China Electronics Huada Technology Company Limited — Proxy Solicitation & Information Statement 2016

Jul 19, 2016

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 licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

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

NEWAY GROUP HOLDINGS LIMITED 中星集團控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00055)

MAJOR TRANSACTION AND CONNECTED TRANSACTION: ACQUISITION OF 100% OF THE ISSUED SHARE CAPITAL OF THE TARGET; AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening a special general meeting of the Company to be held at 11:00 a.m. on Friday, 5 August 2016 at 5/F, Chung Tai Printing Group Building, 11 Yip Cheong Street, On Lok Tsuen, Fanling, New Territories, Hong Kong, is set out on pages SGM-1 to SGM-2 of this circular. Whether or not you are able to attend and vote at the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof to the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish and in such event the form of proxy shall be deemed to be revoked.

20 July 2016

• For identification purpose only

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Letter from the Independent Financial Adviser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
Appendix I – Financial Information of the Group. . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – Financial Information of the Target. . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III – Unaudited Pro Forma Financial Information of
the Enlarged Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV – Property Valuation Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

– i –

DEFINITIONS

In this circular, the following expressions have the meanings set out below unless the context requires otherwise:

• “Acquisition”

the acquisition of the Sale Share pursuant to the Sale and Purchase Agreement

• “Agreed Reference Date”

a date to be agreed between the Vendor and the Purchaser provided that the Conditions Precedent as set out in the sub-paragraphs (2) to (4) under the paragraph headed “Conditions Precedent” in the section headed “Letter from the Board” in this circular shall have been satisfied on or before such date

“Board”

the board of Directors

“BOC”

Bank of China (Hong Kong) Limited, a licensed bank in Hong Kong

“BOC Facilities”

the five mortgage loans granted to the Target under the facility letters dated 7 June 2012 and 19 November 2012 issued by BOC to the Target for an aggregate principal amount of up to HK$170 million

“Business Day(s)”

any day(s) (except any Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

“Company”

Neway Group Holdings Limited, a company incorporated in Bermuda with limited liability and whose Shares are listed on the Main Board of the Stock Exchange

“Completion”

the completion of the Acquisition in accordance with the terms and conditions of the Sale and Purchase Agreement

• “Completion Date”

a day within five Business Days after the last outstanding Condition Precedent (other than the Conditions Precedent which are only capable of being fulfilled upon Completion) having been fulfilled or waived (or such other date as the Vendor and the Purchaser may agree in writing) on which Completion is to take place

– 1 –

DEFINITIONS

• “Conditions Precedent” the conditions precedent set out in the paragraph headed “Conditions Precedent” in the section headed “Letter from the Board” in this circular

• “connected person(s)” the meaning as ascribed to it under the Listing Rules

• “Consideration” the sum as set out in the paragraph headed “Consideration” in the section headed “Letter from the Board” in this circular, being the consideration for the Acquisition

• “Coolstar” Coolstar International Limited, a company incorporated in Hong Kong with limited liability which was a wholly-owned subsidiary of the Target before 13 April 2016

• “Cool Dragon” Cool Dragon Hong Kong Limited, a company incorporated in Hong Kong with limited liability which was a wholly-owned subsidiary of the Target before 13 April 2016

• “Deloitte” Deloitte Touche Tohmatsu, Certified Public Accountants of The Hong Kong Institute of Certified Public Accountants

• “Director(s)”

• the director(s) of the Company

• “Enlarged Group” the Group as enlarged by the Acquisition

• “Group” the Company and its subsidiaries

“Guarantor” Mr. Suek “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “HSBC” the Hongkong and Shanghai Banking Corporation Limited, a licensed bank in Hong Kong

– 2 –

DEFINITIONS

• “HSBC Facilities”

• “Independent Board Committee”

• “Independent Financial Adviser” or “Messis Capital”

• “Independent Property Valuer” or “Peak Vision”

• “Independent Third Party”

• “Independent Shareholders”

• “Latest Practicable Date”

the two loans granted to the Target by HSBC under the facility letter dated 12 January 2015 (as renewed by a renewal letter dated 8 December 2015) issued by HSBC to the Target for a principal amount of HK$29 million and HK$27 million respectively

• the independent board committee comprising all the independent non-executive Directors i.e. Mr. Tse Tin Tai, Ms. Lui Lai Ping, Cecily and Mr. Lee Kwok Wan, which has been established by the Board to advise the Independent Shareholders in respect of the Sale and Purchase Agreement and the Acquisition

• Messis Capital Limited, a corporation licensed under the SFO to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities and the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition contemplated under the Sale and Purchase Agreement

Peak Vision Appraisals Limited, an independent property valuer to assess the market value of the Properties, a report of which is set out in Appendix IV to this circular

a third party independent of the Company and its connected persons, and “Independent Third Parties” shall be construed accordingly

• Shareholders other than those who are required by the Listing Rules to abstain from voting on the resolution approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder

15 July 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

– 3 –

DEFINITIONS

“Listing Rules”

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

• “Long Stop Date” 31 December 2016 (or such later date as the Vendor and the Purchaser may agree in writing)

• “Material Adverse Change”

• any change (or effect) which has a material and adverse effect on the financial position, business or prospects or results of operations of the Target as a whole; provided that the following shall not constitute a Material Adverse Change and shall be disregarded in any determination of whether there has been a Material Adverse Change: any event, effect, change or circumstance resulting from or related to general economic, commercial, property market or political conditions

• “Mr. Suek”

• “Mr. Suek” Mr. Suek Ka Lun, Ernie, an executive Director and the Chairman of the Company

• “PCR Trust” the Preserve Capital Realty Trust, a discretionary trust set up by Mr. Suek

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

• “Pro Forma Completion the unaudited profit and loss accounts of the Target for the Accounts” period commencing from 1 January 2016 to the Agreed Reference Date and the unaudited balance sheet of the Target as at the Agreed Reference Date

• “Properties”

• Units 21, 22, 23, 41 and 77 of 1/F and units 1-32, 34-113 and common area (i.e. the “ whole ”) of 3/F, Hop Yick Commercial Centre (Phase I), No. 33 Hop Choi Street, Yuen Long, New Territories, Hong Kong

“Purchaser”

We-do-best Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

– 4 –

DEFINITIONS

“RMB” Renminbi, the lawful currency of the PRC “Sale and Purchase Agreement” the sale and purchase agreement dated 25 April 2016 entered into among the Vendor, the Purchaser and the Guarantor in respect of the Acquisition “Sale Share” the one share in the issued share capital of the Target, representing the entire issued share capital of the Target “SFO” Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SGM” the special general meeting of the Company convened to be held at 11:00 a.m. on Friday, 5 August 2016 at 5/F, Chung Tai Printing Group Building, 11 Yip Cheong Street, On Lok Tsuen, Fanling, New Territories, Hong Kong for the purposes of considering, and if thought fit, approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder, the notice of which is set out on pages SGM-1 to SGM-2 of this circular “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company “Shareholder(s)” the holder(s) of the Share(s) “Stock Exchange” The Stock Exchange of Hong Kong Limited “Target” Supreme Cycle Inc., a company incorporated in the British Virgin Islands with limited liability “Tenancy Agreement” the tenancy agreement dated 16 March 2016 entered into between the Target as landlord and the Tenant in respect of the leasing of all of the Properties for an initial term of three years from 16 March 2016 to 15 March 2019 “Tenant” Well Dragon Limited, a company incorporated in Hong Kong with limited liability

– 5 –

DEFINITIONS

“Trustee” Fiducia Suisse SA, a company incorporated in the Switzerland “US$” United States dollar, the lawful currency of the United States

“Vendor” Preserve Capital Realty Limited, a company incorporated in the British Virgin Islands with limited liability

“Warranties” the representations, warranties and undertakings given by the Vendor and/or the Guarantor to the Purchaser as contained in the Sale and Purchase Agreement

– 6 –

LETTER FROM THE BOARD

NEWAY GROUP HOLDINGS LIMITED 中星集團控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00055)

Executive Directors: Mr. SUEK Ka Lun, Ernie (Chairman) Mr. SUEK Chai Hong (Chief Executive Officer)

Non-executive Directors:

Dr. NG Wai Kwan Mr. CHAN Kwing Choi, Warren Mr. WONG Sun Fat

Independent non-executive Directors: Mr. TSE Tin Tai Ms. LUI Lai Ping, Cecily Mr. LEE Kwok Wan

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

Principal place of business in Hong Kong: Chung Tai Printing Group Building 11 Yip Cheong Street On Lok Tsuen, Fanling New Territories Hong Kong

Alternate Director:

Mr. LAU Kam Cheong (alternate to Dr. NG Wai Kwan)

20 July 2016

To the Shareholders

Dear Sir or Madam

MAJOR TRANSACTION AND CONNECTED TRANSACTION: ACQUISITION OF 100% OF THE ISSUED SHARE CAPITAL OF THE TARGET

INTRODUCTION

Reference is made to the announcement of the Company dated 25 April 2016 in relation to, among other matters, the Acquisition. On 25 April 2016, the Purchaser, a wholly-owned subsidiary of the Company, the Vendor and the Guarantor entered into the Sale and Purchase Agreement, pursuant to which the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Share, representing the entire issued share capital of the Target.

• For identification purpose only

– 7 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with (i) details of the Sale and Purchase Agreement and the Acquisition contemplated thereunder; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders regarding the Acquisition; (iii) the advice of the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Acquisition; (iv) the financial information of the Group, the Target and the Enlarged Group; (v) the valuation report in respect of the Properties; (vi) other information as required to be disclosed under the Listing Rules; and (vii) the notice of the SGM.

THE SALE AND PURCHASE AGREEMENT

The principal terms of the Sale and Purchase Agreement are set out below:

Date

25 April 2016

Parties

Purchaser:

We-do-best Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company, the principal business of which is investment holding.

Vendor: Preserve Capital Realty Limited, a company incorporated in the British Virgin Islands, the principal business of which is investment holding.

Guarantor: Mr. Suek, who is also a director of the Vendor.

Assets to be acquired

Subject to the terms and conditions of the Sale and Purchase Agreement, the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Share free from all encumbrances together with all rights of any nature now or thereafter attaching thereto including but not limited to all dividends or distributions which may be paid, declared or made in respect thereof at any time on or after the Completion Date.

The Sale Share represents 100% of the issued share capital of the Target.

– 8 –

LETTER FROM THE BOARD

Consideration

The Consideration for the Sale Share payable by the Purchaser to the Vendor is the amount of the net asset value of the Target as shown in the Pro Forma Completion Accounts, but in any event shall not be more than HK$95 million and shall be payable by the Purchaser to the Vendor in the following manner:

• (1) HK$10 million shall be payable within five Business Days upon the date of signing of the Sale and Purchase Agreement as refundable deposit (“ Deposit ”), which shall represent part payment of the Consideration upon Completion; and

• (2) the remaining balance shall be payable at Completion.

If Completion fails to take place for any reason and the Sale and Purchase Agreement is lapsed or terminated howsoever, the Deposit shall be refunded (without interest) by the Vendor to the Purchaser within five Business Days after the lapse or the termination of the Sale and Purchase Agreement.

The Consideration was arrived at after arm’s length negotiations between the Vendor and the Purchaser on normal commercial terms and was determined with reference to the consolidated net asset value of the Target as at 31 March 2016 after taken into account the adjustments to be made in relation to the then contemplated disposal of Cool Dragon and Coolstar, the restructuring of the BOC Facilities and HSBC Facilities as well as the setting off of certain amount due to/from the Related Parties (as defined in the Sale and Purchase Agreement). It was estimated that after the above adjustments, the net asset value of the Target to be shown in the Pro Forma Completion Accounts will not exceed HK$95 million, which represents the cap of the Consideration as agreed under the Sale and Purchase Agreement.

On 13 April 2016, the Target disposed of (i) all its equity interest in Coolstar and certain amount of shareholder’s loan owed to it by Coolstar amounting to HK$12,148,911 to Mass Gainer Limited, a company owned by the Vendor, for an aggregate consideration of HK$1; and (ii) all its equity interest in Cool Dragon and certain amount of shareholder’s loan owed to it by Cool Dragon amounting to HK$2,642,808 to High Class Global Limited, a company owned by the Vendor, for an aggregate consideration of HK$1.

– 9 –

LETTER FROM THE BOARD

Moreover, as part of the Conditions Precedent, (i) the BOC Facilities will be novated to Cool Dragon and/or Coolstar, as a result of which the Target is expected to be released from all obligations of repayment and all liabilities in respect of the BOC Facilities after the novation; (ii) the HSBC Facilities will be restructured such that the loan remaining immediately after the restructuring shall be in a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties; and (iii) the Related Parties (as defined in the Sale and Purchase Agreement) and the Target will repay or otherwise settle all outstanding amount due to each other before the Agreed Reference Date.

In view of the disposal of Coolstar and Cool Dragon and the above Conditions Precedent, the net asset value of the Target as at 31 March 2016 is adjusted to approximately HK$86,989,000, the detailed calculation of which is set out in Note (6) to the unaudited pro forma financial information of the Enlarged Group on page III-4 of this circular.

The Vendor shall deliver to the Purchaser the Pro Forma Completion Accounts within 10 days after the Agreed Reference Date (which is expected to fall on the last day of the month in which the Conditions Precedent as set out in sub-paragraphs (2) to (4) of the paragraph headed “Conditions Precedent” below are satisfied) and for the purpose of the Pro Forma Completion Accounts, the Properties shall be re-valuated at HK$111 million, being the market value of the Properties as at 31 March 2016 and 30 April 2016. The Pro Forma Completion Accounts will be prepared in accordance with the applicable requirements of the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants.

The Consideration shall be paid by the Purchaser in cash and will be funded by the internal resources of the Group. The Company will issue an announcement at Completion which will state the finalised amount of the Consideration based on the Pro Forma Completion Accounts.

Conditions Precedent

Completion shall be conditional upon the following conditions:

• (1) the Sale and Purchase Agreement and the Acquisition having been approved by the Independent Shareholders in compliance with the Listing Rules;

• (2) the BOC Facilities having been novated to Cool Dragon and/or Coolstar and the Target having been released from all obligations of repayment and all liabilities in respect of the BOC Facilities;

– 10 –

LETTER FROM THE BOARD

• (3) the HSBC Facilities having been restructured to the satisfaction of the Purchaser such that the loan remaining immediately after the restructuring shall be in a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties;

• (4) the Related Parties (as defined in the Sale and Purchase Agreement) and the Target having repaid or otherwise settled all outstanding amount due to each other before the Agreed Reference Date and there being no new outstanding amount due to/from between the Related Parties and the Target from the Agreed Reference Date and up to Completion, save for the security deposits for the Tenancy Agreement;

• (5) the delivery of the Pro Forma Completion Accounts to the Purchaser;

• (6) the market value of the Properties as at 31 March 2016 as stated in the valuation of the Properties conducted by the Independent Property Valuer being no less than HK$111 million;

• (7) the Tenancy Agreement having remained in full force and effect;

• (8) the Purchaser being reasonably satisfied with the results of the due diligence exercise (whether on legal, accounting, financial, operational, properties or other aspects that the Purchaser may consider necessary) on the Target and its assets, properties, liabilities, activities, operations, prospects and other status which the Purchaser, its agents or professional advisers think reasonably necessary and appropriate to conduct;

• (9) the Purchaser being satisfied, from the date of the Sale and Purchase Agreement and at any time before the Completion, that the Warranties remain true, accurate and not misleading and that no events have occurred that would result in any breach of any of the Warranties or other provisions of the Sale and Purchase Agreement by the Vendor and/or the Guarantor;

• (10) there being no Material Adverse Change up to Completion;

• (11) (if applicable) all such waivers, consents or other documents as the Purchaser may require in relation to the completion of the transactions contemplated under the Sale and Purchase Agreement having been obtained; and

– 11 –

LETTER FROM THE BOARD

• (12) (if applicable) all such waivers, consents or other documents as the Vendor may require in relation to the completion of the transactions contemplated under the Sale and Purchase Agreement having been obtained.

The Purchaser may waive the Conditions Precedent referred to in sub-paragraphs (8) and (9) above at any time before the Long Stop Date by notice in writing to the Vendor. The Purchaser would only exercise its right to waive the aforesaid Conditions Precedent if the unsatisfactory part of the results of the due diligence exercise on the Target or the breach of the Warranties (as the case may be) is immaterial to the Acquisition and would not materially and adversely affect the legal and financial status of the Target or the Properties.

As at the Latest Practicable Date, Condition Precedent (6) had been fulfilled and the Purchaser did not waive or intend to waive any of the Conditions Precedent.

If any of the above Conditions Precedent have not been fulfilled or waived on or before 5:00 p.m. Hong Kong time on the Long Stop Date, the Sale and Purchase Agreement (save and except the clause in relation to the refund of the Deposit by the Vendor to the Purchaser and clauses in relation to assignment, further assurance, announcements, confidentiality, entire agreement, notices, costs and expenses, general and governing law and jurisdiction) shall lapse immediately thereafter and be of no further effect and no party to the Sale and Purchase Agreement shall have any claim against or liability or obligation to any other parties under the Sale and Purchase Agreement save for any antecedent breaches.

Completion

Completion shall take place on the Completion Date.

Upon Completion, the Target will become a wholly-owned subsidiary of the Company and the financial information of the Target will be consolidated into the Group’s consolidated financial statements.

The aggregate of the remuneration payable to and benefits in kind receivable by the director of the Target will not be varied in consequence of the Acquisition.

– 12 –

LETTER FROM THE BOARD

Guarantee

In consideration of the Purchaser agreeing to enter into the Sale and Purchase Agreement for the Acquisition, the Guarantor has agreed to guarantee to the Purchaser of the performance of the Vendor’s obligations and to pay, on demand, any sum which the Vendor fails to pay to the Purchaser in accordance with the Sale and Purchase Agreement.

INFORMATION OF THE TARGET

The Target is a company incorporated in the British Virgin Islands with limited liability. The principal business activity of the Target is investment holding and property investment and its principal assets are the Properties.

As at the Latest Practicable Date, all of the Properties have been leased to the Tenant for a term of three years from 16 March 2016 to 15 March 2019 at a monthly rental of HK$370,000, renewable at the option of the Tenant for two additional terms of three years with an increase in monthly rent in the range of 0% to 10% for the first renewal term and at the prevailing market rent for the second renewal term. The Properties have been operating as a karaoke outlet as at the Latest Practicable Date. As at the Latest Practicable Date, the Tenant is wholly-owned by the Trustee on trust for the Suek Family 2004 Trust. To the best knowledge, information and belief of the Directors, since the Suek Family 2004 Trust is a discretionary trust of which Mr. Suek is one of the discretionary objects, the Tenant is a connected person of the Company under the Listing Rules. Accordingly, upon Completion of the Acquisition where the Target will become a whollyowned subsidiary of the Company, the transaction contemplated under the Tenancy Agreement will constitute a continuing connected transaction for the Company under the Listing Rules. Please refer to the announcement of the Company in relation to the said continuing connected transaction dated 25 April 2016 for more details.

As disclosed in the announcement of the Company dated 25 April 2016, as all the applicable percentage ratios under the Listing Rules relating to the annual cap for the transaction contemplated under the Tenancy Agreement (i.e. the estimated maximum annual amount of rental income receivable under the Tenancy Agreement) are less than 5%, the transaction contemplated under the Tenancy Agreement at Completion is only subject to the announcement, reporting and annual review requirements under Chapter 14A of the Listing Rules. The Company will comply with the reporting and annual review requirements and, when the Tenancy Agreement is renewed or its terms are varied, comply with all the relevant connected transaction requirements under Chapter 14A of the Listing Rules.

