Wide Bridge Limited (incorporated in British Virgin Islands with limited liability)

Transcription

1 THIS COMPOSITE DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of the Offers, this Composite Document and/or the accompanying Form(s) of Acceptance or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Theme International Holdings Limited, you should at once hand this Composite Document and the accompanying Form(s) of Acceptance to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s). This Composite Document should be read in conjunction with the accompanying Form(s) of Acceptance, the contents of which form part of the terms and conditions of the Offers contained in this Composite Document. Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Composite Document and the accompanying Form(s) of Acceptance, make no representation as to their accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Composite Document and the accompanying Form(s) of Acceptance. THEME INTERNATIONAL HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock code: 990) Wide Bridge Limited (incorporated in British Virgin Islands with limited liability) COMPOSITE OFFER AND RESPONSE DOCUMENT RELATING TO THE MANDATORY CONDITIONAL CASH OFFERS BY HAITONG INTERNATIONAL SECURITIES COMPANY LIMITED ON BEHALF OF WIDE BRIDGE LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF THEME INTERNATIONAL HOLDINGS LIMITED AND CANCEL ALL OUTSTANDING OPTIONS OF THEME INTERNATIONAL HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT) Financial Adviser to the Offeror Haitong International Capital Limited Independent Financial Adviser to the Independent Board Committee A letter from Haitong International Securities containing, amongst other things, details of the terms and conditions of the Offers is set out on pages 7 to 17 of this Composite Document. A letter from the Board is set out on pages 18 to 23 of this Composite Document. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders and the Optionholders in respect of the Offers is set out on pages 24 to 25 of this Composite Document. A letter from the Independent Financial Adviser containing its advice and recommendation in respect of the Offers is set out on pages 26 to 43 of this Composite Document. The procedures for acceptance and settlement of the Offers are set out in Appendix I to this Composite Document and in the accompanying Form(s) of Acceptance. Acceptances of the Offers should be received by the Registrar (in respect of the Share Offer) or the Company (in respect of the Option Offer) by no later than 4:00 p.m. on Wednesday, 20 July 2016 or such later time and/or date as the Offeror may determine and announce with the consent of the Executive, in accordance with the Takeovers Code. Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed DEFINITIONS in this Composite Document. 29 June 2016

2 CONTENTS Page EXPECTED TIMETABLE.... ii DEFINITIONS... 1 LETTER FROM HAITONG INTERNATIONAL SECURITIES LETTER FROM THE BOARD LETTER FROM THE INDEPENDENT BOARD COMMITTEE LETTER FROM THE INDEPENDENT FINANCIAL ADVISER APPENDIX I APPENDIX II FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE... I 1 FINANCIAL INFORMATION OF THE GROUP...II 1 APPENDIX III GENERAL INFORMATION OF THE GROUP....III 1 APPENDIX IV GENERAL INFORMATION OF THE OFFEROR...IV 1 ACCOMPANYING DOCUMENTS WHITE FORM OF SHARE OFFER ACCEPTANCE PINK FORM OF OPTION OFFER ACCEPTANCE i

3 EXPECTED TIMETABLE The timetable set out below is indicative and is subject to change. Any changes to the timetable will be jointly announced by the Offeror and the Company. All the time and date references contained in this Composite Document refer to Hong Kong time and dates. Despatch date of this Composite Document and the accompanying Form(s) of Acceptance and commencement of the Offers (Note 1)... Wednesday, 29 June 2016 Latest time and date for acceptance of the Offers on the Offer Closing Date (Note 2)... 4:00 p.m. on Wednesday, 20 July 2016 Offer Closing Date (Note 2)... Wednesday, 20 July 2016 Announcement of the results of the Offers on the website of the Stock Exchange (Note 2)... by7:00 p.m. on Wednesday, 20 July 2016 Latest date of posting of remittances in respect of valid acceptances received under the Offers by the Offer Closing Date (assuming the Offers become or are declared unconditional on such date) (Note 3)... Friday, 29 July 2016 Latest time and date for the Offers to remain open for acceptance (assuming the Offers become or are declared unconditional on the Offer Closing date) (Note 4)... Wednesday, 3 August 2016 Final closing date of the Offers if the Offers become or are declared unconditional on the Offer Closing date)... Wednesday, 3 August 2016 Latest date of posting of remittances in respect of valid acceptances received under the Offers on or by 4:00 p.m. on Wednesday, 3 August 2016, being the latest date on which the Offers remain open for acceptances assuming the Offers become or are declared unconditional in all respects on the Offer Closing date) (Notes 3 and 4)... Friday, 12 August 2016 Latest date by which the Offers can be Declared unconditional as to acceptances (Note 5)....Monday, 29 August 2016 Notes: (1) The Offers, which are conditional, are made on 29 June 2016, the date of this Composite Document, and are capable of acceptance on and from that date until the Offer Closing Date. Acceptances of the Offers shall be irrevocable and not capable of being withdrawn, except in the circumstances set out in the section headed 7. Right of Withdrawal in Appendix I to this Composite Document. ii

4 EXPECTED TIMETABLE (2) In accordance with the Takeovers Code, the Offers must remain open for acceptance for at least 21 days following the date on which this Composite Document is posted. The Offers will be closed at 4:00 p.m. on the Offer Closing Date unless the Offeror revises or extends the Offers in accordance with the Takeovers Code or the Offers become unconditional after 7th day of the commencement of the Offers. An announcement will be jointly issued by the Company and the Offeror through the website of the Stock Exchange by 7:00 p.m. on the Offer Closing Date stating the results of the Offers and whether the Offers have been revised or extended or have expired. In the event that the Offeror decides that the Offers will remain open, the announcement will state the next closing date of the Offers or that the Offers will remain open until further notice. In the latter case, at least 14 days notice in writing will be given, before the Offers are closed, to those Independent Shareholders and Optionholders who have not accepted the Offers. An acceptor of the Offers shall be entitled to withdraw his acceptance after 21 days from the Offer Closing Date if the Offers have not by then become unconditional as to acceptances. However, this entitlement to withdraw shall only be exercisable until such time as the Offers become or are declared unconditional as to acceptances. For further details, please refer to Appendix I to this Composite Document. If there is a tropical cyclone warning signal number 8 or above or a black rainstorm warning signal in force on the Offer Closing Date and (i) not cancelled in time for trading on the Stock Exchange to resume in the afternoon, the time and date of the close of the Offers will be postponed to 4:00 p.m. on the next Business Day which does not have either of those warnings in force in Hong Kong or such other day as the Executive may approve; or (ii) cancelled in time for trading on the Stock Exchange to resume in the afternoon, the time and date of the close of the Offers will be the same day, i.e. 4:00 p.m. on the Offer Closing Date. (3) Remittances in respect of acceptance of the Offers (after deducting the seller s ad valorem stamp duty) will be made as soon as possible but in any event within seven Business Days (as defined under the Takeovers Code) of (i) the date on which the duly completed acceptance of the Offers and the relevant documents of title of the Shares or the Options (as the case may be) in respect of such acceptance are received by or for the Offeror to render each such acceptance of any of the Share Offer and the Option Offer complete and valid or (ii) the date on which the Offers become or are declared unconditional in all respects, whichever is the later. Remittances in respect of acceptance of the Offers will be despatched to the accepting Independent Shareholders/ the Optionholders by ordinary post at their own risk. (4) In accordance with the Takeovers Code, where the Offers become or are declared unconditional in all respect, the Offers should remain open for acceptance for not less than 14 days thereafter. In such case, at least 14 days notice in writing must be given before the Offers are closed to the Independent Shareholders and Optionholders who have not accepted the Offers. The Offeror has the right, subject to the Takeovers Code, to extend the Offers until such date as it may determine or as permitted by the Executive. The Option Offer is conditional upon Share Offer becoming or being declared unconditional in all respect and will remain open for as long as the Share Offer remains open for acceptance. (5) In accordance with the Takeovers Code, except with the consent of the Executive, the Offers may not become or be declared unconditional in all respects after 7:00 p.m. on Monday, 29 August 2016, being the 60th day after the day on which this Composite Document was posted. Where a period laid down by the Takeovers Code ends on a day which is not a Business Day, the period is extended until the next Business Day. Accordingly, unless the Offers have previously become or are declared unconditional as to acceptances, the Offers will lapse after 7:00 p.m. on Monday, 29 August 2016, unless extended with the consent of the Executive. Save as mentioned above, if the latest time for the acceptance of the Offers and the posting of remittances do not take effect on the date and time as stated above, the other dates mentioned above may be affected. The Offeror and the Company will notify the Shareholders and the Optionholders by way of announcement(s) on any change to the expected timetable as soon as practicable. iii

5 DEFINITIONS In this Composite Document, unless the context otherwise requires, the following expressions have the following meanings: 1 st Acquisition has the meaning ascribed to it under this Composite Document 2 nd Acquisition has the meaning ascribed to it under this Composite Document Acquisition acting in concert associate Board the acquisition of Sale Shares from the Vendors for an aggregate amount of HK$289,746,000 (representing HK$0.18 per Sale Share) under the 1 st Acquisition and 2 nd Acquisition has the meaning ascribed to it in the Takeovers Code has the meaning ascribed to it in the Takeovers Code the board of Directors Business Day(s) a day on which the Stock Exchange is open for transaction of Business BVI CCASS the British Virgin Islands the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited Company Theme International Holdings Limited, a company incorporated in Bermuda with limited liability and the Shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 990) Completion completion of the Acquisition 1

6 DEFINITIONS Composite Document this composite offer and response document dated 29 June 2016 jointly issued by and on behalf of the Offeror and the Company to all Shareholders and Optionholders in accordance with the Takeovers Code containing, among others, the terms and conditions of the Offers, the WHITE Form of Share Offer Acceptance and the PINK Form of Option Offer Acceptance, the letter of advice of the Independent Financial Adviser to the Independent Board Committee in respect of the Offers, and the letter of advice of the Independent Board Committee to the Independent Shareholders and Optionholders as to whether the terms of the Offers are fair and reasonable and as to acceptance Conditions Director(s) the conditions of the Offers, as set out in the section headed MANDATORY CONDITIONAL CASH OFFERS in the LETTER FROM HAITONG INTERNATIONAL SECURITIES in this Composite Document the director(s) of the Company Encumbrances any mortgage, charge, pledge, lien, hypothecation, priority of security interest, deferred purchase, title retention, leasing, sale-and-repurchase or sale-and-lease back arrangement or similar encumbrance(s) over or in any property, assets or rights of whatsoever nature and includes any agreement for any of the same Executive the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director, as defined in the Takeovers Code Facilities Forms of Acceptance Group a loan facility of up to HK$693,000,000 granted by Haitong International Securities to the Offeror which is secured by (i) the Sale Shares acquired by the Offeror and (ii) the Shares to be acquired by the Offeror through the Share Offer the WHITE Form of Share Offer Acceptance and the PINK Form of Option Offer Acceptance (accompanying this Composite Document), and Form of Acceptance means either of them the Company and its subsidiaries 2

7 DEFINITIONS Haitong International Capital Haitong International Capital Limited, the financial adviser of the Offeror in respect of the Offers, and is a licensed corporation under the SFO, licensed to carry out Type 6 (advising on corporate finance) regulated activity Haitong International Securities HK$ Hong Kong Haitong International Securities Company Limited, a fellow subsidiary of Haitong International Capital, and is a licensed corporation under the SFO, licensed to carry out Type 1 (dealing in securities), Type 3 (leveraged foreign exchange trading) and Type 4 (advising on securities) regulated activities Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC Independent Board Committee an independent board committee of the Board comprising the non-executive Directors who have no direct or indirect interest in the Offers, established for the purpose of advising the Independent Shareholders and the Optionholders as to whether the terms of the Offers are fair and reasonable and as to acceptance Independent Financial Adviser or Nuada Independent Shareholder(s) Joint Announcement Last Trading Day Latest Practicable Date Nuada Limited, a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee in relation to the terms of the Offers and in particular (i) as to whether the Offers are, or are not, fair and reasonable; (ii) as to acceptance of the Offers Shareholder(s) other than the Offeror and parties acting in concert with it the announcement dated 26 May 2016 jointly issued by the Company and the Offeror, in relation to, among other things, the Acquisitions and the Offers 19 May 2016, being the last trading day prior to the publication of the Joint Announcement 24 June 2016, being the latest practicable date prior to the printing of this Composite Document for ascertaining certain information contained herein 3

8 DEFINITIONS Listing Rules Offer Closing Date the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited 20 July 2016, being the first offer closing date of the Share Offer which is 21 calendar days after the posting of the Composite Document, or any subsequent offer closing date of the Share Offer as may be extended in accordance with the Takeovers Code Offer Period has the same meaning ascribed to it under the Takeovers Code and commenced from the date of the Joint Announcement until the Offer Closing Date Offers Offeror Offeror Director(s) Option(s) Option Offer Optionholder(s) Option Offer Price Overseas Shareholder(s) the Share Offer and the Option Offer Wide Bridge Limited, a company incorporated in the BVI with limited liability which is owned as to 65% by Bright Power Ventures Limited, 25% by Charming Investment Holdings Limited and 10% by Brilliant Mark Limited the director(s) of the Offeror share option(s) granted by the Company pursuant to the share option scheme of the Company conditionally adopted on 29 December 2009, which entitle(s) holder(s) thereof to subscribe for the Shares in accordance with the terms and conditions thereof the mandatory conditional cash offer to be made by Haitong International Securities for and on behalf of the Offeror for all the cancellation of the outstanding Options held by the Optionholders in accordance with the Takeovers Code holder(s) of the Option(s) the consideration per Option of HK$ payable in cash by the Offeror to the Optionholders under the Option Offer the Shareholder(s) with registered address(es) on the register of members of the Company which was/were outside Hong Kong 4

9 DEFINITIONS PINK Form of Option Offer Acceptance the pink form of acceptance of all outstanding Options in respect of the Option Offer PRC The People s Republic of China (excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan) Registrar Relevant Period Computershare Hong Kong Investor Services Limited, the Hong Kong branch share registrar of the Company, situated at Shops , 17 th Floor, Hopewell Centre, 183 Queen s Road East, Wanchai, Hong Kong the period from 26 November 2015, being the date falling six months preceding the commencement of the Offer Period, up to and including the Latest Practicable Date Sale Shares 1,609,700,000 Shares (representing approximately 30.59% of the entire issued share capital of the Company as at the Latest Practicable Date), owned by the Vendors before the Acquisition SFC SFO Share(s) Shareholder(s) Share Offer Share Offer Price Stock Exchange Takeovers Code Vendors the Securities and Futures Commission of Hong Kong the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) share(s) of HK$ each in the share capital of the Company holder(s) of the Shares the mandatory conditional cash offer to be made by Haitong International Securities for and on behalf of the Offeror for all the issued Shares not already owned or agreed to be acquired by the Offeror or parties acting in concert with it in accordance with the Takeovers Code the consideration per Share of HK$0.18 payable in cash by the Offeror to the Shareholders under the Share Offer The Stock Exchange of Hong Kong Limited the Hong Kong Code on Takeovers and Mergers the vendors of the Sale Shares 5

10 DEFINITIONS WHITE Form of Share Offer Acceptance the white form of acceptance and transfer of Shares in respect of the Share Offer % per cent. 6

11 LETTER FROM HAITONG INTERNATIONAL SECURITIES Haitong International Securities Company Limited 22/F., Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong 29 June 2016 To the Independent Shareholders and Optionholders Dear Sir or Madam, MANDATORY CONDITIONAL CASH OFFERS BY HAITONG INTERNATIONAL SECURITIES COMPANY LIMITED ON BEHALF OF WIDE BRIDGE LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF THEME INTERNATIONAL HOLDINGS LIMITED AND CANCEL ALL OUTSTANDING OPTIONS OF THEME INTERNATIONAL HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT) INTRODUCTION On 19 May 2016, the Board was informed by the Offeror that the Offeror has acquired the Sales Shares at an aggregate consideration of approximately HK$289,746,000 in the following manner: (1) 877,000,000 Sales Shares representing approximately 16.66% of the entire issued share capital of the Company as at the Last Trading Day at the consideration of HK$157,860,000 in cash, representing HK$0.18 per Sale Share, through a broker through an off market block trade on 13 May 2016 (the 1 st Acquisition ). As confirmed by the Offeror with the broker, there was 1 vendor under the 1 st Acquisition. The relevant vendor is an independent third party not connected with the Offeror and parties acting in concert with it. (2) 732,700,000 Sales Shares representing approximately 13.92% of the entire issued share capital of the Company as at the Last Trading Day at the consideration of HK$131,886,000 in cash, representing HK$0.18 per Sale Share, through a broker through an off market block trade on 19 May 2016 (the 2 nd Acquisition ). As confirmed by the Offeror with the broker, there were 6 vendors under the 2 nd Acquisition. The relevant vendors are all independent third parties not connected with the Offeror and parties acting in concert with it. 7

12 LETTER FROM HAITONG INTERNATIONAL SECURITIES The Completion took place on or before 19 May During the period between 8 December 2015 and 21 December 2015, Mr. You Zhenhua has acquired in aggregate of 1,040,000 Shares at price ranging from HK$0.160 to HK$ Such acquisition of Shares were made before the consortium was formed or contemplated. Immediately following Completion and as at the Latest Practicable Date, the shareholding of the Offeror and the parties acting in concert with it increased from approximately 0.02% to 30.61% of the existing issued share capital of the Company. Accordingly, the Offeror and parties acting in concert with it are required to make a mandatory conditional cash offer to acquire all issued Shares (other than those Shares already owned or agreed to be acquired by the Offeror and parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code of the Takeovers Code. Pursuant to Rule 13.5 of the Takeovers Code, the Option Offer will be made to cancel all outstanding Options. This letter sets out, among other things, the principal terms of the Offers, together with the information on the Offeror and the Offeror s intention regarding the Group. Further details of the terms of the Offers and procedures of acceptance are also set out in Appendix I to this Composite Document and the accompanying Form(s) of Acceptance. Your attention is also drawn to the LETTER FROM THE BOARD as well as the LETTER FROM THE INDEPENDENT BOARD COMMITTEE and the LETTER FROM THE INDEPENDENT FINANCIAL ADVISER in respect of the Offers, as contained in the Composite Document. MANDATORY CONDITIONAL CASH OFFERS As at the Latest Practicable Date, the Company has 5,262,819,836 Shares in issue and 358,500,000 outstanding Options in respect of 358,500,000 Shares. All 358,500,000 outstanding options were granted pursuant to the share option scheme adopted by the Company on 29 December Assuming that none of the outstanding Options are exercised prior to the close of the Offers, 5,262,819,836 Shares will be subject to the Share Offer and 358,500,000 Options will be subject to the Option Offer. Assuming that all the outstanding 358,500,000 Options are fully exercised prior to the close of the Offers, 5,621,319,836 Shares will be subject to the Share Offer. Save as aforesaid, there are no other outstanding warrants, options, derivatives or securities which are convertible into Shares and the Company has not entered into any agreement for the issue of such securities, options, derivatives or warrants of the Company as at the Latest Practicable Date. 8

13 LETTER FROM HAITONG INTERNATIONAL SECURITIES Principal terms of the Offers Accordingly, Haitong International Securities is, on behalf of the Offeror, making the Offers in accordance with the Takeovers Code on the following basis: The Share Offer For each Share... HK$0.18 in cash The Option Offer For cancellation of each outstanding Option... HK$ in cash The Share Offer Price of HK$0.18 for each Share under the Share Offer is the same as the price per Share of HK$0.18 at which the Sale Shares had been acquired by the Offeror under the Acquisition. The Share Offer will be extended to all Shareholders other than the Offeror and parties acting in concert with it in accordance with the Takeovers Code. Pursuant to Rule 13 of the Takeovers Code and Practice Note 6 of the Takeovers Code, the offer price for the outstanding Options would normally represent the difference between the exercise price of the Options and the Share Offer Price. Under the Option Offer, since the exercise price of the outstanding Options are above the Share Offer Price, the outstanding Options are out-of-money and the offer price for each outstanding Option is at a nominal value of HK$ Conditions of the Offers The Offers are subject to valid acceptances of the Share Offer being received (and not, where permitted, withdrawn) by 4:00 p.m. on or prior to the Offer Closing Date (or such later time(s) and/or date(s) as the Offeror may decide and the Executive may approve) in respect of such number of Shares which, together with the Shares already owned or agreed to be acquired before or during the Offers, would result in the Offeror and parties acting in concert with it holding more than 50% of the voting rights in the Company. The Offeror will issue an announcement in relation to the revision, extension or lapse of the Offers or the fulfillment of the conditions to the Offers in accordance with the Takeovers Code and the Listing Rules. The latest time on which the Offeror can declare the Offers unconditional as to acceptance is 7:00 p.m. on the 60th day after the posting of this Composite Document (or such later date to which the Executive may consent). WARNING: Shareholders, Optionholders and/or potential investors of the Company should note that the Offers are subject to the satisfaction of the Conditions. The Offers may or may not become unconditional. Shareholders, Optionholders and/or potential investors of the Company should therefore exercise caution when dealing in the Shares and Options. Persons who are in doubt as to the action they should take should consult their licensed securities dealers or registered institutions in securities, bank managers, solicitors, professional accountants or other professional advisers. 9

