Future Bright Mining Holdings Limited - M&A Activity 2018

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of the Offers, this Composite Document and/or the accompanying Form(s) of Acceptance or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Future Bright Mining Holdings Limited, you should at once hand this Composite Document and the accompanying Form(s) of Acceptance 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 Composite Document and the accompanying Form(s) of Acceptance, 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 Composite Document and the accompanying Form(s) of Acceptance.

This Composite Document should be read in conjunction with the accompanying Form(s) of Acceptance, the contents of which form part of the terms and conditions of the Offers.

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ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED

(incorporated in Hong Kong with limited liability)

Future Bright Mining Holdings Limited 高鵬礦業控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2212)

COMPOSITE DOCUMENT RELATING TO VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES AND TO CANCEL ALL OUTSTANDING SHARE OPTIONS OF

FUTURE BRIGHT MINING HOLDINGS LIMITED (OTHER THAN THOSE SHARES OWNED OR AGREED

TO BE ACQUIRED BY

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

Financial Advisor to the Offeror

Independent Financial Advisor

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Capitalised terms used on this cover shall have the same meanings as those defined in this Composite Document unless the content requires otherwise.

A letter from Southwest HK Capital containing, among other things, the details of the terms and conditions of the Offers is out on pages 5 to 16 of this Composite Document. A letter from the Board is set on pages 17 to 22 of this Composite Document. A letter from the Independent Board Committee containing its recommendation in respect of the Offers to the Independent Shareholders and the Optionholders are set out on pages 23 to 24 of this Composite Document. A letter from Red Sun Capital containing its advice to the Independent Board Committee in respect of the Offers is set out on pages 25 to 51 of this Composite Document.

The procedures for acceptance and settlement of the Offers are set out on pages I-1 to I-12 in Appendix I to this Composite Document and in the accompanying Form(s) of Acceptance. Acceptances of the Share Offer must be received by the Registrar and acceptances of the Option Offer must be received by the Company Secretary, by no later than 4: 00 p.m. on Friday, 31 August 2018, or such later time and/or date as the Offeror may determine and announce with the consent of the Executive and in accordance with the Takeovers Code.

Any persons including, without limitation, custodians, nominees and trustees, who would, or otherwise intend to, forward this Composite Document and/or the accompanying Form(s) of Acceptance to any jurisdiction outside Hong Kong should read the section headed ‘‘Overseas Independent Shareholders’’ in the ‘‘Letter from Southwest HK Capital’’ and Appendix I to this Composite Document before taking any action. It is the responsibility of the Overseas Independent Shareholders who wish to accept the Offers to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offers, including the obtaining of any governmental, exchange control or other consent and any registration or filing which may be required or the compliance with other necessary formalities, regulatory and/or legal requirements and the payment of any transfer or other taxes due in respect of such jurisdictions. Overseas Independent Shareholders are advised to seek professional advice on deciding whether to accept the Offers.

10 August 2018

CONTENT

	Pages
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from Southwest HK Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Appendix I — Further terms and procedures of acceptance of the Offers . . . . . . . .	I-1
Appendix II — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III — General Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV — General Information of the Offeror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Accompanying document — Form(s) of Acceptance

– i –

EXPECTED TIMETABLE

The expected timetable set out below is indicative only and is subject to change. Any changes to the timetable will be jointly announced by the Offeror and the Company.

Despatch date of this Composite Document and the accompanying Forms of Acceptance and commencement date of the Offers (Note 1) . . . . . . . . . . . . . . . . . . . . 10 August 2018
Latest time and date for acceptance of the Offers on the

first Closing Date (Note 3 & 7) . . . . . . . . . . . . . . . . . . 4: 00 p.m. on 31 August 2018

First Closing Date (Note 3 & 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 August 2018
Announcement of the results of the Offers as at the first Closing Date, to be posted on the websites of the Stock Exchange and the Company . . . . . . . . . . . . . . . . . . . . no later than 7: 00 p.m.

on Friday, 31 August 2018

Latest date for posting of remittances for the amount due in respect of valid acceptances received under the Offers on or before 4: 00 p.m. on the first Closing Date assuming the Offers become or are declared unconditional on the first Closing Date (Note 4 & 7) . . . . . . . . . . 11 September 2018
Latest time and date for the Offers remaining open for acceptance on the final Closing Date assuming the Offers become or are declared unconditional on the first Closing Date (Note 5 & 7) . . . . . . . . . . . . . . . .4: 00 p.m. on 14 September 2018
Final Closing Date (Note 5 & 7) . . . . . . . . . . . . . . . . . . . . . . . . . . 14 September 2018
Announcement of the results of the Offers as at the final Closing Date, to be posted on the websites of the Stock Exchange and the Company . . . . . . . . . . . . . . . .no later than 7: 00 p.m. on 14 September 2018
Latest date for posting of remittances for the amount due in respect of valid acceptances received under the Offers on or before 4: 00 p.m. on the final Closing Date, being the latest date on which the Offers remains open for acceptances assuming the Offers become or are declared unconditional on the first Closing Date (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 September 2018
Latest time and date by which the Offers can become or be declared unconditional as to acceptances (Note 6 & 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7: 00 p.m. on 9 October 2018
Latest time and date by which the Offers can become or be declared unconditional in all aspects (Note 6 & 7) . . . . . . . . . . . . . . 7: 00 p.m. on 30 October 2018

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EXPECTED TIMETABLE

Notes:

The Offers are open for acceptance on and from 10 August 2018, being the date of posting of this Composite Document, and are capable of acceptance on and from that date until the close of the Offer Period.
Beneficial owners of Shares who hold their Shares in CCASS directly as an investor participant or indirectly via a broker or custodian participant should note the timing requirements (as set out in Appendix I to this Composite Document) for giving instructions to CCASS in accordance with the General Rules of CCASS and CCASS Operational Procedures.
The Offer will initially remain open for acceptances until 4: 00 p.m. on 31 August 2018 unless the Offeror revises or extends the Offers in accordance with the Takeovers Code. The Offeror has the right under the Takeovers Code to extend the Offers until such date as it may determine in accordance with the Takeovers Code (or as permitted by the Executive in accordance with the Takeovers Code). The Offeror will issue an announcement in relation to any extension of the Offers, which announcement will state either the next Closing Date or, if the Offers are at that time unconditional as to acceptances, a statement that the Offers will remain open until further notice. In the latter case, at least 14 days’ notice in writing must be given before the Offers are closed to those Shareholders/Optionholders who have not accepted the Offers.
Subject to the Offers becoming unconditional, remittances in respect of the cash consideration for the Offer Shares tendered under the Offer will be despatched to the accepting Shareholder(s) (to the address specified on the relevant Form of Share Offer Acceptance) by ordinary post at his/her/its own risk as soon as possible, but in any event within seven (7) Business Days following the later of the date of receipt by the Registrar or the Company Secretary (as the case maybe) of all the relevant documents to render the acceptance under the Offers complete, valid and in compliance with Note 1 to Rule 30.2 of the Takeovers Code, and the date on which the Offers become or are declared unconditional in all respects.
In accordance with the Takeovers Code, where the Offers become or are declared unconditional (whether as to acceptances or in all respects), the Offers should remain open for acceptance for not less than 14 days thereafter. In such case, at least 14 days’ notice in writing must be given before the Offers are closed. The Offeror has the right, subject to the Takeovers Code, to extend the Offers until such date as the Offeror determines or as permitted by the Executive, in accordance with the Takeovers Code. The Offeror will issue an announcement in relation to any extension of the Offers, which will state the next Closing Date or, if the Offers have become or are at that time declared unconditional, that the Offers will remain open until further notice.
In accordance with the Takeovers Code, except with the consent of the Executive, the Offers may not become or be declared unconditional as to acceptances after 7: 00 p.m. on 9 October 2018, being the 60th day after the day this Composite Document is posted. Accordingly, unless the Offers have previously become unconditional as to acceptances, the Offers will lapse on 9 October 2018 unless extended with the consent of the Executive and in accordance with the Takeovers Code. In addition, except with the consent of the Executive, if the Offers do not become or are not declared unconditional in all respects within 21 days of the Offers becoming or are declared unconditional as to acceptances, the Offers will lapse. Therefore, the last day by which the Offers can become or be declared unconditional in all respects is 30 October 2018.

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EXPECTED TIMETABLE

The latest time and date for acceptance of the Offers and the latest date for posting of remittances for the amounts due under the Offers in respect of valid acceptances will not take effect if there is a tropical cyclone warning signal number 8 or above, or a ‘‘black rainstorm warning’’, in force in Hong Kong at any local time between 12: 00 noon and 4: 00 p.m. on the latest date for acceptance of the Offers and the latest date for posting of remittances for the amounts due under the Offers in respect of valid acceptances. Instead the latest time for acceptance of the Offers and the posting of remittances will be rescheduled to 4: 00 p.m. on the following Business Day which does not have either of those warnings in force at any time between 9: 00 a.m. and 4: 00 p.m.

All references to date and time contained in this Composite Document and the Forms of Acceptance refer to Hong Kong date and time.

– iv –

DEFINITIONS

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

‘‘acting in concert’’ has the meaning as ascribed thereto under the Takeovers Code
‘‘Announcement’’ the joint announcement of the Company and the Offeror dated 10 July 2018 in relation to, among others, the Offers
‘‘associates’’ has the meaning ascribed thereto in the Takeovers Code
‘‘Board’’ board of the Directors
‘‘Business Day’’ 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
‘‘Closing Date’’ the date stated in this Composite Document as the first closing date of the Offers or any subsequent closing date as may be announced by the Offeror and approved by the Executive
‘‘Company’’ Future Bright Mining Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (stock code: 2212)
‘‘Company Secretary’’ the company secretary of the Company
‘‘Composite Document’’ this composite document to be issued jointly by the Offeror and the Company in relation to the Offers in accordance with the Takeovers Code and the Listing Rules
‘‘Conditions’’ the conditions to the Offers, as set out in the section headed ‘‘Conditions of the Offers’’ of the letter from Southwest HK Capital in this Composite Document
‘‘connected persons’’ has the meaning ascribed thereto in the Listing Rules
‘‘Director(s)’’ director(s) of the Company
‘‘Executive’’ the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director
‘‘Existing Share Option the share option scheme conditionally adopted by the Company Scheme’’ on 8 December 2014 which took effect on 9 January 2015

– 1 –

DEFINITIONS

‘‘Forms of Acceptance’’ the Form of Share Offer Acceptance and the Form of Option Offer Acceptance, and ‘‘Form of Acceptance’’ shall mean any one of them

‘‘Form of Option Offer the PINK form of acceptance in respect of the Option Offer Acceptance’’ accompanying this Composite Document
‘‘Form of Share Offer the WHITE form of acceptance in respect of the Share Offer Acceptance’’ accompanying this Composite Document
‘‘Group’’ the Company and its subsidiaries ‘‘HKSCC’’ the Hong Kong Securities Clearing Company Limited ‘‘HKSCC Nominee’’ HKSCC Nominees Limited ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong ‘‘Hong Kong’’ Hong Kong Special Administrative Region of the PRC
‘‘Independent Board the independent committee of the Board comprising all Committee’’ independent non-executive Directors other than Mr. Hu Minglong established for the purpose of making a recommendation to the Independent Shareholders and the Optionholders in relation to the Offers
‘‘Independent Financial Red Sun Capital Limited, the independent financial adviser to Adviser’’ or ‘‘Red Sun the Independent Board Committee in connection with the Offers Capital’’
‘‘Independent holder(s) of the Shares, other than the Offeror and parties acting Shareholders’’ in concert with it
‘‘Investor Participant’’ the person admitted to participate in CCASS as investor participants
‘‘Irrevocable the irrevocable undertakings given by each of the Optionholders Undertakings’’ to the Offeror respectively in relation to the Option Offer
‘‘Last Trading Day’’ 29 June 2018, being the last trading day immediately prior to suspension of trading in the Shares pending the release of the Announcement
‘‘Latest Practicable 7 August 2018, being the latest practicable date prior to the Date’’ printing of this Composite Document for the purpose of ascertaining certain information for inclusion in this Composite Document

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DEFINITIONS

‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the Stock Exchange

‘‘Mr. Li’’ Mr. Li Yuguo, the sole ultimate beneficial owner of the Offeror
‘‘Offers’’ the Share Offer and the Option Offer
‘‘Offer Period’’ the period from 10 July 2018, being the date of the Announcement, to 31 August 2018 or such other time and/or date to which the Offeror may decide to extend or revise the Offers in accordance with the Takeovers Code
‘‘Offeror’’ Zhong Ke Jiu Tai Technology Group Limited, a company incorporated in Hong Kong with limited liability
‘‘Offer Share(s)’’ any and all of the issued Share(s), other than those Shares already owned or agreed to be acquired by the Offeror or parties acting in concert with it
‘‘Option Offer’’ the offer made by the Offeror in compliance with Rule 13 of the Takeovers Code to cancel all the outstanding Options
‘‘Optionholders’’ holders of the Options
‘‘Options’’ the 352,000,000 share options granted by the Company pursuant to the Existing Share Option Scheme
‘‘Overseas Independent Independent Shareholder(s) whose address(es) as stated in the Shareholder(s)’’ register of members of the Company is (are) outside Hong Kong
‘‘PRC’’ the People’s Republic of China
‘‘Registrar’’ Computershare Hong Kong Investor Services Limited, the branch registrar of the Company at Shops 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
‘‘Relevant Period’’ the period from the date six months before the date of the Announcement, up to and including the Latest Practicable Date
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘SFC’’ the Securities and Futures Commission of Hong Kong
‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

– 3 –

DEFINITIONS

‘‘Share Offer’’ the voluntary conditional cash offer by the Offeror to acquire all of the outstanding Shares (other than the Shares owned or agreed to be acquired by the Offeror or parties acting in concert with it)
‘‘Share Offer Price’’ the price at which the Share Offer will be made, being HK$0.17 per Offer Share
‘‘Share(s)’’ ordinary share(s) of HK$0.001 each in the share capital of the Company
‘‘Shareholder(s)’’ holder(s) of the issued Share(s)
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Southwest HK Southwest Securities (HK) Brokerage Limited, a licensed Brokerage’’ corporation to carry out type 1 and type 4 regulated activities under the SFO
‘‘Southwest HK Southwest Securities (HK) Capital Limited, a licensed Capital’’ corporation to carry out type 1 and type 6 regulated activities under the SFO, being the financial adviser to the Offeror in respect of the Offers
‘‘Takeovers Code’’ The Hong Kong Code on Takeovers and Mergers
‘‘%’’ per cent.

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LETTER FROM SOUTHWEST HK CAPITAL

10 August 2018

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To the Independent Shareholders and Optionholders,

Dear Sir or Madam,

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES
AND TO CANCEL ALL OUTSTANDING SHARE OPTIONS OF FUTURE BRIGHT MINING HOLDINGS LIMITED
(OTHER THAN THOSE SHARES OWNED OR AGREED TO BE ACQUIRED BY
ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 10 July 2018, the Offeror and the Company jointly announced that, among other things, voluntary conditional cash offers would be made by Southwest HK Capital, for and on behalf of the Offeror to acquire all the issued Shares and to cancel all outstanding Options of the Company (other than those Shares owned or agreed to be acquired by the Offeror).

This letter sets out, amongst other things, the principal terms of the Offers, together with the information on the Offeror and the Offeror’s intentions regarding the Group. Further details of the terms of the Offer and procedures for acceptance are also set out in Appendix I to this Composite Document and the accompanying Forms of Acceptance.

THE OFFERS

The Share Offer

Southwest HK Capital makes the Share Offer for and on behalf of the Offeror in compliance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.170 in cash

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LETTER FROM SOUTHWEST HK CAPITAL

full all dividends and other distributions, if any, the record date of which is on or after the Closing Date. Any dividends or other distributions the record date of which is before the Closing Date will be paid by the Company to the Shareholders who are qualified for such dividends or distributions.

The Share Offer Price

The Share Offer Price of HK$0.170 per Offer Share represents:

(i) a discount of approximately 7.10% to the closing price of HK$0.183 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 7.00% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the five (5) consecutive trading days up to and including the Last Trading Day of approximately HK$0.1828 per Share;
(iii) approximately 4.3 times of the unaudited consolidated net asset value per Share as at 31 December 2017 of approximately HK$0.0395 (which was calculated by dividing the sum of the audited consolidated net asset value of the Group as at 31 December 2017 of approximately RMB129,638,000 by 3,870,000,000 Shares in issue as at the date of the Announcement and the exchange rate of approximately RMB1 to HK$1.18); and
(iv) a discount of approximately 14.14% to the closing price of HK$0.198 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Share Offer Price is equivalent to the acquisition price per Share by the Offeror within six months prior to the date of the Announcement. Despite that the Share Offer Price represents a discount to the closing prices of the Shares, it is noted that the trading prices of the Shares were in fluctuations. For instance, the lowest trading price (instead of closing price) per Share during the six-month period immediately prior to and including the Last Trading Day was HK$0.155 per Share on 29 March 2018 and the Share Offer Price represent a premium of approximately 8.82% over such trading price. In light of the recent market fluctuations, the Offeror considers that the Share Offer Price, which represents a substantial premium to the audited net asset value per Share, is fair and reasonable to the Independent Shareholders.

Please refer to the ‘‘Letter from the Independent Financial Adviser’’ and the ‘‘Letter from the Independent Board Committee’’ as set out in the Composite Document for their views on the Share Offer Price.

Highest and Lowest Share Prices

During the Relevant Period and up to and including the Latest Practicable Date, the highest closing price per Share as quoted on the Stock Exchange was HK$0.236 on 19 January 2018 and the lowest closing price per Share as quoted on the Stock Exchange was HK$0.172 on 29 March 2018.

