China New Consumption Group Limited - Capital/Financing Update 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

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

BEAVER GROUP (HOLDING) COMPANY LIMITED 永勤集團( 控股) 有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8275)

(I) PROPOSED SHARE CONSOLIDATION; (II) PROPOSED INCREASED IN AUTHORISED SHARE CAPITAL; AND (III) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE RIGHTS SHARES FOR EVERY TWO CONSOLIDATED SHARES HELD ON THE RECORD DATE

PROPOSED SHARE CONSOLIDATION

The Company proposes to implement the Share Consolidation on the basis that every ten (10) Existing Shares be consolidated into one (1) Consolidated Share. The Share Consolidation is conditional upon, among other things, the approval by the Shareholders by way of poll at the EGM.

No Shareholder is involved or interested in or has a material interest in the Share Consolidation and the transactions contemplated thereunder and therefore no Shareholder is required to abstain from voting in favour of the resolution to approve the Share Consolidation and the transactions contemplated thereunder by way of poll at the EGM.

Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company. If they are in any doubt, they should consult their professional advisers.

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PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

Subject to the Share Consolidation having become effective, the Company proposes to seek the approval of the Shareholders by way of ordinary resolution at the EGM for an increase in its authorised share capital from HK$10,000,000 divided into 100,000,000 Consolidated Shares to HK$100,000,000 divided into 1,000,000,000 Consolidated Shares by creating additional 900,000,000 Consolidated Shares.

PROPOSED RIGHTS ISSUE

The Company proposes to implement the Rights Issue on the basis of three (3) Rights Shares for every two (2) Consolidated Shares held on the Record Date at the Subscription Price of HK$0.21 per Rights Share, to raise HK$28.35 million by issuing 135,000,000 Rights Shares to the Qualifying Shareholders. The Rights Issue will only be available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders (if any).

There will be no excess application arrangements in relation to the Rights Issue and the Rights Issue is not underwritten. Any Unsubscribed Rights Shares and NQS Unsold Rights Shares will be placed to independent places on a best effort basis under the Compensatory Arrangements. Any of the Rights Shares which remain unsold in the market will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

The maximum net proceeds from the Rights Issue (after deducting the estimated expenses) are estimated to be approximately HK$25 million. The estimated net subscription price per Rights Share after deducting the related expenses of the Rights Issue is expected to be approximately HK$0.19. The Company intends to apply the net proceeds from the proposed Rights Issue as to (i) approximately HK$8 million for the repayment of overdue accounts payable; and (ii) approximately HK$17 million for the repayment of bank loans.

In order to be registered as members of the Company on the Record Date, all transfers of the Shares (together with the relevant share certificate(s) and/or instrument(s) of transfer) must be lodged with the Registrar at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by 4:30 p.m. on Friday, 12 March 2021.

The last day of dealing in the Consolidated Shares on cum-rights basis is Wednesday, 10 March 2021. The Consolidated Shares will be dealt with on an ex-rights basis from Thursday, 11 March 2021.

As at the date of this announcement, (i) C3J Development (the substantial Shareholder of the Company and being a company which is beneficially wholly owned by Mr. Tang) is beneficially interested in an aggregate of 187,000,000 Shares, representing approximately 20.78% of the issued share capital of the Company; and (ii) Hunter Corporate (the substantial Shareholder of the Company and being a company which is beneficially wholly owned by Mr. Chui) is beneficially interested in an aggregate of 183,000,000 Shares, representing 20.33% of the issued share capital of the Company.

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As at the date of this announcement, the Board has not received any information from any Shareholders (including C3J Development and Hunter Corporate) of their intention to take up the Rights Shares to be provisionally allotted to them.

According to Rule 10.31(1)(b) of the GEM Listing Rules, the Company will make arrangements to dispose of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares by offering the Unsubscribed Rights Shares and the NQS Unsold Rights Shares to independent placees, who and whose ultimate beneficial owner(s) shall be Independent Third Party(ies) for the benefit of the Shareholders to whom they were offered by way of the Rights Issue. Accordingly, on 25 January 2021 (after trading hours of the Stock Exchange), the Company entered into the Placing Agreement with the Placing Agent in relation to the placing of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares to independent placees on a best effort basis. For details of the Placing Agreement and the Compensatory Arrangements, please refer to the paragraph headed “Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements” in this announcement. The Placing Agent confirmed that it and its ultimate beneficial owner(s) (i) are not Shareholder; and (ii) they are Independent Third Parties.

GEM LISTING RULES IMPLICATIONS

As the Rights Issue will increase the issued share capital of the Company by more than 50%, the Rights Issue is subject to approval by the Independent Shareholders at the EGM by poll in accordance with the requirements of Rule 10.29(1) of the GEM Listing Rules and any Controlling Shareholder and their respective associates or where there is no Controlling Shareholder, the Directors (excluding independent non-executive Directors), the chief executive of the Company and their respective associates shall abstain from voting in favour of the resolution(s) relating to the Rights Issue.

As at the date of this announcement, the Company does not have any Controlling Shareholder. As such, Mr. Tang, being an executive Director, and his associates, including C3J Development which is the legal and beneficial owner of 187,000,000 Existing Shares, and Mr. Chui, being an executive Director, and his associates, including Hunter Corporate which is the legal and beneficial owner of 183,000,000 Existing Shares, shall abstain from voting at the EGM in favour of the Rights Issue in accordance with Rule 10.29(1) of the GEM Listing Rules. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save as disclosed above, none of the Directors or the chief executive of the Company or their respective associates are interested in any Existing Share.

The Rights Issue (whether on its own or when aggregated with the 2020 Rights Issue) does not result in a theoretical dilution effect of 25% or more. As such, the theoretical dilution impact of the Rights Issue is in compliance with Rule 10.44A of the GEM Listing Rules.

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GENERAL

The EGM will be convened and held at which resolutions will be proposed to consider, and, if thought fit, to approve, among other things, the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Placing. The register of members of the Company will be closed from Tuesday, 2 March 2021 to Monday, 8 March 2021 (both days inclusive) for determining the identity of the Shareholders entitled to attend and vote at the EGM.

In order to be registered as members of the Company on the record date for attendance and voting at the EGM, a Shareholder must lodge the relevant transfer(s) of Share(s) (with the relevant share certificates) with the Registrar at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:30 p.m. on Monday, 1 March 2021.

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Cheung Chung Chuen George, Mr. Law Ching Ning Paschal and Mr. Leung Wai Hung, will be established to advise the Independent Shareholders as to whether the terms of the Rights Issue are fair and reasonable and in the interest of the Shareholders as a whole and how to vote on the EGM, taking into account the recommendations of the Independent Financial Adviser to be appointed by the Company. An announcement will be made by the Company upon appointment of the Independent Financial Adviser.

A circular containing, among other things, (i) further details of (a) the Share Consolidation; (b) the Increase in Authorised Share Capital; and (c) the Rights Issue and the Placing; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) a notice convening the EGM, is expected to be despatched to the Shareholders on or before Friday, 19 February 2021.

The Company will despatch the Prospectus Documents containing, among other matters, details of the proposed Rights Issue, to the Qualifying Shareholders. The Company will despatch the Prospectus to the Non-Qualifying Shareholders (if any) for their information only, but the Company will not send the PAL to the Non-Qualifying Shareholders (if any).

WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND THE NIL-PAID RIGHTS

The Shares will be dealt on an ex-rights basis from Thursday, 11 March 2021. Dealings in the nil-paid rights are expected to take place from Wednesday, 24 March 2021 to Wednesday, 31 March 2021 (both days inclusive). If the conditions of the Rights Issue (please refer to the paragraph headed “Conditions of the Rights Issue” in this announcement) are not fulfilled, the Rights Issue will not proceed.

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Shareholder or other person contemplating transferring, selling or purchasing the Shares and/or the nil-paid rights is advised to exercise caution when dealing in the Shares and/or the nil-paid rights.

Any person who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional advisor(s). Any Shareholder or other person dealing in the Shares or in the nil-paid rights up to the time at which the Rights Issue becomes unconditional will accordingly bear the risk that the Rights Issue may not become unconditional and may not proceed.

PROPOSED SHARE CONSOLIDATION

The Company proposes to implement the Share Consolidation on the basis that every ten (10) Existing Shares be consolidated into one (1) Consolidated Share.

Conditions of the Share Consolidation

The Share Consolidation is conditional upon the fulfillment of the following conditions:

(i) the passing of the ordinary resolution by the Shareholders to approve the Share Consolidation at the EGM;
(ii) the GEM Listing Committee granting the listing of, and permission to deal in, the Consolidated Shares; and
(iii) the compliance with the relevant procedures and requirements under the Cayman Islands laws (where applicable) and the GEM Listing Rules to effect the Share Consolidation.

Listing Application

An application will be made by the Company to the GEM Listing Committee for the listing of, and the permission to deal in, the Consolidated Shares upon the Share Consolidation becoming effective.

Subject to the granting of listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, as well as compliance with the stock admission requirements of the HKSCC, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements will be made for the Consolidated Shares to be admitted into CCASS established and operated by HKSCC.

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None of the Existing Shares are listed or dealt in any other stock exchange other than the Stock Exchange, and at the time the Share Consolidation becoming effective, the Consolidated Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought.

Reasons for the Share Consolidation

Pursuant to Rule 17.76 of the GEM Listing Rules, where the market price of the securities of the issuer approaches the extremities of HK$0.01 or HK$9,995, the Stock Exchange reserves the right to require the issuer either to change the trading method or to proceed with a consolidation or splitting of its securities. The “Guide on Trading Arrangements for Selected Types of Corporate Actions” issued by the Hong Kong Exchanges and Clearing Limited on 28 November 2008 and updated on 30 August 2019 has further stated that (i) market price of the Shares at a level less than HK$0.1 each will be considered as trading at extremity as referred to under Rule 17.76 of the GEM Listing Rules; and (ii) taking into account the minimum transaction costs for a securities trade, the expected value per board lot should be greater than HK$2,000.

The existing board lot value has been less than HK$2,000. It is expected that the Share Consolidation will increase the nominal value of the Shares and would bring about a corresponding upward adjustment in the trading price per Consolidated Share. Immediately prior to the date of this announcement, the last trading price of the Company was HK$0.032 per Share, with a board lot size of 10,000, and the existing board lot value was only HK$320, which was less than HK$2,000. Upon the Share Consolidation becoming effective, based on the last trading price of HK$0.032 per Share, the share price of the Company would be adjusted to HK$0.32 per Share. With a board lot size of 10,000, the new board lot value would be HK$3,200, which would be more than the required HK$2,000. As such, the proposed Share Consolidation would enable the Company to comply with the trading requirements under the GEM Listing Rules. Thus, the Board considers that, despite such Share Consolidation would lead to odd lots, it would maintain the trading amount for each board lot at a reasonable level in order to attract more investors and to extend the shareholder base of the Company.

Further, the Share Consolidation would reduce the overall transaction and handling costs of dealings in the shares of the Company as a proportion of the market value of each board lot, since most of the banks/securities houses will charge a minimum transaction costs for each securities trade. It is hoped that this will make investing in the Shares more attractive to a broader range of investors, in particular to institutional investors whose house rules might otherwise prohibit or restrict trading in securities that are priced below a prescribed floor, and thus help to further broaden the shareholder base of the Company. Accordingly, the Board is of the view that the Share Consolidation is beneficial to the Company and the Shareholders as a whole.

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As at the date of this announcement, save as disclosed in this announcement, the Company currently (i) does not have any agreement, arrangement, understanding, intention, or negotiation (either concluded or in process) on any potential fundraising activities which will involve issue of equity securities of the Company; and (ii) has no other plan or intention to carry out any future corporate actions in the next twelve months which may have an effect of undermining or negating the intended purpose of the Share Consolidation. The Board is of the view that, having considered the corporate plan of the Company for the next twelve months, the proposed Share Consolidation is fair and reasonable, and in the interest of the Company and the Shareholders as a whole. However, in the event there is any change to the business environment and/or financial position of the Company due to unforeseeable circumstances, and the Company is required to conduct further fund raising exercises when suitable opportunities arise in order to support future development of the Group, the Company will publish further announcement(s) in compliance with the GEM Listing Rules, as and when appropriate.

Fractional entitlement to Consolidated Shares

Fractional Consolidated Shares will be disregarded and will not be issued to the Shareholders but all such fractional Consolidated Shares will be aggregated and, if possible, sold for the benefit of the Company. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a holder of the Shares of the Company regardless of the number of share certificates held by such holder. Shareholders concerned about losing out on any fractional entitlement are recommended to consult their licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser and may wish to consider the possibility of buying or selling Shares in a number sufficient to make up an entitlement to receive a whole number of Consolidated Shares.

Effects of the Share Consolidation

As at the date of this announcement, the authorised share capital of the Company amounted to HK$10,000,000 divided into 1,000,000,000 ordinary Shares of HK$0.01 each, of which 900,000,000 ordinary Shares had been allotted and issued as fully paid or credited as fully paid.

Upon the Share Consolidation becoming effective and on the basis that no further Existing Shares will be allotted, issued or repurchased prior thereto, the authorised share capital of the Company will become HK$10,000,000 divided into 100,000,000 ordinary Shares of HK$0.1 each, of which 90,000,000 Consolidated Shares will be in issue, which are fully paid or credited as fully paid.

Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other in accordance with the Company’s articles of association.

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Other than the expenses to be incurred in relation to the Share Consolidation, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Group or the interests or rights of the Shareholders, save for any fractional Consolidated Shares to which the Shareholders may be entitled.

Other securities of the Company

As at the date of this announcement, the Company had no outstanding options, warrants or other securities in issue which are convertible into or giving rights to subscribe for, convert or exchange into, any Existing Shares or Consolidated Shares, as the case may be.

Arrangement on odd lot trading

In order to facilitate the trading of odd lots of the Consolidated Shares arising from the Share Consolidation, the Company will appoint a designated broker to provide a matching service, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares. Further details in respect of the odd lots matching arrangement will be set out in the Circular to be despatched by the Company to the Shareholders.

Holders of odd lots of the Consolidated Shares should note that the matching of the sale and purchase of odd lots of the Consolidated Shares is not guaranteed.

Exchange of share certificates

Subject to the Share Consolidation becoming effective, the Shareholders may during the period from Wednesday, 10 March 2021 to Tuesday, 20 April 2021 (both days inclusive) submit existing share certificates in the colour of blue for the Existing Shares to the Registrar at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for exchange for new share certificates in the colour of red for the Consolidated Shares at the expense of the Company.

