Asian Citrus Holdings Limited — Proxy Solicitation & Information Statement 2021

Mar 15, 2021

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Asian Citrus Holdings Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its 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 circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

This circular is not for distribution, directly or indirectly, in or into the United States. This circular does not constitute or form a part of any offer or solicitation to purchase1933, as amendedor subscribe(thefor“ Securities Act securities in the”) andUnitedmayStates.not be TheofferedCompany’sor sold insharesthe Unitedhave notStatesbeenexceptand willpursuantnot betoregisteredregistrationunderor antheexemptionUnited StatesfromSecurities Actthe registrationof requirements of the Securities Act. No public offering of the Company’s shares will be made in the United States.

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ASIAN CITRUS HOLDINGS LIMITED 亞洲果業控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 73)

(I) MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF TARGET LAND AND PROPERTIES; (II) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; (III) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND

(IV) NOTICE OF SPECIAL GENERAL MEETING

Financial adviser to the Company

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Placing Agent

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Cinda International Securities Limited

Capitalized terms used in the lower portion of this cover page shall have the same respective meanings as those defined in the section headed “Definitions” in this circular.

A letter from the Board is set out on pages 5 to 27 of this circular.

A notice convening the SGM to be held at United Conference Centre, Level 10, United Centre, 95 Queensway, Admiralty, Hong Kong on Thursday, 8 April 2021 at 9:00 a.m. is set out on pages 44 and 48 of this circular.

A form of proxy for use at the SGM is enclosed with this circular. If you are a Shareholder and are not able to attend the SGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and any power of attorney or other authority (if any) under which it is signed, or a certified copy of attorney, to Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for the holding of the SGM, or to Computershare Investor Services (Jersey) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY, United Kingdom by 5:00 p.m. (UK time) on Wednesday, 31 March 2021. Completion and return of the form of proxy will not preclude Shareholders from attending and voting in person at the SGM, or any adjourned thereof, should they so wish and in such event the form of proxy shall be deemed to be revoked.

PRECAUTIONARY MEASURES FOR THE SGM

• The following precautionary measures will be implemented to prevent the spread of COVID-19 at the SGM:

• compulsory temperature checks and health declaration for all attendees

• • compulsory wearing of surgical face masks throughout the SGM

• maintaining proper distance between seats

• no beverage or refreshments will be served and no corporate gifts will be distributed at the SGM

• Any person who does not comply with the precautionary measures will not be admitted to the venue of the SGM. The Company would like to remind Shareholders, in particular those who are unwell or subject to quarantine in relation to COVID-19, that physical attendance in person at the SGM is not necessary for the purpose of exercising their voting rights and recommends Shareholders that they may appoint the chairman of the SGM as a proxy to vote on the relevant resolution(s) to be proposed at the SGM instead of attending the SGM in person.

16 March 2021

* For identification purposes only

CONTENTS

			Page
1.	Definitions .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1-4
2.	Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5-27
3.	Appendix I	– Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . .	28-32
4.	Appendix II	– Target Land and Properties Valuation Report . . . . . . . . . . . . . . .	33-39
5.	Appendix III	– General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40-43
6.	Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		44-48

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the following meanings:

• “Acquisition”

• the acquisition of the Target Land and Properties by the Purchaser pursuant to the terms and conditions of the Sale and Purchase Agreement

• “Acquisition Completion” completion of the Acquisition in accordance with the terms and conditions of the Sale and Purchase Agreement

• “Announcements” the announcement of the Company dated 19 January 2021 and the clarification announcement of the Company dated 20 January 2021 in relation to, among other things, the Acquisition, the Placing, and the Increase in Authorised Share Capital

• “Board” the board of Directors

• “Business Day” a day (other than a Saturday, Sunday and public holiday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• “Changjiang Tyling” Changjiang Tyling Management Company Limited, a company 50%-owned by Mr. Ng Ong Nee (an executive Director, Chairman and Chief Executive Officer of the Company) and 50%-owned by a third party independent to the Company and its connected persons

• “Company” Asian Citrus Holdings Limited, a company incorporated in Bermuda with limited liability and whose shares are listed on the Main Board of the Stock Exchange (Stock Code: 73)

• “connected person”

• has the meaning ascribed to it under the Listing Rules

• “Consideration”

• the aggregate consideration of RMB57,000,000 payable by the Purchaser in respect of the Acquisition

• “COVID-19”

• the coronavirus disease 2019

• “Deposit”

• a deposit in the amount of RMB5 million for the Acquisition pursuant to the Sale and Purchase Agreement

• “Director(s)”

• director(s) of the Company

• “Earnest Money”

an earnest money in an amount of RMB5 million paid by the Group to Mr. Gao on 28 October 2020 pursuant to the MOU

– 1 –

DEFINITIONS

• “Fruit Distribution Business”

• the business of distribution of various high-quality fruits in the PRC of the Group

• “GFA” total gross floor area

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC

• “Increase in Authorised Share Capital”

• the proposed increase in the authorised share capital of the Company from HK$20,000,000 divided into 2,000,000,000 Shares to HK$50,000,000 divided into 5,000,000,000 Shares by the creation of an additional 3,000,000,000 new Shares

• “Independent Third Party(ies)”

• any person or company and their respective ultimate beneficial owner(s) who, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are not connected persons of the Company and are third parties independent of the Company and its connected persons in accordance with the Listing Rules

• “Land”

• an industrial land located at the junction of Dongcun Road and Xingqiao Road, Longgang District, Shenzhen, Guangdong Province, the PRC, as detailed in the section headed “The Acquisition – Information of Target Land and Properties” in this circular

• “Last Trading Day”

• 19 January 2021, being the last trading day of the Shares on the Stock Exchange immediately prior to the entering into of the Placing Agreement

• “Latest Practicable Date”

• 11 March 2021, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular

• “Listing Committee”

• the listing sub-committee of the board of directors of the Stock Exchange

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Long Stop Date”

• 30 June 2021 (or such later date as may be agreed by the Placing Agent and the Company)

– 2 –

DEFINITIONS

• “MOU” the non-legally binding memorandum of understanding in relation to the Acquisition entered into between Mr. Gao and Shenzhen First Class Fruits Company Limited (深圳市 冠華水果商城有限公司), a wholly owned subsidiary of the Company, on 21 October 2020

• “Placees” any person or entity procured by the Placing Agent and/or its agent(s) under the Placing Agreement to subscribe for any of the Placing Shares

• “Placing” the placing of Placing Shares by the Placing Agent pursuant to the Placing Agreement

• “Placing Agent” Cinda International Securities Limited, a licensed corporation incorporated in Hong Kong to carry out Type 1 (dealing in securities) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Placing Agreement” the conditional placing agreement entered into between the Company and the Placing Agent dated 19 January 2021 in relation to the Placing under the Specific Mandate

• “Placing Completion” the completion of the Placing and the subscription of the Placing Shares in accordance with the terms and conditions of the Placing Agreement

• “Placing Completion Date”

• the date of the Placing Completion, as defined in the section headed “The Placing under the Specific Mandate – The Placing Agreement – Placing Completion” in this circular

• “Placing Price”

HK$0.08 per Placing Share

• “Placing Share(s)”

• a maximum of 1,250,000,000 new Shares to be allotted and issued to the Placees by the Company through the Placing procured by the Placing Agent

• “PRC”

• the People’s Republic of China, and for the purpose of this circular only, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

• “Purchaser” or “Shenzhen Guanjiali”

• 深圳市冠佳利實業有限公司 (Shenzhen Guanjiali Industrial Limited*), a wholly owned subsidiary of the Company in the PRC

• “RMB”

Renminbi, the lawful currency of the PRC

• For identification purposes only

– 3 –

DEFINITIONS

• “Sale and Purchase Agreement” the sale and purchase agreement dated 19 January 2021 entered into between the Vendor and the Purchaser in respect of the sale and purchase of the Target Land and Properties

• “SGM” the special general meeting of the Company to be convened for the purpose of approving, among other matters, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the Placing Agreement and the transactions contemplated thereunder; (iii) the Increase in Authorised Share Capital; and (iv) the grant of the Specific Mandate for the allotment and issuance of the Placing Shares

• “Share(s)” ordinary share(s) of the Company

• “Shareholder(s)” holder(s) of the share(s) of the Company

• “Specific Mandate” a specific mandate to allot, issue and otherwise deal in additional Shares to be sought from the Shareholders who are entitled to vote and not required to be abstained from voting under the Listing Rules at the SGM to satisfy the allotment and issue of the Placing Shares upon the Placing Completion, which shall be valid until 30 June 2021

• “sq.m.” square meter(s)

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Takeovers Code”

• the Hong Kong Code on Takeovers and Mergers for the time being in force

• “Target Land and Properties”

• an industrial land and various buildings erected thereon located at the junction of Dongcun Road and Xingqiao Road, Longgang District, Shenzhen, Guangdong Province, the PRC, as detailed in the section headed “The Acquisition – Information of Target Land and Properties” in this circular

• “Vacant Possession Delivery”

• the delivery of the Target Land and Properties on vacant possession basis by the Vendor to the Purchaser in accordance with the terms and conditions of the Sale and Purchase Agreement

• “Vendor” or “Mr. Gao”

• Mr. Gao Xiwu (高錫武)

• “Vincorn”

• Vincorn Consulting and Appraisal Limited

• “%”

• per cent

– 4 –

LETTER FROM THE BOARD

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ASIAN CITRUS HOLDINGS LIMITED 亞洲果業控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 73)

Executive Directors: Mr. Ng Ong Nee (Chairman and Chief Executive Officer) Mr. Ng Hoi Yue

(Deputy Chief Executive Officer)

Registered office: Clarendon House 2 Church Street Hamilton Bermuda HM11

Non-executive Director:

Mr. He Xiaohong

Independent Non-executive Directors:

Mr. Chung Koon Yan Dr. Lui Ming Wah, PhD, SBS, JP Mr. Yang Zhen Han

Principal Place of Business in Hong Kong:

1/F., Ching Cheong Industrial Building 1-7 Kwai Cheong Road Kwai Chung, New Territories Hong Kong

16 March 2021

To the Shareholders

Dear Sir or Madam,

(I) MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF TARGET LAND AND PROPERTIES; (II) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; AND

(III) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

Reference is made to the Announcements in relation to the Acquisition, the Placing, and the Increase in Authorised Share Capital.

On 19 January 2021 (after trading hours), the Vendor and the Purchaser entered into the Sale and Purchase Agreement, pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire, the entire interest in the Target Land and Properties

• For identification purposes only

– 5 –

LETTER FROM THE BOARD

free from encumbrances at the Consideration of RMB57 million (equivalent to approximately HK$68.4 million), which shall be settled by cash to be financed by the net proceeds from the Placing.

On 19 January 2021 (after trading hours), the Company entered into the Placing Agreement with the Placing Agent, pursuant to which the Placing Agent has conditionally agreed to procure, on a best effort basis, not less than six Placees, who and whose ultimate beneficial owner shall be Independent Third Parties, to subscribe for up to 1,250,000,000 Placing Shares at the Placing Price of HK$0.08 per Placing Share. The Placing Shares will be allotted and issued pursuant to a Specific Mandate to be sought from the Shareholders at the SGM to be convened in accordance with the Listing Rules.

As at the Latest Practicable Date, the Company has an authorised share capital of HK$20,000,000 divided into 2,000,000,000 Shares. To facilitate the Placing and provide the Company with greater flexibility for future development, the Board proposes to increase the authorised share capital of the Company to HK$50,000,000 divided into 5,000,000,000 Shares by the creation of an additional 3,000,000,000 new Shares. Such new Shares, upon issue, shall rank pari passu in all respects with the existing Shares. The Increase in Authorised Share Capital is subject to the approval of the Shareholders by way of an ordinary resolution at the SGM.

