                        |  |                                                 | 2,268,430  |  |      |  | 2,271,913  |      |  |  | 1,010,026  |  |  |      | 1,996,151  |  |  |  | 1,609,514 | 
|Total assets                                                                                                |  |                                                 | 3,202,878  |  |      |  | 3,175,879  |      |  |  | 1,865,109  |  |  |      | 3,478,064  |  |  |  | 2,823,372 | 
|Total current liabilities                                                                                   |  |                                                 | 1,267,633  |  |      |  | 1,506,647  |      |  |  | 664,505    |  |  |      | 1,159,000  |  |  |  | 1,008,163 | 
|Total non-current liabilities                                                                               |  |                                                 | 745,830    |  |      |  | 393,622    |      |  |  | 362,937    |  |  |      | 461,503    |  |  |  | 415,986   | 
|Total liabilities                                                                                           |  |                                                 | 2,013,463  |  |      |  | 1,900,269  |      |  |  | 1,027,442  |  |  |      | 1,620,503  |  |  |  | 1,424,149 | 
|Total equity                                                                                                |  |                                                 | 1,189,415  |  |      |  | 1,275,610  |      |  |  | 837,667    |  |  |      | 1,857,561  |  |  |  | 1,399,223 | 
|                                                                                                           
|Share capital issued and outstanding (Preferred share 200,000; ordinary share 1,000,000,000, US$0.001
each) | 
|Preferred share                                                                                             |  |                                                 | 100,000    |  |      |  | 100,000    |      |  |  | 100,000    |  |  |      | 100,000    |  |  |  |          | 
|Ordinary share                                                                                              |  |                                                 | 73,543,782 |  |      |  | 73,543,782 |      |  |  | 64,125,804 |  |  |      | 64,125,804 |  |  |  | 10,000    | 



3



---

##### Table of Contents

The following table sets forth selected income statements data of Qiqihar Discontinued
Operations for the five years ended March 31, 2013, 2012, 2011, 2010 and 2009 on the basis of International Financial Reporting Standards as issued by the International Accounting Standards Board. The selected income statements data of Qiqihar
Discontinued Operations for the years ended March 31, 2013, 2012 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected income statements data of Qiqihar Discontinued
Operations for the year ended March 31, 2010 and 2009 have been derived from our audited consolidated financial statements included in the Companys Form 20-F filed to SEC on July 11, 2011.



|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|-------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ---- | --- | ------- | ---- |  |  | ---- |  |  | ---- | - |  |  |  | - | 
|                                                                                                                                 |  | For the years ended March 31, |        
|                                                                                                                                 |  | 2013                          |         |   | 2012 |     |         | 2011 |  |  | 2010 |  |  | 2009 |  
|                                                                                                                                 |  | (HK$ in thousands)            |        
|Income Statements Data: Qiqihar Discontinued Operations:                                                                         |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Revenue                                                                                                                          |  |                               |        |   |      |     | 147,896 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Cost of sales                                                                                                                    |  |                               |        |   |      |     | (9,358  | )    |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Gross profit                                                                                                                     |  |                               |        |   |      |     | 138,538 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Other income and gains, net                                                                                                      |  |                               | 619     |   |      |     |        |      |  |  |     |  |  |      |  |  |  |  |  | 
|Expenses                                                                                                                         |  |                               | (28,929 | ) |      |     | (5,665  | )    |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Operating (loss)/profit                                                                                                          |  |                               | (28,310 | ) |      |     | 132,873 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Finance incomenet                                                                                                               |  |                               | 8,009   |   |      |     | 238     |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|(Loss)/profit before income tax                                                                                                  |  |                               | (20,301 | ) |      |     | 133,111 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Income tax credits/(expenses)                                                                                                    |  |                               | 5,355   |   |      |     | (34,517 | )    |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|(Loss)/profit for the year                                                                                                       |  |                               | (14,946 | ) |      |     | 98,594  |      |  |  |     |  |  |      |  |  |  |  |  | 
|Gain on disposal of discontinued operations                                                                                      |  |                               | 32,478  |   |      |     |        |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Profit from discontinued operations                                                                                              |  |                               | 17,532  |   |      |     | 98,594  |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Attributable to:                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Equity holders of the Company                                                                                                    |  |                               | 17,532  |   |      |     | 98,594  |      |  |  |     |  |  |      |  |  |  |  |  | 
|Non-controlling interests                                                                                                        |  |                               |        |   |      |     |        |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|                                                                                                                                 |  |                               | 17,532  |   |      |     | 98,594  |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Earnings per share for profit from Qiqihar Discontinued Operations attributable to equity holders of the Company during the
year |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Basic                                                                                                                            |  | HK$                           | 0.24    |   |      | HK$ | 1.40    |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Diluted                                                                                                                          |  | HK$                           | 0.24    |   |      | HK$ | 1.40    |      |  |  |     |  |  |      |  |  |  |  |  | 
|                                                                                                                                 |  |                               |         |   |      |     |         |      |  |  |      |  |  |      |   |  |  |  |   | 



4



---

##### Table of Contents

The following table sets forth selected statements of financial position data of Qiqihar
Discontinued Operations as of the dates indicated. The selected statements of financial position data of Qiqihar Discontinued Operations as of November 30, 2012 (the date of the disposal) and March 31, 2012 have been derived from our
audited consolidated financial statements included elsewhere in this Annual Report. The selected statements of financial position data of Qiqihar Discontinued Operations as of March 31, 2011 have been derived from our audited consolidated
financial statements included in the Companys Form 20-F filed to SEC on July 11, 2011. The selected statements of financial position data of Qiqihar Discontinued Operations as of March 31, 2010 and 2009 have been derived from our
audited consolidated financial statements included in Exhibit 99.6 to the Companys Form 6-K furnished to SEC on January 18, 2011.



|                                                                          |  |                    |           |  |                 |  |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|------------------------------------------------------------------------- |  | ------------------ | --------- |  | --------------- |  | ------- | ---- |  |  | ---- |  |  | ---- | - |  |  |  | - | 
|                                                                          |  | As ofNovember 
30, |           |  | As of March 31, | 
|                                                                          |  | 2012               |           |  | 2012            |  |         | 2011 |  |  | 2010 |  |  | 2009 |  
|                                                                          |  | (HK$ in thousands) |          
|Statements of Financial Position Data of Qiqihar Discontinued Operations: |  |                    |           |  |                 |  |         |      |  |  |      |  |  |      |   |  |  |  |   | 
|Total non-current assets                                                  |  |                    | 195,049   |  |                 |  | 149,365 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Total current assets                                                      |  |                    | 941,107   |  |                 |  | 298,035 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Total assets                                                              |  |                    | 1,136,156 |  |                 |  | 447,400 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Total current liabilities                                                 |  |                    | 804,116   |  |                 |  | 132,792 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Total non-current liabilities                                             |  |                    |          |  |                 |  |        |      |  |  |     |  |  |      |  |  |  |  |  | 
|Total liabilities                                                         |  |                    | 804,116   |  |                 |  | 132,792 |      |  |  |     |  |  |      |  |  |  |  |  | 
|Total equity                                                              |  |                    | 332,040   |  |                 |  | 314,608 |      |  |  |     |  |  |      |  |  |  |  |  | 



5



---

##### Table of Contents

The following table sets forth selected income statements data of Man Sang Discontinued
Operations for the five years ended March 31, 2013, 2012, 2011, 2010 and 2009 on the basis of International Financial Reporting Standards as issued by the International Accounting Standards Board. The selected income statements data of Man Sang
Discontinued Operations for the years ended March 31, 2013, 2012 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The selected income statements data of Man Sang
Discontinued Operations for the years ended March 31, 2010 and 2009 have been derived from our audited consolidated financial statements included in Exhibit 99.6 to the Companys Form 6-K furnished to the SEC on January 18, 2011.



|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | - |  | ---- |  | - | ---- |  | --- | -------- | - |  | ---- | -------- | - |  | --- | -------- | -
|                                                                                                                                                |  | For the years ended March 31, |  
|                                                                                                                                                |  | 2013                          |   |  | 2012 |  |   | 2011 |  |     | 2010     |   |  | 2009 |         
|                                                                                                                                                |  | (HK$ in thousands)            |  
|Income Statements Data: Man Sang Discontinued Operations:                                                                                       |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Revenue                                                                                                                                         |  |                               |  |  |      |  |  |      |  |     | 157,452  |   |  |      | 339,379  |   |  |     | 359,734  |  
|Cost of sales                                                                                                                                   |  |                               |  |  |      |  |  |      |  |     | (117,241 | ) |  |      | (276,602 | ) |  |     | (226,422 | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Gross profit                                                                                                                                    |  |                               |  |  |      |  |  |      |  |     | 40,211   |   |  |      | 62,777   |   |  |     | 133,312  |  
|Other income and gains/(losses), net                                                                                                            |  |                               |  |  |      |  |  |      |  |     | 7,722    |   |  |      | 16,776   |   |  |     | (9,783   | )
|Recycling of exchange difference to profit or loss upon the Distribution                                                                        |  |                               |  |  |      |  |  |      |  |     | 20,284   |   |  |      |         |   |  |     |         |  
|Expenses                                                                                                                                        |  |                               |  |  |      |  |  |      |  |     | (33,983  | ) |  |      | (114,073 | ) |  |     | (141,100 | )
|Increase/(decrease) in fair values of investment properties and investment properties under construction                                        |  |                               |  |  |      |  |  |      |  |     | 1,592    |   |  |      | (3,991   | ) |  |     | (184,572 | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Operating profit/(loss)                                                                                                                         |  |                               |  |  |      |  |  |      |  |     | 35,826   |   |  |      | (38,511  | ) |  |     | (202,143 | )
|Finance incomenet                                                                                                                              |  |                               |  |  |      |  |  |      |  |     | 87       |   |  |      | 238      |   |  |     | 9,729    |  
|Share of results of an associate                                                                                                                |  |                               |  |  |      |  |  |      |  |     | 17       |   |  |      | 48       |   |  |     | (53      | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Profit/(loss) before income tax                                                                                                                 |  |                               |  |  |      |  |  |      |  |     | 35,930   |   |  |      | (38,225  | ) |  |     | (192,467 | )
|Income tax (expenses)/credits                                                                                                                   |  |                               |  |  |      |  |  |      |  |     | (6,052   | ) |  |      | 14,036   |   |  |     | 52,131   |  
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Profit/(loss) for the year                                                                                                                      |  |                               |  |  |      |  |  |      |  |     | 29,878   |   |  |      | (24,189  | ) |  |     | (140,336 | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Attributable to:                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Equity holders of the Company                                                                                                                   |  |                               |  |  |      |  |  |      |  |     | 23,950   |   |  |      | 5,504    |   |  |     | (30,978  | )
|Non-controlling interests                                                                                                                       |  |                               |  |  |      |  |  |      |  |     | 5,928    |   |  |      | (29,693  | ) |  |     | (109,358 | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|                                                                                                                                                |  |                               |  |  |      |  |  |      |  |     | 29,878   |   |  |      | (24,189  | ) |  |     | (140,336 | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Earnings/(loss) per share for profit/(loss) from Man Sang Discontinued Operations attributable to equity holders of the Company
during the year |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Basic                                                                                                                                           |  |                               |  |  |      |  |  |      |  | HK$ | 0.37     |   |  | HK$  | 0.08     |   |  | HK$ | (0.49    | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  
|Diluted                                                                                                                                         |  |                               |  |  |      |  |  |      |  | HK$ | 0.37     |   |  | HK$  | 0.08     |   |  | HK$ | (0.49    | )
|                                                                                                                                                |  |                               |   |  |      |  |   |      |  |     |          |   |  |      |          |   |  |     |          |  



6



---

##### Table of Contents

The following table sets forth selected statements of financial position data of Man Sang
Discontinued Operations as of the dates indicated. The selected statements of financial position data of Man Sang Discontinued Operations as of July 28, 2010 (the date of the Distribution) has been derived from our audited consolidated
financial statements included elsewhere in this Annual Report. The selected statements of financial position data of Man Sang Discontinued Operations as of March 31, 2010 and 2009 have been derived from our audited consolidated financial
statements included in Exhibit 99.6 to the Companys Form 6-K furnished to the SEC on January 18, 2011.



|                                                                           |  |                    |           |  |                 |  |           |      |  |  |           | 
|-------------------------------------------------------------------------- |  | ------------------ | --------- |  | --------------- |  | --------- | ---- |  |  | --------- | 
|                                                                           |  | As of July 28,     |           |  | As of March 31, | 
|                                                                           |  | 2010               |           |  | 2010            |  |           | 2009 | 
|                                                                           |  | (HK$ in thousands) |          
|Statements of Financial Position Data of Man Sang Discontinued Operations: |  |                    |           |  |                 |  |           |     
|Total non-current assets                                                   |  |                    | 1,046,725 |  |                 |  | 1,015,399 |      |  |  | 1,132,000 | 
|Total current assets                                                       |  |                    | 1,069,473 |  |                 |  | 1,059,250 |      |  |  | 946,309   | 
|Total assets                                                               |  |                    | 2,116,198 |  |                 |  | 2,074,649 |      |  |  | 2,078,309 | 
|Total current liabilities                                                  |  |                    | 690,328   |  |                 |  | 722,506   |      |  |  | 598,364   | 
|Total non-current liabilities                                              |  |                    | 153,541   |  |                 |  | 107,907   |      |  |  | 206,634   | 
|Total liabilities                                                          |  |                    | 843,869   |  |                 |  | 830,413   |      |  |  | 804,998   | 
|Total equity                                                               |  |                    | 1,272,329 |  |                 |  | 1,244,236 |      |  |  | 1,273,311 | 

Exchange Rate Information

The Hong Kong dollar is freely convertible into other currencies, including the U.S. dollar. Since 1983, the Hong Kong dollar has been generally linked to the U.S. dollar at the rate of HK$7.80
to US$1.00. Under existing Hong Kong law:



| |  |  | there are no foreign exchange controls or other laws, decrees or regulations that affect the remittance of dividend payments to U.S. residents;
and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | there are no limitations on the rights of non-residents or foreign owners to hold the Companys ordinary or preferred shares.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------

The Basic Law of Hong Kong, or the Basic Law, which came into effect on July 1, 1997, provides that no
foreign exchange control policies shall be applied in Hong Kong.

The market exchange rate of the Hong Kong dollar against the
U.S. dollar continues to be determined by supply and demand in the foreign exchange market. However, against the background of the fixed rate system which applies to the issuance and withdrawal of Hong Kong currency in circulation, the market
exchange rate has not deviated significantly from the level of HK$7.80 to US$1.00. The Hong Kong government has indicated its intention to maintain the link at that rate. Under the Basic Law, the Hong Kong dollar will continue to circulate and
remain freely convertible. The Hong Kong government has also stated that it has no intention of imposing exchange controls in Hong Kong and the Hong Kong dollar will remain freely convertible into other currencies, including the U.S. dollar.

On May 18, 2005, the Hong Kong Monetary Authority announced the introduction of certain refinements to the operation of
the linked exchange rate system. These refinements effectively set the market exchange rate of the Hong Kong dollar against the U.S. dollar within a fixed trading range from HK$7.75 to HK$7.85 against US$1.00. However, the Company cannot assure
you that the Hong Kong government will maintain the linked exchange rate system within the range of HK$7.75 to HK$7.85, or at all.



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##### Table of Contents

The following table sets forth the noon buying exchange rate for U.S. dollars in New
York City for cable transfers in Hong Kong dollars as certified for customs purposes by the Federal Reserve Bank of New York for the periods indicated:



|                                 |  |               |        |  |               |  |        |             |  |  |        |  |  |  |        | 
|-------------------------------- |  | ------------- | ------ |  | ------------- |  | ------ | ----------- |  |  | ------ |  |  |  | ------ | 
|                                 |  | Exchange Rate |       
|                                 |  | PeriodEnd     |        |  | High          |  |        | Average (1) |  |  | Low    | 
|                                 |  |               |        |  | (HK$ per US$) |  |        |             | 
|Last Five Fiscal Years           |  |               |        |  |               |  |        |             |  |  |        |  |  |  |        | 
|Fiscal Year Ended March 31, 2009 |  |               | 7.7500 |  |               |  | 7.8159 |             |  |  | 7.7731 |  |  |  | 7.7497 | 
|Fiscal Year Ended March 31, 2010 |  |               | 7.7647 |  |               |  | 7.7752 |             |  |  | 7.7541 |  |  |  | 7.7495 | 
|Fiscal Year Ended March 31, 2011 |  |               | 7.7750 |  |               |  | 7.8040 |             |  |  | 7.7745 |  |  |  | 7.7501 | 
|Fiscal Year Ended March 31, 2012 |  |               | 7.7656 |  |               |  | 7.8087 |             |  |  | 7.7772 |  |  |  | 7.7532 | 
|Fiscal Year Ended March 31, 2013 |  |               | 7.7629 |  |               |  | 7.7699 |             |  |  | 7.7554 |  |  |  | 7.7493 | 
|Last Six Months                  |  |               |        |  |               |  |        |             |  |  |        |  |  |  |        | 
|January 2013                     |  |               | 7.7560 |  |               |  | 7.7585 |             |  |  | 7.7530 |  |  |  | 7.7503 | 
|February 2013                    |  |               | 7.7546 |  |               |  | 7.7580 |             |  |  | 7.7552 |  |  |  | 7.7531 | 
|March 2013                       |  |               | 7.7629 |  |               |  | 7.7640 |             |  |  | 7.7592 |  |  |  | 7.7551 | 
|April 2013                       |  |               | 7.7606 |  |               |  | 7.7652 |             |  |  | 7.7631 |  |  |  | 7.7606 | 
|May 2013                         |  |               | 7.7625 |  |               |  | 7.7639 |             |  |  | 7.7614 |  |  |  | 7.7587 | 
|June 2013                        |  |               | 7.7560 |  |               |  | 7.7654 |             |  |  | 7.7602 |  |  |  | 7.7534 | 



|(1) | For the years indicated, the average exchange rates are determined by averaging the exchange rates on the last business day of each month during the relevant period.
For the months indicated, the average exchange rates are determined by averaging the exchange rates on each day of the month.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On July 12, 2013, the exchange rate was HK$7.7581 per US $1.00.

The
following table sets forth the noon buying exchange rate for U.S. dollars in New York City for cable transfers in Renminbi (RMB) as certified for customs purposes by the Federal Reserve Bank of New York for the periods indicated:



|                                 |  |               |        |  |               |  |        |             |  |  |        |  |  |  |        | 
|-------------------------------- |  | ------------- | ------ |  | ------------- |  | ------ | ----------- |  |  | ------ |  |  |  | ------ | 
|                                 |  | Exchange Rate |       
|                                 |  | PeriodEnd     |        |  | High          |  |        | Average (1) |  |  | Low    | 
|                                 |  |               |        |  | (RMB per US$) |  |        |             | 
|Last Five Fiscal Years           |  |               |        |  |               |  |        |             |  |  |        |  |  |  |        | 
|Fiscal Year Ended March 31, 2009 |  |               | 6.8329 |  |               |  | 7.0185 |             |  |  | 6.8532 |  |  |  | 6.7800 | 
|Fiscal Year Ended March 31, 2010 |  |               | 6.8258 |  |               |  | 6.8371 |             |  |  | 6.8268 |  |  |  | 6.8176 | 
|Fiscal Year Ended March 31, 2011 |  |               | 6.5483 |  |               |  | 6.8323 |             |  |  | 6.6972 |  |  |  | 6.5483 | 
|Fiscal Year Ended March 31, 2012 |  |               | 6.2975 |  |               |  | 6.5477 |             |  |  | 6.3970 |  |  |  | 6.2935 | 
|Fiscal Year Ended March 31, 2013 |  |               | 6.2108 |  |               |  | 6.3879 |             |  |  | 6.2787 |  |  |  | 6.2105 | 
|Last Six Months                  |  |               |        |  |               |  |        |             |  |  |        |  |  |  |        | 
|January 2013                     |  |               | 6.2204 |  |               |  | 6.2303 |             |  |  | 6.2215 |  |  |  | 6.2134 | 
|February 2013                    |  |               | 6.2213 |  |               |  | 6.2438 |             |  |  | 6.2322 |  |  |  | 6.2213 | 
|March 2013                       |  |               | 6.1208 |  |               |  | 6.2246 |             |  |  | 6.2154 |  |  |  | 6.2105 | 
|April 2013                       |  |               | 6.1647 |  |               |  | 6.2078 |             |  |  | 6.1861 |  |  |  | 6.1647 | 
|May 2013                         |  |               | 6.1340 |  |               |  | 6.1647 |             |  |  | 6.1416 |  |  |  | 6.1213 | 
|June 2013                        |  |               | 6.1374 |  |               |  | 6.1488 |             |  |  | 6.1342 |  |  |  | 6.1248 | 



|(1) | For the years indicated, the average exchange rates are determined by averaging the exchange rates on the last business day of each month during the relevant period.
For the months indicated, the average exchange rates are determined by averaging the exchange rates on each day of the month.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On July 12, 2013, the exchange rate was RMB6.1373 per US$1.00.



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B. Capitalization and Indebtedness

Not applicable.

C. Reasons
for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risks Related to Our Business

Our ability to execute our business strategy and grow on our agricultural logistics businesses and rural-urban migration and city re-development
business will depend in part on the success of the PRCs agricultural industry and the economic growth and implementation of government policies, and if the PRC agricultural industry and economy do not continue to grow at a strong rate or the
local government fails to implement its policies, our business may suffer.

We have established logistics platforms in
Tieling, Liaoning Province called China Northeast Logistics CityTieling and in Dezhou, Shandong Province called China Northeast Logistics CityDezhou, which are available to Tieling and Dezhou as well as regional
and international traders based upon an open and free market system for the mutual benefit of sellers and buyers. The logistics platforms are designed to facilitate the marketing of products provided or desired by willing buyers and sellers.
Agriculture products have risk exposure, including weather, climate and seasonal price fluctuations. Farmers are exposed to risks associated with output and input prices, production volume and risks associated with income from non-farm sources.

We have established a rural-urban migration and city re-development business in the prior year in Qiqihar, Heilongjiang
Province called China Focus CityQiqihar, which was available to Qiqihar as well as regional traders and residents which will be comprised of commercial, business, residential and governmental districts. China Focus
CityQiqihar was designed to accommodate the local governments plan to relocate the administration center of Qiqihar. Following the disposal of China Focus CityQiqihar in the fiscal year ended March 31, 2013, we will continue
to carry out this business through other locations. The rural-urban migration and city re-development business has risk exposure including change of local and national economic climates and government policies.

Our results of operation may be significantly adversely affected by these risks.

The PRC Government may introduce new green laws with environmental challenges that may have an adverse effect on our actual and
prospective tenants and customers, and therefore could adversely affect our operations.

There are few quantitative
estimates of projected environmental degradation associated with intensive agricultural production. Yet environmental cleanup will pose a competing challenge for investment in agriculture. Abundant use of coal to meet the increasing demands for
energy and rapid growth of cities with associated growth of automobiles and municipal waste have been large sources of incredibly high levels of air pollution in China.

Acid rain and water use and pollution associated with industrialization and urbanization are other major sources of water constraint. Disposal of industrial waste and organic fertilizer runoffs has been
the major source of water pollution. Yet the health impact has been generally contained due to the widespread availability of safe drinking water. Still, water pollution is increasing water shortages and increasing the cost of provision of drinking
water since this often requires that people move to safer areas.



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Chinas per capita energy demand and increased use of automobiles associated with
urbanization will critically shape the environmental prospects in China. Reduction in environmental pollution will require the PRC Government to encourage the replacement of outdated and environmentally polluting technologies, increasing energy
efficiency and emission standards comparable to those used in Europe and the U.S., and price polluting industrial inputs to reflect the cost of pollution cleanup. The PRC Government would also need to consider imposing taxes on such items as coal,
based on sulfur and ash content, investing in alternative technologies in public transport and domestic energy use, such as the greater use of gas for cooking, planning and regulating industrial, and public and household uses more effectively. Each
of these events could have a material adverse effect on our operations.

The results of our operations substantially depend on our
ability to execute our business strategy and on economic growth in the regions of our trade center projects.

The
results of our operations substantially depend on the successful execution of our business strategy to attract and retain high quality tenants, achieve market rental rates and improve the surrounding infrastructure. Our success will also depend upon
continuing growth in the economic activities region, as well as regions surrounding properties planned for future development, and our ability to compete with other similar businesses. We may face challenges in implementing our strategy, and our
ability to achieve our goals may be adversely affected by various factors, some of which are beyond our control. If we are not able to execute our business strategy or successfully compete with other similar businesses, our business, results of
operations and financial condition will be materially and adversely affected.

We may not be able to increase our revenues from or
sustain our rapid growth rate on revenues from servicing and assignments of development rights, sales or leases of properties or achieve satisfactory rental rates from period to period.

Our revenues from the sales of trade center units in fiscal year 2011 and fiscal year 2012 were HK$575.6 million and HK$758.4 million,
respectively. Our revenue from the leases of properties increased from HK$4.5 million in the fiscal year 2011 to HK$3.9 million in the fiscal year 2012 and our revenue from property management services increased from HK$1.5 million in the fiscal
year 2011 to HK$3.6 million in the fiscal year 2012. Our revenue from servicing and assignments of development rights in the fiscal year 2012 attributable to Qiqihar Discontinued Operation was HK$147.9 million. Our revenue in the fiscal year 2013
was HK$284.8 million, which includes revenue from leases of properties and property management services of HK$5.0 million and HK$6.4 million, respectively.

Each servicing and assignment of development rights was negotiated with independent third parties on a case by case basis and the premium may be significantly affected by economic climates and other
factors at the time of negotiation. We therefore cannot assure you that, in the future, we will be able to negotiate a premium that is higher than a rate we have already achieved in previous periods, nor we will be able to increase the number of
successful negotiations with independent third parties.

Our commission lease arrangements provide us the right to lease to,
and receive rental income from, third parties for the trade center units that we have sold to the purchasers of these units, for a period of approximately three years. However, if we are unable to lease the trade center units for which we have
entered into such commission lease arrangements, we will not receive any rental income from these units. Under these commission lease arrangements, we are not obligated to pay any rent during the three-year period. Such transactions are accounted
for as a sale and operating leaseback given that as part of the sale transaction, the Company disposes of substantially all risks and rewards of owning the property. In concluding that substantially all risks and rewards of owning the property have
been transferred, the Company considers the short period of the lease and the expected future rentals it could earn by letting out these properties, which are insignificant relative to the value of the property. We cannot assure you that, in the
future, we will be able to charge sufficiently high rental rates. As a result, failure to lease the trade center units or to lease the units at satisfactory rental rates would adversely affect our profits for the applicable period.



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Some of our buyers may not be able to obtain mortgages from banks and the inability to secure
financing may adversely impact the Companys stock price.

Currently the majority of our sales are settled by
one-off purchases from buyers. The remaining buyers purchase spaces in our trade centers through mortgages with banks with typically at least a 50% down payment. Due to the volume involved and the mortgage approval process, some of the buyers that
intend to purchase spaces in our trade centers through mortgage financing may not be successful in their mortgage applications for a variety of reasons. In the event that the applicants do not successfully receive mortgage financing, the Company may
not be able to recover its accounts receivable from these buyers on time, the Companys financials may be impaired, and the Companys stock price may go down.

We currently rely on China Northeast Logistics CityDezhou and China Northeast Logistics CityTieling for all of our agricultural logistics business revenues as well as our revenue from
servicing and assignments of development rights. We may be unsuccessful in expanding our projects in these cities, and if we are unsuccessful, our stock price may fall.

Although our agricultural logistics business has properties under development and planned for future development, we currently rely on China Northeast Logistics CityDezhou and China Northeast
Logistics CityTieling for our agricultural logistics business revenues and our revenue from servicing and assignments of development rights. These revenue sources may entail a higher level of risk as compared to other operators of trade
centers that have revenue-generating properties spread over several different locations or have a more diverse range of property investments. In the event of a circumstance which adversely affects the operations or business of China Northeast
Logistics CityDezhou and China Northeast Logistics CityTieling, or their attractiveness to tenants and developers, we will not have income from other properties in our agricultural logistics business and rural-urban migration and city
re-development business to mitigate any ensuing loss. A concentration of investments in only few locations will cause China Northeast Logistics CityDezhou and China Northeast Logistics CityTieling to be highly susceptible to a downturn
in Northeast Chinas agricultural, property or logistics industry. In addition, any property damage at any one of China Northeast Logistics CityDezhou and China Northeast Logistics CityTieling, resulting from fire or other causes,
or a downturn in the industrial materials, agricultural or manufacturing industries in Northeast China, may have a material adverse effect on our business, financial condition and results of operations. Further, we cannot assure that China Northeast
Logistics CityDezhou and China Northeast Logistics CityTieling will continue to attract tenants or developers to generate revenue, or that we will be successful in the future. Although we have projects planned for future development in
2013, 2014 and 2015, we cannot assure that we will be able to successfully obtain state-owned land use rights for all or any portion of land necessary for the development of these projects, complete the development of these projects or generate
revenue and net income from these projects at all or in amounts that we expect.

If we are unable to obtain the state-owned land use
rights for our properties planned for future development, we will not be able to develop these planned projects.

Our
Hong Kong subsidiary, China Metro-Rural Exchange Limited, signed a framework agreement with Tieling Municipal Government in 2006. Pursuant to this master agreement, the Tieling Municipal Government has identified land which is suitable for our
development strategy in Tieling City.

Our Hong Kong subsidiary, China Metro-Rural Development Limited, signed a framework
agreement with Dezhou Municipal Government in 2010. Pursuant to this framework agreement, the Dezhou Municipal Government has identified land which is suitable for our development strategy to develop logistics platforms called China Northeast
Logistics CityDezhou.

Our Hong Kong subsidiary, China Glorious City Development Limited, signed a framework
agreement with Hengyang Municipal Government in the fiscal year ended March 31, 2013. Pursuant to this framework agreement, the Hengyang Municipal Government has identified land which is suitable for our development strategy to develop
logistics platforms which will be called China Glorious CityHengyang.



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Our Hong Kong subsidiary, China Glorious City Investments Limited, signed a framework
agreement with Zhoukou Municipal Government in the fiscal year ended March 31, 2013. Pursuant to this framework agreement, the Zhoukou Municipal Government has identified land which is suitable for our development strategy to develop logistics
platforms which will be called China Glorious CityZhoukou.

However, the signing of these master framework
agreements do not guarantee that we will obtain the land identified therein, which will be transferred by public tender, auction or listing for sale. We cannot assure that the relevant land administration authorities will grant us the appropriate
land use rights or issue the relevant land use rights certificates in a timely manner, or at all. Moreover, we cannot assure that we will be successful in our bidding for the plots of land or that we will be able to obtain the land at our desired
price. If we are not successful in our bidding for the plots of land in the future or fail to obtain land use rights for all or any portion of such land, we may not be able to develop any future projects.

We may experience conflicts of interest with China South City Holdings Limited as a result of contracts to which certain of our directors are a
party.

In addition to their investments in the Company, Mr. Cheng Chung Hing, Ricky, and his brother,
Mr. Cheng Tai Po, own all of the outstanding shares of Accurate Gain Developments Limited and Proficient Success Limited. As of March 31, 2013, Accurate Gain Developments Limited, Proficient Success Limited, Mr. Cheng Chung Hing,
Ricky, and Mr. Cheng Tai Po owned an aggregate of 2,448,116,976 of the 6,053,564,000 outstanding shares of China South City Holdings Limited, or China South City. China South City is one of the leading developers and operators of large-scale
integrated logistics and trade centers in China, providing a comprehensive trading platform for domestic and international wholesale suppliers, buyers, manufacturers and distributors of raw materials and finished products. It sells and leases trade
center units for businesses to display and sell their products. China South City also provides their clients with one-stop convenient supply chain solutions that include a full range of facilities and services such as offices, residential,
conference and exhibition facilities, hotels and restaurants, warehousing and on-site logistics services, property management, e-commerce, banking, on-site government services in a bid to offer. Mr. Cheng Chung Hing, Ricky, is also the
Co-Founder, Co-Chairman and Executive Director of China South City. In addition, Mr. Leung Moon Lam, a director of China Metro, is a Co-Founder, Executive Director and the Chief Executive Officer of China South City.

Mr. Cheng Chung Hing, Ricky, and Mr. Leung Moon Lam are each parties to a deed of option and undertaking with China South City.
Pursuant to the deed of option and undertaking of which we are not a party, each of Mr. Cheng Chung Hing, Ricky, and Mr. Leung Moon Lam has granted to China South City an option to acquire all their respective effective interests in China
Northeast Logistics CityTieling at any time until September 30, 2014 or two years after the completion of the development of China Northeast Logistics CityTieling (whichever is later) so long as: (i) for Mr. Cheng Chung
Hing, Ricky, he remains a controlling shareholder of China South City or a director of China South City; or (ii) for Mr. Leung Moon Lam, he remains a director of China South City. China South City also has the right to buy all the
respective interests held by Mr. Cheng Chung Hing, Ricky, and/or Mr. Leung Moon Lam in China Northeast Logistics CityTieling before they are offered to any other third party. The price payable by China South City for such interests
shall be determined with reference to the fair market value of such interests as determined by an internationally recognized valuer.



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If China South City decides, after due consideration, not to exercise the option but wishes
to develop China South Citys business operations in Liaoning Province, which may result in competition between China South City and China Northeast Logistics CityTieling, China South City shall be entitled to, at any time within the
above option period, require Mr. Cheng Chung Hing, Ricky (so long as he remains a controlling shareholder of China South City or a director of China South City), and/or Mr. Leung Moon Lam (so long as he remains a director of China South
City) to dispose of all their respective interests in China Northeast Logistics CityTieling to independent third parties as soon as practicable and in any event prior to the occurrence of any competition between China South City and China
Northeast Logistics CityTieling. As a result, there may be conflicts of interest presented by Mr. Cheng Chung Hing, Rickys, and Mr. Leung Moon Lams relationships with both us and China South City, which may adversely
affect our opportunities, prospects and results of operations.

In connection with our Merger in 2010, Mr. Cheng Chung
Hing, Ricky and Mr. Leung Moon Lam sought confirmation from China South City as to whether China South City would opt to exercise its rights of first offer granted to it by both Mr. Cheng and Mr. Leung to purchase all their respective
effective interests in China Northeast Logistics CityTieling. Following that request, China South City held an extraordinary general meeting in which its independent shareholders approved, confirmed and ratified its non-exercise of the rights
of first offer granted to it by each of Mr. Cheng and Mr. Leung in relation to the Merger. While the rights of first offer no longer exist with respect to the completed Merger, the option to exercise the rights of first offer remains in
effect with respect to subsequent transfers until September 30, 2014 or two years after the completion of the development of China Northeast Logistics CityTieling (whichever is later).

We may not be able to acquire the land for the completion of additional projects with Urbanization Policy and reduction of agricultural land by PRC
Government.

According to some estimates, since 1988, capital construction in China has removed 190,000 hectares of
land from cultivation annually. Other estimates show a greater loss of land. The land lost in the Shandong and Southeastern coastal provinces is high quality land where multiple cropping is practiced, compounding the loss. Although these losses have
been offset by land reclamation of 245,000 hectares annually, reclaimed land tends to be of poorer quality. In addition, the cost of land reclamation has varied between US$2,000 to US$20,000 per hectare depending on the terrain. In the event we are
unable to obtain additional land at reasonable prices, or at all, we may not be able to complete additional projects in the future, which could have an adverse effect on our operations, financial condition and results of operations.

Three of our PRC subsidiaries, China Northeast Logistics City Co. Ltd., or China Tieling Northeast, Northeast Logistics City Dezhou Co., Ltd., or
China Dezhou Northeast, and China Glorious City (Hengyang) Co. Ltd., or China Hengyang Glorious, are wholly foreign owned enterprises, and are subject to restrictions imposed by relevant PRC laws and regulations.

China Tieling Northeast, China Dezhou Northeast and China Hengyang Glorious were approved by their respective local authorities and filed
with the PRC Ministry of Commerce as wholly foreign owned enterprises and, accordingly, are subject to regulations and restrictions applicable to foreign investment real estate enterprises, including, but not limited to, restrictions on their
ability to obtain loans within and outside of the PRC, as well as restrictions on the conversion and sale of foreign exchange into their capital accounts. In addition, China Tieling Northeast, China Dezhou Northeast and China Hengyang Glorious, as
foreign investment real estate enterprises, are required to maintain registered capital levels at 50% or more of their total investment. As of March 31, 2013, the registered total investment in China Tieling Northeast, China Dezhou Northeast
and China Hengyang Glorious were US$49.80 million, US$49.90 and US$99.99 million respectively, including registered capital of US$35.0 million, US$49.9 million and US$30.0 million, representing approximately 70%, 100% and 30% of their respectively
registered total investment. Currently, China Tieling Northeast, China Dezhou Northeast and China Hengyang Glorious, our project companies for our property planned for future development in Liaoning, Shandong and Hunan, are our only subsidiaries
categorized as foreign investment real estate enterprises.



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The cyclical nature of the real estate, agricultural and logistics industries could adversely affect
our results of operations.

Our results of operations are and will continue to be affected by the cyclical nature of
the real estate, agricultural and logistics industries in the PRC. Property values and rents are affected by, among other factors, the supply and demand of comparable properties, interest rates, inflation, the rate of economic growth, tax laws and
political and economic developments in the PRC. Our tenants and customers may be affected by the weather, climate, import and export of agricultural products and machines, price of the agricultural products and the fluctuation of the RMB. We cannot
assure that property values and rents will not decline. In addition, increased competition brought by any additional supply could adversely affect trade center rents and occupancy rates as well as sales prices for new trade center units. Our trade
centers depend upon the growing demand for industrial and agricultural materials and logistics services in China. A significant downturn in the PRC economy could adversely affect such demand, as well as the demand by suppliers for trade center
units.

Our results of operations may fluctuate from period to period due to variations in the proceeds received from sales and leases
of trade center units and the fair value of our investment properties.

Our results of operations tend to fluctuate
from period to period depending upon the proportion and gross floor area, or GFA, of trade center units that are sold or leased, and when our projects in various stages of development are completed. We generally sell trade center units in the
initial stages following completion of a project subject to the then-current market conditions. The number of trade centers that we are able to develop or complete during any given period is limited due to the substantial capital requirements for
land acquisition and construction, as well as the lengthy development periods required before positive cash flows may be generated. In addition, the trade centers that we have developed or that are under development are large-scale, integrated,
multi-phase projects to be developed over the course of several years. The selling prices and rental rates of trade center units are also subject to fluctuation, which may impact our sales proceeds and rental income and, accordingly, our revenues
for any given period. In this regard, rental rates also vary among trade centers, according to market demand and dates of completion of the various trade centers, which affects rental rates because we generally offer tenants of newly completed trade
center units preferential rental rates and rent-free periods in order to increase occupancy rates of these trade centers. Our rental rates for future periods may also be affected by similar incentive plans, and may be adversely affected by cyclical
changes in market demand.

Our results of operations may also fluctuate due to changes in the fair value of our trade center
units and other facilities retained for rental income and capital appreciation of investment properties. We reassess the fair value of our investment properties each year. Property valuation typically requires the use of certain bases and
assumptions with respect to a variety of factors, including supply and demand of comparable properties, the rate of economic growth in the location of the property, interest rates, inflation and political and economic developments in the PRC.

Our operations are subject to extensive governmental regulations, and we are susceptible to changes in policies related to the real
estate, agricultural and logistics industries in the PRC.

In order to develop and operate a trade center development,
we must obtain various permits, licenses, certificates and other approvals from the relevant administrative authorities at various stages of our trade center development, including land use rights documents, planning permits, construction permits
and certificates or confirmation of completion and acceptance. Each approval is dependent on the satisfaction of certain conditions.



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We cannot assure that we will be able to fulfill the pre-conditions necessary to obtain
required governmental approvals, or that we will be able to adapt to new laws, regulations or policies that may come into effect from time to time with respect to the real estate, agricultural or logistics industries in general or the particular
processes with respect to the grant of approvals in China. There may also be delays on the part of relevant administrative bodies in reviewing our applications and granting approvals. We may also be subject to periodic delays in our trade center
development projects due to building moratoria in the areas in which it operates or plans to operate. If we are unable to obtain, or experience material delays in obtaining, the requisite governmental approvals, or if a building moratorium is
implemented at one or more of our project sites, the development and sale of our projects could be substantially disrupted, which would result in a material adverse effect on our business, financial condition and results of operations. Further, we
cannot assure that the implementation of laws and regulations by relevant authorities, or the interpretation or enforcement of such laws and regulations, will not cause us to incur additional costs, which could have a material adverse effect on our
business, financial condition and results of operations.

We face competition from other agricultural logistics and industrial materials
trade centers.

Our China Northeast Logistics CityTieling and China Northeast Logistics CityDezhou may face
competition from other agricultural and industrial materials trade centers in China. The greatest concentration of industrial materials trade centers in China is in Pearl River Delta, Yangtze River Delta and the Manchuria area. The agricultural,
industrial materials and finished goods featured at these competing trade centers include agricultural products, building materials, automobile and accessories and small goods. In addition, there may be an increase in supply of industrial materials
trade centers in Guangdong and elsewhere in China, such as Shenzhen and Guangzhou, in the future.

The greatest concentration
of agricultural trade centers in China is in Manchuria and Shanghai. The agricultural products for which these trade centers compete include raw materials, corns, wheat, fertilizers, seeds and pesticides, agricultural machinery and tools, which are
concentrated in Manchuria area. The Shanghai Agriculture Equity Exchange (SAEE) was established on September 8, 2009, and the management anticipates that similar exchanges will be established in the future.

This competition may affect our ability to attract and retain tenants and buyers and may reduce the rents or prices we are able to
charge. We cannot assure that we will prevail in competing with other trade center operators. Our inability to compete effectively could adversely affect our business, financial condition and results of operations.

Demand for our trade centers may be negatively affected by uncertainty regarding the recovery of the global economy, which may have a material
adverse effect on our business, results of operations and financial condition.

Uncertainty regarding the recovery of
the global economy may diminish the demand from many parts of the world and increase volatility in credit and equity markets. If these conditions persist or worsen, regardless of any efforts by various governmental authorities to stimulate the
economy, they may adversely affect the availability, terms and cost of borrowings in the future, including financing necessary to complete our properties planned for future development, as well as the demand for our trade center units. Because our
operations are capital intensive, and rely principally on cash flows from operations and bank borrowings, we cannot assure that the global economic downturn will not have a material adverse effect on our business, results of operations, financial
condition and cash flow.

The timing and nature of any recovery in the global economy remain uncertain, and there can be no
assurance that market conditions will improve in the near future or that our results will not be adversely affected. Furthermore, if economic conditions become worse, the development of our properties could be adversely affected and materially
delayed.



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We may not be able to renew or re-obtain qualification certificates as real estate developers upon
expiration of our current qualification certificate, which could adversely affect our business.

Our subsidiary located
in Tieling, China Tieling Northeast, is required to hold a qualification certificate which is normally granted to real estate developers. The Tieling Urban Construction Comprehensive Development Office has previously granted an interim qualification
certificate to China Tieling Northeast confirming that China Tieling Northeast is allowed to undertake the development of properties in the PRC. On August 6, 2009, China Tieling Northeast obtained a renewal of the interim qualification
certificate. On December 22, 2010, China Tieling Northeast obtained from the Liaoning Housing and Urban Rural Construction Bureau a Qualification Certificate for Real Estate Development Enterprise in Grade III with an effective term until
December 21, 2013. After the expiration of its current qualification certificate, China Tieling Northeast will need to renew this qualification certificate or apply for a qualification certificate in a higher grade.

Two of our subsidiaries located in Dezhou, China Dezhou Northeast and Dezhou Northeast City Property Co., Ltd. (a wholly-owned subsidiary
of China Dezhou Northeast), are also required to hold qualification certificates as a real estate developer in mainland China. The Dezhou Housing and Urban Rural Construction Bureau has granted interim qualification certificates to China Dezhou
Northeast and Dezhou Northeast City Property Co., Ltd. confirming that China Dezhou Northeast and Dezhou Northeast City Property Co., Ltd. are allowed to undertake the development of properties in the PRC. The interim qualification certificate of
China Dezhou Northeast will expire on September 30, 2013 and the interim qualification certificate of Dezhou Northeast City Property Co., Ltd. has expired on June 30, 2013 and is in the process of applying to renew the qualification
certificate. Upon expiration of the interim qualification certificate, China Dezhou Northeast will be required to renew its qualification certificate.

We cannot assure that these entities will be able to renew the current qualification certificates or obtain a new qualification certificates in a timely manner, or at all. If these entities or other
project companies for our future projects are unable to renew the current qualification certificates or obtain new qualification certificates, they may not be permitted by the PRC Government to continue to engage in property development activities
associated with the development of their integrated logistics trade center business, which would materially and adversely affect our business, results of operations and financial condition.

The appraisal value of our properties may materially differ from the value we could receive in an actual sales transaction.

Property valuations include a subjective determination of certain factors relating to the properties, such as their relative market
position, their financial and competitive strengths, location and their physical condition. Further, the valuation of the properties is not an indication of, and does not guarantee, a sale price corresponding to such valuation, currently or in the
future. Unforeseen changes in a particular integrated logistics and trade center development or in general or local economic conditions could affect the value of our properties, and the resulting amounts we obtain may be materially lower than the
amount set forth in the valuations.

Potential liability for environmental problems could result in substantial costs.

We are subject to a variety of environmental laws and regulations during the construction of our development projects.
The particular environmental laws and regulations which apply to any given project development site vary greatly according to the sites location, the sites environmental condition, the present and former uses of the site, as well as
adjoining properties. Environmental laws and conditions may result in project delays, may cause us to incur substantial compliance and other costs and can prohibit or severely restrict project development activity in environmentally sensitive
regions or areas. In addition, we cannot predict the impact that unforeseeable environmental contingencies or new or changed laws or regulations may have on us or our trade center projects.



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As required by PRC law, independent environmental consultants have conducted environmental
impact assessments at all of our construction projects. Although the environmental investigations conducted to date have not revealed any environmental liability that would be expected to have a material adverse effect on our business, financial
condition or results of operations, it is possible that these investigations did not reveal all environmental liabilities or their extent, and there may be material environmental liabilities of which we are unaware. Upon completion of each project,
the relevant environmental authorities will inspect the site to ensure compliance with all applicable environmental standards and prepare a report to confirm such compliance. We cannot assure that such internal control procedures will be effective
in preventing non-compliance. If any portion of the project is found to be non-compliant with relevant environmental standards or if we are unable to obtain necessary licenses for releasing contaminants, it may be subject to suspension of a portion
of our operations as well as fines and penalties.

Sales of our properties are subject to land appreciation tax and income tax.

Our sales of trade center units and residential properties are subject to land appreciation tax in the PRC. In
addition, sales of properties in our properties planned for future development may be subject to land appreciation tax. Land appreciation tax is payable on the gain, representing the balance of the proceeds received on such sale, after deducting
various prescribed items, including sums paid for acquisition of land use rights, the direct costs and expenses of the development of the land and construction of buildings and supplementary facilities or the appraised price of any previous
buildings and structures existing on the land and taxes related to the assignment of the real property. Under applicable PRC laws and regulations, land appreciation tax is chargeable on the gain at progressive rates ranging from 30% to 60%. Certain
exemptions may be available for the sale of ordinary residential properties if the appreciation of land value does not exceed 20% of the total deductible items as provided in the relevant tax laws.

On December 28, 2006, the State Administration of Taxation issued the Notice on Administration of the Settlement of Land
Appreciation Tax of Property Development Enterprises, or the LAT Notice, which became effective on February 1, 2007. The LAT Notice provides that land appreciation tax should be settled in stages during a real estate development project and
sets forth, among other things, methods of calculating land appreciation tax and a time frame for settlement of land appreciation tax. We have accrued all land appreciation tax payable on our property sales and transfers in accordance with the
progressive rates specified in relevant tax laws mentioned above. However, the relevant tax authorities have yet to commence the assessment of our land appreciation taxes in order to collect the additional tax payments from it, and, therefore, we
have not made the additional payments of land appreciation tax during the fiscal years ended March 31, 2011 and 2012 and the current period. We have paid such land appreciation tax expenses based on the total sales amount of the contracts it
entered into with purchasers of trade center units for each fiscal year at the rate of 2% set by the local municipal tax authorities. In fiscal years ended March 31, 2011 and 2012, we paid land appreciation tax to the local municipal tax
authorities in the amounts of HK$11.9 million and HK$18.8 million, respectively. In fiscal years ended March 31, 2011 and 2012, we made provisions for land appreciation in the amounts of HK$45.9 million and HK$27.8 million,respectively. In the fiscal year ended March 31, 2013, we paid land appreciation tax to the local municipal tax authorities in the amount of HK$18.6 million, and we made a write-back of provision in the amount of HK$1.4 million. Our cash
flows and financial condition will be affected if the PRC tax authorities do proceed to collect the land appreciation tax for which we have made provisions. In addition, provisioning for land appreciation tax requires our management to use a
significant amount of judgment with respect to the appreciation of land value and the allowability of deductible items for income tax purposes. If the land appreciation tax provisions we have made are substantially lower than the actual land
appreciation tax amounts assessed by the tax authorities, our results of operations and cash flows will be materially and adversely affected.



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We may be required to forfeit land to be developed if it does not comply with the terms of our land
grant contract.

Under PRC laws, if a developer fails to develop land according to the terms of its land grant contract
(including those relating to payment of fees, land use or the time for commencement and completion of the development of the land), the relevant land administration authorities may issue a warning to or impose a penalty on the developer or require
the developer to forfeit the land. Further, if the development is delayed for longer than one year, the developer may be restricted from bidding for any new land. Thus, if we were to delay development on the lands acquired for China Northeast
Logistics CityTieling and China Northeast Logistics CityDezhou (and if these restrictions were applied to us), we may be restricted from bidding for other land designated to us for development. We have not received such a warning or been
subject to such a penalty or threat of forfeiture in the past. However, we cannot assure that circumstances leading to possible forfeiture of land or delays in the completion of the above projects will not occur in the future.

In addition, although the local government is responsible in the master agreement for relocating existing residents on the land and
associated relocation expenses, the local government may experience delays in its negotiation process with the original occupants of the land which may result in delays in the development of any future properties by us. With respect to any future
properties of ours, we will be responsible for land payments only following the successful relocation of existing residents by and at the cost of the local government.

We may not be able to commence or complete our properties planned for future real estate projects on time or within budget.

Our real estate projects involve acquiring land use rights for large plots of land, many of which have existing structures and residents,
from municipal and provincial governments of the PRC. Other properties we may develop in the future may also involve similar circumstances. Acquiring these development rights, converting them into land use rights and committing the financial and
managerial resources to develop the land involve significant risks. Before a real estate development project generates any revenue, we must make a variety of material expenditures, including to acquire the development rights and to construct the
required infrastructure.

It generally takes several years for a planned real estate project to generate revenue, and we
cannot assure you that our real estate projects will achieve positive cash flow. As a result, our current and future real estate development activities may be exposed to the following risks:



| |  |  | we may lease or sell developed properties at below expected rental rates or sales prices, and we may experience delays in the sale or leasing of
developed properties;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may be unable to complete construction of our real estate projects on schedule, or on budget, due to a variety of factors including shortages of
materials, equipment, technical skills and labor, adverse weather conditions, natural disasters, labor disputes, disputes with contractors and sub-contractors, accidents, changes in government priorities and policies, changes in market conditions,
delays in the relocation process, delays in obtaining the requisite licenses, permits and approvals from the relevant authorities and other problems and circumstances, resulting in increased debt service expense and construction costs;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | occupancy rates, rents and sales prices at our real estate properties may fluctuate depending on a number of factors, including market and economic
conditions, and may result in our investments being less profitable than we expected or not profitable at all;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the services rendered by our contractors may not always meet our quality requirements, and negligence or poor work quality by any contractors may
result in defects in our buildings or trade center units, which could in turn cause us to suffer financial losses, harm our reputation or expose us to third-party claims;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | since it normally takes several years for us to complete a real estate project, we expect that we will be affected by increases in the costs of
construction materials and the costs of other goods and services, most significantly labor costs;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may delay, or change the structure of, real estate projects and as a result we may lose deposits paid to participate in the land tender process or
fail to recover expenses already incurred; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may be unable to obtain, or face delays in obtaining, required zoning, land use, building, occupancy, and other governmental permits, rights and
authorizations, which could result in increased costs with respect to a project.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The occurrence of any of
these circumstances, most of which are beyond our control, could delay the completion of our real estate projects, which could adversely affect our business, financial condition and results of operations, which in turn could cause the market value
of our shares to decline.

We may not be able to obtain adequate funding to our property under development or any properties planned for
future development.

To date, for investment activities, we have relied primarily on bank borrowings and other loans
for our funding and liquidity requirements; and to a lesser extent on cash inflows from operations. For further information on our available funding and liquidity resources, please see Managements Discussion and Analysis of Financial
Condition and Results of OperationsLiquidity and Capital Resources. As of March 31, 2013, we had net current assets of HK$1,000.8 million and the outstanding balance of our total indebtedness (including trade payables, other
payables and accruals, excluding shareholders loans and loans from a non-controlling interest) amounted approximately HK$1,274.1 million, which included primarily bank and other borrowings, trade payables, other payables and accruals and
convertible bonds in the amounts of HK$584.0 million, HK$383.4 million and HK$306.7 million, respectively. Approximately HK$286.7 million of our total borrowings were due within one year or on demand and approximately HK$297.3 million were due
within a period of more than one year but not exceeding five years. The projected total investment for China Northeast Logistics CityTieling and China Northeast Logistics CityDezhou could be up to an amount of approximately US$2 billion
and US$5 billion, respectively.

We also have available cash flow from our operations, but such amounts are not likely to be
sufficient to fund our future development requirements. Due to the nature of our trade center development business, it may from time to time experience periods of net cash outflows, when imbalances may arise between the timing of cash inflows from
rentals and sales of trade center units and our cash outflows relating to the construction of properties and purchases of state-owned land use rights. We may require additional bank borrowings and, if necessary, offerings of debt and equity
securities for a significant portion of our liquidity requirements to finance the construction costs of these projects, which are expected to be completed in stages. We cannot assure that we will be able to obtain additional financing at competitive
costs, or at all. In addition, although we have not experienced any difficulties in the past, we may not be able to renew our existing loan facilities granted by banks in the PRC on satisfactory terms, or at all. If we are unable to obtain necessary
additional financing or renew existing loan facilities, we will not be able to complete future projects, and our business development could be severely disrupted.

We cannot assure that we will be able to obtain sufficient funding to finance intended purchases of land use rights, develop future projects or meet other capital needs as and when required at a
commercially reasonable cost or at all. Failure to obtain adequate funding at a commercially reasonable cost may limit our ability to commence new projects or to continue the development of existing projects or may increase our borrowing costs.



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In previous years, the PRC Government introduced a number of measures and regulations to
restrict the ability of property developers to raise capital through external financing and other methods. Because the local authorities treat our project companies, as real property developers, we have been subject to these measures and regulations
with respect to China Tieling Northeast, China Dezhou Northeast and Dezhou Northeast City Property Co., Ltd. Additionally, the PRC Government has also recently introduced a number of restrictions on individuals purchases of residential
properties. These restrictions may affect our sales of residential properties to individual customers.

We may incur substantial
additional indebtedness in the future.

As of March 31, 2013, our debt-to-equity ratio (total bank and other
borrowings and convertible bonds/total equity) was approximately 74.9%. We may incur additional indebtedness to complete additional projects and grow our supporting infrastructure, and the amount of such additional indebtedness may be substantial.
We will face more risks if we or our subsidiaries incur additional debt. For example, the additional debt could:



| |  |  | limit our ability to satisfy our obligations under our borrowings;
| | - |  | ------------------------------------------------------------------



| |  |  | increase our vulnerability to adverse general economic and industry conditions;
| | - |  | -------------------------------------------------------------------------------



| |  |  | require us to dedicate a substantial portion of our cash flow from operations to servicing and repaying our indebtedness, thereby reducing the
availability of our cash flow to fund project developments, working capital, capital expenditures and other general corporate purposes;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for or reacting to changes in our businesses and the industry in which we operate;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | restrict us from making strategic acquisitions or exploring business opportunities;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | place us at a competitive disadvantage compared to our competitors that have less debt;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | limit, along with the restrictive covenants of our indebtedness, among other things, our ability to borrow additional funds or make guarantees; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increase the cost of additional financing.
| | - |  | ------------------------------------------

Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance, which will be affected by then prevailing economic
conditions and financial, business and other factors, many of which are beyond our control. We anticipate that our operating cash flow will be sufficient to meet our anticipated operating expenses and to service our debt obligations as they become
due. However, we may not be able to generate sufficient cash flow for these purposes. If we are unable to service our total indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing or delaying
capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital. These strategies may not be implemented on satisfactory terms, if at all.

If we are unable to comply with the restrictions and covenants in our loan agreements, there could be a default under the terms of these
agreements, which could cause repayment of our debt to be accelerated.

The bank loan agreements of our PRC
subsidiaries contain a number of significant restrictive covenants. These covenants restrict, among other things, our PRC subsidiaries ability and the ability of their subsidiaries to incur additional debt or make guarantees, incur liens, pay
dividends or distributions on its or its subsidiaries capital stock, prepay certain indebtedness, sell or transfer property or assets, make investments and merge or consolidate with another company.



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If our PRC subsidiaries are unable to comply with the restrictions and covenants in its
current or future loan and other agreements, there could be a default under the terms of these agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to our PRC subsidiaries,
accelerate the outstanding debt and/or terminate the agreements, as the case may be. If the underlying obligation relates to our PRC subsidiaries secured borrowings, the lender can enforce the mortgages over the property securing the defaulted
loan. If any of these events occur, our PRC subsidiaries cannot assure that their assets and cash flows would be sufficient to repay all of their indebtedness, or that they would be able to obtain alternative financing on terms that are favorable or
acceptable to our PRC subsidiaries.

Our PRC subsidiaries are not currently in breach of any of these covenants.

In addition, the terms and conditions of convertible bonds we issued during the fiscal year ended March 31, 2013, contained a number
of significant restrictive covenants as well as financial covenants. These covenants restricted our ability and our non-PRC incorporated subsidiaries ability to incur additional secured debts, incur liens, pay dividends distribution on its
capital stock, prepay certain indebtedness, sell or transfer assets and merge or consolidate with another company.

If we are
unable to comply with these restrictions and covenants, there could be a default under the terms of these convertible bonds. In the event of default under these convertible bonds, the holder of the convertible bonds could accelerate the repayment of
these convertible bonds. If this occurs, we cannot assure that our assets and cash flows would be sufficient to repay all of our indebtedness, or that we would be able to obtain alternative financing on terms that are favorable or acceptable to us.

We have obtained a wavier from the holders of these convertible bonds in respect of any non-compliance of covenants during
the fiscal year ended March 31, 2013.

We depend on China Metro-Rural Limiteds founding shareholders, one of whom is also one
of our directors, and our business and growth prospects may be severely disrupted if we lose the support and service of all or any one of them.

Our success and growth depends on the efforts of the founding shareholders of the China Metro-Rural Limited (Mr. Cheng Chung Hing, Ricky and Mr. Leung Moon Lam), one of whom (Mr. Cheng Chung Hing,
Ricky) is also one of our directors. These founding shareholders are critical to our success because of their vision for us and their industry knowledge and relationships. If we were to lose their support, our relationships with bankers, government
officials, potential tenants and industry personnel could be adversely affected. We may not be able to replace these founding shareholders easily or at all. As a result, the loss of any of these founding shareholders, whether because any one or more
of them become unwilling to continue in their present capacities with us, develop disagreements between each other, leave to join a competitor or form a competing business, or other reasons, would severely disrupt our business and growth prospects.

We depend on our senior management and other important staff members, as well as on our ability to attract and retain qualified
management personnel.

We depend on the efforts and skill of our senior management and other important staff members.
As a result, our future success depends to a significant extent on the continuing service and coordination of these individuals, who are not obligated to remain employed with us.

Our success also depends on our ability to identify, hire, train and retain suitably skilled and qualified employees with the requisite
industry expertise. The loss of any member of our senior management team and our other employees could have a material adverse effect on our business if we are unable to find suitable replacements in a timely manner. Competition for such personnel
is intense, and any failure to recruit and retain the necessary personnel or the loss of a significant number of employees at any time could harm our business and prospects.



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We may suffer losses caused by natural disasters or accidents and these losses may not be covered by
insurance.

Our business may be adversely affected due to the occurrence of typhoons, severe storms, floods, wildfires,
earthquakes or other natural disasters, or accidents (including fire or explosion) or similar events in the areas where we operate our trade centers. We do not carry any property insurance. Should a loss occur, we could lose all or a portion of the
capital invested in a property, as well as the anticipated future revenues from the property. Nevertheless, we would remain obligated for any bank borrowings or other financial obligations related to the property. It is also possible that if we were
to obtain insurance, third-party insurance carriers would not be able to maintain reinsurance sufficient to cover any losses that may be incurred. Any material uninsured loss could materially and adversely affect our business, financial condition
and results of operations.

We are a holding company and rely on dividends paid by our subsidiaries for our funding requirements.

As a holding company, we depend upon the receipt of dividends from our subsidiaries to pay dividends to our
shareholders and satisfy our obligations. The ability of our direct and indirect subsidiaries to pay dividends to their shareholders (including us) is subject to relevant shareholders agreements or constitutional documents and restrictions
contained in the loan agreements of such subsidiaries or other instruments.

In addition, the ability of our subsidiaries in
the PRC to pay dividends to their shareholders is subject to the requirements of PRC law. PRC regulations permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations.
Dividends may not be paid until cumulative prior years losses are made up. As a result, if our subsidiaries in the PRC incur losses, such losses may impair their ability to pay dividends or other distributions to us, which would restrict our
ability to pay dividends and to service our indebtedness. Our PRC subsidiaries are required to make monthly contributions to the social security plan and the housing reserve fund maintained for their employees, consisting of pension benefits,
personal injury insurance, maternity insurance and medical and unemployment benefits. In addition, some of our PRC subsidiaries may be required to set aside at least 10% of its after-tax profits based on PRC accounting standards in accordance with
their articles of association and PRC law each year to its PRC statutory reserve until the cumulative amount of such reserve reaches 50% of its registered capital. As of March 31, 2013, we have PRC statutory reserve of approximately
HK$114,393,000 for our PRC subsidiaries.

Any occurrence of avian influenza or other widespread public health problems could adversely
affect our business, financial condition and results of operations.

In December 2003, January 2004 and March
2013, there were media reports regarding the spread of the avian influenza, among birds and in particular poultry, as well as some isolated cases in countries outside Hong Kong and PRC of transmission of the virus to humans. We cannot assure that
there will not be a serious outbreak of a contagious disease in the PRC in the future. A renewed outbreak of SARS, pandemic avian influenza or other widespread public health problems in the PRC could have a material adverse effect on the PRC economy
and our property market generally, and on our business, financial condition and results of operations.



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Restrictions on foreign currency exchange may limit our ability to obtain and remit foreign currency
or to utilize our revenues effectively.

We currently receive substantially all of our revenues in Renminbi through our
ownership and operation of China Northeast Logistics CityDezhou and China Northeast Logistics CityTieling. However, certain of our expenses, including labor costs for our employees in Hong Kong, rental expenses for our office space in
Hong Kong and advertising expenses for advertising in Hong Kong and overseas media are denominated in foreign currencies, mostly Hong Kong dollars and U.S. dollars. As a result, any restriction on currency exchange may limit our ability to use
revenues generated in Renminbi to pay our foreign currency denominated expenses and service and repay our foreign currency denominated indebtedness. Our ability to satisfy our foreign currency denominated debt obligations depends upon the ability of
our subsidiaries incorporated in the PRC to obtain and remit sufficient foreign currency. Our subsidiaries incorporated in the PRC must present certain documents to the designated foreign exchange bank before they can obtain and remit foreign
currency out of the PRC (including, in the case of dividends, evidence that the relevant PRC taxes have been paid and, in the case of shareholder loans, evidence of the registration of the loan with the relevant local office of the State
Administration for Foreign Exchange). We cannot assure that our subsidiaries incorporated in the PRC will not encounter difficulty in the future when undertaking these activities. If our PRC subsidiaries are unable to remit dividends to us, we would
be unable to make payments of interest and/or principal on our foreign currency denominated indebtedness.

We have exposure to general
real estate investment risks.

Real estate investments, like many other types of long-term investments, have
historically experienced significant fluctuations in value, and specific market conditions and cycles may result in occasional or permanent reductions in the value of our investments. Property cash flows and the marketability and value of real
property will depend on many factors beyond our control, including, without limitation:



| |  |  | adverse changes in international, national, regional and local economic and market conditions;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | changes in interest rates or financial markets;
| | - |  | -----------------------------------------------



| |  |  | fluctuating local real estate conditions and changes in local laws and regulations;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | changes or promulgation and enforcement of governmental regulations relating to land use and zoning, environmental, occupational and safety matters;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in real estate tax rates and other operating expenses;
| | - |  | --------------------------------------------------------------



| |  |  | existence of uninsured or uninsurable risks; and
| | - |  | ------------------------------------------------



| |  |  | natural disasters, acts of war or terrorism.
| | - |  | --------------------------------------------

The cyclical nature of the real estate industry could adversely affect our results of operations.

The results of our real estate operations are affected by the cyclical nature of the real estate industry in the PRC. Property values and rents are affected by, among other factors, supply and demand of
comparable properties, interest rates, unemployment rates, inflation, the rate of economic growth, tax laws and political and economic developments in the PRC. We cannot assure you that property values and rents will not decline in the future. A
significant downturn in demand for our units would result in a material adverse effect on our business, financial condition and results of operations.



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Our operations are subject to extensive governmental regulations, and we are susceptible to changes in
policies related to the real estate market in the PRC.

In order to develop and operate our projects, we must obtain
various permits, licenses, certificates and other approvals from the relevant administrative authorities at various stages of development, including land use rights documents, planning permits, construction permits, and certificates or confirmations
of completion and acceptance. Each approval is dependent on the satisfaction of certain pre-conditions. We cannot assure you that we will be able to fulfill the pre-conditions necessary to obtain required governmental approvals, or that we will be
able to adapt to new laws, regulations or policies that may come into effect from time to time with respect to the real estate market in general or the particular processes with respect to the grant of approvals in China. There may also be delays on
the part of relevant administrative bodies in reviewing our applications and granting approvals. If we fail to obtain, or experience material delays in obtaining, the requisite governmental approvals, the development, sale and lease of our projects
could be substantially disrupted, which would result in a material adverse effect on our business, financial condition and results of operations.

Our principal shareholder has substantial control over us and can affect decisions made by our shareholders.

As of July 1, 2013, our principal shareholder, Mr. Cheng Chung Hing, Ricky, our director, together with his affiliates, controls 37,338,104 of our outstanding ordinary shares and 100,000 of our
outstanding preferred shares, which together represented 40,529,329, or 52.82%, of our outstanding voting shares.

Mr. Cheng Chung Hing, Ricky has the requisite voting power to exert substantial influence over actions which require shareholder
approval and generally to direct our affairs, including decisions regarding the election of directors, mergers, consolidations and the sale of all or substantially all of our assets and other significant corporate actions. This concentration of
ownership may discourage, delay or prevent a change in control of the Company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of the Company and might reduce the price of our shares.
These actions may be taken even if they are opposed by our other shareholders.

Because we do not expect to pay dividends in the
foreseeable future, you must rely on the appreciation in price of our ordinary shares for a return on your investment.

Except for the Distribution, we have never declared or paid any dividends on our ordinary shares. We intend to retain any future earnings
to finance the growth and development of our business and do not anticipate paying any dividends in the foreseeable future. Any dividends paid will be solely at the discretion of our Board of Directors, and the amount of any dividends will depend on
various factors, including, without limitation, market conditions, our strategic plans and prospects, our business opportunities, our financial condition and operating results, working capital requirements and anticipated cash needs, contractual
restrictions and obligations, payments by subsidiaries of cash dividends to us and legal, tax and regulatory restrictions, and other factors that our directors deem significant from time to time. Accordingly, the return on your investment in us will
likely depend entirely upon any future price appreciation of our ordinary shares. Our ordinary shares may not appreciate in value or maintain the price at which you purchased units. You may not realize a return on your investment and may even lose
the entire amount of your investment.

It may be difficult to effect service of process upon us or our directors or to enforce any
judgments obtained from non-PRC courts, and it therefore may be difficult for you to resolve any grievance you have with us.

Our operations are substantially conducted and substantially all of our assets are located within China. Our directors reside in Hong Kong and China, where substantially all of their assets are located.
Investors may experience difficulties in effecting service of process upon us, our directors or our senior management in China and it may not be possible to effect such service of process outside China. In addition, our PRC legal counsel has advised
us that China does not have treaties with the United States and many other countries providing for reciprocal recognition and enforcement of court judgments. Therefore, recognition and enforcement in China of judgments of a court in the United
States or certain other jurisdictions may be difficult or impossible.



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The nuclear crisis in Japan in March 2011 may have a negative impact to our logistics cities in China.

There may be chances that large amount of radioactive substances being released from the Fukushima Daichi Nuclear
Plant in Japan to China, where our two projects in Shandong and Liaoning may be subject to radiation exposure. If there is a massive release of radiation resulting from complete meltdown of the Fuksushima Daichi Nuclear Plant, the radiation would
have contaminated the areas up to several hundred kilometers from the nuclear reactor. The distance between Fukushima and Shandong Province is approximately 1,896 kilometres (1,178 miles), where China Northeast Logistics CityDezhou is located,
the distance between Fukushima and Liaoning Province is approximately 1,000 kilometers (621 miles), where China Northeast Logistics CityTieling is located.

China has deployed radiation test vehicles around major cities in China since the Fukushima nuclear crisis, especially the coastal areas close to Japan. The Ministry of Environmental Protection is
responsible for monitoring the situation and has updated analyses daily at www.mep.gov.cn.

Risks Related to Our Ordinary Shares

The market price and trading volume of our ordinary shares may be volatile.

The market price of our ordinary shares may become highly volatile and subject to wide fluctuations. In addition, trading volume in our
ordinary shares may fluctuate and cause significant price variations to occur. Some of the factors that could result in fluctuations in the price or trading volume of our ordinary shares include, among other things: actual or anticipated changes in
our current or future financial performance and general market and economic conditions. We cannot assure you that the market price of our ordinary shares will not fluctuate or decline significantly.

Future sales of our ordinary shares could have an adverse effect on our stock price.

We cannot predict the effect, if any, of future sales of ordinary shares, or the availability of shares for future sales, on the market
price of our ordinary shares. Sales of substantial amounts of ordinary shares, or the perception that such sales could occur, may adversely affect prevailing market prices for our ordinary shares. In addition, a large supply of saleable ordinary
shares, such as those underlying warrants issued in our May 2011 offering and August 2011 placements and those underlying convertible bonds and warrants issued in our August 2012 placement or other shares eligible for future sale, may adversely
affect the prevailing market prices for our ordinary shares.

Our securities offering in May 2011 and our convertible bonds issued in
August 2012 could prevent the acquisition or sale of our business.

The exercise price of the warrants issued in our
offering in May 2011 and the convertible bonds and warrants issued in our August 2012 placement may be decreased if we issue securities below certain prices or if we fail to meet certain financial targets set forth in the warrants and convertible
bonds. The exercise of the convertible bonds and warrants could further dilute the holdings of existing shareholders.

In
addition, the issuance of our ordinary shares to the investors upon exercise of the offered warrants and convertible bonds could have an anti-takeover effect because such issuance will make it more difficult for, or discourage an attempt by, a party
to obtain control of the Company by tender offer or other means. Such issuance of ordinary shares will increase the number of shares entitled to vote, increase the number of votes required to approve a change of control of the Company, and dilute
the interest of a party attempting to obtain control of the Company.



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Risks Relating to Doing Business in the PRC

Economic, political and social conditions, as well as government policies in China could have a material adverse effect on our business, results of operations and financial condition.

All of our agricultural logistics business is conducted in, and all of our agricultural logistics revenues are derived
from China. The economy of China differs from the economies of most developed countries in many respects, including, but not limited to: structure; governmental involvement; level of development; growth rate of gross domestic product, or GDP;
capital re-investment; allocation of resources; control of foreign currency; and rate of inflation. The economy of China has been transitioning from a planned economy to a market-oriented economy. Although in recent years the PRC Government has
implemented measures emphasizing the utilization of market forces for economic reform, a substantial portion of productive assets in China is still owned by the PRC Government. In addition, the PRC Government continues to play a significant role in
regulating industries by imposing industrial policies. It also exercises significant control over Chinas economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and
providing preferential treatment to particular industries or companies.

Policies and other measures taken by the PRC
Government to regulate the economy could have a significant negative impact on economic conditions in China, with a resulting negative impact on our business. For example, our business, results of operations and financial condition may be materially
and adversely affected by:



| |  |  | new laws and regulations and the interpretations of those laws and regulations;
| | - |  | -------------------------------------------------------------------------------



| |  |  | the introduction of measures to control inflation or stimulate growth;
| | - |  | ----------------------------------------------------------------------



| |  |  | changes in the rate or method of taxation; or
| | - |  | ---------------------------------------------



| |  |  | the imposition of additional restrictions on currency conversions and remittances abroad.
| | - |  | -----------------------------------------------------------------------------------------

Previous macroeconomic measures taken by the PRC Government to manage economic growth could have adverse economic consequences, and recent fiscal
stimulus measures may not be successful in offsetting a decline in the rate of economic growth in the PRC.

In previous
years, the PRC Government had periodically taken measures to slow economic growth to a more manageable level, in response to concerns about Chinas historical high growth rate in industrial production, bank credit, fixed investment and money
supply. These measures have included macroeconomic measures to control perceived over investment in the real property market. More recently, along with a decline in economic growth worldwide, the rate of growth of the PRC economy has slowed down. In
2012, Chinas real GDP grew by a rate of an estimated 7.75% as compared to a rate of 9.2% and 10.3% in 2011 and 2010, respectively. In response to the recent global economic downturn, and a resulting slowdown in the PRC economy, the PRC
Government has adopted increasingly flexible macroeconomic policies, including an announced fiscal stimulus package, aimed at offsetting the slowdown brought by the financial crisis. These policies include measures specifically designed to encourage
development of the domestic property market, which represents a reversal on policies implemented since 2003 designed to tighten control on the real property market. However, we cannot assure you that the PRC Governments fiscal stimulus package
will be successful in offsetting the slowdown resulting from the current economic downturn and deterioration in the global credit markets, or that restrictive measures already in place will not adversely affect our business.



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The PRC legal system has inherent uncertainties that could negatively impact our business.

Our business is operated through, and our revenues are generated by, our operating subsidiaries in the PRC.
Substantially all of our assets are located in the PRC. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the PRC Government has issued laws and
regulations dealing with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published
cases and their nonbinding nature, interpretation and enforcement of these laws and regulations involve uncertainties. In addition, as the legal system in China develops, changes in such laws and regulations, their interpretation or their
enforcement may have a negative effect on our business, financial condition and results of operations.

We are subject to risks of
fluctuations in the exchange rate between the Renminbi and foreign currencies.

From 1994 until recently, the
conversion of Renminbi into U.S. dollars was based on rates set by the Peoples Bank of China, which were set daily based on the previous days PRC interbank foreign exchange market rate and current exchange rates on the world financial
markets. On July 21, 2005, the Peoples Bank of China announced a reform of its exchange rate system and revalued the Renminbi to RMB8.11 to US$1.00. Under the reform, the Renminbi would no longer be effectively linked to the United States
dollar but instead would be allowed to fluctuate within a narrow and managed band against a basket of foreign currencies. We cannot assure you that such exchange rate will not fluctuate widely against the U.S. dollar, Hong Kong dollar or any other
foreign currency in the future. The PRC Government may adopt further reforms of its exchange rate system, including making the Renminbi freely convertible in the future. However, we cannot predict if or when these further reforms will occur.
Although currently a substantial portion of our revenues, expenses and bank loans are denominated in Renminbi, we do have loans that are denominated in Hong Kong dollars and convertible bonds that are denominated in United States dollars.
Fluctuation of the value of Renminbi will affect the amount of our non-Renminbi debt service in Renminbi terms since we have to convert Renminbi into non-Renminbi currencies to service our foreign debt. Since a substantial portion of income and
profits are denominated in Renminbi, any appreciation of Renminbi will also increase the value of, and any dividends payable on, our shares in foreign currency terms. Conversely, any depreciation of Renminbi will decrease the value of, and any
dividends payable on, our shares in foreign currency terms.

If the custodians or authorized users of controlling non-tangible assets of
the Company, including corporate chops and seals, fail to fulfill their responsibilities or misappropriate or misuse these assets, the Companys business and operations could be materially and adversely affected.

Under PRC law, legal documents for corporate transactions, including contracts that the Companys business relies on, are executed
using the chops or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant branch of the Administration of Industry and Commerce (AIC).

Although the Company usually utilizes chops to enter into contracts, the designated legal representatives of each of the Companys
PRC subsidiaries have the apparent authority to enter into contracts on behalf of such entities without chops and bind such entities. All designated legal representatives of the Companys PRC subsidiaries are members of the Companys
senior management team who have signed employment agreements with the Company or its PRC subsidiaries under which they agree to abide by various duties they owe to the Company.

In order to maintain the physical security of the Companys chops, the chops are generally stored in secured locations accessible
only by the authorized personnel in the legal or finance departments of each of the Companys subsidiaries. The Companys designated legal representatives generally do not have access to the chops, but if such designated legal
representatives were to obtain the chops, in spite of these protections, the Company may encounter difficulties in maintaining control over the relevant entities. Although the Company has implemented internal control procedures to monitor the use of
corporate chops, such procedures may not be able to prevent all instances of abuse or negligence.



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If any of the designated legal representatives obtains and misuses or misappropriates the
Companys chops and seals or other controlling intangible assets for whatever reason, the Company could experience disruption to its normal business operations. If a designated legal representative obtains control of the chops in an effort to
obtain control over the entity, the Company or its PRC subsidiary would need to pass a new shareholder or board resolution to designate a new legal representative and the Company would need to take legal action to seek the return of the chops, apply
for new chops with the relevant authorities, or otherwise seek legal redress for the violation of the representatives fiduciary duties to the Company, which could involve significant time and resources and divert management attention away from
the Companys business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred out of the Companys control in the event of such a misappropriation if a transferee relies on the apparent
authority of the representative and acts in good faith.

