China Silver Technology Holdings Limited — Proxy Solicitation & Information Statement 2017

Oct 30, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in TC Orient Lighting Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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

TC ORIENT LIGHTING HOLDINGS LIMITED 達進 東 方 照 明 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability) website: www.tatchun.com

(Stock Code: 515)

(I) PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY ONE (1) EXISTING SHARE HELD ON THE RECORD DATE; AND

(II) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

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Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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Terms used in this cover shall have the same meanings as defined in this circular.

It should be noted that the Shares will be dealt in on an ex-rights basis from Friday, 17 November 2017. Any Shareholder or other person dealing in the Shares from the Latest Practicable Date up to the date on which all conditions of the Rights Issue are fulfilled (which is expected to be at 4:00 p.m. on Wednesday, 13 December 2017), and any dealings in the Rights Shares in their nil-paid form from Thursday, 30 November 2017 to Thursday, 7 December 2017 (both days inclusive), will accordingly bear the risk that the Rights Issue cannot become unconditional and may not proceed. Any Shareholders or other persons contemplating dealings in the securities of the Company are recommended to consult their own professional advisers.

A letter from the Board is set out on pages 11 to 32 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 33 of this circular. A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 34 to 59 of this circular.

A notice dated 31 October 2017 convening the EGM to be held on Wednesday, 15 November 2017 at 10:00 a.m at Unit 1101A1, 11/F, East Ocean Centre, 98 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong is set out on pages EGM-1 to EGM-3 of this circular. Whether or not you are able to attend the EGM in person, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked.

It should be noted that the Underwriting Agreement contains provisions granting the Underwriter the right to terminate the obligations of the Underwriter thereunder on the occurrence of certain events including force majeure. These certain events are set out in the section headed ‘‘Termination of the Underwriting Agreement’’ on pages 8 to 10 of this circular. If the Underwriting Agreement is terminated by the Underwriter or does not become unconditional, the Rights Issue will not proceed.

31 October 2017

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
TERMINATION OF THE UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . .	8
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . .	33
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . .	34
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . .	I-1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
NOTICE OF THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

DEFINITIONS

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

• ‘‘Able Turbo’’

• Able Turbo Enterprises Limited, a company incorporated in the British Virgin Islands with limited liability which is owned as to 60.31% by Mr. Chen Hua (an executive Director) and 39.69% owned by Mr. Li Xianggen

• ‘‘Able Turbo Undertaken Shares’’

• 162,000,000 Rights Shares to be allotted and issued to Able Turbo under the Rights Issue and irrevocably undertaken to be taken up by Able Turbo

• ‘‘Able Turbo Undertaking’’

• the irrevocable undertaking given by Able Turbo to the Company and the Underwriter to, subject to the Rights Issue becoming unconditional and the Underwriter not having terminated the Underwriting Agreement, maintain its current beneficial shareholding in 162,000,000 Shares up to and including the Record Date and to lodge acceptance by the Latest Time for Acceptance for all the Able Turbo Undertaken Shares to which it is entitled to subscribe under the Rights Issue

• ‘‘acting in concert’’ having the meaning ascribed thereto under the Takeovers Code

• ‘‘Announcement’’ the announcement of the Company dated 22 September 2017 in respect of the Rights Issue

• ‘‘associates’’ having the meaning ascribed thereto under the Listing Rules

• ‘‘Board’’ the board of Directors

• ‘‘business day(s)’’

• a day (other than a Saturday, Sunday or public holiday or a day on which a typhoon signal no. 8 or above or black rainstorm signal is hoisted in Hong Kong between 9:00 a.m. to 5:00 p.m.) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

• ‘‘CCASS’’

• the Central Clearing and Settlement System established and operated by HKSCC

• ‘‘Company’’

• TC Orient Lighting Holdings Limited (stock code: 515), a company incorporated in the Cayman Islands with limited liability, the Shares of which are listed on the main board of the Stock Exchange

• ‘‘connected person(s)’’

• having the meaning ascribed to it under the Listing Rules

– 1 –

DEFINITIONS

• ‘‘Director(s)’’

the director(s) of the Company

• ‘‘EAF(s)’’

the excess application form(s) to be issued to the Qualifying Shareholders, pursuant to which the Qualifying Shareholders may apply for the Rights Shares in excess of their assured entitlement under the Rights Issue

• ‘‘EGM’’

• the extraordinary general meeting of the Company to be held on Wednesday, 15 November 2017 at 10:00 a.m. at Unit 1101A1, 11/F, East Ocean Centre, 98 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong to consider and, if thought fit, approve the Rights Issue and the transactions contemplated thereunder

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HKSCC’’

• Hong Kong Securities Clearing Company Limited

• ‘‘Hong Kong’’

• The Hong Kong Special Administrative Region of the PRC

• ‘‘Independent Board Committee’’

• the independent board committee of the Board comprising all the independent non-executive Directors, namely Mr. Bonathan Wai Ka Cheung, Mr. Anson Poon Wai Kong, Mr. Li Hongxiang, Mr. Wong Kwok On and Ms. Chen Lei, which was established for the purpose of advising the Independent Shareholders as to the fairness and reasonableness of the Rights Issue and the transactions contemplated thereunder

• ‘‘Independent Financial Adviser’’

Goldin Financial Limited, a corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO and the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders as to the fairness and reasonableness of the Rights Issue and the transactions contemplated thereunder

• ‘‘Independent Shareholders’’

• Shareholder(s) other than the Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates (including Able Turbo) who are required to be abstained from voting in favour of the resolution regarding the Rights Issue and the transactions contemplated thereunder at the EGM under Rule 7.24(5)(a) of the Listing Rules and persons (if any) who have a material interest in the Underwriting Agreement

– 2 –

DEFINITIONS

• ‘‘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

• ‘‘Last Trading Day’’

• 22 September 2017, being the last trading day of the Shares prior to the entering into of the Underwriting Agreement

• ‘‘Latest Lodging Time’’

• 4:30 p.m. on Monday, 20 November 2017 or such other date and/or time as the Underwriter and the Company may agree as the latest time for lodging transfer of Shares in order to qualify for the Rights Issue

• ‘‘Latest Practicable Date’’

• 26 October 2017, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion herein

• ‘‘Latest Time for Acceptance’’

• 4:00 p.m. on Tuesday, 12 December 2017 or such other date and/or time as the Underwriter and the Company may agree as the latest date for acceptance of, and payment for, the Rights Shares under the Rights Issue

• ‘‘Latest Time for Termination’’

• 4:00 p.m. on the next business day after the Latest Time for Acceptance or such other time or date as may be agreed between the Company and the Underwriter, being the latest time for the Underwriter to terminate the Underwriting Agreement pursuant to its terms

• ‘‘Listing Rules’’

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

• ‘‘Non-Qualifying Shareholders’’

• such Overseas Shareholders, to whom the Directors, based on the enquiries or legal advice and on account either of legal restrictions under the laws of relevant place or the requirements of the relevant regulatory body or stock exchange in that place, consider it necessary or expedient not to offer the Rights Shares

• ‘‘Old Share Option Scheme’’

• the share option scheme adopted by the Company on 5 June 2006 and expired on 4 June 2016

• ‘‘Overseas Shareholders’’

Shareholders with registered addresses (as shown in the register of members of the Company as at the close of business on the Record Date) which are outside Hong Kong

– 3 –

DEFINITIONS

• ‘‘PAL(s)’’

• the form(s) of application to be issued to the Qualifying Shareholders to apply for the Rights Shares for their assured entitlement under the Rights Issue

• ‘‘PRC’’

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

• ‘‘Prospectus’’

• the prospectus to be issued by the Company in relation to the Rights Issue

• ‘‘Prospectus Documents’’

• the Prospectus, the PAL and the EAF

• ‘‘Prospectus Posting Date’’

• Tuesday, 28 November 2017 or such other date and/or time as the Underwriter and the Company may agree as the date for the dispatch of the Prospectus Documents

• ‘‘Qualifying Shareholders’’

• Shareholders whose names appear on the register of members of the Company as at the close of business on the Record Date, other than the Non-Qualifying Shareholders

• ‘‘Record Date’’

• Monday, 27 November 2017 or such other date and/or time as the Underwriter and the Company may agree as the date by reference to which entitlements to the Rights Issue will be determined

• ‘‘Rights Issue’’

• the proposed rights issue on the basis of one (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date on the terms and subject to the conditions to be set out in the Prospectus Documents

• ‘‘Rights Shares’’ the Shares proposed to be offered and allotted to the Qualifying Shareholders under the Rights Issue

• ‘‘SFO’’

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• ‘‘Share(s)’’

• ordinary share(s) of HK$0.10 each in the share capital of the Company

• ‘‘Shareholder(s)’’

• holder(s) of the Shares

• ‘‘Share Option(s)’’

• the share option(s) granted under the Old Share Option Scheme

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

– 4 –

DEFINITIONS

• ‘‘Subscription Price’’

the subscription price of HK$0.13 for each Rights Share

• ‘‘Takeovers Code’’ the Hong Kong Code on Takeovers and Mergers

• ‘‘Underwriter’’ China Sky Securities Limited, a corporation licensed to carry on type 1 (dealing in securities) regulated activity under the SFO

• ‘‘Underwriting Agreement’’ the underwriting agreement dated 22 September 2017 entered into between the Company and the Underwriter in relation to the Rights Issue

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘RMB’’ Renminbi, the lawful currency of the PRC

• ‘‘%’’ per cent

For the purpose of illustration, amounts denominated in RMB have been converted into HK$ at an exchange rate of HK$1.00 = RMB0.85.

– 5 –

EXPECTED TIMETABLE

Set out below is the expected timetable for the Rights Issue which is indicative only and has been prepared on the assumption that the Rights Issue and the Underwriting Agreement will be approved by the Independent Shareholders at the EGM. The expected timetable is subject to change, and any such change will be announced in a separate announcement by the Company as and when appropriate.

Latest time for lodging transfer of Shares in order to qualify for attendance and voting at the EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Wednesday, 8 November 2017 Register of members of the Company closed for EGM (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 November 2017 to Wednesday, 15 November 2017 Latest time for lodging forms of proxy for the purpose of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Monday, 13 November 2017 EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Wednesday, 15 November 2017 Announcement of results of EGM to be published on the Stock Exchange website. . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 15 November 2017 Register of members of the Company re-opens. . . . . . . . . . . . . . . . . Thursday, 16 November 2017 Last day of dealing in Shares on a cum-rights basis . . . . . . . . . . . . Thursday, 16 November 2017 First day of dealing in Shares on an ex-rights basis . . . . . . . . . . . . . . . Friday, 17 November 2017 Latest time for lodging transfer of Shares in order to qualify for the Rights Issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Monday, 20 November 2017 Register of members of the Company closed for Rights Issue (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 21 November 2017 to Monday, 27 November 2017 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 27 November 2017 Register of members of the Company re-opens. . . . . . . . . . . . . . . . . . Tuesday, 28 November 2017 Dispatch of the Prospectus Documents. . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 28 November 2017 First day of dealing in the nil-paid Rights Shares . . . . . . . . . . . . . . Thursday, 30 November 2017 Latest time for splitting of the nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Monday, 4 December 2017

– 6 –

EXPECTED TIMETABLE

Last day of dealing in the nil-paid Rights Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00p.m. on Thursday, 7 December 2017

Latest Time for Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 12 December 2017

Latest Time for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 13 December 2017

Announcement of results of the Rights Issue. . . . . . . . . . . . . . . . . . Wednesday, 20 December 2017

Dispatch of certificates for fully-paid Rights Shares and refund cheques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 21 December 2017

Commencement of dealing in fully-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 22 December 2017

Note: All times and dates stated in this circular refer to Hong Kong times and dates.

EFFECT OF BAD WEATHER AT THE LATEST TIME FOR ACCEPTANCE

The Latest Time for Acceptance will be postponed if there is:

• . a tropical cyclone warning signal number 8 or above, or

• . a ‘‘black’’ rainstorm warning

in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Tuesday, 12 December 2017. Instead, the Latest Time for Acceptance will be rescheduled to 12:00 noon on the next business day which does not have either of those warnings in force at any time between 9:00 a.m. and 12:00 noon. If the Latest Time for Acceptance is postponed in accordance with the foregoing, the dates mentioned above may be affected. An announcement will be made by the Company in such event.

– 7 –

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriting Agreement contains provisions entitling the Underwriter, by notice in writing, to terminate its obligations thereunder on the occurrence of certain events. If at any time, prior to the Latest Time for Termination (provided that for the purposes of the termination clause of the Underwriting Agreement, if the date of the Latest Time for Termination shall be a business day on which a tropical cyclone warning signal no. 8 or above or a black rainstorm warning signal is or remains hoisted in Hong Kong between 9:00 a.m. and 5:00 p.m. on that day, the date of the Latest Time for Termination shall be the next business day on which no tropical cyclone warning signal no. 8 or above or no black rainstorm warning signal is or remains in force in Hong Kong between 9:00 a.m. and 5:00 p.m. on that day):

• (1) in the absolute opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:

• (a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue; or

• (b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date hereof) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the absolute opinion of the Underwriter materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (2) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction on trading in securities) occurs which in the absolute opinion of the Underwriter is likely to materially and adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (3) there is any change in the circumstances of the Company or any member of the Group which in the absolute opinion of the Underwriter will materially and adversely affect the prospects of the Company, including without limiting the generality of the foregoing the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any member of the Group or the destruction of any material asset of the Group; or

– 8 –

TERMINATION OF THE UNDERWRITING AGREEMENT

• (4) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out which, in the absolute opinion of the Underwriter, is likely to materially and adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (5) any other material adverse change in relation to the business or the financial or trading position or prospects of the Group as a whole whether or not ejusdem generis with any of the foregoing; or

• (6) any matter which, had it arisen or been discovered immediately before the date of the Prospectus and not having been disclosed in the Prospectus, would have constituted, in the absolute opinion of the Underwriter, a material omission in the context of the Rights Issue; or

• (7) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than 10 consecutive business days, excluding any suspension in connection with the clearance of the Announcement or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue; or

• (8) any moratorium, suspension or material restriction on trading of the Shares on the Stock Exchange due to exceptional financial circumstances or otherwise,

then the Underwriter shall be entitled, by notice in writing to the Company served prior to the Latest Time for Termination, to terminate the Underwriting Agreement.

The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

• (a) any material breach of any of the representations, warranties or undertakings contained under the Underwriting Agreement; or

• (b) any event occurring or matter arising on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of the warranties contained in the Underwriting Agreement untrue or incorrect in any material respect comes to the knowledge of the Underwriter.

Any notice of termination shall be served by the Underwriter prior to the Latest Time for Termination.

– 9 –

TERMINATION OF THE UNDERWRITING AGREEMENT

Upon the giving of notice in accordance with the above, the Underwriting Agreement shall terminate and the obligations of the parties shall forthwith cease and be null and void and none of the parties shall have any right against or liability towards any of the other parties arising out of or in connection with the Underwriting Agreement.

If the Underwriting Agreement is terminated by the Underwriter on or before the Latest Time for Termination or does not become unconditional, the Rights Issue will not proceed.

– 10 –

LETTER FROM THE BOARD

TC ORIENT LIGHTING HOLDINGS LIMITED 達進 東 方 照 明 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability) website: www.tatchun.com (Stock Code: 515)

Executive Directors: Mr. Chen Yongsen (Chairman) Mr. Wang Shi Jin (Chief Executive Officer) Mr. Chen Hua Mr. Xu Ming Mr. Guo Jun Hao

Independent non-executive Directors: Mr. Anson Poon Wai Kong Mr. Li Hongxiang Mr. Wong Kwok On Mr. Bonathan Wai Ka Cheung Ms. Chen Lei

Registered Office: Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Unit 1101A1, 11/F East Ocean Centre 98 Granville Road Tsim Sha Tsui, Kowloon Hong Kong

31 October 2017

To the Shareholders

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY ONE (1) EXISTING SHARE HELD ON THE RECORD DATE

INTRODUCTION

Reference is made to the Announcement in relation to, among other things, the Rights Issue.

The Company proposes to raise not less than approximately HK$133.9 million and not more than approximately HK$137.2 million by way of the Rights Issue involving the issue of not less than 1,029,635,216 Rights Shares and not more than 1,055,204,091 Rights Shares at the Subscription Price of HK$0.13 per Rights Share on the basis of one (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date. The Rights Issue (other than the Able Turbo Undertaken Shares) is fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement.

– 11 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among others, (i) further details of the Rights Issue and the Underwriting Agreement; (ii) financial information of the Group; (iii) a letter of recommendations from the Independent Board Committee to the Independent Shareholders in relation to the Rights Issue; (iv) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Rights Issue; and (v) a notice of the EGM.

PROPOSED RIGHTS ISSUE

On 22 September 2017, the Company entered into the Underwriting Agreement with the Underwriters in respect of the Rights Issue. Details of the Rights Issue are set out below:

Issue statistics

Basis of the Rights Issue : One (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date Subscription Price : HK$0.13 per Rights Share Number of Shares in issue as : 1,029,635,216 Shares at the Latest Practicable Date Number of outstanding Share : 25,568,875 Share Options Options as at the Latest Practicable Date Maximum number of Shares : 1,055,204,091 Shares (assuming the full exercise of in issue on or before the all the outstanding Share Options on or before the Record Date Record Date) Number of Rights Shares : Not less than 1,029,635,216 Rights Shares (assuming no Shares are to be issued or repurchased by the Company on or before the Record Date) and not more than 1,055,204,091 Rights Shares (assuming the full exercise of all the outstanding Share Options on or before the Record Date)

– 12 –

LETTER FROM THE BOARD

Number of Rights Shares to : Able Turbo has irrevocably undertaken to the be taken up or procured to Company and the Underwriter that, subject to the be taken up by Able Turbo Rights Issue becoming unconditional and the pursuant to the Able Turbo Underwriter not having terminated the Underwriting Undertaking Agreement, Able Turbo shall maintain its current beneficial shareholding in 162,000,000 Shares up to and including the Record Date and to lodge acceptance by the Latest Time for Acceptance for all the Able Turbo Undertaken Shares (i.e. 162,000,000 Rights Shares) to which it is entitled to subscribe under the Rights Issue

• Number of Rights Shares : Not less than 867,635,216 Rights Shares (assuming underwritten by the no Shares are to be issued or repurchased by the Underwriter Company on or before the Record Date) and not more than 893,204,091 Rights Shares (assuming the full exercise of all the outstanding Share Options on or before the Record Date), being the total number of the Rights Shares less the number of the Able Turbo Undertaken Shares. The Rights Issue (other than the Able Turbo Undertaken Shares) will be fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement

As at the Latest Practicable Date, the Company had 25,568,875 outstanding Share Options entitling the holders thereof to subscribe for 25,568,875 new Shares (the ‘‘Option Exercise Shares’’) pursuant to the terms of the Old Share Option Scheme. Save for the Share Options, as at the Latest Practicable Date, the Company had no other outstanding derivatives, options, warrants or securities in issue which confer any right to subscribe for, convert or exchange into Shares.

Assuming (i) no exercise of any of the outstanding Share Options on or before the Record Date; and (ii) no Shares are to be issued or repurchased by the Company on or before the Record Date, the 1,029,635,216 Rights Shares being issued under the Rights Issue represent 100% of the issued share capital of the Company as at the Latest Practicable Date and 50% of the issued share capital of the Company as enlarged by the allotment and issue of 1,029,635,216 Rights Shares.

As at the Latest Practicable Date, the Company had not received any notice from the holders of the Share Options of their intention to exercise any Share Options.