– 13 –

LETTER FROM THE BOARD

The Properties were acquired by the Target in the first half of 2009 at a total consideration of HK$20,830,000. The Properties was re-valued at HK$111 million as at 31 March 2016 and 30 April 2016. The Directors consider the reasons for the increase in value of the Properties since 2009 to be as follows:

• (i) poor property market in 2009: the value of the Properties in 2009 was comparatively low since (a) the property prices in Hong Kong declined drastically after the global financial crisis in 2008; (b) the Properties were situated in an area which was then a non-core area in Yuen Long and the then expected rate of rental income of the Properties was low; and (c) a major renovation project was carried out at the Properties before the acquisition of the Properties by the Target which caused the seller to lower the disposal price; and

• (ii) rapid development of the area : the area where the Properties are situated has undergone rapid development with growing population and business activities in recent years. Such development is attributable to the implementation and relaxation of the Individual Visit Scheme of the Hong Kong Government which boosted the retail business as well as the market value of the properties in Hong Kong.

The Target was acquired by the Vendor from the Trustee, which is the former sole shareholder of the Target, at a nominal consideration of US$1.

As shown in the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to this circular, the unaudited pro forma total asset value and net asset value of the Target as at 31 March 2016, after taken into account the adjustments to be made in relation to the then contemplated disposal of Cool Dragon and Coolstar, the restructuring of the BOC Facilities and HSBC Facilities as well as the setting off of certain amount due to/from the Related Parties (as defined in the Sale and Purchase Agreement), were approximately HK$113,785,000 and HK$86,989,000 respectively.

– 14 –

LETTER FROM THE BOARD

The financial information of the Target prepared in accordance with the Hong Kong Financial Reporting Standards for the two years ended 30 June 2014 and 30 June 2015 and the nine months ended 31 March 2016 are as follows (Note 1):

			For the
	For the year ended	For the year ended	nine months ended
	30 June 2014	30 June 2015	31 March 2016
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(unaudited)
Turnover	3,600	3,600	2,700
Profit (before taxation)	2,902	2,608	2,059
Profit (after taxation)	2,427	2,103	1,732
Profit (loss) (before taxation) (Note 2)	7,358	9,065	(4,598)
Profit (loss) (after taxation) (Note 2)	6,884	8,561	(4,925)

Notes:

1. Given that Coolstar and Cool Dragon were disposed of by the Target on 13 April 2016 and will not form part of the Enlarged Group, the figures disclosed in the table above represent the financial information of the Target only. For the consolidated financial information of the Target together with Coolstar and Cool Dragon, being its then subsidiaries for the relevant financial period, please refer to pages II-1 to II-49 of Appendix II to this circular.

2. The amounts took into account the change in fair value of the Properties.

INFORMATION OF THE GROUP

The Group is principally engaged in (i) money lending business; (ii) manufacturing and sales of printing products; (iii) music and entertainment business; (iv) property development and investment; (v) securities trading; and (vi) trading of printing products.

– 15 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE ACQUISITION

The principal assets of the Target are the Properties, which are located in the central area of Yuen Long and have been leasing to the Tenant and operating as a karaoke outlet under the Tenancy Agreement. Since April 2013, the Group has been expanding its property development and investment business with a view to broaden the Group’s earning base. In view of (i) the steady rental income generated under the Tenancy Agreement (currently being HK$370,000 per month); and (ii) the rapid development and growing population and business activities in the area, the Directors consider that the Acquisition and the continuation of the Tenancy Agreement upon Completion will allow the Group to increase the income and enjoy capital appreciation potential in the future.

The Directors have reviewed the financial information of the Target as set out above and noted that (i) there was a decline in profit of the Target for the year ended 30 June 2015 before taking into account the change in fair value of the Properties, which was mainly due to an increase of the interest expense of approximately HK$197,000 incurred on a new loan obtained by the Target during the year; (ii) after taking into account the change in fair value of the Properties, a profit after tax of approximately HK$8,561,000 was recorded by the Target for the year ended 30 June 2015, representing an increase of approximately 24.36% as compared to that for the year ended 30 June 2014, and a loss was made by the Target for the nine months ended 31 March 2016, which was mainly due to a decrease in fair value of the Properties of HK$7 million (from HK$118 million as at 30 June 2015 to HK$111 million as at 31 March 2016). Considering that the fair value of the Properties had been increasing from 2013 to 2015 (being HK$108 million as at 30 June 2013, HK$112 million as at 30 June 2014 and HK$118 million as at 30 June 2015) and that the area where the Properties is situated is still developing, the Directors are of the view that the Properties will enjoy further capital appreciation in the long term.

For all the reasons mentioned above, all Directors (including the independent nonexecutive Directors) are of the view that the Acquisition is in the interests of the Company and the Shareholders as a whole. The terms of the Sale and Purchase Agreement were determined after arm’s length negotiations between the parties thereto. All Directors (including the independent nonexecutive Directors) are of the view that the terms of the Sale and Purchase Agreement are normal commercial terms and are fair and reasonable and the Acquisition is in the ordinary and usual course of business of the Group.

– 16 –

LETTER FROM THE BOARD

IMPLICATION UNDER THE LISTING RULES

As one or more of the applicable percentage ratios under the Listing Rules in respect of the Acquisition exceed 25% but are less than 100%, the Acquisition constitutes a major transaction for the Company and is therefore subject to the notification, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

As at the Latest Practicable Date, the Vendor was wholly-owned by the Trustee on trust for the PCR Trust. Since the PCR Trust is a discretionary trust of which, to the best knowledge, information and belief of the Directors, the immediate family member(s) of Mr. Suek is/are one of the discretionary objects, the Vendor is a connected person of the Company under the Listing Rules. Accordingly, the Acquisition also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the announcement, reporting and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

GENERAL

By virtue of the connection between Mr. Suek and the Vendor as disclosed above, Mr. Suek is deemed to have a material interest in the Acquisition contemplated under the Sale and Purchase Agreement and has abstained from voting on the board resolutions which approved the Sale and Purchase Agreement and the Acquisition contemplated thereunder. Apart from Mr. Suek, no other Director has any material interest in the Acquisition.

SGM

The SGM will be held at 11:00 a.m. on Friday, 5 August 2016 at 5/F, Chung Tai Printing Group Building, 11 Yip Cheong Street, On Lok Tsuen, Fanling, New Territories, Hong Kong, for the purpose of considering, and if thought fit, approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder. The notice of the SGM is set out on pages SGM-1 to SGM-2 of this circular.

In accordance with the Listing Rules, the resolution will be voted on by way of poll at the SGM.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, Mr. Suek and his close associates (as defined in the Listing Rules) in aggregate controlled or were entitled to exercise control over the voting right in respect of 39,872,000 Shares (representing approximately 18.86% of the issued Shares). Since Mr. Suek is deemed to have a material interest in the Acquisition by virtue of his connection with the Vendor, he and his close associates (as defined in the Listing Rules) will abstain from voting at the SGM on the resolution approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder. Save as aforesaid, to the best knowledge, information and belief of the Directors, no other Shareholders had a material interest in the Acquisition and are required to abstain from voting at the SGM.

Enclosed is a form of proxy for use at the SGM. Whether or not you are able to attend and vote at the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon 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 to the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish and in such event the form of proxy shall be deemed to be revoked.

RECOMMENDATION

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the terms of the Sale and Purchase Agreement are normal commercial terms and are fair and reasonable. The Independent Board Committee also considers that the Acquisition is in the ordinary and usual course of business of the Group and is in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote for the resolution approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder. The text of the letter from the Independent Board Committee is set out on page 19 of this circular.

On behalf of the Board NEWAY GROUP HOLDINGS LIMITED Suek Ka Lun, Ernie Chairman

– 18 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

NEWAY GROUP HOLDINGS LIMITED 中星集團控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00055)

20 July 2016

To the Independent Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONNECTED TRANSACTION: ACQUISITION OF 100% OF THE ISSUED SHARE CAPITAL OF THE TARGET

We refer to the circular of the Company dated 20 July 2016 (“ Circular ”), of which this letter forms part. Unless otherwise required, capitalised terms herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board as members of the Independent Board Committee to advise you on the Sale and Purchase Agreement and the Acquisition contemplated thereunder. The Independent Financial Adviser has been appointed to advise you and us in this regard. Details of its advice, together with the principal factors and reasons it has taken into consideration in giving its advice, are set out on pages 20 to 38 of the Circular. Your attention is also drawn to the letter from the Board in the Circular and the additional information set out in the appendices thereto.

Having considered the benefits for and reasons of the Sale and Purchase Agreement and the Acquisition contemplated thereunder and taking into account the advice of the Independent Financial Adviser as set out in its letter on pages 20 to 38 of the Circular, we are of the opinion that the terms of the Sale and Purchase Agreement are normal commercial terms and are fair and reasonable. We also consider that the Acquisition is in the ordinary and usual course of business of the Group and is in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote for the resolution approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder.

TSE Tin Tai

Yours faithfully, Independent Board Committee LUI Lai Ping, Cecily

LEE Kwok Wan

Independent non-executive Directors

• For identification purpose only

– 19 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

20 July 2016

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

Dear Sir/Madam,

MAJOR TRANSACTION AND CONNECTED TRANSACTION: ACQUISITION OF 100% OF THE ISSUED SHARE CAPITAL OF THE TARGET

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company dated 20 July 2016 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

After trading hours on 25 April, 2016, the Purchaser, a wholly-owned subsidiary of the Company, the Vendor and the Guarantor entered into the Sale and Purchase Agreement, pursuant to which the Vendor conditionally agreed to sell, and the Purchaser conditionally agreed to purchase the Sale Share, representing the entire issued share capital of the Target, at the Consideration, being the net asset value of the Target as shown in the Pro Forma Completion Accounts, but in any event shall not be more than HK$95 million.

As one or more of the applicable percentage ratios under the Listing Rules in respect of the Acquisition exceed 25% but are less than 100%, the Acquisition constitutes a major transaction for the Company and is therefore subject to the notification, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, the Vendor was wholly-owned by the Trustee on trust for the PCR Trust. Since the PCR Trust is a discretionary trust of which, to the best knowledge, information and belief of the Directors, the immediate family member(s) of Mr. Suek is/are one of the discretionary objects, the Vendor is a connected person of the Company under the Listing Rules. Accordingly, the Acquisition also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to announcement, reporting and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The SGM will be convened for the purposes of, among other matters, considering, and if thought fit, approving the Sale and Purchase Agreement and the Acquisition contemplated thereunder. The Independent Board Committee, comprising all three independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the Acquisition contemplated under the Sale and Purchase Agreement. We, Messis Capital Limited, have been appointed as the Independent Financial Adviser to provide our opinion to the Independent Board Committee and the Independent Shareholders as to whether the terms of the Sale and Purchase Agreement are fair and reasonable, whether the Acquisition contemplated thereunder is on normal commercial terms, 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 whether the Independent Shareholders should vote in favour of the resolution approving the Acquisition.

As at the Latest Practicable Date, we did not have any relationship with or interest in the Company that could reasonably be regarded as relevant to our independence. In the last two years, we have acted as the independent financial adviser to the Independent Board Committee and the Independent Shareholders of the Company for the following transactions:

Date of our letter of advice Nature of transactions 25 April 2016 Exempted continuing connected transaction – Tenancy Agreement

Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser, no arrangement exists whereby we will receive any fees or benefits from the Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion and recommendations, we have reviewed, inter alia, the announcement of the Company dated 25 April 2016, the Sale and Purchase Agreement, the latest published audited consolidated financial statements of the Company, unaudited financial information for the nine months ended 31 March 2016 of the Target, an analysis of the real estate market in Hong Kong, and the valuation of the Properties as at 31 March 2016 and 30 April 2016. We have assumed that all information and representations contained or referred to in the Circular and all information and representations which have been provided by the Directors and the management of the Company are true and accurate at the time they were made and will continue to be accurate as at the date of the dispatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and the management of the Company.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed by them in the Circular have been arrived at after due and careful consideration and there are no other material facts not contained in the Circular, the omission of which would make any such statement made by them that contained in the Circular misleading in all material respects. We consider that we have been provided with sufficient information on which to form a reasonable basis for our opinion. We have no reason to suspect that any relevant information has been withheld, nor are we aware of any material facts or circumstances which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided by the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group and their respective associates.

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Sale and Purchase Agreement and the Acquisition contemplated thereunder, 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.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Information on the Group and the Target

Information on the Group

As per the annual report of the Company for the year ended 31 December 2015 (the “ 2015 Annual Report ”), the Group’s principal businesses include, money lending, manufacturing and sales of printing products, trading of printing products, artistes management, production and distribution of music albums and movies, property development and investment, and securities trading.

Set out below is a summary of the financial results of the Group for the year ended 31 December 2015, the nine months ended 31 December 2014, and the financial position of the Group as at 31 December 2015 and 2014:

Profit and loss Revenue Gross Profit Profit/(loss) for the year Financial Position Non-current assets Current assets Current liabilities Non-current liabilities Total equity	For the year ended 31 December 2015 HK$’000 (audited) 521,256 93,478 (67,543) As 31 December 2015 HK$’000 329,542 675,159 153,272 4,354 847,076	For the nine months ended 31 December 2014 HK$’000 (audited) 419,514 48,231 (78,843) at 31 December 2014 HK$’000 368,676 571,885 113,335 5,830 821,396

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group’s revenues were approximately HK$419.5 million for the nine months ended 31 December 2014, and HK$521.3 million for the year ended 31 December 2015. Net losses for the nine months ended 31 December 2014 and for the year ended 31 December 2015 were approximately HK$78.8 million and HK$67.5 million, respectively. For the year ended 31 December 2015, approximately 45.9% of losses, or approximately HK$30.1 million, were due to foreign exchange translations from foreign operations.

According to the 2015 Annual Report, property development and investment was the largest profit generating business segment of the Group for both the nine months ended 31 December 2014 and the year ended 31 December 2015, generating profits of approximately HK$2.8 million and HK$5.4 million, respectively.

Net assets increased by 3.1% to HK$847.1 million as at 31 December 2015 from HK$821.4 million as at 31 December 2014, which was attributable to an increase in the Group’s current assets.

Information on the Target

The Target is a company incorporated in the British Virgin Islands with limited liability. The principal business activity of the Target is investment holding and property investment and its principal assets are the Properties. As at the Latest Practicable Date, all of the Properties have been leased to the Tenant at a monthly rent of HK$370,000 and operating as a karaoke outlet.

The Properties were acquired by the Target in the first half of 2009 at a total consideration of approximately HK$20.8 million. The Properties were re-valuated to HK$111.0 million on 31 March and 30 April 2016. The Directors consider the reasons for the increase in value of the Properties since 2009 to be as follows:

• (i) poor property market in 2009: the value of the Properties in 2009 was comparatively low since (a) the property prices in Hong Kong declined drastically after the global financial crisis in 2008; (b) the Properties were situated in an area which was then a non-core area in Yuen Long and the then expected rate of rental income of the Properties was low; and (c) a major renovation project was carried out at the Properties before the acquisition of the Properties by the Target, which caused the seller to lower the disposal price; and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (ii) rapid development of the area: the area where the Properties are situated has undergone rapid development with growing population and business activities since 2009. Such development is attributable to the implementation and relaxation of the Individual Visit Scheme of the Hong Kong Government which boosted the retail business as well as the market value of the properties in Hong Kong.

The Target was acquired by the Vendor from the Trustee, which is the former sole shareholder of the Target, at a nominal consideration of US$1.

As shown in the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to the Circular, the unaudited pro forma total asset value and net asset value of the Target as at 31 March 2016, after taken into account the adjustments to be made in relation to the then contemplated disposal of Cool Dragon and Coolstar, the restructuring of the BOC Facilities and HSBC Facilities as well as the setting off of certain amount due to/from the Related Parties (as defined in the Sale and Purchase Agreement) (collectively known as the “ Adjustments ”), were approximately HK$113.8 million and HK$87.0 million, respectively.

The financial information of the Target prepared in accordance with the Hong Kong Financial Reporting Standards for the two years ended 30 June 2014 and 30 June 2015, and the nine months ended 31 March 2016 are as follows (Note 1):

	For the year	For the year	For the nine
	ended	ended	months ended
Profit and loss	30 June 2014	30 June 2015	31 March 2016
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(unaudited)
Turnover	3,600	3,600	2,700
Net profit (before taxation)	2,902	2,608	2,059
Net profit (after taxation)	2,427	2,103	1,732
Net profit/(loss) (before
taxation) (Note 2)	7,358	9,065	(4,598)
Net profit/(loss) (after taxation)
(Note 2)	6,884	8,561	(4,925)

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

1. Given that Coolstar and Cool Dragon were disposed of by the Target on 13 April 2016 and will not form part of the Enlarged Group, the figures disclosed in the table above represent the financial information of the Target only. For the consolidated financial information of the Target together with Coolstar and Cool Dragon, being its then subsidiaries for the relevant financial period, please refer to pages II-1 to II-49 of Appendix II to the Circular.

2. The amounts included the change in fair value of the Properties.

For the year ended 30 June 2015, the profit after taxation of the Target (excluding the effect of change in fair value of the Properties) decreased by approximately 13.3% year-onyear. In discussions with management, we were advised that the decline in profit was mainly due to an increase in interest expense of approximately HK$197,000, incurred on a new loan obtained by the Target during the year. Excluding the effect of the aforesaid loan interest expense, the profit after taxation of the Target would have been approximately HK$2.3 million, which approximates the HK$2.4 million for the year ended 30 June 2014, with revenue unchanged.

For the nine months ended 31 March 2016, net loss after taxation (including the change in fair value of the Properties) was approximately HK$4.9 million, as compared to a profit of approximately HK$8.6 million for the year ended 30 June 2015. The loss was mainly due to a decrease in fair value of the Properties of HK$7.0 million (from HK$118.0 million as at 30 June 2015 to HK$111.0 million as at 31 March 2016).

2. Reasons for and benefits of the Acquisition

The principal assets of the Target are the Properties, which are located in the central area of Yuen Long, and has been leased to the Tenant to operate as a karaoke outlet under the Tenancy Agreement. Since April 2013, the Group has been expanding its property development and investment business with a view to broaden its earnings base. In view of (i) the steady rental income generated under the Tenancy Agreement (currently being HK$370,000 per month); and (ii) the rapid development and growing population and business activities in the area, the Directors consider that the Acquisition and the continuation of the Tenancy Agreement upon Completion will allow the Group to continue to benefit from a steady stream of rental income, and potential capital appreciation in the future.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Considering that the fair value of the Properties has been increasing from 2013 to 2015 (being HK$108.0 million as at 30 June 2013, HK$112.0 million as at 30 June 2014 and HK$118.0 million as at 30 June 2015) and that the area where the Properties are situated is still developing, the Directors are of the view that the Properties will enjoy further capital appreciation in the long term.

In rendering our opinion, we have conducted an analysis of the real estate market in Hong Kong over the past 5 years ended 31 December 2015 and the first quarter 2016, based on information from the public domain.

Property pricing trends

According to the statistics of the Rating and Valuation Department of Hong Kong (the “ HKRVD ”), over the last 5 years, the property price index for commercial retail properties grew by a compound annual growth rate (“ CAGR ”) of approximately 12.7% from 304.6 in 2011 to 554.9 in 2015. The property price index for commercial retail properties grew by approximately 2.8% and 7.3% year-on-year in 2014 and 2015, respectively, and has subsequently dropped by approximately 4.5% in the first quarter of 2016 as compared with the fourth quarter of 2015.

Management has made known to us that the Company intends to invest in the Properties for the long run, and we have conducted a review of retail property prices for the last 10 years since 2006, and their corresponding 5-year moving averages. Despite current volatilities in the first quarter return of the index in 2016, retail property prices have demonstrated a long term upward trend since 2006, as illustrated in the graphs below.

