FDB Holdings Limited - M&A Activity 2021

THIS RESPONSE DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Response Document or as to the action to be taken, you should consult a 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 Steering Holdings Limited , you should at once hand this Response Document to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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

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Steering Holdings Limited 旭通控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1826)

RESPONSE DOCUMENT RELATING TO THE MANDATORY UNCONDITIONAL CASH OFFER BY CHINA GALAXY INTERNATIONAL SECURITIES (HONG KONG) CO., LIMITED ON BEHALF OF

MASTERVEYOR HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE OWNED OR AGREED TO BE ACQUIRED BY MASTERVEYOR HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT) OF STEERING HOLDINGS LIMITED

Independent Financial Advisor to the Independent Board Committee

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Capitalised terms used in this cover page shall have the same meanings as those defined in this Response Document.

A letter from the Board is set out on pages 10 to 18 of this Response Document. A letter from the Independent Board Committee to the Independent Shareholders containing its recommendations is set out on pages IBC-1 to IBC-2 of this Response Document. A letter from the Independent Financial Adviser containing its advice in respect of the Offer to the Independent Board Committee is set out on pages IFA-1 to IFA-18 of this Response Document.

28 June 2021

EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . .	IBC-1
LETTER FROM VBG CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IFA-1
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . .	I-1
APPENDIX II — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1

– i –

EXPECTED TIMETABLE

The expected timetable of the Offer together with the notes thereto below is extracted from the Offer Document (with appropriate adjustments) for reference.

The timetable set out below is indicative only and may be subject to changes. Further announcement(s) will be made in the event of any changes to the timetable as and when appropriate. All references to time and date contained in the Offer Document and the accompanying Form of Acceptance refer to Hong Kong times and dates.

Event

Time & Date

Despatch of the Offer Document and the Form of Acceptance . . . . . . . . . . Thursday, 3 June 2021 Offer opens for acceptance ( Note 1 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 3 June 2021 Date of the posting of this Response Document (Note 2) . . . . . . . . . . . . . . Monday, 28 June 2021

Latest time for acceptance of the Offer on the Closing Date ( Notes 3, 4 & 5 ) . . . . . . . . . . . . . . . . . . . . . . . . not later than 4:00 p.m. on Monday, 12 July 2021 Announcement of the results of the Offer as at the Closing Date to be published on the websites of the Stock Exchange and the Company ( Note 3 ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . not later than 7:00 p.m. on Monday, 12 July 2021

Latest date for posting of remittances in respect of

valid acceptances received under the Offer (Notes 5 & 6) . . . . . . . . . . Wednesday, 21 July 2021

Notes:

The Offer, which is unconditional, was made on Thursday, 3 June 2021 (being the date of posting of the Offer Document), and is capable of acceptance on and from that date until 4:00 p.m. on the Closing Date, unless the Offeror revises or extends the Offer in accordance with the Takeovers Code.
In accordance with the Takeovers Code, the Company is required to post this Response Document within 14 days from the posting of the Offer Document, unless the Executive consents to a later date and the Offeror agrees to extend the Closing Date by the number of days in respect of which the delay in the posting of the Response Document is agreed. As additional time is required for the Directors to review, communicate and ascertain the content of the draft Response Document prior to giving consent to submit the draft Response Document to the Securities and Futures Commission for pre-vetting purpose, an application was made on 16 June 2021 and the Executive had granted consent for an extension of the deadline for the despatch of the Response Document to the Shareholders from 17 June 2021 to a date falling on or before 25 June 2021. On 25 June 2021 an application was made to the Executive for further delay in despatch of the Respondent Document as additional time was required to finalise the content of the Response Document and the Executive had indicated that it was minded to grant the

– ii –

EXPECTED TIMETABLE

consent for a further extension of the deadline for the despatch of the Response Document to the Shareholders from 25 June 2021 to a date falling on or before 28 June 2021. Pursuant to Rule 8.4 of the Takeovers Code, the Offeror have agreed to an extension of the Closing Date to Monday, 12 July 2021 in respect of which the delay in the posting of the Response Document is agreed.

In accordance with the Takeovers Code, where the Response Document is posted after the date on which the Offer Document is posted, the Offer must initially be open for acceptance for at least 28 days following the date on which the Offer Document is posted. If the Response Document may not be issued within 14 days from the posting of the Offer Document, which was despatched on 3 June 2021, the Offer should be kept open for at least 14 days after despatch of the delayed Response Document to allow sufficient time for the Independent Shareholders to consider the Response Document. As the despatch date of the Response Document has been delayed to 28 June 2021 for reason as expressed in Note 2 above, the latest time and date for acceptance of the Offer has been extended to 4:00 p.m. on Monday, 12 July 2021, unless the Offeror revises or extends the Offer in accordance with the Takeovers Code. An announcement will be issued on the websites of the Stock Exchange and the Company by 7:00 p.m. on the Closing Date, stating whether the Offer has been extended, revised or expired. In the event that the Offeror decides to extend the Offer and the announcement does not specify the next closing date, at least 14 days’ notice by way of an announcement will be given before the Offer is closed in accordance with the Takeovers Code.
Beneficial owners of the Offer Shares who hold their Offer Shares in CCASS directly as an investor participant or indirectly via a broker or custodian participant should note the timing requirements (as set out in Appendix I to the Offer Document) for placing instructions with CCASS in accordance with the General Rules of CCASS and CCASS Operational Procedures. Acceptances of the Offer shall be irrevocable and not capable of being withdrawn, except in the circumstances as set out in the section headed “5. Right of withdrawal” in Appendix I to the Offer Document.
If there is a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning signal in force on the Closing Date or the latest date for the posting of remittances and it has (i) not been cancelled in time for trading on the Stock Exchange to resume in the afternoon, the time and date of the close of the Offer will be postponed to 4:00 p.m. on the next Business Day which does not have either of those warnings in force in Hong Kong or such other day as the Executive may approve; or (ii) been cancelled in time for trading on the Stock Exchange to resume in the afternoon, the time and date of the close of the Offer will remain at 4:00 p.m. on the same Business Day.
Remittances in respect of the cash consideration (after deducting the seller’s ad valorem stamp duty) payable for the Offer Shares tendered under the Offer will be despatched to the Shareholders accepting the Offer by ordinary post at their own risk as soon as possible, but in any event within seven (7) Business Days following the date of receipt of all relevant documents (receipt of which renders such acceptance complete and valid) in accordance with the Takeovers Code.

Save as mentioned above, if the latest time for the acceptance of the Offer does not take effect on the date and time as stated above, the other dates mentioned above may be affected. The Offeror will notify the Shareholders by way of announcement(s) on any change to the expected timetable as soon as practicable.

– iii –

DEFINITIONS

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

“1 June Resolution” the resolution passed by the Board on 1 June 2021 suspending the Resolutions and their legal effects thereunder as if the Resolutions had not been effected
“2020 Annual Report” the annual report of the Company for the financial year ended 31 December 2020, which was dated 30 March 2021
“678 Action ” the civil action commenced in the High Court under HCA No. 678 of 2021 in relation to the Dispute
“704 Writ” the Writ of Summons issued by the Offeror in the High Court under HCA No. 704 of 2021 in relation to the Resolutions
“859 Action” the civil action commenced in the High Court under HCA No. 859 of 2021 in relation to the Dispute
“acting in concert” has the meaning ascribed thereto under the Takeovers Code
“Appointment” the purported appointment of Ms. Chang as an executive Director, Mr. Hao Lijun, Mr. Wong and Mr. Yu Xiaogeng each as an independent non-executive Director
“Appointment the resolution of the Board passed on 5 May 2021 in Resolution” relation to the Appointment
“associate(s)” has the meaning ascribed thereto under the Takeovers Code
“associated company(ies)” has the meaning ascribed thereto under the Takeovers Code
“Audit Committee” the audit committee of the Board
“Auditor” HLB Hodgson Impey Cheng Limited, the auditor of the Company as at the Latest Practicable Date
“Board” the board of Directors

– 1 –

DEFINITIONS

“Business Day(s)”

a day on which the Stock Exchange is open for the transaction of business

“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC
“China Galaxy” China Galaxy International Securities (Hong Kong) Co., Limited, a licensed corporation under the SFO, registered to conduct Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the financial adviser to the Offeror in respect of the Offer
“China Galaxy Facility”
a loan facility provided by China Galaxy to the Offeror to satisfy and meet the payment obligations under the Offer
“Closing Date”
Monday, 12 July 2021, being the closing date of the Offer or any subsequent closing date(s) as may be determined and announced by the Offeror with the consent of the Executive in accordance with the Takeovers Code
“CMBCCFL”
CMBC Capital Finance Limited, a company incorporated in Hong Kong with limited liability, the chargee of the Sale Shares under the Security Charge immediately prior to completion of the Transfer
“CMBCCH”
CMBC Capital Holdings Limited (民銀資本控股有限公司) (Stock Code: 1141), a company incorporated in Bermuda with limited liability, the shares on which are listed on the Main Board of the Stock Exchange
“CMBCCH Share(s)” ordinary share(s) of CMBCCH
“CMBCCH Shares Disposal”
the on-market disposal of 137,740,000 CMBCCH Shares by Jet Speed as disclosed in the paragraph headed “Material Change — (5) Discloseable Transaction — disposal of CMBCCH Shares” in Appendix I to this Response Document below

– 2 –

DEFINITIONS

“Company” Steering Holdings Limited, a limited liability company incorporated in the Cayman Islands, the Shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 1826)
“Consideration” HK$103,000,000, being the consideration paid for the Sale Shares pursuant to the Transfer Agreement
“Director(s)” director(s) of the Company
“Dispute” the dispute among Gentle Soar, CMBCCFL and the Offeror in respect of the Sales Shares
“Encumbrances”
any mortgage, pledge, charge, lien, option, restriction, rights to acquire, rights of pre-emption, trust arrangement, third party right or interest, or any other similar encumbrances, priorities, guarantee or restriction of rights, associated rights or obligations, including any agreement, arrangement in relation thereto relating to property, assets or rights of any nature
“Enforcement Action”
the enforcement action taken by CMBCCFL against Gentle Soar to enforce its security interest in the Finance Documents
“Executive” the Executive Director of the Corporate Finance Division of the SFC and any delegate of such Executive Director
“Facility Agreement”
a secured term loan facility agreement dated 30 May 2018 (as amended and/or supplemented by a supplemental deed dated 12 June 2019 and further amended by a second supplemental deed dated 24 June 2020) entered into, among others, CMBCCFL and Gentle Soar
“Finance Documents” collectively, the Facility Agreement and the Security Charge
“Form of Acceptance”
the accompanying form of acceptance and transfer of Offer Shares in respect of the Offer

– 3 –

DEFINITIONS

“Gentle Soar” Gentle Soar Limited, a company incorporated in the Cayman Islands with limited liability which is wholly owned by Mr. Gao
“Gentle Soar Injunction the application by Gentle Soar to the High Court under the Application” 678 Action for injunctive relief against CMBCCFL and the Offeror in respect of the completion of the Sale Shares and the dealing with and/or exercising of voting rights attached to them
“Group” the Company and its subsidiaries from time to time
“High Court” the High Court of Hong Kong
“HKSCC”
Hong Kong Securities Clearing Company Limited
“Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee”
the independent committee of the Board comprising all the independent non-executive Directors, namely, Mr. Chan, Mr. Lau, Mr. Wan and Mr. Wong, established for the purpose of advising the Independent Shareholders in respect of the Offer
“Independent Financial Adviser” or “VBG Capital”
VBG Capital Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser engaged by the Company to advise the Independent Board Committee in respect of the Offer
“Independent Shareholders”
the Shareholders other than the Offeror and the parties acting in concert with it
“Initial Shares”
61,600,000 Shares, representing approximately 4.62% of the entire issued share capital of the Company as at the Latest Practicable Date, already owned by the Offeror immediately prior to completion of the Transfer

– 4 –

DEFINITIONS

“Last Trading Day”

30 March 2021, being the last trading day on which the Shares were traded on the Stock Exchange prior to the issue and publication of the Offer Announcement

“Latest Practicable Date”
25 June 2021, being the latest practicable date prior to the printing of this Response Document for ascertaining certain information contained in this Response Document
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Masterveyor Injunction Application”

the inter partes summons taken out by the Offeror on 25 May 2021 against each of Mr. Gao, Ms. Feng, the New Directors and the Company seeking an interlocutory injunction against each and any one of them restraining them from acting on, implementing or carrying into effect the Resolutions pending the determination of the 704 Writ

“Mr. Chan”
Mr. Chan Yuk Sang, an independent non-executive Director
“Mr. Fung”
Mr. Fung Kai Man, the sole director of Platinum Alpha
“Mr. Gao”
Mr. Gao Yunhong, the sole director and ultimate beneficial owner of Gentle Soar and a non-executive Director
“Mr. Lau” Mr. Lau Kwok Fai Patrick, an independent non-executive Director
“Mr. Ng” Mr. Ng Kin Siu, the sole director and ultimate beneficial owner of the Offeror and an executive Director
“Mr. Wan” Mr. Wan Chi Wai Anthony, an independent non-executive Director
“Mr. Wong” Mr. Wong Chi Shing, an independent non-executive Director
“Ms. Chang” Ms. Chang Liang, an executive Director

– 5 –

DEFINITIONS

“Ms. Feng” Ms. Feng Xuelian, an executive Director

“New Directors”

the persons appointed as Directors under the Board resolution passed on 5 May 2021 in relation to, among other things, the Appointment
“Nomination Committee” the nomination committee of the Board
“Notice of Default and the notice of default and acceleration dated 31 March 2021 Acceleration” issued by CMBCCFL to Gentle Soar
“Offer” the mandatory unconditional cash offer being made by China Galaxy for and on behalf of the Offeror to acquire all the issued Shares not already owned or agreed to be acquired by the Offeror and the parties acting in concert with it, on the terms and conditions set out in the Offer Document and the accompanying Form of Acceptance and in compliance with the Takeovers Code
“Offer Announcement” the announcement dated 13 May 2021 issued by the Offeror in relation to the Transfer and the Offer
“Offer Document” the offer document dated 3 June 2021 issued by the Offeror to all Shareholders in accordance with the Takeovers Code containing, among other things, details of the Offer
“Offer Period” the meaning given to it under the Takeovers Code, being the period commencing from the date of the Offer Announcement (i.e. 13 May 2021) and ending on the Closing Date
“Offer Price” HK$0.158 per Offer Share
“Offer Share(s)”

all the issued Shares (other than those already beneficially owned or agreed to be acquired by the Offeror and the parties acting in concert with it)

