Da Sen Holdings Group Limited — Proxy Solicitation & Information Statement 2016

Oct 13, 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Asia Tele-Net and Technology Corporation Limited , you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or the 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.

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ASIA TELE-NET AND TECHNOLOGY CORPORATION LIMITED (Incorporated in Bermuda with limited liability)

(Stock Code: 679)

MAJOR TRANSACTION

DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL IN PAL PROPERTIES INVESTMENT LIMITED

A letter from the Board is set out on pages 4 to 14 of this circular.

14 October 2016

CONTENTS

			Page
Definitions . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1

• i -

DEFINITIONS

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

• “Acquisition”

• the acquisition of the entire equity interest in Yu Man by Gold Beat under which the Group obtained the rights to the Project Land;

• “Acquisition Agreement” the sale and purchase agreement dated 29 October 2014 and all subsequent supplemental agreements entered into among Gold Beat, the Vendor and the Vendor’s Guarantor in relation to the Acquisition;

• “Company” Asia Tele-Net and Technology Corporation Limited, a company incorporated under the laws of Bermuda, the shares of which are listed on the main board of the Stock Exchange;

• “connected person” has the meaning ascribed to it under the Listing Rules;

• “Consultancy Service Agreement”

• the agreement dated 9 October 2015 between Gold Beat and Vendor, together with all subsequent supplemental agreements, under which Gold Beat agreed to retain the Vendor as its agent to coordinate, monitor and responsible for the necessary application procedures with the local government for matters in relation to the change of usage of the Project Land;

• “Director(s)” the directors of the Company;

• “Disposal” the disposal of the entire equity interest in Target Company to the Purchaser;

• “Disposal Agreement” the sale and purchase agreement dated 5 July 2016 entered into among Happy Win, the Purchaser and the Purchaser’s Guarantor in relation to the Disposal;

• “Gold Beat” Gold Beat Investments Limited, a company incorporated under the laws of Hong Kong on 26 November 1996, a member of the Target Group, and a wholly-owned subsidiary of the Company;

• “Group” the Company together with its subsidiaries;

• “Happy Win” Happy Win Resources Limited, a company incorporated under the laws of the British Virgin Islands on 28 October 1999 and a wholly-owned subsidiary of the Company;

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC;

• “HK$”

• Hong Kong dollar, the lawful currency of Hong Kong;

• 1 -

DEFINITIONS

• “Independent Third Parties”

• third parties independent of and not connected with the Company or any of its connected persons;

• “Latest Practicable Date” 11 October 2016, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular;

• “New Land Grant Contract” the new land grant contract to be entered into between the PRC Project Company and the Shenzhen Bureau of Land Resources in relation to the new construction plan of the Project Land;

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

• “PRC Project Company” Zhongba Watches and Electronics Development (Shenzhen) Co., Ltd (中霸鐘錶電子發展（深圳）有限公司), a wholly foreign owned enterprise established under the laws of the PRC on 5 April 2002 and indirectly wholly-owned by the Company;

• “Project Land” two parcels of land located at the north of Songbai Road, Gongmin Subdistrict Office, Guangming New District, Shenzhen, the PRC;

• “Purchaser”

• Fortune Able Investment Holdings Limited, a company incorporated under the laws of the British Virgin Islands on 29 March 2016 and a company wholly owned by Mr. Xiao Tam-ping (肖潭平), an Independent Third Party;

• “Purchaser Guarantor” Shenzhen Feng Hua Construction Group Limited, a company incorporated under the laws of the PRC on 26 August 1993 and its ultimate beneficial controlling shareholder is Mr. Xiao Tam-ping (肖潭平);

• “Relevant Shareholders” Medusa Group Limited, Karfun Investments Limited and Mr. Lam Kwok Hing, each being an existing shareholder of the Company;

“RMB”

Renminbi, the lawful currency of the PRC;

• “Shenzhen Bureau of Land Resources”

• Shenzhen City Bureau of Land Resources and Construction Planning (深圳市規劃與國土資源委員會), a government department responsible for land and resources under the local government of Shenzhen;

“Stock Exchange”

The Stock Exchange of Hong Kong Limited;

• 2 -

DEFINITIONS

“Target Company”	PAL Properties Investment Limited, a company incorporated under
	the laws of the British Virgin Islands on 3 July 1996 and a wholly-
	owned subsidiary of the Company;
“Target Group”	the Target Company, Gold Beat, Yu Man and the PRC Project
	Company;
“Vendor”	Trillion Ocean Limited, a company incorporated under the laws of
	the British Virgin Islands on 2 September 2014 and a company
	wholly owned by Mr. Lin His-chang (林喜常), an Independent
	Third Party;
“Vendor’s Guarantor”	Ms. Zhong Qiuxia as guarantor to the Vendor;
“Yu Man”	Yu Man Limited, a company incorporated under the laws of Hong
	Kong on 7 August 2014, a member of the Target Group, and a
	company wholly-owned by the Company; and
“%”	per cent.

For illustration purposes, amounts in RMB in this circular have been translated into HK$ at HK$1.00 = RMB0.862.

• 3 -

LETTER FROM THE BOARD

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ASIA TELE-NET AND TECHNOLOGY CORPORATION LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 679)

Executive Directors: Lam Kwok Hing (Chairman) Nam Kwok Lun (Deputy Chairman)

Independent non-executive Directors: Cheung Kin Wai Kwan Wang Wai Alan Ng Chi Kin David

Registered Office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal Place of Business in Hong Kong: 11 Dai Hei Street Tai Po Industrial Estate Tai Po New Territories Hong Kong

14 October 2016

To the Shareholders

Dear Sir/Madam,

MAJOR TRANSACTION DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL IN PAL PROPERTIES INVESTMENT LIMITED

INTRODUCTION

The Board announced that on 5 July 2016, Happy Win, a direct wholly-owned subsidiary of the Company, entered into the Disposal Agreement with the Purchaser and the Purchaser’s Guarantor, pursuant to which the Purchaser has conditionally agreed to acquire, and Happy Win has conditionally agreed to sell, the entire issued share capital of the Target Company, together with all outstanding shareholder’s loan standing as at completion, at a consideration of HK$181,950,000.

The purpose of this circular is to provide you with the information relating to, among other things, further details regarding the details of the Disposal and other information as required under the Listing Rules.

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LETTER FROM THE BOARD

THE DISPOSAL AGREEMENT

Date: 5 July 2016

The Parties:

• (i) Happy Win, a wholly-owned subsidiary of the Company, as vendor;

• (ii) Fortune Able Investment Holdings Limited as Purchaser; and

• (iii) Shenzhen Feng Hua Construction Group Ltd, as the Purchaser’s Guarantor.

