Beijing Yunji Technology Co., Ltd. - Proxy Solicitation & Information Statement 2024

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 your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Realord Group Holdings Limited you should at once hand this circular and the accompanying proxy form to the purchaser or the transferee or to the bank, stockbroker 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.

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(Incorporated in Bermuda with limited liability) (Stock code: 1196)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED AND NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to the Company

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Independent Financial Adviser to the Independent Board Committee and Independent Shareholders

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Capitalised terms used in this cover shall have the same meanings as those defined in the section headed “Definitions” in this circular, unless the context requires otherwise.

A letter from the Board is set out on pages 5 to 14 of this circular and a letter from the Independent Board Committee to the Independent Shareholders is set out on pages 15 to 16 of this circular. A letter from Red Sun Capital, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 17 to 36 of this circular.

A notice convening the SGM to be held at 9/F, Henley Building, 5 Queen’s Road Central, Central, Hong Kong, on Friday, 13 December 2024 at 11 a.m. is set out on pages SGM-1 to SGM-2 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM or an adjournment thereof (as the case may be) should you so wish.

22 November 2024

		Page
Definitions		1
Letter from	the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from	the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Letter from	Red Sun Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Appendix	– General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		SGM-1

DEFINITIONS

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

“Agreement” the sale and purchase agreement dated 1 November 2024 entered into between MHL and the Company in respect of the Disposal
“Announcement” the announcement dated 1 November 2024 issued by the Company in relation to the Agreement and the Disposal
“associates” has the meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“Business Day” a day on which licensed banks in Hong Kong are open for business, except for the following days: (i) Saturdays; (ii) any day on which a typhoon warning signal No. 8 or above is hoisted in Hong Kong from 9:00 a.m. to 12:00 noon, and is not lifted at or before 12:00 noon; (iii) any day on which a black rainstorm warning is hoisted in Hong Kong before 12:00 noon, and is not lifted at or before 12:00 noon; or (iv) any day on which “extreme conditions” are announced by the Hong Kong government from 9:00 a.m. to 12:00 noon, and remain in force at or before 12:00 noon
“Company” Realord Group Holdings Limited, a company incorporated in Bermuda with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange (stock code: 1196)
“Completion” completion of the Disposal pursuant to the terms and conditions of the Agreement
“Conditions” the conditions precedent to Completion, as set forth in the paragraph headed “The Agreement – Conditions precedent” in the letter from the Board in this circular
“connected person(s)” has the same meaning as ascribed to it under the Listing Rules
“Confirmation”
the confirmation dated 30 October 2024 provided by the Executive confirming that a mandatory general offer will not be triggered on the part of MHL for the shares of (i) Sincere; (ii) Sincere LA; (iii) Sincere FG; and (iv) Sincere Perfumery arising from the Disposal

DEFINITIONS

“Consideration”
HK$387,782,980, or HK$0.3935 per Sincere Share
“Cost of Investment” the original cost of investment of approximately HK$387.8 million paid by the Company for acquiring the Sale Shares pursuant to a voluntary cash general offer in June 2021
“Directors” the director(s) of the Company
“Disposal” disposal of the Sale Shares by the Company to MHL pursuant to the terms and conditions of the Agreement
“Dr. Lin”
Dr. Lin Xiaohui, the Chairman and an executive Director, and the spouse of Madam Su
“Executive” the executive director of the Corporate Finance Division of the Securities and Futures Commission from time to time or any of his delegate(s)
“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee”
an independent committee of the Board, comprising all independent non-executive Directors, established for the purpose of advising the Independent Shareholders in respect of the Agreement, the Disposal and the transactions contemplated thereunder
“Independent Financial Adviser” or “Red Sun Capital”
Red Sun Capital Limited, a licensed corporation to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, appointed by the Company as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Agreement, the Disposal and the transactions contemplated thereunder
“Independent Shareholders” the Shareholders other than MHL, Dr. Lin, Madam Su and their respective connected persons and/or associates
“Last Trading Day”
31 October 2024, being the last trading day on which the Shares were traded on the Stock Exchange before the date of the Agreement

DEFINITIONS

“Latest Practicable Date”	18 November 2024, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained in this circular
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Madam Su”	Madam Su Jiaohua, an executive Director, and the spouse of Dr.
	Lin
“MHL”	Manureen Holdings Limited, a company incorporated in British
	Virgin Islands with limited liability and was owned as to 70% and
	30% by Dr. Lin and Madam Su, respectively, and the controlling
	Shareholder interested in 903,160,000 Shares, representing
	approximately 62.69% of the total issued share capital of the
	Company as at the Latest Practicable Date
“Sale Shares”	985,471,362 Sincere Shares held by the Company, representing
	75% of the total issued Sincere Shares as at the date of the
	Agreement
“SFO”	the Securities and Futures Ordinance (Cap. 571 of the laws of
	Hong Kong) as amended, supplemented or otherwise modified
	from time to time
“SGM”	the special general meeting of the Company to be held on Friday,
	13 December 2024 at 11 a.m. at 9/F, Henley Building, 5 Queen’s
	Road Central, Central, Hong Kong to, among other things,
	consider and, if thought fit, approve the Agreement, the Disposal
	and the transactions contemplated thereunder
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the issued Share(s)
“Shareholder’s Loan”	the outstanding amount of shareholder’s loan owing by the
	Company to MHL, which as at date of the Agreement amounted
	to approximately HK$2,969.0 million
“Sincere”	The Sincere Company, Limited, a company incorporated in Hong
	Kong with limited liability and the issued shares of which are
	listed on the Main Board of the Stock Exchange (stock code:
	0244)

DEFINITIONS

“Sincere FG”	The Sincere Financial Group Limited (formerly known as The
	Sincere Insurance & Investment Co., Ltd.), a non-wholly owned
	subsidiary of Sincere
“Sincere Group”	Sincere and its subsidiaries
“Sincere LA”	The Sincere Life Assurance Co. Ltd., a non-wholly owned
	subsidiary of Sincere
“Sincere Perfumery”	The Sincere Co. (Perfumery Manufacturers) Ltd., a non-wholly
	owned subsidiary of Sincere
“Sincere Subsidiaries”	Sincere LA, Sincere FG and Sincere Perfumery
“Sincere Shares”	ordinary share(s) of Sincere
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Code on Takeovers and Mergers issued by the Securities and
	Futures Commission
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“%”	per cent.

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability) (Stock code: 1196)

Executive Directors: Registered Office: Lin Xiaohui (Chairman) Clarendon House Su Jiaohua (Chief Executive Officer) 2 Church Street Lin Xiaodong Hamilton HM11 Bermuda

Independent non-executive Directors:

Yu Leung Fai Fang Jixin Ho Chun Chung Patrick

Head Office and Principal Place of Business: 24/F, Jardine House 1 Connaught Place Central, Hong Kong

22 November 2024

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED

INTRODUCTION

Reference is made to the Announcement issued by the Company dated 1 November 2024 in relation to the Disposal. On 1 November 2024, the Company and MHL entered into the Agreement, pursuant to which the Company has conditionally agreed to sell, and MHL has conditionally agreed to acquire, the Sale Shares, being 75% of the total issued Sincere Shares held by the Company as at the date of the Agreement, at the Consideration of HK$387,782,980, payable by MHL by way of setting off against part of the Shareholder’s Loan owing by the Company to MHL on a dollar-for-dollar basis.

The purpose of this circular is to provide you with, among other things, (a) details of the Agreement and the Disposal; (b) the views of and recommendations from the Independent Board Committee in relation to the Disposal; (c) the advice of Red Sun Capital to the Independent Board Committee and the Independent Shareholders in relation to the Disposal; (d) other information as required under the Listing Rules; and (e) the notice of SGM.

LETTER FROM THE BOARD

THE AGREEMENT

Date

1 November 2024 (after trading hours)

Parties

(i) The Company, as vendor; and
(ii) MHL, as purchaser.

MHL was incorporated in the British Virgin Islands with limited liability. It is an investment holding company and was owned as to 70% by Dr. Lin and 30% by Madam Su respectively. As at the Latest Practicable Date, MHL was interested in 903,160,000 Shares, representing approximately 62.69% of the total issued share capital of the Company, and was the controlling Shareholder. Accordingly, MHL is a connected person of the Company pursuant to Chapter 14A of the Listing Rules.

Asset to be disposed of

The asset to be disposed of by the Company is the Sale Shares, being 75% of the total issued Sincere Shares.

Consideration

The Consideration of HK$387,782,980, or HK$0.3935 per Sincere Share, was determined upon arm’s length negotiations between the Company and MHL with reference to the Cost of Investment, being the original acquisition cost of the Company for the Sale Shares pursuant to a voluntary cash general offer for the issued Sincere Shares in June 2021.

The Consideration of HK$0.3935 per Sincere Share represents:

(i) a premium of approximately 79.7% over the closing price of HK$0.219 per Sincere Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a premium of approximately 58.7% over the closing price of HK$0.248 per Sincere Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 70.3% over the average of the closing prices per Sincere Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day of approximately HK$0.231;
(iv) a premium of approximately 86.5% over the average of the closing prices per Sincere Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day of approximately HK$0.211;

LETTER FROM THE BOARD

(v) a premium of approximately 534.7% over the audited consolidated net asset value per Sincere Share attributable to equity holders as at 31 December 2023 of approximately HK$0.062 per Sincere Share calculated based on the audited consolidated net assets of the Sincere Group attributable to equity holders of approximately HK$81.1 million as at 31 December 2023 and 1,313,962,560 Sincere Shares in issue; and
(vi) a premium of approximately 836.9% over the unaudited consolidated net asset value per Sincere Share attributable to equity holders as at 30 June 2024 of approximately HK$0.042 per Sincere Share calculated based on the unaudited consolidated net assets of the Sincere Group attributable to equity holders of approximately HK$55.7 million as at 30 June 2024 and 1,313,962,560 Sincere Shares in issue.