==> picture [314 x 213] intentionally omitted <==

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

Hong Kong Retail Property Price Index
600
559.3
500 521.2
506.8
400
420.5
300
327.4
257.2
200
192.2 193.1
172.5
153.5
100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: HKRVD
----- End of picture text -----

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

==> picture [225 x 8] intentionally omitted <==

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

Hong Kong Retail Property Price Index – 5-Year Moving Average
----- End of picture text -----

==> picture [314 x 203] intentionally omitted <==

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

500
450
467.0
400
406.6
350
300 341.0
250
278.1
200 228.5
150 193.7
172.1
157.4
100 136.0
118.5
50
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: HKRVD
----- End of picture text -----

Rental rate trends

According to the statistics of the HKRVD, over the last 5 years, the property rental index for commercial retail properties grew at a CAGR of approximately 7.4% from 128.0 in 2011 to 182.5 in 2015. The property rental index for commercial retail properties grew by approximately 4.6% and 5.4% year-on-year in 2014 and 2015, respectively, and has subsequently dropped by approximately 1.8% in the first quarter of 2016. Despite short term volatilities, as evident in the slight decrease in the retail rental price index in the first quarter of 2016, retail property rents have demonstrated a general upward long term trend since 2006, as illustrated in the graphs below.

==> picture [129 x 8] intentionally omitted <==

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

Hong Kong Retail Rental Price Index
----- End of picture text -----

==> picture [314 x 201] intentionally omitted <==

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

200
180
182.5
160 173.1
165.5
140 151.3
120 134.3
122.9
100 111.8 116.2 110.9
104.3
80
60
40
20
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: HKRVD
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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

==> picture [318 x 222] intentionally omitted <==

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

Hong Kong Retail Rental Price Index – 5-Year Moving Average
160.0
140.0
137.3
120.0 129.1
121.1
113.1
100.0 101.2 100.1 100.6 101.7 103.8 107.3
80.0
60.0
40.0
20.0
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: HKRVD
----- End of picture text -----

Recent transactions in the market

On 11 April 2016, it was announced that Link Real Estate Investment Trust had entered into agreements with 5 different buyers for 7 of their commercial retail properties. The offer amounts to an average premium of 33% over their appraised values (ranging from 21% – 81% for each of the relevant properties). It was also noted that 4 of the 5 buyers were first time bidders that had not participated in any of their previous tenders, indicating interest in commercial retail properties in the market. We consider such recent transactions, representing commercial retail properties across different districts in Hong Kong, as a reflection of the positive market sentiment and long term outlook of the retail property sector in Hong Kong.

According to a recent research report named “Briefing – Retail leasing” released by a global real estate services provider in April 2016, more market activity has been noted in recent months, with high-street fashion brands, active wear retailers and food and beverage operators all taking up space previously occupied by watches and jewellery and other mainland-focused trades. In order to maintain rents, shopping centre landlords are now starting to subdivide units. The recent market activities also suggested that the landlords are actively adjusting their tenant mix in response to the market shift and it is estimated that the shopping centre rents will increase by 0-5% by the end of 2016.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Furthermore, it is also believed that Hong Kong’s property policies are built on solid foundations where the government is experienced in establishing and implementing longterm and short-term policies for sustainable growth. In addition to the above, it has been announced by the U.S. Federal Reserve in April 2016 that it would slow down the pace of increase in the interest rate, which would help improve market sentiment going forward. Accordingly, we believe that despite short term volatilities and a slight decline in the retail property price and rental indices in the first quarter of 2016, as discussed above, the recent transactions and events suggest that there is still demand in the market to support retail property prices and rents in the long term.

Commercial property market in Yuen Long

According to the Hong Kong Property Review 2016 published by the HKRVD in April 2016, completion of private domestic properties are expected to rise to 18,200 units in 2016 and then ease to 17,930 units in 2017. In 2016, it is expected that approximately 68% of new flats to be completed will be in the New Territories, and the remainder, approximately 18% and 14%, will be in Kowloon and Hong Kong island, respectively. On a district basis, Yuen Long and Sai Kung together will account for half of the forecasted completions, indicating that local economic activities in Yuen Long are expected to increase, driven by local household consumption. The development in Yuen Long, including that of the property market in the district, is further evidenced by HKRVD’s estimation that approximately 32% of the supply of commercial properties in 2016 will be contributed mainly from Yuen Long. According to the HKRVD, it is also noted that the vacancy rate of commercial properties in Yuen Long in 2015 was approximately 7.1%, which was lower than that of the average vacancy rate in the New Territories of approximately 8.3%, implying a relatively higher demand for commercial properties in Yuen Long. According to the Hong Kong Census and Statistics records, Yuen Long’s population has been steadily increasing from 534,172 in 2006 to 573,000 in 2011, and to 607,200 by the end of 2015. Additionally, in April 2014, the government announced plans to boost Yuen Long’s population by a quarter over the next 9 years, as they are of the opinion that the development of current facilities and transportation infrastructures are well in place to support this. In light of the foregoing, notwithstanding the estimated increase in the supply of commercial properties in Yuen Long, we are of the opinion that commercial property prices in Yuen Long would be supported by the aforesaid development plan which would lead to increasing economic activities from the rising local population. Furthermore, we have conducted an independent research on the recent average transaction prices of commercial properties in Yuen Long and extracted data from the website

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of an independent property agency. Based on over 1,200 sample transactions obtained throughout the period from January 2012 (base year) to June 2016, we are of the view that such samples are a fair and representative sample for our analysis. Moreover, as the source of the extracted data is from the Land Registry of Hong Kong, we believe that the data is sufficiently reliable for our independent work done. Set out below is the commercial property price index in Yuen Long calculated based on the samples:

Commercial property price index in Yuen Long

==> picture [299 x 195] intentionally omitted <==

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

160
140.6
134.2
140
121.5 121.4
120
100.0
100
80
60
40
20
0
2012 2013 2014 2015 2016
----- End of picture text -----

Source: Website of an independent property agency

Note: Data for 2016 is for period from January 2016 to June 2016

The average transaction prices of commercial properties in Yuen Long increased by approximately 34.2% from January 2012 to June 2016, and it is noted that the overall average transaction prices were relatively stable over the period. As such, we consider the outlook of the commercial property market in Yuen Long, particularly over the long run, as positive.

In consideration of the above factors and given the long-term growth and the presence of ongoing purchasing power in the market, we are of the view that, notwithstanding the recent slow-down in price and rent of the property market in Hong Kong, the local property market remains optimistic. Therefore, we consider that the Acquisition would allow the Group to capitalise on the long term potential for price appreciation in the local property market, particularly in Yuen Long. This is in line with the strategic decision of the management of the Company to expand the Group’s business in property development and investment.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We consider the HK$7.0 million decrease in fair value of the Properties, from HK$118.0 million as at 30 June 2015 to HK$111.0 million as at 31 March 2016, which resulted in a decrease in profit before taxation of the Target for the nine months ended 31 March 2016, is in line with the overall trend of the property market in Hong Kong.

Given that the Company intends to invest in the Properties for the long run, despite the possibilities of volatility in the short run, we consider that the Group can benefit from the long run upward trend of the retail property market in Hong Kong. For further analysis to support the possible short run volatilities and long run upward trend of the retail property market in Hong Kong, please refer to the paragraph headed “2. Reasons for and benefits of the Acquisition – Recent transactions in the market”.

In light of the foregoing, we are of the view that the Acquisition is in the interest of the Company and the Shareholders as a whole.

3. Principal Terms of the Sale and Purchase Agreement

Subject to the terms and conditions of the Sale and Purchase Agreement, the Vendor conditionally agreed to sell and the Purchaser conditionally agreed to purchase the Sale Share free from all encumbrances together with all rights of any nature now or thereafter attaching thereto including but not limited to all dividends or distributions which may be paid, declared or made in respect thereof at any time on or after the Completion Date. The Sale Share represents 100% of the issued share capital of the Target.

The Consideration for the Sale Share payable by the Purchaser to the Vendor is the amount of the net asset value of the Target as shown in the Pro Forma Completion Accounts, but in any event shall not be more than HK$95.0 million and shall be payable by the Purchaser to the Vendor in the following manner:

• (i) HK$10.0 million shall be payable within 5 Business Days upon the date of signing of the Sale and Purchase Agreement as refundable deposit (“ Deposit ”), which shall represent part payment of the Consideration upon Completion; and

• (ii) the remaining balance shall be payable at Completion.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

If Completion fails to take place for any reason and the Sale and Purchase Agreement is lapsed or terminated howsoever, the Deposit shall be refunded (without interest) by the Vendor to the Purchaser within 5 Business Days after the lapse or termination of the Sale and Purchase Agreement.

The Consideration was arrived at after arm’s length negotiations between the Vendor and the Purchaser on normal commercial terms, and was determined with reference to the consolidated net asset value of the Target as at 31 March 2016, after taken into account the Adjustments, being adjustments to be made in relation to the then contemplated disposal of Cool Dragon and Coolstar, the restructuring of the BOC Facilities and HSBC Facilities, as well as the setting off of certain amounts due to/from the Related Parties (as defined in the Sale and Purchase Agreement). It was estimated that after the above Adjustments, the net asset value of the Target to be shown in the Pro Forma Completion Accounts will not exceed HK$95.0 million, which represents the cap of the Consideration as agreed under the Sale and Purchase Agreement.

On 13 April 2016, the Target disposed of (i) all its equity interest in Coolstar and certain amount of shareholder’s loan owed to it by Coolstar amounting to approximately HK$12.1 million to Mass Gainer Limited, a company owned by the Vendor, for an aggregate consideration of HK$1; and (ii) all its equity interest in Cool Dragon and certain amount of shareholder’s loan owed to it by Cool Dragon amounting to approximately HK$2.6 million to High Class Global Limited, a company owned by the Vendor, for an aggregate consideration of HK$1.

Moreover, as part of the Conditions Precedent, (i) the BOC Facilities will be novated to Cool Dragon and/or Coolstar, as a result of which the Target is expected to be released from all obligations of repayment and all liabilities in respect of the BOC Facilities after the novation; (ii) the HSBC Facilities will be restructured such that the loan remaining immediately after the restructuring shall be in a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties; and (iii) the Related Parties (as defined in the Sale and Purchase Agreement) and the Target will repay or otherwise settle all outstanding amount due to each other before the Agreed Reference Date.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For illustration purposes, as shown in the unaudited pro forma financial information of the Enlarged Group set out in Appendix III to the Circular, the unaudited pro forma net asset value of the Target Group as at 31 March 2016, before the Adjustments, is approximately HK$245.3 million. Below are details of the Adjustments, details of which are also set out in Appendix III to the Circular:

An approximately HK$511.0 million decrease in assets classified as held-for-sale and approximately HK$5.2 million decrease in liabilities associated with assets classified as heldfor-sale represent the adjustments for the exclusion of assets and liabilities of Coolstar and Cool Dragon as the Target has disposed of through transferring its entire equity interest in Coolstar and Cool Dragon and certain shareholder’s loan owed to the Target at an aggregate consideration of HK$2 to two companies owned by the Vendor on 13 April 2016.

An approximately HK$162.0 million decrease in borrowings represent the adjustments for the exclusion of bank borrowings granted under the BOC Facilities and the HSBC Facilities as if the following arrangements were completed on 31 December 2015. As at 31 March 2016, the bank borrowings granted under the BOC Facilities and the HSBC Facilities not secured by the Properties amounted to approximately HK$134.7 million and approximately HK$27.3 million, respectively, as extracted from the management accounts of the Target for the nine months ended 31 March 2016. Pursuant to the Sale and Purchase Agreement, it is a Condition Precedent that BOC Facilities shall have been novated to Cool Dragon and/or Coolstar and the HSBC Facilities shall have been restructured to a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties. The entire BOC Facilities will be novated to Cool Dragon and Coolstar through the current accounts between them and the Target. Under the restructuring of the HSBC Facilities, it is intended by the management of the Group that the bank borrowing which is not secured by the Properties will be novated to Mr. Suek through the current account (the “ HSBC Facilities Novation ”). As represented by the management of the Group and Mr. Suek, if the HSBC Facilities Novation is not approved by HSBC, and the Vendor and the Purchaser choose to proceed to Completion of the Sale and Purchase Agreement, Mr. Suek is willing to bear the relevant amount such that the amount to be borne by the Target under the HSBC Facilities will be reduced to a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties. The current accounts with Cool Dragon, Coolstar and Mr. Suek will then be settled according to the Settlement Agreement (as defined below).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Pursuant to the Sale and Purchase Agreement, it is a Condition Precedent that no amounts due from/to between the Related Parties and the Target is outstanding at the Completion. As at 31 March 2016, the current accounts between the Related Parties and the Target consists of an amount due from a related company of approximately HK$10,000, an amount due from a related party of approximately HK$35.6 million (after novation of loan to Mr. Suek as disclosed above), an amount due to a related company of approximately HK$3.2 million, and an amount due to the Vendor of approximately HK$379.9 million (after novation of loans to Cool Dragon and Coolstar as disclosed above), as extracted from the accountants’ report set out in Appendix II to the Circular. Based on the settlement agreement (the “ Settlement Agreement ”) to be signed between the Target and the Related Parties, amounts due from related company and a related party will be settled with the current account with Vendor and the current accounts with a related company and the Vendor will be waived by the Related Parties before Completion and considered as deemed contributions to the Target.

After the Adjustments, the Target’s adjusted net asset value as at 31 March 2016 would be approximately HK$87.0 million. For more details on the Adjustments, please refer to pages III-2 to III-4 of the Circular.

The Vendor shall deliver to the Purchaser the Pro Forma Completion Accounts within 10 days after the Agreed Reference Date (which is expected to fall on the last day of the month in which the Conditions Precedent as set out in sub-paragraphs (2) to (4) of the paragraph headed “Conditions Precedent” in the Letter from the Board are satisfied), and for the purposes of the Pro Forma Completion Accounts, the Properties shall be re-valuated at HK$111.0 million, being the market value of the Properties as at 31 March 2016 and 30 April 2016. The Pro Forma Completion Accounts will be prepared in accordance with the applicable requirements of the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants.

The Consideration shall be paid by the Purchaser in cash and funded by the internal resources of the Group. The Company will issue an announcement at Completion which will state the finalised amount of the Consideration based on the Pro Forma Completion Accounts.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given that the principal business of the Target is only the holding of the Properties, we consider that it is inappropriate to assess the fairness and reasonableness of the Consideration by way of comparable analysis based on price-to-earnings ratio or price-to-book ratio which is commonly used in other sale and purchase transactions of companies. We have, alternatively, researched prior transactions in relation to acquisitions of properties by other companies listed on the Stock Exchange. We have noted that it is common practice to acquire properties through the acquisition of a holding company, with considerations based on the net asset value of the holding company (i.e. the fair value of the properties adjusted for the carrying value of the remaining outstanding assets and liabilities of the holding company).

As per the valuation report as set out in Appendix IV to the Circular (the “ Valuation Report ”), the value of the Properties as at 30 April 2016 amounted to HK$111.0 million. In determining the fairness and reasonableness of the Consideration, we have reviewed the Valuation Report, and discussed with Peak Vision Appraisals Limited (the “ Valuer ”), an independent property valuer appointed by the Company for the purpose of the Valuation, the methodology and basis for assumptions used in arriving at the valuation of the Properties. We were given to understand that the principal method adopted is the Investment Approach which capitalises current passing rental income with due consideration to its reversionary potential. We have reviewed the data used by the Valuer in arriving at the valuation of the Properties, and noted that such data are derived from information in the Tenancy Agreement in conjunction with market data from properties in close proximity to the Properties. We consider the data used for the Investment Approach fair, reasonable, and appropriate in arriving at the valuation of the Properties.

We further understand that, where appropriate, the Direct Comparison Approach was also undertaken, whereby a valuation is derived through the review and comparison of the prices of similar assets transacted in the market. We have obtained and reviewed the sales transactions identified by the Valuer for the Direct Comparison Approach, and noted that such transactions are recent sales transactions for commercial properties in close proximity to the Properties. Based on the above, we consider the sale transactions identified by the Valuer for the Direct Comparison Approach as a fair and representative sample for comparison purposes.

In conducting the valuation of the Properties, the Valuer has confirmed compliance with all the requirements as set out in Chapter 5 of the Listing Rules, and The HKIS Valuation Standards 2012 Edition as issued by the Hong Kong Institute of Surveyors.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Furthermore, the Valuer confirmed that it is an independent third party to the parties to the Sale and Purchase Agreement and their respective core connected persons. Moreover, we understand that Mr. Nick C.L. Kung, the person in charge of the valuation of the Properties, is a registered professional surveyor who has over 20 years of experience in the valuation of properties in Hong Kong and abroad. We have also reviewed the terms of the Valuer’s engagement letter and noted that the scope of work is appropriate for arriving at the opinion of the market value on the Properties and we are unaware that there are any limitation on the relevant scope of work. Nothing has come to our attention that parties to the Sale and Purchase Agreement had made formal or informal representation to the Valuer that contravenes with our understanding of the information, to a material extent, as set out in the Circular.

Based on our review of (i) the terms and conditions of the Sale and Purchase Agreement, particularly that the Consideration was negotiated at arm’s length between the Vendor and the Purchaser, based on the net asset value of the Target as shown in the Pro Forma Completion Accounts, as adjusted by the valuation of the Properties as at 31 March 2016, and (ii) the Valuation Report on the Properties issued by the Valuer, and taking into account the Valuer’s confirmation as to its independence and their compliance with all relevant rules and regulations in performing their duties, we are of the opinion that the terms of the Sale and Purchase Agreement (including but not limited to the Consideration and the determination basis thereof) are fair and reasonable.

4. Financial Effects

Net assets

The Consideration for the Sale Share payable by the Purchaser to the Vendor is the amount of the net asset value of the Target as shown in the Pro Forma Completion Accounts. As such, according to the pro forma financial information of the Enlarged Group, contained in Appendix III to the Circular, the net assets of the Group will remain the same at approximately HK$847.1 million, assuming that the Completion of the Acquisition had taken place on 31 December 2015.

Earnings

The Group intends to acquire the Target for investment purposes with an aim to augment their operations in the property business. In view of the Tenancy Agreement, the Directors expect that the Acquisition will have a positive impact on earnings of the Group. Immediately after Completion of the Acquisition, the turnover of the Enlarged Group is expected to increase by approximately HK$4.4 million per year, representing the yearly rental income of the Properties during the initial term of the tenancy under the Tenancy Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Liquidity

As the Consideration will be paid by internal resources of the Group, upon Completion and consolidation of the Target’s accounts with the Group’s, bank balances and cash is expected to decrease by the amount of the Consideration. Accordingly, the Group’s current ratio is expected to decrease from 4.4 to 3.3 upon Completion.

RECOMMENDATION

In consideration of the above, we are of the view that (i) the Acquisition is in the ordinary and usual course of business of the Group and is in line with the strategic decision of the management of the Company to expand the property business of the Group; (ii) the Acquisition and is in the interest of the Company and the Shareholders as a whole; and (iii) the terms of the Sale and Purchase Agreement, including but not limited to the Consideration, are on normal commercial terms, and are fair and reasonable so far as the Independent Shareholders are concerned. We therefore advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Sale and Purchase Agreement and the Acquisition contemplated thereunder.

Yours faithfully, For and on behalf of Messis Capital Limited

Robert Siu Wallace Cheung Managing Director Associate Director

Mr. Robert Siu is a licensed person registered with the Securities and Futures Commission and regarded as a responsible officer of Messis Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance and has over 15 years of experience in corporate finance industry.