To the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiries, the Purchaser, its ultimate beneficial owner(s) and the Purchaser’s Guarantor are Independent Third Parties.

Subject Matter

Pursuant to the Disposal Agreement, the Purchaser has conditionally agreed to acquire, and Happy Win has conditionally agreed to sell, the entire issued share capital of the Target Company, together with all outstanding shareholder’s loan standing as at completion.

The principal asset of the Target Company is its investment in the PRC Project Company which in turn holds the Project Land. The Project Land comprises two parcels of land located at north of Songbai Road, Gongmin Subdistrict Office, Guangming New District, Shenzhen, the PRC.

The Project Land was acquired by the Group under the Acquisition Agreement. The Project Land originally comprised a site area of 34,367.94 square metres. But further to a land resumption request issued by the Shenzhen Bureau of Land Resources, 21,752 square metres of the Project Land were returned to the local government for the construction of public roads and greenbelt. In return, the PRC Project Company will receive compensation in the aggregate amount of approximately RMB 21,816,000, of which RMB 10,908,000 was received in March 2016. The remaining outstanding amount of RMB10,908,000, if and when refunded, will be refunded to the PRC Project Company and Happy Win will not be entitled to such remaining amount.

The remaining site area of the Project Land is 12,616 square metres and subject to the payment of additional land premium, could build up to a maximum 37,848 square metres of gross floor area. In order to meet the Group’s development plan, the PRC Project Company is in the process of applying to the Shenzhen Bureau of Land Resources to change the usage of the Project Land from pure industrial usage to include research and development office and dormitory purposes.

According to the terms of the Consultancy Service Agreement and the Acquisition Agreement, the expected date to complete the change of usage as well as to enter into the New Land Grant Contract between the PRC Project Company and the Shenzhen Bureau of Land Resources was 30 April 2016. Due to a landslide accident in late-2015, the local government in Gongmin has been busy in the recovery work related to the accident and the subsequent investigation, and the approval process has taken longer than expected as

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LETTER FROM THE BOARD

a result. In accordance with the terms of the Consultancy Service Agreement and the Acquisition Agreement, the Group has the right to extend the agreed deadline if it sees fit. As such, the Group has extended the date of completion of the change of usage to 30 June 2016.

Consideration and Payment Arrangement

Consideration:

The consideration for the Disposal payable by the Purchaser to Happy Win is HK$181,950,000, which will be payable by the Purchaser in the following manner:

• (i) HK$58,320,000, representing approximately 32% of the consideration, will be payable within two business days upon the signing of the Disposal Agreement (the “ First Instalment ”);

• (ii) HK$48,986,000, representing approximately 27% of the consideration, will be payable within two business days of completion (the “ Second Instalment ”); and

• (iii) HK$74,644,000, representing approximately 41% of the consideration, will be payable on or before 23 December 2016.

As at the Latest Practicable Date, the First Instalment and the Second Instalment have been settled.

As at the Latest Practicable Date, the shareholder’s loan made by Happy Win to the Target Group is approximately HK$113,000,000. After netting off the shareholder’s loan due to Happy Win as at the date of completion from the consideration, the balance will represent the consideration paid for the entire equity interest in the Target Company. Based on the Company’s best estimates, the shareholder’s loan due to Happy Win will not be more than HK$117,000,000 as at the date of completion.

Basis of Consideration:

The consideration for the Disposal was determined with reference to (i) the initial capital investment and outstanding shareholder’s loan made by Happy Win to the Target Group; (ii) the further capital requirement for the development of the Project Land; (iii) the remaining outstanding amount of refund to the PRC Project Company as described in the paragraph headed “Subject Matter”; (iv) the benefits that may be offered by other suitable site; and (v) the expected gain from the Disposal. Based on the foregoing, the Directors are of the view that the consideration for the Disposal is fair and reasonable.

Conditions Precedent

Completion of the Disposal is conditional upon:

• (i) closure of the Acquisition Agreement on the terms as set out in the paragraph headed “Closure of the Acquisition Agreement” below;

• (ii) the warranties given by Happy Win under the Disposal Agreement remaining true, accurate and not misleading;

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LETTER FROM THE BOARD

• (iii) in respect of the business, assets or operation of the Target Group, there being no unusual operation, material safety incidents or any material adverse change or any omission to disclose any material risks having been discovered;

• (iv) the Company having complied with the shareholders’ approval requirement of the Disposal Agreement and the transactions contemplated thereunder in accordance with the Listing Rules;

• (v) any and all of the receivables, indebtedness or repayment obligations among any companies of the Target Group or any other third parties, except the shareholder’s loan due to Happy Win, having been satisfied or repaid (as the case may be) to the satisfaction of the Purchaser; and

• (vi) from the date of the Disposal Agreement till completion, the Target Group not having received any order, notice or instructions from any court, arbitration tribunal, governmental or other regulatory department, prohibiting or restricting the Purchaser to proceed with the transactions as contemplated under the Disposal Agreement or having any adverse impact for the entire interests in the Target Company to be transferred to the Purchaser.

If any of the conditions precedent mentioned above have not been fulfilled or waived (save for condition (iv) above which cannot be waived) on or before 30 September 2016 (or such other date as the Purchaser and the Vendor may agree in writing), the Disposal Agreement will cease to have any further effect and none of the parties to the Disposal Agreement will have any obligation and liability towards each other save for any prior breaches of the Disposal Agreement.

Completion

Completion of the Disposal will be on a date within five business days after the satisfaction or waiver (as the case may be), save for condition (iv) above which cannot be waived, of the conditions precedent above.

All of the conditions have been satisfied and completion took place on 27 September 2016.

INFORMATION ON THE TARGET GROUP

As at the Latest Practicable Date, the principal business of the Target Group is investment holding. Except for holding the entire equity interest in the PRC Project Company is held indirectly by the Target Company which in turn is wholly-owned by the Company, the Target Group has no other business. The principal asset of the PRC Project Company is the Project Land.

The valuation report which contains further details of the Project Land is set out in Appendix II of this circular. A summary of the Project Land is set out below:

• (i) the Project Land consists of two parcels of land located at north of Songbai Road, Gongmin Subdistrict Office, Guangming New District, Shenzhen, the PRC, with a total gross site area of 12,616 square metres. The Project Land is currently owned by the PRC Project Company;

• (ii) the Project Land is vacant as at the Latest Practicable Date;

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LETTER FROM THE BOARD

• (iii) the Project Land is designated for industrial use for a term expiring on 7 October 2054. Pending approval by the local government, the existing land grant contract will be changed to include research and development office building and dormitory purpose;

• (iv) as at the Latest Practicable Date, to the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiries:

• (a) there are no encumbrances, liens, pledges, mortgages against the Project Land;

• (b) there are no environmental issues in relation to the Project Land; and

• (c) there are no investigations, notices, pending litigation, breaches of law or title defects.