14 LETTER FROM HAITONG INTERNATIONAL SECURITIES Comparison of value The Share Offer Price of HK$0.18 for each Share under the Share Offer represents: (1) a discount of approximately 27.42% to the closing price of HK$0.248 per Share as quoted on the Stock Exchange on the Last Trading Day; (2) a discount of approximately 26.11% to the average closing price of HK$ per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day; (3) a discount of approximately 26.26% to the average closing price of HK$ per Share as quoted on the Stock Exchange for the 10 consecutive trading days up to and including the Last Trading Day; (4) a discount of approximately 27.62% to the average closing price of HK$ per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day; (5) a premium of approximately 1,163.64% over the net asset value per Share of approximately HK$ calculated based on the audited consolidated net asset value attributable to the Shareholders as at 31 December 2015, the date to which the latest audited financial results of the Group were made up, divided by the number of issued Shares as at the Latest Practicable Date; and (6) a discount of approximately 23.40% to the closing price of HK$0.235 per Share as quoted on the Stock Exchange on the Latest Practicable Date. Highest and lowest Share prices The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Relevant Period were HK$0.275 per Share on 7 March 2016 and HK$0.157 per Share on 15 December 2015 respectively. Total value of the Offers As at the Latest Practicable Date, there are 5,262,819,836 Shares in issue. Assuming that there is no change in the issued share capital of the Company and none of the outstanding Options is exercised prior to the Offer Closing Date, there would be 5,262,819,836 Shares in issue. On the basis of the Share Offer Price at HK$0.18 per Share, the entire issued share capital of the Company would be valued at approximately HK$947,307, Excluding the 1,610,740,000 Shares already owned by the Offeror and the parties acting in concert with it as at the Latest Practicable Date, 3,652,079,836 Shares will be subject to the Share Offer and the Share Offer is therefore valued at HK$657,374, based on the Share Offer Price. 10

15 LETTER FROM HAITONG INTERNATIONAL SECURITIES As at the Latest Practicable Date, the Company has 358,500,000 outstanding Options. Assuming that no Options are exercised before the Offer Closing Date and based on the Option Offer Price of HK$ per Option, the total consideration required to satisfy the cancellation of all the outstanding Options is HK$35,850. Accordingly, the Offers are valued at HK$657,410, in aggregate. Assuming that all the 358,500,000 outstanding Options are fully exercised prior to the close of the Offers, there would be 5,621,319,836 Shares in issue and 4,010,579,836 Shares subject to the Share Offer. On the basis of the Share Offer Price at HK$0.18 per Share, an additional sum of HK$64,530,000 shall be payable by the Offeror as a result thereof. Accordingly, the Offers are valued at HK$721,904, in aggregate on a fully-diluted basis. Financial resources available for the Offers On the basis of the Share Offer Price of HK$0.18 per Share, 5,262,819,836 issued Shares and 358,500,000 outstanding Options, the financial resources of the Offeror to fund the aggregate value of the Offers amounting to an aggregate of HK$657,410, are financed by the Facilities granted by Haitong International Securities (as lender) to the Offeror (as borrower) for the purpose of financing the Offers. The payment of interest on, repayment of or security for any liability (contingent or otherwise) for the Facilities will not depend to any significant extent on the business of the Group. Haitong International Capital, the financial adviser to the Offeror in respect of the Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy full acceptance of the Offers and confirm that there have been no material changes to the availability of financial resources since the date of the Joint Announcement and up until the Latest Practicable Date. Effect of accepting the Offers By validly accepting the Share Offer, Shareholders would sell their tendered Shares to the Offeror free from all Encumbrances and together with all rights attaching to them, including the rights to receive in full all dividends and other distributions, if any, declared, made or paid by reference to a record date on or after the date on which the Share Offer is made, that is, the date of posting of the Composite Document. By validly accepting the Option Offer, Optionholders would agree to the cancellation of their tendered Options and all rights attaching thereto with effect from the date of which the Option Offer is made, that is, the date of posting of the Composite Document. Optionholders should note that under the terms of the share option scheme of the Company conditionally adopted on 29 December 2009, all Options (to the extent not exercised) would lapse automatically 14 days after the date on which the offers become or is declared unconditional. Acceptance of the Offers would be irrevocable and would not be capable of being withdrawn, subject to the provisions of the Takeovers Code. 11

16 LETTER FROM HAITONG INTERNATIONAL SECURITIES Payments Provided that the Offers have become, or has been declared unconditional in all respects, payment in cash in respect of acceptance of the Offers would be made as soon as possible but in any event within seven Business Days (as defined under the Takeovers Code) of (i) the date on which the duly completed acceptance of the Offers and the relevant documents of title of the Shares or the Options (as the case may be) in respect of such acceptance are received by or for the Offeror to render each such acceptance of any of the Share Offer and the Option Offer complete and valid or (ii) the date on which the Offers become or are declared unconditional in all respects, whichever is the later. Stamp duty The seller s Hong Kong ad valorem stamp duty arising in connection with acceptance of the Share Offer amounting to 0.1% of the amount payable in respect of the relevant acceptance or if higher, the market value of the Shares, would be deducted from the amount payable to Shareholders who accept the Share Offer. The Offeror would bear its own portion of buyer s Hong Kong ad valorem stamp duty at the rate of 0.1% of the amount payable in respect of the relevant acceptances or if higher, the market value of the Shares, and would be responsible to account to the Stamp Office of Hong Kong for stamp duty payable for the sale and purchase of the Shares which are validly tendered for acceptance under the Share Offer. No stamp duty is payable in connection with the acceptance of the Option Offer. Overseas Shareholders As the Share Offer to persons not residing in Hong Kong might be affected by the laws of the relevant jurisdiction in which they are resident, overseas Shareholders whose addresses as shown in the registers of members of the Company are outside Hong Kong and beneficial owners of the Shares who are citizens, residents or nationals of a jurisdiction outside Hong Kong should obtain information about and observe any applicable legal or regulatory requirements and, where necessary, seek legal advice in respect of the Share Offer. It is the responsibility of the overseas Shareholders who wish to accept the Share Offer to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions). Any acceptance by any overseas Shareholder will be deemed to constitute a representation and warranty from such overseas Shareholder to the Offeror that the local laws and requirements have been complied with. The overseas Shareholders should consult their professional advisers if in doubt. 12

17 LETTER FROM HAITONG INTERNATIONAL SECURITIES Taxation advice Shareholders and Optionholders are recommended to consult their own professional advisers as to the taxation implications of accepting or rejecting the Offers. The Offeror accepts no responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Offers. Other arrangements The Offeror confirms that, as at the Latest Practicable Date: (i) (ii) save for the interest of the Offeror and Mr. You Zhenhua in the Shares, none of the Offeror, its ultimate beneficial owners and/or parties acting in concert with any of them owns or has control or direction over any voting right or rights over the Shares, options derivatives, warrants and other securities convertible into the Shares; none of the Offeror, its ultimate beneficial owners and/or parties acting in concert with any of them has received any irrevocable commitment whether to accept the Offers; (iii) there is no outstanding derivative in respect of securities in the Company which has been entered into by the Offeror, its ultimate beneficial owners or any person acting in concert with any of them; (iv) (v) (vi) save for the Facilities, there is no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code in relation to the shares of the Offeror or the Company and which might be material to the Offers; there is no agreement or arrangement to which the Offeror, its ultimate beneficial owners and/or parties acting in concert with any of them is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offers; and none of the Offeror, its ultimate beneficial owners and/or parties acting in concert with any of them has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company. Acceptance and Settlement Your attention is drawn to the further details regarding the procedures for acceptance and settlement of the Offers as set out in Appendix I to this Composite Document and the accompanying Forms of Acceptance. 13

18 LETTER FROM HAITONG INTERNATIONAL SECURITIES Shareholding structure of the Company The table below sets out the shareholding structure of the Company (based on information received by the Company and notified pursuant to Part XV of the SFO as at the Latest Practicable Date) (i) immediately before Completion; and (ii) immediately following Completion and as at the Latest Practicable Date: Shareholders Immediately before Completion No. of Shares Approximate % Immediately following Completion and as at the Latest Practicable Date No. of Shares Approximate % Offeror and parties acting in concert with it You Zhenhua 1,040, ,040, Offeror 1,609,700, Sub-total 1,040, ,610,740, Vendors 1,609,700, Public Shareholders 3,652,079, ,652,079, Total 5,262,819, ,262,819, INFORMATION ON THE GROUP Your attention is drawn to the details of the information of the Group as set out under the section headed INFORMATION ON THE GROUP in the LETTER FROM THE BOARD and in Appendices II and III to this Composite Document. INFORMATION ON THE OFFEROR Information of the Offeror The Offeror is an investment holding company incorporated on 6 January 2016 and did not carry out any other business activities other than holding of Shares. in the BVI with limited liability. The Offeror is legally and beneficially owned as to 65% by Bright Power Ventures Limited (a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. You Zhenhua), 25% by Charming Investment Holdings Limited (a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. Lam Chi Ming) and 10% by Brilliant Mark Limited (a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. Dong Ping) as at the Latest Practicable Date. 14

19 LETTER FROM HAITONG INTERNATIONAL SECURITIES As at the Latest Practicable Date, the Offeror Directors are Mr. You Zhenhua and Mr. Lam Chi Ming. Mr. You Zhenhua has more than 13 years experience in commodities trading business. Mr. You is the chairman and the executive director of Prosperity Steel United Singapore Pte. Ltd. ( PSU ) which is principally engaged in commodities trading including iron ore and coal. PSU was first admitted in 2005 under the Global Trader Program in Singapore which provides a reduced corporate tax rate for qualified companies that have a wide trading and distribution network, and are committed to expanding their operation from Singapore. Mr. Lam Chi Ming engages in the trading of antiques, natural jadeite jade jewelry and precious handicrafts. Mr. Dong Ping is an executive director of Huanxi Media Group Limited, a company listed on the Main Board of the Stock Exchange (stock code: 1003) from 2 September 2015 and he redesignated as the chairman of board of directors for Huanxi Media Group Limited from 15 January Mr. Dong has extensive experience, knowledge and connection in investment and operation of Chinese media, advertisement, satellite TV, film productions and media fields and was the former Chairman of ChinaVision Media Group Limited (now known as Alibaba Pictures Group Limited), a company listed on the Main Board of the Stock Exchange (stock code: 1060). From August 2003 to April 2005, Mr. Dong was the president of Asian Union Film and Media. Between 31 May 2005 and 11 January 2008, Mr. Dong was appointed as an executive director of Asian Union New Media (Group) Limited (now known as China Jiuhao Health Industry Corporation Limited), a company listed on the Main Board of the Stock Exchange (stock code: 419), and was the chairman of its board of directors from 12 May 2006 to 11 January THE OFFEROR S INTENTIONS IN RELATION TO THE GROUP Following the close of the Offers, the Offeror intends to continue the existing principal businesses of the Group. The Offeror will conduct a review on the financial position and the operations of the Group and will formulate long-term business plans and strategy of the Group, explore other business opportunities and consider whether any asset disposals, asset acquisitions, business rationalisation, business divestment, fund raising, restructuring of the business and/or business diversification will be appropriate to enhance the long-term growth potential of the Group. The Offeror has no intention to (i) discontinue the employment of any employees of the Group; or (ii) redeploy the fixed assets of the Group other than those in its ordinary and usual course of business. PROPOSED CHANGE OF BOARD COMPOSITION The Board is currently made up of five Directors, comprising two executive Directors and three independent non-executive Directors. The Offeror intends to nominate new Directors to the Board and such appointments will not take effect earlier than the date of posting of the Composite Document in relation to the Offers or such other date as permitted under the Takeovers Code. As at the Latest Practicable Date, the Offeror had not reached 15

20 LETTER FROM HAITONG INTERNATIONAL SECURITIES any final decision as to who will be nominated as new Directors. Any changes to the Board will be made in compliance with the Takeovers Code and the Listing Rules and a separate announcement will be made in this regard as and when appropriate. MAINTAINING THE LISTING STATUS OF THE COMPANY The Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offers. In the event that the public float of the Company falls below 25% following the close of the Offers, the Offeror Directors, the Directors and any new directors of the Company to be appointed will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the Listing Rules as soon as possible following the close of the Offers to ensure that sufficient public float exists for the Shares. The Stock Exchange has stated that if, at the closing of the Offers, less than the minimum prescribed percentage applicable to the Company, being 25%, of the issued Shares are held by the public or if the Stock Exchange believes that: (a) (b) a false market exists or may exist in the trading of the Shares; or there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend dealings in the Shares. In this connection, it should be noted that following the close of the Offers, there may be insufficient public float of the Shares and therefore, trading in the Shares may be suspended until sufficient public float exists in the Shares. COMPULSORY ACQUISITION The Offeror does not intend to exercise any right which may be available to it under the provisions of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) to acquire compulsorily any outstanding Shares not acquired under the Offers after the close of the Offers. GENERAL The attention of the Overseas Shareholders and Optionholders is drawn to paragraph 9 in Appendix I to the Composite Document. All communications, notices, Forms of Acceptance, Share certificate(s), transfer receipt(s), other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to settle the consideration payable under the Offers to be delivered by or sent to or from the Independent Shareholders and/or Optionholders will be delivered by or sent to or from them, or their designated agents, by ordinary post at their own risk, and none of the Company, the Offeror, Haitong International 16

21 LETTER FROM HAITONG INTERNATIONAL SECURITIES Capital, Haitong International Securities, the Independent Financial Adviser, the Registrar and any of their respective directors or other parties involved in the Offers or any of their respective agents accept any liability for any loss in postage or any other liabilities that may arise as a result thereof. Further details have been set out in Appendix I to this Composite Document and in the Forms of Acceptance. ADDITIONAL INFORMATION Your attention is drawn to the LETTER FROM THE BOARD, the LETTER FROM THE INDEPENDENT BOARD COMMITTEE and the LETTER FROM THE INDEPENDENT FINANCIAL ADVISER as set out in this Composite Document, the accompanying Forms of Acceptance and the additional information set out in the appendices to, which form part of, this Composite Document and to consult your professional advisers as you see fit. Yours faithfully For and on behalf of Haitong International Securities Company Limited Hui Yee, Wilson Managing Director 17

22 LETTER FROM THE BOARD THEME INTERNATIONAL HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock code: 990) Executive Directors: Mr. Ng Chi Lung (Vice Chairman) Mr. Wong Hok Bun, Mario Independent non-executive Directors: Mr. Chan Chi Ming, Tony Mr. Wu Shiming Mr. Chan Wah Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head Office and Principal Place of Business: Suite 3604, 36/F, West Tower Shun Tak Centre Connaught Road Central Sheung Wan Hong Kong 29 June 2016 To the Independent Shareholders and Optionholders Dear Sir or Madam, MANDATORY CONDITIONAL CASH OFFERS BY HAITONG INTERNATIONAL SECURITIES COMPANY LIMITED ON BEHALF OF WIDE BRIDGE LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF THEME INTERNATIONAL HOLDINGS LIMITED AND CANCEL ALL OUTSTANDING OPTIONS OF THEME INTERNATIONAL HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT) INTRODUCTION On 19 May 2016, the Board was informed by the Offeror that the Offeror has acquired the Sales Shares at an aggregate consideration of approximately HK$289,746,000 in the following manner: 18

23 LETTER FROM THE BOARD (1) 877,000,000 Sales Shares representing approximately 16.66% of the entire issued share capital of the Company as at the Last Trading Day at the consideration of HK$157,860,000 in cash, representing HK$0.18 per Sale Share, through a broker through an off market block trade on 13 May 2016 (the 1 st Acquisition ). As confirmed by the Offeror with the broker, there was 1 vendor under the 1 st Acquisition. The relevant vendor is an independent third party not connected with the Offeror and parties acting in concert with it. (2) 732,700,000 Sales Shares representing approximately 13.92% of the entire issued share capital of the Company as at the Last Trading Day at the consideration of HK$131,886,000 in cash, representing HK$0.18 per Sale Share, through a broker through an off market block trade on 19 May 2016 (the 2 nd Acquisition ). As confirmed by the Offeror with the broker, there were 6 vendors under the 2 nd Acquisition. The relevant vendors are all independent third parties not connected with the Offeror and parties acting in concert with it. The Completion took place on or before 19 May Immediately following Completion and as at the Latest Practicable Date, the shareholding of the Offeror and the parties acting in concert with it increased from approximately 0.02% to 30.61% of the existing issued share capital of the Company. Accordingly, the Offeror and parties acting in concert with it are required to make a conditional mandatory cash offer to acquire all issued Shares (other than those Shares already owned or agreed to be acquired by the Offeror and parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code. Pursuant to Rule 13.5 of the Takeovers Code, the Option Offer will be made to cancel all outstanding Options. Pursuant to Rules 2.1 and 2.8 of the Takeovers Code, the Company has established the Independent Board Committee comprising the non-executive Directors who have no direct or indirect interest in the Offer namely, Mr. Chan Wah, Mr. Chan Chi Ming, Tony and Mr. Wu Shiming, to advise the Independent Shareholders in relation to the terms and conditions of the Offers, in particular as to whether the Offers are, or are not, fair and reasonable and as to the acceptance of the Offers. Pursuant to Rule 2.1 of the Takeovers Code, Nuada has been appointed as the Independent Financial Adviser by the Company after approval by the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders in respect of the Offers and in particular as to whether the Offers are, or are not, fair and reasonable so far as the Independent Shareholder and Optionholders are concerned and as to the acceptance of the Offers. The purpose of this Composite Document is to provide you with, among other things, information relating to the Group, the Offeror and the Offers as well as setting out the letter from the Independent Board Committee containing its recommendation to the Independent Shareholders and the Optionholders in respect of the terms of the Offers and as to acceptance and the letter from the Independent Financial Adviser containing their advice to the Independent Board Committee in respect of the terms of the Offers and as to acceptance. 19

24 LETTER FROM THE BOARD THE OFFERS As at the Latest Practicable Date, there were 5,262,819,836 Shares in issue and 358,500,000 outstanding Options in respect of 358,500,000 Shares. All 358,500,000 outstanding Options were granted pursuant to the share option scheme adopted by the Company on 29 December Assuming that none of the outstanding Options are exercised prior to the close of the Offers, 5,262,819,836 Shares will be subject to the Share Offer and 358,500,000 Options will be subject to the Option Offer. Assuming that all the outstanding 358,500,000 Options are fully exercised prior to the close of the Offers, 5,621,319,836 Shares will be subject to the Share Offer. Save as aforesaid, there are no outstanding warrants, options, derivatives, warrants or securities which are convertible into Shares and the Company has not entered into any agreement for the issue of such securities, options, derivatives or warrants of the Company as at the Latest Practicable Date. Principal terms of the Offers As mentioned in the LETTER FROM HAITONG INTERNATIONAL SECURITIES on page 7 to 17 of this Composite Document, Haitong International Securities is, on behalf of the Offeror, making the Offers in accordance with the Takeovers Code on the following basis: The Share Offer For each Share... HK$0.18 in cash The Option Offer For cancellation of each outstanding Option... HK$ in cash The Share Offer Price of HK$0.18 for each Share under the Share Offer is the same as the price per Share of HK$0.18 at which the Sale Shares had been acquired by the Offeror under the Acquisition. The Share Offer will be extended to all Shareholders other than the Offeror and parties acting in concert with it in accordance with the Takeovers Code. Pursuant to Rule 13 of the Takeovers Code and Practice Note 6 of the Takeovers Code, the offer price for the outstanding Options would normally represent the difference between the exercise price of the Options and the Share Offer Price. Under the Option Offer, since the exercise prices of the outstanding Options are above the Share Offer Price, the outstanding Options are out-of-money and the offer price for each outstanding Option is at a nominal value of HK$ Further details of the Offers, including terms and procedures for acceptance of the Offers, are contained in the LETTER FROM HAITONG INTERNATIONAL SECURITIES as set out on pages 7 to 17 and Appendix I to this Composite Document and the accompanying Forms of Acceptance. 20