The audit report included in this Annual Report is prepared by an auditor who
is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

Auditors of companies that are registered with the US Securities and Exchange Commission and traded publicly in the United States, including our independent registered public accounting firm, must be
registered with the US Public Company Accounting Oversight Board (United States) (the PCAOB) and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of
the United States and professional standards. Because we have substantial operations within the PRC and the PCAOB is currently unable to conduct inspections of the work of our auditors as it relates to those operations without the approval of the
Chinese authorities, our auditors work related to our operations in China is not currently inspected by the PCAOB.

This
lack of PCAOB inspections of audit work performed in China prevents the PCAOB from regularly evaluating audit work of any auditors that was performed in China including that performed by our auditors. As a result, investors may be deprived of the
full benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of audit work performed in China makes
it more difficult to evaluate the effectiveness of our auditors audit procedures as compared to auditors in other jurisdictions that are subject to PCAOB inspections on all of their work. Investors may lose confidence in our reported financial
information and procedures and the quality of our financial statements.

Proceedings instituted recently by the SEC against five
PRC-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934.

In December 2012, the SEC instituted proceedings under Rule 102(e)(1)(iii) of the SECs Rules of Practice against five PRC-based
accounting firms, including our independent registered public accounting firm, alleging that these firms had violated U.S. securities laws and the SECs rules and regulations thereunder by failing to provide to the SEC the firms work
papers related to their audits of certain PRC-based companies that are publicly traded in the United States and which are subject of certain SEC investigations. We were not and are not the subject of any SEC investigations nor are we involved in the
proceedings brought by the SEC against the accounting firms. If the SEC is successful in the proceedings, it could result in the accounting firms, (including our independent registered accounting firm) losing, temporarily or permanently, the ability
to practice before the SEC. While we cannot predict the outcome of the SECs proceedings, if our independent registered public accounting firm were denied, temporarily or permanently, the ability to practice before the SEC, and we are unable to
find timely another registered public accounting firm which can audit our company, our financial statements could be determined to not be in compliance with the requirements for financial statements of public companies with a class of securities
registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such a determination could ultimately lead to the delisting of our ordinary shares from the NYSE MKT, or deregistration from the SEC, or both, which could
substantially reduce or effectively terminate the trading of our ordinary shares in the United States.



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Risk Related to U.S. Taxation

There is a risk that we could be treated as a U.S. domestic corporation for U.S. federal income tax purposes, which could result in a significant U.S. federal income tax liability to us.

Section 7874(b) of the Internal Revenue Code, or Section 7874(b), generally provides that a corporation
organized outside the United States which acquires, directly or indirectly, pursuant to a plan or series of related transactions substantially all of the assets of a corporation organized in the United States will be treated as a domestic
corporation for U.S. federal income tax purposes if shareholders of the acquired corporation own at least 80% (of either the voting power or the value) of the stock of the acquiring corporation after the acquisition. If Section 7874(b) applied
to the liquidation of Man Sang Holdings Inc. in 2009, then we would be subject to U.S. federal income tax on our worldwide taxable income following the liquidation.

We believe that under Section 7874(b), we should not be treated as a domestic corporation for U.S. federal income tax purposes because Man Sang Holdings Inc. transferred no assets to us (other than
rights to a potential tax refund, which was insignificant). However, the IRS may assert that we are subject to U.S. federal income tax on our worldwide income after the liquidation.

U.S. holders of our ordinary shares and warrants may suffer adverse tax consequences if we are characterized as a Passive Foreign Investment Company.

There is a risk that we will be classified as a PFIC for U.S. federal income tax purposes. Our status as a PFIC could result in a
reduction in the after-tax return to U.S. holders of our ordinary shares and warrants and may cause a reduction in the value of such shares and warrants. We will be classified as a PFIC for any taxable year in which (i) at least 75% of our
gross income is passive income or (ii) at least 50% of the average value of all of our assets produce or are held for the production of passive income. For this purpose, passive income includes dividends, interest, royalties and rents that are
not derived in the active conduct of a trade or business. Based on the projected composition of our income and valuation of our assets, we do not believe we were a PFIC for the year ended March 31, 2013. The U.S. Internal Revenue Service or a
U.S. court could determine that we are a PFIC in any year. If we are classified as a PFIC, U.S. holders of our ordinary shares and warrants could be subject to greater U.S. income tax liability than might otherwise apply, imposition of U.S. income
tax in advance of when tax would otherwise apply, and detailed tax filing requirements that would not otherwise apply. The PFIC rules are complex and U.S. holders of our ordinary shares are urged to consult their own tax advisors regarding the
possible application of the PFIC rules to them in their particular circumstances. See Material United States Federal Income Tax Consequences.



|Item 4. | Information on the Company
|------- | --------------------------

A. History
and Development of the Company

China Metro-Rural Holdings Limited, or China Metro, was incorporated in the British Virgin
Islands as an international business company under the name Man Sang International (B.V.I.) Limited, or MSBVI, under the International Business Companies Act on August 14, 1995, and automatically re-registered as a business company on
January 1, 2007 pursuant to The BVI Business Companies Act, 2004. Prior to August 25, 2009, MSBVI was a wholly-owned subsidiary of Man Sang Holdings, Inc., or MSHI, a United States domestic issuer incorporated in the State of Nevada whose
ordinary shares were listed on the NYSE MKT (formerly known as the American Stock Exchange). On August 25, 2009, at a general meeting, the shareholders of MSHI resolved that MSHI liquidated and dissolved, whereby we were effectively redomiciled
from the United States to the British Virgin Islands and, as part of this transaction (the Reorganziation), MSBVI became the successor of MSHI and a non-United States domestic issuer whose ordinary shares are listed on the NYSE MKT. From
its inception in August 1995 through the completion of the dissolution and liquidation on August 25, 2009, MSBVI was a wholly-owned subsidiary of MSHI. As a result of the dissolution and liquidation of MSHI on August 25, 2009, MSBVI became
the listed holding company of our group. On March 19, 2010, MSBVI was renamed China Metro-Rural Holdings Limited. Our ordinary shares are traded on the NYSE MKT under the ticker symbol CNR.



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Upon the effective date of the Reorganization, the Company and its subsidiaries continued to
conduct the business previously conducted by MSHI and its subsidiaries (including the Company). Although the dissolution and liquidation of MSHI resulted in the cessation of MSHI as the holding company of the Group, the dissolution and liquidation
had no material impact on our financial condition or operating results, other than the costs incurred in connection with its dissolution and liquidation. As the Company contractually assumed all rights, title, obligations and liabilities of MSHI
upon the terms and subject to the conditions of the agreement and plan of the dissolution and liquidation, there was a continuation of the risks and benefits to the ultimate controlling owners that existed prior to the dissolution and liquidation of
MSHI. Accordingly, the Reorganization has been accounted for as a reorganization of entities under common control in a manner similar to pooling-of-interests. On this basis, the Company has been treated as the holding company of MSHI in all periods
presented in the financial statements rather than from the effective date of the Reorganization.

Subsequent to the
Reorganization, pursuant to an agreement and plan of merger, or the Merger Agreement, dated as of February 19, 2010, by and among the Company, China Metro-Rural Limited and Creative Gains Limited (Creative Gains) (a wholly-owned
subsidiary of the Company), Creative Gains was merged with and into China Metro (the Merger). Immediately after the Merger, Creative Gains ceased and China Metro became a wholly-owned subsidiary of the Company. The acquisition of equity
interest of China Metro-Rural Limited has been accounted for as a combination of entities under common control in a manner similar to pooling of interests as both the Company and China Metro-Rural Limited were controlled by Mr. Cheng Chung
Hing, Ricky immediately prior to and immediately after the Merger. On this basis, the consolidated financial statements of China Metro-Rural Holdings Limited for periods prior to the Merger have been restated to include, to the extent of the equity
interest of China Metro-Rural Limited held by Mr. Cheng Chung Hing, Ricky, the assets and liabilities and results of operations of China Metro-Rural Limited for those periods as if China Metro-Rural Holdings Limited had owned China Metro-Rural
Limited at the beginning of the financial period reported in the consolidated financial statements or when MSBVI and China Metro-Rural Limited came under common control by Mr. Cheng Chung Hing, Ricky, whichever is later, and all assets and
liabilities of China Metro-Rural Limited have been stated at historical carrying amounts. The acquisition by the Company of interest owned by all the shareholders of China Metro, including Mr. Cheng, was treated as an equity transaction at the
completion date of the Merger.

As a result of the Merger, our principal operating subsidiaries are China Metro-Rural Limited
and its subsidiaries as well as Man Sang International Limited and its subsidiaries.

In addition, on July 28, 2010, the
Company declared a dividend to its shareholders which was satisfied by way of distribution in specie of the entire equity interest in Man Sang International Limited, or MSIL held by the Company, represented approximately 494 million ordinary
shares of MSIL and was completed in August 2010. Upon the completion of the Distribution, the Group no longer held interest in MSIL and has discontinued its pearls and real estate businesses, or Man Sang Discontinued Operations, which was previously
operated through MSIL. Selected financial data of Man Sang Discontinued Operations is set forth above in Item 3. Key InformationA. Selected Financial Data.

On November 30, 2012, the Company disposed of its entire interest in CFC HK and, in effect, disposed of its entire interest in Qiqihar CFC, which represented Qiqihar Discontinued Operations. The
Group will continue to carry out its rural-urban migration and city re-development business through other subsidiaries. Selected financial date of Qiqihar Discontinued Operations is set forth above in Item 3. Key InformationA. Selected
Financial Data.



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B. Business Overview

China Metro-Rural Holdings Limited, or China Metro, is focused on being one of the leading developers and operators of large scale, integrated agricultural logistics and trade centers in Northern China
that facilitate a relationship between sellers and buyers of agricultural products and small goods, provide relevant physical platform and timely marketing information and intelligence, provide a transparent and competitive market price discovery
mechanism and provide infrastructure to enhance the living standards of those from the rural area. In addition, China Metro also carry out rural-urban migration and city re-development business, which consists of development and sales of commercial
and residential properties and servicing and assignments of development rights to independent third party developers.

On
November 30, 2012, the Company disposed of its entire interest in HK CFC and, in effect, disposed of its entire entity interest in Qiqihar CFC, which currently represented the Companys entire rural-urban migration and city re-development
business. Accordingly, the rural-urban migration and city re-development business carried out by HK CFC and Qiqihar CFC have been classified as discontinued operations (Qiqihar Discontinued Operations). The Group will continue to carry
out its rural-urban migration and city re-development business through other subsidiaries.

Agricultural logistics business

Our agricultural logistics business is comprised of (1) development and operation of integrated agricultural
logistics and trade centers and supporting facilities; and (2) property management which engages in the management of developed properties within the logistics platformsknown as China Northeast Logistics Cities. We currently are
developing two locations in the PRC, namely Northeast Logistics City in Tieling City, Liaoning Province, or China Northeast Logistics CityTieling, and Dezhou Northeast Logistics City in Dezhou City, Shandong Province, or China Northeast
Logistics CityDezhou.

Each China Northeast Logistics City is an integrated agricultural logistics and trade center
platform which mainly focuses on agriculture industry, including agricultural products, agricultural machineries, fertilizers and chemicals, and small goods. Our first project, China Northeast Logistics CityTieling, is currently operating, and
planning and construction work for our second integrated agricultural logistics and trade center platform, China Northeast Logistics CityDezhou, commenced in June 2011 in Dezhou City, Shandong Province.

Each China Northeast Logistics City will provide a wide range of products and services necessary for agricultural production, including
farm equipment, financial services, grain agronomy, marketing, storage and transportation. Each China Northeast Logistics City will provide trade centers covering agricultural products such as corn, rice, beans, seeds, pesticides, fertilizers,
agricultural machinery and other related tools as well as industrial products such as leather, textile and clothing hardware and accessories, building materials, specialized vehicles and their spare parts. We will also facilitate and make available
to our trade center tenants and their customers a full range of integrated agricultural logistics and trade facilities and services, including transportation services, warehouses, agricultural logistics liaison services, on-site agricultural
logistics service providers and quality testing services. The agricultural logistics services will be provided by on-site joint venture and third party service providers in our facilities. In addition, we will provide value-added exhibition and
conference, residential, hotel and office facilities and procure other parties to provide banking and advertising services as well as food and beverage services. Our business model will be further augmented by the on-site presence of PRC Government
agencies, which offer a diverse range of services, including registration and compliance, customs, tax administration, public security and human resources services primarily to trade center tenants, farmers and other customers.

Our development activities consist of site selection, land acquisition, project design and construction of trade centers, warehouse
facilities and supporting commercial and residential facilities. Our operations consist of the operation of these trade centers and facilities on our project sites.



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China Northeast Logistics CityTieling

China Northeast Logistics CityTieling as a whole, including all trade centers and supporting commercial, warehouse and residential
facilities, is expected to cover a total planned GFA of approximately 6 million square meters upon completion of all phases at the end of 2019. Phase I trade centers at China Northeast Logistics CityTieling commenced construction in
January 2008, was partially completed in February 2009 and began operating in August 2009. Upon the completion of its first phase, or Phase I, China Northeast Logistics CityTieling will have a planned total gross floor area, or GFA, of
approximately 2.0 million square meters. We sell and lease trade center units at China Northeast Logistics CityTieling to agricultural traders, farmers, domestic and international suppliers, distributors of raw materials and agricultural
products, and we provide superior facilities and an integrated platform from which to display and sell their agricultural or related products to buyers. We focus on developing our trade centers by providing superior project planning and managing
completed trade centers with quality services. We intend to maintain an optimal mix between trade center units for sale and trade center units held as investment properties for lease.

As of March 31, 2013, a total GFA of approximately 514,680 square meters (excluding self-used properties) were completed and more
than 3,000 independent individuals had entered into sales and purchase agreements to purchase more than approximately 301,000 square meters of GFA, or approximately 58%, of our completed GFA. As of March 31, 2013, we completed sales of GFA of
approximately 301,000 square meters (including approximately 39,000 square meters of residential properties). For such sales, we had outstanding accounts receivable of approximately HK$22,478,000, or 2% of such sales, as of March 31, 2013. An
additional approximately 146,000 square meters of GFA are under construction. In addition, we have GFA of approximately 263,000 square meters and approximately 94,000 square meters, which included GFA under construction, available for sale and
pre-sale, and for lease, respectively, of which approximately 130,000 square meters for sale and approximately 81,000 square meters for lease have been completed.

China Northeast Logistics CityTieling is treated as a real estate developer by the government authorities in Liaoning Province and has obtained a Qualification Certificate for Real Estate
Development Enterprise in Grade III with an effective term until December 21, 2013. China Northeast Logistics CityTieling is required to either renew this qualification certificate or apply for a qualification certificate in a higher
grade once the current qualification has expired.

China Northeast Logistics CityDezhou

China Northeast Logistics CityDezhou is expected to have a total site area of 7 million square meters, which is expected to
provide GFA of approximately 15 million square meters upon completion of all phases in 2021. We entered into a framework agreement to develop China Northeast Logistics CityDezhou with the Dezhou Municipal Government in July 2010 and a
groundbreaking ceremony was held on October 8, 2010. China Northeast Logistics CityDezhou is located in Dezhou City of Shandong Province, approximately 60 minutes drive from Jinan, the capital city of Shandong Province. We have acquired
land use rights for the first parcels of land with site area of approximately 602,386 square meters for China Northeast Logistics CityDezhou, and it is expected to provide up to total GFA of approximately 0.4 million square meters. The
first phase of construction for China Northeast Logistics CityDezhou commenced in June 2011.

As of March 31, 2013,
a total GFA of approximately 231,000 square meters were completed and more than 1,900 independent individuals had entered into sales and purchase agreements to purchase more than approximately 162,000 square meters of GFA, or approximately 70%, of
our completed GFA. As of March 31, 2013, we completed sales of GFA of approximately 162,000 square meters. For such sales, we had outstanding accounts receivable of approximately HK$26,217,000, or 3% of such sales, As of March 31, 2013. An
additional approximately 150,000 square meters of GFA are under construction.

As of March 31, 2013, our total
investments for China Northeast Logistics CityTieling and China Northeast Logistics CityDezhou are approximately RMB2,067 million (US$328 million) and RMB1,427 million (US$226 million), respectively.



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Rural-urban migration and city re-development business

Our rural-urban migration and city re-development business is comprised of (1) servicing and assignments of development rights and
(2) development and sales of residential, commercial and other auxiliary properties in new city center districts. It is China Metros strategy to assign the development rights to independent third party developers on portion of land plots
that have been allocated by the local government under framework agreements for their development in return for a premium while retaining the remaining portion for China Metros own development.

China Metro previously carried out rural-urban migration and city re-development business through China Focus CityQiqihar. Upon
disposal of China Focus CityQiqihar during the fiscal year ended March 31, 2013, China Metro will continue this business through other locations.

All of our agricultural logistics business revenues were derived from our operations at China Northeast Logistics CityTieling, and China Northeast Logistics CityDezhou, and were from sales,
leases and management of trade center units. China Northeast Logistics CityTieling began to generate revenue in the fiscal year ended March 31, 2009 with net revenue of approximately HK$1.1 million, all of which were contributed from
sales of trade center units. Net revenues in the fiscal year ended March 31, 2010 were approximately HK$337.7 million, with HK$336.7 million, HK$0.6 million and HK$0.4 million were contributed from sales of trade center units, rental income
from leases of trade center units and property management fee income, respectively. Net revenues in the fiscal year ended March 31, 2011 were approximately HK$581.6 million, with HK$575.6 million, HK$4.5 million and HK$1.5 million were
contributed from sales of trade center units, rental income from leases of trade center units and property management fee income, respectively. During the fiscal year ended March 31, 2012, Northeast Logistics CityDezhou commenced to
contribute to our agricultural logistics business. Net revenues in fiscal year ended March 31, 2012 were approximately HK$913.8 million, with HK$758.4 million, HK$3.9 million and HK$3.6 million were contributed from sales of trade center
units,rental income from leases of trade center units and property management fee income, respectively, whereas our rural-urban migration and city re-development business contributed revenue of approximately HK$147.9 million through
servicing and assignments of development rights at Qiqihar City. Net revenues in fiscal year ended March 31, 2013 were approximately HK$284.8 million, with HK$273.4 million, HK$5.0 million and HK$6.4 million were contributed from sales of trade
center units,rental income from leases of trade center units and property management fee income, respectively. Although we do not generate significant revenue from the agricultural logistics and other supporting services available at
our trade centers, these services facilitate the operations of our trade center tenants and form an integral part of our trade center operations. In addition, the breadth of our supporting facilities and services distinguishes us from other trade
centers in the PRC, and we believe they are important factors in attracting trade center tenants, farmers and customers.

Changes in fair values of our investment properties (which include investment properties under construction) were approximately HK$111.5
million, HK$2.6 million and HK$6.2 million, in the fiscal years ended March 31, 2011, 2012 and 2013, respectively. In the fiscal years ended March 31, 2011, 2012, and 2013, changes in fair values of investment properties represented
positive of 41.3%, positive of 1.5% and negative of 4.1%, respectively, of our net profit from our continuing operation after taking into account relevant deferred income tax.



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The following maps illustrate the geographic location and construction planning of China
Northeast Logistics CityTieling:



LOGO



LOGO



34



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##### Table of Contents

The following maps illustrate the geographic location of China Northeast Logistics
CityDezhou:



|     |  |  |  |     
|---- |  |  |  | ----
|LOGO |  |  |  | LOGO



LOGO



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Completed Property Development

China Northeast Logistics CityTieling

Phase I of China Northeast
Logistics CityTieling will cover a planned GFA of approximately 2.0 million square meters. Construction of 514,680 square meters of trade centers and residential properties was completed as of March 31, 2013.

China Northeast Logistics CityDezhou

Phase I of China Northeast Logistics CityDezhou will cover a planned GFA of approximately 2.9 million square meters. Construction of 231,000 square meters of trade centers was completed as of
March 31, 2013.

Properties under Development

China Northeast Logistics CityTieling

We are currently constructing
additional trade centers and supporting facilities for Phase I of China Northeast Logistics CityTieling with a planned GFA of approximately 146,000 square meters.

China Northeast Logistics CityDezhou

We are currently constructing
additional trade centers and supporting facilities for Phase I of China Northeast Logistics CityDezhou with a planned GFA of approximately 150,000 square meters.

Properties Planned for Future Development

China Northeast Logistics
CityTieling

We plan to develop and construct additional trade centers, supporting commercial office buildings,
hotels, warehouses and residential facilities on the remaining area of Phase I of China Northeast Logistics CityTieling, which will be approximately 1.5 million square meters. We expect to complete Phase I construction by 2019.

The planned site area for Phase II of China Northeast Logistics CityTieling will be approximately 2.1 million
square meters according to a framework agreement that was signed in 2006. We are in the initial planning stages for Phase II of China Northeast Logistics CityTieling, and we have already obtained land use rights certificates for an area of
approximately 0.6 million square meters.

China Northeast Logistics CityDezhou

We plan to develop and construct additional trade centers, supporting commercial office buildings, hotels, warehouses and residential
facilities on the China Northeast Logistics CityDezhou, which will be approximately 14.8 million square meters. We expect to complete all construction of China Northeast Logistics CityDezhou by 2021.

The total planned site area for China Northeast Logistics CityDezhou will be approximately 15 million square meters according
to a framework agreement that was signed in 2010. We are in the planning stage for construction of further GFA of approximately 0.4 million square meters and we have already obtained land use rights certificates for an area of approximately
0.6 million square meters and are in the process of acquiring more land use rights from local Land Bureau.



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Competitive Strengths

We believe that we are well-positioned to take advantage of the continued strong growth in the trade of agricultural industrial materials as a result of Chinas growing position as a global
manufacturing and export center and Chinas increasing domestic consumption. We believe that we have the following competitive strengths:

Our innovative business model provides an integrated platform for our trade center tenants and their customers to receive a comprehensive range of
trade, agricultural logistics and supporting services.

The scale and scope of each China Northeast Logistics City,
which serves agricultural and related industries, attracts buyers and sellers seeking to take advantage of the synergies present within our integrated agricultural logistics and trade centers. Buyers are able to meet their purchasing needs for a
wide range of agricultural raw materials and products as well as effectively diversify and tailor their sourcing needs. Sellers are able to streamline their business operations by taking advantage of the full range of on-site agricultural logistics
and trade solutions available at our trade centers. In addition, hotel and restaurant facilities are available on-site for the convenience of trade center tenants and their customers. As our trade centers serve as a wholly integrated, single shop
for both buyers and sellers, we believe this business model will continue to set us apart from our competitors and attract new tenants and customers, while allowing us to retain our current tenants and customers.

Our integrated agricultural logistics and trade centers are strategically located in fast growing agricultural, manufacturing and economic centers
near well-developed transportation networks and infrastructure.

China Northeast Logistics CityTieling:

Manchuria is comprised of Liaoning, Jilin and Heilongjiang provinces.

The great Manchurian plain (average elevation 1,000 ft/300 m), crossed by the Liao and Songhua Rivers, is the only extensively level area
in that region. Fertile and densely populated, it has been a major manufacturing and agricultural center of China. As one of the few areas in the country suitable for large-scale mechanized agriculture, it has numerous collective farms. Long, severe
winters limit harvests to once a year, but considerable quantities of soybeans are produced. Sweet potatoes, beans and cereals (including rice, wheat, millet and gaoliang) are also grown, and cotton, flax and sugar beets are raised as industrial
crops. The processing of soybeans into oil, animal feed, and fertilizer is centered in cities in or near the plain, notably Changchun, Harbin and Shenyang. Livestock are raised in the north and the west, and fishing is important off the Yellow Sea
coast.

In addition, China Northeast Logistics CityTieling is connected to each of the major railway arteries in
Northeast China as well as at least two major highways linking each of the major cities in the Manchuria region, Russia, North Korea and South Korea. Located in Bohai sea region, China Northeast Logistics CityTieling also has access to heavy
port facilities in the Yellow Sea coast.

China Northeast Logistics CityDezhou:

China Northeast Logistics CityDezhou is strategically located in the northern of Shandong Province which has a comprehensive
transportation network forming a gateway between south and north. It is only a three-hour drive from Beijing and eight-hour drive from Shanghai. The population of Dezhou City and Shandong Province are over 5 million and 94 million,
respectively. The gross domestic product, or GDP, of Shandong Province was US$792 billion in 2012, which ranked third among Chinese provinces.

Shandong is historically well known for both agricultural and industrial outputs such as corn, cotton, fertilizers and wheat as well as rolled steel, tractors and farming machinery.

We believe the strategic location and agricultural and industrial production near China Northeast Logistics CityDezhou offers
significant opportunity for us.



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We enjoy strong municipal and regional government support in the locations in which we currently plan to
operate.

In selecting new sites for our projects, we strategically seek out locations in which local and regional
governments have actively expressed a desire to develop integrated logistics and trade services in their long-term plans. In doing so, we are able to ensure that our business operations are closely aligned with the long-term economic development
plans of the region in which we develop and operate. With respect to China Northeast Logistics CityTieling, with local administrative support, we were able to secure a plot of land in excess of one square kilometer quickly, efficiently and in
accordance with relevant approval procedures. Pursuant to the terms of our mutual agreement, representatives of the municipal governments undertook or will undertake the responsibility for relocating all prior occupants of the land as well as
improving roads and infrastructure within each China Northeast Logistics City. In addition, as part of a broader effort to improve local transportation infrastructure, government authorities have also undertaken construction of new roads and other
supporting infrastructure surrounding each China Northeast Logistics City. Several PRC Government agencies also plan to have an on-site presence at each China Northeast Logistics City to assist trade center tenants and other visitors. We believe
each China Northeast Logistics City will remain an important part of the municipal and regional governments overall strategy to develop the local economy by creating new jobs, contributing increased tax revenues and attracting new
manufacturing plants and commercial development to the surrounding area.

The founding shareholders of China Metro-Rural Limited possess
in-depth experience and extensive networks of contacts within their respective industries.

The two founding shareholders
of China Metro-Rural Limited, each of whom are either chairmen or executive directors of leading manufacturing and industrial companies based in Hong Kong with operations in the PRC, have extensive experience and a well-developed network of contacts
in their respective industries and have provided a firm foundation for our operations and future development. Mr. Cheng Chung Hing, Ricky, one of the founding shareholders of China Metro-Rural Limited, is also the Chairman of Shenzhen Logistics
and Supply Chain Management Association. He is also a member of the Shenzhen Committee of the Chinese Peoples Political Consultative Conference and a member of Guangxi Committee of Chinese Peoples Consultative Conference. Mr. Leung
Moon Lam is a member of the Liaoning committee of the Chinese Peoples Political Consultative Conference. He is also the Chairman of Federation of Hong Kong Shenzhen Association and Chairman of the Shenzhen Textile Industry Association.

We have a strong, experienced management team with a demonstrated record of success.

We consider the strength of our senior management team to be fundamental to the success of our integrated agricultural logistics and trade
center development projects. We rely on our senior managements experience and insight on important factors that contribute to the success of our projects, such as careful site selection, detailed project management, stringent cost control and
effective quality control. Our senior management team also has extensive experience in real estate operations and financial management, which we believe provides us with a key competitive advantage. Our financial team includes professionals with
experience in financial management, mergers and acquisitions, capital markets financing and corporate restructuring. Furthermore, we have developed a strong sales team with specialized experience in each of the different trade and agricultural
logistics services industries. We believe our management teams comprehensive industry background has helped us to achieve our past success and will enable us to successfully implement our growth strategies in the future.



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Strategy

Our objective is to become the leading developer and operator of large-scale, agricultural and industrial integrated logistics platforms and rural-urban migration and city re-development in the PRC. To
achieve this objective, we intend to implement the following strategies:

Maximize occupancy rates, rental rates, sales prices and traffic
flow in our existing and planned trade centers.

We plan on maximizing occupancy rates, rental rates, sales prices and
traffic flow in our existing and planned industrial integrated agricultural logistics and trade centers by implementing the following initiatives:



| |  |  | Provide preferential rental terms to maximize occupancy rates and increase rental rates and sales prices as occupancy rates increase. Our
operating strategy of the integrated agricultural logistics and trade centers aims to first achieve high occupancy rates and attract a high-quality tenant base, and then increase rental rates and sales prices steadily as occupancy rates increase. We
intend to attract quality tenants to our trade centers by offering preferential rental rates and other more attractive leasing terms than those offered by our competitors, such as rent free periods based on advance rental payments made by tenants.
We intend to increase rental rates after the initial lease period, by which time we believe our tenants who have established their business in our trade centers and are benefiting from the full range of integrated agricultural logistics, trade and
supporting facilities will have strong incentives to renew their leases. We anticipate favorable upward trends in rental rates and sales prices for our trade center units, driven by (1) continuing growth in the manufacturing and export
industries in China, which we expect to generate additional demand for space in integrated agricultural logistics and trade centers, and (2) higher quality features to be developed in the trade centers, which we expect will be offered at higher
rental rates and sales prices. In the fiscal year ended March 31, 2013, our overall average selling price was HK$5,733 per square meter, represented an increase of approximately 10% as compared with the average selling price of HK$5,194 per
square meter in the fiscal year ended March 31, 2012.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continue to offer integrated agricultural logistics services to increase customers access to the global supply chain. We intend to
optimize our offerings of integrated agricultural logistics services, including warehouse, liaison and on-site agricultural logistics services and transportation services, in order to facilitate individual needs and order requirements of trade
center tenants and their customers. By integrating agricultural logistics and trade functions and providing ready access to necessary services for trade center tenants and their customers, we believe we will be able to outperform our competitors in
advancing and expediting the business interests of trade center tenants.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Leverage and improve supporting infrastructure and services. We will seek to enhance the market demand for our trade center units by leveraging
and improving the auxiliary services available to our trade center tenants and their customers. In developing supporting infrastructure and services at China Northeast Logistics CityTieling, we have entered into strategic alliances and
arrangements with a variety of third party service providers, including one of Chinas leading banks, Agricultural Credit Union, and a telecommunications company. We have also signed non-binding memorandum of understanding with two state-owned
enterprises (China Grains and Logistics Corporation) to be anchor tenants and entered into a strategic alliance with Liaoning Chemical Fertilizers Co. Ltd. to build the largest fertilizer trade market in Liaoning. In addition, we will offer
conference and exhibition facilities to the agricultural and related industries participants.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Building a strong brand by expanding into other cities and regions. We intend to expand the brand name China Northeast Logistics
City into other cities and regions in the PRC by establishing a network of China Northeast Logistics Cities. By creating a network, we hope to create synergy between China Northeast Logistics Cities in different regions where customers from
each China Northeast Logistics City will be attracted to one another, thus creating more transactions.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Build our market position and enhance our brand recognition.

We intend to augment our sales and marketing program to further strengthen our market position and enhance brand recognition by using a
variety of promotional, advertising, public relations and customer service campaigns in China. We will emphasize the competitive strengths of our trade centers, including strategic location, integration into the global agricultural logistics supply
chain, strong supporting infrastructure and services and high quality and superior management in our marketing efforts. Our marketing promotions and advertising campaigns will target domestic and multinational companies active in the industries
represented at our trade centers. We believe that these marketing activities will better enable us to promote our trade centers, attract quality trade center tenants and enhance our brand recognition among domestic and international buyers and
suppliers of industrial materials and finished goods, creating higher demand for our trade center units.

Achieve and maintain an optimal
mix between properties for sale and investment properties for lease.

We do not have any limitations or constraints in
sales or leasing. We intend to maintain an optimal mix of properties generating long-term recurring income and capital appreciation, and properties generating profit from sales. We intend to strategically balance the amount of GFA for sale and for
investment in our completed projects and properties under development and planned for future development in order to enhance our working capital position and to finance a portion of our project development costs.

Achieve and maintain an optimal mix between land for self development, and servicing and assignments of development rights.

We intend to retain certain land plots to be acquired for our own development and sales of commercial and residential properties while
assigning the remaining land plots to independent third party developers in return for a premium. By doing so, we hope to be able to maintain at an optimal mix in terms of cash flows from assignments of rights and sales of properties and timing of
such cash flows, creating flexibility in China Metros overall development and funding requirements.

Trade Center Projects

We currently have two large-scale integrated agricultural logistics and trade center projects in various stages of
development.

Our trade center projects are classified into:



| |  |  | Properties under development, representing properties for which we have obtained land use rights certificates and have planned or commenced
construction.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Investment properties under construction, representing properties held for long-term investment and for leasing purposes upon completion.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Properties held for sale, representing properties for which we have completed construction and are ready to be sold and occupied by potential buyers
and tenants.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Properties under planning, representing development activities consisting of site selection, land acquisition and project design.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



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In determining the estimated commencement and completion dates for our properties under
development and planned for future development, we rely on certain assumptions, including that: (1) there will be no material changes with respect to the general economic conditions in the PRC, performance of the PRC property market or demand
for agricultural materials, particularly in the regions where we plan to develop such properties; (2) there will be no material change in the regulatory regime governing the real estate market in the PRC which adversely affects our ability to
develop such properties; (3) there will be no significant obstacles in obtaining necessary licenses and approvals to develop such properties; (4) we will be able to obtain adequate funding through internal financing, bank borrowings and
shareholder loans, as well as expanding our sources of external financing, including access to debt and equity financing, to develop such properties; (5) we will be able to obtain sites identified for future development pursuant to the terms of
the master agreements governing the construction and development of such projects; (6) we will be able to obtain land use rights and building ownership certificates necessary to commence development of such projects; (7) the services
rendered by independent contractors engaged in the construction of such properties will be performed in a satisfactory manner that meets our quality requirements; (8) there will be no material increase in the costs of construction materials and
labor in the PRC; and (9) we will not be involved in any material legal or other governmental proceedings arising from the transfer or development of such properties.

Land-Use Rights and Building Ownership Rights

There are two types
of title registrations in the PRC: land registration and building registration. Land registration is evidenced by the issuance of a land use rights certificate by the relevant authority. A land use rights certificate is the evidentiary legal
document to demonstrate that the registered land user has the lawful right to use the land during the term stated therein, including the right to assign, mortgage or lease the land. Building registration is evidenced by the issuance of a building
ownership certificate. The holder of a land use rights certificate who is issued a building ownership certificate holds land use rights and owns the building erected on the land. All holders of land use rights, and other rights in respect of the
land, such as the right to buildings erected on the land, must register their lawful state-owned land use rights, as well as ownership rights to the buildings. Under the PRC law, land use rights and building ownership rights which are duly
registered are protected by law.

The PRC law prescribes different maximum periods for the grant of a land use right by the
PRC Government to the land user, subject to the payment of the land grant fee by the land user. The maximum period depends upon the use of the land, and varies from 40 years for commercial, tourism and entertainment uses to 70 years for residential
uses. The most common term is 50 years, such as for industrial, warehouse, office and other uses. For further information, please see Regulation.

China Northeast Logistics CityTieling

We have received land use
rights with respect to approximately 1,788,308 square meters of a total site area of approximately 3.9 million square meters planned for development for China Northeast Logistics CityTieling. Other than as discussed below, we have
obtained all necessary land use rights and building ownership certificates to conduct our operations at China Northeast Logistics CityTieling. The land use rights for the Phase I are for a period ranging from 40 to 70 years commencing from the
respective dates as specified in the land use rights certificates.

We have paid for and signed a land grant contract with the
local government for approximately 1,788,308 square meters of land planned for use in Phase I and 558,586 square meters of land planned for use on Phase II, which together representing approximately 60%, of the total site area for China Northeast
Logistics CityTieling. As of March 31, 2013, we received all land use rights for Phase I of our development. All the land has gone through auctions.



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China Northeast Logistics CityDezhou

We have received land use rights with respect to approximately 602,386 square meters of a total site area of approximately 7 million
square meters planned for development for China Northeast Logistics CityDezhou. We have obtained necessary land use rights certificates to conduct our current operations at China Northeast Logistics CityDezhou. The land use rights
obtained are for a period of 40 years commencing from the respective dates as specified in the land use rights certificates. All the land has gone through auctions.

Under relevant PRC laws and regulations, idle land is subject to (a) payment of idle fees equivalent to 20% of the land grant fees paid for these parcels of land, or (b) in more serious cases,
potential forfeiture.

Currently, none of our land has been designated as idle land by relevant PRC authorities, and we do not
believe our land is subject to payment of any idle fees or forfeiture.

Sales and Marketing

As of March 31, 2013, we had a team of approximately 50 and 59 sales and marketing and customer services personnel located in Tieling
City and Dezhou City, respectively, who are responsible for the sales, leasing and marketing of the store units in the trade centers, residential and other properties. Once a project is completed, our sales and marketing staff will also develop
advertising and rental plans for the properties held for rental, and sales plans for the store units to be sold to purchasers of the properties. We will also engage other independent professionals in the PRC to prepare marketing studies to assist us
in developing our advertising and sales and rental plans. This process also includes a determination of target customers, as well as strategies to maximize usage and revenues from the property.

We conduct marketing of our projects through a variety of channels, including the network of our founding shareholders, advertising
media, events and exhibitions and activities of trade associations. China Northeast Logistics CityTieling and China Northeast Logistics CityDezhou also has their own websites www.nlc88.com and www.nlc86.com which provide
platforms for promoting each China Northeast Logistics City and the business carried out therein.

Lease Agreements

China Northeast Logistics CityTieling

Overview

As of March 31, 2013, we had approximately 2,600 completed
trade center units for lease at China Northeast Logistics CityTieling. Leasing of trade center units and commercial facilities is conducted by our sales and marketing department. Prospective tenants complete an application containing
information as to desired location of the rental units and facilities, and pay a nominal deposit. We review the application and, if appropriate, provide a detailed proposal of the rental unit, as well as deposits, rental rates, management fees and
any rent abatement or rent-free periods. Once an agreement is reached with a tenant, a lease agreement is executed.

Preferential Payment Terms

In an effort to attract tenants as part of the initial leasing-out period of Phase I trade center units, we provided early tenants with preferential rental rates and rent-free periods of up to 24 months
for a three-year lease, based primarily on the length of the lease agreements.



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We currently offer preferential rental rates to all of our Phase I trade center tenants. The
discounts offered to tenants depend on a variety of factors, including the duration of the lease, the type and location of the trade center for the unit to be leased, and the credit of the tenant. We also offer additional discounts to those tenants
who make rental payments in advance. Tenants who make rental payments in advance typically receive a discount based on the length of the prepayment term. In addition, we offer incentive discounts to existing tenants who choose to enter into new
lease agreements following the expiration of their initial lease terms and pay a portion of their rent in advance. As of March 31, 2013, taking into account the above preferential terms, the average effective monthly rental rate for our Phase I
trade center units is approximately RMB 61 per square meter annually (excluding management fees).

Self-Used
Properties

In order for us to operate our agricultural logistics business more efficiently and effectively, we have
constructed and occupied the following properties at China Northeast Logistics CityTieling as at March 31, 2013:



| |  |  | Administrative Tower, a 5-story building with a total gross floor area of approximately 10,757 square meters. The Tower is used as our headquarters of
China Northeast Logistics CityTieling and is used by us for daily administrative duties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sales Center, a 2-story building with office area with a total gross floor area of approximately 2,265 square meters. The Sales Center is used as
showroom at China Northeast Logistics CityTieling and is used by our sales team for daily sales and administrative duties.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Recent Developments

China Northeast Logistics CityTieling

During the past few years we have acquired four parcels of land with a total site area of approximately 558,586 square meters for the next
phase, or Phase II, of China Northeast Logistics CityTieling.

For the portion of Phase I of China Northeast Logistics
CityTieling that has been pre-sold/sold, average selling price decreased by approximately 68% from HK$4,132 per square meter in the fiscal year ended March 31, 2012 to HK$1,308 per square meter in the fiscal year ended March 31,
2013. As of March 31, 2013, we have pre-sold/sold total GFA of approximately 304,000 square meters.

Sales of GFA
decreased by 99.5% from approximately 31,000 square meters in the fiscal year ended March 31, 2012 to 164 square meters in the fiscal year ended March 31, 2013.

China Northeast Logistics CityDezhou

We have acquired land use
rights for the first parcels of land from local Land Bureau with site area of approximately 602,386 and commenced construction in June 2011. GFA of approximately 231,000 square meters was completed during the fiscal year ended March 31, 2013and
GFA of approximately 150,000 square meters is still under construction.

For the GFA we have pre-sold/sold, average selling
price increased by approximately 4.9% from HK$5,480 per square meter in the fiscal year ended March 31, 2012 to HK$5,749 per square meter in the fiscal year ended March 31, 2013. As of March 31, 2013, we have pre-sold/sold total GFA
of approximately 187,000 square meters.

Sales of GFA decreased by 59.1% from approximately 115,000 square meters in the
fiscal year ended March 31, 2012 to 47,000 square meters in the fiscal year ended March 31, 2013.



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Our Corporate Information

Our principal executive office is located at Suite 2204, 22/F, Sun Life Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong, telephone: 852-2111-3815. We have designated National
Registered Agents, Inc., located at 111 Eighth Avenue, New York, NY 10011, as our agent for service of process in the United States.

Intellectual Property Rights

Agricultural logistics

We have registered the trademark of (i) 


LOGO
 (China Northeast Logistics City) and its logo and (ii) the logo of China Metro-Rural Exchange under some additional categories with the Trade Marks Registry in Hong Kong, and we have submitted
applications for registration of the trademarks 


LOGO
 and NLC with the Trademark Office of the State Administration For Industry and Commerce of the PRC under various categories relating to metals, textiles, machines, electronics and many other
categories. We are also the owner of the domain names of nlc88.com, nlc86.com, 


LOGO
..com and www.chinametrorural.com.

Provided they are still in use, we will
apply to renew our trademarks prior to or upon their expiration. Currently, we do not anticipate any difficulties in renewing our trademarks. Accordingly, we do not expect any adverse effects from the upcoming expiration of any of our trademarks.

We believe that our business is not dependent, to a significant extent, on patents or licenses, industrial, commercial or
financial contracts or new manufacturing process, and such factors are not material to our business or profitability.

Facilities

Our principal executive office, which is comprised of approximately 1,512 square feet pursuant to a lease that expires on
March 16, 2014, and is staffed by management and office personnel.

Our China administrative office for China Northeast
Logistics CityTieling is located at Administrative Tower, China Northeast City, Zuanshi Road, Xincheng District, Tieling City, Liaoning Province, PRC. Our administrative and sales office for China Northeast Logistics CityTieling,
which is comprised of approximately 13,022 square meters in supporting commercial facilities located within China Northeast Logistics CityTieling, is also staffed by management and office personnel. We have land use rights and building
ownership certificates for the buildings in which our Tieling City office and sales office are located.

Our China
administrative office for China Northeast Logistics CityDezhou is located at Tianqu Industrial Zone, Decheng District, Dezhou, Shandong Province, PRC, which is comprised of approximately 1,200 square meters, and is provided by Tianqu
Industrial Zone Committee on a rent-free basis, and is staffed by management and office personnel.

Our China administrative
office for Shenzhen head office is located at Suite 2119-2123, 2125-2127, 21/F, Global Logistics Center, Pinghu, Longgang District, Shenzhen, PRC, which is comprised of approximately 564 square meters and is staffed by management and office
personnel.

Legal Proceedings

As of March 31, 2013, we did not have any litigation, arbitration or claim of material importance, and the Directors were not aware of any pending or threatened litigation, arbitration or claim of
material importance against us or any of our subsidiaries.



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Insurance

We had purchased construction all-risk insurance during the construction of certain trade centers (which are now completed and the insurance has expired). With respect to our ongoing construction
projects, we require our contractors to insure the construction through all-risk insurance. There are, however, certain types of risks that are not covered by our (or our contractors) insurance policies, including losses resulting from war,
nuclear contamination, tsunami, pollution, earthquake and acts of terrorism. As of March 31, 2013, we have not experienced any significant loss or damage to our properties.

In addition, we maintain employers liability insurance covering bodily injury, medical treatment and litigation expenses for our
employees. We also insure our automobiles through automobile insurance covering collision damage and various types of liability.



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REGULATION

The following section sets forth a summary of the most significant PRC laws and regulations that affect our businesses. For a description of the legal risks relating to government regulation of our
business, and in particular the land system in China, please see Risk Factors.

In this section,
we, us and our refer to the Company and its subsidiaries as the context requires.

Overview

We, through our PRC subsidiaries, China Tieling Northeast, China Dezhou Northeast and Dezhou Northeast City Property Co.,
Ltd., are developers in the PRC of integrated agricultural logistics and trade centers and residential and commercial properties, and are subject to extensive government regulations in the PRC.In connection with our integrated agricultural
logistics and trade center development and residential and commercial property development activities, we are subject to a number of PRC laws and regulations relating to the land system in the PRC, such as those related to land use rights (including
how land use rights may be acquired and transferred), documents of title, property development, real estate loans, mortgages and other financing techniques, property management, leasing and property-specific taxes.Our customers and
agricultural logistics providers located on-site at Tieling and Dezhou are subject to PRC laws and regulations, and licensing requirements, relating to the import/export industry and the provision of agricultural logistics services.

Our Treatment as an Integrated Logistics Enterprise and Industrial and Agricultural Exchange

We, through our PRC subsidiaries, China Tieling Northeast and China Dezhou Northeast, provide or will provide platforms for a variety of
industrial and agricultural exchange, integrated agricultural logistics and trade services and facilities, including transportation services, warehouses, and other services.Because China Tieling Northeast and China Dezhou Northeast develop
properties necessary for their integrated logistics and trade center operations, China Tieling Northeast and China Dezhou Northeast are subject to certain PRC laws, regulations and policies applicable to property development enterprises.

According to Regulations for Guiding the Direction of Foreign Investment (


LOGO
) issued by the State Council on February 11, 2002, foreign investment projects must be examined, approved and submitted for record by development planning authorities or foreign trade and economic cooperation
authorities, depending on the nature of the projects.Our PRC subsidiary, China Tieling Northeast, was examined and approved by the Tieling Bureau of Foreign Trade and Economics Cooperation and established on May 15, 2007, and it filed
as a foreign investment real estate enterprise with the PRC Ministry of Commerce on September 1, 2009. Our PRC subsidiary, China Dezhou Northeast, was examined and approved by the Dezhou Bureau of Commerce and established on September 27,
2010, and it filed as a foreign investment real estate enterprise with the PRC Ministry of Commerce on August 11, 2011.

The Land
System of the PRC

Overview

The Law of the Peoples Republic of China on the Administration of Land(


LOGO
), issued by the National Peoples Congress on June 25, 1986 and amended on August 29, 1998 and further amended on August 28, 2004, distinguishes between the ownership of land and the right to use
land.All land in the PRC is either state-owned or collectively owned, depending on the location of the land.All land in the urban areas of a city or town is state-owned, and all land in the rural areas and all farmland is, unless
otherwise specified by law, collectively owned.The State has the right to resume its ownership of land or the right to use land in accordance with law if required for the public interest.



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Although all land in the PRC is owned by the State or by collectives, individuals and
entities may obtain land use rights and hold such land use rights for development purposes.Individuals and entities may acquire land use rights in different ways, the two most important being land grants from local land authorities and land
transfers from land users who have already obtained land use rights.

Land Grants

National and Local Legislation

In April 1988, the National Peoples Congress passed an amendment to the constitution of the PRC. The amendment, which allowed for the transfer of state-owned land use rights for value, paved the way
for reforms of the legal regime governing the use of state-owned land and transfer of state-owned land use rights. The Decision of the Standing Committee of the National Peoples Congress on Amending the Law of the Peoples Republic of
China on the Administration of Land (


LOGOLOGO
), adopted by the National Peoples Congress on December 29, 1988, amends the Land Administration Law of the Peoples Republic of China (


LOGO
) to permit the transfer of state-owned land use rights for value.

On May 19, 1990, the
State Council issued the Regulations of Peoples Republic of China Concerning the Interim Grant and Assignment of Right to Use State Land in Urban Areas(


LOGO
), or the Urban Land Regulations. These regulations formalized the process of the grant and transfer of land use rights for consideration. Under this system, the State retains the ultimate ownership of the land. However,
the right to use the land, referred to as land use rights, can be granted by the State and local governments at or above the county level for a maximum period of 70 years for specific purposes, including for residential and commercial development,
pursuant to a land grant contract and upon payment to the State of a land grant fee for the grant of land use rights.

The
Urban Land Regulations prescribe different maximum periods of grant for different uses of land as follows:



|                                                                           |  |                      |    | 
|-------------------------------------------------------------------------- |  | -------------------- | -- | 
|Use of Land                                                                |  | MaximumPeriod(years) |   
|Commercial, tourism, entertainment                                         |  |                      | 40 | 
|Residential                                                                |  |                      | 70 | 
|Industrial                                                                 |  |                      | 50 | 
|Educational, scientific, technological, cultural, public health and sports |  |                      | 50 | 
|Comprehensive utilization or other purposes                                |  |                      | 50 | 

Under the Urban Land Regulations, domestic and foreign enterprises are permitted to acquire land use
rights unless the law provides otherwise. The State may not resume possession of lawfully granted land use rights prior to expiration of the term of grant. If the public interest requires the resumption of possession by the State under special
circumstances during the term of grant, compensation must be paid by the State. Subject to compliance with the terms of the land grant contract, a holder of land use rights may exercise substantially the same rights as a land owner during the grant
term, including holding, leasing, transferring, mortgaging and developing the land for sale or lease.

Upon paying in full the
land grant fee pursuant to the terms of the contract, the grantee may apply to the relevant land bureau for issuance of the land use rights certificate. Upon expiration of the term of grant, renewal is possible subject to the execution of a new
contract for the grant of land use rights and payment of a new land grant fee. If the term of the grant is not renewed, the land use rights and ownership of any buildings on the land will revert to the State without compensation.



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The Law of the Peoples Republic of China on Property Rights (


LOGO
), or the Property Law, adopted by the National Peoples Congress on March 16, 2007 and effective as of October 1, 2007, further clarified land use rights in the PRC with the following rules:



| |  |  | land use rights for residences will be automatically renewed upon expiry;
| | - |  | -------------------------------------------------------------------------



| |  |  | car parking spaces and garages within residential buildings must be used to meet the needs of the owners who live in the building first;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the construction of buildings must comply with relevant laws and regulations and must not affect the ventilation of or lighting to neighboring
buildings; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | where the state-owned land use rights for construction use are transferred, exchanged, used as a capital contribution, donated to others or mortgaged,
an application for modification registration must be filed with the registration department.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to
the general framework for transactions relating to land use rights set out in the Urban Land Regulations, local legislation provides for additional requirements, including those applicable to specific transactions within specific areas relating to
the grant and transfer of state-owned land use rights. These local regulations are numerous and some of them are inconsistent with national legislation. Under PRC law, national laws and regulations prevail to the extent of such inconsistencies.

Methods of Land Grant

There are two methods by which state-owned land use rights may be granted, namely by private agreement or competitive processes (i.e., public tender, auction or listing for sale at a land exchange
administered by the local government).

The Ministry of Land and Resources has required, since August 31, 2004, that the
grant of state-owned land use rights must be made pursuant to public tenders, auctions or listings for sale on a land exchange and that no state-owned land use rights for commercial uses could be granted by way of agreement. PRC laws and regulations
specifically provide that land to be used for commercial purposes must be granted by way of competitive processes. A number of measures are provided by PRC laws and regulations to ensure such grant of state-owned land use rights for commercial
purposes is conducted openly and fairly. For instance, the local land bureau must take into account various social, economic and planning considerations when deciding on the use of a certain piece of land, and its decision regarding land use
designation is subject to approval by the city or provincial government. In addition, the announcement of a public tender, auction or listing for sale at a land exchange must be made 20 days prior to the date of beginning such competitive processes.
Further, it is also stipulated that for listing at a land exchange, the time period for accepting bids must not be less than 10 days.

When state-owned land use rights are granted by way of tender, a bid evaluation committee consisting of not less than five members (including a representative of the grantor and other experts) formed by
the land bureau is responsible for evaluating the bids and the tenderee is responsible for deciding on the successful bidder. The successful bidder will then sign the land grant contract with the land bureau and pay the balance of the land-grant fee
before obtaining the state-owned land use rights certificate and before the land bureau will effectuate the registration of the successful bidder as the holder of state-owned land use rights for the land. The land bureau will consider the following
factors: if the invitation to tender only requires a bid from the bidder, whoever offers the highest bid will be the successful bidder; or if the invitation to tender requires the bidder to submit planning proposals in addition to the bid, then
details of the proposals will be considered. If the relevant land bureau considers that none of the bids is satisfactory, the land bureau has the right to reject all the bids. Tenders for state-owned land use rights can be by way of open tenders or
private tenders.

Where state-owned land use rights are granted by way of auction, a public auction will be held by the
relevant local land bureau, and the land use rights are granted to the highest bidder. The successful bidder will then be asked to sign the land grant contract with the local land bureau and pay the relevant land grant fee within a prescribed
period.



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Where state-owned land use rights are granted by way of listing at a land exchange
administered by the local government, a public notice will be issued by the local land bureau to specify the location, area and purpose of use of land, the initial bidding price, the period for receiving bids and the terms and conditions upon which
the land use rights are proposed to be granted. The state-owned land use rights are granted to the bidder with the highest bid who satisfies the terms and conditions. The successful bidder will enter into a land grant contract with the local land
bureau and pay the relevant land grant fee within a prescribed period.

The state-owned land use rights obtained by China
Metros PRC subsidiaries have been granted by way of listing at their respective Land Reserve Centers.

Upon signing the
land grant contract, the grantee is required to pay the land grant fee pursuant to the terms of the contract and the contract is then submitted to the relevant local bureau for the issue of the state-owned land use rights certificate. Upon
expiration of the term of grant, the grantee may apply for its renewal. Upon approval by the relevant local land bureau, a new contract is entered into to renew the grant, and a land grant fee is paid.

Model Land Grant Contract

To standardize land grant contracts, in 2008, the Ministry of Land and Resources and the State Administration for Industry and Commerce
published the model land grant contract, on the basis of which many local governments have formulated their respective local form land grant contract to suit their special local circumstances. The model land grant contract contains terms such as
location of land, use of land, land grant fee and its payment schedule, conditions of land upon delivery, term of grant, land use conditions and restrictions (including GFA, plot ratio and height and density limitations), construction of public
facilities, submission of building plans for approval, deadline for commencement of construction, payment of idle fees, deadline for completion of construction, application for extension of the stipulated construction period, restrictions on
subsequent transfers, responsibility for obtaining supply of utilities, restrictions against alienation before payment of the land-grant fee and completion of prescribed development, application of renewal, force majeure, breach of contract and
dispute resolution.

Our PRC subsidiaries, as grantees, and the respective State-owned Land and Resource Bureaus, as the PRC
land authorities responsible for the grant of the state-owned land use rights, have entered into various land grant contracts. The majority of the terms of our PRC subsidiaries land grant contracts are consistent with the model land grant
contract. However, certain terms have been added or amended to suit our PRC subsidiaries circumstances.

If the land
user fails to develop and invest in the land within the period of time specified in the land grant contract, the land bureau has the right to impose various penalties ranging from fines to withdrawal of the grant without consideration (unless the
failure is due to force majeure or the activities of a government authority).

Termination

A land use right terminates upon the expiry of the term of grant specified in the land grant contract and the resumption by the State of
that right.

The State generally will not withdraw a state-owned land use right before the expiration of its term of grant and
if it does so for special reasons, such as for the public interest, it must offer proper compensation to the land user, having regard to the surrounding circumstances and the period for which the state-owned land use right has been enjoyed by the
user.

Upon expiry, the state-owned land use rights and ownership of the related buildings erected on the land and other
attachments may be acquired by the State without compensation. The land user will take steps to surrender the state-owned land use rights certificate and cancel the registration of the certificate in accordance with relevant regulations.



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A land user may apply for renewal of the state-owned land use rights and, if the application
is granted, the land user is required to enter into a new land grant contract, pay a land grant fee and effect appropriate registration for the renewed grant.

Documents of Title and Registration of Property Interests

A
state-owned land use rights certificate is the evidentiary legal document to demonstrate that the registered land user has the lawful right to use the land during the term stated therein. Upon the completion of construction of a building (including
passing the acceptance tests by various government departments), a building ownership certificate will be issued to the owner of the building. The holder of a state-owned land use right who is issued a building ownership certificate holds the
state-owned land use rights and owns the building erected on the land. All holders of state-owned land use rights, and other rights in respect of the land, such as the right to buildings erected on the land, must register all their lawful
state-owned land use rights, as well as ownership rights to the buildings. In Tieling, the state-owned land use rights certificate and the building ownership certificate are separate certificates.

Mortgage and Guarantee

Under PRC laws and regulations, when a mortgage is created on the ownership of a building on state-owned land legally obtained, a mortgage shall be simultaneously created on the state-owned land use
rights of the land on which the building is erected. Pursuant to PRC laws and regulations, buildings newly erected on a piece of urban land after a mortgage contract has been entered into shall not constitute mortgaged property. If the mortgaged
property is auctioned off, the new buildings added on the land may be auctioned together with the mortgaged property, but the mortgagee shall not be entitled to priority compensation from the proceeds of the auction of the new buildings.

Within 30 days after a real estate mortgage contract has been signed, the parties to the mortgage should register the mortgage with the
real estate administration authority in the city where the real estate is situated. A real estate mortgage becomes effective on the date of registration of the mortgage. When carrying out mortgaged property registration, the loan contract and the
mortgage contract as well as the state-owned land use rights certificate or the building ownership certificate in respect of the mortgaged property must be submitted to the mortgagee.

Under PRC laws and regulations, guarantees may be in two forms: (1) general guarantees whereby the guarantor bears the liability
when the debtor fails to perform the payment obligation; and (2) guarantees with joint and several liability whereby the guarantor and debtor are jointly and severally liable for the payment obligation. A guarantee contract must be in writing
and, unless agreed otherwise, the term of a guarantee shall be six months after the expiration of the term for performance of the principal obligation.

Where indebtedness is secured by both a guarantee and by mortgaged property, the guarantors liability shall be limited to the extent of the indebtedness that is not secured by the mortgaged
property.

Property Development

Property development projects in the PRC are generally divided into single projects and large tract development projects. A single project refers to the construction of buildings on a plot of land and the
subsequent sale of units. Large tract development projects consist of the comprehensive development of large area and the construction of necessary infrastructure such as water, electricity, road and communications facilities. The developer may
either assign the state-owned land use rights of the developed area or construct buildings on the land itself and sell or lease the buildings erected on it.



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Foreign entities must establish foreign investment enterprises in the PRC as project
companies to develop property. The typical scope of business of such project companies includes development, construction, sales, leasing and property management of commodity properties and ancillary facilities on the specific land as approved by
the government. The term of the property development company is usually the same as the term of grant of the state-owned land use rights in question.

Establishment of a project company is subject to the approval by the relevant departments of the PRC Government in accordance with the following procedures. First, a project application report is
submitted to the central or local development and reform commission for verification and approval. If the development and reform commission considers the proposed property development project to be consistent with the prevailing national and local
economic plans and foreign investment regulations, it will grant an approval to the applicant in respect of the project.

Once
the project application report has been verified and approved, a joint feasibility study report is prepared that reflects the investors assessment of the overall economic viability of the proposed project company. The feasibility study report
and/or articles of association may then be submitted to the Ministry of Commerce or its local counterpart, as the case may be, for approval. If the Ministry of Commerce or its local counterpart finds the application documents to be in compliance
with PRC law and industrial policy, it will issue an approval certificate for the establishment of the project company. With this approval certificate, the investor can apply to the local administration for industry and commerce for a foreign
investment enterprise business license for the project company.

Regulations on Foreign Investment Real Estate Enterprises

Once a foreign entity developer has established a project company and secured the state-owned land use rights to a
piece of land for development, it has to apply for and obtain the requisite planning permits from the planning departments and have its design plan approved by, and apply for and obtain construction permits from, the relevant construction commission
for commencement of construction work on the land. When the construction work on the land is completed, the completed buildings and structures must be examined and approved by the government departments before they can be delivered to purchasers or
lessors for occupancy.

Based on the advice of our PRC Counsel, Commerce & Finance Law Offices, we acknowledge that
China Tieling Northeast, China Dezhou Northeast and China Hengyang Glorious are treated as foreign investment real estate enterprises engaged in integrated logistics projects and are subject to the requirements imposed on such enterprises.

PRC law requires that a foreign investment project be approved by government authorities at the appropriate level depending
on the amount of the investment by the foreign enterprise and the industries to which the project belongs under the foreign investment catalog. China Tieling Northeast has obtained approval from the Tieling Bureau of Foreign Trade and Economics
Cooperation as a foreign investment enterprise and have subsequently received approval on two occasions to increase the investment capital to US$35.0 million. China Dezhou Northeast has obtained approval from the Dezhou Bureau of Foreign Trade and
Economics Cooperation as a foreign investment enterprise with investment capital of US$49.9 million. China Hengyang Glorious has obtained approval from the Hengyang Bureau of Foreign Trade and Economics Cooperation as a foreign investment enterprise
with investment capital of US$99.99 million.



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Circular No. 171

Issued in response to increasing foreign investment in the real estate industry in recent years, the Opinions on Regulating the Entry of Foreign Capital Into the Real Estate Market and the
Administration Thereof (


LOGO
), or Circular No. 171, issued by the Ministry of Construction, the Ministry of Commerce, the National Development and Reform Commission, the Peoples Bank of China, the State Administration for Industry and
Commerce and the State Administration of Foreign Exchange, on July 11, 2006, may impact foreign investment in the PRC real estate industry in the following areas:



| |  |  | Circular No. 171 requires a foreign invested real estate enterprise, or FIREE, with total investments equating to or exceeding US$10 million to
have a registered capital consisting of no less than 50% of its total amount of investment. FIREEs with total investments below US$10 million must have a registered capital in amounts pursuant to and consistent with existing regulations.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Upon payment of the state-owned land use rights grant fees, the FIREE can apply to the land administration authority for a state-owned land use rights
certificate. Upon obtaining the state-owned land use rights certificate, an FIREE may then obtain a recertification of its existing foreign investment enterprise approval certificate, or FIEAC, and the business license, with the same validity period
as that of such FIEAC; following which, the FIREE may apply to the tax administration for tax registration purposes.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | When a foreign investor merges with a domestic real estate enterprise, or acquires an FIREEs equity or project, the investor is required to
submit a guarantee which ensures the compliance with the provisions of the state-owned land use rights grant contract, construction site planning permit and construction work planning permit, and the state-owned land use rights certificate, and the
modification certification issued by the construction authorities, and the tax payments certification issued by the relevant tax authorities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Foreign investors which merge with domestic real estate development enterprises by share transfer or other methods, or which acquire the equity of a
PRC party in joint venture enterprises, must allocate their employees appropriately, deal with bank debts and settle the lump sum payment of the transfer price through self-owned funds. However, a foreign investor with an unfavorable record should
not be allowed to conduct any of these activities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | FIREEs which have not paid up their registered capital fully, or failed to obtain a state-owned land use rights certificate, or with under 35% of the
total capital required for the project, may not be allowed to obtain a loan in or outside China, and foreign exchange administration departments shall not approve any settlement of foreign loans by such enterprises. Although the Ministry of Commerce
has not issued any further opinions on the regulation of entry of foreign capital into the real estate market, however, based on the Capital Ratios Notice, issued by the State Council on May 25, 2009, this capital requirement may be reduced to
30% in the future.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Any Sino or foreign investors in an FIREE shall not guarantee fixed profit returns or provide other arrangements to the same effect for any party in
any form.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Circular No. 50

The Notice of the Ministry of Commerce and the State Administration of Foreign Exchange on Further Strengthening and Regulating the Examination, Approval and Oversight of Foreign Direct Investment in
the Real Estate Sector (


LOGOLOGO
), or Circular No. 50, issued by the Ministry of Commerce and the State Administration of Foreign Exchange on May 23, 2007 may impact foreign investment in the PRC real estate industry in the following areas:



| |  |  | the local governments/authorities that approve FIREE establishments are now required to file such approvals with the Ministry of Commerce;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | prior to establishing a foreign invested real estate enterprise, foreign investors are required to obtain state-owned land use rights or the ownership
of a real estate building, or the investor should have entered into an indicative land grant contract or indicative project purchase agreement with the land administrative department, developer of the land or owner of the property;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the practice of allowing foreign investors taking over local project companies by way of roundtrip investment is strictly controlled; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a foreign investment enterprise that intends to engage in real estate development, or an existing FIREE which intends to undertake a new real estate
development project, shall first apply to the relevant authorities for such business scope and scale expansion in accordance with laws and regulations on foreign investments.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Circular No. 130

The Notice of the General Affairs Department of the State Administration of Foreign Exchange on Issuance of the List of the First Batch
of Foreign-Invested Real Estate Projects Recorded With the Ministry of Commerce (


LOGOLOGO
), or Circular No. 130, issued by the State Administration of Foreign Exchange on July 10, 2007, is a strict embodiment and application of Circular No. 50, under which some notices will have a significant
impact on offshore financings of FIREEs. Some of the key developments in this area are as follows:



| |  |  | an FIREE which has obtained an FIEAC (including new establishment and registered capital increase) and filed with the Ministry of Commerce after
June 1, 2007 may not incur foreign debt or convert loans in foreign currency into RMB; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an FIREE which obtains an FIEAC after June 1, 2007 but fails to file with the Ministry of Commerce after June 1, 2007, may not conduct a
foreign exchange registration nor a foreign exchange conversion of its registered capital.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Since our PRC
subsidiaries, China Tieling Northeast and China Dezhou Northeast are considered as foreign investment real estate developers after June 1, 2007, we may not inject capital into China Tieling Northeast and China Dezhou Northeast in the form of
shareholders loans. Further, China Tieling Northeast and China Dezhou Northeast are subject to a registered capital ratio requiring them to maintain registered capital levels at 50% or more of their registered total investment.

Qualifications of a Property Developer

Under the Regulations for the Administration of the Qualifications of Real Estate Development Enterprises (


LOGOLOGO
), or Qualification Certificate Regulations, issued by the Ministry of Construction on March 29, 2000, a real estate developer shall apply for registration of its qualifications according to the Qualification
Certificate Regulations.

According to the Qualification Certificate Regulations, a newly established property developer must
first apply for an interim qualification certificate within 30 days of obtaining its business license. The interim qualification certificate has a one-year validity and may be extended for not more than two years with the approval of the relevant
real estate development administration authority. In addition, an application for a formal qualification certificaten must be made one month before the expiration of the interim certificate. All qualification certificates are subject to renewal on
an annual basis. Under government regulations, developers must fulfill all statutory requirements before they may obtain or renew their qualification certificates.



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The Tieling Urban Construction Comprehensive Development Office has granted a short term
(one year) qualification certificate to China Tieling Northeast in order to allow China Tieling Northeast to undertake the development of property necessary for its integrated logistics operations. On August 6, 2009, China Tieling Northeast
obtained from the Liaoning Housing and Urban Rural Construction Bureau an annual renewal of the qualification certificate. On December 22, 2010, China Tieling Northeast obtained from the Liaoning Housing and Urban Rural Construction Bureau a
Qualification Certificate for Real Estate Development Enterprise in Grade III with an effective term until December 21, 2013. After the expiration of its current qualification certificate, China Tieling Northeast will need to renew this
qualification certificate or apply for a qualification certificate in a higher grade.

The Dezhou Housing and Urban Rural
Construction Bureau has granted interim qualification certificates to China Dezhou Northeast and Dezhou Northeast City Property Co., Ltd. to allow China Dezhou Northeast and Dezhou Northeast City Property Co., Ltd to undertake the development of
properties in the PRC. The interim qualification certificates of China Dezhou Northeast will expire on September 30, 2013 and the interim qualification certificate of Dezhou Northeast City Property Co., Ltd. has expired on June 30, 2013
and is in the process of applying to renew the qualification certificate.

Each of China Tieling Northeast, China Dezhou
Northeast and Dezhou Northeast City Property Co., Ltd. have the requisite qualification certificates for engaging in their property development activities. China Tieling Northeast, China Dezhou Northeast and Dezhou Northeast City Property Co., Ltd.
will apply to obtain the requisite qualification certificates for their properties planned for future development in Tieling City, Dezhou City and Qiqihar as required to conduct their operations.

Property Leasing

Both the Urban Land Regulations and the Property Law permit leasing of granted state-owned land use rights and the buildings or homes
constructed on the land. Leasing of properties situated in urban areas is governed by the Measures for Administration of the Lease of Commercial Premises (


LOGO
), or the Leasing Measures, issued by the Ministry of Construction on December 1, 2010. The Leasing Measures came into effect on February 2011 in accordance with Law on the Urban Real Estate Administration (


LOGO
) in order to strengthen the administration of the leasing of urban buildings. The Leasing Measures permit property owners to lease their properties to others for residential or commercial property uses except as
otherwise prohibited by relevant law. The landlords and tenants who are the parties to a property lease transaction are required to enter into a written lease agreement specifying all of the terms of the lease arrangement as required by statute.
Leasing of buildings and the underlying state-owned land use rights must not exceed a maximum term of 20 years. The lease agreement becomes effective upon signing; however, it must be registered with the relevant real property administration
authority at the municipality or county level within 30 days after its execution for the purpose of protecting the tenants interest against claims from third parties. A tenant may, upon obtaining consent from the landlord, assign or sublease
the premises to sub-tenants. Local governments may impose rent controls.

Under PRC laws and regulations, an enterprise legal
person has the right to possess, use, benefit from and dispose of its immovable property and movable property in accordance with laws, administrative regulations and its articles of association. Based on the advice of our PRC Counsel,
Commerce & Finance Law Offices, we believe that our commission lease arrangements are in compliance with and protected by the Property Law.

Since July 2009, China Tieling Northeast has been entering into unit lease contracts with third parties. Agreements with third party tenants are contracts granting the tenants the right to use the units
for a set period of time. Due to the fact that the Property Law and other relevant PRC laws and regulations do not specifically define this right in relation to housing, these agreements are treated as lease agreements.



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Under the Contract Law of the Peoples Republic of China (


LOGO
), or the PRC Contract Law, issued by the National Peoples Congress on March 15, 1999, a lease agreement is an agreement by which a lessor agrees to deliver a thing to a lessee for the lessee to use or collect
fruits from, and for which the lessee agrees to pay rent to the lessor. Based on the advice of our PRC Counsel, Commerce & Finance Law Offices, our agreements with our tenants (a) comply with relevant PRC laws and regulations, and
(b) are legally binding on all parties to such agreements.

We began entering into lease agreements for certain units
prior to obtaining building ownership certificates. Based on relevant PRC laws and regulations, obtaining building ownership certificates is not a prerequisite to enter into lease agreements. In addition, pursuant to the Tieling Measures for
Administration of the Lease of Urban Premises (


LOGO
), within 30 days after the execution of a lease agreement or delivery of a unit, China Tieling Northeast and the tenant of such unit are required to register the lease agreement with the local authority, Tieling Real
Estate Administration Bureau. Although we have not made such registrations, based on the advice of our PRC Counsel, Commerce & Finance Law Offices, this should not affect the effectiveness or validity of our existing lease agreements with
tenants.

In addition, as a property developer, we are subject to a number of measures and regulations recently introduced by
the PRC Government to tighten control of the real property market. The measures include:



| |  |  | tightening lending of bank loans to property developers and purchasers of developed properties and increasing the reserve requirements for commercial
banks;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restricting the ability of foreign invested real estate companies to raise funds offshore for the purpose of funding such companies either through
capital increase or by way of shareholder loans;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restricting the conversion and sale of foreign exchange on the capital account for foreign invested real estate companies that have not undergone an
examination by the local examination and approval authority;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | imposing strict requirements before commencement of a real estate project can begin, including the requirement that proposed projects with a total
investment value of at least RMB50 million establish administration files and receive relevant approval or permits prior to the commencement of construction;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibiting the extension of loans to real estate developers that do not satisfy certain loan conditions, such as those with a percentage of project
capital of less than 35% and those that are not in possession of necessary certificates and permits;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | requiring the payment of an idle land charge for land that is idle for one year and recovery of such land by the State without consideration if the
land is idle for two years;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | requiring property developers to pay all land grant fees prior to issuing land use rights certificates; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | requiring all industrial and commercial land to be granted through an invitation of bids or auction.
| | - |  | ----------------------------------------------------------------------------------------------------

Property Sales

Presale of
Real Estate

Under PRC laws and regulations, real estate developers wishing to engage in the presale of real estate in the
PRC must first obtain the following permits:



| |  |  | Certificate of Real Estate Exploitation and Business License of the Developer;
| | - |  | ------------------------------------------------------------------------------



| |  |  | State-owned Land Use Rights Certificate;
| | - |  | ----------------------------------------



| |  |  | Construction Work Planning Permit;
| | - |  | ----------------------------------



| |  |  | Construction Site Planning Permit;
| | - |  | ----------------------------------



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| |  |  | Work Commencement Permit; and
| | - |  | -----------------------------



| |  |  | Commodity Premises Pre-sale Permit.
| | - |  | -----------------------------------

Under the Measures for the Administration of the Sale of Commodity Premises (


LOGO
), and the Urban Commodity Premises Pre-Sale Measures (


LOGO
) issued by the Ministry of Construction on April 4, 2001 and July 20, 2004, respectively, the sale of commodity premises, which include residential properties, commercial properties (such as China Tieling
Northeasts and China Dezhou Northeasts trade center units) and other buildings that are developed by property developers can include both pre-completion and post-completion sales.

Pre-completion Sales

A developer intending to sell a commodity property
before the completion of construction must attend to the necessary pre-completion sale registration with the real estate administration authority of the relevant city or county to obtain a Permit for Pre-completion Sale of Commodity Properties.

Commodity properties may only be sold before completion provided that:



| |  |  | the grant premium has been paid in full for the grant of the state-owned land use rights involved and a state-owned land use rights certificate has
been obtained;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a Construction Work Planning Permit and a Work Commencement Permit have been obtained;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | the funds invested in the development of the commodity properties put up for pre-completion sale represent 25% or more of the total investment in the
project and the progress of works and the completion and delivery dates have been ascertained; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the pre-completion sale has been registered and a Commodity Premises Pre-sale Permit has been obtained.
| | - |  | -------------------------------------------------------------------------------------------------------

Post-completion Sales

In accordance with the Measures for the Administration of the Sale of Commodity Premises (


LOGO
), or Commodity Premises Sale Measures, issued by the Ministry of Construction on April 4, 2001, commodity properties may be put up for post-completion sale only when the following preconditions for such sale have
been satisfied:



| |  |  | the real estate developer offering to sell the post-completion properties has a valid business license and a qualification classification certificate;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the real estate developer has obtained a state-owned land use rights certificate or other approval documents of land use;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | the real estate developer has the relevant Construction Work Planning Permit and the Work Commencement Permit;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | the commodity property has been completed, inspected and accepted as qualified;
| | - |  | -------------------------------------------------------------------------------



| |  |  | the original residents have been resettled;
| | - |  | -------------------------------------------



| |  |  | the supplementary and essential facilities for supplying water, electricity, heating, gas, communication and other essentials have been made ready for
use, and other supplementary facilities and public facilities have been made ready for use, or the schedule of construction and delivery date of have been specified; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the property management plan has been completed.
| | - |  | ------------------------------------------------

Prior to a post-completion sale of a commodity property, a real estate developer is also required to submit a Real Estate Development Project Manual and other documents showing that the preconditions for
a post-completion sale have been fulfilled to the relevant real estate development authorities.



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Restrictions on the Sale of Commodity Properties

We (through our PRC subsidiaries China Tieling Northeast and Dezhou Northeast City Property Co., Ltd.) are treated by local authorities as
a real estate developer focused on integrated logistics in Tieling and Dezhou, and, as such, is subject to certain PRC laws, regulations and policies otherwise applicable to property development enterprises, including the Commodity Premises Sale
Measures.

Under the Commodity Premises Sale Measures, a real estate developer may not sell a commodity property, by means of
either pre-completion or post-completion sales, through the use of cost-returned sales. In addition, a real estate developer may not sell a commodity property by means of pre-completion sales through the use of any form of after-sale lease
guarantee. According to the Commodity Premises Sale Measures, a cost-returned sale refers to a situation in which a real estate enterprise sells a commercial property by means of periodically returning the price of the property to the
purchaser. According to the Commodity Premises Sale Measures, an after-sales lease guarantee refers to a situation in which a real estate enterprise sells a commercial property by pledging to act as lessee or as lease agent of the
property within a certain period after sale.

Based on the opinion of our PRC Counsel, Commerce & Finance Law
Offices, our commission lease arrangements constitute neither cost-returned sales (or any form thereof) nor after-sale lease guarantees (or any form thereof).

Under the terms of a commission lease agreement with the purchaser of a trade center unit, we maintain the right to lease and receive rental income from the trade center unit for periods of up to three
years as a means of further developing the trade center market.

Based on the advice of our PRC Counsel, Commerce &
Finance Law Offices, we believe that our commission lease agreement should not be considered a cost-returned sale (or any form thereof) and is in compliance with the Commodity Premises Sale Measures and other relevant laws and
regulations because (1) the commission lease agreement is entered into separately from the purchase agreement for the property; and (2) neither the purchase agreement nor the commission lease agreement contains a provision relating to the
periodic return of the price of the property to the purchaser. Based on the above factors, as well as the fact that we do not account for the lease payments under the commission lease agreements as income, Commerce & Finance Law Offices is
of the opinion that the commission lease arrangement should not be viewed as a cost-return sale (or any form thereof).

Based on the advice of our PRC Counsel, Commerce & Finance Law Offices, we believe that our commission lease agreement should not be considered an after-sales lease guarantee (or any
form thereof) and is in compliance with the Commodity Premises Sale Measures and other relevant laws and regulations because (1) we do not pay any consideration to the purchaser of a trade center unit in exchange for the right to use and derive
profits from the trade center unit, and (2) we did not transfer any rental income to the purchaser of a trade center unit. In this regard, we neither pledge to act as lessee nor as lease agent of the property under the commission lease
agreement.

Based on the advice of our PRC Counsel, Commerce & Finance Law Offices, we believe that the commission
lease arrangements do not violate the Commodity Premises Sale Measures or other relevant PRC laws and regulations.



