AF Global Limited Provides Crucial Update on Xuzhou Investment Liquidation

Key Highlights

• AF Global Limited holds a 55% interest in Xuzhou Yinjian LumChang Real Estate Development Co., Ltd (“XZYJLC”), a joint venture in Xuzhou, China.
• XZYJLC is undergoing liquidation, with its core asset being Gulou Square, a mixed-use development.
• Four rounds of public auctions for key components of Gulou Square have failed, with the latest auction (at a 50% discount to fair value) attracting no bids.
• A fifth auction round at a potential 60% discount to fair value is being considered.
• Significant risk of further write-downs and fair value losses on AF Global’s investment if assets are disposed at or below a 60% discount.
• The final realisation value of the Xuzhou Investment remains uncertain and may significantly impact the Group’s financial statements for the year ending 31 December 2025.

Detailed Summary

AF Global Limited (“AF Global” or the “Company”) has updated shareholders on the status of its investment in XZYJLC, which owns the Gulou Square development in Xuzhou, China. The Company has a majority 55% stake in this joint venture. The liquidation process, managed by an appointed Liquidator, has been ongoing amid challenging market conditions.

Auction Process and Outcomes

To date, the Liquidator has conducted four rounds of public auctions for major components of Gulou Square, specifically the hotel tower, key retail units, and carpark spaces (collectively termed as the “Auction Components”). These assets represent around 81% of the total fair value of XZYJLC’s holdings in Gulou Square.

Each auction round progressively lowered the reserve price, with the latest fourth round having a reserve price set at a 50% discount to fair value. Despite these significant reductions, no bids were received in any of the rounds.

Potential Next Steps and Financial Impact

The Company, together with the Liquidator and its joint venture partner, is now considering further actions, including:

• Conducting additional auction rounds at even lower reserve prices (possibly up to a 60% discount to fair value).
• Exploring alternative disposal options for the real estate assets.
• Taking other measures as deemed necessary by the Liquidator to complete the liquidation process.

If the next auction round proceeds with a reserve price at a 60% discount to fair value and still fails to attract bids, the probability of substantial financial losses and write-downs for AF Global increases significantly.

Implications for Shareholders

This situation is highly price sensitive and could materially affect AF Global’s share value. As disclosed, if all components are disposed of at a 50% to 60% discount, the Group’s investment may be written down, resulting in recognised fair value losses in the financial year ending 31 December 2025. The exact financial impact will depend on the final disposal price of the assets, which remains uncertain and may even exceed the anticipated 60% discount.

Shareholders should note that, unless the liquidation achieves better-than-expected outcomes (i.e., asset sales with less than a 40% discount), AF Global is likely to report a further write-down and fair value loss in its upcoming annual results.

Ongoing Monitoring and Advice

The Board of AF Global will continue to monitor the situation closely and provide updates on any material developments. Shareholders are strongly advised to exercise caution when dealing in the Company’s shares during this period of uncertainty.

Conclusion

The liquidation and auction challenges facing AF Global’s Xuzhou Investment represent a material risk to the Group’s financial health. The lack of bids, even at steep discounts, underscores the difficult market conditions and the potential for further value erosion. This update is material and price sensitive, warranting close attention from all investors.

Disclaimer: This article is based on official disclosures by AF Global Limited regarding its Xuzhou Investment as of 24 November 2025. Investors should conduct their own due diligence and consult professional advisers before making investment decisions. The information herein does not constitute financial advice or a recommendation to buy or sell securities.

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