– 13 –

LETTER FROM THE BOARD

Subscription Price

The Subscription Price is HK$0.13 per Rights Share. The net Subscription Price per Rights Share (after deducting the relevant expenses) is approximately HK$0.125. The Subscription Price represents:

• (i) a discount of 48.0% to the closing price of HK$0.250 per Share as quoted on the Stock Exchange on 22 September 2017, being the Last Trading Day;

• (ii) a discount of approximately 31.6% to the theoretical ex-rights price of HK$0.19 per Share based on the closing price of HK$0.250 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 49.7% to the average closing price of approximately HK$0.259 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day;

• (iv) a discount of approximately 48.7% to the average closing price of approximately HK$0.254 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day;

• (v) a discount of approximately 42.2% to the closing price of HK$0.225 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

• (vi) a discount of approximately 45.8% to the unaudited net asset value per Share of approximately HK$0.240 (calculated by dividing the unaudited equity attributable to owners of the Company of approximately HK$246.9 million as at 30 June 2017 by 1,029,635,216 Shares in issue as at the Latest Practicable Date).

The Subscription Price was determined after arm’s length negotiations between the Company and the Underwriter with reference to, among other things, the prevailing market price and trading liquidity of the Shares.

The trading liquidity of the Shares continued to be thin for the six months preceding the Last Trading Day (the ‘‘Relevant Period’’) and the average daily trading volume of the Shares during the Relevant Period was approximately 2,557,523 Shares, representing approximately 0.25% of the total number of issued Shares and approximately 0.29% of the total number of issued Shares held by the public Shareholders as at the date of the Underwriting Agreement. In view of the unsatisfactory financial performance and position of the Group, as well as the thin trading volume of the Shares, the Board considers that it is necessary to set the Subscription Price at a discount to the recent market price, so as to attract the Qualifying Shareholders to participate in the Rights Issue.

In addition, the Board has reviewed all rights issue announcements issued by companies listed on the Stock Exchange during the Relevant Period and identified an exhaustive list of 21 rights issues (the ‘‘Comparables’’) announced during such period. The subscription prices of the Comparables ranged from a discount of approximately

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LETTER FROM THE BOARD

58.3% to a premium of approximately 21.3% to the respective closing prices of their shares on the last trading day prior to the release of the respective announcements (the ‘‘LTD Market Range’’), with a median of discount of approximately 28.0% and an average of discount of approximately 25.4%. The discount rate implied by the Subscription Price to the closing price of Shares on the Last Trading Day is approximately 48.0%, which falls within the LTD Market Range. Further, the subscription prices of the Comparables ranged from a discount of approximately 50.0% to a premium of approximately 15.9% to the respective theoretical ex-rights prices of their shares based on the closing price on their respective last trading days prior to the release of the rights issue announcements (the ‘‘TERP Market Range’’), with a median of discount of approximately 15.4% and an average of discount of approximately 18.7%. The discount rate implied by the Subscription Price to the theoretical ex-rights price of the Shares based on the closing price on the Last Trading Day is approximately 31.6%, which falls within the TERP Market Range. The Board considers that it is common for listed companies in Hong Kong to set the subscription price of rights issues at a discount to the market price, and the discount level of the Subscription Price to the market price falls within the range of that of the Comparables.

In view of the above, and having considered that all Qualifying Shareholders will be offered equal opportunity to subscribe for the Rights Shares in proportion to their shareholdings held on the Record Date and, if they so wish, excess applications at the same Subscription Price, no interest of any Qualifying Shareholder is prejudiced in this respect. In addition, the Subscription Price has been set as a discount to the recent closing prices of the Shares to encourage existing Shareholders to take up their entitlements and to participate in the future development of the Company. Accordingly, the Directors (excluding the members of the Independent Board Committee who have expressed their views in the letter from the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) consider the terms of the Rights Issue, including the Subscription Price, to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders.

To qualify for the Rights Issue, a Shareholder must at the close of business on the Record Date be registered on the register of members of the Company, and must not be a Non-Qualifying Shareholder. In order to be registered on the register of members of the Company at the close of business on the Record Date, a Shareholder (not being a NonQualifying Shareholder) must lodge any transfers of Shares (together with the relevant share certificates) for registration with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by no later than the Latest Lodging Time, which is currently scheduled for 4:30 p.m. on Monday, 20 November 2017.

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LETTER FROM THE BOARD

Based on the register of members of the Company as at the Latest Practicable Date, there were 7 Overseas Shareholders whose addresses were outside Hong Kong and whose registered shareholding amounted to 137,377,522 Shares. All these 7 Overseas Shareholders had their addresses registered in the PRC.

The Directors have, in compliance with the requirements specified in Rule 13.36(2)(a) of the Listing Rules, conducted enquiries with its PRC legal advisers regarding the feasibility of extending the Rights Issue to Overseas Shareholders with registered addresses in the PRC. Based on the advice of the PRC legal advisers, the Prospectus Documents would not be required to be registered under the relevant laws and regulations of the PRC and may be dispatched to the Shareholders with PRC addresses without any restrictions. On that basis, the Directors decided to extend the Rights Issue, and to dispatch the Prospectus Documents, to Overseas Shareholders with registered addresses in the PRC as at the Record Date will be treated as Qualifying Shareholders, in addition to all Shareholders with registered addresses in Hong Kong.

Holders of Share Options should read the terms and conditions set out in the Old Share Option Scheme relating to the exercise of Shares. Only Shares which are registered with the Company’s branch share registrar and transfer office in Hong Kong, whether pursuant to the exercise of Share Options or otherwise, by no later than the Latest Lodging Time will entitle their holders to participate in the Rights Issue.

The Company will send (i) the Prospectus Documents to the Qualifying Shareholders; and (ii) the Prospectus, for information only, to the Non-Qualifying Shareholders (to the extent permitted by the relevant laws).

Closure of register of members

The register of members of the Company will be closed from Tuesday, 21 November 2017 to Monday, 27 November 2017, both days inclusive, to determine the eligibility of the Rights Issue. No transfer of Shares will be registered during this book closure period. The Record Date for the Rights Issue is currently fixed at Monday, 27 November 2017.

Overseas Shareholders and Non-Qualifying Shareholders

If at the close of business on the Record Date, a Shareholder’s address on the Company’s register of members is in a place outside Hong Kong, such Shareholder may or may not be eligible to take part in the Rights Issue. The Company has no intention to register or file the Prospectus Documents under the applicable securities or equivalent legislation of any jurisdiction other than Hong Kong. Based on the latest available register of members of the Company, there are Overseas Shareholders situated in the PRC. The Company will continue to ascertain whether there are any other Overseas shareholders in any other jurisdictions(s) on the Record Date. The Directors will, in compliance with Rule 13.36(2)(a) of the Listing Rules, make further enquiries and, if necessary, seek legal advice regarding any legal restrictions under the laws of the relevant jurisdiction and the requirements of the relevant regulatory body or stock exchange.

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LETTER FROM THE BOARD

It is the responsibility of the Shareholders (including the Overseas Shareholders) to observe the local legal and regulatory requirements applicable to them for taking up and onward sale (if applicable) of the Rights Shares.

The Non-Qualifying Shareholders, so long as he/she/it is an Independent Shareholder, will be entitled to vote at the EGM to consider and, if thought fit, for the resolution(s) approving the Rights Issue and the transactions contemplated thereunder.

Overseas Shareholders and beneficial owners of Shares who are residing outside Hong Kong should note that they may or may not be eligible to take part in the Rights Issue subject to the results of the enquiries made by the Company. The Company reserves the right to treat as invalid any acceptances of or applications for the Rights Shares where it believes that such acceptance or application would violate the applicable securities or other laws or regulations of any territory or jurisdiction. Accordingly, Overseas Shareholders and beneficial owners of Shares who are residing outside Hong Kong should exercise caution when dealing in the Shares.

No fractional entitlements

On the basis of the entitlement to subscribe one (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date, no fractional entitlements to the Rights Shares will arise under the Rights Issue.

Application for excess Rights Shares

The Rights Shares (i) to which the Non-Qualifying Shareholders would otherwise have been entitled; and (ii) not validly applied for by the Qualifying Shareholders under the Rights Issue will be available for excess application by the Qualifying Shareholders.

The Qualifying Shareholders are entitled to apply for any Rights Shares in excess of their own assured allotments by completing an EAF, but are not assured of being allocated any Rights Shares in excess of their assured allotments under the PALs.

The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis adopting the following principles:

• (i) no preference will be given to applications for topping-up odd-lot holdings to whole-lot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive, which is an unintended and undesirable result; and

• (ii) subject to availability of excess Rights Shares, the excess Rights Shares will be allocated to the Qualifying Shareholders who have applied for excess application on a pro rata basis based on the excess Rights Shares applied for by them.

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LETTER FROM THE BOARD

In the event that the Board noted unusual patterns of excess applications and had reason to believe that any application may have been made with the intention to abuse the excess application mechanism, such application(s) for excess Rights Shares may be rejected at the sole discretion of the Board.

Any Rights Shares not applied for by the Qualifying Shareholders and not taken by excess application will be taken up or procured to be taken up by the Underwriter.

Shareholders whose Shares are held by nominee companies should note that the Board will regard a nominee company as a single Shareholder according to the register of members of the Company. Shareholders with their Shares held by nominee companies 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.

Application may be made only by the Qualifying Shareholders by completing an EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for.

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.

Certificates and refund cheques for the Rights Shares

Subject to the fulfillment of the conditions of the Rights Issue, certificates for the fully-paid Rights Shares are expected to be posted to the Qualifying Shareholders who have accepted and applied for (where appropriate), and paid in full for the Rights Shares on or before Thursday, 21 December 2017 by ordinary post at their own risk. Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares, or if the Rights Issue is terminated, refund cheques in respect of the applications for the Rights Shares are expected to be posted on or before Thursday, 21 December 2017 by ordinary post to the applicants at their own risk. One certificate will be issued for all Rights Shares allotted to a Qualifying Shareholder.

Application for listing of the Rights Shares on the Stock Exchange

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms). The Rights Shares (in both nil-paid and fully-paid forms) shall have the board lot size of 2,000 Shares.

Dealing in the Rights Shares (in both nil-paid and fully-paid forms) on the Stock Exchange will be subject to the payment of stamp duty (if any) in Hong Kong and any other applicable fees and charges in Hong Kong.

Subject to the granting of listing of, and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms) on the Stock Exchange, the Rights Shares (in both nilpaid and fully-paid forms) will be accepted as eligible securities by HKSCC for deposit,

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LETTER FROM THE BOARD

clearance and settlement in CCASS with effect from the commencement date of dealing in the Rights Shares (in both nil-paid and fully-paid forms) 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 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.

CONDITIONS OF THE RIGHTS ISSUE

The Rights Issue is conditional upon the Underwriting Agreement becoming unconditional and not being terminated by the Underwriter prior to the Latest Time for Termination in accordance with its terms. In the event that the Underwriting Agreement does not become unconditional or if it is terminated prior to the Latest Time for Termination in accordance with the terms thereof, then the Rights Issue will not proceed.

ABLE TURBO UNDERTAKING

Pursuant to the Able Turbo Undertaking, Able Turbo has irrevocably undertaken to the Company and the Underwriter that, subject to the Rights Issue becoming unconditional and the Underwriter not having terminated the Underwriting Agreement, Able Turbo shall maintain its current beneficial shareholding in 162,000,000 Shares up to and including the Record Date and to lodge acceptance by the Latest Time for Acceptance for all the Able Turbo Undertaken Shares (i.e. 162,000,000 Rights Shares) to which it is entitled to subscribe for under the Rights Issue.

UNDERWRITING ARRANGEMENT

Date : 22 September 2017 Underwriter : China Sky Securities Limited, a corporation licensed to carry on type 1 (dealing in securities) regulated activity under the SFO

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Underwriter and its ultimate beneficial owners are Independent Third Parties. As at the Latest Practicable Date, each of the Underwriter and its associates is not interested in any Shares.

Number of Rights Shares : Pursuant to the Underwriting Agreement, the Underwriter has underwritten by the conditionally agreed to underwrite all the Rights Shares (other Underwriter than the Able Turbo Undertaken Shares) which have not been taken up by the Qualifying Shareholders, i.e. not less than 867,635,216 Rights Shares (assuming no Shares are to be issued or repurchased by the Company on or before the Record Date) and not more than 893,204,091 Rights Shares (assuming the full exercise of all the outstanding Share Options on or before the Record Date). Accordingly, the Rights Issue is fully underwritten.

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LETTER FROM THE BOARD

• Commission : 1.5% of the aggregate Subscription Price in respect of the maximum number of 893,204,091 Rights Shares committed to be underwritten by the Underwriter

Pursuant to the Underwriting Agreement, in the event of the Underwriter being called upon to subscribe for or procure subscription of the untaken Rights Shares, the Underwriter shall, inter alia, (i) use all reasonable endeavours to procure that each of the subscribers of the untaken Rights Shares shall be third party independent of, not acting in concert with and not connected with any connected person of the Company and their respective associates and close associates; (ii) ensure that none of the subscribers of the untaken Rights Shares will become a substantial Shareholder as a result of such subscription and that such subscriber, together with parties acting in concert with it, shall not be holding 19.99% (or such other percentage which shall trigger any obligations under the Takeovers Code) or more of the issued share capital of the Company upon the allotment and issue of the Rights Shares; and (iii) ensure that the public float requirements under the Listing Rules remains to be fulfilled by the Company upon completion of the Rights Issue.

The commission rate of 1.5% under the Underwriting Agreement was determined after arm’s length negotiations between the Company and the Underwriter by reference to the market rate. The Directors consider the terms of the Underwriting Agreement including the commission rate to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, save for the Able Turbo Undertaking, the Board had not received any information or irrevocable undertakings from any of the substantial Shareholders of their intention to take up the Rights Shares to be offered to them under the Rights Issue.

Conditions of the Underwriting Agreement

The obligations of the Underwriter under the Underwriting Agreement are conditional upon:

• (1) the delivery of the Prospectus to the Stock Exchange and the issue by the Stock Exchange on or before the Prospectus Posting Date of a certificate authorizing registration of the Prospectus with Hong Kong Companies Registry;

• (2) a duly certified copy of the Prospectus (and other required documents) having been lodged with Hong Kong Companies Registry and Hong Kong Companies Registry issuing a confirmation of registration on or before the Prospectus Posting Date;

• (3) following registration, the posting of the Prospectus Documents to the Qualifying Shareholders (and the posting of the Prospectus to the Non-Qualifying Shareholders, if any, for information purposes only) and the publication of the Prospectus Documents on the website of the Stock Exchange on or before the Prospectus Posting Date;

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LETTER FROM THE BOARD

• (4) the grant of listing of the Rights Shares by the Stock Exchange (either unconditionally or subject only to the allotment and dispatch of the share certificates in respect thereof) and the grant of permission to deal in the nil-paid Rights Shares and the Rights Shares by the Stock Exchange (and such permission and listing not subsequently having been withdrawn or revoked prior to the Latest Time for Termination);

• (5) the Underwriting Agreement not being terminated by the Underwriter pursuant to the terms of the Underwriting Agreement at or before the Latest Time for Termination;

• (6) the compliance with and performance by the Company of all the undertakings and obligations under the terms of the Underwriting Agreement;

• (7) the compliance with and performance of all the undertakings and obligations of Able Turbo, or any of its respective associates, under the Able Turbo Undertaking;

• (8) there being no event occurring or matter arising on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of the warranties contained in the Underwriting Agreement untrue or incorrect in any material respect occurring prior to the Latest Time for Termination;

• (9) the Shares remaining listed on the Stock Exchange at all times prior to the date of settlement of the untaken Rights Shares between the Company and the Underwriter and the listing of the Shares not having been withdrawn or the trading of the Shares not having been suspended for a consecutive period of more than 10 trading days (except for any suspension in connection with the clearance of announcement(s), circular(s) or prospectus regarding the Rights Issue) at any time prior to the Latest Time for Acceptance;

• (10) compliance with the requirements under the applicable laws and regulations of Hong Kong and Cayman Islands;

• (11) the passing of the necessary resolutions by the Independent Shareholders at the EGM to approve the Rights Issue and the transactions contemplated thereunder and the issue of the Rights Shares; and

• (12) all other necessary waivers, consents and approvals (if required) from the relevant governmental or regulatory authorities for the Rights Issue and the transactions contemplated thereunder having been obtained and fulfilled.

The above conditions are incapable of being waived. As at the Latest Practicable Date, none of the conditions had been satisfied. If the conditions are not fully satisfied by the Latest Time for Termination (or such other date as the Company and the Underwriter may mutually agree in writing) or if the Underwriting Agreement is rescinded or terminated pursuant to the terms thereof, all obligations and liabilities of the parties under the Underwriting Agreement shall forthwith cease and determine and neither party shall have any claim against the other for fees, costs, damages, compensation or otherwise.

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CHANGES IN SHAREHOLDING STRUCTURE

For illustration purpose only, set forth below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately upon completion of the Rights Issue assuming that all Rights Shares are taken up by the Qualifying Shareholders; and (iii) immediately upon completion of the Rights Issue assuming that no Rights Shares are taken up by Qualifying Shareholders, save for the Able Turbo Undertaken Shares subscribed by Able Turbo:

• (a) Assuming none of the Share Options is exercised on or before the Record Date:

Shareholders Able Turbo (Note 1) Underwriter (Notes 2 and 3) Public Shareholders Total	As at the Latest Practicable Date No. of Shares % 162,000,000 15.73 — — 867,635,216 84.27 1,029,635,216 100.00	Immediately upon completion of the Rights Issue Assuming all Rights Shares are taken up by the Qualifying Shareholders Assuming no Rights Shares are taken up by Qualifying Shareholders, save for the Able Turbo Undertaken Shares subscribed by Able Turbo No. of Shares % No. of Shares % 324,000,000 15.73 324,000,000 15.73 — — 867,635,216 42.13 1,735,270,432 84.27 867,635,216 42.13 2,059,270,432 100.00 2,059,270,432 100.00	Immediately upon completion of the Rights Issue Assuming all Rights Shares are taken up by the Qualifying Shareholders Assuming no Rights Shares are taken up by Qualifying Shareholders, save for the Able Turbo Undertaken Shares subscribed by Able Turbo No. of Shares % No. of Shares % 324,000,000 15.73 324,000,000 15.73 — — 867,635,216 42.13 1,735,270,432 84.27 867,635,216 42.13 2,059,270,432 100.00 2,059,270,432 100.00
			100.00

• (b) Assuming all of the outstanding Share Options are exercised in full on or before the Record Date:

Shareholders Able Turbo (Note 1) Holders of Share Options Underwriter (Notes 2 and 3) Public Shareholders Total	As at the Latest Practicable Date No. of Shares % 162,000,000 15.73 — — — — 867,635,216 84.27 1,029,635,216 100.00	Immediately upon completion of the Rights Issue Assuming all Rights Shares are taken up by the Qualifying Shareholders Assuming no Rights Shares are taken up by Qualifying Shareholders, save for the Able Turbo Undertaken Shares subscribed by Able Turbo No. of Shares % No. of Shares % 324,000,000 15.35 324,000,000 15.35 51,137,750 2.42 25,568,875 1.21 — — 893,204,091 42.32 1,735,270,432 82.22 867,635,216 41.11 2,110,408,182 100.00 2,110,408,182 100.00	Immediately upon completion of the Rights Issue Assuming all Rights Shares are taken up by the Qualifying Shareholders Assuming no Rights Shares are taken up by Qualifying Shareholders, save for the Able Turbo Undertaken Shares subscribed by Able Turbo No. of Shares % No. of Shares % 324,000,000 15.35 324,000,000 15.35 51,137,750 2.42 25,568,875 1.21 — — 893,204,091 42.32 1,735,270,432 82.22 867,635,216 41.11 2,110,408,182 100.00 2,110,408,182 100.00
			100.00

Notes:

1. Able Turbo is a company 60.31% owned by Mr. Chen Hua (an executive Director) and 39.69% owned by Mr. Li Xianggen.

2. Pursuant to the Underwriting Agreement, in the event of the Underwriter being called upon to subscribe for or procure subscription of the untaken Rights Shares, the Underwriter shall, inter alia, (i) use all reasonable endeavours to procure that each of the subscribers of the untaken

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Rights Shares shall be third party independent of, not acting in concert with and not connected with any connected person of the Company and their respective associates and close associates; (ii) ensure that none of the subscribers of the untaken Rights Shares will become a substantial Shareholder as a result of such subscription and that such subscriber, together with parties acting in concert with it, shall not be holding 19.99% (or such other percentage which shall trigger any obligations under the Takeovers Code) or more of the issued share capital of the Company upon the allotment and issue of the Rights Shares; and (iii) ensure that the public float requirements under the Listing Rules remains to be fulfilled by the Company upon completion of the Rights Issue.