25 LETTER FROM THE BOARD SHAREHOLDING STRUCTURE OF THE COMPANY The table below sets out the shareholding structure of the Company (based on information received by the Company and notified pursuant to Part XV of the SFO as at the Latest Practicable Date) (i) immediately before Completion; and (ii) immediately following Completion and as at the Latest Practicable Date: Shareholders Immediately before Completion No. of Shares Approximate % Immediately following Completion and as at the Latest Practicable Date No. of Shares Approximate % Offeror and parties acting in concert with it You Zhenhua 1,040, ,040, Offeror 1,609,700, Sub-total 1,040, ,610,740, Vendors 1,609,700, Public Shareholders 3,652,079, ,652,079, Total 5,262,819, ,262,819, INFORMATION ON THE GROUP The Group is principally engaged in the business of loan financing services and trading of commodities, chemical materials and organic foods. The audited total comprehensive loss attributable to the owners of the Company were approximately HK$24.1 million and HK$21.4 million respectively for the financial years ended 31 December 2015 and 31 December The net assets value of the Group was approximately HK$81.4 million as at 31 December 2015 and the net liabilities of the Group was approximately HK$9.0 million as at 31 December Further details of the information of the Group are set out in Appendices II and III to this Composite Document. INFORMATION ON THE OFFEROR Your attention is drawn to the section headed INFORMATION ON THE OFFEROR in the LETTER FROM HAITONG INTERNATIONAL SECURITIES as set out on pages 14 to 15 of this Composite Document. 21

26 LETTER FROM THE BOARD THE OFFEROR S INTENTIONS IN RELATION TO THE GROUP Your attention is drawn to the sections headed INFORMATION ON THE OFFEROR and THE OFFEROR INTENTION S IN RELATION TO THE GROUP in the LETTER FROM HAITONG INTERNATIONAL SECURITIES as set out on pages 14 and 15 of this Composite Document. The Board is aware of the intention of the Offeror in respect of the Company and is willing to render reasonable co-operation with the Offeror which is in the interests of the Company and the Shareholders as a whole. The Board is pleased to learn that the Offeror intends to continue the existing principal businesses of the Group and that the Offeror has no intention to discontinue the employment of any employees of the Group or redeploy the fixed assets of the Group other than those in the ordinary and usual course of business. MAINTAINING THE LISTING STATUS OF THE COMPANY The Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offers. In the event that the public float of the Company falls below 25% following the close of the Offers, the Offeror Directors, the Directors and any new directors of the Company to be appointed will jointly and severally undertake to the Stock Exchange that they would take appropriate steps to restore the minimum public float as required under the Listing Rules as soon as possible following the close of the Offers to ensure that sufficient public float exists for the Shares. The Stock Exchange has stated that if, at the closing of the Offers, less than the minimum prescribed percentage applicable to the Company, being 25%, of the issued Shares are held by the public or if the Stock Exchange believes that: (a) (b) a false market exists or may exist in the trading of the Shares; or there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend dealings in the Shares. RECOMMENDATION Your attention is drawn to (i) the LETTER FROM THE INDEPENDENT BOARD COMMITTEE on pages 24 to 25 of this Composite Document, which sets out its advice and recommendations to the Independent Shareholders and the Optionholders as to whether the terms of the Offers are, or are not, fair and reasonable so far as the Independent Shareholder and Optionholders are concerned, and as to acceptance thereof; and (ii) the LETTER FROM THE INDEPENDENT FINANCIAL ADVISER on pages 26 to 43 of this Composite Document, which sets out its advice and recommendation to the Independent Board Committee as to whether the terms of the Offers are, or are not, fair and reasonable so far as the Independent Shareholder and Optionholders are concerned, and as to acceptance thereof, and the principal factors considered by it before arriving at its advice and recommendation. 22

27 LETTER FROM THE BOARD ADDITIONAL INFORMATION You are advised to read this Composite Document together with the accompanying Forms of Acceptance in respect of the acceptance and settlement procedures of the Offers. Your attention is drawn to the additional information contained in the appendices to this Composite Document. In considering what action to take in connection with the Offers, you should also consider your own tax positions, if any, and in case of doubt, consult your professional advisers. Yours faithfully, By order of the Board Theme International Holdings Limited Ng Chi Lung Executive Director 23

28 LETTER FROM THE INDEPENDENT BOARD COMMITTEE THEME INTERNATIONAL HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock code: 990) To the Independent Shareholders and Optionholders 29 June 2016 COMPOSITE OFFER AND RESPONSE DOCUMENT RELATING TO THE MANDATORY CONDITIONAL CASH OFFERS BY HAITONG INTERNATIONAL SECURITIES COMPANY LIMITED ON BEHALF OF WIDE BRIDGE LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF THEME INTERNATIONAL HOLDINGS LIMITED AND CANCEL ALL OUTSTANDING OPTIONS OF THEME INTERNATIONAL HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT) INTRODUCTION We refer to the composite offer and response document dated 29 June 2016 issued jointly by the Offeror and the Company of which this letter forms part. Capitalised terms used in this letter have the same meanings as defined elsewhere in the Composite Document unless the context requires otherwise. We have been appointed to form the Independent Board Committee to consider the terms of the Offers and to advise you as to whether, in our opinion, the terms of the Offers are, or are not, fair and reasonable so far as the Independent Shareholders and Optionholders are concerned, and as to acceptances thereof. Nuada has been appointed as the independent financial adviser to advise us in respect of the terms of the Offers and as to acceptance thereof. Details of its advice and the principal factors and reasons taken into account by it in arriving at its advice and recommendation are set out in the LETTER FROM THE INDEPENDENT FINANCIAL ADVISER on pages 26 to 43 of this Composite Document. We also wish to draw your attention to the LETTER FROM THE BOARD, the LETTER FROM HAITONG INTERNATIONAL SECURITIES and the additional information set out in the appendices to the Composite Document. 24

29 LETTER FROM THE INDEPENDENT BOARD COMMITTEE RECOMMENDATION Having considered the terms of the Offers and the letter of advice and recommendations from Nuada, we consider that the terms of the Offers are fair and reasonable so far as the Independent Shareholders and Optionholders are concerned, and therefore we recommend the Independent Shareholders to accept the Share Offer and the Optionholders to accept the Option Offer. The Independent Shareholders and Optionholders are recommended to read the full text of the LETTER FROM THE INDEPENDENT FINANCIAL ADVISER set out in the Composite Document. However, if the net proceeds from the sale of the Shares in the open market after deducting all transaction cost would exceed the net amount receivable under the Share Offer, the Independent Shareholders should consider selling their Shares in the market, rather than accepting the Share Offer. Notwithstanding our recommendation, the Independent Shareholders and Optionholders should consider carefully the terms and conditions of the Offers. Mr. Chan Wah Independent non-executive Director Yours faithfully, For and on behalf of the Independent Board Committee Mr. Chan Chi Ming, Tony Independent non-executive Director Mr. Wu Shiming Independent non-executive Director 25

30 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Set out below is the text of a letter received from Nuada Limited, the Independent Financial Adviser to the Independent Board Committee in respect of the Offers prepared for the purpose of inclusion in this document. Unit , 18/F Wan Wing Lok Street Sheung Wan, Hong Kong To the Independent Board Committee of Theme International Holdings Limited Dear Sirs, 29 June 2016 MANDATORY CONDITIONAL CASH OFFERS BY HAITONG INTERNATIONAL SECURITIES COMPANY LIMITED ON BEHALF OF WIDE BRIDGE LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF THEME INTERNATIONAL HOLDINGS LIMITED AND CANCEL ALL OUTSTANDING OPTIONS OF THEME INTERNATIONAL HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY THE OFFEROR AND PARTIES ACTING IN CONCERT WITH IT) INTRODUCTION We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee in respect of the terms of the Offers, details of which are set out in the Composite Document dated 29 June 2016 jointly issued by the Company and the Offeror to the Independent Shareholders and Optionholders, of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Composite Document unless the context requires otherwise. As disclosed in the Letter from the Board in this Composite Document, the Board was informed by the Offeror that the Offeror has acquired the Sales Shares at an aggregate consideration of approximately HK$289,746,000 in the following manner: (1) 877,000,000 Sales Shares representing approximately 16.66% of the entire issued share capital of the Company as at the Last Trading Day at the consideration of HK$157,860,000 in cash, representing HK$0.18 per Sale Share, through a broker through an off market block trade on 13 May 2016 (the 1st Acquisition ). As confirmed by the Offeror with the broker, there was 1 vendor under the 1st Acquisition. The relevant vendor is an independent third party not connected with the Offeror and parties acting in concert with it. 26

31 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER (2) 732,700,000 Sales Shares representing approximately 13.92% of the entire issued share capital of the Company as at the Last Trading Day at the consideration of HK$131,886,000 in cash, representing HK$0.18 per Sale Share, through a broker through an off market block trade on 19 May 2016 (the 2nd Acquisition ) As confirmed by the Offeror with the broker, there were 6 vendors under the 2nd Acquisition. The relevant vendors are all independent third parties not connected with the Offeror and parties acting in concert with it. The Completion took place on or before 19 May During the period between 8 December 2015 and 21 December 2015, Mr. You Zhenhua has acquired in aggregate of 1,040,000 Shares at price ranging from HK$0.160 to HK$ Such acquisition of Shares were made before the consortium was formed or contemplated. Immediately following Completion and as at the Latest Practicable Date, the shareholding of the Offeror and the parties acting in concert with it increased from approximately 0.02% to 30.61% of the existing issued share capital of the Company. Accordingly, the Offeror and parties acting in concert with it are required to make a mandatory conditional cash offer to acquire all issued Shares (other than those Shares already owned or agreed to be acquired by the Offeror and parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code. Pursuant to Rule 13.5 of the Takeovers Code, the Option Offer will be made to cancel all outstanding Options. Haitong International Securities is, on behalf of the Offeror, making the Offers in accordance with the Takeovers Code on the following basis: The Share Offer For each Share... HK$0.18 in cash The Option Offer For cancellation of each outstanding Option... HK$ in cash The Share Offer Price of HK$0.18 for each Share under the Share Offer is the same as the price per Share of HK$0.18 at which the Sale Shares had been acquired by the Offeror under the Acquisition. The Share Offer will be extended to all Shareholders other than the Offeror and parties acting in concert with it in accordance with the Takeovers Code. Pursuant to Rule 13 of the Takeovers Code and Practice Note 6 of the Takeovers Code, the offer price for the outstanding Options would normally represent the difference between the exercise price of the Options and the Share Offer Price. Under the Option Offer, since the exercise prices of the outstanding Options of HK$1.7 and HK$0.27 are above the Share Offer Price, the outstanding Options are out-of-money and the offer price for each outstanding Option is at a nominal value of HK$

32 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Pursuant to Rules 2.1 and 2.8 of the Takeovers Code, the Company has established the Independent Board Committee comprising the non-executive Directors who have no direct or indirect interest in the Offers namely, Mr. Chan Wah, Mr. Chan Chi Ming, Tony and Mr. Wu Shiming, to advise the Independent Shareholders in relation to the terms and conditions of the Offers, in particular as to whether the Offers are, or are not, fair and reasonable and as to the acceptance of the Offers. We, Nuada Limited, have been appointed by the Company to advise the Independent Board Committee in respect of the Offers and in particular as to whether the Offers are, or are not, fair and reasonable so far as the Independent Shareholder and Optionholders are concerned and as to the acceptance of the Offers. Our appointment has been approved by the Independent Board Committee. We are independent from, and are not associated with the Offeror, Bright Power Ventures Limited, Mr. You Zhenhua, Charming Investment Holdings Limited, Mr. Lam Chi Ming, Brilliant Mark Limited, Mr. Dong Ping, the Company, or the Company s controlling shareholder(s), or any party acting, or presumed to be acting, in concert with any of the above, or any company controlled by any of it/them. In the past two years prior to the date of our engagement as the Independent Financial Adviser, we have been appointed as the independent financial adviser to the then independent board committee and independent shareholders of the Company on (i) 15 May 2015 regarding a possible connected transaction (the Connected Transaction ). The Company did not make any announcement in relation to the Connected Transaction. According to the management of the Company, the Connected Transaction was cancelled and our engagement in respect of the Connected Transaction was terminated on 28 May 2015; and (ii) 2 June 2015 regarding a proposed subscription of new Shares and convertible bonds issued by the Company and a related whitewash waiver (the Whitewash Subscription ). Details of the Whitewash Subscription are set out in the initial announcement of the Company dated 28 August According to the management of the Company and as announced by the Company on 3 November 2015, the Whitewash Subscription was cancelled and our engagement was subsequently terminated on 1 February These two previous appointments were limited to provide independent advisory services to the then independent board committee and independent shareholders of the Company on whether the Connected Transaction and the Whitewash Subscription were fair and reasonable and in the interests of the Company and the Shareholders as a whole. Apart from normal professional fees paid or payable to us in connection with the previous appointments mentioned above, as well as this appointment as the Independent Financial Adviser in respect of the Offers, no arrangements exist whereby we had received or will receive any fees or benefits from the Offeror, Bright Power Ventures Limited, Mr. You Zhenhua, Charming Investment Holdings Limited, Mr. Lam Chi Ming, Brilliant Mark Limited, Mr. Dong Ping, the Company, or the Company s controlling shareholder(s), or any party acting, or presumed to be acting, in concert with any of the above, or any company controlled by any of it/them. Accordingly, we consider that the aforementioned previous appointments would not affect our independence, and that we comply with Rule 2.6 of the Takeovers Code and are eligible to give independent advice in respect of the Offers to the Independent Board Committee. 28

33 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER BASIS OF OUR OPINION In formulating our opinion to the Independent Board Committee, we have relied on the statements, information, opinions and representations contained or referred to in the Composite Document and the representations made to us by the Directors and the senior management of the Company. We have assumed that all statements, information and representations provided by the Directors and the management of the Company, for which they are solely responsible, are true and accurate at the time when they were provided and continue to be so as at the Latest Practicable Date and the Independent Shareholders will be notified of any material changes to such statements, information, opinions and/or representations as soon as possible in accordance with Rule 9.1 of the Takeovers Code. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Composite Document were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Composite Document, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than that relating to the Offeror, the directors of the Offeror, their associates and parties acting in concert with any of them, the terms and conditions of the Offers and the intention of the Offeror regarding the Group) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Offeror, the directors of the Offeror, their associates and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading. The directors of the Offeror, Mr. You Zhenhua and Mr. Lam Chi Ming, jointly and severally accept full responsibility for the accuracy of the information (other than that relating to the Group, the Vendors, their associates and parties acting in concert with any of them) contained in this Composite Document, and confirm, having made all reasonable enquires, that to the best of his knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Group, the Vendors, their associates and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading. We consider that we have been provided with sufficient information and have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule of the Listing Rules. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group. We have not considered the taxation implication on the Group or the Independent Shareholders as a result of the Offers. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Where information in this letter has been extracted from published or otherwise 29

34 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER publicly available sources, the sole responsibility of us is to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant stated sources and not be used out of context. PRINCIPAL FACTORS AND REASONS CONSIDERED In formulating our opinion and recommendation with regards to the Offers, we have taken into account the following principal factors and reasons: 1. Information of the Group and Market Outlook (a) Financial Information of the Group As disclosed in the Letter from the Board in the Composite Document and according to the management of the Company, currently the Group is principally engaged in the business of loan financing services and trading of commodities, chemical materials and organic foods. Set out below is an extract of (i) consolidated statement of profit or loss and other comprehensive income of the Group for the five years ended 31 December 2011, 2012, 2013, 2014 and 2015; and (ii) consolidated statement of financial position of the Group as at the two years ended 31 December 2014 and 31 December 2015, respectively: Table 1: Consolidated statement of profit or loss and other comprehensive income of the Group For the year ended 31 December HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (audited) (audited) (audited) (audited) (audited) Revenue 55,044 77,492 87,274 89,762 99,730 Retailing of garments 21,089 77,492 87,274 89,762 99,730 Loan financing services 730 Trading 33,225 Segment profit/ (loss) Retailing of garments (12,319) (8,051) (7,484) (10,931) (5,447) Loan financing services (3,620) Trading 75 30

35 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER For the year ended 31 December HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (audited) (audited) (audited) (audited) (audited) Loss for the year attributable to owners of the Company 23,383 22,253 15,341 43,286 64,681 Table 2: Consolidated statement of financial position of the Group As at 31 December HK$ 000 HK$ 000 (audited) (audited) Net current assets/(liabilities) 80,638 (13,615) Net assets/(liabilities) 81,409 (8,994) For the year ended 31 December 2014 As stated in the annual report of the Group for the financial year ended 31 December 2015 (the Annual Report 2015 ) and according to the management of the Company, prior to 2015, the Group principally engaged only in retailing of garments through the operation of retail outlets and department store counters in Taiwan through Taiwan Vision Company Limited ( TVCL ), a wholly-owned subsidiary of the Company. As shown in Table 1 above, the revenue of the Group, attributable to the retailing of garments (the only reportable segment of the Group for FY2014) fell by approximately 11.2% from approximately HK$87.3 million for the year ended 31 December 2013 ( FY2013 ) to approximately HK$77.5 million for the year ended 31 December 2014 ( FY2014 ). The loss attributable to owners of the Company rose from approximately HK$15.3 million for FY2013 to approximately HK$22.3 million for FY2014, representing an increase of approximately 45.8%. As stated in the annual report of the Group for the financial year ended 31 December 2014 (the Annual Report 2014 ), such increase in loss was primarily due to (i) the decrease in gross profit from retailing of garments, the only reportable segment of the Group for FY2014; and (ii) the increase in administrative expenses. For the year ended 31 December 2015 As stated in the Annual Report 2015, the Group has recorded losses for the last five consecutive financial years. In view of the unsatisfactory performance of the Group and as part of the business plan as stated in the Annual Report 2014 and according to the management of the Company, the Group has been exploring 31

36 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER and evaluating new businesses and investment opportunities which could be of good potential and/or long-term benefits to the Group and the Shareholders. Since then, the Group commenced its loan financing services business and distribution and trading business in April and May 2015 respectively. Also as stated in the Annual Report 2015 and according to the management of the Company, the Board resolved in November 2015 to gradually scale down the relevant garment business in Taiwan with a view to further evaluate the business strategy in Taiwan from time to time, taking into consideration of the business performance of TVCL, the continuous increase in operating cost and the highly competitive environment in garments retail business in Taiwan. In March 2016, in view of the continuous need of capital and recurring losses in last five financial years, the Board has further resolved to cease the Taiwan garment retailing business after the remaining inventory was sold. As shown in Table 1 above, the revenue of the Group continued to fall by approximately 29.0% from approximately HK$77.5 million for FY2014 to approximately HK$55.0 million for the year ended 31 December 2015 ( FY2015 ). As disclosed in the Annual Report 2015, such decrease was due to the highly competitive business environment in Taiwan s garment retailing business and the close down of loss making shops and counters of the Group in Taiwan. The loss attributable to owners of the Company rose from approximately HK$22.3 million for FY2014 to approximately HK$23.4 million for FY2015, representing an increase of approximately 4.9%. As stated in the Annual Report 2015, such increase was primarily attributable to the decrease in revenue and the drop in gross profit due to the highly competitive business environment in Taiwan s garment retailing business and the close down of loss making shops and counters in Taiwan. We noted from Table 1 that of the two newly commenced business segments of the Group, (i) the loan financing services business of the Group was loss-making for FY2015; and (ii) the trading business only contributed a segment profit of HK$75,000 while generating a revenue of approximately HK$33.2 million for FY2015, representing a profit margin of approximately 0.2%. We also understand that the Taiwan garment retailing business was ceased in March 2016 and it is the intention of the Offeror to pursue the existing two businesses of the Group (please refer to the paragraph headed 2. Information on the Offeror and the Offeror s intention regarding the Group below). In view of the above, we are of the view that it is uncertain whether there would be a turnaround in the Group s financial performance in the near future. 32

