Whole Assets Sale Project of Tonghua Linyuan Grape Planting Co.,LtdAssets Appraisal Report

Step 3. Do the site-checking of the real assets according to the asset inventory valuation schedule content, observe and record the asset situation and talk with asset management staff to understand asset management status.

 

Step 4. Develop various types of specific appraisal methods according to the asset ownership status and characteristics.

 

Step 5. Look up the property supporting documents of appraised assets and information about current accounts, invoices and other financial information.

 

Step 6. Carry out market research , inquiry work；

 

Step 7. Appraise the assets, estimate appraised value.

 

 

According to preliminary appraisal results from the professional groups for the various assets to analyze and summarize to ensure there are no re- assessment and leakage assessment. Besides，to adjust, modify and improve the appraisal results according to the situation analysis.

 

 

To draft asset appraisal report based on the assessment work. After three-time reviews by the project manager, department manager and quality control department，the draft will be submitted to the entrusting party and ask the company for advice and then submit a formal report after confirming that the appraisal results objectively reflect the value of the assets

 

 

This appraisal is based on the following premises and hypothesis:

 

10.1. The appraisal used transaction hypothesis, open market hypothesis and continuous use hypothesis.

 

10.1.1. Transaction hypothesis：assuming appraisal object has already been in the transaction process.

10.1.2. Open market hypothesis. It’s a kind of hypothetical description or limitation for the market conditions that assets intent to enter to and for the impacts which will be accepted by the assets in such market conditions. The key of the open market hypothesis is to understand and grasp the essence and meaning of the open market. In term of assets appraisal, open market is fully developed and improved market conditions, it’s a competitive market in which there are voluntary buyers and sellers. In this market, buyers and sellers are equal in status，each has opportunities and time to get adequate market information, transactions between buyers and sellers are voluntary, rational, but not under the compulsory or unrestricted conditions.

 

10.1.3. Continuous use hypothesis。It’s also a condition for assets intending to enter the market and a hypothetical description of the asset status as under such market conditions. Continuous use hypothesis is subdivided into three specific situations：a)continue to use the existing usages；b)continue to use the switched usages；c)continue to use in another place.

 

Continue to use the existing usages’means that the appraised assets in use will continue to be used in the same way as the existing usages and methods when the property ownership changed or asset business occurred.

 

10.2. This appraisal takes specific evaluation purposes stated in the report as a precondition.

 

10.3. For the legal ownership and restrictions of the assets being evaluated in this report, the appraisers did a general survey based on the standards. In addition to the disclosures in the report, we suppose that the ownership of the appraised assets during the appraisal process is good and can be traded in the market without any burdensome restrictions.

 

10.4. The appraisal institute and the appraisers who signed the report or persons concerned with the report shall not be required to provide a further consultation or testimony because of the report and attend the courts or hearings in other legal proceedings unless prior agreement reached between the commissioning party and the Company.

 

10.5. This appraisal takes unchanged existing use after the reference date as the primary consideration.

10.6. This appraisal supposes the external economic environment remains unchanged on the reference date, there are no material changes of the industrial policy in current industry and no new laws and regulations (whether favorable or unfavorable) will be issued. Neither possible collateral matters in the future are taken into account, nor the impacts of natural forces and other force majeure on asset prices are considered.

 

10.7. All the financial information and materials provided by entrusting party and owner of property are authentic, legitimate and integrated.

 

10.8. This appraisal takes asset stocks and asset position on the reference date as the primary consideration, the influence of subsequent events on the appraisal value is not considered. We do not assume any responsibilities for the changes in market conditions and we have no obligations to amend our report because of the events or circumstances happened after the reference date.

 

This appraisal conclusions will only come into existence when all the above hypotheses are met. If the hypotheses changes, the conclusions will be invalid.

 

 

Cost method will be used in this appraisal.

 

After the implementation of the appraisal process, we got the following conclusions about all the assets and liabilities submitted by Tonghua Linyuan:

 

Total book value of assets is 673,374.19 RMB, appraised value is 2,001,373.38 RMB，evaluation rising in value is 1,327,999.19 RMB, appreciation rate is 197.22%；

 

Total book value of liabilities is 2,001,373.38 RMB, appraised value is 2,001,373.38 RMB；

 

Total book value of net assets is -1,327,999.19 RMB, appraised value is 0.00 RMB，evaluation rising in value is 1,327,999.19 RMB, appreciation rate is -100.00%。

 

The reasons for evaluation rising in value are as follows: part of machineries and equipments are non-standard customized according to process requirements, with the price rising of processing raw materials and labor costs rising, this part of the equipments’ price also rose. Since the equipments were enabled to the reference date, this batch of equipments worked below capacity, however, the equipment daily maintenance is good, the device's better physical condition and better economic condition caused the device rising in value. Equipment depreciation period is shorter than the service life, this also led to evaluation rising in value.

 

12.1. During the time from reference date to reporting date, national macroeconomic policies and market fundamentals do not have any major changes. But we cannot predict the influence of the policies and market changes on the appraisal results after issuing the report.

 

12.2. It’s the responsibilities of PVCs to comply with relevant laws, regulations and appraisal standards and give professional opinions after assessing the value of the object. For entrusting party and related parties, it’s the responsibilities to provide the necessary information and ensure the authenticity, legitimacy and integrity of the information provided and to use the appraisal report appropriately.

 

12.3. The purpose of CPV’s performing assets appraisal business is to estimate the value of the appraisal object and publish professional opinions, they do not assume responsibility for related parties’ decisions. Conclusions of the appraisal should not be considered to be the guarantee for realized price of the appraisal object.

 

12.4. PVCs paid necessary attention to the status of the legal ownership of the appraisal object, but do not make any form of guarantee for the legal ownership of the object. All disputes arising from property relations have nothing to do with our company and our appraisers.

 

12.5. Our company and staff have no existing or expected benefits from the appraisal object, no personal gains with the entrusting party or any prejudice on the entrusting party and related parties. Appraisers abide by professional ethics and norms in the assessment process and make full efforts.

12.6. For other matters that may impact the appraisal results, the entrusting party and the appraised company did not describe specifically, the appraisers thought that can not be generally informed based on professional experience, so our appraisal institute and the appraisers  do not bear the relevant responsibilities.

 

12.7. This report contains a number of reference documents which are an important part of this report，these documents are effective when they are put into use simultaneously with the main report.

 

12.8. If the number of assets and pricing standards changes during the conclusion validity period after the reference date, the principles below should be followed and the conclusions should not be used directly:

 

(1) Adjustment on the amount of assets should be done with the changes in the number of assets according to the original method.

 

(2) The entrusting party shall promptly hire a qualified appraisal institute to re-evaluate when there are great asset prices fluctuations with obvious influence on the conclusions.

 

The issues above might impact the conclusions, we wish to draw the attention of the report users that when foregoing events or circumstances change and have obvious influence on the appraisal value of assets，the entrusting party shall promptly hire a qualified appraisal institute to redefine the  appraisal value.

 

 

13.1. This appraisal report is only for the enterprise sale as a whole, it’s invalid for other purposes.

 

13.2. This appraisal report can only be used by the entrusting party , property owner and other report users restricted in the engagement letter.

13.3. Without first obtaining consent of the appraisal institute, the contents of the report shall not be excerpted , quoted or disclosed in the public media，unless the law stipulates otherwise or the parties concerned have agreed on other arrangements.

 

13.4. This report is valid for one year，that is, from May 31,2013 to May 30,2014.

 

 

The reporting date is June 29, 2013.