1. The Board will procure that the Underwriter undertakes not to involve any of the CB Subscribers (as defined below) and their respective associates during the performance of its underwriting obligations under the Rights Issue whether by way of sub-underwriting, direct subscription or otherwise.

2. Any discrepancies in the table above between totals and sums of amounts set out in it are due to rounding.

REASONS FOR THE RIGHTS ISSUE AND THE USE OF PROCEEDS

The Company is an investment holding company, whose major operating subsidiaries are principally engaged in the manufacturing and trading of light emitting diode (LED) lighting, and single-sided, double-sided and multi-layered printed circuit boards (PCBs).

The trading of the Shares were suspended for almost one year between 10:48 a.m. on 24 April 2015 and 9:00 a.m. on 18 April 2016 due to purported guarantees given by Zhongshan Tat Chun Printed Circuit Board Company Limited (中山市達進電子有限公司) (‘‘Zhongshan Tat Chun’’) (a wholly-owned subsidiary of the Company) and purported indemnity given by the Company and Tat Chun PCB International Company Limited (‘‘Tat Chun PCB’’) (a wholly-owned subsidiary of the Company) in respect of personal loans of Mr. Chen Jing (exchairman and ex-director of the Company who resigned on 5 June 2015) and Shenzhen Optoelectronic Industry Holdings Group Company Limited (深圳光電產業控股集團有限公司) (a company whose president is Mr. Chen Jing and believed to be controlled by Mr. Chen Jing) involving a total sum of RMB77.7 million (equivalent to approximately HK$91.4 million). These purported guarantees and indemnity (the ‘‘Unauthorized Financing Transactions’’) were entered into by Chen Jing and his related parties without the approval or authorization of the Board, Tat Chun PCB or Zhongshan Tat Chun. As a result of the Unauthorized Financing Transactions, (a) on 23 April 2015, a court order (the ‘‘Court Order’’) was imposed on Zhongshan Tat Chun to restrain it from disposing of its assets in the total amount of RMB12.3 million (equivalent to approximately HK$14.5 million); (b) on 27 April 2015, a demand letter (the ‘‘Demand Letter’’) was received by Tat Chun PCB demanding payment of RMB39.0 million (equivalent to approximately HK$45.9 million); and (c) on 13 May 2015, the Company and Tat Chun PCB received petitions (the ‘‘Winding-up Petitions’’) for their winding-up.

The Court Order was withdrawn on 13 August 2015 and the Winding-up Petitions were dismissed on 31 August 2015. However, trading of the Company’s shares has not resumed until April 2016 after completion of the forensic investigation on the Unauthorized Financing Transactions and the putting in place by the Group of financial reporting procedures and internal control systems to the satisfaction of the Stock Exchange.

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LETTER FROM THE BOARD

As disclosed in the Company’s announcements, while the incidents arising from the Unauthorized Financing Transactions (the ‘‘Incidents’’) did not appear to have any direct impact on the financial position of the Group because the Group was already fully discharged and released from the Court Order and the Winding-up Petitions, the Group did suffer loss of reputation and loss in confidence of banks, suppliers and customers as a result of the Incidents. These sufferings were evident by:

• (a) the cutting of low-cost bank borrowings by the Group’s relationship banks from HK$230.3 million (as at 31 December 2014) to HK$137.9 million (as at 31 August 2017), deteriorating the Group’s liquidity and forcing the Company to resort to higher-cost loans from financial institutions and to suspend the upgrade and expansion plans of the Group’s PCB production facilities;

• (b) the decrease in business turnover from HK$705.9 million for the year ended 31 December 2014 to HK$395.5 million for the year ended 31 December 2016, as a result of slow recovery of confidence by customers, lack of funding for facilities upgrade and the gradual phasing-out of existing production facilities, limiting the Group’s capability to accept purchase orders for higher-end and precision PCB products; and

• (c) the increase of financial costs from HK$9.1 million for the year ended 31 December 2014 to HK$12.7 million for the year ended 31 December 2016 and to HK$20.3 million for just eight months ended 31 August 2017, due to the shifting of credit facilities from normal bank loans (carrying interest rate of approximately 2.05– 4.79% per annum) to more costly loans and facilities obtained from smaller financing institutions (carrying interest rate of approximately 8.48–24.00% per annum).

Based on the unaudited management accounts of the Group, the Group’s financial costs for the first eight months ended 31 August 2017 had escalated to HK$20.3 million, representing an increase of 181.9% when compared with the corresponding period in 2016. Without the prompt implementation of an effective and low-cost fund-raising means, the profitability of the Group would be seriously eroded by the increasing financial costs.

As at 31 December 2015, the bank balances, deposits and cash of the Group hit a low level at HK$43.8 million. For the year ended 31 December 2016, the Group incurred a loss for the year and operating cash outflow in the amount of HK$92.5 million and HK$35.3 million, respectively. To ease the Group’s cash flow pressure, the Company has since 2015 adopted new credit and payment cycle practices on the purchases and sales of PCB division. As at 31 August 2017, the accounts payable by the Group to its suppliers amounted to approximately RMB93.3 million (equivalent to approximately HK$109.8 million), of which RMB51.1 million (equivalent to approximately HK$60.2 million) was immediately due or past due.

Following the resumption of trading of the Shares in April 2016, the Company successfully conducted three rounds of small-scale equity fund-raising exercises, namely (a) the share subscription announced by the Company on 14 June 2016 involving the issue of 106,147,960 Shares at the subscription price of HK$0.198 per Share (the ‘‘June Placing’’), which was completed on 21 June 2016 raising net proceeds of approximately HK$21 million;

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LETTER FROM THE BOARD

(b) the one-for-two open offer announced by the Company on 25 May 2016 involving the issue of 265,369,901 Shares at the subscription price of HK$0.10 per Share (the ‘‘2016 Open Offer’’), which was completed in July 2016 raising net proceeds of HK$25 million; and (c) the share subscription announced by the Company on 14 September 2016 involving the issue of 127,377,552 Shares at the subscription price of HK$0.19 per Share (the ‘‘September Placing’’), which was completed on 26 September 2016 raising net proceeds of HK$24 million. With the new strategies relating to payment cycles of the Group’s purchases and sales and the replenishment of total cash proceeds of HK$70 million from the June Placing, the 2016 Open Offer and the September Placing in aggregate, the Group managed to (a) increase its bank balances, deposits and cash from HK$43.8 million as at 31 December 2015 to HK$67.8 million as at 31 December 2016; and (b) reduce its bills payable from HK$135.1 million as at 31 December 2015 to HK$80.5 million as at 31 December 2016. However, the proceeds raised by the Company through the June Placing, the 2016 Open Offer and the September Placing were insufficient for reduction of the Group’s bank loans and other financial institution loans to comfortable and safe levels.

As stated in the Company’s audited financial statements for the year ended 31 December 2016, the Group’s current liabilities exceeded its current assets by HK$4.1 million as at 31 December 2016, as a result of which a material uncertainty on the Group’s ability to continue as a going concern was expressed in the auditors’ opinion. By way of business update, based on the unaudited management accounts of the Group up to and as at 31 August 2017, the Group’s bank balances, deposits and cash again dropped to a low level of approximately HK$23.9 million.

The PCB business has been the Group’s main source of income for many years. However, the revenue generated from the PCB business dropped significantly from HK$527.8 million in 2015 to HK$349.6 million in 2016, representing a decrease of approximately 33.8%. During the first half of 2017, the Group was unable to secure more purchase orders from new and existing customers for higher-end and precision PCB products notwithstanding the increase in market demand of PCB products for LED and automobile industries. The principal reason for the Group’s failure in obtaining more PCB orders from customers is the lack of capital for upgrading the Group’s equipment and machinery to enhance precision, speed and quality and to bring in line with the new industry standard of robotic automation and artificial intelligence. The Company is concerned that if we do not immediately replenish our cash reserve and relieve our cash flow pressure, it would be difficult for us to allow for sufficient budget to invest on new and additional machinery. If the issue of lacking investment budget persists, the Board is concerned that the loss-making trend of the Company may not be reversed easily in the near future.

As at 31 August 2017, the Group’s bank borrowings (carrying interests of approximately 2.05–4.79% per annum) further decreased to approximately HK$137.9 million (compared to HK$230.3 million as at 31 December 2014) and other payables (principally comprising shortterm loans and facilities obtained from smaller financial institutions with higher interest level of approximately 8.48–24.00% per annum) further increased to approximately HK$151.5 million (compared to HK$79.9 million as at 31 December 2014). During the eight months ended 31 August 2017, the Group’s financial costs escalated to HK$20.3 million, representing an increase of 181.9% when compared with the corresponding period in 2016. In order to

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LETTER FROM THE BOARD

resolve the issue of increasing financial costs, the Company’s management has been actively approaching banks, financial institutions and individual professional and high net worth investors since the second half of 2016 with the view to obtaining equity financing or lowercost debt financing.

As disclosed in the Company’s announcement dated 26 September 2016, on 22 and 26 September 2016, the Company entered into the subscription agreements with 17 subscribers (the ‘‘CB Subscribers’’), pursuant to which the Company has conditionally agreed to issue, and the CB Subscribers have agreed to subscribe for, the convertible bonds (‘‘CBs’’) in the aggregate principal amount of HK$285,000,000. The CBs are of three-year maturity date, with interest rate of 7% per annum and a conversion price of HK$0.10 per conversion share. The CB subscriptions were terminated by mutual consent of the Company and the seventeen CB Subscribers on 30 June and 21 July 2017, respectively.

Since the second half of 2016, the Company has approached various banks to explore the possibility of applying for loans or additional loans, and various financial institutions to explore the possibilities of issuing bond or equity instruments by way of best-effort placing, open offer or rights issue with their assistance (i.e. for them to act as the Company’s placing agent or underwriter). However, no positive feedbacks were received from any of these banks or financial institutions. All banks approached by us have turned down the Group’s application for increase in size of credit line. The Company was given to understand that the banks would like to see that the Company can improve its equity and capital base and therefore improve its gearing ratio and liquidity, before they consider appropriate to give the Company higher level of loan and credit facilities.

Amongst the various financial institutions approached by the Company between the second half of 2016 up to around May 2017, none of them is prepared to assist the Company in formulating an alternative equity or convertible securities fund-raising plan which has more favourable terms and more certainty in terms of successful outcome when compared with the CB subscriptions. Therefore, between September 2016 and June 2017, the Company has been working diligently on proceeding with the CB subscriptions which, if materialize, will raise funding with lower-cost (of 7% per annum), longer term (of 3 years maturity) and possibility of reinforcing the Company’s equity and capital base (if holders elect to convert into shares).

As explained above, between September 2016 and around May 2017, the CB subscriptions was the only available fund raising option for the Company. However, with the rising of Hang Seng Index from the level of 24,000 points in May 2017 to the level of 28,000 points in midSeptember 2017, the sentiment of Hong Kong stock market has greatly improved. After the termination of the CB subscriptions in June and July 2017, the Company’s management discussed with financial institutions again with the view to exploring different fund raising opportunities and procuring terms which are most favourable to the Company. None of the financial institutions approached by us, except two, provided any concrete, definite and viable funding proposal to us. One another financial institution has proposed a best-effort share placing at a deep discount to the market price, but it cannot provide any level of certainty on the amount of fund successfully raised. In addition, according to this financial institution,

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LETTER FROM THE BOARD

potential investors approached by it indicated that unless the funding raised in the best effort placing is to be applied to new businesses with good market concept, they are reluctant to invest in the Group’s traditional LED and PCB manufacturing.

In this regard, while the Company has always kept an open mind on diversifying its businesses, its key objective for the present fund-raising is to reduce debt and strengthen the financial position of the Group rather than to spend enormous investment in other new businesses.

The Board has considered other fund raising alternatives before agreeing with the Underwriter on the structure of the Rights Issue. Such fund raising alternatives include debt financing, placing of new shares and rights issue. Taking in account the costs and benefits of each of the alternatives when compared with the Rights Issue, the Board considers that the Rights Issue is the best available fund raising option for the Company in the circumstances.

As explained above, no bank financier approached by the Company is willing to provide further debt financing to the Group without the Company first improving its equity and asset position by way of equity fund-raising. The Company is reluctant to obtain additional shortterm financing from smaller financial institutions due to the high interest rate charged by those institutions.

The Board has also considered conducting the pro rata fund raising by way of open offer, which is of similar nature as rights issue. However, an open offer would not provide an additional option to those Qualifying Shareholders who do not wish to take up their allotments to sell their provisionally allotted nil-paid Rights Shares and those Qualifying Shareholders who wish to increase their shareholding interests in the Company cannot acquire additional nilpaid Rights Shares in the market in the case of an open offer. The Board considers that rights issue would be more favourable and attractive to the Shareholders than open offer because it would allow Shareholders to have more flexibility in dealing with the Shares and the nil paid rights attaching thereto.

The Rights Issue gives the Qualifying Shareholders an opportunity to participate in the business expansion of the Company on equal term, and to maintain their respective pro rata shareholding interests in the Company to avoid dilution of their respective shareholding if they choose to subscribe for the Rights Shares. The Rights Issue (other than the Able Turbo Undertaken Shares) is fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement. The Board considers that entering into the Underwriting Agreement will provide more certainty on the successful outcome of the fund raising exercise if compared to best-efforts share placing.

After comparing all the other financing alternatives, the Directors are of the view that the Rights Issue is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

The Directors consider that the Rights Issue will provide additional and sufficient capital to the Company to enable it to settle the Group’s higher-cost short-term financing and therefore, improve the cash and liquidity position and the gearing ratio of the Group. With reference to (a) the Group’s bank borrowings (including accrued interest) as at 31 August 2017 of approximately RMB117.8 million (equivalent to approximately HK$138.4 million), all of which are due within one year; (b) the other payables (principally higher-cost loans obtained from financing institutions, including accrued interest) as at 31 August 2017 of approximately RMB130.9 million (equivalent to approximately HK$153.3 million), all of which are repayable on demand or due within one year; and (c) the accounts payable to suppliers as at 31 August 2017 of approximately RMB93.3 million (equivalent to approximately HK$109.8 million), of which RMB51.1 million (equivalent to approximately HK$60.2 million) was immediately due or past due, the Company proposes the Rights Issue on the basis of one (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date to raise not less than HK$133.9 million.

The Rights Issue will enable all Qualifying Shareholders to subscribe for the Rights Shares at the same Subscription Price in proportion to their shareholdings held on the Record Date. The Board set the Subscription Price at a discount to the recent closing prices of the Shares so as to encourage existing Shareholders to take up their entitlements and to participate in the future development of the Company in proportion to their shareholdings.

The gross proceeds from the Rights Issue (before expenses) are not less than approximately HK$133.9 million and not more than approximately HK$137.2 million. The net proceeds from the Rights Issue (after expenses) are not less than approximately HK$128.4 million and not more than approximately HK$131.7 million. The net issue price of the Rights Shares (after deducting costs expected to be incurred in the Rights Issue) is estimated to be approximately HK$0.125 per Rights Share. It is intended that all such net proceeds will be used by the Company for settlement of the Group’s liabilities as they fall due. In particular:

• (i) approximately HK$96.3 million was set aside for the partial repayment of the Group’s other payables (principally higher-cost short-term loans and facilities obtained from non-bank financial institutions, including accrued interest), which carry interest rate of over 10% per annum; and

• (ii) approximately HK$32.1 million to HK$35.4 million (depending on whether any Share Options are exercised on or before the Record Date) was set aside for the partial settlement of the accounts payable to suppliers which are immediately due or overdue.

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LETTER FROM THE BOARD

Details of the outstanding short-term financing of the Group as at 31 August 2017 classified as other payables are as follows:

Creditor A: Creditor B: Creditor C: Creditor D: Total:	Outstanding amount Due date Interest rate (Approximately HK$) 3,882,400 20 September 2017 (Note 1) 21.60% p.a. 4,117,600 20 September 2017 (Note 2) 18.00% p.a. 37,647,100 9 October 2017 (Note 3) 18.00% p.a. 26,352,900 Repayable on demand 8.48% p.a. 26,352,900 Repayable on demand 8.48% p.a. 20,000,000 8 December 2017 18.00% p.a. 1,411,800 27 September 2017 (Note 4) 24.00% p.a. 31,764,700 Repayable on demand 18.00% p.a. 151,529,400	Annualized interest accruing per year (Approximately HK$) 838,600 741,200 6,776,400 2,234,700 2,234,700 3,600,000 338,800 5,717,600
		22,482,000

Notes:

1. The original due date of the loan of approximately HK$3,882,400 has been extended to 20 December 2017.

2. The loan of approximately HK$4,117,600 has been repaid on 6 September 2017.

3. The original due date of the loan of approximately HK$37,647,100 has been extended to 6 December 2017.

4. The original due date of the loan of approximately HK$1,411,800 has been extended to 27 December 2017.

Amongst the above other payables, the Company intends to utilize HK$96.3 million out of the net proceeds of the Rights Issue to partially repay those loans which bear interest rate of over 10% per annum.

Assuming successful completion of the Rights Issue and following the implementation of the utilization of the net cash proceeds as planned and stated above, the Company expects to reduce its higher-cost short-term loan to a lower level, with the view to restoring the Group’s credit relationship with suppliers to a normal position. In addition, the Group may stand better chance for re-grant or extension of loans by banks at lower cost. As such, the Company may consider utilizing new or extended bank loans to upgrade our production equipment and machinery of our PCB manufacturing segment, enabling the Group to accept more purchase orders from new and existing customers. The Company considers that the overall commercial benefit of the Rights Issue outweighs the dilution effect caused to any Shareholders who elect not to participate in the Rights Issue.

Despite the loss-making of the Group’s LED and PCB segments, the Board considers that both business segments are viable businesses for the Group. The business performance of these segments were just severely damaged by the temporary loss of confidence of creditors which was affected by the Unauthorized Financing Transactions and the suspension in trading of the

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LETTER FROM THE BOARD

Company’s shares between April 2015 and April 2016. In addition, the normal payment cycle with our suppliers and customers and our production expansion and upgrade were adversely bottlenecked by the limited working capital level of the Group, as a result of the delay and ultimate abortion of the CB subscriptions. If the Rights Issue is successfully completed, it is the view of the Board that the net proceeds of the Rights Issue would be able to replenish the cash and asset position of the Group with the view to bringing the Group’s manufacturing business back to the right track.

The Board considers that the Rights Issue will allow the Group to strengthen its financial position without having to incur interest expenses as compared to debt financing, and will increase the capital base of the Company to finance the Group’s manufacturing business and to reduce the Group’s debt level. In addition, the Rights Issue would provide an opportunity to all Qualifying Shareholders to participate in the future development of the Company in proportion to their shareholdings if they so wish.

