Comtec Solar Systems Group Limited - M&A Activity 2016

THIS SUPPLEMENTAL DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of the Offer, this Supplemental Document, 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 securities in Sun East Technology (Holdings) Limited, you should at once hand this Supplemental Document to the purchaser(s) or to the transferee(s) 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(s) or transferee(s). This Supplemental Document should be read in conjunction with the Composite Document, the contents of which form part of the terms of the Offer.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Supplemental Document, 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 Supplemental Document.

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UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED 紫光科技戰略投資有限公司

(Incorporated in Hong Kong with limited liability)

**SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]**

(Incorporated in Bermuda with limited liability) (Stock Code: 365)

SUPPLEMENTAL DOCUMENT UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED

FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

Financial adviser to Unis Technology Strategy Investment Limited

C A P I T A L

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

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VMS Securities Limited

Unless otherwise defined in the section headed “Definitions” in this Supplemental Document, capitalised terms used herein shall have the same meanings as those defined in the Composite Document.

The procedures for acceptance and settlement of the Offer are set out in Appendix I to the Composite Document. Please refer to the Composite Document for details. Acceptances of the Offer must be received by the Registrar, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong by no later than 4:00 p.m. on Friday, 26 August 2016, or such later time and/or date as the Offeror may determine and announce with the consent of the Executive and in accordance with the Takeovers Code.

Apart from the Closing Date which will be extended to Friday, 26 August 2016, as set out in this Supplemental Document, all the other terms of the Offer as set out in the Composite Document and in the Form of Acceptance remain unchanged and apply to the extended Offer.

For identification purposes only

12 August 2016

SUMMARY OF IMPORTANT INFORMATION

Independent Shareholders should note the following:

The Offeror confirmed that the Offer Price will remain as HK$1.70 per Offer Share.
The Offer shall close on the Revised Closing Date on Friday, 26 August 2016. Apart from the Closing Date which will be extended as set out in this Supplemental Document, all the other terms of the Offer as set out in the Composite Document and in the Form of Acceptance remain unchanged and apply to the extended Offer.
The financial information of the Group for the financial year ended 31 March 2016 is set out in Appendix I to this Supplemental Document.
This Supplemental Document will be served as notice in writing to the Shareholders in accordance with Rule 15.1 of the Takeovers Code.

You are advised to read this Supplemental Document, in particular, the supplemental letter from Quam Capital, the supplemental letter from the Board, the supplemental letter from the Independent Board Committee and the supplemental letter from the Independent Financial Adviser, in conjunction with the Composite Document carefully before taking any action in respect of the Offer.

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	Page
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	iii
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
SUPPLEMENTAL LETTER FROM QUAM CAPITAL . . . . . . . . . . . . . . . . . . . . . .	3
SUPPLEMENTAL LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . .	7
SUPPLEMENTAL LETTER FROM THE INDEPENDENT
BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
SUPPLEMENTAL LETTER FROM THE INDEPENDENT
FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
APPENDIX I – FINANCIAL INFORMATION ON THE GROUP . . . . . . . . . . .	I-1
APPENDIX II – SUPPLEMENTAL GENERAL INFORMATION RELATING
TO THE OFFEROR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III – SUPPLEMENTAL GENERAL INFORMATION RELATING
TO THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV – DOCUMENTS AVAILABLE FOR INSPECTION . . . . . . . . . . .	IV-1

– ii –

EXPECTED TIMETABLE

The timetable set out below is indicative only and may be subject to changes. Any changes to the timetable will be jointly announced by the Offeror and the Company as and when appropriate.

Despatch date of this Supplemental Document (Note 1)	. . . . . . . . . Friday, 12 August 2016
Latest time and date for acceptance
of the Offer (Note 2) . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . 4:00 p.m.
	on Friday, 26 August 2016
Revised Closing Date (Notes 2 and 3) . . . . . . . . . . . . . . . . . . . . . . Friday, 26 August 2016
Announcement of the results of the Offer
to be posted on the website of the Stock
Exchange (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . at or before 7:00 p.m.
	on Friday, 26 August 2016

Latest date for posting of remittances for the amounts due in respect of valid acceptances received under the Offer (Notes 3 and 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 6 September 2016

Notes:

The Offer, which is unconditional in all respects, made on and from Thursday, 2 June 2016, is capable of acceptance until the Revised Closing Date.
In accordance with the Takeovers Code, in the event that the Offer is extended, at least 14 calendar days’ notice in writing will be given, before the extended Offer is closed, to those Shareholders who have not accepted the Offer. Beneficial owners of Shares who hold their Shares in CCASS directly as an investor participant or indirectly via a broker or custodian participant should note the timing requirements for causing instructions to be made to CCASS in accordance with the General Rules of CCASS and CCASS Operational Procedures. Acceptances of the Offer shall be irrevocable and not capable of being withdrawn, except in the circumstances set out in the section headed “Right of withdrawal” in Appendix I to the Composite Document.
If there is (i) a tropical cyclone warning signal number 8 or above, or (ii) a “black” rainstorm warning signal:
(a) in force in Hong Kong at any local time before 12:00 noon but no longer in force after 12:00 noon on the latest date for acceptance of the Offer and the latest date for posting of remittances for the amounts due under the Offer in respect of valid acceptances, the latest time for acceptance of the Offer and the posting of remittances will remain at 4:00 p.m. on the same Business Day; or
(b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the latest date for acceptance of the Offer and the latest date for posting of remittances for the amounts due under the Offer in respect of valid acceptances, the latest time for acceptance of the Offer and the posting of remittances will be rescheduled to 4:00 p.m. on the following Business Day.
Remittances in respect of the cash consideration (after deducting the seller’s ad valorem stamp duty) payable for the Offer will be posted to the accepting Shareholders by ordinary post at their own risk as soon as possible but in any event within seven business days (as defined in the Takeovers Code) following the date of receipt by the Registrar of the duly completed Form of Acceptance and all the valid requisite documents.

– iii –

EXPECTED TIMETABLE

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares, are held by the public, or if the Stock Exchange believes that:– (i) a false market exists or may exist in the trading of the Shares; or (ii) that there are insufficient Shares in public hands to maintain an orderly market; it will consider exercising its discretion to suspend trading in the Shares.

All time and date references contained in this Supplemental Document are to Hong Kong times and dates.

– iv –

DEFINITIONS

Terms defined in the Composite Document shall have the same meanings herein unless the context otherwise requires and the following expressions have the meanings set out below in this Supplemental Document:

“Composite Document”
the composite offer and response document dated 2 June 2016 jointly issued by or for and on behalf of the Offeror and the Company in accordance with the Takeovers Code in connection with the Offer
“Extended Relevant Period”
the period from the Previous Latest Practicable Date and up to and including the Latest Practicable Date
“First Closing Date”
23 June 2016, being the original closing date for acceptance of the Offer as set out in the Composite Document
“Latest Practicable Date”
Tuesday, 9 August 2016, being the latest practicable date prior to the printing of this Supplemental Document for the purpose of ascertaining certain information contained in this Supplemental Document prior to its publication
“Mind Seekers”
Mind Seekers Investment Limited, a company incorporated in BVI with limited liability, which was beneficially owned by Mr. But Tin Hing, Mr. But, Mr. Leung Cheong and Mr. Leung Kuen, Ivan as to 50%, 20%, 20% and 10%, respectively as at the Previous Latest Practicable Date and is beneficially owned by Mr. But as to 100% as at the Latest Practicable Date
“Previous Latest Practicable Date”
30 May 2016, being the previous latest practicable date prior to the printing of the Composite Document for the purpose of ascertaining certain information contained in the Composite Document prior to its publication
“Profit Warning Announcement”
the profit warning announcement dated 15 June 2016 issued by the Company
“Results Announcement”
the results announcement dated 29 June 2016 issued by the Company in connection with the audited consolidated financial results of the Group for the year ended 31 March 2016

– 1 –

DEFINITIONS

“Revised Closing Date” the revised closing date for the Offer as revised by this Supplemental Document, being Friday, 26 August 2016 or such later time(s) and/or date(s) as the Offeror may determine and announce in accordance with the requirements of the Takeovers Code “Supplemental Document” this supplemental document dated Friday, 12 August 2016 containing additional information relating to the Offeror and the Company jointly issued by or for and on behalf of the Offeror and the Company in accordance with the Takeovers Code in connection with the Offer

Certain amounts and percentage figures included in this Supplemental Document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain paragraphs and tables in this Supplemental Document may not be an arithmetic aggregation of the figures preceding them.

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SUPPLEMENTAL LETTER FROM QUAM CAPITAL

12 August 2016

To the Independent Shareholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

INTRODUCTION

Reference is made to (i) the joint announcement dated 14 February 2016 issued by the Offeror and the Company in relation to, among others, the Subscriptions and the Offer; (ii) the joint announcement dated 30 May 2016 issued by the Offeror and the Company in relation to the completion of the Subscriptions; (iii) the joint announcement dated 2 June 2016 issued by the Offeror and the Company in relation to the despatch of the Composite Document; (iv) the Composite Document dated 2 June 2016 jointly issued by the Offeror and the Company; (v) the Profit Warning Announcement dated 15 June 2016 issued by the Company in relation to the expected net loss for the financial year ended 31 March 2016; (vi) the joint announcement dated 15 June 2016 issued by the Offeror and the Company, in relation to the extension of the Offer Period; and (vii) the joint announcement dated 23 June 2016 issued by the Offeror and the Company in relation to the extension of the Offer Period and the level of acceptance of the Offer on the First Closing Date.

As announced jointly by the Company and the Offeror on 23 June 2016, the Closing Date will be extended and the Independent Shareholders shall have at least a further 14 days to tender their acceptances of the Offer after the issue of this Supplemental Document. As set out in the section headed “Expected Timetable” of this Supplemental Document, the latest time and date for acceptance of Offers shall be extended to 4:00p.m. on Friday, 26 August 2016, being the Revised Closing Date.

The purpose of this Supplemental Document is to provide you with, among other things, (i) the financial results of the Group for the financial year ended 31 March 2016; (ii) a supplemental letter from the Independent Financial Adviser; and (iii) any other additional information as required under Rule 8.5 of the Takeovers Code. This Supplemental Document will be served as notice in writing to the Shareholders in accordance with Rule 15.1 of the Takeovers Code.

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SUPPLEMENTAL LETTER FROM QUAM CAPITAL

PRINCIPAL TERMS OF THE OFFER

The Offer Price will remain as HK$1.70 per Offer Share. The Offer shall close on the Revised Closing Date on 26 August 2016. Apart from the Closing Date which will be extended as set out in this Supplemental Document, all the other terms of the Offer as set out in the Composite Document and in the Form of Acceptance remain unchanged and apply to the extended Offer.

As at the Latest Practicable Date, save for the Convertible Bonds, the Company had no other outstanding warrants, derivatives, options, convertibles or other securities in issue which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into Shares.