– 6 –

DEFINITIONS

“Offeror” Masterveyor Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, which is wholly and beneficially owned by Mr. Ng
“Offeror Group” the Offeror and Platinum Alpha “Overseas Shareholder(s)” Shareholder(s) whose address(es) as shown on the register of members of the Company is/are outside Hong Kong
“Platinum Alpha” Platinum Alpha Limited, a company incorporated in the British Virgin Islands with limited liability, a direct wholly owned subsidiary of the Offeror
“Removal” the removal of Mr. Ng as an executive Director, Mr. Chan, Mr. Wan and Mr. Lau as the independent non-executive Directors
“Removal Resolution” the resolution of the Board passed on 3 May 2021 in relation to the Removal
“Resolutions” collectively, the Appointment Resolution and the Removal Resolution
“Receiving Agent” Tricor Standard Limited, in its capacity as the receiving agent of the Offeror with respect to the Offer, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong
“Relevant Period” the period from 13 November 2020, being the date falling six months prior to the date of the Offer Announcement and ending on and including the Latest Practicable Date
“Relevant Securities” has the same meaning ascribed to it in Note 4 to Rule 22 of the Takeovers Code
“Remuneration Committee” the remuneration committee of the Board “Response Document” this response document dated 28 June 2021 issued by the Company in response to the Offer

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DEFINITIONS

“Resumption Guidance”	the resumption guidance issued by the Stock Exchange on
	17 May 2021, details of which are set out in the
	announcement of the Company dated 20 May 2021
“Sale Shares”	652,680,000 Shares beneficially owned by Gentle Soar
	(which was charged to CMBCCFL under the Security
	Charge) and transferred to the Offeror under the Transfer
“Security Charge”	the Share Charge dated 30 May 2018 (as amended and/or
	supplemented by a deed of partial release dated 2 May
	2019 and a confirmation deed dated 24 June 2020) entered
	into by Gentle Soar in favour of CMBCCFL
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	laws of Hong Kong)
“Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of
	the Company
“Share Registrar”	Tricor Investor Services Limited, the Hong Kong branch
	share registrar of the Company, at Level 54, Hopewell
	Centre, 183 Queen’s Road East, Wanchai, Hong Kong
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Takeovers Code”	the Code on Takeovers and Mergers issued by the SFC
“Transfer”	the transfer of the Sale Shares from Gentle Soar to the
	Offeror effected by CMBCCFL in exercising its rights
	under the Finance Documents by effecting book entry
	settlement on the Central Clearing and Settlement System
	on the Stock Exchange
“Transfer Agreement”	the agreement dated 21 April 2021 entered into between
	CMBCCFL and Platinum Alpha in relation to the Transfer

– 8 –

DEFINITIONS

“Undertakings”	the undertakings given by the Offeror to the High Court in
	relation to the Gentle Soar Injunction Application
“Win Lee”	Win Lee Building Engineering Limited, an indirect wholly
	owned subsidiary of the Company
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent

For identification purposes only

– 9 –

LETTER FROM THE BOARD

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Steering Holdings Limited 旭通控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1826)

Executive Directors: Ms. Feng Xuelian Mr. Ng Kin Siu (Chief executive officer) Ms. Chang Liang

Non-executive Director: Mr. Gao Yunhong

Independent non-executive Directors:

Mr. Chan Yuk Sang Mr. Wan Chi Wai Anthony

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

Head Office and Principal Place of Business in Hong Kong: Room 3601, China Resources Building 26 Harbour Road Wanchai, Hong Kong

Mr. Lau Kwok Fai Patrick

Mr. Wong Chi Shing

28 June 2021

To the Shareholders

Dear Sir/Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY CHINA GALAXY INTERNATIONAL SECURITIES (HONG KONG) CO., LIMITED ON BEHALF OF MASTERVEYOR HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE OWNED OR AGREED TO BE ACQUIRED BY MASTERVEYOR HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT) OF STEERING HOLDINGS LIMITED

INTRODUCTION

Reference is made to the Offer Announcement in relation to, among other things, the Transfer and the Offer.

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LETTER FROM THE BOARD

As disclosed in the Offer Announcement, on 26 April 2021, CMBCCFL effected the Transfer of 652,680,000 Shares (representing 49% of the entire issued share capital of the Company as at date of the Offer Announcement) to the Offeror pursuant to the Transfer Agreement and the nomination given by Platinum Alpha in favour of the Offeror to take up the Sale Shares upon completion of the Transfer, at the Consideration of HK$103,000,000 (equivalent to approximately HK$0.1578 per Sale Share), which has been paid by the Offeror and Mr. Ng in full upon completion of the Transfer.

Immediately after completion of the Transfer and as at the Offer Announcement, the Offeror and the parties acting in concert with it were interested in 714,280,000 Shares, representing approximately 53.62% of the entire issued share capital of the Company. The Offeror was therefore required under Rule 26.1 of the Takeovers Code to make a mandatory unconditional general offer in cash for all the issued Shares other than those already owned or agreed to be acquired by the Offeror and the parties acting in concert with it.

In the Offer Announcement, the Offeror announced that China Galaxy would make a mandatory unconditional cash offer on behalf of the Offeror to acquire all the issued Shares (other than those owned or agreed to be acquired by the Offeror and the parties acting in concert with it) pursuant to terms as disclosed therein. The Offeror and the parties acting in concert with it own an aggregate of 714,280,000 Shares, representing approximately 53.62% of the total issued share capital of the Company as at the date of the Offer Announcement.

On 3 June 2021, the Offeror despatched the Offer Document and the Form of Acceptance setting out details of the Offer.

The purpose of this Response Document is to provide you with, among others, information relating to the Group, the recommendation from the Independent Board Committee and the advice from the Independent Financial Adviser in respect of the Offer.

THE OFFER

The information relating to the Offer below is extracted from the Offer Document.

Terms of the Offer

China Galaxy, on behalf of the Offeror, is making the Offer to acquire all the Offer Shares pursuant to Rule 26.1 of the Takeovers Code on the following basis:

The Offer Price for each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.158 in cash

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LETTER FROM THE BOARD

The Offer Price of HK$0.158 per Offer Share under the Offer is approximately equal to but not lower than the price per Sale Share paid by the Offeror as consideration for the Transfer.

The Offer is unconditional in all respects and is not conditional upon acceptances being received in respect of a minimal number of the Shares or any other conditions.

Comparison of the Offer Price

The Offer Price of HK$0.158 per Offer Share represents:

(i) a premium of approximately 37.4% over the closing price of HK$0.115 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a premium of approximately 11.3% over the average of the closing prices as quoted on the Stock Exchange for the 5 consecutive trading days up to and including the Last Trading Day of approximately HK$0.142 per Share;
(iii) a premium of approximately 5.3% over the average of the closing prices as quoted on the Stock Exchange for the 10 consecutive trading days up to and including the Last Trading Day of approximately HK$0.150 per Share;
(iv) a premium of approximately 0.6% over the average of the closing prices as quoted on the Stock Exchange for the 30 consecutive trading days up to and including the Last Trading Day of approximately HK$0.157 per Share; and
(v) a premium of approximately 652.4% over the audited consolidated net asset value attributable to the owners of the Company of approximately HK$0.021 per Share (based on audited equity attributable to owners of the Company of approximately HK$27.4 million as at 31 December 2020 as shown in the 2020 Annual Report and the total number of issued Shares as at the Latest Practicable Date).

The comparison of the Offer Price per Offer Share against the closing price per Share as quoted on the Stock Exchange as at the Latest Practicable Date is not available as trading in the Shares on the Stock Exchange has been suspended and remains suspended since the Last Trading Day.

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LETTER FROM THE BOARD

Highest and lowest Share prices

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Relevant Period were HK$0.22 per Share on 10 November 2020 and HK$0.115 per Share on 30 March 2021, respectively.

Total value of the Offer

As at the Latest Practicable Date, there were 1,332,000,000 Shares in issue. Based on the Offer Price of HK$0.158 per Share, the entire issued share capital of the Company was valued at approximately HK$210.5 million.

On the basis that there will be no change in the issued share capital of the Company from the Latest Practicable Date to the Closing Date and excluding 714,280,000 Shares already owned or agreed to be acquired by the Offeror and the parties acting in concert with it, a total 617,720,000 Shares are subject to the Offer. Accordingly, the maximum cash consideration payable by the Offeror would be approximately HK$97.6 million.

Further details of the Offer

Please refer to the Offer Document and the Form of Acceptance for further details of the terms of the Offer and the procedure for acceptance.

INFORMATION ON THE GROUP

The principal businesses of the Group include building consultancy services, contracting business, project management, and provision of financial information and technology services to individuals in the PRC.

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LETTER FROM THE BOARD

Financial information

Set out below is a summary of the audited financial information of the Group for the three years ended 31 December 2020 as extracted from its annual reports for the year ended 31 December 2018, 2019 and 2020, respectively:

	For the year	For the year	For the year
	ended	ended	ended
	31 December	31 December	31 December
	2018	2019	2020
	HK$’000	HK$’000	HK$’000
	Audited	Audited	Audited
Revenue	648,541	1,293,293	473,860
Profit/(loss) before tax	68,617	214,196	(391,258)
Profit/(loss) and total comprehensive
income for the year	46,096	91,590	(414,125)

The unaudited consolidated equity attributable to equity holders of the Company as at 31 December 2020 was approximately HK$27,374,000.

The Company has no plan to declare any dividend during the Offer Period. During the Offer Period and up to and including the Latest Practicable Date, there is no outstanding dividend declared but not yet paid.

Further details of the Group’s financial information are set out in Appendix I to this Response Document.

INFORMATION OF THE OFFEROR GROUP

As stated in the Offer Document, the Offeror is an investment holding company incorporated in the British Virgin Islands on 24 February 2015 with limited liability and is wholly and ultimately beneficially owned by Mr. Ng. Save for holding the Initial Shares and the Sale Shares, the Offeror did not have any other businesses and/or material assets as at the Latest Practicable Date. The sole director of the Offeror is Mr. Ng.

According to the Offer Document, Platinum Alpha is an investment holding company and did not have any other businesses and/or material assets as at the Latest Practicable Date. The entire issued share in Platinum Alpha was held on trust by Mr. Fung in favour of the Offeror. Such trust

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LETTER FROM THE BOARD

arrangement was terminated on 1 April 2021 when Mr. Fung transferred the entire issued share in Platinum Alpha to the Offeror. Since then, Platinum Alpha is wholly and beneficially owned by the Offeror. The sole director of Platinum Alpha is Mr. Fung.

As stated in the Offer Document, Mr. Ng, aged 54, was an executive Director and the chief executive officer of the Company and was responsible for the overall business development and strategic planning of the Group immediately prior to the Removal and the Appointment (which was subject to dispute as set out in the paragraph headed “Litigation” in the Appendix II to this Response Document). He was appointed as an executive Director on 19 March 2015. He is also a director of Harvest Building Consultancy Limited, Marvo Architecture Limited, Win Lee and FDB Development Limited, all being subsidiaries of the Group.

He graduated from The Robert Gordon University in the United Kingdom in June 1993 with a degree of Bachelor of Science in building surveying. He has been a member of The Hong Kong Institute of Surveyors since March 1997, a member of The Royal Institution of Chartered Surveyors since December 1996 and was registered as a registered professional surveyor with the Surveyors Registration Board in July 1999. He has been an Authorised Person since December 2007 and a Registered Inspector in Hong Kong since 3 October 2012. He has also been the technical director for Win Lee’s registration of registered general building contractor and registered specialist contractor (demolition) since June 2009 and May 2009, respectively.

He has extensive experience with building surveying and is familiar with the Buildings Ordinance in Hong Kong. Prior to founding the Group, he worked in the Buildings Department from April 1997 to March 2008, with last position being held as a building surveyor.

Other than his experience in the building and construction industry, Mr. Ng is also experienced in real estate development, property project management and financial services sectors.

INTENTION OF THE OFFEROR ON THE GROUP

As stated in the Offer Document, the Offeror intends to continue the existing principal businesses of the Group. After the close of the Offer, the Offeror will conduct a detailed review of the existing principal business operations and financial position of the Group for the purpose of formulating a sustainable business plan or strategy for the Group’s future development. Subject to the results of the review, the Offeror may look into business and investment opportunities in different business areas and geographical locations and consider whether any asset disposals, asset acquisitions, business rationalisation, business divestment, fund raising, and/or restructuring of the business will be appropriate in order to enhance the long-term growth potential of the Group. The Offeror intends to leverage upon the expertise and business opportunities that Mr. Ng may have in

– 15 –

LETTER FROM THE BOARD

his sectors of real estate development, property project management and financial services and expand the income stream of the Group. Should such corporate actions materialise, further announcement(s) will be made by the Company in accordance with the Listing Rules as and when appropriate.

According to the Offer Document, as at 31 May 2021, it was stated that no investment or business opportunity has been identified nor has the Offeror entered into any agreement, arrangements, understandings or negotiation in relation to the injection of any assets or business into the Group, and the Offeror has no intention to discontinue the employment of the employees (save for the proposed changes to the Board) or to dispose of or re-deploy the assets of the Group other than those in its ordinary course of business or in accordance with the future plans of the Company as set out in the Company’s annual results announcement dated 30 March 2021.

For further details in relation to the intention of the Offeror on the Company, please refer to the Offer Document.

BOARD COMPOSITION OF THE COMPANY

As at the Latest Practicable Date, the Board is made up of eight Directors, comprising three executive Directors, namely Ms. Feng, Mr. Ng and Ms. Chang, one non-executive Director, namely Mr. Gao, and four independent non-executive Directors, namely Mr. Chan, Mr. Wan, Mr. Lau and Mr. Wong. As stated in the paragraph headed “Litigation” in the Appendix II to this Response Document and the announcement of the Company dated 15 June 2021, the validity of the Resolutions in relation to, among other things, the Removal and the Appointment and the composition of the current Board are subject to dispute under the 704 Writ and the 704 Writ is still ongoing.

As stated in the Offer Document, the Offeror will consider the composition of the Board including nominating new Directors to the Board to facilitate the management of the Group. Any of such appointments will be made in compliance with the Takeovers Code and the Listing Rules and will take effect on the earliest day permitted under the Takeovers Code or such later date as the Offeror considers to be appropriate. As stated in the Offer Document, the Offeror had not decided on the candidates, if any, to be nominated.

Any changes to the Board will be made in compliance with the Takeovers Code and the Listing Rules and further announcement(s) will be made as and when appropriate.

– 16 –

LETTER FROM THE BOARD

PUBLIC FLOAT AND MAINTENANCE OF THE LISTING STATUS OF THE COMPANY

As stated in the Offer Document, the Offeror intended to maintain the listing of the Shares on the Stock Exchange upon the close of the Offer.

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares, are held by the public or if the Stock Exchange believes that:

(i) a false market exists or may exist in the trading of the Shares; or
(ii) there are insufficient Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend the trading in the Shares.

As stated in the Offer Document, the director of the Offeror and the new Director(s) to be appointed to the Board have jointly and severally undertaken to the Stock Exchange to take appropriate steps as soon as possible following the close of the Offer to ensure that sufficient public float exists in the Shares after the close of the Offer under Rule 8.08 of the Listing Rules.

COMPULSORY ACQUISITION

As stated in the Offer Document, the Offeror does not intend to avail itself of any powers of compulsory acquisition of any Shares outstanding after the close of the Offer.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Chan, Mr. Wan, Mr. Lau and Mr. Wong, who have no direct or indirect interest in the Offer, has been established by the Company in accordance with Rule 2.1 and Rule 2.8 of the Takeovers Code to make a recommendation to the Independent Shareholders as to whether the terms of the Offer are fair and reasonable and as to acceptance of the Offer. Since Mr. Gao, who is a non-executive Director, is considered to have an interest in the Offer, the Independent Board Committee would not include Mr. Gao.