37 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER (b) Market Outlook In order to understand the industry of the Group s existing business, we study the market outlook of (i) the money lending industry; and (ii) the trading of bulk commodities industry. Money lending industry To study the outlook of the money lending market in Hong Kong, we intended to study the increase of the dollar amount of newly approved loan and advance in Hong Kong. However, according to the information from the website of the Hong Kong Monetary Authority and Census and Statistics Department of Hong Kong, we cannot identify any information in relation to the dollar amount of the newly approved loan and advance. Instead, we find out the information regarding the total loans and advances which is stated in Table 3 below. We are of the view that, although the information as stated in Table 3 below cannot directly show the information in relation to the dollar amount of the newly approved loan and advance in Hong Kong, it can demonstrate (i) the total outstanding loans and advances at particular point of time (as at end of April in this case); (ii) the difference of the total outstanding loans and advances at end of April in different years; and (iii) the relevant rate of difference. Since the information set out below can demonstrate the market size of the total loans and advances in Hong Kong at particular point of time and the growth rate of the aforesaid when compare with previous year of the corresponding point of time, we are of the view that the statistics can provide meaningful information for Shareholders to understand the market of money lending industry in Hong Kong. Set out below is the summary of total loans and advances denominated in Hong Kong dollar granted by authorised institutions in Hong Kong (i.e. the dollar amount of existing loan and advances denominated in Hong Kong dollars granted by authorised institutions in Hong Kong as at the end of April) as stated in the Monthly Statistical Bulletin (June 2016 Issue No. 262) published by Hong Kong Monetary Authority: Table 3: Total loans and advances denominated in Hong Kong dollar granted in Hong Kong As at the end of April of (Note) Total loans and advances denominated in Hong Kong dollar (in billion HK$) 2, , , , , ,176.8 Annual growth rate (Note) Source: Hong Kong Monetary Authority Note: The latest available data for the total outstanding loans and advances in Hong Kong is up to April Amounts as at the end of April are compared with the same point of time of previous year in order to account for any potential seasonal effect. 33

38 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER As shown in the above Table 3, we noted that the total loans and advances denominated in Hong Kong dollars granted by authorised institutions in Hong Kong was growing at a much slower pace in recent years. The annual growth rate was as high as approximately 14.0% when compared the figure as at 30 April 2011 to that as at 30 April 2010 and further dropped to 6.9% when compared the figure as at 30 April 2012 to that as at 30 April After rebounding with an annual growth rate of approximately 10.6% when compared the figure as at 30 April 2014 to that as at 30 April 2013, it decreased to approximately 2.1% when compared the figure as at 30 April 2016 to that as at 30 April We are of the view that the decreasing trend of the growth rate of total outstanding loans and advances in recent year cast doubt on the outlook of the money lending market in Hong Kong. Trading of bulk commodities industry Regarding the trading business of the Group, we noted from the management of the Company that the Group mainly traded chemical materials, in particular those used for manufacturing of textile products, in FY2015 and has shifted its focus to trading of bulk commodities and related products since late 2015 in the PRC, with several iron ore purchase contracts and sale contracts entered into in December 2015 and early As such, we study the aforesaid trading industry in the PRC and review the relevant statistics available on the online database of the National Bureau of Statistics of the PRC as summarised below: Table 4: Turnover of metal materials and coal and related products Year Turnover of metal materials (in billion Renminbi) 1, , , , ,124.8 Annual growth rate 38.5% 14.5% 26.5% 1.6% -9.5% Turnover of coal and related products (in billion Renminbi) Annual growth rate 184.9% -8.6% -17.0% -6.1% -10.1% Source: National Bureau of Statistics of the PRC ( Note: We sought for relevant official statistics for year 2015 and noted that those statistics are only available for as latest as year As shown in Table 4 above, the turnover of metal materials increased rapidly with double-digit growth rates from 2010 to However, the growth dropped substantially in 2013 and turned negative in Meanwhile, the turnover of coal and related products recorded a substantial growth of approximately 184.9% 34

39 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER in 2010 but decreased continuously in the four years thereafter. Based on the above statistics, we are uncertain as to the future prospects of the trading business of the Group. 2. Information on the Offeror and the Offeror s intention regarding the Group (a) Information on the Offeror As disclosed in the Letter from Haitong International Securities in the Composite Document, the Offeror is an investment holding company incorporated in the BVI with limited liability on 6 January 2016 and did not carry out any other business activities other than holding of Shares. The Offeror is legally and beneficially owned as to 65% by Bright Power Ventures Limited (a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. You Zhenhua), 25% by Charming Investment Holdings Limited (a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. Lam Chi Ming) and 10% by Brilliant Mark Limited (a company incorporated in the BVI with limited liability which is wholly and beneficially owned by Mr. Dong Ping) as at the Latest Practicable Date. As at the Latest Practicable Date, the Offeror Directors are Mr. You Zhenhua and Mr. Lam Chi Ming. Mr. You Zhenhua has more than 13 years experience in commodities trading business. Mr. You is the chairman and the executive director of Prosperity Steel United Singapore Pte. Ltd. ( PSU ) which is principally engaged in commodities trading including iron ore and coal. PSU was first admitted in 2005 under the Global Trader Program in Singapore which provides a reduced corporate tax rate for qualified companies that have a wide trading and distribution network, and are committed to expanding their operation from Singapore. Mr. Lam Chi Ming engages in the trading of antiques, natural jadeite jade jewelry and precious handicrafts. Mr. Dong Ping is an executive director of Huanxi Media Group Limited, a company listed on the Main Board of the Stock Exchange (stock code: 1003) from 2 September 2015 and he redesignated as the chairman of board of directors for Huanxi Media Group Limited from 15 January Mr. Dong has extensive experience, knowledge and connection in investment and operation of Chinese media, advertisement, satellite TV, film productions and media fields and was the former Chairman of ChinaVision Media Group Limited (now known as Alibaba Pictures Group Limited), a company listed on the Main Board of the Stock Exchange (stock code: 1060). From August 2003 to April 2005, Mr. Dong was the president of Asian Union Film and Media. Between 31 May 2005 and 11 January 2008, Mr. Dong was appointed as an executive director of Asian Union New Media (Group) Limited (now known as China Jiuhao Health Industry Corporation Limited), a company listed on the Main Board of the Stock Exchange (stock code: 419), and was the chairman of its board of directors from 12 May 2006 to 11 January

40 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER (b) The Offeror s intentions in relation to the Group As disclosed in the Letter from Haitong International Securities in the Composite Document, following the close of the Offers, the Offeror intends to continue the existing principal businesses of the Group, i.e. loan financing service business and distribution and trading business. The Offeror will conduct a review on the financial position and the operations of the Group and will formulate long-term business plans and strategy of the Group, explore other business opportunities and consider whether any asset disposals, asset acquisitions, business rationalisation, business divestment, fund raising, restructuring of the business and/or business diversification will be appropriate to enhance the long-term growth potential of the Group. The Offeror has no intention to (i) discontinue the employment of any employees of the Group; or (ii) redeploy the fixed assets of the Group other than those in its ordinary and usual course of business. (c) Proposed change of board composition The Board is currently made up of five Directors, comprising two executive Directors and three independent non-executive Directors. As disclosed in the Letter from Haitong International Securities in the Composite Document, the Offeror intends to nominate new Directors to the Board and such appointments will not take effect earlier than the date of posting of the Composite Document in relation to the Offers or such other date as permitted under the Takeovers Code. As at the Latest Practicable Date, the Offeror had not reached any final decision as to who will be nominated as new Directors. Any changes to the Board will be made in compliance with the Takeovers Code and the Listing Rules and a separate announcement will be made in this regard as and when appropriate. (d) Maintaining the listing status of the Company As disclosed in the Letter from Haitong International Securities in the Composite Document, the Offeror intends to maintain the listing of the Shares on the Stock Exchange following the close of the Offers. In the event that the public float of the Company falls below 25% following the close of the Offers, the Offeror Directors, the Directors and any new directors of the Company to be appointed will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the Listing Rules as soon as possible following the close of the Offers to ensure that sufficient public float exists for the Shares. The Stock Exchange has stated that if, at the closing of the Offers, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares are held by the public or if the Stock Exchange believes that: (i) (ii) a false market exists or may exist in the trading of the Shares; or there are insufficient Shares in public hands to maintain an orderly market, 36

41 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER it will consider exercising its discretion to suspend dealings in the Shares. (e) Our view We noted that Mr. You Zhenhua, being one of the Offeror Director and a controlling shareholder of the Offeror, is also the chairman and the executive director of PSU. We have discussed with the Offeror and performed internet search, and noted that PSU was found in 2003 and is principally engaged in trade of commodities including iron ore and coal, and that Mr. You Zhenhua also has more than 13 years experience in commodities trading business. Taking into account the intention of the Offeror to continue the existing principal business of the Group including the distribution and trading business, we consider that Mr. You Zhenhua s relevant experience in the commodities trading business might be beneficial to the future business development of the Group. 3. Principal terms of the Share Offer (a) Comparison of the market prices of the Shares As disclosed in the Letter from Haitong International Securities in this Composite Document, the Share Offer Price of HK$0.18 for each Share under the Share Offer represents: (i) a discount of approximately 27.42% to the closing price of HK$0.248 per Share as quoted on the Stock Exchange on the Last Trading Day; (ii) a discount of approximately 26.11% to the average closing price of HK$ per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day; (iii) a discount of approximately 26.26% to the average closing price of HK$ per Share as quoted on the Stock Exchange for the 10 consecutive trading days up to and including the Last Trading Day; (iv) a discount of approximately 27.62% to the average closing price of HK$ per Share as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day; (v) (vi) a premium of approximately 1,163.64% over the net asset value per Share of approximately HK$ calculated based on the audited consolidated net asset value attributable to the Shareholders as at 31 December 2015, the date to which the latest audited financial results of the Group were made up, divided by the number of issued Shares as at the Latest Practicable Date; and a discount of approximately 23.40% to the closing price of HK$0.235 per Share as quoted on the Stock Exchange on the Latest Practicable Date. 37

42 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER As disclosed above, the Share Offer Price represents (i) discounts to the relevant closing prices of the Share; (ii) a substantial premium over the net asset value per Share as at 31 December 2015; and (iii) discount to the closing price of the Shares as at the Latest Practicable Date. (b) Historical closing prices of the Shares The following chart sets out the closing prices of the Shares as quoted on the Stock Exchange during the period from 2 February 2015 to 19 May 2016, i.e. the Last Trading Day, for a period of at least 15 complete calendar months, up to and including the Latest Practicable Date (the Review Period ): Comparison of the Share Offer Price to Market Prices Suspension Closing Price Offer Price Source: Website of the Stock Exchange ( Note: During the Review Period, trading in the Shares was suspended from 28 May 2015 to 28 August 2015 and from 20 May 2016 to 26 May 2016 respectively. We consider that the length of the Review Period to be reasonably long enough to illustrate the relationship between the recent trend of the closing price of the Shares and the Share Offer Price. In particular, as trading of the Shares was suspended for around three months in the past 12 months, we extend our period of review from 12 months to 15 months. As illustrated by the above chart, at the beginning of the Review Period, the closing prices of the Shares moved with an increasing trend with a spike before trading of the Shares halted from 28 May 2015 to 28 August 2015, pending release of the announcement of the Company in relation to the Whitewash Subscription (the agreements of which were later terminated on 3 November 2015). Trading in the Shares was resumed on 31 August 2015 after publication of the announcement in relation to the Whitewash Subscription (the Subscription Announcement ), and the 38

43 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER closing prices of the Shares then showed a decreasing trend with a trough of HK$0.157 per Share on 15 December The closing prices of the Shares then went up and fluctuated in the range of HK$0.2 to HK$0.3 per Share from early February 2016 to the Last Trading Day and up to the Latest Practicable Date. During the Review Period, the highest and lowest closing price of the Shares during the Review Period were HK$0.440 per Share recorded on 28 May 2015 ( Highest Price ) and HK$0.157 per Share recorded on 15 December 2015 ( Lowest Price ) respectively, with an average closing price during the Review Period of approximately HK$0.248 ( Average Closing Price ). The Share Offer Price represents (i) a discount of approximately 59.1% to the Highest Price; (ii) a premium of approximately 14.6% to the Lowest Price; and (iii) a discount of approximately 27.4% to the Average Closing Price. Independent Shareholders should note that the information set out above is not an indicator of the future performance of the Shares, and that the price of the Shares may increase or decrease from its closing price as at the Last Practicable Date. (c) Historical trading liquidity of the Shares Set out in the table below are figures during the Review Period regarding (i) number of trading days of the Shares in each month; (ii) the total trading volume of the Shares for each month; (iii) the average daily trading volume of the Shares; and (iv) the percentage of average daily trading volume of the Shares to the total number of issued Shares: 39

44 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER Month Number of trading days of the Shares Total monthly trading volume of the Shares Average daily trading volume of the Shares Percentage of average daily trading volume to the total number of issued Shares (Note 1) 2015 February ,214,000 13,178, % March ,955,700 12,088, % April ,323,200 43,280, % May ,385,800 40,632, % June 0 0 N/A N/A July 0 0 N/A N/A August 1 327,240, ,240, % September ,962,000 18,898, % October ,088,000 20,054, % November ,500,000 8,976, % December 22 56,635,412 2,574, % 2016 January ,338,000 7,616, % February 18 35,448,908 1,969, % March 21 92,418,800 4,400, % April ,198,800 5,159, % May ,182,060 7,448, % June (up to and including the Latest Practicable Date) 17 94,390,800 5,552, % Review Period 273 4,005,281,480 14,671, % (Note 2) Source: Website of the Stock Exchange ( Notes: (1) Based on respective number of 4,385,819,836 Shares from May 2015 to December 2015 and 5,262,819,836 Shares from January 2016 to June 2016 in issue as at (i) the end of the relevant months during the Review Period; or (ii) the Latest Practicable Date for June (2) Based on the number of 5,262,819,836 Shares in issue as at the Latest Practicable Date. As illustrated in the table above, the average daily trading volume of the Shares during the Review Period recorded the lowest of approximately 1,969,384 Shares in February 2016 and highest of approximately 327,240,000 Shares in August 2015, representing approximately 0.04% and 7.46% respectively of the total number of issued Shares as at the end of the relevant month. The average daily trading volume of the Shares for the Review Period was 14,671,361 Shares, representing approximately 0.28% of the total number of issued Shares as at the Latest Practicable Date. Having consider that (i) all of the monthly/period average daily trading volume of the Shares during the Review Period (except August 2015 when the Subscription Announcement was published after a long period of trading halt of the Shares for three 40

45 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER months) were below 1%; and (ii) the average daily trading volume of the Shares throughout the Review Period was below 0.3%, we consider that the trading volume of the Shares is relatively low during the Review Period. Given the thin historical trading volume of the Shares as stated above, it is uncertain as to whether there would be sufficient liquidity in the Shares for the Independent Shareholders to dispose of a significant number of Shares in the open market without causing an adverse impact on the market price level of the Shares. Accordingly, the market trading price of the Shares may not necessarily reflect the proceeds that the Independent Shareholders can receive by the disposal of their Shares in the open market. The Share Offer, therefore, represents an assured opportunity for the Independent Shareholders, particular for those who hold a large number of the Shares, to dispose of some or all of them at the Share Offer Price if they so wish, without creating a significant downside pressure on the trading price of the Shares. (d) Comparison with other comparable companies In assessing the fairness and reasonableness of the Share Offer, we have attempted to compare the price-to-earnings ratio (the P/E Ratio ) and the price-to-book ratio (the P/B Ratio ) of other listed companies in Hong Kong, which are comparable to the Company in terms of market size, business and financial performance, with the implied P/E Ratio (the Implied P/E Ratio ) and implied P/B Ratio of the Share Offer using the Share Offer Price (collectively, the Comparable Analysis ). However, taking into account: (i) the Group recorded a loss attributable to owners of the Company of approximately HK$23.4 million for FY2015, we consider that it is not feasible to assess the Offer Price using the Implied P/E Ratio; and (ii) the Group is principally engaged in the business of loan financing services and trading of commodities, chemical materials and organic foods. Although the net assets of the Group s loan financing services segment of HK$66.7 million contributed to approximately 81.9% of the net assets of the Group as at 31 December 2015, the revenue from such business segment represented only approximately 1.3% of the total revenue of the Group for FY2015. Given that revenue generated from the loan financing business of the Group is minimal, we consider that it is not comparable to other listed companies in Hong Kong which are engaged in loan financing. Meanwhile, the trading business segment of the Group represented approximately 60.4% of the total revenue of the Group and is the only business segment of the Group which recorded profit for FY2015, but net assets of the segment contributed to only approximately 7.8% to the net assets of the Group as at 31 December Given that the majority of net assets of the Group is not from the trading business, we consider that it is not meaningful to compare the Implied P/B Ratio with the P/B Ratios (which make reference to the net assets) of listed companies in Hong Kong which are engaged in trading of commodities, 41

46 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER we consider that there is no meaningful Comparable Analysis that is indicative for comparing the terms of the Share Offer. (e) Our view Although the Share Offer Price represents discounts to the recent closing prices of the Share as stated in the sub-paragraph headed (b) Historical closing prices of the Shares above, having considered that: (i) (ii) the Group s financial performance is unsatisfactory in terms of decreasing revenue and continuous loss over the last five financial years as discussed in the sub-paragraph headed (a) Financial information of the Group under the paragraph headed 1. Information of the Group and Market Outlook above; the prospects of the two newly commenced business segments of the Group (including the distribution and trading business, where Mr. You Zhenhua, being one of the Offeror Director and a controlling shareholder of the Offeror, has more than 13 years experience in commodities trading business including iron ore and coal), which the Offeror intends to continue after the completion of the Offers, remain uncertain as discussed in the sub-paragraph headed (b) Market Outlook under the paragraph headed 1. Information of the Group and Market Outlook above; (iii) the trading volume of the Shares during the Review Period is thin as represented by the average daily trading volume of the Shares of approximately 0.28%, where the Independent Shareholders may find it difficult to dispose of a significant number of Shares in the open market should they wish in a short period of time without causing an adverse impact on the market price level of the Shares; and (iv) the Share Offer Price represents a substantial premium of approximately 1,163.64% over the net asset value per Share of approximately HK$ calculated based on the audited consolidated net asset value attributable to the Shareholders as at 31 December 2015 divided by the number of issued Shares as at the Latest Practicable Date, we are of the view that the terms of the Share Offer including the Share Offer Price are fair and reasonable so far as the Independent Shareholders are concerned. Furthermore, we would like to remind the Independent Shareholders that although the Share Offer Price is below the recent closing prices of the Shares on the Stock Exchange, there is no guarantee that the recent trading prices of the Shares on the Stock Exchange will sustain and be higher than the Share Offer Price during and after the Offer Period. The Independent Shareholders, in particular those who may wish to realise their investments in the Shares, are thus reminded to closely monitor the market price of the Shares during the Offer Period. 42

47 LETTER FROM THE INDEPENDENT FINANCIAL ADVISER 4. Principal terms of the Option Offer For cancellation of each outstanding Option... HK$ in cash According to the management of the Company, there are two batches of outstanding Options entitling the Optionholders to subscribe for 157,500,000 Shares and 201,000,000 Shares respectively at an exercise price of HK$1.7 and HK$0.27. Pursuant to Rule 13 of the Takeovers Code and Practice Note 6 of the Takeovers Code, the see-through values of the outstanding Options would be the difference between the exercise prices of the Options and the Share Offer Price. As the exercise prices of the outstanding Options (i.e. HK$1.7 and HK$0.27 respectively) are above the Share Offer Price (i.e. HK$0.18), the outstanding Options are out-of-money with zero see-through value. Accordingly, the Option Offer Price for each outstanding Option is at a nominal value of HK$ under the Option Offer as mentioned in the Letter from Haitong International Securities in this Composite Document. Given that the see-through value of the outstanding Options is zero, we consider that the Option Offer Price of HK$ offered to the Optionholders is fair and reasonable so far as the Optionholders are concerned. RECOMMENDATION Taking into consideration the aforementioned principal factors and reasons, we are of the opinion that the terms of the Share Offer and the Option Offer are fair and reasonable so far as the Independent Shareholders and Optionholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders and the Optionholders to accept the Share Offer and the Option Offer respectively. The Independent Shareholders and the Optionholders, in particular those who intend to accept the Offers, are reminded to closely monitor the market price and liquidity of the Shares during the Offer Period, especially that the disposal of large blocks of Shares held by the Independent Shareholders in the open market may trigger price slump of the Shares as a result of the thin trading of the Shares. The Independent Shareholders who intend to realise their investment in the Company and the Optionholders shall, having regard to their own circumstances, consider exercising the outstanding Options and/or selling the Shares (as the case may be) in the open market, instead of accepting the Offers, if the net proceeds from the ultimate sale of such Shares would be higher than that receivable under the Offers. Kim Chan Executive Director Yours faithfully, For and on behalf of Nuada Limited Kevin Wong Vice President Mr. Kim Chan is a person licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO and is a responsible officer of Nuada Limited who has over 16 years of experience in corporate finance industry. Mr. Kevin Wong is a person licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO and is a responsible officer of Nuada Limited who has over 12 years of experience in corporate finance industry. 43