Mr. Wallace Cheung is a licensed person registered with the Securities and Futures Commission and regarded as a licensed representative of Messis Capital Limited to carry out type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance and has over 5 years of experience in the corporate finance industry.

– 38 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR FINANCIAL INFORMATION OF THE GROUP

Details of the financial information of the Group for the year ended 31 March 2013, the year ended 31 March 2014, the nine months ended 31 December 2014 and the year ended 31 December 2015 respectively have been set out in the Company’s annual reports for the year ended 31 March 2013 (from pages 51 to 139), the year ended 31 March 2014 (from pages 54 to 163), the nine months ended 31 December 2014 (from pages 60 to 186) and the year ended 31 December 2015 (from pages 68 to 202).

All annual reports of the Company have been posted on the website of the Company at http://www.newaygroup.com.hk and of the Stock Exchange at www.hkexnews.hk.

2. INDEBTEDNESS OF THE ENLARGED GROUP

The Group

As at the close of business on 31 May 2016, being the latest practicable date for the purpose of ascertaining the indebtedness prior to the printing of this circular, the Group had aggregate outstanding borrowings of approximately HK$27,931,000 comprising (i) unsecured bank borrowings of HK$6,000,000; (ii) amount due to a related company of approximately HK$21,358,000 which is unsecured; and (iii) finance lease obligations of approximately HK$573,000 secured by a motor vehicle owned by the Group. All bank borrowings, amount due to a related company or finance lease obligations were unguaranteed.

The Target

As at the close of business on 31 May 2016, the Target had total outstanding mortgage loans of approximately HK$185,563,000 comprising (i) approximately HK$133,062,000 granted by BOC and secured by the properties owned by its former subsidiaries, namely Coolstar and Cool Dragon; (ii) approximately HK$25,312,000 and HK$27,189,000 granted by HSBC and secured by the Properties. The mortgage loan granted by HSBC of approximately HK$25,312,000 was guaranteed by Mr. Suek. The remaining mortgage loans of approximately HK$160,251,000 were unguaranteed.

Save as disclosed above, as at 31 May 2016, the Enlarged Group did not have any other borrowings, mortgages, charges, debentures or debt securities issued and outstanding, or authorised or otherwise created but unissued, or other similar indebtedness, liabilities under acceptances or acceptance credits, finance lease or hire purchase commitments, material contingent liabilities or guarantees.

I – 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. WORKING CAPITAL SUFFICIENCY OF THE ENLARGED GROUP

The Directors are of the opinion that, after taking into account the Enlarged Group’s internal resources and the available facilities, the working capital available to the Enlarged Group is sufficient for the Enlarged Group’s requirements for at least the next 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECT OF THE ENLARGED GROUP

The Group is principally engaged in (i) money lending business; (ii) manufacturing and sales of printing products; (iii) music and entertainment business; (iv) property development and investment; (v) securities trading; and (vi) trading of printing products.

The Group will remain committed to this diversification strategy to generate a stable return and promising business growth to the Shareholders. The newly developed and establishing businesses such as the lending business, the property business, the gaming business and the “internet + community” business continue to develop and contribute in the Group’s portfolio.

Regarding the lending business, high growth rate is expected and the Group will allocate more financial resources to expand the lending business. In particular, the Group will expand the mortgage business to corporate clients and expand the personal loan market. In view of the uncertain economy outlook, the Group will operate and expand its business in a cautious and riskbalanced manner to maintain a balanced portfolio.

Regarding the manufacturing, sales and trading businesses of printing products, the management has commenced internal restructuring by merging departments to streamline the whole work processes in all levels in 2015 and the restructuring will continue in 2016. The Group believes that the restructuring process will further reduce the wastage and enhance the efficiency of its factories. Furthermore, the Group will continue to invest in automating the production line to improve the quality stability and efficiency and to reduce the staff costs of the factories.

I – 2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Regarding the music and entertainment business, the Group will continue to broaden its artistes base and target to sign up two to three more artistes in 2016. More financial resources will be allocated in talent cultivation and concerts and shows.

Regarding the securities trading business and property business, while the Group will closely monitor the market and market data related to prospective investees before committing to any securities investment, the Group will devote more resources in developing the mini storage business and business service center business and increase the occupancy rate of the properties of both businesses by implementing various promotion and marketing activities. As mentioned in the section headed “Reasons for and benefits of the Acquisition” of this circular, the Acquisition will commit to the development of the property business.

After the acquisition of the Target, the Group will be able to further broaden its income stream by virtue of the Tenancy Agreement in relation to the lease of the Properties which is for an initial term of three years with two options for renewal for two further terms of three years respectively. It will bring stable cash flow to the Group. Besides, the rapid development and growing population in Yuen Long district in recent years has brought a positive impact on the pricing of the property. The Properties are situated in the centre of Yuen Long district which has a high population density. It is expected that the location of the Properties and the rapid development of Yuen Long district will bring desirable capital appreciation potential to the Group in the future.

As for the newly developed businesses of the Group, while for the gaming business the Group has successfully despatched the first batch of slot machines to Mexico in early 2016 and expects to expand its games distribution network and to introduce games to more parts of the world, such as Colombia, Serbia and Holland, the Group has also commenced the new “internet + community” business in the PRC by the end of 2015 by entering into an exclusive operator agreement with Vinux (Beijing) Information Technology Co., Limited and developed neighbourhood stores.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2015, being the date to which the latest published audited consolidated financial statements of the Group were made up.

I – 3

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. EFFECTS OF THE ACQUISITION ON THE EARNINGS AND ASSETS AND LIABILITIES OF THE GROUP

As at 31 December 2015, the audited consolidated total assets and total liabilities of the Group amounted to approximately HK$1,004,702,000 and HK$157,626,000 respectively. As set out in Appendix III to this circular, assuming the Completion had taken place on 31 December 2015, (i) the unaudited pro forma consolidated total assets of the Enlarged Group would increase by approximately HK$26,796,000 to approximately HK$1,031,498,000; and (ii) the unaudited pro forma consolidated total liabilities of the Enlarged Group would increase by approximately HK$26,796,000 to approximately HK$184,422,000. As the Consideration for the Acquisition will be the net asset value of the Target as shown in the Pro Forma Completion Accounts, the net asset value of the Enlarged Group will remain the same at approximately HK$847,076,000 assuming the Completion had taken place on 31 December 2015.

Immediately after Completion, the turnover of the Enlarged Group will increase by approximately HK$4,440,000 per year, representing the yearly rental income of the Properties during the initial term of the tenancy under the Tenancy Agreement.

Upon Completion, the financial results of the Target will be consolidated with those of the Group and the earnings of the Group will be affected by the performance of the Target and the fair value gain/loss on the Properties. Further details of the financial effect of the Acquisition on the earnings and the assets and liabilities of the Group together with the basis in preparing the unaudited pro forma financial information are set out in Appendix III to this circular.

I – 4

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(1) ACCOUNTANTS’ REPORT ON SUPREME CYCLE INC. AND ITS SUBSIDIARIES

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong.

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20 July 2016

The Directors

Neway Group Holdings Limited

Dear Sirs/Madams,

We set out below our report on the financial information (the “Financial Information”) relating to Supreme Cycle Inc. (“SCI”) and its subsidiaries (hereinafter collectively referred to as the “SCI Group”) for each of the three years ended 30 June 2013, 2014, 2015 and the nine months ended 31 March 2016 (the “Relevant Periods”), for inclusion in the circular of Neway Group Holdings Limited (“the Company”) dated 20 July 2016 (the “Circular”) in connection with the proposed acquisition of entire issued share capital of SCI.

SCI was incorporated in the British Virgin Islands as a limited liability company and acts as an investment holding company. The registered address of SCI is Sea Meadow House, Blackburne Highway, Road Town, Tortola, British Virgin Islands. SCI is principally engaged in property investment in Hong Kong.

Particulars of the SCI’s subsidiaries at the date of this report are as follows:

	Place and		Attributable equity	Attributable equity	interest of	the SCI Group	as at
Name of	date of	Issued and full		30 June		31 March	the date of
subsidiary	incorporation	paid share capital	2013	2014	2015	2016	this report	Principal activities
Cool Dragon	Hong Kong	HK$10,000	100%	100%	100%	100%	–	Property investment in
Hong Kong Limited	16 April 2010							Hong Kong
(“Cool Dragon”)
Coolstar International	Hong Kong	HK$10,000	100%	100%	100%	100%	–	Property investment in
Limited (“Coolstar”)	26 January 2005							Hong Kong

Note: On 13 April 2016, SCI disposed of the entire equity interest in Cool Dragon and Coolstar at a consideration of HK$2 to two related companies.

II – 1

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

All the companies comprising the SCI Group have adopted 30 June as their financial year end date. All subsidiaries are directly held by SCI.

We have acted as the statutory auditor of SCI and its subsidiaries for the years ended 30 June 2013, 2014 and 2015. The statutory financial statements for years ended 30 June 2013, 2014 and 2015 of SCI and its subsidiaries are prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

For the purpose of this report, the director of SCI has prepared the consolidated financial statements of SCI Group for the Relevant Periods in accordance with HKFRSs issued by HKICPA (thereinafter referred to as the “Underlying Financial Statements”). We have undertaken an independent audit of the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

We also examined the Underlying Financial Statements in accordance with Auditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended by the HKICPA.

The Financial Information of SCI Group for the Relevant Periods set out in this report has been prepared from the Underlying Financial Statements. No adjustments have been made to the Underlying Financial Statements in preparation of this report for inclusion in the Circular.

The Underlying Financial Statements are the responsibility of the director of SCI. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the financial position of the SCI Group as at 30 June 2013, 2014 and 2015 and 31 March 2016, and of the financial performance and consolidated cash flows of the SCI Group for the Relevant Periods.

II – 2

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

The comparative consolidated statement of profit or loss and other comprehensive income, consolidated statement of cash flows and consolidated statement of changes in equity of the SCI Group for the nine months ended 31 March 2015 together with the notes thereon have been extracted from the SCI Group’s unaudited financial information for the same period (the “31 March 2015 Financial Information”) which was prepared by the director of SCI solely for the purpose of this report. We have reviewed the 31 March 2015 Financial Information in accordance with the Hong Kong Standard of Review Engagements 2410 “Review of interim financial information performed by the independent auditor of the entity” issued by the HKICPA. Our review of the 31 March 2015 Financial Information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the 31 March 2015 Financial Information. Based on our review, nothing has come to our attention that causes us to believe that the 31 March 2015 Financial Information is not prepared, in all material respects, in accordance with the accounting policies consistent with those used in the preparation of the Financial Information in accordance with HKFRSs.

II – 3

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(A) FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

NOTES Revenue 5 Other income Fair value change in investment properties 12 Administrative expenses Finance costs 7 Profit (loss) before taxation 8 Taxation (charge) credit 9 Profit (loss) and total comprehensive income (expenses) for the year/period	Year ended 30 June 2013 2014 2015 HK$’000 HK$’000 HK$’000 12,770 19,858 21,738 4 2 – 100,595 11,000 15,543 (699) (1,196) (512) (2,472) (3,137) (3,077) 110,198 26,527 33,692 (173) 1,091 (96) 110,025 27,618 33,596	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) 16,428 16,061 – 265 12,300 (18,000) (277) (302) (2,169) (2,509) 26,282 (4,485) (263) 318 26,019 (4,167)	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) 16,428 16,061 – 265 12,300 (18,000) (277) (302) (2,169) (2,509) 26,282 (4,485) (263) 318 26,019 (4,167)
			(4,485) 318
			(4,167)

II – 4

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

NOTES Non-current assets Plant and equipment 11 Investment properties 12 Deferred tax assets 13 Deposits for addition to investment properties Current assets Deposits, prepayments and other receivables 14 Amount due from a related company 15 Amount due from a related party 15 Bank balances and cash 16 Assets classified as held for sale 21 Current liabilities Other payables and accrued charges 17 Amount due to a related company 15 Amount due to immediate holding company 19 Tax payable Bank borrowings 18 Liabilities associated with assets held for sale 21 Net current (liabilities) assets Total assets less current liabilities	2013 HK$’000 305 602,000 47 – 602,352 1,023 1,636 – 9,733 12,392 – 12,392 6,689 10 255,203 503 163,576 425,981 – 425,981 (413,589) 188,763	SCI Group As at 30 June 2014 2015 HK$’000 HK$’000 170 90 613,000 631,000 1,578 1,978 2,457 – 617,205 633,068 1,998 1,193 1,435 1,434 – 49,454 463 13,317 3,896 65,398 – – 3,896 65,398 8,588 6,426 550 182 245,234 245,234 609 500 149,773 196,190 404,754 448,532 – – 404,754 448,532 (400,858) (383,134) 216,347 249,934	As at 31 March 2016 HK$’000 36 111,000 47 –
			111,083
			64 10 62,865 2,638
			65,577 510,977
			576,554
			931 3,210 245,234 328 187,508
			437,211 5,163
			442,374
			134,180
			245,263

II – 5

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

Non-current liabilities Deferred tax liabilities 13 Net assets Capital and reserve Share capital 20 Retained profits Equity attributable to owners of SCI NOTES	547 188,216 – 188,216 188,216 2013 HK$’000	513 504 215,834 249,430 – – 215,834 249,430 215,834 249,430 SCI Group As at 30 June 2014 2015 HK$’000 HK$’000	– As at 31 March 2016 HK$’000
			245,263
			– 245,263
			245,263

II – 6

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

At 1 July 2012 Profit and total comprehensive income for the year At 30 June 2013 Profit and total comprehensive income for the year At 30 June 2014 Profit and total comprehensive income for the year At 30 June 2015 Loss and total comprehensive expenses for the period At 31 March 2016 At 1 July 2014 Profit and total comprehensive income for the period (unaudited) At 31 March 2015 (unaudited)	Share capital HK$’000 – – – – – – – – – – – –	Retained profits HK$’000 78,191 110,025 188,216 27,618 215,834 33,596 249,430 (4,167) 245,263 215,834 26,019 241,853	Total HK$’000 78,191 110,025 188,216 27,618 215,834 33,596 249,430 (4,167) 245,263 215,834 26,019 241,853

II – 7

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

CONSOLIDATED STATEMENTS OF CASH FLOWS

OPERATING ACTIVITIES Profit (loss) before taxation Adjustments for: Depreciation of property, plant and equipment Finance costs Interest income Fair value change in investment properties Operating cash flows before movements in working capital (Increase) decrease in deposits, prepayment and other receivable Increase (decrease) in other payables and accrued charges Net cash generated from operations Income tax paid NET CASH FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Purchases of investment properties Deposits paid for addition to investment properties Advances to related company/party Repayments from related company/party NET CASH USED IN INVESTING ACTIVITIES	Year ended 30 June 2013 2014 2015 HK$’000 HK$’000 HK$’000 110,198 26,527 33,692 45 135 80 2,472 3,137 3,077 (4) (2) – (100,595) (11,000) (15,543) 12,116 18,797 21,306 (915) (975) 805 5,046 1,899 (2,162) 16,247 19,721 19,949 (320) (368) (614) 15,927 19,353 19,335 4 2 – (291,405) – – – (2,457) – (1,636) – (49,453) – 201 – (293,037) (2,254) (49,453)	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) 26,282 (4,485) 54 54 2,169 2,509 – – (12,300) 18,000 16,205 16,078 (126) 564 (1,801) (981) 14,278 15,661 (612) (500) 13,666 15,161 – – – – – – (49,322) (15,845) – – (49,322) (15,845)	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) 26,282 (4,485) 54 54 2,169 2,509 – – (12,300) 18,000 16,205 16,078 (126) 564 (1,801) (981) 14,278 15,661 (612) (500) 13,666 15,161 – – – – – – (49,322) (15,845) – – (49,322) (15,845)
			16,078 564 (981)
			15,661 (500)
			15,161
			– – – (15,845) –
			(15,845)

II – 8

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

FINANCING ACTIVITIES Interest paid New bank borrowings raised Repayment of bank borrowings Advances from a related company Repayment to a related company Repayment to immediate holding company NET CASH FROM (USED IN) FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR/PERIOD CASH AND CASH EQUIVALENTS AT END OF THE YEAR/PERIOD REPRESENTED BY Bank balances and cash	Year ended 30 June 2013 2014 2015 HK$’000 HK$’000 HK$’000 (2,472) (3,137) (3,077) 120,000 – 58,143 (6,196) (13,803) (11,726) 168,285 540 – – – (368) – (9,969) – 279,617 (26,369) 42,972 2,507 (9,270) 12,854 7,226 9,733 463 9,733 463 13,317	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) (2,169) (2,509) 58,145 – (8,858) (8,682) – 3,200 (320) – – – 46,798 (7,991) 11,142 (8,675) 463 13,317 11,605 4,642	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) (2,169) (2,509) 58,145 – (8,858) (8,682) – 3,200 (320) – – – 46,798 (7,991) 11,142 (8,675) 463 13,317 11,605 4,642
			(7,991)
			(8,675) 13,317
			4,642

II – 9

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

NOTES TO FINANCIAL INFORMATION

1. General

SCI is an investment holding company and principally engaged in property investment in Hong Kong. The principal activity of the SCI Group is property investment in Hong Kong.

Preserve Capital Realty Limited is the immediate holding company, a limited company incorporated in the British Virgin Islands.

The Financial Information is presented in HK$, which is also the functional currency of SCI.

2. Application of Hong Kong Financial Reporting Standards (“HKFRSs”)

For the purpose of preparing and presenting the Financial Information for the Relevant Periods, the SCI Group has consistently applied HKFRSs issued by the HKICPA that are effective for the SCI Group’s annual accounting periods beginning on 1 July 2015 throughout the Relevant Periods.

The SCI Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 9	Financial instruments2
HKFRS 15	Revenue from contracts with customers2
HKFRS 16	Leases4
Amendments to HKFRS 10,	Investment Entities: Apply the consolidation
HKFRS 12 and HKAS 28	exception1
Amendments to	Sale or contribution of assets between an investor
HKFRS 10 and HKAS 28	and its associate or joint venture3
Amendments to HKFRS 11	Accounting for acquisitions fo interests in
	joint operations1
Amendments to HKFRS 15	Clarifications to HKFRS 15 Revenue from Contracts
	with Customers2
Amendments to HKAS 1	Disclosure Initiative1
Amendments to HKAS 7	Disclosure Initiative5
Amendments to HKAS 12	Recognition of Deferred Tax Assets for Unrealised
	Losses5
Amendments to HKAS 16 and	Clarification of acceptable methods of depreciation
HKAS 28	and amortisation1
Amendments to HKAS 16 amd	Agriculture: Bearer plants1
HKAS 11
Amendments to HKFRSs	Annual improvements to HKFRSs 2012-2014 cycle1

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

1 Effective for annual periods beginning on or after 1 January 2016.

2 Effective for annual periods beginning on or after 1 January 2018.

3 Effective for annual periods to be determined.

4 Effective for annual periods beginning on or after 1 January 2019.

5 Effective for annual periods beginning on or after 1 January 2017.

HKFRS 15 Revenue from contracts with customers

In July 2014, HKFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. HKFRS 15 will supersede the current revenue recognition guidance including HKAS 18 “Revenue”, HKAS 11 “Construction contracts” and the related Interpretations when it becomes effective.