Thereafter, share certificates of the Existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such other amount as may from time to time be specified by the Stock Exchange) by the Shareholders for each share certificate for the Existing Shares submitted for cancellation or each new share certificate issued for the Consolidated Shares, whichever is higher.

After 4:00 p.m. on Tuesday, 20 April 2021, existing share certificates for the Existing Shares will only remain effective as documents of title and may be exchanged for share certificates for Consolidated Shares at any time but will not be accepted for delivery, trading and settlement purposes.

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Shareholders and potential investors should note that the Share Consolidation is conditional upon satisfaction of the conditions as set out in the paragraph headed “Conditions of the Share Consolidation” above. Accordingly, the Share Consolidation may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company. If they are in any doubt, they should consult their professional advisers.

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

The Board believes that the Increase in Authorised Share Capital will provide the Company with greater flexibility to raise funds and is in the interests of the Company and the Shareholders as a whole.

PROPOSED RIGHTS ISSUE

Issue statistics

Basis of the Rights Issue	:	three (3) Rights Shares for every two (2) Consolidated
		Shares held on the Record Date
Subscription Price	:	HK$0.21 per Rights Share
Number of Existing Shares	:	900,000,000 Existing Shares
in issue at the date of this
announcement
Number of Consolidated	:	90,000,000 Consolidated Shares
Shares in issue upon
the Share Consolidation
having become effective

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Number of Rights Shares	:	135,000,000 Rights Shares (assuming no change in the
		number of Consolidated Shares in issue on or before the
		Record Date)
Aggregate nominal value of	:	HK$13,500,000 (assuming no change in the number of
the Rights Shares		Consolidated Shares in issue on or before the Record Date)
Number of Shares as	:	225,000,000 Consolidated Shares (assuming no change in
enlarged by the allotment		the number of Consolidated Shares in issue on or before the
and issue of the Rights		Record Date and that no new Consolidated Shares (other
Shares		than the Rights Shares) will be allotted and issued on or
		before completion of the Rights Issue)

Assuming no change in the number of issued Consolidated Shares on or before the Record Date and that no new Consolidated Shares (other than the Rights Shares) will be allotted and issued on or before completion of the Rights Issue, the 135,000,000 Rights Shares to be issued pursuant to the terms of the proposed Rights Issue represents (i) 150% of the issued share capital of the Company immediately upon completion of the Share Consolidation; and (ii) 60% of the issued share capital of the Company after completion of the Share Consolidation and as enlarged by the allotment and issue of the Rights Shares.

Non-underwritten basis

The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptance of the provisionally allotted Rights Shares. In the event that the Rights Issue is not fully subscribed, any Rights Shares not taken up by the Qualifying Shareholders or holders of nil-paid rights together with the NQS Unsold Rights Shares will be placed to independent placees on a best effort basis under the Compensatory Arrangements. Any Unsubscribed Rights Shares and NQS Unsold Rights Shares which are not placed under the Compensatory Arrangements will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

There are no statutory requirements regarding minimum subscription levels in respect of the Rights Issue. There is no minimum amount to be raised under the Rights Issue. As the Rights Issue will proceed on a non-underwritten basis, any Shareholder who applies to take up all or part of his/her/its entitlement under the PAL(s) may unwittingly incur an obligation to make a general offer for the Shares under the Takeovers Code. Accordingly, the Rights Issue will be made on terms that the Company will provide for the Shareholders to apply on the basis that if the Rights Shares are not fully taken up, the application of any Shareholder (except for HKSCC Nominees Limited) for his/her/its assured entitlement under the Rights Issue will be scaled down to a level which does not trigger an obligation on part of the relevant Shareholder to make a general offer under the Takeovers Code in accordance to the note to Rule 10.26(2) of the GEM Listing Rules.

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Subscription Price

The Subscription Price is HK$0.21 per Rights Share, payable in full upon acceptance of the relevant provisional allotment of Rights Shares under the Rights Issue or when a transferee of nil-paid Rights Shares applies for the Rights Shares.

The Subscription Price represents:

(i) a discount of approximately 34.38% to the theoretical closing price of HK$0.32 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the closing price of HK$0.032 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 31.82% to the theoretical average closing price of approximately HK$0.31 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the average closing price of approximately HK$0.031 per Share as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 17.32% to the theoretical ex-rights price of approximately HK$0.25 per Consolidated Share (after taking into account the effect of the Share Consolidation), based on the theoretical ex-rights price of approximately HK$0.025 per Share and closing price of HK$0.032 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iv) a theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) represented by a discount of approximately 20.63%, represented by the theoretical diluted price of approximately HK$0.25 per Consolidated Share to the theoretical benchmarked price of HK$0.32 per Consolidated Share (after taking into account the effect of the Share Consolidation) (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the closing price on the Last Trading Day of HK$0.032 per Share and the average of the closing prices of the Shares as quoted on the Stock Exchange for the five previous consecutive trading days prior to the date of this announcement of approximately HK$0.031 per Share); and
(v) a cumulative theoretical dilution effect (as defined under Rule 10.44A of the GEM Listing Rules) in aggregation with the 2020 Rights Issue represented by a discount of approximately 24.48%, represented by the cumulative theoretical diluted price of approximately HK$0.29 per Consolidated Share to the theoretical benchmarked price of HK$0.38 per Consolidated Share in respect of the 2020 Rights Issue (after taking into account the effect of the Share Consolidation) (as defined under Rule 10.44A of the GEM Listing Rules, taking into account the benchmarked price of the 2020 Rights Issue, being HK$0.038 per Share).

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The net price per Rights Share (i.e. Subscription Price less cost and expenses incurred in the Rights Issue) upon full acceptance of the provisional allotment of Rights Shares will be approximately HK$0.19.

The Subscription Price was determined after by the Company with reference to, among others, (i) the market price of the Shares under the prevailing market conditions, (ii) the latest business performance and financial position of the Group; and (iii) the reasons for and benefits of proposed Rights Issue as discussed in the section headed “Reasons for and benefits of the Rights Issue and intended use of proceeds” in this announcement.

The Directors (including the independent non-executive Directors) consider that, despite any potential dilution impact of the proposed Rights Issue on the shareholding interests of the Shareholders, the terms of the proposed Rights Issue, including the Subscription Price, to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole, after taking into account the following factors: (i) the Qualifying Shareholders who do not wish to take up their provisional entitlements under the proposed Rights Issue are able to sell the nil-paid rights in the market; (ii) the proposed Rights issue allows the Qualifying Shareholders an opportunity to subscribe for their pro-rata Rights Shares for the purpose of maintaining their respective existing shareholding interests in the Company at a relatively low price as compared to the historical market price of the Shares and discount to the recent closing prices of the Shares; and (iii) the proceeds from the Rights Issue can fulfil the funding needs of the Group.

Qualifying Shareholders

The Company will send the Prospectus Documents to the Qualifying Shareholders only. For the Non-Qualifying Shareholders, the Company will send copies of the Prospectus to them for their information only, but no PAL will be sent to the Non-Qualifying Shareholders. To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company and not be a Non-Qualifying Shareholder on the Record Date.

Shareholders whose Shares are held by nominee companies (or which are deposited in CCASS) should note that the Board will regard a nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Shareholders with their Shares held by nominee companies (or which are deposited in CCASS) are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date.

In order to be registered as members of the Company on the Record Date, a Shareholder must lodge the relevant transfer(s) of Share(s) (with the relevant share certificates) with the Registrar at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong by 4:30 p.m. on Friday, 12 March 2021.