Having considered that the Consideration is (i) equivalent to the Cost of Investment paid by the Company for the Sale Shares; and (ii) higher than the current market prices and consolidated net assets of Sincere, the Directors (including the independent non-executive Directors after having considered the advice from Red Sun Capital) are of the view that the Consideration is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

As at the date of the Agreement, the Company has outstanding Shareholder’s Loan owing to MHL in the amount of approximately HK$2,969.0 million. The Shareholder’s Loan is unsecured, interest-bearing at 8.2% per annum and will be repayable in June 2026. Pursuant to the Agreement, the Consideration shall be payable by MHL to the Company by way of setting off against part of the carrying amount of the Shareholder’s Loan on a dollar-for-dollar basis.

Conditions precedent

Completion is subject to the fulfilment or waiver (as the case may be) of the following Conditions:

(i) the Company having complied with the necessary requirements of the Listing Rules for the Disposal;
(ii) the Company having obtained the approval from the Independent Shareholders at the SGM to be convened to consider and approve the Agreement and the Disposal;
(iii) the Confirmation provided by the Executive remaining valid up to Completion;
(iv) there being no relevant regulators having expressed an objection to the Disposal up to Completion;
(v) there being no material adverse change on the transactions contemplated under the Agreement or on the financial condition, business, properties or listing status of the Sincere Group (or no such material adverse change as the parties reasonably expected) up to Completion;
(vi) all representations and warranties of the Company under the Agreement remaining true, accurate and not misleading in all material respects up to Completion; and

LETTER FROM THE BOARD

(vii) all representations and warranties of MHL under the Agreement remaining true, accurate and not misleading in all material respects up to Completion.

Save for Conditions (v) and (vi) which may be waived by MHL, and Condition (vii) which may be waived by the Company, all other Conditions are not capable of being waived.

As at the Latest Practicable Date, none of the Conditions had been fulfilled.

If any of the Conditions is not fulfilled or waived (as the case may be) on or before 24 January 2025 or such other date as may be agreed between the Company and MHL in writing, the Agreement shall terminate and upon which the rights and obligations of the Company and MHL under the Agreement shall cease immediately save for any antecedent breaches of the terms thereof.

Completion

Completion shall take place on the 3rd Business Day after the date of which the above Conditions are fulfilled or waived (as the case may be) or such other date as may be agreed between the Company and MHL in writing.

INFORMATION ON THE SINCERE GROUP

Sincere was incorporated in Hong Kong with limited liability, the issued shares of which are listed on the Main Board of the Stock Exchange (stock code: 0244). As at the Latest Practicable Date, Sincere was owned as to 75% by the Company and 25% by public shareholders. Principal businesses of the Sincere Group comprise (i) the operation of department stores; (ii) securities trading; and (iii) the provision of life insurances.

Sincere LA was incorporated in Hong Kong with limited liability. It had minimal operations which was mainly continuing to run off existing insurance policies and had no other active business as at the Latest Practicable Date.

Sincere FG was incorporated in Hong Kong with limited liability. It had no active business as at the Latest Practicable Date.

Sincere Perfumery was incorporated in Hong Kong with limited liability. It had no active business as at the Latest Practicable Date.

LETTER FROM THE BOARD

Financial information

Set out below is a summary of the key financial information of the Sincere Group for the two years ended 31 December 2022 and 2023 and for the six months ended 30 June 2023 and 2024 which is extracted from the respective annual report and interim report published by Sincere:

	For the six	months	months	For the year	For the year
	ended 30	June		ended 31 December
	2024		2023	2023	2022
	HK$’000	HK$’000		HK$’000	HK$’000
	(Unaudited)	(Unaudited)		(Audited)	(Audited)
Revenue	65,050		74,356	146,147	146,516
Loss before income tax	(26,662)		(18,997)	(51,598)	(63,946)
Loss for the period/year
attributable to equity holders of
Sincere	(27,260)		(17,493)	(50,477)	(60,756)

As at 30 June 2024, the unaudited consolidated net assets attributable to equity holders of Sincere amounted to approximately HK$55.7 million.

Intra-group transactions/balances between the Group and the Sincere Group

As at the Latest Practicable Date, the Group shared part of the office space with the Sincere Group and charged the Sincere Group sharing costs proportionate to the area sharing. It is expected that the Group will continue to share a portion of the office space to the Sincere Group following the Completion with an annual sharing costs of less than HK$3 million, which shall constitute a de minimis continuing connected transaction pursuant to Rule 14A.76(1) of the Listing Rules and is fully exempt from the shareholders’ approval, annual review and all disclosure requirements under Chapter 14A of the Listing Rules.

Besides, on 11 June 2021, the Company granted a loan facility of up to HK$40 million to Sincere, which was subsequently revised to a facility limit of up to HK$100 million. The said loan facility is unsecured, interest bearing at 8.2% per annum, and with a maturity date of 10 August 2025. All outstanding amounts drawn down from the loan facility had been fully settled in July 2024, and there was no subsequent drawdown from the loan facility up to the Latest Practicable Date. Upon Completion, Sincere will no longer be a subsidiary of the Company, and the Company and Sincere shall enter into a termination agreement to terminate the loan facility.

As at the Latest Practicable Date, members of the Group had aggregate amounts due from and due to members of the Sincere Group of approximately HK$3.1 million and HK$1.2 million, respectively. It is expected that such intra-group balances shall be settled on or before Completion.

Save as disclosed above, there were no other intra-group transactions/balances between the Group and the Sincere Group as at the Latest Practicable Date.

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE DISPOSAL

The Group is principally engaged in (i) property investment, development and commercial operation; (ii) provision of financial services, including corporate finance advisory, asset management, securities brokerage services and margin financing, and money lending; (iii) scrap materials recycling business involving dismantling, processing, trading and sales of scrap materials; (iv) distribution and sales of motor vehicle parts; (v) provision of citizenship application and consultancy services on citizenship by investment programme and development of project in Grenada; and (vi) operation of department stores in Hong Kong. The department store business is being operated by Sincere under the brand name “Sincere”/“先施百貨”. The Company took over a majority control of Sincere in June 2021.

The Group’s financial position has been adversely impacted by the performance of the department store business operating by Sincere. During the three years ended 31 December 2023 and the six months ended 30 June 2024, the department store segment recorded segment loss of approximately HK$19.2 million, HK$35.3 million, HK$91.1 million and HK$12.4 million, respectively. In recent years, the retail market sentiment in Hong Kong has been deteriorating, which has adversely impacted on the performance of the department store operation.

During the year ended 31 December 2023, the department store segment contributed revenue of approximately HK$145.6 million to the Group, representing approximately 18.2% of the total revenue of the Group. In addition to the segment operating loss from the department store operation of approximately HK$27.9 million, there was also an impairment loss on goodwill in the amount of approximately HK$63.2 million recognised during the year.

LETTER FROM THE BOARD

Taking into consideration the continuous loss recorded by the Sincere Group and the lacklustre short to medium term outlook of the Hong Kong’s retail market, the Board considers that the dissatisfactory performance of the Sincere Group may continue to have negative impact on the financial position of the Group. In order to mitigate the market uncertainties of the department store operation to the Group, it is proposed that the Company to exit from the investment by the Disposal.

As mentioned above, the primary reason for the Disposal is to mitigate the market uncertainties of the department store operation to the Group in light of, among others, the historical years of segment losses recorded and the prevailing retail market sentiment. Given that the Consideration was determined with reference to the Cost of Investment, and that the substantial premium represented by the Consideration over the prevailing market price of the Sincere Shares and the consolidated net assets of Sincere, the Directors considered that it is unlikely for the Company to be able to achieve the same value for the Sale Shares on the open market, or from an independent third-party purchaser, in a short amount of time. Having considered the above, the Directors did not approach any other purchaser in respect of the Sale Shares.

Having considered the above, the Directors (including the independent non-executive Directors after having considered the advice from Red Sun Capital) are of the view that, notwithstanding that the Disposal is not in the ordinary and usual course of business of the Group, the terms of the Agreement are on normal commercial terms and are fair and reasonable, and the Disposal is in the interests of the Company and the Shareholders as a whole.

FINANCIAL EFFECTS OF THE DISPOSAL

Upon Completion, the Company will cease to have any interests in Sincere, and Sincere will cease to be a subsidiary of the Company and the financial results, assets and liabilities of the members of the Sincere Group will no longer be consolidated into the financial statements of the Group.

It is expected that the Group will record a gain on disposal recognised in the capital reserve of approximately HK$170.7 million, which is calculated by subtracting the Consideration of HK$387,782,980 by (i) the net carrying amount of the Sincere Group (net of non-controlling interest) in the accounts of the Group as at 30 June 2024 of approximately HK$214.8 million; (ii) adjustment of exchange differences arising from the Disposal of approximately HK$0.7 million; and (iii) the estimated transaction costs that may be incurred in the Disposal of approximately HK$1.6 million. The aforesaid expected gain on disposal is for illustrative purpose only. It also does not purport to represent the actual gain or loss of the Group from the Disposal which will be subject to, among other things, audit.