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In accordance with the Notice on Enhancing the Supervision of Real Estate Market and
Improving the Pre-Completion Sales System of Commodity Property (


LOGO
) issued by the Ministry of Housing and Urban-Rural Development of the PRC (MOHURD) on April 13, 2010, a developer is required to abide by the following regulations:

For any commodity property project without a Pre-sale Permit, a developer shall not engage in any form of pre-completion sales (including
subscription, reservation, sequence, VIP card, etc.) or receive any retainer fees /security deposits or participate in any promotion affairs. For any commodity property project with a Pre-sale Permit, a developer must disclose a complete list of all
available premises with the price of each premise within 10 days since the issuance date of the Pre-Sale Permit and strictly follow the disclosed price for selling such premises.

A developer shall not sell any self-reserved premises before the primary registration of property title or participate in fraudulent
transactions. If a developer will engage any real estate agent for selling commodity properties, such agent shall be chosen only from those registered with the relative authorities.

A developer will be subject to severe penalty if not selling within the time limit or not selling all available premises after the
issuance of the Pre-Sale Permit and if intentionally reducing the supply of such premises by overpricing or signing false purchase/sale contracts.

The pre-sale revenue must be put into an escrow account supervised by the relative authorities and be used for the purpose of project construction only.

Commodity properties shall be purchased under the true-name policy. The buyers name shall not be changed without course after the
closing of purchase.

A developer shall be primarily responsible for the quality of its commodity properties. The Plan of
Pre-completion Sales submitted by a developer with interim qualification shall set forth the guarantee party for property quality under the circumstances of the developers bankruptcy or dissolution. Such guarantee party who will issue a
guarantee letter accordingly shall be an independent body corporate and be capable of affording relative indemnities.

In
accordance with the Notice on Further Implementing Regulation and Control of Real Property Market(


LOGOLOGO
) issued by the State Council on February 26, 2013, the issuance the pre-sale certificate may be suspended if the pre-sale price is unreasonably high and the developer refuses to accept the direction of the relevant
government authority, or the property project is not subject to the pre-sale revenue supervision.

Regulations on Real Estate Financing

The PRC Government has introduced a number of measures and regulations to restrict the ability of property developers
to raise capital through external financing and other methods since 2003. For example, commercial banks may not grant loans to property developers for the purposes of paying for land grant fees. In addition, a developer applying for real estate
development loans shall have at least 35% of capital funds required for the development. Further, commercial banks are not allowed to advance their loan facilities to developers who do not have the required 35% or more of the total capital for the
construction projects. Banks shall not accept mortgages of commodity properties remaining unsold for more than three years.



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On April 17, 2010, the State Council of PRC issued the Notice on Controlling the
Skyrocketing Price of Properties in Some Cities (


LOGO
) which sets forth some new regulations on real estate financing as follows:

For any
family (including the borrower and the borrowers spouse and minor children) purchasing its first residential premises of 90 square meters or above, the down payment ratio shall be not less than 30%. For any family purchasing its second
residential premises, the downpayment ratio shall be not less than 50% and the interest rate shall be not less than 110% of the standard interest rate. For any family purchasing its third or above residential premises, the downpayment ratio and
interest rate will be substantially raised up. On June 4, 2010, MOHURD, the Peoples Bank of China and China Banking Regulatory Commission (CBRC) promulgated the Notice on Regulating the Criterion of the Second Residential
Premises for Commercial Home Loans (


LOGOLOGO
). The number of premises for commercial home loans shall be judged by the actual number of premises under the names of the borrowers family members (including the borrower, the borrowers spouse and minor
children). The minimum downpayment ratio was up to 60% regulated by the Notice on the Issues Related to Further Enhancing the Regulation and Control of Real Estate Market(LOGO)issued by the State Council of PRC on January 26, 2011.

For certain
areas with skyrocketing property prices and shortage of supply, the banks may temporarily stop making loans to one or above residential premises. For non-resident without 1 year or above tax or social insurance record, no mortgage loans shall be
made by the banks. If necessary, the local governments may temporarily put limits on the number of properties purchased within a certain time period. For the purchase of properties by foreign institutions or foreign individuals, the relative
policies (Circular No. 171) shall be followed strictly.

The land for welfare houses, rebuilding of shanty areas and
ordinary residential premises shall be no less than 70% of the total supply of residential lands and supplied with top priority. A developer who has violated relative laws and regulations will be restricted on purchasing any new land. The
shareholders of a developer shall not provide loans, entrusted loans, guarantee or other financing against applicable regulations to the developer during the biding and construction process. For any developer participating in land speculation or
with idle land, the banks shall not make new development loans and China Securities Regulatory Commission (CSRC) shall temporarily reject its application for listing, rights issue and material assets restructuring.

On February 26, 2013, the State Council issued the Notice on Further Implementing Regulation and Control of Real Property
Markets (


LOGO
) and required strict implementation of certain on-going restrictive measures with respect to residential properties, including that (i) the restriction area should cover the relevant cities entire
administrative area; the restrictive measures should apply to all the newly established or second-hand residential properties in such cities; and the qualification review of the purchasers should be conducted before the execution of the purchase
agreement or subscription agreement; (ii) the minimum down payment of the total purchase price and the minimum mortgage lending interest rate for a second residential property may be further raised in cities where the housing prices are
increasing at an excessively high rate; (iii) the individual income tax rate for selling any self-owned residential properties should strictly be 20%, if the original value of such properties could be verified through taxation or real estate
registration records.

Regulations on Development of a Real Estate Project

Under the Urban Real Estate Law, those who have obtained state-owned land use rights through grant must develop the land in accordance
with the terms of use and within the period of commencement prescribed in the contract for the state-owned land use rights grant.

If construction work has not been commenced within one year upon the commencement date as set forth in the state-owned land use rights agreement, a surcharge on idle land equivalent to less than 20% of
the land grant fees may be levied. If the construction work has not been commenced within two years, the land can be confiscated without any compensation, unless the delay is caused by force majeure, or the acts of government or acts of other
relevant departments under the government, or by indispensable preliminary work.



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Planning of a Real Estate Project

After signing a state-owned land use rights grant contract, a developer shall apply for an Opinion on Construction Projects Site
Selection and a Construction Site Planning Permit with the city planning authority. After obtaining a Construction Site Planning Permit, a developer may commence planning and design work in accordance with the Construction Site Planning Permit
requirements and proceed to apply for a Construction Work Planning Permit with the city planning authority.

Relocation

Upon obtaining approvals for a construction project, a construction site planning permit, a state-owned land use
rights certificate, a relocation plan and a verification of deposit to compensate parties that are affected by the relocation payable by the developer by a bank, a developer may apply to the local real estate administration authorities where the
real estate is located for a permit for housing demolition and removal.

Upon granting a demolition and removal permit, the
real estate administration department must issue a demolition and removal notice to the inhabitants of the area.

Construction of a Real
Estate Project

After obtaining the Construction Work Planning Permit, a developer shall apply for a Work Commencement
Permit from the relevant construction authority.

Completion of a Real Estate Project

A real estate project must comply with the relevant laws and other regulations, requirements on construction quality, safety standards and
technical guidance on survey, design and construction work, as well as provisions of the relevant construction contract. After the completion of works for a project, the developer shall apply for an acceptance examination to the construction
authority and shall also report details of the acceptance examination to the construction authority. A real estate development project may only be delivered after passing the acceptance examination.

Regulations on Environmental Protection in Construction Projects

Under the Regulations for Administration of Environmental Protection in Construction Projects (


LOGOLOGO
), or Environmental Regulations, issued by the State Council on November 29, 1998 and effective as of the same date, each construction project is subject to an environmental impact assessment by the relevant
authorities.

According to the Environmental Regulations, a developer is required to submit an environmental impact report, an
environmental impact report form, or an environmental impact registration form (as the case may be) to the relevant environmental protection administration for approval during the projects feasibility analysis stage. In the meantime, if any
ancillary environmental protection facilities are necessary in the construction project, such facilities are required to be designed, constructed and used in conjunction with the main project. After completion of the project, the developers are
required to apply to the relevant environmental protection administrations for final acceptance examination in respect of any ancillary environmental protection facilities. Construction projects are approved for use after passing such acceptance
examination.

The Law of the Peoples Republic of China on Environmental Impact Assessments (


LOGO
), adopted by the National Peoples Congress on October 28, 2002 and became effective as of September 1, 2003, provides that if the environmental impact assessment documents of a construction project have
not been examined by the relevant environmental protection administrations or are not approved after examination, the authority in charge of examination and approval of the project shall not approve construction of the project, and the construction
work unit may not commence work.



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A notice issued by the State Environmental Protection Administration on July 6, 2006
provides for stringent examination and approval procedures for various real estate development projects. It also stipulates that no approvals may be issued for new residential projects or extensions in industry development zones, areas impacted by
industrial enterprises or areas where such development poses potential harm to residents health.

Property Management

A property management enterprise shall apply for assessment of qualifications by the qualification approval authority.
An enterprise which passes such a qualification assessment will be issued a qualification certificate evidencing the qualification classification by the authority. No enterprise may engage in property management without undertaking a qualification
assessment and obtaining a qualification certificate. One of our subsidiaries, Tieling North Asia Property Management Co., Ltd., has obtained a property management qualification certificate under the classification grade III, which was issued by
Tieling House Bureau on August 25, 2008. Another of our subsidiaries, Dezhou North Asia Property Management Co., Ltd., has obtained a property management qualification certificate under classification grade III (temporary), which was issued by
Dezhou Property Management Center on September 19, 2011.

Insurance

There are no mandatory requirements under PRC laws and regulations for a property developer to obtain insurance policies for its property
developments. Under standard industry practice in the real estate industry, construction companies are generally required to submit insurance proposals in the course of tendering and bidding for construction projects. Construction companies are
required to pay for the insurance premium at their own costs and obtain insurance to cover their liabilities, such as a third-partys liability risk, an employers liability risk, risk of nonperformance of contract in the course of
construction and risks associated with the construction and installation works during the construction period. The requirement for construction companies to obtain insurance coverage for all of these risks ceases immediately after the completion and
acceptance upon inspection of construction.

Regulation of Foreign Currency Exchange and Dividend Distribution

Foreign Currency Exchange

The principal regulation governing foreign currency exchange in the PRC is the Regulations of the Peoples Republic of China for
the Control of Foreign Exchange (


LOGO
), or the Foreign Exchange Regulations, amended by the State Council on August 1, 2008 and effective on August 5, 2008. Under these regulations, Renminbi are freely convertible for payments of current account
items, such as trade and service-related foreign exchange transactions and dividend payments, but not for expenses of capital, such as direct investment, loans or investments in securities outside the PRC unless the prior approval of the State
Administration of Foreign Exchange is obtained.

Under the Foreign Exchange Regulations, foreign investment enterprises in the
PRC may purchase foreign exchange for trade and service-related foreign exchange transactions without approval by the State Administration of Foreign Exchange by providing commercial documents evidencing these transactions. They may also remit
foreign exchange (subject to a cap approved by the State Administration of Foreign Exchange) to satisfy foreign exchange liabilities or to pay dividends.



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Dividend Distribution and Remittance

Under PRC laws and regulations, wholly foreign owned enterprises in China may only pay dividends out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign owned enterprise in China may be required to set aside at least 10.0% of its after-tax profits based on PRC accounting standards in accordance with
its articles of incorporation and PRC law each year, if any, to PRC statutory reserve until the accumulated reserve amounts to 50.0% of its registered capital. It is also required to set aside funds for the employee bonus and welfare fund from its
after-tax profits each year at percentages determined at its sole discretion. These reserves are not distributable as cash dividends. If the registered capital of a foreign investment enterprise has not been fully paid in accordance with the
articles of association, dividends in foreign currency may not be remitted out of the PRC.

Shareholder Loan

Shareholder loans made to foreign investment enterprises are regarded as foreign debt in China, and are therefore subject to a number of
PRC laws and regulations. Under these regulations, our PRC subsidiaries can legally borrow foreign exchange loans up to their borrowing limits, which is the difference between their respective amounts of total investment and
registered capital as approved by the Ministry of Commerce or its local counterparts. Total investment is the projected amount of funds necessary for a foreign investment enterprise to attain the production or operational
capacity set out in its joint venture contract and/or articles of association, whereas registered capital refers to the equity or capital contributions to be paid in full by the foreign investors. According to the Temporary Regulations
on Foreign Debt Statistics and Monitor issued by the State Administration of Foreign Exchange effective on August 27, 1987, and the Implementing Rules on Foreign Debt Statistics and Monitor issued by the State Administration of Foreign Exchange
effective on January 1, 1998, such loans must be registered and recorded with the State Administration of Foreign Exchange or its local branch. Interest payments on such loans, if any, are subject to a 10% withholding tax unless otherwise
exempted pursuant to applicable tax treaties or tax arrangements between the PRC Government and the government of other jurisdictions.

If the foreign exchange debts of a foreign investment enterprise exceed an enterprises statutory borrowing limits, the foreign investor is required to increase its total investment amount and
registered capital as necessary to comply with these limits.

Taxation

Enterprise Income Tax

The Enterprise Income Tax Law imposes a
uniform tax rate of 25% (compared to a previous top rate of 33%) for all enterprises incorporated or resident in China, including foreign investment enterprises, and eliminates many tax exemptions, reductions and preferential treatments formerly
applicable to foreign investment enterprises.



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Under the Enterprise Income Tax Law that has been effective since January 1, 2008,
enterprises established under the laws of foreign countries or regions whose de facto management bodies are located within the PRC territory are considered as resident enterprises and thus will normally be subject to
enterprise income tax at the rate of 25% on global income. In particular, non-resident enterprises with an institution or establishment in China must pay enterprise income tax at the rate of 25% on taxable income derived by such institution or
establishment within China as well as on taxable income earned outside China which has a de facto connection with such institution or establishment. Non-resident enterprises without any institution or establishment within China, or
non-resident enterprises whose income has no connection to its institution or establishment inside China must pay a withholding income tax at the rate of 10% on taxable income derived from inside China, unless otherwise exempted pursuant to
applicable tax treaties or tax arrangements between the PRC Government and the government of other jurisdictions. Under the Enterprise Income Tax Law, dividends, bonuses and other equity investment proceeds received by an enterprise are exempted
from Enterprise Income Tax if distributed between qualified resident enterprises or if obtained by a nonresident enterprise with institutions or establishments in China from a resident enterprise and having a de facto connection with
such institutions or establishments. However, even if we are unable to satisfy the requirements for this exemption from withholding tax on the dividends we receive from our subsidiaries in China, we are entitled to a reduced withholding tax of 5% on
dividend payments due to a tax treaty between China and Hong Kong, which became effective on December 8, 2006. The tax treaty provides that a company incorporated in Hong Kong may be subject to a withholding tax of 5% on dividends it receives
from its PRC subsidiaries if it holds a 25% or more interest in the PRC company, or at the rate of 10% if it holds less than a 25% interest in the PRC company.

The regulations implementing the Enterprise Income Tax Law, or the Implementation Regulations, define the term de facto management body as the place where the exercising, in substance,
of the overall management and control of the production and business operation, personnel, accounting and properties of a non-PRC company is located. The determination of tax residency in a particular situation requires a review of the
surrounding facts and circumstances and the mechanism provided in the Implementation Regulations gives the relevant taxation authority discretion in applying its judgment.

Business Tax

Under the Provisional Regulations of the PRC on
Business Tax issued by the State Council which took effect on January 1, 2009 and the related implementation rules, a business tax is levied on all units and individuals engaged in taxable services, the transfer of intangible assets or the sale
of immovable properties within the territory of the PRC. The tax rates range from 3% to 20% depending on the type of services provided. Most of our PRC subsidiaries which engage in services pay business tax at tax rates of 5%.

According to the Circular on Printing and Issuing the Pilot Program for Transition from Business Tax to Value Added Tax (


LOGO
) jointly issued by the MOF and State Administration of Taxation on October 16, 2011, the MOF and the State Administration of Taxation introduced two new band rates of 11% (transportation and construction
industries) and 6% (part of modern service industries) on the basis of the standard value-added tax rate of 17% and the lesser value-added tax rate of 13% first commenced in Shanghai on January 1, 2012. Furthermore, nine cities and provinces
have also officially applied to participate, specifically Tianjin, Chongqing, Jiangsu, Anhui, Fujian, Xiamen, Shenzhen, Hunan and Hainan in accordance with the Circular on Implementing the Pilot Policy of Transition on Business Tax to Value-Added
Tax in Eight Cities and Provinces Including Beijing (


LOGOLOGO
) jointly issued by the MOF and State Administration of Taxation. On April 10, 2013, the State Council decided that such policy be implemented in all the areas within China since August 1, 2013. Therefore,
storage and other services provided by our Company may be subject to the policy of the transition from business tax to value-added tax since August 1, 2013.



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Land Appreciation Tax

Under PRC laws and regulations, our PRC subsidiaries that engage in integrated logistics and trade center development activities are subject to land appreciation tax for properties sold. Land appreciation
tax is levied on China Northeast by local tax authorities in accordance with the Interim Regulations on Land Appreciation Tax (


LOGO
), issued by the State Council on December 13, 1993, which provides that all enterprises and individuals, domestic and foreign, who receive income as a result of a grant of state-owned land use rights are subject to
payment of land appreciation tax. Land appreciation tax is levied upon the appreciation value of property upon sale or transfer, as defined in the relevant tax laws. All taxable gains from the sale or transfer of land use rights,
buildings and related facilities in China are subject to land appreciation tax at progressive rates that range from 30% to 60%. On December 28, 2006, the State Administration of Taxation issued the LAT Notice, which came into effect on
February 1, 2007. The LAT Notice sets forth, among other things, methods of calculating land appreciation tax and the time frame for settlement of land appreciation tax.

On May 19, 2010, the State Administration of Taxation issued a supplementary LAT Notice (


LOGOLOGO
) which clarifies the details of income confirmation and deduction items.

Value-Added Tax

Under PRC regulations which took effect on January 1, 2009, all units and individuals engaged in the sales of
goods, provision of processing, repairs and replacement services, and the importation of goods within the territory of the PRC are taxpayers of value-added tax, and shall pay value-added tax at tax rates of between 3% and 17%, depending on the
activities in which they engage. Tieling North Asia Development Co., Ltd. and China Tieling Northeast are also required to pay value-added tax under local regulations.

Dividends from Our China Operations

Under PRC tax laws, regulations
and rulings applicable to years prior to 2008, dividends from our operations in China paid to us were exempt from any PRC withholding or income tax. The Enterprise Income Tax Law as currently in effect provides that a withholding tax rate of 10%
will normally be applicable to dividends payable to non-PRC investors that are derived from sources within the PRC, but with a possibility of exemption or reduction. The Implementation Regulations reduce the withholding tax rate for non-PRC
residents to 10%. As a result, effective from January 1, 2008, dividends paid by foreign investment enterprises to non-PRC resident shareholders are subject to withholding tax at an ordinary rate of 10%, unless otherwise exempted or reduced by
PRC laws and regulations or in accordance with arrangements or treaties between the PRC Government and the government of any other jurisdiction where such non-PRC resident shareholder is registered. Currently we are entitled to a reduced withholding
tax of 5% on divided payments due to a tax treaty between China and Hong Kong, which became effective on April 1, 2007.

Dividends
paid by the Company to our Overseas Investors

Prior to January 1, 2008, the distribution of dividends by a
company to its overseas investors was not subject to PRC tax. However, if we are deemed as a resident enterprise under the Enterprise Income Tax Law, which has been effective since January 1, 2008, the dividends we declare and pay after
January 1, 2008 to our investors, including non-PRC investors, will be subject to corporate income tax or income withholding tax unless otherwise exempted.

Transfer or Disposition of Our Shares

As we are not incorporated in
the PRC, under the previous PRC law applicable prior to January 1, 2008, any transfer or disposition of shares of the Company by a non-PRC investor does not trigger PRC tax liabilities. However, if we are deemed a resident enterprise under the
new Enterprise Income Tax Law which took effect on January 1, 2008, any gain on transfer or disposition of shares of the Company will be subject to corporate income tax, unless otherwise exempted or reduced by PRC laws and regulations or in
accordance with arrangements or treaties between the PRC Government and the government of any other jurisdiction where such non-PRC resident investor is registered.



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Environmental Matters

We are subject to various environmental laws and regulations set by the PRC national, provincial and municipal governments with respect to our logistics platform businesses, where our projects are
normally required to undergo an environmental impact assessment by government-appointed third parties, and a report of such assessment needs to be submitted to the relevant environmental authorities in order to obtain their approval before
commencing construction. Upon completion of each project, the relevant environmental authorities inspect the site to ensure the applicable environmental standards have been complied with, and the resulting report is presented together with other
specified documents to the relevant construction administration authorities for their approval and recordation. Approval from the environmental authorities on such report is required before delivery of the properties. In the past, we have not
experienced any difficulties in obtaining such approvals for commencement of construction and delivery of completed projects. Our operations have not been subject to payment of material fines or penalties for violations of environmental regulations.

Due to the relatively low impact of our operations on the environment, our environmental compliance costs have not been
substantial. There was no environmental compliance cost incurred for both fiscal years 2013 and 2012.



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C. Organizational Structure

The following chart shows our corporate structure as of March 31, 2013, including all our significant subsidiaries, with the shareholding percentage and jurisdiction of incorporation of each company:



LOGO



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##### Table of Contents

D. Property, Plants and Equipment

Property

Hong Kong

Headquarters. We entered into a tenancy agreement for a property at Suite 803, 8th Floor, Tower 1, The Gateway, 25 Canton Road,
Tsimshatsui, Kowloon, Hong Kong, for a term of three years commencing from December 15, 2009, which comprised approximately 1,072 square feet. The tenancy agreement was replaced by a new tenancy agreement dated January 18, 2011 with a new
property at Suite 2204, 22th Floor, Sun Life Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong for a term of approximately three years commencing from Mach 21, 2011 to March 16, 2014, which comprises approximately 1,512 square
feet.

Peoples Republic of China

Office and sales facilities. We own an administrative tower, a 5-story building with total gross floor area of approximately 10,757, and a sales center, a 2-story building with total gross floor
area of approximately 2,265 square meters at China Northeast Logistics CityTieling, Zuanshi Road, Xincheng District, Tieling City, Liaoning Province, PRC, which are staffed by management and office personnel. We have land use rights and
building ownership rights for the buildings in which our China Northeast Logistics CityTieling office and sales center are located. Our China administrative office for China Northeast Logistics CityDezhou is located at Tianqu Industrial
Zone, Decheng District, Dezhiu, Shandong Province, PRC, which comprises approximately 1,200 square meters, and is provided by Tianqu Industrial Zone Committee on a rent-free basis. Our China administrative office for Shenzhen head office is located
at Suite 2119-2123, 2125-2127, 21/F, Global Logistics Center, Pinghu, Longgang District, Shenzhen, PRC, which is comprised of approximately 564 square meters and is staffed by management and office personnel.

Properties for sale and lease. Phase I of China Northeast Logistics CityTieling will cover a planned GFA of approximately
2.0 million square meters. As of March 31, 2013, construction of approximately 514,680 square meters of trade centers and residential properties were completed, out of which, approximately 301,000 square meters were sold; whereas among
approximately 2,600 completed trade center units for lease, approximately 430 units were leased out. China Northeast Logistics CityDezhou is expected to provide GFA of approximately 15.0 million square meters. As of March 31, 2013,
construction of approximately 231,000 square meters of trade centers were completed, out of which, approximately 162,000 square meters were sold.



|Item 4A. | Unresolved Staff Comments
|-------- | -------------------------

None.



|Item 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act, including, without limitation, statements
regarding our expectations, beliefs, intentions or future strategies that are signified by the words expect, anticipate, intend, believe, the negative of such terms or other comparable terminology. All
forward-looking statements included in this document are based on information available to us on the date hereof, and we undertake no obligation to update any such forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth above in Item 3. Key InformationD. Risk Factors. We caution you that our business and financial
performance are subject to substantial risks and uncertainties, including the factors identified in Item 3. Key InformationD. Risk Factors, that could cause actual results to differ materially from those in the forward-looking
statements.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included
elsewhere in this Annual Report. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these
forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report, particularly those under Cautionary Statement Concerning
Forward-Looking Statements and Risk Factors.

The Company was previously a wholly-owned subsidiary of
Man Sang Holdings, Inc. (MSHI), a United States domestic company incorporated in the State of Nevada whose common stocks were listed on the NYSE MKT with ticker symbol MHJ.On August 25, 2009, at a general
meeting, for the purpose of the redomicile of MSHI from the United States to the British Virgin Islands, the shareholders of MSHI resolved to carry out a group reorganization (the Reorganization) whereby, inter alia, MSHI was dissolved
and liquidated and the Company contractually assumed all rights, title, obligations and liabilities of MSHI pursuant to the terms and subject to the conditions of the agreement and plan of the dissolution and liquidation of MSHI.As a result
of the Reorganization, the Company succeeded MSHI as the holding company its subsidiaries (the Group) on August 25, 2009 with its ordinary shares being listed on the NYSE MKT as a non-United States domestic company.From its
inception in August 1995 through the effective date of the Reorganization on August 25, 2009, the Company was a wholly-owned subsidiary of MSHI.

Upon the effective date of the Reorganization, the Company and its subsidiaries continued to conduct the business previously conducted by MSHI and its subsidiaries (including the Company).Although the dissolution and liquidation of MSHI resulted in the cessation of MSHI as the holding company of the Group, the dissolution and liquidation had no material impact on our financial condition or operating results, other than the costs
incurred in connection with its dissolution and liquidation.As the Company contractually assumed all rights, title, obligations and liabilities of MSHI upon the terms and subject to the conditions of the agreement and plan of the dissolution
and liquidation, there was a continuation of the risks and benefits to the ultimate controlling owners that existed prior to the dissolution and liquidation of MSHI.Accordingly, the Reorganization has been accounted for as a reorganization
of entities under common control in a manner similar to pooling-of-interests.On this basis, the Company has been treated as the holding company of MSHI in all periods presented in the financial statements rather than from the effective date
of the Reorganization.

Subsequent to the Reorganization, pursuant to an agreement and plan of merger or the Merger
Agreement, dated as of February 19, 2010, by and among the Company, China Metro-Rural Limited and Creative Gains Limited (Creative Gains) (a wholly-owned subsidiary of the Company), Creative Gains was merged with and into China
Metro (the Merger). Immediately after the Merger, Creative Gains ceased and China Metro became a wholly-owned subsidiary of the Company. The acquisition of equity interest of China Metro-Rural Limited has been accounted for as a
combination of entities under common control in a manner similar to pooling of interests as both the Company and China Metro-Rural Limited were controlled by Mr.Cheng Chung Hing, Ricky immediately prior to and immediately after the
Merger. On this basis, the consolidated financial statements of China Metro-Rural Holdings Limited for periods prior to the Merger have been restated to include, to the extent of the equity interest of China Metro-Rural Limited held by
Mr. Cheng Chung Hing, Ricky, the assets and liabilities and results of operations of China Metro-Rural Limited for those periods as if China Metro-Rural Holdings Limited had owned China Metro-Rural Limited at the beginning of the financial
period reported in the consolidated financial statements or when MSBVI and China Metro-Rural Limited came under common control by Mr. Cheng Chung Hing, Ricky, whichever is later, and all assets and liabilities of China Metro-Rural Limited have
been stated at historical carrying amounts. The acquisition by the Company of interest owned by all the shareholders of China Metro, including Mr. Cheng, was treated as an equity transaction at the completion date of the Merger.



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On July 28, 2010, the Company declared a dividend to its shareholders by way of
distribution in specie of the entire equity interest in MSIL held by the Company, represented by 494 million ordinary shares, or the Distribution, and was completed in August 2010. Upon the completion of the Distribution, the Group no longer
held any interests in MSIL and has discontinued its pearls and real estate businesses, or Man Sang Discontinued Operations, which was previously operated through MSIL. Details of results of Man Sang Discontinued Operations is set forth above in
Item 3. Key InformationA. Selected Financial Data.

On November 30, 2012, the Company disposed of its
entire interest in CFC HK and, in effect, disposed of its entire interest in Qiqihar CFC, which represented Qiqihar Discontinued Operations. The Group will continue to carry out its rural-urban migration and city re-development business through
other subsidiaries. Details of results of Qiqihar Discontinued Operations is set forth above in Item 3. Key InformationA. Selected Financial Date.

Unless otherwise specified, references to Notes to the audited consolidated financial statements are to the Notes to our audited consolidated financial statements as of March 31, 2013 and 2012 and
for the years ended March 31, 2013, 2012 and 2011.

Overview

At the end of the fiscal year ended March 31, 2013, the Group had two main business segments, our Agricultural Logistics Operation
and Rural-Urban Migration and City Re-development Operation, which are presented as the continuing operations on the face of the consolidated income statements of the Group for the fiscal years ended March 31, 2013, 2012 and 2011.

As a result of the disposal of HK CFC and Qiqihar CFC, our Rural-Urban Migration and City Re-development OperationsQiqihar was
classified as Qiqihar Discontinued Operations, which comprised of (1) servicing and assignments of development rights and (2) development and sale of residential, commercial and other auxiliary properties in new city center district of
Qiqihar City.

Another of our discontinued business segments was engaged in the purchase, processing, assembling,
merchandising and wholesale distribution of pearls and jewelry products, or the Pearl Operation. We were one of the worlds largest purchasers and processors of saltwater cultured and freshwater cultured pearls.

Another of our discontinued business segment was engaged in real estate development and real estate leasing, or the Real Estate
Operation. We operated real estate for lease and sale in Hong Kong and the PRC, including (1) an industrial complex located in the Shenzhen Special Economic Zone, PRC, or the Man Sang Industrial City; (2) China Pearls and Jewellery City, a
market center with various supporting facilities, including manufacturing, processing, exhibition and residential facilities, among others, located in Shanxiahu, Zhuji, Zhejiang Province, PRC; and (3) commercial and residential properties in
Hong Kong, or the Hong Kong Properties.

The Pearl Operation and Real Estate Operation together comprised Man Sang
Discontinued Operations.

Our Agricultural Logistics Operations are engaged in the development and operations of large scale,
integrated agricultural logistics and trade centers in Northeast China that facilitate a relationship between sellers and buyers of agricultural products and small goods, provide relevant physical platform and timely marketing information and
intelligence, provide a transparent and competitive market price discovery mechanism and provide infrastructure to enhance the living standards of those from the rural area.

Our Rural-Urban Migration and City Re-development Operations is comprised of (1) servicing and assignments of development rights and (2) development and sales of residential, commercial and
other auxiliary properties in new city center districts.



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Following the Distribution discussed above, it resulted in the discontinuation of the Pearl
Operation and the Real Estate Operation, or, collectively, Man Sang Discontinued Operations, which were previously carried out through MSIL. Following of the disposal of HKCFC and Qiqihar CFC, which resulted in Qiqihar Discontinued Operations. As a
result of such discontinuation, the results of operations of Man Sang Discontinued Operations and Qiqihar Discontinued Operations have been presented as a single line item on the face of the consolidated income statement of the Group. We are now
entirely focused on being one of the leading developers and operators of large scale, integrated agricultural logistics and trade centers and rural-urban migration and city re-development business.

Critical Accounting Policies

Managements discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements. These statements have been prepared in accordance with
International Financial Reporting Standards, or IFRS, as issued by the IASB. These principles require management to make certain estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and
related notes. Actual results could differ from these estimates. Periodically, we review all significant estimates and assumptions affecting the consolidated financial statements and records the effect of any necessary adjustments.

We have identified certain accounting policies that involve subjective assumptions and estimates as well as complex judgments relating to
certain accounting items. Set forth below are those accounting policies that we believe involve the most significant estimates and judgments used in the preparation of our financial statements.

Revenue and Other Income

Revenue from sales of properties

Revenue from sales of properties is recognized when the risks and rewards related to the properties are transferred to purchasers, which is when the construction of relevant properties has been completed,
title to the properties has been delivered to the purchasers and collectability of related receivables is reasonably assured. Revenue is recognized only to the extent collectability of such receivable is reasonably assured.

Revenue from servicing and assignments of development rights

In its rural-urban migration and city re-development business, the Company develops and sells residential, commercial and other auxiliary properties as well as assigns the development rights to
independent third party developers on portions of land plots that have already been designated by the local government under the framework agreement for development by such independent third parties. In connection with providing the development
rights to the independent third party developers, the Company agrees with the independent third party developers to construct certain economical housing units on behalf of the third party developers as the local government requires all
property developers to construct certain economical housing units.

In order for the independent third party
developers to acquire land use rights within the land plots that have already been designated by the local government under the framework agreement, the Company is required to provide certain services by liaising between the local government and the
independent third party developers to ensure the independent third party developers are able to secure the land use rights at a certain price. Once the independent third party developers have successfully secured the land use rights and the
collectability of the related receivables is reasonably assured, the Company would recognize the related revenue for the services performed. With regards to the obligations of constructing the economical housing units, the Company would
defer the related revenue which approximates the fair value of the economical housing units until the economical housing units are completely constructed and delivered to the local government.

As part of the aforementioned transaction, the Company would also provide certain financing to the independent third party developers, as
necessary. Such financing is interest bearing and is repayable within one year.



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Revenue from sales of properties with operating leaseback

As part of the Companys overall strategy to develop property projects with specific themes, in relation to sales of certain
properties, immediately following sale of such properties, the Company leases back the properties from purchasers for periods ranging from 3 to 5 years either for an insignificant amount of rental payments or free of charge. As lease back of the
properties for an insignificant amount of rental payments or free of charge was arranged as part of the sale of these properties, the Company determined the fair value of lease payments it would ordinarily make to lease such properties from other
independent owners based on factors such as expected occupancy rates, rental yields etc. and included it as part of the sales consideration received with a corresponding debit to prepaid operating lease payments. Since the fair value of lease
payments the Company would ordinarily make to lease such properties was estimated to be insignificant, the Company did not separately recognize it as part of the sales consideration received with a corresponding debit to prepaid operating lease
payments. Such transactions are accounted for as a sale and operating leaseback given that as part of the sale transaction, the Company disposes of substantially all risks and rewards of owning the property. In concluding that substantially all
risks and rewards of owning the property have been transferred, the Company considers the short period of the lease and the expected future rentals it could earn by letting out these properties, which are insignificant relative to the value of the
property.

The leaseback is considered as an operating lease due to (i) the ownership of the property will not transfer
back to the Company by the end of the lease term; (ii) the Company does not have the option to purchase the property at the end of the lease term; (iii) the lease term is not the major part of the economic life of the property;
(iv) at the inception of the lease, the fair value of the property is significantly higher than the present value of the minimum lease payments; and (v) any gains or losses from the fluctuation in the fair value of the property rest to
purchasers. In addition, operating leases rentals paid to purchasers are recorded as an expense on a straight line basis over the period of the lease.

To promote sales of certain properties, the Company, through its Man Sang Discontinued Operations, conducted a promotional sale of these properties during fiscal year ended March 31, 2010 and fiscal
year ended March 31, 2011 prior to the Distribution wherein it sold such properties at special rates to selected purchasers which was different from the normal sales of properties as discussed above where no special rates were given. Sales
consideration for these properties included an explicitly agreed transaction price to be settled in cash plus a lease back of these properties to the Company free of charge for 5 years. As lease back of the properties free of charge was arranged as
part of the sale of these properties as well as the sales of these properties were at special rates, the Company determined the fair value of lease payments it would ordinarily make to lease such properties from other independent owners based on
factors such as expected occupancy rates, rental yields etc. and included it as part of the sales consideration received with a corresponding debit to prepaid operating lease payments. The leaseback is considered as an operating lease for the same
reasons as explained above. The prepaid operating lease payments will be amortized and recognized as operating leases expense on a straight line basis over the 5 year period of the lease.

Promotional sale of certain properties

As discussed under Revenue
from sales of properties with operating leaseback, the Company, through Man Sang Discontinued Operations, conducted a promotional sale of certain properties during the year. Sales consideration for these properties included an explicitly
agreed transaction price to be settled in cash plus a lease back of these properties to the Company free of charge. Of the explicitly agreed transaction price, the Company received a down-payment of 24% in cash amounting to HK$18,459,000 and
HK$4,147,000 in the fiscal year ended March 31, 2010 and year ended March 31, 2011 prior to the Distribution, respectively, upon transfer of title to the properties with the remainder HK$71,167,000 and HK$13,131,000, respectively, being
receivable in future. As all the revenue recognition criteria had been met, the Company recorded this as a revenue transaction. Having considered a number of factors such as the overall state of the property market, the prospects of the properties
and profile of individual buyers, management determined that the collectability of the receivable was not reasonably assured at the date of sale. Accordingly, revenue was recorded only to the extent of cash received.



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Revenue from sales of goods

Sale of goods is recognized on transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has passed.

Revenue from leasing of investment properties

Rental income under operating leases is recognized in the period in which the properties are let out and on a straight-line basis over the term of the relevant lease, including the rent free periods.

Revenue from property management service

Revenue from property management service is recognized when services are rendered.

Others

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that discounts the estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount.

Dividend income from investments is recognized when the rights to receive payments have been established.

Land Appreciation Tax

Land appreciation tax provisions represent provisions for the estimated land appreciation tax payable in relation to our properties sold during a period. We make provisions based on our own calculations
in accordance with our understanding of the relevant laws and regulations. Our estimate of land appreciation tax provisions requires us to use significant judgment with respect to the appreciation of land value and the allowability of deductible
items for income tax purposes. Disagreements with the taxing authorities could subject us to additional taxes, and possibly, penalties.

Valuation of Properties

We state our investment properties, investment properties under construction and leasehold land and buildings at their fair value as non-current assets on our consolidated statements of financial position
on the basis of valuations supported by a qualified independent professional valuer, Savills Valuation and Professional Services Limited. We provide the independent professional valuer with various information for the valuer to use as a basis for
valuation.

We state our properties held for sale classified as current assets on our consolidated statements of financial
position, at the lower of cost and net realizable value on an individual property basis. Cost includes all development expenses, applicable borrowing costs and other direct costs attributable to the development of such properties. Net realizable
value is determined by reference to the prevailing market prices on an individual property basis.

We state our property,
plant and equipment as non-current assets on our consolidated statements of financial position. We state our property, plant and equipment at cost less impairment losses, with the exception of leasehold land and buildings, which are not depreciated.
Cost includes the direct costs, direct costs of construction and capitalized borrowing costs on related borrowings during the period of construction. Properties under development are transferred to the appropriate category of property, plant and
equipment or properties held for sale when completed and ready for use.



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During the fiscal year ended March 31, 2013, the amount of salaries capitalized in
investment properties, investment properties under construction and properties under development were nil, HK$25,000 and HK$9,510,000 respectively. During the fiscal year ended March 31, 2012, the amount of salaries capitalized in investment
properties, investment properties under construction and properties under development were nil, HK$341,000 and HK$7,401,000, respectively. The amounts of external (construction costs only) and internal costs (salaries and other indirect expenses
that are directly attributable to construction of properties) incurred and capitalized during the fiscal year ended March 31, 2013 and 2012 were:



|               |  |                      |   |  |                                       |  |     |                            |  |  |                      |  |  |                                       |   |  |                            |  |        |  |  |  |         | 
|-------------- |  | -------------------- | - |  | ------------------------------------- |  | --- | -------------------------- |  |  | -------------------- |  |  | ------------------------------------- | - |  | -------------------------- |  | ------ |  |  |  | ------- | 
|               |  | 2013                 |   |  | 2012                                  | 
|               |  | InvestmentProperties |   |  | Investmentpropertiesunderconstruction |  |     | Propertiesunderdevelopment |  |  | InvestmentProperties |  |  | Investmentpropertiesunderconstruction |   |  | Propertiesunderdevelopment | 
|               |  | HK$000              |   |  | HK$000                               |  |     | HK$000                    |  |  | HK$000              |  |  | HK$000                               |   |  | HK$000                    | 
|External costs |  |                      |  |  |                                       |  | 255 |                            |  |  | 379,117              |  |  |                                       |  |  |                            |  | 40,287 |  |  |  | 925,464 | 
|Internal costs |  |                      |  |  |                                       |  | 46  |                            |  |  | 12,459               |  |  |                                       |  |  |                            |  | 429    |  |  |  | 9,388   | 
|               |  |                      |   |  |                                       |  |     |                            |  |  |                      |  |  |                                       |   |  |                            |  |        |  |  |  |         | 
|               |  |                      |  |  |                                       |  | 301 |                            |  |  | 391,576              |  |  |                                       |  |  |                            |  | 40,716 |  |  |  | 934,852 | 
|               |  |                      |   |  |                                       |  |     |                            |  |  |                      |  |  |                                       |   |  |                            |  |        |  |  |  |         | 

Impairment of trade receivables

The management determines the provision for impairment of trade receivables on a regular basis. This estimate is based on the credit history of its customers and prevailing market conditions. Management
reassesses the provision for impairment of trade receivables at the statements of financial position date. In respect of the trade receivables past due but not impaired, majority of which are related to sales of properties in mainland China, they
are due to the reason that longer time is normally required for customers to apply for mortgages in the location at which the Companys subsidiaries are operated. As most of these mortgages were approved by banks and balances settled subsequent
to the date of statement of financial position and additional resources have been invested to monitor the progress of mortgage application, management considered that these receivables are fully recoverable.

Recoverability of completed properties held for sale and properties under development

We perform a regular review on the carrying amounts of completed properties held for sale and properties under development as these
property projects are in their early stages and we have invested significant amount of capital in them. Furthermore, all our current property projects are located in China as discussed under Business Overview where the PRC Government can
exercise significant control over Chinas economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or
companies. Accordingly, policies and other measures taken by the PRC Government to regulate the economy could have a significant negative impact on economic conditions in China, with a resulting negative impact on our business which is further
discussed under Risk Relating to Doing Business in the PRC.

More recently, the Chinas real GDP has
continued to grow even though at a slower rate resulting from a recent global economic downturn which also slowdown the economy in the PRC. Accordingly, the PRC Government has introduced certain stimulus package aimed at offsetting the slow down
brought by the financial crisis. In addition, the PRC Government has introduced certain macroeconomic measures to control perceived overinvestment in the real property market. Considering the overall state of the PRCs economy, specifically the
real estate market which could potentially have a negative effect on the recoverability our property projects, we will consider write-down of our property projects when the estimated net realizable value of these property projects. In determining
the net realizable value, asides from the aforementioned factors, we will also consider the latest economic measures introduced by the local government, recent global and local economic developments, recent sales transactions of the Group and other
similar properties in the surrounding areas, marketability of the Groups existing properties, market survey reports available from independent property valuers, internally available information and managements expectation on future
sales.



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Impairment of long-lived assets

We conduct impairment review of assets when events of changes in circumstances indicate that their carrying amount may not be recoverable
or annually in accordance with relevant accounting standards. An impairment loss is recognized when the carrying amount of an asset is less than the greater of its net selling price or the value in use. In determining the value in use, we assess the
present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Estimates and judgments are applied in determining these future cash flows and the discount
rate.

Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with
changes in their fair value.

The derivative component of the convertible bonds is recognized initially at the fair value. The
liability component is recognized initially at the difference between the fair value of the convertible bonds as a whole and the fair value of the derivative component. Any directly attributable transaction costs are allocated to the derivative
financial liability and the liability components in proportion to their initial carrying amounts.

Derivative financialinstruments

Derivative financial instruments issued by the Company comprise warrants that
can be exercised to purchase share capital of the Company at the option of the holder and derivative component of convertible bonds. The number of shares to be purchased upon exercise of the warrants or conversion of convertible bonds does not vary
with changes in their fair values. Derivative liabilities instruments are initially and subsequently measured at fair value through profit or loss and any gains or losses derived from its changes in fair values are recognized in the consolidated
income statement unless the derivative financial liabilities are qualified for hedge accounting. Transaction costs attributable to the issue of derivative financial instruments are charged to the consolidated income statement during the period in
which they are incurred. The fair values of derivative financial instruments were determined by management based in part on valuations performed by qualified independent professional valuers, Savills Valuation and Professional Services Limited and
Intelliwise Engineering Advisory Corp. Ltd. We provide the independent professional valuers with various information for the valuers to use as a basis for valuations.



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A. Operating Results

Consolidated Results of Operations

The following is a discussion of our
consolidated results of operations for the years ended March 31, 2013, 2012 and 2011:



|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|------------------------------------------------------------ |  | ------- | -------- | - | ------- |  | -------- | ------- |  |  | -------- | -
|                                                             |  | 2013    |          |   | 2012    |  |          | 2011    | 
|                                                             |  | HK$000 |          |   | HK$000 |  |          | HK$000 | 
|Continuing operation:                                        |  |         |          |   |         |  |          |         |  |  |          |  
|Revenue                                                      |  |         | 284,759  |   |         |  | 765,872  |         |  |  | 581,573  |  
|Cost of sales                                                |  |         | (217,955 | ) |         |  | (467,195 | )       |  |  | (352,265 | )
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|Gross profit                                                 |  |         | 66,804   |   |         |  | 298,677  |         |  |  | 229,308  |  
|Other income, net                                            |  |         | 67,535   |   |         |  | 61,363   |         |  |  | 68,234   |  
|Other (losses)/gains, net                                    |  |         | (69,617  | ) |         |  | 6,828    |         |  |  | 120,456  |  
|Selling expenses                                             |  |         | (32,254  | ) |         |  | (24,212  | )       |  |  | (22,436  | )
|Administrative expenses                                      |  |         | (112,504 | ) |         |  | (117,922 | )       |  |  | (64,748  | )
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|Operating (loss)/profit                                      |  |         | (80,036  | ) |         |  | 224,734  |         |  |  | 330,814  |  
|Finance income/(costs)net                                   |  |         | 4,384    |   |         |  | 389      |         |  |  | (3,124   | )
|Share of loss of an associate                                |  |         | (1,606   | ) |         |  | (2,456   | )       |  |  | (386     | )
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|(Loss)/profit before income tax                              |  |         | (77,258  | ) |         |  | 222,667  |         |  |  | 327,304  |  
|Income tax expenses                                          |  |         | (35,746  | ) |         |  | (90,202  | )       |  |  | (124,630 | )
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|(Loss)/profit for the year from continuing operation         |  |         | (113,004 | ) |         |  | 132,465  |         |  |  | 202,674  |  
|Discontinued operations:                                     |  |         |          |   |         |  |          |         |  |  |          |  
|Profit for the year from discontinued operations, net of tax |  |         | 17,532   |   |         |  | 98,594   |         |  |  | 29,878   |  
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|(Loss)/profit for the year                                   |  |         | (95,472  | ) |         |  | 231,059  |         |  |  | 232,552  |  
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|Attributable to:                                             |  |         |          |   |         |  |          |         |  |  |          |  
|Equity holders of the Company                                |  |         | (101,104 | ) |         |  | 208,986  |         |  |  | 227,346  |  
|Non-controlling interests                                    |  |         | 5,632    |   |         |  | 22,073   |         |  |  | 5,206    |  
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  
|                                                             |  |         | (95,472  | ) |         |  | 231,059  |         |  |  | 232,552  |  
|                                                             |  |         |          |   |         |  |          |         |  |  |          |  



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Results of operations of Qiqihar Discontinued Operations



|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|-------------------------------------------------------- |  | ------- | ------- | - | ------- |  | ------- | ------- |  |  | - | 
|                                                         |  | 2013    |         |   | 2012    |  |         | 2011    | 
|                                                         |  | HK$000 |         |   | HK$000 |  |         | HK$000 | 
|Revenue                                                  |  |         |        |   |         |  | 147,896 |         |  |  |  | 
|Cost of sales                                            |  |         |        |   |         |  | (9,358  | )       |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|Gross profit                                             |  |         |        |   |         |  | 138,538 |         |  |  |  | 
|Other income and gains, net                              |  |         | 619     |   |         |  |        |         |  |  |  | 
|Expenses                                                 |  |         | (28,929 | ) |         |  | (5,665  | )       |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|Operating (loss)/profit                                  |  |         | (28,310 | ) |         |  | 132,873 |         |  |  |  | 
|Finance incomenet                                       |  |         | 8,009   |   |         |  | 238     |         |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|(Loss)/profit before income tax                          |  |         | (20,301 | ) |         |  | 133,111 |         |  |  |  | 
|Income tax credits/(expenses)                            |  |         | 5,355   |   |         |  | (34,517 | )       |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|(Loss)/profit for the year                               |  |         | (14,946 | ) |         |  | 98,594  |         |  |  |  | 
|Gain on disposal of discontinued operations              |  |         | 32,478  |   |         |  |        |         |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|Profit for the year from Qiqihar Discontinued Operations |  |         | 17,532  |   |         |  | 98,594  |         |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|Attributable to:                                         |  |         |         |   |         |  |         |         |  |  |   | 
|Equity holders of the Company                            |  |         | 17,532  |   |         |  | 98,594  |         |  |  |  | 
|Non-controlling interests                                |  |         |        |   |         |  |        |         |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 
|                                                         |  |         | 17,532  |   |         |  | 98,594  |         |  |  |  | 
|                                                         |  |         |         |   |         |  |         |         |  |  |   | 

Results of operations of Man Sang Discontinued Operations



|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|------------------------------------------------------------------------ |  | ------- | - |  | ------- |  | - | ------- |  |  | -------- | -
|                                                                         |  | 2013    |   |  | 2012    |  |   | 2011    | 
|                                                                         |  | HK$000 |   |  | HK$000 |  |   | HK$000 | 
|Revenue                                                                  |  |         |  |  |         |  |  |         |  |  | 157,452  |  
|Cost of sales                                                            |  |         |  |  |         |  |  |         |  |  | (117,241 | )
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|Gross profit                                                             |  |         |  |  |         |  |  |         |  |  | 40,211   |  
|Other income and gains, net                                              |  |         |  |  |         |  |  |         |  |  | 9,314    |  
|Recycling of exchange difference to profit or loss upon the Distribution |  |         |  |  |         |  |  |         |  |  | 20,284   |  
|Expenses                                                                 |  |         |  |  |         |  |  |         |  |  | (33,983  | )
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|Operating profit                                                         |  |         |  |  |         |  |  |         |  |  | 35,826   |  
|Finance incomenet                                                       |  |         |  |  |         |  |  |         |  |  | 87       |  
|Share of results of an associate                                         |  |         |  |  |         |  |  |         |  |  | 17       |  
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|Profit before income tax                                                 |  |         |  |  |         |  |  |         |  |  | 35,930   |  
|Income tax expenses                                                      |  |         |  |  |         |  |  |         |  |  | (6,052   | )
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|Profit for the year from Man Sang Discontinued Operations                |  |         |  |  |         |  |  |         |  |  | 29,878   |  
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|Attributable to:                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|Equity holders of the Company                                            |  |         |  |  |         |  |  |         |  |  | 23,950   |  
|Non-controlling interests                                                |  |         |  |  |         |  |  |         |  |  | 5,928    |  
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  
|                                                                         |  |         |  |  |         |  |  |         |  |  | 29,878   |  
|                                                                         |  |         |   |  |         |  |   |         |  |  |          |  



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Fiscal Year Ended March 31, 2013 Compared with Fiscal Year Ended March 31, 2012

Continuing Operation

Revenue

Revenue
in the fiscal year ended March 31, 2012 was approximately HK$765.9 million, which consisted primarily of sales of trade center units were approximately HK$758.4 million. Revenue in the fiscal year ended March 31, 2013 was approximately
HK$284.8 million, which consisted primarily of sales of trade center units and supporting facilities of approximately HK$273.4 million. The change was attributable to a decrease in the sales of trade center units and supporting facilities. In
fiscal year ended March 31, 2013, the sales of trade center units and supporting facilities with the number of units sold and gross floor area were approximately 530 units and approximately 47,000 square meters, which represented a decrease of
approximately 70% and 68% as compared with the number of units sold and gross floor area were approximately 1,740 units and approximately 146,000 square meters, respectively. In the fiscal year ended March 31, 2013, our average selling price
was HK$5,733 per square meter, which represented an increase of approximately 10% as compared with the average selling price of HK$5,194 per square meter in the fiscal year ended March 31, 2012. The remainder of revenue represented rental
income from leases of trade center units of approximately HK$5.0 million and property management fee income of approximately HK$6.4 million.

Cost of Sales

In the fiscal year ended March 31, 2012, our
cost of sales was approximately HK$467.2 million. In the fiscal year ended March 31, 2013, our cost of sales was approximately HK$218.0 million. The cost of sales was based on direct and indirect costs of construction, land grant fee and
capitalized expenses attributable to the area of properties that were recognized as sales.

Gross Profit

Our gross profit decreased by HK$231.9 million, or 77.6%, from HK$298.7 million for the fiscal year ended March 31, 2012 to HK$66.8
million for the fiscal year ended March 31, 2013. The gross profit margin, or gross profit as a percentage of total revenue, decreased from 39.0% for the fiscal year ended March 31, 2012 to 23.5% for the fiscal year ended March 31,
2013. The decrease in gross profit margin was primarily due to an increase in average construction costs.

Other Income and Other
(Losses)/Gains, Net

In the fiscal year ended March 31, 2012, our other income and gains were approximately
HK$68.2 million, primarily from government grants of approximately HK$56.0 million, net income of certain non-recurring land leveling works of approximately HK$4.9 million and a decrease in fair value of warrants of approximately HK$4.0 million.

In the fiscal year ended March 31, 2013, our other income and losses were approximately HK$2.1 million, resulting
primarily from government grants of approximately HK$66.8 million and compensation received for non-exercise of option of approximately HK$61.4 million which was offset in part by an increase in fair value of derivative components of convertible
bonds and warrants of approximately HK$128.7 million.

Selling Expenses

Our selling expenses increased by HK$8.0 million, or 33.1%, from HK$24.2 million for the fiscal year ended March 31, 2012 to HK$32.2
million for the fiscal year ended March 31, 2013. The increase in selling expenses was primarily due to an increase in advertising expenses of approximately of HK$5.7 million. As a percentage of revenue, selling expenses increased from 3.2% for
the fiscal year ended March 31, 2012 to 11.3% for the fiscal year ended March 31, 2013. The increase was primarily attributable to new sales campaign initiated in China Northeast Logistics CityTieling.



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Administrative Expenses

Our administrative expenses of HK$112.5 million for the year ended March 31, 2013 was comprised of HK$102.3 million (2012: HK$107.9
million) from Agricultural Logistics Operation and HK$10.2 million (2012: HK$10.0 million) from corporate expenses. Administrative expenses decreased by approximately HK$5.4 million, or 4.6%, from approximately HK$117.9 million in the fiscal year
ended March 31, 2012 to approximately HK$112.5 million in the fiscal year ended March 31, 2013. The decrease in our administrative expenses was a result of a decrease of HK$5.6 million, or 5.2%, in Agricultural Logistics Operation. The
decrease in administrative expenses from Agricultural Logistics Operation was primarily due to a decrease in impairment of trade receivables of HK$5.8 million and a decrease in heating costs of approximately HK$3.2 million, which was offset in part
by an increase in consultancy fee of approximately HK$5.6 million.

Net Finance Income/(Costs)

Our interest income from bank deposits were HK$0.9 million in both fiscal years ended March 31, 2012 and 2013. In fiscal year ended
March 31, 2013, we received interest income on other receivables of approximately HK$16.1 million.

In the fiscal year
ended March 31, 2012, we incurred interest expense of approximately HK$72.6 million, out of which HK$72.1 million was capitalized in properties under development and investment properties under development and the rest of HK$0.5 million was
recognized as finance costs in the consolidated income statement. In the fiscal year ended March 31, 2013, we incurred interest expense of approximately HK$144.9 million, out of which HK$132.3 million was capitalized in properties under
development and investment properties under development and the rest of HK$12.6 million was recognized as finance costs in the consolidated income statement. In the fiscal year ended March 31, 2013, our weighted average borrowings and weighted
average interest rate were approximately HK$783.2 million and 18.5% per annum (2012: approximately HK$821.3 million and 8.8% per annum), respectively.

Profit Before Income Tax From Continuing Operation

As a result of
the foregoing, we had a profit before income tax from continuing operation of approximately HK$222.7 million in the fiscal year ended March 31, 2012. In the fiscal year ended March 31, 2013, we had a loss before income tax from continuing
operation of approximately HK$77.3 million.

Taxation

In the fiscal year ended March 31, 2012, our income tax expenses of HK$90.2 million consisted of net current income tax expenses of HK$104.2 million and deferred tax expense, arising from fair value
gain on investment properties, of HK$0.6 million which was offset in part by over-provision for PRC land appreciation tax of HK$14.6 million. In the fiscal year ended March 31, 2013, our income tax expense of HK$35.7 million consisted of net
current income tax expenses of HK$36.4 million and deferred tax expense, arising from fair value gain on investment properties, of HK$1.5 million and over-provision for PRC land appreciation tax of HK$2.2 million.

In fiscal year ended March 31, 2012, the effective tax rate was positive 40.5%. In fiscal year ended March 31, 2013, the
effective tax rate was negative 46.3%.

(Loss)/profit for the Year From Continuing Operation

In the fiscal year ended March 31, 2012 we generated a net profit from continuing operation of approximately HK$132.5 million. In the
fiscal year ended March 31, 2013, we had a net loss from continuing operation of approximately HK$113.0 million as a result of the cumulative effect of the factors discussed above.



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Non-Controlling Interests

In the fiscal year ended March 31, 2012 and 2013, profit from continuing operation attributable to non-controlling interests was
approximately HK$22.1 million and HK$5.6 million, respectively.

Qiqihar Discontinued Operations

Revenue

Rural-Urban Migration
and City Re-development OperationQiqihar

Revenue in fiscal year ended March 31, 2012 was approximately HK$147.9
million which was attributable to revenue from servicing and assignments of development rights. No revenue was generated in the fiscal year ended March 31, 2013.

Cost of Sales

Rural-Urban Migration and City Re-development
OperationQiqihar

In the fiscal year ended March 31, 2012, our cost of sales was approximately HK$9.4 million.
In the fiscal year ended March 31, 2013, no cost of sales was recognized. The cost of sales was mainly represented the business tax related to revenue from servicing and assignments of development rights.

Gross Profit

Rural-Urban
Migration and City Re-development OperationQiqihar

In the fiscal year ended March 31, 2012, our gross profit
was approximately HK$138.5 million. In the fiscal year ended March 31, 2013, as there were neither sales nor cost of sales recognized, there was no gross profit. Gross profit margin, or gross profit as a percentage of its total revenue, was
93.6% in the fiscal year ended March 31, 2012.

Other Income and Other Gains, Net

In the fiscal year ended March 31, 2012, no other income and gains were generated. In the fiscal year ended March 31, 2013, our
other income and gains were approximately HK$0.6 million, resulting primarily from government grants.

Expenses



|                               |  |             |      |  |             |  |     |        |  |  |       | 
|------------------------------ |  | ----------- | ---- |  | ----------- |  | --- | ------ |  |  | ----- | 
|                               |  | 2013        |      |  | 2012        |  |     | Change | 
|                               |  | HK$ million |      |  | HK$ million |  |     | %      | 
|Selling and distribution costs |  |             | 12.5 |  |             |  | 2.1 |        |  |  | 495.2 | 
|Administrative expenses        |  |             | 16.4 |  |             |  | 3.6 |        |  |  | 355.6 | 
|                               |  |             |      |  |             |  |     |        |  |  |       | 
|                               |  |             | 28.9 |  |             |  | 5.7 |        |  |  | 407.0 | 
|                               |  |             |      |  |             |  |     |        |  |  |       | 

Rural-Urban Migration and City Re-development OperationQiqihar

Our selling expenses increased by HK$10.4 million, or 495.2%, from HK$2.1 million for the fiscal year ended March 31, 2012 to HK$12.5
million for the fiscal year ended March 31, 2013. The increase was due to an increase in advertising expense of approximately HK$5.9 million. As a percentage of revenue, selling expenses was 1.4% for the fiscal year ended March 31, 2012.



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Administrative expense increased by approximately HK$12.8 million, or 355.6% from
approximately HK$3.6 million in the fiscal year ended March 31, 2012 to approximately HK$16.4 million in the fiscal year ended March 31, 2013. The increase was primarily due to an increase in salaries of approximately HK$4.4 million, an
increase in entertainment expenses of approximately HK$2.6 million, an increase in land use tax of approximately HK$1.8 million and a general increase in other expenses in the fiscal year ended March 31, 2013.

Net Finance Income

Our interest income from bank deposits were HK$0.2 million in both fiscal years ended March 31, 2012 and 2013. In fiscal year ended
March 31, 2013, we received interest income on other receivables of approximately HK$7.8 million.

(Loss)/profit Before Income Tax
From Discontinued Operations

As a result of the foregoing, we had a profit before tax from discontinued operations of
approximately HK$133.1 million in the fiscal year ended March 31, 2012. In fiscal year ended March 31, 2013, we had a loss before income tax from discontinued operations of approximately HK$20.3 million.

Taxation

In the
fiscal year ended March 31, 2012, our income tax expenses were HK$34.5 million primarily represented of current corporate income tax.

In the fiscal year ended March 31, 2013, our income tax credits were HK$5.4 million primarily consisted of deferred tax credit, arising from tax losses recognized, of HK$6.5 million but offset in
part by current income tax of HK$1.1 million.

The effective interest rate increased from 25.9% in the fiscal year ended
March 31, 2012 to 26.4% in the fiscal year ended March 31, 2013.

(Loss)/profit for the Year From Discontinued Operations

In the fiscal year ended March 31, 2012, we incurred a net profit of approximately HK$98.6 million. In the fiscal
year ended March 31, 2013, we incurred a net profit of approximately HK$17.5 million.

Fiscal Year Ended March 31, 2012
Compared with Fiscal Year Ended March 31, 2011

Continuing Operation

Revenue

Revenue
in the fiscal year ended March 31, 2011 was approximately HK$581.6 million, which consisted primarily of sales of trade center units and supporting facilities of approximately HK$575.6 million. Revenue in the fiscal year ended
March 31, 2012 was approximately HK$765.9 million, which consisted primarily of sales of trade center units were approximately HK$758.4 million. The change was attributable to an increase in the average selling prices of the sales of trade
center units and supporting facilities. In the fiscal year ended March 31, 2012, our average selling price was HK$5,194 per square meter, which represented an increase of approximately 49% as compared with the average selling price of HK$3,482
per square meter in the fiscal year ended March 31, 2011. The sales of trade center units and supporting facilities with the number of units sold and gross floor area were approximately 1,740 units and approximately 146,000 square meters (2011:
approximately 1,660 units and approximately 165,000 square meters), respectively. The remainder of revenue represented rental income from leases of trade center units of approximately HK$3.9 million and property management fee income of
approximately HK$3.6 million.



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Cost of Sales

In the fiscal year ended March 31, 2011, our cost of sales was approximately HK$352.3 million. In the fiscal year ended March 31, 2012, our cost of sales was approximately HK$467.2 million. The
cost of sales was based on direct and indirect costs of construction, land grant fee and capitalized expenses attributable to the area of properties that were recognized as sales.

Gross Profit

Our gross profit increased by HK$69.4 million, or
30.3%, from HK$229.3 million for the fiscal year ended March 31, 2011 to HK$298.7 million for the fiscal year ended March 31, 2012. The gross profit margin, or gross profit as a percentage of total revenue, decreased from 39.4% for the
fiscal year ended March 31, 2011 to 39.0% for the fiscal year ended March 31, 2012. The decrease in gross profit margin was primarily due to an increase in average construction costs.

Other Income and Other Gains, Net

In the fiscal year ended March 31, 2011, our other income and gains were approximately HK$188.7 million, resulting primarily from an increase in fair value of investment properties and investment
properties under construction of approximately HK$111.5 million, government grants of approximately HK$56.0 million, net income recognized for a construction contract of approximately HK$11.0 million and gain on disposal of a land use right as a
result of an injection into an associate of approximately HK$8.5 million.

In the fiscal year ended March 31, 2012, our
other income and gains were approximately HK$68.2 million, primarily from government grants of approximately HK$56.0 million, net income of certain non-recurring land leveling works of approximately HK$4.9 million and a decrease in fair value of
warrants of approximately HK$4.0 million.

Selling Expenses

Our selling expenses increased by HK$1.8 million, or 8.0 %, from HK$22.4 million for the fiscal year ended March 31, 2011 to
HK$24.2 million for the fiscal year ended March 31, 2012. The increase in selling expenses was primarily due to an increase in salaries and commissions paid to sales executives for sales of properties of approximately HK$1.3 million. As a
percentage of revenue selling expenses decreased from 3.9% for the fiscal year ended March 31, 2011 to 3.2% for the fiscal year ended March 31, 2012. The decrease was due to lesser sales efforts required by China Northeast Logistics
CityDezhou.

Administrative Expenses

Our administrative expenses of HK$117.9 million for the year ended March 31, 2012 was comprised of HK$107.9 million (2011: HK$57.1 million) from Agricultural Logistics Operation and HK$10.0 (2011:
HK$7.6 million) from corporate expenses. Administrative expenses increased by approximately HK$53.2 million, or 82.2%, from approximately HK$64.7 million in the fiscal year ended March 31, 2011 to approximately HK$117.9 million in the fiscal
year ended March 31, 2012. The increase in our administrative expenses was a result of an increase of HK$50.8 million in Agricultural Logistics Operation and an increase of HK$2.4 million in corporate expenses.

The increase in corporate expenses was primarily due to an increase in insurance expenses of approximately HK$0.4 million, an increase in
audit and consultancy fees of approximately HK$0.5 million and an increase in salaries of approximately HK$0.5 million. The increase in administrative expenses from Agricultural Logistics Operation was primarily due to an increase in impairment of
trade receivables of HK$1.4 million, an increase in salaries of approximately HK$17.0 million, an increase in land use tax of approximately HK$5.1 million, an increase in depreciation of approximately HK$2.8 million, an increase in heating costs of
approximately HK$9.0 million, an increase in entertainment expenses of approximately HK$3.5 million, an increase in donation of approximately HK$1.9 million, an increase in consultancy fee of approximately HK$2.8 million and a general increase in
other expenses in the fiscal year ended March 31, 2012.



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Net Finance Income/(Costs)

Our interest income from bank deposits increased by HK$0.1 million, or 12.5%, from HK$0.8 million for the fiscal year ended March 31,
2011 to HK$0.9 million for the fiscal year March 31, 2012. The increase was primarily due to general increase in average bank balances.

In the fiscal year ended March 31, 2011, we incurred interest expense of approximately HK$30.0 million, out of which HK$26.1 million was capitalized in properties under development and investment
properties under development and the rest of HK$3.9 million was recognized as finance costs in the consolidated income statement. In the fiscal year ended March 31, 2012, we incurred interest expense of approximately HK$72.6 million, out of
which HK$72.1 million was capitalized in properties under development and investment properties under development and the rest of HK$0.5 million was recognized as finance costs in the consolidated income statement. In the fiscal year ended
March 31, 2012, our weighted average borrowings and weighted average interest rate were approximately HK$821.3 million and 8.8% per annum (2011: approximately HK$502.3 million and 6.0% per annum), respectively.

Profit Before Income Tax From Continuing Operation

As a result of the foregoing, we had a profit before income tax from continuing operation of approximately HK$327.3 million in the fiscal year ended March 31, 2011. In the fiscal year ended
March 31, 2012, we had a profit before income tax from continuing operation of approximately HK$222.7 million.

Taxation

In the fiscal year ended March 31, 2011, our income tax expenses of HK$124.6 million consisted of net current
income tax expenses of HK$97.3 million and deferred tax expense, arising from fair value gain on investment properties, of HK$27.9 million which was offset in part by over-provision for income tax of HK$0.6 million. In the fiscal year ended
March 31, 2012, our income tax expense of HK$90.2 million consisted of net current income tax expenses of HK$104.2 million and deferred tax expense, arising from fair value gain on investment properties, of HK$0.6 million which was offset in
part by over-provision for PRC land appreciation tax of HK$14.6 million.

The effective tax rate increased from 38.1% in the
fiscal year ended March 31, 2011 to 40.5% in the fiscal year ended March 31, 2012. The increase in effective tax rate was mainly due to loss making subsidiaries while deferred tax assets have not been provided.

Profit for the Year From Continuing Operation

In the fiscal year ended March 31, 2011 we generated a net profit from continuing operation of approximately HK$202.7 million. In the fiscal year ended March 31, 2012, we had a net profit from
continuing operation of approximately HK$132.5 million as a result of the cumulative effect of the factors discussed above.

Non-Controlling Interests

In the fiscal year ended March 31, 2011, loss from continuing operation attributable to non-controlling interests was approximately HK$0.7 million. In the fiscal year ended March 31, 2012,
profit from continuing operation attributable to non-controlling interests was approximately HK$22.1 million. The increase in profit was mainly due to the commencement of China Northeast Logistics CityDezhou during the fiscal year ended
March 31, 2013.



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Qiqihar Discontinued Operations

Revenue

Rural-Urban Migration and City Re-development OperationQiqihar

We have just commenced the rural-urban migration and city re-development business in the current fiscal year and therefore
no revenue was generated in the fiscal year ended March 31, 2011. Revenue in fiscal year ended March 31, 2012 was approximately HK$147.9 million which was attributable to revenue from servicing and assignments of development rights.

Cost of Sales

Rural-Urban Migration and City Re-development OperationQiqihar

In the fiscal year ended March 31, 2011, no cost of sales was recognized as the operation had not yet commenced. In the fiscal year ended March 31, 2012, our cost of sales was approximately
HK$9.4 million. The cost of sales was mainly represented the business tax related to revenue from servicing and assignments of development rights.

Gross Profit

Rural-Urban Migration and City Re-development
OperationQiqihar

In the fiscal year ended March 31, 2011, no gross profit was generated as the operation had
not yet commenced. In the fiscal year ended March 31, 2012, our gross profit was approximately HK$138.5 million. Gross profit margin, or gross profit as a percentage of its total revenue, was 93.6% in the fiscal year ended March 31, 2012.

Other Income and Other Gains, Net

There were no other income and gains generated for both fiscal years ended March 31, 2011 and 2012.

Expenses



|                               |  |             |     |  |             |  |   |        |  |  |       | 
|------------------------------ |  | ----------- | --- |  | ----------- |  | - | ------ |  |  | ----- | 
|                               |  | 2012        |     |  | 2011        |  |   | Change | 
|                               |  | HK$ million |     |  | HK$ million |  |   | %      | 
|Selling and distribution costs |  |             | 2.1 |  |             |  |  |        |  |  | 100.0 | 
|Administrative expenses        |  |             | 3.6 |  |             |  |  |        |  |  | 100.0 | 
|                               |  |             |     |  |             |  |   |        |  |  |       | 
|                               |  |             | 5.7 |  |             |  |  |        |  |  | 100.0 | 
|                               |  |             |     |  |             |  |   |        |  |  |       | 

Rural-Urban Migration and City Re-development OperationQiqihar

In fiscal year ended March 31, 2011, no selling expenses were generated as the operation had not yet commenced. In the fiscal year
ended March 31, 2012, our selling expenses were approximately HK$2.1 million. As a percentage of revenue selling expenses increased from nil for the fiscal year ended March 31, 2011 to 1.4% for the fiscal year ended March 31, 2012.
The increase was due to the commencement of the Rural-Urban Migration and City Re-development OperationQiqihar during the fiscal year ended March 31, 2012.

In fiscal year ended March 31, 2011, no administrative expenses were generated as the operation had not yet commenced. In the fiscal year ended March 31, 2012, our administrative expenses were
approximately HK$3.6 million.

Net Finance Income

In fiscal year ended March 31, 2011, no interest income from bank deposits were generated as the operation had not yet commenced. In fiscal year ended March 31, 2012, our interest income from
bank deposits were HK$0.2 million.



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Profit Before Income Tax From Discontinued Operations

As a result of the foregoing, no profit before tax from discontinued operations was generated in the fiscal year ended March 31,
2011. In fiscal year ended March 31, 2012, we had a profit before income tax from discontinued operations of approximately HK$133.1 million.

Taxation

In the fiscal year ended March 31, 2011, no income
tax expenses was generated as the operation had not yet commenced.

In the fiscal year ended March 31, 2012, our income
tax expenses were HK$34.5 million primarily represented of current corporate income tax.

The effective tax rate increased
from nil for the fiscal year ended March 31, 2011 to 25.9% for the fiscal year ended March 31, 2012. The increase was due to the commencement of the Rural-Urban Migration and City Re-development OperationQiqihar during the fiscal
year ended March 31, 2012.

Profit for the Year From Discontinued Operations

In fiscal year ended March 31, 2011, no profit was generated as the operation had not yet commenced. In the fiscal year ended
March 31, 2012, we incurred a net profit of approximately HK$98.6 million.

Fiscal Year Ended March 31, 2011 Compared with
Fiscal Year Ended March 31, 2010

Continuing Operation

Revenue

Revenue in the fiscal year ended March 31, 2010 was
approximately HK$337.7 million, which consisted primarily sales of trade center units of approximately HK$336.7 million. Revenue in the fiscal year ended March 31, 2011 was approximately HK$581.6 million, which consisted primarily sales of
trade center units and supporting facilities of approximately HK$575.6 million. The change was attributable to an increase in sales of trade center units and supporting facilities with the number of units sold and gross floor area of approximately
1,660 units and approximately 165,000 square meters (2010: approximately 1,350 units and approximately 104,000 square meters), respectively, which included a hotel property with gross floor area of approximately 26,956 square meters (2010: nil). In
the fiscal year ended March 31, 2011, our average selling price was HK$3,482 per square meter, which represented an increase of approximately 8% as compared with the average selling price of HK$3,228 per square meter in the fiscal year ended
March 31, 2010. The remainder of revenue represented rental income from leases of trade center units of approximately HK$4.5 million and property management fee income of approximately HK$1.5 million.

Cost of Sales

In
the fiscal year ended March 31, 2010, our cost of sales was approximately HK$209.4 million. In the fiscal year ended March 31, 2011, our cost of sales was approximately HK$352.3 million. The cost of sales was based on direct and indirect
costs of construction, land grant fee and capitalized expenses attributable to the area of properties that were recognized as sales.

Gross Profit

Our
gross profit increased by HK$101.1 million, or 78.9%, from HK$128.2 million for the fiscal year ended March 31, 2010 to HK$229.3 million for the fiscal year ended March 31, 2011. The gross profit margin, or gross profit as a percentage of
total revenue, increased from 38.0% for the fiscal year ended March 31, 2010 to 39.4% for the fiscal year ended March 31, 2011. The increase was primarily due to an increase in the average selling prices while construction costs remained
relatively steady.



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Other Income and Other Gains, Net

In the fiscal year ended March 31, 2010, our other income and gains were approximately HK$191.6 million, primarily from an increase
in fair value of investment properties and investment properties under construction of approximately HK$155.6 million, government subsidy of approximately HK$36.6 million, but offset partly by other net loss from a construction contract of
approximately HK$0.8 million.

In the fiscal year ended March 31, 2011, our other income and gains were approximately
HK$188.7 million, resulting primarily from an increase in fair value of investment properties and investment properties under construction of approximately HK$111.5 million, government grants of approximately HK$56.0 million, net income recognized
for a construction contract of approximately HK$11.0 million and gain on disposal of a land use right as a result of an injection into an associate of approximately HK$8.5 million.

Selling Expenses

Our selling expenses increased by HK$14.2 million,
or 171.1%, from HK$8.3 million for the fiscal year ended March 31, 2010 to HK$22.4 million for the fiscal year ended March 31, 2011. The increase in selling expenses was primarily due to an increase in advertising expenses of approximately
HK$11.6 million, an increase in salaries and commissions paid to sales executives for sales of properties of approximately HK$1.5 million and an increase in printing expenses incurred for printing of marketing materials of approximately HK$0.7
million. The increase in the above expenses was a result of new sales campaign initiated and the commencement of the new sales center in the fiscal year ended March 31, 2011.

Administrative Expenses

Administrative expenses increased by
approximately HK$5.0 million, or 8.5%, from approximately HK$59.7 million in the fiscal year ended March 31, 2010 to approximately HK$64.7 million in the fiscal year ended March 31, 2011. The increase in administrative expenses was
primarily due to an increase in impairment of trade receivables of HK$2.6 million, an increase in salaries of approximately HK$6.2 million, an increase in depreciation of approximately HK$2.6 million, an increase in heating costs of approximately
HK$2.8 million, an increase in travelling expenses of approximately HK$2.1 million and a general increase in other expenses in the fiscal year ended March 31, 2011, but was set off partly by a decrease in listing related expenses such as
announcement costs and share registration fees of approximately HK$1.5 million and a decrease in audit and consultancy fees of approximately HK$8.1 million.

Net Finance (Costs)/Income

Our interest income from bank deposits
increased by HK$0.4 million, or 100%, from HK$0.4 million for the fiscal year ended March 31, 2010 to HK$0.8 million for the fiscal year March 31, 2011. The increase was primarily due to general increase in average bank balances.

In the fiscal year ended March 31, 2010, we incurred interest expense of approximately HK$24.4 million, all of which was
capitalized in properties under development. In the fiscal year ended March 31, 2011, we incurred interest expense of approximately HK$30.0 million, out of which HK$26.1 million was capitalized in properties under development and investment
properties under development and the rest of HK$3.9 million was recognized as finance costs in the consolidated income statement. In the fiscal year ended March 31, 2011, our weighted average borrowings and weighted average interest rate were
approximately HK$502.3 million and 6.0% per annum (2010: approximately HK$422.4 million and 5.8% per annum), respectively.

Profit Before Income Tax From Continuing Operation

As a result of the foregoing, we had a profit before income tax from continuing operation of approximately HK$252.3 million in the fiscal year ended March 31, 2010. In the fiscal year ended
March 31, 2011, we had a profit before income tax from continuing operation of approximately HK$327.3 million.



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Taxation

In the fiscal year ended March 31, 2010, our income tax expense of HK$86.6 million consisted of net current income tax expenses of HK$48.5 million, deferred tax expense, arising from fair value gain
on investment properties, of HK$37.5 million and under-provision for income tax of HK$0.6 million. In the fiscal year ended March 31, 2011, our income tax expenses of HK$124.6 million consisted of net current income tax expenses of HK$97.3
million and deferred tax expense, arising from fair value gain on investment properties, of HK$27.9 million which was offset in part by over-provision for income tax of HK$0.6 million.

The effective tax rate increased from 34.3% in the fiscal year ended March 31, 2010 to 38.1% in the fiscal year ended March 31,
2011. The increase was caused by an increase in sales of properties in the PRC which was subject to land appreciation tax at progressive rates.

Profit for the Year From Continuing Operation

In the fiscal year ended March 31, 2010, we incurred a net profit from continuing operation of approximately HK$165.7 million. In the fiscal year ended March 31, 2011 we generated a net
profit from continuing operation of approximately HK$202.7 million as a result of the cumulative effect of the factors discussed above.