48 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE PROCEDURES FOR ACCEPTANCE OF THE OFFERS 1.1 The Share Offer (a) (b) (c) To accept the Share Offer, you should complete and sign the accompanying WHITE Form of Share Offer Acceptance in accordance with the instructions printed thereon, which form part of the terms of the Share Offer. If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in your name, and you wish to accept the Share Offer, you must send the duly completed and signed WHITE Form of Share Offer Acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) for not less than the number of Shares in respect of which you intend to accept the Offers, by post or by hand, to the Registrar, Computershare Hong Kong Investor Services Limited, at Shops , 17 th Floor, Hopewell Centre, 183 Queen s Road East, Wan Chai, Hong Kong, as soon as possible and in any event no later than 4:00 p.m. on the Offer Closing Date or such later time(s) and/or date(s) as the Offeror may determine and announce in accordance with the Takeovers Code. If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Share Offer in respect of your holding of Shares (whether in full or in part), you must either: (i) (ii) lodge your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Share Offer on your behalf and requesting it to deliver the duly completed WHITE Form of Share Offer Acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or arrange for the Shares to be registered in your name by the Company through the Registrar, and deliver the duly completed and signed WHITE Form of Share Offer Acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or (iii) if your Shares have been lodged with your licensed securities dealer/ registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian I-1

49 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE bank to authorize HKSCC Nominees Limited to accept the Share Offer on your behalf on or before the deadline set by HKSCC Nominees Limited. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer/registered institution in securities/ custodian bank for the timing on the processing of your instruction, and submit your instruction to your licensed securities dealer/registered institution in securities/custodian bank as required by them; or (iv) if your Shares have been lodged with your investor participant s account maintained with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System on or before the deadline set out by HKSCC Nominees Limited. (d) (e) If the Share certificate(s) and/or transfer receipts and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are not readily available and/or is/are lost, as the case may be, and you wish to accept the Share Offer in respect of your Shares, the WHITE Form of Share Offer Acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Registrar as soon as possible thereafter. If you have lost your Share certificate(s) and/or transfer receipt(s) and/ or any other document(s) of title, you should also write to the Registrar a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar. If you have lodged transfer(s) of any of your Shares for registration in your name and have not yet received your Share certificate(s), and you wish to accept the Share Offer in respect of your Shares, you should nevertheless complete and sign the WHITE Form of Share Offer Acceptance and deliver it to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to the Offeror and/or Haitong International Securities or their respective agent(s) to collect from the Company or the Registrar on your behalf the relevant Share certificate(s) when issued and to deliver such Share certificate(s) to the Registrar on your behalf and to authorize and instruct the Registrar to hold such Share certificate(s), subject to the terms and conditions of the Share Offer, as if it was/they were delivered to the Registrar with the WHITE Form of Share Offer Acceptance. I-2

50 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE (f) Acceptance of the Share Offer will be treated as valid only if the completed WHITE Form of Share Offer Acceptance is received by the Registrar by no later than 4:00 p.m. on the Offer Closing Date (or such later time and/or date as the Offeror may determine and announce with the consent of the Executive) and the Registrar has recorded the acceptance and any relevant documents required by the Takeovers Code have been so received, and is: (i) (ii) accompanied by the relevant Share certificate(s) and/or transfer receipt(s) and/ or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if that/those Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) is/are not in your name, such other documents (e.g. a duly stamped transfer of the relevant Share(s) in blank or in favour of the acceptor executed by the registered holder) in order to establish your right to become the registered holder of the relevant Shares; or from a registered Shareholder or his personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Shares which are not taken into account under another sub-paragraph of this paragraph (f)); or (iii) inserted in the WHITE Form of Share Offer Acceptance, the total number of Shares equal to that represented by the certificates for Shares tendered for acceptance of the Share Offer. If no number is inserted or a number inserted is greater or smaller than that represented by the certificates for Shares tendered for acceptance of the Share Offer, the WHITE Form of Share Offer Acceptance will be returned to you for correction and resubmission. Any corrected WHITE Form of Share Offer Acceptance must be resubmitted and received by the Shares Registrar on or before the latest time of acceptance of the Share Offer; or (iv) certified by the Registrar or the Stock Exchange. If the WHITE Form of Share Offer Acceptance is executed by a person other than the registered Shareholder, appropriate documentary evidence of authority (e.g. grant of probate or certified copy of a power of attorney) to the satisfaction of the Registrar must be produced. (g) No acknowledgement of receipt of any Form(s) of Acceptance, Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given. I-3

51 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE 1.2 The Option Offer (a) (b) (c) To accept the Option Offer, you should complete the PINK Form of Option Offer Acceptance in accordance with the instructions printed thereon, which form part of the terms of the Option Offer. Without prejudice to the paragraph headed Effect of accepting the Offers in the LETTER FROM HAITONG INTERNATIONAL SECURITIES contained in this Composite Document and the paragraph headed 5. LAPSE OF OPTIONS of this Appendix, the completed PINK Form of Option Offer Acceptance should be forwarded, together with the relevant certificate(s) of the Options (if applicable) and/or other document(s) of title (and/ or satisfactory indemnity or indemnities required in respect thereof) you intend to tender, stating the number of Options in respect of which you intend to accept the Option Offer, by post or by hand, to the Company at Suite 3604, 36/F, West Tower, Shun Tak Centre, Connaught Road Central, Sheung Wan, Hong Kong, as soon as possible and in any event no later than 4:00 p.m. on the Offer Closing Date or such later time(s) and/or date(s) as the Offeror may determine and announce in compliance with the requirements of the Takeovers Code provided however, no Option shall be capable of acceptance if at the time of acceptance such Option has lapsed. Please refer to the paragraph headed 5. LAPSE OF OPTIONS of this Appendix for further information. Optionholders should note that according to published information of the Company in respect of the rules of the share option scheme of the Company conditionally adopted on 29 December 2009, the Optionholders are entitled to exercise their Options (to the extent not exercised) in full or in part by notice in writing to the Company before the close of the Offers. The Options (to the extent not exercised) will lapse automatically 14 days after the date on which the offers become or is declared unconditional. Optionholders are reminded that acceptance of the Option Offer made in relation to any Option that has lapsed will not render acceptance to be valid. Optionholders are therefore recommended to consult their own professional advisers as to the exercise of the Options pursuant to the rules of the share option scheme of the Company conditionally adopted on 29 December 2009, and the implications as to accepting or rejecting the Option Offer. If the certificate(s) in respect of your Options (if applicable) is/are not readily available and/or is/are lost, as the case may be, and you wish to accept the Option Offer, the PINK Form of Option Offer Acceptance should nevertheless be completed and delivered to the Company together with a letter stating that you have lost one or more of your option certificate(s) (if applicable) or that it/they is/ are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Company as soon as possible thereafter. If you have lost your option certificate(s) (if applicable), you should also write to the Company requesting a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Company. I-4

52 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE (d) (e) (f) If the certificate(s) in respect of your Options (if applicable) is/are not readily available and/or is/are lost, as the case may be, and you wish to accept the Share Offer, you must exercise the Options to the extent exercisable as indicated in the paragraph headed 4. EXERCISE OF OPTIONS of this Appendix below, but (i) the relevant exercise notice and cheque for the subscription monies must reach the Company before the Offers close; and (ii) the relevant WHITE Form of Share Offer Acceptance must reach the Registrar on or before 4:00 p.m. on the Offer Closing Date. You should also write to the Company requesting a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Company No stamp duty will be deducted from the amount paid or payable to Optionholder who accept the Option Offer. No acknowledgment of receipt of any PINK Form(s) of Option Offer Acceptance, certificate(s) of the Options (if applicable) and/or any other documents of title (and/or any satisfactory indemnity/indemnities required in respect thereof) will be given. 2. SETTLEMENT OF THE OFFERS 2.1 The Share Offer Provided that a valid WHITE Form of Share Offer Acceptance and the relevant certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are complete and in good order in all respects and have been received by the Registrar before the close of the Share Offer, a cheque for the amount due to each of the Independent Shareholders who accepts the Share Offer less seller s ad valerom stamp duty in respect of the Shares tendered by it/him/ her under the Share Offer will be despatched to such Independent Shareholder by ordinary post at its/his/her own risk as soon as possible but in any event within seven Business Days of (i) the date for the receipt of all the relevant documents by the Registrar to render such acceptance complete and valid or (ii) the date on which the Offers become or are declared unconditional in all respects, whichever is the later. Settlement of the consideration to which any accepting Independent Shareholder is entitled under the Share Offer will be implemented in full in accordance with the terms of the Share Offer (save with respect to the payment of seller s ad valerom stamp duty), without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such accepting Independent Shareholder. 2.2 The Option Offer Provided that a valid PINK Form of Option Offer Acceptance and the relevant certificate(s) in respect of the Options (and/or any satisfactory indemnity or indemnities required in respect thereof) are complete and in good order in all respects and have been I-5

53 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE received by the Company before the close of the Option Offer, a cheque for the amount due to each of the Optionholders who accepts the Option Offer in respect of the Options tendered by it/him/her under the Option Offer will be despatched to such Optionholder by ordinary post at its/his/her own risk as soon as possible but in any event within seven Business Days of (i) the date for the receipt of all the relevant documents by the Company to render such acceptance complete and valid or (ii) the date on which the Offers become or are declared unconditional in all respects, whichever is the later. Settlement of the consideration to which any accepting Optionholder is entitled under the Option will be implemented in full in accordance with the terms of the Option Offer, without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such accepting Optionholder. 3. ACCEPTANCE PERIOD AND REVISIONS (a) (b) (c) (d) (e) In order to be valid for the Offers, the WHITE Form of Share Offer Acceptance and PINK Form of Option Offer Acceptance must be received by the Registrar (in respect of the Share Offer) or the Company (in respect of the Option Offer) in accordance with the instructions printed thereon by 4:00 p.m. on the Offer Closing Date, unless the Offers are extended or revised with the consent of the Executive. The Offeror reserves the right to revise the terms of the Offers after the despatch of this Composite Document until such day as they may determine and in accordance with the Takeovers Code. If the Offeror revises the terms of the Offers, all the Independent Shareholders and the Optionholders, whether or not they have already accepted the Offers, will be entitled to accept the revised Offers under the revised terms. If the Offers are extended or revised, the announcement of such extension or revision will state the next closing date or the Offers will remain open until further notice. In the latter case, at least 14 days notice in writing will be given before the Offers are closed to the Independent Shareholders and the Optionholders who have not accepted the Offers, and an announcement will be released. The revised Offers will be kept open for at least 14 days thereafter If the Offer Closing Date is extended, any reference in this Composite Document and in the Forms of Acceptance to the Offer Closing Date shall, except where the context otherwise requires, be deemed to refer to the closing date of the Offers as so extended. Any acceptance of the relevant revised Offers shall be irrevocable unless and until the Independent Shareholders and the Optionholders who accept the Offers become entitled to withdraw their acceptance under the paragraph headed 7. RIGHT OF WITHDRAWAL below and duly do so. I-6

54 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE 4. EXERCISE OF OPTIONS The Optionholder who wishes to accept the Share Offer may (i) exercise his/her/its Options (to the extent exercisable) by completing, signing and delivering a notice for exercising the Options together with a cheque for payment of the subscription monies and the related certificates (if applicable) for the Options to the Company before the Offers close; and (ii) at the same time, or in any event no later than 4:00 p.m. on the Offer Closing Date, complete and sign the WHITE Form of Share Offer Acceptance and deliver it to the Registrar together with a copy of the set of documents delivered to the Company for exercising the Options. Exercise of the Options is subject to the terms and conditions of the share option scheme of the Company conditionally adopted on 29 December 2009 and the terms attaching to the grant of the relevant Options. Delivery of the completed and signed WHITE Form of Share Offer Acceptance to the Registrar will not serve to complete the exercise of the Options but will only be deemed to be an irrevocable authority to the Offeror and/or Haitong International Securities and/or any of their respective agent(s) or such other person(s) as they may direct to collect from the Company or the Registrar on his/her/its behalf the relevant share certificate(s) when issued on exercise of the Options as if it/they were delivered to the Registrar with the WHITE Form of Share Offer Acceptance. If the Optionholder fails to exercise his/her/ its Options as aforesaid and in accordance with the terms and conditions of the share option scheme of the Company conditionally adopted on 29 December 2009, there is no guarantee that the Company may issue the relevant share certificate in respect of the Shares allotted pursuant to his/her/its exercise of the Option(s) to such Optionholder in time for it to accept the Share Offer as a Shareholder of such Shares under the terms of the Share Offer. 5. LAPSE OF OPTIONS As referred to in the paragraph headed Effect of accepting the Offers in the LETTER FROM HAITONG INTERNATIONAL SECURITIES contained in this Composite Document, Optionholders should note that under the rules of the share option scheme of the Company conditionally adopted on 29 December 2009, all Options (to the extent not exercised) will lapse automatically 14 days after the date on which the offers become or is declared unconditional. Nothing in this Composite Document or the Option Offer will serve to extend the life of any Option which lapses under the share option scheme of the Company conditionally adopted on 29 December No exercise of Options or acceptance of the Option Offer may be made in relation to any Option that has lapsed. 6. ANNOUNCEMENTS (a) By 6:00 p.m. on the Offer Closing Date (or such later time and/or date as the Executive may in exceptional circumstances permit), the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the revision, extension or expiry of the Offers. The Offeror must post an announcement on the I-7

55 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE Stock Exchange s website by 7:00 p.m. on the Closing Date stating, amongst other information required under Rule 19.1 of the Takeovers Code, whether the Offers have been revised, extended, or has expired The announcement will state the total number of Shares and Options and rights over Shares: (i) (ii) for which acceptances of the Offers have been received; held, controlled or directed by the Offeror or persons acting in concert with it before the Offer Period; (iii) acquired or agreed to be acquired during the Offer Period by the Offeror and persons acting in concert with it. The announcement must include details of any relevant securities (as defined in the Takeovers Code) in the Company which the Offeror and parties acting in concert with it have borrowed or lent, save for any borrowed shares which have been either on-lent or sold. The announcement must also specify the percentages of the issued share capital of the Company and the percentages of voting rights of the Company represented by these numbers. In computing the total number or principal amount of Shares and Options represented by acceptances, only valid acceptances that are complete, in good order and fulfill the acceptance conditions set out in paragraph 1 of this Appendix, and which have been received by the Registrar (in respect of the Share Offer) or the Company (in respect of the Option Offer) respectively no later than 4:00 p.m. on the Offer Closing Date, unless the Offers are extended or revised with the consent of the Executive, shall be included. (b) As required under the Takeovers Code, all announcements in relation to the Offers which the Executive and the Stock Exchange have confirmed that they have no further comments thereon must be made in accordance with the requirements of the Takeovers Code and the Listing Rules. 7. RIGHT OF WITHDRAWAL (a) Acceptance of the Offers tendered by the Independent Shareholders and the Optionholders shall be irrevocable and cannot be withdrawn, except in the circumstances set out in subparagraph (b) below or in compliance with Rule 17 of the Takeovers Code, which provides that an acceptor of the Offers shall be entitled to withdraw his acceptance after 21 days from the Offer Closing Date, if the Offers have not by then become unconditional as to acceptance. However, this entitlement to withdraw shall only be exercisable until such time as the Offers become or are declared unconditional as to acceptances. I-8

56 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE (b) If the Offeror is unable to comply with the requirements set out in the paragraph headed 6. ANNOUNCEMENTS above, the Executive may require that the Independent Shareholders and the Optionholders who have tendered acceptances to the Offers be granted a right of withdrawal on terms that are acceptable to the Executive until the requirements set out in that paragraph are met. In such case, when the Independent Shareholders and the Optionholders withdraw their acceptance(s), the Offeror shall, as soon as possible but in any event within ten days thereof, return by ordinary post the Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title or the relevant certificate(s) in respect of the Options (and/or any satisfactory indemnity or indemnities required in respect thereof) lodged with the Forms of Acceptance to the relevant Independent Shareholder(s) and Optionholders. 8. STAMP DUTY The seller s Hong Kong ad valorem stamp duty arising in connection with acceptance of the Share Offer amounting to 0.1% of the amount payable in respect of the relevant acceptance or if higher, the market value of the Shares, will be deducted from the amount payable to Shareholders who accept the Share Offer. The Offeror will bear its own portion of buyer s Hong Kong ad valorem stamp duty at the rate of 0.1% of the amount payable in respect of the relevant acceptances or if higher, the market value of the Shares, and will be responsible to account to the Stamp Office of Hong Kong for stamp duty payable for the sale and purchase of the Shares which are validly tendered for acceptance under the Share Offer. No stamp duty is payable in connection with the acceptance of the Option Offer. 9. OVERSEAS SHAREHOLDERS As the Share Offer to persons not residing in Hong Kong may be affected by the laws of the relevant jurisdiction in which they are residents, Overseas Shareholders should obtain information about and observe any applicable legal or regulatory requirements and, where necessary, seek legal advice in respect of the Share Offer. It is the responsibility of the Overseas Shareholders who wish to accept the Share Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offers (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions). Any acceptance of any Overseas Shareholders will be deemed to constitute a representation and warranty from such Overseas Shareholders to the Offeror that the local laws and requirements have been complied with. The Overseas Shareholders should consult their professional advisers if in doubt. I-9

57 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE 10. TAXATION ADVICE Shareholders and Optionholders are recommended to consult their own professional advisers as to the taxation implications of accepting or rejecting the Offers. The Offeror accepts no responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Offers. 11. GENERAL (a) (b) (c) (d) (e) (f) All communications, notices, Forms of Acceptance, Share certificate(s), transfer receipt(s), other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to settle the consideration payable under the Offers to be delivered by or sent to or from the Independent Shareholders and/or the Optionholders will be delivered by or sent to or from them, or their designated agents, by ordinary post at their own risk, and none of the Company, the Offeror, Haitong International Securities and any of their respective directors nor the Registrar or other parties involved in the Offers or any of their respective agents accept any liability for any loss in postage or any other liabilities that may arise as a result thereof. The provisions set out in the WHITE Form of Share Offer Acceptance and PINK Form of Option Offer Acceptance form part of the terms and conditions of the Share Offer and Option Offer, respectively The accidental omission to despatch this Composite Document and/or Forms of Acceptance or any of them to any person to whom the Offers are made will not invalidate either the Share Offer or the Option Offer in any way. The Offers are, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong. Due execution of the Form(s) of Acceptance will constitute an authority to the Offeror, Haitong International Securities or such person or persons as the Offeror may direct to complete, amend and execute any document on behalf of the person or persons accepting the Offers and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as they may direct, the Shares or the Options in respect of which such person or persons has/have accepted the Offers. By accepting the Offers, the Independent Shareholders or the Optionholders will sell their Shares or Options (as the case may be) to the Offeror free from all liens, claims, Encumbrances and all third party rights and with all rights attached thereto as at the date of this Composite Document, including in the case of the Shares, the right to receive all dividends and declared, paid or made, if any, on or after the date of this Composite Document. The making of the Offers to a person with a registered address in a jurisdiction outside Hong Kong or who is a citizen, resident or national of a jurisdiction outside Hong Kong may be affected by the I-10

58 APPENDIX I FURTHER TERMS OF THE OFFERS AND PROCEDURES OF ACCEPTANCE applicable laws of the relevant jurisdiction. Overseas Shareholders with registered addresses in jurisdictions outside Hong Kong or who are citizens, residents or nationals of a jurisdiction outside Hong Kong should inform themselves about and observe any applicable legal requirements in their own jurisdictions. (g) (h) Acceptance of the Offers by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Shares or Options in respect of which as indicated in the Form(s) of Acceptance is the aggregate number of Shares or Options held by such nominee for such beneficial owner who is accepting the Offers. Reference to the Offers in this Composite Document and in the Forms of Acceptance shall include any extension or revision thereof. (i) All acceptances, instructions, authorities and undertakings given by the Independent Shareholders and the Optionholders in the Forms of Acceptance shall be irrevocable except as permitted under the Takeovers Code. (j) The English text of this Composite Document and the Forms of Acceptance shall prevail over their respective Chinese text for the purpose of interpretation. I-11