Set out below is the unaudited consolidated financial information of the Target Company for the two financial years ended 31 December 2014 and 2015 and the six months ended 30 June 2016:

			For the six
	Year ended 31	Year ended 31	months ended
	December 2014	December 2015	30 June 2016
	(unaudited)	(unaudited)	(unaudited)
	HK$’000	HK$’000	HK$’000
Profit/(loss) before taxation	(346.7)	(1,032.3)	(6,826.3)
Profit/(loss) after taxation	(346.7)	(1,032.3)	(6,826.3)
Total Assets/(liabilities)	78,995.6	76,320.3	117,807.8
Net Assets/(liabilities)	(8,829.6)	(12,867.6)	(8,449.7)

• The Target Company was incorporated on 7 August 2014.

Excluding the shareholder loan due to the Company, the Target Group has a net assets of approximately HK$104.7 million as at 30 June 2016.

The increase of total assets from HK$76.3 million as at 31 December 2015 to HK$117.8 million as at 30 June 2016 was mainly due to (i) land resumption compensation of approximately HK$12.5 million (approximately RMB10.9 million) received by the PRC Project Company details of which are disclosed in the paragraph headed “Subject Matter” of this letter; (ii) an increase in prepayment in relation to the investment in Yu Man of approximately HK$35 million; and (iii) writing off of an intercompany loan due from Happy Win to Gold Beat in the amount of approximately HK$5.8 million.

• 8 -

LETTER FROM THE BOARD

With respect to the item (ii) above in relation to the increased prepayment, the background information is as follows:

• i. pursuant to the entrusted loan agreement dated 27 October 2014 entered into between the Process Automation (Shenzhen) Limited (a wholly owned subsidiary of the Group) (“ PASL ”) as lender and Shang Hao Art and Craft (Huizhou) Company Limited (“ Shanghao ”) as borrower, PASL provided a loan in the amount of RMB30,000,000 through its designated bank in the PRC (the “ Loan ”);

• ii. in March 2016, upon fulfilment of certain conditions under the Acquisition Agreement, PASL obtained repayment of the Loan and pursuant to the terms of the Acquisition Agreement, Gold Beat paid an amount equivalent to the value of the Loan to the Vendor, representing an increased prepayment in relation to the investment in Yu Man. As such, the payment in March was recorded as an increased in assets in the unaudited consolidated financial information of the Target Company as at 30 June 2016.

Upon completion, the Target Company and each of its subsidiaries will cease to be subsidiaries of the Company and their financial results will not be included in the consolidated financial statements of the Group. The following shows the structure of the Group before and after completion of the Disposal:

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LETTER FROM THE BOARD

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

Before completion
Company
100%
Happy Win
100% 100%
Other Group
Target Company
Companies
100%
Gold Beat
100%
Yu Man
100%
PRC Project
Company
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----- Start of picture text -----

After completion
Company
100%
Happy Win
100%
Other Group
Companies
----- End of picture text -----

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LETTER FROM THE BOARD

REASONS FOR AND BENEFIT OF THE DISPOSAL

Reference is made to the Company’s announcement dated 9 October 2015. The Project Land is designated for industrial use under the terms of the existing land grant contract. By changing the usage of the Project Land to include research and development office building and dormitory purposes, the Group will enjoy greater flexibility over the Project Land by dividing the buildings on the Project Land into selfuse or for leasing purposes. If the Group proceeds with the application to change the usage of the Project Land and erect the buildings on its own, the Group will have about 24,579 square metres for its production uses and dormitory for its staff and about 13,270 square metres for leasing purpose. It is expected that the earliest time to be able to lease out the research and development office and move into the production plant will be in late 2019.

The Group has relocated its production base to a ready-built factory in Datianyan Industrial Zone, Songgan Street Committee, Baoan District (the “ Songgan Factory ”) under a short term lease, which will expire in August 2016. In December 2015, the Group has successfully extended the lease of the Songgan Factory from August 2016 to August 2018. It is the intention of the Group to discuss with the landlord prior to the expiry of the current lease term to extend such lease further and beyond August 2018.

The Songgan Factory is a better choice to the Company over the Project Land given its flat and high ground clearance production area. Prior to the Songgan Factory being leased out to the Group, the Songgan Factory was used as a steel-making factory with a single floor with high ceiling which is extremely suitable for the Group’s production needs. The electroplating equipment that the Group built is typically tall and large in nature and as such traditional ready-built factory buildings may not normally be suitable for the purpose of the Group. The Songgan Factory is a single storey production plant with a floor area of about 14,600 square metres. Although the floor area of the production plant to be built on the Project Land is close to 20,000 square metres, it will be spreaded over 4-5 storeys due to the limitation of the site area. While the Project Land is fit for the Group’s uses, the Group believes that a single storey production plant will provide the Group with better efficiency than working from a multi-stories production facility. Before the Group entered into the Acquisition Agreement in 2014, the Group has searched for ready-built factory but no suitable facility was identified at that time. As such, the Project Land represented the best available option to the Group then.

While the Group is in the process of applying to change the usage of the Project Land, the Group received an offer from the Purchaser to acquire the entire beneficial interest in the Project Land. If the Group takes up the offer of the Purchaser, it is expected that, after deducting all relevant expenses, the Group will record a profit after taxes of approximately HK$60 million. Therefore, instead of constructing its own production plant from scratch, the Directors consider that it would be beneficial to accept the offer from the Purchaser and keep the Songgan Factory, as the Disposal will offer an attractive return on the Group’s investment on the Project Land. In the mean time, the Company would still have the option of searching for other sites which is better suited for the Group’s long-term production needs.

Based on the foregoing, the Directors consider that the Disposal is entered into on normal commercial terms, and the terms are fair and reasonable and in the interests of the Company and its shareholders as a whole.

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LETTER FROM THE BOARD

FINANCIAL EFFECTS OF AND USE OF NET PROCEEDS

Following completion, members of the Target Group would cease to be subsidiaries of the Company and their financial results will not be included in the consolidated financial statements of the Group. It is estimated that, upon completion, the Group would recognise a gain of approximately HK$60 million which is calculated by reference to the sum of (i) the consideration of HK$181,950,000; and (ii) the estimated net liabilities of approximately HK$8,449,700; less the sum of (i) the estimated shareholder’s loan of approximately HK$113,000,000; and (ii) the estimated transaction costs and taxes attributable to the Disposal Agreement.

The actual financial effect in relation to the Disposal Agreement will be calculated based on the financial information of the Disposal Group as at completion.