Non-Controlling Interests

In the fiscal year ended March 31, 2010 and 2011, loss from continuing operation attributable to non-controlling interests was approximately HK$0.2 million and HK$0.7 million, respectively.

Man Sang Discontinued Operations

Revenue



|                      |  |             |       |  |             |  |       |        |  |  |       | 
|--------------------- |  | ----------- | ----- |  | ----------- |  | ----- | ------ |  |  | ----- | 
|                      |  | 2011        |       |  | 2010        |  |       | Change | 
|                      |  | HK$ million |       |  | HK$ million |  |       | %      | 
|Pearl Operation       |  |             | 88.3  |  |             |  | 261.6 |        |  |  | -66.2 | 
|Real Estate Operation |  |             | 69.2  |  |             |  | 77.8  |        |  |  | -11.1 | 
|                      |  |             |       |  |             |  |       |        |  |  |       | 
|                      |  |             | 157.5 |  |             |  | 339.4 |        |  |  | -53.6 | 
|                      |  |             |       |  |             |  |       |        |  |  |       | 

Pearl Operation

In the fiscal year ended March 31, 2010, revenue attributable to the Pearl Operation was HK$261.6 million, which represented a full year result. In the fiscal year ended March 31, 2011 prior to
the Distribution, revenue attributable to the Pearl Operation was HK$88.3 million.

Real Estate Operation

In the fiscal year ended March 31, 2010, revenue attributable to the Real Estate Operation was HK$77.8 million, which represented a
full year result. In the fiscal year ended March 31, 2011 prior to the Distribution, revenue attributable to the Real Estate Operation was HK$69.2 million.

Cost of Sales



|                      |  |             |       |  |             |  |       |        |  |  |       | 
|--------------------- |  | ----------- | ----- |  | ----------- |  | ----- | ------ |  |  | ----- | 
|                      |  | 2011        |       |  | 2010        |  |       | Change | 
|                      |  | HK$ million |       |  | HK$ million |  |       | %      | 
|Pearl Operation       |  |             | 54.6  |  |             |  | 150.0 |        |  |  | -63.6 | 
|Real Estate Operation |  |             | 62.6  |  |             |  | 126.6 |        |  |  | -50.6 | 
|                      |  |             |       |  |             |  |       |        |  |  |       | 
|                      |  |             | 117.2 |  |             |  | 276.6 |        |  |  | -57.6 | 
|                      |  |             |       |  |             |  |       |        |  |  |       | 



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Pearl Operation

In the fiscal year ended March 31, 2010, cost of sales attributable to the Pearl Operation was HK$150.0 million. In the fiscal year ended March 31, 2011 prior to the Distribution, cost of sales
was HK$54.6 million. Cost of sales primarily consisted cost of inventory, labour cost and production overhead.

Real Estate Operation

In the fiscal year ended March 31, 2010, cost of sales attributable to the Real Estate Operation was HK$126.6
million. In the fiscal year ended March 31, 2011 prior to the Distribution, cost of sales was HK$62.6 million. Cost of sales primarily consisted of cost of construction, capitalized borrowing cost, china tax expenses in connection with sale of
properties and direct cost and China tax expenses related to rental income.

Gross Profit

Pearl Operation

In the
fiscal year ended March 31, 2010, gross profit attributable to the Pearl Operation was HK$111.6 million. In the fiscal year ended March 31, 2011 prior to the Distribution, gross profit was HK$33.7 million. Gross profit margin decreased
from 42.7% for the fiscal year ended March 31, 2010 to 38.2% for the fiscal year ended March 31, 2011 prior to the Distribution.

Real Estate Operation

In the fiscal year ended March 31, 2010, gross loss attributable to the Real Estate Operation was HK$48.8 million. In the fiscal year
ended March 31, 2011 prior to the Distribution, gross profit was HK$6.6 million. Gross profit margin increased from a gross loss margin of 62.7% for the fiscal year ended March 31, 2010 to a gross profit margin of 9.5% for the fiscal year
ended March 31, 2011 prior to the Distribution.

Other Income and Gains, Net

In the fiscal year 2010, our other income and gains were approximately HK$12.8 million, primarily from a realized gain of approximately
HK$8.9 million on financial assets at fair value through profit or loss, a gain of approximately HK$10.8 million on disposal of investment properties, but was set off partly by an unrealized loss of approximately HK$2.7 million on financial assets
at fair value through profit or loss and the fair value loss of investment properties was HK$5.3 million.

In the fiscal year
ended March 31, 2011 prior to the Distribution, our other income and gains were approximately HK$29.6 million, resulting primarily from a gain on disposal of investment properties of approximately HK$5.8 million and a release of translation
reserve as a result of the Distribution of approximately HK$20.3 million.

Expenses



|                               |  |             |      |  |             |  |       |        |  |  |       | 
|------------------------------ |  | ----------- | ---- |  | ----------- |  | ----- | ------ |  |  | ----- | 
|                               |  | 2011        |      |  | 2010        |  |       | Change | 
|                               |  | HK$ million |      |  | HK$ million |  |       | %      | 
|Selling and distribution costs |  |             | 5.5  |  |             |  | 15.9  |        |  |  | -65.4 | 
|Administrative expenses        |  |             | 28.5 |  |             |  | 98.2  |        |  |  | -71.0 | 
|                               |  |             |      |  |             |  |       |        |  |  |       | 
|                               |  |             | 34.0 |  |             |  | 114.1 |        |  |  | -70.2 | 
|                               |  |             |      |  |             |  |       |        |  |  |       | 

Pearl Operation

In the fiscal year ended March 31, 2010, expenses attributable to the Pearl Operation was HK$84.1 million, consisting of selling and distribution cost of HK$7.7 million and administration expenses of
HK76.4 million.



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In the fiscal year ended March 31, 2011 prior to the Distribution, expenses
attributable to the Pearl Operation was HK$27.7 million, consisting of selling and distribution cost of HK$3.5 million and administration expenses of HK$24.2 million.

Real Estate Operation

In the fiscal year ended March 31, 2010,
expenses attributable to the Real Estate Operation was HK$27.1 million, consisting of selling and distribution cost of HK$8.2 million and general administration expenses of HK$18.9 million but offset in part by recovery of provision for doubtful
debt of HK$15.1 million.

In the fiscal year ended March 31, 2011 prior to the Distribution, expenses attributable to the
Real Estate Operation was HK$6.3 million, consisting of selling and distribution cost of HK$2.0 million and general administration expenses of HK$4.3 million.

Net Finance Income

In the fiscal year ended March 31, 2010,
our interest income from bank deposits was HK$1.8 million. In the fiscal year ended March 31, 2011 prior to the Distribution, our interest income from bank deposits was HK$1.1 million.

In the fiscal year ended March 31, 2010, we incurred interest expense of approximately HK$11.0 million, of which HK$9.4 million was
capitalized in properties under development and investment properties under construction and the rest of HK$1.6 million was recognized as finance cost in the consolidated financial statements. In the fiscal year ended March 31, 2011 prior to
the Distribution, we incurred interest expense of approximately HK$3.5 million, of which HK$2.5 million was capitalized in properties under development and investment properties under construction and the rest of HK$1.0 million was recognized as
finance cost in the consolidated financial statements.

Profit/(Loss) Before Income Tax from Man Sang Discontinued Operations

As a result of the foregoing, we had a loss before income tax from Man Sang Discontinued Operations of approximately
HK$38.2 million in the fiscal year ended March 31, 2010. In the fiscal year ended March 31, 2011 prior to the Distribution, we had a profit before income tax of approximately HK$35.9 million.

Taxation

In the
fiscal year ended March 31, 2010, our income tax credit was HK$14.0 million primarily consisted of deferred tax expenses, arising from fair value loss on investment properties, of HK$26.0 million and over-provision for income tax of HK$0.9
million but offset in part by current income tax of HK$12.9 million.

In the fiscal year ended March 31, 2011 prior to
the Distribution, our income tax expenses were HK$6.1 million generated by current income tax of HK$8.6 million, consisting of corporate income tax of HK$5.0 million and land appreciation tax of HK$3.6 million but offset in part by deferred tax
credit of HK$2.5 million.

The effective tax rate decreased from 36.7% in the fiscal year ended March 31, 2010 to 16.8%
in the fiscal year ended March 31, 2011 prior to the Distribution.

Profit/(Loss) for the Year from Man Sang Discontinued
Operations

In the fiscal year ended March 31, 2010, we incurred a net loss of approximately HK$24.2 million. In
the fiscal year ended March 31, 2011 prior to the Distribution, we generated a net profit of approximately HK$29.9 million as a result of the cumulative effect of the factors discussed above.



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Non-Controlling Interests

In the fiscal year ended March 31, 2010, loss attributable to non-controlling interests was approximately HK$29.7 million. In the
fiscal year ended March 31, 2011 prior to the Distribution, profit attributable to non-controlling interests was approximately HK$5.9 million.

B. Liquidity and Capital Resources

Our primary uses of cash are to pay for
construction costs, land costs (principally the payment of land grant fees), infrastructure costs and consulting fees paid to architects and designers, as well as to service our indebtedness and fund working capital and normal recurring expenses.
For the fiscal year ended March 31, 2012, we financed our operations primarily through internally generated funds, bank and other borrowings and financing through capital markets. For the fiscal year ended March 31, 2013, we financed our
operations primarily through internally generated funds and bank and other borrowings and financing through capital markets. We expect to have sufficient sources of funds for the remainder of the year ending March 31, 2014 to support our
current operations, as well as finance ongoing and future projects. These sources are expected to include: (1) rental and sales revenues; (2) debt financing arrangements with banks, including project financing and working capital
facilities and (3) financing through capital markets.

As detailed in Item 7.B CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, the Company issued certain convertible bonds where under the terms of the Bonds, the Company undertakes to comply with financial covenants as follows:



| | (i) | Consolidated Tangible Net Worth shall not be less than HK$1,253,000,000;
| | --- | ------------------------------------------------------------------------



| | (ii) | Consolidated EBIT shall not at any time be less than 2.50 times Consolidated Finance Charges; and
| | ---- | -------------------------------------------------------------------------------------------------



| | (iii) | Consolidated Total Borrowings shall not at any time exceed 0.85 times Consolidated Tangible Net Worth.
| | ----- | ------------------------------------------------------------------------------------------------------

The financial covenants shall be: (i) calculated and interpreted on a consolidated basis in accordance with IFRS and expressed in Hong Kong dollars;
and (ii) tested by reference to the latest publicly available financial statements of the Group for each period of twelve months ending on the last day of the financial year and each period of twelve months ending on the last day of the first
half of the financial year.

The Company has obtained wavier from the holders of the Bonds in respect of any non-compliance of
the above covenants during the current fiscal year and fiscal year ending March 31, 2014.

Working Capital

Our current assets consist of completed properties held for sale, properties under development, trade receivables, prepayments, deposits
and other receivables, restricted and pledged bank deposits and cash and cash equivalents. Our current liabilities primarily consist of trade payables, other payables, accruals and receipts in advance, interest-bearing bank and other borrowings and
taxes payable.

As of March 31, 2012 and 2013, we had net current assets, representing the amount by which our current
assets exceeded our current liabilities, of approximately HK$765.3 million and HK$1,000.8 million, respectively. The fluctuation in our working capital position during this period primarily reflected changes in cash provided by and used in
operating, investing and financing activities when development of our industrial and agricultural trade centers, supporting commercial facilities, warehouse facilities and other facilities in China Northeast Logistics CityTieling and China
Northeast Logistics CityDezhou were completed and changes in the amount of construction fee payables and bank and other borrowings related to the development of China Northeast Logistics CityTieling and China Northeast Logistics
CityDezhou.



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Cash Flows

The following table sets forth selected cash flow data from our consolidated cash flow statements for the periods indicated:



|                                                                          |  |                             |          |   |      |  |          |      |  |  |          |  
|------------------------------------------------------------------------- |  | --------------------------- | -------- | - | ---- |  | -------- | ---- |  |  | -------- | -
|                                                                          |  | Fiscal Year Ended March 31, |         
|                                                                          |  | 2013                        |          |   | 2012 |  |          | 2011 | 
|                                                                          |  | HK$ in Thousands            |         
|Net cash used in operating activities                                     |  |                             | (27,360  | ) |      |  | (280,388 | )    |  |  | (53,147  | )
|Net cash used in investing activities                                     |  |                             | (219,953 | ) |      |  | (52,497  | )    |  |  | (707,354 | )
|Net cash generated from financing activities                              |  |                             | 267,495  |   |      |  | 516,016  |      |  |  | 163,715  |  
|                                                                          |  |                             |          |   |      |  |          |      |  |  |          |  
|Net increase/(decrease) in cash and cash equivalents                      |  |                             | 20,182   |   |      |  | 183,131  |      |  |  | (596,786 | )
|Effect of foreign exchange rate changes on cash and cash equivalents, net |  |                             | 779      |   |      |  | 3,519    |      |  |  | 7,045    |  
|Cash and cash equivalents at the beginning of the year                    |  |                             | 343,578  |   |      |  | 156,928  |      |  |  | 746,669  |  
|                                                                          |  |                             |          |   |      |  |          |      |  |  |          |  
|Cash and cash equivalents at the end of the year                          |  |                             | 364,539  |   |      |  | 343,578  |      |  |  | 156,928  |  
|                                                                          |  |                             |          |   |      |  |          |      |  |  |          |  

Cash Flow Used in Operating Activities

We derive cash from operating activities principally from the sale of trade center units in Agricultural Logistics Operation and Pearl Operation and revenue from servicing and assignments of development
rights in our Rural-Urban Migration and City Re-development Operation.

In the fiscal year ended March 31, 2013, net cash
used in operating activities was HK$27.4 million, which consisted of operating cash inflow before changes in working capital of HK$29.9 million, cash outflow of net interest and tax of HK$151.5 million and working capital cash inflow of HK$94.2
million. Working capital changes primarily reflected a negative change resulting from additions to properties under development of HK$391.6 million, additions to land use rights of HK$63.7 million and deposits paid for acquisition of land use rights
of HK$143.8 million, partially offset by positive changes resulting from a decrease in completed properties held for sale of HK$195.6 million, a decrease in trade and other receivables of HK$56.2 million, an increase in trade payables, other
payables and accruals of HK$63.6 million, refund of payments from acquisition of land use rights of HK$38.7 million and an increase in receipt in advance of HK$339.2 million. The additions in properties under development and an increase in trade
payables, other payables and accruals were attributable to construction activities carried out for our properties development projects. The increase in receipts in advance was attributable to proceeds received from pre-sale and sale of properties.

In the fiscal year ended March 31, 2012, net cash used in operating activities was HK$280.4 million, which consisted of
operating cash inflow before changes in working capital of HK$363.4 million, cash outflow of net interest and tax of HK$102.8 million and working capital cash outflow of HK$541.0 million. Working capital changes primarily reflected a negative change
resulting from additions to properties under development of HK$934.8 million, an increase in trade and other receivables of HK$279.1 million, additions to land use rights of HK$858.6 million and deposits paid for acquisition of land use rights of
HK$115.1 million, partially offset by positive changes resulting from a decrease in completed properties held for sale of HK$417.8 million, an increase in trade payables, other payables and accruals of HK$352.0 million, refund of payments from
acquisition of land use rights of HK$721.1 million and an increase in receipt in advance of HK$155.7 million. The additions in properties under development and an increase in trade payables, other payables and accruals were attributable to
construction activities carried out for our properties development projects. The increase in receipts in advance was attributable to proceeds received from pre-sale and sale of properties.



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In the fiscal year ended March 31, 2011, net cash used in operating activities was
HK$53.1 million, which consisted of operating cash inflow before changes in working capital of HK$225.7 million, cash outflow of net interest and tax of HK$53.0 million and working capital cash outflow of HK$225.8 million. Working capital changes
primarily reflected a negative change resulting from additions to properties under development of HK$456.4 million, an increase in inventories of HK$0.5 million, an increase in trade and other receivables of HK$81.7 million, additions to land use
rights of HK$137.5 million, deposits paid for acquisition of land use rights of HK$41.2 million and a decrease in receipt in advance of HK$85.1 million, partially offset by positive changes resulting from a decrease in completed properties held for
sale of HK$376.7 million, an increase in trade payables, other payables and accruals of HK$85.7 million, refund of payments from acquisition of land use rights of HK$62.7 million and a decrease in a construction contract of HK$51.5 million. The
additions in properties under development and an increase in trade payables, other payables and accruals were attributable to construction activities carried out for our properties development projects. The decrease in receipts in advance was
attributable to recognition of revenue on pre-sold properties upon completion of the construction of the units and the units were delivered to the purchasers.

Cash Flow Used in Investing Activities

In the fiscal year ended
March 31, 2013, our principal investment activity was the disposal of our subsidiaries. In the fiscal year ended March 31, 2013, net cash used in investing activities was HK$220.0 million, which primarily consisted of cash outflow of
HK$222.0 million resulting from the purchase of property, plant and equipment, additions to investment properties under construction, purchase of marketable securities and cash disposed as a result of disposal of subsidiaries. In the fiscal year
ended March 31, 2012, net cash used in investing activities was HK$52.5 million, which primarily consisted of cash outflow of HK$52.5 million resulting from the purchase of property, plant and equipment and additions to investment properties
under construction. In the fiscal year ended March 31, 2011, net cash used in investing activities was HK$707.4 million, which primarily consisted of cash outflow of HK$746.9 million resulting from the purchase of property, plant and equipment,
additions to investment properties and investment properties under construction, deposit paid for investment properties, purchase of marketable securities, cash disposed as a result of disposal of a subsidiary and cash disposed as a result of the
Distribution, partially offset by cash inflow of HK$38.4 million resulting from proceeds received from disposals of an investment property and proceeds received from disposals of marketable securities.

Cash Flow Generated from Financing Activities

Our cash from financing activities was derived from placement of convertible bonds and warrants and bank and other borrowings. In the fiscal year ended March 31, 2013, net cash generated from
financing activities was HK$267.5 million, consisted of cash outflow of HK$742.0 million resulting from repayment of bank and other borrowings and an increase in restricted and pledged bank deposits, partially offset by cash inflow of HK$1,009.5
million resulting from proceeds from new bank and other loans and placement of convertible bonds. In the fiscal year ended March 31, 2012, net cash generated from financing activities was HK$516.0 million, consisted of cash outflow of HK$873.2
million resulting from repayment of bank and other borrowings, partially offset by cash inflow of HK$1,389.2 million resulting from proceeds from new bank and other loans, contribution from a non-controlling interests of a subsidiary, a decrease in
restricted and pledged bank deposits and placement of shares and warrants. In the fiscal year ended March 31, 2011, net cash generated from financing activities was HK$163.7 million, consisted of cash outflow of HK$225.4 million resulting from
repayment of bank borrowings, partially offset by cash inflow of HK$389.1 million resulting from proceeds from new bank and other loans, contribution from a non-controlling interests of a subsidiary and a decrease in restricted and pledged bank
deposits.

C. Research and Development, Patents and Licenses, etc.

Not applicable.



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D. Trend Information

Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from April 1, 2012 to March 31, 2013 that
are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or
financial conditions.

E. Off-Balance Sheet Arrangements

On August 25, 2009, at the general meeting, the shareholders of Man Sang Holdings, Inc., the former immediate holding company, resolved that Man Sang Holdings, Inc. dissolve and liquidate, whereby
Man Sang Holdings, Inc. has been succeeded by the Company. From its inception in August 1995 through the completion of the dissolution and liquidation on August 25, 2009, the Company was wholly-owned subsidiary of Man Sang Holdings, Inc. The
liquidation did not result in tax for Man Sang Holdings, Inc. Such result is subject to assessment by U.S. tax authority. As the Company has succeeded Man Sang Holdings, Inc. and contractually assumed all of Man Sang Holdings, Inc.s rights,
obligations and liabilities, if the assessment differs from actual result, it may give rise to the possibility of outflow in settlement of tax by the Company.

Except as described above, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any unconsolidated third parties. In addition, we have not entered
into any derivative contracts that are indexed to our shares and classified as shareholders equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets
transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity.

F. Contractual Obligations

Contractual Obligations

We are subject to various financial obligations and commitments in the normal course of operations. These contractual obligations represent known future cash payments that we are required to make and
relate primarily to long-term debt, capital commitment obligations with respect to property under development, construction costs and operating leases.

As of March 31, 2013, our contractual obligations amounted to approximately HK$2,018.9 million. The following table sets forth our contractual obligations as of March 31, 2013.



|                                   |  |                        |           |  |                 |  |         |          |  |  |                  |  |  |  |        | 
|---------------------------------- |  | ---------------------- | --------- |  | --------------- |  | ------- | -------- |  |  | ---------------- |  |  |  | ------ | 
|                                   |  | Payments Due by Period |          
|                                   |  | Total                  |           |  | Less than1 year |  |         | 1-5years |  |  | More than5 years | 
|                                   |  | (HK$ in thousands)     |          
|Debt obligations                   |  |                        | 642,774   |  |                 |  | 286,703 |          |  |  | 297,271          |  |  |  | 58,800 | 
|Convertible bonds                  |  |                        | 468,000   |  |                 |  |        |          |  |  | 468,000          |  |  |  |       | 
|Interest on debt obligations       |  |                        | 607,586   |  |                 |  | 102,154 |          |  |  | 505,432          |  |  |  |       | 
|Capital commitment obligations (1) |  |                        | 290,311   |  |                 |  | 290,311 |          |  |  |                 |  |  |  |       | 
|Operating lease obligations        |  |                        | 10,194    |  |                 |  | 10,134  |          |  |  | 60               |  |  |  |       | 
|                                   |  |                        |           |  |                 |  |         |          |  |  |                  |  |  |  |        | 
|Total                              |  |                        | 2,018,865 |  |                 |  | 689,302 |          |  |  | 1,270,763        |  |  |  | 58,800 | 
|                                   |  |                        |           |  |                 |  |         |          |  |  |                  |  |  |  |        | 



|(1) | Capital commitment obligations represented capital injection in respect of investment in a subsidiary in the PRC of approximately HK$78.0 million and capital
expenditures in relation to the construction of properties and acquisition of land contracted for but not provided in the consolidated financial statements of approximately HK$212.3 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 6. | Directors, Senior Management and Employees
|------- | ------------------------------------------

Information Regarding Directors

The following table sets forth our directors. The information with respect to each director is set forth in the description of business experience of such persons below.



|                             |  |                                                  
|---------------------------- |  | -------------------------------------------------
|Name                         |  | Position(s)                                      
|                             | 
|Mr. Cheng Chung Hing, Ricky  |  | Director                                         
|                             | 
|Mr. Sio Kam Seng             |  | Chairman of the Board and
Chief Executive Officer
|                             | 
|Mr. Cheng Tai Po             |  | Vice Chairman of the Board                       
|                             | 
|Mr. Ho Min Sang              |  | Director                                         
|                             | 
|Mr. Su Shaobin               |  | Director                                         
|                             | 
|Ms. Leung Wai Yan            |  | Director                                         
|                             | 
|Mr. Hui Wan Fai, Eddie       |  | Director                                         
|                             | 
|Mr. Lai Chau Ming, Matthew   |  | Director                                         
|                             | 
|Mr. Wong Gee Hang, Henry     |  | Director                                         
|                             | 
|Mr. Tsui King Chung, Francis |  | Director                                         
|                             | 
|Mr. Yuen Ka Lok, Ernest      |  | Director                                         

Information Regarding Executive Officers

The following table sets forth the executive officers of the Company. The information with respect to each executive officer is set forth in the description of business experience of such persons below.



|                         |  |                                                  
|------------------------ |  | -------------------------------------------------
|Name                     |  | Position(s)                                      
|                         | 
|Mr. Sio Kam Seng         |  | Chairman of the Board and
Chief Executive Officer
|                         | 
|Mr. Cheng Tai Po         |  | Vice Chairman of the Board                       
|                         | 
|Mr. Lee Che Chiu, Arthur |  | Chief Financial Officer                          
|                         | 
|Mr. Lung Hei Man, Alex   |  | Deputy Chief Financial Officer                   



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Business Experience of Directors and Executive Officers

Mr. CHENG Chung Hing, Ricky, our co-founder, served as Chairman of the board of directors, President and Chief Executive Officer of
the Company from July 24, 2009 until August 25, 2011, June 1, 2011 and March 22, 2010 respectively. He remains as one of the directors of the Company currently. He has also served as Chairman of the board of directors and
President of MSHI since January 8, 1996. He was appointed Chief Executive Officer of MSHI on January 2, 1998. He served as Chief Financial Officer of MSHI from February to August 1999 and from August 2000 to August 2003. Mr. Cheng was
appointed Chairman and a Director of Man Sang International Limited, a then-subsidiary listed on The Stock Exchange of Hong Kong Limited, in August 1997. Prior to our reorganization in late 1995, which resulted in MSHIs issuance of common
stock and Series A preferred shares in exchange for all the outstanding securities of MSBVI in January 1996, he had served as Chairman and president of various companies within the Man Sang group of companies. Since March 20, 2007,
Mr. Cheng has also served as a director of China Metro-Rural Exchange Limited. Since February 21, 2007, Mr. Cheng, China Metro-Rural Limiteds co-founder, also served as a director of China Metro-Rural Limited. He also serves as
an executive director, co-founder and Co-Chairman of a Hong Kong company listed on The Stock Exchange of Hong Kong Limited with integrated logistics operations in China (China South City Holdings Limited, stock code: 1668).

Mr. SIO Kam Seng has served as Chairman of the Board and Chief Executive Officer of the Company since August 25, 2011.
Mr. Sio served as Vice Chairman of the Board and Chief Executive Officer of the Company from March 22, 2010 until August 25, 2011. Mr. Sio has served as Chairman of the board of directors of China Metro-Rural Limited and China
Metro-Rural Exchange Limited (a Hong Kong company) since January 1, 2010. He holds a Bachelor of Science degree in Construction Management from Queens University of Brighton and a Master of Business Administration degree from the
University of Wales. He is a member of Institute of Public Accountants, a member of Institute of Certified Management Accountants, a member of Chartered Institute of Building, a member of Society of Environmental Engineers and an associate of
Chartered Institute of Arbitrators. He is a Certified Management Accountant of Australia and is also a Chartered Builder of United Kingdom. He has over 20 years of experience in insurance and senior management. Prior to joining the China Metro
Group, he served as area manager of HSBC Insurance Group from 1989 to 1992, assistant general manager of Sime Insurance Group from 1993 to 1995, director and chief executive officer of MSHI from 1995 to 1997. He also served as director and general
manager of Accette Insurance Hong Kong from 1998 to June 2009 and has remained as its director since then.

Mr. CHENG Tai
Po, our co-founder, has served as our Vice Chairman since July 24, 2009. He has also served as director and Vice Chairman of MSHI since January 1996. He has served as Deputy Chairman and an executive director of Man Sang International Limited
(MSIL), listed on The Stock Exchange of Hong Kong Limited (stock code: 938) since August 1997. Prior to our group reorganization, he served as Vice Chairman of various companies within our group of companies. He has also served as a non-executive
director of China South City Holdings Limited, a Hong Kong Company listed on The Stock Exchange of Hong Kong Limited (stock code: 1668) since April 30, 2010. He has served as a director of some subsidiaries within MSILs group of companies
and China South Citys group of companies. Mr. Cheng has over 31 years experience in the pearl business and is responsible for our overall planning, strategic formulation and business development.

Mr. HO Min Sang has served as our Director since August 25, 2011 and he was one of the initial investors in the Company and was
involved in the Companys business development until the Company was publicly listed, given his insight into the Companys values, structure and goals. Mr. Ho has over 26 years experience in the fine jewelry business including retail,
wholesale and manufacturing. Mr. Ho has served as the Chairman of CARINE FRANCOIS France since 1985. CARINE FRANCOIS is the second largest importer both in quantity and value of fine jewelry in France. As the Chairman of his group of companies,
his investments covered France, Hong Kong and Mainland China. He is experienced in the areas of enterprise management and business development.



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Mr. SU Shaobin has served as our Director since August 25, 2011. Mr. Su is a
Senior Economist in the PRC, and currently the Chairman of Jiangxi Zhenchang Group since 2005. He obtained a Bachelors Degree in Decoration and Design from South China University of Technology in 1993. In 2005, he earned a Master Degree from the
Graduate School of The China Academy of Social Science, and received another Master Degree in Business Administration from The Open University of Hong Kong. Mr. Su has extensive management and working experience in the Building Decoration and
Designs Industry for over 18 years and was awarded Excellent Entrepreneur of China Building Decoration Industry in 2004. Mr. Su is currently a member of the standing committee of the China Building Decoration Association and a
member of the standing committee of the Federation of Industry and Commerce in Jiangxi Province. In 2006, Mr. Su was awarded Excellent Builder of Socialism with Chinese Characteristics by Nanchang Municipal Government, and was
elected as representative of the Twelfth and Thirteenth Peoples Congress of Nanchang City and the representative of the Eleventh Peoples Congress of Jiangxi Province.

Ms. LEUNG Wai Yan has served as our Director since March 22, 2010. She obtained a Master degree in Business Administration from
The Chinese University of Hong Kong in December 2011. She graduated from Les Roches (Switzerland) International School of Hotel Management in 2007 with a Bachelor of Business Administration degree in International Hotel Management with Finance. She
was a director of Tung Wah Group of Hospitals, a charity organization in Hong Kong. She has been the manager of the Strategic Development Department of China South City Holdings Limited since November 2012.

Mr. HUI Wan Fai, Eddie has served as our Director since October 4, 2012. He is the managing partner of PAG (formerly known as
Pacific Alliance Group). PAG is now one of the regions largest Asia-focused alternative investment managers with funds under management across private equity, real estate and absolute return strategies. He has previously served The Blackstone
Group as a managing director. The Blackstone Group is an asset management and financial services company listed on the New York Stock Exchange. Prior to The Blackstone Group, he was a managing director of Mellon HBV Alternative Strategies LLC, a New
York-based hedge fund under Mellon Bank from 2005 to 2006 where he acted as head of distressed investment for China.

Mr. LAI Chau Ming, Matthew, has served as our Director since July 24, 2009. He has also served as a Director of MSHI since
November 1996. Mr. Lai has been Sales Director of DBS Vickers (Hong Kong) Limited since July 1996. Prior to his joining DBS Vickers, Mr. Lai served from 1972 to 1996 as a Senior Manager of Sun Hung Kai Investment Company Limited, an
investment company in Hong Kong. Mr. Lai has over 30 years experience in investment. He is experienced in the areas of financial management and planning.

Mr. WONG Gee Hang, Henry, has served as our Director since July 24, 2009. He has also served as a Director of MSHI since April 2005. Mr. Wong has over 30 years of experience in accounting,
property investment and development and general management. Mr. Wong has also served as the Managing Director of Marspeed Limited, a consultancy firm of property development, investment and management. Mr. Wong had been a member of senior
management in a Hong Kong property developer for more than 15 years. He is a full member of The Hong Kong Management Association.

Mr. TSUI King Chung, Francis, has served as our Director since July 24, 2009. He has also served as a Director of MSHI since January 2006. Mr. Tsui has over sixteen years of experience in
financial services and business development consultancy both in the United States and in Hong Kong. Since 2000, Mr. Tsui has served as the President of DMC Investment Co. Ltd., a private investment company. He holds a Ph.D. degree in History
and a Master of Business Administration degree from the University of Hawaii.

Mr. YUEN Ka Lok, Ernest, has served as our
Director since September 1, 2010. Mr. Yuen has been a solicitor and a partner of Messer. Yuen & Partners since 1997. He has nearly 20 years of experience in litigations and commercial works. He received his Bachelor Degree in
Commerce from University of Toronto in Canada. Mr. Yuen is a member of the Law Society of Hong Kong.



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Mr. LEE Che Chiu, Arthur has served as our Chief Financial Officer since June 1,
2011. Prior to joining us, Mr. Lee was the CFO of Far East Global Group Limited, a company listed on The Stock Exchange of Hong Kong, from 2008 to 2011. Mr. Lee possesses over 18 years of working experience, including 7 years of
professional experience mainly gained from KPMG in Hong Kong, 3 years of investing banking experience, including as an analyst of County NatWest Securities in Australia and 7 years of commercial experience including the group assistant financial
controller of Elite Industrial Holdings Limited which owned a subsidiary listed in the Singapore Stock Exchange. Mr. Lee is a professional accountant and holds the fellow membership of The Hong Kong Institute of Certified Public Accountants and
the membership of the CPA Australia. He is a Chartered Financial Analyst of the CFA Institute and a member of the Hong Kong Institute of Directors. Mr. Lee holds a Master of Business Administration degree from The University of Sydney and a
Bachelor of Economics degree from Monash University in Australia.

Mr. LUNG Hei Man, Alex has served as our Deputy Chief
Financial Officer since March 22, 2010. He has served as financial controller of China Metro-Rural Limited and China Metro-Rural Exchange Limited (a Hong Kong company) since January 1, 2010 (but has been finance manager of China
Metro-Rural Exchange Limited since June 15, 2009). He graduated from the London School of Economics and Political Science in 1999 with a Bachelors degree in Accounting and Finance. He has eight years of experience in auditing in Hong Kong
and China with international accounting firms. Prior to joining the China Metro Group, he spent seven years with Ernst & Young and one year with BDO in auditing.

Family Relationships

Mr. Cheng Chung Hing, Ricky, and Mr. Cheng
Tai Po are brothers. Mr. Leung Moon Lam and Ms. Leung Wai Yan are father and daughter. Other than the foregoing, there are no family relationships among our directors and executive officers.

B. Executive Compensation

For fiscal year 2013, the Company or its subsidiaries paid an aggregate of US$1.0 million in total compensation to its executive officers
and to its directors. In addition the Company or its subsidiaries set aside or accrued US$5,000 to provide pension, retirement or similar benefits for its executive officers.

C. Board Practices

Board Composition

Our board of directors consists of eleven members.

We are a controlled company as defined in Section 801 of the NYSE MKT Company Guide. As a result, we are exempt from certain corporate governance requirements, including the requirement
that a majority of the board of directors be independent.

We have determined that four of the members of the board of
directors, Mr. Lai Chau Ming, Matthew, Mr. Wong Gee Hang, Henry, Mr. Tsui King Chung, Francis, and Mr. Yuen Ka Lok, Ernest, are independent within the meaning of Section 803A of the NYSE MKT Company and
Rule 10A-3 under the Exchange Act. We are not required to have a board of directors comprising a majority of independent directors under the NYSE MKT rules applicable to us.



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Committees and Attendance of the Board of Directors

Audit Committee

The audit committee is a separately-designated standing audit committee as defined in Section 3(a)(58)(A) of the Exchange Act. The
audit committee oversees matters relating to financial reporting, internal controls, risk management and compliance and related party transactions. These responsibilities include appointing and overseeing the independent auditors, as well as
reviewing their independence and evaluating their fees, reviewing financial information that is provided to our shareholders and others, reviewing with management our system of internal controls and financial reporting process and monitoring our
compliance program and system. The audit committee also makes recommendations on improvements and conducts other duties as the board of directors may delegate.

The audit committee consists of Mr. Yuen Ka Lok, Ernest, as Chairman, Mr. Wong Gee Hang, Henry, Mr. Lai Chau Ming, Matthew and Mr. Tsui King Chung, Francis. The audit committee
operates under a written charter, which sets forth the functions and responsibilities of the committee. A copy of our audit committee charter is posted on our website at www.chinametrorural.com.

The audit committee held four meetings during the fiscal year ended March 31, 2012 and three meetings during the fiscal year ended
March 31, 2013.

The board of directors has, in its reasonable judgment, (1) determined that all members of the
audit committee are financially literate, (2) determined that Mr. Wong Gee Hang, Henry is qualified as an audit committee financial expert, within the meaning of SEC regulations, that he has accounting and related financial
management expertise within the meaning of the listing standards of the NYSE MKT and Rule 10A-3 under the Exchange Act, and (3) determined that all audit committee members satisfy the definition of independent as established in
the NYSE MKT corporate governance listing standards.

With respect to the fiscal year ended March 31, 2013, the audit
committee has:



| |  |  | reviewed and discussed with our independent registered public accounting firm and with management the audited consolidated financial statements for the
year ended March 31, 2013;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | discussed with our independent registered public accounting firm the matters relevant with us in the Statement on Auditing Standards;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | received the written disclosures and the letter from our independent registered public accounting firm; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | discussed with our independent registered public accounting firm the independence of our independent registered public accounting firm.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------

Based on the audit committees review and discussions noted above, the audit committee recommended to
the board of directors that audited consolidated financial statements for the year ended March 31, 2013 be included in our Annual Report on Form 20-F for the year ended March 31, 2013.

Compensation Committee

The compensation committee consists of Mr. Lai Chau Ming, Matthew, as Chairman, Mr. Wong Gee Hang, Henry, Mr. Tsui King Chung, Francis and Mr. Yuen Ka Lok, Ernest.



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The compensation committee deliberates and stipulates the compensation policy for our
company. Each year the compensation committee directs our company, through an internal committee consisting of the Chief Financial Officer, the executive directors and Manager of Human Resources and Administration, to prepare a compensation
philosophy and strategy statement for the compensation of the executives and a proposed executive compensation framework for the year. When establishing the proposed compensation framework, in keeping with our goal of attracting, motivating, and
retaining executives who will contribute to our long-term success and an increase in the value of our shares, the internal committee undertakes the review of comparative compensation offered by peer companies that may compete with our company for
executive talent. The peer group we used for compensation comparison and analysis purposes includes companies with workforce sizes, revenues, assets, and market values within a certain range above and below our levels. The internal committee
periodically reviews the comparative compensation offered by the peer group and makes changes as appropriate to reflect changes in the market and our industry. The peer group is not necessarily limited to a particular industry as we believe we
compete for executive talent across a wider group of entities.

During the year ended March 31, 2013, the compensation
committee adopted two unanimous written consents of action for reviewing the personnel system and compensation package of our directors and officers.

The board of directors has determined that each member of the compensation committee satisfies the definition of independent as established in the NYSE MKT corporate governance listing
standards.

The compensation committee has a compensation committee charter which is posted on our website at
www.chinametrorural.com.

Nominating Committee

On August 25, 2011 the Company established a nominating committee was set up by the approval of the Board of Directors. Mr. Tsui King Chung, Francis is the Chairman of the nominating committee.
Mr. Lai Chau Ming, Matthew, Mr. Wong Gee Hang, Henry and Mr. Yuen Ka Lok, Ernest, are the members of the Committee.

The board of directors has determined that each member of the nominating committee satisfies the definition of independent as established in the NYSE MKT corporate governance listing
standards.

A current copy of our nomination charter is posted on our website at www.chinametrorural.com. The
nominating committee will consider recommendations from shareholders holding more than 5% of our outstanding shares for candidates to the board of directors. The name of any recommended candidate for being director, together with a brief
biographical sketch, a document indicating the candidates willingness to serve, if elected, and evidence of the nominating shareholders ownership of our shares should be sent to the attention of the Secretary of the Company not less than
120 days nor more than 180 days before August 2, 2014, the first anniversary of the mailing date of our proxy statement for our 2013 annual meeting.

Attendance of the Board of Directors

During the year ended
March 31, 2013, our board of directors held four meetings and adopted ten unanimous written consents of action.

Six of
our directors attended our 2012 annual meeting of shareholders held at Suite 2204, 22/F, Sun Life Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong.



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Duties of Directors

Under British Virgin Islands law, our directors have a duty of loyalty and must act honestly and in good faith and in our best interests. Our directors also have a duty to exercise the care, diligence and
skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duties to our company, our directors must ensure compliance with our Memorandum and Articles of Association and the class rights vested
thereunder in the holders of the shares. A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is breached.

Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions and powers of our board of directors include, among others:



| |  |  | convening shareholders annual general meetings and reporting its work to shareholders at such meetings;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | declaring dividends and distributions;
| | - |  | --------------------------------------



| |  |  | appointing officers and determining the terms of office of the officers;
| | - |  | ------------------------------------------------------------------------



| |  |  | exercising the borrowing powers of our company and mortgaging the property of our company; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | approving the transfer of shares in our company, including the registering of such shares in our share register.
| | - |  | ----------------------------------------------------------------------------------------------------------------

Employment Agreements

We do not have employment agreements with any of our directors.

China Metro-Rural Limited does not have employment agreements with any of its director. However, China Metro-Rural Exchange Limited, the wholly-owned subsidiary of China Metro-Rural Limited organized
under the laws of Hong Kong, entered into employment agreements with Mr. Ho Min Sang and Mr. Su Shaobin from September 1, 2011 to August 31, 2012.

The major terms of these agreements are as follows:



| |  |  | The employment agreement of Mr. Ho Min Sang commenced on September 1, 2011 and may be terminated by either party upon 1 month written notice
or payment in lieu of notice. The annual base salary payable to Mr. Ho Min Sang is US$461,538 (HK$3,600,000). He received a landing bonus of US$76,923 (HK$600,000) to be payable upon the starting of the Commencement Date (ie September 1,
2011) of the Agreement. He is also entitled to an annual discretionary bonus and/or share option, subject to annual review by the board of directors of China Metro-Rural Exchange Limited.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The employment agreement of Mr. Su Shaobin commenced on September 1, 2011 and may be terminated by either party upon 1 month written notice
or payment in lieu of notice. The annual base salary payable to Mr. Su Shaobin is US$461,538 (HK$3,600,000). He received a landing bonus of US$76,923 (HK$600,000) to be payable upon the starting of the Commencement Date (ie September 1,
2011) of the Agreement. He is also entitled to an annual discretionary bonus and/or share option, subject to annual review by the board of directors of China Metro-Rural Exchange Limited.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other than disclosed above, the employment agreements described do not have any severance arrangements or payments upon termination.



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D. Employees

As of March 31, 2013, the Company and all of its direct and indirect subsidiaries had a total of approximately 461 employees. The following table sets forth a breakdown of our management and
employees by function as of March 31, 2013.



|                                   |  |           |   |  |     |  |     |       |  |  |     | 
|---------------------------------- |  | --------- | - |  | --- |  | --- | ----- |  |  | --- | 
|                                   |  | Hong Kong |   |  | PRC |  |     | Total | 
|Senior management                  |  |           | 3 |  |     |  | 13  |       |  |  | 16  | 
|Marketing and sales                |  |           |  |  |     |  | 114 |       |  |  | 114 | 
|Purchasing                         |  |           |  |  |     |  | 10  |       |  |  | 10  | 
|Finance and accounting             |  |           | 2 |  |     |  | 34  |       |  |  | 36  | 
|Legal and Compliance               |  |           | 1 |  |     |  | 13  |       |  |  | 14  | 
|Construction                       |  |           |  |  |     |  | 36  |       |  |  | 36  | 
|Human resources and administration |  |           |  |  |     |  | 46  |       |  |  | 46  | 
|Property management                |  |           |  |  |     |  | 181 |       |  |  | 181 | 
|Information technology             |  |           |  |  |     |  | 8   |       |  |  | 8   | 
|                                   |  |           |   |  |     |  |     |       |  |  |     | 
|Total                              |  |           | 6 |  |     |  | 455 |       |  |  | 461 | 
|                                   |  |           |   |  |     |  |     |       |  |  |     | 

We believe that we maintain a good working relationship with our employees, and we have not experienced
any significant labor disputes or any difficulty in recruiting staff for our operations. Our employees currently are not party to any collective bargaining agreement, and no labor union has been organized to represent our employees.

We are required under PRC law to make defined contributions to the employee benefit plans including housing funds, pension, work-related
injury benefits, maternity insurance, medical and unemployment benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the respective local government authorities
where we operate our businesses from time to time. Members of the retirement plan are entitled to a pension equal to a fixed proportion of the salary prevailing at the members retirement date.

As of March 31, 2013, 6 of our employees were located in Hong Kong. We operate a defined contribution Mandatory Provident Fund
retirement benefits scheme, or the MPF Scheme, as required under the Mandatory Provident Fund Schemes Ordinance, for our eligible employees in Hong Kong. Contributions are made based on a percentage of the employees basic salaries. The
assets of the MPF Scheme are held separately from our assets in an independently administered fund, and our employer contributions vest fully with the employees when contributed into the MPF Scheme.

The total amount of contributions we made to employee benefit plans in fiscal years 2011, 2012 and 2013 was approximately US$120,000 (or
HK$937,000), US$301,000 (or HK$2,344,000) and US$392,000 (or HK$3,056,000), respectively.

E. Share Ownership

Please see Item 7.A.



|Item 7. | A. Major Shareholders and Related Party Transactions
|------- | ----------------------------------------------------

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ordinary Shares

The following table sets forth information with respect to the beneficial ownership of our ordinary shares, by
(1) each of the Companys shareholders who is a beneficial owner of more than 5% of the Companys ordinary shares, (2) each of the Companys directors and executive officers, individually, and (3) all of the
Companys executive officers and directors, as a group, as of July 1, 2013.



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|                                                             |  |                                              |             |  |                 |  |       |  
|------------------------------------------------------------ |  | -------------------------------------------- | ----------- |  | --------------- |  | ----- | -
|Name and Address of Beneficial Owner (1)                     |  | Amount and Nature ofBeneficial Ownership (2) |             |  | Percent ofClass | 
|Kind United Holdings Limited (3)(4)                          |  |                                              | 37,338,104  |  |                 |  | 50.77 | %
|Willis Plus Limited (3)(4)                                   |  |                                              | 61,499,028  |  |                 |  | 45.54 | %
|Ampleton Developments Limited                                |  |                                              | 5,744,323   |  |                 |  | 7.81  | %
|Luck Merit Holdings Limited                                  |  |                                              | 5,744,323   |  |                 |  | 7.81  | %
|Kudos Limited                                                |  |                                              | 5,744,323   |  |                 |  | 7.81  | %
|Zhong Ying Limited (5)                                       |  |                                              | 11,800,000  |  |                 |  | 14.85 | %
|Mr. Cheng Chung Hing, Ricky (3)                              |  |                                              | 98,837,132  |  |                 |  | 73.19 | %
|Mr. Cheng Tai Po                                             |  |                                              |            |  |                 |  |      |  
|Mr. Leung Moon Lam (4)                                       |  |                                              | 98,837,132  |  |                 |  | 73.19 | %
|Mr. Sio Kam Seng                                             |  |                                              |            |  |                 |  |      |  
|Mr. Ho Min Sang                                              |  |                                              | 5,222,661   |  |                 |  | 7.10  | %
|Mr. Su Shaobin (5)                                           |  |                                              | 11,800,000  |  |                 |  | 14.85 | %
|Ms. Leung Wai Yan                                            |  |                                              |            |  |                 |  |      |  
|Mr. Hui Wan Fai, Eddie                                       |  |                                              |            |  |                 |  |      |  
|Mr. Lai Chau Ming, Matthew                                   |  |                                              |            |  |                 |  |      |  
|Mr. Wong Gee Hang, Henry                                     |  |                                              |            |  |                 |  |      |  
|Mr. Tsui King Chung, Francis                                 |  |                                              |            |  |                 |  |      |  
|Mr. Yuen Ka Lok, Ernest                                      |  |                                              |            |  |                 |  |      |  
|Mr. Lee Che Chiu, Arthur                                     |  |                                              |            |  |                 |  |      |  
|Mr. Lung Hei Man, Alex                                       |  |                                              |            |  |                 |  |      |  
|All executive officers and directors as a group (13 persons) |  |                                              | 115,859,793 |  |                 |  | 70.13 | %



|(1) | Address for each person is c/o China Metro-Rural Holdings Limited, Suite 2204, 22/F, Sun Life Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents our ordinary shares held.As of July 1, 2013, we had 73,543,782 ordinary shares outstanding and none of these individuals or entities had the
right to acquire beneficial ownership of additional securities, as defined in Rule 13d-3(a) of the Exchange Act, within sixty days except as indicated in individual footnotes.This amount does not include securities that may be acquired
under options or other rights more than 60 days after July 1, 2013.This disclosure is made pursuant to certain rules and regulations promulgated by the SEC and the number of shares shown as beneficially owned by any person may not
be deemed to be beneficially owned for other purposes.Unless otherwise indicated in these footnotes, each named individual has sole voting and investment power with respect to such ordinary shares, subject to community property laws, where
applicable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Cheng Chung Hing, Ricky, owns approximately 50.1% of an entity that holds approximately 72% of the outstanding shares of Kind United Holdings Ltd.As a
result, Mr. Cheng Chung Hing, Ricky, may be deemed to be the beneficial owner of the 37,338,104 ordinary shares of the Company issued to Kind United Holdings Ltd. upon completion of the Merger on March 22, 2010. Mr. Cheng Chung Hing,
Ricky, owns approximately 70% of the outstanding shares of Willis Plus Limited.As a result, Mr. Cheng Chung Hing, Ricky, may be deemed to be the beneficial owner of the 61,499,028 ordinary shares of the Company beneficially owned
by Willis Plus Limited which consists of 55,499,028 ordinary shares issuable pursuant to convertible bonds convertible within 60 days of July 1, 2013 and 6,000,000 ordinary shares issuable pursuant to warrants exercisable within 60 days of
July 1, 2013.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Leung Moon Lam owns approximately 61% of an entity that holds approximately 28% of the outstanding shares of Kind United Holdings Ltd.As a result,
Mr. Leung Moon Lam may be deemed to be the beneficial owner of the ordinary shares of the Company issued to Kind United Holdings Ltd. upon completion of the Merger on March 22, 2010. Mr. Leung Moon Lam, owns approximately 30% of the
outstanding shares of Willis Plus Limited.As a result, Mr. Leung Moon Lam, may be deemed to be the beneficial owner of the 61,499,028 ordinary shares of the Company beneficially owned by Willis Plus Limited which consists of 55,499,028
ordinary shares issuable pursuant to convertible bonds convertible within 60 days of July 1, 2013 and 6,000,000 ordinary shares issuable pursuant to warrants exercisable within 60 days of July 1, 2013.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(5) | Zhong Ying Limited holds directly 5,900,000 ordinary shares of the Company and warrants to purchase 5,900,000 ordinary shares at a purchase price of US$2.875 per
ordinary share that are exercisable within 60 days of July 1, 2013. Mr. Su Shaobin, owns 100% of the outstanding shares of Zhong Ying Limited. As a result, Mr. Su Shaobin may be deemed to be the beneficial owners and to share the
voting and dispositive power of the 11,800,000 ordinary shares of the Company beneficially owned by Zhong Ying Limited.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Preferred Shares

The
following table sets forth information with respect to beneficial ownership of our preferred shares as of July 1, 2013, by (1) each of our shareholders who is known to be a beneficial owner of more than 5% of our preferred shares,
(2) each of our directors and executive officers, individually, and (3) all of our executive officers and directors as a group.



|                                                             |  |                                              |         |  |                 |  |     |  
|------------------------------------------------------------ |  | -------------------------------------------- | ------- |  | --------------- |  | --- | -
|Name and Address of Beneficial Owner (1)                     |  | Amount and Nature ofBeneficial Ownership (2) |         |  | Percent ofClass | 
|Cafoong Limited (3)                                          |  |                                              | 100,000 |  |                 |  | 100 | %
|Mr. Cheng Chung Hing, Ricky (3)                              |  |                                              | 100,000 |  |                 |  | 100 | %
|Mr. Cheng Tai Po (3)                                         |  |                                              | 100,000 |  |                 |  | 100 | %
|Mr. Sio Kam Seng                                             |  |                                              |        |  |                 |  |    |  
|Mr. Ho Min Sang                                              |  |                                              |        |  |                 |  |    |  
|Mr. Su Shaobin                                               |  |                                              |        |  |                 |  |    |  
|Ms. Leung Wai Yan                                            |  |                                              |        |  |                 |  |    |  
|Mr. Hui Wan Fai, Eddie                                       |  |                                              |        |  |                 |  |    |  
|Mr. Lai Chau Ming, Matthew                                   |  |                                              |        |  |                 |  |    |  
|Mr. Wong Gee Hang, Henry                                     |  |                                              |        |  |                 |  |    |  
|Mr. Tsui King Chung, Francis                                 |  |                                              |        |  |                 |  |    |  
|Mr. Yuen Ka Lok, Ernest                                      |  |                                              |        |  |                 |  |    |  
|Mr. Lee Che Chiu, Arthur                                     |  |                                              |        |  |                 |  |    |  
|Mr. Lung Hei Man, Alex                                       |  |                                              |        |  |                 |  |    |  
|All executive officers and directors as a group (13 persons) |  |                                              | 100,000 |  |                 |  | 100 | %



|(1) | Address for each person is c/o China Metro-Rural Holdings Limited, Suite 2204, 22/F, Sun Life Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents our preferred shares held.As of July 1, 2013, we had 100,000 preferred shares outstanding and none of these individuals or entities had the
right to acquire beneficial ownership of additional securities, as defined in Rule 13d-3(a) of the Exchange Act, within sixty days.This amount does not include securities that may be acquired under options or other rights more than
60 days after July 1, 2013.This disclosure is made pursuant to certain rules and regulations promulgated by the SEC and the number of shares shown as beneficially owned by any person may not be deemed to be beneficially owned for
other purposes.Unless otherwise indicated in these footnotes, each named individual has sole voting and investment power with respect to such preferred shares, subject to community property laws, where applicable.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Cheng Chung Hing, Ricky, and Mr. Cheng Tai Po own 60% and 40%, respectively, of all issued and outstanding shares of, and are directors of, Cafoong
Limited and, accordingly, are deemed to be the beneficial owners of our preferred shares owned by Cafoong Limited.The preferred shares were issued to Cafoong Limited on August 25, 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Holders of our ordinary shares are entitled to one vote for each share held.The holders of the 100,000 of our preferred
shares outstanding are, as a class, entitled to the number of votes as shall constitute 3,191,225 of our ordinary shares.We are not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company.

Certain agreements with Cafoong Limited provide Cafoong Limited with certain pre-emptive rights to purchase, upon the
issuance of our ordinary shares in certain circumstances to third parties, our ordinary shares in order to allow Cafoong Limited to maintain its percentage ownership interest of our outstanding ordinary shares.



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7.B CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our board of directors is responsible for reviewing relationships and transactions in which we and our directors and executive officers
or their immediate family members are participants to determine whether such related persons have a direct or indirect material interest.We review questionnaires provided by the directors and executive officers at the end of each fiscal year
confirming the nature of their related transactions with us, if any, during the year.Our board of directors is primarily responsible for the development and implementation of processes and controls to obtain information from the directors
and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether a related person has a direct or indirect material interest in the transaction.Our board of directors
reviews and approves or ratifies any related person transaction that is required to be disclosed.In the course of its review and approval or ratification of a disclosable related person transaction, the board of directors considers:



| |  |  | the nature of the related persons interest in the transaction;
| | - |  | ---------------------------------------------------------------



| |  |  | the material terms of the transaction, including, without limitation, the amount and type of transaction;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | the importance of the transaction to the related person;
| | - |  | --------------------------------------------------------



| |  |  | the importance of the transaction to us;
| | - |  | ----------------------------------------



| |  |  | whether the transaction would impair the judgment of a director or executive officer to act in our best interest; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | any other matters the board of directors deems appropriate.
| | - |  | -----------------------------------------------------------

Any member of the board of directors who is a related person with respect to a transaction under review may not participate in the deliberations or vote for approval or ratification of the transaction,
provided, however, that this director may be counted in determining the presence of a quorum at a meeting of the board of directors that considers the transaction.

No material related person transactions have occurred since the beginning of fiscal year 2010 up to and including the date of this Annual Report or are currently proposed, other than as set forth in the
discussion of the Merger and as set forth below:

On August 15, 2012 we issued US$60,000,000 principal amount,
14 per cent. guaranteed secured convertible bonds (the Bonds) due 2017 and 6,000,000 warrants to purchase Ordinary Shares (the CB Warrants) in a private placement to our affiliate Willis Plus Limited (the
Investor). Commencing August 15, 2013, the Bonds are convertible into our Ordinary Shares at an initial conversion price of US$1.0811 per share and the CB Warrants are exercisable to purchase Ordinary Shares at an initial exercise
price of $1.2973 per share, respectively. The Investor is a special purpose entity owned by the Majority Shareholders (as defined below). The Investor borrowed the funds used to purchase the Bonds from PA Universal Opportunity VII Limited
(PAG). The use of proceeds is intended for project development costs for several property development projects in mainland China. The Bonds are jointly and severally guaranteed by the non-PRC subsidiaries of the Company (the
Subsidiary Guarantors) and secured by share pledges over the issued share capital of the Subsidiary Guarantors that are owned by the Company.

Prior to the issuance of the Bonds and CB Warrants, we originally sought the investment directly from PAG. In the negotiation process, PAG demanded the personal guarantee from our majority shareholders,
including, Mr. Chung Hing Cheng (Mr. Cheng) and Mr. Moon Lam Leung (Mr. Leung, together with Mr. Cheng, the Majority Shareholders) and sought collateral from them. As a result of that dialogue, the
Majority Shareholders sought consideration from PAG and us in connection with the guarantee and security requested by PAG. The net result was that PAG would make a US$60,000,000 loan to the Investor and the Investor would use the loan proceeds to
purchase the Bonds and CB Warrants. Under this arrangement, PAG is entitled to receive 20% of any gross return realized by the Investor on the Bonds and CB Warrants, net of certain permitted expenses, that is in excess of 21% per annum internal
rate of return payable on the PAG bond.



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The Investor is categorized as our affiliate since both shareholders of the Investor,
Mr. Cheng and Mr. Leung are together deemed to be our largest shareholder, by their deemed beneficial ownership of over 50% of our issued and outstanding Ordinary Shares through Kind United Holdings Limited. Accordingly, the issuance of
the Bonds and CB Warrants each constitutes a transaction with our affiliate (the Affiliate Transaction) which is subject to, amongst other things, the review and approval of our board of the Company, and our Audit Committee.

Our board and our Audit Committee are of the opinion that the Affiliate Transaction is in our best interests and our shareholders as a
whole and our board and our Audit Committee each approved the Affiliate Transaction on July 17, 2012.

The Company filed
a Form 6-K on August 3, 2012 to report its execution of the subscription agreement and related documents in connection with the proposed issuance to the Investor of the Bonds and the CB Warrants; and the loan from PAG to the Investor.

On October 15, 2012, we, through our subsidiary, entered into an agreement for the disposition of 100% of our equity
interest in China Focus City (H.K.) Holdings Limited and 75% of our equity interest in Qiqihar China Focus City Holdings (Group) Co. Ltd. (Qiqihar CFC) to Run Xing Investments Limited and Honour Noble Holdings Limited (collectively, the
Purchasers) (collectively the Sale). Pursuant to the agreement, we, through our subsidiaries, are to receive considerations of RMB150,000,000 plus an amount of RMB85,595,967, representing certain post-tax profits arising from
Qiqihar CFC prior to the Sale, and interest on the pre-tax balance of such amount calculated from July 28, 2012 through the date of payment. In addition, the Purchasers are to enter into a legally binding guaranty with respect to our remaining
25% interest in Qiqihar CFC that we will receive (X) a pre-tax 21% fixed annual return of our remaining 25% interest in Qiqihar CFC, (equal to RMB10,500,000) beginning October 15, 2013 and (Y) RMB50,000,000 on or before
October 14, 2013.

The Purchasers shall have the right to purchase the remaining 25% interest in Qiqihar CFC at any time
for RMB50,000,000 (plus any amounts due and payable under (X) and (Y) above). Finally, in the event that the Purchasers intend to sell its interests in Qiqihar CFC, they must first purchase our 25% interest in Qiqihar CFC. The payments of
the amounts described above shall be guaranteed by the Purchasers and Qiqihar CFC, as well as Mr. Su Shaobin, who is one of our directors. The disposition was approved by our audit committee and our board of directors on October 12, 2012.
The remaining 25% interest in Qiqihar CFC has been accounted for as a loan receivable due to its nature in accordance with IFRS.

On July 1, 2008, Man Sang Jewellery Company Limited, an former indirect subsidiary of ours, entered into an agreement to share office premises with China South City Holdings Limited, an enterprise
controlled by our controlling shareholders, Mr.Cheng Chung Hing, Ricky, and Mr. Cheng Tai Po, pursuant to which Man Sang Jewellery Company Limited agreed to share a portion of its office premises with China South City Holdings
Limited for a term expiring on March 16, 2011. During the fiscal year ended March 31, 2011, China South City Holdings Limited paid Man Sang Jewellery Company Limited approximately HK$1.88 million (inclusive of rental rates, management
fees and government rates) pursuant to the terms of this agreement. This arrangement is from Man Sang Discontinued Operations, which ceased to be part of the Group subsequent to the Distribution.



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In addition to their investments in the Company, Mr. Cheng Chung Hing, Ricky, and his
brother, Mr. Cheng Tai Po, own all of the outstanding shares of Accurate Gain Developments Limited and Proficient Success Limited. As of March 31, 2013, Accurate Gain Developments Limited, Proficient Success Limited, Mr. Cheng Chung
Hing, Ricky, and Mr. Cheng Tai Po owned an aggregate of 2,448,116,976 of the 6,053,564,000 outstanding shares of China South City Holdings Limited, or China South City. China South City is one of the leading developers and operators of
large-scale integrated logistics and trade centers in China, providing a comprehensive trading platform for domestic and international wholesale suppliers, buyers, manufacturers and distributors of raw materials and finished products. It sells and
leases trade center units for businesses to display and sell their products. China South City also provides their clients with one-stop convenient supply chain solutions that include a full range of facilities and services such as offices,
residential, conference and exhibition facilities, hotels and restaurants, warehousing and on-site logistics services, property management, e-commerce, banking, on-site government services in a bid to offer. Mr. Cheng Chung Hing, Ricky, is also
the Co-Founder, Co-Chairman and Executive Director of China South City. In addition, Mr. Leung Moon Lam, a director of China Metro-Rural Limited and some of its subsidiaries, is a Co-Founder, Executive Director and the Chief Executive Officer
of China South City.

Differences between China Northeast Logistics Cities and China South City

We believe China Northeast Logistics Cities and China South City can be differentiated for a number of reasons. First, China South City is
located in Shenzhen, Guangdong Province, Nanchang, Jiangxi Province, Nanning, Guangxi Zhuang Autonomous Region, Xian, Shaanxi Province, Harbin, Heilongjiang Province and Zhengzhou, Henan Province, Hefei, Anhui Province and attracts clientele from
these regions. In addition, China South City and China Northeast Logistics Cities were established at different times with a focus on different industry sectors. The products offered by, and the occupants of, China Northeast Logistics Cities are
distinctively different from those of China South City. Also, the PRC subsidiaries of China South City has entered into master agreements and/or project agreements with local government in Shenzhen, Guangdong Province, Nanchang, Jiangxi Province,
Nanning, Guangxi Zhuang Autonomous Region, Xian, Shaanxi Province, Harbin, Heilongjiang Province and Zhengzhou, Henan Province and Hefei, Anhui Province that set out each partys commitments and expectations and a proposed framework for these
integrated logistics and trade center developments. On the other hand, our PRC subsidiaries have not entered into a master plan or agreement with government agencies, which gives China Northeast Logistics Cities more flexibility.

Contracts with China South City

Mr. Cheng Chung Hing, Ricky, and Mr. Leung Moon Lam are each parties to a deed of option and undertaking with China South City. Pursuant to the deed of option and undertaking of which we are not
a party of, each of Mr. Cheng Chung Hing, Ricky, and Mr. Leung Moon Lam has granted to China South City an option to acquire all their respective effective interests in China Northeast Logistics Cities at any time until September 30,
2014 or two years after the completion of the development of China Northeast Logistics Cities (whichever is later) so long as: (i) for Mr. Cheng Chung Hing, Ricky, he remains a controlling shareholder of China South City or a director of
China South City; or (ii) for Mr. Leung Moon Lam, he remains a director of China South City. China South City also has the right to buy all the respective interests held by Mr. Cheng Chung Hing, Ricky, and/or Mr. Leung Moon Lam
in China Northeast Logistics Cities before they are offered to any other third party. The price payable by China South City for such interests shall be determined with reference to the fair market value of such interests as determined by an
internationally recognized valuer.

If China South City decides, after due consideration, not to exercise the option but
wishes to develop China South Citys business operations in Liaoning Province, which may result in competition between China South City and China Northeast Logistics Cities, China South City shall be entitled to, at any time within the above
option period, require Mr. Cheng Chung Hing, Ricky (so long as he remains a controlling shareholder of China South City or a director of China South City), and/or Mr. Leung Moon Lam (so long as he remains a director of China South City) to
dispose of all their respective interests in China Northeast Logistics Cities to independent third parties as soon as practicable and in any event, prior to the occurrence of any competition between China South City and China Northeast Logistics
Cities.



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In connection with the Merger, Mr. Cheng Chung Hing, Ricky and Mr. Leung Moon
Lam sought confirmation from China South City as to whether China South City would opt to exercise its rights of first offer granted to it by both Mr. Cheng and Mr. Leung to purchase all their respective effective
interests in China Northeast Logistics Cities. Following that request, China South City held an extraordinary general meeting in which its independent shareholders approved, confirmed and ratified its non-exercise of the rights of first offer
granted to it by each of Mr. Cheng and Mr. Leung in relation to the Merger. While the rights of first offer no longer exist with respect to the completed Merger, the option to exercise the rights of first offer remains in effect
with respect to subsequent transfers until September 30, 2014 or two years after the completion of the development of China Northeast Logistics Cities (whichever is later).

On June 1, 2012, Shenzhen Northeast Logistics City Co., Ltd., an indirect wholly-owned subsidiary of ours, entered into a rental
agreement with China South International Industrial Materials City (Shenzhen) Co., Ltd., a wholly-owned subsidiary of China South City Holdings Limited, an enterprise controlled by our controlling shareholders, Mr. Cheng Chung Hing, Ricky, and
Mr. Cheng Tai Po, pursuant to which Shenzhen Northeast Logistics City Co., Ltd. agreed to lease from China South International Industrial Materials City (Shenzhen) Co., Ltd. an office premises located at Room 2119, China South Global Logistics
Center, Pinghu, Shenzhen, the PRC owned by China South International Industrial Materials City (Shenzhen) Co., Ltd. for a term of two years from June 1, 2012 to May 31, 2014 with monthly rental and management fee of RMB22,563 per month and
RMB4,514 per month, respectively. Shenzhen Northeast Logistics City Co., Ltd. is entitled to a rent-free period from June 1, 2012 to August 31, 2012. During the fiscal year ended March 31, 2013, Shenzhen Northeast Logistics City Co.,
Ltd. paid China South International Industrial Materials City (Shenzhen) Co., Ltd. approximately HK$298,000 (inclusive of rental rates and management fees, an amount less than the threshold of our related party transaction policy) pursuant to the
terms of this rental agreement.



|Item 8. | Financial Information
|------- | ---------------------

A. Consolidated
Statements and Other Information

Please see Item 17 Financial Statements for our audited consolidated
financial statements filed as a part of this Annual Report.

Legal Proceedings

As of March 31, 2013 we did not have any litigation, arbitration or claim of material importance, and the Directors were not aware of
any pending or threatened litigation, arbitration or claim of material importance against us, China Metro or any of our subsidiaries.

Dividend Policy

On
June 28, 2007, MSHI declared a return of capital in the amount of US$1,595,642 (US$0.25 per share of common stock) to its shareholders of record on July 24, 2007. MSHI did not pay cash dividends in fiscal years 2007 and 2008. Any future
determination to pay cash dividends will be at the discretion of our board of directors and will depend upon our financial condition, operating results, capital requirements, any applicable contractual restrictions and such other factors as our
board of directors deems relevant. Cash dividends, if any, on the ordinary shares of the Company will be paid in U.S. dollars.

We are a holding company incorporated in the British Virgin Islands, and will rely principally on dividends, loans or advances paid to us by our subsidiaries incorporated in China for our cash
requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. PRC law restricts the ability of our subsidiaries incorporated in the PRC to
transfer funds to us in the form of cash dividends, loans or advances. PRC regulations currently permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations.



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On July 28, 2010, the Company announced its decision to distribute its entire equity
interest in Man Sang International Limited, or MSIL, to the Companys shareholders, or the Distribution.

Any dividends
paid by a PRC subsidiary to an immediate holding company that is incorporated in Hong Kong will be subject to a withholding tax at the rate of 5%, provided the Hong Kong incorporated subsidiary is not considered to be a PRC tax resident enterprise.

If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be
regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%.

B. Significant Changes

Except as disclosed elsewhere in this Annual Report, we have not experienced any significant changes since the date of our
audited consolidated financial statements included in this Annual Report.



|Item 9. | The Offer and Listing.
|------- | ----------------------

Market Price

Our ordinary shares have been listed on the NYSE MKT under the symbol CNR since April 20, 2010. From
August 26, 2009 through April 19, 2010 our ordinary shares was listed on the NYSE MKT under the symbol MHJ. From August 8, 2005 through August 24, 2009, the common stock of our predecessor-in-interest, MSHI, was
listed on the NYSE MKT under the symbol MHJ. From 1987 to 2005, MSHIs common stock was reported on the Over-The-Counter (OTC) Electronic Bulletin Board under the symbol MSHI.OB. Our preferred shares are not listed.



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The following table sets forth, for the periods indicated, the high and low share prices (in
U.S.$) for the our ordinary shares from August 25, 2009 to March 31, 2013, and the common stock of MSHI from April 1, 2007 through August 24, 2009 on the NYSE MKT.



|                                                   |  |      |      |  |     |  |      | 
|-------------------------------------------------- |  | ---- | ---- |  | --- |  | ---- | 
|                                                   |  | High |      |  | Low | 
|Yearly Highs and Lows for the Year Ended March 31, |  |      |      |  |     |  |      | 
|2013                                               |  |      | 1.56 |  |     |  | 0.50 | 
|2012                                               |  |      | 5.65 |  |     |  | 0.72 | 
|2011                                               |  |      | 5.84 |  |     |  | 1.72 | 
|2010                                               |  |      | 4.46 |  |     |  | 1.70 | 
|2009                                               |  |      | 8.35 |  |     |  | 0.96 | 
|                                                   |  |     
|Quarterly Highs and Lows                           |  |      |      |  |     |  |      | 
|2013                                               |  |      |      |  |     |  |      | 
|First Quarter (April-June 2012)                    |  |      | 1.28 |  |     |  | 0.50 | 
|Second Quarter (July-September 2012)               |  |      | 1.14 |  |     |  | 0.71 | 
|Third Quarter (October-December 2012)              |  |      | 1.04 |  |     |  | 0.74 | 
|Fourth Quarter (January-March 2013)                |  |      | 1.56 |  |     |  | 0.80 | 
|                                                   |  |     
|2012                                               |  |      |      |  |     |  |      | 
|First Quarter (April-June 2011)                    |  |      | 5.65 |  |     |  | 1.15 | 
|Second Quarter (July-September 2011)               |  |      | 1.71 |  |     |  | 1.06 | 
|Third Quarter (October-December 2011)              |  |      | 1.59 |  |     |  | 0.72 | 
|Fourth Quarter (January-March 2012)                |  |      | 1.57 |  |     |  | 0.90 | 
|                                                   |  |     
|Monthly Highs and Lows                             |  |      |      |  |     |  |      | 
|January 2013                                       |  |      | 1.28 |  |     |  | 0.80 | 
|February 2013                                      |  |      | 1.56 |  |     |  | 1.06 | 
|March 2013                                         |  |      | 1.30 |  |     |  | 0.93 | 
|April 2013                                         |  |      | 1.38 |  |     |  | 1.20 | 
|May 2013                                           |  |      | 1.25 |  |     |  | 1.20 | 
|June 2013                                          |  |      | 1.25 |  |     |  | 1.20 | 



|Item 10. | Additional Information.
|-------- | -----------------------

A. Share
Capital

Not applicable.

B. Memorandum and Articles of Association

We are a British Virgin Islands
company and our affairs are governed by our Memorandum and Articles of Association, as amended and restated from time to time, and The BVI Business Companies Act, 2004.

The following statements are summaries of our share capital structure and of the more important rights and privileges of shareholders conferred by our Memorandum and Articles of Association and The BVI
Business Companies Act, 2004 insofar as they relate to the material terms of our ordinary shares. Our Memorandum and Articles of Association are available for examination at our registered office and are on file with the SEC.

We have two classes of shares: ordinary shares, which will have identical rights in all respects and rank equally with one another, and
preferred shares. Our authorized shares consist of 1,000,000,000 ordinary shares, par value US$0.001 per share, and 200,000 preferred shares, par value US$0.001 per share.



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Our Objects and Purposes

Under our Memorandum and Articles of Association, we have, irrespective of corporate benefit, full capacity to carry on or undertake any business or activity, do any act or enter into any transaction.

Preferred Shares

Dividends

The
holders of preferred shares are entitled to receive, when and as declared by the board of directors out of any funds legally available therefor, a dividend per share equal to any dividends per share declared on shares of our ordinary shares.
Dividends on the preferred shares shall be paid or declared and set apart for payment before any dividends shall be paid or declared and set apart for payment on the ordinary shares with respect to the same dividend period. The right to such
dividends on preferred shares are not cumulative, and no rights accrue to the holders of such shares by reason of the boards failure to pay or declare and set apart dividends thereon.

Liquidation Preference

In the event of any liquidation, dissolution
or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of preferred shares are entitled to a liquidation preference to be paid first out of our assets available for distribution to holders of our shares of all
classes an amount equal to US$25 per preferred share before any distribution of assets. If our assets shall be insufficient to permit the payment in full to the holders of the preferred shares, then our entire assets available for such distribution
shall be distributed ratably among the holders of the preferred shares in proportion to the full preferential amount each such holder is otherwise entitled to receive.

Voting Rights

Holders of our preferred shares, as a class, will be
entitled to vote 3,191,225 shares, subject to adjustment for stock splits, stock dividends and combinations, in all matters voted on by our shareholders.

Ordinary Shares

General

All of our outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in
registered form. Our shareholders who are nonresidents of the British Virgin Islands may freely hold and vote their shares.

Dividends

The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors,
subject to The BVI Business Companies Act, 2004.

Liquidation

On a return of capital on winding-up or otherwise (other than on conversion, redemption or purchase of shares), assets available for
distribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis, but subject to the liquidation preference of the holders of the preferred shares. If our assets available for
distribution are insufficient to repay all of the paid-up shares, the assets will be distributed so that the losses are borne by our shareholders proportionately, but, as above, subject to the liquidation preference of the holders of the preferred
shares.



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Voting Rights

Each ordinary share is entitled to one vote on all matters upon which our shares are entitled to vote and voting at any meeting of shareholders is by show of hands.

Convertible BondsAugust 2012

General

On
August 15, 2012 we issued US$60,000,000 principal amount, 14 per cent. guaranteed secured convertible bonds (the Bonds) due 2017 and 6,000,000 warrants to purchase Ordinary Shares (the CB Warrants) in a private
placement to our affiliate Willis Plus Limited (the Investor). Commencing August 15, 2013, the Bonds are convertible into our Ordinary Shares at an initial conversion price of US$1.0811 per share; and the CB Warrants are exercisable
to purchase Ordinary Shares at an initial exercise price of $1.2973 per share, respectively. The Investor is a special purpose entity owned by our Majority Shareholders. The Investor borrowed the funds used to purchase the Bonds from PA Universal
Opportunity VII Limited. The use of proceeds is intended for project development costs for several property development projects in mainland China.

We filed a registration statement with the Securities & Exchange Commission (SEC) covering the public resale of a portion of the Ordinary Shares issuable upon conversion of the Bonds
and the exercise of the CB Warrants (defined below) pursuant to a registration rights agreement between the parties. The registration statement was declared effective on April 4, 2013. As Ordinary Shares are sold into the market, the Company
will have the right to file subsequent registration statements to register the resale of additional shares, subject to certain limitations contained in the SECs rules.

The Bonds are jointly and severally guaranteed by M.S. Electronic Emporium Limited, China Metro-Rural Limited, China Metro-Rural Exchange Limited, China Metro-Rural Development Limited and China Focus
City (H.K.) Holdings Limited (the Subsidiary Guarantors, being our non-PRC subsidiaries) and secured by share pledges over the issued share capital of the Subsidiary Guarantors that we own.

Conversion Price of Bonds

All (but not part only) of the principal amount of the Bonds are convertible into our Ordinary Shares at an initial conversion price per Ordinary Share equal to US$1.0811. The Bonds are not convertible
until August 15, 2013. Based on such initial conversion price, 55,499,028 of the Companys Ordinary Shares are issuable upon conversion of the Bonds, representing approximately 75.46% of the total issued share capital of the Company and
approximately 43.01% of the total issued share capital of the Company as enlarged by such issue and assuming no existing warrants of the Company are exercised and no further issue of shares.

Company Covenants and Investor Put Right

Under the terms of the
Bonds, the Company undertakes to comply with certain financial covenants and will need to seek consent of holders of Bonds in respect of certain corporate activities and major transactions. Under the terms of the Bonds, if the Bonds have not
previously been converted, the Investor has the right to put back the Bonds to the Company on the third anniversary of the date of issue of the Bonds at an amount equal to 100 percent of the principal amount outstanding of the Bonds to be repaid
with accrued but unpaid interest and the relevant PIK Payment (as defined below).



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PIK Payment

On the earlier of the date on which the Bonds are put back to the Company, or maturity, the Company shall also pay a premium on the principal amount of the Bonds outstanding equal to the aggregate of the
following amounts, collectively, the PIK Payment:

(a) an amount representing interest accrued through the date ending on the
earlier of the anniversary of the issue date of the Bonds or the relevant date of redemption or repayment, at the rate of 7 per cent. per annum of the principal amount of the Bonds then outstanding, compounded annually (the PIK Principal
Portion); and

(b) each PIK Principal Portion shall bear interest from the relevant date on which the PIK Principal
Portion is first incurred at a rate of 21 per cent. per annum compounding on an annual basis.