59 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP Set out below is a summary of the financial information of the Group for each of the three financial years ended 31 December 2013, 2014 and 2015, as extracted from the relevant published annual reports of the Company for the three years ended 31 December The Group did not record any non-controlling interests for each of the three financial years ended 31 December 2013, 2014 and For each of the three years ended 31 December 2013, 2014 and 2015, no dividend was declared or paid. (a) Operating results For the year ended 31 December HK$ 000 HK$ 000 HK$ 000 Revenue 87,274 77,492 55,044 Loss before taxation (15,289) (22,253) (23,376) Income tax expenses (52) (7) Loss for the year (15,341) (22,253) (23,383) Other comprehensive income (expense) (686) Total comprehensive loss attributable to owners of the Company (15,026) (21,387) (24,069) Loss per share Basic and diluted (in HK cents) (0.42) (0.61) (0.55) II-1

60 APPENDIX II FINANCIAL INFORMATION OF THE GROUP (b) Assets and liabilities As at 31 December HK$ 000 HK$ 000 HK$ 000 Non-current assets 4,209 4, Current assets 51,678 43, ,909 Total assets 55,887 47, ,680 Current liabilities 43,494 56, ,271 Total liabilities 43,494 56, ,271 Net assets (liabilities) 12,393 (8,994) 81,409 Capital and reserves 12,393 (8,994) 81,409 Total equity attributable to owners of the Company 12,393 (8,994) 81,409 The auditors of the Company for the two years ended 31 December 2013 and 2014 were Deloitte Touche Tohmatsu and the auditors of the Company for the year ended 31 December 2015 were ZHONGHUI ANDA CPA Limited. Their opinions on the consolidated financial statements of the Group for each of the three years ended 31 December 2015 were unqualified and no modification (including adverse opinion or disclaimer of opinion) to the auditors report is necessary. Profit (loss) attributable to owners of the Company for the aforesaid periods included the following items: For the year ended 31 December HK$ 000 HK$ 000 HK$ 000 Gain on disposal of subsidiaries 444 Loss on disposal of a joint venture (93) Save for the aforesaid, there were no other extraordinary items or exceptional items because of size, nature or incidence in respect of the consolidated financial results of the Group for each of the aforesaid periods. II-2

61 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 2. AUDITED CONSOLIDATED FINANCIAL STATEMENTS The following is the full text of the audited consolidated financial statements of the Group for the year ended 31 December 2015 as extracted from the annual report of the Company for the year ended 31 December CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December Notes HK$ 000 HK$ 000 Revenue 6 55,044 77,492 Cost of sales (42,418) (34,296) Gross profit 12,626 43,196 Other income, gain and loss 7 (473) (151) Selling and distribution expenses (17,665) (44,040) Administrative expenses (18,215) (21,258) Loss from operations (23,727) (22,253) Gain on disposal of subsidiaries Loss on disposal of a joint venture (93) Loss before taxation (23,376) (22,253) Income tax 9 (7) Loss for the year attributable to owners of the Company 10 (23,383) (22,253) Other comprehensive income/(loss): Item that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit retirement plans 71 Item that has been reclassified to profit or loss: Exchange differences reclassified to profit or loss upon disposal of subsidiaries 115 Item that may be reclassified to profit or loss: Exchange differences on translating foreign operations (801) 795 (686) 866 Total comprehensive loss for the year attributable to owners of the Company (24,069) (21,387) Loss per share Basic and diluted (HK cents per share) 13 (0.55) (0.61) II-3

62 APPENDIX II FINANCIAL INFORMATION OF THE GROUP CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December Notes HK$ 000 HK$ 000 Non-current assets Property, plant and equipment ,621 Current assets Inventories ,083 9,434 Loans to customers 16 65,000 Trade and interest receivables 17 6,381 3,205 Prepayments, deposits and other receivables 1,173 5,170 Cash and bank balances 12,272 25, ,909 43,030 Current liabilities Trade payables ,042 17,377 Accruals and other payables 1,222 4,261 Dividend payable 7 Current tax liabilities 7 Loans from a shareholder 19 35, ,271 56,645 Net current assets/(liabilities) 80,638 (13,615) NET ASSETS/(LIABILITIES) 81,409 (8,994) Capital and reserves Share capital 20 10,965 9,140 Reserves 70,444 (18,134) TOTAL EQUITY 81,409 (8,994) II-4

63 APPENDIX II FINANCIAL INFORMATION OF THE GROUP CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2015 Share- Foreign Share based currency Share premium payment translation Accumulated capital account reserve reserve losses Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January ,140 69,825 99,297 (5,311) (160,558) 12,393 Total comprehensive loss for the year 795 (22,182) (21,387) Lapse of share options (16,136) 16,136 At 31 December 2014 and 1 January ,140 69,825 83,161 (4,516) (166,604) (8,994) Total comprehensive loss for the year (686) (23,383) (24,069) Issue of shares 1, , ,472 Lapse of share options (4,965) 4,965 At 31 December , ,472 78,196 (5,202) (185,022) 81,409 II-5

64 APPENDIX II FINANCIAL INFORMATION OF THE GROUP CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December Note HK$ 000 HK$ 000 Cash flows from operating activities Loss before taxation: (23,376) (22,253) Adjustments for: Net reversal of allowance for obsolete inventories (1,724) (729) Interest income (17) (17) Reversal of dividend payable (7) Depreciation of property, plant and equipment 1,415 2,582 Loss on disposal of property, plant and equipment 1, Gain on disposal of subsidiaries (444) Loss on disposal of a joint venture 93 Operating cash flows before working capital changes (22,202) (20,316) Change in inventories (111,473) 690 Change in trade receivables (2,870) 4,602 Change in loans to customers (65,000) Change in interest receivables (340) Change in prepayments, deposits and other receivables 3,953 (334) Change in trade payables 107,878 (1,203) Change in accruals and other payables (2,762) (19,270) Cash used in operations (92,816) (35,831) Overseas tax paid (26) Interest received Net cash used in operating activities (92,799) (35,840) Cash flows from investing activities Payment to a joint venture (103) Purchase of property, plant and equipment (1,988) (3,275) Proceeds from disposal of property, plant and equipment 329 Proceeds from disposal of subsidiaries 8 3,067 Proceeds from disposal of a joint venture 10 Net cash generated from/(used in) investing activities 1,315 (3,275) II-6

65 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Note HK$ 000 HK$ 000 Cash flows from financing activities Loans from a shareholder 35,000 Repayment of loans from a shareholder (35,000) Net proceeds from issue of shares 114,472 Net cash generated from financing activities 79,472 35,000 Net decrease in cash and cash equivalents (12,012) (4,115) Effect of changes in foreign exchange rates (937) (376) Cash and cash equivalents at beginning of year 25,221 29,712 Cash and cash equivalents at end of year 12,272 25,221 Analysis of cash and cash equivalents Cash and bank balances 12,272 25,221 II-7

66 APPENDIX II FINANCIAL INFORMATION OF THE GROUP NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December GENERAL INFORMATION Theme International Holdings Limited (the Company ) is a limited liability company incorporated in Bermuda. The address of its registered office is Claredon House, 2 Church Street, Hamilton HM11, Bermuda. The address of its principal place of business was 12th Floor, Kwan Chart Tower, 6 Tonnochy Road, Wanchai, Hong Kong. Subsequent to end of the reporting period, on 18 March 2016, the principal place of business has been changed to Suite 3604, 36/F., West Tower, Shun Tak Centre, Connaught Road Central, Sheung Wan, Hong Kong. The Company s shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The Company is an investment holding company. The principal activities of the Company s subsidiaries are set out in note 25 to the consolidated financial statements. The Company and its subsidiaries are collectively referred to as the Group. 2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS In the current year, the Group has adopted all the new and revised Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the Hong Kong Institute of Certified Public Accountants that are relevant to its operations and effective for its accounting year beginning on 1 January HKFRSs comprise Hong Kong Financial Reporting Standards; Hong Kong Accounting Standards; and Interpretations. The adoption of these new and revised HKFRSs did not result in significant changes to the Group s accounting policies, presentation of the Group s financial statements and amounts reported for the current year and prior years. The Group has not applied the new and revised HKFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new and revised HKFRSs but is not yet in a position to state whether these new and revised HKFRSs would have a material impact on its results of operations and financial position. 3. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with HKFRSs, accounting principles generally accepted in Hong Kong and the applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance. These financial statements have been prepared under the historical cost convention. These financial statements are presented in Hong Kong dollars ( HK$ ) and all values are rounded to the nearest thousand except when otherwise indicated. The preparation of financial statements in conformity with HKFRSs requires the use of certain key assumptions and estimates. It also requires the directors of the Company (the Director(s) ) to exercise its judgments in the process of applying the accounting policies. The areas involving critical judgments and areas where assumptions and estimates are significant to these financial statements, are further disclosed in note 4 to the financial statements. The significant accounting policies applied in the preparation of these financial statements are set out below. II-8

67 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Group has power over an entity when the Group has existing rights that give it the current ability to direct the relevant activities, i.e. activities that significantly affect the entity s returns. When assessing control, the Group considers its potential voting rights as well as potential voting rights held by other parties, to determine whether it has control. A potential voting right is considered only if the holder has the practical ability to exercise that right. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date the control ceases. The gain or loss on the disposal of subsidiaries that results in a loss of control represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that subsidiary and (ii) the Company s share of the net assets of that subsidiary plus any remaining goodwill relating to that subsidiary and any related accumulated foreign currency translation reserve. Intragroup transactions, balances and unrealised profits are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Foreign currency translation (a) 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. (b) Transactions and balances in each entity s financial statements Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss. II-9

68 APPENDIX II FINANCIAL INFORMATION OF THE GROUP (c) Translation on consolidation The results and financial position of all the Group entities that have a functional currency different from the Company s presentation currency are translated into the Company s presentation currency as follows: (i) (ii) Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; Income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the exchange rates on the transaction dates); and (iii) All resulting exchange differences are recognised in the foreign currency translation reserve. On consolidation, exchange differences arising from the translation of the net investment in foreign entities and of borrowings are recognised in the foreign currency translation reserve. When a foreign operation is sold, such exchange differences are recognised in the consolidated profit or loss as part of the gain or loss on disposal. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, 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 recognised in profit or loss during the period in which they are incurred. Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost less their residual values over the estimated useful lives on a straight-line basis. The principal annual rates are as follows: Plant and equipment 15% Furniture and fixtures at: Shops over the lease term Sales counters and offices 20% Office equipment 20% Motor vehicles 20% The residual values, useful lives and depreciation method are reviewed and adjusted, if appropriate, at the end of each reporting period. The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss. II-10

69 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Operating leases Leases that do not substantially transfer to the Group all the risks and rewards of ownership of assets are accounted for as operating leases. Lease payments (net of any incentives received from the lessor) are recognised as an expense on a straight-line basis over the lease term. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out basis. The cost of finished goods and work in progress comprises raw materials, direct labour and an appropriate proportion of all production overhead expenditure, and where appropriate, subcontracting charges. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Recognition and derecognition of financial instruments Financial assets and financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the instruments. Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Group transfers substantially all the risks and rewards of ownership of the assets; or the Group neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, the difference between the asset s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss. Trade and other receivables Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. An allowance for impairment of trade and other receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the receivables carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate computed at initial recognition. The amount of the allowance is recognised in profit or loss. Impairment losses are reversed in subsequent periods and recognised in profit or loss when an increase in the receivables recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the receivables at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised. Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Group s cash management are also included as a component of cash and cash equivalents. II-11

70 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Financial liabilities and equity instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Trade and other payables Trade and other payables are stated initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Group and the amount of the revenue can be measured reliably. Revenue comprises the fair value of the consideration for the sale of goods in the ordinary course of the Group s activities. Revenue is shown, net of value-added tax, returns, rebates and discounts allowed and after eliminating sales within the Group. Revenue is recognised as follows: (a) (b) Revenue from the sale of garments and goods is recognised on the transfer of significant risks and rewards of ownership, which generally coincides with the time when the garments and goods are delivered to customers and title has passed to the customers. Interest income is recognised on a time-proportion basis using the effective interest method. Employee benefits (a) Employee leave entitlements Employee entitlements to annual leave and long service leave are recognised 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 end of the reporting period. Employee entitlements to sick leave and maternity leave are not recognised until the time of leave. (b) Pension obligations The Group contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Group and employees are calculated as a percentage of employees basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Group to the funds. (c) Termination benefits Termination benefits are recognised at the earlier of the dates when the Group can no longer withdraw the offer of those benefits and when the Group recognises restructuring costs and involves the payment of termination benefits. II-12

71 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Share-based payments The Group issues equity-settled share-based payments to certain directors, employees and business associates. Equity-settled share-based payments are measured at the fair value (excluding the effect of non market-based vesting conditions) of the equity instruments at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group s estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Taxation Income tax represents the sum of the current tax and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised 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 recognised for taxable temporary differences arising on investments in subsidiaries and joint ventures 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 the end of each reporting period 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 is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. II-13

72 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Related parties A related party is a person or entity that is related to the Group. (a) A person or a close member of that person s family is related to the Group if that person: (i) (ii) has control or joint control over the Group; has significant influence over the Group; or (iii) is a member of the key management personnel of the Company or of a parent of the Company. (b) An entity is related to the Group if any of the following conditions applies: (i) (ii) The entity and the Company 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). (iii) Both entities are joint ventures of the same third party. (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) (vi) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. If the Group is itself such a plan, the sponsoring employers are also related to the Group. The entity is controlled or jointly controlled by a person identified in (a). Segment reporting (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of parent of the entity). (viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Company or to a parent of the Company. Operating segments and the amounts of each segment item reported in the financial statements are identified from the financial information provided regularly to the Group s most senior executive management for the purpose of allocating resources to and assessing the performance of the Group s various lines of business in different geographical locations. Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of productions processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. II-14

73 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Impairment of assets At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets except inventories and receivables to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset or cashgenerating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Provisions and contingent liabilities Provisions are recognised for liabilities of uncertain timing or amount when the Group has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote. Events after the reporting period Events after the reporting period that provide additional information about the Group s position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes to the financial statements when material. II-15

74 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 4. KEY SOURCES OF ESTIMATION UNCERTAINTY The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below. Impairment loss for bad and doubtful debts The Group makes impairment loss for bad and doubtful debts based on assessments of the recoverability of the trade and other receivables, including the current creditworthiness and the past collection history of each debtor. Impairments arise where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgment and estimates. Where the actual result is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debt expenses in the year in which such estimate has been changed. Allowance for slow-moving inventories Allowance for slow-moving inventories is made based on the aging and estimated net realisable value of inventories. The assessment of the allowance amount involves judgment and estimates. Where the actual outcome in future is different from the original estimate, such difference will impact the carrying value of inventories and allowance charge/write back in the period in which such estimate has been changed 5. FINANCIAL RISK MANAGEMENT The Group s activities expose it to a variety of financial risks: foreign currency risk, credit risk, liquidity risk and interest rate risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. (a) Foreign currency risk The Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are principally denominated in the functional currencies of the Group entities. The Group currently does not have a foreign currency hedging policy in respect of foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise. (b) Credit risk The carrying amount of the cash and bank balances, trade, interest and other receivables and loans to customers included in the statement of financial position represents the Group s maximum exposure to credit risk in relation to the Group s financial assets. The Group s exposure to credit risk is influenced mainly by the individual characteristic of each debtor. At 31 December 2015, the Group has certain concentration of credit risk of approximately HK$65,000,000 (2014: nil) of the total loans to customers which was arising from the Group s largest two debtors respectively. The Group has policies in place to ensure that sales on credit terms and loans are made to customers with an appropriate credit history and the Group performs periodic credit evaluations of its customers. The existing debtors have no significant defaults in the past. The Group s historical experience in collection of trade and other receivables falls within the recorded allowances and the directors are of the opinion that no provision for uncollectible receivables is required. II-16

75 APPENDIX II FINANCIAL INFORMATION OF THE GROUP The credit risk on cash and bank balances is limited because the counterparties are banks with high credit-rating assigned by international credit-rating agencies. (c) Liquidity risk The Group s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer terms. (d) Interest rate risk The Group s loans receivables of approximately HK$65,000,000 (2014: nil) bear interests at fixed rates and therefore are subject to fair value interest rate risks. As the Group has no other significant interest-bearing assets and liabilities, the Group s operating cash flows are substantially independent of changes in marked interest rate. (e) Fair value The carrying amounts of the Group s financial assets and financial liabilities as reflected in the consolidated statement of financial position approximate their respective fair values. 6. REVENUE AND SEGMENT INFORMATION (a) Revenue An analysis of the Group s revenue for the year is as follows: HK$ 000 HK$ 000 Interest income from loans to customers 730 Sales from trading of goods 33,225 Retailing of garments 21,089 77,492 55,044 77,492 (b) Segment information The Group determines its operating segments and measurement of segment profit based on the internal reports to executive directors, the Group s chief operating decision makers, for the purposes of resource allocation and making strategic decision. During the year ended 31 December 2015, the Group s reportable and operating segments are as follows: (i) (ii) Loan financing services provision of funds and financial services to third parties in Hong Kong; Distribution and trading trading of chemical materials, commodities and organic food in Hong Kong; and (iii) Retailing of garments operation of retail outlets and department store counters in Taiwan. II-17

76 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Segment information and results: The following is an analysis of the Group s revenue and results by reportable segment: Year ended 31 December 2015 Loan financing Distribution Retailing of services and trading garments Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Revenue Loan financing services Distribution and trading 33,225 33,225 Retailing of garments 21,089 21,089 Total segment revenue ,225 21,089 55,044 Segment (loss)/profit (3,620) 75 (12,319) (15,864) Unallocated other income, gain and loss 1,455 Gain on disposal of subsidiaries 444 Loss on disposal of a joint venture (93) Corporate expenses (9,318) Loss before taxation (23,376) Year ended 31 December 2014 Retailing of garments HK$ 000 Total HK$ 000 Total segment revenue Retailing of garments 77,492 77,492 Segment loss (8,051) Unallocated other income, gain and loss (197) Corporate expenses (14,005) Loss before taxation (22,253) The accounting policies of the reportable and operating segment are the same as the Group s accounting policies. Segment result represents the profit earned by each segment without allocation of, certain other income, certain other gains and losses and taxation. This is the measure reporting to the executive directors for the purposes of resource allocation and making strategic decision. II-18

77 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Segment assets and liabilities: The following is an analysis of the Group s assets and liabilities by reportable segment: As at 31 December 2015 Loan financing Distribution Retailing of services and trading garments Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Segment assets 66, ,002 4, ,058 Unallocated property, plant and equipment 6 Unallocated prepayments, deposits and other receivables 560 Unallocated cash and bank balances 8,056 Consolidated assets 207,680 Segment liabilities ,627 3, ,554 Unallocated accruals and other payables 717 Consolidated liabilities 126,271 As at 31 December 2014 Retailing of garments HK$ 000 Total HK$ 000 Segment assets 23,568 23,568 Unallocated property, plant and equipment 1,989 Unallocated inventories 482 Unallocated prepayments, deposits and other receivables 1,193 Unallocated cash and bank balances 20,419 Consolidated assets 47,651 Segment liabilities 21,159 21,159 Unallocated accruals and other payables 479 Dividend payable 7 Loans from a shareholder 35,000 Consolidated liabilities 56,645 II-19

78 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Other segment information: Loan financing Retailing of services garments Total HK$ 000 HK$ 000 HK$ 000 Year ended 31 December 2015 Amounts included in the measure of segment results or segment assets: Additions of property, plant and equipment ,464 Depreciation of property, plant and equipment 83 1,047 1,130 Retailing of garments HK$ 000 Total HK$ 000 Year ended 31 December 2014 Amounts included in the measure of segment results or segment assets: Additions of property, plant and equipment 1,379 1,379 Depreciation of property, plant and equipment 2,262 2,262 Geographical information: Revenue Non-current assets HK$ 000 HK$ 000 HK$ 000 HK$ 000 Hong Kong 33, The Peoples Republic of China (the PRC ) 1,806 Taiwan 21,089 77, ,632 55,044 77, ,621 In presenting the geographical information, revenue is based on the locations of the customers. Information about major customers: Revenue from one (2014: nil) customer from the Group s distribution and trading business segment contributing over 10% of the total revenue of the Group represents approximately HK$27,139,000 (2014: nil) of the Group s total revenue. II-20