The last day of dealing in the Shares on cum-rights basis is Wednesday, 10 March 2021. The Shares will be dealt with on an ex-rights basis from Thursday, 11 March 2021.

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Qualifying Shareholders who do not take up the Rights Shares to which they are entitled and Non-Qualifying Shareholders should note that their shareholdings in the Company will be diluted.

Rights of Overseas Shareholders

The Prospectus Documents are not intended to be registered under the applicable securities legislation of any jurisdiction other than Hong Kong. Overseas Shareholder(s) may not be eligible to take part in the Rights Issue as explained below.

In compliance with the necessary requirements of the GEM Listing Rules, the Company will make enquiries regarding the feasibility of extending the Rights Issue to the Overseas Shareholder(s) (if any). If, based on legal opinions, the Directors consider that it is necessary or expedient not to offer the Rights Shares to the Overseas Shareholder(s) on account either of the legal restrictions under the laws of the relevant place(s) or the requirements of the relevant regulatory body or stock exchange in that (those) place(s), the Rights Issue will not be extended to such Overseas Shareholder(s). As at the date of this announcement, there is no Overseas Shareholder.

The basis for excluding the Non-Qualifying Shareholders(s), if any, from the Rights Issue will be set out in the Prospectus. The Company will send the Prospectus (without the PAL) and a letter explaining the circumstances in which the Non-Qualifying Shareholders are not permitted to participate in the Rights Issue to the Non-Qualifying Shareholders for their information only.

Arrangements will be made for Rights Shares which would otherwise have been provisionally allotted to the Non-Qualifying Shareholder(s) to be sold in the market in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence, if a premium (net of expenses) can be obtained. The proceeds of such sale, less expenses and stamp duty, of more than HK$100 will be paid pro rata to the Non-Qualifying Shareholder(s). The Company will retain individual amounts of HK$100 or less for the benefit of the Company.

Overseas Shareholders should note that they may or may not be entitled to the Rights Issue. Accordingly, Overseas Shareholders should exercise caution when dealing in the securities of the Company.

Closure of register of members

The register of members of the Company will be closed from Monday, 15 March 2021 to Friday, 19 March 2021 (both days inclusive) for determining the Shareholders’ entitlements to the Rights Issue.

No transfer of Shares will be registered during the above book closure periods.

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Basis of provisional allotment

The basis of the provisional allotment shall be three (3) Rights Shares for every two (2) Consolidated Shares in issue and held by the Qualifying Shareholders at the close of business on the Record Date at the Subscription Price payable in full on acceptance and otherwise on the terms and subject to the conditions set out in the Prospectus Documents.

Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by lodging a duly completed PAL and a cheque or a banker’s cashier order for the sum payable for the Rights Shares being applied for with the Registrar on or before the Latest Time for Acceptance. There willl be no excess application arrangements in relation to the Rights Issue.

Fractional entitlements to the Rights Shares

No fractional entitlements to the Rights Shares shall be issued to the Shareholders and no entitlements of the Non-Qualifying Shareholders to the Rights Shares shall be issued to the Non-Qualifying Shareholders. All fractions of the Rights Shares shall be rounded down to the nearest whole number of Rights Shares and aggregated and, if a premium (net of expenses) can be achieved, sold in the market by the Company.

Odd lots matching services

In order to facilitate the trading of odd lots of the Rights Shares arising from the Rights Issue, a designated broker, Gransing Securities Co., Limited, has been appointed by the Company to match the purchase and sale of odd lots of the Shares at the relevant market price per Share. Gransing Securities Co., Limited confirmed that it and its ultimate beneficial owner(s) (i) are not Shareholder; and (ii) they are Independent Third Parties. Holders of the Shares in odd lots represented by valid share certificates for the Shares who wish to take advantage of this facility either to dispose of their odd lots of the Shares or to top up their odd lots to a full board lot, may directly or through their brokers, contact Ms. Annie Wong at (852) 3162 6883 of Gransing Securities Co., Limited or by facsimile at (852) 3162 6802. Holders of odd lots of Shares should note that successful matching of the sale and purchase of odd lots of Shares is on a best effort basis and not guaranteed. Any Shareholder who is in any doubt about the odd lot arrangement is recommended to consult his/her/its own professional advisers.

Status of the Rights Shares

The Rights Shares, when allotted and issued, shall rank pari passu in all respects with the Shares then in issue. Holders of fully-paid Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid after the date of allotment of the Rights Shares in their fully-paid form.

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Share certificates and refund cheques for the Rights Issue

Subject to the fulfillment of the conditions of the Rights Issue, certificates for all fully-paid Rights Shares are expected to be posted to those entitled thereto by ordinary post at their own risk on or before Friday, 23 April 2021. Refund cheques in respect of wholly or partially unsuccessful applications for Rights Shares (if any) are expected to be posted on or before Friday, 23 April 2021 by ordinary post to the applicants at their own risk, to their registered addresses.

Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements

Pursuant to the Placing Agreement, the Company has appointed the Placing Agent to place the Unsubscribed Rights Shares and the NQS Unsold Rights Shares during the Placing Period to independent placees on a best effort basis, and any premium over the Subscription Price for those Rights Shares that is realised will be paid to those No Action Shareholders on a pro-rata basis. The Placing Agent will, on a best effort basis, procure, by not later than 4:00 p.m. on Thursday, 15 April 2021, acquirers for all (or as many as possible) of those Unsubscribed Rights Shares and the NQS Unsold Rights Shares. Any Unsubscribed Rights Shares and the NQS Unsold Rights Shares which are not placed under the Compensatory Arrangements will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

Net Gain (if any) will be paid (without interest) to the No Action Shareholders as set out below on pro rata basis (but rounded down to the nearest cent):

A. the relevant Qualifying Shareholders (or such persons who hold any nil-paid rights at the time such nil-paid rights are lapsed) whose nil-paid rights are not validly applied for in full, by reference to the extent that Shares in his/her/its nil-paid rights are not validly applied for; and
B. the relevant Non-Qualifying Shareholders with reference to their shareholdings in the Company on the Record Date.

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If and to the extent in respect of any Net Gain, any No Action Shareholders become entitled on the basis described above to an amount of HK$100 or more, such amount will be paid to the relevant No Action Shareholder(s) in Hong Kong Dollars only and the Company will retain individual amounts of less than HK$100 for its own benefit.

Placing Agreement for the Unsubscribed Rights Shares and NQS Unsold Rights Shares

Details of the Placing Agreement are summarised as follows:

Date:	25 January 2021
Issuer:	The Company
Placing Agent:	Gransing Securities Co., Limited was appointed as the
	Placing Agent to procure, on a best efforts basis, placees
	to subscribe for the Unsubscribed Rights Shares and NQS
	Unsold Rights Shares during the Placing Period.
	The Placing Agent confirmed that it and its ultimate
	beneficial owner(s) (i) are not Shareholder; and (ii) they are
	Independent Third Parties.
Placing Period:	The period commencing from the third Business Day after
	the Latest Time for Acceptance and ending on 4:00 p.m. on
	the fifth Business Day after the Latest Time for Acceptance.
Commission and expenses:	Subject to completion of the Placing, the Company shall
	pay to the Placing Agent a placing commission in Hong
	Kong dollars, of 3.5% of the amount which is equal to the
	placing price multiplied by the number of Unsubscribed
	Rights Shares and NQS Unsold Rights Shares that have
	been successfully placed by the Placing Agent pursuant to
	the terms of the Placing Agreement.
Placing price of the	The placing price of the Unsubscribed Rights Shares
Unsubscribed Rights Shares	and NQS Unsold Rights Shares shall be not less than the
and NQS Unsold	Subscription Price and the final price determination will be
Rights Shares:	depended on the demand for and the market conditions of
	the Unsubscribed Rights Shares and NQS Unsold Rights
	Shares during the process of placement.

