THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Creative China Holdings Limited (the “ Company ”), you should at once hand this circular together with the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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

==> picture [20 x 23] intentionally omitted <==

==> picture [84 x 36] intentionally omitted <==

Creative China Holdings Limited 中國創意控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8368)

CONNECTED TRANSACTIONS IN RELATION TO

(I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; AND (III) NOTICE OF EXTRAORDINARY GENERAL MEETING

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

==> picture [165 x 32] intentionally omitted <==

This circular together with a form of proxy will remain on the website of the Stock Exchange at http://www.hkexnews.hk on the “Latest Listed Company Announcements” page for at least 7 days from the date of its posting and on the website of the Company at http://www.ntmediabj.com.

A notice convening the extraordinary general meeting (“ EGM ”) to be held at 24/F, Admiralty Centre I, 18 Harcourt Road, Admiralty, Hong Kong on Friday, 11 August 2023, at 2:00 p.m. is set out on pages 75 to 77 of this circular. Whether or not you are able to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s Hong Kong branch share registrar and transfer office, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof if you so wish.

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

24 July 2023

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

– i –

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . .	34
LETTER FROM JUN HUI INTERNATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36
APPENDIX I — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .	68
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	75

– ii –

DEFINITIONS

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

“associate”
has the meaning ascribed thereto in the GEM Listing Rules
“Board”

board of the Directors

“Bond Instrument”
the deed to be executed by the Company constituting the Convertible Bonds
“Bondholder(s)”

holder(s) of the Convertible Bonds

“Business Day”
a day on which banks are generally open for business in Hong Kong (other than a Saturday, Sunday or public holiday or a day on which a tropical cyclone warning No. 8 or above or a “black rainstorm warning signal” is hoisted or remains hoisted in Hong Kong at any time between 9:00 a.m. and 5:00 p.m.)
“CB Completion”
completion of the issue of the Convertible Bonds in accordance with the terms and condition of the CB Subscription Agreement
“CB Completion Date”
a date which is within five (5) Business Days after fulfillment or wavier (as the case may be) of the CB Conditions Precedent (or such other date as the Company and the CB Subscriber may agree in writing before CB Completion) and the date on which CB Completion takes place
“CB Conditions”
the terms and conditions of the Convertible Bonds as set out in the Bond Instrument
“CB Material Adverse Effect”
(a) any outbreak or escalation of hostilities, act of terrorism, the declaration by Hong Kong or the PRC of a national emergency or war or other calamity or crisis;
(b) any material adverse change or development involving a prospective material adverse change in or affecting the financial markets in Hong Kong or the PRC, or in international financial, political or economic conditions, currency exchange rates, exchange controls or taxation; or

– 1 –

DEFINITIONS

(c) any change, event, occurrence, state of facts or effect, the consequence of which is to, or could reasonably be expected to materially and adversely affect the financial position, management, business or property, results of operations, legal or financing structure, business prospects or assets or liabilities of the Group,

that would make the enforcement of the CB Subscription Agreement, the Bond Instrument and all other agreements and documents contemplated by the CB Subscription Agreement impracticable

“CB Subscriber”
“CB Subscription Agreement”
“Company”
“Concert Group”
“Contractual Arrangements”
“controlling shareholder(s)”
“Conversion Period”
Mr. Nian Binbin (念彬彬), an Independent Third Party
the Convertible Bonds subscription agreement entered into by and between the Company and the CB Subscriber in relation to the issue of the Convertible Bonds dated 19 June 2023
Creative China Holdings Limited (中國創意控股有限公司), a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the GEM (Stock Code: 8368)

Youth Success Holdings Limited (“ Youth Success ”), Guang Rui Investments Limited, Goldbless International Limited, Alpha Master Global Limited, Qiao Tian Limited and Mr. Liang Longfei

a series of Group’s contractual arrangements to allow New Talent Media Company Limited* (北京聚視文化傳媒有限公司) to exercise effective control over the Group’s PRC subsidiaries and enjoy the economic benefits generated by these entities
has the meaning ascribed to it under the GEM Listing Rules
the period commencing on the Issue Date and ending on the close of business on the Business Day prior to the Maturity Date, both dates inclusive, or such other date as the Company and the CB Subscriber shall agree in writing

– 2 –

DEFINITIONS

“Conversion Price” “Conversion Rights”

the initial conversion price of HK$0.54 per Conversion Share, subject to adjustments

means the rights of the Bondholders to subscribe for fully-paid Shares pursuant to the Convertible Bonds as set out in the CB Conditions

“Conversion Share(s)” the Share(s) to be issued by the Company upon exercise by the Bondholder(s) of the Conversion Rights attached to the Convertible Bonds
“Convertible Bonds”
means the convertible bonds due 2025 in the aggregate principal amount of RMB9,000,000 to be issued by the Company subject to, and with the benefit of, the Bond Instrument and the CB Conditions
“Director(s)” the director(s) of the Company
“EGM”

the extraordinary general meeting of the Company to be convened and held on Friday, 11 August 2023, at 2:00 p.m. at 24/F, Admiralty Centre I, 18 Harcourt Road, Admiralty, Hong Kong, the notice of which is set out on pages 75 to 77 of this circular and any adjournment thereof

“GEM” the GEM of the Stock Exchange
“GEM Listing Rules” the Rules Governing the Listing of Securities on the GEM
“Group” the Company and its subsidiaries
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”
an independent committee of the Board, comprising all three independent non-executive Directors, formed for the purpose of advising the Independent Shareholders in respect of, among other things, the Transactions (including the grant of the Specific Mandate)

– 3 –

DEFINITIONS

“Independent Financial Adviser” or “Jun Hui International”
“Independent Third Party”
“Issue Date”
“Issue Price”
“Latest Practicable Date”
“Majority Bondholder”
“Maturity Date”
“Mr. Yang”
“Ms. Mou”
“PRC”
“RMB”
Jun Hui International Finance Limited, a licensed corporation permitted to carry out Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder
an individual(s) or a company(ies) who or which is/are independent of and not connected with (within the meaning of the GEM Listing Rules) any of the directors, chief executives or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates
means the day on which the Convertible Bonds are issued under the Bond Instrument
RMB9,000,000 (equivalent to HK$10,170,000), a price equal to 100% of the principal amount of the Convertible Bonds
18 July 2023, being the latest practicable date prior to printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
the holder(s) of the Convertible Bonds representing a majority in principal amount of the Convertible Bonds outstanding for the time being
the date falling on the second (2nd) anniversary of the Issue Date
Mr. Yang Shaoqian (楊紹謙), one of the controlling shareholders of the Company
Ms. Mou Sufang (牟素芳), Mr. Yang’s spouse and one of the controlling shareholders of the Company
the People’s Republic of China which, and for the sole purpose of this circular, shall exclude Hong Kong, the Macau Special Administrative Region and Taiwan

Renminbi, the lawful currency of the PRC

– 4 –

DEFINITIONS

“SFO”
“Share(s)”
“Share Subscriber”
“Share Subscription”
“Share Subscription Agreement”
“Share Subscription Completion”
“Share Subscription Completion Date”
“Share Subscription Material Adverse Effect”

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

ordinary share(s) of HK$0.05 each in the share capital of the Company
TAN KOON AIK, an Independent Third Party
the subscription by the Share Subscriber for the Subscription Shares on the terms and subject to the conditions set out in the Share Subscription Agreement
the share subscription agreement entered into by and between the Company and the Share Subscriber in relation to the Share Subscription dated 19 June 2023
completion of the Share Subscription in accordance with the terms and condition of the Share Subscription Agreement
a date which is within five (5) Business Days after fulfillment or wavier (as the case may be) of the Share Subscription Conditions Precedent (or such other date as the Company and the Share Subscriber may agree in writing before the Share Subscription Completion) and the date on which Share Subscription Completion takes place
(a) any outbreak or escalation of hostilities, act of terrorism, the declaration by Hong Kong or the PRC of a national emergency or war or other calamity or crisis;
(b) any material adverse change or development involving a prospective material adverse change in or affecting the financial markets in Hong Kong or the PRC, or in international financial, political or economic conditions, currency exchange rates, exchange controls or taxation; or

– 5 –

DEFINITIONS

(c) any change, event, occurrence, state of facts or effect, the consequence of which is to, or could reasonably be expected to materially and adversely affect the financial position, management, business or property, results of operations, legal or financing structure, business prospects or assets or liabilities of the Group,

that would make the enforcement of contracts to purchase the Subscription Shares impracticable, or would materially prejudice trading of the Subscription Shares in the secondary market

“Shareholder(s)” shareholder(s) of the Company
“Specific Mandate”
the specific mandate to be sought from the Independent Shareholders at the EGM to grant the authority to the Directors for the allotment and issuance of the Subscription Shares and Conversion Shares
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscription Price”
HK$0.214 per Subscription Share
“Subscription Shares”

a total of 44,671,963 Shares to be allotted and issued by the Company at Share Subscription Completion pursuant to terms and condition of the Share Subscription Agreement, and each a “Subscription Share”

“subsidiary(ies)”
has the meaning ascribed to it under the Companies Ordinance (Chapter 622 of the Laws of Hong Kong)
“Takeovers Code”
means the Codes on Takeovers and Mergers and Share Buybacks, as amended from time to time
“Total Subscription Price”
RMB8,460,000 (equivalent to HK$9,559,800), being the consideration payable by the Share Subscriber for the Share Subscription
“Transactions”
collectively, the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder (including the Voting Agreements and the grant of the Specific Mandate)

– 6 –

DEFINITIONS

“Voting Agreements”

means (i) the shareholders voting agreement to be entered into by and between Youth Success, Mr. Yang, Ms. Mou and the Share Subscriber under the Share Subscription Agreement; and (ii) the shareholders voting agreement to be entered into by and between Youth Success, Mr. Yang, Ms. Mou and the CB Subscriber under the CB Subscription Agreement, and each a “Voting Agreement”

“%” per cent

For the purpose of this circular, unless otherwise indicated, conversion of RMB into HK$ is calculated at the exchange rate of RMB1.00 to HK$1.13. This exchange rate is for illustration purpose only and does not constitute a representation that any amounts have been, could have been, or may be exchanged at this or any other rate at all.

For identification purposes only

– 7 –

LETTER FROM THE BOARD

==> picture [20 x 23] intentionally omitted <==

==> picture [84 x 37] intentionally omitted <==

Creative China Holdings Limited 中國創意控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock code: 8368)

Executive Director: Mr. Philip Jian Yang (Chairman)

Non-executive Directors:

Mr. Yang Shiyuan Mr. Ge Xuyu Mr. Wang Yong

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

Independent Non-Executive Directors: Ms. Fu Yuehong Mr. Yau Yan Yuen Mr. Tan Song Kwang

Head office and principal place of business in PRC: Room 1901, 19/F, Yulin Building No. 5A Xiangjun Nanli 2nd Alley Chaoyang District Beijing the PRC

Principal place of business in Hong Kong: 23/F, Yue Thai Commercial Building 128 Connaught Road Central Sheung Wan Hong Kong

24 July 2023

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS IN RELATION TO

(I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; AND (III) NOTICE OF EXTRAORDINARY GENERAL MEETING

– 8 –

LETTER FROM THE BOARD

INTRODUCTION

Reference is made to the announcement of the Company dated 19 June 2023 in relation to (i) the Share Subscription Agreement and issue of the Subscription Shares under Specific Mandate; and (ii) the CB Subscription Agreement and the issue of the Convertible Bonds under Specific Mandate.

The purpose of this circular is to provide you with (i) information relating to the Transactions (including the grant of the Specific Mandate); (ii) the recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Transactions (including the grant of the Specific Mandate); (iii) the letter of advice from Jun Hui International to the Independent Board Committee and the Independent Shareholders in relation to the Transactions; (iv) other information as required under the GEM Listing Rules; and (v) the notice of the EGM.

1. SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

On 19 June 2023 (after trading hours of the Stock Exchange), the Company and the Share Subscriber entered into the Share Subscription Agreement, pursuant to which the Share Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue 44,671,963 Subscription Shares at a subscription price of HK$0.214 per Subscription Share.

The Share Subscription Agreement

Principal terms of the Share Subscription Agreement are summarised as follows:

Date: 19 June 2023 (after trading hours of the Stock Exchange) Parties: The Company as the issuer; and TAN KOON AIK as the subscriber, an Independent Third Party. Subscription A total of 44,671,963 Shares, representing approximately 11.98% Shares: of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 10.70% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares (assuming there are no other changes in the share capital of the Company between the Latest Practicable Date and the Share Subscription Completion Date). The aggregate nominal value of the 44,671,963 Subscription Shares is HK$2,233,598.15. The Subscription Shares upon issue shall rank pari passu with all other Shares. Application will be made by the Company for the listing of, and permission to deal in, the Subscription Shares.

– 9 –

LETTER FROM THE BOARD

Total RMB8,460,000 (equivalent to HK$9,559,800) Subscription Price:

Payment:

The Total Subscription Price shall be paid by the Share Subscriber on or before Share Subscription Completion.

Subscription Price:

HK$0.214 per Subscription Share, representing:

(1) a discount of approximately 17.69% to the closing price of HK$0.260 per Share as quoted on the Stock Exchange on the date of the Share Subscription Agreement;
(2) a discount of approximately 17.37% to the average closing price of approximately HK$0.259 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days of the Shares immediately prior to the date of the Share Subscription Agreement; and
(3) a discount of approximately 14.19% to the average closing price of approximately HK$0.2494 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days of the Shares immediately prior to the date of the Share Subscription Agreement.

The Subscription Price was arrived at after arm’s length negotiations between the Company and the Share Subscriber with reference to the recent trading price and trading volume of the Shares. The Directors consider that the terms and conditions of the Share Subscription Agreement (including the Share Subscription Price) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

Share Subscription Conditions Precedent

Share Subscription Completion is conditional upon the following conditions precedent (the “ Share Subscription Conditions Precedent ”) being fulfilled or waived by the Share Subscriber in writing (as the case may be):

(1) the Stock Exchange having approved the listing of and dealing in the Subscription Shares, and such approval shall not be threatened with any revocation, withdrawal or cancellation at any time prior to Share Subscription Completion;

– 10 –

LETTER FROM THE BOARD

(2) all necessary consents, confirmations, permits, approvals and authorisations (collectively, the “ Necessary Approvals ”) under the GEM Listing Rules and other regulatory regime having been granted to and/or obtained by the Company, and the Necessary Approvals having remained valid and effective, and not being threatened with any revocation, withdrawal, cancellation or suspension at any time before Share Subscription Completion;
(3) the warranties made by the Company under the Share Subscription Agreement having remained true and accurate and not misleading in all material respects as at Share Subscription Completion; and
(4) no Share Subscription Material Adverse Effect having been occurred.

Other than Share Subscription Conditions Precedent referred to in paragraph (1) above which cannot be waived, the Share Subscriber may at any time before Share Subscription Completion waive any of other Share Subscription Conditions Precedent above by prior written notice to the Company. As at the Latest Practicable Date, none of the Share Subscription Conditions Precedent had been fulfilled or waived.

In the event that any of the Share Subscription Conditions Precedent above are not fulfilled or waived on or before 30 September 2023 or such later date as the parties of the Share Subscription Agreement may agree in writing, the Share Subscription Agreement and everything contained thereof shall terminate and be null and void and of no further effect and neither of the parties thereto shall have any liability to any other party, save for any antecedent breach(es) of any obligation under the Share Subscription Agreement.

Share Subscription Completion

Subject to the fulfilment or waiver (as the case may be) of all Share Subscription Conditions Precedent and the Share Subscriber’s full settlement of the Total Subscription Price, the Share Subscription Completion shall take place on the Share Subscription Completion Date.

Information of the Parties

The Share Subscriber

The Share Subscriber is an individual investor who is a Malaysian resident. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Share Subscriber is an Independent Third Party.

– 11 –

LETTER FROM THE BOARD

The Company and the Group

The Company is an exempted company with limited liability incorporated in the Cayman Islands, the shares of which are listed on GEM. The Group is principally engaged in (i) serial program/film production and related services and film rights investment; (ii) concert and event organisation and related services; (iii) mobile application development and operation and related services; and (iv) artist management.

Reasons for the Share Subscription and Use of Proceeds

The aggregate gross proceeds of the Share Subscription will be RMB8,460,000 (equivalent to HK$9,559,800) and the aggregate net proceeds of the Share Subscription, having deducted the professional fees and other expenses in connection with the Share Subscription, are estimated to be approximately HK$8,937,170 (equivalent to RMB7,909,000), representing a net issue price of approximately HK$0.2001 per Subscription Share. The Company intends to apply the net proceeds of the Share Subscription in the following manner:

(i) approximately 70.54% of the net proceeds, or approximately HK$6,304,270 (equivalent to RMB5,579,000) to mobile application development and operation and related services; and
(ii) approximately 29.46% of the net proceeds, or approximately HK$2,632,900 (equivalent to RMB2,330,000), will be used for the general working capital of the Group.

The Board considered that the Share Subscription represents an opportunity to raise additional capital for the development of mobile application development and operation and related services, maintaining the Group’s working capital and business operation and will also enlarge the shareholders and capital base of the Company and strengthen the financial position of the Group.