The Company intends to utilize the net proceeds of the Disposal to acquire another piece of land as the long term production site for the Group and if no suitable site is located, to apply the net proceeds as general working capital of the Group.

CLOSURE OF THE ACQUISITION AGREEMENT

As a condition of completion of the Disposal Agreement, Gold Beat entered into a closure arrangement for the Acquisition Agreement and the Consultancy Service Agreement with the Vendor and the Vendor’s Guarantor on 5 July 2016 with the Vendor and the Vendor’s Guarantor on the following terms:–

• (i) the obligations to complete the application in respect of the change of usage for the Project Land as imposed on the Vendor and Vendor’s Guarantor are relieved;

• (ii) Gold Beat will settle the remaining consideration of RMB16,000,000 (equivalent to approximately HK$18,560,000) to the Vendor on or before 14 July 2016;

• (iii) Gold Beat is not required to settle the remaining service fees of RMB2,100,000 (equivalent to approximately HK$2,440,000) to the Vendor as stipulated under the Consultancy Service Agreement.

Given that the Vendor has to cease all its work in progress through no fault on its part, the Group is obliged to honour the outstanding payments under the Acquisition Agreement. Since the application for the change of usage is not completed, the Vendor agreed to waive the payment of the remaining service fees under the Consultancy Service Agreement.

Based on the foregoing, the Directors consider that the entering into of the above arrangements for the closure of the Acquisition Agreement and the Consultancy Service Agreement is on normal commercial terms, and the terms are fair and reasonable and in the interests of the Company and its shareholders as a whole.

• 12 -

LETTER FROM THE BOARD

SERVICE AGREEMENT TO SEARCH FOR ANOTHER SUITABLE SITE

As explained above, it is the intention of the Group to keep searching for other sites which is better suited for the Group’s long-term production needs. The Group has therefore entered into a service agreement with an independent third party to help the Group in searching for a suitable site in Shenzhen. The service agreement is for an engagement of 18-months period commencing from 1st of July 2016 for a total service fee of RMB1,200,000 (equivalent to approximately HK$1,400,000).

INFORMATION ON THE PARTIES

The Company is a company incorporated in Bermuda with limited liability, the shares of which are listed on the main board of the Stock Exchange. The Company is an investment holding company based in Asia providing advanced technologies to its customers worldwide, with various disciplines with particular strength in electroplating technologies for application in different applications or business segments.

Happy Win is an investment holding company incorporated in the British Virgin Islands and is a wholly-owned subsidiary of the Company.

The Purchaser is an investment holding company incorporated in the British Virgin Islands.

The Purchaser’s Guarantor is a company established in the PRC which has been in the construction business for over twenty years.

The Vendor is an investment holding company incorporated in the British Virgin Islands. The Vender is a company wholly-owned by Mr. Lin His-chang (林喜常), an Independent Third Party.

The Target Company is a company incorporated in the British Virgin Islands and is an investment holding company.

The PRC Project Company is a wholly foreign owned enterprise established in the PRC and was principally engaged in the manufacturing of electronic products.

LISTING RULES IMPLICATIONS

As the applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal are more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company and is subject to notification, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

To the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiries, no shareholders or their associates of the Company have any material interest in the Disposal and accordingly, no shareholder is required to abstain from voting in favour of the resolution approving the Disposal, should the Disposal be put forward to the shareholders for approval at a general

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LETTER FROM THE BOARD

meeting of the Company. As at the date of the Disposal Agreement and the Latest Practicable Date, the shareholding and relationship between the Relevant Shareholders, being Medusa Group Limited, Karfun Investments Limited and Mr. Lam Kwok Hing, are as follows:

• (i) Medusa Group Limited, a company wholly-owned by Mr. Lam Kwok Hing, directly holds 48,520,666 Shares;

• (ii) Karfun Investments Limited, company substantially owned by J & A Investment Limited, which is beneficially owned as to 80% by Mr. Lam Kwok Hing and 20% by Mr. Nam Kwok Lun, each an executive Director, directly holds 201,995,834 Shares; and

• (iii) Mr. Lam Kwok Hing, the Chairman and an Executive Director, directly holds 3,474,667 Shares.

The Relevant Shareholders are collectively interested in an aggregate of 253,991,167 Shares, representing approximately 59.56% of the issued share capital of the Company. Accordingly, the Company has approved the Disposal by a written approval from the Relevant Shareholders in accordance with Rule 14.44 of the Listing Rules in lieu of a resolution to be passed at a general meeting of the Company.

RECOMMENDATION

The Directors, including the independent non-executive Directors, are of the view that the terms of the Disposal Agreement and the transactions contemplated thereunder are fair and reasonable and in the interest of the Group and the Shareholders as a whole. Accordingly, should a resolution be put at a general meeting of the Company for the Shareholders to consider the Disposal, the Directors would recommend the Shareholders to vote in favour of such resolution.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order of the Board Asia Tele-Net and Technology Corporation Ltd Lam Kwok Hing Chairman

• 14 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements, together with the accompanying notes to the financial statements, of the Company for the years ended 31 December 2013, 2014 and 2015 are disclosed on pages 37 to 102, pages 37 to 104 and pages 45 to 114 of the annual reports of the Company for the years ended 31 December 2013, 2014 and 2015 respectively. The unaudited consolidated financial statements, together with the accompanying notes, of the Company for the six months ended 30 June 2016 are disclosed on pages 28 to 44 of the 2016 interim report. The management discussion and analysis of the Company for the years ended 31 December 2013, 2014 and 2015 and the six months ended 30 June 2016 are disclosed in the published annual report and interim report respectively of the Company for the relevant years.

Annual report of the Company for the year ended 31 December 2013:

http://www.hkexnews.hk/listedco/listconews/SEHK/2014/0424/LTN20140424277.pdf

Annual report of the Company for the year ended 31 December 2014:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0427/LTN20150427415.pdf

Annual report of the Company for the year ended 31 December 2015:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0428/LTN201604282056.pdf

Interim Report of the Company for the period ended 30 June 2016:

http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0926/LTN20160926149.pdf

All of the above information have been published on the websites of the Stock Exchange (http://www.hkex.com.hk) and the Company (http://www.atnt.biz).

2. INDEBTEDNESS STATEMENT

(i) Borrowings and debts

As at the close of business on 31 August 2016, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had bank borrowing of approximately HK$15,500,000. As at 31 August 2016, the Group pledged deposits of approximately HK$6,045,000 to a bank for the issuance of a bank guarantee under which customer retains right to claim refund of purchase deposits received by the Group.