The terms of the Rights Issue (including the Subscription Price) were determined after arm’s length negotiations between the Company and the Underwriter with reference to the recent trading price and liquidity of the Shares on the Stock Exchange, the Group’s current financial position and the continuing loss-making annual results. Accordingly, the Directors (excluding the members of the Independent Board Committee who have expressed their views in the letter from the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) consider the terms of the Rights Issue to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

ADJUSTMENTS IN RELATION TO THE SHARE OPTIONS

As a result of the Rights Issue, there may be certain adjustments to the exercise prices and numbers of the outstanding Share Options pursuant to the relevant terms of the Old Share Option Scheme. Pursuant to the terms of the Old Share Option Scheme, the final results of adjustments (if any) to the exercise prices and numbers of the Share Options are subject to certification by an independent financial adviser to be appointed by the Company or the auditors for the time being of the Company. Further details of relating to the adjustments (if any) to the exercise prices and numbers of the Share Options will be disclosed by the Company in further announcement(s) as and when appropriate.

FUNDS RAISING ACTIVITY OF THE COMPANY IN THE PAST TWELVE MONTHS

The Company had not conducted any other equity fund raising activities during the past 12 months immediately preceding the Latest Practicable Date.

LISTING RULES IMPLICATION

Since the Rights Issue will increase the issued share capital or the market capitalization of the Company by more than 50% within twelve-month period immediately preceding the Announcement, the Rights Issue is subject to approval by the Independent Shareholders at the EGM. Pursuant to Rule 7.24(5)(a) of the Listing Rules, where there are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the issuer and their respective associates shall abstain from voting in favour. Accordingly,

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LETTER FROM THE BOARD

Able Turbo (a company which is 60.31% owned by Mr. Chen Hua, an executive Director), who is interested in 162,000,000 Shares representing approximately 15.73% of the issued share capital of the Company as at the Latest Practicable Date, will abstain from voting in favour of the resolution regarding the Rights Issue at the EGM. Save for Mr. Chen Hua, no other Directors are beneficially interested in any Shares as at the Latest Practicable Date.

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

Shareholders and potential investors should note that the Rights Issue is conditional upon the fulfillment of the conditions of the Underwriting Agreement and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Rights Issue may or may not proceed. Shareholders should note that the Shares will be dealt in on an ex-rights basis commencing from Friday, 17 November 2017 and that dealing in Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled. Any Shareholder or potential investor dealing in Shares up to the date on which all conditions of the Rights Issue are fulfilled (which is expected to be on 4:00 p.m. on Wednesday, 13 December 2017) and dealing in the Rights Shares in the nil-paid form from Thursday, 30 November 2017 to Thursday, 7 December 2017 (both dates inclusive) will bear the risk that the Rights Issue does not become unconditional and does not proceed.

Shareholders or potential investors contemplating selling or purchasing Shares and/ or the nil-paid Rights Shares are advised to exercise caution when dealing in the Shares and/or the nil-paid Rights Shares and consult their professional advisers if they are in any doubt about their positions.

GENERAL

The EGM will be held to consider and, if thought fit, approve the Rights Issue and the transactions contemplated thereunder. The resolution in relation to the Rights Issue to be proposed at the EGM will be voted on by the Independent Shareholders (as the case may be) by way of poll. The notice of the EGM is set out on pages EGM-1 to EGM-3 of this circular. A form of proxy for use at the EGM is also enclosed with this circular.

Whether or not you are able to attend the EGM in person, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked.

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LETTER FROM THE BOARD

Subject to the Rights Issue and the transactions contemplated thereunder being approved at the EGM, the Prospectus Documents setting out further details of the Rights Issue will be dispatched to the Qualifying Shareholders on Tuesday, 28 November 2017 or such other date as may be agreed between the Company and the Underwriter.

RECOMMENDATION

The Directors (excluding the members of the Independent Board Committee who have expressed their views in the letter from the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) are of the view that the Rights Issue and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (excluding the members of the Independent Board Committee who have expressed their views in the letter from the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) recommend the Independent Shareholders to vote in favor of the resolution to be proposed at the EGM to approve the Rights Issue and the transactions contemplated thereunder.

FURTHER INFORMATION

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

Yours faithfully, By order of the Board TC Orient Lighting Holdings Limited Chen Yongsen Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

31 October 2017

TC ORIENT LIGHTING HOLDINGS LIMITED 達進 東 方 照 明 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability) website: www.tatchun.com (Stock Code: 515)

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY ONE (1) EXISTING SHARE HELD ON THE RECORD DATE

We have been appointed to form an Independent Board Committee to consider and advise you on the Rights Issue and the transactions contemplated thereunder, details of which are set out in the circular issued by the Company to the Shareholders dated 31 October 2017 (the ‘‘Circular’’), of which this letter forms part. Terms defined in the Circular will have the same meanings when used herein unless the context otherwise requires.

We wish to draw your attention to the letter from the Board and the letter of advice from the Independent Financial Adviser set out on pages 11 to 32 and pages 34 to 59 of the Circular, respectively, and the additional information set out in the appendices to the Circular.

Having taken into account the advice and recommendations of the Independent Financial Adviser and the principal factors and reasons taken into consideration by them in arriving at their opinion, we consider that the Rights Issue and the transactions contemplated thereunder are fair and reasonable and in the interests of the Independent Shareholders. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Rights Issue and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Bonathan Wai Ka Cheung Mr. Anson Poon Wai Kong Mr. Li Hongxiang Mr. Wong Kwok On Ms. Chen Lei

Independent non-executive Directors

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from the Independent Financial Adviser setting out the advice to the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue and as to voting, which has been prepared for the purpose of inclusion in this circular.

==> picture [47 x 39] intentionally omitted <==

Goldin Financial Limited Suites 2202–2209, 22/F Two International Finance Centre 8 Finance Street Central Hong Kong

31 October 2017

To: The Independent Board Committee and the Independent Shareholders of TC Orient Lighting Holdings Limited

Dear Sirs,

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY ONE (1) EXISTING SHARE HELD ON THE RECORD DATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Rights Issue, details of which are set out in the Announcement and the letter from the board (the ‘‘Letter from the Board’’) contained in the circular of the Company dated 31 October 2017 (the ‘‘Circular’’), of which this letter forms part. Unless otherwise specified, capitalised terms used herein shall have the same meanings as those defined in the Circular.

As stated in the Letter from the Board, the Company proposes to raise not less than approximately HK$133.9 million and not more than approximately HK$137.2 million by way of the Rights Issue involving the issue of not less than 1,029,635,216 Rights Shares and not more than 1,055,204,091 Rights Shares at the Subscription Price of HK$0.13 per Rights Share on the basis of one (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date. The Rights Issue (other than the Able Turbo Undertaken Shares) is fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Since the Rights Issue will increase the issued share capital or the market capitalisation of the Company by more than 50% within twelve-month period immediately preceding the Announcement, the Rights Issue is subject to approval by the Independent Shareholders at the EGM. Pursuant to Rule 7.24(5)(a) of the Listing Rules, where there are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the issuer and their respective associates shall abstain from voting in favour. Accordingly, Able Turbo (a company which is 60.31% owned by Mr. Chen Hua, an executive Director), who is interested in 162,000,000 Shares, representing approximately 15.73% of the issued share capital of the Company as at the Latest Practicable Date, will abstain from voting in favour of the resolution regarding the Rights Issue at the EGM. Save for Mr. Chen Hua, no other Directors are beneficially interested in any Shares as at the Latest Practicable Date.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising all the independent non-executive Directors, has been established by the Company to advise the Independent Shareholders on the terms of the Rights Issue and the transactions contemplated thereunder.

We, Goldin Financial Limited, have been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Rights Issue and the transactions contemplated thereunder are normal commercial terms, fair and reasonable as far as the Independent Shareholders are concerned, and in the interests of the Company and the Shareholders as a whole, and advise the Independent Shareholders on how to vote at the EGM. Our appointment has been approved by the Independent Board Committee.

We are independent under Rule 13.84 of the Listing Rules to act as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in connection with the Rights Issue and the transactions contemplated thereunder. Apart from normal professional fees for our services to the Company in connection with the appointment as the Independent Financial Adviser, no other arrangement exists whereby we will receive any fees and/or benefits from the Group. We are not aware of any relationships or interests between us and the Group, the Underwriter or any of their respective substantial shareholders, directors or chief executives, or any of their respective associates as at the Latest Practicable Date.

BASIS OF OUR ADVICE

In formulating our opinion and recommendations, we have reviewed, inter alia, the Announcement, the Underwriting Agreement, the Able Turbo Undertaking, the annual reports of the Company for the respective years ended 31 December 2015 (the ‘‘Annual Report 2015’’) and 31 December 2016 (the ‘‘Annual Report 2016’’), the interim report of the Company for the six months ended 30 June 2017 (the ‘‘Interim Report 2017’’) and the unaudited consolidated management accounts of the Group for the eight months ended 31 August 2017 (the ‘‘Management Accounts’’). We have also reviewed certain information provided by the management of the Company relating to the operations, financial condition and prospects of the Group. We have also (i) considered such other information, analyses and market data which we deemed relevant; and (ii) conducted discussions with the management of

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the Company regarding, among others, the Rights Issue and the transactions contemplated thereunder, and the businesses and future outlook of the Group. We have assumed that such information and statements, and any representation made to us, which we have relied upon them in formulating our opinion, are true, accurate and complete in all material respects as of the Latest Practicable Date and the Shareholders will be notified of any material changes (if any) as soon as possible.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement herein or in the Circular misleading. We consider that we have been provided with, and we have reviewed, all currently available information and documents which are available under present circumstances to enable us to reach an informed view regarding the terms of the Rights Issue and the transactions contemplated thereunder to justify reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis of our opinion. We have no reasons to suspect that any material information has been withheld by the Directors or management of the Company, or is misleading, untrue or inaccurate. We have not, however, for the purpose of this exercise, conducted any independent detailed investigation or audit into the business or affairs or future prospects of the Group. Our opinion is necessarily based on financial, economic, market and other conditions in effect and the information made available to us at the Latest Practicable Date.

This letter is issued for the information for the Independent Board Committee and the Independent Shareholders solely for their consideration of the Rights Issue and the transactions contemplated thereunder. Except for its inclusion in the Circular, this letter is not to be quoted or referred to, in whole or in part, nor be used for any other purposes without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion, we have taken into consideration the following principal factors and reasons:

1 Financial overview of the Group

Set out in Table 1 below is certain financial information of the Group for (i) each of the two years ended 31 December 2016 as extracted from the Annual Report 2016; and (ii) each of the six months ended 30 June 2016 and 30 June 2017 respectively as extracted from the Interim Report 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 1: Financial information of the Group

	For the six months ended	For the six months ended	For the year	ended
	30 June		31 December
	2017	2016	2016	2015
	(Unaudited)	(Unaudited)	(Audited)	(Audited)
	HK$’000	HK$’000	HK$’000	HK$’000
Turnover	316,708	187,940	395,450	533,608
Loss for the year/period
attributable to owners of
the Company	(19,764)	(44,735)	(89,036)	(81,225)
		As at
		30 June	As at 31 December
		2017	2016	2015
		(Unaudited)	(Audited)	(Audited)
		HK$’000	HK$’000	HK$’000
Non-current assets		267,804	284,443	292,636
Current assets		647,595	637,949	687,574
Current liabilities		(647,684)	(642,024)	(677,758)
Net current assets/(liabilities)		(89)	(4,075)	9,816
Non-current liabilities		(14,877)	(15,003)	(16,957)
Net assets		252,838	265,365	285,495

For the year ended 31 December 2016

For the year ended 31 December 2016, the Group recorded turnover of approximately HK$395.45 million, representing a substantial decrease of approximately 25.89% as compared to that of approximately HK$533.61 million recorded for the previous year. Based on the Annual Report 2016, such decrease in turnover of the Group was primarily due to the net effects of (i) the year-on-year decrease in the turnover of the PCB segments, which collectively accounted for a major portion of approximately 88.41% of the total turnover during the year, owing to, among others, the increase in competition in the PCB industry; (ii) the year-onyear increase in the turnover of the LED lighting segment; and (iii) the recognition of the turnover of the trading of tower and electric cable segment, engagement by the Group of which was started only since the second half of 2016.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For the year ended 31 December 2016, the Group recorded loss attributable to owners of the Company of approximately HK$89.04 million, which has widened by approximately 9.61% from approximately HK$81.23 million as recorded for the previous year. With reference to the Annual Report 2016, such increase in loss for 2016 was mainly the net result of, among others, (i) the aforementioned year-on-year decrease in total turnover of the Group, which was mainly attributable to the drop in segment revenue of PCB; (ii) the year-on-year decrease in other income, which was primarily due to the decline in sales of scarp material; (iii) the year-on-year increase in other loss, which was primarily attributable to, among others, the recognitions of the impairment loss recognised on other receivables and trade receivables with extended credit forms, and the year-on-year increase in loss on disposal/written off of property, plant and equipment; (iv) the year-on-year decrease in selling and distribution expenses; and (v) the year-on-year decrease in administrative expenses.

As at 31 December 2016, the Group recorded net current liabilities of approximately HK$4.08 million against its net current assets of approximately HK$9.82 million as at 31 December 2015. Net assets of the Group amounted to approximately HK$265.37 million as at 31 December 2016, representing a decrease of approximately 7.05% from that of approximately HK$285.50 million as at 31 December 2015.

For the six months ended 30 June 2017

For the six months ended 30 June 2017, the Group recorded turnover of approximately HK$316.71 million, representing an increase of approximately 68.52% as compared that of approximately HK$187.94 million recorded for the corresponding period in the previous year. Based on the Interim Report 2017, such improvement of the turnover of the Group was primarily due to the net effects of (i) the slight periodical increase in the turnover of the PCB segments, (ii) the recognition of nil turnover recorded by the LED lighting segment for the six months ended 30 June 2017 against the positive segment turnover recognised for the corresponding period in 2016; and (iii) the recognition of the turnover of the trading of tower and electric cable segment, engagement by the Group of which was started only since the second half of 2016.

For the six months ended 30 June 2017, the Group recorded loss attributable to owners of the Company of approximately HK$19.76 million, representing an improvement of approximately 55.83% from that of approximately HK$44.74 million recorded for the previous corresponding period. With reference to the Interim Report 2017, such decrease in loss for the six months ended 30 June 2017 was mainly attributable to the net affects of, among others, (i) the aforementioned improvement in total turnover of the Group; (ii) the increase in cost of sales; (iii) the decreases in selling and distribution expenses and the administrative expenses, respectively; and (iv) the increase in finance costs.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at 30 June 2017, net current liabilities and net assets of the Group amounted to approximately HK$0.09 million and approximately HK$252.84 million, respectively.

2 Reasons for and the benefits of the Rights Issue and the use of proceeds

The Company is an investment holding company, whose major operating subsidiaries are principally engaged in the manufacturing and trading of LED lighting, and singlesided, double-sided and multi-layered PCBs.

The gross proceeds from the Rights Issues (before expenses) will be not less than approximately HK$133.9 million and not more than approximately HK$137.2 million. The net proceeds from the Rights Issue (after expenses) are expected to be not less than approximately HK$128.4 million and not more than approximately HK$131.7 million. The Company intends to apply the net proceeds from the Rights Issue as to (i) approximately HK$96.3 million for the partial repayment of the Group’s other payables (principally higher-cost short-term loans and facilities obtained from non-bank financial institutions, including accrued interest), which carry interest rate of over 10% per annum; and (ii) approximately HK$32.1 million to approximately HK$35.4 million, depending on whether any Share Options are exercised on or before the Record Date, for the partial settlement of the Group’s accounts payable to suppliers which are immediately due or overdue.

In assessing the fairness and reasonableness of the Rights Issue and the transactions contemplated thereunder, we have primarily made reference to (i) the financial impacts arising from the Incidents and the subsequent suspension of trading in the Shares during the period between around April 2015 and April 2016 (the ‘‘Suspension’’), further details of which are set out in the section headed ‘‘Reasons for the Rights Issue and the use of proceeds’’ in the Letter from the Board; and (ii) other fund raising alternatives considered by the Company.

2.1 Financial impacts arising from the Incidents and the Suspension

Owing to the Incidents and the Suspension, the Group has suffered a loss of reputation and a loss in confidence of banks, suppliers and customers, which have in turn given rise to certain persisting adverse financial impacts on the Group.

2.1.1 Changes in the liability profile and the financial consequences thereof

The loss in confidence of banks arising from the Incidents and the Suspension has led to a reduction in the amount of bank borrowings provided to the Group, forcing the Company to, among others, resort to the higher-cost loans from financial institutions in order to maintain its liquidity.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to the Annual Report 2015 and the Management Accounts, bank borrowings of the Group decreased significantly from approximately HK$230.29 million as at 31 December 2014 to approximately HK$137.9 million as at 31 August 2017, whereas other payables of the Group increased from approximately HK$79.9 million as at 31 December 2014 to approximately HK$151.5 million as at 31 August 2017. It is noted that interest rates of the loans and facilities obtained from the smaller financing institutions, which ranged from approximately 8.48% to approximately 24.00% per annum, are generally higher than those of the normal bank loans of the Group, which ranged from approximately 2.05% to approximately 4.79% per annum as at 31 August 2017. Accordingly, the shift in credit facilities has resulted in an increase in the finance costs of the Group and consequently, imposed pressure on the Group from maintaining its cash flow level. As at 31 December 2015, bank balances, deposits and cash of the Group reached a low level of approximately HK$43.79 million, representing a significant decrease of approximately 73.83% from approximately HK$167.32 million as at 31 December 2014.

Despite the actions subsequently taken by the Group including but not limited to the adoption of new credit and payment cycle practice since 2015, and the June Placing, the 2016 Open Offer and the September Placing (collectively, the ‘‘Implemented Equity Fund-Raisings’’) which have collectively raised cash proceeds of HK$70 million, financial position of the Group has not yet recovered to that prior to the Incidents. With reference to the section above headed ‘‘Financial overview of the Group’’ and the Annual Report 2015, as at 31 December 2016, the Group recorded net current liabilities of approximately HK$4.08 million against its net current assets of approximately HK$9.82 million as at 31 December 2015 and approximately HK$57.93 million as at 31 December 2014 before the Incidents, respectively. In fact, among others, the recognition of net current liabilities as at 31 December 2016 and the loss incurred for the year ended 31 December 2016 had raised the uncertainties on, as expressed by the auditor of the Company in the Annual Report 2016, the ability of the Group to continue as a going concern. Further, according to the Interim Report 2017, gearing ratio of the Group as at 30 June 2017, which was computed based on the then interest-bearing borrowings and the then total assets of the Group of approximately HK$231.4 million and approximately HK$915.40 million respectively, reached a relatively high level of approximately 25.3% as compared to that of approximately 20.3% as at 31 December 2014. Based on the Management Accounts, bank balances, deposits and cash of the Group remained at a low level of approximately HK$23.9 million as at 31 August 2017, while its finance costs for the eight months ended 31 August 2017 were high at approximately HK$20.3 million as compared to that of approximately HK$9.12 million for the entire financial year ended 31 December 2014.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.1.2 Impacts on the business turnover

Business turnover of the Group had been on a decreasing trend throughout the three years ended 31 December 2016. In particular, the aggregate turnover of the PCB segments, collectively being the Group’s main source of income for many years, experienced a substantial decrease from approximately HK$675.47 million for the year ended 31 December 2014 to approximately HK$349.62 million for the year ended 31 December 2016, demonstrating a compound annual decline rate of approximately 19.71% over the three-year period. We were given to understand that the principal reason for the downturn of the Group’s PCB segments is, as attributable to the aforementioned cash flow pressure driven by the increase in finance costs, a lack of capital for the upgrade of the production facilities and the automation of the production lines, which have led to the failure of the Group in meeting customers’ expectations in terms of the product quality and the production efficiency, consequently resulting in a loss of PCB orders.