Issuance of CB Warrants

Simultaneously with the issue of the Bonds, we issued to the Investor warrants, or CB Warrants, exercisable to
purchase up to 6,000,000 Ordinary Shares of the Company at an initial exercise price of US$1.2973 per Ordinary Share, representing a 20% premium over the initial conversion price of the Bonds, exercisable for the four (4) year period commencing
August 15, 2013 (the first anniversary of the date of issue of the Bonds). The terms of the CB Warrants further provide that in case no registration statement is available for resale of Ordinary Shares which may be issued under the CB Warrants
(the Exercise Shares), the holder of the CB Warrants may elect to receive Exercise Shares by way of cashless exercise pursuant to which the difference of the Current Market Value (as defined under the terms of the CB Warrants) of the
Exercise Shares and the exercise price which would have been received for the Exercise Shares would be used to determine the net number of Exercise Shares to be issued to the holder of the CB Warrants. The Company may have the option to pay cash
instead of issued Ordinary Shares. In the event the Company seeks an alternate listing on a recognized stock exchange and the listing of the shares to be issued under the CB Warrants is not allowed or the listing of the shares would be deferred for
reasons associated with the CB Warrants, the Company shall have a right to cancel the CB Warrants by compensating the holder of the CB Warrants with one Ordinary Share for every three CB Warrants tendered for surrender, credited as fully paid.

Anti-dilution protection

The Bonds and CB Warrants will have customary anti-dilution protection, which will include adjustments for (i) consolidation, reclassification or subdivision, (ii) capitalization of profits or
reserves, (iii) capital distributions including cash or non-cash dividends (except aggregate cash dividends in a fiscal year not exceeding the lower of (A) 25% of consolidated net profit attributable to our equity holders immediately
preceding fiscal year), and (B) dividend yield of 6% of the volume weighted average prices of each trading day in the 30 days immediately prior to the announcement of such dividend, (iv) rights issues of shares or options over shares,
(v) rights issues of other securities, (vi) new issues and other issues of securities at a discount of more than 5% to Current Market Price, (vii) modification of rights of conversion, exchange, etc, where the consideration per share
receivable is at a discount of more than 5% to Current Market Price, (viii) other offers of securities in connection with which the shareholders as a class are entitled to participate, (ix) issues of new shares at a discount of more than
5% of the prevailing conversion price in which case adjustment of the conversion price shall occur on a full ratchet basis, and (x) and transactions which are similar to the foregoing, except that existing warrants issued by the Issuer and
employee share schemes or incentives (subject to a cap of 10 % of our total share capital), will each not result in such adjustment.

Listing of Shares

The Ordinary Shares underlying the Bonds and the CB Warrants have been listed on the NYSE MKT.



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Affiliate Transaction

Prior to the issuance of the Bonds and CB Warrants, we originally sought the investment directly from PAG. In the negotiation process, PAG demanded the personal guarantee from our Majority Shareholders
and sought collateral from them. As a result of that dialogue, the Majority Shareholders sought consideration from PAG and us in connection with the guarantee and security requested by PAG. The net result was that PAG would make a loan of
US$60,000,000 to the Investor and the Investor would use the loan proceeds to purchase the Bonds. Under this arrangement, PAG is entitled to receive 20% of any gross return realized by the Investor on the Bonds and CB Warrants, net of certain
permitted expenses, that is in excess of 21% per annum internal rate of return payable on the PAG bond.

The Investor is
categorized as our affiliate since both shareholders of the Investor, Mr. Cheng and Mr. Leung are together deemed to be our largest shareholder, by their deemed beneficial ownership of over 50% of our issued and outstanding Ordinary Shares
through Kind United Holdings Limited. Accordingly, the issuance of the Bonds and CB Warrants each constitutes a transaction with our affiliate (the Affiliate Transaction) which is subject to, amongst other things, the review and approval
of our board of the Company and our Audit Committee.

Our board and our Audit Committee are of the opinion that the Affiliate
Transaction is in our best interests and our shareholders as a whole and our board and our Audit Committee each approved the Affiliate Transaction on July 17, 2012.

Rights as a Shareholder

Except as otherwise provided in the Bonds
or the CB Warrants or by virtue of such holders ownership of our ordinary shares, a holder of a Bond or CB Warrant does not have the rights or privileges of a holder of our ordinary shares, including any voting rights, unless the holder has
converted the Bonds or exercises the CB Warrants.

Warrants to Purchase Ordinary SharesMay 2011

General

We issued
warrants on May 11, 2011, pursuant to a warrant agency agreement. The warrants are exercisable at any time upon issuance until the date that is three years after their issuance, or May 10, 2014. The warrants are exercisable, at the option
of each holder, in whole or in part by delivering to the warrant agent a duly executed exercise notice accompanied by payment in full for the number of our ordinary purchased upon such exercise. No fractional ordinary shares will be issued in
connection with the exercise of a warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount multiplied by the market value of an ordinary share.

Failure to Timely Deliver Ordinary Shares

If we fail to deliver to the investor a certificate representing ordinary shares issuable upon exercise of a warrant by the third trading day after the delivery date as required by the warrant, and if the
investor purchases the ordinary shares after that third trading day to deliver in satisfaction of a sale by the investor of the underlying warrant shares that the investor anticipated receiving from us, then, within three trading days of receipt of
the investors request, we, at the investors discretion, either (i) pay cash to the investor in an amount equal to the investors total purchase price (including brokerage commissions, if any) for the ordinary shares purchased
less the exercise price (as described below), or the Buy-In Price, at which point our obligation to deliver the warrant (and to issue the underlying ordinary shares) shall terminate, or (ii) promptly honor our obligation to deliver to the
investor a certificate or certificates representing the underlying ordinary shares and pay cash to the investor in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) the number of ordinary shares, times
(B) the closing price on the date of the event giving rise to our obligation to deliver the certificate.



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Exercise Price

Each warrant issued in May 2011 represents the right to purchase ordinary shares at an exercise price equal to US$3.456 per share, subject to adjustment as described below. The exercise price is subject
to appropriate adjustment in the event of certain dividends and share distributions, share splits, share combinations, reclassifications or similar events affecting our ordinary shares and also upon any distributions of assets, including cash,
shares or other property to our shareholders. The exercise price is also subject to broad-based weighted average anti-dilution adjustments in the event that we issue shares in the future at a per share price below the exercise price of the warrants,
subject to customary exclusions from anti-dilution adjustments. On August 16, 2011, we informed the warrant holders that the exercise price of the warrants was adjusted from US$3.456 per ordinary shares to US$3.318 pursuant to Section 2(c)
of the Warrant to Purchase Ordinary Shares, as a result of two private placements by the Company, which were closed on August 2, 2011 and August 16, 2011 with an aggregate of 7,900,000 ordinary shares issued at US$2.50 per ordinary share
and 5,900,000 warrants issued where each warrant entitles the holder to purchase 1 ordinary share of the Company at an exercise price of US$2.875 per ordinary share upon exercise. On August 20, 2012, we informed the warrant holders that the
exercise price of the warrants was adjusted to US$1.959 pursuant to Section 2(d)(ii) of the Warrant to Purchase Ordinary Shares, as a result of the August 2012 issuance of US$60 million Bonds discussed above with a initial conversion price of
US$1.0811 per Ordinary Share and the CB Warrants to purchase 6 million Ordinary Shares at an exercise price of US$1.2973 per Ordinary Share. The Adjustment was effective from August 15, 2012.

Transferability

Subject to applicable laws, the warrants may be offered for sale, sold, transferred or assigned without our consent.

Exchange Listing

We do not plan to list the warrants on the NYSE MKT, any other national securities exchange or other nationally recognized trading system
or market.

Fundamental Transactions

If we consummate any merger, consolidation, sale or other reorganization event in which our ordinary shares are converted into or exchanged for securities, cash or other property (as defined in the
warrants, a fundamental transaction), then following such event, the holders of the warrants will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash or other property that the holders would have received had
they exercised the warrants immediately prior to such reorganization event in which our ordinary shares are converted into or exchanged for securities, cash or other property. If the holders of the warrants exercise their warrants within 90 days of
the fundamental transaction and prior to the expiration of the warrant, we will take the necessary actions to ensure that holders of the warrants will have the right to receive the kind and amount of securities, cash or other property that the
holders would have been entitled to receive if the warrant had been exercised immediately prior to the fundamental transaction.

Rights
as a Shareholder

Except as otherwise provided in the warrants or by virtue of such holders ownership of our
ordinary shares, the holder of a warrant does not have the rights or privileges of a holder of our ordinary shares, including any voting rights, until the holder exercises the warrant.



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General Provisions of Our Shares

Voting and Quorum. If the Chairman shall have any doubt as to the outcome of any resolution put to the vote, he shall cause
a poll to be taken of all votes cast upon such resolution, but if the Chairman shall fail to take a poll then any shareholder present in person or by proxy who disputes the announcement by the Chairman of the result of any vote may immediately
following such announcement demand that a poll be taken and the Chairman shall thereupon cause a poll to be taken. If a poll is taken at any meeting, the result thereof shall be duly recorded in the minutes of that meeting by the Chairman.

A quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy or, if a
corporation, by its duly authorized representative holding not less than one-third of the outstanding voting shares in our company. Shareholders meetings may be convened by our board of directors on its own initiative or upon a request to the
directors by shareholders holding in the aggregate 30% or more of our voting share capital. Advance notice of at least 10 (but not more than 60) days is required for the convening of our annual general shareholders meeting and any other
general shareholders meeting. Our shareholders meeting may be held in such place within or outside the British Virgin Islands as our board of directors considers appropriate.

An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the
ordinary shares (including preferred shares which represent ordinary shares) cast in a general meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the ordinary shares (including
preferred shares which represent ordinary shares). An ordinary resolution is required for matters such as an amendment of the Memorandum and Articles of Association to increase or reduce the number of shares that we are authorized to issue and a
repurchase of our outstanding shares. An ordinary resolution is required for the removal of directors with cause.

Transfer of Shares. Any transfer of our shares shall be evidenced by a written instrument of transfer executed by or on
behalf of the transferor and containing the name and address of the transferee. A transfer of shares is effective when the name of the transferee is entered in our share register in respect of such shares and we shall not be required to treat a
transferee of a share as a shareholder until the transferees name has been entered in the register.

Calls on
Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 days prior to the specified time and
place of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.

Redemption of
Shares. The directors may, on our behalf, subject to an ordinary resolution of members (including the written consent of all the members whose shares are to be purchased, redeemed or otherwise acquired), purchase, redeem or otherwise acquire
any of our own shares for such consideration as they consider appropriate, and either cancel or hold such shares as treasury shares. The directors may dispose of any shares held as treasury shares on such terms and conditions as they may from time
to time determine. Shares may be purchased or otherwise acquired in exchange for newly issued shares.

Variation of
Rights of Shares. If at any time our shares are divided into different classes, the rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series), whether or not we
are being wound-up, may be varied with the consent in writing of the holders of a simple majority of the issued shares of that class or series or with the sanction of a resolution passed by a simple majority of the votes cast at a separate meeting
of the holders of the shares of the class or series.

Inspection of Register of Members. Our register of members
and branch register of members shall be open for inspection by shareholders for such times and on such days as our board of directors shall determine, without charge, at the registered office or such other place at which the register is kept in
accordance with The BVI Business Companies Act, 2004, unless the register is closed in accordance with our Memorandum and Articles of Association.



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Designations and Classes of Shares. All of our issued and outstanding are
ordinary shares and preferred shares. Our Memorandum and Articles of Association provide that our authorized unissued shares shall be at the disposal of our board of directors, which may offer, allot, grant options over or otherwise dispose of them
to such persons, at such times and for such consideration and upon such terms and conditions as our board may in its absolute discretion determine.

Shareholders

Only persons who are registered in the register of members
are recognized as our shareholders.

No Limitations on Ownership of Securities.There are no limitations on the
right of non-residents or foreign persons to own our securities imposed by BVI laws or by our Memorandum and Articles of Association.

Ownership Threshold.There are no provisions governing the ownership threshold above which shareholder ownership must be disclosed imposed by BVI laws or by our Memorandum and Articles of
Association.

Changes in Capital

We may, by an ordinary resolution of members, amend our Memorandum and Articles of Association to increase or reduce the maximum number of shares that we are authorized to issue.

Subject to our Memorandum and Articles of Association, we may, by an ordinary resolution of members:



| |  |  | divide our shares, including issued shares, into a larger number of shares; or
| | - |  | ------------------------------------------------------------------------------



| |  |  | combine our shares, including issued shares, into a smaller number of shares;
| | - |  | -----------------------------------------------------------------------------

provided that, where shares are divided or combined, the aggregate par value of the new shares must be equal to the aggregate par value of the original
shares.

Directors Power to Issue Shares

Our Memorandum and Articles of Association authorizes our board of directors to issue additional ordinary and preferred shares from time to time as our board of directors shall determine, up to the amount
of the available authorized but unissued shares.

Our board of directors may issue preferred shares without action by its
shareholders up to the amount of the authorized but unissued preferred shares. The issuance of preferred shares may be used as an anti-takeover device without further action on the part of the shareholders. The issuance of these shares could
adversely affect the voting power and other rights of holders of our ordinary shares. Subject to the directors duty of acting in our interest, preferred shares can be issued quickly with terms calculated to delay or prevent a change in control
of our company or make removal of management more difficult. Additionally, the issuance of preferred shares may have the effect of decreasing the market price of the ordinary shares, and may adversely affect the voting and other rights of the
holders of the ordinary shares.

Conflicts of Interest

A director shall, forthwith after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose the interest to the board of directors,
unless the transaction or proposed transaction (a) is between the director and the Company and (b) is to be entered into in the ordinary course of the Companys business and on usual terms and conditions.



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A transaction entered into by the Company in respect of which a director is interested in
voidable by the Company unless the director complies with the above provision or (a) the material facts of the interest of the director in the transaction are known by the shareholders entitled to vote at a meeting of shareholders and the
transaction is approved or ratified by an ordinary resolution of shareholders or (b) the Company received a fair value for the transaction.

A director who is interested in a transaction entered into or to be entered into by the Company may vote on a matter relating to the transaction, attend a meeting of directors at which a matter relating
to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum and sign a document on behalf of the Company, or do any other thing in his capacity as director that related to the transaction.

Remuneration of Directors

Directors shall not receive any stated salary for their services, but by a resolution of directors a fixed sum may be allowed for attendance at each meeting of the board.

Directors Power to Manage Business

The board of directors may, from time to time and at its discretion, exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any
part thereof, and may exercise power in such manner and upon such terms and conditions in all respects as it thinks fit.

Indemnification

British Virgin Islands law does not limit the extent to which a companys memorandum and articles of association may
provide for indemnification of officers and directors, except to the extent any such provision may be held by the British Virgin Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime.

Our Memorandum and Articles of Association provide that, subject to The BVI Business
Companies Act, 2004, we will indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any
person who:



| |  |  | is or was a party or is threatened to be made a party to any threatened, pending or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the person is or was a director, an officer or a liquidator of our company; or
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | is or was, at the request of our company, serving as a director, officer or liquidator of, or in any other capacity is or was acting for, another body
corporate or a partnership, joint venture, trust or other enterprise.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

To be entitled to indemnification,
these persons must have acted honestly and in good faith and in the best interest of our company, and they must have had no reasonable cause to believe their conduct was unlawful.

If any such person mentioned above has been successful in defense of any proceedings referred to above, that person is entitled to be
indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by that person in connection with the proceedings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons
controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.



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Limitations on Rights to Hold or Vote Shares

Except as described herein, there are no limitations imposed by British Virgin Islands law or by our Memorandum and Articles of
Association on the rights of non-resident shareholders to hold or vote our ordinary shares.

Exchange Controls

There are no material British Virgin Islands laws, decrees, regulations or other legislation that impose foreign exchange controls on us
or that affect our payment of dividends, interest or other payments to non-resident holders of our shares.

Anti-Takeover Effects of Our
Memorandum and Articles of Association

Some provisions of British Virgin Islands law and our Memorandum and Articles of
Association could make the acquisition of us by means of a tender offer or merger, or by means of a proxy contest or otherwise, more difficult.

These provisions, which include a business combination provision, are expected to discourage coercive takeover practices and inadequate takeover bids. Although as a British Virgin Islands
company, we are not subject to Section 203 of the Delaware General Corporation Law, the business combination provision in our articles largely mirror the intention of Section 203 and generally prohibit business combinations
between us and an interested shareholder. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe the benefits of the potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging those proposals because negotiation of them could result in an improvement of their terms.

Transfer Agent and Registrar

The transfer agent and registrar for our ordinary and preferred shares is American Stock Transfer & Trust Company.

Disclosure of Share Ownership

Our Memorandum or Articles of Association do
not provide for any ownership threshold above which shareholder ownership must be disclosed.

Amendment of Memorandum and Articles of
Association

The Company may at any time and from time to time by ordinary resolution alter or amend its Memorandum of
Association and Articles of Association in whole or in part subject, in the case of any alteration or amendment which modifies the rights of a class of shares, to consent from holders of that class of shares as more fully set out above.

C. Material Contracts

Other than those listed in the paragraphs below, we have not entered into any material contracts other than in the ordinary course of
business or other than those described in Item 4 Information on the Company and elsewhere in this Annual Report.

On July 13, 2011, China Tieling Northeast entered into an RMB loan contract with SPD Bank, under which SPD Bank extended an RMB50,000,000 loan to China Tieling Northeast. The term of the loan is from
date of drawn down (July 15, 2011) to July 8, 2012. This RMB loan is secured by charges over certain land use rights of China Tieling Northeast with an aggregate area of approximately 131,328 square meters.



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On August 19, 2011, China Tieling Northeast entered into an RMB loan contract with SPD
Bank, under which SPD Bank extended an RMB20,000,000 loan to China Tieling Northeast. The term of the loan is from date of drawn down (August 19, 2011) to August 3, 2012. This RMB loan is secured by charges over certain office premises of China
Tieling Northeast with an aggregate gross floor area of approximately 20,638 square meters.

On August 30, 2011, China
Tieling Northeast entered into an RMB loan contract with SPD Bank, under which SPD Bank extended an RMB20,000,000 loan to China Tieling Northeast. The term of the loan is from date of drawn down (August 30, 2011) to August 3, 2012. This RMB
loan is secured by charges over certain office premises of China Tieling Northeast with an aggregate gross floor area of approximately 20,638 square meters.

On August 30, 2011, China Tieling Northeast entered into an RMB loan contract with Xian International Trust Co., Ltd. (Xian International), under which Xian
International extended an RMB100,000,000 loan to China Tieling Northeast. The term of the loan is from date of drawn down (August 30, 2011) to August 30, 2012.

On August 30, 2011, China North Asia Development Co., Ltd. entered into an RMB loan contract with Xian International, under which Xian International extended an RMB100,000,000 loan to
China North Asia Development Co., Ltd.. The term of the loan is from date of drawn down (August 30, 2011) to August 30, 2012.

On September 27, 2011, China Tieling Northeast entered into an RMB loan contract with SPD Bank, under which SPD Bank extended an RMB10,000,000 loan to China Tieling Northeast. The term of the loan is
from date of drawn down (September 27, 2011) to August 3, 2012. This RMB loan is secured by charges over certain office premises of China Tieling Northeast with an aggregate gross floor area of approximately 20,638 square meters.

On November 4, 2011, one of our subsidiaries, China Metro-Rural Limited, entered into seven HKD loan agreements, where the terms and
conditions of the loan agreements are identical except for the amount, with certain independent third parties, under which these third parties extended an aggregate amount of HK$131,500,000 loan to China Metro-Rural Limited. The term of these loans
is from November 8, 2011 to November 7, 2014. The loans are unsecured, interest bearing at 18% per annum and subject to additional cumulative interest of 7% per annum if it is repaid early.

On June 6, 2012, one of our subsidiaries, China Tieling Northeast entered into an RMB syndicated loan contract with ICBC and China
Merchant Bank, under which ICBC and CMB extended an RMB97,000,000 loan to China Tieling Northeast. The term the loan is from date of drawn down (June 25, 2012) to June 25, 2015.

On July 24, 2012 we entered into certain agreements in connection with the issuance of US$60,000,000 principal amount, 14 per
cent. guaranteed secured convertible bonds (the Bonds) and 6,000,000 warrants to purchase Ordinary Shares (the CB Warrants) in a private placement to the Investor . The Investor is a special purpose entity owned by our
Majoirty Shareholders. The Investor borrowed the funds used to purchase the Bonds from PAG. The use of proceeds is intended for project development costs for several property development projects in mainland China.

Prior to the issuance of the Bonds and CB Warrants, we originally sought the investment directly from PAG. In the negotiation process,
PAG demanded the personal guarantee from our Majority Shareholders and sought collateral from them. As a result of that dialogue, the Majority Shareholders sought consideration from PAG and us in connection with the guarantee and security requested
by PAG. The net result was that PAG would make a loan of US$60,000,000 of bonds to the Investor and the Investor would use the loan proceeds to purchase the Bonds and CB Warrants. Under this arrangement, PAG is entitled to receive 20% of any gross
return realized by the Investor on the Bonds and CB Warrants, net of certain permitted expenses, that is in excess of 21% per annum internal rate of return payable on the PAG bond.

On August 16, 2012, one of our subsidiaries, China Tieling Northeast entered into an RMB loan contract with SPB Bank, under which
SPD Bank extended an RMB40,000,000 loan to China Tieling Northeast. The term the loan is from date of drawn down (August 20, 2012) to August 7, 2013.



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On August 22, 2012, one of our subsidiaries, China Tieling Northeast entered into an
RMB loan contract with SPB Bank, under which SPD Bank extended an RMB40,000,000 loan to China Tieling Northeast. The term the loan is from date of drawn down (August 31, 2012) to August 7, 2013.

On October 15, 2012, we, through our subsidiary, entered into an agreement for the disposition of 100% of our equity interest in
China Focus City (H.K.) Holdings Limited and 75% of our equity interest in Qiqihar China Focus City Holdings (Group) Co. Ltd. (Qiqihar CFC) to Run Xing Investments Limited and Honour Noble Holdings Limited (collectively, the
Purchasers) (collectively the Sale). Pursuant to the agreement, we, through our subsidiaries, are to receive considerations of RMB150,000,000 plus an amount of RMB85,595,967, representing certain post-tax profits arising from
Qiqihar CFC prior to the Sale, and interest on the pre-tax balance of such amount calculated from July 28, 2012 through the date of payment. In addition, the Purchasers are to enter into a legally binding guaranty with respect to our remaining
25% interest in Qiqihar CFC that we will receive (X) a pre-tax 21% fixed annual return of our remaining 25% interest in Qiqihar CFC, (equal to RMB10,500,000) beginning October 15, 2013 and (Y) RMB50,000,000 on or before
October 14, 2013.

The Purchasers shall have the right to purchase the remaining 25% interest in Qiqihar CFC at any time
for RMB50,000,000 (plus any amounts due and payable under (X) and (Y) above). Finally, in the event that the Purchasers intend to sell its interests in Qiqihar CFC, they must first purchase our 25% interest in Qiqihar CFC. The payments of
the amounts described above shall be guaranteed by the Purchasers and Qiqihar CFC, as well as Mr. Su Shaobin, who is one of our directors.

On October 24, 2012, one of our subsidiaries, China Dezhou Northeast entered into an RMB loan contract with Bank of China, under which Bank of China extended an RMB65,000,000 loan to China Dezhou
Northeast. The term the loan is from date of drawn down (October 24, 2012) to December 25, 2014.

On October 25,
2012, one of our subsidiaries, China Tieling Northeast entered into an RMB syndicated loan contract with ICBC and China Merchant Bank, under which ICBC and CMB extended an RMB141,000,000 loan to China Tieling Northeast. The term the loan is from
date of drawn down (November 1, 2012) to October 31, 2015.

On November 1, 2012, one of our subsidiaries, China
Tieling Northeast entered into an RMB loan contract with Bank of Tieling, under which Bank of Tieling extended an RMB13,000,000 loan to China Tieling Northeast. The term the loan is from date of drawn down (November 1, 2012) to October 31,
2013.

On March 15, 2013, one of our subsidiaries, China Metro-Rural Limited, entered into six HKD loan agreements, where
the terms and conditions of the loan agreements are identical except for the amount, with certain independent third parties, under which these third parties extended an aggregate amount of HK$60,000,000 loan to China Metro-Rural Limited. The term of
these loans is from March 15, 2013 to March 14, 2015. The loans are unsecured, interest bearing at 18% per annum.



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D. Exchange Controls

The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as amended in August 2008. Under the Regulations, the Renminbi is freely
convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of
investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange, or SAFE, is obtained and prior registration with the State Administration of Foreign Exchange is made.
August 29, 2008, the State Administration of Foreign Exchange promulgated a notice, Circular No. 142, regulating the conversion by a foreign-invested company of foreign currency into Renminbi by restricting how the converted Renminbi may
be used. The notice requires that the registered capital of a foreign-invested company settled in Renminbi converted from foreign currencies may only be used for purposes within the business scope approved by the applicable governmental authority
and may not be used for equity investments within the PRC. In addition, the State Administration of Foreign Exchange strengthened its oversight of the flow and use of the registered capital of a foreign-invested company settled in Renminbi converted
from foreign currencies. The use of such Renminbi capital may not be changed without the State Administration of Foreign Exchanges approval, and may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been
used. Violations of Circular No. 142 will result in severe penalties, such as heavy fines.

The dividends paid by the
subsidiary to its overseas shareholder are deemed income of the shareholder and are taxable in China. Pursuant to the Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), foreign-invested enterprises in China may
purchase or remit foreign currency, subject to a cap approved by the State Administration of Foreign Exchange, for settlement of current account transactions without the approval of the State Administration of Foreign Exchange. Foreign currency
transactions under the capital account are still subject to limitations and require approvals from or registration with, the State Administration of Foreign Exchange and other relevant PRC Governmental authorities.

All of our revenues are denominated in Renminbi, while a portion of our expenditures are denominated in foreign currencies, primarily the
U.S. dollar. Fluctuations in exchange rates, particularly those involving the U.S. dollar may affect our costs and operating margins. In addition, these fluctuations could result in exchange losses and increased costs in Renminbi terms. Where our
operations conducted in Renminbi are reported in dollars, such fluctuations could result in changes in reported results which do not reflect changes in the underlying operations. Since January 1, 1994, the PRC Government has used a unitary
managed floating rate system. Under that system, the Peoples Bank of China, or PBOC, publishes a daily base exchange rate with reference primarily to the supply and demand of the Renminbi against the U.S. dollar and other foreign currencies in
the market during the previous day. Authorized banks and financial institutions are allowed to quote buy and sell rates for Renminbi within a specified bank around the central banks daily exchange rate. On July 21, 2005, PBOC announced an
adjustment of the exchange rate of the U.S. dollar to Renminbi from 1:8.27 to 1:8.11 and modified the system by which the exchange rates are determined. While the international reaction to the Renminbi revaluation has generally been positive, there
remains significant international pressure on the PRC Government to adopt an even more flexible currency policy, which could result in a further revaluation and a significant fluctuation of the exchange rate of the Renminbi against the U.S. dollar,
including possible devaluations. As substantially all of our revenues are denominated in Renminbi, such a potential future devaluation of the Renminbi against the U.S. dollar could negatively impact our results of operations.

In October 2005, SAFE promulgated regulations that require registration with local SAFE in connection with direct or indirect offshore
investment by PRC residents, including PRC individual residents and PRC corporate entities. These regulations apply to our shareholders who are PRC residents and also apply to our prior and future offshore acquisitions.



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The SAFE regulations retroactively require registration by March 31, 2006 of direct or
indirect investments previously made by PRC residents in offshore companies. If a PRC resident with a direct or indirect stake in an offshore parent company fails to make the required SAFE registration, the PRC subsidiaries of such offshore parent
company may be prohibited from making distributions of profit to the offshore parent and from paying the offshore parent proceeds from any reduction in capital, share transfer or liquidation in respect of the PRC subsidiaries. Further, failure to
comply with various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.

For more information about foreign exchange control and other foreign exchange regulations in China, see Risk Factors in Item 3 Key Information.

E. Taxation

The
following summary of the material British Virgin Islands tax consequences and material United States federal income tax consequences of an investment in our ordinary shares and warrants is based upon laws and relevant interpretations thereof in
effect as of the date of this Annual Report, all of which are subject to change. We have also provided a summary of the material PRC and Hong Kong taxes in respect of our business operations. This summary does not deal with all possible tax
consequences relating to an investment in our ordinary shares and warrants.

British Virgin Islands Tax Consequences

Capital gains realized with respect to any of our shares, warrants, debt obligations or other securities by persons who are not persons
resident in the British Virgin Islands are exempt from all provisions of the Income Tax Act of the British Virgin Islands. No estate, inheritance, succession or gift tax rate, duty, levy or other charge is payable by persons who are not persons
resident in the British Virgin Islands with respect to any of our shares, warrants, debt obligations or other securities.

No
stamp duty is payable in the British Virgin Islands on a transfer of shares or warrants in a British Virgin Islands business company or upon the exercise of warrants of a British Virgin Islands business company.

Material United States Federal Income Tax Consequences

General

The following are the material U.S. federal income tax
consequences applicable to U.S. Holders of owning ordinary shares and warrants of the Company. For this purpose U.S. Holders is a beneficial owner of our securities that is for U.S. federal income tax purposes:



| |  |  | an individual citizen or resident of the United States;
| | - |  | -------------------------------------------------------



| |  |  | a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the
United States, any state thereof or the District of Columbia;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | a trust if (i) a U.S. court can exercise primary supervision over the trusts administration and one or more U.S. persons are
authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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If a beneficial owner of our securities is not described as a U.S. Holder and is not an
entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes, such owner will be considered a Non-U.S. Holder. This discussion does not address the tax treatment Non-U.S. Holders or of
partnerships or other pass-through entities that hold our ordinary shares or warrants, or of persons who hold such ordinary shares or warrants, or will hold our ordinary shares or warrants, through such entities. The U.S. federal income tax
consequences of a partner in a partnership holding our ordinary shares or warrants generally will depend on the status of the partner and the activities of the partnership. We recommend that partners in such a partnership and beneficial owners of
other pass-through entities holding our ordinary shares or warrants consult their own tax advisors.

The U.S. federal
income tax consequences applicable to Non-U.S. Holders owning our ordinary shares are described below under the heading Tax Consequences to Non-U.S. Holders.

This summary is based on the Internal Revenue Code, its legislative history, U.S. Treasury regulations promulgated thereunder, published
rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations, possibly on a retroactive basis.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular holder of our ordinary shares or warrants based on such holders individual
circumstances. In particular, this discussion considers only holders that own and hold such our ordinary shares and warrants as capital assets within the meaning of Section 1221 of the Code. This discussion does not address the potential
application of the alternative minimum tax or the U.S. federal income tax consequences to holders that are subject to special rules, including but not limited to:



| |  |  | banks and certain financial institutions or financial services entities;
| | - |  | --------------------------------------------------------------------------



| |  |  | broker-dealers;
| | - |  | ---------------



| |  |  | taxpayers who have elected mark-to-market accounting;
| | - |  | -----------------------------------------------------



| |  |  | tax-exempt organizations, plans or accounts;
| | - |  | --------------------------------------------



| |  |  | governments or agencies or instrumentalities thereof;
| | - |  | -----------------------------------------------------



| |  |  | insurance companies;
| | - |  | --------------------



| |  |  | regulated investment companies;
| | - |  | -------------------------------



| |  |  | real estate investment trusts;
| | - |  | ------------------------------



| |  |  | certain expatriates or former long-term residents of the United States;
| | - |  | -----------------------------------------------------------------------



| |  |  | persons that actually or constructively own 10% or more of our voting shares;
| | - |  | -----------------------------------------------------------------------------



| |  |  | persons that hold our ordinary shares as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | persons whose functional currency is not the U.S. dollar.
| | - |  | ---------------------------------------------------------

This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state or local
tax laws.

We have not sought, and will not seek, a ruling from the Internal Revenue Service, or the IRS, as to any
U.S. federal income tax consequence described herein and have not obtained an opinion of counsel in respect of as to such tax consequences. The IRS may disagree with the conclusions expressed in discussion herein, and its determination may be
upheld by a court.



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BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY
PARTICULAR HOLDER OF OUR SECURITIES MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH HOLDER OF OUR SECURITIES IS URGED TO CONSULT WITH ITS TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF ACQUISITION, OWNERSHIP AND DISPOSITION OF OF
OUR SECURITIES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS OTHER U.S. FEDERAL TAX LAWS.

Tax Consequences to U.S. Holders of Our Ordinary Shares

Section 7874
Inversion Rules

Section 7874(b) generally provides that a corporation organized outside the United States which
acquires, directly or indirectly, pursuant to a plan or series of related transactions, substantially all of the assets of a corporation organized in the United States will be treated as a U.S. corporation for U.S. federal income tax purposes if the
stockholders of the acquired corporation own at least 80% of either the voting power or the value of the stock of the acquiring corporation after the acquisition by reason of owning shares in the acquired corporation. If Section 7874(b) were to
apply to the 2009 liquidation of Man Sang Holdings Inc., we would be subject to U.S. federal income tax on our worldwide taxable income as if we were a U.S. corporation.

Upon completion of the liquidation, the shareholders of Man Sang Holdings Inc. owned more than 80% of our then issued and outstanding stock by reason of owning shares in Man Sang Holdings Inc. However, we
did not acquire, directly or indirectly, any of the assets of Man Sang Holdings Inc. (other than rights to a potential tax refund, which was insignificant). Thus, we believe that Section 7874(b) should not apply to us and have consistently
taken that position for U.S. federal income tax purposes. We have not sought a ruling from the IRS on this point. Therefore, the IRS may assert that we are subject to U.S. federal income tax on our worldwide income.

The remainder of this discussion assumes that we will be treated as a foreign corporation and not as a U.S. corporation for U.S. federal
income tax purposes.

Taxation of Distributions Paid on Ordinary Shares

Subject to the discussion of passive foreign investment companies below, any distributions we make with respect to our ordinary shares to
a U.S. Holder should generally constitute dividends, which may be taxable as ordinary income or qualified dividend income, as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined
under U.S. federal income tax principles. Distributions in excess of our earnings and profits should be treated first as a nontaxable return of capital to the extent of the U.S. Holders tax basis in its ordinary shares and thereafter as
capital gain. Because we are not a U.S. corporation, U.S. Holders that are corporations should not be entitled to claim a dividends received deduction with respect to any distributions they receive from us.

With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, dividends in respect of our ordinary shares may be
taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) either (a) the ordinary shares are readily tradable on an established securities market in the United States or (b) we are
eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are neither a PFIC nor treated as such with respect to you (as discussed below) for the taxable year in
which the dividend is paid and the preceding taxable year, and (3) certain holding period requirements are met. Under IRS authority, ordinary shares will be considered for purposes of clause (1) above to be readily tradable on an
established securities market in the United States if they are listed on NYSE MKT Equities, as are our ordinary shares. In addition, if we are treated as a resident enterprise for PRC tax purposes under the EIT Law, we may be eligible
for the benefits of the income tax treaty between the United States and the PRC. You should consult your tax advisors regarding the availability of the lower capital gains rate applicable to qualified dividend income for dividends paid with respect
to our ordinary shares.



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If PRC withholding taxes apply to dividends paid to you with respect to our ordinary shares,
the amount of the dividend paid to you would be net of any PRC taxes withheld and, subject to certain conditions and limitations, such PRC withholding taxes generally would be treated as foreign taxes eligible for credit against your U.S. federal
income tax liability. Dividends would constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for
purposes of calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced tax rate applicable to qualified dividend income and divided by the highest tax rate normally
applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to the ordinary shares will generally
constitute passive category income, but could, in the case of certain U.S. Holders, constitute general category income.

The rules relating to the determination of the foreign tax credit are complex and you should consult your tax advisor regarding the availability of a foreign tax credit in your particular circumstances,
including the effects of any applicable income tax treaties.

Possible Constructive Distributions

The terms of a warrant provide for an adjustment to the number of shares for which the warrant may be exercised or to the exercise price
of the warrant in certain events. If an adjustment is made to the number of shares for which a warrant may be exercised or to the exercise price of a warrant, the adjustment may, under certain circumstances, result in a constructive distribution
that could be taxable as a dividend to a U.S. Holder of the warrant. Conversely, the absence of an appropriate anti-dilution adjustment (e.g., not adjusting the exercise price and number of shares issuable on exercise of the warrant for issuances of
shares at a price below the warrant exercise price and below market) may result in a constructive distribution that could be taxable as a dividend to the U.S. Holders of ordinary shares.

Taxation on the Sale, Exchange or other Disposition of Ordinary Shares

Upon a sale, exchange or other taxable disposition of our ordinary shares, and subject to the PFIC rules discussed below, a U.S. Holder
should generally recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holders adjusted tax basis in the ordinary shares, if the ordinary shares transferred constitute capital assets.
Capital gains recognized by U.S. Holders generally are subject to U.S. federal income tax at the same rate as ordinary income, except that long-term capital gains recognized by non-corporate U.S. Holders are generally subject to U.S. federal income
tax at a maximum rate of 20%. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holders holding period for the ordinary shares exceeds one year. The deductibility of capital losses is subject to various
limitations.

Any gain or loss that you recognize on a disposition of ordinary shares will generally be treated as U.S. source
income or loss for foreign tax credit limitation purposes. However, if we are treated as a resident enterprise for PRC tax purposes, you may be eligible for the benefits of the income tax treaty between the United States and the PRC. In
such event, if PRC tax were to be imposed on any gain from the disposition of the ordinary shares, a U.S. Holder that is eligible for the benefits of the income tax treaty between the United States and the PRC may elect to treat the gain as PRC
source income for foreign tax credit purposes. You should consult your tax advisors regarding the proper treatment of gain or loss in your particular circumstances, including the effects of any applicable income tax treaties.



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Exercise or Lapse of a Warrant

A U.S. Holder generally will not recognize gain or loss upon the exercise of a warrant for cash. Ordinary shares acquired pursuant to the
exercise of a warrant for cash generally will have a tax basis equal to the U.S. Holders tax basis in the warrant, increased by the amount paid to exercise the warrant. The holding period of such ordinary shares generally would begin on the
day after the date of exercise of the warrant. If a warrant is allowed to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holders tax basis in the warrant.

Passive Foreign Investment Company Rules

Special U.S. federal income tax rules apply to a U.S. Holder that directly or indirectly holds stock in a foreign corporation classified as a passive foreign investment company, or PFIC, for United States
federal income tax purposes. Under Proposed Regulations, a holder of an option (such as the warrants) to acquire stock of a PFIC is deemed to own the stock that may be acquired upon exercise of the option.

The Company will generally be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such holder held our
ordinary shares, either:



| |  |  | at least 75% of the Companys gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents
derived other than in the active conduct of a rental business); or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive
income.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

For purposes of determining whether the Company is a PFIC, the Company should be treated as earning
and owning its proportionate share of the income and assets, respectively, of any of its subsidiary corporations in which it owns at least 25% of the value of the subsidiarys stock.

Based on the market price of our ordinary shares, the value of our assets and the composition of our income and assets, we do not believe
we were a PFIC for U.S. federal income tax purposes for our taxable year ended March 31, 2013. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you that the U.S. Internal Revenue
Service will not take a contrary position.

We must make a separate determination after the close of each taxable year
as to whether we were a PFIC for that year. Because the value of our assets for purposes of the PFIC test will generally be determined by reference to the market price of our ordinary shares, our PFIC status will depend in large part on the market
price of the ordinary shares, which may fluctuate significantly.

If we are a PFIC for any taxable year during which you hold
ordinary shares, we generally will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold ordinary shares, unless we cease to be a PFIC and you make a deemed sale election with respect to the
ordinary shares. If such election is made, you will be deemed to have sold the ordinary shares you hold at their fair market value and any gain from such deemed sale would be subject to the consequences described below. After the deemed sale
election, your ordinary shares with respect to which the deemed sale election was made would not be treated as shares in a PFIC unless we subsequently become a PFIC.



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For each taxable year that we are treated as a PFIC with respect to you, you will be subject
to special tax rules with respect to any excess distribution that you receive and any gain you realize from a sale or other disposition (including a pledge) of the ordinary shares, unless you make a mark-to-market election as
discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be
treated as an excess distribution. Under these special tax rules:



| |  |  | the excess distribution or gain will be allocated ratably over your holding period for the ordinary shares;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to the current taxable year, and any taxable years in your holding period prior to the first taxable year in which we were a PFIC,
will be treated as ordinary income; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for
each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses)
realized on the sale or other disposition of the ordinary shares cannot be treated as capital, even if you hold the ordinary shares as capital assets.

If we are treated as a PFIC with respect to you for any taxable year, to the extent any of our subsidiaries are also PFICs, you may be deemed to own shares in such lower-tier PFICs that are directly or
indirectly owned by us in that proportion which the value of the ordinary shares you own bears to the value of all of our ordinary shares, and you may be subject to the adverse tax consequences described above with respect to the shares of such
lower-tier PFICs that you would be deemed to own. You should consult your tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

A U.S. Holder of marketable stock (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market
election for the ordinary shares, you will include in income for each year that we are treated as a PFIC with respect to you an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of your taxable year
over your adjusted basis in such ordinary shares. You will be allowed a deduction for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. However, deductions will be
allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other
disposition of the ordinary shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market loss on the ordinary shares, as well as to any loss realized on the actual sale or
disposition of the ordinary shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in the ordinary shares will be adjusted to reflect any such income
or loss amounts. The tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower capital gains rate applicable to qualified dividend income would not apply.

The mark-to-market election is available only for marketable stock, which is stock that is regularly traded on a qualified
exchange or other market, as defined in applicable U.S. Treasury regulations. Our ordinary shares are listed on NYSE MKT Equities, which is a qualified exchange or other market for these purposes. Consequently, if the ordinary shares continue to be
listed on NYSE MKT Equities and are regularly traded, and you are a holder of ordinary shares, we expect that the mark-to-market election would be available to you if we were to become a PFIC. Because a mark-to-market election cannot be made for
equity interests in any lower-tier PFICs that we own, a U.S. Holder may continue to be subject to the PFIC rules with respect to its indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal
income tax purposes. You should consult your tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.



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Alternatively, if a non-U.S. corporation is a PFIC, a U.S. Holder of shares in that
corporation may avoid taxation under the rules described above by making a qualified electing fund election to include in income its share of the corporations income on a current basis. However, you may make a qualified electing
fund election with respect to your ordinary shares only if we agree to furnish you annually with certain tax information, and we currently do not intend to prepare or provide such information.

If we are classified as a PFIC, you must file United States Internal Revenue Service Form 8621 for each tax year in which you make a
disposition of your ordinary shares, receive direct or indirect distributions on your ordinary shares or make a mark-to-market or deemed sale election mentioned above with respect to your ordinary shares. Legislation enacted on March 18, 2010
creates an additional annual filing requirement for tax years beginning on or after the date of enactment for U.S. persons who are shareholders of a PFIC. The legislation does not describe what information will be required to be included in the
additional annual filing, but rather grants the Secretary of the U.S. Treasury authority to decide what information must be included in such annual filing. If we are a PFIC for a given taxable year, you should consult your tax advisor concerning the
tax consequences to you of such PFIC status, the availability and consequences of making a mark-to-market election mentioned above and your annual filing requirements.

Medicare Tax

For taxable years beginning after December 31, 2012, a
United States person that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) the United States persons net investment
income for the relevant taxable year and (2) the excess of the United States persons modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between US$125 thousand and
US$250 thousand, depending on the individuals circumstances). A United States persons net investment income includes its gross dividend income and its net gains from the disposition of stock, unless such dividends or net gains are
derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a United States person that is an individual, estate or trust, you are urged to
consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in our ordinary shares and warrants.

Information with Respect to Foreign Financial Assets

Individuals who own
specified foreign financial assets with an aggregate value in excess of US$50,000 (or such higher amount as is specified in U.S. Treasury regulations) required to file an information report with respect to such assets with their tax
returns. Specified foreign financial assets include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions:
(i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. U.S. holders that are individuals
are urged to consult their tax advisors regarding the application of these reporting rules to their ownership of our ordinary shares and warrants.

Tax Consequences to Non-U.S. Holders

Non-U.S. Holders of Our Shares

A Non-U.S. Holder generally will not be subject to U.S. federal income tax on dividends paid in respect of the
ordinary shares or on gains recognized in connection with the sale or other disposition of the ordinary shares of the Company, provided that such dividends or gains are not effectively connected with the Non-U.S. Holders conduct of a
United States trade or business.

If the Company is treated as a U.S. corporation pursuant to Section 7874 of the
Code, Non-U.S. Holders generally will be subject to withholding tax at a rate of 30% on all dividends paid by the Company, unless a reduced rate of tax is available under a tax treaty.



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Backup Withholding and Information Reporting

Dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares or
warrants may be subject to information reporting to the Internal Revenue Service and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any
other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status must provide such certification on Internal Revenue Service Form W-9. U.S. Holders should consult their
tax advisors regarding the application of the U.S. information reporting and backup withholding rules. Backup withholding is not an additional tax.

A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly
executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax.
Rather, the amount of any backup withholding generally will be allowed as a credit against a U.S. Holders or a Non-U.S. Holders U.S. federal income tax liability and may entitle such holder to a refund, provided that
certain required information is timely furnished to the IRS.

PRC Taxation

PRC Taxation of Our Overseas Shareholders

Under the new Enterprise
Income Tax Law and the Implementation Regulations, PRC income tax at the rate of 10% applies to dividends payable to investors that are non-resident enterprises (and that do not have an establishment or place of business in China, or
that have such establishment or place of business but the relevant income is not effectively connected with such establishment or place of business) to the extent such dividends are sourced within China and the enterprise that distributes dividends
is considered a resident enterprise in China. Therefore, if we are considered as a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders as well as gains realized by such shareholders from the
transfer of our shares may be regarded as China-sourced income and as a result be subject to 10% PRC withholding tax. We intend to take the position that any dividends we pay to our overseas shareholders will not be subject to a withholding tax in
the PRC.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.



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H. Documents on Display

Our corporate website is www.chinametrorural.com. We make available free of charge on or through our website our Annual Reports, current reports, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We may from time
to time provide important disclosures to investors by posting them in the investor relations section of our website, as allowed by SEC rules. Information contained on our website is not part of this report or any other report filed with the SEC. You
may read and copy any public reports we filed with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site http://www.sec.gov that contains reports, proxy and information statements, and other information that we filed electronically.

I. Subsidiary Information

For a listing of our subsidiaries, see
Item 4. Information on the CompanyC. Organizational Structure. and Exhibit 8.1.



|Item 11. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

Qualitative and Quantitative Disclosures About Market Risk

We are exposed
to various types of market risks in the normal course of business, including foreign exchange risk and interest rate risk. We have not in the past used derivatives to manage our exposure to interest rate risk or foreign exchange risk.

Foreign Exchange Risk

We conduct our business primarily in Renminbi. In addition, our expenses are also primarily denominated in Renminbi, although a portion of expenses are denominated in foreign currencies, such as interest
expense in Hong Kong dollars and United States dollars paid to lenders, salaries paid to staff in Hong Kong, marketing expenses for promotion in Hong Kong, rental expenses for our office space in Hong Kong and other general office expenses. However,
our reporting currency is the Hong Kong dollar because the reporting currency of our major shareholders is the Hong Kong dollar. During fiscal year 2013, all of our revenues were denominated in Renminbi. During the same period, approximately 87.9%
of our expenses (excluding tax) were denominated in Renminbi, approximately 5.6% were denominated in Hong Kong dollars and approximately 6.5% were denominated in U.S. dollars. Further, as of March 31, 2013, approximately 70.9% of our
indebtedness (including trade payables, other payables and accruals) was denominated in Renminbi, approximately 5.0% was denominated in Hong Kong dollars and approximately 24.1% were denominated in U.S. dollars. We believe the impact of foreign
currency risk is not material in our operations and we have not hedged our foreign currency exposures or entered into any other derivative financial instruments.

Interest Rate Risk

We are exposed to interest rate risk due to
fluctuations in interest rates on our debt and deposits. Our indebtedness consists of bank and other borrowings, a loan from a non-controlling interest and convertible bonds. As of March 31, 2013, we had HK$425.1 million in bank borrowings that
bore interest at floating rates ranging from 7.0% to 8.0% per annum and bank and other borrowings that bore interest at fixed rates ranging from 7.0% to 18.0% per annum.



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Additional increases in interest rates could potentially result in an increase in our cost
of float rate borrowings, which could negatively affect our business and results of operations. The Peoples Bank of China, or the PBOC, regulates the interest rates of our Renminbi-denominated borrowings. As of March 31, 2013, the current
lending interest rate for one-to-three-year Renminbi loans was ranging from 7.0% to 8.0% per annum. The PBOC-published benchmark one-to-three-year lending rates in China as of March 31, 2013 were 6.4% per annum (2012: 6.6% per
annum). Based on our borrowings as of March 31, 2013, we estimate that interest expense relating to our borrowings payable would increase by HK$4.3 million on an annual basis in the event interest rates were to increase by 1.0% per annum
assuming our borrowings could be adjusted annually.

We closely monitor interest rate risk and consider using appropriate
financial instruments to hedge any exposure. However, we do not currently use any derivative instruments to manage our interest rate risk.



|Item 12. | Description of Securities Other Than Equity Securities.
|-------- | -------------------------------------------------------

Not applicable.



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PART II



|Item 13. | Defaults, Dividend Arrearages and Delinquencies.
|-------- | ------------------------------------------------

Not applicable.



|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds.
|-------- | -----------------------------------------------------------------------------

Not applicable.



|Item 15. | Controls and Procedures.
|-------- | ------------------------

Evaluation
of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) designed to provide reasonable assurance as to the reliability of our published financial statements and other disclosures included in our reports under the Securities and Exchange
Act of 1934, as amended. In accordance with Rule 13a-15(b) of the Securities and Exchange Act of 1934, as amended, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2013, the end of the period covered by this Annual Report. Based on such evaluation, management with the
participation of the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2013 to ensure that information we are required to disclose under applicable laws and
regulations is (1) recorded, processed, summarized and reported in a timely manner; and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure. No change was made in our internal control over financial reporting during the fiscal year ended March 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.

Our Chief Executive Officer and Chief Financial Officer do not expect that our disclosure controls or
internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Further, the design of a control
system must reflect the fact that there are resources constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Managements Report on Internal Control Over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Internal control over financial reporting
includes, among other things (i) maintaining records that are in reasonable detail and accurately and fairly reflect our transactions and dispositions of assets; (ii) providing reasonable assurance that transactions are recorded as
necessary for preparation of our financial statements in accordance with generally accepted accounting principles; (iii) providing reasonable assurance that our receipts and expenditures are made in accordance with management authorization; and
(iv) providing reasonable assurance that unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements is prevented or detected on a timely basis.



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Under the supervision and with the participation of our management, including Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the end of the fiscal year 2013 based on the framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission using the criteria in Internal-Control Integrated Framework. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of March 31,
2013.

Our internal control system was designed to provide reasonable assurance to our management and board of directors
regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This Annual Report does not
include an attestation report of our registered public accounting firm regarding internal control over financial reporting due to final rules of the SEC with Release Nos. 33-9142 and 34-62914 for non-accelerated filers.

No change was made in our internal control over financial reporting during fiscal year 2013 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.



|Item 15T. | Controls and Procedures.
|--------- | ------------------------

Not applicable.



|Item 16. | [Reserved]
|-------- | ----------



|Item 16A. | Audit Committee Financial Expert.
|--------- | ---------------------------------

The board of directors has, in its reasonable judgment, (1) determined that Mr. Wong Gee Hang, Henry is qualified as an audit committee financial expert, within the meaning of SEC
regulations, that he has accounting and related financial management expertise within the meaning of the listing standards of the NYSE MKT and Rule 10A-3 under the Exchange Act, and (2) determined that Mr. Wong satisfies the
definition of independent as established in the NYSE MKT corporate governance listing standards.



|Item 16B. | Code of Business Conduct and Ethics.
|--------- | ------------------------------------

On July 11, 2011, the Board of Directors adopted a revised written Code of Business Conduct and Ethics for directors, officers and employees. The Code of Business Conduct and Ethics is available for
review on the Companys web site at www.chinametrorural.com and a free copy will be made available upon request from the stockholders of the Company by sending the request to: China Metro-Rural Holdings Limited, Suite 2204, 22/F, Sun Life
Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong.



|Item 16C. | Principal Accountant Fees and Services.
|--------- | ---------------------------------------

Audit Fees

Audit
services of PricewaterhouseCoopers for fiscal year 2013 included the examination of the consolidated financial statements prepared in accordance with IFRS of the Company and its subsidiaries as of March 31, 2012 and March 31, 2013 and for
the years ended March 31, 2011, 2012 and 2013, and services related to filings with the United States Securities and Exchange Commission and other regulatory bodies. The aggregate fees for professional services rendered by
PricewaterhouseCoopers for fiscal year 2013, including the audit of the Companys annual financial statements are approximately US$538,462 (HK$4,200,000).



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Audit services of PricewaterhouseCoopers for fiscal year 2012 included the examination of
the consolidated financial statements prepared in accordance with IFRS of the Company and its subsidiaries as of March 31, 2012 and March 31, 2011 and for the years ended March 31, 2010, 2011 and 2012, and services related to filings
with the United States Securities and Exchange Commission and other regulatory bodies. The aggregate fees for professional services rendered by PricewaterhouseCoopers for fiscal year 2012, including the audit of the Companys annual financial
statements are approximately US$463,846 (HK$3,618,000).

Tax and Other Service Fees

The Company and its subsidiaries have not engaged PricewaterhouseCoopers to perform other non-audit professional services for fiscal year
2012 or 2013. Neither the Company nor any of its subsidiaries have engaged PricewaterhouseCoopers as their principal accountant for tax compliance.

Audit-Related Fees and All Other Fees

The aggregate fees for audit-related
or other fees to PricewaterhouseCoopers for fiscal year 2013 and 2012 are approximately US$44,872 (HK$350,000) and nil, respectively.



|Item 16D. | Exemptions From the Listing Standards for Audit Committees.
|--------- | -----------------------------------------------------------

We have not been granted an exemption from the applicable listing standards for the audit committee of our board of directors.



|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
|--------- | -----------------------------------------------------------------------

None.



|Item 16F. | Change in Registrants Certifying Accountant.
|--------- | ---------------------------------------------

None.



|Item 16G. | Corporate Governance.
|--------- | ---------------------

We
are incorporated under the laws of British Virgin Islands. Our ordinary shares are listed on the NYSE MKT. Section 110 of the NYSE MKT Company Guide permits the NYSE MKT to consider the laws, customs and practices of foreign issuers in relaxing
certain NYSE MKT listing criteria, and to grant exemptions from NYSE MKT listing criteria based on these considerations. A company seeking relief under these provisions is required to provide written certification from independent local counsel that
the non-complying practice is not prohibited by home country law. A description of the significant ways in which our governance practices differ from those followed by domestic companies pursuant to NYSE MKT standards is as follows:

We are a foreign private issuer as defined in Rule 3b-4 under the Exchange Act. Therefore, we are permitted to follow the corporate
governance practices in the British Virgin Islands in lieu of certain corporate governance requirements contained in the NYSE MKT company guide since the laws of the British Virgin Islands do not require compliance.



133



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Shareholder Approval Requirement: Sections 711-713 of the NYSE MKT Company Guide
require shareholder approval prior to an issuance of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants;
(iii) a change of control; and (iv) private placements. Under the laws of the British Virgin Islands, we are not required to solicit shareholder approval of stock plans, including those in which our officers or directors may participate;
stock issuances that will result in a change in control; the issuance of our stock in related party transactions or other transactions in which we may issue 20% or more of our outstanding shares; or, below market issuances of 20% or more of our
outstanding shares to any person. However, it should be noted that under our Articles of Association, any Business Combination (as defined in our Articles of Association) with any Interested Shareholder (as defined in our Articles of Association)
within a period of three years following the date the shareholder became such Interested Shareholder as described in Article 71 of our Articles of Association which may include any transaction which results in the issuance by the Company of any
shares of the Company, the value of which is at least 5% or more of the aggregate market value of all the issued and outstanding voting shares of the Company to an Interested Shareholder or any affiliate or associate of the Interested Shareholder is
(unless it comes within the exemptions set out in Article 71 ) required to be approved by shareholders other than the Interested Shareholder and its affiliate or associate.

Board Independence Requirement: Section 802(a) of the NYSE MKT Company Guide requires a board of directors with a majority of independent directors. Under the laws of the British Virgin
Islands, we are not required to maintain a board of directors with a majority of independent directors and do not intend to voluntarily do so at this time.

Shareholder Meeting Quorum Requirement: The NYSE MKT minimum quorum requirement for a shareholder meeting is one-third of the outstanding shares of common stock. In addition, a company listed on
NYSE MKT is required to state its quorum requirement in its bylaws. Our quorum requirement is set forth in our Articles of Association. A quorum for a meeting of members of the Company is two persons who are, or who represent by proxy, shareholders
holding not less than one-third of the shares entitled to be voted at the meeting.

Proxy Delivery Requirement: NYSE
MKT requires the solicitation of proxies and delivery of proxy statements for all shareholder meetings, and requires that these proxies shall be solicited pursuant to a proxy statement that conforms to SEC proxy rules. We are a foreign private
issuer, and our equity securities are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. We solicit proxies in accordance with our Articles and the applicable rules and regulations in the
British Virgin Islands.

The foregoing is consistent with the laws, customs and practices in the British Virgin Islands.

In addition, we may from time-to-time seek relief from NYSE MKT corporate governance requirements on specific transactions
under Section 110 of the NYSE MKT Company Guide by providing written certification from independent local counsel that the non-complying practice is not prohibited by our home country law, in which case, the we shall make the disclosure of such
transactions available on the our website at www.chinametrorural.com. Information contained on our website is not part of this Annual Report.



|Item 16H. | Mine Safety Disclosure
|--------- | ----------------------

Not Applicable.



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PART III



|Item 17. | Financial Statements
|-------- | --------------------

Our
Audited Financial Statements as of March 31, 2012 and 2013 and for the years ended March 31, 2011, 2012 and 2013, including the notes thereto and together with auditors report thereon, are included in this Annual Report beginning on
page F-1.



|Item 18. | Financial Statements
|-------- | --------------------

Not
Applicable.



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##### Table of Contents

|Item 19. | Exhibits.
|-------- | ---------



|               |  |                                                                                                                                                                                                                                                                                                                                          
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                              
|1.1            |  | Amended and Restated Memorandum of
Association.1                                                                                                                                                                                                                                                                                         
|               | 
|1.2            |  | Amended and Restated Articles of
Association.2                                                                                                                                                                                                                                                                                           
|               | 
|4.1            |  | Agreement and Plan of Dissolution and Liquidation as of July 24, 2009, between MSHI and Man Sang International (B.V.I.) Limited, an international business company incorporated
under the International Business Companies Act of the British Virgin Islands and automatically re-registered under the BVI Business Companies Act, 2004.3
|               | 
|4.2            |  | Agreement and Plan of Merger, dated as of February 19, 2010, by and among MSBVI, China Metro, Merger Sub, and Mr. Sio Kam Seng, as the representative of the shareholders
of China Metro.4                                                                                                                                               
|               | 
|4.5            |  | Employment Agreement, dated January 1, 2010, between China Metro-Rural Exchange Limited and Mr. Sio Kam Seng.1                                                                                                                                                                                                                           
|               | 
|4.8            |  | Credit Facility Letter between China Tieling Northeast and HSBC Bank (China) Company Limited, Shenzhen Branch, dated March 19, 2010.1                                                                                                                                                                                                    
|               | 
|4.10           |  | Cooperative Framework Agreement between China Metro-Rural Development Limited and Dezhou Municipal Government dated July 17, 2010.5                                                                                                                                                                                                      
|               | 
|4.11           |  | Loan Contract between China Tieling Northeast and SPD Bank dated July 31, 2010.5                                                                                                                                                                                                                                                         
|               | 
|4.12           |  | Loan Contract between China Tieling Northeast and Tieling Commercial Bank dated August 2, 2010.5                                                                                                                                                                                                                                         
|               | 
|4.13           |  | Loan Contracts between China Metro-Rural Limited and independent third parties dated December 20, 2010.5                                                                                                                                                                                                                                 
|               | 
|4.14           |  | Loan Contract between China Tieling Northeast and SPD Bank dated July 13, 2011.6                                                                                                                                                                                                                                                         
|               | 
|4.15           |  | Loan Contract between China Tieling Northeast and SPD Bank dated August 19, 2011.6                                                                                                                                                                                                                                                       
|               | 
|4.16           |  | Service Agreement, dated August 25, 2011, between China Metro-Rural Exchange Limited and Mr. Ho Min Sang.6                                                                                                                                                                                                                               
|               | 
|4.17           |  | Service Agreement, dated August 25, 2011, between China Metro-Rural Exchange Limited and Mr. Su Shaobin.6                                                                                                                                                                                                                                
|               | 
|4.18           |  | Loan Contract between China Tieling Northeast and SPD Bank dated August 30, 2011.6                                                                                                                                                                                                                                                       
|               | 
|4.19           |  | Loan Contract between China Tieling Northeast and Xian International Trust Co., Ltd. dated August 30, 2011.6                                                                                                                                                                                                                            
|               | 
|4.20           |  | Loan Contract between Tieling North Asia Development Co., Ltd. and Xian International Trust Co., Ltd. dated August 30, 2011.6                                                                                                                                                                                                           
|               | 
|4.21           |  | Loan Contract between China Tieling Northeast and SPD Bank dated September 27, 2011.6                                                                                                                                                                                                                                                    
|               | 
|4.22           |  | Loan Contracts between China Metro-Rural Limited and independent third parties dated November 4, 2011.6                                                                                                                                                                                                                                  
|               | 
|4.23           |  | Loan Contract between China Tieling Northeast and ICBC/China Merchant Bank dated June 6, 2012                                                                                                                                                                                                                                            
|               | 
|4.24           |  | Subscription Agreement for the Convertible Bonds dated July 24, 2012.7                                                                                                                                                                                                                                                                   
|               | 
|4.25           |  | Form of Terms and Conditions relating to the Convertible Bonds8                                                                                                                                                                                                                                                                          
|               | 
|4.26           |  | Form of Warrant Instrument9                                                                                                                                                                                                                                                                                                              



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|               |  |                                                                                                                                                   
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                       
|4.27           |  | Form of Registration Rights Agreement10                                                                                                           
|               | 
|4.28           |  | Definitive Form of Subsidiary Guarantee11                                                                                                         
|               | 
|4.29           |  | Subscription and Investor Rights Agreement relating to the PAG Bonds, dated July 24, 201212                                                       
|               | 
|4.30           |  | Deed of Undertakings and Negative Pledge Agreement, dated July 24, 201213                                                                         
|               | 
|4.31           |  | Form of Terms and Conditions relating to the PAG
Bonds14                                                                                          
|               | 
|4.32           |  | Form of Guarantee relating to the PAG
Bonds15                                                                                                     
|               | 
|4.33           |  | Loan Contract between China Tieling Northeast and SPD dated August 16, 2012                                                                       
|               | 
|4.34           |  | Loan Contract between China Tieling Northeast and SPD dated August 22, 2012                                                                       
|               | 
|4.35           |  | Sale and Purchase Agreement for the dispositions of HKCFC and Qiqihar CFC dated October 15, 2012                                                  
|               | 
|4.36           |  | Loan Contract between China Dezhou Northeast and Bank of China dated October 24, 2012                                                             
|               | 
|4.37           |  | Loan Contract between China Tieling Northeast and ICBC/China Merchant Bank dated October 25, 2012                                                 
|               | 
|4.38           |  | Loan Contract between China Tieling Northeast and Bank of Tieling dated November 1, 2012                                                          
|               | 
|4.39           |  | Loan Contracts between China Metro-Rural Limited and independent third parties dated March 15, 2013                                               
|               | 
|8.1            |  | List of Subsidiaries.                                                                                                                             
|               | 
|12.1           |  | Certification of Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|               | 
|12.2           |  | Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|               | 
|13.1           |  | Certification of Chief Executive Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|               | 
|13.2           |  | Certification of Chief Financial Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|               | 
|15.1           |  | Consent of Independent Registered Public Accounting Firm.                                                                                         
|               | 
|15.2           |  | Consent of Valuation Firm                                                                                                                         
|               | 
|15.3           |  | Consent of Valuation Firm                                                                                                                         



|1 | Incorporated by reference to the registrants Annual Report on Form 20-F filed on July 9, 2010.
|- | -----------------------------------------------------------------------------------------------

|2 | Incorporated by reference to the registrants Annual Report on Form 20-F filed on July 17, 2012.
|- | ------------------------------------------------------------------------------------------------

|3 | Incorporated by reference to Annex A to the registrants Registration Statement on Form F-4 (Registration No. 333-160777) filed with the SEC on July 24,
2009.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Incorporated by reference to Annex B to Exhibit 99.1 to the registrants Form 6-K filed with the SEC on March 1, 2010.
|- | ----------------------------------------------------------------------------------------------------------------------

|5 | Incorporated by reference to the registrants Annual Report on Form 20-F filed on July 11, 2011.
|- | ------------------------------------------------------------------------------------------------

|6 | Incorporated by reference to the registrants Annual Report on Form 20-F filed on July 16, 2012.
|- | ------------------------------------------------------------------------------------------------

|7 | Incorporated by reference to Exhibit 99.2 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|- | ------------------------------------------------------------------------------------------------------------

|8 | Incorporated by reference to Exhibit 99.3 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|- | ------------------------------------------------------------------------------------------------------------

|9 | Incorporated by reference to Exhibit 99.4 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|- | ------------------------------------------------------------------------------------------------------------



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|10 | Incorporated by reference to Exhibit 99.5 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|-- | ------------------------------------------------------------------------------------------------------------

|11 | Incorporated by reference to Exhibit 99.6 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|-- | ------------------------------------------------------------------------------------------------------------

|12 | Incorporated by reference to Exhibit 99.7 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|-- | ------------------------------------------------------------------------------------------------------------

|13 | Incorporated by reference to Exhibit 99.8 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|-- | ------------------------------------------------------------------------------------------------------------

|14 | Incorporated by reference to Exhibit 99.9 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|-- | ------------------------------------------------------------------------------------------------------------

|15 | Incorporated by reference to Exhibit 99.10 to the registrants Form 6-K filed with the SEC on August 3, 2012.
|-- | -------------------------------------------------------------------------------------------------------------



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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.



China Metro-Rural Holdings LimitedBy:

/s/ Sio Kam SengSio Kam SengChief Executive Officer


Date: July 18, 2013



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##### Table of Contents









Consolidated Financial Statements

CHINA METRO-RURAL HOLDINGS

LIMITED

as at March 31, 2013 and 2012

and

for the years ended March 31, 2013, 2012 and 2011















F-1



---

##### Table of Contents

TABLE OF CONTENTS



|                                                                                                  |  |      |      | 
|------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                                                  |  | Page |     
|                                                                                                  | 
|Report of Independent Registered Public Accounting Firm                                           |  |      | F-3  | 
|                                                                                                  | 
|Consolidated Income Statements for the years ended March 31, 2013, 2012 and
2011                  |  |      | F-4  | 
|                                                                                                  | 
|Consolidated Statements of Comprehensive Income for the years ended March 31, 2013, 2012 and
2011 |  |      | F-5  | 
|                                                                                                  | 
|Consolidated Statements of Financial Position as at March 31, 2013 and 2012                       |  |      | F-6  | 
|                                                                                                  | 
|Consolidated Statements of Cash Flows for the years ended March 31, 2013, 2012 and
2011           |  |      | F-7  | 
|                                                                                                  | 
|Consolidated Statements of Changes in Equity for the years ended March 31, 2013, 2012 and
2011    |  |      | F-9  | 
|                                                                                                  | 
|Notes to the Consolidated Financial Statements                                                    |  |      | F-13 | 



F-2



---

##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and the Shareholders of

China Metro-Rural Holdings Limited

In our opinion, the accompanying consolidated
statement of financial position and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows present fairly, in all material respects, the financial position of China Metro-Rural Holdings Limited
(the Company) and its subsidiaries (collectively referred to as the Group) at March 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended
March 31, 2013 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers

Hong Kong

July 18, 2013.



F-3



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED INCOME STATEMENTS

For the years ended March 31, 2013, 2012 and 2011



|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ----------- | ------- | - | ----------- | --- | -------- | ----------- |  | --- | ----------- | - |  | --- | -------- | -
|                                                                                                                                    |  | Notes |  | 2013US$000 |         |   | 2013HK$000 |     |          | 2012HK$000 |  |     | 2011HK$000 |  
|                                                                                                                                    |  |       |  | (Note 45)   |         |   |             |     |          |             |  |     |             |  
|Continuing operations:                                                                                                              |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Revenue                                                                                                                             |  | 7     |  |             | 36,508  |   |             |     | 284,759  |             |  |     | 765,872     |   |  |     | 581,573  |  
|Cost of sales                                                                                                                       |  | 11    |  |             | (27,943 | ) |             |     | (217,955 | )           |  |     | (467,195    | ) |  |     | (352,265 | )
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Gross profit                                                                                                                        |  |       |  |             | 8,565   |   |             |     | 66,804   |             |  |     | 298,677     |   |  |     | 229,308  |  
|Other income, net                                                                                                                   |  | 9     |  |             | 8,658   |   |             |     | 67,535   |             |  |     | 61,363      |   |  |     | 68,234   |  
|Other (losses)/gains, net                                                                                                           |  | 10    |  |             | (8,926  | ) |             |     | (69,617  | )           |  |     | 6,828       |   |  |     | 120,456  |  
|Selling expenses                                                                                                                    |  | 11    |  |             | (4,135  | ) |             |     | (32,254  | )           |  |     | (24,212     | ) |  |     | (22,436  | )
|Administrative expenses                                                                                                             |  | 11    |  |             | (14,423 | ) |             |     | (112,504 | )           |  |     | (117,922    | ) |  |     | (64,748  | )
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Operating (loss)/profit                                                                                                             |  |       |  |             | (10,261 | ) |             |     | (80,036  | )           |  |     | 224,734     |   |  |     | 330,814  |  
|Finance income                                                                                                                      |  | 13    |  |             | 2,174   |   |             |     | 16,954   |             |  |     | 916         |   |  |     | 803      |  
|Finance costs                                                                                                                       |  | 13    |  |             | (1,612  | ) |             |     | (12,570  | )           |  |     | (527        | ) |  |     | (3,927   | )
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Finance income/(costs)net                                                                                                          |  |       |  |             | 562     |   |             |     | 4,384    |             |  |     | 389         |   |  |     | (3,124   | )
|Share of loss of an associate                                                                                                       |  |       |  |             | (206    | ) |             |     | (1,606   | )           |  |     | (2,456      | ) |  |     | (386     | )
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|(Loss)/profit before income tax                                                                                                     |  |       |  |             | (9,905  | ) |             |     | (77,258  | )           |  |     | 222,667     |   |  |     | 327,304  |  
|Income tax expenses                                                                                                                 |  | 14    |  |             | (4,583  | ) |             |     | (35,746  | )           |  |     | (90,202     | ) |  |     | (124,630 | )
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|(Loss)/profit for the year from continuing operations                                                                               |  |       |  |             | (14,488 | ) |             |     | (113,004 | )           |  |     | 132,465     |   |  |     | 202,674  |  
|Discontinued operations:                                                                                                            |  | 17    |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Profit for the year from discontinued operations, net of tax                                                                        |  |       |  |             | 2,248   |   |             |     | 17,532   |             |  |     | 98,594      |   |  |     | 29,878   |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|(Loss)/profit for the year                                                                                                          |  |       |  |             | (12,240 | ) |             |     | (95,472  | )           |  |     | 231,059     |   |  |     | 232,552  |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Attributable to:                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Equity holders of the Company                                                                                                       |  |       |  |             | (12,962 | ) |             |     | (101,104 | )           |  |     | 208,986     |   |  |     | 227,346  |  
|Non-controlling interests                                                                                                           |  |       |  |             | 722     |   |             |     | 5,632    |             |  |     | 22,073      |   |  |     | 5,206    |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|                                                                                                                                    |  |       |  |             | (12,240 | ) |             |     | (95,472  | )           |  |     | 231,059     |   |  |     | 232,552  |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|(Loss)/earnings per share from continuing and discontinued operations attributable to equity holders of the Company during the
year |  | 15    |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Basic (loss)/earnings per share                                                                                                     |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|From continuing operations                                                                                                          |  |       |  | US$         | (0.21   | ) |             | HK$ | (1.61    | )           |  | HK$ | 1.56        |   |  | HK$ | 3.17     |  
|From discontinued operations                                                                                                        |  |       |  | US$         | 0.03    |   |             | HK$ | 0.24     |             |  | HK$ | 1.40        |   |  | HK$ | 0.37     |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|                                                                                                                                    |  |       |  | US$         | (0.18   | ) |             | HK$ | (1.37    | )           |  | HK$ | 2.96        |   |  | HK$ | 3.54     |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|Diluted (loss)/earnings per share                                                                                                   |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|From continuing operations                                                                                                          |  |       |  | US$         | (0.21   | ) |             | HK$ | (1.61    | )           |  | HK$ | 1.56        |   |  | HK$ | 3.17     |  
|From discontinued operations                                                                                                        |  |       |  | US$         | 0.03    |   |             | HK$ | 0.24     |             |  | HK$ | 1.40        |   |  | HK$ | 0.37     |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|                                                                                                                                    |  |       |  | US$         | (0.18   | ) |             | HK$ | (1.37    | )           |  | HK$ | 2.96        |   |  | HK$ | 3.54     |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  
|DividendNon-cash (HK$000)                                                                                                         |  | 16    |  |             |        |   |             |     |         |             |  |     |            |   |  |     | 466,474  |  
|                                                                                                                                    |  |       |  |             |         |   |             |     |          |             |  |     |             |   |  |     |          |  

The notes on pages F-13 to F-78 are an integral part of these consolidated financial statements.



F-4



---

##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended March 31, 2013, 2012 and 2011



|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|---------------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- |  | -------- | ----------- |  |  | ----------- |  |  |  | ------- | -
|                                                                                   |  | 2013US$000 |         |   | 2013HK$000 |  |          | 2012HK$000 |  |  | 2011HK$000 | 
|                                                                                   |  | (Note 45)   |         |   |             |  |          |             |  |  |             | 
|(Loss)/profit for the year                                                         |  |             | (12,240 | ) |             |  | (95,472  | )           |  |  | 231,059     |  |  |  | 232,552 |  
|Other comprehensive income, net of tax:                                            |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Increase in fair value of leasehold land and buildings, net of deferred income tax |  |             |        |   |             |  |         |             |  |  |            |  |  |  | 4,636   |  
|Exchange difference on translation of foreign operations                           |  |             | 1,189   |   |             |  | 9,277    |             |  |  | 34,778      |  |  |  | 42,700  |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Total comprehensive (loss)/income for the year                                     |  |             | (11,051 | ) |             |  | (86,195  | )           |  |  | 265,837     |  |  |  | 279,888 |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Total comprehensive (loss)/income for the year attributable to:                    |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Equity holders of the Company                                                      |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Continuing operations                                                              |  |             | (14,091 | ) |             |  | (109,911 | )           |  |  | 144,562     |  |  |  | 234,028 |  
|Discontinued operations                                                            |  |             | 2,248   |   |             |  | 17,532   |             |  |  | 98,594      |  |  |  | 29,085  |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|                                                                                   |  |             | (11,843 | ) |             |  | (92,379  | )           |  |  | 243,156     |  |  |  | 263,113 |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Non-controlling interests                                                          |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|Continuing operations                                                              |  |             | 792     |   |             |  | 6,184    |             |  |  | 22,681      |  |  |  | (657    | )
|Discontinued operations                                                            |  |             |        |   |             |  |         |             |  |  |            |  |  |  | 17,432  |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|                                                                                   |  |             | 792     |   |             |  | 6,184    |             |  |  | 22,681      |  |  |  | 16,775  |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  
|                                                                                   |  |             | (11,051 | ) |             |  | (86,195  | )           |  |  | 265,837     |  |  |  | 279,888 |  
|                                                                                   |  |             |         |   |             |  |          |             |  |  |             |  |  |  |         |  

The notes on pages F-13 to F-78 are an integral part of these consolidated financial statements.