Comparisons of value

The Offer Price of HK$1.70 per Offer Share represents:

(a) a premium of approximately 15.65% to the closing price of HK$1.470 per Share as quoted on the Stock Exchange on 4 February 2016, being the Last Trading Day;
(b) a premium of approximately 25.00% to the average closing price of approximately HK$1.360 per Share as quoted on the Stock Exchange for the last five Trading Days up to and including the Last Trading Day;
(c) a premium of approximately 32.09% to the average closing price of approximately HK$1.287 per Share as quoted on the Stock Exchange for the last 10 Trading Days up to and including the Last Trading Day;
(d) a premium of approximately 33.82% over the average closing price of approximately HK$1.270 per Share as quoted on the Stock Exchange for the last 30 Trading Days up to and including the Last Trading Day;
(e) a premium of approximately 165.31% over the unaudited consolidated net asset value per Share of HK$0.641 as at 30 September 2015;
(f) a premium of approximately 0.59% to the closing price of HK$1.69 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(g) a premium of approximately 91.01% to the closing price of HK$0.89 per Share as quoted on the Stock Exchange on the last full Trading Day preceding the date of the initial announcement of the Company regarding a possible change in control of the Company.

– 4 –

SUPPLEMENTAL LETTER FROM QUAM CAPITAL

SUPPLEMENTAL INFORMATION ON THE OFFEROR

The Offeror is a wholly-owned subsidiary of Tsinghua Unigroup and was established for the purpose of the UNISTECH Subscription. Tsinghua Unigroup is one of the key enterprises under Tsinghua Holdings. It aims to become the industry leader in the integrated circuit industry and is committed to the development of an integrated circuit production chain. Principal subsidiaries of Tsinghua Unigroup include Unigroup Guoxin Co., Ltd., a company listed on the Shenzhen Stock Exchange (Stock Code: 002049) and Spreadtrum Communications, Inc.

As at the Latest Practicable Date, the directors of the Offeror were Mr. Zhao Weiguo and Mr. Zhang Yadong and the directors of Tsinghua Unigroup were Mr. Zhao Weiguo, Mr. Li Zhongxiang, Mr. Li Yanhe, Mr. Zhang Yadong, Mr. Li Yi, Mr. Qi Lian and Ms. Zhou Yanhua.

SUPPLEMENTAL INFORMATION ON THE GROUP

The principal activities of the Group comprise the design, manufacture and distribution of production lines and production equipment, and the distribution of brand name production equipment. Additional financial information of the Group and supplemental general information of the Company are set out in Appendices I and III to this Supplemental Document, respectively.

The Company published the Profit Warning Announcement on 15 June 2016 in respect of the expected net loss for the financial year ended 31 March 2016, the Results Announcement on 29 June 2016 in respect of the Group’s audited financial results for the financial year ended 31 March 2016 and the annual report on 28 July 2016 which contains the auditor’s report issued by BDO Limited in respect of the Group’s audited consolidated statements for the financial year ended 31 March 2016.

LEVEL OF ACCEPTANCE

As at 4:00 p.m. on the Latest Practicable Date, the Offeror had received valid acceptances in respect of a total of 258,180,970 Shares under the Offer, representing approximately 17.74% of the total issued share capital of the Company as at the Latest Practicable Date and approximately 59.33% of the Shares subject to the Offer. For the avoidance of doubt, the acceptances of the Offer in respect of 184,323,472 Acceptance Shares, representing approximately 12.67% of the issued capital of the Company, under the Irrevocable Undertakings have been received as at the Latest Practicable Date.

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SUPPLEMENTAL LETTER FROM QUAM CAPITAL

ADDITIONAL INFORMATION

Your attention is also drawn to the supplemental letter from the Board, the supplemental letter from the Independent Financial Adviser contained in this Supplemental Document and the additional information set out in the appendices to, and which forms part of, this Supplemental Document.

Yours faithfully, For and on behalf of Quam Capital Limited Noelle Hung Managing Director

– 6 –

SUPPLEMENTAL LETTER FROM THE BOARD

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**SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]**

(Incorporated in Bermuda with limited liability)

(Stock code: 00365)

Executive Directors: QI Lian XIA Yuan BUT Tin Fu BUT Tin Hing LEUNG Cheong LEUNG Kuen, Ivan

Independent non-executive Directors: SEE Tak Wah XU Yang Sheng LI Wanshou

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

Head office and principal place of business in Hong Kong: Unit H, 1st Floor, Phase 4 Kwun Tong Industrial Centre Nos. 436-446 Kwun Tong Road Kwun Tong Kowloon Hong Kong 12 August 2016

To the Independent Shareholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY CASH OFFER BY

QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

INTRODUCTION

Reference is made to (i) the joint announcement dated 14 February 2016 issued by the Offeror and the Company in relation to, among others, the Subscriptions and the Offer, (ii) the joint announcement dated 30 May 2016 issued by the Offeror and the Company in relation to the completion of the Subscriptions, (iii) the joint announcement dated 2 June 2016 issued by the Offeror and the Company in relation to the despatch of the Composite Document, (iv) the Composite Document dated 2 June 2016 jointly issued by the Offeror and the Company, (v) the Profit Warning Announcement dated 15 June 2016 issued by the Company in relation to the expected net loss for the financial year ended 31 March 2016,

* For identification purposes only

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SUPPLEMENTAL LETTER FROM THE BOARD

(vi) the joint announcement dated 15 June 2016 issued by the Offeror and the Company, in relation to the extension of the Offer Period; and (vii) the joint announcement dated 23 June 2016 issued by the Offeror and the Company in relation to the extension of the Offer Period and the level of acceptance of the Offer on the First Closing Date.

You are advised to read this Supplemental Document, in particular, the supplemental letter from the Board, the supplemental letter from the Independent Board Committee and the supplemental letter from the Independent Financial Adviser, in conjunction with the Composite Document carefully before taking any action in respect of the Offer.

SUPPLEMENTAL INFORMATION ON THE GROUP

The principal activity of the Group comprises the design, manufacture and distribution of production lines and production equipment, and the distribution of brand name production equipment. Additional financial information of the Group and supplemental general information of the Company are set out in Appendices I and III to this Supplemental Document, respectively.

– 8 –

SUPPLEMENTAL LETTER FROM THE BOARD

The following table sets out a summary of certain audited financial information of the Group for each of the three years ended 31 March 2014, 2015 and 2016:

	Year ended	Year ended	Year ended
	31 March	31 March	31 March
	2014	2015	2016
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Revenue	787,603	838,203	726,975
Gross profit	108,337	106,518	98,270
(Loss)/Profit before tax for the year	12,796	4,321	(8,869)
Total comprehensive income for the
year/period attributable to owners of
the Company	19,223	11,147	(23,872)
	As at 31	As at 31	As at 31
	March 2014	March 2015	March 2016
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Net assets	331,905	343,052	319,180

Your attention is drawn to the financial information of the Group for the year ended 31 March 2016 set out in Appendix I and the supplemental general information of the Company set out in Appendix III to this Supplemental Document.

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SUPPLEMENTAL LETTER FROM THE BOARD

Shareholding Structure of the Company

The shareholding structure of the Company as at the Latest Practicable Date is as follows:

The Offeror and its concert parties Mind Seekers Mr. But Reach General Chen Ping Other public shareholders Total	As at the Latest Practicable Date No. of Shares % 988,180,970 67.92% 44,121,168 3.03% 45,746,000 3.14% 100,000,000 6.87% 100,000,000 6.87% 176,951,862 12.16% 1,455,000,000 100%	As at the Latest Practicable Date No. of Shares % 988,180,970 67.92% 44,121,168 3.03% 45,746,000 3.14% 100,000,000 6.87% 100,000,000 6.87% 176,951,862 12.16% 1,455,000,000 100%
		100%

ADVICE AND RECOMMENDATION

Your attention is also drawn to the supplemental letter from Quam Capital, the supplemental letter from the Independent Board Committee and the supplemental letter from the Independent Financial Adviser set out in this Supplemental Document, which contains its advice to the Independent Board Committee in respect of the fairness and reasonableness of the Offer and the principal factors and reasons it has considered before arriving at its advice.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to, and which forms part of, this Supplemental Document. You are also recommended to read carefully this Supplemental Document, in conjunction with the Composite Document, for further details in respect of the procedures for acceptance of the Offers.

Yours faithfully, For and on behalf of the Board of Sun East Technology (Holdings) Limited QI Lian Chairman

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SUPPLEMENTAL LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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**SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]**

(Incorporated in Bermuda with limited liability)

(Stock code: 00365)

12 August 2016

To the Independent Shareholders

Dear Sir or Madam,

UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

INTRODUCTION

We refer to the supplemental document dated 12 August 2016 issued jointly by the Offeror and the Company (the “ Supplemental Document ”) of which this letter forms part. Terms defined in the Supplemental Document shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board to form the Independent Board Committee to consider the terms of the Offer and to advise you as to whether, in our opinion, the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and as to acceptance of the Offer.

VMS Securities Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee in respect of the terms of the Offer.

We wish to draw your attention to the supplemental letter from Quam Capital, the supplemental letter from the Board, the supplemental letter from the Independent Financial Adviser as set out in the Supplemental Document as well as the additional information set out in the Appendices to this Supplemental Document.

* For identification purposes only

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SUPPLEMENTAL LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RECOMMENDATION

Having considered the principal factors and reasons considered by, and the advice of, the Independent Financial Adviser as set out in its supplemental letter of advice, we consider that the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to accept the Offer.

Independent Shareholders are reminded to carefully monitor the market price and liquidity of the Shares during the Offer Period and consider selling their Shares in the open market during the Offer Period, where possible, rather than accepting the Offer, if the net proceeds from the sale of such Shares in the open market would exceed the net amount receivable under the Offer.

Notwithstanding our recommendation, the Independent Shareholders are strongly advised that the decision to realise or to hold their investment in the Shares is subject to individual circumstances and investment objectives and they should consider carefully the terms of the Offer. If in doubt, the Independent Shareholders should consult their own professional advisers for professional advice. Furthermore, the Independent Shareholders who wish to accept the Offer are recommended to read carefully the procedures for accepting the Offer as detailed in the Composite Document.

	Yours faithfully,
	For and on behalf of
	Independent Board Committee of
Sun	East Technology (Holdings) Limited
SEE Tak Wah	XU Yang Sheng	LI Wanshou
Independent non-executive	Independent non-executive	Independent non-executive
Director	Director	Director

– 12 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of the letter of advice from VMS Securities to the Independent Board Committee prepared for inclusion in this Supplemental Document.

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VMS Securities Limited 49/F, One Exchange Square 8 Connaught Place, Central, Hong Kong 香港中環康樂廣場8號交易廣場1期49樓 Tel/電話: (852) 2996 2161 Fax/傳真: (852) 2996 1210 12 August 2016

To: the Independent Board Committee of Sun East Technology (Holdings) Limited

Dear Sirs,

UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF

UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHRES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMTED

We refer to our appointment as the independent financial adviser to the Independent Board Committee in respect of the Offer and our letter of advice to the Independent Board Committee set out in the Composite Document (the “ First Letter ”). Unless otherwise stated, terms used in this letter shall have same meanings as those defined in the Composite Document and the Supplement Document of which this letter forms part.

We note that in light of the recent developments as disclosed in the Profit Warning Announcement, the closing time and date of the Offer will be extended so as to provide additional time for the Independent Shareholders to consider the Offer in light of the audited annual results of the Group for the financial year ended 31 March 2016.