In light of the foregoing, the Board (including the independent non-executive Directors) is of the view that terms and conditions (including the Total Subscription Price) of the Share Subscription Agreement are on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 12 –

LETTER FROM THE BOARD

Effect on the Shareholding Structure of the Company

The following table illustrates the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon Share Subscription Completion assuming there will be no change in the total number of issued Shares between the Latest Practicable Date and the Share Subscription Completion:

Name of shareholders Non-public shareholders: Youth Success (Notes 1, 3 and 5) Guang Rui Investments Limited (“Guang Rui”) (Note 1) Goldbless International Limited (“Goldbless”) (Notes 1 and 2) Alpha Master Global Limited (“Alpha Master”) (Note 1) Qiao Tian Limited (“Qiao Tian”) (Note 1) Mr. Liang Longfei (“Mr. Liang”) (Note 3) Share Subscriber (or its nominee(s)) (Note 4) Sub-total Public Shareholders: Other public Shareholders Sub-total Total	As at the Latest Practicable Date Number of Shares Approximate percentage 81,378,000 21.82% 2,594,400 0.70% 76,500,000 20.51% 10,077,600 2.70% 5,418,000 1.45% 36,000,000 9.65% – – 211,968,000 56.83% 161,018,978 43.17% 161,018,978 43.17% 372,986,978 100.00%	Immediately Subscription Number of Shares 81,378,000 2,594,400 76,500,000 10,077,600 5,418,000 36,000,000 44,671,963 256,639,963 161,018,978 161,018,978 417,658,941	upon Share Completion Approximate percentage 20.18% 0.62% 18.32% 2.41% 1.30% 8.62% 10.70%
			61.45%
			38.55%
			38.55%
			100.00%

Notes:

As at the Latest Practicable Date, Youth Success and Guang Rui owned 81,378,000 Shares and 2,594,400 Shares respectively, representing 21.82% and 0.70% of the issued share capital of the Company. The issued share capital of Youth Success is legally and beneficially owned as to 83.54% by Guang Rui. Under the SFO, Guang Rui is deemed to be interested in all the Shares registered in the name of Youth Success. The entire issued share capital of Guang Rui was legally and beneficially owned as to 60% by Mr. Yang and 40% by Ms. Mou. Ms. Mou is the spouse of Mr. Yang, therefore under the SFO she is deemed to be interested in all the Shares in which Mr. Yang is deemed to be interested, and vice versa. By virtue of the shareholders voting agreement entered into by Mr. Yang, Ms. Mou, Youth Success, Mr. Li Lin, Alpha Master, Ms. Yang Qi, Qiao Tian, Mr. Wang Yong and Goldbless on 8 November 2015 (the “ First Voting Agreement ”), Youth

– 13 –

LETTER FROM THE BOARD

Success is deemed to be interested in the Shares held by Alpha Master, Qiao Tian and Goldbless in aggregate by virtue of the SFO. For details of the First Voting Agreement, please refer to the paragraph headed “First Voting Agreement” below.

Mr. Li Lin and Ms. Yang Qi were former members of the Company’s senior management team, who had already ceased to hold any position in the Group as at the Latest Practicable Date. Mr. Li Lin was appointed as an executive Director on 21 April 2015 and resigned as an executive Director on 6 April 2017. Mr. Li Lin and Ms. Yang Qi are both registered shareholders of Beijing Emphasis Media Co., Ltd.* (北京無限印象傳媒有限公司), a PRC subsidiary of the Company, with shareholding interest of 12% and 5% respectively. Save as being parties to the First Voting Agreement, there is no other relationship among Mr. Li Lin and Ms. Yang Qi, on one hand, and Mr. Yang, Ms. Mou, Mr. Wang Yong, Youth Success, Alpha Master, Qiao Tian and Goldbless, on the other hand.

As at the Latest Practicable Date, the entire issued share capital of Goldbless was owned by Mr. Wang Yong, the non-executive Director. Under the SFO, Mr. Wang Yong is deemed to be interested in all the Shares registered in the name of Goldbless.
By virtue of the shareholders voting agreement entered into by and among Mr. Yang, Ms. Mou, Youth Success and Mr. Liang on 11 November 2021 (the “ Second Voting Agreement ”), Mr. Liang irrevocably agrees to delegate and authorize Youth Success to exercise voting rights attached to all of the Shares held by him, and Youth Success is deemed to be interested in the Shares held by Mr. Liang in aggregate by virtue of the SFO. For details of the Second Voting Agreement, please refer to the paragraph headed “Second Voting Agreement” below.
Pursuant to the Share Subscription Agreement, the Share Subscriber shall, on the Share Subscription Completion Date, execute and deliver to the Company a Voting Agreement for the purpose of ensuring compliance with the undertakings dated 8 November 2015 (the “ Control Undertakings ”) executed by Mr. Yang and Ms. Mou in favour of the Company, pursuant to which Mr. Yang and Ms. Mou shall remain holding/controlling not less that 50% voting rights in the issued share capital of the Company or otherwise maintain control during the subsistence of the Contractual Arrangements (details of the Contractual Arrangements are set out in the paragraph headed “Contractual Arrangements” below). By virtue of such Voting Agreement, Youth Success shall be entitled to exercise voting rights attached to all of the Shares held by the Share Subscriber (or its nominee(s)) (either indirectly through its respective holding company(ies) (the “ Holdco ”) or directly held by itself). As such, Youth Success is deemed to be interested in the Shares held by the Holdco or the Share Subscriber (or its nominee(s)) by virtue of the SFO.
By virtue of the First Voting Agreement and Second Voting Agreement, Youth Success shall be entitled to exercise control over the voting rights attaching to an aggregate of 209,373,600 Shares, representing approximately 56.13% of the issued share capital of the Company as at the Latest Practicable Date.

Contractual Arrangements

Beijing Emphasis Media Co., Ltd. (北京無限印象傳媒有限公司), Starry Knight Entertainment Co., Ltd. (北京縱橫飛揚國際文化發展有限公司), Beijing Joy Star Production Co., Ltd. (北京光影互動影視文化傳播有限公司), Beijing New Image Media Co. Ltd. (北京對比色彩影視文化傳播有限公司) and Beijing Great Wise Media Co., Ltd. (北京天瀚影視文化傳播有限公司) (collectively defined as the “ PRC Contractual Entities* ”) are deemed to be the wholly-owned subsidiaries of the Company pursuant to the Contractual Arrangements.

The PRC Contractual Entities hold certain licences and permits required for the operation of abovementioned principal business (including The Permit to Produce and

– 14 –

LETTER FROM THE BOARD

Distribute Radio or Television Programs and operate as a performance brokerage enterprise with the relevant licence). According to the Guidance Catalogue of Industries for Foreign Investment (2015 Version), radio and television program production and operating companies falls within the prohibited foreign-invested industry, and the production of television programs (limited to Chinese-foreign contractual joint ventures) and performance brokerage fall within the restricted foreign-invested industry. The principal activities of the Group are provision of program production and event organisation services in the PRC, the sectors where foreign investment is subject to significant restrictions under PRC laws and regulations. Accordingly, the Group cannot directly acquire any equity interest in the PRC Contractual Entities, which hold certain licences and permits required for the operation of the principal business of the Group.

In order to achieve the Group’s business purposes and be in line with common practice in industries in the PRC subject to foreign investment restrictions, on 18 May 2015, New Talent Media Company Limited (北京聚視文化傳媒有限公司) (“ New Talent Media* ”), an indirect wholly-owned subsidiary of the Company, entered into the Contractual Arrangements narrowly tailored to provide New Talent Media with control over the PRC Contractual Entities and grant New Talent Media the right to acquire the equity interests of the PRC Contractual Entities when and to the extent permitted by the PRC laws and regulations. By adopting the Contractual Arrangements, the Group has been able to exercise and maintain control over the operations of the PRC Contractual Entities, obtain their entire economic benefits and prevent leakage of the assets and values of the PRC Contractual Entities to their shareholders in the PRC. In addition, as a result of the Contractual Arrangements, financial position and results of operations of the PRC Contractual Entities have been consolidated into the financial position and results of operations of the Group under HKFRSs.

For details of the Contractual Arrangements, please refer to the section headed “Contractual Arrangements” in the Company’s prospectus dated 12 November 2015 (the “ Prospectus ”) and pages 90 to 103 of the Company’s annual report for the year ended 31 December 2022 (the “ 2022 Annual Report ”).

First Voting Agreement

At the time of preparing the Company’s listing application in 2015, the then Company’s PRC legal advisers advised that, with respective to the then existing VIE structures (including in restricted and prohibited business), the relevant opinions of the governmental authorities inclined to allow foreign-invested enterprise controlled by PRC investors to continue to retain the VIE structure under the then Draft Foreign Investment Law of the PRC.

In order to maintain and enhance the control over the Company for the purpose of satisfying the Draft Foreign Investment Law, Mr. Yang, Ms. Mou, Youth Success, Mr. Li Lin, Alpha Master, Ms. Yang Qi, Qiao Tian, Mr. Wang Yong and Goldbless entered into the First Voting Agreement on 8 November 2015, pursuant to which, among other things,

– 15 –

LETTER FROM THE BOARD

(i) each of Mr. Li Lin and Ms. Yang Qi irrevocably agrees to, through their respective holding company, namely Alpha Master and Qiao Tian, delegate to Youth Success and authorise Youth Success to exercise the voting rights attached to all of the Shares indirectly held by him/her;
(ii) Mr. Wang Yong irrevocably agrees to, through Goldbless, delegate to Youth Success and authorise Youth Success to exercise the voting rights attached to all of the Shares indirectly held by him;
(iii) each of Mr. Li Lin, Ms. Yang Qi and Mr. Wang Yong could not, through their respective holding company, namely Alpha Master, Qiao Tian and Goldbless, in any way transfer, charge, mortgage, encumber or create any interest over or in relation to the Shares he/she indirectly holds unless (a) prior written consent has been granted by Mr. Yang and Ms. Mou and (b) the Company will remain to be controlled by PRC investor(s) as defined under the Draft Foreign Investment Law thereafter; and
(iv) the First Voting Agreement could only be terminated by Mr. Yang and Ms. Mou unilaterally and in their sole discretion.

As a result of entering into the arrangements under the First Voting Agreement, Mr. Li Lin, Ms. Yang Qi and Mr. Wang Yong do not hold any voting rights in Shares of the Company. As Mr. Li Lin, Ms. Yang Qi and Mr. Wang Yong have no control of the Company, none of them is a controlling shareholder of the Company.

By virtue of the First Voting Agreement, Youth Success controlled over 50% of the voting rights attached to the issued Shares of the Company upon the listing and could be regarded under the Draft Foreign Investment Law as having the control of the Company with not less than 50% voting rights, and hence capable of exerting decisive impact on the management decisions of the PRC Contractual Entities through the Contractual Arrangements, based on which, the then Company’s PRC legal advisers advised that the arrangements under the First Voting Agreement would significantly reduce the uncertainty when carrying out the “control” test under the Draft Foreign Investment Law and Mr. Yang and Ms. Mou would likely to be deemed as “ultimate control persons” as defined under the Draft Foreign Investment Law.

For details of the First Voting Agreement, please refer to the section headed “Contractual Arrangements” in the Prospectus.

Second Voting Agreement

On 20 October 2021, (i) the Company, (ii) CCH Film Production Limited, (iii) the cooperation partners, namely Truth Pictures (Hong Kong) Limited and Yuanxin Pictures (Beijing) Limited* (源欣影業北京有限公司) and (iv) Mr. Liang as guarantor entered into a cooperation agreement, pursuant to which (a) the Group and the cooperation partners

– 16 –

LETTER FROM THE BOARD

agreed to carry out the cooperation in the distribution of six foreign imported films in the PRC; and (b) the consideration in the sum of RMB30,000,000 was settled by the Company by the allotment and issue of an aggregate of 36,000,000 consideration shares of the Company to the cooperation partners or their nominee(s) at the issue price of HK$1 per consideration share.

In order to maintain Youth Success’s control of over 50% of the voting rights attached to the issued Shares of the Company for compliance with the Control Undertakings, on 11 November 2021, the Second Voting Agreement was entered into by and among Mr. Yang, Ms. Mou, Youth Success and Mr. Liang, pursuant to which Youth Success shall be entitled to exercise voting rights attached to all of the Shares held by Mr. Liang (either indirectly through his respective holding company(ies) or directly held by himself) immediately upon the said allotment, and since then Youth Success has been deemed to be interested in the Shares held by Mr. Liang (either indirectly through his respective holding company(ies) or directly held by himself) by virtue of the SFO.

The Board’s view on the Voting Agreements and Control Undertakings

The Control Undertakings, the Company’s undertaking with the Stock Exchange to enforce the Control Undertakings and the First Voting Agreement have remained effective and validly in force since the listing of the Company in 2015. The Company views it necessary to ensure ongoing compliance with the relevant undertakings.

The Control Undertakings and First Voting Agreement can only be terminated by Mr. Yang and Ms. Mou unilaterally and in their sole discretion. As at the Latest Practicable Date, the Company had not been informed of any intention of Mr. Yang and Ms. Mou to terminate the Control Undertakings and First Voting Agreement.

The Control Undertakings and Voting Agreements can consolidate the controlling shareholders’ interest and maintain their control in the Company. The Company believes that a stable controlling shareholding structure demonstrates to the public a long-term commitment of the controlling Shareholders to the Company and its success. In the event that the Control Undertakings and First Voting Agreement are terminated, the Company will no longer have any controlling shareholder, which could have adverse impact on the trading price of the Shares of the Company and undermine the investors’ confidence in the Company.

Based on the above, the Board believes that the existing arrangements in respect of the Voting Agreements and Control Undertakings are in the best interest of the Company and Shareholders as a whole.

2. ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

On 19 June 2023 (after trading hours of the Stock Exchange), the Company and the CB Subscriber entered into the CB Subscription Agreement, pursuant to which the CB Subscriber

– 17 –

LETTER FROM THE BOARD

has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue the Convertible Bonds in the principal amount of RMB9,000,000 (equivalent to HK$10,170,000).

The CB Subscription Agreement

Principal terms of the CB Subscription Agreement are summarised as follows:

Date: 19 June 2023 (after trading hours of the Stock Exchange) Parties: (a) The Company as the issuer; and (b) Mr. Nian Binbin (念彬彬) as the subscriber, an Independent Third Party.

CB Conditions Precedent

CB Completion is conditional upon the following conditions precedent (the “ CB Conditions Precedent ”) being fulfilled or waived by the CB Subscriber in writing (as the case may be):

(1) the Stock Exchange having granted (either unconditionally or subject only to conditions reasonable acceptable to both the Company and the CB Subscriber) the listing of, and permission to deal in, the Conversion Shares, and such approval not having been revoked prior to CB Completion;
(2) all Necessary Approvals under the GEM Listing Rules and other regulatory regime having been granted to and/or obtained by the Company, and the Necessary Approvals having remained valid and effective, and not being threatened with any revocation, withdrawal, cancellation or suspension at any time before CB Completion;
(3) the warranties made by the Company under the CB Subscription Agreement having remained true and accurate and not misleading in all material respects as at CB Completion; and
(4) no CB Material Adverse Effect having been occurred.

Other than CB Conditions Precedent referred to in paragraph (1) above which cannot be waived, the CB Subscriber may at any time before CB Completion waive any of other CB Conditions Precedent above by prior written notice to the Company. As at the Latest Practicable Date, none of the CB Conditions Precedent had been fulfilled or waived.

In the event that any of the CB Conditions Precedent above are not fulfilled or waived on or before 30 September 2023 or such later date as the parties of the CB Subscription Agreement may agree in writing, the CB Subscription Agreement and everything contained

– 18 –

LETTER FROM THE BOARD

thereof shall terminate and be null and void and of no further effect and neither of the parties thereto shall have any liability to any other party, save for any antecedent breach(es) of any obligation under the CB Subscription Agreement.

CB Completion

Subject to the fulfilment or waiver (as the case may be) of all CB Conditions Precedent and CB Subscriber’s full settlement of the Issue Price, CB Completion shall take place on the CB Completion Date. The Company shall issue the Convertible Bonds in their respective principal amounts to the CB Subscriber (or his nominee(s)) as the Bondholder(s) on the CB Completion Date.

Principal Terms of the Convertible Bonds

The principal terms of the Convertible Bonds are summarized below:

Issuer: The Company CB Subscriber: Mr. Nian Binbin (念彬彬), an Independent Third Party Principal RMB9,000,000 (equivalent to HK$10,170,000) amount: Payment: Payment of the Issue Price shall be settled by the CB Subscriber on or before CB Completion.

Interest rate: 2% per annum, which shall accrue on a daily basis from the Issue Date calculated on the basis of a 365-day year on the principal sum of the Convertible Bond for the time being outstanding and shall be paid on the Maturity Date.

Conversion The Conversion Price of HK$0.54 per Conversion Share Price: represents:

(i) a premium of approximately 107.69% over the closing price of HK$0.260 per Share as quoted on the Stock Exchange on the date of the CB Subscription Agreement;
(ii) a premium of approximately 108.49% over the average closing price of HK$0.259 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days of the Shares immediately prior to the date of the CB Subscription Agreement; and

– 19 –

LETTER FROM THE BOARD

(iii) a premium of approximately 116.52% over the average closing price of HK$0.2494 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days of the Shares immediately prior to the date of the CB Subscription Agreement.