F-5



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at March 31, 2013 and 2012



|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|---------------------------------------------------- |  | ----- | -- |  | -------------------- |  | ------- | -------------------- |  |  | -------------------- |  |  |  | --------- | 
|                                                     |  | Notes |    |  | March 31,2013US$000 |  |         | March 31,2013HK$000 |  |  | March 31,2012HK$000 | 
|                                                     |  |       |    |  | (Note 45)            |  |         |                      |  |  |                      | 
|Non-current assets                                   |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Investment properties                                |  |       | 18 |  |                      |  | 70,979  |                      |  |  | 553,633              |  |  |  | 542,598   | 
|Investment properties under construction             |  |       | 19 |  |                      |  | 1,933   |                      |  |  | 15,077               |  |  |  | 14,854    | 
|Property, plant and equipment                        |  |       | 20 |  |                      |  | 13,737  |                      |  |  | 107,145              |  |  |  | 108,727   | 
|Land use rights                                      |  |       | 21 |  |                      |  | 10,052  |                      |  |  | 78,407               |  |  |  | 70,695    | 
|Deposit for investment properties                    |  |       |    |  |                      |  | 1,889   |                      |  |  | 14,738               |  |  |  | 14,640    | 
|Deposit for acquisition of land use rights           |  |       | 22 |  |                      |  | 16,097  |                      |  |  | 125,556              |  |  |  | 124,724   | 
|Interest in an associate                             |  |       | 23 |  |                      |  | 3,371   |                      |  |  | 26,298               |  |  |  | 27,728    | 
|Restricted and pledged bank deposits                 |  |       | 28 |  |                      |  | 1,743   |                      |  |  | 13,594               |  |  |  |          | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|                                                     |  |       |    |  |                      |  | 119,801 |                      |  |  | 934,448              |  |  |  | 903,966   | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Current assets                                       |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Completed properties held for sale                   |  |       | 25 |  |                      |  | 64,310  |                      |  |  | 501,620              |  |  |  | 475,413   | 
|Properties under development                         |  |       | 26 |  |                      |  | 119,411 |                      |  |  | 931,404              |  |  |  | 811,000   | 
|Land use rights                                      |  |       | 21 |  |                      |  | 279     |                      |  |  | 2,178                |  |  |  | 1,911     | 
|Deposit for acquisition of land use rights           |  |       | 22 |  |                      |  |        |                      |  |  |                     |  |  |  | 160,169   | 
|Trade and other receivables                          |  |       | 27 |  |                      |  | 55,578  |                      |  |  | 433,507              |  |  |  | 462,334   | 
|Restricted and pledged bank deposits                 |  |       | 28 |  |                      |  | 4,510   |                      |  |  | 35,182               |  |  |  | 17,508    | 
|Cash and cash equivalents                            |  |       | 28 |  |                      |  | 46,736  |                      |  |  | 364,539              |  |  |  | 343,578   | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|                                                     |  |       |    |  |                      |  | 290,824 |                      |  |  | 2,268,430            |  |  |  | 2,271,913 | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Current liabilities                                  |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Trade payables, other payables and accruals          |  |       | 29 |  |                      |  | 49,150  |                      |  |  | 383,370              |  |  |  | 599,883   | 
|Receipt in advance                                   |  |       | 34 |  |                      |  | 4,804   |                      |  |  | 37,469               |  |  |  | 179,507   | 
|Current income tax liabilities                       |  |       |    |  |                      |  | 31,483  |                      |  |  | 245,569              |  |  |  | 245,553   | 
|Derivative financial liabilities                     |  |       | 30 |  |                      |  | 40,323  |                      |  |  | 314,522              |  |  |  | 2,941     | 
|Bank and other borrowings                            |  |       | 31 |  |                      |  | 36,757  |                      |  |  | 286,703              |  |  |  | 478,763   | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|                                                     |  |       |    |  |                      |  | 162,517 |                      |  |  | 1,267,633            |  |  |  | 1,506,647 | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Net current assets                                   |  |       |    |  |                      |  | 128,307 |                      |  |  | 1,000,797            |  |  |  | 765,266   | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Total assets less current liabilities                |  |       |    |  |                      |  | 248,108 |                      |  |  | 1,935,245            |  |  |  | 1,669,232 | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Non-current liabilities                              |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Deferred income tax liabilities                      |  |       | 24 |  |                      |  | 10,652  |                      |  |  | 83,090               |  |  |  | 80,983    | 
|Bank and other borrowings                            |  |       | 31 |  |                      |  | 38,112  |                      |  |  | 297,271              |  |  |  | 253,839   | 
|Convertible bonds                                    |  |       | 32 |  |                      |  | 39,317  |                      |  |  | 306,669              |  |  |  |          | 
|Loan from a non-controlling interest of a subsidiary |  |       | 44 |  |                      |  | 7,538   |                      |  |  | 58,800               |  |  |  | 58,800    | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|                                                     |  |       |    |  |                      |  | 95,619  |                      |  |  | 745,830              |  |  |  | 393,622   | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Net assets                                           |  |       |    |  |                      |  | 152,489 |                      |  |  | 1,189,415            |  |  |  | 1,275,610 | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Equity                                               |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Equity attributable to equity holders of the Company |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Share capital                                        |  |       | 33 |  |                      |  | 73      |                      |  |  | 573                  |  |  |  | 573       | 
|Reserves                                             |  |       |    |  |                      |  | 148,804 |                      |  |  | 1,160,671            |  |  |  | 1,253,050 | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|                                                     |  |       |    |  |                      |  | 148,877 |                      |  |  | 1,161,244            |  |  |  | 1,253,623 | 
|Non-controlling interests                            |  |       |    |  |                      |  | 3,612   |                      |  |  | 28,171               |  |  |  | 21,987    | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 
|Total equity                                         |  |       |    |  |                      |  | 152,489 |                      |  |  | 1,189,415            |  |  |  | 1,275,610 | 
|                                                     |  |       |    |  |                      |  |         |                      |  |  |                      |  |  |  |           | 

The notes on pages F-13 to F-78 are an integral part of these consolidated financial statements.



F-6



---

##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended March 31, 2013, 2012 and 2011



|                                                                             |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  
|---------------------------------------------------------------------------- |  | ------ |  | ----------- | ------- | - | ----------- |  | -------- | ----------- |  |  | ----------- | - |  |  | -------- | -
|                                                                             |  | Notes  |  | 2013US$000 |         |   | 2013HK$000 |  |          | 2012HK$000 |  |  | 2011HK$000 |  
|                                                                             |  |        |  | (Note 45)   |         |   |             |  |          |             |  |  |             |  
|Cash flows from operating activities                                         |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  
|(Loss)/profit before income tax                                              |  |        |  |             | (12,508 | ) |             |  | (97,559  | )           |  |  | 355,778     |   |  |  | 363,234  |  
|Adjustments for:                                                             |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  
|Interest income                                                              |  |        |  |             | (3,200  | ) |             |  | (24,963  | )           |  |  | (1,154      | ) |  |  | (1,858   | )
|Interest expenses                                                            |  |        |  |             | 1,612   |   |             |  | 12,570   |             |  |  | 527         |   |  |  | 4,895    |  
|Depreciation of property, plant and equipment                                |  | 20     |  |             | 1,101   |   |             |  | 8,590    |             |  |  | 6,583       |   |  |  | 6,697    |  
|Amortization of land use rights                                              |  | 21     |  |             | 285     |   |             |  | 2,226    |             |  |  | 1,940       |   |  |  | 2,062    |  
|Share of loss of an associate                                                |  |        |  |             | 206     |   |             |  | 1,606    |             |  |  | 2,456       |   |  |  | 369      |  
|Share-based payment                                                          |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | 1,148    |  
|Increase in fair values of investment properties                             |  | 10     |  |             | (798    | ) |             |  | (6,228   | )           |  |  | (2,594      | ) |  |  | (113,120 | )
|Increase/(decrease) in fair values of warrants                               |  | 10     |  |             | 1,046   |   |             |  | 8,157    |             |  |  | (4,047      | ) |  |  |         |  
|Increase in fair values of derivative components of convertible bonds        |  | 10     |  |             | 15,457  |   |             |  | 120,564  |             |  |  |            |   |  |  |         |  
|Gain on disposals of investment properties                                   |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (5,795   | )
|Loss on disposals of property, plant and equipment                           |  |        |  |             |        |   |             |  |         |             |  |  | 3           |   |  |  |         |  
|Net unrealized loss on financial assets at fair value through profit or loss |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | 51       |  
|Gain on disposals of financial assets at fair value through profit or loss   |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (1,128   | )
|Gain on disposals of land use right                                          |  | 10     |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (8,502   | )
|Gain on disposal of subsidiaries                                             |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (90      | )
|Investment income                                                            |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (1,112   | )
|Recycling of exchange difference to profit or loss upon the Distribution     |  | 17     |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (20,284  | )
|(Reversal of)/provision for impairment of trade and other receivables        |  | 11, 27 |  |             | (238    | ) |             |  | (1,855   | )           |  |  | 3,990       |   |  |  | 2,877    |  
|Transaction costs related to derivatives component of the convertible bonds  |  | 32     |  |             | 871     |   |             |  | 6,796    |             |  |  |            |   |  |  |         |  
|Reversal of inventory obsolescence                                           |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (3,700   | )
|                                                                             |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  
|Operating cash flows before movements in working capital                     |  |        |  |             | 3,834   |   |             |  | 29,904   |             |  |  | 363,482     |   |  |  | 225,744  |  
|Additions of properties under development                                    |  | 26     |  |             | (50,202 | ) |             |  | (391,576 | )           |  |  | (934,852    | ) |  |  | (456,450 | )
|Additions of land use rights                                                 |  | 21     |  |             | (8,161  | ) |             |  | (63,653  | )           |  |  | (858,579    | ) |  |  | (137,511 | )
|Refunds of payments from acquisition of land use rights                      |  | 21     |  |             | 4,968   |   |             |  | 38,748   |             |  |  | 721,071     |   |  |  | 62,721   |  
|Deposits paid for acquisition of land use rights                             |  |        |  |             | (18,441 | ) |             |  | (143,836 | )           |  |  | (115,116    | ) |  |  | (41,245  | )
|Increase in inventories                                                      |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | (468     | )
|Decrease in completed properties held for sale                               |  |        |  |             | 25,071  |   |             |  | 195,556  |             |  |  | 417,837     |   |  |  | 376,735  |  
|Decrease in construction contract                                            |  |        |  |             |        |   |             |  |         |             |  |  |            |   |  |  | 51,514   |  
|Decrease/(increase) in trade and other receivables                           |  |        |  |             | 7,202   |   |             |  | 56,177   |             |  |  | (279,125    | ) |  |  | (81,698  | )
|Increase in trade payables, other payables and accruals                      |  |        |  |             | 8,154   |   |             |  | 63,600   |             |  |  | 352,022     |   |  |  | 85,672   |  
|Increase/(decrease) in receipt in advance                                    |  |        |  |             | 43,492  |   |             |  | 339,236  |             |  |  | 155,720     |   |  |  | (85,120  | )
|                                                                             |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  
|Cash generated/(used in) from operations                                     |  |        |  |             | 15,917  |   |             |  | 124,156  |             |  |  | (177,540    | ) |  |  | (106     | )
|Interest received                                                            |  |        |  |             | 137     |   |             |  | 1,066    |             |  |  | 1,154       |   |  |  | 1,858    |  
|Interest paid                                                                |  |        |  |             | (14,451 | ) |             |  | (112,720 | )           |  |  | (72,632     | ) |  |  | (33,513  | )
|Income tax paid                                                              |  |        |  |             | (5,111  | ) |             |  | (39,862  | )           |  |  | (31,370     | ) |  |  | (21,386  | )
|                                                                             |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  
|Net cash used in operating activities                                        |  |        |  |             | (3,508  | ) |             |  | (27,360  | )           |  |  | (280,388    | ) |  |  | (53,147  | )
|                                                                             |  |        |  |             |         |   |             |  |          |             |  |  |             |   |  |  |          |  

The notes on pages F-13 to F-78 are an integral part of these consolidated financial statements.



F-7



---

##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

For the years ended March 31, 2013, 2012 and 2011



|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|----------------------------------------------------------------------------------- |  | ----- | -- |  | ----------- |  | ------- | ----------- |  |  | ----------- | - |  | ----------- | --------- | - |  |  | -------- | -
|                                                                                    |  | Notes |    |  | 2013US$000 |  |         | 2013HK$000 |  |  | 2012HK$000 |   |  | 2011HK$000 |          
|                                                                                    |  |       |    |  | (Note 45)   |  |         |             |  |  |             |   |  |             |          
|Cash flows from investing activities                                                |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Net outflow of cash and cash equivalents in respect of the disposal of subsidiaries |  |       | 39 |  |             |  | (22,682 | )           |  |  | (176,917    | ) |  |             |          |   |  |  | (4,688   | )
|Net outflow of cash and cash equivalents in respect of the Distribution             |  |       | 17 |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | (596,993 | )
|Purchases of property, plant and equipment                                          |  |       | 20 |  |             |  | (4,849  | )           |  |  | (37,820     | ) |  |             | (11,781   | ) |  |  | (6,020   | )
|Additions to investment properties                                                  |  |       |    |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | (4,340   | )
|Additions to investment properties under construction                               |  |       | 19 |  |             |  | (38     | )           |  |  | (301        | ) |  |             | (40,716   | ) |  |  | (98,450  | )
|Deposits paid for investment properties                                             |  |       |    |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | (13,801  | )
|Proceeds from disposal of an investment property                                    |  |       |    |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | 17,185   |  
|Purchases of financial assets at fair value through profit or loss                  |  |       |    |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | (22,584  | )
|Purchase of available-for-sale financial assets                                     |  |       |    |  |             |  | (630    | )           |  |  | (4,915      | ) |  |             |          |   |  |  |         |  
|Proceeds from disposals of financial assets at fair value through profit or loss    |  |       |    |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | 21,225   |  
|Investment income                                                                   |  |       |    |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | 1,112    |  
|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Net cash used in investing activities                                               |  |       |    |  |             |  | (28,199 | )           |  |  | (219,953    | ) |  |             | (52,497   | ) |  |  | (707,354 | )
|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Cash flows from financing activities                                                |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Proceeds from issuance of new shares and warrants                                   |  |       | 33 |  |             |  |        |             |  |  |            |   |  |             | 179,094   |   |  |  |         |  
|Proceeds from issuance of new shares by subsidiaries                                |  |       | 40 |  |             |  |        |             |  |  |            |   |  |             |          |   |  |  | 640      |  
|(Increase)/decrease in restricted and pledged bank deposits                         |  |       |    |  |             |  | (3,971  | )           |  |  | (30,975     | ) |  |             | 109,286   |   |  |  | 62,144   |  
|Proceeds from bank and other borrowings                                             |  |       |    |  |             |  | 71,654  |             |  |  | 558,906     |   |  |             | 1,054,054 |   |  |  | 314,300  |  
|Repayments of bank and other borrowings                                             |  |       |    |  |             |  | (91,159 | )           |  |  | (711,042    | ) |  |             | (873,218  | ) |  |  | (225,369 | )
|Loan from a non-controlling interest                                                |  |       | 44 |  |             |  |        |             |  |  |            |   |  |             | 46,800    |   |  |  | 12,000   |  
|Proceeds from issuance of convertible bonds, net of direct expenses                 |  |       | 32 |  |             |  | 57,770  |             |  |  | 450,606     |   |  |             |          |   |  |  |         |  
|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Net cash generated from financing activities                                        |  |       |    |  |             |  | 34,294  |             |  |  | 267,495     |   |  |             | 516,016   |   |  |  | 163,715  |  
|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Net increase/(decrease) in cash and cash equivalents                                |  |       |    |  |             |  | 2,587   |             |  |  | 20,182      |   |  |             | 183,131   |   |  |  | (596,786 | )
|Cash and cash equivalents at beginning of the year                                  |  |       |    |  |             |  | 44,048  |             |  |  | 343,578     |   |  |             | 156,928   |   |  |  | 746,669  |  
|Effect of foreign exchange rate changes                                             |  |       |    |  |             |  | 101     |             |  |  | 779         |   |  |             | 3,519     |   |  |  | 7,045    |  
|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  
|Cash and cash equivalents at end of the year                                        |  |       | 28 |  |             |  | 46,736  |             |  |  | 364,539     |   |  |             | 343,578   |   |  |  | 156,928  |  
|                                                                                    |  |       |    |  |             |  |         |             |  |  |             |   |  |             |           |   |  |  |          |  

The notes on pages F-13 to F-78 are an integral part of these consolidated financial statements.



F-8



---

##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended March 31, 2011, 2012 and 2013



|                                                                                               |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|---------------------------------------------------------------------------------------------- |  | --------------------------------------------- | --- |  | ------------------- |  | --------- | --------------------------------- |  |  | ------------------------------------ | - |  | --------------------- | ------- | - | -------------------------- |  | -------- | ---------------------- |  |  | ---------------- | - |  | ------------------------------- | -------- | - | ------------------ |  | --------- | - |  |  | -------- | - |  |  | ---------- | -
|                                                                                               |  | Attributable to equity holders of the Company |     |  |                     |  |           |                                   | 
|                                                                                               |  | IssuedcapitalHK$000                          |     |  | SharepremiumHK$000 |  |           | PropertyrevaluationreserveHK$000 |  |  | AccumulatedtranslationreserveHK$000 |   |  | CapitalreserveHK$000 |         |   | PRCstatutoryreserveHK$000 |  |          | RetainedprofitsHK$000 |  |  | Sub-totalHK$000 |   |  | Non-controllinginterestsHK$000 |          |   | TotalequityHK$000 | 
|                                                                                               |  | Note (a)                                      |     |  |                     |  |           |                                   |  |  |                                      |   |  | Note (b)              |         |   | Note (c)                   |  |          |                        |  |  |                  |   |  |                                 |          |   |                    | 
|Balance at April 1, 2010                                                                       |  |                                               | 500 |  |                     |  | 1,003,200 |                                   |  |  | 45,408                               |   |  |                       | 36,834  |   |                            |  | (597,316 | )                      |  |  | 5,067            |   |  |                                 | 568,296  |   |                    |  | 1,061,989 |   |  |  | 795,572  |   |  |  | 1,857,561  |  
|Profit for the year                                                                            |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 | 227,346  |   |                    |  | 227,346   |   |  |  | 5,206    |   |  |  | 232,552    |  
|Other comprehensive income:                                                                    |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|Increase in fair value of leasehold land and building, net of deferred income tax              |  |                                               |    |  |                     |  |          |                                   |  |  | 1,868                                |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  | 1,868     |   |  |  | 2,768    |   |  |  | 4,636      |  
|Exchange difference on translation of foreign operations                                       |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       | 33,899  |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  | 33,899    |   |  |  | 8,801    |   |  |  | 42,700     |  
|                                                                                               |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|Total comprehensive income for the year                                                        |  |                                               |    |  |                     |  |          |                                   |  |  | 1,868                                |   |  |                       | 33,899  |   |                            |  |         |                        |  |  |                 |   |  |                                 | 227,346  |   |                    |  | 263,113   |   |  |  | 16,775   |   |  |  | 279,888    |  
|Transfer to retained profit upon disposals of the properties                                   |  |                                               |    |  |                     |  |          |                                   |  |  | (144                                 | ) |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 | 144      |   |                    |  |          |   |  |  |         |   |  |  |           |  
|Release of depreciation of leasehold land and buildings                                        |  |                                               |    |  |                     |  |          |                                   |  |  | (499                                 | ) |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 | 499      |   |                    |  |          |   |  |  |         |   |  |  |           |  
|Share-based payments                                                                           |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  | 463      |                        |  |  |                 |   |  |                                 |         |   |                    |  | 463       |   |  |  | 685      |   |  |  | 1,148      |  
|Issue of new shares by a subsidiary                                                            |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  |          |   |  |  | 640      |   |  |  | 640        |  
|Deemed receipt from non-controlling interests                                                  |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  | (446     | )                      |  |  |                 |   |  |                                 |         |   |                    |  | (446      | ) |  |  | 446      |   |  |  |           |  
|Transfer to retained profit upon lapse of share options of a subsidiary                        |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  | (58      | )                      |  |  |                 |   |  |                                 | 58       |   |                    |  |          |   |  |  |         |   |  |  |           |  
|Disposal of a subsidiary (note (f))                                                            |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  |          |   |  |  | (8,957   | ) |  |  | (8,957     | )
|DividendDistribution of subsidiaries (note (g))                                               |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 | (466,474 | ) |                    |  | (466,474  | ) |  |  | (805,855 | ) |  |  | (1,272,329 | )
|Release of reserve upon distribution of subsidiary (note (g))                                  |  |                                               |    |  |                     |  |          |                                   |  |  | (46,633                              | ) |  |                       | (20,284 | ) |                            |  | (39,966  | )                      |  |  | (5,067           | ) |  |                                 | 91,666   |   |                    |  | (20,284   | ) |  |  |         |   |  |  | (20,284    | )
|                                                                                               |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|Balance at March 31, 2011 and at April 1, 2011                                                 |  |                                               | 500 |  |                     |  | 1,003,200 |                                   |  |  |                                     |   |  |                       | 50,449  |   |                            |  | (637,323 | )                      |  |  |                 |   |  |                                 | 421,535  |   |                    |  | 838,361   |   |  |  | (694     | ) |  |  | 837,667    |  
|Profit for the year                                                                            |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 | 208,986  |   |                    |  | 208,986   |   |  |  | 22,073   |   |  |  | 231,059    |  
|Other comprehensive income:                                                                    |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|Exchange difference on translation of foreign operations                                       |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       | 34,170  |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  | 34,170    |   |  |  | 608      |   |  |  | 34,778     |  
|                                                                                               |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|Total comprehensive income for the year                                                        |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       | 34,170  |   |                            |  |         |                        |  |  |                 |   |  |                                 | 208,986  |   |                    |  | 243,156   |   |  |  | 22,681   |   |  |  | 265,837    |  
|Appropriation of profit to PRC statutory reserve                                               |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  | 45,514           |   |  |                                 | (45,514  | ) |                    |  |          |   |  |  |         |   |  |  |           |  
|Issue of new shares from the May 2011 Offering (as defined in note 33(a)) (note (h))           |  |                                               | 11  |  |                     |  | 19,120    |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  | 19,131    |   |  |  |         |   |  |  | 19,131     |  
|Issue of new shares from the August 2011 Share Placement (as defined in note 33(b)) (note (i)) |  |                                               | 16  |  |                     |  | 38,714    |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  | 38,730    |   |  |  |         |   |  |  | 38,730     |  
|Issue of new shares from the August 2011 Unit Placement (as defined in note 33(c)) (note (j))  |  |                                               | 46  |  |                     |  | 114,199   |                                   |  |  |                                     |   |  |                       |        |   |                            |  |         |                        |  |  |                 |   |  |                                 |         |   |                    |  | 114,245   |   |  |  |         |   |  |  | 114,245    |  
|                                                                                               |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  
|Balance at March 31, 2012                                                                      |  |                                               | 573 |  |                     |  | 1,175,233 |                                   |  |  |                                     |   |  |                       | 84,619  |   |                            |  | (637,323 | )                      |  |  | 45,514           |   |  |                                 | 585,007  |   |                    |  | 1,253,623 |   |  |  | 21,987   |   |  |  | 1,275,610  |  
|                                                                                               |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |   |  |                       |         |   |                            |  |          |                        |  |  |                  |   |  |                                 |          |   |                    |  |           |   |  |  |          |   |  |  |            |  



The notes
on pages F-13 to F-78 are an integral part of these consolidated financial statements.



F-9



---

##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Continued)

For the years ended March 31, 2011, 2012 and 2013



|                                                         |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |  |  |                       |        |  |                            |  |          |                        |  |  |                  |  |  |                                 |          |   |                    |  |           |   |  |  |        |  |  |  |           |  
|-------------------------------------------------------- |  | --------------------------------------------- | --- |  | ------------------- |  | --------- | --------------------------------- |  |  | ------------------------------------ |  |  | --------------------- | ------ |  | -------------------------- |  | -------- | ---------------------- |  |  | ---------------- |  |  | ------------------------------- | -------- | - | ------------------ |  | --------- | - |  |  | ------ |  |  |  | --------- | -
|                                                         |  | Attributable to equity holders of the Company |     |  |                     |  |           |                                   | 
|                                                         |  | IssuedcapitalHK$000                          |     |  | SharepremiumHK$000 |  |           | PropertyrevaluationreserveHK$000 |  |  | AccumulatedtranslationreserveHK$000 |  |  | CapitalreserveHK$000 |        |  | PRCstatutoryreserveHK$000 |  |          | RetainedprofitsHK$000 |  |  | Sub-totalHK$000 |  |  | Non-controllinginterestsHK$000 |          |   | TotalequityHK$000 | 
|                                                         |  | Note (a)                                      |     |  |                     |  |           |                                   |  |  |                                      |  |  | Note (b)              |        |  | Note (c)                   |  |          |                        |  |  |                  |  |  |                                 |          |   |                    | 
|Balance at April 1, 2012                                 |  |                                               | 573 |  |                     |  | 1,175,233 |                                   |  |  |                                     |  |  |                       | 84,619 |  |                            |  | (637,323 | )                      |  |  | 45,514           |  |  |                                 | 585,007  |   |                    |  | 1,253,623 |   |  |  | 21,987 |  |  |  | 1,275,610 |  
|(Loss)/profit for the year                               |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |  |  |                       |       |  |                            |  |         |                        |  |  |                 |  |  |                                 | (101,104 | ) |                    |  | (101,104  | ) |  |  | 5,632  |  |  |  | (95,472   | )
|Other comprehensive income:                              |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |  |  |                       |        |  |                            |  |          |                        |  |  |                  |  |  |                                 |          |   |                    |  |           |   |  |  |        |  |  |  |           |  
|Exchange difference on translation of foreign operations |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |  |  |                       | 8,725  |  |                            |  |         |                        |  |  |                 |  |  |                                 |         |   |                    |  | 8,725     |   |  |  | 552    |  |  |  | 9,277     |  
|                                                         |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |  |  |                       |        |  |                            |  |          |                        |  |  |                  |  |  |                                 |          |   |                    |  |           |   |  |  |        |  |  |  |           |  
|Total comprehensive income/(loss) for the year           |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |  |  |                       | 8,725  |  |                            |  |         |                        |  |  |                 |  |  |                                 | (101,104 | ) |                    |  | (92,379   | ) |  |  | 6,184  |  |  |  | (86,195   | )
|Appropriation of profit to PRC statutory reserve         |  |                                               |    |  |                     |  |          |                                   |  |  |                                     |  |  |                       |       |  |                            |  |         |                        |  |  | 68,879           |  |  |                                 | (68,879  | ) |                    |  |          |   |  |  |       |  |  |  |          |  
|                                                         |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |  |  |                       |        |  |                            |  |          |                        |  |  |                  |  |  |                                 |          |   |                    |  |           |   |  |  |        |  |  |  |           |  
|Balance at March 31, 2013                                |  |                                               | 573 |  |                     |  | 1,175,233 |                                   |  |  |                                     |  |  |                       | 93,344 |  |                            |  | (637,323 | )                      |  |  | 114,393          |  |  |                                 | 415,024  |   |                    |  | 1,161,244 |   |  |  | 28,171 |  |  |  | 1,189,415 |  
|                                                         |  |                                               |     |  |                     |  |           |                                   |  |  |                                      |  |  |                       |        |  |                            |  |          |                        |  |  |                  |  |  |                                 |          |   |                    |  |           |   |  |  |        |  |  |  |           |  



The notes on pages F-13 to F-78
are an integral part of these consolidated financial statements.



F-10



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Continued)

For the years ended March 31, 2011, 2012 and 2013





Note:



|(a) | Issued capital included ordinary shares of HK$572,000 and preferred shares of HK$1,000 as at March 31, 2012 and 2013.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(b) | Capital reserve as at March 31, 2013 comprises of (1) a deficit of HK$703,648,000 arising from the merger with China Metro-Rural Limited (China
Metro) resulted from a waiver of shareholders loans of HK$300,000,000 (as detailed in note (d) below) and issue of 57,443,238 ordinary shares with an equivalent amount of HK$1,003,648,000 which was recorded as a reduction of capital
reserve (as detailed in note (e) below); and (2) other capital reserve amounted HK$66,325,000 arising from the corporate restructuring in 1997.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | In accordance with PRC law and the articles of association of the relevant subsidiaries established in the PRC, the PRC subsidiaries may, upon the approval of the board
of directors of the PRC subsidiaries, transfer certain of their net profit as stated in corresponding subsidiaries financial statements prepared under PRC accounting regulations to PRC statutory reserve. Such a transfer is not required when
the amount of the PRC statutory reserve reaches 50% of the corresponding subsidiaries registered capital. The PRC statutory reserve shall only be used to make up losses of the corresponding subsidiaries production operations, or to
increase the capital of the corresponding subsidiaries. Upon approval of the corresponding subsidiaries shareholders in general meetings, the subsidiaries may convert their PRC statutory reserve into registered capital and issue bonus capital
to the existing owners in proportion to the existing ownership structure. In addition, this reserve is only distributable in the event of liquidation of these PRC subsidiaries.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | In connection with the acquisition of the equity interest of China Metro which is further discussed in note 2(a) to the consolidated financial statements, the
shareholders of China Metro agreed to waive their loans to China Metro amounted to HK$300,000,000. Accordingly, the Company recorded such waiver as a capital contribution under capital reserve.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | In respect of the acquisition of the equity interest of China Metro which is further discussed in note 2(a) to the consolidated financial statements, an aggregate of
57,443,238 ordinary shares of the Company with an equivalent amount of HK$1,003,648,000 was issued. Such issuance was recorded as a reduction of capital reserve while the par value of the issued shares amounted to HK$448,000 was recorded as issued
capital. The remaining amount between capital reserve and issued capital was recorded as share premium, net of 300,000 ordinary shares with a value of HK$5,241,000 which was issued as the issuance cost in respect of the share issuance.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | In connection with a disposal of a subsidiary, which is further discussed in note 39(b) to the consolidated financial statements, the Companys equity interests in
the then subsidiary, Tieling Motor Vehicle Trading Co., Ltd. was reduced from 60% to 40%. As a result, the Company ceased to consolidate the results of Tieling Motor Vehicle Trading Co., Ltd.. Accordingly, non-controlling interest of approximately
HK$8,957,000 was derecognized from equity upon the disposal.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | In connection with the distribution of Man Sang International Limited (MSIL) which is further discussed in note 2(a) to the consolidated financial
statements, the Company distributed MSIL to its shareholders with net assets attributable to the equity holders of the Company of approximately HK$466,474,000 and non-controlling interests of approximately HK$805,855,000, which were debited from
equity.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As a result of the distribution of MSIL, property revaluation reserve of approximately HK$46,633,000,
capital reserve of approximately HK$39,966,000 and statutory surplus reserve of approximately HK$5,067,000 attributable to MSIL were released to retained profits; and accumulated translation reserve of approximately HK$20,284,000 attributable to
MSIL was released to the consolidated income statement, upon the distribution of MSIL.

Further details in respect of the
distribution of MSIL are set out in notes 2(a) and 17 to the consolidated financial statements.



|(h) | In connection with the May 2011 Offering (as defined in note 33(a)), the Company completed an underwritten offering of 1,517,978 units at a price of US$2.88 per unit
with gross proceeds of approximately US$4,372,000 (approximately HK$34,100,000). Each unit consisted of one of the Companys ordinary share and a warrant to purchase 0.65 of one of the Companys ordinary shares. The exercise price of the
warrants was US$3.456 per ordinary share, subject to certain adjustments with a term of three years. The Company has also issued warrant to the underwriter, to purchase 200,373 ordinary shares of the Company at an exercise price of US$3.456 and with
a term of three years. As at the May 2011 Closing (as defined in note 33(a)), the fair values of these warrants approximated to HK$6,988,000, which was recorded as Derivative financial liabilities, and an amount of approximately
HK$11,000 (being 1,517,978 ordinary shares at US$0.001 each) and HK$27,101,000 (being the difference between the gross proceeds and the fair value of these warrants and nominal value of issued capital) were credited in issued capital and share
premium account, respectively. The Company also incurred certain share issuance expenses amounted to HK$7,981,000 in connection with the May 2011 Offering.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) | In connection with the August 2011 Share Placement (as defined in note 33(b)), the Company completed a private placement of 2,000,000 ordinary shares at a price of
US$2.5 per share with gross proceeds of approximately US$5,000,000 (approximately HK$38,900,000). As a result of the August 2011 Share Closing (as defined in note 33(b)), an amount of approximately HK$16,000 (being 2,000,000 ordinary shares at
US$0.001 each) and HK$38,884,000 were credited in issued capital and share premium account, respectively The Company also incurred certain share issuance expenses amounted to HK$170,000 in connection with the August 2011 Share Placement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-11



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Continued)

For the years ended March 31, 2011, 2012 and 2013





Note:



|(j) | In connection with the August 2011 Unit Placement (as defined in note 33(c)), the Company completed a private placement of 5,900,000 units at a price of US$2.5 per unit
with gross proceeds of approximately US$14,750,000 (approximately HK$114,755,000). Each unit consisted of one of the Companys ordinary share and a warrant to purchase one of the Companys ordinary shares. The exercise price of the
warrants was US$2.875 per ordinary share and with a term of two years. As at the August 2011 Unit Closing (as defined in note 33(c)), the fair value of these warrants approximated to nil. As a result, an amount of approximately HK$46,000 (being
5,900,000 ordinary shares at US$0.001 each) and HK$114,709,000 (being the difference between the gross proceeds and nominal value of issued capital) were credited in issued capital and share premium account, respectively. The Company also incurred
certain share issuance expenses amounted to HK$510,000 in connection with the August 2011 Unit Placement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-12



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1General Information of China Metro-Rural Holdings Limited

China Metro-Rural Holdings Limited (the Company, or we or us) was incorporated in the British Virgin
Islands as an international business company under the BVI International Business Companies Act on August 14, 1995, and automatically re-registered as a business company on January 1, 2007 pursuant of the BVI Companies Act. The Company
through its subsidiaries is principally engaged in the: 1) development and operations of large-scale and integrated agricultural logistics platforms, which include trade centers and other supporting facilities, in the PRC; and 2) rural-urban
migration and city re-development business which comprise of the development and sales of residential and commercial properties and assignment of development rights to developers.

In prior years, the Company, through its former subsidiaries, engaged in the purchasing, processing, assembling, merchandising and
wholesale distribution of pearls and jewelry products. The Company also owned and operated an industrial real estate complex in Shenzhen, Peoples Republic of China (the PRC) and a market center with various supporting facilities in
Shanxiahu, Zhuji, Zhejiang Province, the PRC, which represented the Man Sang Discontinued Operations (as defined in note 2(a)) as a result of the Distribution (as defined in note 2(a)). Further details in respect of the Distribution and the Man Sang
Discontinued Operations are set out in note 2(a) to the consolidated financial statements.

The shares of the Company have
been listed on the NYSE MKT under the ticker symbol of CNR. The Companys principal place of business and executive office is located at Suit 2204, 22/F., Sun Life Tower, The Gateway, 15 Canton Road, Tsimshatsui, Kowloon, Hong Kong.

The directors of the Company consider Kind United Holdings Limited, a company incorporated in British Virgin Islands, to be
the ultimate holding company of the Group.

The consolidated financial statements have been approved and authorized for issue
by the Board of Directors on July 18, 2013.

Note 2Summary of Significant Accounting Policies

(a) Basis of preparation and presentation

On July 28, 2010, the Company declared a dividend to its shareholders which was satisfied by way of distribution in specie of the entire equity interest in Man Sang International Limited
(MSIL), held by the Company, represented approximately 494 million ordinary shares in MSIL (the Distribution), which was completed in August 2010. Upon the completion of the Distribution, the Group no longer held
interest in MSIL and discontinued its jewelry and real estate businesses (the Man Sang Discontinued Operations). In accordance with IFRS 5 Non-current assets held for sale and discontinued operations (IFRS 5), the
Man Sang Discontinued Operations were shown as discontinued operations in the Groups consolidated financial statements.

In addition, on October 15, 2012, the Company has, in effect, entered into an agreement to dispose of its entire equity interest in
HK CFC (as defined in note 39(a)) and Qiqihar CFC (as defined in note 39(a)), which currently represented the Companys entire rural-urban migration and city re-development business. In accordance with IFRS 5, the rural-urban migration and city
re-development business carried out by HK CFC and Qiqihar CFC has been classified as discontinued operations (Qiqihar Discontinued Operations). Further details in respect of the disposal of HK CFC and Qiqihar CFC and the Qiqihar
Discontinued Operations are set out in note 17 to the consolidated financial statements.



F-13



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared under the historical cost convention, except for
derivative financial liabilities, investment properties, investment properties under construction, and leasehold land and buildings, which are stated at fair value as explained in the accounting policies set out below. These policies have been
consistently applied to all the years presented unless otherwise stated.

The IASB has issued certain new and revised IFRS,
which are generally effective for accounting periods beginning on or after April 1, 2012. Details of major changes in accounting policies following the adoption of these IFRSs are summarized in note 3 of the consolidated financial statements.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgment in the process of applying the Groups accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in note 4.

Reorganization transaction

The Company was previously a wholly-owned subsidiary of Man Sang Holdings, Inc. (MSHI), a United States domestic company
incorporated in the State of Nevada whose common stocks were listed on the NYSE MKT. On August 25, 2009, at a general meeting, for the purpose of the redomicile of MSHI and its subsidiaries (the Group) from the United States to the
British Virgin Islands, the shareholders of MSHI resolved to carry out a group reorganization (the Reorganization) whereby, inter alia, MSHI was to be dissolved and liquidated and the Company was to become the new holding company of the
Group and to contractually assume all rights, title, obligations and liabilities of MSHI pursuant to the terms and subject to the conditions of the agreement and plan of the dissolution and liquidation of MSHI. As a result of the Reorganization, the
Company succeeded MSHI as the holding company of the Group on August 25, 2009 with its ordinary shares being listed on the NYSE MKT as a foreign private issuer. From its inception in August 1995 through the effective date of the Reorganization
on August 25, 2009, the Company was a wholly-owned subsidiary of MSHI.

Upon the effective date of the Reorganization,
the Company and its subsidiaries continued to conduct the business previously conducted by MSHI and its subsidiaries (including the Company). Although the dissolution and liquidation of MSHI would result in the cessation of MSHI as the holding
company of the Group, the dissolution and liquidation had no material impact on our financial condition or operating results, other than the costs incurred in connection with its dissolution and liquidation. As the Company shall contractually assume
all rights, title, obligations and liabilities of MSHI upon the terms and subject to the conditions of the agreement and plan of the dissolution and liquidation, there was a continuation of the risks and benefits to the ultimate controlling owners
that existed prior to the planned dissolution and liquidation of MSHI.



F-14



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Merger with China Metro

Pursuant to the Agreement and Plan of Merger, or the Merger Agreement, dated as of February 19, 2010, by and among the Company, China
Metro-Rural Limited (China Metro) and Creative Gains Limited (Creative Gains) (a wholly-owned subsidiary of the Company), Creative Gains was merged with and into China Metro (the Merger). Immediately after the
Merger, Creative Gains ceased and China Metro became a wholly-owned subsidiary of the Company. On March 19, 2010, Merger Agreement was adopted and the Merger was subsequently consummated, each outstanding share of China Metro as of the
effective date of the Merger was converted automatically into the right to receive the number of the Companys ordinary shares equivalent to 57,443,238 divided by the number of China Metro ordinary shares outstanding immediately prior to the
Merger. As a result, based on outstanding 100 ordinary shares of China Metro immediately prior to the Merger, an aggregate of 57,443,238 ordinary shares of the Company was issued in connection with the Merger (with cash paid for fractional shares),
of which 37,338,104 ordinary shares were issued to Kind United Holdings Ltd., the controlling shareholder of China Metro under the control of Mr. Cheng Chung Hing (Mr. Cheng), or Kind United, and the remaining 20,105,130 ordinary
shares of the Company were issued to the minority shareholders of China Metro.

In respect of the acquisition of the equity
interest of China Metro controlled by Mr. Cheng, since both the Company and China Metro were under common control of Mr. Cheng prior to and after the Merger, the Merger was accounted for as a combination of entities under common control in
a manner similar to pooling of interests. On this basis, the consolidated financial statements of the Company for periods prior to the Merger were restated to include, to the extent of equity interest of China Metro held by Mr. Cheng, the
assets and liabilities and results of operations of China Metro for those periods as if the Company had been the holding company of China Metro at the beginning of the financial period reported in the consolidated financial statements or when our
Company and China Metro became under common control by Mr. Cheng, whichever was later, and all assets and liabilities of China Metro were stated at historical carrying amounts. The acquisition by the Company of interest owned by all the
shareholders of China Metro, including Mr. Cheng, was treated as an equity transaction at the completion date of the Merger.

(b) Basis of consolidation

Business combinations (other than for
combining entities under common control) are accounted for by applying the acquisition method. This involves the fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiaries, at the acquisition date,
regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiaries are included in the consolidated statements of financial
position at their fair values, which are also used as the basis for subsequent measurement in accordance with the Groups accounting policies.

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to March 31 each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an entity so as to obtain benefits from its activities. When the control ceases over the entity, the Group no longer consolidates the entity.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposals, as appropriate.

Where necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.



F-15



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Non-controlling interests in the net assets of consolidated subsidiaries are presented
separately from the Groups equity therein. Non-controlling interests in the net assets consist of the amount of those interests at the date of the original business combination and the non-controlling interests share of changes in equity
since the date of the combination.

The Group treats transactions with non-controlling interest as transactions with equity
owners of the Group. For purchases from non-controlling interest, the differences between any consideration paid and the revenant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on
disposals to non-controlling interest are also recorded in equity.

When the Group ceases to have control, any retained
interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This
may mean that the amounts previously recognized in other comprehensive income are reclassified to profit or loss.

If the
ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.

(c) Subsidiaries

A subsidiary is an entity, in which the Company, directly or indirectly, has the power to govern the financial and operating policies so as to obtain benefits from its activities. In relation to the
Companys subsidiary, MSIL, certain shareholders of MSIL, prior to the occurrence of the Distribution, had assigned their voting rights to the Company giving the Company more than 50 percent of the voting rights. Consequently, the Company had
the power to control MSIL. Such assignment of voting rights by these shareholders was cancelled as a result of the Distribution.

(d) Associates

An associate is an entity over which the Group has
significant influence and that is neither a subsidiary nor an interest in a joint venture.

The results and assets and
liabilities of associates are incorporated in the consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale (in which case it is accounted for under IFRS 5). Under the equity
method, investments in associates are carried in the consolidated statements of financial position at cost as adjusted for post acquisition changes in the Groups share of the net assets of the associates, less any identified impairment loss.
When the Groups share of loss of an associate equals or exceeds its interest in that associate (which includes any long-term interests that, in substance, form part of the Groups net investment in the associate), the Group discontinues
recognizing its share of further losses. An additional share of losses is provided for and a liability is recognized only to the extent that if the Group has incurred legal or constructive obligations or made payments on behalf of that associate.



F-16



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(e) Related parties

A related party transaction is a transfer of resources, services or obligations between the Group and a related party of the Group,
regardless of whether a price is charged.



| | (i) | A person, or a close member of that persons family, is related to the Group if that person:
| | --- | --------------------------------------------------------------------------------------------



| |  |  | has control or joint control over the Group;
| | - |  | --------------------------------------------



| |  |  | has significant influence over the Group; or
| | - |  | --------------------------------------------



| |  |  | is a member of the key management personnel of the Group or the Groups parent.
| | - |  | -------------------------------------------------------------------------------



| | (ii) | An entity is related to the Group if any of the following conditions applies:
| | ---- | -----------------------------------------------------------------------------



| |  |  | has control or joint control over the Group;
| | - |  | --------------------------------------------



| |  |  | The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a
member).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Both entities are joint ventures of the same third party.
| | - |  | ---------------------------------------------------------



| |  |  | One entity is a joint venture of a third entity and the other entity is an associate of the third party.
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | The entity is controlled or jointly controlled by a person identified in (i) above.
| | - |  | -----------------------------------------------------------------------------------



| |  |  | A person, or a close member of that persons family, who has control or joint control over the Group has significant influence over the entity or
is a member of the key management personnel of the entity (or of a parent of the entity).
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(f)
Investment properties

Investment properties are land and/or buildings that are held to earn rental income and/or for
capital appreciation, which include property interest held under operating lease carries at fair value. Land held under operating leases is accounted for as investment property when the rest of the definition of an investment property is met.

Investment properties are stated at fair value at the statements of financial position date. Any gain or loss arising from a
change in fair value is recognized in the consolidated income statement. An investment property is derecognized upon disposals or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its
disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year in which the item is
derecognized.

Subsequent expenditure is charged to the assets carrying amount only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed in the consolidated income statement during the financial period in which they
are incurred.



F-17



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Properties under construction or development for future use as investment properties are
classified as investment properties under construction. Such properties under construction are measured initially at cost, including transaction cost, and stated at fair value, subsequent to initial recognition, at the end of each reporting period
when fair value can be determined reliably. Any gains or losses arising from changes in the fair values of completed investment properties and investment properties under construction are included in the consolidated income statement in the year in
which they arise.

The fair values of investment properties are determined by management based in part on valuation by
independent valuers who hold recognized professional qualifications and have recent experiences in the locations and category of properties being valued. Fair value is determined based on market value, being the estimated amount for which a property
could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

If investment properties and/or investment properties under construction become owner-occupied, they are reclassified as property, plant
and equipment under leasehold land and building, or if become intended for sale are transferred to properties under development or completed properties held for sales, and their fair value at the date of reclassification becomes their deemed cost
for accounting purposes.

(g) Property, plant and equipment

Property, plant and equipment, other than leasehold land and buildings, are stated at cost less accumulated depreciation and accumulated
impairment losses.

The cost of an item of property, plant and equipment comprises its purchase price and any directly
attributable costs of bringing the asset to its working condition and location for its intended use. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated income statement during the year in which they are incurred.

The leasehold land and buildings are stated in the consolidated statements of financial position at their revalued amount, being the fair
value at the date of revaluation less any subsequent accumulated depreciation and impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined
using fair values at the statements of financial position date. Any revaluation increase is credited to the property revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognized as an
expense, in which case the increase is credited to the consolidated income statement to the extent of the decrease previously charged. A decrease in the net carrying amount arising on revaluation of an asset is dealt with as an expense to the extent
that it exceeds the balance, if any, on the property revaluation reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained
profits.

If there is no market-based evidence of fair value because of the specialized nature of the item of leasehold land
and buildings and the item is rarely sold, the Group may estimate fair value using an income or a depreciated replacement cost approach.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Construction-in-progress, representing plant and machinery on which construction work
has not been completed and machinery pending installation, is stated at historical cost, which includes construction expenditures incurred, cost of machinery and other direct costs capitalized during the construction and installation period, less
accumulated impairment losses, if any. No depreciation is provided in respect of construction-in-progress until the construction is completed. On completion, the construction-in-progress is transferred to appropriate categories of property, plant
and equipment.

Leasehold land in Hong Kong classified as finance lease commences amortization from the time when the land
interest becomes available for its intended use. Leasehold land outside of Hong Kong is recognized in accordance with the Groups policies in note 2(j) to the consolidated financial statements. Amortization on leasehold land in Hong Kong
classified as finance lease and depreciation for property, plant and equipment, other than construction in progress, are calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their
estimated useful lives, as follows:



|                                                         |  |                                                      
|-------------------------------------------------------- |  | -----------------------------------------------------
|Leasehold land classified as finance lease and buildings |  | Over the shorter of the term of the lease or 20 years
|Leasehold improvements                                   |  | 33%                                                  
|Plant and machinery                                      |  | 10%                                                  
|Furniture, fixtures and equipment                        |  | 20% - 33%                                            
|Motor vehicles                                           |  | 10% - 25%                                            

An assets carrying amount is written down immediately to its recoverable amount if the assets
carrying amount is greater than its estimated recoverable amount. Residual values, useful lives and depreciation methods are reviewed at each statements of financial position date.

An item of property, plant and equipment is derecognized upon disposals or when no future economic benefits are expected to arise from
the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated income statement in the year
in which the item is derecognized.

(h) Properties under development

Property that is being constructed or developed for future use as held-for-sales is classified as properties under development and stated
at lower of costs and net realizable value until construction or development is complete, at which time it is reclassified as completed properties held for sale. Costs comprise construction costs, borrowing costs capitalized, costs of land use
rights, amortization of land use rights and professional fees incurred during the development period. If properties under construction become owner-occupied, they are reclassified as property, plant and equipment under leasehold land and building
and stated at cost less any identified impairment losses for accounting purposes.

Properties under development are classified
as current assets when the construction of the relevant properties commences unless the construction period of the relevant property development project is expected to complete beyond normal operating cycle.

(i) Completed properties held for sale

Completed properties remaining unsold at the end of the year are stated at the lower of cost, deemed cost and net realizable value.

Cost comprises development costs attributable to the unsold properties.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Net realizable value is determined by reference to the sale proceeds of properties sold
in the ordinary course of business, less applicable variable selling expenses, or by management estimates based on prevailing marketing conditions.

If investment properties and/or investment properties under constructions become property held for sale, they are reclassified as completed properties held for sales and their fair value at the date of
reclassification becomes their deemed cost for accounting purpose.

(j) Land use rights

Land use rights include up-front payments to acquire land and payments for lease of properties held under operating leases. Land use
rights are stated at cost and are amortized on a straight-line basis over the period of the lease and the related amortization expense has been charged to administrative expenses. Land use rights are reclassified as properties under developments or
investment properties under developments when the corresponding properties are ready to be constructed.

(k) Financial
instruments

Financial assets and financial liabilities are recognized on the statements of financial position when the
Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets
and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Financial assets

The Groups financial assets are classified into one of the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets.
The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Regular way purchases or sales of financial assets are recognized and
derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that
discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset,
or, where appropriate, a shorter period.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss have two subcategories, including financial assets held for trading and those
designated as at fair value through profit or loss on initial recognition. At each statements of financial position date subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value, with
changes in fair value recognized directly in the consolidated income statement in the period in which they arise. Fair value gain or loss does not include any dividend or interest earned on these financial assets. Dividend and interest income is
recognized in accordance with the Groups policies in note 2(p) to the consolidated financial statements. The Groups financial assets at fair value through profit or loss were solely attributable to the Man Sang Discontinued Operations,
and as a result of the Distribution, the Group did not have any financial assets at fair value through profit or loss as at March 31, 2012 and 2013.

Available-for-sale financial assets

Available-for-sale financial assets
are non-derivative that are either designated in this category or not classified in any other categories. They are included in non-current assets unless the investment natures or management intends to dispose of it within 12 months of the end of the
reporting period.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each statement of financial position date subsequent to initial
recognition, loans and receivables (including trade receivables, loan receivables and other receivables) are carried at amortized cost using the effective interest method, less any identified impairment losses.

Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with
changes in their fair value.

The derivative component of the convertible bonds is recognized initially at the fair value. The
liability component is recognized initially at the difference between the fair value of the convertible bonds as a whole and the fair value of the derivative component. Any directly attributable transaction costs are allocated to the derivative
financial liability and the liability components in proportion to their initial carrying amounts.

Impairment of financial
assets

At each statements of financial position date, financial assets other than those carried at fair value through
profit or loss are reviewed to determine whether there is any objective evidence of impairment.

Objective evidence of
impairment of individual financial assets includes observable data that comes to the attention of the Group about one or more of the following loss events:



| |  |  | significant financial difficulty of the debtor;
| | - |  | -----------------------------------------------



| |  |  | a breach of contract, such as a default or delinquency in interest or principal payments;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | it becomes probable that the debtor will enter bankruptcy or other financial reorganization;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
| | - |  | -------------------------------------------------------------------------------------------------------------



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For financial assets carried at amortized cost, an impairment loss is recognized in
profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the assets carrying amount and the present value of the estimated future cash flows discounted at the original effective
interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. When a trade receivable is considered
uncollectible, it is written off against the allowance account. If, in subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment loss is reversed through the consolidated income statement to the extent that it does not result in a carrying amount of the financial asset exceeding what the amortized cost would have been had the impairment not
been recognized at the date the impairment is reversed. The amount of the reversal is recognized in consolidated income statement of the period in which the reversal occurs.

Financial liabilities and equity

Financial liabilities and equity
instruments issued by the Group entity are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its
liabilities. The Groups financial liabilities are generally classified into financial liabilities at fair value at profit or loss and other financial liabilities.

Effective interest method

The effective interest method is a method of
calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial
liability, or, where appropriate, a shorter period.

Derivative financial liabilities

Derivative financial liabilities are subsequently measured at fair value through profit or loss and any gains or losses derived from its
changes in fair values are recognized in the consolidated income statement unless the derivative financial liabilities are qualified for hedge accounting. Transaction costs attributable to the issue of derivative financial instruments are charged to
the consolidated income statement during the period in which they are incurred.

Other financial liabilities

Other financial liabilities (including bank and other borrowings, trade payables and other payables) are subsequently
measured at amortized cost, using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract issued by the Group and not designated as at fair value through profit or loss is
recognized initially at its fair value less transaction costs that are directly attributable to the issue of the financial guarantee contract. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of:
(i) the amount determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognized less, when appropriate, cumulative amortization recognized in accordance
with IAS 18 Revenue. As at March 31, 2012 and 2013, the Group did not have any material financial guarantee contracts.

Derecognition

Financial assets are derecognized when the rights to receive
cash flows from the assets expire or, the financial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognizing of a financial asset, the difference between the
assets carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized directly in equity is recognized in the consolidated income statement. If the Group retains substantially
all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

Financial liabilities are derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired. The
difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

(l) Impairment of associates and non-financial assets

Assets that
have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.

Impairment testing of the associates is required upon receiving dividends from these
investments if the dividend exceeds the total comprehensive income of the associate in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the
consolidated financial statements of the investees net assets including goodwill.

(m) Construction contract

Contract costs are recognized as expenses in the period in which they are incurred.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract
costs incurred that are likely to be recoverable.

When the outcome of a construction contract can be estimated reliably and
it is probable that the contract will be profitable, contract revenue is recognized over the period of the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense
immediately.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Variations in contract work, claims and incentive payments are included in contract
revenue to the extent that may have been agreed with the customer and are capable of being reliably measured.

The Group uses
the percentage-of-completion method to determine the appropriate amount to be recognized in a given period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a
percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. They are presented as inventories,
prepayments or other assets, depending on their nature.

The Group presents as an asset if the gross amount due from customers
for contract work for all contracts in progress for which costs incurred plus recognized profits (less recognized losses) exceed progress billings. Progress billings not yet paid by customers and retention are included within Construction
contract.

The Group presents as a liability the gross amount due to customers for contract work for all contracts in
progress for which progress billings exceed costs incurred plus recognized profit (less recognized losses).

During the year
ended March 31, 2011, the construction contract of the Group was fully completed and there was no construction contract that was remained outstanding as at March 31, 2012 and 2013.

(n) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value.

Restricted bank deposits are not included
as cash and cash equivalents.

(o) Provisions, contingent liabilities and contingent assets

Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle that obligation. Provisions are measured at the directors best estimate of the expenditure required to settle the obligation at the statements of financial position date, and are discounted to present value where the effect
is material.

(p) Revenue recognition

Revenue from sales of properties

Revenue from sales of properties is
recognized when the risks and rewards related to the properties are transferred to purchasers, which is when the construction of relevant properties has been completed, title to the properties has been delivered to the purchasers and collectability
of related receivables is reasonably assured. Revenue is recognized only to the extent collectability of such receivable is reasonably assured.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Revenue from sales of properties with operating leaseback

As part of the Groups overall strategy to develop property projects with specific themes, in relation to sales of certain
properties, immediately following sale of such properties, the Group leases back the properties from purchasers for periods ranging from 3 to 5 years either for an insignificant amount of rental payments or free of charge. As lease back of the
properties for an insignificant amount of rental payments or free of charge was arranged as part of the sale of these properties, the Group determined the fair value of lease payments it would ordinarily make to lease such properties from other
independent owners based on factors such as expected occupancy rates, rental yields etc. and included it as part of the sales consideration received with a corresponding debit to prepaid operating lease payments. Since the fair value of lease
payments the Group would ordinarily make to lease such properties was estimated to be insignificant, the Group did not separately recognize it as part of the sales consideration received with a corresponding debit to prepaid operating lease
payments. Such transactions are accounted for as a sale and operating leaseback given that as part of the sale transaction, the Group disposes of substantially all risks and rewards of owning the property. In concluding that substantially all risks
and rewards of owning the property have been transferred, the Group considers the short period of the lease and the expected future rentals it could earn by letting out these properties, which are insignificant relative to the value of the property.

The leaseback is considered as an operating lease due to (i) the ownership of the property will not transfer back to the
Group by the end of the lease term; (ii) the Group does not have the option to purchase the property at the end of the lease term; (iii) the lease term is not the major part of the economic life of the property; (iv) at the inception
of the lease, the fair value of the property is significantly higher than the present value of the minimum lease payments; and (v) any gains or losses from the fluctuation in the fair value of the property rest to purchasers. In addition,
operating leases rentals paid to purchasers are recorded as an expense on a straight line basis over the period of the lease.

To promote sales of certain properties, the Group, through its Man Sang Discontinued Operations, conducted a promotional sale of these
properties during fiscal year ended March 31, 2010 and fiscal year ended March 31, 2011 prior to the Distribution wherein it sold such properties at special rates to selected purchasers which was different from the normal sales of
properties as discussed above where no special rates were given. Sales consideration for these properties included an explicitly agreed transaction price to be settled in cash plus a lease back of these properties to the Group free of charge for 5
years. As lease back of the properties free of charge was arranged as part of the sale of these properties as well as the sales of these properties were at special rates, the Group determined the fair value of lease payments it would ordinarily make
to lease such properties from other independent owners based on factors such as expected occupancy rates, rental yields etc. and included it as part of the sales consideration received with a corresponding debit to prepaid operating lease payments.
The leaseback is considered as an operating lease for the same reasons as explained above. The prepaid operating lease payments will be amortized and recognized as operating leases expense on a straight line basis over the 5 year period of the
lease.

Revenue from servicing and assignments of development rights

In its rural-urban migration and city re-development business, the Company develops and sells residential, commercial and other auxiliary
properties as well as assigns the development rights to independent third party developers on portions of land plots that have already been designated by the local government under the framework agreement for development by such independent third
parties. In connection with providing the development rights to the independent third party developers, the Company agrees with the independent third party developers to construct certain economical housing units (i.e. housing units to
be provided to the local government free of charge) on behalf of the third party developers as the local government requires all property developers to construct certain economical housing units.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In order for the independent third party developers to acquire land use rights within
the land plots that have already been designated by the local government under the framework agreement, the Company is required to provide certain services by liaising between the local government and the independent third party developers to ensure
the independent third party developers are able to secure the land use rights at a certain price. Once the independent third party developers have successfully secured the land use rights and the collectability of the related receivables is
reasonably assured, the Company would recognize the related revenue for the services performed. With regards to the obligations of constructing the economical housing units, the Company would defer the related revenue which approximates
the fair value of the economical housing units until the economical housing units are completely constructed and delivered to the local government.

As part of the aforementioned transaction, the Company would also provide certain financing to the independent third party developers, as necessary. Such financing is interest bearing and is repayable
within one year.

Revenue from sales of goods

Sale of goods is recognized on transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has passed assuming amounts owned are
considered collectible. The Groups sale of goods were solely attributable to the Man Sang Discontinued Operations, and as a result of the Distribution, the Group no longer made any sale of goods.

Revenue from leasing of investment properties

Rental income under operating leases is recognized in the period in which the properties are let out and on a straight-line basis over the term of the relevant lease, including the free rent periods.

Revenue from property management services

Revenue from property management service is recognized when services are rendered.

Others

Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that discounts the estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount.

Dividend income from investments is recognized when the rights to receive payments have been established.

(q) Segment reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision-makers. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the
executive board of directors that make strategic decision.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(r) Share-based payments

The Group operated a number of equity-settled, share based compensation plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the
fair value of the options granted. In determining the fair value of the options granted:



| |  |  | market performance conditions are taken into considerations;
| | - |  | ------------------------------------------------------------



| |  |  | the impact of any service and non-market vesting conditions (for example, profitability, sales growth targets and remaining employee of the entity over
a specified time period) is excluded; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | including the impact of any non-vesting conditions.
| | - |  | ---------------------------------------------------

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all
of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on non-marketing vesting conditions and service conditions. It
recognizes the impact of the revision to original estimates, if any, in the consolidated income statement, with a corresponding adjustment to equity.

The cash subscribed for the shares issued when the options are exercised is credited to share capital (nominal value) and share premium, net of any transaction costs that are directly attributable to the
issue.

At the time when the share options are exercised, the amount previously recognized in share option reserve will be
transferred to share premium. When the share options are not exercised at the expiry date or are forfeited after vesting period, the amount previously recognized in share option reserve will be transferred to retained profits.

(s) Foreign currency translation

Functional and presentation currency

Items included in the financial
statements of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Hong Kong
dollars, which is the Companys functional and presentation currency.

Transaction and balances

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of
that entity (foreign currencies) are translated and recorded in the respective entitys functional currency at the rates of exchanges prevailing on the dates of the transactions. At each statements of financial position date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing on the statements of financial position date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on
the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Exchange differences arising on the settlement of monetary items, and on the translation
of monetary items, are recognized in profit or loss in the period in which they arise, except for exchange differences arising on a monetary item that forms part of the Companys net investment in a foreign operation, in which case, such
exchange differences are recognized in equity in the consolidated financial statements. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for
differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in equity, in which cases, the exchange differences are also recognized directly in equity.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Groups foreign operations
are translated into the presentation currency of the Group (i.e. Hong Kong dollars) at the rate of exchange prevailing at the statements of financial position date, and their income and expenses are translated at the average exchange rates for the
year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognized as a separate component of equity (the
translation reserve). Such exchange differences are recognized in the consolidated income statement in the period in which the foreign operation is disposed of.

Goodwill and fair value adjustments arising on an acquisition of a foreign operation are treated as assets and liabilities of that foreign operation and translated at the rate of exchange prevailing at
the statements of financial position date. Exchange differences arising are recognized in the translation reserve.

(t)
Taxation

Income tax expense comprises current and deferred income tax.

Current income tax is calculated based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
income statement because it excludes items of income or expense that are not taxable or deductible. Current income tax payable is calculated using tax rates that have been enacted or substantively enacted by the statements of financial position
date.

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences
and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary
difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries and associates, except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each statements of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the tax authority on either the taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Deferred tax is calculated at the tax rates that are expected to apply in the period
when the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the statements of financial position date. Deferred tax is charged or credited to the consolidated income
statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(u) Operating leases

Leases where substantially all the rewards and
risks of ownership of assets remain with the leasing company are accounted for as operating leases. Rentals payable and receivable under operating leases are recognized as expense and revenue on the straight-line basis over the lease terms.

(v) Retirement benefits scheme

Employee entitlements to annual leave are recognized when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered
by employees up to the statement of financial position date.

Employee entitlements to sick leave and maternity leave are not
recognized until the time of leave.

In accordance with the rules and regulations in the PRC, the PRC based employees of the
Companys subsidiaries in the PRC participate in various defined contribution retirement benefit plans organized by the relevant municipal and provincial governments in the PRC under which the Companys subsidiaries in the PRC and the PRC
based employees are required to make monthly contributions to these plans calculated as a percentage of the employees salaries, which ranging from 10% to 15% of the average basic salary of the PRC based employee.

The municipal and provincial governments undertake to assume the retirement benefit obligations of all existing and future retired PRC
based employees payable under the plans described above. Other than the monthly contributions, the Group has no further obligation for the payment of retirement and other post retirement benefits of its employees. The assets of these plans are held
separately from those of the Group in independently administered funds managed by the PRC government.

The Group also
participates in a pension scheme under the rules and regulations of the Mandatory Provident Fund Scheme Ordinance (MPF Scheme), which is a defined contribution retirement scheme for all employees in Hong Kong. The contributions to the
MPF Scheme are based on minimum statutory contribution requirement of 5% of eligible employees relevant aggregate income. The assets of this pension scheme are held separately from those of the Group in independently administered funds.

The Groups contributions to the defined contribution retirement schemes are expensed as earned.

(w) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, including properties under development and investment properties under construction, are
capitalized as part of the cost of those assets. Capitalization of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in the consolidated income statement in the period in which they are incurred.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(x) Government grants

Grants from government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the
Group will comply with all attached conditions. Government grants are recognized as income over the periods necessary to match with the related costs. If the grants do not relate to any specific expenditure incurred by the Group, they are reported
separately as other operating income. If the grants subsidize an expense incurred by the Group, they are deducted in reporting the related expenses. Grants related to assets are presented as a deduction from the cost of the relevant asset.

(y) Discontinued operations

A discontinued operation is a component of the Groups business that represents a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a
view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale or held for distribution to owners. Discontinued operations are presented in the consolidated income statement (including
comparative) as a separate amount, comprising the total of the post tax profit or loss of the discontinued operations for the period together with any post-tax gain or loss recognized on the measure to fair value less costs to sell, or on disposal
of the assets/disposal groups constituting discontinued operations. When the Group discontinues its subsidiary, the Group is to account for all amounts recognized in other comprehensive income, including exchange difference on translation of foreign
operations, in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income that relates
to an asset or a liability, which when disposed, the Group reclassifies such accumulated gains or losses related to that asset or liability from equity to consolidated income statement, as a reclassification adjustment, when it loses control of the
subsidiary. In presenting interest income and interest expense and various expenses relating to discontinued operations, account is taken of the continuance or otherwise of these income statement items post disposal of the discontinued operations.
In the consolidated statement of financial position, the assets and liabilities of discontinued operations are shown within the caption Disposal groups and non-current assets/(liabilities) held for sale separated from other assets and
liabilities.

A non-current asset or a disposal group comprising assets and liabilities is classified as held for sale or held
for distribution to owners if it is expected that its carrying amount will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly probably within one year. For the sale to be
highly probable, the appropriate level of management must be committed to a plan to sell the asset or disposal group.

On
initial classification as held for sale or held for distribution to owners, non-current assets and disposal groups are measured at the lower of previous carrying amount and fair value less cost to sell with any adjustments taken to the income
statement. The same applies to gains and losses on subsequent remeasurement. However, financial assets within the scope of IAS 39 continue to be measured in accordance with that standard. No reclassifications are made in respect of prior period.

Impairment losses subsequent to classification of assets as held for sale or held for distribution to owners are recognized
in the consolidated income statement. Increase in fair value less costs to sell of assets that have been classified as held for sale or held for distribution to owners are recognized in the consolidated income statement to the extent that the
increase is not in excess of any cumulative impairment loss previously recognized in respect of asset. Assets are not depreciated while they are classified as held for sale or held for distribution to owners.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 3Application of New and Revised International Financial Reporting Standards

(a) Adoption of new or revised IFRS

In the current year, the Group has adopted the following revised IFRS, which are relevant to its operations:



| |  |  | IAS 12 (Amendment), Income Taxes
| | - |  | ----------------------------------



| |  |  | IFRS 7 (Amendment), Financial Instruments: DisclosuresTransfers of Financial Assets
| | - |  | --------------------------------------------------------------------------------------

The adoption of these newly effective amendments to existing standards does not have significant impact to the Groups accounting
policies or financial results.

(b) New or revised standards, interpretations and amendments to published standards that
are not yet effective and have not been early adopted by the Group

The following new or revised standards,
interpretations and amendments to existing standards have been published by the IASB and are relevant to the Groups operations. They are not yet effective for accounting periods beginning on April 1, 2012 and have not been early adopted
by the Group.



|                                                    |  |                                                                                                                         |  |                                                     
|--------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------
|                                                    |  |                                                                                                                         |  | Effective foraccounting periodsbeginning on or after
|                                                    |  |                                                                                                                        
|IAS 1 (Amendment)                                   |  | Presentation of Financial Statements                                                                                    |  | July 1, 2012                                        
|IAS 19 (Revised)                                    |  | Employee Benefits                                                                                                       |  | January 1, 2013                                     
|IAS 27 (As amended in 2011)                         |  | Separate Financial Statements                                                                                           |  | January 1, 2013                                     
|IAS 28 (As amended in 2011)                         |  | Investments in Associates and Joint Ventures                                                                            |  | January 1, 2013                                     
|IAS 32 (Amendment)                                  |  | Financial Instruments: PresentationOffsetting Financial Assets and Financial Liabilities                               |  | January 1, 2014                                     
|IFRS 7 (Amendment)                                  |  | Financial Instruments: DisclosuresOffsetting Financial Assets and Financial Liabilities                                |  | January 1, 2013                                     
|IFRS 9 (As amended in 2011)                         |  | Financial Instruments                                                                                                   |  | January 1, 2015                                     
|IFRS 10                                             |  | Consolidated Financial Statements                                                                                       |  | January 1, 2013                                     
|IFRS 11                                             |  | Joint Arrangements                                                                                                      |  | January 1, 2013                                     
|IFRS 12                                             |  | Disclosure of Interests in Other Entities                                                                               |  | January 1, 2013                                     
|IFRS 13                                             |  | Fair Value Measurement                                                                                                  |  | January 1, 2013                                     
|Amendments to IFRS 7 and 9                          |  | Mandatory Effective Date of IFRS 9 and Transition Disclosures                                                           |  | January 1, 2015                                     
|Amendments to IFRS 10, IFRS 12 and IAS 27 (Revised) |  | Investment Entities                                                                                                     |  | January 1, 2014                                     
|Amendments to IFRS 10, 11 and 12                    |  | Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other EntitiesTransition
Guidance |  | January 1, 2013                                     
|IFRSs (Amendment)                                   |  | Improvements to IFRSs 2009-2011                                                                                         |  | January 1, 2013                                     

The Group has already commenced an assessment of the related impact of adopting the above new or revised
standards and amendments to standards, but it is not yet in a position to state whether they will have a significant impact on its results of operations and financial position. The Group plans to adopt these new or revised standards and amendments
to standards when they become effective.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 4Critical Accounting Estimates and Judgment

In the application of the Groups accounting policies, which are described in note 2, the directors of the Company are required to
make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.

In the process of applying the Groups accounting policies, management has made the
following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

Estimated useful lives of property, plant and equipment

The Groups management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual
useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and competitor actions in response to market conditions. Management will increase the depreciation
charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgment.
Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portions that is held for use in
the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group accounts for these portions separately. If the portions could not be
sold separately, the property is an investment property.

Judgment is made on an individual property basis to determine
whether ancillary services are so significant that a property does not qualify as an investment property.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Classification between investment properties and properties held for sale

The Group develops properties held for sale and properties held to earn rentals and/or for capital appreciation. Judgment
is made by management on determining whether a property is designated as an investment property or a property held for sale. The Group considers its intention for holding the properties at the development stage of the related properties. During the
course of construction, the related properties under construction are accounted for as properties under development if the properties are intended for sale after its completion, whereas, the properties are accounted for as investment properties
under construction if the properties are intended to be held to earn rentals and/or for capital appreciation. Upon completion of the properties, the properties held for sale are transferred to completed properties held for sale and are stated at the
lower of cost and net realizable value, while the properties held to earn rentals and/or for capital appreciation are transferred to completed investment properties. Investment properties, both under construction and completed, are stated at fair
value (where fair value can be reliably measured) and subject to revaluation at the end of each reporting period.

Fair
value of leasehold land and buildings and investment properties

The leasehold land and buildings and investment properties
of the Group were stated at fair value in accordance with the Groups accounting policies stated in note 2(g) and 2(f) respectively. The fair value of investment properties, investment properties under development, and leasehold land and
buildings are determined by management based in part on valuation by independent professional valuers, and the fair values of investment properties, investment properties under development and leasehold land and buildings are set out in notes 18, 19
and 20 to the consolidated financial statements respectively. The valuation is based upon assumptions including estimated rental values, future rental income, and appropriate discount rates. The valuers also make reference to current prices in an
active market for the properties with similar lease and other contracts. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. In making its judgment, the Group considers information
from a variety of sources including:



| | (i) | current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect
those differences, by reference to independent valuations; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that
occurred at those prices, by reference to independent valuations.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the case of investment properties under
development, their fair value reflects the expectations of market participants of the value of the properties when they are completed, less deductions for the costs required to complete the projects and appropriate adjustments for profit and risk.
The valuation and all key assumptions used in the valuation should reflect market conditions at the balance sheet date. The key assumptions include value of completed properties, period of development, outstanding construction costs, other
professional costs, risk associated with completing the projects and generating income after completion and investors return as a percentage of value or cost. The fair value is made by reference to independent valuation.

In making the judgment, reasonable consideration has been given to the underlying assumptions based on market conditions existing at the
statements of financial position date. These estimates are regularly compared to actual market data and actual transactions in the market.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Impairment of trade receivables

The Groups management determines the provision for impairment of trade receivables on a regular basis. This estimate is based on the
credit history of its customers and prevailing market conditions. Management reassesses the provision for impairment of trade receivables at the statements of financial position date. In respect of the trade receivables past due but not impaired,
majority of which are related to sales of properties in mainland China, they are due to the reason that longer time is normally required for customers to apply for mortgages in the location at which the Companys subsidiaries are operated. As
most of these mortgages were approved by banks and balances settled subsequent to the date of statement of financial position and additional resources have been invested to monitor the progress of mortgage application, management considered that
these receivables are fully recoverable.

Net realizable value of inventories

Net realizable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion
and selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitors actions in response to severe
industry cycles. Management reassesses these estimations at the statements of financial position date to ensure inventories are shown at the lower of cost and net realizable value. The Groups inventories were solely attributable to the Man
Sang Discontinued Operations, and as a result of the Distribution, the Group no longer carried any inventories nor its related provision/write-back of provision in its consolidated statement of financial position.

Recoverability of completed properties held for sale and properties under development

Management performs a regular review on the carrying amounts of completed properties held for sale and properties under development. Based
on managements review, write-down of completed properties held for sale and properties under development will be made when the estimated net realizable value has declined below the carrying amount. In determining the net realizable value of
completed properties held for sale and properties under development, management refers to the latest economic measures introduced by the local government, recent global and local economic developments, recent sales transactions of the Group and
other similar properties in the surrounding areas, marketability of the Groups existing properties, market survey reports available from independent property valuers, internally available information and managements expectation on future
sales.

Impairment of long-lived assets

The Group conducts impairment reviews of assets when events of changes in circumstances indicate that their carrying amounts may not be recoverable or annually in accordance with relevant accounting
standards. An impairment loss is recognized when the carrying amount of an asset is lower than the greater of its fair value less costs to sell or the value in use. In determining the value in use, management assesses the present value of the
estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Estimates and judgments are applied in determining these future cash flows and the discount rate.

Recognition of construction contract

Profit on individual contracts is taken only when their outcome can be foreseen with reasonable certainty based on the lower of the percentage margin earned to date and that prudently forecast at
completion, taking into account agreed variations in contract work and incentive payment claims. Full provision is made for all known or expected losses on individual contracts taking into account anticipated future claims income, immediately when
such losses are foreseen.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Fair value of convertible bonds

The fair value of convertible bonds are determined using valuation techniques including reference to other instruments that are
substantially the same, discounted cash flow analysis and option pricing model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair
values.

Fair value of derivative financial instruments

The Group has issued certain warrants and convertible bonds where its derivative financial liability component are classified as
derivative financial liabilities. These warrants and derivative financial liability component of convertible bonds are determined by way of valuation technique or external valuation which require subjective assumptions that are mainly based on
performance conditions of the Group. The key assumptions are made by reference to the nature of the warrants and convertible bonds, share price of the trading securities, their conversion prices, implied volatility of their underlying trading
securities and their exercise periods. Should the price of the underlying trading securities of these warrants is to be increased or decreased by 1%, the impact on profit or loss would be a loss of HK$499,000 and a gain of HK$482,000, respectively.
Should the price of the underlying trading securities of the convertible bonds is to be increased or decreased by 1%, the impact on profit or loss would be a loss of HK$3,323,000 and a gain of HK$3,222,000, respectively.

PRC land appreciation taxes

The Group is subject to land appreciation taxes in the PRC. The provision of land appreciation taxes is based on managements best estimates according to the understanding of the requirements set
forth in the relevant PRC tax laws and regulations. The actual land appreciation tax liabilities are subject to the determination by the tax authorities upon the completion of the property development projects. The Group has not finalized its land
appreciation tax calculations and payments with the tax authorities for certain property development projects. The final outcome might be different from the amounts that were initially recorded, and any differences will impact the land appreciation
tax expenses and the related provision in the period in which the differences realize. Further details are set out in note 14 to the consolidated financial statements.

Current and deferred income tax

The Group is subject to income taxes in
the PRC. Significant judgment is required in determining the amount of the provision for taxation and the timing of payment of the related taxations. There are many transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.

Deferred tax assets relating to certain temporary differences and tax losses are recognized as
management considers it is probable that future taxable profit will be available against which the temporary differences or tax losses can be utilized. Where the expectation is different from the original estimate, such differences will impact the
recognition of deferred assets and income tax expense in the periods in which such estimate is changed. As at March 31, 2013 and 2012, management did not recognize any deferred tax assets on tax losses incurred by certain of the Groups
subsidiaries as management considered future taxable profits of these subsidiaries where losses were incurred were not probable.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Deferred income tax is provided on temporary differences arising on investments in
subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable
future. As at March 31, 2013 and 2012, management did not recognize any deferred income tax liability with respect to these temporary differences as management considered these temporary differences would not be reversed in the foreseeable future.

Recognition and allocation of construction cost on properties under development

Development costs of properties are recorded as properties under development during construction stage and will be transferred to
completed properties held for sale upon completion. Apportionment of these costs will be recognized in the consolidated income statement upon the recognition of the sale of the properties. Before the final settlement of the development costs and
other costs relating to the sale of the properties, these costs are accrued by the Group based on managements best estimate.

When developing properties, the Group may divide the development projects into phases. Specific costs directly related to the development of a phase are recorded as the cost of such phase. Costs that are
common to phases are allocated to individual phases based on the estimated saleable area of the entire project. Where the final settlement of costs and the related cost allocation is different from the initial estimates, any increase or decrease in
the development costs and other costs would affect the profit or loss in future years. Further details are set out in note 26 to the consolidated financial statements.

Government grant

Government grants are recognized as income over the
periods necessary to match with the related costs. The Group generally received two types of government grants from the local governments. Some government grants are received throughout the development of the integrated agricultural logistic and
trade centers as recognition for the Groups contribution to the city. The Group considers such grants generally relate to properties successfully completed and sold and would recognize such grants separately as other operating income in the
period of receipt as there are no conditions attached to the grant. For the government grants related to the land use rights, the Group would deduct the grants received from the land use rights as they are granted with respect to the costs incurred
by the Group in acquiring the related land use rights.

Promotional sale of certain properties

As discussed in note 2(p), the Group, through the Discontinued Operations, conducted a promotional sale of certain properties during the
fiscal year ended March 31, 2011 prior to the Distribution. Sales consideration for these properties included an explicitly agreed transaction price to be settled in cash plus a lease back of these properties to the Group free of charge. Of the
explicitly agreed transaction price, the Group received a down-payment of 24% in cash amounting to HK$4,147,000 upon transfer of title to the properties with the remainder HK$13,131,000 being receivable in future. As all the revenue recognition
criteria had been met, the Groups Man Sang Discontinued Operations recorded this as a revenue transaction. Having considered a number of factors such as the overall state of the property market, the prospects of the properties and profile of
individual buyers, management determined that the collectability of the receivable was not reasonably assured at the date of sale. Accordingly, revenue was recorded only to the extent of cash received during the year ended March 31, 2011 prior
to the Distribution. As these transactions were solely attributable to the Man Sang Discontinued Operations, subsequent to the Distribution, the Group no longer carried out these transactions.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 5Capital Risk Management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximizing the return
to stakeholders through the optimization of the bank and other borrowings and equity balances.

The capital structure of the
Group consists of net debt and equity attributable to equity holders of the Company, comprising issued share capital, share premium, retained earnings and other reserves.

The management of the Group reviews the capital structure periodically. As a part of this review, the management of the Group considers costs of capital, its bank covenant obligations, as discussed in
note 32, and the risks associated with issued share capital and will balance its overall capital structure through the drawdown of bank and other borrowings, the repayment of existing bank and other borrowings or the adjustment of dividends paid to
equity holders.