The purpose of this circular is to provide you with, among other things, further information relating to (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the Placing Agreement and the transactions contemplated thereunder; (iii) the Increase in Authorised Share Capital; (iv) the grant of the Specific Mandate for the allotment and issuance of the Placing Shares; (v) other information as required to be disclosed under the Listing Rules; and (vi) the notice of the SGM.

THE ACQUISITION

The Sale and Purchase Agreement

The principal terms of the Sale and Purchase Agreement are summarized as follows:

Date

19 January 2021

Parties

(i) Vendor: Mr. Gao Xiwu (高錫武) (ii) Purchaser: Shenzhen Guanjiali, a wholly owned subsidiary of the Company

To the best knowledge, information and belief of the Directors, after having made all reasonable enquiries, the Vendor is an Independent Third Party.

– 6 –

LETTER FROM THE BOARD

Assets to be acquired

Pursuant to the Sale and Purchase Agreement, the Vendor conditionally agreed to sell, and the Purchaser conditionally agreed to acquire, free from encumbrances, the entire interest in the Target Land and Properties which comprise a parcel of land and four buildings erected thereon. For further details on the Target Land and Properties, please refer to the section headed “The Acquisition – Information of Target Land and Properties” in this circular.

Consideration

Pursuant to the Sale and Purchase Agreement, the Consideration is RMB57 million (equivalent to approximately HK$68.4 million) which shall be funded by part of the proceeds from the Placing.

The Earnest Money of RMB5 million under the MOU shall be applied to the Consideration as Deposit in accordance with the payment terms of the Sale and Purchase Agreement stated below under the section headed “The Acquisition – The Sale and Purchase Agreement – Payment Terms” in this circular.

Payment terms

Pursuant to the Sale and Purchase Agreement, the Consideration of RMB57 million (which is inclusive of the Deposit) shall be payable by the Purchaser to the Vendor in the following manner:

• (a) Deposit: the Earnest Money in the amount of RMB5 million previously paid shall be applied as the Deposit upon signing of the Sale and Purchase Agreement;

• (b) First payment: RMB9.25 million shall be payable to the Vendor in cash after the approval of the Acquisition from the relevant government authorities (including but not limited to Industry and Information Technology Bureau) having been obtained and submission of the relevant transfer documentation;

• (c) Second payment: RMB14.25 million shall be payable to the Vendor in cash within 30 days after the completion of the transfer of title registration of the Target Land and Properties to the Purchaser and the real-estate title certificates having been obtained by the Purchaser;

• (d) Third payment: RMB27.5 million shall be payable to the Vendor in cash within 30 days after the Vacant Possession Delivery; and

• (e) Final payment: the balance (if any) of the retained assurance fund of RMB1 million, after deducting all outstanding fees and expenses relating to the Target Land and Properties, including but not limited to property management fees, cable TV, water, electricity, gas and telephone lines, as at the date of the Vacant Possession Delivery, shall be payable to the Vendor in cash within 90 days after the Vacant Possession Delivery.

– 7 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, no payment has been made by the Purchaser to the Vendor under the Sale and Purchase Agreement save for the Earnest Money.

Basis of determination of the Consideration

The Consideration was determined after arm’s length negotiations between the Vendor and the Purchaser taking into account factors including (i) the valuation of the Target Land and Properties of RMB60 million which is included in the valuation report prepared by Vincorn Consulting and Appraisal Limited, an independent valuer for the Acquisition; and (ii) the reasons for and benefits of the Acquisition as set out under the section headed “The Acquisition – Reasons for and benefits of the Acquisition” in this circular.

The Directors consider that the Consideration is fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Conditions to the registration of the Target Land and Properties

The Vendor and the Purchaser agreed that the submission of the transfer of title registration of the Target Land and Properties is subject to the following conditions precedent:

• (a) the Shareholders having passed all necessary resolutions at the SGM to approve the Sale and Purchase Agreement and the Acquisition contemplated thereunder and the Placing Agreement and the Placing contemplated thereunder (including the grant of the Specific Mandate); and

• (b) the Placing Completion having taken place.

None of the aforesaid conditions precedent to the registration of the Target Land and Properties are waivable by either the Vendor or the Purchaser.

In the event that any condition stated above cannot be satisfied by 30 June 2021, each of the Vendor and the Purchaser shall be entitled to terminate the Sale and Purchase Agreement and the Vendor shall refund the amount equal to the aggregate payments which have already been made by the Purchaser (including the Deposit and all other payments) within 3 days after the notice from the Purchaser.

The application for the Acquisition to the relevant government authorities shall be made within 15 days upon the satisfaction of the conditions stated above and the submission of the application for transferring the title registration of the Target Land and Properties to Shenzhen Real Estate Registration Centre shall be made within 15 days upon obtaining the approvals from Industry and Information Technology Bureau.

In the event that the transfer of title registration is not approved by the relevant government authorities, the Purchaser shall be entitled to nominate a designated purchaser for the Acquisition.

– 8 –

LETTER FROM THE BOARD

In the event that the completion of transferring title cannot take place within 180 days after the submission of the application to the government authorities (except where the failure is due to reasons associated with the Vendor), each of the Vendor and the Purchaser shall be entitled to terminate the Sale and Purchase Agreement and the Vendor shall refund the amount equal to the aggregate payments which have already been made by the Purchaser (including the Deposit and all other payments) within 3 days after the notice from the Purchaser. The Vendor shall be liable for breach of contract if the failure in transferring the title of the Target Land and Properties is due to reasons associated with the Vendor.

Termination of the Acquisition and the compensation arrangements

If the Purchaser fails to perform its obligations in accordance with the Sale and Purchase Agreement in a timely manner (including but not limited to any unreasonable delay of payment of the Consideration), the Purchaser shall pay the Vendor liquidated damages in an amount equivalent to 0.05% of the Consideration for each day of the delay. If the Purchaser has delayed payment of the Consideration for over 15 days, the Vendor shall be entitled to (a) terminate the Sale and Purchase Agreement and forfeit the Deposit; or (b) claim liquidated damages against the Purchaser in an amount equivalent to 20% of the Consideration, and the Vendor shall be entitled to claim any damages on losses incurred therefrom against the Purchaser.

In the event that the Vendor fails to perform its obligations in accordance with the Sale and Purchase Agreement in a timely manner (including but not limited to any late submission of relevant documents, transfer of title registration or Vacant Possession Delivery), the Vendor shall pay to the Purchaser liquidated damages in an amount equivalent to 0.05% of the Consideration for each day of the delay, and the Purchaser shall be entitled to delay relevant payments of the Consideration and performance of its obligation.

If the Vendor has delayed the performance of its obligations for over 15 days, the Purchaser shall be entitled to terminate the Sale and Purchase Agreement and claim twice the amount of the Deposit against the Vendor or claim liquidated damages in an amount equivalent to 20% of the Consideration against the Vendor. In addition, the Vendor shall also return the entire amount received from the Purchaser. Alternatively, the Purchaser shall also be entitled to continue to enforce the Sale and Purchase Agreement and claim liquidated damages in an amount equivalent to 20% of the Consideration against the Vendor, in addition to the liquidated damages equivalent to 0.05% of the Consideration for each day of the delay. In any event, the Purchaser shall be entitled to claim damages on losses incurred therefrom against the Vendor.

In the event that the Vendor otherwise commits a breach of the Sale and Purchase Agreement, the Purchaser shall be entitled to either (a) continue to enforce the Sale and Purchase Agreement; or (b) terminate the Sale and Purchase Agreement, subject always that in any event the Purchaser shall be entitled to claim liquidated damages in an amount equivalent to 20% of the Consideration against the Vendor, together with any damages on losses incurred therefrom against the Vendor.

– 9 –

LETTER FROM THE BOARD

The valuation on the Target Land and Properties

The valuer

The Company has engaged Vincorn to perform the valuation on, and prepare the valuation report for, the Target Land and Properties (the “ Valuation ”).

In assessing Vincorn’s competency on the Valuation, the Directors have requested and obtained a capability statement from Vincorn which demonstrates their track record of valuation on land and/or properties similar to the Target Land and Properties. Based on the Director’s review, the Directors understood that Vincorn has accumulated extensive experience in evaluating land and/or properties similar to the Target Land and Properties.

Vincorn has also confirmed that it was an Independent Third Party as at the Latest Practicable Date.

Based on the above, the Directors are of the view that Vincorn is qualified and competent to perform the valuation on and prepare the valuation report for the Target Land and Properties.

The valuation methodology

The cost approach has been adopted by Vincorn to value the Target Land and Properties.

Cost approach is a valuation approach which is based on an estimate of the value of the land on the basis of its existing use, plus the current gross replacement (reproduction) costs of the improvements, and less allowances for physical deterioration and all relevant forms of obsolescence and optimisation. In order to assess the value of the Land under the cost approach, comparable land transactions available in the market have been referred to.

The Directors have discussed with Vincorn regarding the rationale for adopting different valuation methodologies in respect of the Valuation. According to Vincorn, the cost approach is the most appropriate valuation methodology for the Valuation due to the following reasons:

• (a) the market approach is not appropriate for the Valuation as there are limited relevant comparable sales for the Target Land and Properties in the market;

• (b) the income approach is not appropriate for the Valuation as (i) there are limited relevant comparable rentals for the Target Land and Properties in the market; and (ii) the income to be generated from the Target Land and Properties cannot be easily and accurately quantified or ascertained as they will be used as the fruit distribution centre for the Fruit Distribution Business and do not have an identifiable income stream; and

• (c) the cost approach is appropriate for the Valuation since cost approach is a commonly utilised method in the valuation, which takes into account the fundamental cost to reproduce the assets appraised in accordance with the current market prices of similar assets.

– 10 –

LETTER FROM THE BOARD

After considering the reasons above, the Directors are of the view that the valuation methodology adopted by Vincorn for the Valuation is fair and reasonable.

Key assumptions and parameters for the valuation

Vincorn has made the following key assumptions in respect of the Valuation:

• (a) the Vendor sells the Target Land and Properties in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement;

• (b) no allowances have been made for any charges, mortgages or amounts owing on the Target Land and Properties, nor for any expenses or taxations which may be incurred in effecting a sale;

• (c) except such encumbrances disclosed in the valuation report, the Target Land and Properties are free from any other encumbrances, restrictions and outgoings of an onerous nature; and

• (d) the owner of the Target Land and Properties has free and unencumbered rights to use the Target Land and Properties for the whole of the unexpired term of the land use rights.

The major parameters adopted by Vincorn for the Valuation are summarised as follows:

Depreciated replacement cost of buildings Site unit rate of Land

RMB2,019/sq.m. on the basis of GFA RMB8,271/sq.m. on the basis of site area

The Directors have reviewed the specific data of the depreciated replacement cost of the four buildings and site unit rate of the Land and noted that:

• (a) the depreciated replacement cost of the four buildings was determined with reference to: (i) the economic useful life; (ii) the estimated salvage value; and (iii) the total gross replacement cost, including the estimated replacement cost, professional fee, ancillary facility fee, finance cost, and contingency cost in respect of the four buildings;

• (b) Vincorn selected five comparable transactions in respect of the industrial lands since 2018, which bear similarity to the Land. The Directors had discussed with Vincorn the comparable transactions adopted, and Vincorn was of the view that the identified transactions are considered relevant to and representative of the subject matter of the Valuation (being the Land) in terms of relevance to the location and use of the Land; and

• (c) the site unit rate of the Land was determined with reference to the adjusted site unit rates of the aforementioned five comparable transactions, which have been adjusted by reference to the variances in various locational and physical attributes.