In recent years, the PCB industry has been developing rapidly and such trend is expected to continue in the near future. According to ‘‘WECC Global PCB Production Report for 2015’’ issued in October 2016 by World Electronic Circuits Council, a strategic partnership formed by various major industry associations worldwide in 1998, the global PCB production demonstrated a year-on-year real growth in 2015. With reference to 《2016–2021年中國印製電 路板行業分析及投資咨詢報告》(‘‘2016–2021 China Printer Circuit Board Industry Analysis and Investment Advisory Report*’’) (the ‘‘Research Report’’) issued in 2017 by China Merchants Industry Research Institute (http://www.chnci.com/), a market research provider whose database has been consecutively adopted by several PRC governmental authorities, with the continuous improvements in technology, the demand for PCB is expected to increase in the future. It is stated in the report that the global PCB market output value reached 54.2 billion United State dollars (‘‘US$’’) in 2016, and such figure is expected to grow to approximately US$55.3 billion in 2017 and further to US$60.4 billion in 2021, implying a compound annual growth rate of the PCB demand of approximately 2.19% over the period between 2016 and 2021.

In order to maintain the competitiveness and seize opportunities from the generally promising PCB industry, it is essential for the Group to consistently improve the conditions of the production facilities so as to ensure that the quality of the PCB products is in line with the market requirements. As at the Latest Practicable Date, the Group had two manufacturing plants for the PCB business, both of which have been in operations for more than 10 years. Without replacement and regular maintenance, those existing production facilities have been encountering severe phasing-out, which in turn have led to repetitive issues such as failure of electric conduction between different layers

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of PCB and short electric circuits. As a result, several customers including material customers have lost their confidence in the Group’s PCB production and ceased the co-operations with the Group.

In addition to the renewal of the existing production facilities, there is also a need for the Group to purchase machineries with new technology that can brings enhancement to the precision and quality of the PCB products as well as the production efficiency. According to the Research Report, as stimulated by the rapid development of the downstream electronic information technology, market demand for PCB of high density, multi-layered and high technology shall continue to rise in the future. Further, in light of, among others, the potential mitigation of human error, production automation has been increasingly valued by the customers in selecting the suppliers of PCB products. As suggested by the management of the Company, notwithstanding the slow progress within the Group due to a lack of capital, investments in production automation by several competitors have facilitated them in gaining a large number of PCB orders from the existing customers of the Group.

As at the 31 August 2017, (i) the bank borrowings (including accrued interest) of the Group amounted to approximately RMB117.8 million (equivalent to approximately HK$138.4 million), all of which are due within one year; (ii) the other payables (principally higher-cost loans obtained from financing institutions, including accrued interest) of the Group amounted to approximately RMB130.9 million (equivalent to approximately HK$153.3 million), all of which are repayable on demand or due within one year; and (iii) the accounts payable to suppliers amounted to approximately RMB93.3 million (equivalent to approximately HK$109.8 million), of which approximately RMB51.1 million (equivalent to approximately HK$60.2 million) was immediately due or past due.

Accordingly, considering the shift in credit facilities of the Group as resulted from the Incidents and the financial consequences thereof, we are of the view that the Rights Issue will provide additional capital to the Company for settling its financing, ultimately improving the cash and liquidity position and the gearing ratio of the Group. Further, with the successful implementation of the expected utilisation of the net cash proceeds, i.e. partial settlements of the Group’s other payables and account payables to suppliers, it is expected that the resulted improvement in the financial position will allow the Group to obtain a better chance for re-grant or extension of loans by banks at lower cost. Considering the aforementioned optimistic prospect of the PCB industry and urgency for the Group to renew and upgrade its PCB production facilities, we are of the view that the Rights Issue would potentially enable the Group to replenish its cash reserve and accordingly allow for a sufficient investment budget for developing its PCB business, which shall bring positive impacts on the segmental performance and ultimately help improve the profitability of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.2 Other fund raising alternatives considered by the Company

In order to reduce the level of indebtedness and improve the financial position, save for the Implemented Equity Fund-Raisings, the CB subscriptions which had been consequently terminated and the Rights Issue, the Group has considered other fund raising alternatives including but not limited to debt financing and equity financing such as placing of new Shares and open offer. In fact, the management of the Company has been actively approaching different banks, financial institutions and individual professional and high net worth investors since the second half of 2016 in such regards.

With respect to debt financing, we were advised that notwithstanding the attempts by the Company to explore with (i) various banks into the possibility of obtaining loans or additional loans; and (ii) various financial institutions into the possibilities of issuing bond instruments with their assistance, no positive feedbacks were received by the Company. Further, the Company was given to understand that applications for further loans or credit facilities will only be considered upon improvements in the equity and capital base and accordingly the gearing ratio and liquidity of the Company by way of equity fund-raising. In addition, the Company is reluctant to obtain additional short-term financing from smaller financial institutions due to the generally high interest rates charged by those institutions.

With respect to equity financing, following the Implemented Equity FundRaisings and termination of the CB subscriptions in June and July 2017, the management of the Company has discussed with financial institutions with the view to explore different fund raising opportunities and procuring the most favourable terms to the Company. Yet, among others, one financial institution has proposed a best-effort share placing at a deep discount to the market price without any level of certainty on the amount of fund to be successfully raised. Moreover, such financial institution advised that potential investors would only be interested in such placing of new Shares if the funding to be raised would be applied to new businesses of the Group other than LED and PCB manufacturing, which is inconsistent with the business strategies of the Group. In addition, we consider that placing of new Shares would be a suboptimal fund raising means as it will lead to an immediate dilution in shareholding interest of the existing Shareholders without offering them opportunities to participate in the enlargement of the capital base of the Company. Besides, the Board has also considered conducting pro rata fund raising by way of open offer, which is of similar nature as rights issue. However, an open offer would not provide an additional option to those Qualifying Shareholders who do not wish to take up their allotments to sell their provisionally allotted nil-paid Rights Shares and those Qualifying Shareholders who wish to increase their shareholding interest in the Company cannot acquire additional nil-paid Rights Shares in the market in the case of an open offer.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As compared with placing of new Shares, Rights Issue is more advantageous in the senses that (i) it provides all Qualifying Shareholders with opportunities to maintain their respective pro rata shareholdings in the Company and participate in the future development of the Group; and (ii) the Rights Issue (other than the Able Turbo Undertaken Shares) will be fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement, therefore providing the Company with a higher certainty to raise funds against the usual besteffort basis adopted in a placing of new Shares. Further, the Rights Issue would be more favourable than an open offer in a sense that the Shareholders will be provided with a higher flexibility in dealing in the Shares and the nil paid rights attaching thereto. Taking into account the above, we are of the view that the Rights Issue would be a preferred means for the Group to raise fund over other alternatives.

In light of the foregoing, we are of the view that the implementations of the Rights Issue and the transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3 Principal terms of the Rights Issue and the transactions contemplated thereunder

Set out in Table 2 below are the principal statistics of the Rights Issue.

Table 2: A summary of the principal statistics of the Rights Issue

Basis of the Rights Issue : one (1) Rights Share for every one (1) existing Share held by the Qualifying Shareholders on the Record Date Subscription Price : HK$0.13 per Rights Share Number of Shares in issue as : 1,029,635,216 Shares at the Latest Practicable Date Number of outstanding Share : 25,568,875 Share Options Options as at the Latest Practicable Date Maximum number of Shares : 1,055,204,091 Shares (assuming the full in issue on or before the exercise of all the outstanding Share Options Record Date on or before the Record Date)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Number of Rights Shares : Not less than 1,029,635,216 Rights Shares (assuming no Shares are to be issued or repurchased by the Company on or before the R e c o r d D a t e ) a n d n o t m o r e t h a n 1,055,204,091 Rights Shares (assuming the full exercise of all the outstanding Share Options on or before the Record Date)

Number of Rights Shares to : be taken up or procured to be taken up by Able Turbo pursuant to the Able Turbo Undertaking

Able Turbo has irrevocably undertaken to the Company and the Underwriter than, subject to the Rights Issue becoming unconditional and the Underwriter not having terminated the Underwriting Agreement, Able Turbo shall maintain its current beneficial shareholding in 162,000,000 Shares up to and including the Record Date and to lodge acceptance by the Latest Time for Acceptance for all the Able Turbo Undertaken Shares (i.e. 162,000,000 Rights Shares) to which it is entitled to subscribe under the Rights Issue

Number of Rights Shares : not less than 867,635,216 Rights Shares underwritten by the (assuming no Shares are to be issued or Underwriter repurchased by the Company on or before the Record Date) and not more than 893,204,091 Rights Shares (assuming the full exercise of all the outstanding Share Options on or before the Record Date), being the total number of the Rights Shares less the number of the Able Turbo Undertaken Shares. The Rights Issue (other than the Able Turbo Undertaken Shares) will be fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement.

As at the Latest Practicable Date, the Company had 25,568,875 outstanding Share Options entitling the holders thereof to subscribe for 25,568,875 Option Exercise Shares pursuant to the terms of the Old Share Option Scheme. Save for the Share Options, as at the Latest Practicable Date, the Company had no other outstanding derivatives, options, warrants or securities in issue which confer any right to subscribe for, convert or exchange into Shares.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Assuming (i) no exercise of any of the outstanding Share Options on or before the Record Date; and (ii) no Shares are to be issued or repurchased by the Company on or before the Record Date, the 1,029,635,216 Rights Shares being issued under the Rights Issue represent 100% of the issued share capital of the Company as at the Latest Practicable Date and 50% of the issued share capital of the Company as enlarged by the allotment and issue of 1,029,635,216 Rights Shares.

As at the Latest Practicable Date, the Company had not received any notice from the holders of the Share Options of their intention to exercise any Share Options.

3.1 The Subscription Price

The Subscription Price is HK$0.13 per Rights Share. The net Subscription Price per Rights Share (after deducting the relevant expenses) is approximately HK$0.125. The Subscription Price represents:

• (i) a discount of 48.0% to the closing price of HK$0.250 per Share (the ‘‘Last Closing Price’’) as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 31.6% to the theoretical ex-rights price of HK$0.19 per Share (the ‘‘Theoretical Ex-right Price’’) based on the Last Closing Price;

• (iii) a discount of approximately 49.7% to the average closing price of approximately HK$0.259 per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day;

• (iv) a discount of approximately 48.7% to the average closing price of approximately HK$0.254 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day;

• (v) a discount of 42.2% to the closing price of HK$0.225 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

• (vi) a discount of approximately 45.8% to the unaudited net asset value per Share of approximately HK$0.240 (calculated by dividing the unaudited equity attributable to owners of the Company of approximately HK$246.9 million as at 30 June 2017 by 1,029,635,216 Shares in issue as at the Latest Practicable Date) (the ‘‘NAV per Share’’).

The Subscription Price was determined after arm’s length negotiations between the Company and the Underwriter with reference to, among others, the prevailing market price and trading liquidity of the Shares.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In assessing the fairness and reasonableness of the Subscription Price, we have primarily made references to (i) the historical performance of the Share price; (ii) the historical trading liquidity of the Shares; and (iii) a comparable analysis against other comparable rights issue exercises in the market (the ‘‘Comparable Analysis’’), details of which are set out below respectively.

3.1.1 Historical performance of the Share price

Chart 1 below sets out the comparison among (i) the daily closing prices of the Shares from 27 September 2016, being the first trading day (following the suspension of trading in the Shares from 22 September 2016 up to and including 26 September 2016) of the 12-month period prior to the Last Trading Day, up to and including the Latest Practicable Date (the ‘‘Review Period’’); (ii) the Subscription Price of HK$0.13 per Rights Share; and (iii) the Hang Seng Index during the Review Period.

Chart 1: Share price performance against the Subscription Price and the Hang Seng Index during the Review Period

==> picture [343 x 231] intentionally omitted <==

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

0.70 35,000
0.60 30,000
0.50 25,000
0.40 20,000
0.30 15,000
0.20 10,000
0.10 5,000
0.00 0
Closing price of the Shares Subscription Price Hang Seng Index
27/9/201627/10/201627/11/201627/12/201627/1/201727/2/201727/3/201727/4/201727/5/201727/6/201727/7/201727/8/201727/9/2017
closing price (HK$)
Hang Seng Index (points)
----- End of picture text -----

Sources:

• (i) The website of the Stock Exchange (http://www.hkex.com.hk/); and

• (ii) the website of the Hang Seng Indexes (http://www.hsi.com.hk/)

– 47 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Shares had been traded at above the Subscription Price throughout the Review Period. As shown in Chart 1, the closing price of the Shares during the Review Period ranged from HK$0.209 per Share to HK$0.60 per Share, with an average of approximately HK$0.396 per Share. The Subscription Price of HK$0.13 per Share therefore represents a discount of approximately 37.80% to the aforementioned lowest closing price of the Shares, a discount of approximately 78.33% to the aforementioned highest closing price of the Shares, and a discount of approximately 67.17% to the average closing price of the Shares during the Review Period respectively.

Throughout the Review Period, save for the period between around December 2016 and February 2017, movement of the closing price of the Shares had been generally on a diverging trend as compared with that of Hang Seng Index. As illustrated in Chart 1, from around March 2017 up to the end of the Review Period, closing price of the Shares has been generally decreasing whereas the Hang Seng Index has been generally increasing. Save for the following, the Directors are not aware of any reasons for the recent downward movement of the closing price of the Shares during the Review Period. During the period between March 2017 and May 2017, the Company has published an aggregate of three announcements in relation to, among others, the further delay in despatch of circular with respect to the CB subscriptions, the proposed implementation of which was initially announced by the Company on 26 September 2016, and/or extension of the underlying long stop date. On 28 March 2017 and 27 April 2017, the Company respectively published the annual results announcement for the year ended 31 December 2016 and the Annual Report 2016, each of which showed a widening of the loss incurred by the Group for 2016 as compared with that for the previous year. On 30 June 2017 and 21 July 2017, the Company respectively published two announcements in relation to the termination of the CB subscriptions. On 29 August 2017 and 19 September 2017, the Company respectively published the interim results announcement for the six months ended 30 June 2017 and the Interim Report 2017, each of which showed the loss incurred by the Group for the reporting period. On 24 September 2017, the Company published the Announcement in relation to the Rights Issue according to which, among others, the Subscription Price represents a discount to the Last Closing Price, resulting in a discount of the Theoretical Ex-right Price to the Last Closing Price which would lead to a potential downward adjustment to the Share price after completion of the Rights Issue. In light of the above disclosures, it is anticipated that the downward trend in the closing price of the Shares during the Review Period was due to the resulting negative market speculations arising from (i) the continuing delay in and the subsequent terminations of the CB subscriptions; (ii) the continuing loss-making of the Group; and (iii) the Rights Issue.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account (i) the recent downward trend in the closing price of the Shares, (ii) the discount of the Subscription Price to the Last Closing Price would attract the Qualifying Shareholders to participate in the Rights Issue, which would in turn allow them to maintain their shareholding interests in, and participate in the future growth of the Company; and (iii) the Rights Issue is available to all Qualifying Shareholders and therefore provide them with an equal opportunity to participate, we are of the view that the determination of the Subscription Price of HK$0.13 per Rights Share is justifiable.

3.1.2 Historical trading liquidity of the Shares

Table 3 below shows the monthly statistics of the trading volume of the Shares during the Review Period.

Table 3: Historical trading volume of the Shares

					Average	Average
					daily trading
	Total				volume over
	monthly	Number	Average	Total number	total number
	trading	of trading	daily trading	of Shares in	of Shares in
Month	volume	days	volume	issue		issue
				(Note 1)
	(Number of	(Number of	(Approximate	(Number of	(Approximate
	Shares)	days)	number of	Shares)		%)
			Shares)
2016
September
(Note 2)	622,364,239	21	29,636,392	1,029,635,216		2.88
October	433,479,000	19	22,814,684	1,029,635,216		2.22
November	541,493,454	22	24,613,339	1,029,635,216		2.39
December	99,672,000	20	4,983,600	1,029,635,216		0.48
2017
January	123,536,900	19	6,501,942	1,029,635,216		0.63
February	39,681,165	20	1,984,058	1,029,635,216		0.19
March	60,710,000	23	2,639,565	1,029,635,216		0.26
April	68,395,760	17	4,023,280	1,029,635,216		0.39
May	81,730,000	20	4,086,500	1,029,635,216		0.40
June	75,349,654	22	3,424,984	1,029,635,216		0.33
July	39,059,000	21	1,859,952	1,029,635,216		0.18
August	14,405,000	22	654,773	1,029,635,216		0.06
September	46,088,900	21	2,194,710	1,029,635,216		0.21
October (Up to the
Latest Practicable
Date)	27,954,017	17	1,644,354	1,029,635,216		0.16

Source: The website of the Stock Exchange (http://www.hkex.com.hk/)

– 49 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

1. Based on the number of the Shares in issue as of the last date of each of the respective months or that as at the Latest Practicable Date for October 2017.

2. Figures for September 2016 were computed on a full-month basis.

As illustrated in Table 3, the average daily trading volume of the Shares during the Review Period was generally low with a range from approximately 0.06% to approximately 2.88% of the total number of Shares in issue as at the last date of the respective months during the Review Period.

The generally thin liquidity of the Shares during the Review Period indicates the potential difficulties in initiating the Qualifying Shareholders to participate in the Rights Issue should the subscription price have been set at a premium to the Last Closing Price. Considering that, among others, the discount of the Subscription Price to the Last Closing Price would attract the Qualifying Shareholders to participate in the Rights Issue, which would in turn allow them to maintain their shareholding interests in, and participate in the future growth of the Company, we are of the view that the determination of the Subscription Price of HK$0.13 per Rights Share is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3.1.3 The Comparables Analysis

In assessing the fairness and reasonableness of the determination of the Subscription Price, we have conducted research from the public domain and identified an exhaustive list of 24 proposed rights issue (the ‘‘Comparables’’) as announced by the listed companies in Hong Kong during the period from six months prior to the Last Trading Day up to and including the Latest Practicable Date, which in our view represents a reasonable period to reflect the prevailing market conditions for conducting such transactions. It is worth noting that the underlying issuers of the Comparables may or may not be identical to the Company in terms of principal business, operations and financial position. Nevertheless, we consider that our analysis could provide a general reference for the common market practice of determining the subscription price under rights issue exercises. Details of the Comparables are summarised in Table 4 below.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 4: A summary of the Comparables

				Premium/		Premium/
				(discount) of		(discount) of
				subscription	Premium/	subscription
				price over/to	(discount) of	price
				the closing	subscription	over/to the
				share price	price over/to	consolidated
				per (adjusted)	the theoretical	net asset
				share on the	ex-right price	value per
		Date of	Basis of	last trading	per (adjusted)	(adjusted)	Commission	Dilution	Excess
Name of issuers	Stock code	announcement	entitlement	day	share	share	rate	impact	application
						(Note 1)		(Note 2)	(Note 3)
				(Approximate	(Approximate	(Approximate	(Approximate	(Approximate	(Yes/No)
				%)	%)	%)	%)	%)
							3.00	79.89
The 13 Holdings Limited	577	20/10/2017	10 for 1	(87.91)	(39.89)	(98.22)	(Note 4)	(Note 5)	Yes
China Agri-products
Exchange Limited	149	4/10/2017	5 for 1	(30.20)	(6.40)	(85.01)	2.50	25.40	Yes
eFORCE Holdings Limited	943	21/9/2017	4 for 1	(15.40)	(3.50)	(86.26)	nil	12.31	Yes
The Sincere Company
Limited	244	18/9/2017	3 for 5	(28.00)	(19.60)	(0.28)	nil	10.40	No
CircuTech International						337.58
Holdings Limited	8051	4/9/2017	2 for 5	(9.60)	(6.80)	(Note 7)	2.00	3.01	Yes
China HKBridge Holdings						164.64
Limited	2323	31/8/2017	1 for 2	(21.43)	(15.38)	(Note 7)	1.00	7.14	Yes
China State Construction
International Holdings
Limited	3311	22/8/2017	1 for 8	(9.36)	(8.41)	80.21	2.00	1.04	Yes
China Polymetallic Mining
Limited	2133	18/8/2017	1 for 2	(50.80)	(40.80)	(83.98)	1.50	16.80	Yes
Carnival Group
International Holdings
Limited	996	15/8/2017	1 for 4	(39.39)	(34.21)	(2.55)	3.50	7.88	Yes
								20.61
Roma Group Limited	8072	14/8/2017	3 for 2	(34.21)	(17.13)	(60.63)	7.00	(Note 5)	Yes
Mega Medical Technology						203.43		N/A
Limited	876	28/7/2017	1 for 3	21.25	15.94	(Note 7)	nil	(Note 9)	Yes
Digital China Holdings
Limited	861	21/7/2017	1 for 4	(29.60)	(25.10)	(25.13)	nil	5.99	Yes
Beautiful China Holdings
Company Limited	706	19/7/2017	3 for 4	(29.50)	(19.30)	(19.37)	1.50	12.63	Yes
V.S. International Group
Limited	1002	19/7/2017	1 for 4	(17.86)	(14.81)	(14.24)	nil	3.57	Yes