• I-1 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(ii) General debt structure

Save as otherwise disclosed herein and apart from intra-group liabilities, the Group did not have any debt securities issued and outstanding, and authorised or otherwise created but unissued, bank overdrafts, charges or debentures, mortgages, loans or other similar indebtedness or any finance lease commitments, hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits or any guarantees.

(iii) Contingent liabilities

As at 31 August 2016, the Group had granted corporate guarantees of approximately HK$137,500,000 to banks in respect of banking facilities of approximately HK$132,300,000 granted to the subsidiaries of the Company. The amount utilized by the subsidiaries was approximately HK$24,780,000 being HK$15,500,000 in relation to discounted export bills, HK$6,045,000 in relation to the issuance of a bank guarantee and HK$3,235,000 in relation to the issuance of import letters of credit to suppliers.

3. WORKING CAPITAL

After taking into account (i) the estimated net proceeds from the Disposal; and (ii) the financial resources presently available to the Group including our internally generated funds, the Directors, after due and careful enquiry, are of the opinion that the Group has sufficient working capital to satisfy its present requirements and at least the next 12 months from the date of publication of this circular, in the absence of unforeseeable circumstances.

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material change in the financial or trading position or outlook of the Group since 31 December 2015, the date to which the latest audited consolidated financial statements of the Group were made up, up to and including the Latest Practicable Date.

5. FINANCIAL AND TRADING PROSPECTS

During the period ended 30 June, 2016 (“ Period Under Review ”), the Group recorded profit attributable to owners of the Company of approximately HK$5,620,000 compared to the profit attributable to owners of the Company of approximately HK$27,722,000 for the period ended 30 June, 2015 (“ Previous Period ”). The significant drop in Group’s profit attributable to owners of the Company during the Period Under Review was primarily due to (i) the change from a net positive change recorded in the Previous Period to a net negative change recorded in the Period Under Review in the fair value of investments held for trading and (ii) reduced profit margin from 26% to 21%. As far as the sales of electroplating equipment is concerned, the revenue recorded in the Period Under Review was in fact higher than that of the Previous Period. However, this positive impact was offset by a decrease in gross profit margin as recorded in the Period Under Review. The performance of the Group is further reviewed and elaborated in the following sections.

• I-2 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The basic earnings per share for the Period Under Review was HK1.32 cents compared to the basic earnings per share of HK6.50 cents for the Previous Period.

BUSINESS REVIEW ON ELECTROPLATING EQUIPMENT (UNDER THE TRADE NAME OF “PAL”)

Electroplating Equipment-Printed Circuit Boards (“PCB”) Sector

This sector is traded through our subsidiary Process Automation International Ltd (“ PAL ”).

During the Period Under Review, the revenue in this business area increased to HK$139,903,000 from HK$88,986,000 in Previous Period, representing 57% rise. Out of this total revenue, nearly 44% were shipment made to PRC.

Key drivers for demand of PCBs are mobile devices, car electronics and internet-of-things. Consumers crave advanced technology and that drives the demands. On the other hands, price erosion is severe as there is no sign of strong recovery in economy. This explains why most of the PCB players were busy but were not making substantial profit in first half of 2016. Worldwide PCB output has shrunk in 2015 in terms of dollars and is expected a moderate increase only in 2016.

Major Region	2012	2013	2014	2015	2016(F)
Americas	3,156	3,100	3,078	2,928	3,000
Germany	1,075	1,090	1,097	917	980
Other Europe	1,840	1,720	1,640	1,485	1,720
China	25,530	26,551	28,200	28,605	29,100
Japan	8,624	6,300	5,930	5,430	5,400
Taiwan	7,995	8,155	7,850	7,810	7,850
S. Korea	7,992	8,870	7,597	6,720	6,890
Thailand	1,298	1,747	2,209	2,470	2,830
Other Asia	2,287	2,247	2,622	2,582	2,470
World Total	59,797	59,780	60,223	58,947	60,240

Source: New Technology Information Ltd[1]

The June leading indicators published by Markit Economics and ISM provided a snapshot of the global electronic market conditions:–

• With the exception of China and Japan most countries’ manufacturing activity increased.

1 New Technology Information Ltd is a consulting company specialized in PCB industry.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

• The global manufacturing PMI[2] although weighed down by China and Japan, still increased modestly on a world basis.

• The USA rebounded.

• The Eurozone saw a significant increase but it should be noted that most of the June survey was done prior to the UK’s Brexit vote. However, with the exception of France, all major European countries reported a manufacturing expansion (PMI>50) in June.

• Asia was mixed with China and Japan contracting but Taiwan, S Korea, India, Vietnam and Indonesia expanding.

Europe felt the pain of Brexit as the UK PMI dropped sharply and many other European countries saw weaker July PMIs. In addition global terrorism and political unrest remain major issues but world manufacturing activity seems to be growing.

During the Period Under Review, PAL sold mainly to premium smartphone PCB makers. Since the lines on smartphone PCB are getting thinner and thinner, industrial players have to invest in high-end electroplating equipment in order to support the most advanced smartphone models. Regrettably, although the sales of high-end smartphone is still growing, Gartner[3] said sale of smartphone is expected to grow 7% only in 2016. The era of double digits growth has gone. It is mainly because smartphone markets has reached 90% penetration in the mature markets of North America, Western Europe, Japan and mature Asian countries. Based on the figures released by Gartner, sales of smartphone in 2016 grew 3.9% in quarter one and 4.3% in quarter two on year-on-year basis.

Worldwide Smartphone Sales to End Users by Vendor in 2Q16 (Thousands of Units)

		2Q16		2Q15
		Market		Market
Company	2Q16	Share	2Q15	Share
	Units	(%)	Units	(%)
Samsung	76,743.5	22.3	72,072.5	21.8
Apple	44,395.0	12.9	48,085.5	14.6
Huawei	30,670.7	8.9	26,454.4	8.0
Oppo	18,489.6	5.4	8,073.8	2.4
Xiaomi	15,530.7	4.5	15,464.5	4.7
Others	158,530.3	46.0	160,162.1	48.5
Total	344,359.7	100.0	330,312.9	100.0

Source: Gartner Inc (August 2016)

2 The Global Manufacturing PMI is compiled by Markit Economics based on the results of surveys covering over 10,000 purchasing executives in over 30 countries. Together these countries account for an estimated 89% of global manufacturing output.

3 Gartner Inc (NYSE: IT) is an information technology research and advisory company.

• I-4 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Due to this moderate sales improvement in smartphone, the Group was under price pressure to support our customers and the gross profit margin has dropped by 5% for the Period Under Review.

Electroplating Equipment-Surface Finishing (“SF”) Sector

This sector is traded through our subsidiary PAL Surface Treatment Systems Ltd (“ PSTS ”).