In this connection, we have further enquired the Directors and the management of the Company on the recent affairs of the Company and the Directors have confirmed that all information and representations contained in the Composite Document and this Supplemental Document and/or provided to us by the Directors continue to be true and accurate as at the date hereof and that no material facts have been changed from the information provided to us and/or made by them in the Composite Document and this Supplemental Document were reasonably made after due enquiry and continue to be valid as at the date hereof. We are satisfied that we have been provided with sufficient information by the management of the Company to form a reasonable basis of our opinion. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and have been advised by the Directors that no material facts have been omitted from the information provided to us and/or referred to the Composite Document and the

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SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Supplemental Document. We have not, however, conducted any verification of the information supplied to us, nor have we conducted an in-depth investigation into the business and affairs of the Group.

We note that subsequent to the publication of the Composite Document, the following information would require to be updated and they are set out in the following:

1) Further to the section head “2. Financial performance and prospects of the Group” in the First Letter, in order to reassess the fairness and reasonableness of the Offer, we have updated to include with the financial figures for the year ended 31 March 2016. A summary of the financial performance and prospects of the Group are set out below for reference. Further information of the financial information of the Group for the year ended 31 March 2016 could be found in Appendix I to the Supplemental Document.

a. Financial information of the Group – financial performance

Revenue
Production lines and production
equipment
Brand name production equipment
Total revenue
Cost of sales
Gross profit
Other income and gains
Selling and distribution expenses
Administrative expenses
Other expenses
Finance costs
Profit before tax for the year
Income tax expenses
Net Profit/(Net Loss)

For the year ended 31 March
2014
2015
2016
HK$’000
HK$’000
HK$’000
(Audited)
(Audited)
(Audited)
442,037
416,103
384,060
345,566
422,100
342,915
787,603
838,203
726,975
(679,266)
(731,685)
(628,705)
108,337
106,518
98,720
20,049
28,600
18,271
(55,749)
(63,540)
(46,276)
(53,747)
(55,777)
(59,007)
(5,229)
(6,886)
(13,091)
(865)
(4,594)
(7,036)
12,796
4,321
(8,869)
(3,370)
(1,786)
433
9,426
2,535
(8,436)

For the two years ended 31 March 2014 and 2015

As stated in the 2015 Annual Report, the Group’s revenue increased approximately 6.4% to approximately HK$838.2 million in 2015. The increase was mainly due to the increase in sales of wire bonders which

– 14 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

benefited from the China-ASEAN Free Trade Agreement removing the import tariff on the wire bonders.

Comparing to 2014, the profit mix shifted with slightly more weights on segment of brand name production equipment which accounted for approximately 50.4% of the total revenue.

Net profit margin in 2015 was approximately 0.3%. Net profit decreased approximately 73.1% to approximately HK$2.5 million in 2015 which was mainly due to i) the increase in salary of sales staff and cost of management personnel and ii) the increase on the finance cost in relation to the interest on bank and other borrowings.

For the two years ended 31 March 2015 and 2016

As stated in the Results Announcement, the Group’s revenue decreased by approximately 13.3% from approximately HK$838.2 million for the year ended 31 March 2015 to HK$727.0 million for the year ended 31 March 2016. The decrease was mainly attributed to the sales decrease in the segment of brand name production equipment arising from reduced demand for SMT machines and semi-conductor as a result of the slowdown of China economy.

The Group recorded a net loss of approximately HK$8.4 million for the year ended 31 March 2016. The net loss was mainly attributed to i) an increase on the other expenses of approximately 90.1% to approximately HK$13.1 million in 2016 due to exchange loss of approximately HK$10.3 million caused by RMB depreciation against USD; and ii) the increase on the finance cost in relation to the interest on bank and other borrowings from approximately HK4.9 million for the year ended 31 March 2015 to approximately HK$7.0 million for the year ended 31 March 2016.

b. Financial information of the Group – financial position

Set out below are the latest published consolidated financial positions of the Group extracted from the Results Announcement.

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SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Non-current assets Current assets Total assets Current liabilities Net current assets Non-current liabilities Net assets/Total equity Net asset value (the “NAV”) per Share attributable to owners of the Company (Note)	As at 31 March 2016 HK$’000 (Audited) 163,943 590,579 754,522 422,015 168,564 13,327 319,180 HK$0.61	As at 31 March 2015 HK$’000 (Audited) 178,530 645,849
		824,379

		468,184
		177,665
		13,143
		343,052

		HK$0.65

Note: The NAV per Share attributable to owners of the Company is calculated based on 525,000,000 Shares in issue as at the end of the period.

Financial positions of the Group as at 31 March 2016 and 2015

As set out in the Results Announcement, non-current assets of the Group decreased by approximately HK$14.6 million from approximately HK$178.5 million as at 31 March 2015 to approximately HK$163.9 million as at 31 March 2016. For current assets, they amounted to approximately HK$590.6 million as at 31 March 2016 and approximately HK$645.9 million as at 31 March 2015, representing a decrease of approximately 8.6%. Such decrease was mainly attributed to the decrease in inventories and trade and bill receivables from approximately HK$166.3 million and HK$373.6 million respectively as at 31 March 2015 to approximately HK$112.7 million and HK$338.3 million respectively as at 31 March 2016. Although the Group’s current liabilities decreased approximately 9.9% from approximately HK$468.2 million as at 31 March 2015 to approximately HK$422.0 million as at 31 March 2016, net current assets of the Group decreased approximately 5.1% to approximately HK$168.6 million as at 31 March 2016 due to substantial decrease in current assets.

The Group’s total equity decreased approximately 7.0% from approximately HK$343.1 million as at 31 March 2015 to approximately HK$319.2 million as at 31 March 2016. Moreover, the NAV per share

– 16 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

attributable to owners of the Company decreased approximately 6.2% from HK$0.65 as at 31 March 2015 and approximately HK$0.61 as at 31 March 2016.

2) Further to the section head “3. Analysis of price performance and trading liquidity” in the First Letter, in order to reassess the fairness and reasonableness of the Offer, we have updated and reviewed the price performance and trading liquidity analysis. We have updated and extend our Review Period from 1 December 2014 up to the Latest Practicable Date (the “ New Review Period ”). A summary of the analysis of price performance and trading liquidity are set out below for reference.

a. Review of trading of Shares

Set out below is a chart showing the daily closing price of the Shares as quoted on the Stock Exchange from 1 December 2014 up to and including the Latest Practicable Date:

==> picture [419 x 193] intentionally omitted <==

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

Company announced a further updated
announcement in relation to the possible
subscription of shares on 4 February
2016
1.8
Offer price at HK$1.70 per Share
1.6
Company announced the first
announcement in relation to the
1.4 possible subscription of Shares
on 10 December 2015
1.2
1.0
0.8 Suspension of
trading (Note) The Company and the Offeror issued the Joint
0.6 Announcement on 14
Company announced the February 2016
updated announcement
0.4 inrelation to the possible
subscription of shares on 8
January 2016
0.2
0.0
12/1/2014 1/1/2015 2/1/2015 3/1/2015 4/1/2015 5/1/2015 6/1/2015 7/1/2015 8/1/2015 9/1/2015 10/1/2015 11/1/2015 12/1/2015 1/1/2016 2/1/2016 3/1/2016 4/1/2016 5/1/2016 6/1/2016 7/1/2016 8/1/2016 8/9/2016
Share Price HK$
----- End of picture text -----

Source: Stock Exchange

Note: Trading of the Shares was suspended from 5 February 2016 to 13 February 2016 pending the release of the Joint Announcement in relation to the Subscription Agreement and the Offer, and on 15 June 2016 pending the release of profit warning announcement relating to financial results of the Company for the year ended 31 March 2016.

In the First letter, the Review Period had covered a roughly 18-months period which was more than 12 months before and including the Joint Announcement in relation to the Subscription and the Offer on 14 February 2016. We have updated the chart above in order to cover the period after the Previous Latest Practicable Date and up to the Latest Practicable Date. We consider that the length of the New Review Period to be reasonably long enough to illustrate the relationship between the historical trend of the closing price of the Shares and the Offer. The chart above represents the daily movement in the closing prices of the Shares against the Offer Price during the New Review Period.

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SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Prior to the release of the announcement in relation to the possible share subscription on 10 December 2015 (the “ First Announcement ”), the lowest and highest closing price of the Shares during 1 December 2014 to 9 December 2015 (the “ First Review Period ”) were HK$0.42 per Share recorded on 8 July 2015 and HK$1.21 per Share recorded on 5 June 2015 respectively. The average daily closing price of the Shares during the First Review Period before the release of the First Announcement was approximately HK$0.70 per Share. The Offer Price of HK$1.70 per Share represents (i) a premium of approximately 304.76% over the lowest closing price during the First Review Period before the release of the First Announcement; (ii) a premium of approximately 40.50% over the highest closing price during the First Review Period before the release of the First Announcement; and (iii) a premium of approximately 142.86% over the average daily closing price during the First Review Period before the release of the First Announcement. In this regard, the Shares have been traded at a price substantially lower than the Offer Price before the First Announcement.

Upon the release of the First Announcement, the Share price surged from HK$0.89 per Share, being the closing price on 9 December 2015 as the last full trading day before the release of the First Announcement, to HK$1.63 per Share on 15 February 2016, being the first day of resumption of trading after release of the Joint Announcement. The Share price peaked on 24 March 2016, closing at HK$1.74 per Share as quoted on Bloomberg. The Share price became steady after 16 February 2016 and up to the Latest Practicable Date ranging from HK$1.61 per Share to HK$1.74 per Share. The Shares price closed at HK$1.69 per Share as at the Latest Practicable Date.

Over the New Review Period, the average closing price was approximately HK$1.038 per share, over which the Offer Price of HK$1.70 represents a premium of approximately 63.78%.

Shareholders should note that the information set out above is not an indicator of the future performance of the Shares and that the price of the Shares may increase or decrease from its closing price as at the Latest Practicable Date.

– 18 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

b. Trading liquidity of the Shares

The table below sets out the total trading volume per month/period, the number of trading days per month/period, the average daily trading volume of Shares during each month/period of the New Review Period and the percentage of average daily trading volume to the total number of issued Shares:

					Percentage of	Percentage of	Percentage of
					average daily		the total daily
			Average			trading	trading
	No. of	Total Daily	Daily		volume to the		volume of the
	Trading	Trading	Trading	Total no. of		total no. of	Shares to the
	Days	Volume	Volume	issued Shares	Shares in issue		public float
		(note)			(Approximate)		(Approximate)
2014
December	21	14,870,000	708,095	525,000,000		0.135%	5.929%
2015
January	21	4,656,000	221,714	525,000,000		0.042%	1.856%
February	18	422,000	23,444	525,000,000		0.004%	0.168%
March	22	670,000	30,455	525,000,000		0.006%	0.267%
April	19	15,141,046	796,897	525,000,000		0.152%	6.037%
May	19	180,636,217	9,507,169	525,000,000		1.811%	72.021%
June	22	179,040,264	8,138,194	525,000,000		1.550%	71.385%
July	22	26,805,866	1,218,448	525,000,000		0.232%	10.688%
August	21	8,648,977	411,856	525,000,000		0.078%	3.448%
September	20	26,545,200	1,327,260	525,000,000		0.253%	10.584%
October	20	59,466,800	2,973,340	525,000,000		0.566%	23.710%
November	21	20,788,044	989,907	525,000,000		0.189%	8.288%
December	22	104,527,707	4,751,259	525,000,000		0.905%	41.676%
2016
January	20	64,752,021	3,237,601	525,000,000		0.617%	25.82%
February	15	106,754,369	7,116,958	525,000,000		1.356%	42.56%
March	21	81,465,200	3,879,295	525,000,000		0.739%	32.48%
April	20	30,259,200	1,512,960	525,000,000		0.289%	12.06%
May	21	40,020,585	1,905,742	1,455,000,000		0.131%	8.877%
June	21	36,256,041	1,726,478	1,455,000,000		0.119%	8.042%
July	20	21,783,000	1,089,150	1,455,000,000		0.075%	12.310%
August (up to the
Latest Practicable
Date)	6	3,226,000	537,667	1,455,000,000		0.037%	1.823%

Note: Source: Bloomberg

As set out in the above table, the highest average daily trading volume of the Shares during the First Review Period was approximately 9.5 million Shares in May 2015, representing approximately 72.02% of the public float. In fact, the average daily trading volume from April 2015 to June 2015 was substantially higher than previous months which coincided with the very active Hong Kong capital markets during that period when daily turnover on the Stock Exchange reached new highs until the PRC stock market crashed in July 2015 and the average trading volume subsided to approximately the same level before April 2015, the daily average trading volume remained stable since August 2015.