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LETTER FROM SOUTHWEST HK CAPITAL

The Option Offer

Southwest HK Capital makes the Option Offer for and on behalf of the Offeror to the Optionholders in accordance with Rule 13 of the Takeovers Code to cancel all the outstanding Options in exchange of cash on the following basis:

For cancellation of each 1,000 Options . . . . . . . . . . . . . . . . . . . . . . HK$0.01 in cash

According to Rule 13 of the Takeovers Code, the consideration under any offer in relation to options will be considered appropriate if it is based on the offer price for the relevant equity share capital and such ‘‘see-through’’ price should be regarded as the minimum offer price. The ‘‘see-through’’ value of each Option would be the difference between the Share Offer Price and the exercise price of each Option. The Options entitling the holders thereof to subscribe for Shares at the exercise price of HK$0.25 per Share while the Share Offer Price is HK$0.17 per Share. Thus, the ‘‘see-through’’ price of the out-ofmoney Options (i.e. exercise price of these Options is higher than the Share Offer Price) is zero. As the exercise price of the Options is significant higher than the Offer Price, it justifies the basis for making nominal offer in respect of the outstanding Options.

The Option Offer will be conditional upon the Share Offer becoming or being declared unconditional in all respects. Please refer to Appendix I to this Composite Document together with the Form of Option Offer Acceptance in respect of the procedures of acceptance of the Option Offer.

Following acceptance of the Option Offer, the relevant Options together with all rights attaching thereto will be cancelled and renounced.

Irrevocable Undertakings

Reference is made to the joint announcement of the Company and the Offeror dated 20 July 2018. During 11 July 2018 to 17 July 2018, each of the Optionholders has given irrevocable undertaking (the ‘‘Irrevocable Undertakings’’) in favour of the Offeror, pursuant to which each of Optionholders has irrevocably undertaken to the Offeror not to exercise the Options and to accept the Option Offer in respect of the Option by no later than the fifth Business Day after the despatch of the Composite Document.

The Irrevocable Undertakings are conditional upon:

(i) the release of the Announcement before 11: 00 p.m. on or before 31 July 2018 or such later date as may be agreed (the Announcement has been published on 10 July 2018); and
(ii) the despatch of the Composite Document within the period in accordance with the requirements of the Takeovers Code or within such longer period as the Offeror may with the consent of the Executive determine,

and in the event of either of such conditions failing to be satisfied by the time and date mentioned above, the Irrevocable Undertakings shall lapse and be of no force and effect.

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LETTER FROM SOUTHWEST HK CAPITAL

Value of the Offers

As at the Latest Practicable Date, there are 3,870,000,000 Shares in issue and 352,000,000 outstanding Options. There are no other outstanding warrants, options, derivatives or securities convertible into Shares and the Company has not entered into any agreement for the issue of such warrants, options, derivatives or securities convertible into Shares as at the Latest Practicable Date.

Assuming that there is no change in the issued share capital of the Company and taking into account the Irrevocable Undertakings, on the basis of the Share Offer Price at HK$0.170 per Offer Share and the Option Offer Price at HK$0.01 for each 1,000 Options, the value of the Share Offer and the Option Offer will be approximately HK$589,900,000 and HK$3,520 respectively. The total value of the Offers is approximately HK$589,903,520.

Financial resources available to the Offeror

Besides its internal financial resources, the Offeror intends to finance the consideration payable by the Offeror under the Offers partially by the external financing granted by Southwest HK Brokerage to the Offeror. As security for the external financing granted by Southwest HK Brokerage to the Offeror, the Offeror is required to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage and Mr. Li has also provided personal guarantee in favour of Southwest HK Brokerage.

Southwest HK Capital, as the financial adviser to the Offeror in respect of the Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy the total consideration in respect of full acceptance of the Offers.

Conditions of the Offers

The Share Offer is conditional upon the satisfaction or waiver of the following Conditions:

(a) valid acceptances of the Offers being received (and not, where permitted, withdrawn) by 4: 00 p.m. on the Closing Date (or such later time or date as the Offeror may, subject to the Takeovers Code, decide) in respect of such number of Shares which, together with Shares acquired or agreed to be acquired before or during the Offers, will result in the Offeror and parties acting in concert with it together holding not less than 51.0% of the voting rights of the Company;
(b) the Shares remaining listed and traded on the Stock Exchange up to the Closing Date save for any temporary suspension(s) of trading in the Shares as a result of the Offers and no indication being received on or before the Closing Date from the SFC and/or the Stock Exchange to the effect that the listing of the Shares on the Stock Exchange is or is likely to be withdrawn; and

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LETTER FROM SOUTHWEST HK CAPITAL

(c) no events, up to the Closing Date, having occurred which would make the Offers or the acquisition of any of the Shares under the Offers void, unenforceable or illegal or their implementation being prohibited or which would impose material conditions, limitations or obligations with respect to the Offers.

The Option Offer will be conditional upon the Share Offer becoming or being declared unconditional in all respects.

The Offeror reserves the right to waive, in whole or in part, Condition (b). For the avoidance of doubt, Conditions (a) and (c) cannot be waived.

Pursuant to Note 2 to Rule 30.1 of the Takeovers Code, the Offeror should not invoke Condition (c) so as to cause the Offers to lapse unless the circumstances which give rise to the right to invoke such Condition are of material significance to the Offeror in the context of the Offers.

The Offeror reserves the right to revise the terms of the Offers in accordance with the Takeovers Code.

In accordance with Rule 15.3 of the Takeovers Code, the Offeror must publish an announcement when the Share Offer becomes unconditional as to acceptances and when the Offers become unconditional in all respects. The Offers must also remain open for acceptance for at least fourteen (14) days after the Offers become unconditional in all respects. Independent Shareholders should note that Offeror does not have any obligation to keep the Offers open for acceptance beyond this 14-day period.

WARNING: Shareholders, Optionholders and/or potential investors of the Company should note that the Offers is subject to the satisfaction or waiver (where applicable) of the Conditions. Accordingly, the Offers may or may not become unconditional. Shareholders, and/ or potential investors of the Company should therefore exercise caution when dealing in the securities of the Company. Persons who are in doubt as to the action they should take should consult their licensed securities dealers or registered institutions in securities, bank managers, solicitors, professional accountants or other professional advisers.

Effect of Accepting the Offers

Acceptance of the Share Offer will constitute a warranty to the Offeror by each person accepting it that the Shares acquired under the Share Offer and sold by such persons are free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them as at the Closing Date or subsequently becoming attached to them, including the right to receive in full all dividends and other distributions, if any, declared, made or paid on or after the Closing Date.

Following acceptance of the Option Offer, the relevant Options together with all rights attaching thereto will be entirely cancelled and renounced.

Acceptance of the Offers would be irrevocable and would not be capable of being withdrawn, subject to the provisions of the Takeovers Code.

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LETTER FROM SOUTHWEST HK CAPITAL

Taxation advice

Independent Shareholders and the Optionholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting or rejecting the Offers. None of the Offeror and parties acting in concert with it, the Company, Southwest HK Capital, Southwest HK Brokerage and their respective ultimate beneficial owners, directors, officers, agents or associates or any other person involved in the Offers accepts any responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Offers.

Stamp Duty

Seller’s ad valorem stamp duty at a rate of 0.1% of the market value of the Shares or consideration payable by the Offeror in respect of the relevant acceptances of the Share Offer, whichever is higher, will be deducted from the amount payable to the relevant Shareholder on acceptance of the Share Offer. The Offeror will arrange for payment of the sellers’ ad valorem stamp duty on behalf of accepting Shareholders and pay the buyer’s ad valorem stamp duty in connection with the acceptance of the Share Offer and the transfer of the Shares.

No stamp duty is payable in connection with the Option Offer.

Payment

Payment in cash in respect of acceptance of the Offers will be made as soon as possible but in any event within seven (7) business days (as defined under the Takeovers Code) after the later of (i) the date on which the Offers become, or are declared, unconditional in all respects and (ii) the date on which the duly completed acceptance of the Offers and the relevant documents of title in respect of such acceptance are received by the Offeror (or its agent).

Other Information

The Offeror confirms that, as at the Latest Practicable Date:

(a) save for 400,000,000 Shares legally and beneficially held by the Offeror as at the Latest Practicable Date and the share mortgage executed by the Offeror to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage, none of the Offeror, its ultimate beneficial owner and/or the parties acting in concert with any of them owns or has control or direction over any voting rights or rights over the Shares, options, derivatives, warrants or other securities convertible into Shares;
(b) save for the Irrevocable Undertakings, none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them has received any irrevocable commitment to accept the Offers;

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LETTER FROM SOUTHWEST HK CAPITAL

(c) save for the Irrevocable Undertakings and the share mortgage executed by the Offeror to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage, there is no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code in relation to the shares of the Offeror or the Company and which might be material to the Offers;
(d) there is no agreement or arrangement to which the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them is a party which relates to circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offers;
(e) save for the Irrevocable Undertakings, none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them has entered into any arrangements or contracts in relation to any outstanding derivative in respect of the securities in the Company;
(f) none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company; and
(g) save for the acquisition of 400,000,000 Shares by the Offeror on 4 April 2018 at the price of HK$0.17 per Share, representing approximately 10.34% of the total issued share capital of the Company and the share mortgage executed by the Offeror to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage, none of the Offeror, Mr. Li and their respective concert parties have dealt in the Shares, options, derivatives, warrants and/or other securities convertible into Shares during the Relevant Period.

Overseas Independent Shareholders

The Offeror intends to make the Share Offer available to all Independent Shareholders, including those who are not resident in Hong Kong. The availability of the Share Offer to persons who are not resident in Hong Kong may be affected by the laws of the relevant overseas jurisdictions. The making of the Share Offer to persons with a registered address in jurisdictions outside Hong Kong may be prohibited or affected by the laws or regulations of the relevant jurisdictions. Such Independent Shareholders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should observe relevant applicable legal or regulatory requirements and, where necessary, seek independent legal advices. It is the responsibility of the individual Independent Shareholders who wish to accept the Share Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Share Offer (including the obtaining of any regulatory or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions).

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LETTER FROM SOUTHWEST HK CAPITAL

This Composite Document will not be filed, nor approval for its issuance sought, under the applicable securities or equivalent legislation or rules of any jurisdiction other than Hong Kong. It is the responsibility of the individual Independent Shareholders who wish to accept the Offers to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offers (including the obtaining of any regulatory or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions).

Any acceptance by any Independent Shareholder who is not resident in Hong Kong will be deemed to constitute a representation and warranty from such Shareholder to the Offeror that the local laws and requirements have been complied with. All such Independent Shareholders should consult their professional advisers if in doubt.

INFORMATION OF THE OFFEROR

The Offeror is an investment holding company incorporated in Hong Kong with limited liability and is owned as to 100% by Zhong Ke Jiu Tai Resources Use Technology Holdings Company Limited (中科九台資源利用科技股份有限公司) which is in turn whollyowned by Mr. Li.

Mr. Li, aged 63, was also appointed as an executive director of Asia Resources Holdings Limited, a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: 899) on 16 August 2017. He has been a non-executive director of Shengjing Bank Co., Ltd. (盛京銀行股份有限公司), a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: 2066), since July 2013 and the vice chairman of the board of directors of the said bank since June 2014. He has been the chairman of Liaoning Huibao International Investment Group Co., Ltd. since June 2013 and the chairman of Beijing Jiutai Group Co., Ltd. (北京九台集團有限公司) since May 1993. Liaoning Huibao International Investment Group Co., Ltd. is principally engaged in investing activities and Beijing Jiutai Group Co., Ltd. (北京九台集團有限公司) is principally engaged in property development, property investment and management. Prior to that, he successively worked at the planning bureau of the China Association for Science and Technology (中國科學技術協會) as principal staff, deputy chief and chief of the accounting division from August 1983 to October 1992. Mr. Li also has experience in mining business in the PRC relating to non-ferrous metals mining during his involvement in Beijing Jiutai Group Co., Ltd and related affiliate companies.

Mr. Li graduated from Jiangxi University of Finance and Economics (formerly known as Jiangxi Institute of Finance and Economics (江西財經學院)) (Jiangxi, PRC) in July 1983, majoring in industrial accounting.

As at the date of the Announcement and the Latest Practicable Date, Mr. Li is the sole director of the Offeror.

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LETTER FROM SOUTHWEST HK CAPITAL

INTENTIONS OF THE OFFEROR IN RELATION TO THE GROUP

The Offeror intends that the Group will continue to operate its existing business. After the close of the Offers, the Offeror will conduct a detailed review of the financial position and business operations of the Group in order to formulate a long-term strategy for the Group and explore other business/investment opportunities for enhancing its future development and strengthening its revenue bases. As at the Latest Practicable Date, the Offeror has not identified such investment or business opportunities.

The Offeror has no intention to terminate the employment of any employees of the Group or to make significant changes to any employment (except for the proposed change of the Board composition as detailed in the section sub-headed ‘‘Proposed change to the Board composition of the Company’’ below). The Offeror has no intention to dispose of or reallocate the Group’s assets other than those in the ordinary course of business of the Group.

Proposed Change to the Board Composition of the Company

The Offeror intends to nominate new Directors (including Mr. Li) to the Board with effect from the earliest time as permitted under the Takeovers Code, which is the date immediately after the Composite Document is posted.

As at the Latest Practicable Date, the Board comprises (i) six executive Directors namely, Ms. Liu Jie, Mr. Chen Gang, Mr. Rao Dacheng, Mr. Wan Tat Wai David, Ms. Tang Xiaoqiu and Mr. Zhang Decong; (ii) four independent non-executive Directors namely Mr. Chow Hiu Tung, Mr. Hu Minglong, Mr. Lai Kwok Leung and Mr. Lau Tai Chim; and (iii) Mr. Yuan Shan as alternate director to Mr. Zhang Decong.

In compliance with Rule 7 of the Takeovers Code, it is intended, save as disclosed below, all existing Directors as at the Latest Practicable Date will resign with effect from the earliest time permitted under the Takeovers Code (the first Closing Date, or the date when the Offers become or are declared unconditional, whichever is the later).

The Offeror intends to appoint new Directors with effect not earlier than such date as is permitted under the Takeovers Code (that is, with effect from immediately after posting of this Composite Document). It is expected that Mr. Li Yuguo will be appointed as the Chairman and an executive Director of the Company. Also, the Offeror intends to nominate Mr. Chen Gang, Mr. Hu Minglong, Mr. Lau Chi Pang and Mr. Zhang Yijun to be appointed as Directors, among whom Mr. Chen Gang and Mr. Hu Minglong to be appointed as executive Directors, Mr. Lau Chi Pang and Mr. Zhang Yijun to be appointed as independent non-executive Directors.

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LETTER FROM SOUTHWEST HK CAPITAL

Save for the biographical information of Mr. Li which has been disclosed in the section headed ‘‘Information of the Offeror’’, the biographical details of the four other nominated Directors are set out below:

Mr. Chen Gang (陳鋼), aged 42, graduated from Beijing Institute of Fashion Technology (北京服裝學院) with a bachelor’s degree in international trade in July 1999 and a master degree in industrial economics from Beijing Technology and Business University (北京工商大學) in June 2005. He has extensive experience in operation, investment and corporate management. Since August 2009, he has been an executive director and the vice president of Beijing Jiutai Group Co., Ltd. (北京九台集團有限公司). He has been an executive Director of the Company since February 2018.

Mr. Hu Minglong (胡明龍), aged 42, graduated from Capital Normal University (首都師範大學) with a bachelor of arts degree in Chinese language and literature education (漢語言文學教育) in July 1999 and a master of laws from Renmin University of China (中國人民大學) in January 2012. He has extensive experience in business strategy, business modelling and corporate management. Since February 2017, he has been an executive director and the vice president of Beijing Oriental Media Properties Limited (北京東方梅地亞置業有限公司). He has been an independent non-executive Director of the Company since February 2018.

Mr. Zhang Yijun (張怡軍), aged 63, obtained his bachelor’s degree from China University of Geosciences (中國地質大學) in 2000 and a diploma in geological mineral exploration from Hunan Province School of Geosciences (湖南省地質學校) in 1980. Since August 1980, he has served at Hunan Province Geological Survey Institute (湖南省湘南地質勘察院) for geological survey and mineral exploration. In September 2001, he obtained the qualification of senior engineer in geoscience (地質高級工程師). He has also published academic papers on the national or provincial publications in China.

Mr. Lau Chi Pang (劉智鵬), aged 58, is currently an associate professor in the history department of Lingnan University. He has lectured at Lingnan University since September 1993. He has also been secretary general of Hong Kong Local Records Foundations and director of Hong Kong Local Records Office (香港地方誌辦公室) since June 2009 and the director of the history of Hong Kong and southern China research department of Lingnan University since September 2005. He had served as the vice chairman of the Tuen Mun District Council of Hong Kong from July 2011 to December 2011 and had been a member of the Tuen Mun District Council from January 2004 to December 2011. He has been an independent non-executive director of Shengjing Bank Co., Ltd. (Stock Code: 02066) since May 2014.

The Offeror intends to nominate additional new directors to the Board upon the Offers becoming unconditional in all respects or such later date. The Offeror expects the business of the Group will not be materially affected in the immediate future after the formation of the new Board.

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

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LETTER FROM SOUTHWEST HK CAPITAL

Maintaining the Listing Status of the Company

The Offeror has no intention to privatise the Group and intends to maintain the listing of the Shares on the Stock Exchange. The sole director of the Offeror and the new directors to be appointed to the Board will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that not less than 25% of the entire issued share capital of the Company will continue to be held by the public at all times.

In the event that the public will hold less than 25% of the Shares upon closing of the Offers, the Offeror intends to dispose of such number of Shares through placing to ensure that the public float requirement under the Listing Rules can be met as soon as practicable after close of the Offers. Further announcement(s) will be made in this regard as and when appropriate in compliance with the Listing Rules.

The Stock Exchange has stated that if, upon closing 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 Shares; or
(ii) there are insufficient Shares in public hands to maintain an orderly market,

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

INFORMATION ON THE GROUP

Principal activities

The Company is an investment holding company. The Group is principally engaged in the production and sale of marble and marble related products. Through its subsidiaries, the Company is also engaged in mining and ore processing business.