The Conversion Price was determined after arm’s length negotiations between the Company and the CB Subscriber, taking into account the business development and future prospect of the Group and the audited consolidated net asset value attributable to the Shareholders of approximately HK$0.54 per Share as at 31 December 2022. The Directors (including the independent non-executive Directors) consider that the Conversion Price and the terms and conditions of the CB Subscription Agreement and the Convertible Bonds are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Conversion Price shall from time to time be subject to adjustment only upon occurrence of consolidation or sub-division of Shares (an “ Adjustment Event ”) in accordance with the provisions of the Convertible Bonds.

Following an Adjustment Event and before the effect of such event has been reflected in the trading price of Shares on the Stock Exchange, the Conversion Price shall be adjusted so that, after such adjustment and on conversion of the Convertible Bonds, the Bondholders shall be entitled to receive the same percentage of the issued share capital of the Company carrying the same proportion of votes exercisable at a general meeting of Shareholders and the same entitlement to participate in distributions of the Company, in each case as nearly as practicable, as would have been the case had no Adjustment Event occurred (and making such reduction or increase as is necessary to the premium arising on the issue and allotment of the Conversion Shares on conversion of the Convertible Bonds). The relevant adjustment shall be determined by the auditors of the Company for the time being. Every adjustment to the Conversion Price shall be certified in writing by the auditors (acting as an expert) unless otherwise agreed between the Company and the Majority Bondholder.

– 20 –

LETTER FROM THE BOARD

Conversion Shares:

Based on the Conversion Price of HK$0.54 per Conversion Share, a total of 18,833,333 Conversion Shares will be allotted and issued upon exercise of the Conversion Rights attaching to the Convertible Bonds in full, which represent approximately 5.05% of the existing issued share capital of the Company and approximately 4.81% of the issued share capital of the Company as enlarged by the allotment and issue of all Conversion Shares, assuming that there will be no changes in the issued share capital of the Company between the Latest Practicable Date and the date of issue of the Conversion Shares upon full conversion of the Convertible Bonds. The aggregate nominal value of the 18,833,333 Conversion Shares is HK$941,666.65.

Maturity Date: The date falling on the second (2nd) anniversary of the Issue Date.

Conversion Subject to and upon compliance with the conditions, each Rights: Bondholder shall have the right, at the sole option of such Bondholder, at any time during the Conversion Period to convert (in whole or in part (in multiples of RMB900,000)) the outstanding principal amount of the Convertible Bonds held by such Bondholder into fully-paid Shares, calculated for each conversion to be the greatest number of Shares, disregarding fractions, obtainable by dividing the aggregate principal amount of the Convertible Bonds to be converted, by the applicable Conversion Price in effect on the relevant date of the conversion.

The Bondholder shall not have the right to convert (in whole or in part) the outstanding principal amount of the Convertible Bonds held by such Bondholder into fully-paid Shares if the issue of the Conversion Shares following the exercise by the Bondholder of the Conversion Rights would result in (i) the Company not meeting the requirement under the GEM Listing Rules that not less than 25% (or such other percentage as may from time to time be specified in the GEM Listing Rules) of the Shares shall be held by the public immediately after the conversion; or (ii) the Bondholder and parties acting in concert with it (within the meaning of the Takeovers Code), taken together, directly or indirectly controlling or being interested in 30% or more of the entire issued voting share capital of the Company (or such other percentage as may from to time be specified in the Takeovers Code as being the level of triggering a mandatory general offer) as at the date of conversion and a mandatory general offer obligation will be triggered under the Takeovers Code.

– 21 –

LETTER FROM THE BOARD

Voting rights:

Bondholders shall not have any right to attend or vote in any general meeting of the Company.

Transferability: The Convertible Bonds shall be freely transferable.

Events of default:

Without prejudice to the other provisions of the CB Conditions, the occurrence of any of the following events (each, an “ Event of Default ”) and the giving of written notice by the Majority Bondholder, the principal moneys outstanding on any Convertible Bonds together with all interest accrued thereon up to and including the date of payment shall on the occurrence of any Event of Default (immediately upon such notice being given) become due and redeemable:

(a) if the Company fails to make a payment (whether of principal, premium or otherwise) in accordance with the conditions, and such default continues for a period of 20 (twenty) Business Days after the due date for such payment;
(b) if there is a default in the performance or observance by the Company of any covenant, undertaking, condition, obligation or provision set out in the Bond Instrument and on its part to be performed or observed (other than a payment obligation referred to in paragraph (a) above) and (except where such failure is not capable of remedy) such default continues for 20 (twenty) Business Days after written notice of such default has been given to the Company by a Bondholder (or, if earlier, the Company becoming aware of the failure to comply);
(c) any failure by the Company to deliver any Shares as and when the Shares are required to be delivered following conversion of the Convertible Bonds and such failure continues for more than twenty (20) Business Days, except such failure is not resulted from wilful default on the part of the Company or it is caused by temporary restriction imposed by the Stock Exchange;

– 22 –

LETTER FROM THE BOARD

(d) the Convertible Bonds or any CB Condition cease for any reason to be in full force and effect or are terminated or become invalid or unenforceable, or if there is any dispute by the Company regarding the validity or enforceability of the same, or if there is any purported termination or repudiation by the Company of the same, or if it becomes impossible or unlawful for the Company to perform any of its obligations under the Bond Instrument or (so far as is within the control or influence of the Company) for any Bondholder to exercise all or any of its rights, power and remedies under the Bond Instrument; or
(e) if the listing of, and permission to deal in, the Conversion Shares is revoked for any reason, except such failure is not resulted from wilful default on the part of the Company or it is caused by temporary restriction imposed by the Stock Exchange.
Application for No application will be made for the listing of the Convertible listing: Bonds on the Stock Exchange or any other stock or securities exchange. Application will be made by the Company for the listing of, and permission to deal in, the Conversion Shares.

Ranking: The Conversion Shares upon issue shall rank pari passu with all other Shares.

Information of the Parties

The CB Subscriber

The CB Subscriber is an individual investor who is a PRC resident. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the CB Subscriber is an Independent Third Party.

The Company and the Group

– 23 –

LETTER FROM THE BOARD

Reasons for the Issue of the Convertible Bonds and Use of Proceeds

The aggregate gross proceeds from the issue of the Convertible Bonds will be HK$10,170,000 (equivalent to RMB9,000,000) and the aggregate net proceeds from the issue of the Convertible Bonds, having deducted the professional fees and other expenses in connection with the issue of the Convertible Bond, are estimated to be approximately HK$9,502,170 (equivalent to RMB8,409,000). The net price per Conversion Share is estimated to be approximately HK$0.5045. The Company intends to apply the net proceeds from the issue of the Convertible Bonds in the following manner:

(i) approximately 70.51% of the net proceeds, or approximately HK$6,699,770 (equivalent to RMB5,929,000), will be used for mobile application development and operation; and
(ii) approximately 29.49% of the net proceeds, or approximately HK$2,802,400 (equivalent to RMB2,480,000), will be used for the general working capital of the Group.

The Directors consider that (i) the issuance of the Convertible Bonds provides an opportunity for the Company to raise additional funds for its operations and broaden the Company’s capital base for business development, and (ii) the issue of the Convertible Bonds is an appropriate mean of raising additional capital of the Company since it will not have an immediate dilution effect on the shareholding of the existing Shareholders.

The Directors further consider that the Transactions present an opportunity to raise additional capital for the Group’s mobile application development and operation and related services. Additional funding is needed by the Group as the Group entered into a letter of intent with an independent service provider in June 2023 in relation to the provision of marketing and promotional services to the Group’s live streaming e-commerce business. The total net proceeds from the ANL Share Subscription, the LW CB Subscription, the TYJ Share Subscription (as respectively defined in the paragraph headed “Equity Fund-Raising Activities of the Company During the Past Twelve Months” below) and the Transactions which are allocated for the Group’s mobile application development and operation and related services, amount to HK$26,223,967 (equivalent to RMB23,207,050). Of this amount, approximately HK$15,989,500 (equivalent to RMB14,150,000), representing approximately 60.97% of such amount, will be used to subscribe to promotion services that will enhance interaction with fans on the live streaming e-commerce channel; approximately HK$5,989,000 (equivalent to RMB5,300,000), representing approximately 22.84% of such amount, will be used to purchase the right to disseminate content via information networks; and approximately HK$4,245,467 (equivalent to RMB3,757,050), representing approximately 16.19% of such amount, will be used for research and development of mobile applications and its related fees. These services include sending gifts, cash coupons, platform-recommended traffic, commercial traffic purchases. The aim is to increase the Group’s live streaming e-commerce publicity on various online platforms by encouraging like, share, comment, follow, reward, and shopping activities.

– 24 –

LETTER FROM THE BOARD

The Subscription Price and Conversion Price were determined after arm’s length negotiations between the Company and each of the Share Subscriber and CB Subscriber. Since the Subscription Shares can be traded in the market immediately after the Share Subscription Completion, an investor generally only accepts subscription price which is close to the current trading price of the Shares. On the other hand, an investor for the Convertible Bonds is usually less sensitive to the current trading price of the Shares. Furthermore, the CB Subscriber will be entitled to receive interest amount of 2% interest per annum, and exercise its conversion rights during the Conversion Period up to the Maturity Date. Hence, the Company has been able to agree with the CB Subscriber to ascertain the Conversion Price at a higher price to reduce the dilution impact on the Shareholders as a whole. Although the current trading price-to-earnings ratio of the Company is relatively low which may not reflect the market value of the Company and the business development and future prospect of the Group, the Company was able to agree with the CB Subscriber to conclude the Conversion Price with reference to the Company’s audited consolidated net asset value attributable to the Shareholders as at 31 December 2022. As such, the Board considers that the difference in the basis to ascertain the Subscription Price and Conversion Price is fair and reasonable, which serves to appeal to different kinds of investors and to promptly secure funding for the Group.

In light of the foregoing, the Board (including the independent non-executive Directors) is of the view that and the terms and conditions of the CB Subscription Agreement and the Convertible Bonds (including the Conversion Price) are on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 25 –

LETTER FROM THE BOARD

Effect on the Shareholding Structure of the Company

The following table illustrates the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) for illustration purpose only, immediately after the allotment and issue of the Conversion Shares in full upon exercise of the Conversion Rights under the Convertible Bonds (on the assumptions that the Conversion Price being HK$0.54 and there is no further allotment of Shares from the Latest Practicable Date other than the Conversion Shares):

Name of shareholders Non-public shareholders: Youth Success (Notes 1, 3 and 5) Guang Rui (Note 1) Goldbless (Notes 1 and 2) Alpha Master (Note 1) Qiao Tian (Note 1) Mr. Liang (Note 3) Bondholder (Note 4) Sub-total Public Shareholders: Other public Shareholders Sub-total Total	As at the Latest Practicable Date Number of Shares Approximate percentage 81,378,000 21.82% 2,594,400 0.70% 76,500,000 20.51% 10,077,600 2.70% 5,418,000 1.45% 36,000,000 9.65% – – 211,968,000 56.83% 161,018,978 43.17% 161,018,978 43.17% 372,986,978 100.00%	Immediately upon full conversion of the Convertible Bonds Number of Shares Approximate percentage 81,378,000 20.77% 2,594,400 0.66% 76,500,000 19.52% 10,077,600 2.57% 5,418,000 1.38% 36,000,000 9.19% 18,833,333 4.81% 230,801,333 58.90% 161,018,978 41.10% 161,018,978 41.10% 397,820,311 100.00%	Immediately upon full conversion of the Convertible Bonds Number of Shares Approximate percentage 81,378,000 20.77% 2,594,400 0.66% 76,500,000 19.52% 10,077,600 2.57% 5,418,000 1.38% 36,000,000 9.19% 18,833,333 4.81% 230,801,333 58.90% 161,018,978 41.10% 161,018,978 41.10% 397,820,311 100.00%
			58.90%
			41.10%
			41.10%
			100.00%

Notes:

As at the Latest Practicable Date, Youth Success and Guang Rui owned 81,378,000 Shares and 2,594,400 Shares respectively, representing 21.82% and 0.70% of the issued share capital of the Company. The issued share capital of Youth Success was legally and beneficially owned as to 83.54% by Guang Rui. Under the SFO, Guang Rui is deemed to be interested in all the Shares registered in the name of Youth Success. The entire issued share capital of Guang Rui is legally and beneficially owned as to 60% by Mr. Yang and 40% by Ms. Mou. Ms. Mou is the spouse of Mr. Yang therefore under the SFO she is deemed to be interested in all the Shares in which Mr. Yang is deemed to be interested, and vice versa. By virtue of the First Voting Agreement, Youth Success is deemed to be interested in the Shares held by Alpha Master, Qiao Tian and Goldbless in aggregate by virtue of the SFO. For details of the First Voting Agreement, please refer to the paragraph headed “First Voting Agreement” above.

– 26 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the entire issued share capital of Goldbless was owned by Mr. Wang Yong, the non-executive Director. Under the SFO, Mr. Wang Yong is deemed to be interested in all the Shares registered in the name of Goldbless.
By virtue of the Second Voting Agreement, Mr. Liang irrevocably agrees to delegate and authorize Youth Success to exercise voting rights attached to all of the Shares held by him, and Youth Success is deemed to be interested in the Shares held by Mr. Liang in aggregate by virtue of the SFO. For details of the Second Voting Agreement, please refer to the paragraph headed “Second Voting Agreement” above.
Pursuant to the CB Subscription Agreement, each Bondholder shall, prior to the conversion of the Convertible Bonds, execute and deliver to the Company a Voting Agreement (for the purpose of ensuring compliance with the Control Undertakings), whereby Youth Success shall be entitled to exercise voting rights attached to all of the Shares held by the Bondholder (either indirectly through the Holdco or directly held by himself/ herself/itself). As such, Youth Success is deemed to be interested in the Shares held by the Holdco or the Bondholder by virtue of the SFO.
By virtue of the First Voting Agreement and Second Voting Agreement, Youth Success shall be entitled to exercise control over the voting rights attaching to an aggregate of 209,373,600 Shares, representing approximately 56.13% of the issued share capital of the Company as at the Latest Practicable Date.

3. EQUITY FUND-RAISING ACTIVITIES OF THE COMPANY DURING THE PAST TWELVE MONTHS

The following are details of the equity fund-raising activities of the Company (the “ Fundraisings ”) conducted in the past twelve months immediately preceding the Latest Practicable Date. As at the Latest Practicable Date, none of the following transactions contemplated under the Fundraisings had been completed.

Date of		Net proceeds expected
announcement	Fund raising activity	to be raised	Intended use of the net proceeds
19 June 2023	Issue an aggregate of	HK$5,244,895 (equivalent	(i)	approximately 70.00% of the
	25,187,383 new Shares	to RMB4,641,500)		net proceeds, or approximately
	to TAN YEW JING			HK$3,671,427 (equivalent to
	(“TYJ Share			RMB3,249,050) to mobile
	Subscription”) (Note 1)			application development and
				operation and related services;
				and
			(ii)	approximately 30.00% of the
				net proceeds, or approximately
				HK$1,573,469 (equivalent to
				RMB1,392,450), will be used
				for the general working capital
				of the Group.

Note:

(1) The new Shares are to be issued under the general mandate. For details, please refer to the announcement of the Company titled “Subscription of New Shares under General Mandate” and dated 19 June 2023. As at the Latest Practicable Date, the conditions precedent had not been fully fulfilled because the Company and its PRC legal advisers were, for the purpose of the transaction, in the process of preparing the necessary materials for filing with the China Securities Regulatory Commission in accordance the relevant laws and regulations of the PRC. As a result, completion had not taken place as at the Latest Practicable Date.

– 27 –

LETTER FROM THE BOARD

Date of		Net proceeds expected
announcement	Fund raising activity	to be raised	Intended use of the net proceeds
22 May 2023	Issue an aggregate of	HK$5,681,640 (equivalent	(i)	approximately	70.17% of the
	30,362,150 new Shares	to RMB5,028,000)		net proceeds, or approximately
	to ALPINE NOVA			HK$3,986,640	(equivalent to
	LIMITED			RMB3,528,000) to mobile
	(高星有限公司)			application development and
	(“ANL Share			operation and	related services;
	Subscription”)			and
			(ii)	approximately	29.83% of the
				net proceeds, or approximately
				HK$1,695,000	(equivalent to
				RMB1,500,000), will be used
				for the general	working capital
				of the Group.
22 May 2023	Issue the convertible	HK$17,630,260	(i)	approximately	38.45% of the
	bonds in the principal	(equivalent to		net proceeds, or approximately
	amount of	RMB15,602,000)		HK$6,780,000	(equivalent to
	RMB17,500,000 to			RMB6,000,000), will be used
	Ms. Li Wen (李雯)			for serial	program/film
	(“LW CB			production and	related services
	Subscription”)			and film rights	investment;
			(ii)	approximately	31.55% of the
				net proceeds, or approximately
				HK$5,561,860	(equivalent to
				RMB4,922,000), will be used
				for mobile	application
				development	and operation;
				and
			(iii)	approximately	30.00% of the
				net proceeds, or approximately
				HK$5,288,400	(equivalent to
				RMB4,680,000), will be used
				for the general	working capital
				of the Group.

Save as disclosed above, the Company has not conducted any other Fundraisings during the twelve months immediately preceding the Latest Practicable Date.