– 19 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

However, the daily average trading volume climbed significantly to approximately 7.1 million Shares in February 2016 which could be due to the publication of Joint Announcement in relation to the Subscription Agreement and the Offer. After a dramatic rise in the average trading volume in February 2016, the daily average trading volume declined to approximately 3.9 million in March 2016 and remained steady up to August 2016 (up to the Latest Practicable Date).

c. Offer Price comparisons

The closing price of the Shares as quoted on the Stock Exchange on the Last Trading Day was HK$1.47.

The Offer Price of HK$1.70 per Offer Share represents:

(a) a premium of approximately 15.65% over the closing price of HK$1.47 per Share as quoted on the Stock Exchange on 4 February 2016, being the Last Trading Day;
(b) a premium of approximately 4.29% over the closing price of HK$1.63 per Share as quoted on the Stock Exchange on the Previous Latest Practicable Date;
(c) a premium of approximately 0.59% over the closing price of HK$1.69 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(d) a premium of approximately 25.00% over the average closing price of approximately HK$1.36 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;
(e) a premium of approximately 32.09% over the average closing price of approximately HK$1.287 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day;
(f) a premium of approximately 33.82% over the average closing price of approximately HK$1.27 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day;
(g) a premium of approximately 91.01% over the closing price of HK$0.89 per Share as quoted on the Stock Exchange on 9 December 2015, being the full last trading day prior to the commencement of the Offer Period; and
(h) a premium of approximately 178.69% over the audited consolidated net asset value per Share of approximately HK$0.61 as at 31 March 2016.

– 20 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

d. Highest and lowest Share price

During the New Review Period (i.e. from 1 December 2014 up to the Latest Practicable Date)

i. the highest closing price of the Shares as quoted on the Stock Exchange was HK$1.74 per Share on 24 March 2016; and
ii. the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.42 per Share on 8 July 2015.

Having considered that (i) the Offer Price is substantially higher than the historical prices of the Shares during the New Review Period prior to the release of the Joint Announcement; and (ii) although the Share price has risen substantially after the release of the Joint Announcement with the Offer Price being known by the public, the current level of Share price may not be sustainable if it were solely due to market speculation, we are of the view that the Offer Price is fair and reasonable so far as the Independent Shareholders are concerned.

During the First Review Period (i.e. from 1 December 2014 up to 9 December 2015)

i. the highest closing price of the Shares as quoted on the Stock Exchange was HK$1.21 per Share on 5 June 2015; and
ii. the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.42 per Share on 8 July 2015.

Having considered that the Shares have been traded notably below the Offer Price for majority of the duration of the First Review Period. The Offer Price represents a premium of approximately 91.01% over the closing price of HK$0.89 as quoted on 9 December 2015. The Offer Price also represents a premium of approximately 178.69% and approximately 161.54% over the Group’s audited consolidated net asset value per Share attributable to owners of the Company of approximately HK$0.61 and approximately HK$0.65 as at 31 March 2016 and 2015, respectively, based on the number of the issued Shares as at 31 March 2016 and 2015, respectively. On this basis, we consider the Offer Price to be fair and reasonable so far as the Independent Shareholders are concerned.

3) Further to the subsection head “Comparison of the Offer Price” in the First Letter, in order to reassess the fairness and reasonableness of the Offer, we have updated and reviewed the comparison of the price-to-earnings ratio (the “ P/E Ratio ”) and the price-to-book ratio (the “ P/B Ratio ”) of the Comparable Companies. To the best of our knowledge and belief, it is an exhaustive list of the Comparable Companies. We have not been able to identify any company listed on the Stock

– 21 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Exchange which is principally engaged in the design, manufacture and distribution of production lines and production equipment, and the distribution of brand name production equipment.

Taking into account the importance and representation of the sale of production lines and production equipment in the Group’s overall business where such segment has been a major growth driver of the Group in recent years, we consider that the Comparable Companies which are principally engaged in the design and manufacture and sale of electronic equipment are relevant in giving valuation information in relation to the Group’s business.

		Market
		capitalisation
		as at the
		Latest
Company Name		Practicable
(stock code)	Principal business	Date	PE Ratio	PB Ratio
		(HK$ million)	(Note 2)	(Note 3)
		(Note 1)
Asia Tele-Net And	Design, manufacturing and	434.99	14.99	1.45
Technology Corporation	sale of custom-built
Ltd. (stock code: 679)	electroplating equipment,
	sale of spare parts of
	electroplating machinery
	and provision of repairs
	and maintenance services.
Wuxi Sunlit Science and	Research and development,	407.04	N/A	0.64
Technology Co. Ltd.	design, manufacture,
(stock code: 1289)	equipment supply,
	installation, testing, repair
	and maintenance of
	production lines for
	manufacturing steel wire
	products.
CW Group Holdings Ltd.	Provision of precision	1,610.54	7.31	1.07
(stock code: 1322)	engineering solutions,
	machine tool
	manufacturing and
	distribution as well as
	cement production
	equipment and
	components manufacturing
	and distribution.

– 22 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

		Market
		capitalisation
		as at the
		Latest
Company Name		Practicable
(stock code)	Principal business	Date	PE Ratio	PB Ratio
		(HK$ million)	(Note 2)	(Note 3)
		(Note 1)
CIMC Enric Holdings Ltd.	Design, development,	6,197.59	9.67	0.82
(stock code: 3899)	manufacturing,
	engineering and sales of,
	and provision of technical
	maintenance services for,
	a wide spectrum of
	transportation, storage and
	processing equipment that
	used in energy, chemical
	and liquid food industries.
Huazhang Technology	Research and development,	1,414.53	41.06	6.68
Holding Ltd. (stock	manufacture and sale of
code: 1673)	industrial automation and
	sludge treatment products
	and the provision of
	after-sales service in the
	PRC.
North Asia Strategic	Trading of surface mount	193.41	N/A	0.24
Holdings Ltd. (stock	technology assembly
code: 8080)	equipment, machinery &
	spare parts; provide
	related installation,
	training, repair &
	maintenance services;
	provide advisory services
	in mining exploration,
	exploitation & valuation
	projects.
Maximum			41.06	6.68
Minimum			7.31	0.24
Average			18.26	1.82
Median			12.33	0.94
The Group at the Offer			N/A	7.75
Price			(Note 4)	(Note 5)

Notes:

As extracted from Bloomberg.

– 23 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

P/E Ratio is calculated based on the market capitalisation of the respective Comparable Companies as at the Latest Practicable Date divided by the net profit attributable to shareholders of the respective Comparable Companies as extracted from their respective latest annual reports.
P/B Ratio is calculated based on the market capitalisation of the respective Comparable Companies as at the Latest Practicable Date divided by the latest published net assets attributable to shareholders of the respective Comparable Companies as extracted from their respective latest published financial results.
The P/E Ratio implied by the Offer Price is not applicable due to the loss making of the Group for the year ended 31 March 2016.
The P/B Ratio implied by the Offer Price is calculated by multiplying the Offer Price of HK$1.70 per Offer Share by the total number of issued Shares as at the Latest Practicable Date, divided by the net assets attributable to Shareholders of the Group as at 31 March 2016 of HK$319.2 million.

With regard to P/E Ratio, given that the Company is loss making for the year ended 31 March 2016, it is impracticable to compare the Company with the Comparable Companies in terms of P/E Ratio. Therefore, we have attempted to conduct an analysis with reference to the P/B Ratios.

As illustrated in the analysis above, the P/B Ratios of the Comparable Companies range from the lowest of approximately 0.24 times to the highest of approximately 6.68 times with the average figure being approximately 1.82 times. Accordingly, the implied P/B Ratio of the Company (based on the Offer Price) of approximately 7.75 times is higher than all of the P/B Ratios of the Comparable Companies, which is considered favorable.

4. SUPPLEMENTAL INFORMATION OF THE OFFEROR

Save as disclosed above, no other information would require to be updated.

– 24 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. RECOMMENDATION

Having considered the abovementioned factors and reasons as set out in this letter, in particular:

i. the Offer Price is substantially higher than the historical prices of the Shares prior to the release of the Joint Announcement;
ii. the Offer Price represents a premium of approximately 15.65% over the closing price of the Shares of HK$1.47 per Share as quoted on the Stock Exchange on the Last Trading Day;
iii. the Offer Price represents a significant premium of (a) approximately 161.54% over the audited consolidated net asset value per Share (based on the number of the issued Shares as at 31 March 2015) of the Company of approximately HK$0.65; and (b) 178.69% over the audited consolidated net asset value per Share (based on the number of the issued Shares as at 31 March 2016) of the Company of approximately HK$0.61; and
iv. the P/B Ratio represented by the valuation for the Offer Shares is significantly higher than the mean and maximum of those of the Comparable Companies.

Based on the findings in the above, our review of the letter from the Board contained in the Supplemental Letter and the First Letter, the updates thereto have not changed our views. Accordingly, we hereby confirm that our views and recommendations as stated in the First Letter remain unchanged.

Having considered the above and also the principal factors and reasons as stated in the First Letter, we consider that the terms of the Offer (including the Offer Price) are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to accept the Offer.

The Independent Shareholders who hold a positive view on the future prospect of the Group may consider keeping their Shares instead of accepting the Offer. The Independent Shareholders who would like to realise part or all of their investments in the Shares should monitor the market prices of the Shares (which may reflect the potential investors’ expectation due to the announcement of the Offer Price in the Joint Announcement, the change in controlling shareholder subsequent to the publication of the Joint Announcement and the potential change in the prospect of the Group) during the Offer Period. In the event that the market price of the Shares exceeds the Offer Price during the Offer Period, the Independent Shareholders should consider selling their Shares in the open market instead of accepting the Offer.

In view of the recent surge in the Share price of the Group, Independent Shareholders who wish to realize their investment in the Group are reminded that they should carefully and closely monitor the market price of the Group during the Offer Period and consider selling their Shares in the open market during the Offer Period, rather than accepting the

– 25 –

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Offer, if the net proceeds from the sales of such Shares in the open market would exceed the net amount receivable under the Offer.

The Independent Shareholders may consider searching for other potential purchaser(s) to purchase the Shares and to consider selling their Shares to those potential purchaser(s), if possible, instead of accepting the Offer, if the net proceeds from such sales exceed the amount receivable under the Offer.