The management of the Group monitors its capital structure on the basis of the net debt. Net debt is set out
as follows:



|                                    |  |             |          |   |             |  |          |  
|----------------------------------- |  | ----------- | -------- | - | ----------- |  | -------- | -
|                                    |  | 2013HK$000 |          |   | 2012HK$000 | 
|Bank and other borrowings           |  |             | 583,974  |   |             |  | 732,602  |  
|Convertible bonds                   |  |             | 306,669  |   |             |  |         |  
|Restricted and pledged bank deposit |  |             | (48,776  | ) |             |  | (17,508  | )
|Cash and cash equivalents           |  |             | (364,539 | ) |             |  | (343,578 | )
|                                    |  |             |          |   |             |  |          |  
|Net debt                            |  |             | 477,328  |   |             |  | 371,516  |  
|                                    |  |             |          |   |             |  |          |  

Note 6Financial Risk Management

The Groups major financial instruments include trade and other receivables, restricted and pledged bank deposits, cash and cash equivalents, trade and other payables, derivative financial
liabilities, bank and other borrowings, convertible bonds and loan from a non-controlling interest. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments, include market risk
(currency risk and interest rate risk), credit risk and liquidity risk, and the policies on how to mitigate these risks are set out below. The Group does not have written risk management policies and guidelines. However, the board of directors meets
periodically to analyze and formulate measures to manage the Groups exposure to different risks arising from the use of financial instruments. Generally, the Group employs conservative strategies regarding its risk management. The management
manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

(a) Market risk

(i) Currency risk

As the Groups assets, liabilities and transactions
are principally denominated in RMB and HK$, which are also the functional currency of the Groups entities to which these balances relate. In additions, the Group has certain assets, liabilities and transaction denominated in US$. Given the
exchange rate is pegged between HK$ and US$, it is not foreseen that the Group will be exposed to significant exchange risk is US$. Accordingly, risk that the Group is subject to foreign currency risk at March 31, 2012 and 2013 is minimal.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(ii) Interest rate risk

The Groups exposure to interest rate risk relates primarily to variable-rate bank borrowings of HK$425,111,000 (2012:
HK$310,582,000) which were denominated in RMB, fixed-rate convertible bonds of HK$306,669,000 (2012: Nil) which were denominated in United States Dollar and fixed-rate bank and other borrowings of HK$60,000,000 (2012: HK$176,500,000) and
HK$98,863,000 (2012: HK$245,520,000) which were dominated in Hong Kong Dollar and RMB, respectively. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable rates.
Borrowings issued at fixed rate expose the Group to fair value interest rate risk. It is the Groups policy to keep the majority of borrowings at floating interest rate whenever possible so as to minimize the fair value interest rate risk.
However, subject to the Groups working capital requirements and the availability of variable-rate bank borrowings, the Group may have to obtain borrowings with fixed interest rate.

The tenure of the fixed-rate bank and other borrowings ranging from one to two years. The management considers the fair value interest
rate risk was insignificant. The liquidity risk on repayment of the bank and other borrowings was detailed in note 6(c) to the consolidated financial statements.

At March 31, 2013, if interest rates had been 0.25% higher/lower with all other variables held constant, interest payment on floating rate borrowings would have been approximately HK$1,063,000 (2012:
HK$776,000) higher/lower. Post-tax profit for the year would have been approximately HK$745,000 (2012: HK$768,000) lower/higher mainly as a result of an increase/decrease in the fair value of fixed rate borrowings. Majority of the interest expenses
would be capitalized as a result of such interest expenses directly attributable to the property construction. The management does not anticipate any significant impact on profit or loss of the Group resulting from changes in interest rate on
floating rate borrowings.

(b) Credit risk

Credit risk mainly arises from trade and other receivables, restricted and pledged bank deposits and cash and cash equivalents.

In respect of restricted and pledged bank deposits and cash and cash equivalents, the Group will place cash in banks and
financial institutions with high credit ratings assigned by international credit-rating agencies.

Most of the Groups
customers do not have independent rating. Before accepting certain new customers, where available at reasonable cost, the Group obtains credit reports from commercial information provider to assess the potential customers credit and defines
credit limits by customer. Credit limits of customers are reviewed periodically. In order to minimize the credit risk, the management of the Group has established credit limits, credit approvals and other monitoring procedures to ensure that
follow-up action is taken to recover overdue debts. For the trade receivables arising from sales of properties, the Group managed the credit risk by fully receiving cash or properly arranging the purchasers mortgage loans financing procedures
unless strong credit records of the customers could be established. The Group has policies in place to ensure that sales are made to purchasers with an appropriate financial strength and appropriate percentage of down payments. It also has other
monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews regularly the recoverable amount of each individual trade receivables to ensure that adequate impairment provisions are made for
irrecoverable amounts. The Group has no significant concentrations of credit risk, with exposure spread over a number of counterparties and customers.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For certain trade receivables in connection with sales of properties, the Group has the
right to repossess the properties when the repayments of trade receivables in respect of properties sales are in default. The arrangement has mitigated the credit risk for the customers which cannot be assessed through our past experience and other
factors to prove their credit standing.

(c) Liquidity risk

The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Groups
operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilization of bank and other borrowings and ensures compliance with loan covenants.

As at March 31, 2013 and 2012, the Groups financial liabilities which have contractual maturities are summarized below:



|                          |  |                              |         |  |                                                |  |         |                                                 |  |  |                              |  |  |                                                |           |  |                                                 |  |         |  |  |  |         | 
|------------------------- |  | ---------------------------- | ------- |  | ---------------------------------------------- |  | ------- | ----------------------------------------------- |  |  | ---------------------------- |  |  | ---------------------------------------------- | --------- |  | ----------------------------------------------- |  | ------- |  |  |  | ------- | 
|                          |  | March 31, 2013               |         |  | March 31, 2012                                 | 
|                          |  | Currentwithinone yearHK$000 |         |  | Non-currentafter onebut withintwo yearsHK$000 |  |         | Non-currentafter twobut withinfive yearsHK$000 |  |  | Currentwithinone yearHK$000 |  |  | Non-currentafter onebut withintwo yearsHK$000 |           |  | Non-currentafter twobut withinfive yearsHK$000 | 
|Trade and other payables  |  |                              | 378,785 |  |                                                |  |        |                                                 |  |  |                             |  |  |                                                | 573,181   |  |                                                 |  |        |  |  |  |        | 
|Bank and other borrowings |  |                              | 286,703 |  |                                                |  | 162,570 |                                                 |  |  | 134,701                      |  |  |                                                | 478,763   |  |                                                 |  | 77,339  |  |  |  | 176,500 | 
|Convertible bonds         |  |                              |        |  |                                                |  |        |                                                 |  |  | 468,000                      |  |  |                                                |          |  |                                                 |  |        |  |  |  |        | 
|Interest obligations      |  |                              | 102,154 |  |                                                |  | 158,528 |                                                 |  |  | 346,904                      |  |  |                                                | 54,395    |  |                                                 |  | 31,748  |  |  |  | 18,195  | 
|                          |  |                              |         |  |                                                |  |         |                                                 |  |  |                              |  |  |                                                |           |  |                                                 |  |         |  |  |  |         | 
|                          |  |                              | 767,642 |  |                                                |  | 321,098 |                                                 |  |  | 949,605                      |  |  |                                                | 1,106,339 |  |                                                 |  | 109,087 |  |  |  | 194,695 | 
|                          |  |                              |         |  |                                                |  |         |                                                 |  |  |                              |  |  |                                                |           |  |                                                 |  |         |  |  |  |         | 

(d) Fair value estimation

Below analyses financial instruments carried at fair values, by valuation method. The different levels have been defined as follows:



| |  |  | Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
| | - |  | ------------------------------------------------------------------------------------------------------------------------

As at March 31, 2013, the Groups derivative financial instruments, warrants and derivative financial liability component of
the convertible bonds, were valued at HK$37,365,000 (2012: HK$2,941,000) and HK$277,157,000 (2012: Nil), respectively. The fair value of the warrants and derivative financial liability component of the convertible bonds that are not traded in an
active market is determined by way of valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. As one or more of the significant
inputs is not based on observable market data, the warrants and derivative financial liability component of the convertible bonds are included on level 3.

As at March 31, 2013 and 2012, the Group did not have any financial instruments categorized as level 1 or level 2.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 7Revenue

Revenue represents (i) the amounts received and receivable from customers in respect of goods sold, less returns and allowances, (ii) the proceeds from the sale of properties during the year,
(iii) the amounts received and receivable in respect of leasing and property management fees of investment properties and (iv) amounts received and receivable from servicing and assignments of development rights.



|                                                             |  |             |         |  |             |  |         |             |  |  |         | 
|------------------------------------------------------------ |  | ----------- | ------- |  | ----------- |  | ------- | ----------- |  |  | ------- | 
|                                                             |  | 2013HK$000 |         |  | 2012HK$000 |  |         | 2011HK$000 | 
|Continuing operations:                                       |  |             |         |  |             |  |         |             |  |  |         | 
|Sales of properties                                          |  |             | 273,410 |  |             |  | 758,369 |             |  |  | 575,569 | 
|Rental and property management income                        |  |             | 11,349  |  |             |  | 7,503   |             |  |  | 6,004   | 
|                                                             |  |             |         |  |             |  |         |             |  |  |         | 
|                                                             |  |             | 284,759 |  |             |  | 765,872 |             |  |  | 581,573 | 
|                                                             |  |             |         |  |             |  |         |             |  |  |         | 
|Discontinued operations (Note 17):                           |  |             |         |  |             |  |         |             |  |  |         | 
|Revenue from servicing and assignments of development rights |  |             |        |  |             |  | 147,896 |             |  |  |        | 
|Sales of pearls and jewelry                                  |  |             |        |  |             |  |        |             |  |  | 88,300  | 
|Sales of properties                                          |  |             |        |  |             |  |        |             |  |  | 57,574  | 
|Rental and property management income                        |  |             |        |  |             |  |        |             |  |  | 11,578  | 
|                                                             |  |             |         |  |             |  |         |             |  |  |         | 
|                                                             |  |             |        |  |             |  | 147,896 |             |  |  | 157,452 | 
|                                                             |  |             |         |  |             |  |         |             |  |  |         | 
|                                                             |  |             | 284,759 |  |             |  | 913,768 |             |  |  | 739,025 | 
|                                                             |  |             |         |  |             |  |         |             |  |  |         | 

Note 8Segment Information

The Group determines its operating segments based on the reports reviewed by the executive board of directors that are used to make strategic decision.

As at and for the year ended March 31, 2013, the Group has two reportable operating segments. The Groups operating businesses
are structured and managed separately according to the nature of the operations and the product perspectives. Each of the Groups reportable operating segments represents a strategic business unit that is subject to risks and returns that are
different from the other reportable operating segment. Details of the reportable operating segment are as follows:

Continuing operations:

Agricultural logisticsDevelopment, sales and leasing properties of integrated agricultural logistics and trade centers in Northeast China.

Rural-urban migration and city re-developmentDevelopment, sales and leasing of residential and commercial properties and servicing
and assignments of development rights.

Discontinued operations:

Rural-urban migration and city re-developmentQiqiharDevelopment, sales and leasing of residential and commercial properties
and servicing and assignments of development rights.

Pearls and jewelryPurchasing, processing, assembling,
merchandising, wholesale distribution of pearls and jewelry products.

Property development and investmentDevelopment,
sales and leasing of properties, including industrial complex in Shenzhen, the PRC, a market center with various supporting facilities in Zhuji, the PRC and commercial properties in Hong Kong.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Segment information for these businesses is presented below:

The segment results for the year ended March 31, 2013



|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|--------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | -------------------------------------------------- |  | - | ---------------- |  |  | ---------------------------------------------------------- | - |  | ------------------------------- | ------- | - | ---------------------------------------- |  | - | ---------------- |  |  | ------------ |  |  |  | ------- | - |  |  | ------- | -
|                                                                                              |  | Continuing operations        |         |   | Discontinued operations (Note 17)                  |  |   |                  | 
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  | QiqiharDiscontinuedOperations                              |   |  | Man Sang DiscontinuedOperations |         |   |                                          |  |   |                  | 
|                                                                                              |  | AgriculturallogisticsHK$000 |         |   | Rural-urbanmigrationand city re-developmentHK$000 |  |   | Sub-totalHK$000 |  |  | Rural-urbanmigrationand city re-developmentQiqiharHK$000 |   |  | Pearls andjewelryHK$000        |         |   | Propertydevelopment andinvestmentHK$000 |  |   | Sub-totalHK$000 |  |  | TotalHK$000 | 
|Profit and loss items                                                                         |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|Segment revenue and revenue from external customers                                           |  |                              | 284,759 |   |                                                    |  |  |                  |  |  | 284,759                                                    |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 284,759 |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|Segment operating profit/(loss)                                                               |  |                              | 67,479  |   |                                                    |  |  |                  |  |  | 67,479                                                     |   |  |                                 | (28,310 | ) |                                          |  |  |                  |  |  |             |  |  |  | (28,310 | ) |  |  | 39,169  |  
|Finance income                                                                                |  |                              | 16,952  |   |                                                    |  |  |                  |  |  | 16,952                                                     |   |  |                                 | 8,009   |   |                                          |  |  |                  |  |  |             |  |  |  | 8,009   |   |  |  | 24,961  |  
|Finance costs                                                                                 |  |                              | (12,570 | ) |                                                    |  |  |                  |  |  | (12,570                                                    | ) |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | (12,570 | )
|Share of losses of an associate                                                               |  |                              | (1,606  | ) |                                                    |  |  |                  |  |  | (1,606                                                     | ) |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | (1,606  | )
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|Segment profit/(loss) before income tax                                                       |  |                              | 70,255  |   |                                                    |  |   |                  |  |  | 70,255                                                     |   |  |                                 | (20,301 | ) |                                          |  |  |                  |  |  |             |  |  |  | (20,301 | ) |  |  | 49,954  |  
|Income tax (expenses)/credits                                                                 |  |                              | (35,746 | ) |                                                    |  |  |                  |  |  | (35,746                                                    | ) |  |                                 | 5,355   |   |                                          |  |  |                  |  |  |             |  |  |  | 5,355   |   |  |  | (30,391 | )
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|Segment profit/(loss) after taxation                                                          |  |                              | 34,509  |   |                                                    |  |  |                  |  |  | 34,509                                                     |   |  |                                 | (14,946 | ) |                                          |  |  |                  |  |  |             |  |  |  | (14,946 | ) |  |  | 19,563  |  
|Gain on disposal of subsidiaries                                                              |  |                              |        |   |                                                    |  |  |                  |  |  |                                                           |   |  |                                 | 32,478  |   |                                          |  |  |                  |  |  |             |  |  |  | 32,478  |   |  |  | 32,478  |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|                                                                                              |  |                              | 34,509  |   |                                                    |  |  |                  |  |  | 34,509                                                     |   |  |                                 | 17,532  |   |                                          |  |  |                  |  |  |             |  |  |  | 17,532  |   |  |  | 52,041  |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|Other information:                                                                            |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  
|Depreciation                                                                                  |  |                              | 7,821   |   |                                                    |  |  |                  |  |  | 7,821                                                      |   |  |                                 | 769     |   |                                          |  |  |                  |  |  |             |  |  |  | 769     |   |  |  | 8,590   |  
|Amortization                                                                                  |  |                              | 2,226   |   |                                                    |  |  |                  |  |  | 2,226                                                      |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 2,226   |  
|Increase in fair values of investment properties and investment properties under construction |  |                              | 6,228   |   |                                                    |  |  |                  |  |  | 6,228                                                      |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 6,228   |  
|Reversal of impairment of trade and other receivables                                         |  |                              | 1,855   |   |                                                    |  |  |                  |  |  | 1,855                                                      |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 1,855   |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |         |  



F-41



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The segment results for the year ended March 31, 2012



|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|--------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | -------------------------------------------------- |  | - | ---------------- |  |  | ---------------------------------------------------------- | - |  | ------------------------------- | ------- | - | ---------------------------------------- |  | - | ---------------- |  |  | ------------ |  |  |  | ------- | - |  |  | -------- | -
|                                                                                              |  | Continuing operations        |         |   | Discontinued operations (Note 17)                  |  |   |                  | 
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  | QiqiharDiscontinuedOperations                              |   |  | Man Sang DiscontinuedOperations |         |   |                                          |  |   |                  | 
|                                                                                              |  | AgriculturallogisticsHK$000 |         |   | Rural-urbanmigrationand city re-developmentHK$000 |  |   | Sub-totalHK$000 |  |  | Rural-urbanmigrationand city re-developmentQiqiharHK$000 |   |  | Pearls andjewelryHK$000        |         |   | Propertydevelopment andinvestmentHK$000 |  |   | Sub-totalHK$000 |  |  | TotalHK$000 | 
|Profit and loss items                                                                         |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|Segment revenue and revenue from external customers                                           |  |                              | 765,872 |   |                                                    |  |  |                  |  |  | 765,872                                                    |   |  |                                 | 147,896 |   |                                          |  |  |                  |  |  |             |  |  |  | 147,896 |   |  |  | 913,768  |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|Segment operating profit                                                                      |  |                              | 230,543 |   |                                                    |  |  |                  |  |  | 230,543                                                    |   |  |                                 | 132,873 |   |                                          |  |  |                  |  |  |             |  |  |  | 132,873 |   |  |  | 363,416  |  
|Finance income                                                                                |  |                              | 915     |   |                                                    |  |  |                  |  |  | 915                                                        |   |  |                                 | 238     |   |                                          |  |  |                  |  |  |             |  |  |  | 238     |   |  |  | 1,153    |  
|Finance costs                                                                                 |  |                              | (527    | ) |                                                    |  |  |                  |  |  | (527                                                       | ) |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | (527     | )
|Share of losses of an associate                                                               |  |                              | (2,456  | ) |                                                    |  |  |                  |  |  | (2,456                                                     | ) |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | (2,456   | )
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|Segment profit before income tax                                                              |  |                              | 228,475 |   |                                                    |  |  |                  |  |  | 228,475                                                    |   |  |                                 | 133,111 |   |                                          |  |  |                  |  |  |             |  |  |  | 133,111 |   |  |  | 361,586  |  
|Income tax expenses                                                                           |  |                              | (90,202 | ) |                                                    |  |  |                  |  |  | (90,202                                                    | ) |  |                                 | (34,517 | ) |                                          |  |  |                  |  |  |             |  |  |  | (34,517 | ) |  |  | (124,719 | )
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|Segment profit after taxation                                                                 |  |                              | 138,273 |   |                                                    |  |   |                  |  |  | 138,273                                                    |   |  |                                 | 98,594  |   |                                          |  |  |                  |  |  |             |  |  |  | 98,594  |   |  |  | 236,867  |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|Other information:                                                                            |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  
|Depreciation                                                                                  |  |                              | 6,457   |   |                                                    |  |  |                  |  |  | 6,457                                                      |   |  |                                 | 126     |   |                                          |  |  |                  |  |  |             |  |  |  | 126     |   |  |  | 6,583    |  
|Amortization                                                                                  |  |                              | 1,940   |   |                                                    |  |  |                  |  |  | 1,940                                                      |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 1,940    |  
|Increase in fair values of investment properties and investment properties under construction |  |                              | 2,594   |   |                                                    |  |  |                  |  |  | 2,594                                                      |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 2,594    |  
|Provision for impairment of trade and other receivables                                       |  |                              | 3,990   |   |                                                    |  |  |                  |  |  | 3,990                                                      |   |  |                                 |        |   |                                          |  |  |                  |  |  |             |  |  |  |        |   |  |  | 3,990    |  
|                                                                                              |  |                              |         |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |         |   |                                          |  |   |                  |  |  |              |  |  |  |         |   |  |  |          |  



F-42



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The segment results for the year ended March 31, 2011



|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|--------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | -------------------------------------------------- |  | - | ---------------- |  |  | ---------------------------------------------------------- | - |  | ------------------------------- | - |  | ---------------------------------------- |  | ------ | ---------------- |  |  | ------------ | - |  |  | ------- | - |  |  | -------- | -
|                                                                                              |  | Continuing operations        |          |   | Discontinued operations (Note 17)                  |  |   |                  | 
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  | QiqiharDiscontinuedOperations                              |   |  | Man Sang DiscontinuedOperations |   |  |                                          |  |        |                  | 
|                                                                                              |  | AgriculturallogisticsHK$000 |          |   | Rural-urbanmigrationand city re-developmentHK$000 |  |   | Sub-totalHK$000 |  |  | Rural-urbanmigrationand city re-developmentQiqiharHK$000 |   |  | Pearls andjewelryHK$000        |   |  | Propertydevelopment andinvestmentHK$000 |  |        | Sub-totalHK$000 |  |  | TotalHK$000 |  
|Profit and loss items                                                                         |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Segment revenue                                                                               |  |                              | 581,573  |   |                                                    |  |  |                  |  |  | 581,573                                                    |   |  |                                 |  |  |                                          |  | 88,300 |                  |  |  | 69,485       |   |  |  | 157,785 |   |  |  | 739,358  |  
|Inter-segment revenue                                                                         |  |                              |         |   |                                                    |  |  |                  |  |  |                                                           |   |  |                                 |  |  |                                          |  |       |                  |  |  | (333         | ) |  |  | (333    | ) |  |  | (333     | )
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Revenue from external customers                                                               |  |                              | 581,573  |   |                                                    |  |  |                  |  |  | 581,573                                                    |   |  |                                 |  |  |                                          |  | 88,300 |                  |  |  | 69,152       |   |  |  | 157,452 |   |  |  | 739,025  |  
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Segment operating profit                                                                      |  |                              | 337,808  |   |                                                    |  |  |                  |  |  | 337,808                                                    |   |  |                                 |  |  |                                          |  | 7,174  |                  |  |  | 7,613        |   |  |  | 14,787  |   |  |  | 352,595  |  
|Finance income                                                                                |  |                              | 801      |   |                                                    |  |  |                  |  |  | 801                                                        |   |  |                                 |  |  |                                          |  | 696    |                  |  |  | 358          |   |  |  | 1,054   |   |  |  | 1,855    |  
|Finance costs                                                                                 |  |                              | (3,927   | ) |                                                    |  |  |                  |  |  | (3,927                                                     | ) |  |                                 |  |  |                                          |  | (919   | )                |  |  | (49          | ) |  |  | (968    | ) |  |  | (4,895   | )
|Share of results of an associate                                                              |  |                              | (386     | ) |                                                    |  |  |                  |  |  | (386                                                       | ) |  |                                 |  |  |                                          |  |       |                  |  |  | 17           |   |  |  | 17      |   |  |  | (369     | )
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Segment profit before income tax                                                              |  |                              | 334,296  |   |                                                    |  |  |                  |  |  | 334,296                                                    |   |  |                                 |  |  |                                          |  | 6,951  |                  |  |  | 7,939        |   |  |  | 14,890  |   |  |  | 349,186  |  
|Income tax expenses                                                                           |  |                              | (125,201 | ) |                                                    |  |  |                  |  |  | (125,201                                                   | ) |  |                                 |  |  |                                          |  | (807   | )                |  |  | (5,107       | ) |  |  | (5,914  | ) |  |  | (131,115 | )
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Segment profit after taxation                                                                 |  |                              | 209,095  |   |                                                    |  |  |                  |  |  | 209,095                                                    |   |  |                                 |  |  |                                          |  | 6,144  |                  |  |  | 2,832        |   |  |  | 8,976   |   |  |  | 218,071  |  
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Other information:                                                                            |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  
|Depreciation                                                                                  |  |                              | 3,457    |   |                                                    |  |  |                  |  |  | 3,457                                                      |   |  |                                 |  |  |                                          |  | 1,976  |                  |  |  | 1,264        |   |  |  | 3,240   |   |  |  | 6,697    |  
|Amortization                                                                                  |  |                              | 1,234    |   |                                                    |  |  |                  |  |  | 1,234                                                      |   |  |                                 |  |  |                                          |  |       |                  |  |  | 828          |   |  |  | 828     |   |  |  | 2,062    |  
|Increase in fair values of investment properties and investment properties under construction |  |                              | 111,528  |   |                                                    |  |  |                  |  |  | 111,528                                                    |   |  |                                 |  |  |                                          |  |       |                  |  |  | 1,592        |   |  |  | 1,592   |   |  |  | 113,120  |  
|Gain on disposals of investment properties                                                    |  |                              |         |   |                                                    |  |  |                  |  |  |                                                           |   |  |                                 |  |  |                                          |  |       |                  |  |  | 5,795        |   |  |  | 5,795   |   |  |  | 5,795    |  
|Gain on disposals of land use rights                                                          |  |                              | 8,502    |   |                                                    |  |  |                  |  |  | 8,502                                                      |   |  |                                 |  |  |                                          |  |       |                  |  |  |             |   |  |  |        |   |  |  | 8,502    |  
|Gain on disposal of a subsidiary                                                              |  |                              | 90       |   |                                                    |  |  |                  |  |  | 90                                                         |   |  |                                 |  |  |                                          |  |       |                  |  |  |             |   |  |  |        |   |  |  | 90       |  
|Provision for impairment of trade and other receivables                                       |  |                              | 2,570    |   |                                                    |  |  |                  |  |  | 2,570                                                      |   |  |                                 |  |  |                                          |  | 307    |                  |  |  |             |   |  |  | 307     |   |  |  | 2,877    |  
|Reversal of provision for inventory obsolescence                                              |  |                              |         |   |                                                    |  |  |                  |  |  |                                                           |   |  |                                 |  |  |                                          |  | 3,700  |                  |  |  |             |   |  |  | 3,700   |   |  |  | 3,700    |  
|                                                                                              |  |                              |          |   |                                                    |  |   |                  |  |  |                                                            |   |  |                                 |   |  |                                          |  |        |                  |  |  |              |   |  |  |         |   |  |  |          |  



F-43



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The segment assets and liabilities at March 31, 2013



|                                       |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |   |  |                                          |  |   |                  |  |  |              |  |  |  |   |  |  |  |           | 
|-------------------------------------- |  | ---------------------------- | --------- |  | -------------------------------------------------- |  | - | ---------------- |  |  | ---------------------------------------------------------- |  |  | ------------------------------- | - |  | ---------------------------------------- |  | - | ---------------- |  |  | ------------ |  |  |  | - |  |  |  | --------- | 
|                                       |  | Continuing operations        |           |  | Discontinued operations (Note 17)                  |  |   |                  | 
|                                       |  |                              |           |  |                                                    |  |   |                  |  |  | QiqiharDiscontinuedOperations                              |  |  | Man Sang DiscontinuedOperations |   |  |                                          |  |   |                  | 
|                                       |  | AgriculturallogisticsHK$000 |           |  | Rural-urbanmigrationand city re-developmentHK$000 |  |   | Sub-totalHK$000 |  |  | Rural-urbanmigrationand city re-developmentQiqiharHK$000 |  |  | Pearls andjewelryHK$000        |   |  | Propertydevelopment andinvestmentHK$000 |  |   | Sub-totalHK$000 |  |  | TotalHK$000 | 
|Statements of financial position items |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |   |  |                                          |  |   |                  |  |  |              |  |  |  |   |  |  |  |           | 
|Total segment assets                   |  |                              | 3,098,562 |  |                                                    |  |  |                  |  |  | 3,098,562                                                  |  |  |                                 |  |  |                                          |  |  |                  |  |  |             |  |  |  |  |  |  |  | 3,098,562 | 
|Total segment assets include:          |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |   |  |                                          |  |   |                  |  |  |              |  |  |  |   |  |  |  |           | 
|Investment in an associate             |  |                              | 26,298    |  |                                                    |  |  |                  |  |  | 26,298                                                     |  |  |                                 |  |  |                                          |  |  |                  |  |  |             |  |  |  |  |  |  |  | 26,298    | 
|Additions to non-current assets        |  |                              | 27,407    |  |                                                    |  |  |                  |  |  | 27,407                                                     |  |  |                                 |  |  |                                          |  |  |                  |  |  |             |  |  |  |  |  |  |  | 27,407    | 
|Total segment liabilities              |  |                              | 1,389,107 |  |                                                    |  |  |                  |  |  | 1,389,107                                                  |  |  |                                 |  |  |                                          |  |  |                  |  |  |             |  |  |  |  |  |  |  | 1,389,107 | 
|                                       |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |   |  |                                          |  |   |                  |  |  |              |  |  |  |   |  |  |  |           | 

The segment assets and liabilities at March 31, 2012



|                                       |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |         |  |                                          |  |   |                  |  |  |              |  |  |  |         |  |  |  |           | 
|-------------------------------------- |  | ---------------------------- | --------- |  | -------------------------------------------------- |  | - | ---------------- |  |  | ---------------------------------------------------------- |  |  | ------------------------------- | ------- |  | ---------------------------------------- |  | - | ---------------- |  |  | ------------ |  |  |  | ------- |  |  |  | --------- | 
|                                       |  | Continuing operations        |           |  | Discontinued operations (Note 17)                  |  |   |                  | 
|                                       |  |                              |           |  |                                                    |  |   |                  |  |  | QiqiharDiscontinuedOperations                              |  |  | Man Sang DiscontinuedOperations |         |  |                                          |  |   |                  | 
|                                       |  | AgriculturallogisticsHK$000 |           |  | Rural-urbanmigrationand city re-developmentHK$000 |  |   | Sub-totalHK$000 |  |  | Rural-urbanmigrationand city re-developmentQiqiharHK$000 |  |  | Pearls andjewelryHK$000        |         |  | Propertydevelopment andinvestmentHK$000 |  |   | Sub-totalHK$000 |  |  | TotalHK$000 | 
|Statements of financial position items |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |         |  |                                          |  |   |                  |  |  |              |  |  |  |         |  |  |  |           | 
|Total segment assets                   |  |                              | 2,721,426 |  |                                                    |  |  |                  |  |  | 2,721,426                                                  |  |  |                                 | 447,400 |  |                                          |  |  |                  |  |  |             |  |  |  | 447,400 |  |  |  | 3,168,826 | 
|Total segment assets include:          |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |         |  |                                          |  |   |                  |  |  |              |  |  |  |         |  |  |  |           | 
|Investment in an associate             |  |                              | 27,728    |  |                                                    |  |  |                  |  |  | 27,728                                                     |  |  |                                 |        |  |                                          |  |  |                  |  |  |             |  |  |  |        |  |  |  | 27,728    | 
|Additions to non-current assets        |  |                              | 924,940   |  |                                                    |  |  |                  |  |  | 924,940                                                    |  |  |                                 | 1,581   |  |                                          |  |  |                  |  |  |             |  |  |  | 1,581   |  |  |  | 926,521   | 
|Total segment liabilities              |  |                              | 1,760,809 |  |                                                    |  |  |                  |  |  | 1,760,809                                                  |  |  |                                 | 132,792 |  |                                          |  |  |                  |  |  |             |  |  |  | 132,792 |  |  |  | 1,893,601 | 
|                                       |  |                              |           |  |                                                    |  |   |                  |  |  |                                                            |  |  |                                 |         |  |                                          |  |   |                  |  |  |              |  |  |  |         |  |  |  |           | 



F-44



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



A reconciliation of the reportable segments (loss)/profit before income tax to
the Groups (loss)/profit before income tax is as follows:



|                                                                                        |  |                             |          |   |                               |  |         |              |  |  |                             |   |  |                               |         |   |              |  |         |                             |  |  |                               |   |  |              |         |   |  |  |        |   |  |  |         |  
|--------------------------------------------------------------------------------------- |  | --------------------------- | -------- | - | ----------------------------- |  | ------- | ------------ |  |  | --------------------------- | - |  | ----------------------------- | ------- | - | ------------ |  | ------- | --------------------------- |  |  | ----------------------------- | - |  | ------------ | ------- | - |  |  | ------ | - |  |  | ------- | -
|                                                                                        |  | 2013                        |          |   | 2012                          |  |         | 2011         | 
|                                                                                        |  | ContinuingoperationsHK$000 |          |   | DiscontinuedoperationsHK$000 |  |         | TotalHK$000 |  |  | ContinuingoperationsHK$000 |   |  | DiscontinuedoperationsHK$000 |         |   | TotalHK$000 |  |         | ContinuingoperationsHK$000 |  |  | DiscontinuedoperationsHK$000 |   |  | TotalHK$000 |        
|                                                                                        |  |                             |          |   | (Note 17)                     |  |         |              |  |  |                             |   |  | (Note 17)                     |         |   |              |  |         |                             |  |  | (Note 17)                     |   |  |              |        
|Total profit/(loss) before income tax for reportable segments                           |  |                             | 70,255   |   |                               |  | (20,301 | )            |  |  | 49,954                      |   |  |                               | 228,475 |   |              |  | 133,111 |                             |  |  | 361,586                       |   |  |              | 334,296 |   |  |  | 14,890 |   |  |  | 349,186 |  
|Gain on disposals of financial assets at fair value through profit or loss              |  |                             |         |   |                               |  |        |              |  |  |                            |   |  |                               |        |   |              |  |        |                             |  |  |                              |   |  |              |        |   |  |  | 1,128  |   |  |  | 1,128   |  
|Net unrealized loss on financial assets at fair value through profit or loss            |  |                             |         |   |                               |  |        |              |  |  |                            |   |  |                               |        |   |              |  |        |                             |  |  |                              |   |  |              |        |   |  |  | (51    | ) |  |  | (51     | )
|(Increase)/decrease in fair value of the warrants                                       |  |                             | (8,157   | ) |                               |  |        |              |  |  | (8,157                      | ) |  |                               | 4,047   |   |              |  |        |                             |  |  | 4,047                         |   |  |              |        |   |  |  |       |   |  |  |        |  
|(Increase)/decrease in fair value of derivative components of convertible bonds         |  |                             | (120,564 | ) |                               |  |        |              |  |  | (120,564                    | ) |  |                               |        |   |              |  |        |                             |  |  |                              |   |  |              |        |   |  |  |       |   |  |  |        |  
|Share-based payment as share options granted to directors and employees by a subsidiary |  |                             |         |   |                               |  |        |              |  |  |                            |   |  |                               |        |   |              |  |        |                             |  |  |                              |   |  |              |        |   |  |  | (1,148 | ) |  |  | (1,148  | )
|Investment income                                                                       |  |                             |         |   |                               |  |        |              |  |  |                            |   |  |                               |        |   |              |  |        |                             |  |  |                              |   |  |              |        |   |  |  | 1,112  |   |  |  | 1,112   |  
|Recycling of exchange difference to profit or loss upon the Distribution (Note 17)      |  |                             |         |   |                               |  |        |              |  |  |                            |   |  |                               |        |   |              |  |        |                             |  |  |                              |   |  |              |        |   |  |  | 20,284 |   |  |  | 20,284  |  
|Corporate finance income                                                                |  |                             | 2        |   |                               |  |        |              |  |  | 2                           |   |  |                               | 1       |   |              |  |        |                             |  |  | 1                             |   |  |              | 2       |   |  |  | 1      |   |  |  | 3       |  
|Corporate expenses, net                                                                 |  |                             | (18,794  | ) |                               |  |        |              |  |  | (18,794                     | ) |  |                               | (9,856  | ) |              |  |        |                             |  |  | (9,856                        | ) |  |              | (6,994  | ) |  |  | (286   | ) |  |  | (7,280  | )
|                                                                                        |  |                             |          |   |                               |  |         |              |  |  |                             |   |  |                               |         |   |              |  |         |                             |  |  |                               |   |  |              |         |   |  |  |        |   |  |  |         |  
|(Loss)/profit before income tax of the Group                                            |  |                             | (77,258  | ) |                               |  | (20,301 | )            |  |  | (97,559                     | ) |  |                               | 222,667 |   |              |  | 133,111 |                             |  |  | 355,778                       |   |  |              | 327,304 |   |  |  | 35,930 |   |  |  | 363,234 |  
|                                                                                        |  |                             |          |   |                               |  |         |              |  |  |                             |   |  |                               |         |   |              |  |         |                             |  |  |                               |   |  |              |         |   |  |  |        |   |  |  |         |  

A reconciliation of the total of reportable segments assets to the Groups total assets is as
follows:



|                              |  |                             |           |  |                              |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 
|----------------------------- |  | --------------------------- | --------- |  | ---------------------------- |  | - | ------------ |  |  | --------------------------- |  |  | ----------------------------- | --------- |  | ------------ |  | ------- |  |  |  | --------- | 
|                              |  | At March 31, 2013           |           |  | At March 31, 2012            | 
|                              |  | ContinuingoperationsHK$000 |           |  | DiscontinuedoperationHK$000 |  |   | TotalHK$000 |  |  | ContinuingoperationsHK$000 |  |  | DiscontinuedoperationsHK$000 |           |  | TotalHK$000 | 
|                              |  |                             |           |  | (Note 17)                    |  |   |              |  |  |                             |  |  | (Note 17)                     |           |  |              | 
|Total for reportable segments |  |                             | 3,098,562 |  |                              |  |  |              |  |  | 3,098,562                   |  |  |                               | 2,721,426 |  |              |  | 447,400 |  |  |  | 3,168,826 | 
|Unallocated:                  |  |                             |           |  |                              |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 
|Corporate assets              |  |                             | 104,316   |  |                              |  |  |              |  |  | 104,316                     |  |  |                               | 7,053     |  |              |  |        |  |  |  | 7,053     | 
|                              |  |                             |           |  |                              |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 
|Total assets for the Group    |  |                             | 3,202,878 |  |                              |  |  |              |  |  | 3,202,878                   |  |  |                               | 2,728,479 |  |              |  | 447,400 |  |  |  | 3,175,879 | 
|                              |  |                             |           |  |                              |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 



F-45



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



A reconciliation of the total of the reportable segments liabilities to the
Groups total liabilities is as follows:



|                                 |  |                             |           |  |                               |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 
|-------------------------------- |  | --------------------------- | --------- |  | ----------------------------- |  | - | ------------ |  |  | --------------------------- |  |  | ----------------------------- | --------- |  | ------------ |  | ------- |  |  |  | --------- | 
|                                 |  | At March 31, 2013           |           |  | At March 31, 2012             | 
|                                 |  | ContinuingoperationsHK$000 |           |  | DiscontinuedoperationsHK$000 |  |   | TotalHK$000 |  |  | ContinuingoperationsHK$000 |  |  | DiscontinuedoperationsHK$000 |           |  | TotalHK$000 | 
|                                 |  |                             |           |  | (Note 17)                     |  |   |              |  |  |                             |  |  | (Note 17)                     |           |  |              | 
|Total for reportable segments    |  |                             | 1,389,107 |  |                               |  |  |              |  |  | 1,389,107                   |  |  |                               | 1,760,809 |  |              |  | 132,792 |  |  |  | 1,893,601 | 
|Unallocated:                     |  |                             |           |  |                               |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 
|Corporate liabilities            |  |                             | 3,165     |  |                               |  |  |              |  |  | 3,165                       |  |  |                               | 3,727     |  |              |  |        |  |  |  | 3,727     | 
|Derivative financial liabilities |  |                             | 314,522   |  |                               |  |  |              |  |  | 314,522                     |  |  |                               | 2,941     |  |              |  |        |  |  |  | 2,941     | 
|Convertible bonds                |  |                             | 306,669   |  |                               |  |  |              |  |  | 306,669                     |  |  |                               |          |  |              |  |        |  |  |  |          | 
|                                 |  |                             |           |  |                               |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 
|Total liabilities for the Group  |  |                             | 2,013,463 |  |                               |  |  |              |  |  | 2,013,463                   |  |  |                               | 1,767,477 |  |              |  | 132,792 |  |  |  | 1,900,269 | 
|                                 |  |                             |           |  |                               |  |   |              |  |  |                             |  |  |                               |           |  |              |  |         |  |  |  |           | 

The Company is domiciled in Hong Kong. The Groups revenue from external customers derived from Hong
Kong and places other than Hong Kong are Nil (2012: Nil and 2011: HK$4,004,000) and HK$284,759,000 (2012: HK$913,768,000 and 2011: HK$735,021,000) respectively.

As of March 31, 2013, the total of non-current assets located in Hong Kong and places other than Hong Kong are HK$146,000 (March 31, 2012: HK$261,000) and HK$934,302,000 (March 31, 2012:
HK$903,705,000) respectively.

The breakdown of major component of the total of revenue from external customers by
geographical analysis which is based on the location of the customers is disclosed as follows:-



|                          |  |                             |         |  |                               |  |   |              |  |  |                             |  |  |                               |         |  |              |  |         |                             |  |  |                               |  |  |              |         |  |  |  |         |  |  |  |         | 
|------------------------- |  | --------------------------- | ------- |  | ----------------------------- |  | - | ------------ |  |  | --------------------------- |  |  | ----------------------------- | ------- |  | ------------ |  | ------- | --------------------------- |  |  | ----------------------------- |  |  | ------------ | ------- |  |  |  | ------- |  |  |  | ------- | 
|                          |  | 2013                        |         |  | 2012                          |  |   | 2011         | 
|                          |  | ContinuingoperationsHK$000 |         |  | DiscontinuedoperationsHK$000 |  |   | TotalHK$000 |  |  | ContinuingoperationsHK$000 |  |  | DiscontinuedoperationsHK$000 |         |  | TotalHK$000 |  |         | ContinuingoperationsHK$000 |  |  | DiscontinuedoperationsHK$000 |  |  | TotalHK$000 |        
|                          |  |                             |         |  | (Note 17)                     |  |   |              |  |  |                             |  |  | (Note 17)                     |         |  |              |  |         |                             |  |  | (Note 17)                     |  |  |              |        
|Hong Kong                 |  |                             |        |  |                               |  |  |              |  |  |                            |  |  |                               |        |  |              |  |        |                             |  |  |                              |  |  |              |        |  |  |  | 4,004   |  |  |  | 4,004   | 
|North America             |  |                             |        |  |                               |  |  |              |  |  |                            |  |  |                               |        |  |              |  |        |                             |  |  |                              |  |  |              |        |  |  |  | 20,336  |  |  |  | 20,336  | 
|Europe                    |  |                             |        |  |                               |  |  |              |  |  |                            |  |  |                               |        |  |              |  |        |                             |  |  |                              |  |  |              |        |  |  |  | 51,174  |  |  |  | 51,174  | 
|PRC (excluding Hong Kong) |  |                             | 284,759 |  |                               |  |  |              |  |  | 284,759                     |  |  |                               | 765,872 |  |              |  | 147,896 |                             |  |  | 913,768                       |  |  |              | 581,573 |  |  |  | 68,477  |  |  |  | 650,050 | 
|Other Asian countries     |  |                             |        |  |                               |  |  |              |  |  |                            |  |  |                               |        |  |              |  |        |                             |  |  |                              |  |  |              |        |  |  |  | 10,029  |  |  |  | 10,029  | 
|Others                    |  |                             |        |  |                               |  |  |              |  |  |                            |  |  |                               |        |  |              |  |        |                             |  |  |                              |  |  |              |        |  |  |  | 3,432   |  |  |  | 3,432   | 
|                          |  |                             |         |  |                               |  |   |              |  |  |                             |  |  |                               |         |  |              |  |         |                             |  |  |                               |  |  |              |         |  |  |  |         |  |  |  |         | 
|                          |  |                             | 284,759 |  |                               |  |  |              |  |  | 284,759                     |  |  |                               | 765,872 |  |              |  | 147,896 |                             |  |  | 913,768                       |  |  |              | 581,573 |  |  |  | 157,452 |  |  |  | 739,025 | 
|                          |  |                             |         |  |                               |  |   |              |  |  |                             |  |  |                               |         |  |              |  |         |                             |  |  |                               |  |  |              |         |  |  |  |         |  |  |  |         | 

During the year ended March 31, 2013, there was no revenue (2012: HK$97,177,000 and 2011:
HK$113,408,000) derived from a single external customer amounted to 10% or more of the Groups revenue.



F-46



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 9Other Income, Net

The Groups other income, net, attributable to continuing operations as presented on the face of the consolidated income statements
is analyzed as follows:



|                                   |  |             |        |  |             |  |        |             |  |  |        | 
|---------------------------------- |  | ----------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ------ | 
|                                   |  | 2013HK$000 |        |  | 2012HK$000 |  |        | 2011HK$000 | 
|Government grants (Note)           |  |             | 66,807 |  |             |  | 55,972 |             |  |  | 56,044 | 
|Contract income, net               |  |             |       |  |             |  |       |             |  |  | 11,000 | 
|Income of land leveling works, net |  |             |       |  |             |  | 4,887  |             |  |  |       | 
|Others                             |  |             | 728    |  |             |  | 504    |             |  |  | 1,190  | 
|                                   |  |             |        |  |             |  |        |             |  |  |        | 
|                                   |  |             | 67,535 |  |             |  | 61,363 |             |  |  | 68,234 | 
|                                   |  |             |        |  |             |  |        |             |  |  |        | 



Note:

The Group received government grants from local governments on its contribution to the overall developments and operations of integrated
agricultural logistic and trade centers and supporting facilities at their cities. Majority of these grants were provided subsequent to the sales of properties developed in these integrated agricultural logistic and trade centers.

Note 10Other (Losses)/Gains, Net

The Groups other (losses)/gains, net, attributable to continuing operations as presented on the face of the consolidated income statements is analyzed as follows:



|                                                                                        |  |             |          |   |             |  |       |             |  |  |         | 
|--------------------------------------------------------------------------------------- |  | ----------- | -------- | - | ----------- |  | ----- | ----------- |  |  | ------- | 
|                                                                                        |  | 2013HK$000 |          |   | 2012HK$000 |  |       | 2011HK$000 | 
|Exchange (loss)/gain                                                                    |  |             | (1,770   | ) |             |  | 190   |             |  |  | 14      | 
|Increase in fair value of derivative components of convertible bonds (Note (i))         |  |             | (120,564 | ) |             |  |      |             |  |  |        | 
|(Increase)/decrease in fair value of the warrants (Note (ii))                           |  |             | (8,157   | ) |             |  | 4,047 |             |  |  |        | 
|Increase in fair value of investment properties                                         |  |             | 6,228    |   |             |  | 2,594 |             |  |  | 111,528 | 
|Gain on disposals of land use rights                                                    |  |             |         |   |             |  |      |             |  |  | 8,502   | 
|Gain on disposal of a subsidiary (Note 39(b))                                           |  |             |         |   |             |  |      |             |  |  | 90      | 
|Loss on disposals of property, plant and equipment                                      |  |             |         |   |             |  | (3    | )           |  |  |        | 
|Compensation received for non-exercise of option (Note (iii))                           |  |             | 61,442   |   |             |  |      |             |  |  |        | 
|Transactions costs related to the derivatives components of convertible bonds (Note 32) |  |             | (6,796   | ) |             |  |      |             |  |  |        | 
|Others                                                                                  |  |             |         |   |             |  |      |             |  |  | 322     | 
|                                                                                        |  |             |          |   |             |  |       |             |  |  |         | 
|                                                                                        |  |             | (69,617  | ) |             |  | 6,828 |             |  |  | 120,456 | 
|                                                                                        |  |             |          |   |             |  |       |             |  |  |         | 



Note:

|(i) | As discussed in note 32, the Company issued certain CBs (as defined in note 32) which contained a derivative component during the year ended March 31, 2013. Due to an
increase in fair value of the derivative component mainly arising from the increase in the Companys share price, the Company recorded a loss of HK$120,564,000. The assumptions used in determining the fair value of the derivative component were
further discussed in note 32 to these consolidated financial statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | As discussed in note 30, the Company issued certain warrants during the year ended March 31, 2013 and 2012. In the current year, due to an increase in fair value of
these warrants arising from the increase in the Companys share price, the Company recorded a loss of HK$8,157,000 (2012: a gain of HK$4,047,000 arising from the decrease in the Companys share price). The assumptions used in determining
the fair value of these warrants were further discussed in note 30 to these consolidated financial statements.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | During the fiscal year ended March 31, 2012, the Company was granted an option to purchase 20% equity interest in a company registered in the PRC for a term of one
year and the fair value of such option was insignificant to the Group. During the current fiscal year, the Company was paid RMB50,000,000 (approximately equivalent to HK$61,442,000) not to exercise such option.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-47



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 11Expenses by Nature

The Groups expenses attributable to continuing operations by their nature as presented on the face of the consolidated income
statements is analyzed as follows:



|                                                                                            |  |             |         |   |             |  |         |             |  |  |         | 
|------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | 
|                                                                                            |  | 2013HK$000 |         |   | 2012HK$000 |  |         | 2011HK$000 | 
|Costs of completed properties sold                                                          |  |             | 212,116 |   |             |  | 460,258 |             |  |  | 348,037 | 
|Cost of property management                                                                 |  |             | 5,839   |   |             |  | 6,937   |             |  |  | 4,228   | 
|Employee benefit expenses (including directors emoluments) (Note 12)                       |  |             | 39,045  |   |             |  | 37,844  |             |  |  | 18,643  | 
|Auditors remuneration                                                                      |  |             |         |   |             |  |         |             |  |  |         | 
|Provision for current year                                                                 |  |             | 4,274   |   |             |  | 3,800   |             |  |  | 3,548   | 
|Depreciation of property, plant and equipment (Note 20)                                     |  |             | 7,821   |   |             |  | 6,457   |             |  |  | 3,457   | 
|Amortization of land use rights (Note 21)                                                   |  |             | 2,226   |   |             |  | 1,940   |             |  |  | 1,234   | 
|(Reversal of)/provision for impairment of trade and other receivables                       |  |             | (1,855  | ) |             |  | 3,990   |             |  |  | 2,570   | 
|Operating lease rental on rented premises                                                   |  |             | 1,251   |   |             |  | 878     |             |  |  | 405     | 
|Advertising, promotion and related expenses                                                 |  |             | 23,120  |   |             |  | 18,617  |             |  |  | 18,610  | 
|Land use tax                                                                                |  |             | 24,568  |   |             |  | 23,023  |             |  |  | 17,955  | 
|Heating costs                                                                               |  |             | 11,054  |   |             |  | 14,301  |             |  |  | 5,273   | 
|Legal and professional fees                                                                 |  |             | 12,259  |   |             |  | 7,898   |             |  |  | 4,864   | 
|Others                                                                                      |  |             | 20,995  |   |             |  | 23,386  |             |  |  | 10,625  | 
|                                                                                            |  |             |         |   |             |  |         |             |  |  |         | 
|Total cost of sales, selling expenses and administrative expenses from continuing operation |  |             | 362,713 |   |             |  | 609,329 |             |  |  | 439,449 | 
|                                                                                            |  |             |         |   |             |  |         |             |  |  |         | 

Note 12Employee Benefit Expenses (Including Directors Emoluments)



|                                                                   |  |             |        |  |             |  |        |             |  |  |        | 
|------------------------------------------------------------------ |  | ----------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ------ | 
|                                                                   |  | 2013HK$000 |        |  | 2012HK$000 |  |        | 2011HK$000 | 
|Salaries, wages and other benefits                                 |  |             | 35,989 |  |             |  | 35,500 |             |  |  | 17,706 | 
|Pension costsdefined contribution plans and social security costs |  |             | 3,056  |  |             |  | 2,344  |             |  |  | 937    | 
|                                                                   |  |             |        |  |             |  |        |             |  |  |        | 
|                                                                   |  |             | 39,045 |  |             |  | 37,844 |             |  |  | 18,643 | 
|                                                                   |  |             |        |  |             |  |        |             |  |  |        | 



F-48



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 13Finance Income and Costs

The Groups finance income, net, attributable to continuing operations as presented on the face of the consolidated income statements
is analyzed as follows:



|                                            |  |             |         |   |             |  |         |             |  |  |         |  
|------------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                            |  | 2013HK$000 |         |   | 2012HK$000 |  |         | 2011HK$000 | 
|Finance income                              |  |             |         |   |             |  |         |             |  |  |         |  
|Interest income on short-term bank deposits |  |             | 866     |   |             |  | 916     |             |  |  | 803     |  
|Interest income on other receivables (Note) |  |             | 16,088  |   |             |  |        |             |  |  |        |  
|                                            |  |             |         |   |             |  |         |             |  |  |         |  
|                                            |  |             | 16,954  |   |             |  | 916     |             |  |  | 803     |  
|                                            |  |             |         |   |             |  |         |             |  |  |         |  
|                                            |  |             |        
|Finance costs                               |  |             |         |   |             |  |         |             |  |  |         |  
|Interest expense on bank borrowings         |  |             | (55,250 | ) |             |  | (36,519 | )           |  |  | (27,833 | )
|Interest expense on other borrowings        |  |             | (24,710 | ) |             |  | (36,113 | )           |  |  | (2,201  | )
|Interest expense on convertible bonds       |  |             | (64,887 | ) |             |  |        |             |  |  |        |  
|Amounts capitalized on qualifying assets    |  |             | 132,277 |   |             |  | 72,105  |             |  |  | 26,107  |  
|                                            |  |             |         |   |             |  |         |             |  |  |         |  
|                                            |  |             | (12,570 | ) |             |  | (527    | )           |  |  | (3,927  | )
|                                            |  |             |         |   |             |  |         |             |  |  |         |  
|Net finance income/(costs)                  |  |             | 4,384   |   |             |  | 389     |             |  |  | (3,124  | )
|                                            |  |             |         |   |             |  |         |             |  |  |         |  



Note:

As discussed in note 39(a), the Company disposed its equity interests in HK CFC (as defined in note 39(a)) and Qiqihar CFC (as defined in note
39(a)) and the disposal was satisfied by cash and certain interest bearing receivables with interest rates ranging from 12% to 21% per annum. The disposal was further discussed in note 32 to these consolidated financial statements.

The capitalization rate of borrowings is 16.9% for the year ended March 31, 2013 (2012: 8.8% and 2011: 5.2%). The increase is mainly
contributed to the increase in fixed rate borrowings as well as the interest expense arising from the convertible bonds.

Note
14Income Tax Expenses

The Groups income tax expenses attributable to continuing operations as presented on the
face of the consolidated income statements is analyzed as follows:



|                                                |  |             |        |   |             |  |         |             |  |  |         |  
|----------------------------------------------- |  | ----------- | ------ | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                |  | 2013HK$000 |        |   | 2012HK$000 |  |         | 2011HK$000 | 
|Current income tax:                             |  |             |        |   |             |  |         |             |  |  |         |  
|PRC enterprise income tax                       |  |             | 35,541 |   |             |  | 61,722  |             |  |  | 51,381  |  
|PRC land appreciation tax                       |  |             | 817    |   |             |  | 42,478  |             |  |  | 45,938  |  
|                                                |  |             |        |   |             |  |         |             |  |  |         |  
|                                                |  |             | 36,358 |   |             |  | 104,200 |             |  |  | 97,319  |  
|                                                |  |             |        |   |             |  |         |             |  |  |         |  
|                                                |  |             |       
|Over-provision in prior years:                  |  |             |        |   |             |  |         |             |  |  |         |  
|PRC Land appreciation tax                       |  |             | (2,170 | ) |             |  | (14,647 | )           |  |  |        |  
|Others                                          |  |             |       |   |             |  |        |             |  |  | (571    | )
|                                                |  |             |        |   |             |  |         |             |  |  |         |  
|                                                |  |             | (2,170 | ) |             |  | (14,647 | )           |  |  | (571    | )
|                                                |  |             |        |   |             |  |         |             |  |  |         |  
|                                                |  |             |       
|Deferred income tax charge for the current year |  |             | 1,558  |   |             |  | 649     |             |  |  | 27,882  |  
|                                                |  |             |        |   |             |  |         |             |  |  |         |  
|                                                |  |             | 35,746 |   |             |  | 90,202  |             |  |  | 124,630 |  
|                                                |  |             |        |   |             |  |         |             |  |  |         |  

The PRC enterprise income tax in respect of operations in Mainland China has been provided at the tax
rate of 25% (2012: 25% and 2011: 25%) on the estimated assessable profits for the year based on existing legislation, interpretation and practices in respect thereof.



F-49



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Income tax in respect of operations in Hong Kong has been provided at the tax rate of
16.5% (2012: 16.5% and 2011: 16.5%) on the estimated assessable profits for the year based on existing legislation, interpretation and practices in respect thereof.

PRC land appreciation tax is levied and provided for in the consolidated financial statements at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds of sales of
properties less deductible expenditures including cost of land use rights and all property expenditures.

The tax charge for
the year attributable to continuing operations can be reconciled to the profit before income tax from continuing operations using the enacted tax rates of the home countries where the subsidiaries are operated are as follows:



|                                                                             |  |             |         |   |             |  |         |             |  |  |         |  
|---------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                                             |  | 2013HK$000 |         |   | 2012HK$000 |  |         | 2011HK$000 | 
|(Loss)/profit before income tax from continuing operations                   |  |             | (77,258 | ) |             |  | 222,667 |             |  |  | 327,304 |  
|                                                                             |  |             |         |   |             |  |         |             |  |  |         |  
|Tax calculated at tax rates applicable to profits in the respective entities |  |             | (4,468  | ) |             |  | 58,097  |             |  |  | 83,178  |  
|Tax effect of:                                                               |  |             |         |   |             |  |         |             |  |  |         |  
|Associates losses reported net of tax                                       |  |             | 402     |   |             |  | 614     |             |  |  | 96      |  
|Deduction of land appreciation tax                                           |  |             | 338     |   |             |  | (6,958  | )           |  |  | (11,484 | )
|Expenses that are not deductible for tax purpose                             |  |             | 32,274  |   |             |  | 3,023   |             |  |  | 3,041   |  
|Income not subject to tax                                                    |  |             | (1      | ) |             |  | (699    | )           |  |  | (130    | )
|Utilization of tax loss not previously recognized                            |  |             | (1,623  | ) |             |  | (1,178  | )           |  |  |        |  
|Temporary difference not recognized                                          |  |             |        |   |             |  | (2      | )           |  |  | 8       |  
|Tax loss for which no deferred income tax was recognized                     |  |             | 10,177  |   |             |  | 9,474   |             |  |  | 4,554   |  
|Over-provision in prior years                                                |  |             |        |   |             |  |        |             |  |  | (571    | )
|                                                                             |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                             |  |             | 37,099  |   |             |  | 62,371  |             |  |  | 78,692  |  
|Land appreciation tax                                                        |  |             | (1,353  | ) |             |  | 27,831  |             |  |  | 45,938  |  
|                                                                             |  |             |         |   |             |  |         |             |  |  |         |  
|Income tax charge for the year from continuing operations                    |  |             | 35,746  |   |             |  | 90,202  |             |  |  | 124,630 |  
|                                                                             |  |             |         |   |             |  |         |             |  |  |         |  

The effective tax rate during the fiscal year ended March 31, 2013 was negative of 46.3% (2012:
positive of 40.5% and 2011: positive of 38.1%). The decrease is contributed to expenses, including losses arising from the increase in fair value of derivative financial liabilities, which were non-deductible for tax purposes.



F-50



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 15Earnings Per Share (EPS)



|                                                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|----------------------------------------------------------------------------------------------------- |  | -------------- | -------- | - | -------------- |  | ------ | -------------- |  |  | -------- | - |  | ------ | ------- |  | --- |  | ------ | -------- |  |  | ------ |  |  | --- | ------- | - |  |  | ------ |  |  |  | ---- | 
|                                                                                                      |  | March 31, 2013 |          |   | March 31, 2012 |  |        | March 31, 2011 | 
|                                                                                                      |  | Earnings       |          |   | Shares         |  |        | EPS            |  |  | Earnings |   |  | Shares |         |  | EPS |  |        | Earnings |  |  | Shares |  |  | EPS |        
|                                                                                                      |  | HK$000        |          |   | 000           |  |        | HK$            |  |  | HK$000  |   |  | 000   |         |  | HK$ |  |        | HK$000  |  |  | 000   |  |  | HK$ |        
|Basic (loss)/earnings per share:                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|Net (loss)/profit attributable to ordinary shares:                                                    |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|From continuing operations                                                                            |  |                | (118,499 | ) |                |  | 73,544 |                |  |  | (1.61    | ) |  |        | 110,096 |  |     |  | 70,536 |          |  |  | 1.56   |  |  |     | 203,079 |   |  |  | 64,126 |  |  |  | 3.17 | 
|From discontinued operations (Note 17)                                                                |  |                | 17,532   |   |                |  | 73,544 |                |  |  | 0.24     |   |  |        | 98,594  |  |     |  | 70,536 |          |  |  | 1.40   |  |  |     | 23,913  |   |  |  | 64,126 |  |  |  | 0.37 | 
|                                                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|                                                                                                      |  |                | (100,967 | ) |                |  | 73,544 |                |  |  | (1.37    | ) |  |        | 208,690 |  |     |  | 70,536 |          |  |  | 2.96   |  |  |     | 226,992 |   |  |  | 64,126 |  |  |  | 3.54 | 
|Net (loss)/profit attributable to preferred shares                                                    |  |                | (137     | ) |                |  | 100    |                |  |  | (1.37    | ) |  |        | 296     |  |     |  | 100    |          |  |  | 2.96   |  |  |     | 354     |   |  |  | 100    |  |  |  | 3.54 | 
|                                                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|Net (loss)/profit attributable to equity holders                                                      |  |                | (101,104 | ) |                |  |        |                |  |  |          |   |  |        | 208,986 |  |     |  |        |          |  |  |        |  |  |     | 227,346 |   |  |  |        |  |  |  |      | 
|Effect of dilutive share options of a subsidiary granted by a subsidiary from discontinued operations |  |                |         |   |                |  |       |                |  |  |          |   |  |        |        |  |     |  |       |          |  |  |        |  |  |     | (78     | ) |  |  |       |  |  |  |      | 
|                                                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|Diluted (loss)/earnings per share:                                                                    |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|Net (loss)/profit attributable to ordinary shares, including assumed exercise:                        |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|From continuing operations                                                                            |  |                | (118,499 | ) |                |  | 73,544 |                |  |  | (1.61    | ) |  |        | 110,096 |  |     |  | 70,536 |          |  |  | 1.56   |  |  |     | 203,079 |   |  |  | 64,126 |  |  |  | 3.17 | 
|From discontinued operations (Note 17)                                                                |  |                | 17,532   |   |                |  | 73,544 |                |  |  | 0.24     |   |  |        | 98,594  |  |     |  | 70,536 |          |  |  | 1.40   |  |  |     | 23,835  |   |  |  | 64,126 |  |  |  | 0.37 | 
|                                                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 
|                                                                                                      |  |                | (100,967 | ) |                |  | 73,544 |                |  |  | (1.37    | ) |  |        | 208,690 |  |     |  | 70,536 |          |  |  | 2.96   |  |  |     | 226,914 |   |  |  | 64,126 |  |  |  | 3.54 | 
|Net (loss)/profit attributable to preferred shares, including assumed exercise                        |  |                | (137     | ) |                |  | 100    |                |  |  | (1.37    | ) |  |        | 296     |  |     |  | 100    |          |  |  | 2.96   |  |  |     | 354     |   |  |  | 100    |  |  |  | 3.54 | 
|                                                                                                      |  |                |          |   |                |  |        |                |  |  |          |   |  |        |         |  |     |  |        |          |  |  |        |  |  |     |         |   |  |  |        |  |  |  |      | 

The calculation of the basic earnings per share is based on the adjusted net profit attributable to
equity holders for the year, which is derived by net profit attributable to equity holders deducting the profit shared by preferred shares, and on the weighted average number of ordinary shares in issue during the year.

For the year ended March 31, 2011, the effect of dilutive share options is attributable to share options granted by MSIL. In the
calculation of diluted earnings per share attributable to ordinary shares, the Companys net profit is reduced by the difference between the basic and diluted earnings per share attributable to the subsidiary multiplied by the Companys
holding in the subsidiarys shares. For the year ended March 31, 2012 and 2013, there were no dilutive ordinary shares.

Note
16Dividend



|                                                                             |  |             |   |  |             |  |   |             |  |  |         | 
|---------------------------------------------------------------------------- |  | ----------- | - |  | ----------- |  | - | ----------- |  |  | ------- | 
|                                                                             |  | 2013HK$000 |   |  | 2012HK$000 |  |   | 2011HK$000 | 
|Special dividendNil (2012: Nil; 2011: HK$7.27) per ordinary share (Note 17) |  |             |  |  |             |  |  |             |  |  | 466,474 | 
|                                                                             |  |             |   |  |             |  |   |             |  |  |         | 



F-51



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 17Discontinued Operations

(a) Qiqihar Discontinued Operations

As detailed in note 2(a) to the consolidated financial statements, as a result of the disposal of HK CFC (as defined in note 39(a)) and Qiqihar CFC (as defined in note 39(a)), the Group discontinued the
Qiqihar Discontinued Operations. The financial information relating to the Qiqihar Discontinued Operations is set out below:

(i) Financial performance information for the year ended March 31:



|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- | --- | ------- | ----------- |  |  | - | 
|                                                                                                                          |  | 2013HK$000 |         |   | 2012HK$000 |     |         | 2011HK$000 | 
|Revenue                                                                                                                   |  |             |        |   |             |     | 147,896 |             |  |  |  | 
|Cost of sales                                                                                                             |  |             |        |   |             |     | (9,358  | )           |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Gross profit                                                                                                              |  |             |        |   |             |     | 138,538 |             |  |  |  | 
|Other income and gains, net                                                                                               |  |             | 619     |   |             |     |        |             |  |  |  | 
|Expenses                                                                                                                  |  |             | (28,929 | ) |             |     | (5,665  | )           |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Operating (loss)/profit                                                                                                   |  |             | (28,310 | ) |             |     | 132,873 |             |  |  |  | 
|Finance income, net                                                                                                       |  |             | 8,009   |   |             |     | 238     |             |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|(Loss)/profit before income tax                                                                                           |  |             | (20,301 | ) |             |     | 133,111 |             |  |  |  | 
|Income tax credits/(expenses)                                                                                             |  |             | 5,355   |   |             |     | (34,517 | )           |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|(Loss)/profit for the year                                                                                                |  |             | (14,946 | ) |             |     | 98,594  |             |  |  |   | 
|Gain on disposal of discontinued operations (note 39(a))                                                                  |  |             | 32,478  |   |             |     |        |             |  |  |   | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Profit from discontinued operations                                                                                       |  |             | 17,532  |   |             |     | 98,594  |             |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Attributable to:                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Equity holders of the Company                                                                                             |  |             | 17,532  |   |             |     | 98,594  |             |  |  |  | 
|Non-controlling interests                                                                                                 |  |             |        |   |             |     |        |             |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|                                                                                                                          |  |             | 17,532  |   |             |     | 98,594  |             |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Earnings per share from the Qiqihar Discontinued Operations attributable to equity holders of the Company during the
year |  |             |         |   |             |     |         |             |  |  |   | 
|Basic                                                                                                                     |  | HK$         | 0.24    |   |             | HK$ | 1.40    |             |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 
|Diluted                                                                                                                   |  | HK$         | 0.24    |   |             | HK$ | 1.40    |             |  |  |  | 
|                                                                                                                          |  |             |         |   |             |     |         |             |  |  |   | 

(ii) Cash flows information for the year ended March 31:



|                     |  |             |         |   |             |  |          |             |  |  |   | 
|-------------------- |  | ----------- | ------- | - | ----------- |  | -------- | ----------- |  |  | - | 
|                     |  | 2013HK$000 |         |   | 2012HK$000 |  |          | 2011HK$000 | 
|Operating cash flows |  |             | 174,955 |   |             |  | (120,079 | )           |  |  |  | 
|Investing cash flows |  |             | (30,324 | ) |             |  | (1,581   | )           |  |  |  | 
|Financing cash flows |  |             |        |   |             |  |         |             |  |  |  | 
|                     |  |             |         |   |             |  |          |             |  |  |   | 
|Total cash flows     |  |             | 144,631 |   |             |  | (121,660 | )           |  |  |  | 
|                     |  |             |         |   |             |  |          |             |  |  |   | 

In addition to the above, there was a net outflow of cash and cash equivalents in respect of the disposal
of HK CFC (as defined in note 39(a)) and Qiqihar CFC (as defined in note 39(a)) of HK$176,917,000 which was further discussed in note 39(a) to these consolidated financial statements.

(iii) Financial position information as at date of the Disposals:

Details of financial position information of Qiqihar Discontinued Operations as at date of its disposal are set out in note 39(a) to the
consolidated financial statements.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(b) Man Sang Discontinued Operations

As detailed in note 2(a) to the consolidated financial statements, as a result of the Distribution, the Group discontinued the Man Sang
Discontinued Operations. The financial information relating to the Man Sang Discontinued Operations is set out below:

(i)
Financial performance information for the year ended March 31:



|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- |  | - | ----------- |  | --- | -------- | -
|                                                                                                                           |  | 2013HK$000 |   |  | 2012HK$000 |  |   | 2011HK$000 | 
|                                                                                                                           |  |             |   |  |             |  |   | (Note (i))  | 
|Revenue                                                                                                                    |  |             |  |  |             |  |  |             |  |     | 157,452  |  
|Cost of sales                                                                                                              |  |             |  |  |             |  |  |             |  |     | (117,241 | )
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Gross profit                                                                                                               |  |             |  |  |             |  |  |             |  |     | 40,211   |  
|Other income and gains, net                                                                                                |  |             |  |  |             |  |  |             |  |     | 9,314    |  
|Recycling of exchange difference to profit or loss upon the Distribution (Note (ii))                                       |  |             |  |  |             |  |  |             |  |     | 20,284   |  
|Expenses                                                                                                                   |  |             |  |  |             |  |  |             |  |     | (33,983  | )
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Operating profit                                                                                                           |  |             |  |  |             |  |  |             |  |     | 35,826   |  
|Finance income, net                                                                                                        |  |             |  |  |             |  |  |             |  |     | 87       |  
|Share of results of an associate                                                                                           |  |             |  |  |             |  |  |             |  |     | 17       |  
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Profit before income tax                                                                                                   |  |             |  |  |             |  |  |             |  |     | 35,930   |  
|Income tax expenses                                                                                                        |  |             |  |  |             |  |  |             |  |     | (6,052   | )
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Profit for the year                                                                                                        |  |             |  |  |             |  |  |             |  |     | 29,878   |  
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Attributable to:                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Equity holders of the Company                                                                                              |  |             |  |  |             |  |  |             |  |     | 23,950   |  
|Non-controlling interests                                                                                                  |  |             |  |  |             |  |  |             |  |     | 5,928    |  
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|                                                                                                                           |  |             |  |  |             |  |  |             |  |     | 29,878   |  
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Earnings per share from the Man Sang Discontinued Operations attributable to equity holders of the Company during the
year |  |             |   |  |             |  |   |             |  |     |          |  
|Basic                                                                                                                      |  |             |  |  |             |  |  |             |  | HK$ | 0.37     |  
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  
|Diluted                                                                                                                    |  |             |  |  |             |  |  |             |  | HK$ | 0.37     |  
|                                                                                                                           |  |             |   |  |             |  |   |             |  |     |          |  



Note:

|(i) | The financial performance of the Man Sang Discontinued Operations for the year ended March 31, 2011 was up to the date of the Distribution.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | The financial performance of the Man Sang Discontinued Operations included a release of translation reserve.
|---- | ------------------------------------------------------------------------------------------------------------

(ii) Cash flows information for the year ended March 31:



|                     |  |             |   |  |             |  |   |             |  |  |          |  
|-------------------- |  | ----------- | - |  | ----------- |  | - | ----------- |  |  | -------- | -
|                     |  | 2013HK$000 |   |  | 2012HK$000 |  |   | 2011HK$000 | 
|                     |  |             |   |  |             |  |   | (Note)      | 
|Operating cash flows |  |             |  |  |             |  |  |             |  |  | 78,744   |  
|Investing cash flows |  |             |  |  |             |  |  |             |  |  | (599,392 | )
|Financing cash flows |  |             |  |  |             |  |  |             |  |  | 17,640   |  
|                     |  |             |   |  |             |  |   |             |  |  |          |  
|Total cash flows     |  |             |  |  |             |  |  |             |  |  | (503,008 | )
|                     |  |             |   |  |             |  |   |             |  |  |          |  



Note:

The cash flows of the Man Sang Discontinued Operations for the year ended March 31, 2011 was up to the date of the Distribution.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(iii) Financial position information as at date of the Distribution:

The assets and liabilities of MSIL as of July 28, 2010 distributed by the Company as a result of the Distribution (as detailed in
note 2(a)) during the year ended March 31, 2011 are as follows:



|                                                      |  |         |          |  
|----------------------------------------------------- |  | ------- | -------- | -
|                                                      |  | HK$000 |         
|Net assets distributed:                               |  |         |          |  
|Investment properties                                 |  |         | 844,560  |  
|Investment properties under construction              |  |         | 77,404   |  
|Property, plant and equipment                         |  |         | 114,068  |  
|Land use rights                                       |  |         | 9,237    |  
|Interest in an associate                              |  |         | 119      |  
|Deferred tax assets                                   |  |         | 1,337    |  
|Inventories                                           |  |         | 56,232   |  
|Completed properties held for sale                    |  |         | 220,304  |  
|Properties under development                          |  |         | 493      |  
|Trade receivables                                     |  |         | 138,987  |  
|Financial assets at fair value through profit or loss |  |         | 51,630   |  
|Income tax receivable                                 |  |         | 4,834    |  
|Cash and cash equivalents                             |  |         | 596,993  |  
|Trade payables, other payables and accruals           |  |         | (305,657 | )
|Deposits received/receipt in advance                  |  |         | (185,965 | )
|Income tax payable                                    |  |         | (82,151  | )
|Interest-bearing bank borrowings                      |  |         | (183,998 | )
|Amount due to an associate                            |  |         | (1,557   | )
|Deferred tax liability                                |  |         | (84,541  | )
|Non-controlling interests                             |  |         | (805,855 | )
|                                                      |  |         |          |  
|Special dividend (Note 16)                            |  |         | 466,474  |  
|                                                      |  |         |          |  

An analysis of the net outflow of cash and cash equivalents in respect of the Distribution is as follows:



|                                                                                                                  |  |         |          |  
|----------------------------------------------------------------------------------------------------------------- |  | ------- | -------- | -
|                                                                                                                  |  | HK$000 |         
|Cash and cash equivalents disposed of and net outflow of cash and cash equivalents in respect of the Distribution |  |         | (596,993 | )
|                                                                                                                  |  |         |          |  

No tax expense was recognized from the Distribution as such Distribution did not result into any gain or
loss.

Note 18Investment Properties



|                                                                    |  |             |         |  |             |  |         | 
|------------------------------------------------------------------- |  | ----------- | ------- |  | ----------- |  | ------- | 
|                                                                    |  | 2013HK$000 |         |  | 2012HK$000 | 
|At fair value                                                       |  |             |         |  |             |  |         | 
|At beginning of the year                                            |  |             | 542,598 |  |             |  | 133,950 | 
|Exchange difference                                                 |  |             | 3,662   |  |             |  | 9,279   | 
|Transferred from investment properties under construction (Note 19) |  |             |        |  |             |  | 396,227 | 
|Increase in fair values                                             |  |             | 7,373   |  |             |  | 3,142   | 
|                                                                    |  |             |         |  |             |  |         | 
|At end of the year                                                  |  |             | 553,633 |  |             |  | 542,598 | 
|                                                                    |  |             |         |  |             |  |         | 



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Groups investment properties at March 31, 2013 and March 31, 2012
were determined by management based in part on valuation by independent firms of professional property valuers, on market value basis, at HK$553,633,000 (2012: HK$542,598,000). The valuations were arrived at by reference to comparable market
transaction and where appropriate, on the basis of capitalization of net income. The increase in fair value amounted to HK$7,373,000 of the investment properties has been credited to the consolidated income statement (2012: HK$3,142,000).

The Groups investment properties are either rented or intended to be rented out under operating leases.

All the Groups investment properties are located in the PRC and the land, at which these investment properties are located, was
held under leases of 40 years.

Note 19Investment Properties Under Construction



|                                               |  |             |        |   |             |  |          |  
|---------------------------------------------- |  | ----------- | ------ | - | ----------- |  | -------- | -
|                                               |  | 2013HK$000 |        |   | 2012HK$000 | 
|At fair value                                  |  |             |        |   |             |  |          |  
|At beginning of the year                       |  |             | 14,854 |   |             |  | 346,728  |  
|Exchange difference                            |  |             | 100    |   |             |  | 8,500    |  
|Additions                                      |  |             | 301    |   |             |  | 40,716   |  
|Interest capitalized                           |  |             | 967    |   |             |  | 15,445   |  
|Transferred from land use rights               |  |             |       |   |             |  | 240      |  
|Transferred to investment properties (Note 18) |  |             |       |   |             |  | (396,227 | )
|Decrease in fair values                        |  |             | (1,145 | ) |             |  | (548     | )
|                                               |  |             |        |   |             |  |          |  
|At end of the year                             |  |             | 15,077 |   |             |  | 14,854   |  
|                                               |  |             |        |   |             |  |          |  

The Groups investment properties under construction at March 31, 2013 and March 31, 2012
were determined by management based in part on valuation by independent firms of professional property valuers, on market value basis, at HK$15,077,000 (2012: HK$14,854,000). The valuations were arrived at by reference to comparable market
transaction and where appropriate, on the basis of capitalization of net income. The decrease in fair values of investment properties under construction amounted to HK$1,145,000 has been debited to the consolidated income statement (2012:
HK$548,000).