– 28 –

LETTER FROM THE BOARD

4. SHAREHOLDING STRUCTURE OF THE COMPANY UPON SHARE SUBSCRIPTION COMPLETION AND FULL CONVERSION OF THE CONVERTIBLE BONDS

The following table illustrates the shareholding structure of the Company upon Share Subscription Completion and the allotment and issue of the Conversion Shares in full upon exercise of the Conversion Rights under the Convertible Bonds (on the assumptions that the Conversion Price being HK$0.54 and there is no other allotment of Shares from the Latest Practicable Date other than the Subscription Shares and Conversion Shares):

Name of shareholders Non-public shareholders: Youth Success Guang Rui Goldbless Alpha Master Qiao Tian Mr. Liang Share Subscriber (or its nominee(s)) Bondholder Sub-total Public Shareholders: Other public Shareholders Sub-total Total	Upon Share Subscription Completion and full conversion of the Convertible Bonds Number of Shares Approximate percentage 81,378,000 18.64% 2,594,400 0.59% 76,500,000 17.53% 10,077,600 2.31% 5,418,000 1.24% 36,000,000 8.25% 44,671,963 10.23% 18,333,333 4.31% 275,473,296 63.11% 161,018,978 36.89% 161,018,978 36.89% 436,492,274 100.00%	Upon Share Subscription Completion and full conversion of the Convertible Bonds Number of Shares Approximate percentage 81,378,000 18.64% 2,594,400 0.59% 76,500,000 17.53% 10,077,600 2.31% 5,418,000 1.24% 36,000,000 8.25% 44,671,963 10.23% 18,333,333 4.31% 275,473,296 63.11% 161,018,978 36.89% 161,018,978 36.89% 436,492,274 100.00%
		63.11%
		36.89%
		36.89%
		100.00%

For illustrative purposes only, the following table shows the shareholding structure of the Company (a) as at the Latest Practicable Date; (b) upon completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription; (c) upon (i) completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription and (ii) completion of the TYJ Share Subscription; and (d) upon (i) completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription, (ii) completion of the TYJ Share Subscription and (iii) Share Subscription Completion and full conversion of the Convertible Bonds (on the assumptions that

– 29 –

LETTER FROM THE BOARD

the Conversion Price being HK$0.54 and there is no other allotment of Shares from the Latest Practicable Date):

Name of shareholders Non-public shareholders: Youth Success Guang Rui Goldbless Alpha Master Qiao Tian Mr. Liang ALPINE NOVA LIMITED (or its nominee(s)) Ms. Li Wen TAN KOON AIK (or its nominee(s)) Mr. Nian Binbin Sub-total Public Shareholders: TAN YEW JING Other public Shareholders Sub-total Total	As at the Latest Practicable Date Number of Shares Approximate percentage 81,378,000 21.82% 2,594,400 0.70% 76,500,000 20.51% 10,077,600 2.70% 5,418,000 1.45% 36,000,000 9.65% – – – – – – – – 211,968,000 56.83% – – 161,018,978 43.17% 161,018,978 43.17% 372,986,978 100.00%	Upon completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription Number of Shares Approximate percentage 81,378,000 18.50% 2,594,400 0.59% 76,500,000 17.39% 10,077,600 2.29% 5,418,000 1.23% 36,000,000 8.18% 30,362,150 6.90% 36,620,370 8.32% – – – – 278,950,520 63.40% – – 161,018,978 36.60% 161,018,978 36.60% 439,969,498 100.00%	Upon (i) completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription and (ii) completion of the TYJ Share Subscription Number of Shares Approximate percentage 81,378,000 17.49% 2,594,400 0.56% 76,500,000 16.45% 10,077,600 2.17% 5,418,000 1.16% 36,000,000 7.74% 30,362,150 6.53% 36,620,370 7.87% – – – – 278,950,520 59.97% 25,187,383 5.41% 161,018,978 34.62% 186,206,361 40.03% 465,156,881 100.00%	Upon (i) completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription, (ii) completion of the TYJ Share Subscription and (iii) Share Subscription Completion and full conversion of the Convertible Bonds Number of Shares Approximate percentage 81,378,000 15.39% 2,594,400 0.49% 76,500,000 14.47% 10,077,600 1.91% 5,418,000 1.02% 36,000,000 6.81% 30,362,150 5.74% 36,620,370 6.93% 44,671,963 8.45% 18,833,333 3.56% 342,455,816 64.78% 25,187,383 4.76% 161,018,978 30.46% 186,206,361 35.22% 528,662,177 100.00%	Upon (i) completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription, (ii) completion of the TYJ Share Subscription and (iii) Share Subscription Completion and full conversion of the Convertible Bonds Number of Shares Approximate percentage 81,378,000 15.39% 2,594,400 0.49% 76,500,000 14.47% 10,077,600 1.91% 5,418,000 1.02% 36,000,000 6.81% 30,362,150 5.74% 36,620,370 6.93% 44,671,963 8.45% 18,833,333 3.56% 342,455,816 64.78% 25,187,383 4.76% 161,018,978 30.46% 186,206,361 35.22% 528,662,177 100.00%
					64.78%
					4.76% 30.46%
					35.22%
					100.00%

– 30 –

LETTER FROM THE BOARD

5. SPECIFIC MANDATE

The Subscription Shares and Conversion Shares will be allotted and issued pursuant to the Specific Mandate proposed to be sought from the Independent Shareholders at the EGM.

6. LISTING RULES IMPLICATIONS

The Share Subscriber is required to enter into a Voting Agreement with Youth Success, Mr. Yang and Ms. Mou on the Share Subscription Completion Date under the Share Subscription Agreement, while the CB Subscriber is required to enter into a Voting Agreement with Youth Success, Mr. Yang and Ms. Mou prior to the conversion of the Convertible Bonds under the CB Subscription Agreement. By entering into the Voting Agreements, Youth Success shall be entitled to exercise voting rights attached to all the Shares held by the Share Subscriber and the Bondholder. As Youth Success, Mr. Yang and Ms. Mou are the controlling shareholders of the Company and are therefore connected persons of the Company, the Transactions constitute connected transactions of the Company and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

Based on the following: (i) Mr. Philip Jian Yang, the executive Director and chairman of the Company, is the son of Mr. Yang and Ms. Mou, and is therefore considered to have an interest in the Transactions; (ii) by virtue of the First Voting Agreement entered into by, among others, Mr. Yang, Ms. Mou, Youth Success, Mr. Wang Yong and Goldbless, Mr. Wang Yong, the non-executive Director, is considered to have an interest in the Transactions; and (iii) as at the Latest Practicable Date, Mr. Yang Shiyuan, the non-executive Director, beneficially owned approximately 1.48% of the issued share capital of Youth Success and is therefore considered to have an interest in the Transactions, each of Mr. Philip Jian Yang, Mr. Wang Yong and Mr. Yang Shiyuan had abstained from voting on the Board resolutions approving the Transactions. Save as disclosed above, none of the Directors had any interest in the Transactions and abstained from voting on the Board resolutions approving the Transactions.

7. EGM

A notice convening the EGM to be held at 24/F, Admiralty Centre I, 18 Harcourt Road, Admiralty, Hong Kong on Friday, 11 August 2023, at 2:00 p.m. is set out on pages 75 to 77 of this circular. At the EGM, ordinary resolutions will be proposed to the Shareholders to consider and, if thought fit, approve the Transactions (including the grant of the Specific Mandate).

Whether or not you are able to attend the EGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same by 2:00 p.m. (Hong Kong time) on Wednesday, 9 August 2023 or not later than 48 hours before the time appointed for any adjourned meeting of the EGM to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and in such event, the form of proxy previously submitted shall be deemed to be revoked. A form of proxy for use at the EGM is enclosed with this circular.

– 31 –

LETTER FROM THE BOARD

At the EGM, any Shareholder with a material interest in the Transactions (including the grant of the Specific Mandate) as set out in the ordinary resolutions is required to abstain from voting on the relevant resolutions at the EGM.

The Concert Group, being interested in the Transactions, shall abstain from voting on the resolution(s) of the Company approving the Transactions (including the grant of the Specific Mandate). To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, save as disclosed above, no other Shareholder has a material interest in the Transactions (including the grant of the Specific Mandate) and shall be required to abstain from voting at the EGM in respect of the resolutions to approve the Transactions (including the grant of the Specific Mandate). As at the Latest Practicable Date, the Concert Group was interested in an aggregate of 211,968,000 Shares, representing approximately 56.83% of the issued share capital of the Company.

8. INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Ms. Fu Yuehong, Mr. Yau Yan Yuen and Mr. Tan Song Kwang, being all the independent non-executive Directors, has been formed to advise the Independent Shareholders as to the fairness and the reasonableness of the terms of the Transactions and as to how to vote at the EGM. Jun Hui International has been appointed as Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder. The text of the letter from the Independent Board Committee is set out on pages 34 to 35 of this circular while the text of the letter from Jun Hui International containing its advice is set out on pages 36 to 67 of this circular.

9. CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Tuesday, 8 August 2023 to Friday, 11 August 2023, both dates inclusive, during which period no transfer of shares will be registered, for the purpose of ascertaining Shareholders’ entitlement to attend and vote at the EGM. In order to be eligible to attend and vote at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged for registration with the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not later than 4:30 p.m. on Monday, 7 August 2023.

– 32 –

LETTER FROM THE BOARD

10. RECOMMENDATION

You are advised to read carefully the letter from the Independent Board Committee of this circular. The Independent Board Committee, having taken into account the advice and recommendation of the Independent Financial Adviser, consider that the terms of the Transactions (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned. While the Transactions (including the grant of the Specific Mandate) are not conducted in the ordinary and usual course of business of the Group, they are in the interests of the Company and the Shareholders as a whole, and accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM to approve, among others, the Transactions (including the grant of the Specific Mandate).

The Board (including members of the Independent Board Committee) considers that the terms of the Transactions (including the grant of the Specific Mandate) are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole and recommends the Shareholders to vote in favour of the relevant resolution to be proposed at the EGM.

11. ADDITIONAL INFORMATION

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

WARNING OF THE RISKS OF DEALING IN THE SHARES

As the Transactions are subject to the fulfillment or waiver (as the case may be) of the certain conditions precedent under the Share Subscription Agreement and CB Subscription Agreement respectively, holders of securities of the Company and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

Yours faithfully, By order of the Board Creative China Holdings Limited Philip Jian Yang

Chairman and Executive Director

For identification purposes only

– 33 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation from the Independent Board Committee to the Shareholders in relation to the Transactions prepared for the purpose of incorporation in this circular.

==> picture [20 x 23] intentionally omitted <==

==> picture [84 x 37] intentionally omitted <==

Creative China Holdings Limited 中國創意控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock code: 8368)

24 July 2023

To the Shareholders,

Dear Sir or Madam,

CONNECTED TRANSACTIONS IN RELATION TO (I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; AND (III) NOTICE OF EXTRAORDINARY GENERAL MEETING

We refer to the circular dated 24 July 2023 (the “ Circular ”) of the Company of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context requires otherwise.

We have been appointed by the Board as members to form the Independent Board Committee and to advise the Independent Shareholders as to whether, in our opinion, the Transactions (including the grant of the Specific Mandate) are on normal commercial terms which are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

Jun Hui International has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in these respects. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 36 to 67 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 8 to 33 of the Circular and the additional information set out in the appendix to the Circular.

– 34 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RECOMMENDATION

Having considered the terms and conditions of the Transactions (including the grant of the Specific Mandate) and the principal factors and reasons considered by, and the advice and recommendation of the Independent Financial Adviser, we concur with its views and consider that the terms of the Transactions (including the grant of the Specific Mandate) are on normal commercial terms although it is not conducted in the ordinary and usual course of business of the Company, and that the Transactions (including the grant of the Specific Mandate) are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution(s) to be proposed at the EGM to approve the Transactions (including the grant of the Specific Mandate).

Yours faithfully,

For and on behalf of the Independent Board Committee of Creative China Holdings Limited

Mr. Yau Yan Yuen, Mr. Tan Song Kwang and Ms. Fu Yuehong Independent Non-executive Directors

– 35 –

LETTER FROM JUN HUI INTERNATIONAL

The following is the text of the letter of advice from Jun Hui International Finance Limited, the Independent Financial Adviser, to the Independent Board Committee and the Independent Shareholders in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder, which has been prepared for the purpose of inclusion in this circular.

Jun Hui International Finance Limited Unit 1406, Office Plus 93–103 Wing Lok Street Sheung Wan, Hong Kong

24 July 2023

To: the Independent Board Committee and the Independent Shareholders of Creative China Holdings Limited

Dear Sir or Madam,

CONNECTED TRANSACTIONS IN RELATION TO

(I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; AND (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company dated 24 July 2023 (the “ Circular ”) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

Connected transaction in relation to subscription of new Shares under Specific Mandate

Reference is made to the announcement of the Company dated 19 June 2023 in relation to the Share Subscription. On 19 June 2023 (after trading hours of the Stock Exchange), the Company and the Share Subscriber entered into the Share Subscription Agreement, pursuant to which the Share Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue, 44,671,963 Subscription Shares at a subscription price of HK$0.214 per Subscription Share.

– 36 –

LETTER FROM JUN HUI INTERNATIONAL

Connected transaction in relation to issue of the Convertible Bonds under Specific Mandate

Reference is made to the announcement of the Company dated 19 June 2023 in relation to the issue of the Convertible Bonds. On 19 June 2023 (after trading hours of the Stock Exchange), the Company and the CB Subscriber entered into the CB Subscription Agreement, pursuant to which the CB Subscriber has conditionally agreed to subscribe for, and the Company has conditionally agreed to issue the Convertible Bonds in the principal amount of RMB9,000,000 (equivalent to HK$10,170,000).

Referring to the Letter from the Board, the Share Subscriber is required to enter into a Voting Agreement with Youth Success, Mr. Yang and Ms. Mou on the Share Subscription Completion Date under the Share Subscription Agreement, while the CB Subscriber is required to enter into a Voting Agreement with Youth Success, Mr. Yang and Ms. Mou prior to the conversion of the Convertible Bonds under the CB Subscription Agreement. By entering into the Voting Agreements, Youth Success shall be entitled to exercise voting rights attached to all the Shares held by the Share Subscriber and the Bondholder. As Youth Success, Mr. Yang and Ms. Mou are the controlling shareholders of the Company and are therefore connected persons of the Company, the entering into of transactions including the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder constitute connected transactions of the Company and are subject to the reporting, announcement and the Independent Shareholders’ approval requirements under Chapter 20 of the GEM Listing Rules.

As stated in the Letter from the Board, the Concert Group, being interested in the Share Subscription Agreement, the CB Subscription Agreement and the transactions contemplated thereunder, shall abstain from voting on the resolution(s) of the Company approving the said transactions (including the grant of the Specific Mandate). To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, save as disclosed above, no other Shareholder has a material interest in the said transactions (including the grant of the Specific Mandate) and shall be required to abstain from voting at the EGM in respect of the resolutions to approve the said transactions (including the grant of the Specific Mandate). As at the Latest Practicable Date, the Concert Group was interested in an aggregate of 211,968,000 Shares, representing approximately 56.83% of the issued share capital of the Company.

The Independent Board Committee comprising all independent non-executive Directors, namely Ms. Fu Yuehong, Mr. Yau Yan Yuen and Mr. Tan Song Kwang, has been formed to advise the Independent Shareholders as to (i) the fairness and reasonableness of the terms of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder; and (ii) how to vote at the EGM, after taking into account the factors and reasons considered by the Independent Financial Adviser and its conclusion and advice.

– 37 –

LETTER FROM JUN HUI INTERNATIONAL

In this connection, we, Jun Hui International, have been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder. We do not, by this letter, warrant the merits of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder, other than to form an opinion, for the purpose of the GEM Listing Rules. Within the two years prior to the Latest Practicable Date, we were engaged as an independent financial adviser to the then independent board committee and independent shareholders of the Company with respect to connected transactions in relation to (I) subscription of new shares under specific mandate; and (II) issue of convertible bonds under specific mandate, details of which are set out in the circular of the Company dated 27 June 2023. Other than that, we did not have any relationships with, or have any interests in the Company, the Share Subscriber, the CB Subscriber or any other parties that could reasonably be regarded as relevant to our independence. Apart from normal professional fees payable to us for the aforesaid appointment and this appointment, no arrangement exists whereby we will receive any fees or benefits from any party abovementioned. Accordingly, we consider that we are independent pursuant to Rule 17.96 of the GEM Listing Rules and are eligible to give independent advice in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder.

BASIS OF OUR OPINION

In formulating our opinion and recommendation to the Independent Board Committee and the Independent Shareholders, we have relied on the accuracy of the information, opinions and representations contained or referred to in the Circular (or otherwise provided to us by the Directors and the management of the Group (the “ Management ”)), and have assumed that all information, opinions and representations contained or referred to in the Circular (or otherwise provided to us by the Directors and the Management) were true, accurate and complete in all respects at the time when they were made and up to the date of this letter. We have also assumed that all statements of belief, opinions and intention made by the Directors in the Circular (or otherwise provided to us by the Directors and the Management) are reasonably made after due and careful enquiry. We have no reason to doubt that any relevant information has been withheld or omitted, nor are we aware of any fact or circumstance which would render the information, opinions and representations provided or made to us untrue, inaccurate or misleading.