Those Independent Shareholders who decide to retain part or all of their investment in the Shares should carefully monitor the intentions of the Offeror regarding the Group in the future and the potential difficulties the Independent Shareholders may encounter in disposing of their investments in the Shares after the close of the Offer. Further details and terms of the Offer are set out in the “Letter from Quam Capital” and Appendix I to the Composite Document.

As different Shareholders would have different investment criteria, objectives, risk preference and tolerance level and/or circumstances, we would recommend any Shareholder who may require advice in relation to any aspect of the Composite Document and this Supplemental Document, or as to the action to be taken, to consult a licensed securities dealer, bank manager, solicitor, professional accountant, tax adviser or other professional adviser.

Yours faithfully, For and on behalf of VMS Securities Limited Nick Man Managing Director Corporate Finance

Note: Mr. Nick Man is a licensed person registered with the Securities and Futures Commission of Hong Kong and a responsible officer of VMS Securities Limited to carry out type 6 (advising on corporate finance) regulated activities under the SFO and has over 10 years of experience in corporate finance industry.

– 26 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

The Company published the audited consolidated financial results of the Group for the financial year ended 31 March 2016 in the Results Announcement on 29 June 2016. The details of the audited consolidated financial results of the Group for the financial year ended 31 March 2016 has been disclosed in details in the paragraph headed “Audited consolidated financial results of the Group for the year ended 31 March 2016” of this Appendix I. There has been no changes in the information set out in the paragraph headed “Summary of financial information of the Group” in Appendix II to the Composite Document. Please refer to the Composite Document for details.

2. AUDITED CONSOLIDATED FINANCIAL RESULTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2016

The following is the full text of the audited consolidated financial results of the Group for the year ended 31 March 2016 as extracted from the Results Announcement of the Company for the year ended 31 March 2016. No exceptional items were recorded in the audited consolidated financial results of the Group for the year ended 31 March 2016.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 March 2016

Notes Revenue 4 Cost of sales Gross profit Other income and gains 4 Selling and distribution costs Administrative expenses Other expenses Finance costs 5 (Loss)/Profit before income tax 6 Income tax credit/(expense) 7 (Loss)/Profit for the year attributable to owners of the Company	2016 HK$’000 726,975 (628,705) 98,270 18,271 (46,276) (59,007) (13,091) (7,036) (8,869) 433 (8,436)	2015 HK$’000 838,203 (731,685) 106,518 28,600 (63,540) (55,777) (6,886) (4,594) 4,321 (1,786) 2,535

– I-1 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

Notes Other comprehensive income Items that will not be reclassified subsequently to profit or loss: Surplus on revaluation of properties held for own use Deferred tax relating to revaluation surplus Items that may be reclassified subsequently to profit or loss: Exchange (loss)/gain on translation of financial statements of foreign operations Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to owners of the Company (Loss)/Earnings per share for profit attributable to owners of the Company – Basic – Diluted	2016 HK$’000 2,058 (314) (17,180) (15,436) (23,872) HK(0.82) cents N/A	2015 HK$’000 4,491 4,015 106
		8,612
		11,147

		HK0.25 cents (restated) N/A

– I-2 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2016

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Prepaid land lease payments Finance lease receivables Current assets Inventories Trade and bills receivables 9 Prepayments, deposits and other receivables Finance lease receivables Derivative financial instruments Tax reserve certificates Taxes recoverable Pledged and restricted deposits Cash and bank balances Current liabilities Trade and bills payables 10 Other payables and accruals Bank and other borrowings 11 Finance lease liabilities Taxes payable Net current assets Total assets less current liabilities Non-current liabilities Finance lease liabilities Deferred tax liabilities Net assets EQUITY Equity attributable to owners of the Company Share capital Reserves Total equity	2016 HK$’000 151,892 10,275 1,776 163,943 112,717 338,329 45,867 3,107 183 3,600 191 14,680 71,905 590,579 166,194 80,633 143,219 98 31,871 422,015 168,564 332,507 164 13,163 13,327 319,180 52,500 266,680 319,180	2015 HK$’000 167,349 11,181 –
		178,530 166,263 373,628 47,533 – – 3,600 191 2,934 51,700
		645,849 178,612 150,769 105,447 93 33,263
		468,184
		177,665
		356,195 262 12,881
		13,143
		343,052

		52,500 290,552
		343,052

– I-3 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

NOTES TO FINANCIAL RESULTS:

1. BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). These financial statements also include the applicable disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”).

2. ADOPTION OF NEW OR AMENDED HKFRSs

During the year, the Group has adopted all the new and amended HKFRSs which are first effective for the reporting year and relevant to the Group. The adoption of these new and amended HKFRSs did not result in material changes to the Group’s accounting policies.

At the date of this results announcement, certain new and amended HKFRSs have been published but are not yet effective, and have not been adopted early by the Group.

The Directors anticipate that all of the pronouncements will be adopted in the Group’s accounting policy for the first period beginning after the effective date of the pronouncement. The Directors are currently assessing the impact of the new and amended HKFRSs upon initial application. So far, the Directors have preliminarily concluded that the initial application of these HKFRSs will not result in material financial impact on the consolidated financial statements. Information on new and amended HKFRSs that are expected to have an impact on the Group’s accounting policies is provided below.

HKFRS 9 (2014) – Financial Instruments

The standard is effective for accounting periods beginning on or after 1 January 2018. HKFRS 9 introduces new requirements for the classification and measurement of financial assets. Debt instruments that are held within a business model whose objective is to hold assets in order to collect contractual cash flows (the business model test) and that have contractual terms that give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding (the contractual cash flow characteristics test) are generally measured at amortised cost. Debt instruments that meet the contractual cash flow characteristics test are measured at fair value through other comprehensive income if the objective of the entity’s business model is both to hold and collect the contractual cash flows and to sell the financial assets. Entities may make an irrevocable election at initial recognition to measure equity instruments that are not held for trading at fair value through other comprehensive income. All other debt and equity instruments are measured at fair value through profit or loss.

HKFRS 9 includes a new expected loss impairment model for all financial assets not measured at fair value through profit or loss replacing the incurred loss model in HKAS 39 and new general hedge accounting requirements to allow entities to better reflect their risk management activities in financial statements.

HKFRS 9 carries forward the recognition, classification and measurement requirements for financial liabilities from HKAS 39, except for financial liabilities designated at fair value through profit or loss, where the amount of change in fair value attributable to change in credit risk of the liability is recognised in other comprehensive income unless that would create or enlarge an accounting mismatch. In addition, HKFRS 9 retains the requirements in HKAS 39 for de-recognition of financial assets and financial liabilities.

– I-4 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

HKFRS 15 – Revenue from Contracts with Customers

The standard is effective for accounting periods beginning on or after 1 January 2018. The new standard establishes a single revenue recognition framework. The core principle of the framework is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. HKFRS 15 supersedes existing revenue recognition guidance including HKAS 18 Revenue, HKAS 11 Construction Contracts and related interpretations.

HKFRS 15 requires the application of a 5 steps approach to revenue recognition:

Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to each performance obligation Step 5: Recognise revenue when each performance obligation is satisfied

HKFRS 15 includes specific guidance on particular revenue related topics that may change the current approach taken under HKFRS. The standard also significantly enhances the qualitative and quantitative disclosures related to revenue.

HKFRS 16 – Leases

From the perspective as a lessee, under the existing standard, leases are classified as either finance lease or operating lease, resulting in different accounting treatment. Finance leases are required to be accounted for “On Balance Sheet” (i.e. lease asset and corresponding liabilities are recognised in the statement of financial position); while operating lease is accounted for “Off Balance Sheet” where no asset or liabilities are recognised and the lease expenses are recognised on a straight-line basis along the lease period. Under the new standard, “On Balance Sheet” accounting treatment is required for all leases, except for certain short-term leases and leases of low-value assets. The statement of financial position will be “inflated” by their rights and obligations relating to their existing operating leases. In addition, the recognition of operating lease expenses will change from the existing straight-line model to a “front-loaded” model as finance lease, i.e. during the initial period of the lease term, the lease expenses (asset depreciation plus interest) under the new standard are higher compared to the operating lease expenses recognised under the existing standard.

From the perspective as a lessor, the accounting stays almost the same. However, the HKICPA has updated the guidance on the definition of a lease, sub-lease, as well as the guidance on the combination and separation of contracts, lessors will also be affected by the new standard.

HKFRS 16 will be effective for accounting period beginning on 1 January 2019. The directors of the Company anticipate that the application of HKFRS 16 in the future will have impact on the amounts reported in respect of the Group’s consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of HKFRS 16 until the Group performs a detailed review.

– I-5 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. SEGMENT INFORMATION

The executive directors have identified the Group’s two product lines as reportable segments:

(i) Production lines and production equipment (ii) Brand name production equipment

– Design, manufacture and sale of production lines and production equipment

– Trading and distribution of brand name production equipment

Segment revenue: Sales to external customers Other revenue – external Reportable segment revenue Reportable segment results Depreciation and amortisation Loss on disposal of property, plant and equipment Bad debts written off Provision for impairment of trade and bills receivables Write-back of inventories to net realisable value Write-off of property, plant and equipment Reportable segment assets Capital expenditure Reportable segment liabilities	Production lines and production equipment 2016 2015 HK$’000 HK$’000 384,060 416,103 9,938 11,829 393,998 427,932 18,649 12,149 10,483 10,606 45 8 87 97 1,373 6,749 (785) (788) – 40 500,186 529,795 876 9,837 196,256 273,528	Brand name production equipment 2016 2015 HK$’000 HK$’000 342,915 422,100 7,996 13,463 350,911 435,563 (6,855) 5,085 – – – – – – – – – – – – 154,305 226,668 – – 47,434 54,043	Consolidated 2016 2015 HK$’000 HK$’000 726,975 838,203 17,934 25,292 744,909 863,495 11,794 17,234 10,483 10,606 45 8 87 97 1,373 6,749 (785) (788) – 40 654,491 756,463 876 9,837 243,690 327,571

– I-6 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The totals presented for the Group’s operating segments reconcile to the Group’s key financial figures as presented in the financial statements as follows:

Reportable segment results Rental income Interest and other corporate income Corporate expenses Finance costs (Loss)/Profit before income tax Segment assets Production lines and production equipment Brand name production equipment Finance lease receivables Derivative financial instruments Tax reserve certificates Taxes recoverable Pledged and restricted deposits Cash and bank balances Other corporate assets Total assets Segment liabilities Production lines and production equipment Brand name production equipment Bank and other borrowings Finance lease liabilities Deferred tax liabilities Other corporate liabilities Total liabilities	2016 HK$’000 11,794 12 325 (13,964) (7,036) (8,869) 500,186 154,305 654,491 4,883 183 3,600 191 14,680 71,905 4,589 754,522 196,256 47,434 243,690 143,219 262 13,163 35,008 435,342	2015 HK$’000 17,234 17 3,291 (11,627) (4,594) 4,321 529,795 226,668 756,463 – – 3,600 191 2,934 51,700 9,491 824,379 273,528 54,043 327,571 105,447 355 12,881 35,073 481,327

– I-7 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The Group’s revenue from external customers and segment assets are divided into the following geographical areas:

Mainland China (domicile) Hong Kong Europe (principally Spain) Others (principally Japan)	Revenue from external customers 2016 2015 HK$’000 HK$’000 703,957 804,221 7,202 9,242 10,301 13,000 5,515 11,740 726,975 838,203	Non-current assets (excluded finance lease receivables) 2016 2015 HK$’000 HK$’000 136,698 152,269 25,469 26,261 – – – – 162,167 178,530	Non-current assets (excluded finance lease receivables) 2016 2015 HK$’000 HK$’000 136,698 152,269 25,469 26,261 – – – – 162,167 178,530
			178,530

The geographical location of customers is based on the location at which the goods delivered. The geographical location of non-current assets is based on the physical location of the assets. The Company is an investment holding company where the Group has majority of its operation and workforce in Mainland China, and therefore, Mainland China is considered as the Group’s country of domicile for the purpose of the disclosures as required by HKFRS 8 “Operating Segments”.