Upon Completion, the outstanding amount of the Shareholder’s Loan owing by the Company to MHL will also be reduced by the amount of the Consideration of HK$387,782,980.

LETTER FROM THE BOARD

TAKEOVERS CODE IMPLICATIONS

Upon Completion, MHL will hold directly 75% of the voting rights of Sincere. As at the date of the Agreement, three subsidiaries in the Sincere Group are unlisted public companies in Hong Kong which are subject to the Takeovers Code, namely, Sincere LA, Sincere FG and Sincere Perfumery. MHL will also, through Sincere, control the Sincere Subsidiaries upon Completion. In accordance with Rule 26.1 of the Takeovers Code, MHL may be obliged to make mandatory general offers for all the issued shares of (i) Sincere; (ii) Sincere LA; (iii) Sincere FG; and (iv) Sincere Perfumery other than those already owned or agreed to be acquired by it and parties acting in concert with it unless such obligation is waived by the Executive.

On 30 October 2024, the Executive confirmed that a mandatory general offer will not be triggered on the part of MHL for the shares of (i) Sincere; (ii) Sincere LA; (iii) Sincere FG; and (iv) Sincere Perfumery arising from the Disposal.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios as stipulated under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5% but are all less than 25%, the Disposal constitutes a discloseable transaction of the Company, and is subject to the notification and announcement requirements pursuant to Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, MHL was interested in 903,160,000 Shares, representing approximately 62.69% of the total issued share capital of the Company, and was the controlling Shareholder. Accordingly, MHL is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. The Disposal therefore also constitutes a connected transaction of the Company, and is subject to the notification, announcement and independent shareholders’ approval requirements pursuant to Chapter 14A of the Listing Rules.

As at the Latest Practicable Date, MHL was owned as to 70% and 30% by Dr. Lin and Madam Su respectively, who are executive Directors. Given their interest in the Agreement and the Disposal, Dr. Lin, Madam Su and Mr. Lin Xiaodong (being the brother of Dr. Lin, the brother-in-law of Madam Su and an executive Director) had abstained from voting at the Board meeting approving the Agreement and the Disposal. Save as disclosed above, no other Directors have any material interest in the Agreement and the Disposal and were required to abstain from voting on the relevant Board resolution.

SGM

The SGM will be held at 9/F, Henley Building, 5 Queen’s Road Central, Central, Hong Kong on Friday, 13 December 2024 at 11 a.m. to consider and, if thought fit, approve the Agreement and the Disposal.

Voting by the Shareholders at the SGM will be taken by poll and an announcement will be made by the Company after the SGM on the results of the SGM.

LETTER FROM THE BOARD

A notice convening the SGM is set out on pages SGM-1 to SGM-2 of this circular. A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM or an adjournment thereof (as the case may be) should you so wish.

As at the Latest Practicable Date, MHL was interested in 903,160,000 Shares, representing approximately 62.69% of the total issued share capital of the Company. As MHL has material interests in the Agreement and the Disposal, MHL and its associates will be required to abstain from voting on the relevant resolutions to be proposed at the SGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save as disclosed above, no other Shareholder is required to abstain from voting at the SGM.

CLOSURE OF REGISTER OF MEMBERS OF THE COMPANY

The register of members of the Company will be closed from Tuesday, 10 December 2024 to Friday, 13 December 2024, both days inclusive, in order to determine the eligibility of the Shareholders to attend and vote at the SGM, during which period no Share transfers will be registered. To be eligible to attend and vote at the SGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged for registration with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not later than 4:30 p.m. on Monday, 9 December 2024.

THE INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. Yu Leung Fai, Mr. Fang Jixin and Mr. Ho Chun Chung Patrick, being all independent non-executive Directors, has been formed to advise the Independent Shareholders in respect of the Agreement, the Disposal and the transactions contemplated thereunder.

Red Sun Capital has been appointed as the Independent Financial Adviser to advise and make recommendations to the Independent Board Committee and the Independent Shareholders in the same regard.

LETTER FROM THE BOARD

RECOMMENDATION

The Directors (including the independent non-executive Directors after having considered the advice of Red Sun Capital) are of the view that, although the Disposal is not in the ordinary and usual course of business of the Group, the terms of the Agreement are on normal commercial terms and are fair and reasonable, and the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Agreement, the Disposal and the transactions contemplated thereunder.

FURTHER INFORMATION

Your attention is drawn to the letter from the Independent Board Committee as set out on pages 15 to 16 of this circular which contains its recommendation to the Independent Shareholders in relation to the Agreement, the Disposal and the transactions contemplated thereunder, and as to voting at the SGM and the letter from Red Sun Capital as set out on pages 17 to 36 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in the same regard.

Your attention is drawn to the additional information set out in the appendix to this circular and the notice of the SGM.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company and are recommended to consult their professional advisers if they are in any doubt about their position and as to actions that they should take.

Yours faithfully, By Order of the Board Realord Group Holdings Limited Lin Xiaohui Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the full text of the letter from the Independent Board Committee prepared for the purpose of inclusion in this circular.

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(Incorporated in Bermuda with limited liability) (Stock code: 1196)

22 November 2024

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED

We refer to the circular of the Company dated 22 November 2024 (the “ Circular ”) to the Shareholders, of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as those defined in the Circular.

We have been appointed to form the Independent Board Committee to consider the Agreement and the Disposal, and to advise the Independent Shareholders as to whether the terms of the Agreement are on normal commercial terms and are fair and reasonable, and whether the Disposal is in the ordinary and usual course of business of the Group and in the interests of the Group and the Shareholders as a whole, and as to how to vote at the SGM. Red Sun Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board as set out on pages 5 to 14 of the Circular as well as the letter from the Independent Financial Adviser as set out on pages 17 to 36 of the Circular which contains its advice in respect of the Agreement and the Disposal.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the advice of Red Sun Capital, we consider that, although the Disposal is not in the ordinary and usual course of the business of the Group, the terms of the Agreement are on normal commercial terms and are fair and reasonable, and the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the SGM to approve the Agreement, the Disposal and the transactions contemplated thereunder.

Yu Leung Fai

Yours faithfully, For and on behalf of the Independent Board Committee Fang Jixin

Ho Chun Chung Patrick

Independent Non-Executive Directors

LETTER FROM RED SUN CAPITAL

The following is the full text of the letter from the Independent Financial Adviser which sets out its advice to the Independent Board Committee and Independent Shareholders in relation to the Agreement and the transactions contemplated thereunder for inclusion in this circular.

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Room 310, 3/F, China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong

Tel: (852) 2857 9208 Fax: (852) 2857 9100 22 November 2024

To: The Independent Board Committee and the Independent Shareholders of Realord Group Holdings Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED

I. INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders with regard to the Agreement and the transactions contemplated thereunder, details of which are contained in the letter from the Board (the “ Letter from the Board ”) as set out in the circular to the Shareholders dated 22 November 2024 (the “ Circular ”). Unless otherwise specified, terms defined in the Circular have the same meanings in this letter.

On 1 November 2024 (after trading hours), the Company and MHL entered into the Agreement, pursuant to which the Company has conditionally agreed to sell, and MHL has conditionally agreed to acquire, the Sale Shares, being 75% of the total issued Sincere Shares held by the Company as at the date of the Agreement, at the Consideration of HK$387,782,980, payable by MHL by way of setting off against part of the Shareholder’s Loan owing by the Company to MHL on a dollar-for-dollar basis.

As set out in the Letter from the Board, as one or more of the applicable percentage ratios as stipulated under Rule 14.07 of the Listing Rules in respect of the Disposal exceeds 5% but are all less than 25%, the Disposal constitutes a discloseable transaction of the Company, and is subject to the notification and announcement requirements pursuant to Chapter 14 of the Listing Rules.

LETTER FROM RED SUN CAPITAL

As disclosed in the Letter from the Board, as at the Latest Practicable Date, MHL was interested in 903,160,000 Shares, representing approximately 62.69% of the total issued share capital of the Company, and was the controlling Shareholder. Accordingly, MHL is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. The Disposal therefore also constitutes a connected transaction of the Company, and is subject to the notification, announcement and independent shareholders’ approval requirements pursuant to Chapter 14A of the Listing Rules.

II. THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Yu Leung Fai, Mr. Fang Jixin and Mr. Ho Chun Chung Patrick, has been formed to advise the Independent Shareholders in respect of the Agreement and the transactions contemplated thereunder. Red Sun Capital Limited has been appointed by the Board with the approval of the Independent Board Committee as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in the same regard.

Our role as the independent financial adviser is to give our recommendation to the Independent Board Committee and the Independent Shareholders in respect of the Agreement and the transactions contemplated thereunder, as to whether (i) the Agreement is on normal commercial terms and fair and reasonable; and (ii) the transactions contemplated thereunder are conducted in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole, and how the Independent Shareholders should vote in respect of the relevant resolution to approve the transactions contemplated under the Agreement at the SGM.

III. OUR INDEPENDENCE

As at the Latest Practicable Date, we were independent from and not connected with the Company, Sincere and their respective shareholders, directors or chief executives, or any of their respective associates. Accordingly, we are qualified to give independent advice to the Independent Board Committee and the Independent Shareholders regarding the transactions contemplated under the Agreement.

Save for this appointment, we have not acted as an independent financial adviser to the independent board committee of the Company and/or the Independent Shareholders in the last two years. Apart from normal professional fees paid or payable to us in connection with this appointment as the independent financial adviser and the engagement as stated above as the independent financial adviser, no arrangements exist whereby we have received or will receive any fees or benefits from the Group or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent from the Group pursuant to Rule 13.84 of the Listing Rules.