Your attention is drawn to the details of the information of the Group as set out under the section headed ‘‘Information on the Group’’ in the ‘‘Letter from the Board’’ and in Appendices II and III to this Composite Document.

ACCEPTANCES OF THE OFFER

Acceptance of the Share Offer or the Option Offer by Independent Shareholders or the Optionholders, respectively, will be deemed to constitute a warranty by such person(s) to the Offeror that such Shares acquired under the Share Offer or Options tendered under the Option Offer (as the case may be) are sold or tendered by the Independent Shareholders or the Optionholders (as the case may be) free from all third party rights, liens, claims, charges, equities and encumbrances and together with all rights accruing or attaching thereto on the Closing Date or subsequently becoming attached to it, including, without limitation, in the case of the Shares, the rights to receive all future dividends and/or other distributions declared, paid or made, if any, on or after the Closing date.

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LETTER FROM SOUTHWEST HK CAPITAL

COMPULSORY ACQUISITION

The Offeror does not intend to exercise any right which may be available to them under the provisions of the laws of Cayman Islands to compulsorily acquire any outstanding Offer Shares not acquired pursuant to the Offers after the close of the Offers.

GENERAL

All documents and remittances will be sent to the Shareholders and the Optionholders by ordinary post at such Shareholder’s and/or Optionholder’s own risk. These documents and remittances will be sent to them at their respective addresses as they appear in the register of the Optionholders of the Company and the register of members of the Company, or in the case of joint Shareholders, to the Shareholder whose name appears first in the said register of members, unless otherwise specified in the accompanying Forms of Acceptance completed, returned and received by the Registrar. None of the Offeror, the Company, their ultimate beneficial owners and parties acting in concert with any of them, Southwest HK Brokerage, Southwest HK Capital, Red Sun Capital, the Registrar or any of their respective directors, officers or associates or any other person involved in the Offers will be responsible for any loss or delay in transmission of such documents and remittances or any other liabilities that may arise as a result thereof.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information regarding the Offers set out in the appendices to this Composite Document and the accompanying Forms of Acceptance, which form part of this Composite Document. In addition, your attention is also drawn to the ‘‘Letter from the Board’’, the ‘‘Letter from the Independent Board Committee’’ and the letter of advice by the independent financial adviser to the Independent Board Committee as set out in the ‘‘Letter from the Independent Financial Adviser’’ contained in this Composite Document.

Yours faithfully, For and on behalf of

Southwest Securities (HK) Capital Limited Steven Lo

Managing Director and Co-Head of Corporate Finance

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LETTER FROM THE BOARD

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Future Bright Mining Holdings Limited 高鵬礦業控股有限公司 (Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2212)

Executive Directors:

Ms. Liu Jie (Chairperson) Mr. Chen Gang Mr. Rao Dacheng Mr. Wan Tat Wai David

Ms. Yang Xiaoqiu Mr. Zhang Decong

Mr. Yuan Shan (alternate Director to Mr. Zhang Decong)

Independent non-executive Directors:

Mr. Chow Hiu Tung

Mr. Lau Tai Chim

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

Principal place of business: 16th Floor Guangdong Finance Building 88 Connaught Road West Hong Kong

Mr. Lai Kwok Leung

Mr. Hu Minglong

10 August 2018

To the Independent Shareholders and the Optionholders

Dear Sir or Madam,

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES

AND TO CANCEL ALL OUTSTANDING SHARE OPTIONS OF FUTURE BRIGHT MINING HOLDINGS LIMITED (OTHER THAN THOSE SHARES OWNED OR

AGREED TO BE ACQUIRED BY ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 10 July 2018, the Offeror and the Company jointly announced that Southwest HK Capital will, for and on behalf of the Offeror, make a voluntary cash offer to acquire all of the Shares and to cancel all outstanding Share Options of the Company (other than those Shares owned or agreed to be acquired by the Offeror and parties acting in concert with it).

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LETTER FROM THE BOARD

As at the Latest Practicable Date, there were 3,870,000,000 Shares in issue, and the Offeror is the owner of 400,000,000 Shares, representing approximately 10.34% of the issued share capital of the Company. Save for the 400,000,000 Shares, the Offeror and parties acting in concert with it are not interested in any other Shares. Save for the 352,000,000 Options, the Company has no other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) as at the Latest Practicable Date.

The exercise price of the outstanding 352,000,000 Options is HK$0.250 per Share.

Save as disclosed, the Company has no other outstanding Shares, options, warrants convertible securities, derivatives or other securities convertible or exchangeable into Shares or any other type of securities in the Company in issue.

The Independent Board Committee comprising all the independent non-executive Directors other than Mr. Hu Minglong, namely Mr. Chow Hiu Tung, Mr. Lau Tai Chim and Mr. Lai Kwok Leung, has been established to make a recommendation to the Independent Shareholders and the Optionholders as to whether the terms of the Share Offer and the Option Offer are fair and reasonable and as to acceptance of the Offers. Mr. Hu Minglong is not taking part in the Independent Board Committee in order to avoid any perceived conflict of interest due to his involvement in communications and discussions between the Offeror and the Company regarding the Offers by conveying information and messages from the Offeror to the Company and/or other professional parties, although he has no interests in the Offers and is not acting in concert with the Offeror. Red Sun Capital Limited has also been appointed by the Company after approval by the Independent Board Committee as the Independent Financial Adviser to advise the Independent Board Committee in this regard.

The purpose of this Composite Document is to provide you with, among other matters, information relating to the Company, the Offeror and the Offers as well as to set out the ‘‘Letter from the Independent Board Committee’’ containing its recommendation to the Independent Shareholders and Optionholders in respect of the Offers and the ‘‘Letter from Independent Financial Adviser’’ containing its advice to the Independent Board Committee in respect of the Offers.

THE OFFERS

The Share Offer

Southwest HK Capital has been appointed as the financial advisor to the Offeror to make the Share Offer for and on behalf of the Offeror in compliance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.170 in cash

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LETTER FROM THE BOARD

The Company has no intention to declare or make any dividends and/or other distribution the record date of which is before the Closing Date.

The Option Offer

Southwest HK Capital is making the Option Offer for an on behalf of the Offeror to the Optionholders in accordance with Rule 13 of the Takeovers Code to cancel all outstanding Options in exchange of cash on the following basis:

For cancellation of each 1,000 Options . . . . . . . . . . . . . . . . . . . . . . HK$0.01 in cash

The Option Offer will be conditional upon the Share Offer becoming or being declared unconditional in all respects. The exercise price of the existing Options in issue is HK$0.25 per Share.

Following acceptance of the Option Offer, the relevant Options together with all rights attaching thereto will be cancelled and renounced.

As disclosed in the announcement dated 20 July 2018 jointly issued by the Offeror and the Company, during 11 July 2018 to 17 July 2018, each of the Optionholders has given Irrevocable Undertaking in favour of the Offeror, pursuant to which each of Optionholders has irrevocably undertaken to the Offeror not to exercise the Options and to accept the Option Offer in respect of the Option by no later than the fifth Business Day after the despatch of the Composite Document.

The Irrevocable Undertakings are conditional upon:

(i) the release of the Announcement before 11: 00 p.m. on or before 31 July 2018 or such later date as may be agreed (the Announcement has been published on 10 July 2018); and
(ii) the despatch of the Composite Document within the period in accordance with the requirements of the Takeovers Code or within such longer period as the Offeror may with the consent of the Executive determine,

and in the event of either of such conditions failing to be satisfied by the time and date mentioned above, the Irrevocable Undertakings shall lapse and be of no force and effect.

If the Offers become or are declared unconditional, the Optionholders shall be entitled to exercise their outstanding Options in full or any part thereof within 14 days after the date on which the Offers become or is declared unconditional. The outstanding Options shall lapse thereafter. For the avoidance of doubt, all Optionholders have given the Irrevocable Undertakings.

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LETTER FROM THE BOARD

Further details of the Offers

Further details of the Offers including, among others, the terms and conditions and the procedures for acceptance and settlement are set out in the ‘‘Letter from Southwest HK Capital’’, Appendix I to this Composite Document and the accompanying Forms of Acceptance.

INFORMATION OF THE GROUP

Principal Activities

Financial Information

Set out below is a summary of the financial information of the Group extracted from (i) the annual report of the Company for the year ended 31 December 2017; and (ii) the annual report of the Company for the year ended 31 December 2016.

	Year ended	Year ended
	31 December	31 December
	2016	2017
	(audited)	(audited)
	(RMB’000)	(RMB’000)
Revenue	12,909	42,540
Profit/(Loss) before taxation	(10,905)	(42,397)
Profit/(Loss) after taxation	(11,909)	(43,228)
	As at	As at
	31 December	31 December
	2016	2017
	(audited)	(audited)
	(RMB’000)	(RMB’000)
Total assets	100,355	143,644
Total liabilities	14,458	14,006
Net assets	85,897	129,638

Your attention is drawn to Appendices II and III to this Composite Document which contain further financial and general information of the Group.

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LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below are the shareholding structure of the Company as at the Latest Practicable Date:

	As at the	As at the
	Latest Practicable		Date
		Approximate
	Number of	percentage of
Shareholders	Shares	shareholding
The Offeror, Mr. Li and parties acting in concert
with any of them	400,000,000		10.34
Victor Spring Venture Limited (Note 1)	1,082,400,000		29.97
Yang Xiaoqiu (Note 2)	28,800,000		0.74
Kai De Int’l Holding Limited (Note 3)	212,340,000		5.49
Public Shareholders	2,146,460,000		55.46

Notes:

These Shares are registered in the name of Victory Spring Ventures Limited, the issued capital of which is owned as to 90% by Ms. Liu Jie (‘‘Ms. Liu’’), an executive Director and the chairperson of the Board. Under the SFO, Ms. Liu is deemed to be interested in all the Shares registered in the name of Victory Spring Ventures Limited.
Ms. Yang Xiaoqiu (‘‘Ms. Yang’’) is an executive Director.
These Shares are registered in the name of Kai De Int’l Holding Limited, the issued capital of which is owned as to 100% by Ms. Yang, an executive Director. Under the SFO, Ms. Yang is deemed to be interested in all the Shares registered in the name of Kai De Int’l Holding Limited.

INFORMATION OF THE OFFEROR

Your attention is drawn to the section headed ‘‘Information of the Offeror’’ in the ‘‘Letter from Southwest HK Capital’’ on page 12 of this Composite Document.

OFFEROR’S INTENTION ON THE GROUP

Your attention is drawn to the paragraph headed ‘‘Intentions of the Offeror in relation to the Group’’ in the ‘‘Letter from Southwest HK Capital’’ as set out on pages 13 to 15 of this Composite Document, which sets out more information on the intention of the Offeror in respect of the Group, its business and employees. The Board is aware of the intentions of the Offeror in respect of the Group and the proposed appointment of new Directors after despatch of this Composite Document. The Directors are willing to render reasonable cooperation with the Offeror which is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

MAINTAINING THE LISTING STATUS OF THE COMPANY

The Stock Exchange has stated that if, at the close of the Offers, less than 25% of the issued Shares, being the minimum prescribed percentage applicable to the Company, is 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 dealings in the Shares.

As mentioned in the ‘‘Letter from Southwest HK Capital’’, the Offeror has no intention to privatise the Group and intends to maintain the listing of the Shares on the Stock Exchange. The sole director of Offeror and the new directors to be appointed to the Board will jointly and severally will undertake to the Stock Exchange to take appropriate steps to ensure that not less than 25% of the entire issued share capital of the Company will continue to be held by the public at all times.

RECOMMENDATION

Your attention is drawn to the letters from the Independent Board Committee and Independent Financial Adviser, respectively, which set out their recommendations and opinions in relation to the Offers and the principal factors considered by them before arriving at their recommendation.

ADDITIONAL INFORMATION

You are also advised to read this Composite Document together with the accompanying Forms of Acceptance in respect of the acceptance and settlement procedures of the Offers. Your attention is also drawn to the additional information contained in the appendices to this Composite Document.

By Order of the Board of Future Bright Mining Holdings Limited Liu Jie Chairperson

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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Future Bright Mining Holdings Limited 高鵬礦業控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2212)

10 August 2018

To the Independent Shareholders and the Optionholders,

Dear Sir or Madam,

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES

AND TO CANCEL ALL OUTSTANDING SHARE OPTIONS OF FUTURE BRIGHT MINING HOLDINGS LIMITED
(OTHER THAN THOSE SHARES OWNED OR AGREED TO BE ACQUIRED BY

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

We refer to the Composite Document dated 10 August 2018 issued jointly by the Offeror and 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 Composite Document.

We have been appointed to form the Independent Board Committee to consider the terms of the Offers and to give recommendations to the Independent Shareholders and the Optionholders as to whether, in our opinion, the terms of the Offers are fair and reasonable so far as they are concerned and as to the acceptance of the Offers. Red Sun Capital has been appointed as the independent financial adviser to advise us in this respect. Detail of its advice and the principal factors and reasons taken into consideration in arriving at its advice are set out in the ‘‘Letter from the Independent Financial Adviser’’ on pages 25 to 51 of the Composite Document.

We also wish to draw your attention to the ‘‘Letter from the Board’’, the ‘‘Letter from Southwest HK Capital’’ and the additional information set out in the appendices to the Composite Document.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RECOMMENDATIONS

Having considered the terms of the Offers and the advice from the Independent Financial Adviser, in particular the factors, reasons and recommendations as set out in the ‘‘Letter from the Independent Financial Adviser’’, even after taking into account the Irrevocable Undertakings given by the Optionholders, we concur with the view of the Independent Financial Adviser and consider that the terms of the Offers are fair and reasonable so far as the Independent Shareholders and the Optionholders are concerned, and recommend the Independent Shareholders and the Optionholders to accept the Offers.

Notwithstanding our recommendations, the Independent Shareholders and the Optionholders are strongly advised that their decision to realise or to hold their investment in the Company depends on their own individual circumstances and investment objectives. Furthermore, the Independent Shareholders and the Optionholders should consider carefully the terms of the Offers and the full text of the ‘‘Letter from the Independent Financial Adviser’’ as set out in the Composite Document and then decide whether to accept or reject the Offers. If in any doubt, the Independent Shareholders and/or the Optionholders should consult their own professional advisers for professional advice.

Yours faithfully, For and on behalf of the Independent Board Committee

Mr. Chow Hiu Tung Mr. Lai Kwok Leung Mr. Lau Tai Chim Independent non-executive Independent non-executive Independent non-executive Director Director Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from the Independent Financial Adviser which sets out its advice to the Independent Board Committee for inclusion in this composite document.

==> picture [54 x 43] intentionally omitted <==

==> picture [198 x 43] intentionally omitted <==

10 August 2018

To: The Independent Board Committee of Future Bright Mining Holdings Limited

Dear Sirs,

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES AND TO CANCEL ALL OUTSTANDING SHARE OPTIONS OF FUTURE BRIGHT MINING HOLDINGS LIMITED (OTHER THAN THOSE SHARES OWNED OR AGREED TO BE ACQUIRED BY ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee in respect of the Offers, details of which are set out in this composite document dated 10 August 2018 (the ‘‘Composite Document’’), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Composite Document unless the context otherwise requires.

As stated in the ‘‘Letter from the Board’’ contained in the Composite Document, the Company and the Offeror jointly announced on 10 July 2018 that Southwest HK Capital will, for and on behalf of the Offeror, make a voluntary conditional cash offer to acquire all of the Shares in the entire issued share capital of the Company (other than those Shares owned or agreed to be acquired by the Offeror and parties acting in concert with it). Southwest HK Capital will also make the Option Offer for and on behalf of the Offeror to the Optionholders in accordance with Rule 13 of the Takeovers Code to cancel all the outstanding Options in exchange of cash.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, there are 3,870,000,000 Shares in issue, and the Offeror is the owner of 400,000,000 Shares, representing approximately 10.34% of the issued share capital of the Company. Save for the 400,000,000 Shares, the Offeror and parties acting in concert with it are not interested in any other Shares. Save for the aforesaid and the 352,000,000 Options, the Company has no other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) as at the Latest Practicable Date.

The Independent Board Committee comprising all the independent non-executive Directors (other than Mr. Hu Minglong), namely, Mr. Chow Hiu Tung, Mr. Lau Tai Chim, and Mr. Lai Kwok Leung, has been established in accordance with Rule 2.1 of the Takeovers Code to make recommendations to the Independent Shareholders and the Optionholders as to whether the Offers are fair and reasonable and as to acceptance of the Offers.

Mr. Hu Minglong is not taking part in the Independent Board Committee in order to avoid any perceived conflict of interest due to his involvement in communications and discussions between the Offeror and the Company regarding the Offers by conveying information and messages from the Offeror to the Company and/or other professional parties, although he has no interests in the Offers and is not acting in concert with the Offeror.

THE INDEPENDENT BOARD COMMITTEE

In accordance with Rule 2.1 of the Takeovers Code, an Independent Board Committee, comprising all three independent non-executive Directors, namely Mr. Chow Hiu Tung, Mr. Lau Tai Chim, and Mr. Lai Kwok Leung, has been established to advise the Independent Shareholders and the Optionholders as to whether the terms of the Offers are fair and reasonable so far as the Independent Shareholders and the Optionholders are concerned and whether the Independent Shareholders and the Optionholders should accept the Offers.

We, Red Sun Capital Limited, have been appointed by the Company as the Independent Financial Adviser to advise the Independent Board Committee in relation to the Offers. Our appointment has been approved by the Independent Board Committee. Our role as the Independent Financial Adviser is to give our recommendation to the Independent Board Committee as to (i) whether the terms of the Offers are fair and reasonable so far as the Independent Shareholders and the Optionholders are concerned; and (ii) whether the Offers should be accepted.