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

				Premium/		Premium/
				(discount) of		(discount) of
				subscription	Premium/	subscription
				price over/to	(discount) of	price
				the closing	subscription	over/to the
				share price	price over/to	consolidated
				per (adjusted)	the theoretical	net asset
				share on the	ex-right price	value per
		Date of	Basis of	last trading	per (adjusted)	(adjusted)	Commission	Dilution	Excess
Name of issuers	Stock code	announcement	entitlement	day	share	share	rate	impact	application
						(Note 1)		(Note 2)	(Note 3)
				(Approximate	(Approximate	(Approximate	(Approximate	(Approximate	(Yes/No)
				%)	%)	%)	%)	%)
Focus Media Network							2.25
Limited	8112	29/6/2017	4 for 1	(17.86)	(4.17)	(73.51)	(Note 6)	14.29	Yes
						N/A
abc Multiactive Limited	8131	17/5/2017	1 for 4	(54.55)	(48.98)	(Note 8)	0.83	10.91	Yes
Kirin Group Holdings
Limited	8109	16/5/2017	5 for 2	(34.58)	(13.15)	36.10	1.50	24.67	Yes
Theme International						290.36
Holdings Limited	990	4/5/2017	1 for 2	(30.00)	(22.10)	(Note 7)	nil	9.81	Yes
						182.72
Quam Limited	952	28/4/2017	3 for 1	(7.56)	(1.79)	(Note 7)	nil	5.88	Yes
Epicurean and Company						N/A
Limited	8213	26/4/2017	1 for 2	(52.00)	(41.94)	(Note 8)	nil	17.33	Yes
Xinyi Solar Holdings						143.21
Limited	968	19/4/2017	1 for 10	(10.00)	(9.30)	(Note 7)	nil	0.80	Yes
China Ground Source
Energy Industry Group
Limited	8128	12/4/2017	2 for 5	(58.33)	(50.00)	(79.39)	2.50	16.67	Yes
Global Energy Resources
International Group
Limited	8192	29/3/2017	1 for 2	(21.05)	(15.01)	(23.56)	3.00	7.11	Yes
Hong Kong International
Construction
Investment
Management Group								N/A
Co. Limited	687	28/3/2017	2 for 1	0.99	0.33	56.89	2.50	(Note 9)	Yes
			Maximum	21.25	15.94	80.21	7.00	79.89
			Minimum	(87.91)	(50.00)	(98.22)	nil	0.80
			Average	(27.79)	(18.40)	(29.93)	1.52	14.28
The Company	515	22/9/2017	1 for 1	(48.00)	(31.58)	(45.83)	1.50	24.00	Yes

Source: The website of the Stock Exchange (http://www.hkex.com.hk/)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

1. For each of the Comparables, the corresponding figure was either (i) extracted from the relevant announcement or circular of the underlying listed issuer in relation to the proposed rights issue; or (ii) computed based on the underlying consolidated net asset value per share, which was computed based on the then latest reported consolidated net asset value attributable to the owners thereof and the number of shares in issue as disclosed in the public documents available as at the date of the relevant announcement in relation to the proposed rights issue.

2. Represents the potential dilution impact of each of the Comparables which was, unless specified otherwise in note 5 below, computed as (the theoretical ex-right price — the closing price per share as quoted on the last trading day)/(the closing price per share as quoted on the last trading day) * 100%.

3. Represents the availability of excess application (as defined under Rule 7.21(1) of the Listing Rules) by the qualifying shareholders.

4. Represents the underwriting commission computed based on the aggregate subscription price of the underwritten shares, save for those underwritten shares to be arisen from the exercise of the rights attaching to the then outstanding convertible securities of the underlying listed issuer.

5. Capital reorganisation or share consolidation was proposed to be implemented and become effective prior to the underlying rights issues. Accordingly, each of the corresponding dilution impacts was computed as: (the theoretical ex-right price per adjusted share — the closing price per adjusted share as quoted on the last trading day)/(the closing price per adjusted share as quoted on the last trading day)*100% after taking into account the effect of the underlying proposed capital reorganisation or share consolidation.

6. Represents the average of the two commission rates payable to the two underlying underwriters respectively.

7. These premiums of subscription price over the consolidated net asset value per share are excluded from the analysis because such figures, which are outside the adopted range from a discount of approximately 147.33% to a premium of approximately 120.32%, respectively being the figures equivalent to 1.5 times of the existing minimum figure of a discount of approximately 98.22% and 1.5 times of the existing maximum figure of a premium of approximately 80.21%, appear to be the outliers (the ‘‘Outliers’’) and the inclusion of which may inappropriately skew the overall results.

8. Not applicable as the issuers underlying such Comparables (the ‘‘Excluded NAV Comparables’’) recorded net liabilities per share as at the date of the relevant announcement in relation to the proposed rights issue.

9. Not applicable as the subscription prices underlying such Comparables (the ‘‘Excluded Dilution Comparables’’) respectively represent a premium over the respective underlying closing prices per share on the last trading day.

As illustrated in Table 4, the underlying subscription prices of 22 out of 24 Comparables were set at a discount to the respective closing share prices on the respective last trading days. Further, the subscription prices of the Comparables represent a range (the ‘‘LTD Market Range’’) from a maximum discount of approximately 87.91% to a premium of approximately 21.25% to/over the respective closing share prices on the respective last trading days, with the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

average of a discount of approximately 27.79% (the ‘‘LTD Market Average’’). Therefore, the discount of the Subscription Price to the Last Closing Price of 48.00% is higher than the LTD Market Average while falls within the LTD Market Range.

On the other hand, the underlying subscription prices of 22 out of 24 Comparables were set at a discount to the respective theoretical ex-right prices. The subscription prices of the Comparables represent a range (the ‘‘TEP Market Range’’) from a maximum discount of approximately 50.00% to a premium of approximately 15.94% to/over the respective theoretical ex-right prices, with the average of a discount of approximately 18.40% (the ‘‘TEP Market Average’’). Therefore, the discount of the Subscription Price to the Theoretical Ex-right Price of approximately 31.58% is higher than the TEP Market Average while falls within the TEP Market Range.

In addition, without considering the Outliers and the Excluded NAV Comparables, the underlying subscription prices of 14 out of 16 Comparables were set at a discount to the respective consolidated net asset values per share. The subscription prices of those Comparables represent a range (the ‘‘NAV Market Range’’) from a maximum discount of approximately 98.22% to a premium of approximately 80.21% to/over the respective consolidated net asset values per share, with an average of a discount of approximately 29.93% (the ‘‘NAV Market Average’’). Accordingly, the discount of the Subscription Price to the NAV per Share of approximately 45.83% is higher than the NAV Market Average while falls within the NAV Market Range.

Taking into account the above, we consider that it is a common market practice for listed issuers in Hong Kong to conduct rights issue with a subscription price that is lower than each of the prevailing share price and the theoretical ex-right price and the consolidated net asset value per share.

3.1.4 Conclusion on the determination of the Subscription Price

Based on the analyses above, despite that the discounts of the Subscription Price to each of the Last Closing Price, the Theoretical Ex-right Price and the NAV per Share are higher than the LTD Market Average, the TEP Market Average and the NAV Market Average respectively, having considered (i) the recent downward trend in the closing prices of the Shares; (ii) the generally thin liquidity of the Shares during the Review Period, which indicates the potential difficulties in initiating the Qualifying Shareholders to participate in the Rights Issue should the subscription price have been set at a premium to the Last Closing Price; (iii) that it is a common practice for the listed issuers in Hong Kong to set the subscription price at a discount to each of the prevailing share price, the theoretical ex-right price and the consolidated net asset value per share; (iv) that the discount of the Subscription Price to the Last Closing Price falls within the LTD Market Range; (v) that the discount of the Subscription Price to the Theoretical Ex-right Price falls within the TEP Market Range; (vi)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

that the discount of the Subscription Price to the NAV per Share falls within the NAV Market Range; (vii) the continuous loss-making performances and net current liabilities of the Group in recent years as discussed in the sub-section above headed ‘‘Financial overview of the Group’’; (viii) that the discounts of the Subscription Price would attract the Qualifying Shareholders to participate in the Rights Issue, which would in turn allow them to maintain their shareholding interests in, and participate in the future growth of the Company; (ix) the potential positive impacts of the Rights Issue on the financial position and the profitability of the Group as discussed in the sub-section above headed ‘‘Reasons for and the benefits of the Rights Issue and the use of proceeds’’; and (x) that the Rights Issue is available to all Qualifying Shareholders and therefore provide them with an equal opportunity to participate, we are of the view that the determination of the Subscription Price of HK$0.13 per Rights Share is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

3.2 Application for excess Rights Shares

The Rights Shares (i) to which the Non-Qualifying Shareholders would otherwise have been entitled; and (ii) not validly applied for by the Qualifying Shareholders under the Rights Issue will be available for excess application by the Qualifying Shareholders.

The Qualifying Shareholders are entitled to apply for any Rights Shares in excess of their own assured allotments by completing an EAF, but are not assured of being allocated any Rights Shares in excess of their assured allotments under the PALs.

The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis adopting the following principles:

• (i) no preference will be given to applications for topping-up odd-lot holdings to whole-lot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive, which is an unintended and undesirable result; and

• (ii) subject to availability of excess Rights Shares, the excess Rights Shares will be allocated to the Qualifying Shareholders who have applied for excess application on a pro rata basis based on the excess Rights Shares applied for by them.

In the event that the Board noted unusual patterns of excess applications and had reason to believe that any application may have been made with the intention to abuse the excess application mechanism, such application(s) for excess Rights Shares may be rejected at the sole discretion of the Board.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3.3 The Underwriting Agreement

On 22 September 2017, the Company and the Underwriter entered into the Underwriting Agreement pursuant to which the Underwriter has conditionally agreed to underwrite all the Rights Shares (other than the Able Turbo Undertaken Shares) which have not been taken up by the Qualifying Shareholders, i.e. not less than 867,635,216 Rights Shares (assuming no Shares are to be issued or repurchased by the Company on or before the Record Date) and not more than 893,204,091 Rights Shares (assuming the full exercise of all outstanding Share Options on or before the Record Date). Accordingly, the Rights Issue is fully underwritten. The underwriting commission under the Underwriting Agreement is 1.5% of the aggregate Subscription Price in respect of the maximum number of 893,204,091 Rights Shares committed to be underwritten by the Underwriter, which was determined after arm’s length negotiations between the Company and the Underwriter by reference to the market rate.

The obligations of the Underwriter under the Underwriting Agreement are conditional upon satisfaction of the conditions referred to in the sub-section headed ‘‘Conditions of the Underwriting Agreement’’ in the Letter from the Board, which are incapable of being waived. If the conditions are not fully satisfied by the Latest Time for Termination (or such other date as the Company and the Underwriter may mutually agree in writing) or if the Underwriting Agreement is rescinded or terminated pursuant to the terms thereof, all obligations and liabilities of the parties under the Underwriting Agreement shall forthwith cease and determine and neither party shall have any claim against the other for fees, costs, damages, compensation or otherwise.

In assessing the fairness and reasonableness of the terms of the Underwriting Agreement, we have made reference to results of the Comparable Analysis. As shown in Table 4, the commission fee rates of the Comparables range from nil to approximately 7.00% of the total subscription amount of the underwritten shares (the ‘‘Commission Range’’), with an average of approximately 1.52%. Therefore, we are of the view that the determination of the underwriting commission under the Underwriting Agreement of 1.50% falls within the Commission Range during the Review Period. In addition, we have reviewed other principal terms of the Underwriting Agreement including but not limited to the conditions precedent thereto, further details of which are set out in the section headed ‘‘Underwriting arrangement’’ in the Letter from the Board, and we are not aware of any terms being unusual that the Independent Shareholders should be noted.

3.4 The Able Turbo Undertaking

Pursuant to the Able Turbo Undertaking, Able Turbo has irrevocably undertaken to the Company and the Underwriter that, subject to the Rights Issue becoming unconditional and the Underwriter not having terminated the Underwriting Agreement, Able Turbo shall maintain its current beneficial shareholding in 162,000,000 Shares up to and including the Record Date and to lodge acceptance by

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the Latest Time for Acceptance for all the Able Turbo Undertaken Shares (i.e. 162,000,000 Rights Shares) to which it is entitled to subscribe for under the Rights Issue.

We consider that the Able Turbo Undertaking demonstrates the confidence of Able Turbo in the future prospect of the Group and its support in the Rights Issue, an exercise which in our view is beneficial to the Company and the Shareholders as explained in the section headed ‘‘Reasons for and the benefits of the Rights Issue and the use of proceeds’’ in this letter, and therefore is in the interests of the Company and the Shareholders as a whole.

Considering the above, we are of the view that the terms of the Rights Issue including the Subscription Price and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders as a whole.

4 Potential dilution in public shareholding interest

Reference is made to the shareholding table under the section headed ‘‘Changes in shareholding structure’’ in the Letter from the Board.

Assuming none of the Share Options is exercised on or before the Record Date, under the scenarios that (i) all Rights Shares are taken up by the Qualifying Shareholders, shareholding interests of the public Shareholders immediately upon completion of the Rights Issue will remain as that as at the Latest Practicable Date of approximately 84.27%, representing nil dilution in their shareholding interests arising from the Rights Issue; and (ii) no Rights Shares are taken up by the Qualifying Shareholders, save for the Able Turbo Undertaken Shares, shareholding interest of the public Shareholders will decrease from approximately 84.27% as at the Latest Practicable Date to approximately 42.13% immediately upon completion of the Rights Issue, representing a dilution of approximately 50.00% in their shareholding interests arising from the Rights Issue.

On the other hand, assuming all of the Share Options are exercised in full on or before the Record Date, under the scenarios that (i) all Rights Shares are taken up by the Qualifying Shareholders, shareholding interests of the public Shareholders will decrease from approximately 84.27% to approximately 82.22% immediately upon completion of the Rights Issue, representing a dilution of approximately 2.43% in their shareholding interest arising from the Rights Issue; and (ii) no Rights Shares are taken up by the Qualifying Shareholders, save for the Able Turbo Undertaken Shares, shareholding interest of the public Shareholders will decrease from approximately 84.27% as at the Latest Practicable Date to approximately 41.11% immediately upon completion of the Rights Issue, representing a dilution of approximately 51.22% in their shareholding interests arising from the Rights Issue.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition, in the event that the Qualifying Shareholders elect not to participate in the Rights Issue, based on the Last Closing Price of HK$0.250 per Share and the Theoretical Ex-right Price of HK$0.19 per Share, the potential dilution impact of the Rights Issue on their shareholdings in monetary value (the ‘‘Dilution Impact’’) would be 24.00%.

In justifying the fairness and reasonableness of the Dilution Impact, we have, among others, made reference to the results of the Comparable Analysis. As shown in Table 4 above, the Dilution Impact is (i) higher than the average of the corresponding dilution impacts of the Comparables of approximately 14.28% (the ‘‘Dilution Market Average’’); and (ii) falls within the range of the potential dilutions in public shareholding interests arising from the Comparables (excluding the Excluded Dilution Comparables) from approximately 0.80% to approximately 79.89%.

Despite that the Dilution Impact is larger than the Dilution Market Average, taking into account (i) that all Qualifying Shareholders are offered an equal opportunity to participate in the Rights Issues so as to maintain their respective shareholding interest in, and participate in the future growth of the Company; (ii) the inherent dilutive nature of rights issues in general if the existing shareholders of the issuers do not take up their entitlements thereunder in full; (iii) the Dilution Impact falls within the range of the corresponding dilutions in public shareholding interests arising from the Comparables (excluding the Excluded Dilution Comparables); (iv) the Rights Issue is considered to be a relatively more preferred means as compared to other financing alternatives as previously discussed; and (v) the net proceeds from the Rights Issue would, among others, help enhance the financial position of the Group and strengthen its capital base against the continuous loss-making performances and net current liabilities of the Group in recent years as previously discussed, we are of the view that the Dilution Impact is justifiable.

5 Financial effects of the Rights Issue

5.1 Net asset value

Reference is made to the Unaudited Pro Forma Financial Information of the Group as set out in Appendix II to the Circular. As at 30 June 2017, based on (i) the unaudited consolidated net tangible assets attributable to the owners of the Company of approximately HK$246.92 million; and (ii) the 1,029,635,216 Shares in issue, the unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company per Share amounted to approximately HK$0.24. On the bases that completion of the Rights Issues had taken place on 30 June 2017 and 1,029,635,216 Rights Shares had been issued, immediately upon completion of the Rights Issue, (i) the unaudited pro forma consolidated net tangible assets attributable to the owners of the Company would become approximately HK$375.31 million; and (ii) the number of Shares in issue would become 2,059,270,432 Shares, resulting in the unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company per Share of approximately HK$0.18.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5.2 Liquidity

According to the Interim Report 2017, bank balances, deposits and cash and the net current liabilities of the Group as at 30 June 2017 were approximately HK$37.83 million and approximately HK$0.09 million, respectively. Immediately upon completion of the Rights Issue, it is expected that the bank balances, deposits and cash and accordingly the current assets of the Group will be increased by the estimated net proceeds from the Rights Issue of not less approximately HK$128.4 million and not more than approximately HK$131.7 million. As such, the Rights Issue is expected to have positive impacts on the liquidity of the Group.

5.3 Gearing ratio

Based on the interest-bearing borrowings of approximately HK$231.4 million and the total assets of approximately HK$915.40 million, the gearing ratio of the Group as at 30 June 2017 was approximately 25.3%. Given that the net proceeds are intended to be used for, among others, partial repayment of the Group’s other payables which carry interest rate of over 10% per annum, it is expected that interest-bearing borrowings of the Group will decrease and the resulted gearing ratio will improve in the long run.

Shareholders should note that the analyses above are for illustrative purpose only and do not purport to represent the financial position of the Group upon completion of the Rights Issue.

RECOMMENDATIONS

Having considered the principal factors and reasons set out in this letter, we are of the view that the terms of the Rights Issue and the transaction contemplated thereunder are on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the relevant resolution(s) to be proposed at the EGM to approve the Rights Issue and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of Goldin Financial Limited Billy Tang Director

Note: Mr. Billy Tang is a licensed person registered with the Securities and Futures Commission and a responsible officer of Goldin Financial Limited to carry out type 6 (advising on corporate finance) regulated activities under the SFO. He has over 10 years of experience in the corporate finance profession.