– 11 –

LETTER FROM THE BOARD

Based on the above assessment, the Directors consider that the above key assumptions and parameters adopted by Vincorn for the Valuation are fair and reasonable.

Information of Target Land and Properties

The Target Land and Properties comprise the Land on which four buildings, including two workshops, an ancillary office and a dormitory, are erected.

The Land is located at the junction of Dongcun Road and Xingqiao Road, Longgang District, Shenzhen, Guangdong Province, the PRC (中國廣東省深圳市龍崗區東村路與興橋路交 界) with a total site area of approximately 6,674.30 square metres. The Land is designated for industrial use with a use right for 50 years from 8 December 1992.

The Vendor obtained ownership over the land use rights in respect of the Target Land and Properties from Shenzhen City Zhiyuan Real Estate Development Company Limited (previously referred to as Shenzhen Wulong Real Estate Development Company Limited) by way of a judgment issued on 4 December 2017 by the People’s Court of Huilai County of Guangdong Province.

To the best knowledge, information and belief of the Directors, after having made all reasonable enquiries, Shenzhen City Zhiyuan Real Estate Development Company Limited was an Independent Third Party and did not have any shareholding or relationships, directly or indirectly, in or with (i) any member of the Group or (ii) any connected person of the Company as at the Latest Practicable Date.

Set forth below is a table demonstrating the details of the four buildings which are erected on the Land:

Certificate No. Building 1. Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Ancillary Office 2. Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Workshop Block 1 3. Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Workshop Block 2 4. Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Dormitory Total	GFA (square metres) 470.02 673.32 260.15 973.88
	2,377.37

– 12 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, buildings with a total GFA of 1,640 sq.m. (the “ Leased Area ”) of the Target Land and Properties were occupied by an Independent Third Party for the manufacture and sales of electrical insulators and other electrical materials under a lease which will expire on 31 December 2021 (the “ Lease Arrangement ”). The lessee has consented to vacate the Leased Area within 15 days after the completion of the transfer of the title registration of the Target Land and Properties to the Purchaser. It is expected that the registration of transfer of the title of the Target Land and Properties will be completed within three months upon the making of the submission of the application for the transfer of title registration to Shenzhen Real Estate Registration Centre (currently expected to be around by the end of July 2021).

Given that the lessee has consented to vacate the Leased Area as aforesaid, the Company anticipates that the Lease Arrangement shall have been terminated by the parties thereto before the Acquisition Completion. As advised by the PRC legal advisers of the Company, the lessee is not entitled to any compensation for early termination under the Lease Arrangement from the Group.

As the Target Land and Properties are intended to be used as the fruit distribution centre to operate the Fruit Distribution Business and are not intended to be leased to any tenant, the Directors are of the view that the Target Land and Properties will not have an identifiable income stream and thus do not constitute revenue-generating assets with an identifiable income stream or assets valuation under Rule 14.67(6)(b) of the Listing Rules.

The Company is not aware that the current use of the Target Land and Properties will affect the planned use of them for the Fruit Distribution Business.

Upon Vacant Possession Delivery, the Company plans to refurbish the Target Land and Properties, the renovation costs, timetable, and intended source of financing of which have been disclosed under the section headed “Use of proceeds” in this circular.

Information of the Group

The Company is an investment holding company and the Group is principally engaged in (i) the planting, cultivation and sales of agricultural produce in the PRC market; and (ii) the Fruit Distribution Business.

Information of the Vendor

The Vendor, Mr. Gao, a PRC citizen, is specialized in the business operation on the supply chain of fruit distribution business such as site selection for the business operation and the development of the sales channel. The Company has been acquainted with the Vendor through social network of one of the directors of the Company’s subsidiaries in September 2020. After preliminary discussion, the Company showed its interest in the Target Land and Properties as (a) they suit the requirements on the operation of a fruit distribution centre; and (b) their location and transportation network as stated under the section headed “The Acquisition – Reasons for and benefits of the Acquisition” below are appropriate for the business development of the Group. Thereafter, the Company started to initiate the negotiation with the Vendor and has obtained more in-depth information of the Target Land and Properties, including but not limited to their current status and the estimated consideration of the Target Land and Properties. After considering the factors as stated under the section headed “The Acquisition – Reasons for and benefits of the

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LETTER FROM THE BOARD

Acquisition” below and the terms and conditions of the Acquisition, the Purchaser entered into the Sale and Purchase Agreement to acquire the Target Land and Properties.

Save as disclosed above, to the best knowledge, information and belief of the Directors, after having made all reasonable enquiries, the Vendor, being Mr. Gao, was an Independent Third Party and did not have (a) any shareholding, directly or indirectly, in any member of the Group or any connected person of the Company nor (b) any relationship with any member of the Group or any connected person of the Company as at the Latest Practicable Date.

Reasons for and benefits of the Acquisition

The Fruit Distribution Business of the Group involves distribution of various types of premium fruits in the PRC by, among other things, sourcing from quality suppliers, with value-added services for processing and distributing to the customers. In addition to fruits grown in the PRC, with the relevant permit granted by the PRC authorities, the Group has expanded the product offering by importing premium fruits from overseas, e.g. durian from Malaysia.

The Fruit Distribution Business recorded a significant increase in revenue from approximately RMB17.3 million for the year ended 30 June 2019 to RMB401.4 million for the year ended 30 June 2020.

The Group currently provides a series of value-added services on processing fruits at the suppliers’ farms, including grading, cleaning, waxing, packaging and labelling of the fruits with the Company’s brand name “Royalstar 新雅奇” to the customers. As the Fruit Distribution Business of the Group is growing rapidly, the Directors consider it necessary for the Fruit Distribution Business to establish a comprehensive distribution centre in order to (a) process the fruits in a centralised manner; (b) offer stock management for various fruits to the customers under different humidity and/or temperature storage requirements; and (c) build up a distribution fleet for the trucks to distribute the fruits to the customers, which would fundamentally enhance the efficiency on processing fruits to achieve economies of scale by increasing the handling capacity of each distribution and the storage capacity, taking into account the increasing trend in the sales volume under the Fruit Distribution Business in the foreseeable future.

The Acquisition represents an opportunity for the Group to establish a distribution centre to cater for such needs of the Fruit Distribution Business. As the Target Land and Properties comprise four well-established buildings with multi-functions including workshops, offices and dormitories which are likely to satisfy the operating requirements of the distribution centre, the Group would be able to save a substantial amount of costs in building the relevant facilities. Furthermore, given that the Target Land and Properties are located in Shenzhen, Guangdong which has the well-developed transportation networks in the PRC, the Directors believe that the fruits, after being processed at the new distribution centre, can be delivered to the customers in Southern China in an efficient and a cost-effective manner.

In view of the above, the Directors are of the view that the Acquisition is a commercially sensible business decision and an appropriate course of action to take for the long-term development of the Group. Taking into account the aforesaid factors, the Directors consider that the terms and conditions of the Acquisition contemplated under the Sale and Purchase Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

THE PLACING UNDER THE SPECIFIC MANDATE

Introduction

On 19 January 2021 (after trading hours), the Company and the Placing Agent entered into the Placing Agreement, pursuant to which the Placing Agent has conditionally agreed to procure not less than six Placees on a best effort basis to subscribe for up to a maximum of 1,250,000,000 Placing Shares at the Placing Price of HK$0.08 per Placing Share.

The Placing Agreement

The principal terms of the Placing Agreement are summarized as follows:

Date

19 January 2021 (after trading hours)

Parties

• (i) the Company (as the issuer); and

• (ii) the Placing Agent (as the placing agent)

(collectively, the “ Parties ” and each a “ Party ”)

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are Independent Third Parties.

Placing Shares

As at the Latest Practicable Date, the Company has 1,249,637,884 Shares in issue. Assuming that (a) there will be no change in the number of issued Shares of the Company between the date of this circular and the date of the Placing Completion; and (b) the maximum of 1,250,000,000 Placing Shares are successfully placed, the Placing Shares represent (i) approximately 100.03% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 50.01% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares. The aggregate nominal value of the maximum of 1,250,000,000 Placing Shares will be HK$12,500,000.

Ranking of the Placing Shares

The Placing Shares will rank, when issued and fully paid up, pari passu in all respects with all other Shares in issue on the Placing Completion Date.

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LETTER FROM THE BOARD

Placees

As at the Latest Practicable Date, all of the Placing Shares have been tentatively placed by the Placing Agent to not less than six Placees at the Placing Price of HK$0.08 per Placing Share and to the best knowledge, information and belief of the Directors, after having made all reasonable enquiries, (i) all of the Placees, together with their respective ultimate beneficial owners, are Independent Third Parties; and (ii) none of the Placees is the Vendor or his associates (as defined under the Listing Rules).

Notwithstanding that the Placing Agent has undertaken to the Company that none of the Placees and their respective ultimate beneficial owners would, immediately upon the completion of the Placing, become a substantial shareholder of the Company, the Company has given its conditional consent to (without releasing the Placing Agent’s obligations and prejudicing the Company’s rights under any other provisions of the Placing Agreement) the Placing Agent’s entering into of any agreement or arrangement to procure Placee to subscribe for Placing Shares which represent 10% or more of the Company’s enlarged issued share capital as at the date of completion of the Placing.

As at the Latest Practicable Date, the Company has been advised by the Placing Agent that not less than six Placees have been identified. Amongst the identified Placees, two of them, namely Xu Guodian (許國典) (“ Mr. Xu ”) and Kung Chak Ming (龔澤民) (“ Mr. Kung ”), both of whom are entrepreneurs conducting business in the PRC and Hong Kong, have each indicated his intention to subscribe for 276,243,000 and 419,298,000 Placing Shares, representing approximately 11.05% and 16.77% of the Company’s enlarged issued share capital as at the Placing Completion Date, respectively, and will become substantial shareholders of the Company upon the Placing Completion.

To the best knowledge, information and belief of the Directors, after having made all reasonable enquiries, both Mr. Xu and Mr. Kung indicated to the Placing Agent that they intended to be passive investors of the Company and will not be engaged in the daily management of the Group.

As at the Latest Practicable Date, based on the information provided by the Placing Agent, the Placing will not lead to any Placee triggering a mandatory offer obligation under Rule 26.1 of the Takeovers Code or the introduction of a controlling Shareholder (as defined under the Listing Rules).

Placing Price

The Placing Price of HK$0.08 per Placing Share represents:

• (a) a discount of approximately 60.00% to the closing price of HK$0.200 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (b) a discount of approximately 44.06% to the closing price of HK$0.143 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (c) a discount of approximately 46.31% to the average closing price of approximately HK$0.149 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day;

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LETTER FROM THE BOARD

• (d) a discount of approximately 45.95% to the average closing price of approximately HK$0.148 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day; and

• (e) a discount of approximately 27.27% to the net asset value of approximately HK$0.11 per Share as at 30 June 2020 (based on the consolidated net assets of the Group of approximately RMB129,732,000 as at 30 June 2020 (equivalent to approximately HK$142,705,000 at the then exchange rate of RMB1 to HK$1.10) and 1,249,637,884 Shares in issue as at 30 June 2020).

The net Placing Price, after deduction of placing fees, legal expenses and disbursements, and other expenses incidental to the Placing, amounted to approximately HK$0.076 per Placing Share.

The Placing Price was arrived at after arm’s length negotiations between the Company and the Placing Agent with reference to, among other things, the prevailing market prices and the recent trading performance of the Shares.

When determining the Placing Price, the Directors have reviewed the closing prices and the trading volume of the Shares during the period from 1 September 2020, being the date of the resumption of trading of Shares since the suspension of the trading of Shares on 29 September 2016, to the Last Trading Day (the “ Review Period ”).