OUR INDEPENDENCE

As at the Latest Practicable Date, we were not connected with the Company or the Offeror, or any of their respective substantial shareholders, directors or chief executives, or any of their respective associates, or any party acting, or presumed to be acting, in concert with any of them and accordingly, are considered suitable to give independent advice to the Independent Board Committee in respect of the Offers. In the last two years, we have not acted as financial adviser to the Company. Apart from normal professional fees paid or payable to us in connection with the current appointment as the Independent Financial Adviser, no arrangements exist whereby we had received or will receive any fees or benefits

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

from the Company or the Offeror, their respective controlling shareholders or any other party acting or presumed to be acting, in concert with any of them that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent pursuant to the Listing Rules and the Takeovers Code to act as the Independent Financial Adviser to the Independent Board Committee in respect of the Offers.

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion, we have relied on the statements, information, opinions and representations contained in the Composite Document and the information and representations provide to us by the Directors and the management of the Company. We have reviewed, inter alia, the Composite Document, the annual report of the Company for the year ended 31 December 2015, the annual report of the Company for the year ended 31 December 2016 (the ‘‘Annual Report 2016’’) and the annual report of the Company for the year ended 31 December 2017 (the ‘‘Annual Report 2017’’). We have also researched and considered market data which we deemed relevant in arriving at our recommendation. We have assumed that all statements, information and representations provided by the Directors and the management of the Company, for which they are solely responsible, were true and accurate at the time when they were provided and continue to be so as at the Latest Practicable Date and the Shareholders will be notified of any material changes to such information and representations as soon as possible in accordance with Rule 9.1 of the Takeovers Code. We have also assumed that all statements of belief, opinion and expectation made by the Directors in the Composite 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 Composite Document, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors. We believe 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, carried out any independent verification of the information provided by the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group.

The sole director of the Offeror accepts full responsibility for the accuracy of the information contained in the Composite Document (other than any information relating to the Group) and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in the Composite Document (other than opinions expressed by the Directors) have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Document, the omission of which would make any statement in the Composite Document misleading.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Composite Document (other than information relating to the Offeror and parties acting in concert with it) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Composite Document (other than those expressed by the sole director of the Offeror) have been arrived

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

at after due and careful consideration and there are no other facts not contained in the Composite Document, the omission of which would make any statement contained in the Composite Document misleading.

We have not considered the tax and regulatory implications on the Independent Shareholders and Optionholders of acceptance or non-acceptance of the Offers since these depend on their individual circumstances. In particular, the Independent Shareholders and Optionholders who are resident overseas or subject to overseas taxes or Hong Kong taxation on securities dealings should consider their own tax positions, and if in any doubt, should consult their own professional advisers.

This letter is issued for the information of the Independent Board Committee solely in connection with their consideration of the Offers, and except for its inclusion in the Composite Document, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

Financial information of the Group and outlook
(a) Principal business of the Group

The Company is principally engaged in sale of marble blocks and trading of commodities business.

In the year ended 31 December 2017, the Group has established three joint venture companies in Hong Kong and the PRC which are principally engaged in the wholesale of non-metallic ore, mineral products and construction materials and the retail sale of ceramic and stone decoration materials, the trading and processing of lithium ores, and the trading of non-ferrous metals ores in the PRC (details of which are set out in the announcements of the Company dated 5 April 2017 and 31 August 2017). Moreover, during the year ended 31 December 2017, the Group acquired a company which is principally engaged in money lending business as a holder of the Money Lenders License under the Money Lenders Ordinance (Cap 163 of the Laws of Hong Kong).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Historical financial performance of the Group

Set out below are the highlights of the audited financial results of the Group for the three years ended 31 December 2015, 2016, and 2017, details of which are set out in the Company’s annual reports for the respective years:

Table 1: Consolidated statement of comprehensive income of the Group

Revenue Cost of Sales Gross Profit Other income and gains Selling and distribution expenses Administrative expenses Other expenses Finance costs (Loss) profit before tax Income tax credit (expenses) (Loss) profit for the period/year	For the year ended 31 December 2017 2016 2015 (audited) (audited) (audited) RMB’000 RMB’000 RMB’000 42,540 12,909 11,271 (32,610) (3,805) (3,382) 9,930 9,104 7,889 2,109 536 2,553 (2,251) (2,108) (756) (48,927) (16,341) (10,378) (3,188) (2,030) (672) (70) (66) (99) (42,397) (10,905) (1,463) (831) (1,004) (1,301) (43,228) (11,909) (2,764)

According to the Annual Report 2017, all the Group’s revenue was derived from the trading, processing or construction of marble blocks and commodity trading.

(i) Comparison between the two years ended 31 December 2017

The Group’s revenue for the year ended 31 December 2017 (‘‘FY2017’’) was approximately RMB42.54 million, representing an increase of approximately 229.54% as compared to the year ended 31 December 2016 (‘‘FY2016’’). The increase was mainly due to the increase in revenue generated from commodity trading during the year.

For FY2017, the overall cost of sales for the Group was approximately RMB32.61 million, representing an increase of approximately 753.03% as compared to FY2016. The overall gross profit of the Group increased by approximately 9.07% from approximately RMB9.10 million for FY2016 to approximately RMB9.93 million for FY2017. The gross profit margin for FY2017 was approximately 23.34% as compared to approximately 70.52% for FY2016. The decrease was mainly due to the sales of commodities which accounted for 64.55% of total sales, but with a lower gross profit margin, and thus lead to the decrease in average gross profit margin of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For both FY2016 and FY2017, the Group recorded losses of approximately RMB11.91 million for FY2016 and approximately RMB43.2 million for FY2017. The increase in loss was mainly due to the significantly increase in administrative expenses (i.e. mainly attributable to the increase in staff costs including the equity-settled share option expenses) from approximately RMB16.34 million for FY2016 to approximately RMB48.93 million for FY2017.

(ii) Comparison between the two years ended 31 December 2016

The Group’s revenue for FY2016 was approximately RMB12.91 million, representing an increase of approximately 14.53% as compared to the revenue of approximately RMB11.27 million for the year ended 31 December 2015 (‘‘FY2015’’). The increase was mainly due to the sale of marble blocks income derived from the Yiduoyan Project located in Hubei, PRC. For FY2016, the overall cost of sales for the Group was approximately RMB3.81 million, representing an increase of approximately 12.51% as compared to FY2015. The overall gross profit of the Group increased by approximately 15.40% from approximately RMB7.89 million for FY2015 to approximately HK$9.10 million for FY2016. The gross profit margin increased from approximately 69.99% for FY2015 to approximately 70.52% for FY2016.

The Group recorded loss of approximately RMB11.91 million and RMB2.76 million for FY2016 and FY2015 respectively. The increase of loss was mainly attributable to the increase in the selling and distribution expenses and the administrative expenses during the year.

(c) Financial position of the Group

Set out below is the summary of the consolidated assets and liabilities of the Group as at 31 December 2017, details of which are set out in the Annual Report 2017 of the Company:

Table 2: Consolidated statement of financial position of the Group

Non-current assets — Property, plant and equipment — Long-term prepayments — Goodwill — Other intangible assets	As at 31 December 2017 (audited) RMB’000 19,420 754 4,249 35,940
	60,363

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Current assets
— Inventories
— Trade receivables
— Prepayments, deposits and other receivables
— Equity investments at fair value through profit or loss
— Loans receivables
— Cash and cash equivalents
Current liabilities
— Trade payables
— Other payables and accruals
— Tax payable
Net current assets
Capital and reserves
— Share capital
— Reserves
— Non-controlling interests
Non-current liability
— Deferred tax liability
— Provision for rehabilitation

As at
31 December
2017
(audited)
RMB’000
2,387
34,285
9,998
11,489
5,852
19,270
83,281
150
2,464
474
3,088
80,193
140,556
3,087
126,608
(57)
129,638
9,810
1,108
10,918
140,556

As at 31 December 2017, total assets amounted to approximately RMB143.64 million, total liabilities amounted to approximately RMB14.00 million and net assets amounted to RMB129.64 million.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Prospects and outlook of the Group

The Group is principally engaged in (i) the supply of marble blocks in the PRC; (ii) mining and ore processing business; (iii) trading of commodities; and (iv) money lending business.

According to the Group’s 2017 Annual Report. The Group plans to develop the Yiduoyan Project, which is an open pit mine located in Hubei Province of the People’s Republic of China (the ‘‘PRC’’). A total of 4,912 m[3] of marble blocks had already been produced and 6,485 m[3] of marble blocks had already been sold. The Group also plans to develop product recognition, the Directors believe that recognition of the Group’s marble block products among industry professionals is critical to the Group’s development and success. As such, the Group intends to increase exposure of the Group’s marble block products in selected trade and other high-end decorative surfacing stone magazines, as well as attend industry forums, trade fairs and exhibitions to establish communications with industry professionals, major dimension stone processors and construction and decoration companies.

Moreover, to achieve further recognition of the Group’s marble block products, the Group plans to market their marble block products for use in landmark construction projects, such as high-end hotels and major commercial buildings, where the Group’s marble block products can be prominently displayed and showcased. In doing so, the Directors believe that the Group will be able to keep abreast of the industry trends, which will enable the Group to strengthen its corporate profile, enhance its business and achieve product recognition among both industry professionals and end customers.

The Group also plans to expand its resource and reserve through further and selective acquisitions. As part of the Group’s future plans for acquisitive growth, the Group plans to continue to carefully evaluate and identify selective acquisition opportunities. In the long run, the Group intends to increase its marble resource and reserve further through the acquisition of additional mining permit of marble projects in the PRC. The Group also plans to develop the commodities trading business. The Directors believe that the trading of commodities will enable the Group to expand its business portfolio, diversify its income source and possibly enhance its financial performance. The Group has established three joint venture companies in Hong Kong and the PRC which are principally engaged in the wholesale of non-metallic ore, mineral products and construction materials and the retail sale of ceramic and stone decoration materials, the trading and processing of lithium ores, and the trading of non-ferrous metals ores in the PRC.

The Group also plans to continue its money lending business. The Directors believe that the money lending business would generate reasonable interest income that serves as a steady source of cash flow for the Group.

Regarding the prospects and outlook of the Group’s industry, we have performed research on the public domain in respect of the general outlook of (i) the marble blocks trading industry in the PRC; (ii) the commodities trading industry in the PRC and Hong Kong; and (iii) the money lending industry in Hong Kong.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(i) The marble blocks trading industry in the PRC and the commodities trading industry in the PRC and Hong Kong

According to China Stone Material Association (中國石材協會) (‘‘CSMA’’), the total import and export of stone in the PRC in 2017 was USD9.6 billion and 49.1 million tons, it increased by 5.84% and 29.36% respectively when compared with previous year. In 2017, exports of stone reduced by 0.83% to USD6.8 billion while imports of stone increased by 26.78% to USD2.8 billion when compared with previous year. We are of the view that the marble industry is becoming more competitive since the demand for foreign exported stone has increased and more overseas suppliers have entered into the PRC market. Therefore, the sustainability of local market players is uncertain and challenging.

According to the CSMA website, In the first half of 2018, there were 4,226 land transactions in 300 cities in the PRC, a year-on-year decrease of 20.94%. The total construction area of the transactions was 41,238,500 m[2] , a year-on-year decrease of 14.72%. Among them, there were 2,825 residential land transactions, a year-on-year decrease of 15.75%, the total transaction area was 30,715,500 m[2] , which represented a year-on-year decrease of 15.50%. This reflects that the property market has slowed down in the PRC and this will directly affect the marble trading business of the Group. Therefore, we are of the view that the Group’s marble trading business faces uncertainty in this slowdown of property market in the PRC.

Average Import Prices of Marble (Hong Kong), 2013 – 2017

==> picture [413 x 199] intentionally omitted <==

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

HK$/tonne
Marble
6,0006000
5,0005000 4,619.2 4,660.4 4,226.3 4,180.0 4,145.3
4,0004000
3,0003000
2,0002000
1,0001000
00
2013 2014 2015 2016 2017
----- End of picture text -----

Note: Data is extracted from Census and Statistics Department of Hong Kong under SITC Code 27312, 66134 and 66136 for marble.

Source: Census and Statistics Department of Hong Kong.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to Census and Statistics Department of Hong Kong, the average import prices of marble decreased from HK$4,619.2 per tonne in 2013 to HK$4,145.3 per tonne in 2017 (2014: HK$4,660.4; 2015: HK$4,226.3; 2016: HK$4,180.0). Since there is a decreasing trend in the marble prices, we are of the view that the profit margins of the Company in the marble segment may also decrease accordingly. Therefore, the Group’s marble business faces uncertainty in terms of profitability.

According to the Annual Report 2017, the environmental awareness increased and the Chinese government continued to deepen environmental policies which affected the marble blocks business. Since large amount of waste will be generated in the extraction process and during the cutting and polishing process, for example stone rubble and dusty residue respectively. These wastes will cause risks of water pollution and lead to the proliferation of insects and rodents through nests created in their midst. Because of the environmental problems as a result of the marble production process, deepen environmental policies will affect the marble blocks business. For instance, the Chinese government made a second amendment to the Water Pollution Act in June 2017. The amendment will increase the punishment for water pollution and the penalty ceiling can reach as much as RMB1 million. Since the requirement for environment protection has enhanced, the Group has adopted and implemented various measures on an ongoing basis to minimize the impact of its operation on the environment and comply with the relevant environmental protection laws and regulations such as collecting and treating waste water for recycling in production or for irrigation. Moreover, according China’s Statistics Bureau, China’s economy grew 6.7% in 2016, the slowest growth since 1990. According to the Annual Report 2017, because of the slowdown in economic growth in the PRC, the Company did not carry out any exploration activities during 2017 and thus slowing down the pace of the Yiduoyan Project.

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

US$ indexes, 2010=100
140 The World’s Bank Metals and Minerals Price Index
120
100
Base metals
80
60
40 Iron ore
20
Jan-10 Jan-12 Jan-14 Jan-16 Jan-18
Source: World Bank.
----- End of picture text -----

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above chart extracted from the World Bank Report (April 2018), the prices of base metals and iron ore has been fluctuating since 2010 which indicates that there is a great uncertainty in terms of the prices of metals. In the commodities trading business, there will be a time gap between the time of purchase and the time of selling for the commodities trader which places uncertainty on the profit margins in the commodities trading segment.

According to the website of the Hong Kong Trade & Development Council, the ‘‘Belt and Road’’ initiative helps in promoting economic co-operation among countries along the proposed Belt and Road routes. It has been designed to enhance the orderly free-flow of economic factors and the efficient allocation of resources. The Directors believe that this will drive global trading activities in the future which may generate positive effects on the trading of commodities and thus creating a more favourable market condition. However, the ‘‘Belt and Road’’ initiative is still in progress and involves uncertainty and therefore there will be uncertainty on the Group’s commodities trading segment.

The Group is facing challenges from (a) intense competition and potentially lower profitability in the marble industry in the PRC; and (b) increased environmental awareness by the Chinese government; (c) slowdown in economic growth in the PRC; and (d) increase in production cost, for instance, according to the Statista.com (statistics and studies from more than 22,500 sources) report, the manufacturing labour costs per hour for China were in an increasing trend from US$4.99 in 2016 to US$5.21 in 2017 which represented an increase of 4.41%, and further projected to be US$6.5 in 2020. Therefore, the outlook of the Group’s marble trading and commodities trading business is uncertain and challenging.

(ii) The money lending industry in Hong Kong

On 26 July 2017, the Group acquired a company which is principally engaged in money lending business as a holder of the Money Lenders License under the Money Lenders Ordinance (Cap 163 of the Laws of Hong Kong). According to the Registrar of Money Lenders, the number of licensed money lenders in Hong Kong has been growing rapidly from 1,605 in 2015 to 2,095 as at 30 June 2018. With the rapid increase in number of money lenders in Hong Kong, the money lending industry become more competitive and thus this segment become more challenging in terms of sustainability. Furthermore, Hong Kong has one of the highest concentration of banking institutions in the world and therefore the money lending industry is competitive. Moreover, the money lending businesses are subject to restrictive requirements bound by the supervision of public authorities which are expensive and burdensome, for instance, compliance experts are needed to facilitate the compliance with government requirements. Therefore, the outlook of the Group’s money lending business is uncertain and challenging.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Principal terms of the Offers

(a) The Offers

The Share Offer

Southwest HK Capital is making the Share Offer for and on behalf of the Offeror in compliance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.170 in cash

The Shares to be acquired under the Share Offer shall be fully paid and shall be acquired free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching to them as at the Closing Date or subsequently becoming attached to them, including the right to receive in full all dividends and other distributions, if any, the record date of which is on or after the Closing Date. Any dividends or other distributions the record date of which is before the Closing Date will be paid by the Company to the Shareholders who are qualified for such dividends or distributions.

The Company has no intention to declare or make any dividends and/or other distribution the record date of which is before the Closing Date.

The Option Offer

Southwest HK Capital is making the Option Offer for and on behalf of the Offeror to the Optionholders in accordance with Rule 13 of the Takeovers Code to cancel all the outstanding Options in exchange of cash on the following basis:

For cancellation of each 1,000 Options . . . . . . . . . . . . . . HK$0.01 in cash

The Option Offer will be conditional upon the Share Offer becoming or being declared unconditional in all respects. The exercise price of the existing Options in issue is HK$0.25 per Share.

Following acceptance of the Option Offer, the relevant Options together with all rights attaching thereto will be cancelled and renounced.

Irrevocable Undertakings

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Irrevocable Undertakings are conditional upon:

(i) the release of the Announcement before 11: 00 p.m. on or before 31 July 2018 or such later date as may be agreed (the Announcement has been published on 10 July 2018); and
(ii) the despatch of the Composite Document within the period in accordance with the requirements of the Takeovers Code or within such longer period as the Offeror may with the consent of the Executive determine,

and in the event of either of such conditions failing to be satisfied by the time and date mentioned above, the Irrevocable Undertakings shall lapse and be of no force and effect.