4. REVENUE, OTHER INCOME AND GAINS

The Group’s turnover represents revenue from its principal activities, measured at the net invoiced value of goods sold, after allowances for returns and trade discounts during the year.

An analysis of revenue, other income and gains is as follows:

Revenue – sale of goods Other income: Rental income Bank interest income Impairment loss on trade receivables written back Government grants Sales of scrap Discount received on the settlement of other payables Interest income from finance leases Over-accrual of commission payables Others Gains: Exchange gain, net Other income and gains*	2016 HK$’000 726,975 12 325 353 9,881 1,850 – 203 3,906 1,741 18,271 – 18,271	2015 HK$’000 838,203

		17 2,971 2,260 16,827 2,516 1,740 – – 1,949
		28,280 320
		28,600

Non-refundable government subsidies from the PRC government for subsidising the Group in conducting and launching projects relating to research and development activities, development of the high-tech operating system and imports of the high-tech equipments. There are no unfulfilled conditions or contingencies relating to these grants.

– I-8 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

5. FINANCE COSTS

Interest on bank and other borrowings, wholly repayable within one year Finance lease charges Total interest on financial liabilities stated at amortised cost	2016 HK$’000 7,022 14 7,036	2015 HK$’000 4,587 7
		4,594

6. (LOSS)/PROFIT BEFORE INCOME TAX

The Group’s (loss)/profit before income tax is arrived at after charging/ (crediting): Cost of inventories sold – including write-back of inventories to net realisable value Depreciation – Owned – Held under finance leases Fair value loss on derivative financial instruments Research and development costs Minimum lease payments under operating leases in respect of leasehold land and buildings Loss on disposal of property, plant and equipment Auditor’s remuneration Exchange loss/(gain), net Staff costs (including directors’ remuneration) – Wages and salaries – Defined contribution scheme Amortisation of prepaid land lease payments Provision for impairment of trade and bills receivables Bad debts written off Write-off of property, plant and equipment	2016 HK$’000 491,757 (785) 10,106 90 131 6,299 3,304 45 990 10,349 118,624 9,794 128,418 287 1,373 87 –	2015 HK$’000 570,625 (788) 10,279 30 1,103 6,128 2,652 8 950 (320) 130,687 8,913
		139,600 297 6,749 97 40

7. INCOME TAX (CREDIT)/EXPENSE

Current tax – Elsewhere – Tax for the year – Over-provision in prior year Deferred tax Income tax (credit)/expense	2016 HK$’000 1,257 (1,658) (401) (32) (433)	2015 HK$’000 1,810 –
		1,810 (24)
		1,786

No Hong Kong profits tax was provided as the Group did not generate any assessable profits arising from its operations in Hong Kong during the current and prior years. Taxes assessable in elsewhere have been calculated at the prevailing rates of tax based on existing legislation, interpretations and practices.

– I-9 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

The PRC enterprise income tax for foreign enterprises have been calculated on the estimated assessable profits for the year at 25% except that 日東電子科技（深圳）有限公司 and 日東電子發展（深圳）有限公司 are granted the tax benefit for the National High-Tech Enterprise for three years starting from the year ended 31 December 2014. It is subject to income tax rate of 15%.

8. (LOSS)/EARNINGS PER SHARE

The calculation of basic (loss)/earnings per share is based on the loss for the year of approximately HK$8,436,000 (2015: profit of approximately HK$2,535,000) attributable to owners of the Company, and 1,023,750,000 (2015: 1,023,750,000 as restated) ordinary shares in issue during the year after the adjustment of the bonus elements in the shares issued under the share subscription completed subsequent to the reporting date but before the issuance of these financial statements.

The comparative figures for the basic earnings per share for the year ended 31 March 2015 are restated to take into account of the effect of the bonus elements arising from the above share subscription as if they had taken place since the beginning of the comparative period.

Diluted (loss)/earnings per share for the year ended 31 March 2016 and 2015 are not presented as there were no potential ordinary shares in issue during the year.

9. TRADE AND BILLS RECEIVABLES

The normal credit period granted by the Group to its customers, each of which has a maximum credit limit, ranges from 30 to 180 days (2015: 30 to 180 days).

Ageing analysis of trade and bills receivables as at the reporting dates, based on the date of revenue recognition and net of provision, is as follows:

Within 90 days 91 to 120 days 121 to 180 days 181 to 360 days Over 360 days	2016 HK$’000 85,150 16,368 34,152 74,823 127,836 338,329	2015 HK$’000 148,552 33,903 34,988 73,439 82,746
		373,628

10. TRADE AND BILLS PAYABLES

Ageing analysis of trade and bills payables as at the reporting dates, based on invoice date, is as follows:

Within 90 days 91 to 120 days Over 120 days	2016 HK$’000 89,198 23,266 53,730 166,194	2015 HK$’000 166,744 2,686 9,182
		178,612

Trade and bills payables are non-interest bearing and are normally settled within 90 to 270 days (2015: 90 to 180 days).

– I-10 –

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

11. BANK AND OTHER BORROWINGS

Current portion – Secured bank loans due for repayment within one year (note i) – Asset-backed financing (note ii) – Unsecured bank loans due for repayment within one year	2016 HK$’000 127,093 16,126 – 143,219	2015 HK$’000 78,639 20,493 6,315
		105,447

Notes:

(i) These bank borrowings are secured by the Group’s leasehold land and buildings, prepaid land lease payments, trade receivables, pledged deposits of USD200,000 (equivalent to HK$1,551,000) and corporate guarantees provided by the Company and its subsidiaries (2015: secured by the Group’s leasehold land and buildings, prepaid land lease payments and corporate guarantees provided by the Company and its subsidiaries).
(ii) The asset-backed financing represents the amount of financing obtained in factoring transactions which do not meet the de-recognition requirements in HKAS 39. The corresponding financial assets are included in bills receivables.

As at 31 March 2016 and 2015, all bank and other borrowings are due for repayment within one year.

The interest-bearing bank and other borrowings are carried at amortised cost.

As at 31 March 2016, the bank and other borrowings included bank and other loans of approximately USD2,556,000 and RMB103,531,000 (2015: USD1,998,000 and RMB71,227,000).

Effective interest rate of the bank and other borrowings ranged from 3.83% to 7.09% (2015: from 1.73% to 19.20%) per annum for the year.

12. DIVIDENDS

No dividend was paid or proposed during the year of 2016, nor has any dividend been proposed since the end of reporting period (2015: Nil).

13. COMMITMENTS

At the reporting date, the Group had the following outstanding commitments:

(a) Operating lease commitments – as lessee

The Group leases certain of its office premises or staff quarter under operating lease arrangements. Leases for these assets are negotiated for the terms ranging between one and three years (2015: one and three years).

At 31 March 2016, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	2016 HK$’000 1,673 1,334 3,007	2015 HK$’000 1,313 92
		1,405

– I-11 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

(b) Capital commitments

									2016	2015
									HK$’000	HK$’000
Commitments	for	the	acquisition	of	property,	plant	and	equipment	–	100

14. CONTINGENT LIABILITIES

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business.

During the year ended 31 March 2016, a subsidiary of the Group was in dispute with one of its customers in relation to the product quality. In 9 August 2015, the contractor instituted a proceeding against the subsidiary, to claim a compensation relating to the product quality dispute, totaling RMB8,500,000 (equivalent to approximately HK$10,130,000).

Provision amounted to RMB1,000,000 (equivalent to approximately HK$1,192,000) had been provided for in respect of the claims as at 31 March 2016. As management has determined, on the basis of external legal advice from the Group that it is not probable that these claims would result in an outflow of economic benefits exceeding the provisions made by the Group. The management believes that any resulting liabilities will not have a material adverse effect on the financial position, operating results and business of the Group.

According to the rulings made by the relevant courts, cash at bank totaling RMB8,500,000 (equivalent to approximately HK$10,130,000) of the subsidiary should be frozen or attached.

As at 31 March 2016, the Group has no other significant contingencies except for the abovementioned contingencies.

15. RELATED PARTY TRANSACTIONS

Compensation of key management personnel of the Group

The remuneration of the directors and other members of key management during the year were as follows:

Short term employee benefits Post-employment benefits	2016 HK$’000 9,633 132 9,765	2015 HK$’000 10,219 148
		10,367

The remuneration of the 4 (2015: 5) members of senior management (excluding directors) were within the emolument band of nil to HK$1,000,000 for each of the years ended 31 March 2016 and 2015.

16. EVENTS AFTER THE REPORTING DATE

On 30 May 2016, the Company issued 930,000,000 ordinary shares at a subscription price of HK$0.4 per share and convertible bonds with an aggregate principal amount of HK$148,000,000, which can be converted into 370,000,000 ordinary shares at a conversion price of HK$0.4 per share. The Company received gross proceeds in an aggregate amount of HK$520 million in cash.

Details of the subscription of new shares and convertible bonds are set out in the Company’s announcement dated 30 May 2016.

– I-12 –

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

3. UNAUDITED INTERIM FINANCIAL INFORMATION

There has been no changes in the information set out in the paragraph headed “Unaudited interim financial information” in Appendix II to the Composite Document. Please refer to the Composite Document for details.

4. INDEBTEDNESS

The information set out in the paragraph headed “Indebtedness” in Appendix II to the Composite Document remains valid. Please refer to the Composite Document for details.

5. MATERIAL CHANGE

As disclosed in the Profit Warning Announcement, based on the Group’s preliminary unaudited assessment for the year ended 31 March 2016, the Group is expected to record a consolidated net loss attributable to equity shareholders of the Company for the year ended 31 March 2016, whereas the Group recorded a consolidated net profit attributable to equity shareholders of the Company for the year ended 31 March 2015 of approximately HK$2,535,000. The audited consolidated financial results of the Group for the year ended 31 March 2016 were published in the Results Announcement on 29 June 2016 and are included in the paragraph headed “Audited consolidated financial results of the Group for the year ended 31 March 2016” in this Appendix I to the Supplemental Document.

In light of the publication of the Profit Warning Announcement and the Results Announcement by the Company since the Previous Latest Practicable Date, the Directors confirm that, as at the Latest Practicable Date, save and except for the completion of the subscription of new shares and convertible bonds of the Company as disclosed in the joint announcement jointly issued by Unis Technology Strategy Investment Limited and the Company dated 30 May 2016, there is no material change in the financial or trading position or outlook of the Group subsequent to 31 March 2016, being the date to which the latest published audited consolidated financial results of the Group were made up and up to the Latest Practicable Date.