The revenue of SF sector has increased by 510% from approximately HK$23,159,000 in the Previous Period to approximately HK$141,269,000 for the Period Under Review.

While the increased revenue streamed from European and US customers in automobile sector, a majority of their newly established production base was in China in view of the up-rising sales of passenger cars in China. In July 2016, sales were up 26.3% year-on-year to 1.6 million units, the highest monthly growth in 30 months, according to the China Association of Automobile Manufacturers. Sales over the first seven months of the year were up 11% to 12.64 million cars. Vehicle sales, passenger cars plus commercial vehicles, were up 9.84% to 14.68 million units in the first seven months. The possible drawback for any further expansion in China is the difficulty in getting an approval over the environmental assessment when a new plant is being set up.

Another trend we seen in automobile sector is there are more and more auto makers building their new factories in Mexico. Volkswagen AG was the first to set its footprint in Mexico in 2008. At least seven Asian and European auto makers have opened Mexican assembly plants by now, among them are Nissan Motor Co., General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV. Audi is now finishing a $1.3 billion factory in a Mexico town called San José Chiapa and is expecting to produce the Audi Q5 in 2016. The Mexico’s low wages and improved logistics were part of the draw. But what tipped the scales was Mexico’s unrivaled trade relationships. Mexico had more than 40 different free-trade agreements which provides exporters from Mexico duty-free access to markets that contain 60% of the world’s economic output. Our customers who are the downstream parts-suppliers to these auto makers are following the trend and setting out plan to expand their production capacity in Mexico. During the Period Under Review, the Group has also shipped to and installed equipment in Mexico. Quite a number of quotes were issued for enquires in relation to Mexico sites.

Electroplating Equipment – Photo Voltaic (“PV” or “Solar”) Sector

This sector is traded through our subsidiary Process Automation International Ltd (“ PAL ”).

Sales to PV sector in the Period Under Review has decreased by 99% from approximately HK$46,420,000 in the Previous Period to approximately HK$394,000 for the Period Under Review.

• I-5 -

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In March 2016, we wrote in our 2015 Annual Report “according to a forecast released by GTM Research in March 2016, GTM said US solar market will grow by 119% in 2016.” Originally, we were expecting increased orders from our US customers in PV sector for the Period Under Review but then came the headwind:–

• In the first quarter of 2016, US has only installed 1,665MW of solar PV. With 14.5GW of installations forecast by GTM Research for 2016, the actual performance was down by 1.5GW than was previously predicted. GTM Research analyst Colin Smith explained that this shortfall is largely due to the tax credit extension. Upon the extension, developers have no rush to complete their production facilities.

• SunEdison Inc., once the fastest-growing U.S. renewable energy company, filed for Chapter 11 bankruptcy protection in April 2016.

• Most of the big solar players reported wider losses in first half of 2016.

The economics of renewable energy are a balance between public policies (e.g. subsidies, legislation, etc.), the availability and pricing of alternative energy sources (e.g. crude oil, natural gas, coal, etc.). The fact that the price of crude oil (Brent) fell by 50 percent from approximately $110 per barrel in July 2014 to $50-55 per barrel now would not help sales of renewable energy. The recent undergoing change in the public policies will only add further pressure on the solar players. Authorities are now moving away from making fixed subsidy payments for clean energy and toward a system of auctions. The new system forces solar companies to compete for contracts to sell electricity and has resulted in offers to supply photo voltaic power at record-low rates this year. Bigger markets including Germany and Japan will start the practice next year. Under this new public policies, there are concerns that many of the projects won’t make money but companies are still eager to win the bids in order to get new funding to keep their companies going. Thincapitalized developers will easily go bust under such circumstances and this is not a healthy development as far as the industry is concerned.

Outlook

Although the Group’s recorded profit after taxes was significantly lower year-on-year basis, the key factor attributable to this result was the change from a net positive change recorded in the Previous Period to a net negative change recorded in the Period Under Review in the fair value of investments held for trading. If one ignores the financial impact of this factor, the Group would in fact made a profit of approximately HK$19,000,000 for the Period Under Review. Net negative change in the fair value of investment held for trading was an unrealized losses and brought no impact at all to the cash flow position of the Group.

Performance of next half year will mainly rest on next round of investment in relation to the new smartphone models and the continuation of the car sales growth. PCBs for new smartphone models are switching from high-density interconnect (“ HDI ”) board to substrate-like HDI. Our customers are working diligently to get qualifications over this new process in order to capture the 2017 smartphone shipment orders. If global automobile production continues to gain momentum in the second half of 2016 as in the first half 2016, we are conservatively confident that the Group will continue to report an operating profit throughout this year.

• I-6 -

VALUATION REPORT

APPENDIX II

The following is the text of a letter and valuation certificate, prepared for the purpose of incorporation in this circular received from RHL Appraisal Limited., an independent valuer, in connection with its valuation as at 31 August 2016 of the Property held by Asia Tele-Net and Technology Corporation Ltd.

==> picture [93 x 99] intentionally omitted <==

T: +852 2730 6212 F: +852 2736 9284 Room 1010, 10/F, Star House Tsimshatsui, Hong Kong

11 October 2016

The Board of Directors

Asia Tele-Net and Technology Corporation Ltd

11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong

Dear Sir/Madam,

INSTRUCTIONS

We refer to your instruction for us to value the property interest (“the Property”) to be disposed by Asia Tele-Net and Technology Corporation Ltd (the “Company”) located in the People’s Republic of China (“PRC”). We confirm that we have carried out property inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property as at 31 August 2016 (the “Valuation Date”).

This letter which forms part of our valuation report explains the basis and methodologies of valuation, clarifying assumptions, valuation considerations, title investigations and limiting conditions of this valuation.

BASIS OF VALUATION

The valuation is our opinion of the market value (“Market Value”) which we would define as intended to mean the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion.

• II-1 -

VALUATION REPORT

APPENDIX II

Market Value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase and without offset for any associated taxes or potential taxes.

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, joint ventures, management agreements, special considerations or concessions granted by anyone associated with the sale, or any element of special value.

VALUATION METHODOLOGY

We have valued the Property interest by using the Direct Comparison Approach by making reference to the comparable market transactions/asking cases as available. Comparable properties of similar size, scale, nature, character and location are analysed and carefully weighed against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of market value.

VALUATION CONSIDERATIONS

In valuing the property interest, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the HKIS Valuation Standards 2012 Edition.

VALUATION ASSUMPTION

In our valuation, unless otherwise stated, we have assumed that:

• i. transferable land use rights in respect of the Property for specific terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid;

• ii. the Property is connected to main services and sewers which are available on normal terms;

• iii. there is no substantial change in the physical conditions of the Property between the Valuation Date and the date of our inspection.