The following chart illustrates the trend of the closing prices of the Shares during the Review Period:

==> picture [417 x 271] intentionally omitted <==

----- Start of picture text -----

HK$ Share price performance during the Review Period
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Closing Price Placing Price
1/9/20208/9/202015/9/202022/9/202029/9/20206/10/202013/10/202020/10/202027/10/20203/11/202010/11/202017/11/202024/11/20201/12/20208/12/202015/12/202022/12/202029/12/20205/1/202112/1/202119/1/2021
----- End of picture text -----

Source: the website of the Stock Exchange

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LETTER FROM THE BOARD

Subsequent to the Review Period, the Directors noted the sporadic movement in the price of the Shares since 17 February 2021 (i.e. following Chinese New Year public holiday in Hong Kong) and up to the Latest Practicable Date.

The following table sets out (a) the average daily trading volume of the Shares during the Review Period; and (b) the percentage of the average daily trading volume of the Shares in proportion to the total number of issued Shares as at the end of the month/period during the Review Period:

				Percentage
				of average
				daily
				trading
				volume to
				total
				number of
			Average	issued
	Total		daily	Shares as at
	trading	Number of	trading	the end of
	volume of	trading	volume of	the
Month/period	the Shares	days	the Shares	month/period
	Number of		Number of
	Shares		Shares	%
September 2020	190,025,887	22	8,637,540	0.6912
October 2020	44,622,241	18	2,479,013	0.1984
November 2020	23,104,460	21	1,100,212	0.0880
December 2020	23,860,976	22	1,084,590	0.0868
January 2021 (up to the
Last Trading Day)	21,793,619	12	1,816,135	0.1453

Source: the website of the Stock Exchange

Notwithstanding that the Placing Price represents a discount to the closing prices of the Shares and the net asset value per Share as at 30 June 2020 as disclosed above, the Directors consider that the Placing Price and the terms of the Placing Agreement are fair and reasonable based on the current market conditions and that the Placing is in the interests of the Company and the Shareholders as a whole for the reasons set forth below:

• (a) having considered (i) the general downward trend of the closing price of the Shares during the Review Period (ranged from the lowest of HK$0.143 per Share on 19 January 2021 to the highest of HK$0.405 per Share on 18 September 2020); (ii) the relatively low liquidity of the Shares during the Review Period (the monthly average daily trading volume in proportion to the total number of issued Shares ranged from approximately 0.0868% to 0.6912%); and (iii) the impact from the uncertainty of COVID-19, the Directors are of the view that it is reasonable and necessary to set the Placing Price at a discount to the recent market price so as to attract the investors to participate in the Placing;

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LETTER FROM THE BOARD

• (b) the Directors have enquired with various financial institutions, including the Placing Agent, which indicated that the Placing Price shall be within a range from HK$0.05 to HK$0.08 per Placing Share in light of the current market sentiment as well as factors referred to in paragraph (a) above; and

• (c) as stated under the section headed “The Acquisition – Reasons for and benefits of the Acquisition” in this circular, funding is required by the Group in order to fully implement its development strategy to further expand its Fruit Distribution Business.

In addition, despite the sporadic movement in the Share price after the date of the Placing Agreement and took place around the second half of February 2021 as aforesaid, in particular, when the closing prices of the Shares ranged from the lowest of HK$0.189 per Share on 17 February 2021 to the highest of HK$0.244 per Share on 25 February 2021, the Directors consider that the Placing remains to be in the best interest of the Company and the Shareholders as a whole and the most appropriate fundraising method in light of the following:

• (a) the aforementioned considerations taken into account by the Directors at the time of the entering into of the Placing Agreement;

• (b) save for the sporadic movement in the Share prices during a short period of time, as at the Latest Practicable Date, the Directors were not aware of any other significant changes in the Share price;

• (c) the Group’s imminent need to raise sufficient funds for the Group’s business development on the fruit distribution centre in particular for the Acquisition, as Placing is more expeditious than rights issue or open offer as further detailed in the section headed “The Placing under the Specific Mandate – Reasons for and benefits of the Placing” in this circular and can meet the timing stipulated under the Sale and Purchase Agreement as further detailed in the section headed “The Acquisition – The Sale and Purchase Agreement” in this circular; and

• (d) other reasons set out in the section headed “The Placing under the Specific Mandate – Reasons for and benefits of the Placing” in this circular.

During the past 12 months immediately preceding the date of this circular, the Company had not undertaken any rights issue, open offer or specific mandate placing. The Placing under the Specific Mandate on its own would result in a theoretical dilution effect (as defined in Rule 7.27B of the Listing Rules) of 23.41% up to the date of this circular.

Placing fees

The Company shall pay to the Placing Agent a placing fee of 3% of the aggregate Placing Price of the Placing Shares actually placed and subscribed under the Placing Agreement.

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LETTER FROM THE BOARD

Placing conditions

The Placing Completion is conditional upon the following conditions having been fulfilled or waived:

• (a) the Shareholders of the Company having passed all necessary resolutions at the SGM to approve, among others, (i) the entering into and performance of the obligations of the Company under the Placing Agreement and the transactions contemplated thereunder (including but not limited to the grant of the Specific Mandate and such Specific Mandate remaining valid and subsisting) and (ii) the Increase in Authorised Share Capital of the Company to HK$50,000,000 divided into 5,000,000,000 Shares of HK$0.01 each;

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Placing Shares;

• (c) the representations, warranties and undertakings given by the Company under the Placing Agreement being true and accurate and not misleading as at the Placing Completion Date; and

• (d) the representations, warranties and undertakings given by the Placing Agent under the Placing Agreement being true and accurate and not misleading as at the Placing Completion Date.

The Placing Agent may in its absolute discretion waive either in whole or in part at any time by notice in writing to the Company the condition set out in paragraph (c) above.

The Company may in its absolute discretion waive either in whole or in part at any time by notice in writing to the Placing Agent the condition set out in paragraph (d) above.

Save for the above, none of the other conditions can be waived by any Parties.

In the event that any of the above conditions is not fulfilled or waived by the Long Stop Date, all rights, obligations and liabilities of the Parties under the Placing Agreement in relation to the Placing shall cease and terminate and none of the Parties shall have any claim against any other Party in respect of the Placing save for any antecedent breaches or claims.

As at the Latest Practicable Date, none of the above conditions to the Placing have been fulfilled or waived.

Validity period of the Specific Mandate

The Specific Mandate, if approved by the Shareholders at the SGM, shall remain valid until 30 June 2021. In the event that the Placing Completion does not take place on or before 30 June 2021, the Company will re-comply with the applicable Listing Rules requirement, including but not limited to, seeking the necessary Shareholders’ approval in respect of the issuance of the Placing Shares.

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LETTER FROM THE BOARD

Placing Completion

The Placing Completion shall take place at 5:00 p.m. on the third Business Day (the “ Placing Completion Date ”) following the fulfilment (or waiver) of the placing conditions or such other date as may be agreed in writing between the Parties.

Termination of the Placing

The Placing Agent has the right to terminate the arrangements set out in the Placing Agreement by notice in writing at or prior to 8:00 a.m. on the Placing Completion Date (or such later date as may be agreed between the Parties), if in its reasonable opinion, the success of the Placing would be materially and adversely affected by any force majeure events.

In addition, if, at or prior to 5:00 p.m. on the Placing Completion Date:

• (a) the Company commits any material breach of or omits to observe any of the obligations or undertakings expressed or assumed under the Placing Agreement in any material respect; or

• (b) there is any suspension in the trading of the Shares on the Stock Exchange for more than ten consecutive trading days save for the purposes of clearing of any announcement relating to the Placing Agreement or circulars relating to the Placing and/or the Sale and Purchase Agreement and the ancillary agreements thereto; or

• (c) the Placing Agent shall become aware of the fact that any of the representations or warranties contained in the Placing Agreement was, when given, untrue or inaccurate or would in any respect be untrue or inaccurate, in any material respects, if repeated and if the Placing Agent, in its reasonable opinion, determines that any such untrue representation or warranty represents or is likely to represent a material adverse change in the financial or trading position or prospects of the Group taken as a whole or will otherwise likely to have a material prejudicial effect on the Placing; or

• (d) there is any adverse change in the financial position of the Company since 30 June 2020 which is material in the context of the Placing;

after consultation with the Company, the Placing Agent shall be entitled, by notice in writing to the Company (which shall set out the grounds of termination with supporting evidence) prior to 5:00 p.m. on the Placing Completion Date, to elect to treat such matter or event as releasing and discharging it from its obligations under the Placing Agreement.

Upon giving of the notice pursuant to the above, all obligations of the Placing Agent under the Placing Agreement shall cease and determine and no Parties shall have any claim against the other Party in respect of any matter or thing arising out of or in connection with the Placing Agreement, save for any antecedent breach of any obligation under the Placing Agreement or any surviving claims.

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LETTER FROM THE BOARD

Reasons for and benefits of the Placing

As disclosed in the section headed “The Acquisition – Reasons for and benefits of the Acquisition” in this circular, the Directors consider it necessary for the Group to establish a comprehensive fruit distribution centre to process the fruits in a centralized manner for the Fruit Distribution Business.

Based on the announcement of the interim results for the six months ended 31 December 2020 of the Company disclosed on 26 February 2021, the cash and cash equivalents of the Group amounted to approximately RMB13.7 million as at 31 December 2020, which is insufficient to pay the Consideration in full and finance the development plan as stated above. As such, the Directors are of the view that the Company has an imminent need to raise funds to cover the shortfall of the Consideration.

Prior to the entering into of the Placing Agreement, the Directors had considered other fundraising alternatives available to the Group, such as debt financing, rights issue and open offer.

Regarding the possibility of debt financing for the Acquisition, the Directors have enquired with the Company's long-term relationship bank which indicated that only mortgage loan facilities with loan principal amount of up to 50% of the appraised value of the mortgaged property at an annual interest rate of approximately 4.5% above HIBOR can be offered. Given that (a) the estimated loan principal amount is not sufficient to cover the aggregate amount of the Consideration and the anticipated refurbishment expenditure of the Target Land and Properties as stated in the section headed “Use of proceeds” in this circular; and (b) the quoted annual interest rate is considerably higher than the usual interest rates on mortgage loans of approximately 2.5% in Hong Kong, the Directors considered that bank borrowing was not the most favorable financing means to the Company.

In light of the above, the Directors considered that debt financing is not an attractive option as compared with the Placing due to the following reasons: (a) the financial institutions would not accept farmland infrastructure and bearer plants as collateral for pledging; (b) the terms of the banking facility offered to the Company is not favourable; (c) the debt financing will result in additional interest burden and affect the financial performance of the Group; and (d) the Placing, as compared to bank facilities, carries no payment obligation to the Group and at the same time is able to enlarge the Company’s capital base for its business development.

Fund raising activities conducted through rights issue or open offer generally are more time-consuming compared to Placing due to the involvement of the issue of listing documents together with other application and extensive administrative procedures (e.g. trading arrangements), which would usually take additional two to three months to complete as compared to Placing. Rights issue or open offer is also less cost-effective than Placing due to the estimated additional costs for the engagement of reporting accountants and/or brokerage agent(s) of approximately HK$3.0 million to HK$3.5 million to be incurred. Based on the above, the Directors consider that the issue of Placing Shares under Specific Mandate is a more desirable solution for the business development of the Group.

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LETTER FROM THE BOARD

In view of the above, notwithstanding that the shareholding of the existing Shareholders will be diluted upon the Placing Completion, after taking into account: (a) the Group’s imminent need to raise sufficient funds for the Group’s business development; (b) the Placing being the most feasible, favourable and cost-effective financing method to raise sufficient funds as compared to debt financing, rights issue, and open offer; and (c) the Directors’ assessment of the fairness and reasonableness of the Placing Price as stated under the section headed “The Placing under the Specific Mandate – The Placing Agreement – Placing Price” above, the Directors consider that the Placing and its terms and conditions are fair and reasonable so far as the Company and the Shareholders are concerned.