(b) Conditions of the Offers

The Share Offer is conditional upon the satisfaction or waiver of the following Conditions:

(a) valid acceptances of the Offers being received (and not, where permitted, withdrawn) by 4: 00 p.m. on the Closing Date (or such later time or date as the Offeror may, subject to the Takeovers Code, decide) in respect of such number of Shares which, together with Shares acquired or agreed to be acquired before or during the Offers, will result in the Offeror and parties acting in concert with it together holding not less than 51.0% of the voting rights of the Company;
(b) the Shares remaining listed and traded on the Stock Exchange up to the Closing Date save for any temporary suspension(s) of trading in the Shares as a result of the Offers and no indication being received on or before the Closing Date from the SFC and/or the Stock Exchange to the effect that the listing of the Shares on the Stock Exchange is or is likely to be withdrawn; and
(c) no events, up to the Closing Date, having occurred which would make the Offers or the acquisition of any of the Shares under the Offers void, unenforceable or illegal or their implementation being prohibited or which would impose material conditions, limitations or obligations with respect to the Offers.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Option Offer will be conditional upon the Share Offer becoming or being declared unconditional in all respects.

The Offeror reserves the right to waive, in whole or in part, Condition (b). For the avoidance of doubt, Conditions (a) and (c) cannot be waived.

The Offeror reserves the right to revise the terms of the Offers in accordance with the Takeovers Code.

(c) Comparison of value

The Share Offer Price of HK$0.170 per Offer Share represents:

(i) a discount of approximately 7.10% to the closing price of HK$0.183 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 7.00% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the five (5) consecutive trading days up to and including the Last Trading Day of approximately HK$0.1828 per Share;
(iii) a premium of approximately 4.3 times over the unaudited consolidated net asset value per Share as at 31 December 2017 of approximately HK$0.0395 (which was calculated by dividing the sum of the audited consolidated net asset value of the Group as at 31 December 2017 of approximately RMB129,638,000 by 3,870,000,000 Shares in issue as at the Latest Practicable Date and the exchange rate of approximately RMB1 to HK$1.18); and
(iv) a discount of approximately 14.14% to the closing price of HK$0.198 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Further terms and conditions of the Offers including, among other things, its extension to the Independent Shareholders and Optionholders whose address(es) as stated in the register of members of the Company is(are) outside Hong Kong, information on taxation, the terms and conditions and the procedures for acceptance and settlement and acceptance period are set out in the ‘‘Letter from Southwest HK Capital’’ as set out in the Composite Document, Appendix I of the Composite Document and the Form of Acceptance.

4. Historical Share price performance

Set out below is a chart showing the daily closing prices of the Shares as quoted on the Stock Exchange during the period from 30 June 2017, being the date which is 12 months prior to the Last Trading Day, up to and including the Latest Practicable Date which we consider to be reasonably long enough to illustrate the relationship between the historical trend of the closing price of the Share and the Share Offer Price (the ‘‘Review Period’’):

==> picture [417 x 241] intentionally omitted <==

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

Comparison of the Offer Price to daily closing prices of
the Shares during the Reveiw Period
0.3
Trading suspension
0.25
0.2
0.15
Offer Price = HK$0.17 per Offer Share
0.1
0.05
0
Closed Price Offer price
2017/06/302017/07/212017/08/112017/09/042017/09/252017/10/182017/11/082017/11/292017/12/202018/01/152018/02/052018/02/282018/03/212018/04/162018/05/082018/05/302018/06/212018/07/132018/08/13
Share price (HK$)
----- End of picture text -----

– 39 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

During the Review Period:

(i) the highest closing price of the Shares as quoted on the Stock Exchange was HK$0.285 per Share on 23 October 2017; and
(ii) the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.142 per Share on 8 September 2017.

During the Review Period, we note that the price of the Shares was at a range between HK$0.142 per Share and HK$0.285 per Share and the Share Offer Price was within this range, however, we note that, other than on 8 September 2017 where the closing price was HK$0.142 which was below the Offer Price, the Offer Price were below all the closing prices during the Review Period.

The Share price significantly dropped approximately 27.18% from HK$0.195 on 7 September 2017 to HK$0.142 on 8 September 2017. Since there was no information of material change of the Group published in the public domain during such period, we have enquired the Directors regarding the possible reasons for the decrease in the Share price and were advised that they are not aware of any particular matters which might have impacted on the Share price.

After that, the Share prices were in an increasing trend and reached the highest closing price of the Review Period of HK$0.285 on 23 October 2017. On 17 October 2017, the Group made a supplemental announcement in respect of the acquisition of 100% equity interest in Imperial Dragon Finance Limited, the Share price boosted approximately 16.8% from HK$0.244 on 17 October 2017 to HK$0.285 on 23 October 2017.

Between 23 October 2017 and 7 August 2018, the Share prices were in a general decreasing trend from HK$0.285 to HK$0.198 with an average price of HK$0.217, which were still above the Offer Price.

In conclusion, (i) the general downward trend in the recent closing prices of the Shares over the period from mid-October in 2017 to July 2018 as evidenced by that the Share Offer Price represented a slight discount range from 7.0% to 7.1% to the closing prices of the Last Trading Date and the average price for the 5 consecutive trading days immediately prior to and including the Last Trading Day; and (ii) the Share Offer Price represents a relatively high premium of approximately 4.30 times over the unaudited consolidated net asset value of approximately HK$0.0395 per Share as at 31 December 2017 calculated based on the unaudited consolidated net asset value of the Group as at 31 December 2017 of approximately HK$152.98 million (RMB129.64 million) and 3,870,000,000 Shares in issue as at the Latest Practicable Day as discussed in the paragraph head ‘‘Comparable Analysis’’ below.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5. Liquidity of the Shares

				Percentage of	Percentage of
				average daily	average daily
				trading volume	trading volume
			Average	to total	to total
		Number of	daily trading	number of	number of
	Total	trading days in	volume	Shares	Shares in
	trading volume	the month	of the shares	in issue	public hands
					(Note 1)
2017
July	684,600,000	21	32,600,000	0.88%	1.66%
August	340,660,000	22	15,484,545	0.41%	0.76%
September	620,300,000	21	29,538,095	0.76%	1.38%
October	643,280,000	20	32,164,000	0.83%	1.50%
November	157,800,000	22	7,172,727	0.19%	0.33%
December	104,040,000	19	5,475,789	0.14%	0.26%
2018
January	60,400,002	22	2,745,455	0.07%	0.13%
February	160,180,000	18	8,898,889	0.23%	0.41%
March	158,580,000	21	7,551,429	0.20%	0.35%
April	410,620,000	19	21,611,579	0.56%	1.01%
May	272,600,000	21	12,980,952	0.34%	0.60%
June	427,700,000	20	21,385,000	0.55%	1.00%
July	119,340,000	15	7,956,000	0.21%	0.37%
August (up to and
including the Latest
Practicable Date)	238,140,000	5	47,628,000	1.23%	2.22%

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

Note 1: Based on the 2,146,460,000 Shares held in public hands as disclosed in the ‘‘Shareholding Structure of the Company’’ in the Letter from the Board in the Composite Document.

As illustrated in the table above, the average daily trading volume of the Shares during the Review Period ranged from approximately 2,745,455 Shares to approximately 32,600,000 Shares, representing approximately 0.07% to approximately 0.88% of the total number of the Shares in issue and approximately 0.13% to approximately 1.66% of the total number of Shares in public hands, respectively, as at the Latest Practicable Date. The average daily trading volume of Shares from 30 June 2017 onwards up to the Latest Practicable Date was generally thin, especially in January 2018, the average daily trading volume of the Shares was only approximately 0.07% which was considerably low compared to other months in the Review Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The average daily trading volume of Shares was generally thin and fluctuated during the Review Period, it is uncertain as to whether there would be sufficient liquidity in the Shares for the Independent Shareholders to dispose of a significant number of the Shares in the open market without depressing the Share price. Accordingly, the market trading price of the Shares may not necessarily reflect the proceeds that the Independent Shareholders can receive by the disposal of their Shares in the open market. Therefore, we are of the view that the Offer represents an opportunity for the Independent Shareholders, particularly for those who hold a large volume of the Shares, to dispose of part or all of their Shares at the Offer Price if they so wish to.

6. Comparable analysis

Given that the Company is loss making for the preceding financial year, it is impracticable to use price-to-earnings ratio (‘‘P/E Ratio’’) to value the Company with other companies engaged in similar industry. It is also not practicable to use enterprise value over earnings before interest, tax, depreciation and amortisation (‘‘EBITDA’’) ratio (‘‘EV/ EBITDA Ratio’’) to value the Company with other companies engaged in similar industry as the Company’s EBITDA is also a negative figure. Other than P/E Ratio and EV/EBITDA ratio, price-to-book ratio (‘‘P/B Ratio’’) is the most commonly used benchmark in valuing capital-intensive business or businesses with plenty of assets on the books. According to the Annual Report 2017, the Group does not have plenty of non-current assets on the books as the book value of property, plant and equipment only accounted for approximately 14.98% of the Group’s net asset value. Although the Group is not engaged in capital intensive business and does not have plenty of assets on the books, the level of net assets of the Company would have impact to the Group’s overall growth and development on its (i) supply of marble blocks in the PRC; (ii) mining and ore processing business; (iii) trading of commodities; and (iv) money lending business; and hence the operation and the financial performance of the Company would be affected. Therefore, we consider that the P/B Ratio analysis is an applicable valuation method for our analysis. Based on the price of HK$0.17 per Offer Share and the total number of issued Shares of 3,870,000,000 as at the Latest Practicable Date, the Company is valued at approximately HK$657.90 million. The P/B Ratio of the Company implied by the Share Offer Price (the ‘‘Implied P/B Ratio’’) is approximately 4.30 times based on the audited consolidated net asset value of the Group as at 31 December 2017 of approximately HK$152.97 million (RMB129.64 million). As at the Latest Practicable Date, the market capitalisation of the Company was approximately HK$708.21 million.

In order to access the fairness and reasonableness of the Share Offer Price, we have performed a comparable analysis and selected peer companies. When selecting peer companies for the purpose of comparison, we understand that (i) the principal activities of the Company include mining and sale of marble blocks, trading of commodities, and money lending business; and (ii) the Company is publicly listed on the Stock Exchange. However, we did not look for comparable companies that are in the money lending business, because (i) the Group had also only commenced its money lending business in 2017 and the other income generated from this business segment during FY2017 amounted to only approximately RMB0.50 million. Accordingly, we have focused on companies which (i) are engaged in the mining and sale of marble or are engaged in commodities mining and

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

trading business; and (ii) are listed on the Stock Exchange. For this purpose, we have identified ten companies (the ‘‘Comparable Companies’’) which we believe to be complete and exhaustive list based on the said criteria above. We consider that while the Company and the Comparable Companies are not closely similar in terms of, among others, financial performance, financial position and market capitalisation, the supply and demand of products, and therefore the fundamentals of such companies engaged in similar business, are in general affected by similar macro-economic factors including, but not limited to, economy and outlook, prices of raw materials, demand from customers. Based on the foregoing, we consider the Comparable Companies as fair and representative comparable, the analysis of which is useful for assessing the fairness and reasonableness of the Share Offer Price. The following table sets out the details of the Comparable Companies:

					Net Assets
			Market		attributable to
			capitalisation		owners
			as at the		according
			Latest	Profit after tax	to relevant
			Practicable	attributable	annual/
Company name	Stock code	Principal business	Date	to owners	interim results	P/E Ratio	P/B Ratio
			(i)	(ii)	(iii)	(iv) = (i)/(ii)	(v) = (i)/(iii)
			(HK$ million)	(HK$ million)	(HK$ million)
Brockman Mining	159	Engaged in acquisition,	1,759.1	(38.3)	448.9	N/A	3.92
Limited		exploration and
		development of iron
		ore in Australia; and in
		the exploitation,
		processing and sales of
		mineral resources in
		the PRC
Ding He Mining	705	Engaged in mining of	211.5	59.4	(14.2)	3.6	N/A
Holdings Limited		dolomite and
		manufacturing and
		sales of magnesium
		ingots in the state of
		Perak, Malaysia,
		exploration of mining
		resources in Indonesia
		and bottling and sale
		of mineral water in
		PRC
Junefield Department	758	Engaged in trading of	637.7	(44.9)	241.8	N/A	2.64
Store Group		mineral concentrates
Limited		business and coal
		mining business
China Kingstone	1380	Engaged in production and	223.7	9.2	483.6	24.3	0.46
Mining Holdings		sales of marble and		(note 1)	(note 2)
Limited		marble related
		products in China
CNNC International	2302	Engaged in uranium	1,756.1	0.3	545.7	5,853.7	3.22
Ltd		resources business

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					Net Assets
			Market		attributable to
			capitalisation		owners
			as at the		according
			Latest	Profit after tax	to relevant
			Practicable	attributable	annual/
Company name	Stock code	Principal business	Date	to owners	interim results	P/E Ratio	P/B Ratio
			(i)	(ii)	(iii)	(iv) = (i)/(ii)	(v) = (i)/(iii)
			(HK$ million)	(HK$ million)	(HK$ million)
New Provenance	2326	Engaged in sourcing and	1,096.4	233.6	480.6	4.7	2.28
Everlasting		sale of metal minerals
Holdings Ltd		and related industrial
		materials, production
		and sale of industrial
		products and
		production and sale of
		utilities
ArtGo Holdings Ltd	3313	Engaged in mining,	917.3	10.0	2,057.2	91.5	0.45
		process, trading and		(note 3)	(note 4)
		sales of marble stones
		and the business of
		trading of commodities
Evershine Group	8022	Engaged in trading	1,766.6	(67.0)	177.0	N/A	9.98
Holdings Ltd		business, property
		development and
		investment business,
		money lending
		business, cemetery
		business and mobile
		application business
		and travel agency
		business
Pizu Group Holdings	8053	Engaged in bulk mineral	1,921.7	183.9	383.7	10.4	5.01
Ltd		trade, manufacturing		(note 5)	(note 6)
		and sale of explosives
		and provision of
		blasting operation and
		related services
Perfect Optronics Ltd	8331	Engaged in bentonite	237.5	(84.8)	131.2	N/A	1.81
		mining, production and		(note 7)	(note 8)
		sales of drilling mud
		and pelletising clay
					Average	998.02	3.31
					Maximum	5,853.67	9.98
					Minimum	3.56	0.45
The Group	2212	engaged in mining and sale	657.9	(50.9)	153.0	N/A	4.30
		of marble blocks,	(note 9)	(note 10)	(note 11)
		trading of commodities
		business and money
		lending business

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Note:

For the comparison purpose, the profit after tax, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB7,797,000 to HK$9,200,460 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the net assets value, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB409,865,000 to HK$483,640,700 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the profit after tax, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB8,450,000 to HK$9,971,000 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the net assets value, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB1,743,368,000 to HK$2,057,174,240 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the profit after tax, disclosed on the latest annual report announced at 31 March 2018, has been converted from RMB155,879,000 to HK$183,937,220 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the net assets value, disclosed on the latest annual report announced at 31 March 2018, has been converted from RMB325,146,000 to HK$383,672,280 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the loss after tax, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB71,874,000 to HK$84,811,320 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the net assets value, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB111,183,000 to HK$131,195,940 based on the exchange rate of RMB1.00 = HK$1.18
Calculated by the Share Offer Price of HK$0.17 per Offer Share multiplied by the total number of issued Shares of 3,870,000,000 as at the Latest Practicable Date.
For the comparison purpose, the loss after tax, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB43,171,000 to HK$50,941,780 based on the exchange rate of RMB1.00 = HK$1.18.
For the comparison purpose, the net assets value, disclosed on the latest annual report announced at 31 December 2017, has been converted from RMB129,638,000 to HK$152,972,840 based on the exchange rate of RMB1.00 = HK$1.18.

As illustrated in the table set out above, the P/B Ratio of the Comparable Companies ranged from approximately 0.45 times to approximately 9.98 times, with an average of approximately 3.31 times. Accordingly, the implied P/B Ratio of the Share Offer Price of approximately 4.30 times is higher than the average P/B Ratio of the Comparable Companies and is within the range of the P/B Ratio of all Comparable Companies.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered that the implied P/B Ratio of the Company represented by the Share Offer Price, being 4.30 times, is higher than the average P/B Ratio of 3.31 times and is also within the range of the P/B Ratio of all Comparable Companies, we are of the view that the Share Offer Price is fair and reasonable so far as the Independent Shareholders are concerned.

7. Information on the Offeror and the intention of the Offeror in relation to the Group

(a) Information of the Offeror

Mr. Li, aged 63, was also appointed as an executive director of Asia Resources Holdings Limited, a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: 899) on 16 August 2017. He has been a nonexecutive director of Shengjing Bank Co., Ltd. (盛京銀行股份有限公司), a company listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: 2066), since July 2013 and the vice chairman of the board of directors of the said bank since June 2014. He has been the chairman of Liaoning Huibao International Investment Group Co., Ltd. since June 2013 and the chairman of Beijing Jiutai Group Co., Ltd. (北京九台集團有限公司) since May 1993. Liaoning Huibao International Investment Group Co., Ltd. is principally engaged in investing activities and Beijing Jiutai Group Co., Ltd. (北京九台集團有限公司) is principally engaged in property development, property investment and management. Prior to that, he successively worked at the planning bureau of the China Association for Science and Technology (中國科學技術協會) as principal staff, deputy chief and chief of the accounting division from August 1983 to October 1992. Mr. Li also has experience in mining business in the PRC relating to non-ferrous metals mining during his involvement in Beijing Jiutai Group Co. Limited and related affiliate companies.

As at the Latest Practicable Date, Mr. Li is the sole director of the Offeror.

(b) Intention of the Offeror

As stated in the ‘‘Letter from Southwest’’ contained in the Composite Document, the Offeror intends that the Group will continue to operate its existing business. After the close of the Offers, the Offeror will conduct a detailed review of the financial position and business operations of the Group in order to formulate a long-term strategy for the Group and explore other business/investment opportunities for

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

enhancing its future development and strengthening its revenue bases. As at the Latest Practicable Date, the Offeror has not identified such investment or business opportunities.

The Offeror has no intention to terminate the employment of any employees of the Group or to make significant changes to any employment (except for the proposed change of the Board composition as detailed in the paragraph below). The Offeror has no intention to dispose of or reallocate the Group’s assets other than those in the ordinary course of business of the Group.