TITLE INVESTIGATION

We have been shown copies of various documents relating to the Property. However, we have not examined the original documents to verify the existing titles to the Property or any amendment which does not appear on the copies handed to us. We have relied considerably on the information given by the Company’s PRC legal advisers, Zhong Lun Law Firm, concerning the validity of the titles to the Property.

LIMITING CONDITIONS

We have conducted on-site inspections to the Property in the PRC on 14 September 2016 by our staff Mr. Christopher Cheung (BSc in Estate Management, BBA) who has 2-year experience in property inspection.

• II-2 -

VALUATION REPORT

APPENDIX II

During the course of our inspections, we did not note any serious defects. However, we must point out that we have not carried out a structural survey nor have we inspected parts of the structures which are covered, unexposed or inaccessible, we are therefore unable to report and any such part of the Property are free from rot, infestation or any other defects.

However, we have not carried out any site investigation to determine the suitability of the ground conditions or the services for any property development erected or to be erected thereon. Nor did we undertake archaeological, ecological or environmental surveys for the Property. Our valuation is prepared on the assumptions that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. Should it be discovered that contamination, subsidence or other latent defects exists in the Property or on adjoining or neighboring land or that the Property had been or are being put to contaminated use, we reserve right to revise our opinion of value.

We have relied very considerable extent on the information provided by the Group and have accepted advices given to us on such matters, in particular, but not limited to tenure, planning approvals, statutory notices, easements, particulars of occupancy, size and floor areas and all other relevant matters in the identification of the Property. The plans including but not limited to location plan, site plan, lot index plan, outline zoning plan, building plan if any, in the report are included to assist the reader to identify the Property for reference only and we assume no responsibility for their accuracy.

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

We do not accept a liability for any interpretation which we have placed on such information which is more properly the sphere of the legal advisers of the Group. Neither have we verified the correctness of any information supplied to us concerning the Property.

REMARKS

We have valued the property interest in Renminbi (RMB).

We enclose herewith the valuation certificate.

Yours faithfully, For and on behalf of

RHL Appraisal Ltd. Sr Serena S. W. Lau FHKIS, AAPI, MRICS, RPS(GP), MBA(HKU) Managing Director

Sr Serena S. W. Lau is a Registered Professional Surveyor (GP) with over 19 years’ experience in valuation of properties in HKSAR, Macau SAR, mainland China and the Asia Pacific Region. Sr Lau is a Professional Member of The Royal Institution of Chartered Surveyors, an Associate of Australian Property Institute, a Fellow of The Hong Kong Institute of Surveyors as well as a registered real estate appraiser in the PRC.

• II-3 -

VALUATION REPORT

APPENDIX II

VALUATION CERTIFICATE

Property

Description, age and Particulars of Market value as at tenure occupancy 31 August 2016 RMB

Two parcels of land (part of Lot No.: A632-0027) located at north of Songbai Road, Gongmin Subdistrict Office, Guangming New District, Shenzhen, Guangdong Province, the PRC

廣東省深圳市光明新區公明街 道辦公室松白路北側之兩幅土 地（宗地號為A632-0027之部分）

The Property comprise of The Property is No commercial two parcels of land with a currently vacant. value total site area of 12,616 (refer to Notes 6) sq.m.

The Property is designated for industrial use for a term expiring on 7 October 2054.

Notes:

1. Pursuant to the State-owned Land Use Right Grant Contract – Shen Di He Zi (2004) No.4069 (深地合字(2004)4069 號), the land parcel (Lot No.: A632-0027) with a site area of 34,367.94 sq.m. had been granted to Zhongba Watches and Electronics Development (Shenzhen) Co Ltd（中霸鐘錶電子發展（深圳）有限公司）(“Zhongba”) with planning details as below:

Land Use Right Term: 50 years from 8 October 2004 to 7 October 2054 Usage: Industrial Site Coverage: ≦35% Plot Ratio: ≦1.164 Total Permitted Maximum Gross Floor Area: 40,000 sq.m.

1. Pursuant to the State-owned Land Use Rights Certificate – Shen Fang Di Zi No. 5000156271 (深房地字第5000156271 號) dated April 2005, the land parcels (Lot No.: A632-0027) has been granted to Zhongba.

2. Pursuant to the Sale and Purchase Agreement dated on 29 October 2014 and various supplemental agreements among Trillion Ocean Limited (億海有限公司) as Vendor, Gold Beat Investments Limited (金賓投資有限公司, an indirect wholly-owned subsidiary of the Company) as Purchaser and Ms. Zhong Qiuxia (鐘秋霞) as Vendor’s Guarantor, the Vendor agreed to transfer to the Purchaser the entire issued capital of the Yu Man Limited at an aggregate consideration of RMB85,620,909. The principal assets of the Yu Man Limited is its investment in Zhongba which in turn holds the Property.

3. As informed by the Instructing Party, portion of the land (Lot No.: A632-0027) with site area of 21,751.51 sq. m. has been resumed by the government for construction of public road and green belt, the Property is therefore remaining a site area of 12,616 sq. m. and is divided into two pieces with site area of 8,193 sq. m. (“Parcel A”) and 4,423 sq. m. (“Parcel B”) respectively. The resumed portion has been disregarded in our valuation.

4. II-4 -

VALUATION REPORT

APPENDIX II

1. As inspected, the Property is a bare site with some immaterial temporary structures erected on the Property. As informed by the Instructing Party, these temporary structures will be removed in due course. In the course of our valuation, we have disregarded these temporary structures and assumed the Property is a bare site and pending for future development.

2. Pursuant to the opinion by the Company’s PRC legal adviser, according to requirement of the City Real Estate Management law of the People’s Republic of China (中華人民共和國城市房地產管理法) Article 39, transfer of land use right is allowed only if more than 25% of the total investment for the subject land development is completed. Since the development of the property has not yet commenced, therefore it may be restricted on the direct transfer of land use right on current stage. For reference purpose, assuming that the property can be freely transferred in the market, the market value of the whole property as at existing usage is RMB 27,000,000.

3. We have been provided with a legal opinion by the Group’s PRC legal adviser, Zhong Lun Law Firm, regarding the legal title of the property, which contains, inter alia, the followings:

4. i. The property is legally held by Zhongba;

5. ii. The property as at the Valuation Date is subject to a restriction on direct transfer of land use right, please see details on Note.6 above;

6. iii. The Property is not subject to any lien, pledge or mortgage;

7. iv. Zhongba is not subject to any pending litigation, investigations nor is in receipt of any notice with respect to any breaches of laws; and

8. v. Except for the above, the property is free from any mortgage or third party’s encumbrance.