As at the Latest Practicable Date, an aggregate of 1,250,000,000 Placing Shares have been tentatively placed by the Placing Agent to not less than six Placees at the Placing Price of HK$0.08 per Placing Share. The Company intends to apply the entire net proceeds from the Placing in accordance with the section headed “Use of proceeds” in this circular.

Save for the above and as at the Latest Practicable Date, the Company does not have any intention or plans to undertake any fundraising plans. However, the Directors will not rule out any fundraising activities they may consider when it is reasonably necessary for the Group to raise fund to meet its operational needs or for future development. The Directors will carefully consider the likely impact on the Shareholders before they will proceed on any fundraising exercises.

FUNDRAISING ACTIVITIES OF THE COMPANY DURING THE PAST 12 MONTHS

The Company did not carry out any fundraising activities during the past 12 months immediately preceding the date of this circular.

APPLICATION FOR LISTING

An application will be made to the Stock Exchange for the listing of, and the permission to deal in, the Placing Shares.

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LETTER FROM THE BOARD

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

The changes in the shareholding structure of the Company as a result of the Placing (assuming that there are no other changes in the issued share capital of the Company from the date of this circular up to and immediately upon the Placing Completion) are set forth as follows:

Changjiang Tyling (Note 1) Mr. Xu (Note 2) Mr. Kung (Note 2) Public Shareholders: Other Placees Other public Shareholders	As at the Latest Practicable Date Number of Shares % 179,252,394 14.34 – – – – – – 1,070,385,490 85.66 1,249,637,884 100.00	Immediately upon the Placing Completion (assuming all the Placing Shares are fully placed) Number of Shares % 179,252,394 7.17 276,243,000 11.05 419,298,000 16.77 554,459,000 22.19 1,070,385,490 42.82 2,499,637,884 100.00	Immediately upon the Placing Completion (assuming all the Placing Shares are fully placed) Number of Shares % 179,252,394 7.17 276,243,000 11.05 419,298,000 16.77 554,459,000 22.19 1,070,385,490 42.82 2,499,637,884 100.00
			100.00

Notes:

1. Changjiang Tyling is 50%-owned by Mr. Ng Ong Nee (an executive Director, Chairman and Chief Executive Officer of the Company) and 50%-owned by a third party independent to the Company and its connected persons. Mr. Ng Ong Nee (who is also a director of Changjiang Tyling) is deemed to be interested in the 179,252,394 Shares held by Changjiang Tyling by virtue of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

2. Please refer to the section headed “The Placing under the Specific Mandate – The Placing Agreement – Placees” in this circular for the subscription indications of Mr. Xu and Mr. Kung.

Based on the above, the Directors expect that, upon the Placing Completion, the Company will continue to comply with the minimum public float requirement of 25% as required under Rule 8.08(1)(a) of the Listing Rules.

FINANCIAL IMPACT OF THE ACQUISITION

Earnings

Upon the Acquisition Completion, it is expected that the Acquisition will increase the annual depreciation charges by approximately RMB2,591,000 (equivalent to approximately HK$3,107,000 at an exchange rate of RMB1 to HK$1.199).

Assets

Upon the Acquisition Completion, the total assets of the Group would have increased by approximately HK$94.7 million.

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LETTER FROM THE BOARD

USE OF PROCEEDS

Assuming that all the Placing Shares are fully placed, the gross proceeds from the Placing would amount to HK$100 million. The net proceeds, after deduction of all relevant expenses, including but not limited to placing fees, legal expenses and disbursements, and other expenses incidental to the Placing of approximately HK$5.3 million, would amount to approximately HK$94.7 million.

The Company intends to apply the net proceeds from the Placing as to: (i) approximately HK$68.4 million for the financing of the Consideration; (ii) approximately HK$11.0 million for the refurbishment of the Target Land and Properties; and (iii) approximately HK$15.3 million for the working capital of the Group for daily operations.

The following table sets forth the details of use of the net proceeds from the Placing:

Use of proceeds Particulars Financing of the Consideration Refurbishment of the Target Land and Properties_(Note)_ Decoration of the Target Land and Properties, including flooring works, demolition works, refurbishment of roof, etc.; installation of facilities for the Target Land and Properties, including water supply and sanitation facilities and electrical facilities Working capital of the Group for daily operation Accrued expenses, including legal and professional fees and other corporate expenses Administrative expenses, including staff costs, office rental, and other corporate expenses etc. Sub-total Total of net proceeds

Net proceeds to be used Expected timing of the use of net proceeds HK$’000 68,400 To be fully utilised in or before June 2021 11,000 To be fully utilised in or before November 2021 7,680 To be fully utilised in or before April 2021 7,620 To be fully utilised in or before November 2021 15,300 94,700

Note: Save for the expenses to be incurred as disclosed in the table above, as at the Latest Practicable Date, it is expected that no additional capital expenditure on the Target Land and Properties will be incurred, and no further fund raising activities may be required for the aforementioned refurbishment of the Target Land and Properties. As at the Latest Practicable Date, the Company has not made any payment in relation to the refurbishment of the Target Land and Properties.

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LETTER FROM THE BOARD

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

As at the Latest Practicable Date, the Company has an authorised share capital of HK$20,000,000 divided into 2,000,000,000 Shares of HK$0.01 each, of which 1,249,637,884 Shares have been issued. To facilitate the Placing and provide the Company with greater flexibility for future development, the Board proposes to increase the authorised share capital of the Company to HK$50,000,000 divided into 5,000,000,000 Shares by the creation of an additional 3,000,000,000 new Shares. Such new Shares, upon issue, shall rank pari passu in all respects with the existing Shares. The Increase in Authorised Share Capital is subject to the approval of the Shareholders by way of an ordinary resolution at the SGM.

IMPLICATIONS UNDER THE LISTING RULES

The Acquisition

As the highest percentage ratio in respect of the Acquisition under the Sale and Purchase Agreement exceeds 25% but is less than 100%, the Acquisition constitutes a major transaction of the Company pursuant to Rule 14.06(3) of the Listing Rules and is therefore subject to reporting, announcement, circular and Shareholders’ approval requirement under Chapter 14 of the Listing Rules.

The Placing under the Specific Mandate

The Company will seek the Shareholders’ approval at the SGM for the grant of the Specific Mandate to allot and issue the Placing Shares. Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in the Placing Shares on the Stock Exchange.

SGM

Set out on pages 44 and 48 of this circular is a notice convening the SGM to be held at United Conference Centre, Level 10, United Centre, 95 Queensway, Admiralty, Hong Kong on Thursday, 8 April 2021 at 9:00 a.m. (Hong Kong time). The SGM will be held for the purpose of, considering and, if thought fit, passing the ordinary resolution(s) to approve, among other things, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the Placing Agreement and the transactions contemplated thereunder; (iii) the Increase in Authorised Share Capital; and (iv) the grant of the Specific Mandate for the allotment and issuance of the Placing Shares.

A form of proxy for use at the SGM is enclosed in this circular. If you are a Shareholder and are not able to attend the SGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and any power of attorney or other authority (if any) under which it is signed, or a certified copy of attorney, to the Company’s branch share registrars, Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for the holding of the SGM, or to Computershare Investor Services (Jersey) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY, United Kingdom by 5:00 p.m. (UK time) on Wednesday, 31 March 2021 or any adjournment thereof. Completion and return of the form of

– 26 –

LETTER FROM THE BOARD

proxy will not preclude any Shareholder from attending and voting in person at the SGM or any adjourned meeting should the Shareholder so wish and, in such event, the form of proxy shall be deemed to be revoked.

Pursuant to the Listing Rules, any Shareholder who has a material interest in the Acquisition or the Placing and his/her/its close associates is/are required to abstain from voting on the relevant resolution(s) at the SGM. As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief and after having made all reasonable enquiries, no Shareholder has a material interest in the Acquisition or the Placing which is different from other Shareholders, and therefore no Shareholder is required to abstain from voting on the relevant resolution(s) to be proposed at the SGM to approve, among other things, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the Placing Agreement and the transactions contemplated thereunder; (iii) the Increase in Authorised Share Capital; and (iv) the grant of the Specific Mandate for the allotment and issuance of the Placing Shares.

RECOMMENDATION

The Directors consider that (a) the terms and condition of the Sale and Purchase Agreement, the Placing Agreement, and the respective transactions contemplated thereunder are fair and reasonable; and (b) the Sale and Purchase Agreement, the Placing Agreement, the Increase in Authorised Share Capital, and the grant of Specific Mandate for the allotment and issuance of the Placing Shares are in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve, among other things, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the Placing Agreement and the transactions contemplated thereunder; (iii) the Increase in Authorised Share Capital; and (iv) the grant of the Specific Mandate for the allotment and issuance of the Placing Shares.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

Yours faithfully, On behalf of the Board Asian Citrus Holdings Limited Ng Ong Nee Chairman

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE THREE FINANCIAL YEARS ENDED 30 JUNE 2020

The audited consolidated financial statements of the Group for the year ended 30 June 2020 has been set out in the 2019/20 annual report of the Company which was published on 23 September 2020 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below the link to the 2020 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0923/2020092300374.pdf

The audited consolidated financial statements of the Group for the year ended 30 June 2019 has been set out in the 2018/19 annual report of the Company which was published on 27 September 2019 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below the link to the 2019 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0927/ltn20190927091.pdf

The audited consolidated financial statements of the Group for the year ended 30 June 2018 has been set out in the 2017/18 annual report of the Company which was published on 30 October 2018 on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below the link to the 2018 annual report:

https://www1.hkexnews.hk/listedco/listconews/sehk/2018/1030/ltn20181030865.pdf

1. INDEBTEDNESS STATEMENT

At the close of business on 31 January 2021, being the latest practicable date prior to this circular for ascertaining certain information relating to the indebtedness statement, the Group had incurred an amount due to a Director and lease liabilities of approximately RMB327,000 and RMB460,000 respectively, which are unguaranteed and unsecured.

Save as disclosed above, the Group did not have any outstanding mortgages, charges, debentures, other issued debt capital, bank overdrafts, borrowings, liabilities under acceptance (other than normal trade bills), acceptance credits, hire purchase commitments, outstanding convertible debt securities or other similar indebtedness, any guarantees or other material contingent liabilities at the close of business on 31 January 2021.

2. WORKING CAPITAL OF THE GROUP

After taking into account the internally generated funds and net cash proceeds received from the Placing, the Directors are of the opinion that the working capital available to the Group is sufficient for its present requirement for at least next twelve months from the date of this circular.

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is principally engaged in (i) the planting, cultivation and sales of agricultural produce in the PRC market (the “ Plantation Business ”); and (ii) the Fruit Distribution Business. The following table sets forth the revenue and profit attributable to the owners of the Company for the six months ended 31 December 2019 and 2020:

Plantation Business Fruit Distribution Business Total	For the six 2020 (unaudited) RMB’000 6,373 113,805 120,178	months ended 31 December 2019 % change (unaudited) RMB’000 4,919 29.6 111,998 1.6 116,917 2.8

For the six months ended 31 December 2020, the Group recorded revenue of approximately RMB6.4 million (six months ended 31 December 2019: RMB4.9 million) from the Plantation Business during the harvest season of the winter oranges in the Hepu Plantation which started and completed in December 2020.