LETTER FROM RED SUN CAPITAL

IV. BASIS OF OUR ADVICE

In formulating our advice, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations provided to us by the Group, the Directors and/or senior management of the Company (the “ Management ”). We have assumed that all information, representations and opinions contained or referred to in the Circular or made, given or provided to us by the Company, the Directors and the Management, for which they are solely and wholly responsible, were true and accurate and complete in all material respects at the time when they were made and continue to be so as at the Latest Practicable Date. We have assumed that all the opinions and representations made by the Directors in the Circular have been reasonably made after due and careful enquiry. The Directors and the Management confirmed that no material facts have been omitted from the information provided and referred to in the Circular.

We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the financial position, business and affairs of the Group, the Sincere Group, MHL and, where applicable, their respective shareholder(s) and subsidiaries or affiliates, and their respective history, experience and track records, or the prospects of the markets in which they respectively operate.

We consider that we have been provided with sufficient information to enable us to reach an informed view and to provide a reasonable basis for our advice. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Group, the Directors and/or the Management and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents.

This letter is issued to the Independent Board Committee and the Independent Shareholders solely for their consideration of the transactions contemplated under the Agreement, and, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent. In the event of inconsistency, the English text of this letter shall prevail over the Chinese translation of this letter.

LETTER FROM RED SUN CAPITAL

V. PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have taken into consideration the following principal factors and reasons:

1. Information of the Group

The Group is principally engaged in (i) property investment, development and commercial operation; (ii) provision of financial services, including corporate finance advisory, asset management, securities brokerage services and margin financing, and money lending; (iii) scrap materials recycling business involving dismantling, processing, trading and sales of scrap materials; (iv) distribution and sales of motor vehicle parts; (v) provision of citizenship application and consultancy services on citizenship by investment programme and development of project in Grenada; and (vi) operation of department stores in Hong Kong. The department store business is being operated by Sincere under the brand name “Sincere”/“先施百貨”. The Company completed the acquisition of a majority control of Sincere in June 2021.

We herewith set out a summary of the financial information of the Group for the years ended 31 December 2022 and 2023 as extracted from the annual report of the Group for the year ended 31 December 2023 (the “ 2023 Annual Report ”) and the financial information for the six months ended 30 June 2023 and 2024 as extracted from the interim report of the Group for the six months ended 30 June 2024 (the “ 2024 Interim Report ”), respectively:

Summary of the consolidated statement of comprehensive income of the Group extracted from the 2023 Annual Report and 2024 Interim Report

	For the six months ended	For the six months ended	For the year	ended
	30 June		31 December
	2024	2023	2023	2022
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(audited)	(audited)
Revenue
– Goods and services	290,794	335,341	689,404	1,126,123
– Rental income	22,283	9,038	19,452	14,924
– Interest income	36,531	48,090	92,629	57,763
Total Revenue	349,608	392,469	801,485	1,198,810
Cost of sales	(213,710)	(237,388)	(482,123)	(911,412)
Gross profit	135,898	155,081	319,362	287,398
(Loss)/Profit for the
period/year attributable
to owners of the
Company	(515,424)	48,561	76,689	112,787

LETTER FROM RED SUN CAPITAL

Financial performance of the Group for the six months ended 30 June 2023 (the “1H2023”) and the six months ended 30 June 2024 (the “1H2024”)

As set out in the 2024 Interim Report, the Group’s revenue decreased by approximately HK$42.9 million or 10.9% from approximately HK$392.5 million for 1H2023 to approximately HK$349.6 million for 1H2024. The largest revenue stream for each of 1H2023 and 1H2024 was related to “Goods and services”, which contributed to over 80% of the Group’s total revenue for the aforesaid periods, respectively. For 1H2024, the Group recorded loss for the period attributable to owners of the Company of approximately HK$515.4 million, compared to the profit for the period attributable to owners of the Company of approximately HK$48.6 million for 1H2023. For detailed analysis on the financial performance of Sincere Group, please refer to the section headed “3.1 Background and financial information of Sincere Group” in this letter below.

Financial performance of the Group for the year ended 31 December 2023 (the “FY2023”) and the year ended 31 December 2022 (the “FY2022”)

As set out in the 2023 Annual Report, the Group’s revenue decreased by approximately HK$397.3 million or 33.1% from approximately HK$1,198.8 million for FY2022 to approximately HK$801.5 million for FY2023. The largest revenue stream for each of FY2023 and FY2024 was related to “Goods and services”, which contributed to over 85% of the Group’s total revenue for the aforesaid years, respectively. The Group recorded profit for the year attributable to owners of the Company of approximately HK$76.7 million for FY2023, representing a decrease of approximately HK$36.1 million or 32.0% as compared to approximately HK$112.8 million for FY2022.

Summary of the consolidated statement of financial position of the Group extracted from the 2023 Annual Report and the 2024 Interim Report

	As at 30 June	As at 31	December
	2024	2023	2022
	HK$’000	HK$’000	HK$’000
	(unaudited)	(audited)	(audited)
Non-current assets	10,090,810	10,710,856	9,908,685
Current assets	9,746,679	9,770,073	9,960,992
Non-current liabilities	5,881,928	13,317,129	7,907,199
Current liabilities	9,577,839	2,065,737	6,799,260
Equity attributable to the owners of the
Company	2,925,211	3,592,939	3,610,950

LETTER FROM RED SUN CAPITAL

Financial position of the Group as at 30 June 2024

The Group’s total assets amounted to approximately HK$19,837.5 million as at 30 June 2024 which primarily comprised, among others, (i) investment properties of approximately HK$9,109.7 million; (ii) properties under development of approximately HK$5,484.5 million; and (iii) proposed development project of approximately HK$2,100.7 million. The total liabilities of the Group amount to approximately HK$15,459.8 million as at 30 June 2024 which primarily comprised, among others, (i) bank borrowings, under non-current and current liabilities, of approximately HK$9,330.1 million; (ii) loans from ultimate holding company (i.e. MHL), which is unsecured with an interest rate of 8.2% per annum and will be repayable in June 2026, of approximately HK$2,779.2 million; (iii) deferred tax liabilities of approximately HK$1,080.2 million; and (iv) other payables and accruals of approximately HK$958.7 million. As at 30 June 2024, the equity attributable to the owners of the Company amounted to approximately HK$2,925.2 million, representing a decrease of approximately HK$667.7 million or 18.6% as compared to approximately HK$3,592.9 million as at 31 December 2023.

Financial position of the Group as at 31 December 2023

The Group’s total assets amounted to approximately HK$20,480.9 million as at 31 December 2023 which comprised, among others, (i) investment properties of approximately HK$9,542.1 million; (ii) properties under development of approximately HK$5,555.1 million; and (iii) proposed development project of approximately HK$2,101.9 million. The total liabilities of the Group amount to approximately HK$15,382.9 million as at 31 December 2023 which comprised, among others, (i) bank borrowings, under non-current and current liabilities, of approximately HK$9,559.9 million; (ii) loans from ultimate holding company (i.e. MHL) of approximately HK$2,797.5 million; (iii) deferred tax liabilities of approximately HK$1,172.3 million; and (iv) other payables and accruals of approximately HK$740.8 million. As at 31 December 2023, the equity attributable to the owners of the Company amounted to approximately HK$3,592.9 million, representing a decrease of approximately HK$18.0 million or 0.5% as compared to approximately HK$3,611.0 million as at 31 December 2022.

2. Reasons for and benefits of the Disposal

We have extracted and summarised the following background information, reasons for and benefits of the Disposal from the Letter from the Board.

The Management has considered the principal businesses of the Group, which covered a range of different businesses, including the department store business, which is being operated by Sincere under the brand name “Sincere”/“先施百貨”, further details of the Group’s principal businesses are set out under “1. Information of the Group” above and in the Letter from the Board.

LETTER FROM RED SUN CAPITAL

It was also noted that the Group’s financial position has been adversely impacted by the performance of the department store business operating by Sincere. During the three years ended 31 December 2023 and the six months ended 30 June 2024, the department store segment recorded segment loss of approximately HK$19.2 million, HK$35.3 million, HK$91.1 million and HK$12.4 million, respectively. In recent years, the operating environment of the Hong Kong retail market has continued to be challenging, which has adversely impacted on the performance of the department store operation.

The primary reason for the Disposal is to mitigate the market uncertainties of the department store operation to the Group in light of, among others, the historical years of segment losses recorded and the prevailing retail market sentiment. The Consideration was determined with reference to the Cost of Investment, and that the Consideration represents a substantial premium over the prevailing market price of the Sincere Shares and the consolidated net assets of Sincere.

Having considered the factors above, in particular, (i) the Group’s department store segment recorded segment loss during each of the two years ended 31 December 2023 and the six months ended 30 June 2024 attributable to the Sincere Group; (ii) the impairment losses related to the Sincere Group as recorded by the Group; and (iii) barring unforeseen circumstances, the Sincere Group will continue to face and operate under the challenging outlook of the Hong Kong retail market, we concur with the view of the Directors that the Disposal is in the interests of the Company and the Shareholders as a whole.

3. Our analysis on the Disposal

As part of our work for assessing the fairness and reasonableness of the terms of the Agreement, we have, among others, considered factors and carried out analysis including the following.