The core principle of HKFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition:

• Step 1: Identify the contract(s) with a customer

• Step 2: Identify the performance obligations in the contract

• Step 3: Determine the transaction price

• Step 4: Allocate the transaction price to the performance obligations in the contract

• Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under HKFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in HKFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by HKFRS 15. However, the director of SCI considered that it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

The director of SCI anticipates that the application of other new and revised HKFRSs will have no material impact on the Financial Information.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

3. Significant accounting policies

The Financial Information has been prepared on the historical cost basis, except for investment properties that are measured at fair values at the end of each reporting period, as appropriate, and in accordance with HKFRSs issued by the HKICPA. In addition, the Financial Information includes the applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the SCI Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in this Financial Information is determined on such a basis, except for leasing transactions that are within the scope of Hong Kong Accounting Standards (“HKAS”) 17 “Leases”, and measurements that have some similarities to fair value but are not fair value, such as value in use in HKAS 36 “Impairment of assets”.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The principal accounting policies adopted are set out below.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Basis of consolidation

The Financial Information incorporates the financial statements of SCI and its subsidiaries. Control is achieved when SCI:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The SCI Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the SCI Group obtains control over the subsidiary and ceases when the SCI Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year/period are included in the consolidated statements of profit or loss and other comprehensive income from the date the SCI Group gains control until the date when the SCI Group ceases to control the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the SCI Group’s accounting policies.

All intra-group assets, liabilities, equity, income, expenses and cash flows relating to transactions between members of the SCI Group are eliminated in full on consolidation.

Revenue recognition

Revenue is measured at fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business.

SCI Group’s policy for the recognition of revenue from operating leases is described in the accounting policy for leasing below.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the SCI Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Government grants

Government grants are not recognised until there is reasonable assurance that the SCI Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the SCI Group recognises as expenses the related costs for which the grants are intended to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the SCI Group with no future related costs are recognised in profit or loss on a systematic and rational basis in the period in which they become receivable.

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values. All of the SCI Group’s property interests held under operating leases to earn rentals or for capital appreciation purposes are classified and accounted for as investment properties and are measured using fair value model. Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the period in which the property is derecognised.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Plant and equipment

Plant and equipment are stated in the consolidated statements of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Depreciation is recognised so as to write off the cost of items of plant and equipment over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for a prospective basis.

An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Impairment loss on tangible assets

At the end of each reporting period, the SCI Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the SCI Group estimates the recoverable amount of the cashgenerating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cashgenerating units, or otherwise they are allocated to the smallest group of cashgenerating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the SCI Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the SCI Group will retain a non-controlling interest in its former subsidiary after the sale.

Immediately before the initial classification as held for sale, the noncurrent assets are measured in accordance with applicable HKFRSs. Subsequent to classification, non-current assets that are within the scope of the measurement requirements of HKFRS 5 “Non-current assets held for sale and discontinued operations” are measured at the lower of their previous carrying amount and fair value less costs of disposal.

On disposal of the non-current assets, any gain or loss (calculated as the difference between the net disposal proceeds and the carrying amount of the noncurrent assets) is included in the profit or loss in the period in which the assets are disposed of.

Financial instruments

Financial assets and financial liabilities are recognised on the consolidated statements of financial position when a group entity becomes a party to the contractual provisions of the instrument.

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial instruments at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

The SCI Group’s financial assets are loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including deposits and other receivables, bank balances and cash and amounts due from a related company and a related party) are measured at amortised cost using the effective interest method, less any identified impairment (see accounting policy on impairment of financial assets below).

Impairment of loans and receivables

Loans and receivables are assessed for indicators of impairment at the end of each reporting period. Loans and receivables are considered to be impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the loans and receivables, the estimated future cash flows of the loans and receivables have been affected.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

The amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets. Subsequent recoveries of amounts previously written off are credited to profit or loss.

If, in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the group entities are recognised at the proceeds received, net of direct issue costs.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest expense is recognised on an effective interest basis for debt instruments.

Financial liabilities

The SCI Group’s financial liabilities including other payables and accrued charges, bank borrowings, amounts due to a related company and immediate holding company are subsequently measured at amortised cost, using the effective interest method.

Derecognition

The SCI Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire.

On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

The SCI Group derecognises financial liabilities when, and only when, the SCI Group’s obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Retirement benefits costs

Payments to Mandatory Provident Fund Scheme (“MPF Scheme”) as defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The SCI Group as lessor

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease.

Taxation

Taxation represents the sum of the income tax expense currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year/period. Taxable profit differs from ‘profit before taxation’ as reported in the consolidated statements of profit or loss and other comprehensive income because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The SCI Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of each reporting period.

Deferred tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business consolidation) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of each reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the SCI Group expects, at the end of each reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred tax liabilities or deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

Current and deferred tax are recognised in profit or loss.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised as and included in profit or loss under the finance costs in the consolidated statements of profit or loss and other comprehensive income in the period in which they are incurred.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

4. Key sources of estimation uncertainty

In the application of the SCI Group’s accounting policies, which are described in note 3, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following is the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of each reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Estimated of fair value of investment properties

Investment properties are stated at fair value based on the valuation performed by independent professional valuers. In determining the fair value, the valuers have based on a method of valuation which involves certain estimates of market conditions such as market evidence of transaction prices for similar properties in the same locations and conditions. In relying on the valuation report, the director of SCI has exercised their judgment and are satisfied that the assumptions used in the valuation is reflective of the current market conditions and the current condition of the properties. Changes to these assumptions would result in changes in the fair values of the SCI Group’s investment properties and the corresponding adjustments to the amount of fair value gain or loss of the SCI Group’s investment properties reported in the consolidated statement of profit or loss and other comprehensive income. As at 30 June 2013, 2014 and 2015 and 31 March 2016, the carrying amount of investment properties is HK$602,000,000, HK$613,000,000, HK$631,000,000 and HK$613,000,000, respectively.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

5. Revenue and segmental information

Revenue represents the rental income received and receivable from tenants for the Relevant Periods.

The SCI Group’s operations is solely derived from rental income in Hong Kong during the Relevant Periods. For the purpose of resources allocation and performance assessment, the chief operating decision maker (i.e. the director of the SCI) reviews the overall results and financial position of the SCI Group as a whole prepared based on same accounting policies set out in note 3. Accordingly, the SCI Group has only one single operating segment and no further analysis of this single segment is presented.

Geographical information

No geographical segment information is presented as the SCI Group’s revenue are all derived from Hong Kong based on the location of services delivered and the SCI Group’s plant and equipment and investment properties are all located in Hong Kong by physical location of assets.

Information about major customers

Revenue from customers of the year/period contributing over 10% of total sales of the SCI Group are as follows:

				Nine months ended	Nine months ended
	Year	ended 30 June		31 March
	2013	2014	2015	2015	2016
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(unaudited)
Neway Karaoke Box Limited
(“Neway Karaoke”) and
its subsidiaries	12,770	12,400	11,560	8,355	9,710
Customer A	–	7,458	10,178	8,073	6,351

Note: Neway Karaoke is indirectly owned by a discretionary trust for the benefits of Dr. Suek Chai Kit, Christopher and his family members. SCI is indirectly owned by a discretionary trust set up by Mr. Suek Ka Lun, Ernie, the son of Dr. Suek Chai Kit, Christopher, the beneficiaries of which include certain family member of Mr. Suek Ka Lun, Ernie.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

6. Director’s and employees’ emoluments

(a) Director’s and chief executive’s emoluments

During the Relevant Periods, the emoluments paid or payable by SCI Group to the director of SCI (“Director”) were as follows:

Year ended 30 June 2013 Fees Other emoluments Salaries and other benefits Retirement benefit scheme contributions Total emoluments Year ended 30 June 2014 Fees Other emoluments Salaries and other benefits Retirement benefit scheme contributions Total emoluments Year ended 30 June 2015 Fees Other emoluments Salaries and other benefits Retirement benefit scheme contributions Total emoluments	Leung Arwenmila (previously named as Ma Tik Man) (Note i) HK$’000 – – –
	–
	– – –
	–
	– – –
	–

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Nine months ended 31 March 2015 (unaudited) Fees Other emoluments Salaries and other benefits Retirement benefit scheme contributions Total emoluments Nine months ended 31 March 2016 Fees Other emoluments Salaries and other benefits (note) Retirement benefit scheme contributions Total emoluments	Leung Arwenmila (previously named as Ma Tik Man) (Note i) HK$’000 – – –
	–
	– – –
	–

Note: The salaries and other benefits shown above were mainly for his management services in connection with management of the affairs of the SCI Group.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Leung Arwenmila acts as the chief executive of the SCI Group.

During the Relevant Periods, no remuneration was paid by the SCI Group to the Director as an inducement to join or upon joining the SCI Group or as compensation for loss of office. The Director has not waived any remuneration during the Relevant Periods.

Note i: Ma Tik Man was re-named as Leung Arwenmila, with effective date on 30 July 2015.

(b) Employees’ emoluments

During the nine months ended 31 March 2016, the SCI Group only paid emoluments to Suek Ka Lun, Ernie, for his management services in connection with management of the affairs of the SCI Group. There is no other emolument paid/ payable during the Relevant Periods.

7. Finance costs

The amount represents finance costs on bank borrowings.

8. Profit (loss) before taxation

				Nine months ended	Nine months ended
	Year	ended 30 June		31 March
	2013	2014	2015	2015	2016
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
				(unaudited)
Profit (loss) before taxation has been
arrived at after charging (crediting):
Auditor’s remuneration	90	90	90	68	68
Director’s emoluments (note 6)	–	–	–	–	–
Bank interest income	(4)	(2)	–	–	–

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

9. Taxation (charge) credit

Hong Kong Profits Tax: Current year/period Deferred tax: Credit for the year/period (note 13)	Year ended 30 June 2013 2014 2015 HK$’000 HK$’000 HK$’000 (505) (474) (505) 332 1,565 409 (173) 1,091 (96)	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) (444) (328) 181 646 (263) 318	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) (444) (328) 181 646 (263) 318
			318

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for the Relevant Periods.

The taxation for the year/period can be reconciled to the profit (loss) before taxation as follows:

Profit (loss) before taxation Taxation at Hong Kong Profits Tax rate of 16.5% Tax effect of expenses not deductible for tax purposes Tax effect of income not taxable for tax purpose Others Taxation for the year/period	Year ended 30 June 2013 2014 2015 HK$’000 HK$’000 HK$’000 110,198 26,527 33,692 18,183 4,377 5,559 25 111 – (16,598) (1,815) (2,565) (1,783) (1,582) (3,090) (173) 1,091 (96)	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) 26,282 (4,485) 4,337 (740) – 2,970 (2,030) – (2,570) (1,912) (263) 318	Nine months ended 31 March 2015 2016 HK$’000 HK$’000 (unaudited) 26,282 (4,485) 4,337 (740) – 2,970 (2,030) – (2,570) (1,912) (263) 318
			(740) 2,970 – (1,912)
			318

10. Earnings per share

No earnings per share information is presented for the purpose of this report as its inclusions is not considered meaningful.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

11. Plant and equipment

COST At 1 July 2012, 30 June 2013, 30 June 2014, 30 June 2015 and 31 March 2016 ACCUMULATED DEPRECIATION At 1 July 2012 Provided for the year At 30 June 2013 Provided for the year At 30 June 2014 Provided for the year At 30 June 2015 Provided for the period At 31 March 2016 CARRYING AMOUNTS At 30 June 2013 At 30 June 2014 At 30 June 2015 At 31 March 2016	Leasehold improvements HK$’000 333 117 28 145 83 228 50 278 22 300 188 105 55 33	Air- conditioning and systems HK$’000 206 72 17 89 52 141 30 171 32 203 117 65 35 3	Total HK$’000 539
			189 45
			234 135
			369 80
			449 54
			503
			305
			170
			90
			36

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The above items of plant and equipment are depreciated on a straight-line basis at the rate of 20% per annum.

12. Investment properties

FAIR VALUE At 1 July 2012 Additions Increase in fair value of investment properties At 30 June 2013 Increase in fair value of investment properties At 30 June 2014 Additions Increase in fair value of investment properties At 30 June 2015 Decrease in fair value of investment properties Transfer to assets classified as held for sale At 31 March 2016	HK$’000 210,000 291,405 100,595 602,000 11,000 613,000 2,457 15,543 631,000 (18,000) (502,000) 111,000

The fair values of the investment properties at 30 June 2013, 2014 and 2015 and 31 March 2016 have been arrived at on the basis of a valuation carried out on those dates by Messrs. RHL Appraisal Limited on the premises owned by Cool Dragon and Coolstar and Messrs. Peak Vision Appraisal Limited on the premise owned by SCI. Both RHL Appraisal Limited and Peak Vision Appraisal Limited are independent qualified professional valuers not connected with the SCI Group, and are the members of the Hong Kong Institute of Surveyors.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The fair values of investment properties owned by Cool Dragon and Coolstar were determined based on direct comparison approach making reference to comparable market observable transactions of similar locations and conditions as available in the relevant market.

The fair value of the investment property owned by SCI was determined based on the income capitalisation approach, where the market rentals of all lettable units of the properties are assessed and discounted at the market yield expected by investors for this type of properties. The market rentals are assessed based on estimates of future cash flows, supported by the terms of existing lease and the market rentals of the similar properties in the neighbourhood. The capitalisation rate is determined by reference to the yields derived from analysing the sales transactions of similar properties and adjusted to take into account the market expectation from property investors to reflect factors specific to the SCI Group’s investment properties.

There has been no change from the valuation technique used during the Relevant Periods.

In estimating the fair value of the properties, the highest and best use of the properties is their current use.

At the end of each reporting period, the management of the SCI Group works closely with the independent qualified professional valuer to establish and determine the appropriate valuation techniques and inputs. Where there is a material change in the fair value of the assets, the causes of the fluctuations will be reported to the management of the SCI Group.

The fair value of investment properties as disclosed below are determined (in particular, the valuation techniques and input used), as well as the fair value hierarchy in which the fair value measurements are categorised (Levels 1 to 3) of the based on the degree to which significant inputs used in the fair value measurement is observable.

There were no transfers into or out of Level 3 during the year/period.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Information about fair value measurements using significant unobservable input

The following table shows the valuation techniques used in the determination of fair values for investment properties and unobservable inputs used in the valuation models.

Description At 30 June 2013 Premises owned by Coolstar and Cool Dragon Premise owned by SCI At 30 June 2014 Premises owned by Coolstar and Cool Dragon Premise owned by SCI

Fair value Fair value hierarchy Valuation techniques Unobservable inputs Range of significant inputs Relationship of inputs to fair value HK$’000 494,000 Level 3 Direct comparison approach Adjusting factors on location and condition Adjusting factors ranging from 80% to 118% The higher the adjusting factor, the higher the fair value 108,000 Level 3 Income approach (i) Capitalisation rate taking into account the capitalisation of rental income potential 4% The higher the capitalisation rate, the higher the fair value (i) Market rental HK$20 to HK$60 per gross floor area The higher the market price, the higher the fair value 602,000 501,000 Level 3 Direct comparison approach Adjusting factors on location and condition Adjusting factors ranging from 90% to 115% The higher the adjusting factor, the higher the fair value 112,000 Level 3 Income approach (i) Capitalisation rate taking into account the capitalisation of rental income potential 4% The higher the capitalisation rate, the higher the fair value (i) Market rental HK$21 to HK$63 per gross floor area The higher the market price, the higher the fair value 613,000

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

Description At 30 June 2015 Premises owned by Coolstar and Cool Premise owned by SCI At 31 March 2016 Premises owned by Coolstar and Cool Dragon (note) Premise owned by SCI

Fair value Fair value hierarchy Valuation techniques Unobservable inputs Range of significant inputs Relationship of inputs to fair value HK$’000 513,000 Level 3 Direct comparison approach Adjusting factors on location and condition Adjusting factors ranging from 90% to 115% The higher the adjusting factor, the higher the fair value 118,000 Level 3 Income approach (i) Capitalisation rate taking into account the capitalisation of rental income potential 4% The higher the capitalisation rate, the higher the fair value (i) Market rental HK$26 to HK$67 per gross floor area The higher the market price, the higher the fair value 631,000 502,000 Level 3 Direct comparison approach Adjusting factors on location and condition Adjusting factors ranging from 90% to 115% The higher the adjusting factor, the higher the fair value 111,000 Level 3 Income approach (i) Capitalisation rate taking into account the capitalisation of rental income potential 4% The higher the capitalisation rate, the higher the fair value (i) Market rental HK$22 to HK$67 per gross floor area The higher the market price, the higher the fair value 613,000

Note: The premises owned by Coolstar and Cool Dragon are transferred to assets classified as held for sale. Details refer to note 21.

All of the SCI Group’s interests in leasehold land held under operating leases in respect of completed properties and buildings to earn rentals or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

The investment properties are situated in Hong Kong.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

13. Deferred tax assets (liabilities)

For the purpose of presentation in the consolidated statements of financial positions, certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances for financial reporting purposes:

Deferred tax assets Deferred tax liabilities Deferred tax liabilities (included in liabilities associated with assets held for sale) (note 21)	2013 HK$’000 47 (547) – (500)	As at 30 June 2014 HK$’000 1,578 (513) – 1,065	2015 HK$’000 1,978 (504) – 1,474	As at 31 March 2016 HK$’000 2,597 – (477)
				2,120

The following are the major deferred tax assets (liabilities) recognised and movements thereon during the Relevant Periods:

At 1 July 2012 Credit to profit or loss At 30 June 2013 Credit (charge) to profit or loss At 30 June 2014 Credit (charge) to profit or loss At 30 June 2015 Credit (charge) to profit or loss At 31 March 2016	Accelerated accounting depreciation HK$’000 – 47 47 1,531 1,578 400 1,978 619 2,597	Accelerated tax depreciation HK$’000 (1,210) 180 (1,030) 129 (901) 130 (771) 98 (673)	Tax losses HK$’000 378 105 483 (95) 388 (121) 267 (71) 196	Total HK$’000 (832) 332
				(500) 1,565
				1,065 409
				1,474 646
				2,120

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

14. Deposits, prepayments and other receivables

Utilities deposits Prepayments Effective rent receivables	2013 HK$’000 87 936 – 1,023	As at 30 June 2014 HK$’000 87 11 1,900 1,998	2015 HK$’000 87 55 1,051 1,193	As at 31 March 2016 HK$’000 9 55 –
				64

15. Amount due from/to a related company/Amount due from a related party

Amount due from a related company

Amount is non-trade nature, unsecured, interest-free and is repayable on demand.

Details of amount due from a related company are as follows:

						Maximum amount outstanding	Maximum amount outstanding
								During
								nine months
				At				ended
		At 30 June		31 March	During	the year ended 30 June		31 March
	2013	2014	2015	2016	2013	2014	2015	2016
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Neway Karaoke	1,636	1,435	1,434	10	1,656	1,435	1,435	1,435

Amount due from a related party

Amount is non-trade nature, unsecured, interest-free and is repayable on demand.

Details of amount due from a related party are as follows:

						Maximum amount outstanding	Maximum amount outstanding
								During
								nine months
				At				ended
		At 30 June		31 March	During	the year ended 30 June		31 March
	2013	2014	2015	2016	2013	2014	2015	2016
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Suek Ka Lun, Ernie	–	–	49,454	62,865	–	–	49,454	65,298

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Amount due to a related company

The amount is due to Neway Karaoke and is non-trade nature, unsecured, interest-free and is repayable on demand.

16. Bank balances and cash

Bank balances and cash comprise cash held by the SCI Group and short term bank deposits with an original maturity of three months or less. As at 30 June 2013, 2014 and 2015 and 31 March 2016, the bank balances carry interest at prevailing market rate of 0.31%, 0.36%, 0.5% and 0.5% per annum, respectively.