For the six months ended 31 December 2020, the Group recorded revenue of approximately RMB113.8 million (six months ended 31 December 2019: RMB112.0 million) from the Fruit Distribution Business, representing a slight increase by approximately 1.6% as compared to the corresponding period of last year.

The Plantation Business of the Group involves plantation of oranges and cooperation with the local farmers in the plantation of various types of fruits. The Group continues to closely monitor the reform of its Plantation Business through deploying procedures to improve its plantation technology and processes at the plantation, such as cost control and productivity management, and through diversified fruit projects by providing professional/technical advisory services to local farmers in exchange for certain management income. The Company considers that the Plantation Business will continue to perform steadily in accordance with its business plan.

The Fruit Distribution Business of the Group involves distribution of various types of high-quality fruits in the PRC by sourcing from quality suppliers, with value-added services for processing and distributing under its own brand “Royalstar 新雅奇” to the customers. The Group also continues to receive recurring orders from various customers and cooperate with its suppliers seamlessly for its Fruit Distribution Business. It is expected that the scale of the Fruit Distribution Business and market penetration of the high-quality fruits under its own brand “Royalstar 新雅 奇” will continue to grow at a steady pace. The Company is moving forward to establish a comprehensive distribution centre, which would enhance the efficiency on processing fruits to achieve economies of scale by increasing the handling capacity of each distribution and the storage capacity, taking into account of the increasing trend in the sales volume under the Fruit Distribution Business in the foreseeable future.

– 29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The COVID-19 pandemic and the trade war negotiation between the PRC and the United States had slowed down the economic growth of China to a rate of 2.3% in 2020. The Company considers that, as long as the impacts persist, the market demand for high-quality fruits will experience a temporary decline due to the fact that the consumers’ spending sentiment is still sluggish and certain customers of the Fruit Distribution Business request for longer credit periods on sales transactions. The Group will remain conservative and formulate different sales strategies with prudent attitude towards market changes caused by the COVID-19 pandemic in 2021. Nevertheless, the Directors will take precautionary measures to mitigate any possible impact of economic downturn faced by the Group as well as to enhance the long-term profitability and sustainability of the Group.

4. LIQUIDITY AND FINANCE RESOURCES

Liquidity

As at 31 December 2020, the current ratio and quick ratio of the Group amounted to 3.43 and 3.22, respectively (30 June 2020: 2.80 and 2.73 respectively). The increase of current ratio and quick ratio of the Group during the six months ended 31 December 2020 were mainly attributable to the settlement of the tax payable during the aforementioned period.

As at 30 June 2020 and 31 December 2020, the Group did not incur any debt instruments nor any bank borrowings. The net cash position of the Group was approximately RMB13.7 million as at 31 December 2020 (30 June 2020: RMB31.5 million). The decrease of the net cash position of the Group during the six months ended 31 December 2020 was mainly attributable to the net cash out flow in the operating activities and the prepayment for the purchase of property, plant and equipment.

Financial resources and treasury policy

The financial resources of the Group comprise of cash and cash equivalents. The sources of funding of the Group are mainly cash inflow from operating activities.

The Group did not have any outstanding borrowings as at 30 June 2020 and 31 December 2020.

During the six months ended 31 December 2020, the Group had sufficient funds for its operation and would continue to adopt stringent cost control and conservative treasury policies in the future.

Charge on assets

None of the Group’s assets were pledged as at 30 June 2020 and 31 December 2020.

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Capital commitments

The Group did not have any capital commitments as at 31 December 2020 (30 June 2020: RMB70,000).

Foreign exchange risk

The Group is exposed to foreign currency risk primarily through its cash and cash equivalents being denominated in a currency other than the functional currency of the operation to which they related. The currency giving rise to this risk are primarily Hong Kong dollars.

As the Group has relatively limited transactions denominated in foreign currencies, hence its exposure to exchange rate fluctuation is currently minimal and the Group does not need to use any derivative contracts to hedge against its exposure to foreign currency risk. Management manages the foreign currency risk by closely monitoring the movement of the currency exchange rates from time to time.

Significant investments, material acquisitions and disposals

The Group did not have significant investments or material acquisitions or disposals for the financial year ended 30 June 2020 and the six months ended 31 December 2020.

5. EMPLOYEES AND REMUNERATION POLICY

As at 31 December 2020, the Group had a total of 29 (30 June 2020: 36) permanent employees. For the six months ended 31 December 2020, total employees’ remuneration (including directors’ remuneration and benefits) was approximately RMB4.5 million (six months ended 31 December 2019: approximately RMB6.2 million).

The Group has adopted a competitive remuneration package since it aims to attract, retain and motivate high calibre individuals. Remuneration packages are primarily performance-linked while business performance, market practices and competitive market conditions are also taken into consideration in calculating the remuneration. Remuneration packages, which are reviewed annually, include salaries/wages and other employee benefits, such as discretionary bonuses, mandatory provident fund contributions and share options.

6. SHARE OPTION SCHEME

Pursuant to a resolution of the Shareholders on 30 December 2020, a new share option scheme was adopted (the “ 2020 Share Option Scheme ”). On the basis of 1,249,637,884 Shares in issue as at 30 December 2020, the maximum number of Shares to be allotted and issued upon the exercise of the options that may be granted under the 2020 Share Option Scheme and any other schemes of the Company will be 124,963,788 Shares.

As at 31 December 2020, no option has been granted or agreed to be granted pursuant to the 2020 Share Option Scheme (30 June 2020: Not applicable).

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

7. DEVELOPMENT AND TRAINING ASPECT

The Group values its employees as the most valuable assets and always supports enhancing their value by providing them with development and trainings programs in terms of skills and job knowledge, plant operations and production know-hows at various levels, so that they are able to perform their required job duties in a competent and capable manner without risk to their health and safety or damage to plants and operations.

During the six months ended 31 December 2020, the Group provided a total of 24 and 48 hours of internal and external training to 12 and 6 employees respectively (six months ended 31 December 2019: 23 and 104 hours of internal and external training to 7 and 10 employees respectively). With such a training policy, it will enhance the quality and value of its human capital, which the Group and the employees will both be benefitted. In the future, the Group foresees that its current training policy will continue to be implemented.

– 32 –

APPENDIX II TARGET LAND AND PROPERTIES VALUATION REPORT

The following is the text of a letter and a valuation certificate prepared for the purpose of incorporation in this circular received from Vincorn Consulting and Appraisal Limited, an independent valuer, in connection with its valuation of the property interests to be acquired by the Group. Terms defined in this appendix applies to this appendix only.

Vincorn Consulting and Appraisal Limited 21/F No. 268 Des Voeux Road Central Hong Kong

==> picture [139 x 39] intentionally omitted <==

The Board of Directors

Asian Citrus Holdings Limited 1/F., Ching Cheong Industrial Building 1-7 Kwai Cheong Road Kwai Chung New Territories Hong Kong

16 March 2021

Dear Sirs,

INSTRUCTION AND VALUATION DATE

We refer to your instructions for us to assess the Market Value of the property interests located in The People’s Republic of China (“ The PRC ”) to be acquired by Asian Citrus Holdings Limited (the “ Company ”) and its subsidiaries (hereinafter together referred to as the “ Group ”) for the purposes of public disclosure. We confirm that we have carried out inspection, made relevant enquiries and searches and obtained such further information as we consider necessary in order to provide you with our opinion of the Market Value of the property interests as at 31 December 2020 (the “ Valuation Date ”).

VALUATION STANDARDS

The valuation has been prepared in accordance with the HKIS Valuation Standards 2020 published by The Hong Kong Institute of Surveyors effective from 31 December 2020 with reference to the International Valuation Standards published by the International Valuation Standards Council effective from 31 January 2020; and the requirements set out in the Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited issued by The Stock Exchange of Hong Kong Limited.

VALUATION BASIS

Our valuation has been undertaken on the basis of Market Value (as hereinafter defined) of the property interests in the existing state, assuming that the property interests are sold subject to the immediate vacant possession, and are free from any encumbrances, as at the Valuation Date.

– 33 –

APPENDIX II TARGET LAND AND PROPERTIES VALUATION REPORT

Market value is defined as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion (“ Market Value ”)”.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the seller sells the property interests in the market without the benefit of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which could serve to affect the values of the property interests.

No allowances have been made for any charges, mortgages or amounts owing on the property interests, nor for any expenses or taxations which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature, which could affect the values of the property interests.

As the property interests are held under long term land use rights, we have assumed that the owner has free and unencumbered rights to use the property interests for the whole of the unexpired term of the land use rights.

VALUATION METHODOLOGY

When valuing the property interests to be acquired by the Group, we have adopted Cost Approach (as hereinafter defined).

Cost approach is a valuation basis which is subject to an assumption of adequate potential profitability of the business (or to service potential of the entity from the use of assets as a whole) paying due regard to the total assets employed (the “ Cost Approach ”). This technique is based on an estimate of the value for the existing use of the land, plus the current gross replacement (reproduction) costs of the improvements, less allowances for physical deterioration and all relevant forms of obsolescence and optimisation. In arriving at the value of the land, reference has been made to the land sale transactions as available in the locality. It generally provides the most reliable indication of value for a property in the absence of a known market based on comparable sales.

LAND TENURE AND TITLE INVESTIGATION

We have been provided with copies of documents in relation to the titles of the property interests. However, we have not scrutinized the original documents to verify ownership or to verify any amendments, which may not appear on the copies handed to us. We have relied to a considerable extent on the information provided by the Group.

We have relied on the advices given by the PRC legal adviser of the Group, Guangdong Sun Law Firm, regarding the titles of the property interests in the PRC. We do not accept liability for any interpretation that we have placed on such information, which is more properly placed within the sphere of the legal adviser.

– 34 –

APPENDIX II TARGET LAND AND PROPERTIES VALUATION REPORT

All legal documents disclosed in this letter and the valuation certificate are for reference only. No responsibility is assumed for any legal matters concerning the legal titles to the property interests set out in this letter and the valuation certificate.

INFORMATION SOURCES

We have relied to a considerable extent on the information provided by the Group and the legal adviser, in respect of the titles of the property interests in The PRC. We have also accepted advice given to us on matters such as identification of the property, particulars of occupancy, areas and all other relevant matters. Dimensions, measurements and areas included in the valuation are based on information contained in the documents provided to us and are, therefore, only approximations.

We have also been advised by the Group that no material factors or information have been omitted or withheld from the information supplied and consider that we have been provided with sufficient information to reach an informed view. We believe that the assumptions used in preparing our valuation are reasonable and have had no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuation.

INSPECTION AND INVESTIGATIONS

The property was inspected externally and internally on 16 December 2020. Although not all areas were accessible for viewing at the time of inspection, we have endeavoured to inspect all areas of the property. Investigations were carried out as necessary. Our investigations have been conducted independently and without influence from any third party in any manner.

We have not tested any services of the property and are therefore unable to report on their present conditions. We have not undertaken any structural surveys of the property and are therefore unable to comment on the structural conditions. We have not carried out any investigations on site to determine the suitability of the ground conditions for any future developments. Our valuation is prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be required.

We have not carried out any on-site measurements to verify the correctness of the areas in respect of the property but have assumed that the areas shown on the documents or deduced from the plans are correct. All documents and plans have been used as reference only and all dimensions, measurements and areas are therefore approximations.

– 35 –

APPENDIX II TARGET LAND AND PROPERTIES VALUATION REPORT

CURRENCY

Unless otherwise stated, all monetary figures stated in this report are in Renminbi (“ RMB ”).

The valuation certificate is attached hereto.

