Valuation Report
of
Adjusted Net Asset Value
of
Jiangsu Neptunus Bio-pharmaceutical Company Limited
(江苏海王生物制药有限公司)
江苏
for
Shenzhen Neptunus Interlong Bio-Technique
Company Limited
Date: 19 January 2016
Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
CONTENT
1. Instruction ........................................................................................................................ 1
2. Purpose of Valuation ....................................................................................................... 1
3. Basis of Valuation ............................................................................................................ 2
4. Basis of Opinion .............................................................................................................. .2
5. Sources of Information .................................................................................................... 2
6. Valuation Approch and Methodolgy ............................................................................... 2
7. Opinion of Value .............................................................................................................. 4
Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
Date: 19 January 2016
The Board of Directors
Shenzhen Neptunus Interlong
Bio-Technique Company Limited
Suite 2301C, Neptunus Yinhe
Technology Mansion, 1 Keji Middle Road,
Nanshan District, Shenzhen,
Guangdong Province, PRC 518057
Dear Madam/Sir,
RE: Adjusted Net Asset Value of Jiangsu Neptunus Bio-pharmaceutical Company Limited (江苏
海王生物制药有限公司)
1. Instruction
In accordance with your instructions for us to conduct and prepare a valuation of the adjusted net
asset value (the “Adjusted NAV”) of Jiangsu Neptunus Bio-pharmaceutical Company Limited
(江苏海王生物制药有限公司) (the “Company” or “Jiangsu Neptunus”). As instructed, the
valuation date is 30 November 2015 (the “Valuation Date”).
The Company is a limited liability company established under the laws of the People’s Republic
of China (the “PRC”), is a wholly-owned subsidiary of the Client and have a wholly owned
subsidiary Taizhou Neptunus Nano Bio-medical Technology Company Limited (“Taizhou
Neptunus“) (together refer to the “Group”). The Group is principally engaged in the research and
development of bio-pharmaceutical products and the industrialization of in-vitro diagnostic
reagents. Currently, production of the products under development has not yet commenced.
Our report consists our latest findings and valuation results.
2. Purpose of Valuation
The purpose of this valuation is to conduct an independent opinion on the Adjusted NAV of the
Company as at the Valuation Date. This valuation is only prepared for internal reference by
Shenzhen Neptunus Interlong Bio-Technique Company Limited (the “Client”).
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Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
3. Basis of Valuation
As instructed by the management of the Client, we have valued the Adjusted NAV on the basis
of its net book value of the Company as at the Valuation Date, with adjusted the property,
machines and equipment value for the fair value of the assets and liabilities. The valuation was
carried out on fair value basis, which is defined as “the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date.”
4. Basis of Opinion
The valuation procedures include the review of economic condition and financial condition of
the subject asset, business, key assumption or estimations and representations made by the Client.
In forming our opinion, we also considered the business nature, economic environment factors
and financial statement of the subject asset, we have assumed and relied extensively on the
accuracy and completeness of the information provided to us by the Client including, financial
statements, documents, oral conversation through correspondences. Our valuation is conduct on
the date of valuation, we have no responsibility to update or revise our opinion after the date of
this report in any events or circumstances.
5. Sources of information
In conducting the valuation, we have considered and relied on the key information provided by
the Client, including the management accounts of the Company as at the Valuation Date,
company information provided by the Client and representations made by the Client.
6. Valuation Approach and Methodology
Per instructions by the Client, the Adjusted NAV is based on the book value of the Company as
at the Valuation Date, with adjusted the fair value of assets and liabilities.
Key assumptions and notes:
Property, plant and equipment, construction in process, capitalized development cost and
intangible asset and other long term receivables – includes property, machines and equipment
and others, as advised by management of the Company, the fair value of plant and equipment is
reference to the machines and equipment valuation report provided dated 3 January 2015 and
construction in process, capitalized development cost and intangible asset and other long term
receivables ’s carrying amount is approximate their fair value
Long term investment – mainly the investment cost in Taizhou Neptunus, as advised by the
management of the Company, Taizhou Neptunus is net liabilities as at the Valuation Date, the
fair value of Taizhou Neptunus is assumed to be zero in this exercise.