17. Other payables and accrued charges

Rental deposits received Accrued charges	2013 HK$’000 6,521 168 6,689	As at 30 June 2014 HK$’000 6,460 2,128 8,588	2015 HK$’000 6,111 315 6,426	As at 31 March 2016 HK$’000 750 181
				931

Included in rental deposits received of HK$5,821,000, HK$3,939,000, HK$3,590,000 and HK$750,000 as at 30 June 2013 and 2015 and 31 March 2016, respectively, represented the deposits received from Neway Karaoke and its subsidiaries.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

18. Bank borrowings

Secured bank borrowings Carrying amounts of bank borrowings (shown under current liabilities) contain a repayment on demand clause: – within one year – in the second year – in the third to fifth years – more than five years	2013 HK$’000 163,576 8,803 8,981 28,041 117,751 163,576	As at 30 June 2014 HK$’000 149,773 8,681 8,834 27,597 104,661 149,773	2015 HK$’000 196,190 11,586 11,797 36,488 136,319 196,190	As at 31 March 2016 HK$’000 187,508
				11,611 11,795 36,488 127,614
				187,508

The bank borrowings are at floating rate which carry interest at Hong Kong Prime Rate less spread per annum and the effective interest rate is from 1.88% to 2.25%, 1.86% to 2.25%, 2.25% to 2.88% and 2.25% to 3.00% for the Relevant Period.

As at 30 June 2013, 2014 and 2015 and 31 March 2016, the bank borrowings are secured by the investment properties owned by the SCI Group with carrying amount of HK$494,000,000, HK$501,000,000, HK$513,000,000 and HK$613,000,000, respectively.

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APPENDIX II

19. Amount due to immediate holding company

The amount is non-trade nature, unsecured, interest-free and repayable on demand.

20. Share capital

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

Number of
ordinary
shares of
US$1 each HK$’000
Authorised:
At 1 July 2012, at 30 June 2013, 2014 and
2015 and at 31 March 2016 50,000 390
Issued and fully paid:
At 1 July 2012, at 30 June 2013, 2014 and
2015 and at 31 March 2016 1 –
----- End of picture text -----

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APPENDIX II

21. Assets classified as held for sale and liabilities associated with assets held for sale

As at 31 March 2016, management of SCI considered to dispose of Coolstar and Cool Dragon to a related company so as to streamline the business of SCI by holding an investment property in Yuen Long, Hong Kong. The Director determines the disposal is highly probable and thus, the relevant assets and liabilities of the Coolstar and Cool Dragon are classified to assets classified as held for sale and liabilities associated with assets classified as held for sale respectively in accordance with HKFRS 5 “Non-current assets held for sale and discontinued operations”. Details of the relevant assets and liabilities of the Coolstar and Cool Dragon as at 31 March 2016 are as follows:

Investment properties Deferred tax assets Deposits, prepayments and other receivables Amounts due from a related party Amount due from a related company Bank balances and cash Current liabilities Other payables and accrued charges Amount due to a related company Deferred tax liabilities	HK$’000 502,000 2,550 565 2,443 1,415 2,004
	510,977 4,514 172 477
	5,163

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

22. Operating lease commitments

SCI Group as lessor

All of the SCI Group’s properties held for rental purposes have committed tenants for the next one to two years. At the end of the reporting period, the SCI Group had contracted with tenants for the future minimum lease payments under noncancellable operating leases in respect of rented premises which fall due as follows:

Within one year In the second to fifth years inclusive	2013 HK$’000 8,160 10,550 18,710	As at 30 June 2014 HK$’000 18,244 14,994 33,238	2015 HK$’000 12,474 2,521 14,995	As at 31 March 2016 HK$’000 12,002 13,980
				25,982

23. Related party transactions

Apart from the rental deposits received as disclosed in note 17, the SCI Group had the following transactions with its related parties during the Relevant Periods:

					Nine months	ended
		Year	ended 30 June		31 March
Name of	Nature of
related company	transactions	2013	2014	2015	2015	2016
		HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
					(unaudited)
Neway Karaoke and	Rental income	12,770	12,400	11,560	8,355	9,710
its subsidiaries

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

24. Statement of financial position of SCI

Non-current assets Interests in subsidiaries Plant and equipment Investment properties Deferred tax assets Deposits for addition to investment properties Current assets Deposits, prepayments and other receivables Amounts due from subsidiaries Amount due from a related party Amount due from a related company Bank balances and cash	2013 HK$’000 20 305 108,000 47 – 108,372 17 404,349 – – 2,722 407,088	As at 30 June 2014 HK$’000 20 170 112,000 47 2,457 114,694 17 385,665 – – 409 386,091	2015 HK$’000 20 90 118,000 47 – 118,157 64 374,958 49,454 – 8,459 432,935	As at 31 March 2016 HK$’000 20 36 111,000 47 –
				111,103
				64 363,842 62,865 10 2,638
				429,419

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

Current liabilities Other payables and accrued charges Amount due to a related company Amount due to immediate holding company Tax payable Bank borrowings Net current liabilities Net assets Capital and reserve Share capital Retained profits Total	2013 HK$’000 873 10 255,203 503 163,576 420,165 (231,402) 95,295 – 95,295 95,295	As at 30 June 2014 HK$’000 2,660 379 245,185 609 149,773 398,606 (182,259) 102,179 – 102,179 102,179	2015 HK$’000 922 10 245,185 500 196,190 442,807 (192,873) 108,285 – 108,285 108,285	As at 31 March 2016 HK$’000 931 3,210 245,185 328 187,508
				437,162
				(191,899)
				103,360
				– 103,360
				103,360

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APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

At 1 July 2012 Profit and total comprehensive income for the year At 30 June 2013 Profit and total comprehensive income for the year At 30 June 2014 Profit and total comprehensive income for the year At 30 June 2015 Loss and total comprehensive expenses for the period At 31 March 2016 At 1 July 2014 Profit and total comprehensive income for the period (unaudited) At 31 March 2015 (unaudited)	Retained profits HK$’000 79,352 15,943 95,295 6,884 102,179 6,106 108,285 (4,925) 103,360 102,179 6,024 108,203

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

25. Capital risk management

The SCI Group manages its capital to ensure that entities in the SCI Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The SCI Group’s overall strategy remains unchanged throughout the Relevant Periods.

The capital structure of the SCI Group consists of debt balance and equity balance. Equity balance consists of equity attributable to owners of SCI, comprising share capital and retained earnings.

The management of the SCI Group reviews the capital structure on an on-going annual basis. As part of this review, the management of the SCI Group considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the management of the SCI Group, the SCI Group will balance its overall capital structure through the payment of dividends, new share issues and share repurchase as well as the issue of new debt.

26. Financial instruments

(a) Categories of financial instruments

Financial assets Loans and receivables (including bank balances and cash) Financial liabilities Amortised costs	2013 HK$’000 11,456 425,478	As at 30 June 2014 HK$’000 1,985 404,145	2015 HK$’000 64,292 448,032	As at 31 March 2016 HK$’000 65,522
				436,883

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(b) Financial risk management objectives and policies

The SCI Group’s major financial instruments include deposits, bank balances and cash, amounts due from/to related company and a related party, other payables and accrued charges, bank borrowings and amount due to immediate holding company. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below.

(i) Market risk

Interest rate risk

The SCI Group is also exposed to cash flow interest rate risk in relation to the SCI Group’s bank balances as well as variable-rate bank borrowings (note 18).

The SCI Group currently does not have interest rate hedging policy. However, management closely monitors its exposure to future cash flow interest rate risk as a result of change on market interest rate and will consider hedging changes in market interest rates should the need arise.

Sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rate risk on bank borrowings. The sensitivity analysis is prepared assuming the bank borrowings outstanding at the end of each reporting period were outstanding for the whole period. No sensitivity analysis is provided on bank balances as the management of SCI considers that the interest rate fluctuation on bank balances is minimal and the impact from the exposure to interest rate risk sensitivity is considered insignificant.

II – 44

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

A 50 basis points increase or decrease is used during the year/ period, which represents management’s assessment of the reasonably possible change in interest rates. A positive number below indicates a decrease in post-tax profit for the year/period where the interest rate had been 50 basis points higher and all other variables were held constant. For 50 basis points lower on interest rate, there would be an equal and opposite impact on the result for the year.

					As at
		As at 30 June			31 March
	2013		2014	2015	2016
	HK$’000		HK$’000	HK$’000	HK$’000
Decrease in post-tax profit
for the year/period	683		625	819	783

In the opinion of the management of SCI, the sensitivity analysis is unrepresentative of the interest rate risk as the exposure at the end of each reporting period does not reflect the exposure during the year/ period.

(ii) Credit risk

The SCI Group has significant concentration of credit risk on amounts due from a related company and a related party. The management of the SCI Group considers the counterparties with good credit worthiness based on its past repayment history and subsequent settlement. In view of this, management of SCI considered the credit risk is significantly reduced.

The credit risk on liquid funds of the SCI Group is limited because the counterparties are banks with good reputation and the SCI Group have limited exposure to any single financial institution.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(iii) Liquidity risk

SCI Group has net current liabilities of approximately HK$413,589,000, HK$400,858,000 and HK$383,134,000 as at 30 June 2013, 2014 and 2015 respectively. The Financial Information has been prepared on a going concern basis because the Director believes that SCI Group has sufficient funds to finance its current working capital requirements taking into account of the existing banking facilities and cashflows from operations. Also, taking into account the SCI Group’s financial position and the fair value of the investment properties of SCI Group, management does not believe that it is probable that the bank will exercise its discretionary right to demand immediate repayment. Management of the SCI Group believes that such bank borrowings of the SCI Group will be repaid after the end of reporting period in accordance with the scheduled repayment dates set out in the loan agreement. Furthermore, the immediate holding company agreed to provide adequate funds to enable the SCI Group to meet in full its financial obligations as they fell due for the forseeable future.

In the management of liquidity risk, the SCI Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the SCI Group’s operations and mitigates the effects of fluctuations in cash flows.

The following table details the SCI Group’s remaining contractual maturity for its non-derivative financial liabilities which has been drawn up based on the undiscounted cash flows of the non-derivative financial liabilities based on the earliest date on which the SCI Group can be required to pay. Specifically, borrowings with a repayment on demand clause are included in the earliest time band regardless of the probability of the financial institutions choosing to exercise their rights. The maturity dates for other financial liabilities are based on the agreed repayment dates.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curve at the end of the reporting period.

Effective interest rate % As at 30 June 2013 Non-derivative financial liabilities Other payables and accrued charges N/A Amount due to a related company N/A Bank borrowings 2.00 Amount due to immediate holding company N/A As at 30 June 2014 Non-derivative financial liabilities Other payables and accrued charges N/A Amount due to a related company N/A Bank borrowings 1.96 Amount due to immediate holding company N/A As at 30 June 2015 Non-derivative financial liabilities Other payables and accrued charges N/A Amount due to a related company N/A Bank borrowings 2.71 Amount due to immediate holding company N/A As at 31 March 2016 Non-derivative financial liabilities Other payables and accrued charges N/A Amount due to a related company N/A Bank borrowings 2.86 Amount due to immediate holding company N/A	On demand or less than 1 month HK$’000 – 10 163,576 255,203 432,167 – 550 149,773 245,234 395,557 – 182 196,190 245,234 441,606 – 3,210 187,508 245,234 435,952	1 – 3 months Total undiscounted cash flow HK$’000 HK$’000 6,689 6,689 – 10 – 163,576 – 255,203 6,689 425,478 8,588 8,588 – 550 – 149,773 – 245,234 8,588 404,145 6,426 6,426 – 182 – 196,190 – 245,234 6,426 448,032 931 931 – 3,210 – 187,508 – 245,234 931 436,883	Total carrying amount HK$’000 6,689 10 163,576 255,203
			425,478
			8,588 550 149,773 245,234
			404,145
			6,426 182 196,190 245,234
			448,032
			931 3,210 187,508 245,234
			436,883

II – 47

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

As at 30 June 2013, 2014 and 2015 and 31 March 2016, bank borrowings with a repayment on demand clause is included in the “On demand” time band in the above maturity analysis. As at 30 June 2013, 2014 and 2015 and 31 March 2016, the aggregate carrying amount of these bank borrowings of amounted to approximately HK$163,576,000, HK$149,773,000, HK$196,190,000 and HK$187,508,000, respectively. Taking into account the SCI Group’s financial position, management of SCI does not believe that it is probable that the banks will exercise its discretionary right to demand immediate repayment. Management of the SCI Group believes that such bank borrowings of the SCI Group will be repaid after the end of reporting period in accordance with the scheduled repayment dates set out in the loan agreement.

For the purpose of managing liquidity risk, management reviews the expected cash flow information of the SCI Group’s bank borrowings based on the scheduled repayment dates set out in the bank borrowing agreements as set out in the table below:

	Weighted
	average							Total	Total
	effective	Less than	1 –3	3	months	1 to 5	Over	undiscounted	carrying
	interest rate	1 month	months	to 1 year		years	5 years	cash flows	amount
	%	HK$’000	HK$’000	HK$’000		HK$’000	HK$’000	HK$’000	HK$’000
Bank borrowings:
As at 30 June 2013	2.00	998	2,993		7,983	47,898	110,792	170,664	163,576
As at 30 June 2014	1.96	961	2,882		7,687	46,119	114,941	172,590	149,773
As at 30 June 2015	2.71	1,286	3,864		10,281	61,141	145,992	222,564	196,190
As at 31 March 2016	2.86	1,286	3,851		10,252	60,988	134,996	211,373	187,508

(c) Fair value of the SCI Group’s financial assets and financial liabilities that are measured at amortised cost.

The management of the SCI Group estimates the fair value of its financial assets and financial liabilities measured at amortised cost using discounted cash flows analysis. The management of the SCI Group considers that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Financial Information approximate their fair values.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(B) SUBSEQUENT EVENTS

On 13 April 2016, SCI disposed of the entire equity interest in Cool Dragon and Coolstar at a consideration of HK$2 to two related companies.

(C) SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by SCI, any of its subsidiaries or the SCI Group in respect of any period subsequent to 31 March 2016.

Yours faithfully,

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

II – 49

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

• (2) MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET FOR EACH OF THE YEARS ENDED 30 JUNE 2013, 2014 AND 2015 AND THE NINE MONTHS ENDED 31 MARCH 2016

Set out below is the management discussion and analysis of the Target:

Key financial information of the Target (Note 1) :

				For the nine
	For year ended	For year ended	For year ended	months ended
	30 June 2013	30 June 2014	30 June 2015	31 March 2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)	(unaudited)
Revenue	3,600	3,600	3,600	2,700
Profit (before taxation)	2,893	2,902	2,608	2,059
Profit (after taxation)	2,485	2,427	2,103	1,732
Profit (loss) (after taxation)
(Note 2)	15,943	6,884	8,561	(4,925)
	As at	As at	As at	As at
	30 June 2013	30 June 2014	30 June 2015	31 March 2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)	(unaudited)
Total assets (Note 3)	515,460	500,785	551,092	540,522
Total liabilities	420,165	398,606	442,807	437,162
Total current assets	407,088	386,091	432,935	429,419
Total current liabilities	420,165	398,606	442,807	437,162

Notes:

1. Given that Coolstar and Cool Dragon were disposed of by the Target on 13 April 2016 and will not form part of the Enlarged Group, the figures disclosed in the table above represent the financial information of the Target only. For the consolidated financial information of the Target together with Coolstar and Cool Dragon, being its then subsidiaries for the relevant financial period, please refer to pages II-1 to II-49 of this appendix.

2. The amounts took into account the change in fair value of the Properties.

3. The total assets included the fair value of the Properties.

II – 50

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Breakdown of bank borrowings of the Target:

Bank borrowing pledged by the Properties Bank borrowings pledged by the properties owned by Coolstar and Cool Dragon Total	As at 30 June 2013 HK$’000 (audited) – 163,576 163,576	As at 30 June 2014 HK$’000 (audited) – 149,773 149,773	As at 30 June 2015 HK$’000 (audited) 28,516 167,674 196,190	As at 31 March 2016 HK$’000 (unaudited) 25,537 161,971
				187,508

(i) Financial and business performance

The Target is principally engaged in investment holding and property investment in Hong Kong. Its principal assets are the Properties which are held by the Target for investment purpose. For the years ended 30 June 2013, 2014 and 2015 and the nine months ended 31 March 2016, revenue of the Target was all generated from the leasing of the Properties which were used by the Tenant for operating as a karaoke outlet with a fixed monthly rental income of HK$300,000 throughout these periods.

After taken into account the change in fair value of the Properties, the profits of the Target for the years ended 30 June 2013, 2014 and 2015 amounted to approximately HK$15,943,000, HK$6,884,000 and HK$8,561,000 respectively and the loss of the Target for the nine months ended 31 March 2016 is HK$4,925,000. The loss made by the Target for the nine months ended 31 March 2016 was mainly due to a decrease in fair value of the Properties of HK$7 million (from HK$118 million as at 30 June 2015 to HK$111 million as at 31 March 2016).

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(ii) Liquidity, financial resources and capital structure

The following table sets out the Target’s current ratio and gearing ratio as at 30 June 2013, 2014 and 2015 and 31 March 2016:

			As at	As at	As at	As at
	Notes	30	June 2013	30 June 2014	30 June 2015	31 March 2016
Current ratio	(i)		1.0	1.0	1.0	1.0
Gearing ratio (%)	(ii)		81.5%	79.6%	80.4%	80.9%

Notes:

(i) Current ratio is calculated by dividing total current assets by total current liabilities as at the end of the year/period.

(ii) Gearing ratio is calculated by dividing total liabilities by total assets as at the end of the year/period and then multiplying it by 100%.

For the year ended 30 June 2013

The Target generally financed its operations through its internal resources generated from its operating activities. As at 30 June 2013, the Target held bank and cash balances of approximately HK$2,722,000 and bank borrowings of approximately HK$163,576,000 repayable in 2027 and carried a floating interest rate from 1.88% to 2.25%, which were secured by the pledge of the properties owned by the then subsidiaries of the Target, namely Cool Dragon and Coolstar. As at 30 June 2013, there was no bank borrowing which was secured by a pledge of the Properties owned by the Target.

For the year ended 30 June 2014

The Target generally financed its operations through its internal resources generated from its operating activities. As at 30 June 2014, the Target held bank and cash balances of approximately HK$409,000 and bank borrowings of approximately HK$149,773,000, repayable in 2027 and carried a floating interest rate from 1.86% to 2.25%, which were secured by the pledge of the properties owned by the then subsidiaries of the Target, namely Cool Dragon and Coolstar. As at 30 June 2014, there was no bank borrowing which was secured by a pledge of the Properties owned by the Target.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

For the year ended 30 June 2015

The Target generally financed its operations through its internal resources generated from its operating activities and through secured bank borrowing. As at 30 June 2015, the Target held (i) bank and cash balances of approximately HK$8,459,000; (ii) bank borrowings of approximately HK$28,516,000, repayable in 2022 and carried a floating interest rate from 2.25% to 2.88%, which were secured by the pledge of the Properties owned by the Target; and (iii) bank borrowings of approximately HK$167,674,000, repayable in 2027 and carried a floating interest rate from 2.25% to 2.28%, which were secured by the pledge of the properties owned by the then subsidiaries of the Target, namely Cool Dragon and Coolstar.

For the nine months ended 31 March 2016

The Target generally financed its operations through its internal resources generated from its operating activities and through secured bank borrowing. As at 31 March 2016, the Target held (i) bank and cash balances of approximately HK$2,638,000; (ii) bank borrowings of approximately HK$25,537,000, repayable in 2022 and carried a floating interest rate from 2.25% to 3.00%, which was secured by the pledge of the Properties owned by the Target; and (iii) bank borrowings of approximately HK$161,971,000, repayable in 2027 and carried a floating interest rate from 2.25% to 3.00%, which was secured by the pledge of the properties owned by the then subsidiaries of the Target, namely Cool Dragon and Coolstar.