Yours faithfully, For and on behalf of Vincorn Consulting and Appraisal Limited

Vincent Cheung

BSc(Hons) MBA FRICS MHKIS RPS(GP) MCIREA MHKSI MISCM MHIREA Registered Real Estate Appraiser & Agent PRC Managing Director

Note:

Vincent Cheung is a fellow of the Royal Institution of Chartered Surveyors, a member of the Hong Kong Institute of Surveyors, a Registered Professional Surveyor (General Practice) under the Surveyors Registration Ordinance (Cap. 417) in Hong Kong Special Administrative Region (“ Hong Kong ”), a member of China Institute of Real Estate Appraisers and Agents, a member of Hong Kong Securities and Investment Institute, a member of Institute of Shopping Centre Management, a member of Hong Kong Institute of Real Estate Administrators and a Registered Real Estate Appraiser and Agent People’s Republic of China. He is suitably qualified to carry out the valuation and has over 23 years of experience in the valuation of properties of this magnitude and nature in the subject region.

– 36 –

TARGET LAND AND PROPERTIES VALUATION REPORT

APPENDIX II

VALUATION CERTIFICATE

Property Interests to be Acquired by the Group in The PRC for Occupation

Property Description and Tenure

The property comprises a parcel of land, on which two workshops, an ancillary office and a dormitory are erected.

An industrial land (also known as Lot No. G09407-22) and various buildings erected thereon located at the junction of Dongcun Road and Xingqiao Road, Longgang District, Shenzhen, Guangdong Province, The PRC

As per the Real Estate Title Certificates, the subject site has a site area of approximately 6,674.30 square metres (“ sq.m. ”) and the property has a total gross floor area (“ GFA ”) of approximately 2,377.37 sq.m. As per the Real Estate Title Certificates, it was completed in about 1994.

The land use rights of the property were granted for a term expiring on 8 December 2042 for industrial use.

	Market Value
	as at
Occupancy	31 December
Particulars	2020
As per our on-site	RMB60,000,000
inspection and the	(Renminbi Sixty
information	Million)
provided by the
Group, a portion	100% Interest to
of the property	be Attributable
with a GFA of	to the Group
1,640.00 sq.m. is	After
currently leased	Acquisition:
for a term expiring
on 31 December	RMB60,000,000
2021 at a monthly	(Renminbi Sixty
rental of	Million)
RMB42,000. The
remaining portion
of the property is
currently
owner-occupied.

Notes:

1. The property was inspected by Xiaolong Liu MComm Probationer of RICS on 16 December 2020.

2. The valuation and this certificate were prepared by Vincent Cheung FRICS MHKIS RPS(GP) MCIREA MHKSI MISCM MHIREA Registered Real Estate Appraiser & Agent PRC and Kit Cheung MRICS MHKIS RPS(GP) MCIREA Registered Real Estate Appraiser PRC .

3. Pursuant to a Land Use Rights Grant Contract, Shen Di He Zi No. 19975026 dated 19 April 1997 and entered into between Shenzhen Planning and State-owned Land Bureau and Shenzhen Wulong Real Estate Development Company Limited, the land use rights of the property with a site area of 6,674.30 sq.m. were granted to Shenzhen Wulong Real Estate Development Company Limited for a term of 50 years for industrial use.

4. Pursuant to an Execution Judgement, (2017) Yue 5224 Zhi No. 74 Zhi Yi dated 4 December 2017 and issued by People’s Court of Huilai County, Guangdong Province, the land use rights of the property with a site area of 6,674.30 sq.m. together with the building ownership rights of the property with a total GFA of 2,377.37 sq.m. were transferred from Shenzhen City Zhiyuan Real Estate Development Company Limited (previously referred to as Shenzhen Wulong Real Estate Development Company Limited) to Mr. Gao Xiwu to offset the outstanding loan, interests and relevant expenses.

5. Pursuant to Real Estate Title Certificates, both dated 20 July 2018 and issued by State-owned Land Resources Bureau of The PRC, the land use rights of the property with a site area of 6,674.30 sq.m. and the building ownership rights of the property with a total GFA of 2,377.37 sq.m. were vested in Mr. Gao Xiwu. The land use rights were granted to Mr. Gao Xiwu for a term expiring on 8 December 2042 for industrial use.

– 37 –

TARGET LAND AND PROPERTIES VALUATION REPORT

APPENDIX II

The details of the Real Estate Title Certificates are summarized as below:

Certificate No. Building Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Ancillary Office Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Workshop Block 1 Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Workshop Block 2 Yue (2018) Shen Zhen Shi Bu Dong Chan Quan Di No. 0123487 Dormitory Total	GFA (sq.m.) 470.02 673.32 260.15 973.88
	2,377.37

1. Pursuant to a lease agreement dated 1 January 2019, a portion of the property with a GFA of 1,640.00 sq.m. was leased for a term of three years from 1 January 2019 to 31 December 2021 at a monthly rent of RMB42,000. Given that the lessee has consented to vacate the Leased Area as aforesaid, the Company anticipates that the Lease Arrangement shall have been terminated by the parties thereto before the Acquisition Completion. As advised by the PRC legal advisers of the Company, the lessee is not entitled to any compensation for early termination under the Lease Arrangement from the Group.

2. The general description and market information of the property are summarized below:

Location : The property is located at the junction of Dongcun Road and Road, Longgang District, Shenzhen, Guangdong Province, The Transportation : Shenzhen Bao’an International Airport, Shenzhen Pingshan Station and Shuanglong Station of Shenzhen Metro Line No. 3 are located approximately 61.7 kilometres, 5.4 kilometres and 1.7 kilometres from the property respectively. Nature of Surrounding : The area is predominately an industrial area in Longgang District. Area

The property is located at the junction of Dongcun Road and Xingqiao Road, Longgang District, Shenzhen, Guangdong Province, The PRC.

Shenzhen Bao’an International Airport, Shenzhen Pingshan Railway Station and Shuanglong Station of Shenzhen Metro Line No. 3 are located approximately 61.7 kilometres, 5.4 kilometres and 1.7 kilometres away from the property respectively.

1. For reference purposes, the land and building components of the property were assessed at circa RMB55,200,000 and circa RMB4,800,000 respectively.

2. Pursuant to the public records made available at the Shenzhen Land & Real Estate Exchange Centre, the recorded total industrial lands transaction in Longgang District in Shenzhen in 2020 on site area basis is approximately 145,668 sq.m., representing a year-on-year increase of approximately 56.9%. The total industrial lands transaction in Longgang District in 2020 accounts for approximately 8.8% of the overall industrial land supply in Shenzhen. The 2020 transaction price of industrial lands in Longgang District ranged from RMB2,434 to RMB10,561 per sq.m. on site unit rate basis, representing a year-on-year growth of approximately 12.1%. The active transaction of industrial lands in Longgang District indicates the increasing demand of concerning assets in the area. It is anticipated that the industrial property market in Longgang District will maintain a steady growth in 2021 and onwards, amid the implementation of the Shenzhen Model City Initiatives and continuous development of the Greater Bay Area.

3. We have been provided with a legal opinion regarding the property by Guangdong Sun Law Firm, which contains, inter alia, the following:

4. (a) The real estate title of the property was vested in the vendor, Mr. Gao Xiwu, and was clearly-established; and

5. (b) The real estate title of the property was not subject to any mortgage and seizure.

– 38 –

APPENDIX II TARGET LAND AND PROPERTIES VALUATION REPORT

1. The major parameters adopted for the valuation of the property are summarized below:

2. Depreciated replacement cost of buildings Site unit rate of Land

RMB2,019 per sq.m. on the basis of GFA RMB8,271 per sq.m. on the basis of site area

1. In assessing the value of the land by Cost Approach, five comparable transactions in respect of industrial lands since 2018 have been identified and referred to. Given that the five selected transactions are considered relevant to and representative of the subject matter of the valuation (being the land) in terms of location and use, such comparable transactions have been adopted for the purpose of the valuation. The unit rates on the basis of site area of the adopted comparables ranged from RMB5,080 to RMB10,561 per sq.m.. Accordingly, the site unit rate of land for the valuation was arrived at by adopting the unit rates of the relevant comparables after making due adjustments in terms of different locational and physical attributes.

The following table sets forth the details of five comparable transactions:

	Comparable	Comparable	Comparable	Comparable	Comparable
	transaction 1	transaction 2	transaction 3	transaction 4	transaction 5
	Industrial land in	Industrial land in	Industrial land in	Industrial land in	Industrial land in
	Longgang District,	Pingshan District,	Longgang District,	Guangming	Yantian District,
Location	Shenzhen	Shenzhen	Shenzhen	District, Shenzhen	Shenzhen
Permitted use	Industrial use	Industrial use	Industrial use	Industrial use	Industrial use
Site area_(sq.m.)_	8,976	45,669	8,952	9,588	13,538
Price_(RMB)_	94,800,000	232,000,000	57,200,000	54,300,000	108,700,000
Site unit rate_(RMB/sq.m.)_	10,561	5,080	6,390	5,663	8,029
Transaction date	November 2020	October 2020	September 2020	February 2019	November 2018

– 39 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive; and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ and Chief Executive’s interests and short positions in Shares, underlying Shares and debentures

As at the Latest Practicable Date, the interests or short positions of the Directors and the Chief Executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong (the “ SFO ”)), which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or otherwise notified to the Company and the Stock Exchange, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”), are set out below:

			Approximate
			percentage
			of the issued
			share capital
Name of Director/		Number of	of the
Chief Executive	Capacity	Shares held	Company
Mr. Ng Ong Nee	Interests in a controlled	179,252,394	14.34%
	corporation	(Note)

Note: The corporate interests of 179,252,394 Shares are owned by Changjiang Tyling, a company 50%-owned by Mr. Ng Ong Nee, the Company’s Chairman, an Executive Director and Chief Executive Officer.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor Chief Executive of the Company and their associates had any interests or short positions in any Shares, underlying Shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

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GENERAL INFORMATION

APPENDIX III

(b) Shareholders’ and other persons’ interests and short positions in Shares and underlying Shares

As at the Latest Practicable Date, so far as is known to the Directors, the persons or companies (other than the Directors and the Chief Executive of the Company) who/which had an interest or short position in the shares or underlying shares of the Company, which would fall to be disclosed under the provision of Divisions 2 and 3 of Part XV of the SFO, or which would be required, to be entered in the register required to be kept by the Company pursuant to section 336 of the SFO, are set out below:

			Approximate
			percentage
			of the issued
			share capital
		Number of	of the
Name	Capacity	Shares held	Company
Mr. Ng Ong Nee	Interests in a controlled	179,252,394	14.34%
	corporation
Changjiang Tyling	Beneficial owner	179,252,394	14.34%
		(Note)

Note: Changjiang Tyling is 50%-owned by Mr. Ng Ong Nee and 50%-owned by a third party independent to the Company and its connected persons. Mr. Ng Ong Nee, who is also a director of Changjiang Tyling, is deemed to be interested in the 179,252,394 Shares held by Changjiang Tyling by virtue of the SFO.

Save as disclosed above, the Directors are not aware of any other persons or companies (other than the Directors and the Chief Executive of the Company) who/which had interests or short positions in the Shares or underlying Shares of the Company, which would fall to be disclosed under the provision of Divisions 2 and 3 of Part XV of the SFO or were required to be entered in the register required to be kept by the Company under section 336 of the SFO.

3. DIRECTORS’ INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors were interested in any business which competed or was likely to compete directly or indirectly with the businesses of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any member of the Group excluding contracts expiring or determinable by the employer within one year without payment of compensation, other than statutory compensation.

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GENERAL INFORMATION

APPENDIX III

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any member of the Group was engaged in any litigation or arbitration or claim of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against the Company or any member of the Group.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 30 June 2020, the date to which the latest published audited financial statements of the Company were made up.