VBG Capital has been appointed as the Independent Financial Adviser with the approval of the Independent Board Committee to advise the Independent Board Committee in connection with the Offer.

– 17 –

LETTER FROM THE BOARD

CONFLICT OF INTEREST

As at the Latest Practicable Date, Mr. Ng, the executive Director, is interested in the entire issued share capital of the Offeror. To avoid conflict of interest, Mr. Ng does not join the remainder of the Board in giving their views on the Offer as set out in this letter.

RECOMMENDATION

Your attention is drawn to (i) the “Letter from the Independent Board Committee” on pages IBC-1 to IBC-2 of this Response Document, which sets out the recommendations from the Independent Board Committee to the Independent Shareholders in relation to the Offer; and (ii) the “Letter from VBG Capital” on pages IFA-1 to IFA-18 of this Response Document, which sets out its advice to the Independent Board Committee in respect of the Offer and, in particular, as to whether the terms of the Offer are fair and reasonable and as to the acceptance of the Offer.

For the Independent Shareholders who decide to monetise your investments in the near term before the end of the Offer Period, you are reminded that the trading of the Shares on the Stock Exchange have been suspended since 31 March 2021 and the exact time for resumption of trading of the Shares on the Stock Exchange is unknown, subject to, among other things, fulfilment of the Resumption Guidance to the satisfaction of the Stock Exchange. You shall, having regard to your own circumstances, consider accepting the Offer, as the Offer provides an exit alternative if you would like to realise your investment in the Shares.

Yours faithfully, By order of the Board STEERING HOLDINGS LIMITED Ng Kin Siu

Executive Director

– 18 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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Steering Holdings Limited 旭通控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1826)

28 June 2021

To the Independent Shareholders

Dear Sir/Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY CHINA GALAXY INTERNATIONAL SECURITIES (HONG KONG) CO., LIMITED ON BEHALF OF MASTERVEYOR HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE OWNED OR

AGREED TO BE ACQUIRED BY MASTERVEYOR HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT) OF STEERING HOLDINGS LIMITED

We refer to the Response Document dated 28 June 2021 issued by the Company of which this letter forms part. Unless the context requires otherwise, terms used in this letter shall have the same meaning as those defined in the Response Document.

We have been appointed as members of the Independent Board Committee to give recommendations to the Independent Shareholders on the Offer. VBG Capital has been appointed as the independent financial adviser to advise us in this respect. Details of its advice and the principal factors and reasons taken into consideration in arriving at its advice are set out in the letter from VBG Capital on pages IFA-1 to IFA-18 of the Response Document.

– IBC-1 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We also wish to draw your attention to the letter from the Board and the additional information set out in the appendices to the Response Document. While the members of the Independent Board Committee do not opine on the on-going litigation cases (the “ Litigation Cases ”) as set out in the paragraph headed “Litigation” in the Appendix II to the Response Documents, we would recommend the Independent Shareholders who may require advice in relation to the Litigation Cases to consult a licensed securities dealer, bank manager, solicitor, professional accountant, tax adviser or other professional adviser. We would also like to draw the Independent Shareholders’ attention to the warning statements set out in the last paragraph in page IFA-17 onwards in the letter of advice from VBG Capital in the Response Document.

Having considered the terms of the Offer and the advice from VBG Capital, in particular the factors, reasons and recommendations as set out in the letter from VBG Capital, we do not disagree with the view of VBG Capital that the terms of the Offer are fair and reasonable and we accordingly advise the Independent Shareholders to accept the Offer, however subject to the Litigation Cases.

Yours faithfully,

Independent Board Committee

Mr. Chan Yuk Sang Mr. Wan Chi Wai Mr. Lau Kwok Fai Mr. Wong Chi Shing Anthony Patrick Independent Independent Independent Independent Non-executive Director Non-executive Director Non-executive Director Non-executive Director

– IBC-2 –

LETTER FROM VBG CAPITAL

Set out below is the text of a letter received from VBG Capital Limited, the Independent Financial Adviser to the Independent Board Committee in respect of the Offer for the purpose of inclusion in this Response Document.

==> picture [12 x 12] intentionally omitted <==

18/F., Prosperity Tower 39 Queen’s Road Central Hong Kong

28 June 2021

To: The independent board committee of Steering Holdings Limited

Dear Sirs,

MANDATORY UNCONDITIONAL CASH OFFER BY CHINA GALAXY INTERNATIONAL SECURITIES (HONG KONG) CO., LIMITED FOR AND ON BEHALF OF MASTERVEYOR HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY MASTERVEYOR HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT) OF STEERING HOLDINGS LIMITED

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee in respect of the Offer, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the Response Document dated 28 June 2021, of which this letter of advice forms part. Capitalised terms used in this letter of advice shall have the same meanings as defined in the Response Document unless the context requires otherwise.

Reference is made to the Offer Announcement in relation to, among other things, the Transfer and the Offer. The Board was informed on 13 May 2021 that on 26 April 2021, CMBCCFL effected the Transfer of 652,680,000 Shares (representing 49% of the entire issued share capital of the Company as at the date of the Offer Announcement) to the Offeror pursuant to the Transfer Agreement and the nomination given by Platinum Alpha in favour of the Offeror to take up the Sale Shares upon completion of the Transfer, at the Consideration of HK$103,000,000 (equivalent to approximately HK$0.1578 per Sale Share), which has been paid by the Offeror and Mr. Ng in full upon completion of the Transfer on 26 April 2021.

– IFA-1 –

LETTER FROM VBG CAPITAL

With reference to the Offer Announcement, immediately prior to completion of the Transfer, the Offeror held 61,600,000 Shares, representing approximately 4.62% of the entire issued share capital of the Company as at the date of the Offer Announcement. Immediately after completion of the Transfer and as at the date of the Offer Announcement, the Offeror and the parties acting in concert with it were interested in 714,280,000 Shares, representing approximately 53.62% of the entire issued share capital of the Company as at the date of the Offer Announcement. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a mandatory unconditional cash offer for all the issued Shares (other than those already owned or agreed to be acquired by the Offeror and the parties acting in concert with it).

On 3 June 2021, the Offeror despatched the Offer Document, accompanied with the Form of Acceptance setting out details of the Offer.

An Independent Board Committee comprising all non-executive Directors (except for Mr. Gao as he is considered to have interest in the Offer), namely Mr. Chan, Mr. Lau, Mr. Wan and Mr. Wong, who have no direct or indirect interest in the Offer, has been established by the Company in accordance with Rule 2.1 and Rule 2.8 of the Takeovers Code to make a recommendation to the Independent Shareholders as to whether the terms of the Offer are fair and reasonable and as to the acceptance of the Offer. We, VBG Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee in this respect, and our opinion herein is solely for the assistance of the Independent Board Committee in connection with its consideration of the Offer pursuant to Rule 2.1 of the Takeovers Code. The appointment of VBG Capital as the Independent Financial Adviser has been approved by the Independent Board Committee.

OUR INDEPENDENCE

As at the Latest Practicable Date, apart from the existing engagement in connection with the Offer and having acted as the independent financial adviser of the Company regarding certain VIE agreements of which a circular was published on 21 August 2019, we confirm that we did not have any significant connection, business, financial or otherwise, with the Company and/or the Offeror or the controlling shareholders (as defined in the Listing Rules) of either of them within two years prior to the commencement of the Offer Period, of a kind reasonably likely to create, or create the perception of, a conflict of interest or reasonably likely to affect the objectivity of our advice. Save for the normal fees payable to us in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company and its subsidiaries or the Directors, chief executive or substantial shareholders (as defined in the Listing Rules) of the Company or any of their associates, the Offeror or the parties acting in concert with any of them. We consider ourselves independent to form our opinion in respect of the Offer.

– IFA-2 –

LETTER FROM VBG CAPITAL

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee, we have relied on the statements, information, opinions and representations contained or referred to in the Response Document and the information and representations as provided to us by the management of the Group. We have assumed that all information and representations that have been provided by the management of the Group, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Response Document were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Response Document, or the reasonableness of the opinions expressed by the Company and/or its advisers, which have been provided to us. Our opinion is based on the management of the Group’s representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Offer. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules and Rule 2 of the Takeovers Code.

All Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Response Document (other than those relating to the Offer, the Offeror, its ultimate beneficial owner(s) and the parties acting in concert with any of them), and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Response Document have been arrived at after due and careful consideration and there are no other facts not contained in the Response Document, the omission of which would make any statement in the Response Document misleading.

The information contained in the Response Document relating to the Offer, the Offeror, its ultimate beneficial owner(s) and the parties acting in concert with any of them has been extracted from or based on the Offer Document. The only responsibility accepted by the Directors in respect of such information is for the correctness and fairness of the extraction of such information and/or its reproduction or presentation.

We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Response Document, save and except for this letter of advice. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent investigation into the business and affairs of the Company, the Offeror or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Offer. Moreover, we are not in the position to opine on the outcome and effect of the ongoing

– IFA-3 –

LETTER FROM VBG CAPITAL

litigation cases as highlighted in the section headed “Litigation” in Appendix II to the Response Document. The Company has been separately advised by its own professional advisers with respect to the Offer and the preparation of the Response Document (other than this letter of advice).

We have assumed that the Offer will be consummated in accordance with the terms and conditions set forth in the Offer Document without any waiver, amendment, addition or delay of any terms or conditions. We have assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents as required for the Offer, no delay, limitation, condition or restriction will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived from the Offer. In addition, our opinion is necessarily based on the financial, market, economic, industry-specific and other conditions as they existed on, and the information made available to us as at the Latest Practicable Date.

Where information in this letter of advice has been extracted from published or otherwise publicly available sources, we have ensured that such information has been correctly and fairly extracted, reproduced or presented from the relevant sources while we did not conduct any independent investigation into the accuracy and completeness of such information.

Should there be any material changes to our opinion after the Latest Practicable Date, Shareholders would be notified as soon as possible in compliance with Rule 9.1 of the Takeovers Code.

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

(1) Terms of the Offer

According to the Letter from the Board, China Galaxy is, on behalf of the Offeror and in compliance with the Takeovers Code, making the Offer to acquire all the issued Shares (other than those already owned or agreed to be acquired by the Offeror and the parties acting in concert with it) on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.158 in cash

As disclosed in the Offer Document, the Offer Price of HK$0.158 per Offer Share is approximately equal to but not lower than the price per Sale Share paid by the Offeror as Consideration.

– IFA-4 –

LETTER FROM VBG CAPITAL

The Offer is unconditional in all respects and is not conditional upon acceptances being received in respect of a minimal number of the Shares or any other conditions.

As at the latest practicable date of the Offer Document (the “ Offer Document LPD ”), the Relevant Securities of the Company in issue comprised 1,332,000,000 Shares of HK$0.01 each. Excluding the 714,280,000 Shares that are already owned or acquired by the Offeror and the parties acting in concert with it, a total of 617,720,000 Shares are subject to the Offer.

(2) Business and financial information on the Group

The principal businesses of the Group include (i) contracting business and project management in Hong Kong (the “ Contracting Services ”); (ii) provision of building consultancy services in Hong Kong (the “ Consultancy Services ”); and (iii) provision of financial information and technology services for loan facilitation in the PRC (the “ Financial Information and Technology Services ”). Set out below is the key financial information of the Group for the two years ended 31 December 2020 as extracted from the 2020 Annual Report:

	For	the year ended	For	the year ended
	31 December 2020		31 December 2019
		(audited)		(audited)
		HK$’000		HK$’000
Revenue		473,860		1,293,293
— Contracting Services		411,860		489,053
— Consultancy Services		44,983		57,689
— Financial Information and Technology
Services		17,017		746,551
Gross (loss)/profit		(10,017)		585,573
(Loss)/Profit for the year		(429,528)		116,577

As depicted by the above table, the Group’s revenue dropped considerably by approximately 63.4% from approximately HK$1,293.3 million in 2019 to approximately HK$473.9 million in 2020. During the year, the Group also recorded gross loss of approximately HK$10.0 million. The Financial Information and Technology Services segment experienced a sharp decline in revenue of almost 100%. As referred to in the 2020 Annual Report, this business segment faced headwinds in 2020 amid the economic downturn caused by the COVID-19 pandemic. Credit cycles have been frozen as borrowers and lenders become increasingly wary of making loans until the pandemic passes and the economy fully revitalises. Consequently, demand for the Group’s Financial Information and Technology Services reduced significantly, thereby triggering a sharp decline in revenue as aforesaid. Moreover, after assessment of the recoverability of the receivables and prepayments in relation to the Financial Information and Technology Services segment, a

– IFA-5 –

LETTER FROM VBG CAPITAL

substantial impairment loss of approximately HK$290.9 million was recognised, representing over 90% of the total impairment losses, net of reversal recorded by the Group during 2020. Owing to such substantial impairment loss, the Group suffered from net loss of approximately HK$429.5 million for the year ended 31 December 2020 as compared to the net profit of approximately HK$116.6 million for the prior year.

With reference to the 2020 Annual Report, due to the high risk profile of the Financial Information and Technology Services segment as well as the unsatisfactory financial performance of the Group, banks have adopted strengthened credit measures towards the Group and tightened their credit facility limits for the construction segment of the Group, causing significant negative impact on the operations of the construction segment. Coupled with the economic downturn and the increasingly difficult business environment, lower revenue was generated from the construction segment in 2020. The Contracting Services recorded a gross loss of approximately HK$9.1 million given the decrease in gross profit of the Group’s top five projects in terms of contract size and the high costs of its project team and operating team. Likewise, the gross profit of the Consultancy Services decreased by approximately 74.7% given the delay in progress of the existing projects and projects put on hold by customers. As advised by the Directors, during the year, the Group disposed of two subsidiaries operating non-core business to mitigate the cash flow pressure on the operations of the construction segment. To streamline and restructure the construction segment, the Group also sold the entire Consultancy Services in January 2021. Currently, the Contracting Services is the only business of the Group within the construction segment.

In addition to the disposals as aforementioned, the Group further entered into a disposal agreement for the sale of its entire equity interest in an indirect wholly-owned subsidiary which was its operating arm for the Financial Information and Technology Services (the “ Disposal ”). The disposal group recorded a net loss of approximately HK$321.0 million in 2020 and its net liabilities were approximately HK$109.2 million as at 31 December 2020. As confirmed by the Directors, the Disposal was completed on 30 March 2021 and it is expected that the net asset value of the Group would be increased by approximately HK$71.7 million (subject to audit) after the completion. Upon our enquiry with the Directors, we understand that the Financial Information and Technology Services segment would continue to be affected by the rapidly changing business environment and the weakened consumer sentiment. Furthermore, the Group is yet to formulate a concrete comprehensive plan for the future development of this business segment.

Based on the 2020 Annual Report, the Group had net current liabilities of approximately HK$16.8 million. With regard to cash flow, for the year ended 31 December 2020, the Group recorded significant net cash outflow from operating activities of approximately HK$99.4 million; and significant net cash outflow of approximately HK$150.7 million.