9. II-5 -

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. 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. DIRECTORS’ INTERESTS

a. Director’s Interest in the securities of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests which the Directors and chief executive were taken or deemed to have under such provisions of the SFO), or were required, pursuant to section 352 of the SFO, to be recorded in the register required to be kept by the Company, or were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “ Model Code ”) of the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Long position

				Percentage of
	Number of issued ordinary			the issued
	shares held			share capital
	Personal	Corporate		of the
Name of director	interest	interest	Total	Company
Lam Kwok Hing	3,474,667	250,516,500	253,991,167	59.56%
		(Note)

Note: The amount composed of 48,520,666 and 201,995,834 Shares that were held by Medusa Group Limited (“ Medusa ”) and Karfun Investment Ltd (“ Karfun ”), respectively. Medusa is a company wholly-owned by Mr. Lam Kwok Hing. Karfun is a wholly-owned subsidiary of Karl Thomson Holdings Ltd, a company in which Mr. Lam Kwok Hing is a controlling shareholder. As such, Karfun and Medusa are interested in 47.37% and 11.38% interests in the Company, respectively.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company, had an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests which the Directors and chief executive were taken or deemed to have under such provisions of the SFO), or were required, pursuant to

• III-1 -

GENERAL INFORMATION

APPENDIX III

section 352 of the SFO, to be recorded in the register required to be kept by the Company, or were required, pursuant to the Model Code of the Listing Rules to be notified to the Company and the Stock Exchange.

b. Directors’ competing interests

As at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group as required to be disclosed pursuant to the Listing Rules.

c. Directors’ interests in assets

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been, since the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by, or leased to the Company or any of its subsidiaries, or are proposed to be acquired or disposed of by, or leased to, the Company or any of its subsidiaries.

d. Directors’ interests in contract or arrangement

As at the Latest Practicable Date, none of the Directors is materially interested in any contract or arrangement entered into by the Company or any of its subsidiaries which contract or arrangement is subsisting at the date of this circular and which is significant in relation to the business of the Group.

e. Directors’ service contracts

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which does not expire or is not determinable by such member of the Group within one year without payment of compensation (other than statutory compensation).

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register kept by the Company under section 336 of the SFO, the persons other than a Director or chief executive of the Company who had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follows:

Long position

		Number of	Company’s issued
Name of shareholder	Capacity	Shares held	share capital
Medusa	Beneficial owner	48,520,666	11.38%
Karfun	Beneficial owner	201,995,834	47.37%

• III-2 -

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, the Directors and the chief executive of the Company were not aware that there was any person (other than a Director or chief executive of the Company) who, as at the Latest Practicable Date, had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meeting of any other member of the Group or had any share options in respect of such capital.

As at the Latest Practicable Date, none of the Directors is a director or employee of a company which has an interest in the shares and underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts, not being contracts entered into in the ordinary course of business, were entered into by members of the Group within the two years immediately preceding the Latest Practicable Date which are, or may be material:

• (a) the Disposal Agreement;

• (b) the service agreement dated 4 July 2016 with an independent third party to help the Group in searching for a suitable site in Shenzhen for an engagement of 18-months period commencing from 1 July 2016 for a total service fee of RMB1,200,000;

• (c) the Acquisition Agreement;

• (d) Consultancy Service Agreement;

• (e) the first supplemental agreement dated 4 December 2014 entered into between into among Gold Beat, the Vendor and the Vendor’s Guarantor pursuant to the which the parties to the Acquisition Agreement agreed to amend certain terms to the Acquisition Agreement;

• (f) the second supplemental agreement dated 30 July 2015 entered into between into among Gold Beat, the Vendor and the Vendor’s Guarantor pursuant to the which the parties to the Acquisition Agreement agreed to amend certain terms to the Acquisition Agreement;

• (g) the third supplemental agreement dated 9 October 2015 entered into between into among Gold Beat, the Vendor and the Vendor’s Guarantor pursuant to the which the parties to the Acquisition Agreement agreed to amend certain terms to the Acquisition Agreement;

• (h) the fourth supplemental agreement dated 30 April 2016 entered into between into among Gold Beat, the Vendor and the Vendor’s Guarantor pursuant to the which the parties to the Acquisition Agreement agreed to amend certain terms to the Acquisition Agreement;

• III-3 -

GENERAL INFORMATION

APPENDIX III

• (i) the fifth supplemental agreement dated 5 July 2016 entered into between into among Gold Beat, the Vendor and the Vendor’s Guarantor pursuant to the which the parties to the Acquisition Agreement agreed to amend certain terms to the Acquisition Agreement;

• (j) the first supplemental agreement dated 30 April 2016 entered into between into among Gold Beat and the Vendor pursuant to the which the parties to the Consultancy Service Agreement agreed to amend certain terms to the Consultancy Service Agreement;

• (k) the second supplemental agreement dated 5 July 2016 entered into between into among Gold Beat and the Vendor pursuant to the which the parties to the Consultancy Service Agreement agreed to amend certain terms to the Consultancy Service Agreement; and

• (l) rental agreements dated 22 February 2016 for the Songgan Factory for the period from 1 September 2016 to 31 August 2018.

5. EXPERT’S QUALIFICATION AND CONSENT

The following is the qualification of the expert whose name and report are contained in this circular:

Name Qualification RHL Appraisal Limited Chartered surveyors

As at the Latest Practicable Date, the above expert did not have any direct or indirect interest in any asset which had been acquired, 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, since 31 December 2015, the date to which the latest audited financial statements of the Group was made up; and was not beneficially interested in the share capital of any member of the Group and did not have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

The above expert has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which it appears.

6. LITIGATION

At the Latest Practicable Date, there was no litigation or claim of material importance that is known to the Directors to be pending or threatening against the Company or any of its subsidiaries.

7. GENERAL

• a. The company secretary of the Company is Ms. YUNG Wai Ching, who is a member of Association of Chartered Certified Accountants, Hong Kong Institute of Certified Public Accountants and Hong Kong Institution of Chartered Secretaries.

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GENERAL INFORMATION

APPENDIX III

• b. The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda and the head office and principal place of business of the Company in Hong Kong is at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong.

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

• d. The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

8. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at 11 Dai Hei Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong during normal business hours on any weekdays during the period of 14 days from the date of this circular:

• a) the bye-laws of the Company;

• b) the written consent referred to in the paragraph headed “Experts’ qualifications and consents” in this Appendix;

• c) the annual reports of the Company for the two years ended 31 December 2014 and 2015 and the interim report of the Company for the period ended 30 June 2016;

• d) each of the material contracts set out under the paragraph headed “Material Contracts” in this Appendix;

• e) the property valuation report as set out in Appendix II to this circular; and

• f) this circular.

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