All the Groups investment properties under construction are located in the PRC and the land, at which
these investment properties under constructions located, was held under leases of 40 years.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 20Property, Plant and Equipment



|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|--------------------------------------------- |  | --------------------------------- | ------ | - | ---------------------------- |  | ------ | ------------------------- |  |  | ------------------------------------- |  |  | -------------------- | ------ | - | ------------------------------- |  | ------ | ------------ |  |  | ------- | - |  |  | ------- | -
|                                              |  | Leaseholdland andbuildingsHK$000 |        |   | LeaseholdimprovementsHK$000 |  |        | Plant andmachineryHK$000 |  |  | Furniture,fixturesandequipmentHK$000 |  |  | MotorvehiclesHK$000 |        |   | Construction-in-progressHK$000 |  |        | TotalHK$000 | 
|Cost or valuation                             |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|At April 1, 2011                              |  |                                   | 66,894 |   |                              |  | 96     |                           |  |  | 10,415                                |  |  |                      | 11,282 |   |                                 |  | 6,750  |              |  |  | 54      |   |  |  | 95,491  |  
|Exchange difference                           |  |                                   | 2,518  |   |                              |  | 59     |                           |  |  | 379                                   |  |  |                      | 425    |   |                                 |  | 282    |              |  |  | 14      |   |  |  | 3,677   |  
|Additions                                     |  |                                   |       |   |                              |  | 5,484  |                           |  |  |                                      |  |  |                      | 2,629  |   |                                 |  | 3,654  |              |  |  | 14      |   |  |  | 11,781  |  
|Disposals                                     |  |                                   |       |   |                              |  | (96    | )                         |  |  |                                      |  |  |                      | (8     | ) |                                 |  |       |              |  |  |        |   |  |  | (104    | )
|Transferred from properties under development |  |                                   | 6,218  |   |                              |  |       |                           |  |  | 714                                   |  |  |                      | 16     |   |                                 |  |       |              |  |  | 983     |   |  |  | 7,931   |  
|Reclassification upon completion              |  |                                   |       |   |                              |  |       |                           |  |  |                                      |  |  |                      | 14     |   |                                 |  |       |              |  |  | (14     | ) |  |  |        |  
|Revaluation decrease                          |  |                                   | (2,100 | ) |                              |  |       |                           |  |  |                                      |  |  |                      |       |   |                                 |  |       |              |  |  |        |   |  |  | (2,100  | )
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|At March 31, 2012                             |  |                                   | 73,530 |   |                              |  | 5,543  |                           |  |  | 11,508                                |  |  |                      | 14,358 |   |                                 |  | 10,686 |              |  |  | 1,051   |   |  |  | 116,676 |  
|Exchange difference                           |  |                                   | 537    |   |                              |  | 34     |                           |  |  | 77                                    |  |  |                      | 104    |   |                                 |  | 110    |              |  |  | 157     |   |  |  | 1,019   |  
|Additions                                     |  |                                   |       |   |                              |  | 777    |                           |  |  |                                      |  |  |                      | 1,794  |   |                                 |  | 7,110  |              |  |  | 28,139  |   |  |  | 37,820  |  
|Disposals of subsidiaries                     |  |                                   |       |   |                              |  | (4,658 | )                         |  |  |                                      |  |  |                      | (2,917 | ) |                                 |  | (4,115 | )            |  |  | (21,944 | ) |  |  | (33,634 | )
|Reclassification upon completion              |  |                                   | 3,485  |   |                              |  |       |                           |  |  | 97                                    |  |  |                      |       |   |                                 |  |       |              |  |  | (3,582  | ) |  |  |        |  
|Revaluation decrease                          |  |                                   | (2,720 | ) |                              |  |       |                           |  |  |                                      |  |  |                      |       |   |                                 |  |       |              |  |  |        |   |  |  | (2,720  | )
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|At March 31, 2013                             |  |                                   | 74,832 |   |                              |  | 1,696  |                           |  |  | 11,682                                |  |  |                      | 13,339 |   |                                 |  | 13,791 |              |  |  | 3,821   |   |  |  | 119,161 |  
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|Comprising:                                   |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|At costMarch 31, 2012                        |  |                                   |       |   |                              |  | 5,543  |                           |  |  | 11,508                                |  |  |                      | 14,358 |   |                                 |  | 10,686 |              |  |  | 1,051   |   |  |  | 43,146  |  
|At valuationMarch 31, 2012                   |  |                                   | 73,530 |   |                              |  |       |                           |  |  |                                      |  |  |                      |       |   |                                 |  |       |              |  |  |        |   |  |  | 73,530  |  
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|                                              |  |                                   | 73,530 |   |                              |  | 5,543  |                           |  |  | 11,508                                |  |  |                      | 14,358 |   |                                 |  | 10,686 |              |  |  | 1,051   |   |  |  | 116,676 |  
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|At costMarch 31, 2013                        |  |                                   |       |   |                              |  | 1,696  |                           |  |  | 11,682                                |  |  |                      | 13,339 |   |                                 |  | 13,791 |              |  |  | 3,821   |   |  |  | 44,329  |  
|At valuationMarch 31, 2013                   |  |                                   | 74,832 |   |                              |  |       |                           |  |  |                                      |  |  |                      |       |   |                                 |  |       |              |  |  |        |   |  |  | 74,832  |  
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  
|                                              |  |                                   | 74,832 |   |                              |  | 1,696  |                           |  |  | 11,682                                |  |  |                      | 13,339 |   |                                 |  | 13,791 |              |  |  | 3,821   |   |  |  | 119,161 |  
|                                              |  |                                   |        |   |                              |  |        |                           |  |  |                                       |  |  |                      |        |   |                                 |  |        |              |  |  |         |   |  |  |         |  



F-56



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                                       |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|---------------------------------------------------------------------- |  | --------------------------------- | ------ | - | ---------------------------- |  | ----- | ------------------------- |  |  | ------------------------------------- |  |  | -------------------- | ------ | - | ------------------------------- |  | ----- | ------------ |  |  | ----- |  |  |  | ------- | -
|                                                                       |  | Leaseholdland andbuildingsHK$000 |        |   | LeaseholdimprovementsHK$000 |  |       | Plant andmachineryHK$000 |  |  | Furniture,fixturesandequipmentHK$000 |  |  | MotorvehiclesHK$000 |        |   | Construction-in-progressHK$000 |  |       | TotalHK$000 | 
|Accumulated depreciation                                               |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|At April 1, 2011                                                       |  |                                   |       |   |                              |  | 66    |                           |  |  | 507                                   |  |  |                      | 1,326  |   |                                 |  | 1,414 |              |  |  |      |  |  |  | 3,313   |  
|Exchange difference                                                    |  |                                   | 89     |   |                              |  | 5     |                           |  |  | 32                                    |  |  |                      | 65     |   |                                 |  | 63    |              |  |  |      |  |  |  | 254     |  
|Depreciation from continuing operations charged for the year           |  |                                   | 2,011  |   |                              |  | 605   |                           |  |  | 1,102                                 |  |  |                      | 1,859  |   |                                 |  | 880   |              |  |  |      |  |  |  | 6,457   |  
|Depreciation from Qiqihar Discontinued Operations charged for the year |  |                                   |       |   |                              |  |      |                           |  |  |                                      |  |  |                      | 37     |   |                                 |  | 89    |              |  |  |       |  |  |  | 126     |  
|Eliminated on disposals                                                |  |                                   |       |   |                              |  | (96   | )                         |  |  |                                      |  |  |                      | (5     | ) |                                 |  |      |              |  |  |      |  |  |  | (101    | )
|Eliminated on revaluation                                              |  |                                   | (2,100 | ) |                              |  |      |                           |  |  |                                      |  |  |                      |       |   |                                 |  |      |              |  |  |      |  |  |  | (2,100  | )
|                                                                       |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|At March 31, 2012                                                      |  |                                   |       |   |                              |  | 580   |                           |  |  | 1,641                                 |  |  |                      | 3,282  |   |                                 |  | 2,446 |              |  |  |      |  |  |  | 7,949   |  
|Exchange difference                                                    |  |                                   | 42     |   |                              |  | 8     |                           |  |  | 17                                    |  |  |                      | 30     |   |                                 |  | 28    |              |  |  |      |  |  |  | 125     |  
|Depreciation from continuing operations charged for the year           |  |                                   | 2,678  |   |                              |  | 797   |                           |  |  | 1,159                                 |  |  |                      | 1,442  |   |                                 |  | 1,745 |              |  |  |      |  |  |  | 7,821   |  
|Depreciation from Qiqihar Discontinued Operations charged for the year |  |                                   |       |   |                              |  | 256   |                           |  |  |                                      |  |  |                      | 179    |   |                                 |  | 334   |              |  |  |      |  |  |  | 769     |  
|Eliminated on disposals of subsidiaries                                |  |                                   |       |   |                              |  | (931  | )                         |  |  |                                      |  |  |                      | (448   | ) |                                 |  | (549  | )            |  |  |      |  |  |  | (1,928  | )
|Eliminated on revaluation                                              |  |                                   | (2,720 | ) |                              |  |      |                           |  |  |                                      |  |  |                      |       |   |                                 |  |      |              |  |  |      |  |  |  | (2,720  | )
|                                                                       |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|                                                                       |  |                                   |       |   |                              |  | 710   |                           |  |  | 2,817                                 |  |  |                      | 4,485  |   |                                 |  | 4,004 |              |  |  |      |  |  |  | 12,016  |  
|                                                                       |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|                                                                       |  |                                   |        |   |                              |  |      
|Net book value                                                         |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|At March 31, 2012                                                      |  |                                   | 73,530 |   |                              |  | 4,963 |                           |  |  | 9,867                                 |  |  |                      | 11,076 |   |                                 |  | 8,240 |              |  |  | 1,051 |  |  |  | 108,727 |  
|                                                                       |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  
|At March 31, 2013                                                      |  |                                   | 74,832 |   |                              |  | 986   |                           |  |  | 8,865                                 |  |  |                      | 8,854  |   |                                 |  | 9,787 |              |  |  | 3,821 |  |  |  | 107,145 |  
|                                                                       |  |                                   |        |   |                              |  |       |                           |  |  |                                       |  |  |                      |        |   |                                 |  |       |              |  |  |       |  |  |  |         |  

All the Groups leasehold land and buildings are located in the PRC and the land, at which these
buildings are located, was held under leases of 40 years.

Certain properties of the Group regarded as operational are for
continuing business, such as sales center and showroom located at Tieling, Liaoning Province and were valued on the basis of depreciated replacement cost (DRC) at HK$74,832,000 (2012: HK$73,530,000) as there were no comparable market
transaction for such properties. Such valuation using DRC has no gain or loss charged to the equity or consolidated income statement for the year.

If the leasehold land and buildings had not been revalued, they would have been included in the consolidated financial statements at historical cost less accumulated depreciation and impairment losses of
HK$74,832,000 (March 31, 2012: HK$73,530,000).



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 21Land Use Rights

The cost is amortized over the lease period. Amortization expense has been charged to administrative expenses.



|                                                                    |  |             |          |   |             |  |          |  
|------------------------------------------------------------------- |  | ----------- | -------- | - | ----------- |  | -------- | -
|                                                                    |  | 2013HK$000 |          |   | 2012HK$000 | 
|At beginning of the year                                            |  |             | 72,606   |   |             |  | 78,351   |  
|Exchange difference                                                 |  |             | 527      |   |             |  | 2,694    |  
|Amortization from continuing operations                             |  |             | (2,226   | ) |             |  | (1,940   | )
|Additions (Note (i))                                                |  |             | 211,695  |   |             |  | 858,579  |  
|Refunds of payments from acquisition of land use rights (Note (ii)) |  |             | (38,748  | ) |             |  | (721,071 | )
|Transferred to investment properties under construction             |  |             |         |   |             |  | (240     | )
|Transferred to properties under development (Note 26)               |  |             | (163,269 | ) |             |  | (143,767 | )
|                                                                    |  |             |          |   |             |  |          |  
|At end of the year                                                  |  |             | 80,585   |   |             |  | 72,606   |  
|                                                                    |  |             |          |   |             |  |          |  



Note:

|(i) | During the year ended March 31, 2013, the additions included certain up-front payments and related costs incurred in acquiring a portion of the China Northeast
Logistics CityTieling Phase II land and China Focus CityQiqihar (2012: the additions included certain up-front payments and related costs incurred in acquiring a portion of the China Northeast Logistics CityTieling Phase II land
and China Northeast Logistics CityDezhou).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | During the years ended March 31, 2013 and 2012, majority of the refunds represented government grants received from the local governments and money received from
the local governments for certain payments made and costs incurred in acquiring lands for China Northeast Logistics CityTieling and China Focus CityQiqihar.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                         |  |                      |        |  |                      |  |        | 
|---------------------------------------- |  | -------------------- | ------ |  | -------------------- |  | ------ | 
|                                         |  | March 31,2013HK$000 |        |  | March 31,2012HK$000 | 
|Represented by:                          |  |                      |        |  |                      |  |        | 
|Amount included under current assets     |  |                      | 2,178  |  |                      |  | 1,911  | 
|Amount included under non-current assets |  |                      | 78,407 |  |                      |  | 70,695 | 
|                                         |  |                      |        |  |                      |  |        | 
|                                         |  |                      | 80,585 |  |                      |  | 72,606 | 
|                                         |  |                      |        |  |                      |  |        | 

The land use rights are situated in the PRC and held under the lease of between 40 and 70 years.

Note 22Deposits for Acquisition of Land Use Rights

During the year ended March 31, 2009, the Group, from its continuing operations, disposed of all assets and liabilities, together with all related commitment and contingent liabilities thereof, in
relation to a property development project at a consideration of RMB101,600,000 (the Receivables) to an independent third party (the Buyer). During the year ended March 31, 2010, the PRC local government, the Buyer and
the Group entered into a memorandum in December 2009 pursuant to which the PRC local government and the Buyer agreed that the Group was able to utilize the Receivable as part of the future land acquisition consideration in Tieling, Mainland China.
Accordingly, the Receivable was transferred to deposits for acquisition of land use rights during the fiscal year ended March 31, 2010 and its amount at March 31, 2013 was approximately HK$125,556,000 (2012: HK$124,724,000).

During the fiscal year ended March 31, 2011, the Group has entered into an agreement with the PRC local government where the Group
provided an escrow money of RMB80,000,000 to the PRC local government (the Escrow Money) as an expression of good faith on the Groups determination to acquire land use rights in respect of certain land plots situated in mainland
China. During the fiscal year ended March 31, 2011, an aggregate amount of RMB70,000,000 was refunded to the Group and the remainder of RMB10,000,000 was refunded to the Group during the current fiscal year.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In addition, during the fiscal year ended March 31, 2011, the Group paid an
aggregate amount of RMB25,641,000 to the PRC local government as a deposit for purchase of a land use right for its project in Dezhou, the PRC, and the deposit at March 31, 2011 was approximately HK$30,395,000. During the fiscal year ended
March 31, 2012, the deposit was transferred to other receivables upon the receipt of land use right certificates pending for refund from the PRC local government.

During the fiscal year ended March 31, 2012, the Group paid an aggregate amount of RMB238,371,000 to the PRC local government as a deposit for purchase of a land use right for its project in Qiqihar,
the PRC. During the fiscal year ended March 31, 2012, an aggregate amount of RMB117,897,000 was refunded to the Group and the remaining amount at March 31, 2012 was approximately HK$147,893,000. During the fiscal year ended March 31,
2013, the deposits were transferred to land use rights upon the receipt of land use right certificates.

In addition, during
the fiscal year ended March 31, 2013, the Group paid an aggregate amount of RMB127,050,000 to the PRC local government as a deposit for purchase of a land use right for its project in Qiqihar, the PRC and the amount of approximately
HK$156,814,000 was derecognized from the Groups consolidated statement of financial position during the current fiscal year upon the disposal of Qiqihar CFC (as defined in note 39(a)), further details of which are set out in note 39(a) to the
consolidated financial statements of the Company.

Note 23Interest in an Associate



|                                |  |                       |        |   |                       |  |        |  
|------------------------------- |  | --------------------- | ------ | - | --------------------- |  | ------ | -
|                                |  | March 
31,2013HK$000 |        |   | March 
31,2012HK$000 | 
|Non-current assets:             |  |                       |        |   |                       |  |        |  
|Unlisted investment, at cost    |  |                       | 28,686 |   |                       |  | 28,686 |  
|Share of losses of an associate |  |                       | (4,448 | ) |                       |  | (2,842 | )
|Exchange difference             |  |                       | 2,060  |   |                       |  | 1,884  |  
|                                |  |                       |        |   |                       |  |        |  
|Share of net assets             |  |                       | 26,298 |   |                       |  | 27,728 |  
|                                |  |                       |        |   |                       |  |        |  

Financial information of the associate for the years ended March 31, 2013 and March 31, 2012
was summarized as follows:



|            |  |                       |         |   |                       |  |          |  
|----------- |  | --------------------- | ------- | - | --------------------- |  | -------- | -
|            |  | March 
31,2013HK$000 |         |   | March 
31,2012HK$000 | 
|Assets      |  |                       | 173,500 |   |                       |  | 198,798  |  
|Liabilities |  |                       | (93,158 | ) |                       |  | (114,444 | )
|            |  |                       |         |   |                       |  |          |  
|Equity      |  |                       | 80,342  |   |                       |  | 84,354   |  
|            |  |                       |         |   |                       |  |          |  



|         |  |             |        |   |             |  |        |  
|-------- |  | ----------- | ------ | - | ----------- |  | ------ | -
|         |  | 2013HK$000 |        |   | 2012HK$000 | 
|Turnover |  |             |       |   |             |  |       |  
|         |  |             |        |   |             |  |        |  
|Net loss |  |             | (4,016 | ) |             |  | (6,140 | )
|         |  |             |        |   |             |  |        |  



F-59



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



At March 31, 2013, details of the Groups investment in an associate are as
follows:



|                                                |  |                                   |  |                                     |  |                                  |    |   |                     |  |    |   |  |                                 
|----------------------------------------------- |  | --------------------------------- |  | ----------------------------------- |  | -------------------------------- | -- | - | ------------------- |  | -- | - |  | --------------------------------
|Name of Company                                 |  | Place
ofestablishmentandoperation |  | Class of sharesheld                 |  | Proportionof ownershipinterest % |    |   | Principalactivities
|                                                |  |                                   |  |                                     |  | 2013                             |    |   | 2012                |  |    |  
|Tieling Motor Vehicles Trading Co., Ltd.*
 LOGO |  | The Peoples Republic of China    |  | Registered capital
of RMB75,000,000 |  |                                  | 40 | % |                     |  | 40 | % |  | Propertydevelopmentandinvestment



|* | For identification purpose only.
|- | --------------------------------

Note
24Deferred Income Tax

The major deferred tax liabilities/(assets) recognized by the Group and movements thereon
during the current year and prior year are as follows.

Deferred tax assets:



|                                                             |  |                  |        |  
|------------------------------------------------------------ |  | ---------------- | ------ | -
|                                                             |  | TaxlossesHK$000 |       
|At April 1, 2011, March 31, 2012 and at April 1, 2012        |  |                  |       |  
|Net credit to the consolidated income statement for the year |  |                  | (6,490 | )
|Exchange difference                                          |  |                  | (39    | )
|Disposal of subsidiaries (Note 39(a))                        |  |                  | 6,529  |  
|                                                             |  |                  |        |  
|At March 31, 2013                                            |  |                  |       |  
|                                                             |  |                  |        |  

Deferred tax liabilities:



|                                                             |  |                                                                          |        | 
|------------------------------------------------------------ |  | ------------------------------------------------------------------------ | ------ | 
|                                                             |  | Revaluation ofleasehold landand buildingsand investmentpropertiesHK$000 |       
|At April 1, 2011                                             |  |                                                                          | 77,566 | 
|Net charge to the consolidated income statement for the year |  |                                                                          | 649    | 
|Exchange difference                                          |  |                                                                          | 2,768  | 
|                                                             |  |                                                                          |        | 
|At March 31, 2012 and at April 1, 2012                       |  |                                                                          | 80,983 | 
|Net charge to the consolidated income statement for the year |  |                                                                          | 1,558  | 
|Exchange difference                                          |  |                                                                          | 549    | 
|                                                             |  |                                                                          |        | 
|At March 31, 2013                                            |  |                                                                          | 83,090 | 
|                                                             |  |                                                                          |        | 



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



As at March 31, 2013 and 2012, the deferred taxes recognized by the Group were
expected to be recovered in the period of beyond one year. As at March 31, 2013, the Group did not recognize deferred income tax assets of HK$24,504,000 (March 31, 2012: HK$17,062,000) in respect of losses amounting to HK$111,512,000
(March 31, 2012: HK$78,744,000) that can be carried forward against future taxable income as future taxable profits of certain of the Groups subsidiaries where these losses were incurred were not probable. Losses amounting to
HK$39,690,000 (March 31, 2012: HK$30,866,000) can be carried forward indefinitely. Losses amounting to HK$71,822,000 expire by 2018 (March 31, 2012: HK$47,878,000 expired by 2017).

At March 31, 2013, deferred income tax liabilities of HK$33,587,000 (March 31, 2012: HK$29,525,000) has not been recognized for the
withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries as the Company controls the dividend policies of these subsidiaries and it has determined that these earnings will not be distributed in the
foreseeable future. Unremitted earnings totaled HK$671,740,000 as of March 31, 2013 (March 31, 2012: HK$590,497,000).

Note
25Completed Properties Held for Sale

All the Groups properties held for sale are located in the PRC and were
held under lease term of 40 to 70 years. All the properties held for sale are stated at the lower of cost, deemed cost or net realizable value.

Note 26Properties Under Development



|                                                  |  |             |          |   |             |  |          |  
|------------------------------------------------- |  | ----------- | -------- | - | ----------- |  | -------- | -
|                                                  |  | 2013HK$000 |          |   | 2012HK$000 | 
|At beginning of the year                          |  |             | 811,000  |   |             |  | 275,607  |  
|Exchange difference                               |  |             | 7,198    |   |             |  | 15,637   |  
|Additions                                         |  |             | 391,576  |   |             |  | 934,852  |  
|Interest capitalized                              |  |             | 131,310  |   |             |  | 56,660   |  
|Disposals of subsidiaries (Note 39(a))            |  |             | (354,444 | ) |             |  |         |  
|Transferred from land use rights (Note 21)        |  |             | 163,269  |   |             |  | 143,767  |  
|Transferred to completed properties held for sale |  |             | (218,505 | ) |             |  | (607,592 | )
|Transferred to property, plant and equipment      |  |             |         |   |             |  | (7,931   | )
|                                                  |  |             |          |   |             |  |          |  
|At end of the year                                |  |             | 931,404  |   |             |  | 811,000  |  
|                                                  |  |             |          |   |             |  |          |  

All the Groups properties under development are located in the PRC and were held under leases of 40
to 70 years.

Note 27Trade and Other Receivables



|                                                    |  |                       |         |   |                       |  |         |  
|--------------------------------------------------- |  | --------------------- | ------- | - | --------------------- |  | ------- | -
|                                                    |  | March 
31,2013HK$000 |         |   | March 
31,2012HK$000 | 
|Trade receivables                                   |  |                       | 53,636  |   |                       |  | 270,038 |  
|Less: provision for impairment of trade receivables |  |                       | (4,941  | ) |                       |  | (6,761  | )
|                                                    |  |                       |         |   |                       |  |         |  
|Trade receivables, net                              |  |                       | 48,695  |   |                       |  | 263,277 |  
|Prepaid expenses                                    |  |                       | 3,735   |   |                       |  | 9,542   |  
|Loans receivable (Note (i))                         |  |                       | 61,789  |   |                       |  | 98,207  |  
|China tax receivable                                |  |                       | 6,659   |   |                       |  | 3,899   |  
|Deposits and other receivables (Note (ii))          |  |                       | 312,629 |   |                       |  | 87,409  |  
|                                                    |  |                       |         |   |                       |  |         |  
|                                                    |  |                       | 433,507 |   |                       |  | 462,334 |  
|                                                    |  |                       |         |   |                       |  |         |  



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)





Note:

|(i) | During the year ended March 31, 2012, the Group has serviced and assigned development rights to independent third parties with aggregate sum of RMB154,182,000,
where RMB80,000,000 of which was lent to these parties as loans. The loans receivable from these parties are secured by equity interests in certain companies owned by these third parties. The loans receivable were interest bearing at interest rate
of 12% per annum commencing from three months after first land use rights from assignment of development rights has been obtained by these third parties. The amount was derecognized during the current fiscal year as a result of the disposal of
Qiqihar CFC (as defined in note 39(a)). The balance as of March 31, 2013 represented a loan, with an effective interest rate of 21%, made to the Qiqihar Buyer (as defined in note 39(a)) as a result of the disposal of Qiqihar CFC during the
current fiscal year, further details of which are set out in note 39(a) to the consolidated financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | Balance included the following:
|---- | -------------------------------



| | (a) | During the year ended March 31, 2012, the Group paid an aggregate amount of approximately RMB43,995,000 to the PRC local government for the land acquisition fees
in acquiring a portion of the China Northeast LogisticsDezhou land. The amount will be refunded upon the receipt of land use right certificates and the carrying amounts as at March 31, 2013 was approximately HK$54,369,000 (2012:
HK$54,008,000);
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | During the year ended March 31, 2011, the Group paid another deposit of an aggregate amount of approximately RMB25,641,000 to the PRC local government for the land
acquisition fees in acquiring another portion of the China Northeast LogisticsDezhou land. Upon the receipts of the land use rights, the same amount was not applied to the land acquisition fees and the PRC local government agreed to refund the
amount back to the Group whereby the same amount was transferred to other receivables. During the fiscal year ended March 31, 2012, an aggregate amount of RMB4,932,000 was refunded to the Group and the remaining amount at March 31, 2013
was approximately HK$25,592,000 (2012: HK$25,423,000); and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | During the fiscal year March 31, 2013, the Company disposed of the entire equity interest in Qiqihar CFC in return for an aggregate consideration of
RMB276,923,000, where RMB150,000,000 of which was settled in the current fiscal year and the remaining amount, including interest receivables, at March 31, 2013 was approximately HK$173,029,000, which is due within one year from the
consolidated statement financial position date.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | As at March 31, 2013, the Group had incurred certain expenses on behalf of its tenants located in China Northeast LogisticsTieling amounted HK$49,171,000 (2012:
HK$1,204,000). The Group expected these tenants to settle these expenses with the Group within the next twelve months.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Group grants an average credit periods ranging from 60 days to 105 days to its customers. The carrying amounts of the trade and other receivables approximate their fair values as these financial
assets, which are measured at amortized cost, are expected to be paid within a short period of time, such that the impact of the time value of money is not significant.

At each statements of financial position date, the recoverability of the Groups trade receivables due from individual customers is assessed based on the credit history of its customers, their
financial conditions and current market conditions. Consequently, specific impairment provision is recognized.

The carrying
amounts of the Groups trade and other receivables are denominated in the following currencies:



|                      |  |                       |         |  |                       |  |         | 
|--------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                      |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Hong Kong dollars     |  |                       | 1,831   |  |                       |  | 1,775   | 
|Renminbi              |  |                       | 431,676 |  |                       |  | 459,616 | 
|United States dollars |  |                       |        |  |                       |  | 943     | 
|                      |  |                       |         |  |                       |  |         | 
|                      |  |                       | 433,507 |  |                       |  | 462,334 | 
|                      |  |                       |         |  |                       |  |         | 

The Group has provided fully for all receivables where recovery of the amounts is remote unless the Group
has determined that such balances are not recoverable, in which case the impairment loss is directly written off against the corresponding trade receivables. Based on past experience and the Groups assessment, the management believes that no
impairment provision is necessary in respect of the remaining balances as there had not been a significant change in credit quality of such receivables and the balances are considered fully recoverable.



F-62



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Movements in the provision for impairment of trade receivables are as follows:



|                                              |  |                       |        |   |                       |  |       |                       |  |  |         |  
|--------------------------------------------- |  | --------------------- | ------ | - | --------------------- |  | ----- | --------------------- |  |  | ------- | -
|                                              |  | March 
31,2013HK$000 |        |   | March 
31,2012HK$000 |  |       | March 
31,2011HK$000 | 
|At beginning of the year                      |  |                       | 6,761  |   |                       |  | 2,632 |                       |  |  | 54,709  |  
|Exchange differences                          |  |                       | 35     |   |                       |  | 139   |                       |  |  | 522     |  
|(Reversal of)/provision for impairment losses |  |                       | (1,855 | ) |                       |  | 3,990 |                       |  |  | 2,877   |  
|Amounts written off as uncollectible          |  |                       |       |   |                       |  |      |                       |  |  | (244    | )
|Distribution of subsidiaries                  |  |                       |       |   |                       |  |      |                       |  |  | (55,232 | )
|                                              |  |                       |        |   |                       |  |       |                       |  |  |         |  
|At end of the year                            |  |                       | 4,941  |   |                       |  | 6,761 |                       |  |  | 2,632   |  
|                                              |  |                       |        |   |                       |  |       |                       |  |  |         |  

Included in trade and other receivables of the Group are trade receivables of HK$53,636,000 (2012:
HK$270,038,000) and their ageing analysis is as follows:



|                            |  |                       |        |  |                       |  |         | 
|--------------------------- |  | --------------------- | ------ |  | --------------------- |  | ------- | 
|                            |  | March 
31,2013HK$000 |        |  | March 
31,2012HK$000 | 
|Not past due                |  |                       | 9,543  |  |                       |  | 221,167 | 
|1 to 60 days past due       |  |                       | 4,605  |  |                       |  |        | 
|61 to 120 days past due     |  |                       | 426    |  |                       |  | 1,289   | 
|More than 120 days past due |  |                       | 39,062 |  |                       |  | 47,582  | 
|                            |  |                       |        |  |                       |  |         | 
|                            |  |                       | 53,636 |  |                       |  | 270,038 | 
|                            |  |                       |        |  |                       |  |         | 

As of March 31, 2013, trade receivables of HK$39,152,000 (2012: HK$42,110,000) were past due but not
impaired. These relate to a number of independent customers for whom there is no recent history of default. Based on past experience, the mortgage applications by customers would take longer than normally required in the location at which the
Groups subsidiaries are operated and management believes that, despite longer time is required, no impairment provision is necessary in respect of these balances as there has not been a significant change in credit quality of these receivables
and the balances are still considered fully recoverable. The ageing analysis of these trade receivables is as follows:



|                            |  |                       |        |  |                       |  |        | 
|--------------------------- |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|                            |  | March 
31,2013HK$000 |        |  | March 
31,2012HK$000 | 
|1 to 60 days past due       |  |                       | 4,605  |  |                       |  |       | 
|61 to 120 days past due     |  |                       | 426    |  |                       |  | 1,289  | 
|More than 120 days past due |  |                       | 34,121 |  |                       |  | 40,821 | 
|                            |  |                       |        |  |                       |  |        | 
|                            |  |                       | 39,152 |  |                       |  | 42,110 | 
|                            |  |                       |        |  |                       |  |        | 

As March 31, 2013, trade receivables of HK$4,941,000 (2012: HK$6,761,000) were impaired and provided
for. The individually impaired receivables mainly relate to customers which are in unexpectedly difficult economic situations. The ageing of these receivables is as follows:



|                            |  |                       |       |  |                       |  |       | 
|--------------------------- |  | --------------------- | ----- |  | --------------------- |  | ----- | 
|                            |  | March 
31,2013HK$000 |       |  | March 
31,2012HK$000 | 
|Not past due                |  |                       |      |  |                       |  |      | 
|1 to 60 days past due       |  |                       |      |  |                       |  |      | 
|61 to 120 days past due     |  |                       |      |  |                       |  |      | 
|More than 120 days past due |  |                       | 4,941 |  |                       |  | 6,761 | 
|                            |  |                       |       |  |                       |  |       | 
|                            |  |                       | 4,941 |  |                       |  | 6,761 | 
|                            |  |                       |       |  |                       |  |       | 



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 28Restricted and Pledged Bank Deposits and Cash and Cash Equivalent

(a) Restricted and pledged bank deposits

As at March 31, 2013, the Groups bank balances amounting to approximately HK$22,824,000 (March 31, 2012: HK$17,508,000) were deposited at designated bank accounts in certain banks where these
deposits can only be used for the payments of property development costs incurred by the Group, the repayments of the relevant loans, and as guarantee deposits for property ownership certificates not yet transferred from the customers to the banks.

As at March 31, 2013, the Groups bank balances amounting to approximately HK$12,358,000 (March 31, 2012: nil) and
HK$13,594,000 (March 31, 2012: nil), which are pledged for approximately 12 months and approximately 3 years, respectively, and are carried interest at deposit rate of approximately 3% per annum (March 31, 2012: nil).

The carrying amounts of the Groups restricted and pledged bank deposits are denominated in RMB.

(b) Cash and Cash Equivalents



|                       |  |                       |         |  |                       |  |         | 
|---------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                       |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Bank balances and cash |  |                       | 364,539 |  |                       |  | 333,755 | 
|Time deposits          |  |                       |        |  |                       |  | 9,823   | 
|                       |  |                       |         |  |                       |  |         | 
|                       |  |                       | 364,539 |  |                       |  | 343,578 | 
|                       |  |                       |         |  |                       |  |         | 

As at March 31, 2012, time deposits are made for approximate range of 1 month to 3 months and carry
interest at short-term deposit rates of below 4% per annum.

The carrying amounts of cash and cash equivalents are
denominated in the following currencies:



|                      |  |                       |         |  |                       |  |         | 
|--------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                      |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Hong Kong dollars     |  |                       | 84,490  |  |                       |  | 7,986   | 
|Renminbi              |  |                       | 87,397  |  |                       |  | 333,931 | 
|United States dollars |  |                       | 192,648 |  |                       |  | 1,657   | 
|Others                |  |                       | 4       |  |                       |  | 4       | 
|                      |  |                       |         |  |                       |  |         | 
|                      |  |                       | 364,539 |  |                       |  | 343,578 | 
|                      |  |                       |         |  |                       |  |         | 

The carrying amounts of restricted and pledged bank deposits and cash and cash equivalents approximate
their fair values.

The conversion of RMB denominated balances into foreign currencies and the remittance of such currencies
denominated bank balances and cash out of the PRC are subject to relevant rules and regulations of foreign exchange control promulgated by the PRC government.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 29Trade Payables, Other Payables and Accruals



|                                      |  |                       |         |  |                       |  |         | 
|------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                                      |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Trade payables                        |  |                       | 347,865 |  |                       |  | 491,245 | 
|Deferred income (Note)                |  |                       |        |  |                       |  | 39,706  | 
|China taxes payable                   |  |                       | 4,585   |  |                       |  | 26,704  | 
|Accrued payroll and employee benefits |  |                       | 2,589   |  |                       |  | 3,140   | 
|Guarantee deposits                    |  |                       | 10,148  |  |                       |  | 7,779   | 
|Accrued charges and other payables    |  |                       | 18,183  |  |                       |  | 31,309  | 
|                                      |  |                       |         |  |                       |  |         | 
|                                      |  |                       | 383,370 |  |                       |  | 599,883 | 
|                                      |  |                       |         |  |                       |  |         | 

The carrying amounts of trade payables, other payables and accruals approximate their fair values.



Note:

During the year ended March 31, 2012, the Group has serviced and assigned development rights to independent third parties with aggregate sum of
RMB154,182,000, where RMB121,837,000 of which was recognized in the consolidated income statement as revenue. The remaining balance of approximately RMB32,345,000 was deferred for the construction of auxiliary infrastructures for local government in
accordance with the relevant regulations and agreements. As at March 31, 2012, the carrying value of the amount approximated to HK$39,706,000. During the year ended March 31, 2013, the amount was derecognized upon the disposal of Qiqihar
CFC (as defined in note 39(a)). Further details of the disposal of Qiqihar CFC are set out in note 39(a) to the consolidated financial statements.

The carrying amounts of trade payables, other payables and accruals are denominated in the following currencies:



|                      |  |                      |         |  |                      |  |         | 
|--------------------- |  | -------------------- | ------- |  | -------------------- |  | ------- | 
|                      |  | March 31,2013HK$000 |         |  | March 31,2012HK$000 | 
|Hong Kong dollars     |  |                      | 3,859   |  |                      |  | 14,686  | 
|Renminbi              |  |                      | 379,495 |  |                      |  | 584,969 | 
|United States dollars |  |                      | 16      |  |                      |  | 228     | 
|                      |  |                      |         |  |                      |  |         | 
|                      |  |                      | 383,370 |  |                      |  | 599,883 | 
|                      |  |                      |         |  |                      |  |         | 

Note 30Derivative financial liabilities



|                                            |  |                       |         |  |                       |  |       | 
|------------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ----- | 
|                                            |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Warrants issued in May 2011 (Note (i))      |  |                       | 2,622   |  |                       |  | 2,941 | 
|Derivative component of the CBs (Note (ii)) |  |                       | 277,157 |  |                       |  |      | 
|Warrants issued in August 2012 (Note (iii)) |  |                       | 34,743  |  |                       |  |      | 
|                                            |  |                       |         |  |                       |  |       | 
|                                            |  |                       | 314,522 |  |                       |  | 2,941 | 
|                                            |  |                       |         |  |                       |  |       | 



Note:

|(i) | On May 11, 2011, the Company completed an underwritten offering of 1,517,978 units at a price of US$2.88 per unit with gross proceeds of approximately US$4,372,000
(approximately HK$34,100,000). Each unit consisted of one of the Companys ordinary share and a warrant to purchase 0.65 of one of the Companys ordinary shares. The exercise price of the warrants was US$3.456 per ordinary share, subject
to certain adjustments with a term of three years. The Company has also issued warrants to the underwriter, to purchase 200,373 ordinary shares of the Company at an exercise price of US$3.456 and with a term of three years. At the issuance of these
warrants, derivatives financial liabilities were recognized at fair value which approximated HK$6,988,000. As at March 31, 2013, these warrants were recognized at fair value at HK$2,622,000 (March 31, 2012: HK$2,941,000).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The fair values of the warrants as at May 11, 2011 were determined using the
binomial valuation model and the Black-Scholes model. The significant inputs into the models were volatility of 77.72%, dividend yield of 0%, risk-free interest rate of 0.97%, projected adjusted EBITDA of HK$137.9 million and standard deviation on
adjusted EBITDA of 1.62.

The fair values of the warrants as at March 31, 2013 were determined using the binomial
valuation model and the Black-Scholes model. The significant inputs into the models were volatility of 80% (2012: 91.83%), dividend yield of 0% (2012: 0%) and risk-free interest rate of 0.54% (2012: 0.35%).



|(ii) | On August 15, 2012, the Company issued the CBs (as defined in note 32) to Willis Plus Limited, a company owned by majority shareholders of the Company. The CBs
have been bifurcated into a derivative and a liability component. Details of the derivative component of the CBs are set out in note 32 to the consolidated financial statement. As at March 31, 2013, the derivative component of the CBs was
recognized at fair value at HK$277,157,000.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | On August 15, 2012, together with the CBs (as defined in note 32) issued by the Company, the Company issued warrants to Willis Plus Limited, a company owned by
majority shareholders, to purchase 6,000,000 ordinary shares of the Company at an exercise price of US$1.2973 with a term of five years. These warrants are exercisable from first anniversary from date of issuance. At the issuance of these warrants,
derivatives financial liabilities were recognized at fair value which approximated HK$26,267,000. As at March 31, 2013, these warrants were recognized at fair value at HK$34,743,000.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The fair values of the warrants as at August 15, 2012 were determined using the binomial valuation model (Binomial
model). The significant inputs into the models were volatility of 74%, dividend yield of 0% and risk-free interest rate of 0.8%.

The fair values of the warrants as at March 31, 2013 were determined using the Binomial model. The significant inputs into the models were volatility of 80%, dividend yield of 0% and risk-free
interest rate of 0.54%.

Note 31Bank and Other Borrowings



|                                                                  |  |                      |         |  |                      |  |         | 
|----------------------------------------------------------------- |  | -------------------- | ------- |  | -------------------- |  | ------- | 
|                                                                  |  | March 31,2013HK$000 |         |  | March 31,2012HK$000 | 
|Current                                                           |  |                      |         |  |                      |  |         | 
|Short-term bank loanSecured                                      |  |                      | 114,928 |  |                      |  | 122,759 | 
|Portion of long-term bank loans repayable within one yearSecured |  |                      | 171,775 |  |                      |  | 110,484 | 
|Other borrowingsUnsecured                                        |  |                      |        |  |                      |  | 245,520 | 
|                                                                  |  |                      |         |  |                      |  |         | 
|                                                                  |  |                      | 286,703 |  |                      |  | 478,763 | 
|                                                                  |  |                      |         |  |                      |  |         | 
|Non-current                                                       |  |                      |         |  |                      |  |         | 
|Portion of long-term bank loans repayable after one yearSecured  |  |                      | 237,271 |  |                      |  | 77,339  | 
|Other borrowingsUnsecured                                        |  |                      | 60,000  |  |                      |  | 176,500 | 
|                                                                  |  |                      |         |  |                      |  |         | 
|                                                                  |  |                      | 297,271 |  |                      |  | 253,839 | 
|                                                                  |  |                      |         |  |                      |  |         | 
|Total bank and other borrowings                                   |  |                      | 583,974 |  |                      |  | 732,602 | 
|                                                                  |  |                      |         |  |                      |  |         | 

The interest-bearing bank borrowings are carried at amortized cost. The Group does not have any bank
borrowings which contain a repayable on demand clause.

The Groups bank and other borrowings are repayable as follows:



|                      |  |                      |         |  |                      |  |         | 
|--------------------- |  | -------------------- | ------- |  | -------------------- |  | ------- | 
|                      |  | March 31,2013HK$000 |         |  | March 31,2012HK$000 | 
|Within 1 year         |  |                      | 286,703 |  |                      |  | 478,763 | 
|Between 1 and 2 years |  |                      | 162,570 |  |                      |  | 77,339  | 
|Between 2 and 5 years |  |                      | 134,701 |  |                      |  | 176,500 | 
|                      |  |                      |         |  |                      |  |         | 
|                      |  |                      | 583,974 |  |                      |  | 732,602 | 
|                      |  |                      |         |  |                      |  |         | 



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Some of the banking facilities are subject to the fulfillment of covenants relating to
certain of the Groups statement of financial position ratios, as are commonly found in lending arrangements with financial institutions. If the Group was to breach the covenants the drawn down facilities would become repayable on demand.

The Group regularly monitors its compliance with these covenants and is up to date with the scheduled repayments of the term
loans. Further details of the Groups management of liquidity risk are set out in Note 6(c) to the consolidated financial statements. As at March 31, 2013, none of the covenants relating to drawn down facilities had been breached (As at
March 31, 2012: Nil).

The carrying amounts of bank borrowings approximate their fair values. All bank borrowings are
denominated in RMB (March 31, 2012: All bank borrowings are denominated in RMB) and of which HK$425,111,000 (March 31, 2012: HK$310,582,000) are carried at variable interest rates ranged from approximately 7.0% to 8.0% per annum (March 31,
2012: 6.6% to 8.7% per annum) and the remaining HK$98,863,000 (March 31, 2012: nil) are carried at fixed interest rate of 7% per annum (March 31, 2012: nil). The bank borrowings are secured by the assets of the Group (Note 36).

The carrying amounts of other borrowings approximate their fair values. Other borrowings of HK$60,000,000 (March 31, 2012:
HK$176,500,000) and nil (March 31, 2012: HK$245,520,000) are denominated in HKD and RMB, respectively, and are carried at fixed interest rate of 18% per annum (March 31, 2012: 13% to 18% per annum). The other borrowings are unsecured.

As at March 31, 2013, bank borrowings with carrying amount of approximately HK$75,383,000 (March 31, 2012:
HK$187,822,000) were guaranteed by a director and a shareholder.

Note 32Convertible Bonds

During the fiscal year ended March 31, 2013 on August 15, 2012, the Company issued (1) US$60,000,000 principal amount,
14 per cent. guaranteed secured convertible bonds due on August 15, 2017 (the CBs) and (2) warrants to purchase 6,000,000 ordinary shares of the Company (August 2012 Warrants), to Willis Plus Limited, a company
owned by majority shareholders of the Company (the Bondholder). In addition, the Bondholder has options to convert the CBs into the ordinary shares of the Company or require the Company to redeem all, but not less than all, of such
holders CBs on August 15, 2015. The CBs are convertible into 55,499,028 ordinary shares of the Company at an initial conversion price of US$1.0811 per share from its first anniversary at the option of the Bondholder.

The fair value of the derivative component of the CBs was estimated at the issuance date using binomial valuation model (Binomial
model) and its changes in fair value is recognized in the consolidated income statement. The liability component is the difference between the face value of the CBs and the sum of the fair values of the derivative component of the CBs and
August 2012 Warrants at date of their issuance.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The CBs recognized in the statement of financial position is calculated as follows:



|                                                                               |  |                      |          |   |                      |  |   | 
|------------------------------------------------------------------------------ |  | -------------------- | -------- | - | -------------------- |  | - | 
|                                                                               |  | March 31,2013HK$000 |          |   | March 31,2012HK$000 | 
|Face value of the CBs issued at August 15, 2012                                |  |                      | 468,000  |   |                      |  |  | 
|August 2012 Warrants                                                           |  |                      | (26,267  | ) |                      |  |  | 
|Derivative component of the CBs                                                |  |                      | (156,593 | ) |                      |  |  | 
|Directly attributable costs allocated to liability component of the CBs (Note) |  |                      | (10,598  | ) |                      |  |  | 
|                                                                               |  |                      |          |   |                      |  |   | 
|Liability component of the CBs on initial recognition at August 15, 2012       |  |                      | 274,542  |   |                      |  |  | 
|Interest expense                                                               |  |                      | 64,887   |   |                      |  |  | 
|Interest paid                                                                  |  |                      | (32,760  | ) |                      |  |  | 
|                                                                               |  |                      |          |   |                      |  |   | 
|Liability component at March 31, 2013                                          |  |                      | 306,669  |   |                      |  |  | 
|                                                                               |  |                      |          |   |                      |  |   | 

The liability component of the CBs is carried at amortized cost at an effective interest rate of 37.2%
per annum.

The fair value of the derivative component of the CBs as at August 15, 2012 was determined using the Binomial
model. The significant inputs into the models were volatility of 74%, dividend yield of 0% and risk-free interest rate of 0.8%.

The fair value of the derivative component of the CBs as at March 31, 2013 was determined using the Binomial model. The significant
inputs into the models were volatility of 80%, dividend yield of 0% and risk-free interest rate of 0.54%.

The fair values of
liability component of the CBs were approximately HK$450,544,000 and HK$308,545,000 as of March 31, 2013 and August 15, 2012, using a discount rate of 25% and 36%, respectively.

Under the terms of the CBs, the Company undertakes to comply with financial covenants as follows:



| | (i) | Consolidated Tangible Net Worth shall not be less than HK$1,253,000,000;
| | --- | ------------------------------------------------------------------------



| | (ii) | Consolidated EBIT shall not at any time be less than 2.50 times Consolidated Finance Charges; and
| | ---- | -------------------------------------------------------------------------------------------------



| | (iii) | Consolidated Total Borrowings shall not at any time exceed 0.85 times Consolidated Tangible Net Worth.
| | ----- | ------------------------------------------------------------------------------------------------------

The financial covenants shall be: (i) calculated and interpreted on a consolidated basis in accordance with IFRS and expressed in
Hong Kong dollars; and (ii) tested by reference to the latest publicly available financial statements of the Group for each period of twelve months ending on the last day of the financial year and each period of twelve months ending on the last
day of the first half of the financial year.

The Company has obtained wavier from the holders of the CBs in respect of any
non-compliance of the above covenants during the current fiscal year and fiscal year ending March 31, 2014.



Note:

Total transaction costs directly
attributable to the issuance of the CBs amounted to HK$17,394,000 of which HK$10,598,000 was attributable to liability component of the CBs and has been capitalized. The remaining HK$6,796,000 was attributable to derivative component of the CBs and
has been expensed to the consolidated income statement during the current fiscal year.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 33Share Capital



|                                                |  |                  |           |  |               |  |           |            |  |  |            |  |  |  |       | 
|----------------------------------------------- |  | ---------------- | --------- |  | ------------- |  | --------- | ---------- |  |  | ---------- |  |  |  | ----- | 
|                                                |  | Number of shares |           |  | Share capital | 
|                                                |  | 2013000         |           |  | 2012000      |  |           | 2013HK$000 |  |  | 2012HK$000 | 
|Authorized:                                     |  |                  |           |  |               |  |           |            |  |  |            |  |  |  |       | 
|Preferred share at US$0.001 each at end of year |  |                  | 200       |  |               |  | 200       |            |  |  | 2          |  |  |  | 2     | 
|                                                |  |                  |           |  |               |  |           |            |  |  |            |  |  |  |       | 
|Ordinary share at US$0.001 each at end of year  |  |                  | 1,000,000 |  |               |  | 1,000,000 |            |  |  | 7,793      |  |  |  | 7,793 | 
|                                                |  |                  |           |  |               |  |           |            |  |  |            |  |  |  |       | 



|                                                         |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|-------------------------------------------------------- |  | ---------------- | ------ |  | ------------- |  | ------ | ---------- |  |  | ---------- |  |  |  | --- | 
|                                                         |  | Number of shares |        |  | Share capital | 
|                                                         |  | 2013000         |        |  | 2012000      |  |        | 2013HK$000 |  |  | 2012HK$000 | 
|Issued and fully paid:                                   |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|Preferred share                                          |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|At end of the year                                       |  |                  | 100    |  |               |  | 100    |            |  |  | 1          |  |  |  | 1   | 
|                                                         |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|Ordinary shares                                          |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|At beginning of the year                                 |  |                  | 73,544 |  |               |  | 64,126 |            |  |  | 572        |  |  |  | 499 | 
|Issue of new shares from May 2011 Offering (a)           |  |                  |       |  |               |  | 1,518  |            |  |  |           |  |  |  | 11  | 
|Issue of new shares from August 2011 Share Placement (b) |  |                  |       |  |               |  | 2,000  |            |  |  |           |  |  |  | 16  | 
|Issue of new shares from August 2011 Unit Placement (c)  |  |                  |       |  |               |  | 5,900  |            |  |  |           |  |  |  | 46  | 
|                                                         |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|At end of the year                                       |  |                  |       |  |               |  | 73,544 |            |  |  | 572        |  |  |  | 572 | 
|                                                         |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 
|                                                         |  |                  | 73,644 |  |               |  | 73,644 |            |  |  | 573        |  |  |  | 573 | 
|                                                         |  |                  |        |  |               |  |        |            |  |  |            |  |  |  |     | 

The Companys share capital consists of ordinary shares and preferred shares.



Note:

|(a) | On May 11, 2011 (the May 2011 Closing), the Company completed an underwritten offering of 1,517,978 units at a price of US$2.88 per unit (May
2011 Offering) with gross proceeds of approximately US$4,372,000 (approximately HK$34,100,000). Each unit consisted of one of the Companys ordinary shares and a warrant to purchase 0.65 of one of the Companys ordinary shares. The
exercise price of the warrants was US$3.456 per ordinary share, subject to certain adjustments with a term of three years. The Company has also issued warrants to the underwriter, to purchase 200,373 ordinary shares of the Company at an exercise
price of US$3.456 and with a term of three years. As at the May 2011 Closing, the fair values of these warrants approximated to HK$6,988,000. As a result, an amount of approximately HK$6,988,000 was recorded as Derivative financial
liabilities for these warrants, and amount of approximately HK$11,000 (being 1,517,978 ordinary shares at US$0.001 each) and HK$27,101,000 (being the difference between the gross proceeds, and the fair value of these warrants and nominal value
of issued capital) were credited in issued capital and share premium account, respectively. The Company also incurred certain share issuance expenses amounted to HK$7,981,000 in connection with the May 2011 Offering.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | On August 4, 2011 (the August 2011 Share Closing), the Company completed a private placement of 2,000,000 ordinary shares at a price of US$2.5 per
share (the August 2011 Share Placement), with gross proceeds of approximately US$5,000,000 (approximately HK$38,900,000). At a result of the August 2011 Share Closing, an amount approximately HK$16,000 (being 2,000,000 ordinary shares at
US$0.001 each) and HK$38,884,000 were credited in issued capital and share premium account, respectively. The Company also incurred certain share issuance expenses amounted to HK$170,000 in connection with the August 2011 Share Placement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | On August 16, 2011 (the August 2011 Unit Closing), the Company completed a private placement of 5,900,000 units at a price of US$2.5 per unit (the
August 2011 Unit Placement), with gross proceeds of approximately US$14,750,000 (approximately HK$114,755,000). Each unit consisted of one of the Companys ordinary share and a warrant to purchase one of the Companys ordinary
shares. The exercise price of the warrants was US$2.875 per ordinary share and with a term of two years. As at the August 2011 Unit Closing, the fair value of these warrants approximated to nil, and an amount of approximately HK$46,000 (being
5,900,000 ordinary shares at US$0.001 each) and HK$114,709,000 (being the difference between the gross proceeds and nominal value of issued capital) were credited in issued capital and share premium account, respectively. The Company also incurred
certain share issuance expenses amounted to HK$510,000 in connection with the August 2011 Unit Placement.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 34Receipt in advance

Receipt in advance represented proceeds received from the pre-sale activities at China Northeast Logistics CityTieling, China
Northeast Logistics CityDezhou and Qiqihar CFC (as defined in note 39(a)). As at March 31, 2012, approximately HK$47,798,000 was related to Qiqihar CFC which Qiqihar CFC was disposed during the year ended March 31, 2013 as further discussed in
note 39(a) to the consolidated financial statements and the remaining amount was related to China Northeast Logistics CityTieling and China Northeast Logistics CityDezhou.

Note 35Share Incentive Plan

On August 25, 2011, the Company
adopted a share incentive plan (the 2011 Share Incentive Plan). The purposes of the 2011 Share Incentive Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional
incentive to employees, directors, advisors or consultants, and to promote the success of the Companys business. Options granted under the 2011 Share Incentive Plan may be incentive stock options (Incentive Stock Options) or
nonstatutory stock options (Nonstatutory Stock Options), as determined by the administrator (may be the board of directors (the Board) or one of more committees of the Board) at the time of grant of an option. Under the 2011
Share Incentive Plan, the administrator of the Company may grant options to any person being an employee, a director, an advisor or a consultant, of the Group, to subscribe for shares in the Company at a price to be determined by the administrator
being:



| | (1) | In the case of Incentive Stock Option:
| | --- | --------------------------------------



| | a. | granted to an employee who at the time of grant is a person who owns stock representing more than 10% of the voting power of all classes of stock of the Company or any
parent or subsidiary measured as of date of grant, the per Share exercise price shall be no less than 110% of the Fair Market Value (as defined below) on the date of grant;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value (as defined below) on the date of grant;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | In the case of a Nonstatutory Stock Option, the per share exercise price shall be such price as is determined by the administrator, provided that, if the per share
exercise price is less than 100% of the Fair Market Value (as defined below) on the date of grant, it shall otherwise comply with all all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable United
States federal or state laws, any stock exchange rules or regulations, and the applicable laws, rules or regulations of any other country or jurisdiction where options or restricted stock are granted under the 2011 Share Incentive Plan or
participants reside or provide services, as such laws, rules, and regulations shall be in effect from time to time; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Notwithstanding the foregoing, options may be granted with a per share exercise price other than as required above pursuant to a merger or other corporate transaction.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the purpose of the 2011 Share Incentive Plan, Fair Market Value means, as of any date, the per share fair
market value of the ordinary shares of the Company, as determined by the administrator in good faith on such basis as it deems appropriate and applied consistently with respect to participants. Whenever possible, the determination of Fair Market
Value shall be based upon the per share closing price for the Shares as reported in The Wall Street Journal for the applicable date.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The maximum aggregate number of shares that may be issued under the 2011 Share Incentive
Plan is 7,000,000 shares, all of which shares may be issued under the 2011 Share Incentive Plan pursuant to Incentive Stock Options. The shares issued under the 2011 Share Incentive Plan may be authorized, but unissued, or reacquired shares. If an
award of an option should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an option exchange program, the unpurchased shares that were subject thereto shall, unless the 2011 Share
Incentive Plan shall have been terminated, become available for future grant under the 2011 Share Incentive Plan. In addition, any shares which are retained by the Company upon exercise of an award of options in order to satisfy the exercise or
purchase price for such award of options or any withholding taxes due with respect to such award of options shall be treated as not issued and shall continue to be available under the 2011 Share Incentive Plan and shares issued under the 2011 Share
Incentive Plan and later repurchased by the Company at the original purchase price paid to the Company for the shares (including, without limitation, upon repurchase by the Company in connection with the termination of a participants
continuous service status) shall again be available for future grant under the 2011 Share Incentive Plan.

The 2011 Share
Incentive Plan shall be valid and effective for a period of 10 years commencing August 25, 2011.

Details of the
principal terms of the 2011 Share Incentive Plan are set out in the proxy of the Company dated July 11, 2011.

As at and
up to March 31, 2012 and 2013, no share option has been granted under the 2011 Share Incentive Plan.

Note 36Pledge of Assets

At the statement of financial position date, the Group had pledged the following assets to banks to secure banking
facilities granted to the Group:



|                                   |  |                       |         |  |                       |  |         | 
|---------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                                   |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Land                               |  |                       | 24,577  |  |                       |  | 4,553   | 
|Investment properties              |  |                       | 553,633 |  |                       |  | 165,725 | 
|Completed properties held for sale |  |                       | 24,368  |  |                       |  | 15,290  | 
|Property, plant and equipment      |  |                       | 57,080  |  |                       |  | 55,409  | 
|Properties under development       |  |                       | 27,201  |  |                       |  | 79,529  | 
|Pledged bank deposits (Note 28)    |  |                       | 25,952  |  |                       |  |        | 
|                                   |  |                       |         |  |                       |  |         | 
|                                   |  |                       | 712,811 |  |                       |  | 320,506 | 
|                                   |  |                       |         |  |                       |  |         | 

Note 37Capital Commitments



|                                                                                                                                                               |  |                       |         |  |                       |  |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                                                                                                                                                               |  | March 
31,2013HK$000 |         |  | March 
31,2012HK$000 | 
|Capital injection in respect of investment in a subsidiary in the PRC                                                                                          |  |                       | 78,000  |  |                       |  |        | 
|                                                                                                                                                               |  |                       |         |  |                       |  |         | 
|Capital expenditure in relation to construction of properties and acquisition of land contracted for but not provided in the
consolidated financial statements |  |                       | 212,311 |  |                       |  | 211,199 | 
|                                                                                                                                                               |  |                       |         |  |                       |  |         | 



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 38Notes to the Consolidated Cash Flows Statements

Major Non-Cash Transactions

The Group has the following major non-cash transactions during the year ended March 31, 2013:



| | (i) | During the fiscal year ended March 31, 2011, the Group paid an aggregate amount of RMB25,641,000 to the PRC local government as a deposit for purchase of a land
use right for its project in Dezhou, the PRC, and the deposit at March 31, 2011 was approximately HK$30,395,000. During the fiscal year ended March 31, 2012, the deposit of approximately HK$31,125,000 was transferred to other receivables
upon the receipt of land use right certificates pending for refund from the PRC local government and there was no cash involved in this transaction. Further details of these deposits are set out in note 22.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | During the fiscal year ended March 31, 2012, the Group paid an aggregate amount of RMB238,371,000 to the PRC local government as a deposit for purchase of a land
use right for its project in Qiqihar, the PRC. During the fiscal year ended March 31, 2012, an aggregate amount of RMB117,897,000 was refunded to the Group and the remaining amount at March 31, 2012 was approximately HK$147,893,000. During
the fiscal year ended March 31, 2013, the deposits of approximately HK$148,042,000 were transferred to land use rights upon the receipt of land use right certificates and there was no cash involved in this transaction. Further details of these
deposits are set out in note 22.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | During the fiscal year ended March 31, 2013, the Company has disposal of its interests in HK CFC (as defined in note 39(a)) and Qiqihar CFC (as defined in note
39(a)), and the considerations of which was partially satisfied by certain receivables and payables. Further details are set out in note 39(a).
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 39Disposal of Subsidiaries

(a) Disposal of China Focus
City (H.K.) Holdings Limited (HK CFC) and China Focus City Holdings (Group) Co., Ltd. (Qiqihar CFC)

During the fiscal year ended March 31, 2013, the Company entered into an agreement (the S&P Agreement) with an independent third party (the Qiqihar Buyer) to dispose of
its entire 100% equity interest in HK CFC and 75% equity interest in Qiqihar CFC. Under the terms of the S&P Agreement, the Qiqihar Buyer agreed to pay the Company a fixed income at a rate of 21% per annum on the Companys remaining
25% equity investment, representing 25% of the initial investment cost in Qiqihar CFC, in Qiqihar CFC in return the Company gave up its rights and obligations to share profits and to bear losses of Qiqihar CFC so arising in the future for indefinite
period. In addition, the Qiqihar Buyer has the right, at its own discretion, to purchase from the Company its remaining 25% equity interest in Qiqihar CFC at cost. As a result, the disposal of 75% equity interest in Qiqihar CFC has been accounted
for as if 100% equity interest of Qiqihar CFC has been disposed of by the Company and the remaining 25% interest has been accounted for as a loan to the Qiqihar Buyer.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following is an analysis of the net assets on the date which HK CFC and Qiqihar CFC
were being disposed of:



|                                                                          |  |         |          |  
|------------------------------------------------------------------------- |  | ------- | -------- | -
|                                                                          |  | HK$000 |         
|Net assets disposed of:                                                   |  |         |          |  
|Property, plant and equipment (Note 20)                                   |  |         | 31,706   |  
|Deposit for acquisition of land use rights (Note 22)                      |  |         | 156,814  |  
|Deferred tax assets (Note 24)                                             |  |         | 6,529    |  
|Properties under development (Note 26)                                    |  |         | 354,444  |  
|Trade and other receivables                                               |  |         | 318,411  |  
|Available-for-sale financial assets                                       |  |         | 4,937    |  
|Cash and cash equivalents                                                 |  |         | 263,315  |  
|Trade payables, other payables and accruals                               |  |         | (284,084 | )
|Receipt in advance                                                        |  |         | (483,794 | )
|Current income tax liabilities                                            |  |         | (36,238  | )
|                                                                          |  |         |          |  
|Net assets                                                                |  |         | 332,040  |  
|Gain on disposal of subsidiaries, net of related tax (Note 17(a))         |  |         | 32,478   |  
|                                                                          |  |         |          |  
|                                                                          |  |         | 364,518  |  
|                                                                          |  |         |          |  
|Satisfied by:                                                             |  |         |          |  
|Cash                                                                      |  |         | 86,398   |  
|Other payables undertook by Qiqihar Buyer                                 |  |         | 98,741   |  
|Other receivables                                                         |  |         | 156,657  |  
|Loan receivable                                                           |  |         | 61,713   |  
|                                                                          |  |         |          |  
|Total consideration                                                       |  |         | 403,509  |  
|Less: Income tax expense, related to the gain on disposal of subsidiaries |  |         | (38,991  | )
|                                                                          |  |         |          |  
|                                                                          |  |         | 364,518  |  
|                                                                          |  |         |          |  

An analysis of the net outflow of cash and cash equivalents in respect of the disposal of subsidiaries is
as follows:



|                                                                                    |  |  |          |  
|----------------------------------------------------------------------------------- |  |  | -------- | -
|Cash consideration received                                                         |  |  | 86,398   |  
|Cash and bank balances disposed of                                                  |  |  | (263,315 | )
|                                                                                    |  |  |          |  
|Net outflow of cash and cash equivalents in respect of the disposal of subsidiaries |  |  | (176,917 | )
|                                                                                    |  |  |          |  

All of the unpaid considerations and fixed income receivable by the Company are guaranteed by a
shareholder and director of the Company.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



(b) Disposal of Tieling Motor Vehicles Trading Co., Ltd.

During the fiscal year ended March 31, 2011, China Northeast Logistic City Co., Ltd., a wholly-owned subsidiary of the Company, which
is principally engaged in property development, entered into an agreement with the non-controlling interest of Tieling Motor Vehicles Trading Co., Ltd. (Motor Vehicles Company), a then non-wholly owned subsidiary of the Company, whereby
both parties agreed to revise their shareholdings in Motor Vehicles Company as follows: (1) China Northeast Logistic City Co., Ltd. to ultimately hold 40% equity interest in Motor Vehicles Company and (2) the non-controlling interest of
Motor Vehicles Company to ultimately hold 60% equity interest in Motor Vehicles Company. Upon the execution of this agreement, the Group disposed of 20% of its interest in Motor Vehicles Company as the Group no longer had the interest in controlling
the financial and operating policies of Motor Vehicles Company. As a result of the revised shareholding, Motor Vehicles Company became an associate of China Northeast Logistic City Co., Ltd and is no longer consolidated by the Group.

The following is an analysis of the net assets on the date which Motor Vehicles Company was being disposed of:



|                                                      |  |         |        |  
|----------------------------------------------------- |  | ------- | ------ | -
|                                                      |  | HK$000 |       
|Net assets disposed of:                               |  |         |        |  
|Cash and bank balances                                |  |         | 4,688  |  
|Prepayments and other receivables                     |  |         | 57     |  
|Property under development                            |  |         | 27,199 |  
|Accounts payable                                      |  |         | (9,552 | )
|Non-controlling interest                              |  |         | (8,957 | )
|                                                      |  |         |        |  
|Net assets                                            |  |         | 13,435 |  
|Gain on disposal of a subsidiary                      |  |         | 90     |  
|                                                      |  |         |        |  
|                                                      |  |         | 13,525 |  
|                                                      |  |         |        |  
|Satisfied by:                                         |  |         |        |  
|Acquisition of interest in an associate upon disposal |  |         | 13,525 |  
|                                                      |  |         |        |  

An analysis of the net outflow of cash and cash equivalents in respect of the disposal of a subsidiary is
as follows:



|                                                                                                                           |  |  |        |  
|-------------------------------------------------------------------------------------------------------------------------- |  |  | ------ | -
|Cash and bank balances disposed of and net outflow of cash and cash equivalents in respect of the disposal of a
subsidiary |  |  | (4,688 | )
|                                                                                                                           |  |  |        |  

As at the date of the disposal of Motor Vehicles Company as a subsidiary and acquisition of Motor
Vehicles Company as an associate, the net assets attributable to the Group approximated to their fair values.

Note 40Issuance of New
Shares by Subsidiaries

During fiscal year ended March 31, 2011, there were 1,600,000 of MSILs share options
exercised with an exercise price of HK$0.397. The share options exercised were solely attributable to the Man Sang Discontinued Operations, and subsequent to the Distribution, the Group no longer has any share options outstanding at March 31,
2011 and 2012. In addition, during the fiscal year ended March 31, 2011, a subsidiary of the Discontinued Operations issued certain shares to a non-controlling interest with an aggregate consideration of approximately HK$5,000.



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 41Operating Lease Arrangements

The Group as lessee

At the statements of financial position date, the Group had outstanding commitments for the future minimum lease payments in respect of non-cancellable operating leases which fall due as follows:



|                                      |  |                       |        |  |                       |  |       | 
|------------------------------------- |  | --------------------- | ------ |  | --------------------- |  | ----- | 
|                                      |  | March 
31,2013HK$000 |        |  | March 
31,2012HK$000 | 
|Operating leases which expire:        |  |                       |        |  |                       |  |       | 
|Within one year                       |  |                       | 10,134 |  |                       |  | 765   | 
|In the second to fifth year inclusive |  |                       | 60     |  |                       |  | 735   | 
|                                      |  |                       |        |  |                       |  |       | 
|                                      |  |                       | 10,194 |  |                       |  | 1,500 | 
|                                      |  |                       |        |  |                       |  |       | 

The Group as lessor

Property rental income earned during the year was HK$4,959,000 (2012: HK$3,942,000). Most of the investment properties held have committed
tenants for the next one to three years.

At the statements of financial position date, the Group had contracted with tenants
for the following future minimum lease receivables:



|                                      |  |                       |       |  |                       |  |       | 
|------------------------------------- |  | --------------------- | ----- |  | --------------------- |  | ----- | 
|                                      |  | March 
31,2013HK$000 |       |  | March 
31,2012HK$000 | 
|Within one year                       |  |                       | 1,617 |  |                       |  | 1,049 | 
|In the second to fifth year inclusive |  |                       | 18    |  |                       |  | 411   | 
|                                      |  |                       |       |  |                       |  |       | 
|                                      |  |                       | 1,635 |  |                       |  | 1,460 | 
|                                      |  |                       |       |  |                       |  |       | 

Note 42Contingent Liabilities

On August 25, 2009, at the general meeting, the shareholders of Man Sang Holdings, Inc., the former immediate holding company, resolved that Man Sang Holdings, Inc. be dissolved and liquidated,
whereby Man Sang Holdings, Inc. had been succeeded by the Company. From its inception in August 1995 through the completion of the dissolution and liquidation on August 25, 2009, the Company was a wholly-owned subsidiary of Man Sang Holdings,
Inc. The liquidation did not result in tax for Man Sang Holdings, Inc. Such result is subject to assessment by U.S. tax authority. As the Company has succeeded Man Sang Holdings, Inc. and contractually assumed all of Man Sang Holdings Inc.s
rights, obligations and liabilities, if the assessment differs from actual result, it may give rise to the possibility of outflow in settlement of tax by the Company. The directors are of the view that the likelihood of an indemnification liability
arising from such dissolution at years ended March 31, 2013 and 2012 is remote. Accordingly, no accrual has been made.

Save as disclosed above, the Group had no other significant contingent liabilities at March 31, 2013 and 2012.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 43Related Party Transactions

The Group entered into the following related party transactions, which were carried out in the ordinary course of the Groups
business.



|                                                                                         |  |                                                                                                              |  |             |           |  |             |  |            |             |  |  |               | 
|---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----------- | --------- |  | ----------- |  | ---------- | ----------- |  |  | ------------- | 
|Related party relationship                                                               |  | Nature of transaction                                                                                        |  | 2013HK$000 |           |  | 2012HK$000 |  |            | 2011HK$000 | 
|Key management personnel including directors                                             |  | Salaries and other allowance
Retirement benefit Share-based
payments                                         |  |             | 7,55038
 |  |             |  | 10,13542
 |             |  |  | 9,62744
1,148 | 
|                                                                                         |  |                                                                                                              |  |             |           |  |             |  |            |             |  |  |               | 
|                                                                                         |  |                                                                                                              |  |             | 7,588     |  |             |  | 10,177     |             |  |  | 10,819        | 
|An entity which is significantly influenced by a key management personnel of the Company |  | Operating lease rental and management fees on rented premises Reimbursement of rental charges paid on behalf |  |             | 298      |  |             |  |          |             |  |  | 639          | 
|                                                                                         |  |                                                                                                              |  |             |           |  |             |  |            |             |  |  |               | 

Save as disclosed in notes 30(note (i)), 30(note (ii)), 31, 32, 37 and 39 to the consolidated financial
statements, there were no other significant related party transactions.

Note 44Balances with Related Parties and Equity Holders

The loan from a non-controlling interest of HK$58,800,000 was unsecured and interest-free which is not repayable within
one year as at March 31, 2013.

Note 45US Dollar Equivalents

The US dollar equivalents of the figures shown in the consolidated financial statements are supplementary information and have been
translated at HK$7.8 to US$1.0, representing the rate for U.S. dollar in New York for cable transfers in Hong Kong dollars as certified for custom purposes by the Federal Reserve Bank of New York. Such translation should not be construed as
representations that the Hong Kong dollar amounts represent, or have been or could be converted into, US dollars at that or any other rate.

Note 46Comparative Figures

Certain comparative figures have been reclassified to conform to the current years presentation.



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##### Table of Contents

CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Note 47Particulars of Subsidiaries

Particulars of the Companys subsidiaries at March 31, 2013 and 2012 are as follows:



|                                                                            |  |                                                                  |  |                                                       |  |                                                                                             |     |   |                      |  |     |   |  |                                                     
|--------------------------------------------------------------------------- |  | ---------------------------------------------------------------- |  | ----------------------------------------------------- |  | ------------------------------------------------------------------------------------------- | --- | - | -------------------- |  | --- | - |  | ----------------------------------------------------
|Name of subsidiary                                                          |  | Place of incorporation /establishment
orregistration / operation |  | Issued and fullypaid sharecapital
/registered capital |  | Proportion ofnominal valueof issued capital/ registeredcapital held
bythe Company(Note (i)) |     |   | Principal activities
|                                                                            |  |                                                                  |  |                                                       |  | 2013                                                                                        |     |   | 2012                 |  |     |  
|M.S. Electronic Emporium Limited                                            |  | British Virgin Islands                                           |  | Ordinary shares US$100                                |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Inactive                                            
|                                                                            |  |                                                                  |  |                                                       | 
|China Metro-Rural Limited                                                   |  | British Virgin Islands
(redomiciled from Cayman Islands)         |  | Ordinary shares US$1                                  |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Investment holding                                  
|                                                                            |  |                                                                  |  |                                                       | 
|China Metro-RuralExchange Limited                                           |  | Hong Kong                                                        |  | Ordinary shares HK$10,000                             |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Investment holding                                  
|                                                                            |  |                                                                  |  |                                                       | 
|China Northeast LogisticsCity Co., Ltd. ^


LOGO(Note (ii))                 |  | PRC                                                              |  | Registered capital US$35,000,000                      |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Operating of agricultural logistic platform         
|                                                                            |  |                                                                  |  |                                                       | 
|Tieling North AsiaDevelopment Co., Ltd. ^LOGO                               |  | PRC                                                              |  | Registered capital RMB5,000,000                       |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Not yet commenced operation                         
|                                                                            |  |                                                                  |  |                                                       | 
|Tieling Northeast CityAdvertising Co., Ltd. ^LOGO                           |  | PRC                                                              |  | Registered capital RMB300,000                         |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Not yet commenced operation                         
|                                                                            |  |                                                                  |  |                                                       | 
|Tieling North Asia PropertyManagement Co., Ltd.^LOGOLOGO                    |  | PRC                                                              |  | Registered capital RMB500,000                         |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Provision of property management and related service
|                                                                            |  |                                                                  |  |                                                       | 
|Tieling Northeast CityMotor Vehicle TradingCo., Ltd.^LOGOLOGO
 (Note (iii)) |  | PRC                                                              |  | Registered capital RMB5,000,000                       |  |                                                                                             | 100 | % |                      |  |    |   |  | Not yet commenced operation                         
|                                                                            |  |                                                                  |  |                                                       | 
|China Metro-RuralDevelopment Limited                                        |  | Hong Kong                                                        |  | Ordinary shares HK$100                                |  |                                                                                             | 85  | % |                      |  | 85  | % |  | Investment holding                                  
|                                                                            |  |                                                                  |  |                                                       | 
|China Northeast LogisticsCity Dezhou Co., Ltd.^LOGOLOGO
 (Note (ii))        |  | PRC                                                              |  | Registered capital US$49,990,000                      |  |                                                                                             | 85  | % |                      |  | 85  | % |  | Operating of agricultural logistic platform         
|                                                                            |  |                                                                  |  |                                                       | 
|Dezhou Northeast CityProperty Co., Ltd.^LOGOLOGO                            |  | PRC                                                              |  | Registered capital RMB50,000,000                      |  |                                                                                             | 85  | % |                      |  | 85  | % |  | Not yet commenced operation                         
|                                                                            |  |                                                                  |  |                                                       | 
|Dezhou Northeast City Advertising Co., Ltd.^LOGO(Note (iv))                 |  | PRC                                                              |  | Registered capital RMB2,000,000                       |  |                                                                                             |    |   |                      |  | 85  | % |  | Liquidated                                          
|                                                                            |  |                                                                  |  |                                                       | 
|Dezhou North Asia Property Management Co., Ltd.^LOGOLOGO                    |  | PRC                                                              |  | Registered capital RMB2,000,000                       |  |                                                                                             | 85  | % |                      |  | 85  | % |  | Not yet commenced operation                         



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CHINA METRO-RURAL HOLDINGS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                                                                                                                                               |  |                                                                  |  |                                                       |  |                                                                                             |     |   |                      |  |     |   |  |                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------- |  | ----------------------------------------------------- |  | ------------------------------------------------------------------------------------------- | --- | - | -------------------- |  | --- | - |  | --------------------------------------------------------------------
|Name of subsidiary                                                                                                                                                             |  | Place of incorporation /establishment
orregistration / operation |  | Issued and fullypaid sharecapital
/registered capital |  | Proportion ofnominal valueof issued capital/ registeredcapital held
bythe Company(Note (i)) |     |   | Principal activities
|                                                                                                                                                                               |  |                                                                  |  |                                                       |  | 2013                                                                                        |     |   | 2012                 |  |     |  
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Northeast LogisticsCity Shenzhen Co., Ltd.^LOGO                                                                                                                          |  | PRC                                                              |  | Registered capital RMB10,000,000                      |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Management company                                                  
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Glorious CityStrategic Limited(Note (iii))                                                                                                                               |  | Hong Kong                                                        |  | Ordinary shares HK$100                                |  |                                                                                             | 100 | % |                      |  |    |   |  | Not yet commenced operation                                         
|China Glorious CityInvestments Limited(Note (iii))                                                                                                                             |  | Hong Kong                                                        |  | Ordinary shares HK$100                                |  |                                                                                             | 100 | % |                      |  |    |   |  | Not yet commenced operation                                         
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Glorious CityConstruction Limited(Note (iii))                                                                                                                            |  | Hong Kong                                                        |  | Ordinary shares HK$100                                |  |                                                                                             | 100 | % |                      |  |    |   |  | Not yet commenced operation                                         
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Glorious CityDevelopment Limited(Note (iii))                                                                                                                             |  | Hong Kong                                                        |  | Ordinary shares HK$100                                |  |                                                                                             | 100 | % |                      |  |    |   |  | Investment
holding                                                  
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Glorious City (Hengyang) Co., Ltd.^ LOGO (Note (ii),(iii))                                                                                                               |  | PRC                                                              |  | Registered capital US$30,000,000                      |  |                                                                                             | 100 | % |                      |  |    |   |  | Not yet commenced operation                                         
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|Shenyang JiataiheInvestmnets Co., Ltd.^LOGO                                                                                                                                    |  | PRC                                                              |  | Registered capital RMB20,000,000                      |  |                                                                                             | 100 | % |                      |  | 100 | % |  | Not yet commenced operation                                         
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Focus City (H.K.)Holdings Limited(Note (v))                                                                                                                              |  | Hong Kong                                                        |  | Ordinary shares HK$100                                |  |                                                                                             |    |   |                      |  | 100 | % |  | Investment
holding                                                  
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|China Focus City Holdings(Group) Co., Ltd.^
LOGO (Note (v))                                                                                                                    |  | PRC                                                              |  | Registered capital RMB200,000,000                     |  |                                                                                             |    |   |                      |  | 100 | % |  | Investment holding and rural-urban migration and city re-development
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|Qiqihar China Focus City HuaYu
Real Estates Development Co., Ltd. (formerly known as Qiqihar China Focus City China South Real Estates Development Co.,
Ltd.)^ LOGO (Note (v)) |  | PRC                                                              |  | Registered capital RMB100,000,000                     |  |                                                                                             |    |   |                      |  | 100 | % |  | Property development                                                
|                                                                                                                                                                               |  |                                                                  |  |                                                       | 
|Qiqihar Northeast LogisticsCity Co., Ltd.^LOGOLOGO(Note (v))                                                                                                                   |  | PRC                                                              |  | Registered capital RMB50,000,000                      |  |                                                                                             |    |   |                      |  | 100 | % |  | Note yet commenced operation                                        



Note:

|(i): | The Company directly holds China Metro-Rural Limited and M.S. Electronic Emporium Limited. All other interests shown above are indirectly held by the Company.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii): | These subsidiaries registered or operated in the PRC are wholly foreign owned enterprises.
|----- | ------------------------------------------------------------------------------------------

|(iii): | Incorporated during the current year.
|------ | -------------------------------------

|(iv): | Liquidated during the current year
|----- | ----------------------------------

|(v): | Disposed of during the current year
|---- | -----------------------------------

The symbol
of  ^  represents the English name of the subsidiary for identification purpose only.



F-78