– IFA-6 –

LETTER FROM VBG CAPITAL

(3) Multiple uncertainties relating to going concern

At extracted from the independent auditor’s report (the “ Auditor’s Report ”) contained in the 2020 Annual Report, the Auditor expressed a disclaimer of opinion on the consolidated financial statements of the Group for the year ended 31 December 2020 with basis in relation to (a) other receivables, deposits and prepayments (the “ Receivables Disclaimer ”); (b) income tax expenses and tax payable (the “ Tax Payable Disclaimer ”); and (c) multiple uncertainties relating to going concern (the “ Going Concern Issue ”). The issues giving rise to the Receivables Disclaimer are that the Auditor was unable to obtain sufficient appropriate audit evidence to satisfy themselves about the net carrying amounts of the certain receivables of the Group as at 31 December 2020 and 2019 and the impairment loss on those receivables recognised in consolidated profit or loss for the years then ended; while the issues giving rise to the Tax Payable Disclaimer are that the Auditor was unable to obtain sufficient appropriate audit evidence to satisfy themselves about the provision for late penalty or surcharge that should be recorded by the Group as at 31 December 2020 and 2019 and the carrying amounts of the tax payable as at 31 December 2020 and 2019 and the tax and related expenses recognised in consolidated profits or loss for the year then ended. As announced by the Company on 29 April 2021, the Auditor shall consider satisfactory that the issues giving rise to the Receivables Disclaimer and the Tax Payable Disclaimer are satisfactorily resolved having considered the relevant audit evidence provided by the Group. Nonetheless, we understand that the Going Concern Issue was still unresolved as at the Latest Practicable Date given primarily that (a) the Group incurred a net loss of approximately HK$429.5 million for the year ended 31 December 2020; and (b) the Group had net current liabilities of approximately HK$16.8 million as at 31 December 2020.

In view of the gross loss recorded by the Contracting Services together with the extensive downturn of the Financial Information and Technology Services segment in 2020, we are of the opinion that regardless of the completion of the Disposal which was aimed to improve the financial position of the Group, in the absence of other strong favourable factors in support of the Group’s existing businesses, the business prospect of the Group is likely to remain doubtful in at least the short run.

Besides, the Company announced on 18 June 2021 that it received a statutory demand (the “ Statutory Demand ”) from the legal adviser acting on behalf of Gentle Soar dated 18 June 2021, demanding it to pay the amount of HK$14,148,825, allegedly being the amount paid, injected and/or credited to the Company from time to time between the period from 15 August 2018 to 18 May 2021, within three weeks from the date of service of the Statutory Demand, failing which Gentle Soar may present a winding up petition against the Company. We understand that the Company is taking legal advice regarding the same. Shareholders are reminded to keep abreast of the relevant development.

– IFA-7 –

LETTER FROM VBG CAPITAL

(4) Trading suspension of the Shares

At the request of the Company, trading in the Shares on the Stock Exchange has been suspended since 31 March 2021 (the “ Trading Suspension ”). On 17 May 2021, the Company was notified by the Stock Exchange of the following Resumption Guidance:

(i) Demonstrate to have a validly constituted Board in accordance with the applicable laws and regulations and the Company’s articles of association.
(ii) Inform the market of all material information for the Shareholders and other investors to appraise the Company’s position.

The Stock Exchange has also indicated that it may modify or supplement the Resumption Guidance if the Company’s situation changes. As the Resumption Guidance is yet to be fulfilled, trading in the Shares on the Stock Exchange will continue to be suspended until fulfilment of the relevant guidance to the satisfaction of the Stock Exchange. Shareholders shall only be able to dispose of their investments in the Shares in the open market after trading in the Shares is allowed to resume (the “ Trading Resumption ”).

(5) Disagreement within the Board

On 3 May 2021, the Company announced (the “ Removal Announcement ”) that the Board passed the Removal to remove, with immediate effect, (i) Mr. Ng as an executive Director; and (ii) Mr. Chan, Mr. Wan and Mr. Lau as the independent non-executive Directors (altogether, the “ Removed Directors ”). With reference to the Removal Announcement, the Board took the view that the Removed Directors had failed to collaborate, in a timely manner, with the other members of the Board to proactively disclose relevant information to the Shareholders and potential investors of the Company, and the management style and ideology of the Removed Directors are substantially different from that of the other members of the Board.

Subsequently on 5 May 2021, the Company announced that the Board (comprising Mr. Gao and Ms. Feng) passed the Appointment regarding the appointment of the New Directors with effect from 5 May 2021.

As disclosed in the Offer Document, on 6 May 2021, the Offeror has filed the 704 Writ in the High Court against, amongst others, Mr. Gao, Ms. Feng, the New Directors and the Company to protect its legitimate interest as a Shareholder. Details of the 704 Writ are included in the sub-section headed “HCA No. 704 of 2021” of the Offer Document. The Offeror has sought, among other things, (a) a declaration that each of the Removal and the Appointment be invalid and/or void and/or otherwise of no legal effect; (b) an order that each of Mr. Gao and Ms. Feng be

– IFA-8 –

LETTER FROM VBG CAPITAL

restrained from acting on, implementing or carrying into effect the Removal as well as the Appointment; and (c) an order that the each of Mr. Gao, Ms. Feng and the New Directors be restrained from acting on, implementing or carrying into effect the Appointment.

On 25 May 2021, the Offeror has filed an amended 704 Writ in the High Court. The amended 704 Writ and the Masterveyor Injunction Application have been served on Mr. Gao, Ms. Feng, the New Directors and the Company on even date. Each of Mr. Gao, Ms. Feng and the New Directors have filed their acknowledgement of service of the amended 704 Writ, stating that they will contest the 704 Writ.

The Masterveyor Injunction Application has been heard by the High Court on 28 May 2021 and 4 June 2021. It was ordered by the High Court on 4 June 2021 that, amongst others, the New Directors and the Company, each of them and their servants or agents or otherwise, be restrained from acting on, implementing or carrying into effect the Removal as well as the Appointment pending determination of the 704 Writ or further order from the High Court.

On 1 June 2021, the Board (comprising Mr. Gao, Ms. Feng and the New Directors) has passed the 1 June Resolution, pursuant to which the operations and implementation of the Resolutions together with the legal effects thereunder shall be suspended as if the Resolutions had not been effected. After the passing of the 1 June Resolution, the Board resolved to re-appoint Ms. Chang as executive Director and Mr. Wong as independent non-executive Director on 1 June 2021.

The aforesaid disagreement among the Board members may or may not continue after the close of the Offer. In the event that the disagreement continues, the business and operations of the Group may be disrupted posing higher uncertainty to the Group’s future development.

(6) Information on the Offeror Group

To provide Independent Shareholders with basic information on the background of the Offeror Group, set out below is the key information on the Offeror Group as extracted from the Offer Document:

“The Offeror is an investment holding company incorporated in the British Virgin Islands on 24 February 2015 with limited liability and is wholly and ultimately beneficially owned by Mr. Ng. Save for holding the Initial Shares and the Sale Shares, the Offeror did not have any other businesses and/or material assets as at the Offer Document LPD. The sole director of the Offeror is Mr. Ng.

Platinum Alpha is an investment holding company and did not have any other businesses and/or material assets as at the Offer Document LPD. The entire issued share in Platinum Alpha was held on trust by Mr. Fung in favour of the Offeror. Such trust arrangement was terminated on

– IFA-9 –

LETTER FROM VBG CAPITAL

1 April 2021 when Mr. Fung transferred the entire issued share in Platinum Alpha to the Offeror. Since then, Platinum Alpha is wholly and beneficially owned by the Offeror. The sole director of Platinum Alpha is Mr. Fung.

Mr. Ng, aged 54, was an executive Director and the chief executive officer of the Company and was responsible for the overall business development and strategic planning of the Group immediately prior to the Removal and the Appointment (which were subject to dispute as set out in the section headed “Legal proceedings with Gentle Soar and Mr. Gao” of the Offer Document). He was appointed as an executive Director on 19 March 2015. He is also a director of Harvest Building Consultancy Limited, Marvo Architecture Limited, Win Lee and FDB Development Limited, all being subsidiaries of the Group.

Other than the experience in the building and construction industry, Mr. Ng is also experienced in real estate development, property project management and financial services sectors.”

(7) Intentions of the Offeror in relation to the Group

To provide Independent Shareholders with information on the intentions of the Offeror, set out below is the Offeror’s intentions on the Group’s operational matters, employees and senior management, and the Board composition as extracted from the Offer Document:

The Group’s operational matters, employees and senior management

“The Offeror intends to continue the existing principal businesses of the Group. After the close of the Offer, the Offeror will conduct a detailed review of the existing principal business operations and financial position of the Group for the purpose of formulating a sustainable business plan or strategy for the Group’s future development. Subject to the results of the review, the Offeror may look into business and investment opportunities in different business areas and

– IFA-10 –

LETTER FROM VBG CAPITAL

geographical locations and consider whether any asset disposals, asset acquisitions, business rationalisation, business divestment, fund raising, and/or restructuring of the business will be appropriate in order to enhance the long-term growth potential of the Group. The Offeror intends to leverage upon the expertise and business opportunities that Mr. Ng may have in his sectors of real estate development, property project management and financial services and expand the income stream of the Group. Notwithstanding the above, as at the Offeror Document LPD, no investment or business opportunity had been identified nor had the Offeror entered into any agreement, arrangements, understandings or negotiation in relation to the injection of any assets or business into the Group, and the Offeror had no intention to discontinue the employment of the employees (save for the proposed changes to the Board as described below) or to dispose of or re-deploy the assets of the Group other than those in its ordinary course of business or in accordance with the future plans of the Company as set out in the Company’s annual results announcement dated 30 March 2021.”

The Board composition

“The Offeror will consider the composition of the Board including nominating new Directors to the Board to facilitate the management of the Group. Any of such appointments will be made in compliance with the Takeovers Code and the Listing Rules and will take effect on the earliest day permitted under the Takeovers Code or such later date as the Offeror considers to be appropriate.”

(8) The Offer Price

Offer Price comparison

The Offer Price of HK$0.158 per Offer Share represents:

(a) a premium of approximately 37.4% over the closing price of HK$0.115 per Share as quoted on the Stock Exchange on the Last Trading Day;
(b) a premium of approximately 11.3% over the average of the closing prices as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day of approximately HK$0.142 per Share;
(c) a premium of approximately 5.3% over the average of the closing prices as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day of approximately HK$0.150 per Share;
(d) a premium of approximately 0.6% over the average of the closing prices as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day of approximately HK$0.157 per Share;

– IFA-11 –

LETTER FROM VBG CAPITAL

(e) a premium of approximately 652.4% over the audited consolidated net asset value attributable to the owners of the Company of approximately HK$0.021 per Share as at 31 December 2020; and
(f) a premium of approximately 113.5% over the adjusted consolidated net asset value attributable to the owners of the Company of approximately HK$0.074 per Share based on the audited consolidated net asset value per Share as at 31 December 2020 as adjusted by the expected increase in the net asset value of the Group of approximately HK$71.7 million resulting from the Disposal.

As illustrated above, the Offer Price represents premiums over the recent closing prices of the Shares on the Stock Exchange and the latest net asset values per Share.

The comparison of the Offer Price per Offer Share against the closing price per Share as quoted on the Stock Exchange on the Latest Practicable Date is not available due to the Trading Suspension.

Historical price performance of the Shares

Set out below is a chart showing the movement of the closing prices of the Shares within the period from 1 April 2020 up to the Last Trading Day (the “ Review Period ”), being the approximate one-year period to illustrate the general trend and level of movement of the closing prices of the Shares before the Trading Suspension:

==> picture [437 x 232] intentionally omitted <==

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

HK$
0.300
0.250
0.200
0.150
0.100
0.050
0.000
Closing price of the Shares (HK$) The Offer Price (HK$)
2020/04/01 2020/04/14 2020/04/23 2020/05/06 2020/05/15 2020/05/26 2020/06/04 2020/06/15 2020/06/24 2020/07/07 2020/07/16 2020/07/27 2020/08/05 2020/08/14 2020/08/25 2020/09/03 2020/09/14 2020/09/23 2020/10/06 2020/10/16 2020/10/28 2020/11/06 2020/11/17 2020/11/26 2020/12/07 2020/12/16 2020/12/28 2021/01/07 2021/01/18 2021/01/27 2021/02/05 2021/02/18 2021/03/01 2021/03/10 2021/03/19 2021/03/30
----- End of picture text -----

Source: the Stock Exchange website (www.hkex.com.hk)

– IFA-12 –

LETTER FROM VBG CAPITAL

As depicted by the above chart, during the Review Period, the closing prices of the Shares on the Stock Exchange attained the highest level of HK$0.280 per Share on 2 April 2020 and demonstrated an overall plummeting trend thereafter until reaching the floor of HK$0.116 in mid-October 2020. On 4 November 2020, there was a sudden upsurge in the Share price of approximately 24.3% from HK$0.152 per Share on the previous trading day to HK$0.189 per Share. The closing prices of the Shares rebounded within a short time interval afterwards and stayed at above HK$0.200 per Share for a number of trading days in November 2020. We have enquired into the Directors regarding the possible reasons for such Share price recovery and the Directors advised us that they were not aware of any affirmative happenings which might have affected the Share price. Based on our study of the movement of the Hang Seng Index, the Hang Seng Index had risen from 24,460 points on 2 November 2020 to 26,341 points on 30 November 2020. Thus, such Share price recovery might be in alignment with the market index. From December 2020 onwards up to the Last Trading Day, the closing prices of the Shares on the Stock Exchange have been plunging persistently for nearly four months. As advised by the Directors, the plunge may be attributable to the various announcements of the Company (including the profit warning announcement dated 29 December 2020 and the disposal announcements dated 22 January 2021, 2 February 2021 and 30 March 2021) made during the period. We noted that the Offer Price represents a slight discount of approximately 4.8% to the average of the closing prices as quoted on the Stock Exchange for the last 60 consecutive trading days up to and including the Last Trading Day; but mounting premiums of approximately 0.6%, 5.3% and 11.3%, respectively, over the recent 30-day, 10-day and 5-day averages of the closing prices of the Shares as presented in the foregoing sub-section of this letter of advice.

Historical trading liquidity of the Shares

The number of trading days, the average daily number of the Shares traded per month, and the respective percentages of the Shares’ monthly trading volume as compared to (i) the total number of issued Shares held by the public as at the Latest Practicable Date; and (ii) the total number of issued Shares as at the Latest Practicable Date during the Review Period are tabulated as below:

– IFA-13 –

LETTER FROM VBG CAPITAL

			% of the Average	% of the Average
			Volume to total		% of the Average
			number of issued		Volume to total
	Number of	Average daily	Shares held by the		number of issued
	trading days	trading volume	public as at the		Shares as at the
	in each	(the “Average	Latest Practicable		Latest Practicable
Month	month	Volume”)	Date *(Note 1)*		Date *(Note 2)*
		Number of Shares		%	%
2020
April	19	4,264,211		1.05	0.32
May	20	642,000		0.16	0.05
June	21	6,779,048		1.66	0.51
July	22	798,636		0.20	0.06
August	21	180,476		0.04	0.01
September	22	281,364		0.07	0.02
October	18	398,889		0.10	0.03
November	21	1,411,429		0.35	0.11
December	22	275,455		0.07	0.02
2021
January	20	338,500		0.08	0.03
February	18	167,778		0.04	0.01
March	22	453,636		0.11	0.03

Source: the Stock Exchange website (www.hkex.com.hk)

Notes:

Based on 408,000,000 Shares held by the public as at the Latest Practicable Date.
Based on 1,332,000,000 Shares in issue as at the Latest Practicable Date.