– 38 –

LETTER FROM JUN HUI INTERNATIONAL

The Directors jointly and severally accept full responsibility for the accuracy of the information contained or referred to in the Circular (or otherwise provided to us by the Directors and the Management) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions and representations expressed in the Circular (or otherwise provided to us by the Directors and the Management) have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading. We consider that we have received sufficient information to enable us to reach an informed view, and have performed all the necessary steps as required under Rule 17.92 of the GEM Listing Rules to justify our reliance on the information, opinions and representations provided or made to us so as to form a reasonable basis for our opinion and recommendation, which include, among other things:

(a) reviewed the announcement of the Company in relation to the Share Subscription and the issue of the Convertible Bonds, the Letter from the Board, the annual reports of the Company for the years ended 31 December 2021 and 2022 (“ Annual Report 2021 ” and “ Annual Report 2022 ” respectively) and its first quarterly report for the three months ended 31 March 2023 (“ First Quarterly Report 2023 ”);
(b) reviewed the information and documents in relation to the Share Subscription Agreement and the CB Subscription Agreement;
(c) conducted comparable researches to analyse the major terms of the Share Subscription Agreement and the CB Subscription Agreement; and
(d) discussed with the Directors and the Management regarding, among other things, the business and financial conditions of the Group, the reasons for entering into the Share Subscription Agreement and the CB Subscription Agreement, and the basis of the major terms of the Share Subscription Agreement and the CB Subscription Agreement.

We have not, however, for the purpose of this exercise, conducted any independent detailed verification or audit into the businesses, affairs, development plans or future prospects of the Group. Our opinion was necessarily based on the legal, financial, economic, market and other conditions in effect, and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

– 39 –

LETTER FROM JUN HUI INTERNATIONAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in respect of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder, we have considered the following principal factors and reasons:

I. Background and financial information of the Group

	For the year	For the year		For the three months	For the three months	For the three months
	ended 31 December			ended 31	March
	2021		2022	2022		2023
	RMB’000	RMB’000		RMB’000		RMB’000
	(audited)	(audited)		(unaudited)	(unaudited)
Revenue	59,307	152,688		778		448
Among which, segment
revenue of:
– Mobile application
development and
operation and related
services	13,632		6,738	–		111
Finance costs	(138)		(458)	(27)		(207)
Profit/(loss) for the
year/period	23,496		48,997	(3,850)		(6,693)
Net cash used in
operating activities	(9,429)	(18,538)		N/A_(Note)_		N/A_(Note)_

– 40 –

LETTER FROM JUN HUI INTERNATIONAL

	As at 31	December
	2021	2022
	RMB’000	RMB’000
	(audited)	(audited)
Bank balances and cash	6,126	24,044
Total current assets	236,297	329,567
Bank borrowings	–	26,000
Total current liabilities	148,977	161,564
Net current assets	87,320	168,003
Net assets	95,508	177,717

Source: Annual Report 2021, Annual Report 2022 and First Quarterly Report 2023 published by the Company on the website of the Stock Exchange

Note: Information not available in First Quarterly Report 2023.

(i) Financial results for the year ended 31 December 2022 compared with the year ended 31 December 2021

For the year ended 31 December 2022, the Group recorded revenue of approximately RMB152.7 million, representing a year-on-year increase of approximately 157.5%. As disclosed in Annual Report 2022, the increase in revenue was mainly due to sales of script copyrights (including serial programs, movies and variety show), licensing of broadcasting rights of serial programs and film rights investment. During the same year, the Group’s revenue generated from mobile application development and operation and related services was approximately RMB6.7 million, which was contributed by its live streaming e-commerce. Comparing to the segment revenue of approximately RMB13.6 million for the year ended 31 December 2021, the decrease in segment revenue for the year ended 31 December 2022 was mainly due to more business focus and segment resources placed by the Group to live streaming e-commerce from development of customised mobile application during the year and therefore no relevant revenue was recorded on the sale of mobile application (whilst the sale was approximately RMB9.1 million to the Group for the year ended 31 December 2021), as advised by the Directors. For the year ended 31 December 2022, the Group’s net profit amounted to approximately RMB49.0 million, comparing to that of approximately RMB23.5 million for the year ended 31 December 2021. For the years ended 31 December 2021 and 2022, the Group’s finance costs were approximately RMB138,000 and RMB458,000, respectively. For the same years, the Group’s net cash used in operating activities was approximately RMB9.4 million and RMB18.5 million, respectively.

– 41 –

LETTER FROM JUN HUI INTERNATIONAL

The Group’s total current assets (comprising mainly trade and other receivables, bank balances and cash and serial program rights) increased from approximately RMB236.3 million as at 31 December 2021 to approximately RMB329.6 million as at 31 December 2022. Its total current liabilities were approximately RMB161.6 million as at 31 December 2022 (comprising mainly other payables and accruals, amounts due to shareholders and bank borrowings), as compared to that of approximately RMB149.0 million as at 31 December 2021. As at 31 December 2022, the Group had net assets of approximately RMB177.7 million, among which, its bank balances and cash were approximately RMB24.0 million and its bank borrowings (which are repayable within one year) were RMB26.0 million as at the same date.

(ii) Financial results for the three months ended 31 March 2023 compared with the three months ended 31 March 2022

For the three months ended 31 March 2022 and 2023, the Group recorded revenue of approximately RMB0.8 million and RMB0.4 million, respectively. As disclosed in First Quarterly Report 2023, the decrease in revenue for the three months ended 31 March 2023 was mainly due to no revenue from serial program/film production and related services and film rights investment segment and the ongoing artist endorsement project has not yet recognised as revenue during the period. During the three months ended 31 March 2022 and 2023, the Group’s revenue generated from mobile application development and operation and related services was nil and approximately RMB111,000, respectively. For the three months ended 31 March 2023, the Group’s net loss amounted to approximately RMB6.7 million. For the three months ended 31 March 2022 and 2023, the Group’s finance costs were approximately RMB27,000 and RMB207,000, respectively.

– 42 –

LETTER FROM JUN HUI INTERNATIONAL

II. Historical price and trading performance of the Shares

(i) Share prices

The chart below shows the daily closing prices of the Shares as quoted on the Stock Exchange from 20 June 2022 to 19 June 2023 (the “ Review Period ”):

HK$ per Share

==> picture [403 x 230] intentionally omitted <==

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

0.35
0.3
0.25 Closing prices
of the Shares
0.2
0.15
0.1
0.05
0
Source: the website of the Stock Exchange
2022/06/20 2022/06/30 2022/07/13 2022/07/25 2022/08/04 2022/08/16 2022/08/26 2022/09/07 2022/09/20 2022/09/30 2022/10/13 2022/10/25 2022/11/04 2022/11/16 2022/11/28 2022/12/08 2022/12/20 2023/01/04 2023/01/16 2023/01/31 2023/02/10 2023/02/22 2023/03/06 2023/03/16 2023/03/28 2023/04/12 2023/04/24 2023/05/05 2023/05/17 2023/05/30 2023/06/09 2023/06/19
----- End of picture text -----

During the Review Period, the closing prices of the Shares were between a low of HK$0.178 per Share on 9 May 2023 and a high of HK$0.320 per Share on 15 June 2023, with an average closing price of approximately HK$0.212 per Share.

– 43 –

LETTER FROM JUN HUI INTERNATIONAL

(ii) Trading volumes

Set out below is the average daily trading volume of the Shares per relevant month/period, and the respective percentage of the average daily trading volume of the Shares to the total number of issued Shares as at the end of relevant month/period, in the Review Period:

					Percentage	Percentage
					of average
						daily
						trading
					volume of
					total issued
				Average	Shares as at
	Total			daily	the end of
	trading	Number of		trading	relevant
	volume of	trading		volume of		month/
Year/Month	the Shares		days	the Shares		period
2022
June (from 20 June
2022)	4,000		9	444		0.000%
July	60,200		20	3,010		0.001%
August	24,000		23	1,043		0.000%
September	1,295,400		21	61,686		0.017%
October	100,200		20	5,010		0.001%
November	78,000		22	3,545		0.001%
December	153,800		20	7,690		0.002%
2023
January	230,600		18	12,811		0.003%
February	733,000		20	36,650		0.010%
March	915,000		23	39,783		0.011%
April	431,000		17	25,353		0.007%
May	613,200		20	30,660		0.008%
June (to 19 June
2023)	984,000		13	75,692		0.020%
Maximum	1,295,400		23	75,692		0.020%
Minimum	4,000		9	444		0.000%
Mean	432,492		19	23,337		0.006%

Source: the website of the Stock Exchange

– 44 –

LETTER FROM JUN HUI INTERNATIONAL

It is noted that the average daily trading volume of the Shares per relevant month/period accounted for only a small portion of the total number of issued Shares as at the end of the relevant month/period, which ranges from approximately 0.000% to 0.020% during the Review Period.

III. The Share Subscription Agreement

(i) Information of the Share Subscriber

As stated in the Letter from the Board, the Share Subscriber is an individual investor who is a Malaysian resident. As confirmed by the Directors, the Share Subscriber is an Independent Third Party.

(ii) Reasons for entering into of the Share Subscription Agreement

As illustrated in the section headed “Background and financial information of the Group” above in this letter, for the year ended 31 December 2022, the Group’s revenue from mobile application development and operation and related services amounted to approximately RMB6.7 million which was attributable to its live streaming e-commerce. As advised by the Directors, the Group has diversified its mobile application development and operation and related services business to live streaming e-commerce since the second quarter of 2022 and has been placing more business focus and segment resources to live streaming e-commerce. In addition, the Group is optimistic about the prospects of live streaming e-commerce in view of the rising mobile internet penetration and the growing popularity of live streaming in recent years, and expects live streaming e-commerce to have a growing market demand and be one of the revenue drivers of the Group. We note from the 48th Statistical Report on China’s Internet Development published by China Internet Network Information Centre, a platform operated by Ministry of Industry and Information Technology of the PRC, in August 2021 that, the user size of live

– 45 –

LETTER FROM JUN HUI INTERNATIONAL

streaming e-commerce in the PRC reached approximately 384 million as of June 2021, representing a year-on-year increase of approximately 75 million. We consider such historical growth could to a certain extent indicate a potential market demand for live streaming e-commerce in the PRC, and based on the Directors’ representations above, we consider that the proposed use of proceeds from the Share Subscription is in line with the principal business and strategy of the Group.

As further advised by the Directors, the additional fund raised under the Share Subscription could further support the Group in the mobile application development and operation business, among others, the live streaming e-commerce. We are furnished by the Company with a letter of intent entered into by the Group with an independent service provider in June 2023 (the “ Letter of Intent ”) in relation to the provision of marketing and promotional services to the Group’s live streaming e-commerce business, which demonstrates the funding needs of the Group. We agree with the Directors that the fund raised under the Share Subscription could serve for its business need.

The Share Subscription could improve the Group’s liquidity. As referred to the section headed “Financial effects of the Share Subscription Agreement” below in this letter, upon Share Subscription Completion, it is expected that both the net assets and bank balances and cash of the Group will increase by approximately RMB7.9 million, being the estimated aggregate net proceeds of the Share Subscription.

In addition, we are given to understand from the Directors that they considered raising funds by way of allotment and issue of the Subscription Shares shall enable the Company to obtain funds at a lower cost, as compared to other alternative fund raising methods since (i) bank borrowings may involve higher time cost due to lengthy due diligence and negotiations with commercial banks; and (ii) rights issue or open offer will involve additional costs such as underwriting fees as compared to the equity financing by way of allotment and issue of new Shares. We agree with the Directors that the allotment and issue of new Shares shall be an appropriate mean of raising additional capital for the Company in view of the lower cost involved.

Having considered the aforesaid reasons, including (i) the proposed use of proceeds from the Share Subscription is in line with the principal business and strategy of the Group as well as the potential market demand for live streaming e-commerce; (ii) the fund raised under the Share Subscription could be utilised to support the Group’s mobile application development and operation business; (iii) the Share Subscription could improve the Group’s liquidity; (iv) the Share Subscription could enlarge the shareholders and capital base of the Company as considered by the Directors; and (v) the allotment and issue of new Shares is considered as an appropriate mean of raising additional capital for the Company in view of the lower cost involved, we agree with the Directors that the entering into of the Share Subscription Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

– 46 –

LETTER FROM JUN HUI INTERNATIONAL

(iii) Principal terms of the Share Subscription Agreement

As set out in the Letter from the Board, the principal terms of the Share Subscription Agreement are summarised as follows:

Date: 19 June 2023 (after trading hours of the Stock Exchange) Parties: The Company, as the issuer; and the Share Subscriber, an Independent Third Party Subscription Shares: A total of 44,671,963 Shares, representing approximately 11.98% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 10.70% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares (assuming there are no other changes in the share capital of the Company between the Latest Practicable Date and the Share Subscription Completion Date). The aggregate nominal value of the 44,671,963 Subscription Shares is HK$2,233,598.15. Total Subscription Price: RMB8,460,000 (equivalent to HK$9,559,800) Payment: The Total Subscription Price shall be paid by the Share Subscriber on or before Share Subscription Completion. Subscription Price: HK$0.214 per Subscription Share, representing:

(1) a discount of approximately 17.69% to the closing price of HK$0.260 per Share as quoted on the Stock Exchange on the date of the Share Subscription Agreement;

– 47 –

LETTER FROM JUN HUI INTERNATIONAL

(2) a discount of approximately 17.37% to the average closing price of approximately HK$0.259 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days of the Shares immediately prior to the date of the Share Subscription Agreement; and
(3) a discount of approximately 14.19% to the average closing price of approximately HK$0.2494 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days of the Shares immediately prior to the date of the Share Subscription Agreement.

As advised by the Directors, the Subscription Price was arrived at after arm’s length negotiations between the Company and the Share Subscriber with reference to the recent trading price and trading volume of the Shares. The Directors consider that the terms and conditions of the Share Subscription Agreement (including the Subscription Price) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

For further details and terms of the Share Subscription Agreement, please refer to the Letter from the Board.

==> picture [61 x 10] intentionally omitted <==

==> picture [82 x 10] intentionally omitted <==

In order to assess the fairness and reasonableness of the Subscription Price, we reviewed the daily closing price of the Shares as quoted on the Stock Exchange for the Review Period. We consider that the Review Period which covers a full year prior to and including the date of the Share Subscription Agreement represents a reasonable and sufficient period to provide a general overview of the recent price performance of the Shares.

– 48 –

LETTER FROM JUN HUI INTERNATIONAL

As illustrated in the chart under the section headed “Historical price and trading performance of the Shares – Share prices” above in this letter, the closing prices of the Shares were between a low of HK$0.178 per Share on 9 May 2023 and a high of HK$0.320 per Share on 15 June 2023, with an average closing price of approximately HK$0.212 per Share during the Review Period. We note that the Subscription Price of HK$0.214 per Subscription Share is within the range of the daily closing prices of the Shares during the Review Period. The Subscription Price is also at a level slightly higher than the average closing price of the Shares during the Review Period, which is fair to the Company.

(b) Trading volumes

As illustrated in the table under the section headed “Historical price and trading performance of the Shares – Trading volumes” above in this letter, it is noted that the average daily trading volume of the Shares per relevant month/period accounted for only a small portion of the total number of issued Shares as at the end of the relevant month/period, which ranges from approximately 0.000% to 0.020% during the Review Period. Given the relatively low liquidity of the Shares as illustrated above, it is considered justifiable to set the Subscription Price at a discount to the prevailing market price of the Shares as a discounted issue price shall be more attractive to investor(s).