3.1 Background and financial information of Sincere Group

Sincere was incorporated in Hong Kong with limited liability, the issued shares of which are listed on the Main Board of the Stock Exchange (stock code: 0244). As at the Latest Practicable Date, Sincere is owned as to 75% by the Company and 25% by public shareholders. Principal businesses of the Sincere Group comprise (i) the operation of department stores; (ii) securities trading; and (iii) the provision of life insurances.

LETTER FROM RED SUN CAPITAL

The financial information of the Sincere Group for the years ended 31 December 2022 and 2023 as extracted from the annual report of the Sincere Group for the year ended 31 December 2023 (the “ 2023 Sincere Annual Report ”) and the financial information for the six months ended 30 June 2023 and 2024 as extracted from the interim report of the Sincere Group for the six months ended 30 June 2024 (the “ 2024 Sincere Interim Report ”), are set out below:

Summary of the consolidated statement of comprehensive income of the Sincere Group extracted from the 2023 Sincere Annual Report and 2024 Sincere Interim Report

	For the six months ended	For the six months ended	For the year	ended
	30 June		31 December
	2024	2023	2023	2022
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(audited)	(audited)
Revenue	65,050	74,356	146,147	146,516
Cost of sales	(29,116)	(30,432)	(62,213)	(64,575)
Gross profit	35,934	43,924	83,934	81,941
(Loss) for the period/	(27,260)	(17,493)	(50,477)	(60,756)
year attributable to
equity holders of
Sincere

Financial performance of the Sincere Group for 1H2023 and 1H2024

As set out in the 2024 Sincere Interim Report, the Sincere Group’s revenue decreased by approximately HK$9.3 million or 12.5% from approximately HK$74.4 million for 1H2023 to approximately HK$65.1 million for 1H2024. For 1H2024, the Sincere Group recorded loss for the period attributable to equity holders of Sincere of approximately HK$27.3 million, representing an increase in losses of approximately HK$9.8 million or 55.8% as compared to approximately HK$17.5 million for 1H2023.

Financial performance of the Sincere Group for FY2023 and FY2022

As set out in the 2023 Sincere Annual Report, the Sincere Group’s revenue was largely stable at approximately HK$146.5 million for FY2022 and approximately HK$146.1 million for FY2023, respectively. The Sincere Group recorded loss for the year attributable to equity holders of Sincere of approximately HK$50.5 million for FY2023, representing a reduction in losses of approximately HK$10.3 million or 16.9% as compared to approximately HK$60.8 million for FY2022.

LETTER FROM RED SUN CAPITAL

Summary of the consolidated statement of financial position of the Sincere Group extracted from the 2023 Sincere Annual Report and the 2024 Sincere Interim Report

		As at
	As at 30 June	31 December
	2024	2023	2022
	HK$’000	HK$’000	HK$’000
	(unaudited)	(audited)	(audited)
Non-current assets	268,592	419,213	433,523
Current assets	255,235	173,403	249,171
Non-current liabilities	7,501	213,928	19,586
Current liabilities	415,556	253,134	489,468
Equity attributable to the equity	55,710	81,125	127,709
holders of the Sincere Group

Financial position of Sincere Group as at 30 June 2024

The Sincere Group’s total assets amounted to approximately HK$523.8 million as at 30 June 2024 which mainly comprised, among others, (i) prepayments, deposits, other receivables and other assets of approximately HK$249.0 million (under both non-current assets and current assets), including the carrying amount of gift receivable from Win Dynamic Limited (“ Win Dynamic ”) amounted to approximately HK$200.7 million, net of expected credit loss allowance of approximately HK$1.7 million. Further details of which are set out in the paragraphs below; (ii) asset classified as held for sale of approximately HK$177.0 million; and (iii) inventories of approximately HK$34.3 million.

The “Gift receivable from Win Dynamic balance amounted to approximately HK$202.5 million, net of expected credit loss allowance of approximately HK$1.7 million as at 30 June 2024. During the six months ended 30 June 2024, the Group has also recognised imputed interest income on gift receivable from Win Dynamic under “Other income and gains, net” of approximately HK$9.4 million.

As per the 2024 Interim Report, such gift receivable was pursuant to a deed executed by Win Dynamic, being the then controlling shareholder of Sincere, in favour of Sincere at no consideration in October 2020 (the “ Deed ”). However, subsequent in February 2021, Win Dynamic issued a letter to the board of Sincere (the “ Sincere Board ”) stating that, among others, Win Dynamic’s declaration that the Deed was null and void and cancelled with immediate effect, for the reason that it was executed by Win Dynamic under undue influence and duress, given without separate legal representation or proper advice (the “ Purported Cancellation ”).

LETTER FROM RED SUN CAPITAL

Against this backdrop, the Purported Cancellation become the subject matter of an ongoing litigation between the Company and Win Dynamic. Such litigation was initialed back in May 2021 by the Company, where the Company issued a writ of summons in the High Court of the Hong Kong Special Administrative Region against Win Dynamic in relation to the Purported Cancellation (the “ Action ”). In July 2021, Sincere agreed to be joined as a party to the Action. The corresponding legal proceedings have commenced since 2021 and remained ongoing as at the Latest Practicable Date. For further details, please refer to the disclosure as set out in the 2024 Interim Report.

Based on our discussion with the Management and the information available, the recovery of the gift receivable balance is subject to the actual outcome of the legal proceedings, and the timing of settlement is also uncertain as at the Latest Practicable Date.

The total liabilities of the Sincere Group amounted to approximately HK$423.1 million as at 30 June 2024 which mainly comprised, among others, (i) loan from a related company of approximately HK$211.0 million; (ii) bank borrowing of approximately HK$83.9 million; (iii) deposits, accrued expenses and other payables of approximately HK$55.2 million; and (iv) creditors of approximately HK$46.8 million.

As at 30 June 2024, the equity attributable to the equity holders of the Company amounted to approximately HK$55.7 million, representing a decrease of approximately HK$25.4 million or 31.3% as compared to approximately HK$81.1 million as at 31 December 2023.

Financial position of the Sincere Group as at 31 December 2023

The Sincere Group’s total assets amounted to approximately HK$592.6 million as at 31 December 2023 which mainly comprised, among others, (i) prepayments, deposits, other receivables and other assets of approximately HK$237.9 million (under both non-current assets and current assets), including the carrying amount of gift receivable from Win Dynamic amounted to HK$191.9 million, net of expected credit loss allowance of approximately HK$1.1 million; (ii) property, plant and equipment of approximately HK$189.3 million; and (iii) cash and bank balances of approximately HK$92.7 million.

LETTER FROM RED SUN CAPITAL

The total liabilities of the Sincere Group amounted to approximately HK$467.1 million as at 31 December 2023 which mainly comprised, among others, (i) loan from a related company of approximately HK$211.0 million, which is unsecured and bears interest at HIBOR plus 5% per annum and is repayable on 20 March 2025; (ii) bank borrowing of approximately HK$84.3 million; and (iii) loan from immediate holding company (i.e. the Company) of approximately HK$71.9 million which was unsecured with an interest rate of 8.2% per annum and repayable on or before 10 August 2024; (iv) deposits, accrued expenses and other payables of approximately HK$42.8 million; and (v) creditors of approximately HK$38.0 million.

As at 31 December 2023, the equity attributable to the equity holders of the Company amounted to approximately HK$81.1 million, representing a decrease of approximately HK$46.6 million or 36.5% as compared to approximately HK$127.7 million as at 31 December 2022.

3.2 Overview of the retail market in Hong Kong

Based on the aforesaid analysis, in particular, the Sincere Group has recorded losses attributable to equity holders of Sincere for the six months ended 30 June 2024, and for the two years ended 31 December 2022 and 2023, the historical financial performance of the Sincere Group has not been satisfactory. Having reviewed the historical financial performance of the Sincere Group, we will analyse the retail market in Hong Kong in this sub-section.

According to the statistics of the Census and Statistics Department of the Government of the Hong Kong Special Administrative Region[1] , the value of sales recorded HK$279.4 billion for the nine months ended 30 September 2024, representing a decrease of approximately HK$22.9 billion or 7.6% as compared to approximately HK$302.3 billion for the nine months ended 30 September 2023.

As per the publication titled “Gloom Deepens in the Retail Sector as Sales Drop Further”[2] by Hong Kong Trade Development Council in October 2024, tourism-oriented trades, including clothing, footwear and allied products, department stores, and jewellery, watches and clocks, and valuable goods, all suffered a double digit decrease in sales value during the first seven months of 2024 compared to the same period in 2023 and the retail sales performance for the remainder of 2024 is expected to remain soft.

On this basis, the operating environment of the retail market in Hong Kong has been challenging and barring unforeseen circumstances, such is expected to continue into the foreseeable future.

1 Statistics of total retail sales (Source: www.censtatd.gov.hk/en/web_table.html?id=620-67001)

2 Publication by Hong Kong Trade Development Council titled “Gloom Deepens in the Retail Sector as Sales Drop Further” (Source: research.hktdc.com/en/article/MTgxNjE2ODAyMQ )

LETTER FROM RED SUN CAPITAL

3.3 Background of the voluntary conditional cash offer

We noted that Sincere is currently a 75% non-wholly owned subsidiary of the Group, and the subject 75% equity interest of Sincere (i.e. the Sale Shares) was acquired by the Company in 2021. The background of which is set out below.

With reference to (i) the joint announcement dated 15 May 2020 whereby the Company, as the “ VGO Offeror ”, and Sincere, as the offeree company, jointly announced, among others, that Realord Asia Pacific Securities Limited intended to make, for and on behalf of the VGO Offeror and subject to the satisfaction or the waiver (as the case may be) of the pre-conditions, a voluntary conditional cash offer (the “ VGO ”) to acquire all of the then issued shares of Sincere; and (ii) the joint announcement dated 17 June 2020 issued by the VGO Offeror and Sincere, set out, among others, the final offer price under the VGO is fixed at HK$0.3935 per Sincere Share.