79 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 7. OTHER INCOME, GAIN AND LOSS HK$ 000 HK$ 000 Interest income Others 1, Exchange loss, net (335) (197) Loss on disposals of property, plant and equipment (1,858) (101) (473) (151) 8. DISPOSAL OF SUBSIDIARIES On 9 April 2015, the Group disposed of its entire interests in City Code Investments Limited and its subsidiary, Zhongshan City Hewan Stone Technology Limited* ( ). The principal activity of City Code Investments Limited was investment holding and Zhongshan City Hewan Stone Technology Limited* was previously principally engaged in trial production of environmental building materials. Net assets at the date of disposal were as follows: HK$ 000 Property, plant and equipment 2,225 Inventories 482 Prepayment, deposits and other receivables 44 Cash and bank balances 3,759 Accruals and other payables (243) Shareholder s loan (8,411) Net assets disposed of (2,144) Assignment of shareholder s loan 8,411 Release of foreign currency translation reserve 115 Direct cost to the disposal 14 Gain on disposal of subsidiaries 444 Total consideration satisfied by cash 6,840 Net cash inflow arising on disposal: Cash consideration received 6,840 Cash paid for direct cost (14) Cash and cash equivalents disposed of (3,759) 3,067 * for identification purpose only II-21

80 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 9. INCOME TAX HK$ 000 HK$ 000 Current tax 7 Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits in respect of the Group s operating entities in Hong Kong for the year (2014: no provision was made). The profit tax rate prevailing in Taiwan is 17% for both years. No provision for Taiwan profit tax in both years as the Group has no assessable profit arising in Taiwan. The reconciliation between the income tax and loss before taxation is as follows: HK$ 000 HK$ 000 Loss before taxation 23,376 22,253 Notional tax on loss before taxation, calculated at the rates applicable in the jurisdiction concerned (3,906) (3,783) Tax effect on income that is not taxable (245) (1) Tax effect of expenses that are not deductible Tax losses not recognised 3,833 3,136 Others (25) 7 At the end of the reporting period, subject to agreement with tax authorities, the Group has unused tax losses of approximately HK$409,049,000 (2014: HK$388,626,000) available for offset against future profits. No deferred tax asset has been recognised due to the unpredictability of future profit streams. Included in unused tax losses are losses of approximately HK$48,705,000 (2014: HK$39,174,000) that will expire on or before 2024 (2014: 2023), other tax losses may be carried forward indefinitely. 10. LOSS FOR THE YEAR The Group s loss for the year is stated after charging the following HK$ 000 HK$ 000 Cost of inventories recognised as expenses (included net reversal of allowance of approximately HK$1,724,000 (2014: HK$729,000) for obsolete inventories (note a)) 42,418 34,296 Depreciation of property, plant and equipment 1,415 2,582 Auditor s remuneration Operating lease rentals in respect of rented premises 7,221 9,869 Contingent rents (note b) 11,238 Directors remuneration (note 11) 2,800 2,337 Other staff costs salaries, bonuses and allowances 12,012 19,784 retirement benefits scheme contributions ,484 20,747 II-22

81 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Notes: (a) (b) Excess obsolete inventory provisions were reversed when the relevant inventories were sold. The contingent rents are determined based on a certain percentage of the gross sales of the relevant shops when the sales meet certain specified levels. 11. DIRECTORS AND SENIOR MANAGEMENT S EMOLUMENTS (a) Directors emoluments The remuneration of each Director for the year ended 31 December 2015 is set out below: Retirement benefit scheme Fees Salaries contributions Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Executive directors: Mr. Liu Bing (note 4) 2, ,098 Ms. Wong Fung Chi (note 1) Mr. Wong Lik Ping (note 5) Mr. Wong Hok Bun Mario (note 6) Non-executive director: Mr. Huang Bin (note 3) Independent non-executive directors: Mr. Kee Wah Sze (note 2) Mr. Chan Pat Lam (note 3) Mr. To Yan Ming Edmond (note 2) Mr. Goh Choo Hwee (note 3) Mr. Chan Wah (note 3) Mr. Wu Shiming (note 1) Mr. Chan Chi Ming, Tony (note 1) , ,800 II-23

82 APPENDIX II FINANCIAL INFORMATION OF THE GROUP The remuneration of each Director for the year ended 31 December 2014 is set out below: Retirement benefit scheme Fees Salaries contributions Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Executive directors: Mr. Wong Lik Ping Mr. Liu Bing 2, ,097 Non-executive director: Mr. Huang Bin Independent non-executive directors: Mr. Kee Wah Sze Mr. Chan Pat Lam Mr. To Yan Ming Edmond Mr. Goh Choo Hwee , ,337 Notes: 1. Ms. Wong Fung Chi was appointed as an executive director and Mr. Chan Chi Ming, Tony and Mr. Wu Shiming were appointed as independent non-executive directors on 22 May Mr. Kee Wah Sze and Mr. To Yan Ming Edmond resigned as independent non-executive directors on 31 May Mr. Chan Pat Lam and Mr. Goh Choo Hwee resigned as independent non-executive directors and Mr. Huang Bin resigned as a non-executive director on 4 November Mr. Chan Wah was appointed as an independent non-executive director on 4 November Mr. Liu Bing resigned as an executive director on 1 January Mr. Wong Lik Ping resigned as an executive director on 6 January Mr. Wong Hok Bun, Mario was appointed as an executive director on 31 December II-24

83 APPENDIX II FINANCIAL INFORMATION OF THE GROUP (b) Five highest paid individuals Of the five individuals with the highest emoluments, two (2014: one) are Directors whose emoluments are disclosed in note 11(a) above. The aggregate of the emoluments in respect of the five individuals with the highest emoluments (including the Directors) are follows: HK$ 000 HK$ 000 Salaries and allowances 4,742 7,668 Retirement benefit scheme contributions ,821 7,732 The emoluments of the five individuals with the highest emoluments are within the following bands: Nil to HK$1,000, HK$1,500,001 to HK$2,000,000 2 HK$2,000,001 to HK$2,500, Save as disclosed above, for the two years ended 31 December 2015 and 2014, no other emoluments had been paid by the Group to the Directors or the five highest paid individuals as an inducement to join or upon joining the Group, or as compensation for loss of office. 12. DIVIDEND The Directors do not recommend the payment of any dividend in respect of the year ended 31 December 2015 (2014: nil). 13. LOSS PER SHARE (a) Basic loss per share The calculation of basic loss per share attributable to owners of the Company was based on the loss for the year attributable to owners of the Company of approximately HK$23,383,000 (2014: HK$22,253,000) and the weighted average number of approximately 4,277,820,000 (2014: 3,655,820,000) ordinary shares in issue during the year. (b) Diluted loss per share Diluted loss per share does not assume the exercise of the Company s share options as the exercise of the Company s share options would result in a decrease in loss per share. II-25

84 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 14. PROPERTY, PLANT AND EQUIPMENT Furniture, Plant and fixtures and Motor equipment equipment vehicles Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Cost: At 1 January , ,821 Additions 1,020 1, ,275 Disposals (2,484) (2,484) Exchange adjustments (10) (961) (12) (983) At 31 December 2014 and 1 January ,057 18, ,629 Additions ,988 Disposals (15,147) (178) (15,325) Disposals of subsidiaries (1,535) (611) (259) (2,405) Exchange adjustments 2 (141) (1) (140) At 31 December , ,747 Accumulated depreciation: At 1 January , ,612 Charge for the year 8 2, ,582 Disposals (2,383) (2,383) Exchange adjustments (3) (791) (9) (803) At 31 December 2014 and 1 January , ,008 Charge for the year 104 1, ,415 Eliminated on disposal (12,975) (163) (13,138) Eliminated on disposal of subsidiaries (111) (18) (51) (180) Exchange adjustments (2) (126) (1) (129) At 31 December , ,976 Carrying amount: At 31 December At 31 December ,005 3, ,621 II-26

85 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 15. INVENTORIES HK$ 000 HK$ 000 Raw materials 482 Finished goods 122,083 8, ,083 9, LOANS TO CUSTOMERS HK$ 000 HK$ 000 Loans to customers 65,000 The fixed-rate loans receivable of HK$65,000,000 under the Group s loan financing services operation as at 31 December 2015 represent loan advances to two independent third parties which are secured by the pledge of certain shares in a private company and personal guarantees. The interest rate for the loans receivable was ranging from 10% to 15.6% (2014: nil) per annum. The loan made available to customers depends on management s assessment of credit risk on the customers by evaluation on background check and repayment abilities. The Group determines the allowance of impaired debts based on the evaluation of collectability and aged analysis of accounts and on the management s judgment, including assessment of change of credit quality and the past collection history of each customer. There are no loans to customers which were past due at the end of reporting period and the Directors consider that no impairment was necessary. Aging analysis Aging analysis of loans to customers prepared based on loan commencement or renewal date set out in the relevant contracts is as follows: HK$ 000 HK$ 000 Less than 1 month 60,000 7 to 12 months 5,000 65,000 Aging analysis of loans to customers prepared based on contractual due date is as follows: HK$ 000 HK$ 000 Not yet past due 65,000 Loans to customers that were neither past due nor impaired related to customers for whom there was no recent history of default. Impairment provisions are recognised for financial reporting purposes only for losses that have incurred at the end of reporting period based on objective evidence of impairment. II-27

86 APPENDIX II FINANCIAL INFORMATION OF THE GROUP A summary of the principal of the collateralised and non-collateralised loans to customers at the end of the reporting period is as follows: HK$ 000 HK$ 000 Collateralised 60,000 Non-collateralised but with guarantee 5,000 65,000 The fair value of collaterals, as assessed by the management, at loans inception date is not less than the principal amount of the relevant loans. 17. TRADE AND INTEREST RECEIVABLES HK$ 000 HK$ 000 Trade and interest receivables 6,381 3,205 Trade and interest receivable from third parties mainly represent receivables from department stores in relation to the collection of sales proceeds from concessionaire sales of merchandise to customers and interest receivables from loans to customers. The average credit period granted to the department stores is 90 days (2014: 60 days). The aging analysis of trade and interest receivables, based on the invoice date or interest due date, and net of allowance, is as follows: HK$ 000 HK$ 000 Not yet due or within 90 days 6,378 3, days to 180 days 3 6,381 3,205 The Group has policy of providing allowance for bad and doubtful debts which is based on the evaluation of collectability and age of accounts and on management s judgment including credit worthiness and past collection history of each debtor. In determining the recoverability of the trade receivables, the Group considers any changes in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that no allowance for bad and doubtful debts is required. No allowance for bad and doubtful debts are provided for trade receivables during the year and at the end of the reporting period. II-28

87 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 18. TRADE PAYABLES HK$ 000 HK$ 000 Trade payables 125,042 17,377 The aging analysis of trade payables, based on the date of receipt of goods, is as follows: HK$ 000 HK$ 000 Within 90 days 121,629 3, days to 180 days days to 360 days 6,297 Over 360 days 3,413 7, ,042 17, LOANS FROM A SHAREHOLDER The loans from a shareholder were unsecured, non-interest bearing, repayable on demand and fully settled during the year. 20. SHARE CAPITAL Number of ordinary shares HK$ each ( 000) HK$ 000 Authorised: At 31 December 2015 and ,000, ,000 Issued and fully paid: At 1 January 2014, 31 December 2014 and 1 January ,655,820 9,140 Issues of shares on placement 730,000 1,825 At 31 December ,385,820 10,965 Completion of the share placement took place on 24 February 2015 pursuant to which 730,000,000 placement shares were issued under the placement agreement at the placement price of HK$0.161 per placement share. Accordingly, the Company s issued share capital was increased by approximately HK$1,825,000 and its share premium account was increased by approximately HK$112,647,000. Net proceeds from the issues after deduction of expenses of approximately HK$3,058,000, were approximately HK$114,472,000. II-29

88 APPENDIX II FINANCIAL INFORMATION OF THE GROUP Capital Management The Group s objectives when managing capital are to safeguard the Group s ability to continue as a going concern and to maximise the return to the shareholders through the optimisation of the debt and equity balance. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No major changes were made in the objectives, policies or processes for managing capital during the two years ended 31 December 2015 and The capital structure of the Group consists of debt, which includes loans from a shareholder as disclosed in note 19 and equity attributable to owners of the Company, comprising share capital and reserves. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total liabilities to total assets. The gearing ratios at 31 December 2015 and 2014 were as follows: HK$ 000 HK$ 000 Total liabilities 126,271 56,645 Total assets 207,680 47,651 Gearing ratio 61% 119% 21. EQUITY-SETTLED SHARE OPTION SCHEME The Share Option Scheme of the Company ( 2009 Scheme ) was adopted by the Company on 29 December The purpose of the 2009 Scheme is to encourage the eligible participants to perform their best in achieving the goals of the Group and at the same time allow the Company in retaining its existing employees and recruiting additional employees. A stronger business relationship will accordingly be established by the Group with the participants. Eligible participants of the 2009 Scheme include any employee, business associate and trustee. The total number of shares which may be issued upon exercise of all options which may be granted under the 2009 Scheme shall not exceed 10% of the total number of shares in issue at the date of adoption of the 2009 Scheme. The maximum number of shares issuable under share options to each eligible participant in the 2009 Scheme within any 12-month period, is limited to 1% of the shares of the Company in issue at anytime. Any further grant of share options in excess of this limit is subject to shareholders approval in a general meeting. Any grant of option to a director, chief executive or substantial shareholder of the Company or any of their respective associates must be approved by the independent non-executive director. In addition, any share options granted to a substantial shareholder of the Company or an independent non-executive director or any of their respective associates in excess of 0.1% of the shares of the Company in issue at any time or with an aggregate value (based on the Company s shares at the date of the grant) in excess of HK$5 million, within any 12-month period, are subject to shareholders approval in advance in a general meeting. The offer of a grant of share options may be accepted within 21 days from the date of the offer. The share option may be exercised at any time during the option period, which is determinable by the Company s board of directors and will not exceed 10 years from the date of grant of the options. II-30

89 APPENDIX II FINANCIAL INFORMATION OF THE GROUP The exercise price of the share options is determinable by the Company s Board of Directors, but may not be less than the highest of (i) the closing price of the Company s shares as stated in the Stock Exchange s daily quotation sheet on the date of the offer of the share options (ii) the average closing price of the Company s shares as stated in the Stock Exchange s daily quotation sheet for the five trading days immediately preceding the date of the offer and (iii) the nominal value of the Company s shares. Share options do not confer rights on the holders to dividends or to vote at shareholders meetings. All share-based compensation was settled in equity. The Group had no legal or constructive obligation to repurchase or settle the options other than by issuing the Company s ordinary shares. The following tables disclose movements in the Company s share options during both years: 2015 Lapsed Outstanding at Outstanding at Reclassified during the 31 December Exercisable Exercise Directors 1 January 2015 during the year year 2015 Grant date period price Mr. Wong Lik Ping 3,000,000 3,000, April April 2012 HK$ April 2020 Mr. Huang Bin (note 2) 3,000,000 (3,000,000) 15 April April 2012 HK$ April 2020 Mr. Kee Wah Sze (note 1) 3,000,000 (3,000,000) 15 April April 2012 HK$ April 2020 Mr. Chan Pat Lam (note 2) 3,000,000 (3,000,000) 15 April April 2012 HK$ April 2020 Mr. To Yan Ming, Edmond (note 1) 3,000,000 (3,000,000) 15 April April 2012 HK$ April 2020 Sub-total 15,000,000 (12,000,000) 3,000,000 Other employees (note 3) 15,500,000 (12,500,000) 3,000, April April 2012 HK$ April 2020 Others 127,000, ,000, April April 2012 HK$ April 2020 Others (note 3) 10,000,000 (10,000,000) 15 April April 2012 HK$ April 2015 Others (note 1) 6,000,000 6,000, April April 2012 HK$ November 2016 Others (note 3) 12,500,000 12,500, April April 2012 HK$ February 2017 Others (note 2) 6,000,000 6,000, April April 2012 HK$ May 2017 Total 167,500,000 (10,000,000) 157,500,000 II-31

90 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 2014 Lapsed Outstanding at Outstanding at during the 31 December Exercisable Exercise Directors 1 January 2014 year 2014 Grant date period price Mr. Wong Lik Ping 3,000,000 3,000, April April 2012 HK$ April 2020 Mr. Huang Bin 3,000,000 3,000, April April 2012 HK$ April 2020 Mr. Kee Wah Sze 3,000,000 3,000, April April 2012 HK$ April 2020 Mr. Chan Pat Lam 3,000,000 3,000, April April 2012 HK$ April 2020 Mr. To Yan Ming, Edmond 3,000,000 3,000, April April 2012 HK$ April 2020 Sub-total 15,000,000 15,000,000 Other employees 15,500,000 15,500, April April 2012 HK$ April 2020 Others 149,500,000 (12,500,000) 137,000, April April 2012 HK$ April 2020 Others 20,000,000 (20,000,000) 21 June June 2012 HK$ August 2014 Total 200,000,000 (32,500,000) 167,500,000 Notes: 1. Mr. Kee Wah Sze and Mr. To Yan Ming Edmond resigned as independent non-executive directors on 31 May In accordance with the 2009 Scheme, the respective share options are exercisable within 18 months from his resignation. 2. Mr. Huang Bin and Mr. Chan Pat Lam resigned as non-executive director and independent nonexecutive directors respectively on 4 November In accordance with the 2009 Scheme, the respective share options are exercisable within 18 months from his resignation. 3. Some employees resigned during the year ended 31 December In accordance with the 2009 Scheme, the respective share options are exercisable within 18 months from their resignation. Out of the share options granted to ex-employees resigned in the year ended 31 December 2013, 10,000,000 options were lapsed during the year ended 31 December ,000,000 options (2014: 32,500,000) were lapsed under the 2009 Scheme during the year ended 31 December II-32

91 APPENDIX II FINANCIAL INFORMATION OF THE GROUP No share option was exercised, granted or cancelled under the 2009 Scheme during the years ended 31 December 2015 and Apart from the 2009 Scheme, during the years ended 31 December 2015 and 2014, no rights were granted to the directors, chief executives of the Company, or any of their spouses or children under 18 years of age to subscribe for equity or debt securities of the Company. 22. RESERVES (a) Group The amounts of the Group s reserves and movements therein are presented in the consolidated statement of profit or loss and other comprehensive income and consolidated statement of changes in equity. (b) Company Share-based Share compensation Accumulated premium reserve losses Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January ,825 99,297 (155,317) 13,805 Loss for the year (32,775) (32,775) Lapse of share options (16,136) 16,136 At 31 December 2014 and 1 January ,825 83,161 (171,956) (18,970) Loss for the year (20,038) (20,038) Issue of new shares 112, ,647 Lapse of share options (4,965) 4,965 At 31 December ,472 78,196 (187,029) 73,639 (c) Nature and purpose of reserves (i) Share premium account The application of the share premium account is governed by section 40 of the Bermuda Companies Act (ii) Foreign currency translation reserve The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in note 3 to the financial statements. II-33

92 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 23. OPERATING LEASE COMMITMENTS Leases for office premises are negotiated for terms ranging from 1 to 2 years. At the end of the reporting period, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows: Land and buildings HK$ 000 HK$ 000 Within one year 1,129 7,503 In the second to fifth years, inclusive 95 6,431 1,224 13, STATEMENT OF FINANCIAL POSITION OF THE COMPANY HK$ 000 HK$ 000 Non-current assets Property, plant and equipment Investments in subsidiaries 2 2 Amount due from subsidiaries 77,859 8,415 77,867 8,601 Current assets Deposits, prepayments and other receivables Cash and bank balance 8,056 16,467 8,617 17,017 Current liabilities Other payable and accruals Amount due to subsidiaries 1,162 2 Loans from a shareholder 35,000 1,880 35,448 Net current assets/(liabilities) 6,737 (18,431) NET ASSETS 84,604 (9,830) Equity Share capital 10,965 9,140 Reserves 73,639 (18,970) TOTAL EQUITY 84,604 (9,830) II-34