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Placees:

The Unsubscribed Rights Shares and NQS Unsold Rights Shares are expected to be placed to placee(s), who and whose ultimate beneficial owner(s) shall be Independent Third Party(ies).

For the avoidance of doubt, no placee shall become a substantial shareholder of the Company.

Ranking of the placed Unsubscribed Rights Shares and NQS Unsold Rights Shares:

The placed Unsubscribed Rights Shares and NQS Unsold Rights Shares (when allotted, issued and fully paid, if any) shall rank pari passu in all respects among themselves and with the existing Shares in issue as at the date of completion of the Rights Issue.

Conditions of the Placing Agreement:

The obligations of the Placing Agent under the Placing Agreement are conditional upon, among others, the following conditions being fulfilled:

(i) the GEM Listing Committee having granted the listing of, and permission to deal in, the Rights Shares;
(ii) all necessary consents and approvals to be obtained on the part of each of the Placing Agent and the Company in respect of the Placing Agreement and the transactions contemplated thereunder having been obtained; and
(iii) the Placing Agreement not having been terminated in accordance with the provisions thereof, including provisions regarding the force majeure events.

In the event that the above condition precedents have not been fulfilled on or before the Latest Time for Termination, all rights, obligations and liabilities of the parties thereunder in relation to the Placing shall cease and determine and none of the parties shall have any claim against the other in respect of the Placing (save for any antecedent breaches thereof).

The engagement between the Company and the Placing Agent of the Unsubscribed Rights Shares and NQS Unsold Rights Shares (including the commission payable) was determined after arm’s length negotiation between the Placing Agent and the Company and is on normal commercial terms with reference to the market comparables, the existing financial position of the Group, the size of the Rights Issue, and the current and expected market conditions. The Directors consider that the terms of Placing Agreement in respect of the Unsubscribed Rights Shares and NQS Unsold Rights Shares (including the commission payable) are on normal commercial terms.

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As explained above, the Unsubscribed Rights Shares and NQS Unsold Rights Shares will be placed by the Placing Agent to Independent Third Parties on a best effort basis for the benefits of the No Action Shareholders. If all or any of the Unsubscribed Rights Shares and NQS Unsold Rights Shares are successfully placed, any premium over the Subscription Price will be distributed to the relevant No Action Shareholders.

The Board is of the view that the above Compensatory Arrangements are fair and reasonable and are in the best interests of the Shareholders as a whole:

(i) the arrangements are in compliance with the requirements under Rule 10.31(1)(b) of the GEM Listing Rules under which the No Action Shareholders may be compensated even if they do nothing (i.e. neither subscribe for Rights Shares nor sell their nil-paid rights) because under the arrangements, the Unsubscribed Rights Shares and the NQS Unsold Rights Shares will be first offered to Independent Third Parties and any premium over the Subscription Price will be paid to the No Action Shareholders. The commission payable to the Placing Agent and the related fees and expenses in relation to such placing will be borne by the Company;
(ii) the Compensatory Arrangements (including the determination of the placing price) will be managed by an independent licensed placing agent which is subject to the stringent code of conduct over, among others, pricing and allocation of the placing Shares. The Placing Agent and its ultimate beneficial owner(s) (a) are not Shareholder; and (b) are Independent Third Parties; and
(iii) the Compensatory Arrangements will not only provide an additional channel of participation in the Rights Issue for the Qualifying Shareholders and the Non-Qualifying Shareholders, it also provides a distribution channel of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares to the Company.

Application for listing of the Rights Shares

The Company will apply to the GEM Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares, in both their nil-paid and fully-paid forms.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement dates of the dealings in the Rights Shares in both their nil-paid and fully-paid forms or such other dates as may be determined by HKSCC.

Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

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Dealing in the Rights Shares in both their nil-paid and fully-paid forms which are registered in the register of members of the Company in Hong Kong will be in the board lots of 10,000 Rights Shares and will be subject to the payment of stamp duty, Stock Exchange trading fee, transaction levy, investor compensation levy or any other applicable fees and charges in Hong Kong.

Shareholders are advised to consult their professional advisers if they are in doubt as to the taxation implications of the receipt, purchase, holding, exercising, disposing of or dealing in, the nil-paid Rights Shares or the fully-paid Rights Shares and, regarding Non-Qualifying Shareholders, their receipt of the net proceeds, if any, from sales of the nil-paid Rights Shares on their behalf.

Conditions of the Rights Issue

The Rights Issue is conditional upon:

(a) the passing of the necessary resolutions at the EGM to approve the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue, the Placing and the transactions contemplated thereunder (including but not limited to the allotment and issue of the Rights Shares) by the Shareholders (other than those who are required to abstain from voting according to the GEM Listing Rules or other applicable laws and regulations if necessary);
(b) the Share Consolidation having become effective;
(c) the Increase in Authorised Share Capital having become effective;
(d) the delivery to the Stock Exchange for authorization and the registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the GEM Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance not later than the Prospectus Posting Date;
(e) the posting of the Prospectus Documents to the Qualifying Shareholders by the Prospectus Posting Date and the posting of the Prospectus and a letter in the agreed form to the Non-Qualifying Shareholders, if any, for information purposes only explaining the circumstances in which they are not permitted to participate in the Rights Issue on or before the Prospectus Posting Date;

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(f) the GEM Listing Committee granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked the listing of, and the permission to deal in, the Rights Shares (in their nil-paid and fully-paid forms) by no later than the business day prior to the first day of their dealings; and
(g) compliance with the requirements under the applicable laws and regulations of Hong Kong and the Cayman Islands.

None of the above conditions can be waived. If any of the conditions referred to above is not fulfilled by the Latest Time for Termination, the Rights Issue will not proceed.

EXPECTED TIMETABLE

Set out below is the expected timetable for the proposed Share Consolidation, Increase in Authorised Share Capital, the Rights Issue and the Placing which is indicative only and has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled:

Expected Timetable

2021

Announcement of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 25 January Despatch of circular in relation to the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Placing together with the notice of EGM and proxy form for EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 19 February

Latest time for loding transfer documents of the

Existing Shares to qualify for attendance and voting at the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Monday, 1 March Closure of register of members of the Company for determining the identity of the Shareholders entitled to attend and vote at the EGM (both dates inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 2 March to Monday, 8 March

Lates time for lodging proxy forms for the EGM . . . . . . . . . . . . 11 a.m. on Saturday, 6 March Record date for attendance and voting at the EGM . . . . . . . . . . . . . . . . . . . . Monday, 8 March Expected date and time of the EGM to approve the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Placing . . . . . . . . . . . . . . . . . . . . . . . .11 a.m. on Monday, 8 March Announcement of the poll results of the EGM . . . . . . . . . . . . . . . . . . . . . . . Monday, 8 March