As depicted by the above table, trading in the Shares had been extremely thin (below 0.40% of the total number of issued Shares held by the public as at the Latest Practicable Date) during the Review Period (save and except for April 2020 and June 2020). In other words, the Shares are highly illiquid.

Taking into account that (i) from December 2020 onwards up to the Last Trading Day, the closing prices of the Shares on the Stock Exchange have been plunging persistently for nearly four months and the Offer Price represents mounting premiums over the recent closing prices of the Shares on the Stock Exchange; and (ii) the Shares are highly illiquid, we are of the view that the Independent Shareholders (especially those with relatively sizeable shareholdings) may not be able

– IFA-14 –

LETTER FROM VBG CAPITAL

to identify potential purchaser(s) to acquire their Shares at a price higher than the Offer Price during the Trading Suspension. In the event that the Trading Resumption takes place during or shortly after the Offer Period, Independent Shareholders (especially those with relatively sizeable shareholdings) may still be unable to realise their investments in the Shares at a price higher than the Offer Price, as they may encounter difficulties in selling a significant number of Shares in the market at a fixed cash price without disturbing the market price if the same trading pattern of the Shares persists. In such circumstances, we consider that the Offer provides an exit alternative for the Independent Shareholders who would like to realise their investments in the Shares.

Nonetheless, if any Independent Shareholders who would like to realise their investments in the Shares are able to identify potential purchaser(s) to acquire their Shares and/or are confident that they can dispose of their Shares in the open market after the Trading Resumption at a price higher than the Offer Price, those Independent Shareholders may consider not accepting the Offer but selling their Shares to such potential purchaser(s) and/or in the open market after the Trading Resumption, as they wish to do so and as they think fit having regard to their own circumstances, in case the net proceeds from the sale of their Shares would exceed the net amount receivable under the Offer.

Furthermore, those Independent Shareholders who, after reading through the 2020 Annual Report, the Offer Document and the Response Document, are optimistic about the future financial performance of the Group after the Offer, may, having regard to their own circumstances, consider retaining all or any part of their Shares.

Accordingly, Independent Shareholders should carefully consider the relevant risks and uncertainties based on their individual risk preference and tolerance level. Those Independent Shareholders who decide to retain part or all of their investments in the Shares should also carefully monitor the financial performance of the Group as well as the intentions of the Offeror in relation to the Company in the future, and the potential difficulties they may encounter in disposing of their investments in the Shares after the close of the Offer.

Comparison with the latest net asset values of the Shares

As aforementioned, the Offer Price represents premiums over the latest consolidated net asset values per Share. Nonetheless, given the asset light nature of the Group’s principal businesses, we are of the view that the comparison between the Offer Price and the net asset value of the Shares is rather not meaningful. Therefore, the comparison between the Offer Price and the net asset value of the Shares is just for Independent Shareholders’ reference.

– IFA-15 –

LETTER FROM VBG CAPITAL

Comparison with other comparable companies

We have also attempted to use the price multiples analysis which consists of the price to earnings ratio and the price to book ratio to assess the fairness and reasonableness of the Offer Price. Nevertheless, in light of that the Group was loss making during the year ended 31 December 2020, the price to earnings ratio is considered to be inapplicable. Similarly, given the asset light nature of the Group’s principal businesses, the price to book ratio is rather not meaningful. As such, our analysis on the fairness and reasonableness of the Offer Price does not include the price multiples analysis of comparison with other comparable companies.

RECOMMENDATION

Having considered the principal factors and reasons as discussed above, in particular:

(i) as shown in the section headed “Business and financial information on the Group” of this letter of advice, the Group’s revenue dropped considerably by approximately 63.4% and it suffered from net loss of approximately HK$429.5 million in 2020. The Financial Information and Technology Services segment performed poorly during the year, and the Directors advised us that this business segment would continue to be affected by the rapidly changing business environment and the weakened consumer sentiment;
(ii) as shown in the section headed “Business and financial information on the Group” of this letter of advice, performance of the construction segment also worsened in 2020 as a result of (a) the negative impact caused by the high risk profile of the Financial Information and Technology Services segment; and (b) the economic downturn and the increasingly difficult business environment;
(iii) as stated in the Auditor’s Report, the Group faces the Going Concern Issue. In view of the gross loss recorded by the Contracting Services together with the extensive downturn of the Financial Information and Technology Services segment in 2020, we are of the opinion that regardless of the completion of the Disposal which was aimed to improve the financial position of the Group, in the absence of other strong favourable factors in support of the Group’s existing businesses, the business prospect of the Group is likely to remain doubtful in at least the short run;
(iv) the Trading Suspension has taken place since 31 March 2021, and the exact time for the Trading Resumption is unknown subject to, among other things, fulfilment of the Resumption Guidance to the satisfaction of the Stock Exchange. Shareholders shall only be able to dispose of their investments in the Shares in the open market after the Trading Resumption;

– IFA-16 –

LETTER FROM VBG CAPITAL

(v) in the event that the disagreement among the Board members as shown in the section headed “Disagreement within the Board” of this letter of advice continues after the close of the Offer, the business and operations of the Group may be disrupted posing higher uncertainty to the Group’s future development;
(vi) as shown in the sub-section headed “Historical price performance of the Shares” of this letter of advice, from December 2020 onwards up to the Last Trading Day, the closing prices of the Shares on the Stock Exchange have been plunging persistently for nearly four months and the Offer Price represents mounting premiums over the recent closing prices of the Shares on the Stock Exchange;
(vii) as shown in the sub-section headed “Historical trading liquidity of the Shares” of this letter of advice, the Shares are highly illiquid; and
(viii)given points (vi) and (vii) above, we are of the view that the Independent Shareholders (especially those with relatively sizeable shareholdings) may not be able to identify potential purchaser(s) to acquire their Shares at a price higher than the Offer Price during the Trading Suspension. In the event that the Trading Resumption takes place during or shortly after the Offer Period, Independent Shareholders (especially those with relatively sizeable shareholdings) may still be unable to realise their investments in the Shares at a price higher than the Offer Price, as they may encounter difficulties in selling a significant number of Shares in the market at a fixed cash price without disturbing the market price if the same trading pattern of the Shares persists. In such circumstances, we consider that the Offer provides an exit alternative for the Independent Shareholders who would like to realise their investments in the Shares,

we consider that the terms of the Offer (including the Offer Price) are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to accept the Offer.

However, we would also like to remind the Independent Board Committee to remind the Independent Shareholders that if they are able to identify potential purchaser(s) to acquire their Shares and/or are confident that they can dispose of their Shares in the open market after the Trading Resumption at a price higher than the Offer Price, those Independent Shareholders may consider not accepting the Offer but selling their Shares to such potential purchaser(s) and/or in the open market after the Trading Resumption, as they wish to do so and as they think fit having regard to their own circumstances, in case the net proceeds from the sale of their Shares would exceed the net amount receivable under the Offer.

– IFA-17 –

LETTER FROM VBG CAPITAL

Besides, Independent Shareholders should note that under Rule 6.01A(1) of the Listing Rules, the Stock Exchange may cancel the listing of any securities that have been suspended from trading for a continuous period of 18 months. In the case of the Company, the 18-month period expires on 30 September 2022. Moreover, under Rules 6.01 and 6.10 of the Listing Rules, the Stock Exchange has the right to impose a shorter specific remedial period for fulfilment of the Resumption Guidance. Should the Shares be delisted from the Stock Exchange, interests of the Shareholders would be severely jeopardised.

Those Independent Shareholders who decide to retain part or all of their investments in the Shares should also carefully monitor the financial performance of the Group as well as the intentions of the Offeror in relation to the Company in the future, and the potential difficulties they may encounter in disposing of their investments in the Shares after the close of the Offer. Further terms and conditions of the Offer are set out in the Offer Document.

As different Independent Shareholders would have different investment criteria, objectives and/or circumstances, we would recommend any Independent Shareholders who may require advice in relation to the ongoing litigation cases as highlighted in the section headed “Litigation” in Appendix II to the Response Document, and any other aspect of the Response Document, or as to the action to be taken, to consult a licensed securities dealer, bank manager, solicitor, professional accountant, tax adviser or other professional adviser.

Yours faithfully, For and on behalf of VBG Capital Limited Doris Sing Managing Director

Ms. Doris Sing is a licensed person and responsible officer of VBG Capital Limited registered with the SFC to carry on Type 6 (advising on corporate finance) regulated activity under the SFO and has over 16 years of experience in corporate finance industry.

– IFA-18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

Set out below is a summary of the audited consolidated financial results and financial position of the Group for each of the financial years ended 31 December 2018, 2019 and 2020, respectively, as extracted from the relevant published consolidated financial statements of the Group for the relevant years:

Revenue
Cost of services
Gross profit/(loss)
Other income
Other gains and losses
Impairment losses under expected credit loss
model, net of reversal
Other expenses
Administrative expenses
Finance costs
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the year
Other comprehensive (loss)/income
Items that will not be reclassified to profit or
loss:
Fair value loss on investments in equity
instruments at fair value through other
comprehensive income
Exchange differences on translation from
functional currency to presentation currency
Item that may be reclassified subsequently to
profit or loss:
Exchange differences arising on translation of
foreign operations
Other comprehensive (loss)/income for the
year
Total comprehensive income/(loss) for the
year

Financial years ended 31 December
2018
2019
2020
HK$’000
HK$’000
HK$’000
648,541
1,293,293
473,860
(539,526)
(707,720)
(483,877)
109,015
585,573
(10,017)
2,020
1,397
26,615
(24)
(54,606)
(24,000)
(1,072)
(208,003)
(311,099)
(220)
—
—
(39,172)
(107,168)
(70,824)
(1,930)
(2,997)
(1,933)
68,617
214,196
(391,258)
(17,321)
(97,619)
(38,270)
51,296
116,577
(429,528)
(5,234)
(25,069)
(1,240)
—
(3,089)
2,873
(5,234)
(28,158)
1,633
34
3,171
13,770
(5,200)
(24,987)
15,403
46,096
91,590
(414,125)

– I-1 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Profit/(loss) for the year attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive income/(loss) for the
year attributable to:
Owners of the Company
Non-controlling interests
Earnings/(loss) per share
Basic (HK cents)
Diluted (HK cents)
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Deposit paid for acquisition of property, plant
and equipment
Equity instruments at fair value through other
comprehensive income
Deferred tax assets
Current assets
Contract assets
Trade and other receivables
Financial assets at fair value through profit or
loss (“FVTPL”)
Tax recoverable
Pledged bank deposits
Bank balances and cash

Financial years ended 31 December
2018
2019
2020
HK$’000
HK$’000
HK$’000
32,057
20,568
(245,030)
19,239
96,009
(184,498)
51,296
116,577
(429,528)
26,786
(4,222)
(230,877)
19,310
95,812
(183,248)
46,096
91,590
(414,125)
2.6
1.7
(18.4)
N/A
1.7
(18.4)
As at 31 December
2018
2019
2020
HK$’000
HK$’000
HK$’000
5,390
4,079
1,908
—
5,763
—
—
7,227
337
1,150
—
—
44,766
19,697
18,457
270
51,780
3
51,576
88,546
20,705
163,451
141,067
95,193
198,094
512,152
226,309
—
24,683
13,902
2,751
4,470
1,346
33,194
36,316
25,583
21,996
171,039
24,023
419,486
889,727
386,356

– I-2 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Current liabilities
Trade and other payables
Contract liabilities
Amounts due to shareholders
Tax liabilities
Lease liabilities
Bank borrowings
Net current assets/(liabilities)
Total assets less current liabilities
Non-current liabilities
Deferred tax liabilities
Lease liabilities
Net assets
Capital and reserves
Share capital
Reserves
Equity attributable to owners of the Company
Non-controlling interests
Total equity

As at 31 December
2018
2019
2020
HK$’000
HK$’000
HK$’000
169,993
297,754
229,259
13,875
37,623
31,731
52,355
15,503
12,406
13,704
123,083
119,285
—
6,818
3,994
53,400
52,600
6,500
303,327
533,381
403,175
116,159
356,346
(16,819)
167,735
444,892
3,886
76
16,278
56
—
425
1,514
76
16,703
1,570
167,659
428,189
2,316
12,320
13,320
13,320
124,654
244,931
14,054
136,974
258,251
27,374
30,685
169,938
(25,058)
167,659
428,189
2,316

For the financial years ended 31 December 2018, 2019 and 2020, the Company did not declare or pay dividends to the Shareholders.

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Set out below is a summary of the consolidated statement of cash flows of the Group for the year ended 31 December 2020 as extracted from its annual report for the year ended 31 December 2020:

Operating Activities
(Loss) before tax
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Depreciation of right-of-use assets
Finance costs
Impairment losses under expected credit loss model, net of reversal
Impairment losses on property, plant and equipment
Impairment losses on right-of-use assets
Impairment losses on intangible assets
Loss from change in fair value of convertible bonds at FVTPL
Realised gain on financial assets at FVTPL
Loss from change in fair value of financial assets at FVTPL
Bank interest income
Dividend income
Loss on disposal of property, plant and equipment
Gain on disposal on subsidiaries
Operating cash flows before movements in working capital
Increase in trade and other receivables
Decrease in contract assets
(Decrease) in trade and other payables
(Decrease) in contract liabilities
Cash used in from operations
Income tax paid
Net cash used in from operating activities

Financial year
ended 31
December 2020
HK$’000
(391,258)
1,959
821
9,079
1,933
311,099
1,012
5,018
5,225
—
(47)
11,918
(319)
(455)
138
(1,943)
(45,820)
(13,555)
42,492
(69,115)
(5,020)
(91,018)
(8,414)
(99,432)

– I-4 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Investing activities
Purchase of financial assets at FVTPL
Purchase of property, plant and equipment
Initial payment of acquiring right-of-use asset
Proceed from disposal of financial assets at FVTPL
Proceeds from disposal of property, plant and equipment
Net cash outflow on disposal of subsidiaries
Placement of pledged bank deposits
Withdrawal of pledged bank deposits
Interest received
Dividend received
Net cash generated from investing activities
Financing activities
Interest paid
Proceeds from bank borrowings
Repayment of bank borrowings
Repayment of lease liabilities
Capital contribution by a non-controlling shareholder of a subsidiary
Advances from a shareholder
Repayments to a shareholder
Proceeds on issue of convertible bonds
Net cash used in from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalent at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
represented by bank balances and cash

Financial year
ended 31
December 2020
HK$’000
—
(948)
(69)
177
22
(1,684)
(5,317)
16,050
319
455
9,005
(1,668)
44,811
(90,911)
(9,144)
274
—
(3,616)
—
(60,254)
(150,681)
171,039
3,665
24,023

Save as disclosed above, the Group did not have any item of any income or expense which was material for the financial years ended 31 December 2018, 2019 and 2020.