93 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 25. PARTICULARS OF SUBSIDIARIES OF THE COMPANY Particulars of the subsidiaries as at 31 December 2015 are as follows: Issued and Place of paid-up incorporation/ share capital/ Percentage of equity registration/ registered interest attributable Principal Name of the subsidiary operation capital to the Group activities Access Sino Limited BVI US$1 100% 100% Investment holding Billion Team Investments Limited Top Board International Limited Allied Power Development Limited BVI US$ % 100% Dormant BVI US$ % 100% Dormant BVI US$ % 100% Dormant Asia Develop Limited Hong Kong HK$1 100% N/A Loan financing services King Topwell International Limited Asia Toprich Development Limited Hong Kong HK$1 100% N/A Distribution and trading Hong Kong HK$1 100% N/A Dormant Da Hua Li Company Limited Taiwan NTD8,000, % 100% Retailing of garments Taiwan Vision Company Limited Taiwan NTD80,000, % 100% Retailing of garments 26. EVENTS AFTER THE REPORTING PERIOD On 15 January 2016, the Company entered into a subscription agreement with Hua Lang Limited to allot and issue a total of 877,000,000 new shares of the Company at the subscription price of HK$0.14 per subscription share. The subscription agreement has been fulfilled and the completion of the subscription took place on 27 January APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved and authorised for issue by the Board of Directors on 18 March II-35

94 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 3. STATEMENT OF INDEBTEDNESS At the close of business on 30 April 2016, being the latest practicable date for the purpose of ascertaining information contained in this statement of indebtedness prior to the printing of this Composite Document, the details of the Group s indebtedness are as follows: Debt instruments As at the close of business on 30 April 2016, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Composite Document, the Group has no bank borrowings, other borrowings nor convertible notes outstanding. Commitments As at the close of business on 30 April 2016, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Composite Document, the Group has no significant capital commitment. Pledge of assets As at the close of business on 30 April 2016, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Composite Document, the Group has not pledged any of its assets to the banks to secure credit facilities granted to the Group. Contingent liabilities As at the close of business on 30 April 2016, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Composite Document, the Group has no material contingent liabilities. Disclaimer Apart from intra-group liabilities between the Company and its subsidiaries or between subsidiaries of the Group and normal trade payables in the ordinary course of business, the Group did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, mortgages, charges or debentures, loans or other similar indebtedness, liabilities under acceptances (other than normal trade bills and payables), acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities outstanding at the close of business on 30 April II-36

95 APPENDIX II FINANCIAL INFORMATION OF THE GROUP 4. MATERIAL CHANGE The Directors confirm that save for the following matters, there has been no material change in the financial or trading position or outlook of the Group subsequent to 31 December 2015 (being the date to which the latest published audited financial statements of the Company were made up) up to and including the Latest Practicable Date: (i) As disclosed in the announcement of the Company dated 15 January 2016, the Company entered into a subscription agreement dated 15 January 2016 with Hua Lang Limited to allot and issue 877,000,000 new Shares pursuant to the general mandate granted to the directors of the Company at the annual general meeting held on 17 April 2015 at a subscription price of HK$0.14 each ( January 2016 Subscription ). The conditions precedent to the subscription agreement were fulfilled and the completion of the January 2016 Subscription took place on 27 January 2016 as announced by the Company on 27 January The total net proceeds from the January 2016 Subscription amounted to HK$122,517,000. The Company has applied the entire net proceeds from the subscription to further develop the distribution and trading business that the Group is developing; and (ii) Following the resolution of the Board as announced by the Company on 8 November 2015 in relation to the scale down of the garment business of the Group in Taiwan in view of highly competitive environment in garments retail business and continuous increase in operating cost in Taiwan, the Company announced on 18 March 2016 that the Board further resolved to cease the garment business in Taiwan by the end of the first quarter of 2016 upon sale of the remaining inventory considering that, among others, the business segment has been making losses for the past five financial years. II-37

96 APPENDIX III GENERAL INFORMATION OF THE GROUP 1. RESPONSIBILITY STATEMENT The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than that relating to the Offeror, the directors of the Offeror, their associates and parties acting in concert with any of them, the terms and conditions of the Offers and the intention of the Offeror regarding the Group) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Offeror, the directors of the Offeror, their associates and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading. 2. SHARE CAPITAL OF THE COMPANY (a) Authorised and issued share capital As at the Latest Practicable Date, the authorised and issued share capital of the Company were as follows: Authorised HK$ 200,000,000,000 Shares of HK$ each 500,000, Issued and fully paid 5,262,819,836 Shares of HK$ each 13,157, The total number of issued Shares as at the end of the last financial year of the Company (being 31 December 2015) was 4,385,819,836 and 877,000,000 Shares have been issued since that date up to the Latest Practicable Date. All of the existing issued Shares currently in issue rank pari passu in all respects with each other, including, in particular, as to rights in respect of capital, dividends and voting. As at the Latest Practicable Date, the Company had 358,500,000 outstanding Options. As at the Latest Practicable Date, save for the Options, the Company did not have any outstanding options, warrants or other conversion rights affecting the Shares. III-1

97 APPENDIX III GENERAL INFORMATION OF THE GROUP 3. DISCLOSURE OF INTERESTS (a) Interests of the Directors in the Shares or securities of the Company As at the Latest Practicable Date, the following Directors had, or were deemed to have, interests and short positions in the Shares, underlying Shares and debentures of the Company or shares, underlying shares and debentures of any of the Company s associated corporations (within the meaning of Part XV of the SFO), which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or which are required, pursuant to Section 352 of the SFO, to be entered into the register referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange: Name of Director Nature of interest Total number of Shares interested Approximate percentage of the existing issued share capital of the Company Ng Chi Lung (Note) Wong Hok Bun, Mario (Note) Chan Wah (Note) Chan Chi Ming, Tony (Note) Wu Shiming (Note) Beneficial owner Beneficial owner Beneficial owner Beneficial owner Beneficial owner 40,000, % 10,000, % 1,000, % 1,000, % 1,000, % Note: Including shares in relation to 40,000,000 Options, 10,000,000 Options, 1,000,000 Options, 1,000,000 options and 1,000,000 Options granted on 6 April 2016 to Ng Chi Lung, Wong Hok Bun, Mario, Chan Wah, Chan Chi Ming Tony and Wu Shiming. Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective associates had any interests or short positions in the Shares, underlying Shares and debentures of the Company and shares, underlying shares and debentures of its associated corporations (within the meaning of Part XV of the SFO), which are required to be notified to the Company and the Stock Exchange pursuant to the Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they are deemed or taken to have under such provisions of the SFO) or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which are required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange. III-2

98 APPENDIX III GENERAL INFORMATION OF THE GROUP (b) Other Interests As at the Latest Practicable Date, (i) (ii) none of the Company or any of the Directors was interested in any shares, convertible securities, warrants, options or derivatives in respect of the shares of the Offeror; none of the subsidiaries of the Company, pension funds of the Company or of any member of the Group, and any advisers to the Company as specified in class (2) of the definition of associate under the Takeovers Code, but excluding exempt principal traders (as defined under the Takeovers Code), owned or controlled any Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company; (iii) no Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company were managed on a discretionary basis by fund managers (other than exempt fund managers) connected with the Company; (iv) (v) no person had irrevocably committed himself to accept or reject the Offers; none of the Company nor any Directors had borrowed or lent any Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company. 4. DEALINGS IN SECURITIES During the Relevant Period and up to the Latest Practicable Date, (i) (ii) save as disclosed in the paragraph headed 3. DISCLOSURE OF INTERESTS in this Appendix III, none of the Directors have dealt for value in any Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company; none of the subsidiaries of the Company, pension funds of the Company or of any member of the Group or any advisers to the Company as specified in class (2) of the definition of associate under the Takeovers Code but excluding exempt principal traders (as defined under the Takeovers Code) had dealt for value in any Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company; (iii) save for the Acquisition, no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who was an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code; III-3

99 APPENDIX III GENERAL INFORMATION OF THE GROUP (iv) no Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company were managed on a discretionary basis by fund managers (other than exempt fund managers) connected with the Company and no such person had dealt for value in any Shares or any securities, convertible securities, warrants, options or derivatives in respect of any Shares or securities of the Company. 5. ARRANGEMENTS AFFECTING AND RELATING TO DIRECTORS As at the Latest Practicable Date: (a) (b) (c) no benefit (other than statutory compensation) would be given to any Director as compensation for loss of office or otherwise in connection with the Offers; there was no agreement or arrangement between any Director and any other person which was conditional or dependent upon the outcome of the Offers or otherwise connected with the Offers; and there was no material contract entered into by the Offeror in which any Director had a material personal interest. 6. SERVICE CONTRACTS OF DIRECTORS Mr. Ng Chi Lung has been appointed as the executive Director with effect from 1 April 2016 and entered into a service contract with the Company for a term of 1 year commencing on 1 April 2016 at a monthly remuneration of HK$100,000, which is determinable by either party serving on the other not less than 1 month written notice, subject to retirement by rotation and re-election in accordance with the bye-laws of the Company and the Listing Rules. The service contract of Mr. Ng described above did not contain any provision of variance pay. Save as the aforesaid, as at the Latest Practicable Date, none of the Directors had any service contracts with the Company or any of its subsidiaries or associated companies in force which: (a) (b) (c) (including both continuous and fixed term contracts) had been entered into or amended within 6 months before the commencement of the Offer Period; were continuous contracts with a notice period of 12 months or more; or were fixed term contracts with more than 12 months to run irrespective of the notice period. III-4

100 APPENDIX III GENERAL INFORMATION OF THE GROUP 7. MATERIAL CONTRACTS The following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by any member of the Group) have been entered into by the members of the Group after the date 2 years before the commencement of the Offer Period up to and including the Latest Practicable Date and which are or may be material: (a) the subscription agreement dated 15 January 2016 entered into between Hua Lang Limited and the Company in relation to the subscription of 877,000,000 new Shares at a subscription price of HK$0.14 each; (b) the loan agreement dated 6 November 2015 entered into between Asia Develop Limited, a wholly owned subsidiary of the Company, as lender, Golden Empires Limited, as borrower and Putian City Jin Di Huang Trading Company Limited* as mortgagor, pursuant to which Asia Develop Limited agreed to grant to Golden Empires Limited a loan of HK$60 million for a term of 1 year at interest rate of 10% per annum; (c) (d) (e) the deed of termination to the placing agreement detailed in paragraph (e) of this section dated 3 November 2015 entered into between the Company and Partners Capital Securities Limited; the deed of termination to the subscription agreement detailed in paragraph (f) of this section dated 3 November 2015 entered into between the Company and Asia Pacific Resources Development Investment Limited; the placing agreement dated 2 June 2015 (as supplemented by the supplemental placing document dated 28 August 2015) entered into between the Company and Partners Capital Securities Limited in relation to the placing of up to 6,000,000,000 new Shares at placing price of HK$0.1 per Share and convertible bonds of the Company with principal amount of HK$1,000,000,000 convertible to 10,000,000,000 Shares at the conversion price of HK$0.1 per Share; (f) the subscription agreement dated 2 June 2015 (as supplemented by the supplemental subscription document dated 28 August 2015) entered into between the Company and Asia Pacific Resources Development Investment Limited in relation to the subscription of up to 6,000,000,000 new Shares at subscription price of HK$0.1 per Share and convertible bonds of the Company with principal amount of HK$1,000,000,000 convertible to 10,000,000,000 Shares at the conversion price of HK$0.1 per Share; * for identification purpose only III-5

101 APPENDIX III GENERAL INFORMATION OF THE GROUP (g) (h) the sale and purchase agreement dated 9 April 2015 for Billion Team Investments Limited, a wholly-owned subsidiary of the Company, to dispose of the (i) 50% share capital in Crown Age Investments Limited and (ii) 100% interest in City Code Investments Limited to Mr. Wong Lik Ping at an aggregate consideration of HK$6,850,000; and the placing agreement dated 6 February 2015 entered into between the Company and Kingston Securities Limited in relation to the placing of up to 730,000,000 new Shares at the placing price of HK$0.161 per share. 8. LITIGATION As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors are aware, no litigation or claims of material importance is pending or threatened by or against the Company and any of its subsidiaries. 9. EXPERT AND CONSENT The following is the qualification of the expert who has given opinion or advice which are contained in this Composite Document. Name Qualification Nuada a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO Nuada has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion herein of its letter, report and/or references to its name, in the form and context in which it is included. 10. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection (i) during normal business hours (i.e. from 9:00 a.m. to 5:00 p.m.) on Monday to Friday, except for public holidays, at the principal place of business of the Company at Suite 3604, 36/F, West Tower, Shun Tak Centre, Connaught Road Central, Sheung Wan, Hong Kong; (ii) on the website of the SFC ( and (iii) on the website of the Company ( for so long as the Offers remain open for acceptance during the period from the date of this Composite Document up to and including the Offer Closing Date: (a) Memorandum of Association and Bye-laws of the Company; (b) the annual report of the Company for the financial year ended 31 December 2014; (c) the annual report of the Company for the financial year ended 31 December 2015; III-6

102 APPENDIX III GENERAL INFORMATION OF THE GROUP (d) (e) (f) (g) the letter from the Board, the text of which is set out on pages 7 to 17 of this Composite Document; the letter from the Independent Board Committee, the text of which is set out on pages 24 to 25 of this Composite Document; the letter from the Independent Financial Adviser, the text of which is set out on pages 26 to 43 of this Composite Document; the letter of consent from Nuada referred to in the paragraph headed 9. EXPERT AND CONSENT in this Appendix III; (h) each material contract referred to in paragraph headed 7. MATERIAL CONTRACTS in this Appendix III; and (i) the service contract referred to in paragraph headed 6. SERVICE CONTRACTS OF DIRECTORS in this Appendix III. III-7

103 APPENDIX IV GENERAL INFORMATION OF THE OFFEROR 1. RESPONSIBILITY STATEMENT The information contained in this Composite Document relating to the Offeror and its intention has been supplied by the Offeror. The directors of the Offeror, Mr. You Zhenhua and Mr. Lam Chi Ming, jointly and severally accept full responsibility for the accuracy of the information (other than that relating to the Group, the Vendors, their associates and parties acting in concert with any of them) contained in this Composite Document, and confirm, having made all reasonable enquires, that to the best of his knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Group, the Vendors, their associates and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading. 2. MARKET PRICES The table below shows the closing prices of the Shares quoted on the Stock Exchange on (i) the last day on which trading took place in each of the calendar months during the Relevant Period; (ii) the Last Trading Day; and (iii) the Latest Practicable Date. Date Closing price per Share HK$ November December January February March April May (Last Trading Day) May Latest Practicable Date During the Relevant Period: (i) (ii) the highest closing price of the Shares as quoted on the Stock Exchange was HK$0.275 per Share on 7 March 2016; and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.157 per Share on 15 December IV-1

104 APPENDIX IV GENERAL INFORMATION OF THE OFFEROR 3. SHAREHOLDINGS AND DEALINGS IN SECURITIES OF THE COMPANY The Offeror is a company incorporated in the BVI with limited liability which is owned as to as to 65% by Bright Power Ventures Limited, 25% by Charming Investment Holdings Limited and 10% by Brilliant Mark Limited. As at the Latest Practicable Date, the Offeror and parties acting in concert with it are interested in 1,610,740,000 Shares, representing 30.61% of the entire share capital of the Company. Save as disclosed above, the Offeror confirms that: (a) (b) (c) (d) (e) (f) (g) As at the Latest Practicable Date, save as disclosed above, none of the Offeror, its ultimate beneficial owners, the directors of the Offeror, nor parties acting in concert with any of them owned or controlled any other interest in the Shares, Options, derivatives, warrants or other securities convertible into Shares during the Relevant Period. As at the Latest Practicable Date, save of the Acquisition, none of the Offeror, its directors, its ultimate beneficial owner, nor parties acting in concert with any one of them had dealt in the Shares, outstanding options, derivatives, warrants or other securities convertible into Shares during the Relevant Period. As at the Latest Practicable Date, no arrangement of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code existed between the Offeror or its associates or any parties acting in concert with it and any other person. As at the Latest Practicable Date, no person had irrevocably committed himself to accept the Offer. As at the Latest Practicable Date, no arrangement of any kind referred to in Note 8 to Rule 22 of the Takeovers Code exists between a person who owned or controlled Shares or convertible securities, warrants, options or derivatives of the Company and any of the Offeror, its ultimate beneficial owner and/or parties acting in concert with it during the Relevant Period. As at the Latest Practicable Date, none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with it has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company. As at the Latest Practicable Date, no Shares, convertible securities, warrants, options or derivatives of the Company was managed on a discretionary basis by any fund managers connected with the Offeror, its ultimate beneficial owner and/ or parties acting in concert with it, and no such person had dealt in any Shares or convertible securities, warrants, options or derivatives of the Company during the Relevant Period. IV-2

105 APPENDIX IV GENERAL INFORMATION OF THE OFFEROR 4. OTHER ARRANGEMENTS IN RELATION TO THE OFFERS As at the Latest Practicable Date: (a) (b) (c) none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with it had received any irrevocable commitment to accept the Offers; there was no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code in relation to the shares of the Offeror or the Company and which might be material to the Offers; no benefit (other than statutory compensation) was or would be given to any Directors as compensation for loss of office or otherwise in connection with the Offers; (d) there was no agreement or arrangement to which the Offeror, its ultimate beneficial owner and/or parties acting in concert with it was a party which related to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offers; (e) there was no agreement, arrangement or understanding (including any compensation arrangement) between the Offeror and parties acting in concert with it and any Director, recent Director, Shareholder or recent Shareholder which had any connection with or dependent on the Offers; (f) (g) no material contracts had been entered into by the Offeror in which any Director has a material personal interest; and save for the Facilities, there was no agreement, arrangement or understanding that the securities acquired in pursuance of the Offers would be transferred, charged or pledged to any other persons. 5. EXPERTS QUALIFICATIONS AND CONSENTS The following are the qualification of the experts whose letter/opinion is contained in this Composite Document: Name Qualification Haitong International Capital a licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO Haitong International Securities a licensed corporation to carry out Type 1 (dealing in securities ), Type 3 (leveraged foreign exchange trading) and Type 4 (advising on securities) regulated activities under the SFO IV-3

106 APPENDIX IV GENERAL INFORMATION OF THE OFFEROR Each of the above experts has given and has not withdrawn its respective written consent to the issue of this Composite Document with the inclusion of its advices, reports and/or the references to its name in the form and context in which it appear. As at the Latest Practicable Date, the above expert did not have any shareholding, direct or indirect, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did it have any direct or indirect interest in any assets which had been, since 31 December 2015, being the date of the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group. 6. MATERIAL CONTRACTS IN RELATION TO THE OFFERS No material contracts were entered into by the Offeror and its parties acting in concert in relation to the Offers which are or may be material. 7. MISCELLANEOUS (a) (b) (c) The principal members of the Offeror s concert group are the Offeror and Mr. You Zhenhua. The registered office of the Offeror is situated at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The correspondence address of the Offeror is 3 Anson Road, #19-01 Springleaf Tower, Singapore Mr. You Zhenhua and Mr. Lam Chi Ming are the directors of the Offeror. The address of Mr. You Zhenhua is 3 Anson Road, #19-01 Springleaf Tower, Singapore The address of Mr. Lam Chi Ming is P , 2/F, 38 Lok Ku Road, Sheung Wan, Hong Kong. The Offeror is legally and beneficially owned as to 65% by Bright Power Ventures Limited (a company incorporated in BVI with limited liability which is wholly and beneficially owned by Mr. You Zhenhua) and as such, Mr. You Zhenhua is also the ultimate controlling shareholder of the Offeror. (d) The financial adviser to the Offeror in respect of the Offers is Haitong International Capital. The fellow subsidiary of Haitong International Capital, Haitong International Securities, is making the Offers on behalf of the Offeror. The registered address of both of Haitong International Capital and Haitong International Securities is 22/F, Li Po Chun Chambers, 189 Des Voeux Road Central, Hong Kong. (e) The English text of this Composite Document and the Forms of Acceptance shall prevail over their respective Chinese texts in the case of inconsistency. IV-4

107 APPENDIX IV GENERAL INFORMATION OF THE OFFEROR 8. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection (i) during normal business hours from 9:00 a.m. to 5:00 p.m. (other than Saturdays, Sundays and public holidays) at principal place of business of the Company in Hong Kong at Suite 3604, 36/F, West Tower, Shun Tak Centre, Connaught Road Central, Sheung Wan, Hong Kong; (ii) on the website of the SFC ( and (iii) the Company s website ( during the period from the date of this Composite Document onwards for as long as the Offers remain open for acceptance: (a) (b) the memorandum and articles of association of the Offeror; the letter from Haitong International Securities, the text of which is set out in the section headed LETTER FROM HAITONG INTERNATIONAL SECURITIES in this Composite Document; and (c) the written consents from the experts as referred to in the paragraph headed 5. EXPERTS QUALIFICATIONS AND CONSENTS in this Appendix IV. IV-5