As at the Latest Practicable Date, the Board comprises (i) six executive Directors namely, Ms. Liu Jie, Mr. Chen Gang, Mr. Rao Dacheng, Mr. Wan Tat Wai David, Ms. Yang Xiaoqiu and Mr. Zhang Decong; (ii) four independent non-executive Directors namely Mr. Chow Hiu Tung, Mr. Hu Minglong, Mr. Lai Kwok Leung and Mr. Lau Tai Chim; and (iii) Mr. Yuan Shan as alternate director to Mr. Zhang Decong.

– 47 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Since the directors of the new Board are experienced, knowledgeable and competent as described above, we are of the view that the formation of the new Board is beneficial to the Group and therefore, we considered that the Share Offer is fair and reasonable to the Independent Shareholders.

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

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

THE OPTION OFFER

Pursuant to Rule 13 of the Code, the Offeror is also required to make the Option Offer.

As at the Latest Practicable Date, there are 352,000,000 outstanding Share Options which were granted by the Company under the share option scheme adopted by the Company on 8 December 2014 and entitle the holder thereof to subscribe for 352,000,000 new Shares at an exercise price of HK$0.250 per Share. Pursuant to the share option scheme adopted by the Company on 8 December 2014, the Optionholders will be entitled to exercise his Share Options to the extent not tendered for cancellation under the Option Offer up to the Closing Date, after which the Share Options will lapse and the existing share option scheme will be terminated.

In order to assess the fairness and reasonableness on the terms of the Option Offer, we have made reference to Rule 13 of the Takeovers Code. According to Rule 13 of the Takeovers Code, the consideration under any offer in relation to options will be considered appropriate if it is based on the offer price for the relevant equity share capital and such ‘‘see-through’’ price should be regarded as the minimum offer price. The ‘‘see-through’’ value of each Option would be the difference between the Share Offer Price and the exercise price of each Option. For out-of-the-money Options (i.e. exercise prices of these Options are higher than the Share Offer Price), we note that the ‘‘see-through’’ price of the out-ofthe-money Share Options is zero while the offer price for those Share Options are at a nominal price of HK$0.01 for cancellation of every 1,000 Share Options.

– 49 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

OPINION AND RECOMMENDATION

Based on the above principal factors and reasons, in particular the following (which should be read in conjunction with and interpreted in the full context of this letter):

(i) the Group recorded loss attributable to the owners of the Company for the three years ended 31 December 2015, 2016 and 2017;
(ii) there are uncertainties in the future prospects of the Group’s business as explained in the paragraph headed ‘‘Prospects and outlook of the Group’’;
(iii) the Share Offer Price represents a premium of approximately 4.30 times over the unaudited consolidated net asset value of approximately HK$0.0395 per Share as at 31 December 2017 calculated based on the unaudited consolidated net asset value of the Group as at 31 December 2017 of approximately HK$152.98 million (RMB129.64 million) and 3,870,000,000 Shares in issue as at the Latest Practicable Date;
(iv) the Company’s implied P/B Ratio represented by the Share Offer Price is higher than the average P/B Ratio and the P/B Ratio of most Comparable Companies as analysed in the paragraph headed ‘‘Comparable analysis’’ above;
(v) although the Share Offer Price of HK$0.170 represents a discount of approximately 7.1% to the closing price of the Last Trading Day and the closing prices are generally higher than the Offer Price, there was a general downward trend of closing price since October 2017. Therefore, there is no guarantee on whether the trading price of the Shares could be sustained at a level higher than the Share Offer Price during and after the Offer Period;
(vi) the trading volume during the Review Period were generally thin. The Share Offer provides the Independent Shareholders with an assured exit if they wish to realise their investments in the Shares; and
(vii) all the outstanding Options are out-of-money Options (i.e. exercise prices of these Options are higher than the Share Offer Price), the exercise price of the Options (i.e. HK$0.25 per Share) is significantly higher than the Offer Price (i.e. HK$0.17 per Share), thus the ‘‘see-through’’ price is zero. Therefore, the Option Offer Price of a nominal price of HK$0.01 for cancellation of every 1,000 Share Options is above the ‘‘see-through’’ price and is fair and reasonable.

We are of the opinion that the terms of the Offers are fair and reasonable so far as the Independent Shareholders and Optionholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders and Optionholders to accept the Offers. In view of the volatility of market conditions, those Independent Shareholders and Optionholders who intend to accept the Offers are reminded that they should closely monitor the market price and the liquidity of the Shares during the

– 50 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Offer Period and should consider selling their Shares in the open market rather than accepting the Offers, if the net proceeds from the sale of such Shares in the open market or exercising the Options would exceed the net proceeds receivable under the Offers.

In addition, the Independent Shareholders who wish to realise their investments in the Company in the open market should also consider and monitor the trading volume of the Shares during the Offer Period as, having taken into account the thin historical trading volume of the Shares on the Stock Exchange as discussed in the paragraph headed ‘‘Liquidity of the Shares’’ of this letter, they may experience difficulty in disposing of their Shares in the open market without creating downward pressure on the price of the Shares.

As each individual Independent Shareholder and Optionholders would have different investment objectives and/or circumstances, we would recommend the Independent Shareholders and Optionholders who may require advice in relation to any aspect of the Composite 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. Furthermore, they should carefully read the procedures for accepting the Offers as set out in the Composite Document, its appendices and the accompany Forms of Acceptance.

Yours faithfully,
For and on behalf of
Red Sun Capital Limited
Robert Siu Angel Ip
Managing Director Director

Note: Mr. Robert Siu is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Red Sun Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has over 20 years of experience in corporate finance industry.

Ms. Angel Ip is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Red Sun Capital Limited to carry out type 6 (advising on corporate finance) regulated activities under the SFO and has over 6 years of experience in corporate finance industry.

– 51 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

1. PROCEDURES FOR ACCEPTANCE

1.1 The Share Offer
(a) To accept the Share Offer, you should complete and sign the accompanying WHITE Form of Share Offer Acceptance in accordance with the instructions printed thereon, which instructions form part of the terms of the Share Offer. You should insert the total number of the Offer Shares for which the Share Offer is accepted. If no number is inserted or a number inserted is greater or smaller than your registered holding of Share(s) or those physical Share(s) tendered for acceptance of the Share Offer and you have signed the form, the form will be returned to you for correction and resubmission.
(b) Any corrected form must be resubmitted and received by the Registrar by not later than 4: 00 p.m. on 31 August 2018 or such later time(s) and/or date(s) as may be announced by the Offeror in compliance with the Takeovers Code and approved by the Executive. Subject to the Share Offer becomes unconditional, your Shares sold to the Offeror by way of acceptance of the Share Offer will be registered under the name of the Offeror or its nominee.
(c) By signing and returning the WHITE Form of Share Offer, you warrant to the Offeror, Southwest HK Capital and the Company that you have not taken or omitted to take any action which will or may result in the Offeror and parties acting in concert with it, the Company, Southwest HK Capital or any other person acting in breach of the legal or regulatory requirements of any territory in connection with the Share Offer or your acceptance thereof.
(d) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in your name and you wish to accept the Share Offer, you must send the duly completed and signed WHITE Form of Share Offer Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong in any event by not later than 4: 00 p.m. on 31 August 2018 or such later time(s) and/or date(s) as may be announced by the Offeror in compliance with the Takeovers Code and approved by the Executive.

– I-1 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

(e) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or a name other than your own and you wish to accept the Share Offer in full or in part, you must either:
(i) lodge your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, and with instructions authorising it to accept the Share Offer on your behalf and requesting it to deliver the WHITE Form of Share Offer Acceptance duly completed together with the relevant share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) for the number of Shares in respect of which you intend to accept the Share Offer to the Registrar; or
(ii) arrange for the Shares to be registered in your name by the Company, through the Registrar, and send the duly completed WHITE Form of Share Offer Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or
(iii) if your Shares have been lodged with your licensed securities dealer/ registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian bank to authorise HKSCC Nominees to accept the Share Offer on your behalf on or before the deadline set by HKSCC Nominees. In order to meet the deadline set by HKSCC Nominees, you should check with your licensed securities dealer/registered institution in securities/custodian bank for the timing on processing your instruction, and submit your instruction to your licensed securities dealer/registered institution in securities/custodian bank as required by them; or
(iv) if your Shares have been lodged with your Investor Participant’s account maintained with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System before the deadline set by HKSCC Nominees.
(f) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title in respect of your Shares is/are not readily available and/or is/are lost, as the case may be, and you wish to accept the Share Offer, the WHITE Form of Share Offer Acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your share certificates and/or transfer receipt(s)

– I-2 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

and/or other document(s) of title in respect of your Shares or that it/they is/ are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Registrar as soon as possible thereafter.

If you have lost your share certificate(s) and/or transfer receipt(s) and/or other document(s) of title in respect of your Shares, you should also write to the Registrar requesting a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.

If you have lodged transfer(s) of any of your Shares for registration in your name and have not received your share certificate(s) and you wish to accept the Share Offer, you should nevertheless complete and sign the WHITE Form of Share Offer Acceptance and deliver it to the Registrar together with the transfer receipt(s) duly signed by you. Such action will be deemed to be an irrevocable authority to the Offeror to collect from the Company or the Registrar on your behalf the relevant share certificate(s) when issued and to deliver such share certificate(s) to the Registrar and to authorise and instruct the Registrar to hold such share certificate(s), subject to the terms and conditions of the Share Offer, as if it/they were delivered to the Registrar with the WHITE Form of Share Offer Acceptance.

(g) An acceptance of the Share Offer may not be counted as valid unless:
(i) it is received by the Registrar by not later than 4: 00 p.m. on 31 August 2018 or such later time(s) and/or date(s) as may be announced by the Offeror in compliance with the Takeovers Code and approved by the Executive, and the Registrar has recorded that such acceptance and any relevant documents required under paragraph (b) below have been so received; and
(ii) the WHITE Form of Share Offer Acceptance is duly completed and signed and is:
- (1) accompanied by the relevant share certificate(s) and/or transfer receipt(s) and/or other document (s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if that/those share certificate(s) is/are not in your name, such other documents (e.g. a duly stamped transfer of the relevant Shares in blank or in favour of the acceptor executed by the registered holder) in order to establish your right to become the registered holder of the relevant Shares; or

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FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

(2) from a registered Shareholder or his personal representatives (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Shares which are not taken into account under the other sub-paragraphs of this paragraph (g)(ii)); or
(3) certified by the Registrar or the Stock Exchange.

If the WHITE Form of Share Offer Acceptance is executed by a person other than the registered Shareholder, appropriate documentary evidence of authority (e.g. grant of probate or certified copy of a power of attorney) to the satisfaction of the Registrar must be produced.

(h) No acknowledgment of receipt of any WHITE Form of Share Offer Acceptance, share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.
(i) Seller’s ad valorem stamp duty for transfer of Offer Shares arising in connection with acceptances of the Share Offer will be payable by the relevant Independent Shareholders at a rate of 0.1% of (i) the market value of the Offer Shares; or (ii) the consideration payable by the Offeror in respect of the relevant acceptances of the Offer, whichever is higher. An amount equivalent to the aforesaid stamp duty will be deducted from the cash amount payable by the Offeror to such Independent Shareholder who accepts the Share Offer (where the stamp duty calculated includes a fraction of HK$1, the stamp duty would be rounded-up to the nearest HK$1). The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of the relevant Independent Shareholders accepting the Share Offer and will pay the buyer’s ad valorem stamp duty in connection with the acceptances of the Offer and the transfer of the Offer Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).
(j) If the Share Offer does not become, or is not declared, unconditional in all respects within the time permitted by the Takeovers Code, the share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) received by the Registrar will be returned to the Shareholders who have accepted the Share Offer by ordinary post at the Shareholders’ own risk as soon as possible but in any event within 10 days after the Share Offer has lapsed.
(k) References to the Offers in this Composite Document and in the Forms of Acceptance shall include any extension and/or revision thereof.

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APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

(l) In making their decision, Independent Shareholders must rely on their own examination of the Group and the terms of the Share Offer, respectively, including the merits and risks involved. The contents of this Composite Document, including any general advice or recommendation contained herein together with the Forms of Acceptance, shall not be construed as any legal or business advice on the part of any of the Offeror, the Company, Southwest HK Capital, Southwest HK Brokerage, Red Sun Capital, or their respective professional advisers. Shareholders should consult their own professional advisers for professional advice.

1.2 The Option Offer

(a) If you accept the Option Offer, you should complete the PINK Form of Option Offer Acceptance in accordance with the instructions printed thereon, which instructions form part of the terms of the Option Offer.
(b) The completed PINK Form of Option Offer Acceptance should be forwarded, together with the relevant certificate(s) of the Options (if applicable) you intend to tender, stating the number of Options in respect of which you intend to accept the Option Offer under such Option Class, by post or by hand to the Company Secretary as soon as possible and in any event so as to reach the Company Secretary at 16/F, Guangdong Finance Building, 88 Connaught Road West, Hong Kong by not later than 4: 00 p.m. on 31 August 2018 or such later time(s) and/or date(s) as may be announced by the Offeror in compliance with the Takeovers Code and approved by the Executive.
(c) If the certificate(s) in respect of your Options (if applicable) is/are not readily available and/or is/are lost, as the case may be, and you wish to accept the Option Offer, the PINK Form of Option Offer Acceptance should nevertheless be completed and delivered to the Company Secretary together with a letter stating that you have lost one or more of your Option certificate(s) (if applicable) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Company Secretary as soon as possible thereafter. If you have lost your Option certificate(s) (if applicable), you should also write to the Company Secretary requesting a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Company Secretary.
(d) No stamp duty will be deducted from the amount paid or payable to Optionholders who accept the Option Offer.

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FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

(e) No acknowledgment of receipt of any PINK Form of Option Offer Acceptance and/or certificate(s) of the Options (if applicable) will be given.
(f) References to the Offers in this Composite Document and in the Forms of Acceptance shall include any extension and/or revision thereof.
(g) In making their decision, the Optionholders must rely on their own examination of the Group and the terms of the Option Offer, respectively, including the merits and risks involved. The contents of this Composite Document, including any general advice or recommendation contained herein together with the Forms of Acceptance, shall not be construed as any legal or business advice on the part of any of the Offeror, the Company, Southwest HK Capital, Southwest HK Brokerage, Red Sun Capital, or their respective professional advisers. Optionholders should consult their own professional advisers for professional advice.

2. ACCEPTANCE PERIOD AND REVISION

(a) Unless the Offers have previously been revised or extended with the consent of the Executive and in accordance with the Takeovers Code, to be valid, the Form(s) of Acceptance must be received by the Registrar or the Company Secretary (as the case maybe) by 4: 00 p.m. on 31 August 2018 in accordance with the instructions printed on the relevant Form(s) of Acceptance and the Offer will close on 31 August 2018.
(b) The Offeror and the Company will jointly issue an announcement through the website of the Stock Exchange no later than 7: 00 p.m. on 31 August 2018 stating the results of the Offers and whether the Offers have been extended, revised or have expired.
(c) If the Offers are extended, the announcement of such extension will state the next Closing Date or a statement that the Offers will remain open until further notice. In the latter case, at least 14 days’ notice in writing must be given to the Independent Shareholders and the Optionholders before the Offers are closed to those Independent Shareholders and the Optionholders who have not accepted the Offers.
(d) If, in the course of the Offers, the Offeror revise the terms of the Offers, all Independent Shareholders and/or the Optionholders, whether or not they have already accepted the Offers, will be entitled to accept the revised Offers under the revised terms. The revised Offers must be kept open for at least 14 days following the date on which the revised offer document(s) are posted and shall not close earlier than the Closing Date.

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APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

(e) If the Closing Date is extended, any references in this Composite Document and the Forms of Acceptance to the Closing Date shall, except where the context otherwise requires, be deemed to refer to the subsequent closing date.

3. ANNOUNCEMENT

By 6: 00 p.m. on the Closing Date (or such later time and/or date as the Executive may in exceptional circumstances permit), the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the revision, extension, expiry or unconditionality of the Offers. The Offeror must publish an announcement in accordance with the Listing Rules on the Stock Exchange’s website by 7: 00 p.m. on 31 August 2018 stating the results of the Offers and whether the Offers have been revised, extended or expired. The announcement will state the following:

(i) the total number of Shares and rights over Shares for which acceptances of the Offers have been received;
(ii) the total number of Shares and rights over Shares held, controlled or directed by the Offeror and its Concert Parties before the Offer Period;
(iii) the total number of Shares and rights over Shares acquired or agreed to be acquired during the Offer Period by the Offeror and its Concert Parties; and
(iv) details of any relevant securities (as defined in Note 4 to Rule 22 of the Takeover Code) in which the Offeror and any of its Concert Parties have borrowed or lent, save for any borrowed Shares which have been either on-lent or sold.

The announcement will specify the percentages of voting rights represented by these numbers of Shares.

In computing the total number of Offer Shares and Options represented by acceptances, only valid acceptances that are complete, in good order and fulfill the acceptance conditions set out in this Appendix I, and which have been received by the Registrar no later than 4: 00 p.m. on the Closing Date, being the latest time and date for acceptance of the Offers, shall be included.

As required under the Takeovers Code, all announcements in relation to the Offers will be made in accordance with the requirements of the Listing Rules.

– I-7 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

4. RIGHT OF WITHDRAWAL

The Offer is conditional upon fulfilment of the Conditions set out in the ‘‘Letter from Southwest HK Capital’’ in this Composite Document and being declared unconditional in all respects. Acceptance of the Share Offer and the Option Offer tendered by Shareholders and/or the Optionholders, shall be irrevocable and cannot be withdrawn, except in the circumstances set out in the subparagraph (a) and (b) below:

(a) in compliance with Rule 17 of the Takeovers Code, which provides that an acceptor of the Offers shall be entitled to withdraw his/her/its consent after 21 days from the first Closing Date (being, 31 August 2018) and if the Offers have not by then become unconditional as to acceptances. An acceptor of the Offers may withdraw his/her/its acceptance by lodging a notice in writing signed by the acceptor (or his/her/its agent duly appointed in writing and evidence of whose appointment is produced together with the notice) to the Registrar;
(b) in the circumstances set out in Rule 19.2 of the Takeovers Code (which is to the effect that if the Offeror is unable to comply with any of the requirements of making announcements relating to the Offers as described under the paragraph headed ‘‘3. Announcement’’ above), the Executive may require that acceptors be granted a right of withdrawal, on terms acceptable to the Executive, until such requirements can be met.