– I-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Audit Opinion

There were no modified opinion, emphasis of matter or material uncertainty related to going concern contained in the auditor’s reports of Deloitte Touche Tohmatsu, the then auditor of the Company, on the audited consolidated financial statements of the Group for the financial years ended 31 December 2018 and 2019.

According to the 2020 Annual Report, the Auditor did not express an opinion on the consolidated financial statements of the Group. Because of the significance of the matters described in the “Basis for Disclaimer of Opinion” section thereof, the Auditor expressed that they had not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated financial statements (the “ Disclaimer of Opinion ”). Set out below is the Disclaimer of Opinion and its corresponding basis based on the 2020 Annual Report.

“Disclaimer of opinion

We were engaged to audit the consolidated financial statements of Steering Holdings Limited (formerly known as Dafy Holdings Limited) (the “ Company ”) and its subsidiaries (collectively referred to as the “ Group ”) set out on pages 89 to 179, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

We do not express an opinion on the consolidated financial statements of the Group. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated financial statements. In all other respects, in our opinion, the consolidated financial statements have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

– I-6 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Basis for Disclaimer of Opinion

The following paragraphs reproduce the disclaimer of opinion stated by the Auditor in the financial statement for the year ended 31 December 2020.

1. Other receivables, deposits and prepayment

As disclosed in Note 20 to the consolidated financial statements, included in the gross carrying amounts of trade and other receivables of the Group as at 31 December 2020 and 2019 are the following other receivables, deposits and prepayments of the financial information and technology services segment of the Group (the “ Receivables ”):

deposits of approximately RMB35,735,000 and RMB8,804,000 paid by the Group to a credit service provider and a financial institution respectively during the year ended 31 December 2019 and equivalent to approximately HK$52,472,000 and HK$49,794,000 as at 31 December 2020 and 2019 respectively. As disclosed in note (c) in Note 20, the deposits were calculated based on a fixed percentage of the amounts of the loans distributed to borrowers through the credit service provider or the financial institution and the deposits would be released upon the maturity of the relevant loans, which ranged from 3 months to 1 year from the loan origination date;
other receivables from a credit service provider of approximately HK$126,727,000 and HK$177,689,000 as at 31 December 2020 and 2019 respectively, which relate to payments amounting to RMB158,929,000 (equivalent to approximately HK$177,689,000) made by the Group to the credit service provider during the year ended 31 December 2019 as part of the business cooperation between the Group and the credit service provider; and
other receivable of approximately HK$79,528,000 as at 31 December 2020 which arose from payments made by the Group to agents which amounted to approximately RMB67,504,000

The Receivables had been long outstanding as at 31 December 2020 and based on the impairment assessment performed under the expected credit loss model, impairment loss on the deposits to a credit service provider and a financial institution of approximately HK$36,537,000, impairment loss on other receivables from a credit service provider of approximately HK$77,544,000 and impairment loss on other receivable arising from payments to agents of approximately HK$79,216,000 were recognised in consolidated profit

– I-7 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

or loss of the Group for the year ended 31 December 2020 to impair the carrying amounts of the Receivables to their estimated recoverable amount of approximately HK$10,274,000, HK$29,190,000 and Nil respectively as at 31 December 2020.

We were unable to obtain sufficient appropriate audit evidence to satisfy ourselves about the net carrying amounts of the Receivables as at 31 December 2020 and 2019 and the impairment loss on the Receivables recognised in consolidated profit or loss for the years then ended because we were not provided with (i) reasonable explanation and supporting documentation to substantiate the commercial substance, validity and nature of the relevant transactions that gave rise to the Receivables; and (ii) reasonable explanation and supporting documentation to substantiate the recoverable amount of the Receivables as at 31 December 2020 and the recoverability of the respective net carrying amounts of the Receivables as at 31 December 2019. There were no alternative satisfactory audit procedures that we could adopt to determine whether the net carrying amounts of the Receivables as at 31 December 2020 and 2019 and the impairment loss on the Receivables recognised in consolidated profit or loss for the years then ended contain material misstatements. As a result, we were unable to determine whether any adjustments or additional disclosures might have been found necessary in respect of the Receivables and the impairment losses recognised thereon, including the related tax impact and other related elements in the consolidated financial statements, which may have consequential significant effects on the consolidated financial position of the Group as at 31 December 2020 and 2019 and the consolidated financial performance and consolidated cash flows of the Group for the years then ended, and may result in additional disclosures in the consolidated financial statements.

2. Income tax expense and tax payable

Included in the tax payable of the Group are tax payable of approximately HK$119,285,000 and HK$122,745,000 as at 31 December 2020 and 2019 respectively of the financial information and technology services segment of the Group, for which the related income tax expense recognised in consolidated profit or loss amounted to approximately HK$54,638,000 and HK$79,790,000 for the years ended 31 December 2020 and 2019 respectively. The Group paid only approximately HK$10,280,000 and HK$9,700,000 of income tax in the years ended 31 December 2020 and 2019 respectively in respect of the income tax liabilities of the financial information and technology services segment and no such income tax was paid during the period from the end of the reporting period up to the date of this report. The Group has engaged an independent tax expert to review the tax position and tax exposure of the Group in relation to the financial information and technology services segment. Up to the date of this report, the tax expert is still in the process of determining the income tax related to financial information and technology

– I-8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

services but suggested that the Group may be subject to significant late penalty or surcharge. No provision is recognised in the consolidated financial statements in respect of any late penalty or surcharge that may be imposed by the tax authorities.

We were unable to obtain sufficient appropriate audit evidence to satisfy ourselves about the provision for late penalty or surcharge that should be recorded by the Group as at 31 December 2020 and 2019 and the carrying amounts of the tax payable as at 31 December 2020 and 2019 because the independent tax expert’s review of the tax position and tax exposure of the Group in relation to the financial information and technology services segment is still not yet completed. There were no alternative satisfactory audit procedures that we could adopt to determine whether the carrying amounts of the tax payable and related provision as at 31 December 2020 and 2019 and the tax and related expenses recognised in consolidated profit or loss for the years then ended contain material misstatements. As a result, we were unable to determine whether any adjustments or additional disclosures might have been found necessary in respect of the tax payable and related provision and the tax and related expenses recognised thereon, including the other related elements in the consolidated financial statements, which may have consequential significant effects on the consolidated financial position of the Group as at 31 December 2020 and 2019 and the consolidated financial performance and consolidated cash flows of the Group for the years then ended, and may result in additional disclosures in the consolidated financial statements.

3. Multiple uncertainties relating to the going concern

As explained in Note 3 to the consolidated financial statements, the Group incurred a net loss of approximately HK$429,528,000 for the year ended 31 December 2020, and, as of that date, the Group had net current liabilities of approximately HK$16,819,000. In addition, as described above, the Group may be subject to significant late penalty and surcharge related to income tax of the financial information and technology services segment. These conditions indicate the existence of material uncertainties that may cast significant doubt on the Group’s ability to continue as a going concern.

The directors have been undertaking certain measures to improve the Group’s liquidity and financial position, as set out in Note 3 to the consolidated financial statements. The consolidated financial statements have been prepared on a going concern basis, the validity of which depends on the eventual successful outcome of these measures, which as at the date of this report cannot be ascertained with reasonable certainty and are subject to multiple uncertainties, including (i) whether the Group is able to obtain further financing from its

– I-9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

stakeholders; and/or (ii) whether the cost and working capital control measures would significantly reduce overall operating costs of the Group and enable the Group to attain positive cash flow from operations.

Should the Group fail to achieve successful outcomes from the above mentioned measures, it might not be able to continue to operate as a going concern, and adjustments would have to be made to write down the carrying value of the Group’s assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effects of these adjustments have not been reflected in these consolidated financial statements.

We have not been provided with sufficient appropriate audit evidence to conclude on the appropriateness of management’s use of the going concern basis of accounting in the preparation of the consolidated financial statements because of the lack of detailed analysis provided by management in relation to its plans and measures for future actions in its going concern assessment which take into account the uncertainty of outcome of these plans and measures and how variability in outcome would affect the future cash flows of the Group. Any adjustments found to be required may have consequential significant effects on the consolidated financial position of the Group as at 31 December 2020 and the consolidated financial performance and consolidated cash flows of the Group for the year then ended.

Background of the Disclaimer of Opinion and management’s response

Background

The basis of the Disclaimer of Opinion were in relation to (a) other receivables, deposits and prepayments (the “ Receivables Disclaimer ”); (b) income tax expenses and tax payable (the “ Tax Payable Disclaimer ”); and (c) multiple uncertainties relating to going concern (the “ Going Concern Disclaimer ”).

The issues giving rise to the Disclaimer of Opinion (other than the Going Concern Disclaimer) are that the Auditors were unable to obtain sufficient appropriate audit evidence to satisfy themselves about (a) the net carrying amounts of the Receivables as at 31 December 2020 and 2019 and the impairment loss on the Receivables recognised in consolidated profit or loss for the years then ended (being the issues giving rise to the Receivables Disclaimer); and (b) the provision for late penalty or surcharge that should be recorded by the Group as at 31 December 2020 and 2019 and the carrying amounts of the tax payable as at 31 December 2020 and 2019 and the tax and related expenses recognised in consolidated profits or loss for the year then ended.

– I-10 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Given the Auditor raising the Disclaimer of Opinion, the trading of the Shares on the Stock Exchange was suspended with effect from 9:00 a.m. on 31 March 2021 under Rule 13.50A of the Listing Rules.

Management’s Response

As disclosed in the 2020 Annual Report, the Group carried out its loan facilitation business in the PRC through Shanghai Faye Yu Technology Company Limited (“ Shanghai Faye Yu ”) and its non-wholly owned subsidiaries (collectively, the “ Shanghai Faye Yu Group ”). The Receivables relate solely to the Shanghai Faye Yu Group. As disclosed in the announcement dated 29 April 2021, the Board announced and the Auditor agreed that the issues giving rise to the Receivables Disclaimer and the Tax Payable Disclaimer are relating to the Shanghai Faye Yu Group only. The Auditors have not issued a disclaimer of opinion on other part of the consolidated financial statements of the Group for the year ended 31 December 2020 (other than the Going Concern Disclaimer).

The management of the Group and the auditor come to a consensus that as (1) Shanghai Faye Yu Group has ceased operations in December 2020 and impairment has been made during the year ended 31 December 2020; and (2) if the Group disposes of the Shanghai Faye Yu Group in 2021 which, if materialised, would lead to Shanghai Faye Yu Group ceasing to be subsidiaries of the Group upon completion and being treated as having been disposed of in the year ending 31 December 2021, there would still be qualifications relating to the impairment of the other receivables, deposits and prepayments up to the date of the disposal of Shanghai Faye Yu Group. In addition, the gain or loss on the disposal is also expected to be qualified in the following year.

On 30 March 2021, Jet Speed Asia Pacific Limited (創捷亞太有限公司) (“ Jet Speed ”), an indirect wholly owned subsidiary of the Company and a limited liability company incorporated under the laws of Hong Kong, as vendor, Zhang Jin (張錦) (the “ Purchaser ”), an independent third party of the Company and Shanghai Faye Yu, entered into a share transfer agreement (the “ Share Transfer Agreement ”), pursuant to which Jet Speed agreed to sell and the Purchaser agreed to purchase 100% equity interest in Shanghai Faye Yu for a consideration of RMB1.00 in accordance with the terms and conditions thereof. The completion of the Share Transfer Agreement (the “ Completion* ”) has taken place immediately upon signing of the Share Transfer Agreement. Immediately upon completion of the disposal of the entire equity interest in Shanghai Faye Yu, Shanghai Faye Yu was no longer a subsidiary of the Company and the financial results, assets and liabilities of Shanghai Faye Yu Group would no longer be consolidated into the financial statements of the Company.

– I-11 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

~~O~~ n 29 April 2021, the Board announced that with the disposal of the entire equity interest in Shanghai Faye Yu being completed:

(i) the Receivables Disclaimer and the Tax Payable Disclaimer have been satisfactorily addressed;
(ii) any modified opinion in the forthcoming year in respect of the Receivable Disclaimer and Tax Payable Disclaimer should only relate to (a) the impairment loss of other receivables, deposits and prepayments and income tax and related expenses from 1 January 2021 to the date of Completion; (b) the net carrying amounts of the net assets of the Shanghai Faye Yu Group at the date of disposal and hence the amount on the gain (or loss) on disposal of the Shanghai Faye Yu Group; and (c) the comparability of the 2020/2021 figures and the 2021/2022 figures to be presented in the consolidated financial statements for the years ending 31 December 2021 and 31 December 2022 respectively; and
(iii) accordingly, the Receivables Disclaimer and Tax Payable Disclaimer should not have any continuing effect on the Group’s consolidated financial statements after the financial year ending 31 December 2022.

Application of new and amendments to Hong Kong Financial Reporting Standards (“HKFRSs”)

For the financial year ended 31 December 2020, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the Hong Kong Institute of Certified Public Accountants for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the consolidated financial statements:

Amendments to HKAS 1 and HKAS 8 Definition of Material

Amendments to HKFRS 3 Definition of a Business Amendments to HKFRS 9, HKAS 39 Interest Rate Benchmark Reform and HKFRS 7

The application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs for the financial year ended 31 December 2020 had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in the Group’s consolidated financial statements.

– I-12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group, together with the accompanying notes to the consolidated financial statements, for each of the three financial years ended 31 December 2018, 2019 and 2020 are disclosed in the annual reports of the Company for the financial years ended 31 December 2018, 2019 and 2020, respectively. The said annual reports are published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.steering.com.hk):

(i) the annual report of the Company for the year ended 31 December 2018 published on 26 April 2019 (pages 61 to 125)
(https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0426/ltn20190426401.pdf)
(ii) the annual report of the Company for the year ended 31 December 2019 published on 15 May 2020 (pages 66 to 147)
(https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0515/2020051500994.pdf)
(iii) the annual report of the Company for the year ended 31 December 2020 published on 28 April 2021 (pages 89 to 179)
(https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0428/2021042800953.pdf)

The audited consolidated financial statements of the Group for each of the three financial years ended 31 December 2018, 2019 and 2020 are incorporated by reference into this Response Document and form part of this Response Document.

– I-13 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. INDEBTEDNESS

As the close of business on 31 March 2021, being the latest practicable date for the purpose of ascertaining information contained in this statement of indebtedness prior to the printing of this Response Document, the Group had indebtedness of approximately HK$179,069,000, details of which are as follows:

Trade and other payables

The Group had trade and other payables of approximately HK$129,888,000.

Lease liabilities

The Group had lease liabilities (comprising both current and non-current liabilities) of approximately HK$4,691,000.

Amount due to a shareholder

The Group had amount due to a shareholder of HK$12,844,000 which are unsecured, interest-free and repayable within one year from the end of the reporting period.

Bank borrowing

As at the Latest Practicable Date, the Group had no outstanding bank borrowing.

Contract liabilities

The Group had contract liabilities of approximately HK$31,646,000.