– I-13 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE OFFEROR

APPENDIX II

1. RESPONSIBILITY STATEMENTS OF THE OFFEROR AND TSINGHUA GROUP

The directors of the Offeror, namely Mr. Zhao Weiguo and Mr. Zhang Yadong, jointly and severally accept full responsibility for the accuracy of the information contained in this Supplemental Document (other than the information relating to the Group, Reach General and Chen Ping), and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Supplemental Document (other than opinions expressed by the Group, Reach General and Chen Ping) have been arrived at after due and careful consideration and there are no other facts not contained in this Supplemental Document the omission of which would make any statement in this Supplemental Document misleading.

The directors of Tsinghua Unigroup, namely Mr. Zhao Weiguo, Mr. Li Zhongxiang, Mr. Li Yanhe, Mr. Zhang Yadong, Mr. Li Yi, Mr. Qi Lian and Ms. Zhou Yanhua, jointly and severally accept full responsibility for the accuracy of the information contained in this Supplemental Document (other than the information relating to the Group, Reach General and Chen Ping), and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Supplemental Document (other than opinions expressed by the Group, Reach General and Chen Ping) have been arrived at after due and careful consideration and there are no other facts not contained in this Supplemental Document the omission of which would make any statement in this Supplemental Document misleading.

2. RESPONSIBILITY STATEMENT OF REACH GENERAL AND CHEN PING

The sole director of Reach General, namely Mr. Wu Xin, accepts full responsibility for the accuracy of the information contained in this Supplemental Document (other than the information relating to the Group, the Offeror and Chen Ping), and confirm, having made all reasonable inquiries, that to the best of his knowledge, opinions expressed in this Supplemental Document (other than opinion expressed by the Group, the Offeror and Chen Ping) have been arrived at after due and careful consideration and there are no other facts not contained in this Supplemental Document the omission of which would make any statement in this Supplemental Document misleading.

Chen Ping accepts full responsibility for the accuracy of the information contained in this Supplemental Document (other than the information relating to the Group, the Offeror and Reach General), and confirm, having made all reasonable inquiries, that to the best of her knowledge, opinions expressed in this Supplemental Document (other than opinions expressed by the Group, the Offeror and Reach General) have been arrived at after due and careful consideration and there are no other facts not contained in this Supplemental Document the omission of which would make any statement in this Supplemental Document misleading.

– II-1 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE OFFEROR

APPENDIX II

3. MARKET PRICES

The table below shows the closing prices per Share on the Stock Exchange on (i) the last Trading Day of each of the calendar months during the Relevant Period and the Extended Relevant Period; (ii) the last full Trading Day immediately preceding the date of the initial announcement of the Company regarding a possible change in control of the Company; (iii) the Last Trading Day; and (iv) the Latest Practicable Date:

Date	Closing price
	HK$
30 June 2015	0.94
31 July 2015	0.65
31 August 2015	0.455
30 September 2015	0.73
30 October 2015	1.09
30 November 2015	1.00
9 December 2015 (the last full Trading Day immediately preceding the
date of the initial announcement of the Company regarding a
possible change in control of the Company)	0.89
31 December 2015	1.40
29 January 2016	1.24
4 February 2016 (Last Trading Day)	1.47
29 February 2016	1.63
31 March 2016	1.65
29 April 2016	1.71
30 May 2016	1.63
30 June 2016	1.69
29 July 2016	1.69
9 August 2016 (Latest Practicable Date)	1.69

During the Relevant Period and the Extended Relevant Period:

(i) the highest closing price of the Shares as quoted on the Stock Exchange was HK$1.74 per Share on 24 March 2016; and
(ii) the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.42 per Share on 8 July 2015.

– II-2 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE OFFEROR

APPENDIX II

4. INTERESTS IN THE SECURITIES OF THE COMPANY

(a) As at the Latest Practicable Date, the Offeror and parties acting in concert with it in aggregate were interested in 988,180,970 Shares, representing approximately 67.92% of entire issued share capital of the Company. Upon full conversion of the Convertible Bonds, the Offeror and parties acting in concert with it will in aggregate be interested in 1,358,180,970 Shares, representing approximately 74.42% of entire issued share capital of the Company as enlarged by the Conversion Shares upon conversion of the Convertible Bonds in full.
(b) As at the Latest Practicable Date:
(i) save for the UNISTECH Subscription Shares, the Convertible Bonds and valid acceptances in respect of a total of 258,180,970 Shares under the Offer, none of the Offeror nor any director of the Offeror was interested in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares;
(ii) save for the UNISTECH Subscription Shares, the Convertible Bonds and valid acceptances in respect of a total of 258,180,970 Shares under the Offer, none of the parties acting in concert with the Offeror owned or controlled any Shares, warrants, options, derivatives or securities carrying conversion or subscription rights into Shares;
(iii) save as disclosed in the paragraphs headed “Irrevocable Undertakings in relation to the Offer” in the “Letter from Quam Capital” in the Composite Document, no other person had irrevocably committed in favour of the Offeror to accept or reject the Offer. The shareholdings in the Company owned or controlled by the Shareholders who have irrevocably committed in favour of the Offeror are set out in the paragraphs headed “Irrevocable Undertakings in relation to the Offer” in the “Letter from Quam Capital” in the Composite Document; and
(iv) as at the Latest Practicable Date, the Offeror and parties acting in concert with it had not borrowed or lent any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares.

– II-3 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE OFFEROR

APPENDIX II

5. DEALINGS

During the Relevant Period and the Extended Relevant Period:

(i) Save for the UNISTECH Subscription Shares, the Convertible Bonds, valid acceptances in respect of a total of 258,180,970 Shares under the Offer and the dealings by discretionary accounts managed by Quam Securities as disclosed below, none of the Offeror and parties acting in concert with it and directors of the Offeror had dealt for value in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares.

Quam Capital is the financial adviser to the Offeror and Quam Securities is making the Offer on behalf of the Offeror. Quam Capital and Quam Securities are presumed to be parties acting in concert with the Offeror under the Takeovers Code. During the Relevant Period and the Extended Relevant Period, discretionary accounts managed by Quam Securities have made the dealings as follows:

		Number of	Transaction
		Shares	price per
Date	Type of transaction	involved	Share
			(HK$)
16 December 2015	Buy	50,000	1.35
17 December 2015	Buy	50,000	1.24
18 December 2015	Sell	50,000	1.35
	Sell	6,000	1.38
	Sell	4,000	1.40
21 December 2015	Buy	62,000	1.38
	Buy	30,000	1.41
	Buy	20,000	1.43
22 December 2015	Buy	48,000	1.39
22 December 2015	Sell	52,000	1.50
23 December 2015	Buy	100,000	1.42
20 June 2016	Accept the Offer	148,000	1.70
29 July 2016	Accept the Offer	100,000	1.70

(ii) No person who had irrevocably committed in favour of the Offeror to accept or reject the Offer as disclosed in the paragraphs headed “Irrevocable Undertakings in relation to the Offer” in the “Letter from Quam Capital” in the Composite Document had dealt for value in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares.
(iii) No person who had any arrangements of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any party acting in concert with it had dealt for value in the Shares or any convertible securities, warrants, options or derivatives in respect of any Shares.

– II-4 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE OFFEROR

APPENDIX II

6. NO CHANGE IN INFORMATION IN THE COMPOSITE DOCUMENT

Save as disclosed in this Appendix II, as at the Latest Practicable Date there had been no changes in the information set out in Appendix III to the Composite Document during the Extended Relevant Period. Please refer to the Composite Document for details.

7. QUALIFICATIONS AND CONSENTS OF EXPERTS

The following are the qualifications of Quam Capital and Quam Securities who have given opinions or advice which are contained or referred to in this Supplemental Document:

Name		Qualification
Quam	Capital	a corporation licensed under the SFO to conduct Type 6
		(advising on corporate finance) regulated activities, and the
		financial adviser to the Offeror in respect of the Offer
Quam	Securities	a corporation licensed under the SFO to conduct Type 1
		(dealing in securities), Type 2 (dealing in future contracts),
		Type 4 (advising on securities), Type 6 (advising on corporate
		finance) and Type 9 (asset management) regulated activities

Each of Quam Capital and Quam Securities has given and has not withdrawn its written consent to the issue of this Supplemental Document with the inclusion of its supplemental letter and references to its name, in the form and context in which they respectively appear.

– II-5 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE COMPANY

APPENDIX III

1. RESPONSIBILITY STATEMENTS

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Supplemental Document (other than the information relating to the Offeror and parties acting in concert with it, Reach General and Chen Ping), and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Supplemental Document (other than opinions expressed by the Offeror and parties acting in concert with it, Reach General and Chen Ping) have been arrived at after due and careful consideration and there are no other facts not contained in this Supplemental Document the omission of which would make any statement in this Supplemental Document misleading.

2. SHARE CAPITAL

As at the Latest Practicable Date, there has been no changes in the information set out under the paragraph headed “Share capital” in Appendix IV to the Composite Document. Please refer to the Composite Document for details.

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the following Directors had, or were deemed to have, interests and short positions in the Shares, underlying Shares and debentures of the Company or shares, underlying shares and debentures of any of the Company’s associated corporations (within the meaning of Part XV of the SFO), which are required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), or which are required, pursuant to Section 352 of the SFO, to be entered into the register referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules, to be notified to the Company and the Stock Exchange:

Name of Directors Mr. But	Number of Shares Nature of interest 39,525,200 Beneficial owner 44,121,168 Interest of controlled corporation (Note) 3,796,000 Interest of controlled corporation (Note) 2,424,800 Interest of controlled corporation (Note) 89,867,168	Percentage of total issued share capital of the Company (%) 2.72 3.03 0.26 0.17
		6.18

– III-1 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE COMPANY

APPENDIX III

Note: Mr. But is the beneficial owner of 50% of the issued shares in Sun East Group Limited and 100% of the issued shares in Sum Win Management Corp. and Mind Seekers and therefore Mr. But is deemed, or taken to be interested in the 3,796,000 Shares held by Sun East Group Limited, 2,424,800 Shares held by Sum Win Management Corp. and 44,121,168 Shares held by Mind Seekers for the purposes of the SFO.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective associates had any interests or short positions in the Shares, underlying Shares and debentures of the Company and shares, underlying shares and debentures of its associated corporations (within the meaning of Part XV of the SFO), which are required to be notified to the Company and the Stock Exchange pursuant to the Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they are deemed or taken to have under such provisions of the SFO) or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein or which are required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange.

4. INTERESTS IN THE OFFEROR

As at the Latest Practicable Date, neither the Company nor any of the Directors had any interest in the shares, convertible securities, warrants, options or derivatives in respect of the shares of the Offeror, and no such person had dealt in the shares of the Offeror during the Relevant Period and the Extended Relevant Period.