Inventory, prepayment and other receivables – mainly inventory materials, deposit and other
prepayments, its carrying amount is approximate their fair value in view of the management of
the Company
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Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
Accruals, other payables and deferred revenue – mainly accruals, tax payables, deferred revenue
and payables to holding company, its carrying amount is approximate their fair value in view of
the management of the Company
Short term loan – mainly loan payable on demand, its carrying amount is approximate their fair
value in view of the management of the Company
The summary of book value adopted and adjusted value are listed:
Fair value Adjusted
Book value
adjustments value
(RMB'000) (RMB'000) (RMB'000)
Tangible assets
Property, plant and
equipment 48,285,644 (386,044) 47,899,600
Construction in
progress 3,816,680 - 3,816,680
Long term investment 3,000,000 (3,000,000) -
Capitalized
development cost and
intangible asset 21,367,035 - 21,367,035
Other long term
receivables 8,813,966 - 8,813,966
Sub-total 85,283,325 (3,386,044) 81,897,281
Current assets
Bank balances and cash 42,962 - 42,962
Inventory 122,099 - 122,099
Prepayments 483,663 - 483,663
Other receivables 9,628,894 - 9,628,894
Sub-total 10,277,618 - 10,277,618
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Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
Current liabilities
Short term loan (10,000,000) - (10,000,000)
Payables, accruals, and
other payables (20,808,154) - (20,808,154)
Tax payables (11,231) - (11,231)
Sub-total (30,819,385) - (30,819,385)
Non-Current liabilities
Deferred revenue (5,000,000) - (5,000,000)
Net Asset 59,741,558 (3,386,044) 56,355,514
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Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
7. Opinion of Value
Based on the above of our analysis and assumptions outlined in this report, we are of the opinion
that the adjusted net assets of the Company as at the Valuation Date is reasonably stated as
RENMINBI FIFTY SIX MILLION THREE HUNDRED FIFTY-FIVE THOUSAND (RMB
56,355,000).
We hereby certify that we have neither present nor prospective interest in the Company or the
values reported. This valuation is prepared for the Client’s internal reference only and the result
is subject to our limiting conditions.
Yours faithfully,
For and on behalf of
Verity Appraisals Company Limited
________________________________
Raymond Leung
AICPA
Associate Director
Encl.
Appendix I - Limiting Conditions
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Verity Appraisals Company Limited
Ref: VAC-PV-151221_000118_05
Appendix I – Limiting Conditions
1. All existing liens and encumbrances, if any, have been disregarded and the subject
assets are appraised as though free and clear under responsible ownership.
2. In the inventory, machinery and/or equipment were listed as complete units, i.e.,
machinery and/or equipment as listed is meant to include all parts and accessories
normally comprising the unit.
3. We have totally disregarded such items which, in our opinion, have no practical
take-up value or are normally charged as operating expenses.
4. We are not prepared to give testimony or attendance in court or to any government
agency with reference to the subject assets subject of this appraisal unless
arrangements have been previously made.
5. We are not intended to express an opinion for matters which require legal or other
specialised expertise or knowledge, beyond what is customarily employed by
valuers
6. It is our assumption that there are no hidden or unexpected conditions associated
with the assets valued that might adversely affect the reported value. Further, we
assume no responsibility for changes in market conditions after the date of this
report.
7. This report is confidential to the client for the specific purpose to which it refers.
This report and valuation is intended for the use only of the party to whom it is
addressed and we accept no responsibility with respect to any third party for the
whole or any part of its contents.
8. As part of our analysis, we have reviewed financial and business information from
public sources together with such financial information, client representation,
project documentation and other pertinent data concerning the project made
available to us during the course of our valuation. We have assumed the accuracy
of, and have relied on the information and client representations provided in
arriving at our opinion of value
9. It is the director’s responsibility to ensure proper books of accounts are
maintained, and the financial statements give a true and fair view and have been
prepared in accordance with the relevant companies’ ordinance.
10. To come up our conclusion, we have assumed continuation of prudent client
policies over whatever period of time that is considered to be necessary in order to
maintain the character and integrity of the assets valued.
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