Contingent liabilities

Certain customers of construction contracts undertaken by the Group required the Group entities to issue guarantees for performance of contract works in the form of surety bonds secured by pledged bank deposits. In addition, the Group provided a counter-indemnity to the financial institutions which have issued such surety bonds.

As at 31 March 2021, the outstanding amount of surety bonds of the Group was approximately HK$35.6 million.

– I-14 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed above, as at 31 March 2021, the Group did not have any other material contingent liabilities or guarantee.

4. MATERIAL CHANGE

Since 31 December 2020, being the date to which the latest published audited consolidated financial statements of the Company were made up, and up to and including the Latest Practicable Date, the Group has the following material changes in the financial or trading position or outlook of the Group:

(1) Disclaimer of Opinion

According to the 2020 Annual Report, the Auditor issued the Disclaimer of Opinion for the financial year ended 31 December 2020. For further details of the Disclaimer of Opinion, its background and the management’s response, please refer to the paragraphs headed “Audit Opinion” in the Appendix I to this Response Document above.

(2) Suspension of trading

Given the Auditor raising the Disclaimer of Opinion, the trading of the Shares on the Stock Exchange was suspended with effect from 9:00 a.m. on 31 March 2021 under Rule 13.50A of the Listing Rules. On 17 May 2021, the Company has been notified by the Stock Exchange of the Resumption Guidance, details of which are as follows:

(i) demonstrate to have a validly constituted Board in accordance with the applicable laws and regulations and the Company’s articles of association; and
(ii) inform the market of all material information for the Company’s shareholders and other investors to appraise the Company’s position.

According to the 1 June Resolution, the Board resolved to suspend the operation and implementation of the Resolutions as if the Resolutions had not been effected. After passing the 1 June Resolution, the Board comprises Ms. Feng, Mr. Ng and Ms. Chang as executive Directors, Mr. Gao as non-executive Director, Mr. Chan, Mr. Wan, Mr. Lau and Mr. Wong as independent non-executive Directors. As at the Latest Practicable Date, the trading of the Shares remains suspended and will continue to remain suspended until further notice.

– I-15 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(3) Connected Transaction — disposal of the entire issued share capital in Fruit Design & Build Limited

On 22 January 2021, FDB & Associates Limited (“ FDB Associates ”), a company incorporated in the British Virgin Islands with limited liability and a direct wholly-owned subsidiary of the Company, as the vendor and the Mr. Ip Kong Ling (“ Mr. Ip ”), a director of Fruit Design & Build Limited (“ FDBL ”), as purchaser entered into the sale and purchase agreement, pursuant to which the FDB Associates agreed to sell, and Mr. Ip agreed to purchase, the entire issued share capital of FDBL, a wholly-owned subsidiary of the Company, at the consideration of HK$8,500,000. Upon the completion of the sale and purchase of the entire issued share capital of FDBL, the Group would no longer hold any interest in FDBL and FDBL ceased to be a subsidiary of the Company and its financial results no longer consolidated with the results of the Group.

As Mr. Ip was a director of FDBL at the time when the sale and purchase agreement was signed, Mr. Ip was a connected person of the Company at the subsidiary level. As the Stock Exchange had accepted the Company’s application to use the alternative size tests under Rule 14.20 of the Listing Rules, and all the applicable percentage ratios for the disposal were less than 25% and the aggregate consideration for the disposal was less than HK$10,000,000, the disposal was therefore subject to the reporting and announcement requirements but is exempt from the circular, independent financial advice and shareholders’ approval requirement.

For further information in relation to the disposal of FDBL, please refer to the announcement of the Company dated 22 January 2021.

(4) Discloseable Transaction — disposal of the entire equity interest in Shanghai Faye Yu

On 30 March 2021, the sale and purchase agreement was entered into among Jet Speed as the vendor, Zhang Jin* (張錦) as the purchaser and Shanghai Faye Yu, pursuant to which the Jet Speed agreed to sell and the Purchaser agreed to purchase 100% equity interest in Shanghai Faye Yu for a consideration of RMB1.00 in accordance with the terms and conditions thereof. The Completion had taken place immediately upon signing of the Share Transfer Agreement. Immediately upon the Completion, Shanghai Faye Yu was no longer a subsidiary of the Company and the financial results, assets and liabilities of Shanghai Faye Yu Group would no longer be consolidated into the financial statements of the Company.

The disposal of the entire equity interest in Shanghai Faye Yu constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules as one of the applicable percentage ratios under Rule 14.07 of the Listing Rules exceeds 5% but is less than 25%.

– I-16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

~~F~~ or further information in relation to the disposal of Shanghai Faye Yu, please refer to the announcement of the Company dated 30 March 2021.

(5) Discloseable Transaction — disposal of the CMBCCH Shares

Between 27 May 2021 and 1 June 2021, the Company, through its indirect wholly-owned subsidiary, Jet Speed, conducted a series of on-market transactions to dispose of an aggregate of 137,740,000 CMBCCH Shares, representing approximately 0.3% of the total issued CMBCCH Shares as at 1 June 2021, at the selling price between HK$0.098 and HK$0.101 per shares for an aggregate consideration of approximately HK$13.7 million (exclusive of transaction costs). The Group would receive net proceeds of approximately HK$13.6 million from the CMBCCH Shares Disposal, and it was intended that the net proceeds would be applied as general working capital of the Group.

The CMBCCH Shares Disposal constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules as one of the applicable percentage ratios under Rule 14.07 of the Listing Rules exceeds 5% but is less than 25%.

For further information in relation to the CMBCCH Shares Disposal, please refer to the announcement of the Company dated 1 June 2021.

(6) Disposal of Tianjin Tuling

On 28 May 2021, a sale and purchase agreement (the “ Tianjin Tuling Disposal Agreement ”) was entered into among Jet Speed as the vendor, Liu Chang (劉暢) (“ Mr. Liu ”) as the purchaser and Tianjin Tuling Technology Information Consultancy Limited (天津圖靈科技信息諮詢有限公司) (“ Tianjin Tuling ”), pursuant to which the Jet Speed agreed to sell and Mr. Liu agreed to purchase 100% equity interest in Tianjin Tuling for a consideration of RMB1.00 in accordance with the terms and conditions thereof. The completion of the sale and purchase of 100% equity interest in Tianjin Tuling (the “ Tianjin Tuling Disposal Completion ”) had taken place immediately upon signing of the Tianjin Tuling Disposal Agreement. Immediately upon the Tianjin Tuling Disposal Completion, Tianjin Tuling was no longer a subsidiary of the Company and the financial results, assets and liabilities of Tianjin Tuling would no longer be consolidated into the financial statements of the Company. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, Mr. Liu is a person independent of and not connected with the Company and its connected persons.

– I-17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The disposal of the entire equity interest in Tianjin Tuling did not constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules as all of the applicable percentage ratios under Rule 14.07 of the Listing Rules did not exceed 5%.

Save and except for the matters disclosed above, the directors confirm that there was no material change in the financial or trading position or outlook of the Group since 31 December 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up, up to and including the Latest Practicable Date.

– I-18 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

The information contained in this Response Document relating to the Offer, the Offeror, its ultimate beneficial owners and the parties acting in concert with any of them has been extracted from or based on the Offer Document. The only responsibility accepted by the Directors in respect of such information is for the correctness and fairness of the extraction of such information and/or its reproduction or presentation.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date is as follow:

HK$

Authorised

4,000,000,000 Shares

HK$40,000,000

Issued and fully paid

1,332,000,000 Shares

HK$13,320,000

As at the Latest Practicable Date, the Company did not have any outstanding options, derivatives, warrants or other securities which may confer to the holder thereof any right to subscribe for, or convert or exchange into any Shares.

All Shares in issue shall rank pari passu in all respects with each other including rights to dividends, voting and return of capital. The Company has not issued any Shares or no change in the number of shares in issue since 31 December 2020, being the end of the latest financial year of the Company, and up to the Latest Practicable Date.

– II-1 –

GENERAL INFORMATION

APPENDIX II

3. DISCLOSURE OF INTEREST IN THE COMPANY’S SECURITIES

(i) Directors and chief executives

As at the Latest Practicable Date, the interest and short positions of the Directors, chief executives and their associates had in any Shares, underlying Shares of equity derivatives or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), as recorded in the register to be kept under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transaction by Director of Listed Issuers (the “ Model Code ”) set out in Appendix 10 to the Listing Rules or as required to be disclosed under the Takeovers Code, were set out as follows:

Interests in the Shares, underlying Shares and debentures of the Company

			Approximate
		Number of	percentage of
		Shares interested	shareholding
Name of Director	Capacity	(long position)	*(Note 2)*
Mr. Ng	Executive Director	714,280,000	53.62%
		(Note 1)
Mr. Gao	Non-executive	209,720,000	15.74%
	Director	(Note 2)

Notes:

The 714,280,000 Shares are beneficially owned by the Offeror which is wholly-owned by Mr. Ng. Therefore, Mr. Ng is deemed to be interested in the 714,280,000 Shares held by the Offeror pursuant to Part XV of the SFO.
The 209,720,000 Shares are beneficially owned by Gentle Soar, which is wholly-owned by Mr. Gao. Therefore, Mr. Gao is deemed to be interested in the 209,720,000 Shares held by Gentle Soar pursuant to Part XV of the SFO.
The percentage was calculated based on 1,332,000,000 Shares, being the total issued share capital of the Company as at the Latest Practicable Date.

– II-2 –

GENERAL INFORMATION

APPENDIX II

Interests in the shares, underlying shares and debenture of associated corporations of the Company

			Number of	Approximate
			shares	percentage of
Name of	Associated		interested	shareholding
Director	corporation	Capacity	(long position)	*(Note 2)*
Mr. Ng	The Offeror	Beneficial owner	2	100%

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or the chief executives of the Company had any interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as were required to be notified to the Company and the Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO, or as were recorded in the register required to be kept under section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

(ii) Substantial Shareholders

As at the Latest Practicable Date, the interests or short position of the following persons (including Directors) in the Shares or underlying Shares (i) which were notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO; or which were required, (ii) to be recorded in the register required to be kept by the Company under section 336 of the SFO; or (iii) to be disclosed under the Takeovers Codes were as follows:

			Approximate
			percentage of
Name of substantial		Total interest	issued share
Shareholder	Capacity	in the Shares	capital
The Offeror	Beneficial owner	714,280,000	53.62%
Gentle Soar	Beneficial owner	209,720,000	15.74%
Pop Reach Limited (Note)	Beneficial owner	89,480,000	6.72%
Yeung So Lai (Note)	Controlled corporation	89,480,000	6.72%

Note: Pop Reach Limited, a company incorporated in the British Virgin Islands with limited liability, is wholly-owned by Ms. Yeung So Lai. Under the SFO, Ms. Yeung So Lai is deemed to be interested in the same number of Shares in which Pop Reach Limited is interested in.

– II-3 –

GENERAL INFORMATION

APPENDIX II

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any person (including Directors) who had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or recorded in the register required to be kept by the Company under section 336 of the SFO, or required to be disclosed under the Takeovers Code.

4. SHAREHOLDINGS AND DEALINGS

As at the Latest Practicable Date,

(a) save for Mr. Ng who is the sole beneficial owner of the entire issued share capital of the Offeror, neither the Company nor any of the other Directors had any interest in the Relevant Securities of the Offeror, and none of them had dealt for value in any Relevant Securities of the Offeror during the Relevant Period, and neither the Company is interested in any shares in the offeror;
(b) save as disclosed in the section headed “Disclosure of Interests in the Company’s Securities — Directors and chief executives” above and the Transfer made under the Transfer Agreement entered into between CMBCCFL and Platinum Alpha and the China Galaxy Facility, none of the other Directors held any Relevant Securities of the Company and none of the other Directors had dealt for value in any Relevant Securities of the Company during the Relevant Period. For further details in relation to the transfer made under the Transfer Agreement, please refer in the paragraph headed “Introduction” in the letter from the Board in this Response Document;
(c) no Relevant Securities of the Company were owned or controlled by a subsidiary of the Company, by a pension fund of any member of the Group, or by a person who is presumed to be acting in concert with the Company by virtue of class (5) of the definition of acting in concert or who is an associate of the Company by virtue of class (2) of the definition of associate under the Takeovers Code, and no such person had dealt for value in any Relevant Securities of the Company since commencement of the Offer Period and up to the Latest Practicable Date;
(d) there was no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code between any person and the Company or with any person who is presumed to be acting in concert with the Company by virtue of classes (1), (2), (3) and (5) of the definition of acting in concert or who is an associate of the Company by virtue of classes (2), (3) and (4) of the definition of associate under the Takeovers Code, and no such person had dealt for value in any Relevant Securities of the Company since commencement of the Offer Period and up to the Latest Practicable Date;

– II-4 –

GENERAL INFORMATION

APPENDIX II

(e) no Relevant Securities of the Company were managed on a discretionary basis by fund managers (other than exempt fund managers) connected with the Company, and no such person had dealt for value in any Relevant Securities of the Company since commencement of the Offer Period and up to the Latest Practicable Date;
(f) save for Mr. Ng who is the sole beneficial owner of the Offeror and Mr. Gao who is the sole beneficial owner of Gentle Soar holding 209,720,000 Shares, which as at the Latest Practicable Date did not indicate to the Company its intention as to whether to accept the Offer, no Director had any beneficial interest in the Offer Shares which would entitle him to accept or reject the Offer;
(g) neither the Company nor any of the Directors had borrowed or lent any Relevant Securities of the Company; and
(h) there is no other understanding, arrangement, agreement or special deal between any Shareholder on one hand and the Company, its subsidiaries or associated companies on the other hand.

5. LITIGATION

The Company was involved in the following material litigation cases as at the Latest Practicable Date:

HCA No. 704 of 2021

As disclosed in the Offer Document:

(i) on 6 May 2021, the Offeror has filed the 704 Writ against, among others, Mr. Gao, Ms. Feng, the New Directors and the Company to protect its legitimate interest as a Shareholder;
(ii) as stated in the 704 Writ it is the Offeror’s case that:
(1) the Removal Resolution was in fact never passed and the Removal was unlawful. Even if the Removal Resolution was passed, which is not true, it was passed in breach of Article 83(5) of the Company’s Amended and Restated Articles of Association and Section 462 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong); and

– II-5 –

GENERAL INFORMATION

APPENDIX II

(2) the Appointment Resolution was passed by the Board comprising only Mr. Gao and Ms. Feng who had committed a breach of directors’ and/or fiduciary duties owed to the Company and thereby acted ultra vires and/or committed a fraud on the Company and/or obtained personal benefits or preferred or promoted their personal interest(s) at the expense of the interest(s) of other Shareholders or that of the Company.
(iii) the Offeror seeks, among other things, (a) a declaration that each of the Resolutions be invalid and/or void and/or otherwise of no legal effect; (b) an order that each of Mr. Gao and Ms. Feng be restrained from acting on, implementing or carrying into effect the Resolutions; and (c) an order that the each of Mr. Gao, Ms. Feng and the New Directors be restrained from acting on, implementing or carrying into effect the Appointment;
(iv) the Offeror has obtained legal advice in relation to the Removal and the Appointment. The Offeror’s legal advisors are of the view that each of the Removal Resolution and the Appointment Resolution was and is void, invalid or otherwise of no legal effect; and
(v) the Offeror’s legal advisers are of the view that the Offeror has a good merit in pursuing the 704 Writ and the Offeror will actively pursue the same.