– 59 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR FINANCIAL INFORMATION

Financial information of the Group for each of the three years ended 31 December 2014, 2015 and 2016 and the six months ended 30 June 2017 are disclosed in (i) pages 48 to 127 of the annual report of the Company for the year ended 31 December 2014; (ii) pages 46 to 123 of the annual report of the Company for the year ended 31 December 2015; (iii) pages 54 to 129 of the annual report of the Company for the year ended 31 December 2016; and (iv) pages 4 to 21 of the interim report of the Company for the six months ended 30 June 2017, respectively, which were published on both the website of the Stock Exchange (http://www.hkex.com.hk) and the website of the Company (http://www.tatchun.com). Please refer to the relevant hyperlinks as stated below:

• . annual report of the Company for the year ended 31 December 2014:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0218/LTN20160218293.pdf http://www.tatchun.com/attachment/2016021817320100032434574_en.pdf

• . annual report of the Company for the year ended 31 December 2015:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0428/LTN201604281271.pdf http://www.tatchun.com/attachment/2016042817470100032499044_en.pdf

• . annual report of the Company for the year ended 31 December 2016:

http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0427/LTN201704271422.pdf http://www.tatchun.com/attachment/2017042717500100012794159_en.pdf

• . interim report of the Company for the six months ended 30 June 2017:

http://www.hkexnews.hk/listedco/listconews/SEHK/2017/0919/LTN20170919245.pdf http://www.tatchun.com/attachment/2017091916470100032924390_en.pdf

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 August 2017, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Circular, the Group had outstanding secured bank borrowings, obligation under finance leases and other borrowing of approximately HK$137,913,000, HK$75,000 and HK$151,529,000, respectively. The obligation under finance leases are secured by the lessor’s charge over the lease assets and corporate guarantees provided by the Company. These secured bank borrowings comprised fixed interest rate ranging from 2.05% to 4.79% per annum. The other borrowing of approximately HK$151,529,000 were loan from financial institutions in interest rate range from 8.48% to 24.00% and repaid in accordance with the terms of the loan agreements.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Securities

The aforesaid secured bank borrowings of approximately HK$137,913,000 were secured by building and prepaid lease payment with a carrying amount of approximately HK$127,166,000 and HK$18,433,000, respectively. The partial of aforesaid other borrowing of approximately HK$52,706,000 were secured by the plant and machinery with a carrying amount of approximately HK$8,282,000.

The bank deposits of approximately HK$38,281,000 were pledged for the issue of bills payable of approximately HK$38,231,000.

Contingent liabilities

As at the Latest Practicable Date, the Group had been involved in the litigation disclosed in note 9 of Appendix III.

3. WORKING CAPITAL STATEMENT

The Directors, after due and careful enquiry, are of the opinion that the working capital available to the Group is sufficient for the Group’s requirements for at least the next 12 months from the date of publication of this circular after taking into account (i) the internal resources of the Group; and (ii) the estimated net proceeds from the Rights Issue.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practical Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2016, being the date to which the latest published audited consolidated financial statement of the Company were made up.

5. FINANCIAL AND TRADING PROSPECT

The Company is an investment holding company, whose major operating subsidiaries are principally engaged in the manufacturing and trading of broad range of light emitting diode (LED) lighting, printed circuit boards (PCBs) including single-sided PCBs, double-sided PCBs and multi-layered PCBs (for up to 12 layers) and trading of tower and electric cable.

For the six months ended 30 June 2017, the Group’s turnover amounted to approximately HK$316.7 million, representing a significant increase of approximately 68.5% as compared to approximately HK$187.9 million for the six months ended 30 June 2016. However, as a result of the more severe competition in PCB industry and reduction in average selling price of PCBs, the gross profit margin for manufacturing and trading of PCBs decreased from 4.3% for the six months ended 30 June 2016 to 1.0% for the six months ended 30 June 2017.

During the first half of 2017, the Group was unable to secure more purchase orders from new and existing customers for higher-end and precision PCB products notwithstanding the increase in market demand of PCB products for LED and automobile industries. The principal reason for the Group’s failure in obtaining more PCB orders from customers is the lack of

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

capital for upgrading the Group’s equipment and machinery to enhance precision, speed and quality and to bring in line with the new industry standard of robotic automation and artificial intelligence. The current situation is that the Company is lacking sufficient budget to invest on new and additional machinery. Should the Rights Issue be successfully completed, it is the view of the Board that the net proceeds of the Rights Issue would be able to replenish the cash and asset position of the Group with the view to bringing the Group’s manufacturing business back to the right track and restoring the Group’s credit relationship with suppliers to a normal position. In addition, the Group may stand better chance for re-grant or extension of loans by banks at lower cost. As such, the Company may consider utilizing new or extended bank loans to upgrade the production equipment and machinery of the Group’s PCB manufacturing segment. Depending on the financial position of the Group upon completion of the Rights Issue and subject to the success of obtaining new or extended bank loans, the Board plans to invest, to the maximum extent, RMB50 million in the first half of 2018 to, inter alia, (i) install new machineries (including but not limited to plating lines, automated V-cutting machines and digital drilling machines) to increase the Group’s productivity and precision; and (ii) upgrade the aging machineries on the Group’s existing production lines with an aim to enhancing the precision and quality of PCB products. The Board expects that the equipment and machinery upgrade will enable the Group to accept more purchase orders from new and existing customers and accordingly, the overall operating efficiency and profitability of the Group will be improved.

To leverage on existing customer network and experience in manufacturing and trading in the PRC and overseas, the Group started tower and electric cable business in the second half of 2016. In this new segment, the Group sourced raw materials from local and overseas market to supply to a manufacturer of electric tower and cable manufacturer. Although the initial performance of this new segment is promising, the revenue was so far contributed by a single customer. As such, the management anticipates that it takes time for the Group to expand and diversify its source and clientele to establish a sustainable business model.

The management will continue to supervise the Group’s business development activities so as to align with the market trend and equip the Group’s staff members with the necessary technology knowledge with an aim to bring the Group’s business forward.

– I-3 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

(A) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT OF UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The following is the text of the unaudited pro forma financial information prepared for the purpose of inclusion in this prospectus received from the independent reporting accountants of the Company, HLB Hodgson Impey Cheng Limited, Certified Public Accountants, Hong Kong.

==> picture [236 x 47] intentionally omitted <==

,

31 October 2017

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION IN AN INVESTMENT CIRCULARS

TO THE BOARD OF DIRECTORS OF TC ORIENT LIGHTING HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of pro forma financial information of TC Orient Lighting Holdings Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’) by the directors of the Company for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June 2017 and related notes as set out in Appendix II to the circular issued by the Company date 31 October 2017 (the ‘‘Circular’’). The applicable criteria on the basis of which the directors of the Company have compiled the unaudited pro forma financial information are described in Section B of Appendix II to the Circular.

The unaudited pro forma financial information has been compiled by the directors of the Company to illustrate the impact of the proposed rights issue on the basis of one rights share for every one existing shares held on the record date (the ‘‘Proposed Rights Issue’’) on the Group’s consolidated net tangible assets as at 30 June 2017 as if the Rights Issue had taken place at 30 June 2017. As part of this process, information about the Group’s financial position has been extracted by the directors of the Company from the Group’s consolidated financial statements for the six months ended 30 June 2017, on which a review report has been published.

– II-1 –

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

DIRECTORS’ RESPONSIBILITIES FOR THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The directors of the Company 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’’).

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.

The 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 ACCOUNTANTS’ 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 of the Company 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.

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The purpose of unaudited pro forma financial information included in an investment circular 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 as at 30 June 2017 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 unaudited 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.

Opinion

In our opinion:

• . the unaudited pro forma financial information has been properly compiled on the basis stated;

• . such basis is consistent with the accounting policies of the Group; and

• . 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.

Yours faithfully HLB Hodgson Impey Cheng Limited Certified Public Accountants

Wong Sze Wai, Basilia Practising Certificate Number: P05806 Hong Kong

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(B) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The following is the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group as at 30 June 2017 (the ‘‘Unaudited Pro Forma Financial Information’’) which has been prepared by the Directors in accordance with paragraph 4.29 of the Listing Rules to illustrate the effects of the Rights Issue on the unaudited consolidated net tangible assets of the Group attributable to owners of the Company as if the Rights Issue had taken place on 30 June 2017.

The Unaudited Pro Forma Financial Information of the Group has been prepared for illustrative purpose only, based on the judgments, estimates and assumptions of the directors, and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of the Group had the Rights Issue has been completed as at 30 June 2017 or at any future date.

The Unaudited Pro Forma Financial Information of the Group is prepared based on the unaudited consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June 2017, as extracted from the published interim report of the Company for the six months ended 30 June 2017 and is adjusted for the effect of the Rights Issue described below.

Based on 1,029,635,216 Rights Shares to be issued at the Subscription Price of HK$0.13 per Rights Share	Unaudited consolidated net tangible assets attributable to the owners of the Company as at 30 June 2017 HK$’000 (Unaudited) (Note 1) 246,917	Estimated net proceeds from the Rights Issue HK$’000 (Unaudited) (Note 2) 128,396	Unaudited pro forma consolidated net tangible assets attributable to the owners of the Company as if the Rights Issue had been completed on 30 June 2017 HK$’000 (Unaudited) (Note 3) 375,313	Unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company per Share before the completion of the Rights Issue HK$ (Unaudited) (Note 4) 0.24	Unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company per Share immediately after the completion of the Rights Issue HK$ (Unaudited) (Note 5) 0.18

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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Notes:

1. The unaudited consolidated net tangible assets attributable to the owners of the Company as at 30 June 2017 has been extracted from the published interim report of the Company for the six months ended 30 June 2017.

2. The estimated net proceeds from the Rights Issue is approximately HK$128,396,000 based on 1,029,635,216 Rights Shares to be issued at the Subscription Price of HK$0.13 per Rights Share and after deducting estimated expenses of approximately HK$5,457,000 attributable to the Rights Issue.

3. The unaudited pro forma consolidated net tangible assets attributable to owners of the Company as if the Rights Issue has been completed on 30 June 2017 of approximately HK$375,313,000, which comprise (i) HK$246,917,000 as disclosed in note 1 and (ii) HK$128,396,000 as disclosed in note 2.

4. The unaudited pro forma adjusted consolidated net tangible liabilities of the Group per share attributable to the owners of the Company before the completion of the Rights Issue is determined based on the unaudited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June 2017 of approximately HK$246,917,000 as disclosed in note 1 above, divided by 1,029,635,216 shares of the Company in issue as at 30 June 2017.

5. The unaudited pro forma adjusted consolidated net tangible assets of the Group per share attributable to the owner of the Company as at 30 June 2017 upon the completion of the Rights Issue per share is determined based on the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June 2017 after completion of the Rights Issue of approximately HK$375,313,000 as disclosed in note 3 above divided by 2,059,270,432 Shares immediately after the Rights Issue, which comprise (i) 1,029,635,216 shares in issue as at 30 June 2017 and (ii) 1,029,635,216 Rights Shares to be issued upon completion of the Rights Issue.

6. No adjustment other than those adjusted above has been made to reflect any trading results or other transactions of the Group subsequent to June 2017.

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GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL AND SHARE OPTIONS

(a) Share Capital

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Rights Issue (assuming there is no other change in the shareholding structure of the Company since the Latest Practicable Date up to completion of the Rights Issue) were/will be as follows:

• (i) As at the Latest Practicable Date

Authorised: 4,000,000,000 Shares Issued, fully paid or credited as fully paid: 1,029,635,216 Shares	HK$ HK$400,000,000.00
	HK$102,963,521.60

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• (ii) Assuming completion of the Rights Issue (assuming there is no other change in the shareholding structure of the Company since the Latest Practicable Date up to completion of the Rights Issue)

Authorised: 4,000,000,000 Shares	HK$ HK$400,000,000.00

Issued, fully paid or credited as fully paid:

1,029,635,216 Shares in issue as at the Latest Practicable Date 1,029,635,216 Rights Shares to be allotted and issued 2,059,270,432 Shares in issue and fully paid upon completion of the Rights Issue	HK$102,963,521.60 HK$102,963,521.60
	HK$205,927,043.20

The existing issued Shares are fully paid up and rank pari passu with each other in all respects, including the rights as to return of capital, dividends and voting. The Rights Shares, when issued and fully paid, will rank pari passu in all respects among themselves and with all the Shares in issue at their respective dates of allotment and issue, including the right to any dividends or distributions made or declared on or after their respective dates of allotment and issue.

The Shares are listed and traded on the Stock Exchange. None of the Shares is listed, or dealt in, on any other stock exchange, nor is any listing or permission to deal in the Shares being, or proposed to be sought, on any other stock exchange.

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APPENDIX III

(b) Share Options

As at the Latest Practicable Date, the Company had outstanding Share Options granted under the Old Share Option Scheme to subscribe for 25,568,875 new Shares, the details of which are set out below:

Holders of Share Options Date of grant Exercise price per Share Exercise period Employees (other than Directors) 2 September 2011 HK$1.747 2 March 2012– 2 September 2021 22 October 2014 HK$1.035 22 October 2014– 22 October 2024 Sub-total (A): Consultants 29 November 2010 HK$2.807 29 November 2010– 28 November 2020 22 October 2014 HK$1.035 22 October 2014– 22 October 2024 Sub-total (B): Total (A+B):	Number of Shares falling to be issued upon full exercise 5,193,237 5,712,561
	10,905,798
	1,570,048 13,093,029
	14,663,077
	25,568,875

Save as disclosed in this section headed ‘‘Share Capital and Share Options’’, as at the Latest Practicable Date, the Company had no other (a) outstanding derivatives, options, warrants or securities in issue which confer any right to subscribe for, convert or exchange into Shares; and (b) relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in issue.

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GENERAL INFORMATION

APPENDIX III

3. DISCLOSURE OF INTERESTS

3.1 Interests of Directors

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executives of the Company in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were: (a) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); (b) entered in the register maintained by the Company pursuant to section 352 of the SFO; or (c) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers were as follows:

Long position in Shares

			Percentage
		Number of	of issued
Names of Directors	Capacity	Shares	share capital
Chen Hua	Interest in controlled	162,000,000	15.73%
	corporation (Note 1)

Notes:

1. (a) These 162,000,000 Shares are currently held by Able Turbo, a company which is 60.31% owned by Mr. Chen Hua (an executive Director) and 39.69% owned by Mr. Li Xianggen. These 162,000,000 Shares are the same block of Shares which are deemed to be interested by Able Turbo and Mr. Li Xianggen as referred to in the section headed ‘‘3.2 Interests of substantial shareholders’’ below in this Appendix.

2. (b) Based on the DI filings and information provided by Mr. Wang Shi Jin (a Director of the Company), on 20 May 2015, he obtained a stop notice (the ‘‘Stop Notice’’) from the High Court of Hong Kong (HCSN 5 of 2015) to stop the transfer of 128,262,303 Shares (the ‘‘Restrained Shares’’) which were at the relevant time registered in the name of Propitious Group Limited (‘‘PGL’’) (a company purportedly controlled by Mr. Chen Jing, ex-Director and ex-chairman of the Company) and representing 24.17% of the issued share capital of the Company at the relevant time. Mr. Wang Shi Jin confirmed that he has no relationship with PGL or Mr. Chen Jing, save for the lender-borrower relationship as a result of certain loans owed by Mr. Chen Jing, by virtue of which Mr. Wang Shi Jin asserted his interest in the debt against Mr. Chen Jing and successfully obtained from the High Court of Hong Kong the Stop Notice over the Restrained Shares.

Based on the information gathered by the Company from Mr. Wang Shi Jin and Mr. Chen Hua after Mr. Chen Hua joined the Board in February 2016, the Company was given to understand that, notwithstanding the Stop Notice, the Restrained Shares were transferred by PGL (upon instructions of Mr. Chen Jing) to Ms. Fang Hailing at some time between April and June 2015. Thereafter, on 2 July 2015, 108,000,000 Restrained Shares (the ‘‘Relevant Shares’’) out of the 128,262,303 Restrained Shares were further transferred by Ms. Fang Hailing to Able Turbo (which is owned as to 60.31% by Mr. Chen Hua and 39.69% by Mr. Li Xianggen).

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APPENDIX III

Mr. Wang Shi Jin confirmed that he has no relationship with Ms. Fang Hailing, Able Turbo, Mr. Chen Hua nor Mr. Li Xianggen. In the meantime, Mr. Wang Shi Jin acknowledged that he does not currently exercise (and in fact has never exercised) control over any of the Restrained Shares nor the voting rights thereon, and the DI filings made by him in respect of the Stop Notice on 20 May 2015 were simply deemed interests in the Restrained Shares by virtue of the Stop Notice and for no other reason.

Mr. Chen Hua (a Director of the Company) confirmed to the Company that he, through his controlled corporation Able Turbo, is currently in possession of the Relevant Shares and the voting rights represented by them.

Based on the information provided by Mr. Chen Hua, on 2 July 2015, Able Turbo acquired 108,000,000 Relevant Shares out of the 128,262,203 Restrained Shares then held by Ms. Fang Hailing. At the relevant time, he was given to understand that Ms. Fang Hailing kept the remaining 20,262,203 Shares. However, as Ms. Fang Hailing’s deemed interests dropped below the disclosure threshold of 5% shareholding under the disclosure of interests obligations under Part XV of the SFO as a result of the partial disposal, Mr. Chen Hua is no longer in the position to confirm whether Ms. Fang Hailing still keeps these 20,262,203 Shares as at and up to the Latest Practicable Date. Mr. Chen Hua confirmed that he has no relationship with Mr. Chen Jing, Ms. Fang Hailing or Mr. Wang Shi Jin.

On the basis of the above, it appears to the Company that (a) PGL (under the control of Mr. Chen Jing) should have disposed of all 128,262,203 Restrained Shares to Ms. Fang Hailing at certain time between April and June 2015 despite the Stop Notice, but neither PGL nor Mr. Chen Jing ever filed a DI filing notifying the Company or the Stock Exchange about their ceasing to have interest in those Shares; (b) despite his obtaining of the Stop Notice on 20 May 2015, Mr. Wang Shi Jin had never exercised control on the 128,262,203 Restrained Shares or the voting rights thereon and his DI filings were purely made as a matter of deemed interests; (c) notwithstanding the Stop Notice, Ms. Fang Hailing acquired 128,262,203 Restrained Shares from PGL and subsequently sold 108,000,000 Relevant Shares out of them to Able Turbo on 2 July 2015; (d) these 108,000,000 Relevant Shares are currently owned by Able Turbo; and (e) in July 2016, Able Turbo participated in the open offer of the Company and further subscribed 54,000,000 Shares, resulting in his total shareholding in the Company being 162,000,000 Shares as at the Latest Practicable Date.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short positions in any Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were: (a) 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 are deemed or taken to have under provisions of the SFO); (b) entered in the register maintained by the Company pursuant to section 352 of the SFO; or (c) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors was a director or employee of a company which had any interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

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GENERAL INFORMATION

APPENDIX III

3.2 Interests of substantial shareholders

As at the Latest Practicable Date, so far as was known to the Directors, the following persons or entities (not being a Director or chief executive of the Company) had or were deemed or taken to have interests or short positions in the Shares and underlying Shares which were disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were entered into the register maintained by the Company pursuant to section 336 of the SFO:

Long position in Shares or underlying Shares

		Number of	Percentage
		Shares or	of issued
		underlying	share
Names of Shareholders	Capacity	Shares	capital
Able Turbo (Note 1)	Beneficial Owner	162,000,000	15.73%
Li Xianggen (Note 1)	Interest in controlled	162,000,000	15.73%
	corporation
Underwriter (Note 2)	Others	893,204,091	42.32%

Notes:

1. Based on the DI filings made by the relevant person(s), these 162,000,000 Shares were held by Able Turbo, a company which is 60.31% owned by Mr. Chen Hua (an executive Director) and 39.69% owned by Mr. Li Xianggen.

2. The Shares are the Rights Shares which the Underwriter is interested under the Underwriting Agreement on the assumption of no acceptance by the Qualifying Shareholders under the Rights Issue and all of the outstanding Share Options are exercised in full on or before the Record Date.

Save as disclosed herein, there is no person known to the Directors, who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares which disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were entered into the register maintained by the Company pursuant to section 336 of the SFO.

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 Group or associated companies (excluding contracts expiring or determinable by the Company within one year without payment of compensation, other than statutory compensation.

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GENERAL INFORMATION

APPENDIX III

5. DIRECTORS’ INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors had any interest (direct or indirect) in any asset which had been since 31 December 2016 (being the date to which the latest published audited financial statements of the Group were made up) acquired or disposed of by or leased to any member of the Group or was proposed to be acquired or disposed of by or leased to any member of the Group.