5. SHAREHOLDINGS AND DEALINGS IN SECURITIES OF THE COMPANY

As at the Latest Practicable Date,

(a) no Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company was owned or controlled by a subsidiary of the Company or by a pension fund (if any) of any member of the Group or by an adviser to the Company as specified in class (2) of the definition of associate under the Takeovers Code (but excluding exempt principal traders), and no such person had dealt in the Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company during the Relevant Period and the Extended Relevant Period;
(b) no Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company was managed on a discretionary basis by fund managers (other than exempt fund managers) (if any) connected with the Company, and no such person had dealt in the Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company during the Relevant Period and the Extended Relevant Period;
(c) save for the Subscription Agreements, the Irrevocable Undertakings and the Lock-up Undertakings, there was no arrangement of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code which existed between the Company, or any person who is an associate of the Company by

– III-2 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE COMPANY

APPENDIX III

virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code, and any other person. The shareholdings of the Offeror, Reach General, Chen Ping, Mr. But, Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan as at the Previous Latest Practicable Date are set out in the paragraphs headed “Information on the Group – Shareholding Structure of the Company” in the section headed “Letter from the Board” in the Composite Document. The shareholdings of the Offeror, Reach General, Chen Ping and Mr. But as at the Latest Practicable Date are set out in the paragraph headed “Supplemental Information on the Group – Shareholding Structure of the Company” in the section headed “Supplemental Letter from the Board” in the Supplemental Document. Other than the aforesaid interests, no Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company was owned or controlled by a person who has an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code, and no such person had dealt in the Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company during the Relevant Period and the Extended Relevant Period;

(d) neither the Company nor any of the Directors had borrowed or lent any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Company; and
(e) save as disclosed in the paragraphs headed “Irrevocable Undertakings in relation to the Offer” in the section headed “Letter from Quam Capital” in the Composite Document, no other Director had irrevocably committed in favour of the Offeror to accept or reject the Offer. The shareholdings in the Company owned or controlled by the Shareholders who have irrevocably committed in favour of the Offeror are set out in the paragraphs headed “Irrevocable Undertakings in relation to the Offer” in the section headed “Letter from Quam Capital” in the Composite Document. As at the Latest Practicable Date, the acceptances of Offer in respect of 184,323,472 Acceptances Shares (representing approximately 12.67% of the issued share capital of the Company) held directly or indirectly by Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan, being directors of the Company, have been received pursuant to the Irrevocable Undertakings.

6. MATERIAL LITIGATION

There have been no changes in the information set out under the paragraph headed “Material litigation” in Appendix IV to the Composite Document. Please refer to the Composite Document for details.

7. MATERIAL CONTRACTS

There have been no changes in the information set out under the paragraph headed “Material contracts” in Appendix IV to the Composite Document. Please refer to the Composite Document for details.

– III-3 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE COMPANY

APPENDIX III

8. ARRANGEMENTS AFFECTING DIRECTORS

Save for the arrangement disclosed in the section headed “Directors’ Service Contracts” in this Appendix, there have been no changes in the information set out under the paragraph headed “Arrangement affecting Directors” in Appendix IV to the Composite Document. Please refer to the Composite Document for details.

9. DIRECTORS’ SERVICE CONTRACTS

i. On 30 May 2016, Mr. Xia Yuan entered into a service contract with the Company in respect of his appointment (i) as an executive Director for an initial term of three years commencing from the date of despatch of the Composite Document, and (ii) as the Chief Executive Officer for an initial term of three years commencing from 30 May 2016, each of which may be terminated by either party giving not less than three months prior notice in writing. According to his service contract with the Company, Mr. Xia Yuan is not entitled to any fixed remuneration. During his term of employment as a director, Mr. Xia Yuan shall be entitled to an emolument to be determined or adjusted by the Board following recommendation by the remuneration committee with reference to operating results of the Group and his performance;
ii. on 2 June 2016, Mr. Qi Lian entered into a service contract with the Company in respect of his appointment as an executive Director for an initial term of three years commencing from 2 June 2016, which may be terminated by either party giving not less than three months prior notice in writing. According to his service contract with the Company, Mr. Qi Lian is not entitled to any fixed remuneration. During his term of employment as a director, Mr. Qi Lian shall be entitled to an emolument to be determined or adjusted by the Board following recommendation by the remuneration committee with reference to operating results of the Group and his performance;
iii. on 2 June 2016, Mr. Zhang Yonghong entered into a service contract with the Company in respect of his appointment as an executive Director for an initial term of three years commencing from the completion of the Offer, which may be terminated by either party giving not less than three months prior notice in writing. According to his service contract with the Company, Mr. Zhang Yonghong is not entitled to any fixed remuneration. During his term of employment as a director, Mr. Zhang Yonghong shall be entitled to an emolument to be determined or adjusted by the Board following recommendation by the remuneration committee with reference to operating results of the Group and his performance; and
iv. on 6 June 2016, HK$756,100, HK$704,210 and HK$704,210 were paid by the Company to Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan, respectively. Out of the aforesaid amounts, HK$245,300, HK$228,396 and HK$228,396 were Mr. But Tin Hing’s, Mr. Leung Cheong’s and Mr. Leung Kuen, Ivan’s respective director’s monthly salary in June 2016 (after deducting the relevant director’s contribution to Mandatory Provident Fund) and outstanding

– III-4 –

SUPPLEMENTAL GENERAL INFORMATION RELATING TO THE COMPANY

APPENDIX III

unpaid annual leave pursuant to their existing service contracts with the Company. The Company noted the payment of remaining amount, being HK$1,462,428 in aggregate (representing an additional payment of HK$510,800, HK$475,814 and HK$475,814 (the “ Additional Amounts ”) to Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan, respectively) has given rise to various implications under the Listing Rules and Takeovers Code. Upon noting such implications and consequences, Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan agreed to repay their respective Additional Amounts to the Company, but since they were not in Hong Kong at the relevant time, the Additional Amounts were repaid in full by Mr. But on behalf of Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan, to the Company on 8 July 2016. The Additional Amounts of HK$510,800, HK$475,814 and HK$475,814 owing by Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan respectively to Mr. But were repaid to Mr. But on 5 August 2016.

v. On 9 August 2016, each of Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan signed a confirmation, confirming to the Company and the Offeror that he is not entitled to, and will not, receive from the Company or the Offeror and any of its concert parties any amount or benefit which is not disclosed in the Composite Document and Supplemental Document.

Save for the above, there have been no changes in the information set out under the paragraph headed “Directors’ Service Contracts” in Appendix IV to the Composite Document. Please refer to the Composite Document for details.

Any future payment made by the Company to Mr. But Tin Hing, Mr. Leung Cheong and Mr. Leung Kuen, Ivan, otherwise than pursuant to their respective service contracts shall be subject to compliance with the Listing Rules and the Takeovers Code.

10. QUALIFICATION AND CONSENT OF AN EXPERT

The following are the qualifications of VMS Securities Limited who have given opinions or advice which are contained or referred to in this Supplemental Document:

Name	Qualification
VMS Securities	a company incorporated in Hong Kong with limited liability
Limited	and a licensed corporation to carry out Type 1 (dealing in
	securities), Type 4 (advising on securities), Type 6 (advising on
	corporate finance) and Type 9 (asset management) regulated
	activities under the SFO.

VMS Securities Limited has given and has not withdrawn its written consent to the issue of this Supplemental Document with the inclusion of its supplemental letter and references to its name, in the form and context in which they respectively appear.

– III-5 –

DOCUMENTS AVAILABLE FOR INSPECTION

APPENDIX IV

ADDITIONAL DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following additional documents will be available for inspection (i) during normal business hours from 9:00 a.m. to 5:00 p.m. (other than Saturdays, Sundays and public holidays) at the principal place of business of the Company in Hong Kong at Unit H, 1st Floor, Phase 4, Kwun Tong Industrial Centre, Nos. 436-446 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong; (ii) on the website of the SFC (www.sfc.hk); and (iii) on the website of the Company (www.suneasthk.com) from the date of this Supplemental Document onwards for so long as the Offer remains open for acceptance:

(a) the Profit Warning Announcement of the Company dated 15 June 2016;
(b) the Results Announcement of the Company for the financial year ended 31 March 2016;
(c) the supplemental letter from Quam Capital, the text of which is set out in this Supplemental Document;
(d) the supplemental letter from the Board, the text of which is set out in the Supplemental Document;
(e) the supplemental letter from the Independent Board Committee, the text of which is set out in the Supplemental Document;
(f) the supplemental letter from the Independent Financial Adviser, the text of which is set out in this Supplemental Document;
(g) the written consents referred to in the paragraph headed “Qualification and Consent of Experts” in Appendix II and the paragraph headed “Qualification and Consent of an Expert” in Appendix III; and
(h) the service contracts of Mr. Xia Yuan, Mr. Qi Lian and Mr. Zhang Yonghong referred to in the paragraphs headed “Directors’ Service Contracts” in Appendix III.

– IV-1 –

AI assistant

Comtec Solar Systems Group Limited — M&A Activity 2016

49415_rns_2016-08-11_f6497d36-35e1-417e-9d15-6a39d4d31548.pdf

UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED 紫光科技戰略投資有限公司

SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]

SUPPLEMENTAL DOCUMENT UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED

FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

VMS Securities Limited

CONTENTS

EXPECTED TIMETABLE

EXPECTED TIMETABLE

DEFINITIONS

UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

INTRODUCTION

PRINCIPAL TERMS OF THE OFFER

Comparisons of value

SUPPLEMENTAL INFORMATION ON THE OFFEROR

SUPPLEMENTAL INFORMATION ON THE GROUP

LEVEL OF ACCEPTANCE

ADDITIONAL INFORMATION

SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]

UNCONDITIONAL MANDATORY CASH OFFER BY

QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHARES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMITED

INTRODUCTION

SUPPLEMENTAL INFORMATION ON THE GROUP

Shareholding Structure of the Company

ADVICE AND RECOMMENDATION

ADDITIONAL INFORMATION

SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]

INTRODUCTION

RECOMMENDATION

UNCONDITIONAL MANDATORY CASH OFFER BY QUAM SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF

UNIS TECHNOLOGY STRATEGY INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THE EXCLUDED SHRES) OF SUN EAST TECHNOLOGY (HOLDINGS) LIMTED

a. Financial information of the Group – financial performance

For the two years ended 31 March 2015 and 2016

b. Financial information of the Group – financial position

a. Review of trading of Shares

b. Trading liquidity of the Shares

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

c. Offer Price comparisons

d. Highest and lowest Share price

SUPPLEMENTAL LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

4. SUPPLEMENTAL INFORMATION OF THE OFFEROR

5. RECOMMENDATION

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

2. AUDITED CONSOLIDATED FINANCIAL RESULTS OF THE GROUP FOR THE YEAR ENDED 31 MARCH 2016

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

APPENDIX I

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

NOTES TO FINANCIAL RESULTS:

1. BASIS OF PREPARATION

2. ADOPTION OF NEW OR AMENDED HKFRSs

HKFRS 9 (2014) – Financial Instruments

HKFRS 15 – Revenue from Contracts with Customers

HKFRS 16 – Leases

3. SEGMENT INFORMATION

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

4. REVENUE, OTHER INCOME AND GAINS

5. FINANCE COSTS

6. (LOSS)/PROFIT BEFORE INCOME TAX

7. INCOME TAX (CREDIT)/EXPENSE

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

8. (LOSS)/EARNINGS PER SHARE

9. TRADE AND BILLS RECEIVABLES

10. TRADE AND BILLS PAYABLES

APPENDIX I

FINANCIAL INFORMATION ON THE GROUP

11. BANK AND OTHER BORROWINGS

12. DIVIDENDS

13. COMMITMENTS

(a) Operating lease commitments – as lessee

APPENDIX I

(b) Capital commitments

14. CONTINGENT LIABILITIES

15. RELATED PARTY TRANSACTIONS

Comtec Solar Systems Group Limited M&A Activity 2016

**SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]**

**SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]**

**SUN EAST TECHNOLOGY (HOLDINGS) LIMITED 日東科技（控股）有限公司[*]**