On 25 May 2021, the Offeror has filed an amended 704 Writ in the High Court amending certain particulars of Mr. Gao and Ms. Feng by including their usual and last known addresses in the PRC. The amended 704 Writ and the Masterveyor Injunction Application have been served on Mr. Gao, Ms. Feng, the New Directors and the Company on 25 May 2021. Each of Mr. Gao, Ms. Feng and the New Directors have filed their acknowledgement of service of the amended 704 Writ, stating that they would contest the 704 Writ.

The Masterveyor Injunction Application has been heard by the High Court on 28 May 2021 and 4 June 2021. On 4 June 2021, upon the undertaking by Ms. Feng and Mr. Gao to the Offeror and the High Court that each of them and servants or agents or otherwise not to act on, implement or carry into effect the Resolutions pending determination of the 704 Writ or further order of the High Court, it was ordered by the High Court, among others, that the New Directors and the Company, each of them and their servants or agents or otherwise, be restrained from acting on, implementing or carrying into effect the Resolutions pending determination of the 704 Writ or further order of the High Court.

– II-6 –

GENERAL INFORMATION

APPENDIX II

HCA No. 859 of 2021

On 23 June 2021, each of the Company and Jet Speed have received a Writ of Summons issued by the Offeror in the High Court under HCA No. 859 of 2021 against, among others, Ms. Feng, the Company, Rhythm Hope Limited (a direct wholly-owned subsidiary of the Company) and Jet Speed, pursuant to which it was alleged by the Offeror that:-

(i) the CMBCCH Shares Disposal was a breach of Rule 4 of the Takeovers Code by the Company and might frustrate the progress of the Offer;
(ii) by effecting the CMBCCH Shares Disposal, Ms. Feng has exercised her power as the sole director of Jet Speed for an improper purpose and in breach of fiduciary/directors duty owed to both Jet Speed and the Company; and
(iii) Ms. Feng was in breach of her duties as a director and/or fiduciary duties owed to Jet Speed and the Company, and thereby acted ultra vires, and/or committed a fraud on Jet Speed and the Company, and/or obtained personal benefits or preferred or promoted her personal interests at the expense of the interest of other shareholders or that of Jet Speed and the Company.

The Company understands that Ms. Feng would contest the 859 Action.

Statutory Demand issued by Gentle Soar against the Company

The Company received a statutory demand dated 18 June 2021 from the legal advisers of Gentle Soar pursuant to Section 327(4)(a) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) on 18 June 2021 (“ SD against the Company ”), demanding the Company to pay the amount of HK$14,148,825 (“ Disputed Debt against the Company ”), purportedly being the amount paid, injected and/or credited to the Company from time to time between the period from 15 August 2018 to 18 May 2021, within 3 weeks from 18 June 2021, failing which Gentle Soar may present a winding up petition against the Company. The Company is taking legal advice in relation to the Disputed Debt against the Company and the SD against the Company. Further announcement(s) relating to the SD against the Company will be made by the Company as and when appropriate.

As at the Latest Practicable Date, the above litigation cases were still ongoing. Further announcement(s) will be made by the Company as and when appropriate.

– II-7 –

GENERAL INFORMATION

APPENDIX II

Litigation cases among the Offeror, Mr. Ng and Gentle Soar

The Company on voluntary basis discloses the on-going litigation cases among the Offeror, Mr. Ng and Gentle Soar as follows:

HCA No. 678 of 2021

Reference is made to two announcements made by the Company dated 4 May 2021 titled “Inside Information” and “Inside Information — Application for Injunction”. On 30 April 2021, Gentle Soar commenced the 678 Action against CMBCCFL, the Offeror and Mr. Ng in relation to a dispute over 49% of the entire issued share capital of the Company (the “ Subject Shares ”) and alleged that CMBCCFL wrongfully enforced a share charge over the Subject Shares and disposed of the same to the Offeror.

On 4 May 2021, Gentle Soar applied to the High Court for injunctive relief against CMBCCFL, the Offeror and Mr. Ng (the “ Injunction Application ”), which was heard before the High Court on 7 May 2021 and was thereafter withdrawn as against CMBCCFL. As the part against the Offeror and Mr. Ng, upon, among others, the undertaking by Gentle Soar and the Offeror that each of them would not procure or request or cause or exercise the voting rights attached to the Subject Shares pending determination of the Injunction Application or until further court of the High Court, the Injunction Application was adjourned for substantive argument to be heard on 6 September 2021.

Statutory Demand issued by Gentle Soar against Mr. Ng and the application to set aside under HCSD No. 26 of 2021

The Company has been informed that:

(a) Gentle Soar issued a statutory demand dated 5 May 2021 against Mr. Ng which was personally served on him on 21 May 2021 (“ SD against Mr. Ng ”), demanding for repayment of debt in the sum of HK$52,000,000 (“ Disputed Debt against Mr. Ng ”) within 3 weeks of service, failing which a bankruptcy petition may be presented against Mr. Ng.
(b) Both the Disputed Debt against Mr. Ng and the SD against Mr. Ng are disputed, and Mr. Ng made an application to set it aside under High Court action no. HCSD 26/2021 on 10 June 2021. A hearing date will be fixed to hear Mr. Ng’s set aside application and as at the Latest Practicable Date, no hearing date has been fixed.

As at the Latest Practicable Date, the Company understands that the above litigation cases among the Offeror, Mr. Ng and Gentle Soar are still ongoing.

– II-8 –

GENERAL INFORMATION

APPENDIX II

6. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Company or its subsidiaries) have been entered into by the Company or its subsidiaries after the date which is two years before commencement of the Offer Period and up to the Latest Practicable Date and are or may be material in relation to the business of the Company as a whole:

the shares transfer agreement dated 24 September 2019 for Shenzhen Qianhai Weiyuan Zhicheng Operation Management Technology Co., Ltd. (深圳前海微遠至誠運營管理科技有限公司), a company established in the PRC with limited liability, which is legally owned as to 99% and 1% by Mr. Gao Yunhong and Shangrao Yaxin, respectively and by a variable interest entity structure, being treated as a subsidiary of the Company, agreed to acquire and Ms. Shen Dan (沈丹女士) and Mr. Yang Xianfeng (楊險峰先生) as vendors agreed to sell 19.48% of the equity interests in Datong Development Zone Sunshine Micro-credit Co., Ltd. (大同開發區陽光小額貸款股份有限公司), a company established in the PRC with limited liability for the consideration of RMB58,440,000;
the placing agreement dated 1 August 2019 signed between the Company as the issuer and South China Securities Limited as the placing agent for the Company to issue and the placing agent to place the convertible bonds in the principal amount of up to HK$80,000,000 at the coupon rate of 8% per annum to be issued by the Company;
the sale and purchase agreement dated 22 January 2021 for disposal of the entire issued share capital of FDBL at the consideration of HK$8.5 million. For further information as to the sale and purchase agreement, please refer to the paragraph headed “4. Material Change — (3) Connected Transaction — disposal of the entire issued share capital in Fruit Design and Build Limited” in Appendix I to this Response Document; and
the sale and purchase agreement dated 30 March 2021 for disposal of the entire equity interest in Shanghai Faye Yu at the consideration of RMB1.00. For further details, please refer to the paragraph headed “4. Material Change — (4) Discloseable Transaction — disposal of the entire equity interest in Shanghai Faye Yu” in Appendix I to this Response Document.

– II-9 –

GENERAL INFORMATION

APPENDIX II

7. EXPERT AND CONSENT

Set out below the qualifications of the expert who has given opinion or advice which is contained or referred to in this Response Document:

Expert Qualification

VBG Capital Limited a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

The above expert has given and has not withdrawn its written consent to the issue of this Response Document with the inclusion of its letter and references to its name in the form and context in which they are included.

8. ARRANGEMENT AFFECTING DIRECTORS

As at the Latest Practicable Date,

(a) no benefit (other than statutory compensation) had been given or would be given to any Director as compensation for loss of office or otherwise in connection with the Offer;
(b) there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Offer or otherwise connected with the Offer; and
(c) There was no material contract entered into by the Offeror or any party acting in concert with the offeror in which any Director had a material personal interest.

9. DIRECTORS’ SERVICE CONTRACTS

Save as disclosed below, as at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company or any member of the Group or associated companies of the Group (i) which (including both continuous and fixed terms contracts) have been entered into or amended in the Relevant Period; (ii) which are continuous contracts with a notice period of 12 months or more; or (iii) which are fixed term contracts with more than 12 months to run irrespective of the notice period.

– II-10 –

GENERAL INFORMATION

APPENDIX II

			Amount of
	Commencement		remuneration payable
	date of service		under the service
Director	contract	Expiry date of the service contract	contract
Ms. Feng	24 January 2019	For a term of three year commencing from 24 January	HK$1,162,000 per
		2019 (expiry date on 23 January 2022), unless	annum
		terminated by either party by giving not less than
		three months’ prior written notice
Mr. Ng	30 September 2015	For an initial term of three years commencing on 30	HK$3,300,000 per
		September 2015 and shall continue thereafter unless	annum
		and until terminated by either party by giving not less
		than three months’ prior written notice
Ms. Chang	1 June 2021	For a term of one year commencing from 1 June 2021	HK$120,000 per annum
		(expiry date on 31 May 2022) or upon determination
		of the Gentle Soar Injunction Application, whichever
		the earlier, unless terminated by either party by giving
		not less than one month’s prior written notice
Mr. Gao	5 January 2018 and	For a term of three year commencing from 20 February	HK$120,000 per annum
	renewed on 20	2020 (expiry date on 21 February 2023), unless
	January 2020	terminated by either party by giving not less than
		three months’ prior written notice. The terms of the
		superseded service contract on 5 January 2018 were
		identical with the service contract on 20 January 2020
Mr. Chan	12 January 2018	Not specific expiry date as the term shall continue until	HK$168,000 per annum
		terminated by either party by giving not less than
		three months’ prior written notice
Mr. Wan	12 January 2018	Not specific expiry date as the term shall continue until	HK$168,000 per annum
		terminated by either party by giving not less than
		three months’ prior written notice
Mr. Lau	12 January 2018	Not specific expiry date as the term shall continue until	HK$168,000 per annum
		terminated by either party by giving not less than
		three months’ prior written notice

– II-11 –

GENERAL INFORMATION

APPENDIX II

Amount of Commencement remuneration payable date of service under the service Director contract Expiry date of the service contract contract Mr. Wong 1 June 2021 For a term of one year commencing from 1 June 2021 HK$240,000 per annum (expiry date on 31 May 2022) or upon determination of the Gentle Soar Injunction Application, whichever the earlier, unless terminated by either party by giving not less than one month’s prior written notice

10. VALUATION REPORT

As at 31 December 2020, the Group did not hold any significant property interests, of which its book value exceeds 15% of its consolidated total assets of the Company. As such no valuation report is prepared in this Response Document.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection on the websites of the SFC (www.sfc.hk) and the Company (www.steering.com.hk) and during normal business hours from 9:00 a.m. to 5:00 p.m. on any Business Day at the principal place of business of the Company at Room 3601, 36th Floor, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong from the date of this Response Document until the close of the Offer:

(a) the memorandum of association and articles of association the Company;
(b) the annual reports of the Company for the three years ended 31 December 2018, 2019 and 2020;
(c) the letter from the Board as set out on pages 10 to 18 of this Response Document;
(d) the letter from the Independent Board Committee as set out on pages IBC-1 to IBC-2 of this Response Document;
(e) the letter from VBG Capital as set out on pages IFA-1 to IFA-18 of this Response Document;
(f) the written consent as referred to in the section headed “Expert and Consent” in this appendix;

– II-12 –

GENERAL INFORMATION

APPENDIX II

(g) the material contracts as referred to in the section headed “Material Contracts” in this appendix;
(h) the service contracts of the Directors as referred to in the section headed “Directors’ Service Contracts” in this appendix; and
(i) this Response Document.

– II-13 –

AI assistant

FDB Holdings Limited — M&A Activity 2021

50197_rns_2021-06-28_3b40f8d0-5fa0-4e1b-bcad-992081b6fbe9.pdf

Steering Holdings Limited 旭 通 控 股 有 限 公 司

CONTENTS

EXPECTED TIMETABLE

Event

Time & Date

Notes:

EXPECTED TIMETABLE

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

Steering Holdings Limited 旭 通 控 股 有 限 公 司

(Stock code: 1826)

INTRODUCTION

LETTER FROM THE BOARD

THE OFFER

Terms of the Offer

Comparison of the Offer Price

Highest and lowest Share prices

Total value of the Offer

Further details of the Offer

INFORMATION ON THE GROUP

Financial information

INFORMATION OF THE OFFEROR GROUP

LETTER FROM THE BOARD

INTENTION OF THE OFFEROR ON THE GROUP

LETTER FROM THE BOARD

BOARD COMPOSITION OF THE COMPANY

PUBLIC FLOAT AND MAINTENANCE OF THE LISTING STATUS OF THE COMPANY

COMPULSORY ACQUISITION

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

CONFLICT OF INTEREST

RECOMMENDATION

Steering Holdings Limited 旭 通 控 股 有 限 公 司

MANDATORY UNCONDITIONAL CASH OFFER BY CHINA GALAXY INTERNATIONAL SECURITIES (HONG KONG) CO., LIMITED ON BEHALF OF MASTERVEYOR HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE OWNED OR

AGREED TO BE ACQUIRED BY MASTERVEYOR HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT) OF STEERING HOLDINGS LIMITED

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully,

Independent Board Committee

INTRODUCTION

LETTER FROM VBG CAPITAL

OUR INDEPENDENCE

BASIS OF OUR OPINION

LETTER FROM VBG CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

(1) Terms of the Offer

(2) Business and financial information on the Group

LETTER FROM VBG CAPITAL

(3) Multiple uncertainties relating to going concern

(4) Trading suspension of the Shares

(5) Disagreement within the Board

LETTER FROM VBG CAPITAL

(6) Information on the Offeror Group

LETTER FROM VBG CAPITAL

(7) Intentions of the Offeror in relation to the Group

The Group’s operational matters, employees and senior management

LETTER FROM VBG CAPITAL

The Board composition

(8) The Offer Price

Offer Price comparison

Historical price performance of the Shares

LETTER FROM VBG CAPITAL

Historical trading liquidity of the Shares

LETTER FROM VBG CAPITAL

LETTER FROM VBG CAPITAL

Comparison with the latest net asset values of the Shares

LETTER FROM VBG CAPITAL

Comparison with other comparable companies

RECOMMENDATION

LETTER FROM VBG CAPITAL

LETTER FROM VBG CAPITAL

1. SUMMARY OF FINANCIAL INFORMATION OF THE GROUP

FDB Holdings Limited M&A Activity 2021

Steering Holdings Limited 旭通控股有限公司

Steering Holdings Limited 旭通控股有限公司

Steering Holdings Limited 旭通控股有限公司