In such case, when the Independent Shareholders and/or the Optionholders withdraw their acceptance(s), the Offeror shall, as soon as possible but in any event within 10 days thereof, return by ordinary post the share/option certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) lodged with the Form(s) of Acceptance to the relevant Independent Shareholder(s) and/or the relevant Optionholder(s).

Save as aforesaid, acceptances of the Offers shall be irrevocable and not capable of being withdrawn.

5. SETTLEMENT

5.1 The Share Offer

If you accept the Share Offer, settlement of the consideration (less seller’s ad valorem stamp duty) will be made by cheque as soon as possible, but in any event within seven Business Days of the date of receipt of a complete and valid acceptance of the Share Offer, or of the date on which the Offers become or are declared unconditional in all respects, whichever is the later. Each cheque will be despatched by ordinary post to the address specified on the relevant Form of Share Offer Acceptance at his/her own risk.

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APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

No fractions of a cent will be payable and the amount of cash consideration payable to a Shareholder who accepts the Share Offer will be rounded up to the nearest cent.

Shareholders are recommended to consult their professional advisers if they are in doubt as to the above procedures.

5.2 The Option Offer

If you accept the Option Offer, settlement of the consideration will be made by cheque as soon as possible, but in any event within seven Business Days of the date of receipt of a complete and valid acceptance of the Option Offer, or of the date on which the Offers become or are declared unconditional in all respects, whichever is the later. Each cheque will be despatched by ordinary post at the own risk of the relevant Optionholder to the address specified on the relevant Form of Option Offer Acceptance.

No fractions of a cent will be payable and the amount of cash consideration payable to an Optionholder who accepts the Option Offer will be rounded up to the nearest cent.

6. OVERSEAS INDEPENDENT SHAREHOLDERS

The Offeror intends to make the Share Offer available to all Independent Shareholders, including those who are not resident in Hong Kong. The availability of the Offer to persons who are not resident in Hong Kong may be affected by the laws of the relevant overseas jurisdictions. The making of the Share Offer to persons with a registered address in jurisdictions outside Hong Kong may be prohibited or affected by the laws or regulations of the relevant jurisdictions. Such Independent Shareholders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should observe relevant applicable legal or regulatory requirements and, where necessary, seek legal advice. This Composite Document will not be filed, nor approval for its issuance sought, under the applicable securities or equivalent legislation or rules of any jurisdiction other than Hong Kong.

It is the responsibility of the individual Independent Shareholders who wish to accept the Share Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Share Offer (including the obtaining of any regulatory or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due in respect of such jurisdictions).

– I-9 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

8. NOMINEE REGISTRATION

To ensure equality of treatment of all Shareholders, those Shareholders who hold Shares as nominees on behalf of more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for beneficial owners of Shares whose investments are registered in the names of nominees, to accept the Share Offer, it is essential that they provide instructions of their intentions with regard to the Share Offer to their nominees.

9. TAX IMPLICATIONS

None of the Offeror, the Company, their ultimate beneficial owners and parties acting in concert with any of them, Southwest HK Capital, Southwest HK Brokerage, Red Sun Capital, the Registrar or any of their respective directors or any persons involved in the Offer is in a position to advise the Independent Shareholders and/or the Optionholders on their individual tax implications. Independent Shareholders and the Optionholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting or rejecting the Offers. It is emphasised that none of the Offeror, the Company, their ultimate beneficial owners and parties acting in concert with any of them, Southwest HK Capital, Southwest HK Brokerage, Red Sun Capital, the Registrar or any of their respective directors, officers or associates or any persons involved in the Offers accepts responsibility for any taxation effects on, or liabilities of, any person or persons as a result of their acceptance or rejection of the Offers.

10. GENERAL

(a) All communications, notices, the Forms of Acceptance, share/option certificates, transfer receipts, other documents of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to be delivered by or sent to or from the Shareholders and/or the Optionholders will be delivered by or sent to or from them, or their designated agents, by ordinary post at their own risk. Such communications, notices, documents and remittances will be sent to Shareholders and/or the Optionholders at their addresses, in the case of Shareholders and/or the Optionholders, specified on the relevant Form(s) of Acceptance. None of the Offeror, the Offeror’s ultimate beneficial owner, the Company and parties acting in concert with any of them, Southwest HK Capital, Southwest HK Brokerage, Red Sun Capital, the Registrar or any of their respective directors, officers or associates, or any other person involved in the Offers, accepts any liability for any loss in postage or delay in transmission or such other liabilities whatsoever which may arise as a result.

– I-10 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

(b) Acceptance of the Share Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror, Southwest HK Capital and the Company that the Shares acquired under the Share Offer are sold by such person or persons free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching thereto including, the right to receive in full all dividends and other distributions, if any, declared, paid or made on or after the Closing Date.
(c) Acceptance of the Option Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror, Southwest HK Capital and the Company that the Options to be cancelled under the Option Offer are sold by such person or persons free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature and together with all rights attaching thereto including, the right to receive in full all dividends and other distributions, if any, declared, paid or made on or after the Closing Date.
(d) Acceptance of the Offers by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Shares and/or Options it has indicated in the Forms of Acceptance is the aggregate number of Shares for which such nominee has received authorisations from the beneficial owners to accept the Offers on their behalf.
(e) The provisions set out in the Forms of Acceptance and form part of the terms of the Offers.
(f) The accidental omission to despatch this Composite Document and/or Forms of Acceptance or any of them to any person to whom the Offers are made will not invalidate the Offers in any way.
(g) The Offers are, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong. Execution of a Forms of Acceptance by or on behalf of an Independent Shareholder and/or Optionholder will constitute such Independent Shareholder’s agreement and/or Optionholder’s agreement that the courts of Hong Kong shall have exclusive jurisdiction to settle any dispute which may arise in connection with the Offers.
(h) Due execution of the Form(s) of Acceptance will constitute an irrevocable authority to the Offeror and/or Southwest HK Capital (or such person or persons as the Offeror and/or Southwest HK Capital may direct) to complete and execute any document on behalf of the person accepting the Offers and to do any other act that may be necessary or expedient for the purposes of vesting in either Offeror (or such person or persons as it may direct) the Shares in respect of which such person has accepted the Offers.

– I-11 –

APPENDIX I

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

(i) Save for the payment of stamp duty, settlement of the consideration to which any Independent Shareholder is entitled under the Offers will be implemented in full in accordance with the terms of the Offers without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Independent Shareholder.
(j) The Offers are made in accordance with the Takeovers Code.
(k) References to the Offers in this Composite Document and in the Forms of Acceptance shall include any extension and/or revision thereof.
(l) In making their decision, Independent Shareholders must rely on their own examination of the Group and the terms of the Offer, including the merits and risks involved. The contents of this Composite Document, including any general advice or recommendation contained herein together with the Forms of Acceptance, shall not be construed as any legal or business advice on the part of any of the Offeror, the Company, Southwest HK Capital, Southwest HK Brokerage, Red Sun Capital, or their respective professional advisers. Shareholders should consult their own professional advisers for professional advice.
(m) The English text of this Composite Document and of the accompanying Forms of Acceptance shall prevail over the Chinese text for the purpose of interpretation.

– I-12 –

APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL SUMMARY

The following is a summary of the audited financial results of the Group for each of the financial years ended 31 December 2015, 2016 and 2017 as extracted from the annual reports of the Company for the years ended 31 December 2015, 2016 and 2017 respectively:

	For the year ended 31 December	For the year ended 31 December
	2015	2016	2017
	RMB’000	RMB’000	RMB’000
Revenue	11,271	12,909	42,540
Gross profit	7,889	9,104	9,930
Loss before tax	(1,463)	(10,905)	(42,397)
Income tax expense	(1,301)	(1,004)	(831)
Loss after tax	(2,764)	(11,909)	(43,228)
Loss attributable to owners of
the Group	(2,764)	(11,909)	(43,171)
Loss attributable to non-
controlling interests	—	—	(57)
Dividend	—	—	—

Basic and diluted loss per share RMB0.8 cents RMB0.34 cents RMB1.16 cents

The Group did not have any items of any income or expense which are material for each of the years ended 31 December 2015, 2016 and 2017.

There were no qualifications in the auditor’s report on the consolidated financial statements of the Company for each of the years ended 31 December 2015, 2016 and 2017 as contained in the annual reports for these respective years.

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APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

2. FINANCIAL INFORMATION OF THE GROUP

The Company is required to set out or refer to in this Composite Document the consolidated statement of financial position, consolidated statement of cash flows and any other primary statement as shown in the audited consolidated financial statements of the Group for the year ended 31 December 2017 (the ‘‘2017 Financial Statements’’), together with the notes to the relevant published accounts which are of major relevance to the appreciation of the above financial information.

The 2017 Financial Statements are set out from page 78 to page 139 in the Annual Report 2017 of the Company, which was published on 25 April 2018. The Annual Report 2017 is posted on the Company’s website http://www.futurebrightltd.com. Please also see below a quick link to the Annual Report 2017:

http://www.futurebrightltd.com/UploadFiles/Files/2018/4/20180425044215175.pdf

The 2017 Financial Statements are incorporated by reference into this Composite Document and form part of this Composite Document.

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APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

3. INDEBTEDNESS

Statement of Indebtedness

Apart from intra-group liabilities and normal account payable in the ordinary course of business, the Group did not, as at 30 June 2018, have any debt securities, term loans, other borrowings or indebtedness in the nature of borrowing including bank overdrafts and liabilities under acceptance or acceptance credits, hire purchase commitments, mortgages, charges, guarantees or material contingent liabilities.

4. NO MATERIAL CHANGE

The Directors were not aware of any material change in the financial or trading position or outlook of the Group since 31 December 2017, being the date to which the latest published audited consolidated financial statements of the Company were made up, up to and including the Latest Practicable Date.

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APPENDIX III

GENERAL INFORMATION OF THE GROUP

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date are as follows:

Authorised	Par value	HK$
	(HK$)
80,000,000,000 shares	0.001	80,000,000
Issued and fully paid
3,870,000,000 shares	0.001	3,870,000

As at the Latest Practicable Date, the Company has Options outstanding entitling the holders thereof to subscribe for an aggregate of 352,000,000 new Shares.

Apart from the aforementioned Options, the Company had no outstanding options, derivatives, warrants or securities which are convertible or exchangeable into Shares and had not entered into any agreement for the issue of such options, derivatives, warrants or securities of the Company as at the Latest Practicable Date.

All Shares in issue 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 since 31 December 2017, the date to which the latest audited financial statements of the Company were made up.

3. DISCLOSURE OF INTERESTS

(a) Interests in the Offeror

As at the Latest Practicable Date, none of the Company nor any of its Directors had any interest in the equity share capital or any convertible securities, warrants, options or derivatives of the Offeror, and no such person (including the Company) had dealt in the equity share capital or any convertible securities, warrants, options or derivatives of the Offeror during the Relevant Period.

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APPENDIX III

GENERAL INFORMATION OF THE GROUP

(b) Directors’ interests in the Shares

As at the Latest Practicable Date, the following Directors or chief executive of the Company had or were deemed to have interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions or (iv) which were required to be disclosed under the Takeovers Code:

(i) Long positions in the Shares or the underlying Shares

			Approximate
			percentage in
		Number of Shares	the issued
		or underlying	share capital
		Shares held or	of the
Name of Director	Nature of interest	interested	Company
Liu Jie	Beneficial owner and	1,085,920,000	28.06%
	interest in controlled	(Notes 1 and 9)
	corporation
Yang Xiaoqiu	Beneficial interest and	241,140,000	6.23%
	interest in controlled	(Note 2)
	corporation
Rao Dacheng	Beneficial owner	35,200,000	0.91%
		(Notes 3 and 9)
Wan Tat Wai David	Beneficial owner	35,200,000	0.91%
		(Notes 4 and 9)
Zhang Decong	Beneficial owner	3,520,000	0.09%
		(Notes 5 and 9)
Chow Hiu Tung	Beneficial owner	3,520,000	0.09%
		(Notes 6 and 9)
Lai Kwok Leung	Beneficial owner	3,520,000	0.09%
		(Notes 7 and 9)
Lau Tai Chim	Beneficial owner	3,520,000	0.09%
		(Notes 8 and 9)

– III-2 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

Notes:

These 1,085,920,000 Shares included (i) 3,520,000 Shares which may be allotted and issued to Ms. Liu Jie, an executive Director, upon full exercise of the Options granted to her under the Existing Share Option Scheme and (ii) 1,082,400,000 Shares indirectly held through Victory Spring Ventures Limited, the issued capital of which is owned as to 90% by Ms. Liu. Under the SFO, Ms. Liu is deemed to be interested in all the Shares registered in the name of Victory Spring Ventures Limited.
These 241,140,000 Shares included (i) 28,800,000 Shares beneficially held by Ms. Yang Xiaoqiu, an executive Director and (ii) 212,340,000 Shares indirectly held through Kai De Int’l Holding Limited, the issued capital of which is owned as to 100% by Ms. Yang. Under the SFO, Ms. Yang is deemed to be interested in all the Shares registered in the name of Kai De Int’l Holding Limited.
These 35,200,000 underlying Shares represent the Shares which may be allotted and issued to Mr. Rao Dacheng upon full exercise of the Options granted to him under the Existing Share Option Scheme.
These 35,200,000 underlying Shares represent the Shares which may be allotted and issued to Mr. Wan Tat Wai David upon full exercise of the Options granted to him under the Existing Share Option Scheme.
These 3,520,000 underlying Shares represent the Shares which may be allotted and issued to Mr. Zhang Decong upon full exercise of the Options granted to him under the Existing Share Option Scheme.
These 3,520,000 underlying Shares represent the Shares which may be allotted and issued to Mr. Chow Hiu Tung upon full exercise of the Options granted to him under the Existing Share Option Scheme.
These 3,520,000 underlying Shares represent the Shares which may be allotted and issued to Mr. Lai Kwok Leung upon full exercise of the Options granted to him under the Existing Share Option Scheme.
These 3,520,000 underlying Shares represent the Shares which may be allotted and issued to Mr. Lau Tai Chim upon full exercise of the Options granted to him under the Existing Share Option Scheme.
The Options are exercisable from 1 December 2017 to 30 November 2020 (both dates inclusive), subject to the provisions for early termination contained in the Existing Share Option Scheme at the subscription price of HK$0.25 per Share.

(c) Other interests

As at the Latest Practicable Date,

(i) no Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company was owned or controlled by a subsidiary of the Company or by a pension fund (if any) of any member of the Group or any person who is presumed to be acting in concert with the Company by virtue of class (5) of the definition of ‘‘acting

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APPENDIX III

GENERAL INFORMATION OF THE GROUP

in concert’’ under the Takeovers Code or who is an associate of the Company by virtue of class (2) of the definition of ‘‘associate’’ under the Takeovers Code (excluding exempt principal traders and exempt fund managers);

(ii) there were no Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company which the Company and any Directors had borrowed or lent;
(iii) save for the Irrevocable Undertakings, no person who owned or controlled any Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company had irrevocably committed himself/herself to accept or not to accept the Offers;
(iv) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with 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;
(v) no Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options or derivatives of Company were managed on a discretionary basis by fund managers connected with the Company;
(vi) Ms. Liu Jie and Ms. Yang Xiaoqiu, who are executive Directors, have indicated that they intend to accept the Share Offer, but would pay attention to the market price of the Shares during the Offer Period before deciding whether to accept or reject the Share offer. Save as disclosed above, none of the Directors had any interests in any Shares, convertible securities, warrants, options or other derivatives of the Company and none of the Directors intended, in respect of their own beneficial shareholdings, to accept the Offers.

– III-4 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

4. DEALING IN SECURITIES OF THE COMPANY

(a) During the Relevant Period, save as disclosed below, none of the Directors had dealt in any Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company.

			Number of	Price per
Name	of Director	Date of dealing	Shares involved	Share
				(HK$)
Yang	Xiaoqiu	4 April 2018	Disposal of	0.17
			400,000,000
			Shares (Note 1)

Note:

The disposal of 400,000,000 Shares was conducted by Kai De Int’l Holding Limited, the issued capital of which is owned as to 100% by Ms. Yang Xiaoqiu. Under the SFO, Ms. Yang is deemed to be interested in all the Shares registered in the name of Kai De Int’l Holding Limited.

(b) During the Relevant Period,

(i) the Company did not deal in any interest in the equity share capital or any convertible securities, warrants, options and derivatives of the Offeror;
(ii) none of the subsidiaries of the Company or a pension fund (if any) of any member of the Group or any person who is presumed to be acting in concert with the Company by virtue of class (5) of the definition of ‘‘acting in concert’’ under the Takeovers Code or who is an associate of the Company by virtue of class (2) of the definition of ‘‘associate’’ under the Takeovers Code (excluding exempt principal traders and exempt fund managers) had dealt in any interest in the Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company;
(iii) no person, with whom the Company or 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 has an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code had dealt in the Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company;
(iv) no fund managers connected with the Company had dealt in the Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company.