(c) Comparable analysis

To further assess the fairness and reasonableness of the Subscription Price, we have reviewed comparable transactions involving subscription of new shares by independent third party(ies) or connected person(s) under specific mandate, announced by companies listed on the Stock Exchange (other than the Company) in the past 12 months immediately preceding the date of the Share Subscription Agreement but excluding issues of shares as part of consideration in acquisition or under loan or debt capitalisation or share award or restricted stock unit scheme (the “ Share Comparable Transactions ”). We have, to our best effort and so far as we are aware, identified 17 Share Comparable Transactions which we consider to be exhaustive. We consider the following list of the Share Comparable Transactions is fair, representative and comparable to the Share Subscription Agreement, taking into account that (i) they involve the same type of transaction as the entering into of the Share Subscription Agreement, i.e. the subscription of new shares under specific mandate by listed companies on the Stock Exchange, which could facilitate meaningful comparison purpose. The selection of the Share Comparable Transactions without considering the connected relationship of the subscriber(s) with the listed companies could instead provide a more balanced and comprehensive reference as terms given to connected person(s) shall be no more favourable than terms given to independent third party(ies) under the general regulatory framework; (ii) the 12-month period immediately prior to the date of the Share Subscription Agreement represents a

– 49 –

LETTER FROM JUN HUI INTERNATIONAL

reasonable and meaningful time period to capture the recent market practice for the said transaction; and (iii) a list of 17 Share Comparable Transactions identified in accordance with the aforesaid selection criteria shall be adequate to provide a general reference for comparison purpose. Independent Shareholders should note that the businesses, operations and prospects of the Group may not be the same as, or vary from, those of the listed companies conducting the Share Comparable Transactions, and the Share Comparable Transactions set out below are for the purpose of providing a general insight on the terms in respect of the subscription of new shares under specific mandate during the said 12 months’ period. Details of the Share Comparable Transactions are set out below:

						Premium/(discount)	Premium/(discount)
						of subscription price	of subscription price
					Premium/(discount)	over/(to) average	over/(to) average
					of subscription price	closing price per	closing price per
					over/(to) closing	share for the last	share for the last
					price per share on	five trading days	ten trading days
					the last trading day	prior to or including	prior to or including
					prior to or on the	the date of	the date of
Date of			Connected		date of subscription	subscription	subscription
announcement	Name of company	Stock code	transaction		agreement	agreement	agreement
			(Yes/No)
16-Jun-23	Bank of Jiujiang Co., Ltd.	6190.HK	No		0%	2.6%	2.6%
12-Jun-23	VPower Group International	1608.HK	No		2.4%	5.0%	7.7%
	Holdings Limited
9-Jun-23	China Silver Technology	515.HK	No		(4.8)%	(5.7)%	(7.0)%
	Holdings Limited
28-Apr-23	Energy International	353.HK	Yes		(5.5)%	(8.4)%	(7.6)%
	Investments Holdings
	Limited
26-Apr-23	New Huo Technology	1611.HK	Yes	(Note)	(9.6)%	(11.8)%	(14.8)%
	Holdings Limited
20-Apr-23	Glory Sun Financial Group	1282.HK	No		65.3%	67.5%	63.6%
	Limited
19-Mar-23	Suoxinda Holdings Limited	3680.HK	No		(5.0)%	(6.9)%	(7.8)%
19-Jan-23	New Concepts Holdings	2221.HK	No		(13.6)%	(11.0)%	(12.4)%
	Limited
12-Dec-22	In Technical Productions	8446.HK	Yes		(16.9)%	(13.9)%	(7.2)%
	Holdings Limited
7-Dec-22	Cornerstone Technologies	8391.HK	Yes		(55.8)%	(34.3)%	(27.6)%
	Holdings Limited
18-Oct-22	China Titans Energy	2188.HK	No		3.0%	5.9%	4.6%
	Technology Group Co.,
	Limited

– 50 –

LETTER FROM JUN HUI INTERNATIONAL

							Premium/(discount)	Premium/(discount)
							of subscription price	of subscription price
					Premium/(discount)		over/(to) average	over/(to) average
					of subscription price		closing price per	closing price per
						over/(to) closing	share for the last	share for the last
					price per share on		five trading days	ten trading days
					the	last trading day	prior to or including	prior to or including
					prior to or on the		the date of	the date of
Date of			Connected		date of subscription		subscription	subscription
announcement	Name of company	Stock code	transaction			agreement	agreement	agreement
			(Yes/No)
13-Sep-22	Link-Asia International	1143.HK	No			78.4%	78.4%	78.4%
	MedTech Group Limited
2-Sep-22	Cornerstone Technologies	8391.HK	Yes			5.1%	(2.8)%	(5.1)%
	Holdings Limited
1-Sep-22	Suoxinda Holdings Limited	3680.HK	Yes	(Note)		(19.6)%	(6.0)%	(0.4)%
1-Sep-22	BOE Varitronix Limited	710.HK	Yes			(7.2)%	(11.8)%	(14.1)%
23-Aug-22	Standard Development Group	1867.HK	Yes			(14.8)%	(16.1)%	(18.4)%
	Limited
14-Jul-22	China Ruyi Holdings Limited	136.HK	Yes			(2.0)%	(10.1)%	(13.7)%
			Maximum			78.4%	78.4%	78.4%
			Minimum			(55.8)%	(34.3)%	(27.6)%
			Average			0.0%	1.2%	1.2%
19-Jun-23	The Company	8368.HK	Yes			(17.7)%	(17.4)%	(14.2)%

Source: the website of the Stock Exchange

Note: The company announced on the same date that it entered into relevant subscription agreements with both its connected person(s) and independent third party(ies) at the same subscription price. For illustrative purpose under this table, “Yes” is stated.

As illustrated in the table above, the subscription price per share issued under the Share Comparable Transactions ranged from (i) a discount of approximately 55.8% to a premium of approximately 78.4% over their respective closing price per share on the last trading day prior to or on the date of subscription agreement, and on average, closing to no premium over or discount to the said closing price per share; (ii) a discount of approximately 34.3% to a premium of approximately 78.4% over their respective average closing price per share for the last five trading days prior to or including the date of subscription agreement, with an average premium of approximately 1.2%; and (iii) a discount of approximately 27.6% to a premium of 78.4% over their respective average closing price per share for the last ten trading days prior to or including the date of subscription agreement, with an average premium of approximately 1.2%.

– 51 –

LETTER FROM JUN HUI INTERNATIONAL

We note that the discounts of the Subscription Price to the closing Share price on the date of the Share Subscription Agreement, the average for the last five trading days immediately prior to the date of the Share Subscription Agreement and the average for the last ten trading days immediately prior to the date of the Share Subscription Agreement, which were approximately 17.7%, 17.4% and 14.2% respectively, are within the respective range of the Share Comparable Transactions as described above. We therefore consider that the Subscription Price is fair and reasonable.

Having considered that (i) the Subscription Price is within the range of the daily closing prices of the Shares and is higher than the average closing price of the Shares during the Review Period, which is fair to the Company; (ii) the Shares had a relatively low liquidity during the Review Period and it is considered justifiable setting the Subscription Price at a discount to the prevailing market price of the Shares; (iii) the discounts of the Subscription Price are within the ranges of subscription prices of the Share Comparable Transactions as illustrated above; (iv) the Subscription Price was arrived at after arm’s length negotiations between the Company and the Share Subscriber with reference to the recent trading price and trading volume of the Shares as advised by the Directors; and (v) the reasons for entering into of the Share Subscription Agreement as mentioned previously in this letter, we are of the view that the terms of the Share Subscription Agreement are fair and reasonable, and the entering into of the Share Subscription Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

(iv) Financial effects of the Share Subscription Agreement

Based on our discussion with and the representation from the Directors, we understand from the Directors that they have taken into account the following factors when they considered the potential impact of the Share Subscription Agreement on the financial positions of the Group.

According to Annual Report 2022, the net assets and bank balances and cash of the Group amounted to approximately RMB177.7 million and RMB24.0 million as at 31 December 2022, respectively. Upon Share Subscription Completion, it is expected that both the net assets and bank balances and cash of the Group will increase by the same amount of approximately RMB7.9 million, being the estimated aggregate net proceeds of the Share Subscription. The Share Subscription is expected to have a positive impact on the Group’s financial positions.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial positions of the Group will be upon Share Subscription Completion.

– 52 –

LETTER FROM JUN HUI INTERNATIONAL

IV. The CB Subscription Agreement

(i) Information of the CB Subscriber

As stated in the Letter from the Board, the CB Subscriber is an individual investor who is a PRC resident. As confirmed by the Directors, the CB Subscriber is an Independent Third Party.

(ii) Reasons for entering into of the CB Subscription Agreement

The Group is principally engaged in (i) serial program/film production and related services and film rights investment; (ii) concert and event organisation and related services; (iii) mobile application development and operation and related services; and (iv) artist management. As set out in the Letter from the Board, the Company intends to apply the net proceeds from the issue of the Convertible Bonds of approximately HK$9,502,170 (equivalent to RMB8,409,000) in the following manner: (i) approximately 70.51% of the net proceeds will be used for mobile application development and operation; and (ii) approximately 29.49% of the net proceeds will be used for the general working capital of the Group. The Directors considered that the issuance of the Convertible Bonds provides an opportunity for the Company to raise additional funds for its operations and broaden the Company’s capital base for business development. Further referring to the Letter from the Board, the total net proceeds from the ANL Share Subscription, the LW CB Subscription, the TYJ Share Subscription and the Transactions which are allocated for the Group’s mobile application development and operation and related services, amount to HK$26,223,967 (equivalent to RMB23,207,050). Of this amount, approximately HK$15,989,500 (equivalent to RMB14,150,000), representing approximately 60.97% of such amount, will be used to subscribe to promotion services that will enhance interaction with fans on the live streaming e-commerce channel; approximately HK$5,989,000 (equivalent to RMB5,300,000), representing approximately 22.84% of such amount, will be used to purchase the right to disseminate content via information networks; and approximately HK$4,245,467 (equivalent to RMB3,757,050), representing approximately 16.19% of such amount, will be used for research and development of mobile applications and its related fees. These services include sending gifts, cash coupons, platform-recommended traffic, commercial traffic purchases. The aim is to increase the Group’s live streaming e-commerce publicity on various online platforms by encouraging like, share, comment, follow, reward, and shopping activities.

As abovementioned in this letter, the Group’s revenue from mobile application development and operation and related services amounted to approximately RMB6.7 million for the year ended 31 December 2022 as contributed by its live streaming e-commerce. The Group has been placing more business focus and segment resources to live streaming e-commerce and expects such market to have a growing demand and be one of the major revenue drivers of the Group. The Directors considered that the additional fund could further support it in the mobile application development and

– 53 –

LETTER FROM JUN HUI INTERNATIONAL

operation business, among others, the live streaming e-commerce. We note that the proposed use of proceeds from the issuance of the Convertible Bonds is in line with the principal business and strategy of the Group as well as the potential market demand for live streaming e-commerce in the PRC. In addition, the Letter of Intent furnished by the Company to us demonstrates the funding needs of the Group. We agree with the Directors that the fund raised from the issuance of the Convertible Bonds could serve for its business need.

The issue of the Convertible Bonds could improve the Group’s liquidity. As referred to the section headed “Financial effects of the CB Subscription Agreement” below in this letter, upon CB Completion, the Group is expected to receive an aggregate net proceeds of approximately RMB8.4 million, being the estimated aggregate net proceeds from the issue of the Convertible Bonds.

As stated in the Letter from the Board, the Directors considered that the issue of the Convertible Bonds is an appropriate mean of raising additional capital of the Company since it will not have an immediate dilution effect on the shareholding of the existing Shareholders. We are also given to understand from the Directors that they had considered other financing alternatives to raise funds such as bank borrowings, rights issue and/or open offer. The Directors consider that bank borrowings may be subject to lengthy due diligence and negotiations with commercial banks, as well as it would incur higher interest expenses to the Group as compared to the issue of the Convertible Bonds. We note from Annual Report 2022 that, as at 31 December 2022, the carrying interest rate of the Group’s bank borrowings range from 2.8% to 3.7% per annum, which is higher than that of the Convertible Bonds of 2%. In respect of rights issue and/or open offer, the Directors considered that such alternatives will involve additional costs such as underwriting fees to the Group. We agree with the Directors that issuance of the Convertible Bonds shall be an appropriate mean of raising additional capital of the Company from the cost perspective as described above.

Having considered the aforesaid reasons, including (i) the proposed use of proceeds from the issue of the Convertible Bonds is in line with the principal business and strategy of the Group as well as the potential market demand for live streaming e-commerce; (ii) the fund raised from the issuance of the Convertible Bonds could be utilised to support the Group’s mobile application development and operation business; (iii) the issue of the Convertible Bonds could improve the Group’s liquidity; and (iv) the issue of the Convertible Bonds is considered as an appropriate mean of raising additional capital for the Company from the cost perspective, we agree with the Directors that the entering into of the CB Subscription Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

– 54 –

LETTER FROM JUN HUI INTERNATIONAL

(iii) Principal terms of the CB Subscription Agreement

As set out in the Letter from the Board, the principal terms of the CB Subscription Agreement are summarised as follows:

Date: 19 June 2023 (after trading hours of the Stock Exchange) Parties: The Company, as the issuer; and the CB Subscriber, an Independent Third Party Principal amount: RMB9,000,000 (equivalent to HK$10,170,000) Payment: Payment of the Issue Price shall be settled by the CB Subscriber on or before CB Completion Interest rate: 2% per annum, which shall accrue on a daily basis from the Issue Date calculated on the basis of a 365-day year on the principal sum of the Convertible Bonds for the time being outstanding and shall be paid on the Maturity Date. Conversion Price: The Conversion Price of HK$0.54 per Conversion Share represents:

(1) a premium of approximately 107.69% over the closing price of HK$0.260 per Share as quoted on the Stock Exchange on the date of the CB Subscription Agreement;
(2) a premium of approximately 108.49% over the average closing price of HK$0.259 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days of the Shares immediately prior to the date of the CB Subscription Agreement; and

– 55 –

LETTER FROM JUN HUI INTERNATIONAL

(3) a premium of approximately 116.52% over the average closing price of HK$0.2494 per Share as quoted on the Stock Exchange for the ten (10) consecutive trading days of the Shares immediately prior to the date of the CB Subscription Agreement.

As advised by the Directors, the Conversion Price was determined after arm’s length negotiations between the Company and the CB Subscriber, taking into account the business development and future prospect of the Group and the audited consolidated net asset value attributable to the Shareholders of approximately HK$0.54 per Share as at 31 December 2022. The Directors (including the independent non-executive Directors) consider that the Conversion Price and the terms and conditions of the CB Subscription Agreement and the Convertible Bonds are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The Conversion Price shall from time to time be subject to adjustment only upon occurrence of consolidation or sub-division of Shares in accordance with the provisions of the Convertible Bonds.

– 56 –

LETTER FROM JUN HUI INTERNATIONAL

Conversion Shares:

Maturity Date:

The date falling on the second (2nd) anniversary of the Issue Date.

For further details and terms of the CB Subscription Agreement, please refer to the Letter from the Board.

Our analysis

(a) Share prices

In order to assess the fairness and reasonableness of the Conversion Price, we reviewed the daily closing price of the Shares as quoted on the Stock Exchange for the Review Period. We consider that the Review Period which covers a full year prior to and including the date of the CB Subscription Agreement represents a reasonable and sufficient period to provide a general overview of the recent price performance of the Shares.

As illustrated in the chart under the section headed “Historical price and trading performance of the Shares – Share prices” above in this letter, the closing prices of the Shares were between a low of HK$0.178 per Share on 9 May 2023 and a high of HK$0.320 per Share on 15 June 2023, with an average closing price of approximately HK$0.212 per Share during the Review Period. We note that the Conversion Price of HK$0.54 per Conversion Share is above the highest and the average closing price of the Shares during the Review Period, which is favourable to the Company.

– 57 –

LETTER FROM JUN HUI INTERNATIONAL

(b) Trading volumes

As illustrated in the table under the section headed “Historical price and trading performance of the Shares – Trading volumes” above in this letter, it is noted that the average daily trading volume of the Shares per relevant month/period accounted for only a small portion of the total number of issued Shares as at the end of the relevant month/period, which ranges from approximately 0.000% to 0.020% during the Review Period. The relatively low trading volume of the Shares may suggest that it would be difficult for the Company to pursue financing alternatives in the stock market without offering considerable discount as an incentive, and the Conversion Shares with a premium conversion price is considered favourable to the Company.

(c) Comparable analysis

To further assess the fairness and reasonableness of the terms of the CB Subscription Agreement, we have reviewed comparable transactions involving issue of convertible bonds or notes or securities to independent third party(ies) or connected person(s) under specific mandate, announced by companies listed on the Stock Exchange (other than the Company) in the past 12 months immediately preceding the date of the CB Subscription Agreement but excluding issues of convertible bonds or notes or securities as part of consideration in acquisition (the “ CB Comparable Transaction(s) ”). We have, to our best effort and so far as we are aware, identified eight CB Comparable Transactions which we consider to be exhaustive. We consider the following list of the CB Comparable Transactions is fair, representative and comparable to the CB Subscription Agreement, taking into account that (i) they involve the same type of transaction as the entering into of the CB Subscription Agreement, i.e. the issue of convertible bonds or notes or securities under specific mandate by listed companies on the Stock Exchange, which could facilitate meaningful comparison purpose. The selection of the CB Comparable Transactions without considering the connected relationship of the subscriber(s) with the listed companies could instead provide a more balanced and comprehensive reference as terms given to connected person(s) shall be no more favourable than terms given to independent third party(ies) under the general regulatory framework; (ii) the 12-month period immediately prior to the date of the CB Subscription Agreement represents a reasonable and meaningful time period to capture the recent market practice for the said transaction; and (iii) an exhaustive list of the CB Comparable Transactions with each fulfilled the abovementioned selection criteria is more representative to provide a comprehensive reference for comparison purpose and the determination of any outlier involves subjective judgement which may bias the final result. Independent Shareholders should note that the businesses, operations and prospects of the Group may not be the same as, or vary from, those of the listed companies conducting the CB Comparable Transactions, and the CB Comparable Transactions set out below are for the purpose of providing a

– 58 –

LETTER FROM JUN HUI INTERNATIONAL

general insight on the terms in respect of the issue of convertible bonds or notes or securities under specific mandate during the said 12 months’ period. Details of the CB Comparable Transactions are set out below:

								Premium/
							Premium/	(discount) of
						Premium/	(discount) of	conversion price
						(discount) of	conversion price	over/(to) the
						conversion price	over/(to) average	latest published
						over/(to) closing	closing price per	consolidated net
						price per share	share for the last	asset value
						on the last	five trading days	attributable to
						trading day	prior to or	the owners of
						prior to or on	including the	the company per
						the date of	date of	share prior to
						convertible	convertible	the convertible
						bonds or note or	bonds or note or	bonds or note of
					Interest	securities	securities	securities
Date of			Connected	Maturity	rate (per	subscription	subscription	subscription
announcement	Name of company	Stock code	transaction	(Year)	annum)	agreement	agreement	agreement
			(Yes/No)
6-Jun-23	China Asia Valley	66.HK	Yes	5	3.6%	(33.3)%	(31.5)%	115.1%
	Group Limited
12-May-23	Hong Kong	1725.HK	No	0.6	0.5%	(8.9)%	(8.3)%	956.6% (Note 1)
	Aerospace
	Technology Group
	Limited
29-Mar-23	Kerry Logistics	636.HK	Yes	Perpetual	3.3%	44.2%	46.6%	84.4%
	Network Limited
29-Mar-23	China Baoli	164.HK	No	3.0	2.0%	181.3%	186.3%	N/A (Note 2)
	Technologies
	Holdings Limited
22-Dec-22	Wai Chun	660.HK	Yes	3.0	0.0%	25.0%	32.0%	N/A (Note 2)
	Bio-Technology
	Limited
16-Nov-22	CCT Fortis Holdings	138.HK	Yes	3.1	4.5%	10.4%	5.8%	(91.3)%
	Limited
14-Nov-22	Merdeka Financial	8163.HK	Yes	1.7	0.0%	14.8%	14.8%	N/A (Note 2)
	Group Limited

– 59 –

LETTER FROM JUN HUI INTERNATIONAL

									Premium/
								Premium/	(discount) of
							Premium/	(discount) of	conversion price
							(discount) of	conversion price	over/(to) the
							conversion price	over/(to) average	latest published
							over/(to) closing	closing price per	consolidated net
							price per share	share for the last	asset value
							on the last	five trading days	attributable to
							trading day	prior to or	the owners of
							prior to or on	including the	the company per
							the date of	date of	share prior to
							convertible	convertible	the convertible
							bonds or note or	bonds or note or	bonds or note of
						Interest	securities	securities	securities
Date of			Connected	Maturity		rate (per	subscription	subscription	subscription
announcement	Name of company	Stock code	transaction	(Year)		annum)	agreement	agreement	agreement
			(Yes/No)
19-Sep-22	Huscoke Holdings	704.HK	Yes	2		8.0%	(30.5)%	(31.4)%	N/A (Note 2)
	Limited
			Maximum	Perpetual		8.0%	181.3%	186.3%	956.6%
			Minimum	0.6		0.0%	(33.3)%	(31.5)%	(91.3)%
			Average	2.3	(Note 3)	2.7%	25.4%	26.8%	266.2%
19-Jun-23	The Company	8368.HK	Yes	2		2.0%	107.7%	108.5%	0.0%

Source: the website of the Stock Exchange

Notes:

(1) The company is considered as one of the CB Comparable Transactions despite the relatively high premium rate, as an exhaustive list of the CB Comparable Transactions with each fulfilled the abovementioned selection criteria is more representative to provide a comprehensive reference for comparison purpose and the determination of any outlier involves subjective judgment which may bias the final result.
(2) The company recorded net liabilities attributable to the owners of the company.
(3) The CB Comparable Transaction(s) with perpetual maturity is excluded for illustrative purpose.

– 60 –

LETTER FROM JUN HUI INTERNATIONAL

As illustrated in the table above, the conversion price per share issued under the CB Comparable Transactions ranged from (i) a discount of approximately 33.3% to a premium of approximately 181.3% over their respective closing price per share on the last trading day prior to or on the date of convertible bonds or note or securities subscription agreement, with an average premium of approximately 25.4%; (ii) a discount of approximately 31.5% to a premium of approximately 186.3% over their respective average closing price per share for the last five trading days prior to or including the date of convertible bonds or note or securities subscription agreement, with an average premium of approximately 26.8%; and (iii) a discount of approximately 91.3% to a premium of approximately 956.6% over the latest published consolidated net asset value attributable to the owners of the company per share prior to the convertible bonds or note or securities subscription agreement, with an average premium of approximately 266.2%. We note that (i) the premiums of the Conversion Price over the closing Share price on the date of the CB Subscription Agreement and for the last five trading days immediately before the date of the CB Subscription Agreement, which were approximately 107.7% and 108.5% respectively, are within the respective range and above the respective average of the CB Comparable Transactions as described above; and (ii) the Conversion Price per Conversion Share is close to the Group’s audited consolidated net asset value attributable to the Shareholders of approximately HK$0.54 per Share as at 31 December 2022, and is also within the range of the CB Comparable Transactions. We therefore consider that the Conversion Price is fair and reasonable.

The interest rate of the CB Comparable Transactions ranged from nil to 8.0% per annum with an average interest rate of approximately 2.7% per annum. We note that the interest rate of the Convertible Bonds of 2.0% per annum is within the range and below the average of the CB Comparable Transactions, where the lower interest rate represents the more favourable terms to the Group. We therefore consider that the interest rate of the Convertible Bonds is fair and reasonable.

The maturity of the CB Comparable Transactions ranged from approximately 0.6 year to perpetual, with an average of approximately 2.3 years. We note that the maturity of the CB Subscription Agreement of 2 years falls within the range and close to the average maturity of the CB Comparable Transactions. We therefore consider that the maturity of the Convertible Bonds is fair and reasonable.

Having considered that (i) the Conversion Price is above the highest and the average closing price of the Shares during the Review Period, which is favourable to the Company; (ii) the Conversion Shares with a premium conversion price is considered favourable to the Company whose Shares are of relatively low liquidity; (iii) the Conversion Price and the interest rate and maturity of the Convertible Bonds are considered fair and reasonable as illustrated above; (iv) the Conversion Price was

– 61 –

LETTER FROM JUN HUI INTERNATIONAL

determined after arm’s length negotiations between the Company and the CB Subscriber taking into account the business development, future prospect and financial positions of the Group as advised by the Directors; and (v) the reasons for entering into of the CB Subscription Agreement as mentioned previously in this letter, we are of the view that the terms of the CB Subscription Agreement are fair and reasonable, and the entering into of the CB Subscription Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole.

As further referred to the Letter from the Board, the Subscription Price and the Conversion Price were determined after arm’s length negotiations between the Company and each of the Share Subscriber and the CB Subscriber. Since the Subscription Shares can be traded in the market immediately after Share Subscription Completion, an investor generally only accepts subscription price which is close to the current trading price of the Shares. On the other hand, an investor for the Convertible Bonds is usually less sensitive to the current trading price of the Shares. Furthermore, the CB Subscriber will be entitled to receive interest amount of 2% interest per annum, and exercise the Conversion Rights during the Conversion Period up to the Maturity Date. Hence, the Company has been able to agree with the CB Subscriber to ascertain the Conversion Price at a higher price to reduce the dilution impact on the Shareholders as a whole and to conclude the Conversion Price with reference to the Company’s audited consolidated net asset value attributable to the Shareholders as at 31 December 2022. As stated in the Letter from the Board, the Board considers that the difference in the basis to ascertain the Subscription Price and the Conversion Price serves to appeal to different kinds of investors and to promptly secure funding for the Group. Having considered that: (i) the different nature of the Subscription Shares and the Convertible Bonds attached with different entitlements/rights (such as interest entitlement and conversion rights), their investors shall have different risk appetite/preference and it is reasonable that their price determination basis may not be the same; and (ii) the Company negotiated the terms of the Share Subscription Agreement and the CB Subscription Agreement (including the Subscription Price and the Conversion Price respectively) with each of the Share Subscriber and the CB Subscriber on an individual basis, who are two separate parties, and such terms are arrived at after arm’s length negotiations with each of them as confirmed by the Directors, we agree with the Board’s view that the different basis for determining the Subscription Price and the Conversion Price is fair and reasonable.

– 62 –

LETTER FROM JUN HUI INTERNATIONAL

(iv) Financial effects of the CB Subscription Agreement

Based on our discussion with and the representation from the Directors, we understand from the Directors that they have taken into account the following factors when they considered the potential impact of the CB Subscription Agreement on the financial positions of the Group.

(a) Earnings

The Convertible Bonds are interest-bearing, and the related finance costs are expected to be recognised in the consolidated statement of profit or loss of the Group prior to full conversion of the Convertible Bonds. As advised by the Directors, it is expected that the issue of the Convertible Bonds will not have a material impact on the earnings of the Group.

(b) Net asset value

According to Annual Report 2022, the net assets of the Group amounted to approximately RMB177.7 million as at 31 December 2022. The net proceeds from the issue of the Convertible Bonds are expected to be approximately RMB8.4 million. Upon CB Completion, the issue of the Convertible Bonds would lead to an increase in bank balances and cash of the Group by the same amount. As advised by the Directors, the Convertible Bonds will be consisted of an equity portion and a liability portion. The exact figures of respective fair value of the liability and equity components of the Convertible Bonds and their financial impacts to the Group will be subject to the review by the auditors of the Company and the assessment and valuation from an independent valuer at the time of CB Completion.

(c) Liquidity

According to Annual Report 2022, the bank balances and cash of the Group amounted to approximately RMB24.0 million as at 31 December 2022. Immediately upon the subscription of the Convertible Bonds under the CB Subscription Agreement, the Group is expected to receive an aggregate net proceeds of approximately RMB8.4 million and have a positive impact on its liquidity as advised by the Directors.

(d) Gearing

According to Annual Report 2022, the gearing ratio of the Group, which is calculated by dividing the Group’s net debt by total equity, was approximately 23.9% as at 31 December 2022. As advised by the Directors, it is expected that the issue of the Convertible Bonds will not have a material impact on the gearing ratio of the Group upon the subscription of the Convertible Bonds. As further

– 63 –

LETTER FROM JUN HUI INTERNATIONAL

advised by the Directors, in the event that the CB Subscriber exercises the Conversion Rights attaching to the Convertible Bonds, assuming there are no other factors affecting the financial positions of the Group, the gearing position of the Group would improve and the conversion of the Convertible Bonds into the Conversion Shares would enlarge the capital base and increase the net assets of the Group. On the other hand, if the Conversion Rights attaching to the Convertible Bonds are not exercised prior to the Maturity Date, the gearing ratio of the Group may increase due to redemption of the outstanding principal amount of the Convertible Bonds on the Maturity Date.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial positions of the Group will be upon the issue or the conversion of the Convertible Bonds.

V. Potential dilution of the shareholding of the Company

As illustrated in the Letter from the Board, the shareholding of the existing public Shareholders as at the Latest Practicable Date was approximately 43.17%.

(i) Under the Share Subscription Agreement

The Subscription Shares represent approximately 11.98% of the existing issued share capital of the Company as at the Latest Practicable Date and approximately 10.70% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares (assuming there are no other changes in the share capital of the Company between the Latest Practicable Date and the Share Subscription Completion Date). On such basis, the shareholding of existing public Shareholders will be diluted from approximately 43.17% to approximately 38.55% upon Share Subscription Completion.

Taking into account (i) the reasons for entering into of the Share Subscription Agreement as previously mentioned in this letter; (ii) the terms of the Share Subscription Agreement are considered to be fair and reasonable and the entering into of the Share Subscription Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole; (iii) the Share Subscription is expected to have a positive impact on the Group’s financial positions; and (iv) the dilution effect to the existing public Shareholders is relatively mild (i.e. around 4.62 percentage points), we consider that the dilution to the existing public Shareholders as a result of the Share Subscription to be acceptable.

– 64 –

LETTER FROM JUN HUI INTERNATIONAL

(ii) Under the CB Subscription Agreement

Based on the Conversion Price of HK$0.54 per Conversion Share, a total of 18,833,333 Conversion Shares will be allotted and issued upon exercise of the Conversion Rights attaching to the Convertible Bonds in full, which represent approximately 5.05% of the existing issued share capital of the Company and approximately 4.81% of the issued share capital of the Company as enlarged by the allotment and issue of all Conversion Shares, assuming that there will be no changes in the issued share capital of the Company between the Latest Practicable Date and the date of issue of the Conversion Shares upon full conversion of the Convertible Bonds. On such basis, the shareholding of existing public Shareholders will be diluted from approximately 43.17% to approximately 41.10% upon exercise of the Conversion Rights attaching to the Convertible Bonds in full.

Taking into account (i) the reasons for entering into of the CB Subscription Agreement as previously mentioned in this letter; (ii) the terms of the CB Subscription Agreement are considered to be fair and reasonable and the entering into of the CB Subscription Agreement and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole; (iii) the expected positive impact to the Group’s liquidity upon the subscription of the Convertible Bonds; and (iv) the dilution effect to the existing public Shareholders is relatively mild (i.e. around 2.07 percentage points), we consider that the dilution to the existing public Shareholders as a result of the issue of the Convertible Bonds to be acceptable.

(iii) Aggregate dilution effect

Together, Share Subscription Completion and exercise of the Conversion Rights attaching to the Convertible Bonds in full (based on the Conversion Price of HK$0.54 per Conversion Share) would result in an aggregate of 63,505,296 new Shares to be allotted and issued, which represent approximately 17.03% of the existing issued share capital of the Company and approximately 14.55% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares and all Conversion Shares, assuming that there will be no changes in the issued share capital of the Company between the Latest Practicable Date and the date(s) of issue of the Subscription Shares and the Conversion Shares. On such basis, the shareholding of existing public Shareholders would be diluted from approximately 43.17% to approximately 36.89% upon occurrence of such events. However, it should be noted that the aforementioned analyses are for illustrative purpose only and do not purport, in particular, whether and when the Conversion Rights attaching to the Convertible Bonds will be exercised, in part or in full, by the CB Subscriber.

– 65 –

LETTER FROM JUN HUI INTERNATIONAL

It is noted that the aggregate maximum dilution effect to the existing public Shareholders arisen from the Share Subscription Agreement and the CB Subscription Agreement would be around 6.28 percentage points. However, this figure only implies a possible maximum dilution reference as the Conversion Rights attaching to the Convertible Bonds may or may not be exercised in part or in full by the CB Subscriber during the Conversion Period, and the nature of convertible bonds would not generally result in an immediate dilution effect to existing shareholders. Even though, in balance of consideration that (i) the reasons for entering into of the Share Subscription Agreement and the CB Subscription Agreement which could generally benefit the Group from the business and financial perspectives as previously discussed in this letter (under sub-sections (ii) and (iv) relating to each the Share Subscription Agreement and the CB Subscription Agreement), and the entering into of which are in the interests of the Company and the Shareholders as a whole; (ii) the terms of each the Share Subscription Agreement and the CB Subscription Agreement are fair and reasonable, which are also arrived at after arm’s length negotiations between relevant parties as confirmed by the Directors, we are of the view that the aggregate maximum dilution effect to the existing public Shareholders is acceptable.

For further illustrative purpose, it is also disclosed in the Letter from the Board that the aggregate effect upon (i) completion of the ANL Share Subscription and full conversion of the convertible bonds under the LW CB Subscription, (ii) completion of the TYJ Share Subscription and (iii) Share Subscription Completion and full conversion of the Convertible Bonds would result in an aggregate of 155,675,199 new Shares to be allotted and issued, which represent approximately 41.74% of the existing issued share capital of the Company and approximately 29.45% of the issued share capital of the Company as enlarged by the allotment and issue of (i) the subscription shares under the ANL Share Subscription and all conversion shares under the LW CB Subscription, (ii) the subscription shares under the TYJ Share Subscription and (iii) the Subscription Shares and all Conversion Shares, assuming that there will be no changes in the issued share capital of the Company between the Latest Practicable Date and the date(s) of issue of the abovementioned subscription shares and conversion shares. On such basis, the shareholding of existing public Shareholders would be diluted from approximately 43.17% to approximately 30.46% upon occurrence of such events.

– 66 –

LETTER FROM JUN HUI INTERNATIONAL

OPINION AND RECOMMENDATION

Having considered the abovementioned principal factors and reasons, although the entering into of the Share Subscription Agreement and the CB Subscription Agreement is not in the ordinary and usual course of business of the Group, we are of the view that the terms of the Share Subscription Agreement and the CB Subscription Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and the entering into of the Share Subscription Agreement and the CB Subscription Agreement is in the interests of the Company and the Shareholders as a whole. We therefore advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the entering into of the Share Subscription Agreement and the CB Subscription Agreement and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of

JUN HUI INTERNATIONAL FINANCE LIMITED

Tina Tian Karol Hui Managing Director Executive Director

Note: Ms. Tina Tian and Ms. Karol Hui are licensed persons registered with the SFC to carry out Type 6 (advising on corporate finance) regulated activity under the SFO and have over 14 years and 11 years of experience in corporate finance industry respectively.

– 67 –

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

Directors’ and chief executives’ interests and short positions in shares, underlying shares and debentures of the Company or any associated corporation

As at the Latest Practicable Date, the interest and short position of the Directors and chief executive of the Group in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which had been 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 taken under such provisions of the SFO), or which were required pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange:

(i) Long positions in the Shares

			Percentage
			of the
			Company’s
Name of	Capacity and nature	Number of	issued share
Shareholder	of interest	Shares	capital
Goldbless	Beneficial owner (Note)	76,500,000	20.51%
Mr. Wang Yong	Interest of controlled	76,500,000	20.51%
	corporation (Note)

Note: The entire issued share capital of Goldbless is owned by Mr. Wang Yong. Under the SFO, Mr. Wang Yong is deemed to be interested in all the Shares registered in the name of Goldbless.