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Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 9 March Effective date of the Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 10 March Commencement of dealings in the Consolidated Shares . . .9:00 a.m. on Wednesday, 10 March Original counter for trading in Existing Shares in the board lot size of 10,000 Existing Shares (in the form of existing share certificates) temporarily closes . . . . . . .9:00 a.m. on Wednesday, 10 March Temporary counter for trading in the Consolidated Shares in the board lot size of 1,000 Consolidated Shares (in the form of existing share certificates) opens . . . . . . .9:00 a.m. on Wednesday, 10 March First day of free exchange of existing share certificates for new share certificates for Consolidated Share . . . . . . . . . . . . . . . . . . .Wednesday, 10 March Last day of dealings in Consolidated Shares on a cum-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 10 March First day of dealings in Consolidated Shares on an ex-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 11 March Latest time for the Shareholders to lodge transfer documents to Consolidated Shares in order to qualify for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Friday, 12 March Register of members of the Company closes (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . Monday, 15 March to Friday, 19 March Record Date for determining entitlements to the Rights Issue . . . . . . . . . . . . .Friday, 19 March Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . . . Monday, 22 March Despatch of Prospectus Documents (in the case of Non-Qualifying Shareholders, the Prospectus only) . . . . . . . . . . . . . . . Monday, 22 March First day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . .Wednesday, 24 March Original counter for trading in the Consolidated Shares in the board lot size of 10,000 Consolidated Shares (in the form of new share certificates) reopens . . . . . . . . . . . . . . . . . . .Wednesday, 24 March Parallel trading in the Consolidated Shares (in the form of both existing share certificates and new share certificates) commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 24 March

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Designated broker starts to stand in the market to provide matching services for odd lots of the Consolidated Shares . . . . . . . . . .Wednesday, 24 March Latest time for splitting of the PAL . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Friday, 26 March Last day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . .Wednesday, 31 March Latest Time for Acceptance of and payment for the Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 8 April Announcement of the number of Unsubscribed Rights Shares and NQS Unsold Rights Shares subject to the Compensatory Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 12 April Commencement of placing of Unsubscribed Rights Shares and NQS Unsold Rights Shares by the Placing Agent . . . . . . . . . . . . . . . . Tuesday, 13 April Latest time of placing of Unsubscribed Rights Shares and NQS Unsold Rights Shares by the Placing Agent . . . . . 4:00 p.m. on Thursday, 15 April Latest Time for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 16 April Designated broker ceases to provide matching services for odd lots of the Consolidated Shares . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 16 April Temporary counter for trading in the Consolidated Shares in the board lot size of 1,000 Consolidated Shares (in the form of existing share certificates) closes . . . . . . . . . . . 4:10 p.m. on Friday, 16 April Parallel trading in Consolidated Shares (represented by both existing share certificates and new share certificates) ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Friday, 16 April Latest time for free exchange of existing share certificates for new share certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 20 April Announcement of results of the Rights Issue (including results of the placing of Unsubscribed Rights Shares and NQS Unsold Rights Shares and the amount of the Net Gain per Unsubscribed Rights Share and NQS Unsold Rights Share under the Compensatory Arrangements) . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 22 April Despatch of certificates for fully-paid Rights Shares and refund cheques, if any, in respect of wholly or partially unsuccessful applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 23 April

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Expected first day of dealings in fully-paid Rights Shares . . . . 9:00 a.m. on Monday, 26 April

Payment of Net Gain to relevant No Action

Shareholders (if any) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Monday, 3 May

Dates or deadlines specified in expected timetable above or in other parts of this announcement are indicative only and may be varied by the Company. Any changes to the expected timetable will be published or notified to the Shareholders and the Stock Exchange as and when appropriate.

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES

The Latest Time for Acceptance of and payment for the Rights Shares will not take place if there is a tropical cyclone warning signal no. 8 or above, or a “black” rainstorm warning or “extreme conditions” caused by super typhoons:

(i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on Thursday, 8 April 2021. Instead the latest time for acceptance of and payment for the Rights Shares will be extended to 5:00 p.m. on the same Business Day; or
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Thursday, 8 April 2021. Instead the latest time for acceptance of and payment for the Rights Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance of and payment for the Rights Shares does not take place on or before 4:00 p.m. on Thursday, 8 April 2021, the dates mentioned in this section may be affected. An announcement will be made by the Company in such event.

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND INTENDED USE OF PROCEEDS

The Group is a foundation contractor primarily specialising in bored piling works as well as other foundation works. The Group is also engaged in leasing of machinery.

As disclosed in the interim report of the Company for the six months ended 30 September 2020, for the said period, the Group recorded an unaudited net loss of approximately HK$2.4 million as compared to a net loss of approximately HK$2.2 million for the same period in 2019. The Directors are of the view that the net loss was primarily due to decrease in rental income from machinery and provision of allowance for impairment loss of financial assets. The Directors are of the view that the general outlook of the industry and the business environment in which the Group operates will remain challenging. The outbreak of the

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COVID-19 pandemic since early 2020 has created economic uncertainty to Hong Kong and imposed negative impacts on the foundation industry, including supply chain disruptions, workforce shortages due to illness and preventative quarantines, and work stoppages due to measures imposed by the government.

It is expected that, as at 31 January 2021, the Company’s accounts payable which will have been due for over 120 days will amount to approximately HK$11 million. The Company also had two bank loans with a total outstanding principal amount of HK$2 million which would be due in April 2021. Furthermore, under the Pre-approved Principal Payment Holiday Scheme (the “ Payment Holiday ”), which has been implemented by the Hong Kong Monetary Authority since April 2020 to alleviate the financial pressure on corporates in light of the COVID-19 outbreak, the Company has been deferring principal repayments and paying only the interest for two other bank loans with a total outstanding amount of approximately HK$14.83 million (the “ Loans ”). However, the Payment Holiday for the Loans will end in April and May 2021 respectively and there is no indication that it will be extended. Accordingly, from May and June 2021 respectively, the Company will be required to resume monthly payment of principal plus interest of the Loans, which will in aggregate amount to approximately HK$600,000 per month until the end of their terms, being April 2025 and June 2025 respectively. In order to save up to approximately HK$938,000 in interest payment and ease the burden of the Company to repay approximately HK$600,000 per month for the remaining terms of the Loans after expiration of the Payment Holiday, the Company intends to make an early repayment of the Loans in full prior to the expiration of the Payment Holiday.

However, as at 31 December 2020, the Company had a bank and cash balance of only approximately HK$3.85 million, which was severely insufficient for meeting its imminent cashflow demand in view of the aforementioned liabilities. As such, the Company has a genuine and urgent funding need, and considers it appropriate and necessary to conduct the Rights Issue to ease its cashflow pressure.

In light of the above, the Company intends to raise funds by way of the Rights Issue. The maximum net proceeds from the Rights Issue (after deducting the estimated expenses) are estimated to be approximately HK$25 million. The estimated net subscription price per Rights Share after deducting the related expenses of the Rights Issue is expected to be approximately HK$0.19. The Company intends to use the net proceeds from the Rights Issue as to (i) approximately HK$8 million for the repayment of overdue accounts payable; and (ii) approximately HK$17 million for the repayment of bank loans.

The Company had considered other fund-raising alternatives available to the Group, including debt financing such as bank borrowings, and other equity financing such as placing or subscription of new Shares.

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The Company is of the view that debt financing will result in additional interest burden and will further increase the gearing ratio of the Group which is not beneficial to the Group given that the Group had incurred a net loss for the year ended 31 March 2020 and for the six months ended 30 September 2020 respectively. The Board considers that financing the funding needs of the Group in the form of equity is a better alternative. Amongst the equity financing methods, placing or subscription of new Shares would dilute the shareholding of the existing Shareholders without giving the chance to the existing Shareholders to participate.