The 75% equity interest of Sincere held by the Group (i.e. the Sale Shares) was acquired by the Company via the VGO as mentioned in the preceding paragraph. The VGO was closed in June 2021 and the acquisition cost of the Sale Shares for the Group via the VGO was approximately HK$387.8 million, or HK$0.3935 per Sincere Share.

It is noted that the Consideration of HK$387,782,980, or HK$0.3935 per Sincere Share, is the same as the offer price per Sincere Share of HK$0.3935 paid by the Group under the VGO.

LETTER FROM RED SUN CAPITAL

3.4 Consideration

As set out in the Letter from the Board, The Consideration of HK$387,782,980, or HK$0.3935 per Sincere Share, was determined upon arm’s length negotiations between the Company and MHL with reference to the Cost of Investment.

The Consideration per Sincere Share of HK$0.3935 represents:

(i) a premium of approximately 79.7% over the closing price of HK$0.219 per Sincere Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a premium of approximately 58.7% over the closing price of HK$0.248 per Sincere Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 70.3% over the average of the closing prices per Sincere Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day of approximately HK$0.231;
(iv) a premium of approximately 86.5% over the average of the closing prices per Sincere Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day of approximately HK$0.211;
(v) a premium of approximately 534.7% over the audited consolidated net asset value per Sincere Share attributable to equity holders as at 31 December 2023 of approximately HK$0.062 per Sincere Share calculated based on the audited consolidated net assets of the Sincere Group attributable to equity holders of approximately HK$81.1 million as at 31 December 2023 and 1,313,962,560 Sincere Shares in issue; and
(vi) a premium of approximately 836.9% over the unaudited consolidated net asset value per Sincere Share attributable to equity holders as at 30 June 2024 of approximately HK$0.042 per Sincere Share calculated based on the unaudited consolidated net assets of the Sincere Group attributable to equity holders of approximately HK$55.7 million as at 30 June 2024 and 1,313,962,560 Sincere Shares in issue.

LETTER FROM RED SUN CAPITAL

(a) Our analysis on historical Sincere Share price performance

In order to assess the fairness and reasonableness of the Consideration per Sincere Share, we have also reviewed the movements in the closing price per Sincere Share during (i) the period from 3 January 2023, being the first trading day of 2023, up to and including the Last Trading Day (the “ First Review Period ”); and (ii) the period commencing on 1 November 2024, being the trading day immediately after the Last Trading Day and up to and including the Latest Practicable Date (the “ Second Review Period ”, together with the First Review Period, the “ Review Period ”). We consider that the First Review Period, being a period of around 22 months, to be of an appropriate length of time for our review of the closing prices of Sincere Shares as such period covered the publication of several interim and annual results of the Sincere Group and therefore would capture the possible market reactions to the then financial performance and position of the Sincere Group, thus is an appropriate benchmark to assess the fair value of the Sincere Shares, and that it is considered to be adequate and sufficient to illustrate the recent price movements of the Sale Shares for conducting a comparison between (i) the Consideration per Sincere Share; and (ii) the closing price of the Sincere Shares, for assessing the reasonableness of the Consideration per Sincere Share.

Sincere Share price chart during the Review Period

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relation to profit
0.100 warning for the Announcement of
year ended 31 Announcement in relation annual results for the Announcement of
December 2022 to profit warning for the six months ended 30 June year ended 31 the six months ended interim results for
2023 December 2023 30 June 2024
0.000
Date
Closing price per Sincere share Consideration per Sincere Share of HK$0.3935
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2023/01/03 2023/01/16 2023/02/01 2023/02/14 2023/02/27 2023/03/10 2023/03/23 2023/04/06 2023/04/21 2023/05/05 2023/05/18 2023/06/01 2023/06/14 2023/06/28 2023/07/11 2023/07/25 2023/08/07 2023/08/18 2023/08/31 2023/09/15 2023/09/28 2023/10/12 2023/10/26 2023/11/08 2023/11/21 2023/12/04 2023/12/15 2024/01/02 2024/01/15 2024/01/26 2024/02/08 2024/02/23 2024-03-07 2024/03/20 2024/04/05 2024/04/18 2024/05/02 2024/05/16 2024/05/29 2024/06/12 2024/06/25 2024/07/09 2024/07/22 2024/08/02 2024/08/15 2024/08/28 2024/09/11 2024/09/25 2024/10/09 2024/10/23 2024/11/05 2024/11/18
----- End of picture text -----

Source: www.hkex.com.hk

As illustrated in the chart above, during the First Review Period, the closing Sincere Share was generally on a declining trend. The closing prices per Sincere Share ranged from HK$0.190 (27 September 2024) to HK$0.280 (9 January 2023), and that the average closing price per Sincere Share for the First Review Period was approximately HK$0.234.

LETTER FROM RED SUN CAPITAL

During the First Review Period, Sincere Group issued three profit warning announcements dated 17 March 2023, 17 August 2023 and 25 August 2024, respectively. The Sincere Group recorded lost attributable to its equity holders of (i) approximately HK$60.8 million and HK$50.5 million for the year ended 31 December 2022 and 2023; and (ii) approximately HK$27.3 million for the six months ended 30 June 2024.

The closing price per Sincere Share was HK$0.275 at the commencement of the First Review Period on 3 January 2023, such was decreased to HK$0.255 per Sincere Share on the date after the issuance of the final results for the year ended 31 December 2022, further decreased to HK$0.238 per Sincere Share on the date after the issuance of the final results for the year ended 31 December 2023 and further to HK$0.204 per Sincere Share on the date after the issuance of the interim results for the six months ended 30 June 2024. The aforesaid decreases in the closing price per Sincere Share coincided with a period of unsatisfactory financial performance of the Sincere Group.

During the Second Review Period, the closing price per Sincere Share ranged from HK$0.219 to HK$0.247.

In light of the above analysis on historical price performance of the Sincere Share, it is noted that the Consideration per Sincere Share of HK$0.3935 is (i) higher than the average closing price per Sincere Share during the First Review Period; (ii) at a notable premium over the closing price per Sincere Share as quoted on the Stock Exchange on the Last Trading Day, for the last five and 30 consecutive trading days up to and including the Last Trading Day, respectively; and (iii) exceeded the top range of the closing price per Sincere Share of HK$0.280 during the First Review Period,

LETTER FROM RED SUN CAPITAL

(b) Our analysis on historical trading volume and liquidity of Sincere Shares

				Percentage	Percentage
				of average	of average
				daily number	daily number
				of Sincere	of Sincere
			Average	Shares	Shares
			daily	traded to the	traded to the
		Number of	number of	total number	total number
		days with	Sincere	of Sincere	of Sincere
		trading of	Shares	Shares in	Shares held
	Number of	Sincere	traded per	issue as at	by public
	trading days	Shares in	trading days	the end of the	shareholders
	in the month/	the month/	in the month/	month/period	of Sincere
Month/period	period	period	period	*(Note 1)*	*(Note 2)*
*First Review Period*
2023
January	18	15	175,611	0.01%	0.05%
February	20	16	94,100	<0.01%	0.03%
March	23	8	65,998	<0.01%	0.02%
April	17	10	63,588	<0.01%	0.02%
May	21	9	30,762	<0.01%	0.01%
June	21	10	143,095	0.01%	0.04%
July	20	4	37,050	<0.01%	0.01%
August	23	16	66,794	<0.01%	0.02%
September	19	13	497,284	0.04%	0.15%
October	20	8	43,050	<0.01%	0.01%
November	22	13	792,493	0.06%	0.24%
December	19	9	328,053	0.02%	0.10%
2024
January	22	14	390,455	0.03%	0.12%
February	19	7	52,263	<0.01%	0.02%
March	20	8	105,700	<0.01%	0.03%
April	20	8	271,120	0.02%	0.08%
May	21	17	105,438	<0.01%	0.03%
June	19	9	80,000	<0.01%	0.02%
July	22	11	103,182	<0.01%	0.03%
August	22	17	1,261,773	0.10%	0.38%
September	19	15	746,947	0.06%	0.23%
October_(up to and including the Last_
Trading Day)	21	20	359,496	0.03%	0.11%
*Second Review Period*
November_(commencing from the_
trading day immediately after the Last
Trading Day up to the Latest
Practicable Date)	12	8	3,535,083	0.27%	1.08%
Minimum during the First Review
Period				<0.01%	0.01%
Maximum during the First Review
Period				0.10%	0.38%
Average during the First Review
Period				0.02%	0.08%

Source: www.hkex.com.hk

Notes:

Calculated based on the total number of the Sincere Shares in issue at the end of month/ period.
Calculated based on the total number of the Sincere Shares in issue deducted by the number of Sincere Shares held by the Company.

LETTER FROM RED SUN CAPITAL

As set out in the table above, during the First Review Period, the percentage of average daily trading volume of the Sincere Shares by month/period, were in the range of (i) less than 0.01% to approximately 0.10% with an average of approximately 0.02% as to the total number of issued Sincere Shares; and (ii) approximately 0.01% to approximately 0.38% with an average of approximately 0.08% as to the total number of Sincere Shares held by public shareholders of Sincere, which illustrates that the trading liquidity of the Sincere Shares has been low in the open market. As such, disposing a substantial volume of Sincere Shares within a short period of time in the open market would be impractical.