(iii) Material investments, acquisitions or disposals

As disclosed above, the principal assets of the Target during the years ended 30 June 2013, 2014 and 2015 and the nine months ended 31 March 2016 were the Properties which it held for investment purpose. The Properties are situated in the centre of Yuen Long district which has a high population density. It is expected that the location of the Properties and the rapid development of Yuen Long district will bring desirable capital appreciation potential to the Group in the future.

During the years ended 30 June 2013, 2014 and 2015 and the nine months ended 31 March 2016, the Target had two wholly-owned subsidiaries, namely Coolstar and Cool Dragon, which were principally engaged in property investment in Hong Kong.

II – 53

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

On 13 April 2016, the Target disposed of all its equity interest in Coolstar, representing 100% of the entire issued share capital of Coolstar, and certain amount of shareholder’s loan owed to it by Coolstar amounting to HK$12,148,911 to a company owned by the Vendor for an aggregate consideration of HK$1.

On 13 April 2016, the Target disposed of all its equity interest in Cool Dragon, representing 100% of the entire issued share capital of Cool Dragon, and certain amount of shareholder’s loan owed to it by Cool Dragon amounting to HK$2,642,808 to a company owned by the Vendor for an aggregate consideration of HK$1.

Except for the above, the Target did not have any other material investment and there was no other material acquisition or disposal of subsidiaries and associated companies by the Target which took place during the years ended 30 June 2013, 2014 and 2015 and the nine months ended 31 March 2016.

(iv) Segmental information

The Target did not have any business segment apart from its investment in the Properties for the years ended 30 June 2013, 2014 and 2015 and the nine months ended 31 March 2016.

(v) Employee

The Target did not have any employees as at 30 June 2013, 30 June 2014, 30 June 2015 and 31 March 2016. The Target carried on its business activity of property investment and managed the Properties by the employees of other companies controlled by Mr. Suek.

(vi) Charge on assets

As at 30 June 2013 and 2014, none of the assets of the Target was charged or pledged as security for any banking facilities.

As at 30 June 2015 and 31 March 2016, the Target had pledged the Properties with an fair value of HK$118 million and HK$111 million respectively to secure the banking facilities granted to the Target.

(vii) Future plan for material investments or capital assets

The Target has no plan for material investments or capital assets for the 12 months ending 31 March 2017.

II – 54

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(viii) Foreign exchange exposure

Most of the transactions, assets and liabilities of the Target for the years ended 30 June 2013, 2014, 2015 and the nine months ended 31 March 2016 were denominated in Hong Kong dollars and the Target had minimal exposure to foreign currency risk throughout the years/period since the principal business of the Target was conducted and recorded in Hong Kong dollars.

(ix) Contingent liabilities

As at 30 June 2013, 2014 and 2015 and 31 March 2016, the Target had no material contingent liabilities.

II – 55

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(A) THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The unaudited pro forma financial information of the Enlarged Group has been prepared to illustrate the effect of the Acquisition on the Group’s financial position as at 31 December 2015 as if the Acquisition had taken place at 31 December 2015.

The unaudited pro forma consolidated statement of asset and liabilities of the Enlarged Group is prepared based on (i) the audited consolidated statement of financial position of the Group as at 31 December 2015 which has been extracted from the published annual report of the Company for the year ended 31 December 2015; and (ii) the audited consolidated statement of financial position of the Target as at 31 March 2016 as extracted from the accountants’ report set out in Appendix II to this circular.

The unaudited pro forma financial information of the Enlarged Group has been prepared by the Directors in accordance with paragraph 29 of Chapter 4 of the Listing Rules and is solely for the purpose to illustrate the financial position of the Enlarged Group as if the Acquisition had been completed on 31 December 2015.

The unaudited pro forma financial information of the Enlarged Group is prepared based on the aforesaid historical data after giving effect to the pro forma adjustments described in the accompanying notes. Narrative description of the pro forma adjustments of the proposed Acquisition that are (i) directly attributable to the transactions; and (ii) factually supportable, is summarised in the accompanying notes.

The unaudited pro forma financial information of the Enlarged Group has been prepared by the Directors based on certain assumptions, estimates and uncertainties for illustrative purposes only and because of its hypothetical nature, the unaudited pro forma financial information of the Enlarged Group may not purport to predict what the results and cash flows, or financial position of the Enlarged Group would have been upon completion of the Acquisition in any future periods or on any future dates.

The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the historical financial information of the Group as set out in Appendix I to this circular and the financial information of the Target as set out in Appendix II to this circular, and other financial information included elsewhere in this circular.

III – 1

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group

Non-current assets Property, plant and equipment Prepaid lease payments Investment properties Deferred tax assets Deposits for land use rights Available-for-sale investments Loans to joint ventures Interests in joint ventures Deposits paid for acquisition of property, plant and equipment Current assets Inventories and record masters Properties under development for sale Held-for-trading investments Derivative financial instrument Trade and other receivables, prepayments and deposits Loans to available-for-sale investees Loans receivable Prepaid lease payments Amounts due from related companies Amount due from a related party Tax recoverable Short-term bank deposits Cash and cash equivalents Assets classified as held for sale Current liabilities Trade and other payables and accruals Tax liabilities Amount due to a non-controlling shareholder of a subsidiary Amount due to a related company Amount due to immediate holding company Borrowings Liabilities associated with assets held for sale Net current assets (liabilities) Total assets less current liabilities Non-current liabilities Amount due to a related company Deferred tax liabilities Net assets	The Group as at 31 December 2015 HK$’000 Note 1 151,392 29,434 76,365 – 17,486 40,844 13,254 428 340 329,543 39,636 44,882 45,090 10,370 178,592 41,163 76,220 718 3,489 – 862 113,390 120,747 675,159 – 675,159 103,471 2,562 17,908 23,331 – 6,000 153,272 – 153,272 521,887 851,430 674 3,680 4,354 847,076	Target Group as at 31 March 2016 Disposal of Coolstar and Cool Dragon HK$’000 HK$’000 Note 2 Note 3	The Target HK$’000 HK$’000 HK$’000 HK$’000 Note 4 Note 5 Note 6 36 – 111,000 47 – – – – – 111,083 – – – – 64 – – – 10 (10) 62,865 (62,865) – – 2,638 (86,989) 65,577 – 65,577 931 328 – 3,210 (3,210) 245,234 (245,234) 187,508 (161,971) 437,211 – 437,211 (371,634) (260,551) – – – (260,551)	The Enlarged Group HK$’000 151,428 29,434 187,365 47 17,486 40,844 13,254 428 340
		36 – 111,000 47 – – – – – 111,083 – – – – 64 – – – 10 62,865 – – 2,638 65,577 510,977 510,977 576,554 931 328 – 3,210 245,234 187,508 437,211 5,163 (5,163) 442,374 134,180 245,263 – – – 245,263	36 – 111,000 47 – – – – –
			111,083	440,626
			– – – – 64 – – – 10 62,865 – – 2,638	39,636 44,882 45,090 10,370 178,656 41,163 76,220 718 3,489 – 862 113,390 36,396
			65,577 –	590,872 –
			65,577	590,872
			931 328 – 3,210 245,234 187,508	104,402 2,890 17,908 23,331 – 31,537
			437,211 –	180,068 –
			437,211	180,068
			(371,634)	410,804
			(260,551)	851,430
			– –	674 3,680
			–	4,354
			(260,551)	847,076

III – 2

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Notes to unaudited pro forma financial information

• (1) The audited consolidated statement of assets and liabilities of the Group as at 31 December 2015 was extracted from the published annual report of the Group for the year ended 31 December 2015.

• (2) The audited consolidated statement of assets and liabilities of the Target as at 31 March 2016 was extracted from the accountants’ report set out in Appendix II to this circular.

• (3) The adjustment represented the exclusion of assets and liabilities of Coolstar and Cool Dragon as the Target has disposed of its entire equity interest in Coolstar and Cool Dragon and certain shareholder’s loan owed to the Target at an aggregate consideration of HK$2 to two companies owned by the Vendor on 13 April 2016.

• (4) As at 31 March 2016, the bank borrowings granted under the BOC Facilities and HSBC Facilities not secured by the Properties amounted to HK$134,662,000 and HK$27,309,000, respectively, as extracted from the management accounts of the Target for the nine months ended 31 March 2016. Pursuant to the Sale and Purchase Agreement, it is a Condition Precedent that the BOC Facilities shall have been novated to Cool Dragon and/or Coolstar and the HSBC Facilities shall have been restructured to a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties. The entire BOC Facilities will be novated to Cool Dragon and Coolstar through the current accounts between them and the Target. Under the restructuring of the HSBC Facilities, it is intended by the management of the Group that the bank borrowings which is not secured by the Properties will be novated to Mr. Suek through the current account (“HSBC Facilities Novation”). As represented by the management of the Group and Mr. Suek, if the HSBC Facilities Novation is not approved by HSBC, and the Vendor and the Purchaser choose to proceed to Completion of the Sale and Purchase Agreement, Mr. Suek is willing to bear the relevant amount such that the amount to be borne by the Target under the HSBC Facilities will be reduced to a principal sum of not more than HK$27,429,600 and which shall only be secured by legal charge over the Properties. The current accounts with Cool Dragon, Coolstar and Mr. Suek will then be settled according to the Settlement Agreement (as defined below) as detailed in note (5) below.

The adjustment represented the exclusion of bank borrowings granted under the BOC Facilities and HSBC Facilities as if the aforementioned arrangements had been completed on 31 December 2015.

III – 3

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

• (5) Pursuant to the Sale and Purchase Agreement, it is a Condition Precedent that no amounts due from/to between the Related Parties (as defined in the Sale and Purchase Agreement) and the Target is outstanding at the Completion. As at 31 March 2016, the current accounts between the Related Parties and the Target comprise of amount due from a related company of approximately HK$10,000, amount due from a related party of approximately HK$35,556,000 (after novation of loan to Mr. Suek as disclosed in note (4) above), amount due to a related company of approximately HK$3,210,000 and amount due to the Vendor of approximately HK$379,896,000 (after novation of loans to Cool Dragon and Coolstar as disclosed in note (4) above) as extracted from the accountants’ report set out in Appendix II to this circular. Pursuant to the settlement agreement to be signed between the Target and the Related Parties (“Settlement Agreement”), amounts due from a related company and a related party will be settled with the current account with the Vendor, and the current accounts with a related company and the Vendor will be waived by the Related Parties before the Completion and considered as deemed contributions to the Target.

The adjustment represented the exclusion of all the current accounts between the Related Parties and the Target as if the settlement had been completed on 31 December 2015.

• (6) Pursuant to the Sale and Purchase Agreement, the Consideration is the amount of the net asset value of the Target as shown in the Pro Forma Completion Accounts which will be settled by cash.

Based on the above adjustments, the calculation of the estimated Consideration is set out below:

	HK$’000
Consideration:
Net liabilities of Target assuming that the disposal of Coolstar and
Cool Dragon had taken place as at 31 March 2016	(260,551)
Exclusion of bank borrowings granted from BOC Facilities (note (i))	134,662
Exclusion of current accounts between Related Parties and Target
(note (ii))	212,878
Total Consideration	86,989
Notes:

(i) The amount of bank borrowings granted under the BOC Facilities is disclosed in note (4) above.

• (ii) The amounts of current accounts between Related Parties and Target are disclosed in note (5) above.

III – 4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(B) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report, prepared for the purpose of inclusion in this circular, received from the Company’s reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong:

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To the Directors of Neway Group Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Neway Group Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 31 December 2015 and related notes as set out on pages III-1 to III-4 of the circular issued by the Company dated 20 July 2016 (the “Circular”). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on page III-1 of the Circular.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisition of entire equity interest of Supreme Cycle Inc. as at 31 December 2015 as if the transaction had taken place at 31 December 2015. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s financial statements for the year ended 31 December 2015, on which an annual report have been published.

Directors’ Responsibilities for the Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

III – 5

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the “Code of Ethics for Professional Accountants” issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements” issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the unaudited pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

III – 6

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 31 December 2015 would have been as presented.

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

III – 7

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Opinion

In our opinion:

• (a) the unaudited pro forma financial information has been properly compiled on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong 20 July 2016

III – 8

PROPERTY VALUATION REPORT

APPENDIX IV

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Peak Vision Appraisals Limited, an independent property valuer, in connection with its opinion of market value of the Properties as at 30 April 2016.

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20 July 2016

The Board of Directors Neway Group Holdings Limited Chung Tai Printing Group Building 11 Yip Cheong Street On Lok Tsuen Fanling New Territories Hong Kong

Dear Sirs,

Re: Units 21, 22, 23, 41 and 77 on 1st Floor and the whole of 3rd Floor, Hop Yick Commercial Centre (Phase I), No. 33 Hop Choi Street, Yuen Long, New Territories

In accordance with the instructions from Neway Group Holdings Limited (the “ Company ”) for us to value the captioned property interest in the Hong Kong Special Administrative Region (“ Hong Kong ”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for providing you with our opinion of value of the property interest as at 30 April 2016 (the “ Valuation Date ”) for public documentation purpose regarding the proposed acquisition by the Company.

IV – 1

APPENDIX IV

PROPERTY VALUATION REPORT

This letter, forming part of our valuation report, identifies the property interest being valued, explains the basis and methodology of our valuation and lists out the assumptions and title investigation, which we have made in the course of our valuation, as well as the limiting conditions.

Our valuation represents our opinion of market value which we would define to mean “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.

In valuing the property interest, which is to be held for investment by the Company, we have adopted the Investment Approach by taking into account the current rents passing and the reversionary income potential of the tenancies.

Our valuation has been made on the assumption that the owner sells the property on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which could serve to affect the value of the property. No forced sale situation in any manner is assumed in our valuation.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property interest or for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interest is free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

We have caused title searches to be made at the Land Registry in respect of the property. However, we have not searched the original documents to verify the ownership or to ascertain the existence of any amendments.

In valuing the property interest located in Hong Kong, of which the Government Lease has expired before 30 June 1997, we have taken into account the provisions contained in the Basic Law of the Hong Kong Special Administrative Region and the New Territories (Extension) Ordinance 1988 that such lease has been extended without any additional payment of premium until 30 June 2047 and that an annual rent equivalent to three per cent of the rateable value of the property will be charged from the date of extension.

IV – 2

APPENDIX IV

PROPERTY VALUATION REPORT

The property was inspected by Tony M. W. Cheng, a manager of our firm with 10 years of experience in the inspection of properties in Hong Kong and the PRC, during February 2016. We have inspected the exterior of the property. In the course of our inspections, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report whether the property is free from rot, infestation or any other defects. No tests were carried out on any of the services.

We have not carried out on-site measurements to verify the correctness of the floor area of the property but have assumed that the floor area shown on the documents and floor plans available to us are correct. Dimensions, measurements and areas included in the attached valuation certificates are based on information contained in the documents provided to us and are, therefore, only approximations.

We have relied to a considerable extent on the information provided by the Company and have accepted advice on such matters as planning approvals, statutory notices, easements, tenures, floor areas and all other relevant materials regarding the property.

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We were also advised by the Company that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information to reach an informed view, and we have no reason to suspect that any material information has been withheld.

In valuing the property interest, we have complied with all the requirements set out in Chapter 5 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and The HKIS Valuation Standards 2012 Edition issued by the Hong Kong Institute of Surveyors.

Unless otherwise stated, all monetary amounts stated in this report are in Hong Kong Dollars (HK$).

IV – 3

PROPERTY VALUATION REPORT

APPENDIX IV

We hereby confirm that we have neither present nor prospective interest in the Company, the property interest or the value reported herein.

Our Valuation Certificate is enclosed herewith.

Yours faithfully, For and on behalf of

Peak Vision Appraisals Limited Nick C. L. Kung

MRICS, MHKIS, RPS (G.P.), RICS Registered Valuer

Director

Note: Mr. Nick C. L. Kung is a RICS Registered Valuer and a Registered Professional Surveyor who has over 20 years of experience in the valuation of properties in Hong Kong and abroad.

IV – 4

PROPERTY VALUATION REPORT

APPENDIX IV

VALUATION CERTIFICATE

Property

Units 21, 22, 23, 41 and 77 on 1st Floor and the whole of 3rd Floor, Hop Yick Commercial Centre (Phase I), No. 33 Hop Choi Street, Yuen Long, New Territories

1,119/11,800th equal and undivided shares of and in Yuen Long Town Lot No. 292 (the “ Lot ”)

Description and tenure

Hop Yick Commercial Centre (Phase I) is a 4-storey commercial podium completed in about 1982 with a 9-storey residential building erected thereon (known as “Hop Yick House ( Phase II ) ”) completed in about 1985. It is located on the eastern side of Hop Choi Street near its junction with Hop Yick Road within Yuen Long, New Territories.

The property comprises 5 shop units on the 1st Floor and the whole of 3rd floor, accommodating 112 shop units and common areas, of Hop Yick Commercial Centre (Phase I) with a total saleable area of approximately 11,451 sq.ft. (1,063.82 sq.m.).

The Lot is held under New Grant No. YL2701 for a term of 99 years commencing from 1 July 1898 which has been statutorily extended to 30 June 2047.

Capital value in Particulars of existing state as at occupancy 30 April 2016

As at the Valuation Date, HK$111,000,000 the property was subject to a tenancy for a term of 3 years from 16 March 2016 to 15 March 2019 at a monthly rental of HK$370,000 exclusive of rates, Government rent, management fee and other outgoings, renewable at the option of the tenant for two further terms of three years with an increase in monthly rental in the range of 0% to 10% for the first renewal term of three years and at the prevailing market rent for the second renewal term of three years.

The government rent payable for the Lot is an amount equal to 3% of the rateable value from time to time of the Lot.

IV – 5

APPENDIX IV

PROPERTY VALUATION REPORT

Notes:

• i) The property comprises Units 21, 22, 23, 41 and 77 of 1st Floor and Units 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113 and common areas (i.e. the “ whole ”) of 3rd Floor of Hop Yick Commercial Centre (Phase I).

• ii) According to the Land Registry Search conducted on 6 April 2016:

• a) The registered owner of Units 21, 22, 23, 41 and 77 on 1st Floor of the property is Supreme Cycle Inc. vide Memorial No. 09071402860304 dated 18 June 2009 for a consideration of HK$1,050,000.

• b) The registered owner of the whole of 3rd Floor (except common areas) of the property is Supreme Cycle Inc. vide Memorial No. 09042902560192 dated 3 April 2009 for a consideration of HK$19,492,000.

• c) The registered owner of the Common Areas at 3rd Floor of the property is Supreme Cycle Inc. vide Memorial No. 09042902560207 dated 3 April 2009 for a consideration of HK$288,000.

• d) Units 21, 22, 23, 41 and 77 on 1st Floor and the whole of 3rd Floor (except common areas) of the property are subject to a Mortgage in favour of The Hongkong and Shanghai Banking Corporation Limited to secure all moneys in respect of general banking facilities vide Memorial No. 15021802590240 dated 5 February 2015.

• e) The Common Areas at 3rd Floor of the property is subject to a Mortgage in favour of The Hongkong and Shanghai Banking Corporation Limited to secure all moneys in respect of general banking facilities vide Memorial No. 15021802590263 dated 5 February 2015.

• iii) The property is zoned as “Residential (Group A)” under Draft Yuen Long Outline Zoning Plan No. S/YL/22 dated December 2015.