– 68 –

GENERAL INFORMATION

APPENDIX I

(ii) Long positions in ordinary shares of US$1.00 each in Youth Success

	Number of	Percentage of
Name of Director	Shares	shareholding
Mr. Philip Jian Yang (Note 1)	1,273	12.73%
Mr. Yang Shiyuan (Note 2)	148	1.48%

Notes:

Mr. Philip Jian Yang holds the shares of Youth Success through Ever Ring Holdings Limited which is wholly-owned by him.
Mr. Yang Shiyuan holds the shares of Youth Success through State Trade Global Limited which is wholly-owned by him.

Save as disclosed above, as at the Latest Practicable Date, none of the directors and chief executives of the Company had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which have been 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 taken under such provisions of the SFO), or which were required pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange.

Substantial shareholders’ and other persons’ interests and short positions in the shares and underlying shares of the Company

As at Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the SFO, and so far as is known to the Directors or chief executive of the Company, the following persons (other than a Director or a chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was directly or indirectly interested in 5% or more of the nominal value of any class of share

– 69 –

GENERAL INFORMATION

APPENDIX I

capital carrying rights to vote in all circumstances at general meetings of any member of the Group and the amount of each of such person’s interests in such securities, together with particulars of any options in respect of such capital:

Long positions in the Shares

			Percentage
			of the
			Company’s
Name of		Number of	issued share
Shareholder	Capacity and nature of interest	Shares	capital
Youth Success	Beneficial owner; deemed interest	209,373,600	56.13%
	under shareholders voting
	agreement (Note 1)
Guang Rui	Beneficial owner; interest in	211,968,000	56.83%
	controlled corporation; deemed
	interest under shareholders
	voting agreement Note 1)
Mr. Yang	Interest in controlled corporation	211,968,000	56.83%
	(Note 1); interest of spouse
	(Note 2); deemed interest under
	shareholders voting agreement
	(Note 1)
Ms. Mou	Interest in controlled corporation	211,968,000	56.83%
	(Note 1); interest of spouse
	(Note 2); deemed interest under
	shareholders voting agreement
	(Note 1)
Mr. Liang	Beneficial owner	36,000,000	9.65%
Mr. Wu Jian	Beneficial owner	31,612,903	8.48%

Notes:

Youth Success and Guang Rui owns 81,378,000 Shares and 2,594,400 Shares respectively, representing 24.56% and 0.78% of the issued share capital of the Company. The issued share capital of Youth Success is legally and beneficially owned as to 83.54% by Guang Rui. Under the SFO, Guang Rui is deemed to be interested in all the Shares registered in the name of Youth Success. The entire issued share capital of Guang Rui is legally and beneficially owned as to 60% by Mr. Yang and 40% by Ms. Mou. By virtue of the First Voting Agreement entered into by Mr. Yang, Ms. Mou,

– 70 –

GENERAL INFORMATION

APPENDIX I

Youth Success, Mr. Li Lin, Alpha Master, Ms. Yang Qi, Qiao Tian, Mr. Wang Yong and Goldbless, Youth Success is deemed to be interested in the Shares held by Alpha Master, Qiao Tian and Goldbless in aggregate by virtue of the SFO.

Ms. Mou is the spouse of Mr. Yang and she is therefore deemed to be interested in all the Shares in which Mr. Yang is deemed to be interested, and vice versa, by virtue of the SFO.

Save as disclosed above, as at the Latest Practicable Date, the Company had not been notified of any other person (other than the Directors and chief executives of the Company) who had an interest or short position in the shares and/or underlying shares of the Company which fell to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO, or pursuant to section 336 of the SFO, which would have to be recorded in the register referred to therein.

3. COMPETING INTERESTS

As at the Latest Practicable Date, the Directors were not aware of any business or interest of the Directors nor the controlling shareholder of the Company nor any of their respective associates that compete or may compete with the business of the Group and any other conflicts of interest which any such person has or may have with the Group.

4. DIRECTOR’S SERVICE CONTRACTS

Mr. Philip Jian Yang, the executive director of the Company, has entered into the service contract with the Company for an initial fixed term of three (3) years commencing from 18 November 2015 renewable automatically until terminated by not less than three (3) months’ prior written notice served by either party on the other expiring at the end of the initial term or any time thereafter.

All non-executive directors of the Company were not appointed for a specific term but their respective terms of office are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the articles of the association of the Company. The rotation clause sets up a mechanism to ensure that all Directors of the Company shall retire at least once every three (3) years and be eligible for re-election.

Each of our independent non-executive directors has entered into a letter of appointment with the Company. Each letter of appointment is for an initial term commencing on the date of the respective letter of appointment and shall continue thereafter subject to a maximum of three (3) years unless terminated by either party giving at least one (1) month’s prior written notice.

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

– 71 –

GENERAL INFORMATION

APPENDIX I

5. INTERESTS IN CONTRACT OR ARRANGEMENTS

Save for disclosed in this circular and below, as at the Latest Practicable Date, none of the Directors was materially interested in contract or arrangement subsisting which is significant in relation to the business of the Group, nor has any Director had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2022, the date to which the latest published audited consolidated financial statements of the Group were made up.

On 15 March 2022, a tenancy agreement (the “ Tenancy Agreement ”) was entered into between Mr. Philip Jian Yang and Beijing Emphasis Media Company Limited (北京無限印象傳媒有限公司) (“ Emphasis Media* ”) for the lease period commencing from 16 March 2022 to 15 March 2024. The right-of-use asset was recognised at approximately RMB1,983,000, representing the present value of the lease payments payable by Emphasis Media under the terms of the Tenancy Agreement.

6. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claim of material importance and there was no litigation, arbitration or claim of material importance pending or threatened against any member of the Group.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2022, the date to which the latest published audited accounts of the Company have been made up.

8. EXPERT AND CONSENT

The following is the qualification of the expert or professional adviser who has given opinion or advice contained in this circular:

Name	Qualification
Jun Hui International	a licensed corporation permitted to carry out Type 6
Finance Limited	(advising on corporate finance) regulated activity
	under the SFO

As at the Latest Practicable Date, Jun Hui International:

(a) did not have any shareholding directly or indirectly in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group;

– 72 –

GENERAL INFORMATION

APPENDIX I

(b) did not have any direct or indirect interest in any assets which had been, since 31 December 2022, the date of the latest published audited accounts of the Group, acquired or disposed of by or leased to any member of the Group, or was proposed to be acquired or disposed of by or leased to any member of the Group; and
(c) had given and had not withdrawn its written consent to the issue of this circular with the inclusion of its statements, letter, report and opinion (as the case maybe) as set out in this circular and references to its name in the form and context in which they are included.

9. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business of the Company) have been entered into by members of the Group within two (2) years immediately preceding up to and including the Latest Practicable Date which are or may be material:

(a) the cooperation agreement dated 20 October 2021 entered into among Truth Pictures (Hong Kong) Limited, Yuanxin Pictures (Beijing) Limited*, Mr. Liang Longfei, CCH Film Production Limited and the Company pursuant to which the said parties agreed to carry out the distribution of six (6) foreign imported films through cinemas, television stations and/or the New Media (as the case may be) at a consideration of RMB30 million;
(b) the equity transfer agreement dated 1 December 2021 entered into among Beijing Chuangju Shi Dai Cultural Communication Limited (北京創聚時代文化傳播有限公司) and Emphasis Media for the sale and purchase of 10% equity interests of Beijing Yiju Creative Technology Limited (北京易聚創意科技有限公司) at the consideration of RMB2,112,900;
(c) the share subscription agreement dated 22 May 2023 entered into by and between the Company as issuer and ALPINE NOVA LIMITED as subscriber, pursuant to which ALPINE NOVA LIMITED agreed to subscribe for, and the Company agreed to allot and issue, a total of 30,362,150 Shares at the total subscription price of RMB5,750,000;
(d) the convertible bonds subscription agreement dated 22 May 2023 entered into by and between the Company as issuer and Ms. Li Wen (李雯) as subscriber, pursuant to which Ms. Li Wen (李雯) agreed to subscribe for, and the Company agreed to issue the convertible bonds due 2025 in the aggregate principal amount of RMB17,500,000;
(e) the share subscription agreement dated 19 June 2023 entered into by and between the Company as issuer and TAN YEW JING as subscriber, pursuant to which TAN YEW JING agreed to subscribe for, and the Company agreed to allot and issue, a total of 25,187,383 Shares at the total subscription price of RMB4,770,000;

– 73 –

GENERAL INFORMATION

APPENDIX I

(f) the Share Subscription Agreement; and
(g) the CB Subscription Agreement.

10. GENERAL

(a) The company secretary of the Company is Ms. Cheung Hoi Fun, who is an associate member of each of The Hong Kong Chartered Governance Institute and The Chartered Governance Institute.
(b) The registered office of the Company is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.
(c) The principal place of business of the Company in Hong Kong is on 23/F, Yue Thai Commercial Building, 128 Connaught Road Central, Sheung Wan, Hong Kong.
(d) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong.
(e) The English texts of this circular shall prevail over the Chinese texts.

11. DOCUMENTS ON DISPLAY

Electronic copies of the following documents are published on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of the Company (http://www.ntmediabj.com) for a period of 14 days from the date of this circular (both days inclusive):

(i) the Share Subscription Agreement;
(ii) the CB Subscription Agreement;
(iii) the letter from the Board;
(iv) the letter from the Independent Board Committee;
(v) the letter from Jun Hui International;
(vi) the written consent of the expert as referred to in the section headed “Expert and Consent” of this Appendix; and
(vii) this circular.
For identification purposes only

– 74 –

NOTICE OF EGM

==> picture [20 x 23] intentionally omitted <==

==> picture [84 x 37] intentionally omitted <==

Creative China Holdings Limited 中國創意控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8368)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Extraordinary General Meeting (“ EGM ”) of Creative China Holdings Limited (the “ Company ”) will be held at 24/F, Admiralty Centre I, 18 Harcourt Road, Admiralty, Hong Kong on Friday, 11 August 2023, at 2:00 p.m. for the following purpose. Unless otherwise indicated, capitalized terms used herein shall have the same meanings as those defined in the circular of the Company dated 24 July 2023 (the “ Circular ”).

ORDINARY RESOLUTIONS

To consider and, if thought fit, pass with or without amendments the following resolutions as ordinary resolutions:

“ THAT :

(1) the Share Subscription Agreement dated 19 June 2023 entered into between the Company and TAN KOON AIK (the “ Share Subscriber ”) (a copy of the Share Subscription Agreement has been produced to the meeting and marked “A” and initialed by the chairman of the EGM for identification purpose) in relation to the allotment and issue of a total of 44,671,963 Subscription Shares by the Share Subscriber at the Subscription Price of HK$0.214 per Subscription Share and the transaction contemplated thereunder be and are hereby approved, confirmed and ratified; and
(2) the CB Subscription Agreement dated 19 June 2023 entered into between the Company and Mr. Nian Binbin (念彬彬) (the “ CB Subscriber ”) (a copy of the CB Subscription Agreement has been produced to the meeting and marked “B” and initialed by the chairman of the EGM for identification purpose) in relation to the issue of the Convertible Bonds in the principal amount of RMB9,000,000 and the transaction contemplated thereunder (including but not limited to the issue of the Convertible Bonds and the allotment and issue of the Conversion Shares upon exercise of conversion rights attaching to the Convertible Bonds) be and are hereby approved, confirmed and ratified;

– 75 –

NOTICE OF EGM

(3) conditional upon the Stock Exchange having approved the listing of and dealing in the Subscription Shares and the Conversion Shares, the Directors be and are hereby granted the Specific Mandate to allot and issue the Subscription Shares and the Conversion Shares in accordance with the terms of the Share Subscription Agreement and CB Subscription Agreement respectively, provided that the Specific Mandate shall be in addition to, and shall not prejudice nor revoke any existing or such other general or specific mandates which may from time to time be granted to the Directors prior to the passing of this resolution; and
(4) any one of the Directors be and is hereby authorised to take any action and execute such other documents as he/she considers necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the Share Subscription Agreement and CB Subscription Agreement and the transactions contemplated thereunder, including, without limitation, the allotment and issue of the Subscription Shares and Conversion Shares under the Specific Mandate.”

By order of the Board Creative China Holdings Limited Philip Jian Yang Chairman and Executive Director

Hong Kong, 24 July 2023

Notes:

(1) Any member entitled to attend and vote at the EGM is entitled to appoint one or more proxies (if such member is the holder of two or more shares) to attend and to vote instead of them. A proxy need not be a member of the Company.
(2) Where there are joint holders of any share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders be present at any meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the register of members in respect of the joint holding.
(3) A form of proxy for use at the EGM is enclosed.
(4) To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority, must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong not less than 48 hours before the time appointed for holding the EGM or adjourned meeting. Completion and return of the form of proxy will not preclude members from attending and voting in person at the EGM or any adjourned meeting.
(5) The register of members of the Company will be closed from Tuesday, 8 August 2023 to Friday, 11 August 2023, both dates inclusive, during which period no transfer of shares will be registered, for the purpose of ascertaining Shareholders’ entitlement to attend and vote at the EGM. In order to be eligible to attend and vote at the EGM, all transfer documents accompanied by the relevant share certificates must be lodged for registration with the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not later than 4:30 p.m. on Monday, 7 August 2023.

– 76 –

NOTICE OF EGM

(6) According to Rule 17.47(4) of the GEM Listing Rules, the voting at the EGM will be taken by poll.
(7) If there is Typhoon Signal No. 8 or above, a “black” rainstorm warning and/or extreme conditions caused by a super typhoon in force in Hong Kong at any time after 11:00 a.m. on the date of the forthcoming extraordinary general meeting, the meeting will be postponed. The Company will publish an announcement on the websites of the Company at http://www.ntmediabj.com and the Stock Exchange at http://www.hkexnews.hk to notify Shareholders of the date, time and venue of the rescheduled meeting.
(8) No corporate gifts or refreshments will be provided at the EGM to reduce close contact between attendees.

As at the date of this notice, the Board of Directors of the Company comprises Mr. Philip Jian Yang as executive Director; Mr. Yang Shiyuan, Mr. Ge Xuyu and Mr. Wang Yong as non-executive Directors; and Ms. Fu Yuehong, Mr. Yau Yan Yuen and Mr. Tan Song Kwang as independent non-executive Directors.

– 77 –

AI assistant

Creative China Holdings Limited — Proxy Solicitation & Information Statement 2023

51411_rns_2023-07-24_57adc6ad-dcb6-40bc-8a23-a329027d48ac.pdf

Creative China Holdings Limited 中國創意控股有限公司

CONNECTED TRANSACTIONS IN RELATION TO

(I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; AND (III) NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Creative China Holdings Limited 中國創意控股有限公司

CONNECTED TRANSACTIONS IN RELATION TO

INTRODUCTION

1. SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE

The Share Subscription Agreement

Share Subscription Conditions Precedent

Share Subscription Completion

Information of the Parties

The Share Subscriber

The Company and the Group

Reasons for the Share Subscription and Use of Proceeds

Effect on the Shareholding Structure of the Company

Contractual Arrangements

LETTER FROM THE BOARD

First Voting Agreement

Second Voting Agreement

LETTER FROM THE BOARD

The Board’s view on the Voting Agreements and Control Undertakings

2. ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

The CB Subscription Agreement

CB Conditions Precedent

LETTER FROM THE BOARD

CB Completion

Principal Terms of the Convertible Bonds

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Information of the Parties

The CB Subscriber

The Company and the Group

Reasons for the Issue of the Convertible Bonds and Use of Proceeds

LETTER FROM THE BOARD

Effect on the Shareholding Structure of the Company

3. EQUITY FUND-RAISING ACTIVITIES OF THE COMPANY DURING THE PAST TWELVE MONTHS

4. SHAREHOLDING STRUCTURE OF THE COMPANY UPON SHARE SUBSCRIPTION COMPLETION AND FULL CONVERSION OF THE CONVERTIBLE BONDS

LETTER FROM THE BOARD

5. SPECIFIC MANDATE

6. LISTING RULES IMPLICATIONS

7. EGM

8. INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

9. CLOSURE OF REGISTER OF MEMBERS

10. RECOMMENDATION

11. ADDITIONAL INFORMATION

WARNING OF THE RISKS OF DEALING IN THE SHARES

Creative China Holdings Limited 中國創意控股有限公司

CONNECTED TRANSACTIONS IN RELATION TO (I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE; AND (III) NOTICE OF EXTRAORDINARY GENERAL MEETING

RECOMMENDATION

CONNECTED TRANSACTIONS IN RELATION TO

(I) SUBSCRIPTION OF NEW SHARES UNDER SPECIFIC MANDATE; AND (II) ISSUE OF CONVERTIBLE BONDS UNDER SPECIFIC MANDATE

INTRODUCTION

Connected transaction in relation to subscription of new Shares under Specific Mandate

Connected transaction in relation to issue of the Convertible Bonds under Specific Mandate

BASIS OF OUR OPINION

LETTER FROM JUN HUI INTERNATIONAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Background and financial information of the Group

(i) Financial results for the year ended 31 December 2022 compared with the year ended 31 December 2021

LETTER FROM JUN HUI INTERNATIONAL

(ii) Financial results for the three months ended 31 March 2023 compared with the three months ended 31 March 2022

II. Historical price and trading performance of the Shares

(i) Share prices

(ii) Trading volumes

III. The Share Subscription Agreement

(i) Information of the Share Subscriber

(ii) Reasons for entering into of the Share Subscription Agreement

Creative China Holdings Limited Proxy Solicitation & Information Statement 2023