(c) Our analysis on market comparables

For our market comparable analysis, we have considered common valuation market ratio, namely, price-to-earnings ratio, price-to-sales ratio and price-to-book ratio, for comparison purposes.

However, as set out in the 2023 Sincere Annual Report and the 2024 Sincere Interim Report, the Sincere Group recorded a loss for the year/period attributable to its equity holders for the year ended 31 December 2023 and the six months ended 30 June 2024. On this basis, price-to-earnings ratio analysis is not applicable. We also noted that the revenue of the Sincere Group fluctuated from approximately HK$130.1 million (on an annualised basis[3] ) to approximately HK$146.1 million based on the six months ended 30 June 2024 and the year ended 31 December 2023. Such fluctuations would distort the results of analysis on price-to-sales ratio. Furthermore, the size of the revenue of the market comparables would differ from that of the Sincere Group and that their respective revenue would also fluctuate from year-to-year making the relevant analysis of a limited use for comparison purposes. Given the aforesaid limitations, price-to-sales ratio analysis is not included in our analysis below. Nonetheless, as part of our analysis, we have evaluated the Consideration by conducting an analysis on the price-to-book ratio (the “ P/B Ratio ”).

In this connection, having considered the principal businesses of the Group, we have set the following criteria to select comparable companies for the purpose of our analysis, namely (i) shares of the companies being listed and traded on the main board of the Stock Exchange as at the Last Trading Day; (ii) the listed company(ies) that falls under the category “Consumer Discretionary – Specialty Retail” of the Industry Classification (HSIC) according to the Stock Exchange’s website; (iii) the listed company is engaged in the operations of department stores with more than 50% of its total revenue generated from such operations for its latest completed and published financial year; (iv) the listed company operate department stores and generate over 50% of its revenue in Hong Kong (together the “ Comparable Companies Criteria ”).

3 The annualised amount is calculated based on the revenue of the Sincere Group for the six months ended 30 June 2024 for illustration purposes only and does not purport the actual annual revenue of the Sincere Group for its full financial year.

LETTER FROM RED SUN CAPITAL

Based on the Comparable Companies Criteria, we have identified a list of two comparable companies (the “ Market Comparables ”) and set out in the following table the details of the Market Comparables:

		Market
	Closing price	capitalisation
	as at Last	as at Last
	Trading Day	Trading Day	P/B Ratio
	(HK$)	(HK$)	(approximate)
Henderson
Investment Limited (97.HK)	0.118	359,584,633	0.33
Wing On Company
International Limited
(289.HK)	12.18	3,529,544,760	0.20
		Average	0.27
		Maximum	0.33
		Minimum	0.20
	Consideration	Implied
	per Sincere	market	Implied P/B
	Share	capitalisation	Ratio
	(HK$)	(HK$)	(approximate)
Sincere (244.HK)	0.3935	517,044,267	9.28

As shown in the table above, the P/B Ratio of the Market Comparables ranged from approximately 0.20 times to approximately 0.33 times (“ P/B Comparables Range ”) with an average of approximately 0.27 times. The implied P/B Ratio of Sincere under the Disposal (“ Implied P/B Ratio ”) of approximately 9.28 times, calculated based on the Consideration divided by the equity attributable to the equity holders of Sincere as at 30 June 2024, is higher than the P/B Comparables Range, representing that the implied valuation on a P/B Ration basis is significantly higher than that of the price-to-book trading multiples of the Market Comparables, which supports that the Consideration is in the interests of the Company and the Shareholders as a whole.

LETTER FROM RED SUN CAPITAL

3.5 Settlement of Consideration

As disclosed in the Letter from the Board, the Consideration shall be payable by MHL to the Company by way of setting off against part of the carrying amount of the Shareholder’s Loan on a dollar-for-dollar basis pursuant to the Agreement (the “ Set Off ”).

The outstanding amount of the Shareholder’s Loan owing by the Company to MHL, amounted to approximately HK$2,969.0 million as at the date of the Agreement and the Shareholder’s Loan is unsecured, interest-bearing at 8.2% per annum and shall be repayable in June 2026.

Having considered that, the Set Off (i) reduces the liabilities, namely the Shareholder’s Loan, of the Group; (ii) reduces the finance costs in the form of interest expenses arising from the outstanding Shareholder’s Loan of the Group; and (iii) increase the capital reserve of the Group as further elaborated under the section headed “4. Possible financial effects of the Disposal” in this letter below, we are of the view that the settlement methodology of the Consideration is reasonable.

3.6 Summary of our analysis on the Disposal

Having considered (i) the historical financial performance of the Sincere Group for the two years ended 31 December 2022 and 2023, and the six months ended 30 June 2024, which the Sincere Group recorded a loss for the subject year/period, respectively; (ii) the prospects of the Hong Kong retail industry; (iii) the Consideration is equivalent to the original cost of investment of approximately HK$387.8 million paid by the Company for acquiring the Sale Shares pursuant to a voluntary cash general offer in June 2021; (iv) the Consideration per Sincere Share exceeded the top range of the closing price per Sincere Share during the First Review Period and represented a substantial premium over (aa) the average closing price per Sincere Share during the First Review Period; and (bb) the closing price per Sincere Share on the Last Trading Day, for the last five and 30 consecutive trading days up to and including the Last Trading Day, respectively; (v) the Consideration per Sincere Share represented over nine times of the unaudited consolidated net asset value per Sincere Share attributable to equity holders as at 30 June 2024; (vi) the low trading liquidity of Sincere Shares in the open market during the First Review Period; (vii) the Implied P/B Ratio is substantially higher than the P/B Comparables Range; and (viii) our analysis on the settlement methodology as set out above, we concur with the view of the Directors that the Disposal is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

4. Possible financial effects of the Disposal

LETTER FROM RED SUN CAPITAL

Upon Completion, the outstanding amount of the Shareholder’s Loan owing by the Company to MHL will also be reduced by the amount of the Consideration of HK$387,782,980.

VI. RECOMMENDATION

Having considered of the above principal factors and reasons, we consider that although the Agreement and the transactions contemplated thereunder are not entered into under the ordinary and usual course of the business of the Group, the Agreement is on normal commercial terms, and the transactions contemplated under the Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the SGM to approve the Agreement and the transactions contemplated thereunder.

Yours faithfully, for and on behalf of Red Sun Capital Limited Lewis Lai Managing Director

Mr. Lewis Lai is a licensed person registered with the SFC and a responsible officer of Red Sun Capital Limited to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO and has over 17 years of experience in the corporate finance industry.

for identification purposes only

GENERAL INFORMATION

APPENDIX

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. Interests of Directors and chief executive

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules (the “ Model Code ”) to be notified to the Company and the Stock Exchange, were as follows:

GENERAL INFORMATION

APPENDIX

Directors’ interests in shares – Long position in the Shares

Number of Shares held

						Total
	Personal					interests
	interests			Interest		as % of the
	(held as			under		issued
	beneficial	Corporate	Spouse	equity	Total	share
Name of director	owner)	interests	interests	derivatives	interests	capital
Dr. Lin	–	903,160,000	–	42,590,000	945,750,000	65.64%
		(Note 1)		(Note 2)
Madam Su	–	–	945,750,000	–	945,750,000	65.64%
					(Note 3)
Mr. Lin Xiaodong	–	–	–	1,000,000	1,000,000	0.07%
				(Note 4)	(Note 4)
Mr. Yu Leung Fai	500,000	–	–	–	500,000	0.03%
Mr. Fang Juxin	500,000	–	–	–	500,000	0.03%

Notes:

As at the Latest Practicable Date, MHL was the legal and beneficial owner of 903,160,000 Shares. Since Dr. Lin owned 70% of the issued share capital of MHL, he was deemed to be interested in 903,160,000 Shares.
As at the Latest Practicable Date, Dr. Lin was beneficially interested in 42,590,000 Shares (together with Mr. Ma Chao) which (i) some nominees of Mr. Ma Chao exercised their first put option in July 2022 requiring Dr. Lin and/ or Mr. Ma Chao to acquire 42,590,000 Shares; (ii) Dr. Lin and Mr. Ma Chao did not exercise the call option which lapsed on 31 December 2022; and (iii) none of Mr. Ma Chao’s nominees exercised the second put option which lapsed on 30 January 2023. Further details are disclosed in the announcement of the Company dated 28 January 2022.
Madam Su, the spouse of Dr. Lin, was deemed to be interested in 945,750,000 Shares which Dr. Lin was deemed to be interested under the SFO as at the Latest Practicable Date.
Mr. Lin Lin Xiaodong was interested in 1,000,000 Shares from options granted under the share option scheme.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had, or deemed to hold, any interests or short positions in any shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code to be notified to the Company and the Stock Exchange.

GENERAL INFORMATION

APPENDIX

b. Interests of substantial shareholders

As at the Latest Practicable Date, to the best knowledge of the Directors, the following persons (each not being a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

Substantial shareholders’ interests in shares – Long position in the Shares

Name of shareholder MHL Mr. Ma Chao	Number of Shares held Interest held as beneficial owner Interest under equity derivatives Total interests Percentage of issued share capital 903,160,000 (Note 1) – 903,160,000 62.69% 136,258,000 42,590,000 (Note 2) 178,848,000 12.41%

Notes:

As at the Latest Practicable Date, MHL was the legal and beneficial owner of 903,160,000 Shares. MHL was owned as to 70% by Dr. Lin and as to 30% by Madam Su.
As at the Latest Practicable Date, Mr. Ma Chao was beneficially interested in 42,590,000 Shares (together with Dr. Lin) which (i) some nominees of Mr. Ma Chao exercised their first put option in July 2022 requiring Dr. Lin and/or Mr. Ma Chao to acquire 42,590,000 Shares; (ii) Dr. Lin and Mr. Ma Chao did not exercise the call option which lapsed on 31 December 2022; and (iii) none of Mr. Ma Chao’s nominees exercised the second put option which lapsed on 30 January 2023. Further details are disclosed in the announcement of the Company dated 28 January 2022.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (who were not a Director or chief executive of the Company) had interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.

3. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or proposed to enter into any service agreements with any member of the Group, excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation).

4. DIRECTORS’ INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective close associates had engaged in or had any interest in any business that competes or is likely to compete, either directly or indirectly, with the business of the Group, or has any other conflict of interest with the Group.

GENERAL INFORMATION

APPENDIX

5. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which had been, since 31 December 2023 (being the date to which the latest published audited consolidated financial statements of the Company were made up), acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Group subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

6. MATERIAL ADVERSE CHANGE

Save that the Group recorded a net loss of approximately HK$551.0 million for the six months ended 30 June 2024 as compared to a net profit of approximately HK$26.0 million for the six months ended 30 June 2023 as disclosed in the interim report of the Company for the six months ended 30 June 2024 published on 19 September 2024, 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 31 December 2023, being the date to which the latest audited financial statements of the Company were made up.

7. EXPERT AND CONSENT

The following is the qualification of the expert who has been engaged by the Company and who has been named in this circular or who has given its opinion or advice contained in this circular:

Name Qualification Red Sun Capital Limited a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

Red Sun Capital has given and confirmed that it has not withdrawn its written consent to the issue of this circular, with the inclusion herein of its letter, advice, opinion and/or references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, Red Sun Capital:

(a) did not have any shareholding, directly or indirectly, in any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and

GENERAL INFORMATION

APPENDIX

(b) did not have any interest, direct or indirect, in any asset which had been acquired, or disposed of by, or leased to any member of the Group, or was proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2023, being the date to which the latest published audited consolidated financial statements of the Company were made up.

8. MISCELLANEOUS

(i) The company secretary of the Company is Mr. Tsang Chin Pang, who is a member of the Hong Kong Institute of Certified Public Accountants.
(ii) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
(iii) The head office and principal place of business of the Company in Hong Kong is at 24/F, Jardine House, 1 Connaught Place, Central, Hong Kong.
(iv) The Hong Kong branch share registrar and transfer office of the Company is Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong.
(v) The English text of this circular and the accompanying form of proxy shall prevail over the Chinese text.

9. DOCUMENTS ON DISPLAY

Copies of the following documents are published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.realord.com.hk) from the date of this circular to and including the date of the SGM:

(a) the Agreement;
(b) the letter from Red Sun Capital, the text of which is set out on pages 17 to 36 of this circular;
(c) the letter of consent from Red Sun Capital referred to in the paragraph headed “Expert and Consent” of this appendix to this circular; and
(d) this circular.

NOTICE OF THE SPECIAL GENERAL MEETING

==> picture [232 x 75] intentionally omitted <==

(Incorporated in Bermuda with limited liability) (Stock code: 1196)

NOTICE OF THE SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “ Meeting ”) of Realord Group Holdings Limited (the “ Company ”) will be held at 9/F, Henley Building, 5 Queen’s Road Central, Central, Hong Kong on Friday, 13 December 2024 at 11 a.m. to consider, if thought fit, pass with or without modifications the following as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :
(a) the conditional sale and purchase agreement dated 1 November 2024 entered into between Manureen Holdings Limited (as purchaser) and the Company (as seller) in relation to, among other things, the disposal of 985,471,362 shares of The Sincere Company, Limited (“ Sincere ”), representing 75% of the total issued shares of Sincere (the “ Agreement ”) (a copy of which has been produced to the Meeting and initialled by the chairman of the Meeting for identification purpose), the transactions contemplated thereunder and any other ancillary documents, be and are hereby ratified, confirmed and approved, subject to such addition or amendment as any director(s) of the Company (the “ Director(s) ”) may consider necessary, desirable or appropriate; and
(b) any Director be and is hereby authorised for and on behalf of the Company to, among other matters, sign, execute and deliver or to authorise the signing, execution and delivery of all such documents and deeds, to do or authorise doing all such acts, matters and things as he/she may in his/her discretion consider necessary, expedient or desirable to give effect to and implement the Agreement and any ancillary documents and the transactions contemplated thereunder.”

Yours faithfully

For and on behalf of the board of directors of

Realord Group Holdings Limited

Lin Xiaohui

Chairman

Hong Kong, 22 November 2024

SGM-1

NOTICE OF THE SPECIAL GENERAL MEETING

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business in Hong Kong

24/F, Jardine House 1 Connaught Place Central, Hong Kong

Notes:

A member entitled to attend and vote at the Meeting convened by the above notice is entitled to appoint one or more proxy to attend and, subject to the provisions of the bye-laws of the Company to vote on his behalf. A proxy need not be a member of the Company but must be present in person at the Meeting to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares of the Company (the “ Shares ”) in respect of which each such proxy is so appointed.
In order to be valid, the form of proxy must be deposited together with a power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority, at the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not less than 48 hours before the time for holding the Meeting (i.e. no later than Wednesday, 11 December 2024 at 11 a.m. (Hong Kong time)) or any adjournment thereof. Completion and return of a form of proxy will not preclude a shareholder of the Company from attending in person and voting at the Meeting or any adjournment thereof, should he/she so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.
Where there are joint holders of any Share, any one of such holders may vote at the Meeting either personally or by proxy in respect of such Share as if he/she were solely entitled to vote; but if more than one of such joint holders be present at the Meeting in person or by proxy, then the one of such holders whose name stands first on the register of members in respect of such Share shall alone be entitled to vote in respect thereof.
For the purpose of determining shareholders’ entitlement to attend and vote at the Meeting, the register of members of the Company will be closed from Tuesday, 10 December 2024 to Friday, 13 December 2024 (both days inclusive) during which period no transfer of Shares will be registered. In order to qualify for attending at the Meeting, all properly completed transfer forms accompanied by the relevant share certificates must be lodged for registration with the Company’s Hong Kong branch registrar and transfer office, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not later than 4:30 p.m. on Monday, 9 December 2024 (Hong Kong time).
If Typhoon Signal No. 8 or above, or a “black” rainstorm warning or “extreme conditions after super typhoons” announced by the Government of Hong Kong is/are in effect any time after 9:00 a.m. on the date of the Meeting, the Meeting will be postponed. The Company will publish an announcement on the website of the Company at http://www.realord.com.hk and on the website of the Stock Exchange at http://www.hkexnews.hk to notify shareholders of the Company of the date, time and venue of the rescheduled meeting.
In case of discrepancy between the English version and the Chinese version of the notice of the Meeting, the English version shall prevail.

SGM-2

AI assistant

Beijing Yunji Technology Co., Ltd. — Proxy Solicitation & Information Statement 2024

50748_rns_2024-11-21_13e2211a-84b8-4b34-8f0a-201b4ec4def2.pdf

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED AND NOTICE OF SPECIAL GENERAL MEETING

Financial Adviser to the Company

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED

INTRODUCTION

THE AGREEMENT

Date

Parties

Asset to be disposed of

Consideration

LETTER FROM THE BOARD

Conditions precedent

Completion

INFORMATION ON THE SINCERE GROUP

Financial information

Intra-group transactions/balances between the Group and the Sincere Group

REASONS FOR AND BENEFITS OF THE DISPOSAL

LETTER FROM THE BOARD

FINANCIAL EFFECTS OF THE DISPOSAL

TAKEOVERS CODE IMPLICATIONS

LISTING RULES IMPLICATIONS

SGM

LETTER FROM THE BOARD

CLOSURE OF REGISTER OF MEMBERS OF THE COMPANY

THE INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

FURTHER INFORMATION

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO DISPOSAL OF 75% OF THE ISSUED SHARES OF THE SINCERE COMPANY, LIMITED

I. INTRODUCTION

II. THE INDEPENDENT BOARD COMMITTEE

III. OUR INDEPENDENCE

IV. BASIS OF OUR ADVICE

V. PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information of the Group

Financial position of the Group as at 30 June 2024

2. Reasons for and benefits of the Disposal

3. Our analysis on the Disposal

3.1 Background and financial information of Sincere Group

Financial performance of the Sincere Group for FY2023 and FY2022

Financial position of the Sincere Group as at 31 December 2023

3.2 Overview of the retail market in Hong Kong

3.3 Background of the voluntary conditional cash offer

3.4 Consideration

(c) Our analysis on market comparables

3.5 Settlement of Consideration

3.6 Summary of our analysis on the Disposal

4. Possible financial effects of the Disposal

VI. RECOMMENDATION

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

a. Interests of Directors and chief executive

APPENDIX

Number of Shares held

b. Interests of substantial shareholders

3. DIRECTORS’ SERVICE CONTRACTS

4. DIRECTORS’ INTEREST IN COMPETING BUSINESS

5. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

6. MATERIAL ADVERSE CHANGE

7. EXPERT AND CONSENT

8. MISCELLANEOUS

9. DOCUMENTS ON DISPLAY

NOTICE OF THE SPECIAL GENERAL MEETING

ORDINARY RESOLUTION

Realord Group Holdings Limited

Lin Xiaohui

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