IV – 6

GENERAL INFORMATION

APPENDIX V

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

(i) Interests of Directors

As at the Latest Practicable Date, the interests 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 (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Long positions in the Shares and underlying Shares

			Percentage of
			the issued share
		Number of	capital of
Name of Director	Capacity	Shares held	the Company
Mr. Suek	Beneficiary of a trust(Note)	39,872,000	18.86%
Mr. Suek Chai Hong	Beneficial owner	700,000	0.33%
Dr. Ng Wai Kwan	Beneficial owner	8,000	0.01%
Mr. Wong Sun Fat	Beneficial owner	100,000	0.05%

Note: These Shares are beneficially owned by CNA Company Limited (“ CNA ”) which in turn is beneficially owned by the Preserve Capital Trust, a discretionary trust set up by Mr. Suek, the beneficiaries of which include certain family member of Mr. Suek and a charitable institution set up in Hong Kong.

V – 1

GENERAL INFORMATION

APPENDIX V

Long positions in the shares and underlying shares of associated corporations

At at the Latest Practicable Date, CNA beneficially owned deferred non-voting shares in the following subsidiaries of the Company:

	Number of deferred non-
Name of subsidiary	voting shares held
New Box Mini Storage Limited	2
Chung Tai Printing (China) Company Limited	100
Chung Tai Printing Company Limited	3,000
Profit Link Investment Limited	2
The Greatime Offset Printing Company, Limited	9,500

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interest and short positions in the shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including the interests and short positions in which they were deemed or taken to have under such provisions of the SFO); or (ii) which are required, pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein; or (iii) which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

V – 2

GENERAL INFORMATION

APPENDIX V

(ii) Interests of substantial Shareholders

As at the Latest Practicable Date, so far as was known to the Directors, the following persons, other than the Directors or chief executives of the Company, had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

			Percentage of
			the issued share
		Number of	capital of
Name of Shareholder	Capacity	Shares held	the Company
CNA1	Beneficial owner	39,872,000	18.86%
Fiducia Suisse SA	Trustee	39,872,0002	18.86%
David Henry	Interest in a controlled	39,872,0002	18.86%
Christopher Hill	corporation
Rebecca Ann Hill3	Interest of spouse	39,872,0002	18.86%

Notes:

1. CNA is beneficially owned by the Preserve Capital Trust, a discretionary trust set up by Mr. Suek, the beneficiaries of which include certain family member of Mr. Suek and a charitable institution set up in Hong Kong. Mr. Suek, an executive Director, is a director of CNA.

2. These 39,872,000 Shares duplicate with those held by CNA.

3. Spouse of Mr. David Henry Christopher Hill.

Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, there was no other person who had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

V – 3

GENERAL INFORMATION

APPENDIX V

3. MATERIAL CONTRACTS

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

• (a) the placing agreement dated 15 August 2014 entered into between the Company as issuer and One China Securities Limited as placing agent in relation to the placing of 203,860,000 ordinary shares of HK$0.05 each in the share capital of the Company at a price of HK$0.163 per placing share, further details of which are set out in the announcement of the Company dated 15 August 2014;

• (b) the placing agreement dated 25 September 2014 entered into between the Company as issuer and One China Securities Limited as placing agent in relation to the placing of 244,640,000 ordinary shares of HK$0.05 each in the share capital of the Company at a price of HK$0.156 per placing share, further details of which are set out in the announcement of the Company dated 25 September 2014;

• (c) the sale and purchase agreement dated 21 November 2014 entered into between Luxury Field Limited (“ Luxury Field ”), a wholly-owned subsidiary of the Company, as vendor and Jovial Investment Limited (“ Jovial Investment ”) as purchaser in relation to the disposal of the entire equity interest in Marble Arch Investments Limited (“ Marble Arch ”) at a consideration of RMB22,104,100 (equivalent to approximately HK$28,001,000), further details of which are set out in the announcement of the Company dated 21 November 2014;

• (d) the loan agreement dated 28 January 2015 entered into between Grand Prospects Finance International Limited (“ Grand Prospects ”), a wholly-owned subsidiary of the Company, as lender and an individual who was an Independent Third Party as borrower in relation to the provision of a loan in the principal amount of HK$20 million by Grand Prospects to the borrower at an interest rate of 3% per month for a period of one month, further details of which are set out in the announcement of the Company dated 28 January 2015;

• (e) the agreement for subscription of shares dated 11 February 2015 entered into between Neway Entertainment Limited, a wholly-owned subsidiary of the Company, as subscriber and Soliton Holdings Limited (“ Soliton ”) as issuer in relation to the subscription of 50 shares of US$1.00 each in the share capital of Soliton at a purchase price of US$1 million, further details of which are set out in the announcement of the Company dated 11 February 2015;

V – 4

GENERAL INFORMATION

APPENDIX V

• (f) the supplemental sale and purchase agreement dated 18 February 2015 entered into between Luxury Field and Jovial Investment in relation to, among others, the extension of the completion date of the disposal of the entire equity interest in Marble Arch, further details of which are set out in the announcement of the Company dated 18 February 2015;

• (g) the loan agreement dated 3 March 2015 entered into between Grand Prospects as lender and a company incorporated in Hong Kong which was an Independent Third Party as borrower in relation to the provision of a loan in the principal amount of HK$11 million by Grand Prospects to the borrower at an interest rate of 15% per annum for a period of 12 months, further details of which are set out in the announcement of the Company dated 3 March 2015;

• (h) the placing agreement dated 15 April 2015 entered into between the Company as issuer and Trinity Finance Investment Limited (currently known as China Demeter Securities Limited) as placing agent in relation to the placing of a maximum of 293,560,000 ordinary shares of HK$0.05 each in the share capital of the Company at a price of HK$0.146 per placing share, further details of which are set out in the announcement of the Company dated 15 April 2015;

• (i) the second supplemental sale and purchase agreement dated 30 April 2015 entered into between Luxury Field and Jovial Investment in relation to, among others, the further extension of the completion date of the disposal of the entire equity interests of Marble Arch, further details of which are set out in the announcement of the Company dated 30 April 2015;

• (j) the investment co-operation agreement dated 8 May 2015 entered into between 中星 國影（北京）文化傳媒有限公司 (“ Zhongxing Guoying ”), a company indirectly held by the Company through contractual arrangement, and a company incorporated in the PRC which is an Independent Third Party as co-presenter in relation to the investment, production and distribution of a film and pursuant to which Zhongxing Guoying agreed to invest RMB6,300,000 in the film, further details of which are set out in the announcement of the Company dated 8 May 2015;

• (k) the placing agreement dated 18 June 2015 entered into between the Company as issuer and Success Securities Limited as placing agent in relation to the placing of 352,280,000 ordinary shares of HK$0.05 each in the share capital of the Company at a price of HK$0.24 per placing share, further details of which are set out in the announcement of the Company dated 18 June 2015;

V – 5

GENERAL INFORMATION

APPENDIX V

• (l) the loan agreement dated 3 August 2015 entered into between Grand Prospects as lender and a company incorporated in Hong Kong which was an Independent Third Party as borrower in relation to the provision of a loan in the principal amount of HK$7 million by Grand Prospects to the borrower at an interest rate of 14% per annum for a period of 12 months, further details of which are set out in the announcement of the Company dated 3 August 2015;

• (m) the loan agreement dated 3 August 2015 entered into between Grand Prospects as lender and two individuals who were Independent Third Parties as borrowers in relation to the provision of a loan in the principal amount of HK$3 million by Grand Prospects to the borrowers at an interest rate of 14% per annum for a period of 12 months, further details of which are set out in the announcement of the Company dated 3 August 2015;

• (n) the subscription agreement dated 7 September 2015 entered into between Magic Mark Investments Limited (“ Magic Mark ”), a wholly owned subsidiary of the Company, as subscriber and Zhong Wei General Partner Limited (“ General Partner as the general partner of Zhong Wei Capital, L.P. (“ Partnership ”), an exempted limited partnership formed and registered in the Cayman Islands, in relation to the subscription of a limited partner interest in the Partnership by Magic Mark with a subscription amount of US$2 million, further details of which are set out in the announcement of the Company dated 7 September 2015;

• (o) the amended and restated limited partnership agreement dated 7 September 2015 entered into among the General Partner, Magic Mark, other limited partners to the Partnership and the initial limited partner of the Partnership in relation to the admission and management of the Partnership, further details of which are set out in the announcement of the Company dated 7 September 2015;

• (p) an agreement dated 7 December 2015 entered into between 濰坊櫻桃陣電子商務有 限公司（“ 濰坊櫻桃陣 ”）, a wholly-owned subsidiary of the Company, and 無錫櫻桃 陣信息技術有限公司, a subsidiary of 九櫻天下（北京）信息技術有限公司 (Vinux (Beijing) Information Technology Co., Ltd.) (“ Vinux ”), pursuant to which 濰坊櫻桃 陣 was authorised to act as an exclusive top-level operation of Vinux neighbourhood stores in Weifang city, Shandong province in the PRC for a term of two years (subject to fulfilment of certain performance targets), renewable for successive terms of one year each upon mutual agreement, further details of which are set out in the announcement of the Company dated 7 December 2015;

V – 6

GENERAL INFORMATION

APPENDIX V

• (q) the sale and purchase agreement dated 14 December 2015 entered into between Luxury Field and Jovial Investment in relation to the disposal of the entire equity interest in Marble Arch at a consideration of HK$25,039,012, further details of which are set out in the announcement of the Company dated 14 December 2015;

• (r) the supplemental shareholder’s loan agreement dated 26 February 2016 entered into between 四川英華房地產有限公司 (unofficial English translation being Sichuan Yinghua Real Estate Co., Ltd.) (“ Ying Wah ”) and 深圳市中星國隆投資 發展有限公司 (unofficial English translation being Shenzhen Zhongxing Guolong Investment Development Co., Ltd.) (“ Zhongxing Guolong ”), an indirect whollyowned subsidiary of the Company, in relation to the extension of the repayment date of the shareholder’s loan granted by Zhongxing Guolong in the aggregate principal amount of RMB30 million to Ying Wah, further details of which are set out in the announcement of the Company dated 26 February 2016;

• (s) the supplemental put option deed dated 26 February 2016 entered into between Dream Class Limited, a wholly-owned subsidiary of the Company, and Kwong Da Enterprises Limited in relation to the amendment of the put option period and the deferring of the Cut-off Date (as defined in the announcement of the Company dated 26 February 2016), further details of which are set out in the announcement of the Company dated 26 February 2016;

• (t) the share transfer agreement dated 13 April 2016 entered into between the Target as transferor and High Class Global Limited as transferee in relation to the disposal by the Target of its entire equity interest in Cool Dragon and certain shareholder’s loan owed to it by Cool Dragon for an aggregate consideration of HK$1;

• (u) the assignment of shareholder’s loan dated 13 April 2016 entered into among the Target, High Class Global Limited and Cool Dragon in relation to the assignment of the shareholder’s loan in the amount of HK$2,642,808 by the Target to High Class Global Limited;

• (v) the share transfer agreement dated 13 April 2016 entered into between the Target as transferor and Mass Gainer Limited as transferee in relation to the disposal by the Target of its entire equity interest in Coolstar and certain shareholder’s loan owed to it by Coolstar for an aggregate consideration of HK$1;

V – 7

GENERAL INFORMATION

APPENDIX V

• (w) the assignment of shareholder’s loan dated 13 April 2016 entered into among the Target, Mass Gainer Limited and Coolstar in relation to the assignment of the shareholder’s loan in the amount of HK$12,148,911 by the Target to Mass Gainer Limited; and

• (x) the Sale and Purchase Agreement.

4. DIRECTORS’ SERVICE CONTRACTS

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

5. QUALIFICATIONS AND CONSENTS OF EXPERTS

The following are the qualifications of the experts who have been named in this circular or have given opinions, letters or advice contained in this circular:

Name	Qualifications
Deloitte Touche Tohmatsu	Certified Public Accountants
Peak Vision Appraisals	independent property valuer
Limited
Messis Capital Limited	a licensed corporation under the SFO to carry out type 1
	(dealing in securities) and type 6 (advising on corporate
	finance) regulated activities

Each of Deloitte, Peak Vision and Messis Capital has given and has not withdrawn its written consent to the issue of this circular with inclusion herein of its letter or report and/or reference to its name, in the form and context in which they appear.

V – 8

GENERAL INFORMATION

APPENDIX V

As at the Latest Practicable Date, each of Deloitte, Peak Vision and Messis Capital did not have any interest in the share capital of any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, each of Deloitte, Peak Vision and Messis Capital did not have any interest, direct or indirect, in any assets which have been, since 31 December 2015, being the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to or were proposed to be acquired or disposed of or leased to any member of the Enlarged Group.

6. LITIGATION

So far as is known to the Directors, no member of the Enlarged Group was engaged in any litigation or claims of material importance and no litigation or claims of material importance was pending or threatened against any member of the Enlarged Group as at the Latest Practicable Date.

7. COMPETING INTERESTS

As at the Latest Practicable Date, the spouse of Mr. Suek was a shareholder of and participated in the management of a private company which was principally engaged in artiste management business (“ Competing Co .”). Although the Group and the Competing Co. are both engaged in the artiste management business in Hong Kong and the PRC, the types of artistes managed by the Group and the Competing Co. are different. While most of the artistes managed by the Group are Hong Kong or overseas singers and most of the management jobs undertaken by the Group are related to musical events, most of the artistes managed by the Competing Co. are actors who mainly focus on drama shooting. The Directors are of the view that the Group is capable of carrying on its business independently of, and at arm’s length with the Competing Co. as the events or functions organised for these two types of artistes and their target audience groups are different. Therefore, the artistes managed by the Group and the Competing Co. are often not substitute to one another and the Directors consider that there is no competition as such between the Group and the Competing Co. in this regard. The Company does not currently have any intention to inject the Competing Co. into the Group.

Save as aforesaid, as at the Latest Practicable Date, none of the Directors or any proposed Director nor their respective close associates had any interests in a business, which competes or is likely to compete either directly or indirectly with the business of the Group which would be required to be disclosed under Rule 8.10 of the Listing Rules.

V – 9

GENERAL INFORMATION

APPENDIX V

8. INTERESTS IN CONTRACTS OR ARRANGEMENTS

So far as is known to the Directors, Mr. Suek was considered to have a material interest in (i) the Acquisition contemplated under the Sale and Purchase Agreement by virtue of his connection with the Vendor; and (ii) the disposal of Coolstar and Cool Dragon by the Target at an aggregate consideration of HK$2 to two companies owned by the Vendor on 13 April 2016, the details of which is more particularly described on page 9 of this circular. Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or proposed Directors had any interest, direct or indirect, in any assets which have been, since 31 December 2015, being the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to or were proposed to be acquired or disposed of or leased to any member of the Enlarged Group.

Save for the following contracts, none of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which was significant in relation to the business of the Enlarged Group:

• (i) the master agreement dated 31 March 2015 entered into between Neway Entertainment Limited (a wholly-owned subsidiary of the Company) and Neway Karaoke Box Limited (which is indirectly wholly-owned by a discretionary trust for the benefit of Dr. Suek Chai Kit Christopher, who is the father of Mr. Suek, and his family members) in relation to the provision by Neway Entertainment Limited and its subsidiaries of promotion services and distribution of licensed content in the form of karaoke music videos to the karaoke outlets operated by Neway Karaoke Box Limited and its subsidiaries for a term commencing from 1 April 2015 to 31 December 2017, details of which are set out in the announcement of the Company dated 31 March 2015; and

• (ii) the Tenancy Agreement, the details of which are set out in the announcement of the Company dated 25 April 2016.

9. GENERAL

• (a) The registered office of the Company is at Clarendon House, Church Street, Hamilton, HM 11, Bermuda.

• (b) The principal place of business of the Company in Hong Kong is at Chung Tai Printing Group Building, 11 Yip Cheong Street, On Lok Tsuen, Fanling, New Territories, Hong Kong.

V – 10

GENERAL INFORMATION

APPENDIX V

• (c) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (d) The company secretary of the Company is Ms. Cheung Yuk Shan who is a fellow member of the Association of Chartered Certified Accountants and a member of the Hong Kong Institute of Certified Public Accountants.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (except Saturdays and public holidays) from 10:00 a.m. to 1:00 p.m. and from 2:00 p.m. to 5:00 p.m. at the principal place of business of the Company in Hong Kong from the date of this circular up to and including the date of the SGM:

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

• (b) the annual reports of the Company for the year ended 31 March 2014, the nine months ended 31 December 2014 and the year ended 31 December 2015;

• (c) the letter from the Independent Financial Adviser, the text of which is set out on pages 20 to 38 of this circular;

• (d) the accountants’ report on the Target Group issued by Deloitte as set out in Appendix II to this circular;

• (e) the unaudited pro forma financial information of the Enlarged Group issued by Deloitte as set out in Appendix III to this circular;

• (f) the valuation report on the Properties issued by Peak Vision as set out in Appendix IV to this circular;

• (g) the written consents referred to in the section headed “Qualifications and consents of experts” in this appendix; and

• (h) the material contracts referred to in the section headed “Material Contracts” in this appendix.

V – 11

NOTICE OF SGM

NEWAY GROUP HOLDINGS LIMITED 中星集團控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00055)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (“ Meeting ”) of Neway Group Holdings Limited (“ Company ”) will be held at 11:00 a.m. on Friday, 5 August 2016 at 5/F, Chung Tai Printing Group Building, 11 Yip Cheong Street, On Lok Tsuen, Fanling, New Territories, Hong Kong to consider and, if thought fit, pass the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT

• (a) the sale and purchase agreement dated 25 April 2016 entered into among Preserve Capital Realty Limited as vendor, We-do-best Limited, a wholly-owned subsidiary of the Company, as purchaser and Mr. Suek Ka Lun, Ernie as guarantor in respect of the Acquisition (as defined in the circular of the Company dated 20 July 2016 (“ Circular ”), a copy of which is marked “A” and signed by the chairman of the meeting for identification purpose has been tabled at the meeting) (“ Sale and Purchase Agreement ”) be and is hereby approved, confirmed and ratified and the transactions contemplated thereunder be and are hereby approved;

• (b) any one of the directors of the Company be and is hereby authorised to do all such acts and things, to sign and execute such documents or agreements or deeds on behalf of the Company and to do such other things and to take all such actions as he/she considers necessary, appropriate, desirable and expedient for the purposes of giving effect to or in connection with the Sale and Purchase Agreement and all transactions contemplated thereunder, and to agree to such variation, amendments or waiver or matters relating thereto (including any variation, amendments or waiver of such documents or any terms thereof, which are not fundamentally different from those as provided in the Sale and Purchase Agreement) as are, in the opinion of such director, in the interest of the Company and its shareholders as a whole.”

On behalf of the Board NEWAY GROUP HOLDINGS LIMITED Suek Ka Lun, Ernie Chairman

20 July 2016

• For identification purpose only

SGM – 1

NOTICE OF SGM

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

Principal place of business in Hong Kong: Chung Tai Printing Group Building 11 Yip Cheong Street On Lok Tsuen, Fanling New Territories Hong Kong

Notes:

• (1) A member of the Company entitled to attend and vote at the Meeting 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/her behalf. A proxy needs 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 of shares in respect of which each proxy is so appointed.

• (2) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. 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 Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

• (3) Completion and return of an instrument appointing a proxy will not preclude a member of the Company from attending and voting in person at the Meeting or any adjournment thereof and in such event the instrument appointing a proxy shall be deemed to be revoked.

• (4) As required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the above resolution will be decided by way of poll.

As at the date of this notice, the directors of the Company are Mr. Suek Ka Lun, Ernie (chairman) and Mr. Suek Chai Hong (chief executive officer) being the executive directors; Dr. Ng Wai Kwan, Mr. Chan Kwing Choi, Warren and Mr. Wong Sun Fat being the non-executive directors; and Mr. Tse Tin Tai, Ms. Lui Lai Ping, Cecily and Mr. Lee Kwok Wan, being the independent nonexecutive directors; and Mr. Lau Kam Cheong being the alternate director to Dr. Ng Wai Kwan.

SGM – 2