In the contrary, the Rights Issue will enable the Group to strengthen its capital base and to enhance its financial position without increasing its debt or finance costs. Since the Rights Issue will allow the Qualifying Shareholders to maintain their proportional shareholdings in the Company, the Board considers that raising capital through the Rights Issue is in the best interest of the Company and the Shareholders as a whole. However, those Qualifying Shareholders who do not take up the Rights Shares to which they are entitled and NonQualifying Shareholders (if any) should note that their shareholdings in the Company will be diluted.

CHANGE IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE SHARE CONSOLIDATION AND THE RIGHTS ISSUE

For illustration purposes only, set out below is the shareholding structure of the Company as at the date of the announcement, and the effect on the shareholding structure of the Company upon completion of the Share Consolidation and the Rights Issue:

C3J Development_(Note 1) Hunter Corporate(Note 2)_ Public Shareholders Independent placees Total	(i) As at the date of this announcement Number of issued Shares % 187,000,000 20.78 183,000,000 20.33 530,000,000 58.89 – – 900,000,000 100.00	(ii) Immediately upon completion of the Share Consolidation (iii) Immediately upon completion of the Rights Issue assuming full acceptance by all Qualifying Shareholders Number of issued Shares % Number of issued Shares % 18,700,000 20.78 46,750,000 20.78 18,300,000 20.33 45,750,000 20.33 53,000,000 58.89 132,500,000 58.89 – – – – 90,000,000 100.00 225,000,000 100.00	(iv) Immediately upon completion of the Rights Issue assuming no acceptance by any Qualifying Shareholder and all Unsubscribed Rights Shares and NQS Unsold Rights Shares have been placed by the Placing Agent Number of issued Shares % 18,700,000 8.31 18,300,000 8.13 53,000,000 23.56 135,000,000 60 225,000,000 100.00

Notes:

C3J Development is owned as to 100% by Mr. Tang who is deemed to be interested in 187,000,000 Existing Shares pursuant to the Part XV of the SFO.
Hunter Corporate is owned as to 100% by Mr. Chui who is deemed to be interested in 183,000,000 Existing Shares pursuant to the Part XV of the SFO.

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FUND RAISING EXERCISE IN THE PAST 12 MONTHS

The Company has conducted the following fund raising activity involving issue of securities in the twelve (12) months before the date of this announcement:

			Intended use
Date of announcement/	Fund raising	Net proceeds	of proceeds as	Actual use of
prospectus	activity	(approximate)	announced	proceeds
10 August 2020,	The 2020 Rights	HK$6.9 million	Approximately	All net proceeds
18 August 2020,	Issue		HK$4.2 million	have been fully
16 September 2020,			for repayment	utilised as
29 September 2020 and			of outstanding	intended.
22 October 2020			principal,
			interest amount
			and relevant
			administrative
			expenses of
			loans and the
			remaining balance
			of approximately
			HK$2.7 million
			for repayment of
			debts owing by
			the Group to its
			suppliers.

Save as disclosed above, the Company had not conducted any other equity fund raising activities in the past twelve months immediately prior to the date of this announcement.

GEM LISTING RULES IMPLICATIONS

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the EGM in favour of the Rights Issue in accordance with Rule 10.29(1) of the GEM Listing Rules. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save as disclosed above, none of the Directors or the chief executive of the Company or their respective associates are interested in any Existing Share.

GENERAL

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WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND THE NIL-PAID RIGHTS

Shareholder or other person contemplating transferring, selling or purchasing the Shares and/or nil-paid rights is advised to exercise caution when dealing in the Shares and/or the nil-paid rights.

DEFINITIONS

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

“2020 Rights Issue” the rights issue previously conducted by the Company as announced on 10 August 2020 and completed in October 2020

“acting in concert” has the meaning ascribed to it under the Takeovers Code
“associates” has the meaning ascribed to it under the GEM Listing Rules
“Board” the board of Directors

“Business Day” any day (other than a Saturday or Sunday or public holiday or a day on which a tropical cyclone warning signal no. 8 or above or “black” rainstorm warning signal is hoisted or remains hoisted or “extreme conditions” caused by super typhoons in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon and is not lowered or discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

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“C3J Development” C3J Development Limited, a company incorporated in the British Virgin Islands with limited liability, which is wholly-owned by Mr. Tang and the legal and beneficial owner of 187,000,000 Existing Shares as at the date of this announcement
“CCASS”
“Circular”
the Central Clearing and Settlement System established and operated by HKSCC the circular to be despatched to the Shareholders by the Company in relation to, among other things, the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Placing
“Compensatory Arrangements”
the compensatory arrangements pursuant to Rule 10.31(1) (b) of the GEM Listing Rules as described in the paragraph headed “Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements” in this announcement
“Company”
Beaver Group (Holding) Company Limited, a company incorporated in the Cayman Islands with limited liability, the issued shares of which are listed on GEM
“connected person”
has the meaning ascribed to it under the GEM Listing Rules
“Consolidated Shares”
ordinary shares of HK$0.1 each in the share capital of the Company after the Share Consolidation becoming effective
“Controlling Shareholder”
has the meaning ascribed to it under the GEM Listing Rules
“Director(s)”
the director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be convened and held at which resolutions will be proposed to consider, and, if thought fit, to approve, among other things, the Share Consolidation, the Increase in Authorised Share Capital, the Rights Issue and the Placing
“Existing Shares”
ordinary shares of HK$0.01 each in the share capital of the Company prior to the Share Consolidation becoming effective
“GEM” GEM operated by the Stock Exchange

– 29 –

“GEM Listing Committee” has the meaning ascribed to it in the GEM Listing Rules

“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM “Group” the Company and its subsidiaries “HK$” Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” the Hong Kong Securities Clearing Company Limited

“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

“Hunter Corporate” Hunter Corporate Limited, a company incorporated in the British Virgin Islands with limited liability, which is wholly-owned by Mr. Chui and the legal and beneficial owner of 183,000,000 Existing Shares as at the date of this announcement

“Independent Board Committee” an independent board committee of the Board comprising all the independent non-executive Directors, namely Mr. Cheung Chung Chuen George, Mr. Law Ching Ning Paschal and Mr. Leung Wai Hung, which will be established to advise the Independent Shareholders on the fairness and reasonableness of the terms of the Rights Issue and the transactions contemplated thereunder and how to vote at the EGM
“Independent Financial Adviser” an independent financial adviser to be appointed by the Company with the approval of the Independent Board Committee for the purpose of the advising the Independent Board Committee and the Independent Shareholders on the terms of the Rights Issue and the transactions contemplated thereunder
“Independent Shareholder(s)” any Shareholder(s) who are not required to abstain from voting at the EGM under the GEM Listing Rules
“Independent Third Party(ies)”
third party(ies) who, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, are independent of and not acting in concert or connected with the Company and its connected persons or any of their respective associates