6. DIRECTORS’ INTEREST IN CONTRACTS AND ARRANGEMENTS

As at the Latest Practicable Date, 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 Group.

7. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or their respective associates had any interest in businesses that competed or was likely to compete, whether directly or indirectly, with the business of the Group, or has or may have any other conflicts of interest with the Group pursuant to Rule 8.10 of the Listing Rules.

8. MATERIAL CONTRACTS

The following contracts (not being a contract entered into in the ordinary course of business of the Group) were entered into by members of the Group within two years immediately preceding 22 September 2017 (being the date of signing of the Underwriting Agreement) and up to the Latest Practicable Date and are or may be material:

• (a) the underwriting agreement dated 25 May 2016 and entered into between the Company and China Sky Securities Limited in relation to the underwriting of the open offer;

• (b) the subscription agreements dated 14 June 2016 and entered into between the Company (as issuer) and thirteen independent subscribers in relation to the subscriptions of 106,147,960 new Shares at the subscription price of HK$0.198 per Share;

• (c) the subscription agreements dated 14 September 2016 and entered into between the Company (as issuer) and six independent subscribers in relation to the subscription of 127,377,552 new Shares at the subscription price of HK$0.19 per Share;

• (d) the subscription agreements (the ‘‘CB Subscription Agreements’’) entered into between the Company and seventeen subscribers (the ‘‘CB Subscribers’’) in relation to the subscription of convertible bonds in the aggregate principal sum of HK$285,000,000 dated 22 September 2016 and 26 September 2016 (together with written consents dated 14 December 2016, 13 January 2017, 31 March 2017 and 31 May 2017 and entered into between the Company and the CB Subscribers in relation

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GENERAL INFORMATION

APPENDIX III

to the extension of the long stop date of the CB Subscription Agreements), which were terminated by mutual consent of the Company and the CB Subscribers on 30 June 2017 and 21 July 2017, respectively;

• (e) the strategic cooperative framework agreement dated 14 October 2016 and entered into between the Company and Sichuan Changhong Component Technology Company Limited; and

• (f) the Underwriting Agreement.

9. LITIGATION

As at the Latest Practicable Date, the Group had been involved in the following litigation:

The Company was informed by its legal advisers that a writ of summons dated 10 May 2016 under Hong Kong High Court Action No. 1228/2016 (the ‘‘Legal Action’’) was filed by Mr. Li Jian Chao (‘‘Mr. Li’’, formerly the chief executive officer and executive director the Company before he resigned on 5 June 2015) seeking to claim from the Company an alleged outstanding special bonus payment in the amount of HK$1,640,000. On 12 July 2016, the Company filed a defence and counterclaim against Mr. Li (the ‘‘Counterclaim’’), whereby the Company denied (inter alia) that Mr. Li is entitled to the alleged amount and counterclaimed from Mr. Li (inter alia) a total sum of HK$5,224,000, being wrongful receipts by Mr. Li based on certain invalid resolutions purportedly passed by the Board between 31 December 2014 and 4 June 2015, and/or damages for breach of fiduciary duties by Mr. Li when he was a director of the Company between 1 September 2014 and 5 June 2015. Further details relating to the Legal Action and Counterclaim are more particularly set out in the Company’s announcements dated 13 May and 14 July 2016.

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

10. EXPERTS AND CONSENTS

The following are the qualifications of the professional experts who have given opinion or advice, which is contained in this circular:

Name	Qualification
HLB Hodgson Impey Cheng	Certified Public Accountants
Limited
Goldin Financial Limited	a corporation licensed to engage in type 6 (advising on
	corporate finance) regulated activity under the SFO

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GENERAL INFORMATION

APPENDIX III

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter or report and references to its name and logo in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the above experts had no direct or indirect shareholding in 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, nor does it have any interest (whether direct or indirect) in any assets which have been, since 31 December 2016 (being the date to which the latest published audited financial statements of the Group were made up) acquired or disposed of or leased to any member of the Group or are proposed to be acquired, disposed of or leased to any member of the Group.

11. EXPENSES

The expenses in connection with the Rights Issue, including the underwriting commission, printing, registration, translation, legal, financial advisory and accounting fees, are estimated to be approximately HK$5.5 million, which are payable by the Company.

12. DIRECTORS AND SENIOR MANAGEMENT PROFILE

Particulars of the Directors and senior management of the Company:

Name Address Executive Directors Mr. Chen Yongsen No. 9, Lane 1, Bei Di Tang Yi Lu Dong Baoan District, Shenzhen Guangdong Province, the PRC Mr. Wang Shi Jin 3 Robs Way South Deerfield MA 01373, United States of America Mr. Chen Hua No. 2, Lane 1 Unit 3 Xinqiao, Shajing Lu Baoan District, Shenzhen Guangdong Province, the PRC

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GENERAL INFORMATION

APPENDIX III

Name	Address
Independent Non-executive Directors
Mr. Xu Ming	87 Mianyang Avenue
	Xiaotao City
	Hubei Province, the PRC
Mr. Guo Jun Hao	No.58, Lane 2
	Chiwei Cun, Bin He Da Dao
	Futian District, Shenzhen
	Guangdong Province, the PRC
Mr. Anson Poon Wai Kong	Flat B, 13/F, Tower 1, The Waterfront
	No.1 Austin Road West
	Tsimshatsui, Kowloon
	Hong Kong
Mr. Li Hongxiang	Flat A, 9/F, Block 2
	Xing Hai Ming Cheng Phase 4
	Qian Hai Road
	Nanshan District, Shenzhen
	Guangdong Province, the PRC
Mr. Wong Kwok On	12/F, South China Building
	1–3 Wyndham Street, Central
	Hong Kong
Mr. Bonathan Wai Ka Cheung	1101A, 11/F
	East Ocean Centre
	98 Granville Road
	Tsimshatsui, Kowloon
	Hong Kong
Ms Chen Lei	Room 1501, Block E5, Jinxiu Area
	Jincheng Road, Shajing Street
	Bao’an District, Shenzhen
	Guangdong Province, the PRC
Senior Management
Mr. Chen ChangZhi	Room 401, Block B
	Gui Xiang Yuan
	Wuguishan Area, Zhongshan
	Guangdong Province, the PRC

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GENERAL INFORMATION

APPENDIX III

The biographies of the Directors and senior management are set out below:

Executive Directors

Mr. Chen Yongsen, aged 47, was appointed as an executive Director with effect from 12 August 2015, was appointed as the Chairman of the Board with effect from 16 November 2015 and the chairman of the NC with effect from 29 February 2016. Mr. Chen has over 21 years’ experience in hotel management. Since as early as the 1990’s, he was responsible for key managerial positions in various hotels in Shenzhen, China. From around 11 years ago, Mr. Chen started his own business, and owned a factory and managed a hotel in Shenzhen, China.

Mr. Wang Shi Jin, aged 64, was appointed as an executive Director with effect from 29 January 2015 and appointed as the Deputy Chairman of the Company with effect from 5 June 2015. Mr. Wang stepped down from the position of the Deputy Chairman and was re-designated as the Chief Executive Officer of the Company with effect from 16 November 2015. Mr. Wang was appointed as the chairman of the NC between 8 October 2015 and 29 February 2016. Mr. Wang is a founder of a reputable company in the PRC specializing in advanced technologies and engineering services. Mr. Wang obtained a bachelor’s degree and a master’s degree from the Peking University and furthered his studies in America as candidate for the Doctor of Philosophy.

Mr. Chen Hua, aged 55, was appointed as an executive Director with effect from 29 February 2016. Mr. Chen has over 34 years of experience in property construction and engineering and project management in China. He obtained a Bachelor of Civil Engineering from Sun Yat-sen University, Guangzhou in 1983. Mr. Chen was appointed to assist Mr. Chen Yongsen, the Chairman of the Board, to supervise the Group’s operation and development.

Mr. Xu Ming, aged 46, was appointed as executive Director with effect from 14 September 2016. He obtained a master’s degree in Economics and Management from Wuhan University, China. Mr. Xu is currently a director of Shenzhen Senhe Holdings Limited (深圳市森和控股集團有限公司), the scope of business of which include asset management, stock investment, management consultancy and the provision of guarantee.

Mr. Guo Jun Hao, aged 35, was appointed as executive Director of the Company with effect from 10 April 2017. Mr. Guo obtained a bachelor’s degree in arts from the University of Wolverhampton in 2004, a master’s degree in social sciences from The University of Leicester in 2006 and a master’s degree in science from the University of Warwick in 2007. Before joining the Company, Mr. Guo has over 6 years of experience working in financial institutions in China and has occupied management position responsible for customer services, staff training, sales and marketing. Mr. Guo will also be appointed as the general manager of the Company’s subsidiary, TC Hong Kong Electric Company Limited and be responsible for overseeing its sales and marketing operations.

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APPENDIX III

Independent Non-executive Directors

Mr. Anson Poon Wai Kong, aged 46, was appointed as an independent nonexecutive Director of the Company with effect from 1 June 2015. Mr. Poon received his Bachelor of Economics in University of London in United Kingdom, followed by Master of Practicing Accounting in Monash University in Australia, Master of Business Administration and Master of Professional Accounting and Corporate Governance both in City University of Hong Kong. Mr. Anson Poon is a qualified member of Hong Kong Institute of Company Secretary, a qualified member of Hong Kong Institute of Certified Public Accountants and a Certified Practicing Accountant (Australia). He is currently an executive director of Tou Rong Chang Fu Group Limited, a company which is listed on the Main Board of the Stock Exchange (Stock Code: 850).

Mr. Li Hongxiang, aged 27, was appointed as an independent executive Director with effect from 4 July 2016 and graduated from the University of Sydney, Australia with a Bachelor of Commerce (Accounting and Economics). Mr. Li has participated in the organization of youth and student activities amongst the Chinese population in Australia.

Mr. Wong Kwok On, aged 62, was appointed as an independent non-executive Director of the Company since 14 September 2016 and he has previously worked in licensed corporations in Hong Kong engaging in securities, futures and corporate finance. Mr. Wong is currently the Chairman of the Hong Kong Securities & Futures Professionals Association.

Mr. Bonathan Wai Ka Cheung, aged 26, was appointed as Independent nonexecutive Director of the Company since 14 September 2016 and he graduated from University of Waterloo, Canada with a Bachelor of Arts in Economics. Mr. Cheung has experience in working in a securities brokerage company in Canada.

Ms. Chen Lei, aged 28, was appointed as Independent non-executive Director of the Company since 14 September 2016 and she graduated from Guangzhou College of South China University of Technology, China with a Bachelor of Business Administration. Ms. Chen has previous experience in human resources and business administration.

Senior Management

Mr. Chen Changzhi, aged 53, was appointed the Chief Financial Officer of Zhongshan Tat Chun Printed Circuit Board Company Limited, Zhongshan Electric Company Limited and Guang Dong Tat Chun Electric Technology Co., Ltd. on 1 August 2013. Mr. Chen has extensive experience of over 30 years in the accounting and financial field in various companies in China and Hong Kong. He holds a Bachelor of Financial Accounting from Hunan University.

– III-12 –

GENERAL INFORMATION

APPENDIX III

1. CORPORATE INFORMATION AND THE PARTIES INVOLVED IN THE RIGHTS ISSUE

Registered office of the Company Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Principal place of business of the Unit 1101A1, 11/F, East Ocean Centre Company 98 Granville Road Tsim Sha Tsui, Kowloon Hong Kong Underwriter China Sky Securities Limited Room 1106, 11/F Cosco Tower 183 Queen’s Road Central Hong Kong Legal advisers to the Company Lawrence Chan & Co. Unit 2406, 24/F, Alliance Building 130–136 Connaught Road Central Hong Kong Auditor and reporting accountant of the HLB Hodgson Impey Cheng Limited Company 31/F, Gloucester Tower The Landmark 11 Pedder Street Central, Hong Kong Financial adviser to the Company Astrum Capital Management Limited Room 2704, 27/F Tower 1, Admiralty Centre 18 Harcourt Road Hong Kong Independent Financial Adviser to the Goldin Financial Limited Independent Board Committee Suites 2202–2209, 22/F Two International Finance Centre 8 Finance Street Central Hong Kong

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GENERAL INFORMATION

APPENDIX III

Principal bankers China Construction Bank Zhongshan Branch, Guangdong Province, the PRC Agricultural Bank of China Zhongshan Branch, Guangdong Province, the PRC China Trust Commercial Bank, Ltd. Principal share registrar and transfer office Codan Trust Company (Cayman) Limited Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Hong Kong branch share registrar and Tricor Investor Services Limited transfer office Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong Authorised representatives Mr. Chen Yongsen No. 9, Lane 1, Bei Di Tang Yi Lu Dong Baoan District, Shenzhen Guangdong Province, the PRC Mr. Chan Chun Kau Unit 2406, 24th Floor Alliance Building 133 Connaught Road Central Hong Kong Company secretary Mr. Chan Chun Kau (Note)

Note: Mr. Chan Chun Kau, aged 43, graduated from Trinity College, Cambridge University of England with a bachelor degree in computer science and laws. He is a solicitor in Hong Kong and is a partner of two law firms in Hong Kong, namely Cheung and Choy, Solicitors and J.S. Gale & Co., and the sole proprietor of Lawrence Chan & Co.

14. GENERAL

In the event of inconsistency, the English text of this circular shall prevail over the Chinese text thereof.

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GENERAL INFORMATION

APPENDIX III

15. DOCUMENTS AVAILABLE FOR PUBLIC INSPECTION

Copies of the following documents are available for inspection from 9:00 a.m. to 5:00 p.m. on any weekday other than public holidays, from the date of this circular up to and including the date of the EGM at the principal place of business of the Company at Unit 1101A1, 11/F, East Ocean Centre, 98 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong:

• (a) the memorandum and articles of association of the Company;

• (b) the annual reports of the Company for each of the three financial years ended 31 December 2014, 2015 and 2016, respectively;

• (c) the interim report of the Company for the six months ended 30 June 2017;

• (d) the ‘‘Letter from the Board’’, the text of which is set out on pages 11 to 32 of this circular;

• (e) the ‘‘Letter from the Independent Board Committee’’, the text of which is set out on page 33 of this circular;

• (f) the ‘‘Letter from the Independent Financial Adviser’’, the text of which is set out on pages 34 to 59 of this circular;

• (g) the report from HLB Hodgson Impey Cheng Limited in respect of the unaudited pro forma financial information of the Group, the text of which is set out in Appendix II to this circular;

• (h) the written consents referred to in the paragraph headed ‘‘Experts and Consents’’ in this appendix;

• (i) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ in this appendix;

• (j) the Underwriting Agreement; and

• (k) this circular.

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NOTICE OF THE EGM

TC ORIENT LIGHTING HOLDINGS LIMITED 達進 東 方 照 明 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability) website: www.tatchun.com (Stock Code: 515)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘EGM’’) of TC Orient Lighting Holdings Limited (the ‘‘Company’’) will be held at Unit 1101A1, 11/F, East Ocean Centre, 98 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong on Wednesday, 15 November 2017 at 10:00 a.m. for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT conditional upon (i) the Listing Committee of The Stock Exchange of Hong Kong Limited granting or agreeing to grant the listing of and permission to deal in the Rights Shares (as defined below) in their nil-paid and fully-paid forms; and (ii) the filing and registration of all documents relating to the Rights Issue (as defined below) required to be filed or registered with the Registrar of Companies in Hong Kong in accordance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance in Hong Kong:

• (a) the entering into and the terms and conditions of the underwriting agreement (the ‘‘Underwriting Agreement’’, a copy of which has been produced to the meeting marked ‘‘A’’ and signed by the chairman of the meeting for the purpose of identification) dated 22 September 2017 entered into between the Company and China Sky Securities Limited (the ‘‘Underwriter’’) in relation to the Rights Issue (as defined below) and the transactions contemplated thereunder (including the underwriting of the Rights Shares by the Underwriter) be and are hereby approved, confirmed and ratified;

• (b) the issue by way of rights issue (the ‘‘Rights Issue’’) of not less than 1,029,635,216 shares in the Company (‘‘Shares’’) and not more than 1,055,204,091 Shares in the Company (the ‘‘Rights Shares’’) at a subscription price of HK$0.13 per Rights Share to the shareholders of the Company (the ‘‘Shareholders’’) whose names shall appear on the register of members of the Company (the ‘‘Qualifying Shareholders’’) at the close of business on Monday, 27 November 2017 or such other date as the Company and the Underwriter may agree as the record date for determination of the entitlements of the Shareholders to the Rights Issue (the ‘‘Record Date’’) (excluding those Shareholders whose addresses on the register of members of the Company are outside Hong Kong on the Record Date and who are considered necessary or expedient by the Directors to be excluded from the Rights Issue after making

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NOTICE OF THE EGM

enquiries regarding any applicable securities or other laws or regulations of any territory or jurisdiction, the ‘‘Non-Qualifying Shareholders’’) on the basis of one (1) Rights Share for every one (1) existing Share held on the Record Date and pursuant to the terms and conditions as set out in the Underwriting Agreement, be and is hereby approved;

• (c) the Directors be and are hereby authorized to issue and allot the Rights Shares pursuant to and in connection with the Rights Issue notwithstanding that (i) the Rights Shares may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, the Directors be and are hereby authorized to make such exclusions or other arrangements in relation to fractional entitlements (where applicable) and/or Non-Qualifying Shareholders as they deem necessary, desirable or expedient having regard to any restrictions or obligations under the articles of association of the Company or the laws of any applicable jurisdiction and/or any rules or regulations of any recognized regulatory body or stock exchanges; and (ii) the Rights Shares which would otherwise have been made available for application by the Qualifying Shareholders or the Non-Qualifying Shareholders (as the case may be) will be made available for subscription under forms of application for excess Rights Shares; and

• (d) any one Director be and is hereby authorised to do all such acts and things, including to sign and execute all such documents and to take such steps as such Director in his/her absolute discretion considers necessary, appropriate, desirable or expedient to give effect to or in connection with the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder.’’

By order of the Board TC Orient Lighting Holdings Limited Chen Yongsen Chairman

Hong Kong, 31 October 2017

Registered Office: Head office and principal place in Hong Kong: Cricket Square Unit 1101A1, 11/F Hutchins Drive, P.O. Box 2681 East Ocean Centre Grand Cayman KY1-1111 98 Granville Road Cayman Islands Tsim Sha Tsui, Kowloon Hong Kong

– EGM-2 –

NOTICE OF THE EGM

Notes:

1. A member of the Company entitled to attend and vote at the EGM is entitled to appoint one or, if he is the holder of two or more shares, more proxies to attend and vote instead of him. A proxy need not be a member of the Company.

2. In the case of joint holders of shares in the Company, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), seniority being determined by the order in which names stand in the register of members.

3. In order to be valid, the form of proxy must be in writing under the hand of the appointor or of his attorney duly authorized in writing, or if the appointor is a corporation, either under seal, or under the hand of an officer or attorney or other person duly authorized, and must be deposited with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, (together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof) not less than 48 hours before the time fixed for holding of the EGM.

4. Completion and return of the form of proxy will not preclude members from attending and voting at the EGM and in such event, the instrument appointing a proxy shall be deemed to be revoked.

5. In compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, all resolution to be proposed at the EGM convened by this notice will be voted on by way of poll.

As at the date of this notice, the executive Directors are Mr. Chen Yongsen (Chairman), Mr. Wang Shi Jin (Chief Executive Officer), Mr. Chen Hua, Mr. Xu Ming and Mr. Guo Jun Hao; and the independent non-executive Directors are Mr. Anson Poon Wai Kong, Mr. Li Hongxiang, Mr. Wong Kwok On, Mr. Bonathan Wai Ka Cheung and Ms. Chen Lei.

– EGM-3 –