– III-5 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

5. LITIGATION

As at the Latest Practicable Date, none of the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

6. MATERIAL CONTRACTS

Save as disclosed below, there were no material contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Group) which have been entered into by any member of the Group after the date falling two years before the date of the Announcement up to and including the Latest Practicable Date:

(a) the placing agreement dated 26 January 2017 and entered into between the Company and Kingston Securities Limited pursuant to which the Company conditionally agreed to place through Kingston Securities Limited, on a best effort basis, up to 176,000,000 Shares to not less than six placees at the placing price of HK$0.205 per Share;
(b) the joint venture agreement dated 5 April 2017 (the ‘‘JV Agreement’’) and entered into between Future Bright (H.K.) Investments Limited (高鵬（香港）投資有限公司) (an indirect wholly-owned subsidiary of the Company) (‘‘Future Bright (H.K.)’’) and Xiamen Huan Shuo Trading Company Limited (廈門環碩貿易有限公司) (‘‘Xiamen Huan Shuo’’) in relation to the establishment of a joint venture company in Xiamen, Fujian Province, the People’s Republic of China (the ‘‘JV Company’’), pursuant to which Xiamen Huan Shuo and Future Bright (H.K.) will contribute RMB9,200,000 and an amount in United States dollars or Hong Kong dollars equivalent to RMB13,800,000 respectively to the registered capital of the JV Company;
(c) the supplemental agreement to the JV Agreement dated 7 April 2017, pursuant to which Xiamen Huan Shuo and Future Bright (H.K.) agreed to amend the composition of the board of directors and the supervisory committee of the JV Company;
(d) the placing agreement dated 19 July 2017 (the ‘‘July 2017 Placing Agreement’’) and entered into between the Company and Head & Shoulders Securities Limited (‘‘Head & Shoulders’’) pursuant to which the Company conditionally agreed to place through Head & Shoulders, on a best endeavour basis, up to 180,000,000 Shares to not less than six placees at the placing price of HK$0.205 per Share;
(e) the share purchase agreement dated 26 July 2017 and entered into between Gold Title Investments Limited (金標投資有限公司) (a wholly-owned subsidiary of the Company) (‘‘Gold Title’’) and Yi Feng Holding Group Limited (一風控股集團有限公司) (‘‘Yi Feng’’), pursuant to which Yi Feng conditionally agreed to sell, and Gold Title conditionally agreed to purchase 100% of the equity interest in

– III-6 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

Imperial Dragon Finance Limited (帝國龍財務有限公司) (currently known as Future Bright Finance Limited) (‘‘Imperial Dragon’’), at a consideration of approximately HK$7,240,000 in cash;

(f) the termination agreement dated 4 August 2017 and entered into between the Company and Head & Shoulders, pursuant to which the July 2017 Placing Agreement shall be terminated and shall cease to have any force or effect with effect from 4 August 2017;
(g) the placing agreement dated 4 August 2017 and entered into between the Company and Kingston Securities Limited, pursuant to which the Company conditionally agreed to place through Kingston Securities Limited, on a best effort basis, up to 180,000,000 Shares to not less than six placees at the placing price of HK$0.210 per Share;
(h) the facility letter dated 17 August 2017 and entered into between Imperial Dragon and a borrower (an independent third party) (the ‘‘First Borrower’’), pursuant to which Imperial Dragon agreed to provide a loan in the principal amount of HK3.5 million to the First Borrower for a term of six months at the interest rate of 24% per annum (the ‘‘First Loan’’);
(i) the facility letter dated 18 August 2017 and entered into between Imperial Dragon and a borrower (an independent third party) (the ‘‘Second Borrower’’), pursuant to which Imperial Dragon agreed to provide a loan in the principal amount of HK3.5 million to the Second Borrower for a term of six months at the interest rate of 24% per annum (the ‘‘Second Loan’’);
(j) the joint venture agreement dated 31 August 2017 and entered into among Future Bright (H.K.), Zhong Xi Int’l Holding Limited (中禧國際控股有限公司) (‘‘Zhong Xi’’) and Super Vision Development Co., Ltd. (‘‘Super Vision’’), pursuant to which Future Bright (H.K.), Zhong Xi and Super Vision agreed to form a joint venture company and contribute HK$5,100,000, HK$1,500,000 and HK$3,400,000 in cash and hold the equity interests in the joint venture company as to 51%, 15% and 34% respectively;
(k) the joint venture agreement dated 31 August 2017 and entered into among Future Bright (H.K.) and China Africa Minerals Limited (中非礦產有限公司) (‘‘China Africa’’), pursuant to Future Bright (H.K.) and China Africa agreed to form a joint venture company and contribute HK$5,100,000 and HK$4,900,000 in cash and hold the equity interests in the joint venture company as to 51% and 49% respectively;
(l) the extension agreement dated 15 March 2018 and entered into between Imperial Dragon and the First Borrower, pursuant to which the repayment date of the First Loan to 28 August 2018; and

– III-7 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

(m) the extension agreement dated 15 March 2018 and entered into between Imperial Dragon and the Second Borrower, pursuant to which the repayment date of the Second Loan to 28 August 2018.

7. EXPERT AND CONSENTS

The following are the qualification of the expert who has given opinion or advice which are contained or referred to in this Composite Document:

Name Qualification

Red Sun Capital Limited a corporation licensed 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 Composite Document with the inclusion of its letter, advice or report as the case may be and references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, the above expert was not beneficially interested in the share capital of any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, the above expert did not have any direct or indirect interest in any assets which have been acquired, disposed of by or leased to, or which were proposed to be acquired, disposed of by or leased to, any member of the Group since 31 December 2017 (the date to which the latest published audited financial statements of the Group were made up).

8. ADDITIONAL DISCLOSURE OF INTERESTS AND DEALINGS IN SECURITIES

(a) As at the Latest Practicable Date, no benefit (other than statutory compensation) had been given or would be given to any Directors as compensation for loss of office or otherwise in connection with the Offers.
(b) As at the Latest Practicable Date, there was no agreement or arrangement between any of the Directors and any other person which was conditional or dependent on the outcome of the Offers or otherwise connected with the Offers.
(c) As at the Latest Practicable Date, there was no material contract entered into by the Offeror or any party acting in concert with it in which any Director had a material personal interest.

– III-8 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

9. DIRECTORS’ SERVICE CONTRACTS

Save as disclosed below, as at the Latest Practicable Date, none of the Directors had a service contract with the Company or any of its subsidiaries or associated companies, which: (i) (including both continuous and fixed term contracts) have been entered into or amended within six months before the commencement of the Offer Period; (ii) are continuous contracts with a notice period of 12 months or more; or (iii) are fixed term contracts with more than 12 months to run irrespective of the notice period:

Name of Director

Term of the contract

Amount of remuneration

Yang Xiaoqiu A term of 3 years from 8 February 2018 and shall continue thereafter until terminated by giving at least 3 months’ notice
(i) A fixed remuneration of HK$240,000 per annum; and (ii) an annual discretionary bonus determined by the Board and the remuneration committee of the Company with reference to the audited consolidated net profit of the Group attributable to the Shareholders
Chen Gang A term of 3 years from 8 February 2018 and shall continue thereafter until terminated by giving at least 3 months’ notice
(i) A fixed remuneration of HK$600,000 per annum; and (ii) an annual discretionary bonus determined by the Board and the remuneration committee of the Company with reference to the audited consolidated net profit of the Group attributable to the Shareholders
Hu Minglong A term of three years from 8 A fixed remuneration of February 2018 HK$180,000 per annum

10. MISCELLANEOUS

(a) The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
(b) The principal place of business of the Company in Hong Kong is located at 16th Floor, Guangdong Finance Building, 88 Connaught Road West, Hong Kong.
(c) The company secretary of the Company is Mr. Ho Yuk Ming, Hugo who is an associate member of the Hong Kong Institute of Certified Public Accountants.

– III-9 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

(d) The branch share registrar of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited, Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(e) The English text of this Composite Document and the Form(s) of Acceptance shall prevail over their respective Chinese text for the purpose of interpretation.
DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours (from 10: 00 a.m. to 12: 30 p.m. and from 2: 30 p.m. to 5: 30 p.m.) on any weekday (except for public holidays) at the principal place of business of the Company in Hong Kong at 16th Floor, Guangdong Finance Building, 88 Connaught Road West, Hong Kong from the date of this Composite Document until the end of the Offer Period and will be displayed on the website of the SFC (www.sfc.hk) and the website of the Company (www.futurebrightltd.com):

(a) memorandum and articles of association of the Company;
(b) the memorandum and articles of association of the Offeror;
(c) the letter from Southwest HK Capital as set out on pages 5 to 16 of this Composite Document;
(d) the letter from the Board as set out on pages 17 to 22 of this Composite Document;
(e) the letter from the Independent Board Committee as set out on pages 23 to 24 of this Composite Document;
(f) the letter from Red Sun Capital Limited as set out on pages 25 to 51 of this Composite Document;
(g) the written consent referred to in the paragraph headed ‘‘7. Expert and consents’’ in this Appendix;
(h) the written consent referred to in the paragraph headed ‘‘7. Consents and qualifications’’ in Appendix IV to this Composite Document;
(i) the Irrevocable Undertakings;
(j) the material contracts referred to in the paragraph headed ‘‘6. Material contracts’’ in this Appendix;
(k) the annual reports of the Company for each of the two financial years ended 31 December 2016 and 2017;

– III-10 –

APPENDIX III

GENERAL INFORMATION OF THE GROUP

(l) the service contracts as referred to in the paragraph headed ‘‘9. Directors’ Service Contracts’’ in this Appendix; and
(m) this Composite Document.

– III-11 –

APPENDIX IV

GENERAL INFORMATION OF THE OFFEROR

1. RESPONSIBILITY STATEMENT

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

2. MARKET PRICES

(a) During the Relevant Period, the highest closing price per Share as quoted on the Stock Exchange was HK$0.236 on 19 January 2018 and the lowest closing price per Share as quoted on the Stock Exchange was HK$0.172 on 29 March 2018.
(b) The table below sets out the closing prices of the Shares as quoted on the Stock Exchange on the last trading day of each of the calendar months during the Relevant Period on which trading of the Shares took place:

	Closing Price
Date	of Shares
	(HK$)
29 December 2017	HK$0.234
31 January 2018	HK$0.220
28 February 2018	HK$0.220
29 March 2018	HK$0.172
30 April 2018	HK$0.201
31 May 2018	HK$0.188
29 June 2018 (Last Trading Day)	HK$0.183
31 July 2018	HK$0.198
7 August 2018 (Latest Practicable Date)	HK$0.198

(c) The closing price of the Shares on the Stock Exchange on the Last Trading Day was HK$0.183.
(d) The closing price of the Shares on the Stock Exchange on the Latest Practicable Date was HK$0.198.

– IV-1 –

APPENDIX IV

GENERAL INFORMATION OF THE OFFEROR

3. DISCLOSURE OF INTERESTS

The Offeror confirms that, as at the Latest Practicable Date, save as disclosed below, none of the Offeror, the sole director of the Offeror, nor any person acting in concert with any of them, owns or controls any Shares, convertible securities, warrants, options or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in respect of any Shares:

		Number of	Percentage
		Shares	of holding
Name of Shareholders	Capacity	Long Position	Long Position
The Offeror	Beneficial Owner	400,000,000	10.34%
Mr. Li	Interest of controlled	400,000,000	10.34%
	corporation

4. ARRANGEMENTS IN CONNECTION WITH THE OFFER

As at the Latest Practicable Date:

(a) save for 400,000,000 Shares representing approximately 10.34% of the issued share capital of the Company held by the Offeror, as at the Latest Practicable Date and the share mortgage executed by the Offeror to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage, none of the Offeror, its ultimate beneficial owner and/or the parties acting in concert with any of them owns or has control or direction over any voting rights or rights over the Shares, options, derivatives, warrants or other securities convertible into Shares;
(b) save for the Irrevocable Undertakings, none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them has received any irrevocable commitment to accept the Offers;
(c) save for the Irrevocable Undertakings and the share mortgage executed by the Offeror to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage, there is no arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code in relation to the shares of the Offeror or the Company and which might be material to the Offers;
(d) there is no agreement or arrangement to which the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them is a party which relates to circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Offers;

– IV-2 –

APPENDIX IV

GENERAL INFORMATION OF THE OFFEROR

(e) none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them has entered into any arrangements or contracts in relation to any outstanding derivative in respect of the securities in the Company; and
(f) none of the Offeror, its ultimate beneficial owner and/or parties acting in concert with any of them has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company.
ADDITIONAL DISCLOSURE OF INTERESTS

As at the Latest Practicable Date:

(a) save as disclosed in the section headed ‘‘Disclosure of Interests’’ in this appendix, none of the Offeror, Mr. Li nor any person acting in concert with either of them, owns or controls any Shares, convertible securities, warrants, options or derivatives of the Company in respect of such securities;
(b) neither the Offeror, Mr. Li, nor any person acting in concert with either of them had borrowed or lent any Shares, convertible securities, warrants, options or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in respect of any Shares;
(c) none of the Offeror, Mr. Li or any persons acting in concert with either of them is a party to any arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code with any other persons in relation to the Shares; and
(d) save for the Irrevocable Undertakings, no person has irrevocably committed themselves to accept or reject the Offers.

6. DEALINGS IN SECURITIES

During the Relevant Period:

(a) save for the acquisition of 400,000,000 Shares representing approximately 10.34% of the total issued share capital of the Company by the Offeror on 4 April 2018 at the price of HK$0.17 per Share and the share mortgage executed by the Offeror to charge all Shares held by it as of the date of the Announcement and the Shares to be acquired by it under the Share Offer in favour of Southwest HK Brokerage, the Offeror, Mr. Li, nor any person acting in concert with it had dealt for value in the Shares, convertible securities, warrants, options or derivatives of the Company;
(b) save as disclosed in paragraph (a), Mr. Li, the sole director of the Offeror had not dealt for value in the Shares, convertible securities, warrants, options or derivatives of the Company; and

– IV-3 –

APPENDIX IV

GENERAL INFORMATION OF THE OFFEROR

(c) no person who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror, Mr. Li or any person acting in concert with either of them, had dealt for value in any Shares, convertible securities, warrants, options or derivatives of the Company.

7. CONSENTS AND QUALIFICATIONS

The following are the qualifications of the expert who has given opinions or advice which are contained in this Composite Document:

Name

Qualification

Southwest HK Capital a licensed corporation by SFC 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 Composite Document with the inclusion of its advice, letters and/or reports (as the case may be) and references to its name and logo in the form and context in which it appears.

8. GENERAL

(a) Set out below are details of the Offeror and Mr. Li:
(i) The Offeror

The sole director and the sole ultimate Registered Address beneficial owner of the Offeror

Unit 4209, 42/F., Mr. Li Hong Kong Plaza, 188 Connaught Road West, Hong Kong

(b) The registered office of Southwest HK Capital is at 40/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong.
(c) The English language text of this Composite Document and the Form(s) of Acceptance shall prevail over their respective Chinese language text.

– IV-4 –

AI assistant

Future Bright Mining Holdings Limited — M&A Activity 2018

50450_rns_2018-08-10_bce2c8fc-5260-4729-a2d0-24e16d24572f.pdf

EXPECTED TIMETABLE

EXPECTED TIMETABLE

EXPECTED TIMETABLE

DEFINITIONS

DEFINITIONS

DEFINITIONS

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

INTRODUCTION

THE OFFERS

The Share Offer

The Share Offer Price

Highest and Lowest Share Prices

The Option Offer

For cancellation of each 1,000 Options . . . . . . . . . . . . . . . . . . . . . . HK$0.01 in cash

Irrevocable Undertakings

Value of the Offers

Financial resources available to the Offeror

Conditions of the Offers

Effect of Accepting the Offers

Taxation advice

Stamp Duty

Payment

Other Information

Overseas Independent Shareholders

INFORMATION OF THE OFFEROR

INTENTIONS OF THE OFFEROR IN RELATION TO THE GROUP

Proposed Change to the Board Composition of the Company

Maintaining the Listing Status of the Company

INFORMATION ON THE GROUP

Principal activities

ACCEPTANCES OF THE OFFER

COMPULSORY ACQUISITION

GENERAL

ADDITIONAL INFORMATION

Southwest Securities (HK) Capital Limited Steven Lo

Future Bright Mining Holdings Limited 高 鵬 礦 業 控 股 有 限 公 司 (Incorporated in the Cayman Islands with limited liability)

AGREED TO BE ACQUIRED BY ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

LETTER FROM THE BOARD

THE OFFERS

The Share Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.170 in cash

The Option Offer

For cancellation of each 1,000 Options . . . . . . . . . . . . . . . . . . . . . . HK$0.01 in cash

Further details of the Offers

INFORMATION OF THE GROUP

Principal Activities

Financial Information

SHAREHOLDING STRUCTURE OF THE COMPANY

INFORMATION OF THE OFFEROR

OFFEROR’S INTENTION ON THE GROUP

MAINTAINING THE LISTING STATUS OF THE COMPANY

RECOMMENDATION

ADDITIONAL INFORMATION

Future Bright Mining Holdings Limited 高 鵬 礦 業 控 股 有 限 公 司

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED TO ACQUIRE ALL THE ISSUED SHARES

ZHONG KE JIU TAI TECHNOLOGY GROUP LIMITED OR PARTIES ACTING IN CONCERT WITH IT)

RECOMMENDATIONS

Yours faithfully, For and on behalf of the Independent Board Committee

VOLUNTARY CONDITIONAL CASH OFFER BY SOUTHWEST SECURITIES (HK) CAPITAL LIMITED FOR AND ON BEHALF OF

INTRODUCTION

THE INDEPENDENT BOARD COMMITTEE

OUR INDEPENDENCE

BASIS OF OUR OPINION AND RECOMMENDATION

PRINCIPAL FACTORS AND REASONS CONSIDERED

(b) Historical financial performance of the Group

(i) Comparison between the two years ended 31 December 2017

(ii) Comparison between the two years ended 31 December 2016

(c) Financial position of the Group

2. Prospects and outlook of the Group

(i) The marble blocks trading industry in the PRC and the commodities trading industry in the PRC and Hong Kong

Average Import Prices of Marble (Hong Kong), 2013 – 2017

(ii) The money lending industry in Hong Kong

3. Principal terms of the Offers

(a) The Offers

The Share Offer

Future Bright Mining Holdings Limited M&A Activity 2018

Future Bright Mining Holdings Limited 高鵬礦業控股有限公司 (Incorporated in the Cayman Islands with limited liability)

Future Bright Mining Holdings Limited 高鵬礦業控股有限公司