– 30 –

“Last Trading Day”
25 January 2021, being the last full trading day of the Shares on the Stock Exchange prior to the release of this announcement
“Latest Lodging Time”
4:30 p.m. on Friday, 12 March 2021 or such other date as the Company may agree, being the latest time for the Shareholders to lodge transfer of Shares in order to qualify for the Rights Issue
“Latest Time for Acceptance”
4:00 p.m. on Thursday, 8 April 2021 or such later time or date as may be determined by the Company, being the latest time for acceptance of, and payment for, the Rights Shares as described in the Prospectus Documents
“Latest Time for Termination”
4:00 p.m. on the first Business Day after the latest time for the placing of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares by the Placing Agent, being the latest time to terminate the Placing Agreement
“Mr. Chui”
Mr. Chui Koon Yau, an executive Director
“Mr. Tang”
Mr. Tang Kwai Leung Stanley, the chairman of the Board and an executive Director
“Net Gain”
the aggregate of any premiums (being the aggregate amount paid by the placees after deducting the aggregate amount of the Subscription Price for the Unsubscribed Rights Shares and the NQS Unsold Rights Shares placed by the Placing Agent under the Placing Agreement) under the Compensatory Arrangements
“No Action Shareholder(s)”
Qualifying Shareholder(s) who do not subscribe for the Rights Shares (whether partially or fully) under the PALs or their renouncees who hold any nil-paid rights at the time such nil-paid rights are lapsed, and/or the Non-Qualifying Shareholders (if any)
“Non-Qualifying Shareholder(s)” those Overseas Shareholder(s) whom the Directors, based on legal opinions provided by the Company’s legal advisers, consider it necessary or expedient not to offer the Rights Shares to such Shareholders on account either of restrictions under the laws of the relevant place or the requirements of a relevant regulatory body or stock exchange in that place

– 31 –

“NQS Unsold Rights Shares” the Rights Shares which would otherwise have been provisionally allotted to the Non-Qualifying Shareholders (if any) in nil-paid form that have not been sold by the Company
“Overseas Shareholder(s)”
Shareholder(s) whose name(s) appear on the register of members of the Company on the Record Date and whose address(es) as shown on such register is/are in a place(s) outside Hong Kong
“PAL(s)”
the renounceable provisional allotment letter(s) in repsect of the Rights Issue proposed to be issued to the Qualifying Shareholders
“Placing”
the offer by way of private placing of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares on a best effort basis by the Placing Agent and/or its sub-placing agents(s), who and whose ultimate beneficial owners shall not be the Shareholder(s) and shall be the Independent Third Party(ies), to the independent placee(s) during the Placing Period on the terms and subject to the conditions set out in the Placing Agreement
“Placing Agent”
Gransing Securities Co., Limited, a corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO
“Placing Agreement” the placing agreement dated 25 January 2021 and entered into between the Company and the Placing Agent in relation to the placing of Unsubscribed Rights Shares and the NQS Unsold Rights Shares
“Placing Period”
the period commencing from the third Business Day after the Latest Time for Acceptance and ending on 4:00 p.m. on the fifth Business day after the Latest Time for Acceptance
“Prospectus” the prospectus to be despatched to the Shareholders by the Company containing details of the proposed Rights Issue
“Prospectus Documents”

the Prospectus and the PAL

“Prospectus Posting Date” Monday, 22 March 2021, or such other day as may be determined by the Company for the despatch of the Prospectus Documents

– 32 –

“Qualifying Shareholder(s)” Shareholder(s) whose name(s) appear on the register of members of the Company on the Record Date, other than the Non-Qualifying Shareholders
“Record Date”
Friday, 19 March 2021 or such other date as may be determined by the Company for the determination of the entitlements under the Rights Issue
“Registrar” the share registrar of the Company in Hong Kong, Tricor Investor Services Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong
“Rights Issue”
the proposed issue by way of rights on the basis of three (3) Rights Shares for every two (2) Consolidated Shares held by the Qualifying Shareholders on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Prospectus Documents
“Rights Share(s)” new Consolidated Shares to be allotted and issued under the proposed Rights Issue on the basis of three (3) Rights Shares for every two (2) Consolidated Shares in issue on the Record Date, being 135,000,000 Consolidated Shares based on the Company’s issued share capital as at the date of this announcement
“SFO” Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
“Share(s)” ordinary share(s) in issue and unissued share capital of the Company
“Share Consolidation” proposed consolidation of the issued Shares on the basis of ten (10) Existing Shares into one (1) Consolidated Share
“Shareholder(s)” holder(s) of issued share(s)
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscription Price” HK$0.21 per Rights Share
“substantial shareholder” has the meaning ascribed to it under the GEM Listing Rules
“Takeovers Code” The Hong Kong Code on Takeovers and Mergers (as amended and supplemented from time to time)

– 33 –

“Unsubscribed Rights Shares”

the Rights Shares that are not subscribed by the Qualifying Shareholders or holders of nil-paid rights

“%”

per cent.

By order of the Board Beaver Group (Holding) Company Limited Tang Kwai Leung Stanley Chairman and executive Director

Hong Kong, 25 January 2021

As at the date of this announcement, the Board comprises Mr. Tang Kwai Leung Stanley and Mr. Chui Koon Yau as executive Directors; and Mr. Cheung Chung Chuen George, Mr. Law Ching Ning Paschal and Mr. Leung Wai Hung as independent non-executive Directors.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of The Stock Exchange of Hong Kong Limited 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 announcement 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 announcement misleading.

This announcement will remain on the website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk on the “Latest Listed Company Information” page for at least 7 days from the date of its posting and will be published on the Company’s website at www.beavergroup.com.hk.

– 34 –

AI assistant

China New Consumption Group Limited — Capital/Financing Update 2021

51361_rns_2021-01-25_ee32c414-f80b-4a42-a7a1-2601fabb124e.pdf

BEAVER GROUP (HOLDING) COMPANY LIMITED 永勤集團( 控股) 有限公司

(I) PROPOSED SHARE CONSOLIDATION; (II) PROPOSED INCREASED IN AUTHORISED SHARE CAPITAL; AND (III) PROPOSED RIGHTS ISSUE ON THE BASIS OF THREE RIGHTS SHARES FOR EVERY TWO CONSOLIDATED SHARES HELD ON THE RECORD DATE

PROPOSED SHARE CONSOLIDATION

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

PROPOSED RIGHTS ISSUE

GEM LISTING RULES IMPLICATIONS

GENERAL

WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND THE NIL-PAID RIGHTS

PROPOSED SHARE CONSOLIDATION

Conditions of the Share Consolidation

Listing Application

Reasons for the Share Consolidation

Fractional entitlement to Consolidated Shares

Effects of the Share Consolidation

Other securities of the Company

Arrangement on odd lot trading

Exchange of share certificates

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

PROPOSED RIGHTS ISSUE

Issue statistics

Non-underwritten basis

Subscription Price

Qualifying Shareholders

Rights of Overseas Shareholders

Closure of register of members

Basis of provisional allotment

Fractional entitlements to the Rights Shares

Odd lots matching services

Status of the Rights Shares

Share certificates and refund cheques for the Rights Issue

Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements

Placing Agreement for the Unsubscribed Rights Shares and NQS Unsold Rights Shares

Application for listing of the Rights Shares

Conditions of the Rights Issue

EXPECTED TIMETABLE

Expected Timetable

2021

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND INTENDED USE OF PROCEEDS

CHANGE IN THE SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE SHARE CONSOLIDATION AND THE RIGHTS ISSUE

FUND RAISING EXERCISE IN THE PAST 12 MONTHS

GEM LISTING RULES IMPLICATIONS

GENERAL

WARNING OF THE RISKS OF DEALINGS IN THE SHARES AND THE NIL-PAID RIGHTS

DEFINITIONS

Hong Kong, 25 January 2021

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China New Consumption Group Limited Capital/Financing Update 2021