7. QUALIFICATION AND CONSENT

The following is the qualification of the experts who has given its opinions or advices which are contained or referred to in Appendix II of this circular:

Name	Qualification
Vincorn Consulting and Appraisal Limited	Independent property valuer
Guangdong Sun Law Firm	PRC legal adviser
(collectively, the “Experts”)

Vincorn has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and references to its name in the form and context in which it is included.

As at the Latest Practicable Date, the Experts did not have any shareholding, directly or indirectly, 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.

As at the Latest Practicable Date, the Experts did not have any interest, direct or indirect, in any asset which since 30 June 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up, has been acquired or disposed of by or leased to any member of the Group, or is proposed to be acquired or disposed of by or leased to any member of the Group.

8. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business) had been entered into by members of the Group within the two years preceding the issue of this circular and are or may be material:

• (a) the Sale and Purchase Agreement;

• (b) the Placing Agreement; and

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GENERAL INFORMATION

APPENDIX III

• (c) the sale and purchase agreement dated 3 June 2019 in relation to the disposal of (i) the then subsidiaries of the Group; and (ii) all the loans owing by the then subsidiary to Access Fortune Investments Limited (達運投資有限公司) (“ Access Fortune Investments ”), a wholly owned subsidiary of the Company, entered into between Access Fortune Investments (as vendor), Sino Corporate Development Limited (中華 企業發展有限公司) (as purchaser), and Mr. HONG Yantao (洪燕濤) (as guarantor) at a consideration of RMB2.00.

9.

MISCELLANEOUS

• (a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton, Bermuda HM11 and the head office and principal place of business in Hong Kong is at 1/F., Ching Cheong Industrial Building, 1-7 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong.

• (b) The company secretary of the Company is Miss Ng Ling Ling, a member of the Hong Kong Institute of Certified Public Accountants and a fellow member of the Association of Chartered Certified Accountants.

• (c) The Company’s branch share registrars are Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong and Computershare Investor Services (Jersey) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY, United Kingdom.

• (d) The English text of this circular shall prevail over the Chinese text in case of inconsistency.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company at 1/F., Ching Cheong Industrial Building, 1-7 Kwai Cheong Road, Kwai Chung, New Territories, Hong Kong during normal business hours on any weekday (except Saturdays, Sundays and public holidays), from the date of this circular up to and including the date of the SGM:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the annual reports of the Company for the financial years ended 30 June 2018, 2019 and 2020;

• (c) the material contracts referred to under the section headed “8. Material contracts” in this appendix;

• (d) the Target Land and Properties Valuation Report prepared by Vincorn as set out in Appendix II in this circular;

• (e) the written consent from the experts referred to under the paragraph headed “7. Qualification and consent” in this appendix; and

• (f) this circular.

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NOTICE OF SGM

==> picture [79 x 79] intentionally omitted <==

ASIAN CITRUS HOLDINGS LIMITED 亞洲果業控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 73)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ SGM ”) of Asian Citrus Holdings Limited (the “ Company ”) will be held at United Conference Centre, Level 10, United Centre, 95 Queensway, Admiralty, Hong Kong on Thursday, 8 April 2021 at 9:00 a.m. (Hong Kong time), for the purpose of considering and, if thought fit, passing with or without modification the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

1. “ THAT

2. (a) the terms and conditions of the sale and purchase agreement (the “ Sale and Purchase Agreement ”) dated 19 January 2021 entered into between Mr. Gao Xiwu and 深圳市冠佳利實業有限公司 (Shenzhen Guanjiali Industrial Limited*), a wholly owned subsidiary of the Company in the PRC, in relation to the acquisition of an industrial land and various buildings erected thereon located at the junction of Dongcun Road and Xingqiao Road, Longgang District, Shenzhen, Guangdong Province, the PRC (a copy of which has been produced to the meeting marked “A” and signed by the chairman of the SGM for the purpose of identification), and the transactions contemplated thereunder be and are hereby approved, confirmed, and/or ratified; and

3. (b) any one director of the Company (the “ Director ”) be and is hereby authorised for and on behalf of the Company to execute all such other documents, instruments and to do all such acts or things as that director may in his absolute discretion deem appropriate to give effect to the Sale and Purchase Agreement and the transactions contemplated thereunder.”

“ THAT

• (a) the placing agreement (the “ Placing Agreement ”) dated 19 January 2021 entered into between the Company and Cinda International Securities Limited in relation to the placing of up to a maximum of 1,250,000,000 new shares (the “ Placing Shares ”) at the placing price of HK$0.08 per Placing Share and the transactions contemplated thereunder be and are hereby approved, confirmed, and/or ratified;

• For identification purposes only

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NOTICE OF SGM

• (b) conditional upon the listing committee of The Stock Exchange of Hong Kong Limited granting the listing of, and permission to deal in, the Placing Shares to be allotted and issued, the Directors be and are hereby granted a specific mandate (the “ Specific Mandate ”) to allot, issue and deal with the Placing Shares on the term and subject to the conditions of the Placing Agreement, which shall be valid until 30 June 2021, provided that such Specific Mandate being additional to and not prejudicing or revoking any general or specific mandate(s) which has/have been granted or may from time to time be granted to the Directors by the shareholders of the Company prior to the passing of this resolution; and

• (c) any one Director be and is hereby generally and unconditionally authorised to do all such acts or things and execute (including under common seal where applicable) and deliver all such documents, instruments and agreements which he considers necessary, desirable or expedient to give effect to or otherwise in connection with the Placing Agreement and the transactions contemplated thereunder, and the allotment and issue of the Placing Shares under the Specific Mandate, and to agree to such variation, amendments or waiver of matters relating thereto as are, in the opinion of the Directors, in the interests of the Company.”

• “ THAT

• (a) the authorised share capital of the Company be and is hereby increased from HK$20,000,000 divided into 2,000,000,000 shares of HK$0.01 each (the “ Shares ”) to HK$50,000,000 divided into 5,000,000,000 Shares by creating an additional 3,000,000,000 Shares (the “ Increase in Authorised Share Capital ”); and

• (b) any one Director be and is hereby authorised to do all such acts and things and execute all such documents which he considers necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the Increase in Authorised Share Capital.”

Yours faithfully, On behalf of the Board Asian Citrus Holdings Limited Ng Ong Nee Chairman

Hong Kong, 16 March 2021

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NOTICE OF SGM

Registered office:

Clarendon House 2 Church Street Hamilton Bermuda HM11

Principal Place of Business in Hong Kong:

1/F., Ching Cheong Industrial Building 1-7 Kwai Cheong Road Kwai Chung, New Territories Hong Kong

As at the date of this notice, the board of directors of the Company comprises the following Directors:

Executive Directors:

Mr. Ng Ong Nee (Chairman and Chief Executive Officer)

Mr. Ng Hoi Yue (Deputy Chief Executive Officer)

Non-executive Director:

Mr. He Xiaohong

Independent Non-executive Directors:

Mr. Chung Koon Yan

Dr. Lui Ming Wah, PhD, SBS, JP

Mr. Yang Zhen Han

Notes:

1. A form of proxy (as applicable) is enclosed.

2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to sign the same.

3. Any member of the Company (the “ Member ” or the “ Members ”) entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A Member who is the holder of two or more shares may appoint more than one proxy to represent him/her and vote on his/her behalf at a general meeting of the Company. A proxy need not be a Member. In addition, a proxy or proxies representing either a Member who is an individual or a Member which is a corporation shall be entitled to exercise the same powers on behalf of the Member which he/she or they represent(s) as such Member could exercise.

4. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, shall be delivered to the Company’s branch share registrars, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong (for Members whose names appear in the Company’s branch register of members in Hong Kong and who hold Shares in certificated form) not less than 48 hours before the time appointed for holding the meeting (or any adjournment thereof) at which the person named in the instrument proposes to vote, or Computershare Investor Services (Jersey) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY, United Kingdom by 5:00 p.m. (UK time) on Wednesday, 31 March 2021 (for Members whose names appear in the Company’s register of members in Jersey and who hold Shares in certificated form).

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NOTICE OF SGM

1. Delivery of an instrument appointing a proxy shall not preclude a Member from attending and voting in person at the meeting convened and in such event the form of proxy shall be deemed to be revoked.

2. In the case of joint holders of any Share, if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company (the “ Register ”) in respect of the joint holding.

3. Any corporation which is a Member may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of members of the Company. The person so authorised shall be entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual member of the Company and such corporation shall be deemed to be present in person at any such meeting if a person so authorised is present thereat.

4. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 of the United Kingdom, only those Shareholders registered in the Register as of 31 March 2021 are entitled to attend or vote at the SGM of the Company in respect to the number of Shares registered in their name at that time. For Members whose names appear in the Company’s register of members in Jersey and who hold Shares in certificated form, in order to qualify for attending the SGM, all transfer documents, accompanied by the relevant share certificates, have to be lodged for registration with the Company’s branch share registrar in the UK, Computershare Investor Services (Jersey) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY, United Kingdom by 5:00 p.m. (UK time) on Wednesday, 31 March 2021.

For Members whose names appear in the Company’s register of members in Hong Kong and who hold Shares in certificated form, the register of members of the Company in Hong Kong will be closed from Wednesday, 31 March 2021 to Thursday, 8 April 2021, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for attending the SGM, all transfer documents, accompanied by the relevant share certificates, have to be lodged for registration with the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:30 p.m. (Hong Kong time) on Tuesday, 30 March 2021.

Changes to entries on the Register after that time will be disregarded when determining the rights of any person to attend or vote in the SGM.

1. If a tropical cyclone warning signal no. 8 or above is expected to be hoisted or a black rainstorm warning signal is expected to be in force at any time between 8:00 a.m. and 5:00 p.m. (Hong Kong time) on the date of the meeting, the meeting will be postponed and Members will be informed of the date, time and venue of the postponed meeting by a supplementary notice posted on the respective websites of the Company and The Stock Exchange of Hong Kong Limited.

If a tropical cyclone warning signal no. 8 or above or a black rainstorm warning signal is lowered or cancelled at or before 8:00 a.m. (Hong Kong time) on the date of the meeting and where conditions permit, the meeting will be held as scheduled.

The meeting will be held as scheduled when an amber or red rainstorm warning signal is in force.

After considering their own situations, Shareholder(s) should decide on their own whether or not they would attend the meeting under any bad weather condition and if they do so, they are advised to exercise care and caution.

1. Due to the recent development of the COVID-19, the Company will implement the following precautionary measures at the SGM:

2. (i) a compulsory body temperature check and health declaration will be conducted on every person at the entrance of the venue. Any person with a body temperature of over 37.5 degrees Celsius or having any flu-like or other common COVID-19 symptoms will not be admitted to the venue;

3. (ii) no entry to the venue will be allowed for any attendee who is subject to quarantine order by the Government of the Hong Kong Special Administrative Region;

4. (iii) every attendee is required to wear a surgical face mask at all times at the venue. No surgical face masks will be provided by the Company at the SGM. Any person who does not wear a surgical face mask will not be permitted to enter into the venue;

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NOTICE OF SGM

• (iv) should any attendee decline any of the abovementioned measures, the Company reserves the right to refuse to admit such person to the venue;

• (v) no beverage or refreshment will be served and no corporate gifts will be distributed before, during or after the SGM; and

• (vi) Shareholders or proxies may be directed to sit in different partitioned rooms or areas to ensure adequate physical distance among them and compliance with the relative regulation.

The Company would like to remind the Shareholders that they should carefully consider the risks of attending the SGM, taking into account their own personal circumstances, especially that physical attendance in person at the SGM is not necessary for the Shareholders to exercise their voting rights. The Company recommends that Shareholders may appoint the chairman of the SGM as their proxy to vote on their behalf and should submit their form of proxy as early as possible.

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