G-Resources Group Limited — Capital/Financing Update 2017

Nov 28, 2017

THIS OFFERING CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Offering Circular or as to the action to be taken, you should consult your stockbroker, a licensed dealer in securities or registered institution in securities, bank manager, solicitor, professional accountant or other professional advisers. If you have sold or transferred all your shares in Paladin Limited, you should at once hand this Offering Circular to the purchaser(s) or transferee(s) or to the bank, or 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). No application will be made for the listing of the Convertible Notes on The Stock Exchange of Hong Kong Limited or any other stock exchange. Accordingly, the Convertible Notes will not be accepted as eligible securities for deposit, clearance or settlement in CCASS. Subject to the granting of the listing of, and permission to deal in, the Conversion Shares and new Shares in the Share Alternative on the Stock Exchange and compliance with the stock admission requirements of HKSCC, the Conversion Shares and new Shares in the Share Alternative will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Conversion Shares and new Shares in the Share Alternative on the Stock Exchange or such other date as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the general rules of CCASS and CCASS operational procedures in effect from time to time. You should consult your stockbroker or licensed securities dealer, registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser for details of the settlement arrangements and how such arrangements may affect your rights and interests. SharesYou should’’ in theread‘‘Letterthe wholefromofthethisBoardOffering’’ of thisCircularOfferingincludingCircular.the discussions of certain risks and other factors as set out in the paragraph headed ‘‘Warning of the Risks of Dealing in the Hong Kong Exchanges and Clearing Limited, the Stock Exchange and Hong Kong Securities Clearing Limited take no responsibility for the contents of this Offering Circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Offering Circular. Distribution of this Offering Circular into jurisdictions other than Hong Kong may be restricted by law. Persons into whose possession this Offering Circular should inform themselves of and observe any such restrictions. ShareholdersresidentsExcluded outsideShareholderswithHongregistered’’Kongunderaddressesarethe referredsectionin anyheadedto thejurisdictionimportant‘‘Letter fromoutsideinformationtheHongBoardKongset’’ ofoutthisorinholdingOfferingthe sectiontheCircular.SharesheadedThison‘‘behalfNoticeOfferingof’’ andpersonsCircularthe paragraphwithdoessuchnot addressesheadedconstitute‘‘Rightsandor formbeneficialofpartthe ofOverseasownersany offerofShareholderstheor invitationShares whoandto selltheare or issue, or any solicitation of any offer to acquire, the Convertible Notes and new Shares in the Share Alternative or to take up any entitlements to the Convertible Notes and new Shares in the Share Alternative, or any solicitation or act in furtherance to a trade in any jurisdiction in which such an offer or solicitation or act is unlawful. None of the Convertible Notes and new Shares in the Share Alternative and this Offering Circular have been or will be registered under the U.S. Securities Act or the securities laws of any State or other jurisdiction of the United States and they may not be offered, sold, allotted, taken up, exercised, resold, renounced, pledged, transferred or delivered, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with anyto youapplicablein reliancesecuritieson yourlawsrepresentationof any StatetoortheotherCompanyjurisdictionthat youof theareUnitednot a ‘‘States.U.S. PersonThere’’will(‘‘U.S.be noPersonpublic’’)offeras definedof anyinsecuritiesRegulationin theS. ByUnitedacceptingStates.andThisaccessingOfferingthisCircularOfferingis beingCircular,sent you shall be deemed to have represented that you consent to delivery of this Offering Circular and any amendments or supplements thereto and you shall be deemed to have confirmed your representationowner (dated asthatof youa specificare, ordatein theon eventor sincethattheyoucloseare ofactingsuchonbeneficialbehalf ofownerone or’smoremost beneficialrecent fiscalownersyear)oftothetheShares,effect thatyousuchhavebeneficialreceived aownerwrittenis,certificationnot a U.S. Person.from each such beneficial Distribution of this Offering Circular into jurisdictions other than Hong Kong may be restricted by law. Persons (including, without limitation, Shareholders and beneficial owners of the Shares, agents custodians, nominees and trustees) into whose possession this Offering Circular comes should inform themselves of and observe any such restrictions. This Offering Circular is not for release, publication or distribution, directly or indirectly, in or into the United States. This Offering Circular will not be registered or filed under any applicable securities or equivalent legislation of any jurisdictions.

This Offering Circular does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments or to take up any entitlements to the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments in any jurisdiction in which such an offer or solicitation is unlawful.

PALADIN LIMITED

(Incorporated in Bermuda with limited liability) (Stock code: 495)

OPEN OFFER

ON THE BASIS OF ONE (1) CONVERTIBLE NOTE WITH SHARE ALTERNATIVE

FOR EVERY FIVE (5) EXISTING SHARES HELD ON THE RECORD DATE

Underwriter to the Open Offer Gold Seal Holdings Limited

Capitalised terms used on this cover shall have the same meanings as those defined in this Offering Circular.

The latest time for application, and payment for the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments is 4:00and inp.m.excesson Tuesday,of assured12allotmentsDecember,are 2017.set outThein theprocedures‘‘Letter fromfor applicationthe Board’’andof paymentthis Offeringor transferCircular.of the Convertible Notes or new Shares in the Share Alternative in assured allotments

ThethereunderUnderwritingon the occurrenceAgreement ofin certainrespect events.of the OpenTheseOffereventscontainsare set provisionsout in the sectionentitlingheadedthe Underwriter‘‘Terminationby noticeof theinUnderwritingwriting to theAgreementCompany’’ toof terminatethis Offeringthe obligationsCircular. of the Underwriter Shareholders should note that the existing Shares have been dealt in on ex-entitlement basis from Monday, 13 November, 2017. Any Shareholder or other person dealing in such Shares up to the date on which all conditions to which the Open Offer are fulfilled will bear the risk that the Open Offer does not become unconditional and may not proceed.

If‘‘Conditionsprior to theofLatestthe OpenTimeOfferfor ’’Termination,contained inthethisUnderwriterOffering Circularterminatesare thenot Underwritingfulfilled, the OpenAgreementOffer orwillif notany proceed.of the otherIf theconditionsUnderwriterof theterminatesOpen Offerthe asUnderwritingset out in theAgreement,paragraphstheheadedOpen Offer will not proceed.

Any Shareholder or other person contemplating selling or purchasing Shares who is in any doubt about his, or her position is recommended to consult his, or her own professional adviser. The Open Offer is conditional upon, inter alia, the fulfilment and, or waiver of the conditions set out under the paragraphs headed ‘‘Conditions of the Open Offer’’, ‘‘Conditions precedent of the Underwriting Agreement’’ and ‘‘Termination of the Underwriting Agreement’’ in this Offering Circular. If the Underwriter terminates the Underwriting Agreement, or if the conditions of the Underwriting Agreement are not fulfilled (or waived by the Underwriter) in accordance with the terms thereof, the Open Offer will not proceed. Shareholders should therefore exercise caution when dealing in the Shares, and if they are in any doubt about their position, they are recommended to consult their professional advisers.

28 November, 2017

NOTICE

The Open Offer is conditional upon the Underwriting Agreement becoming unconditional and not being terminated. Furthermore, if the conditions of the Open Offer are not fulfilled, the Open Offer may not proceed, in which case, a further announcement will be made by the Company at the relevant time. It should also be noted that the Shares have been dealt with on an ex-entitlement basis from Monday, 13 November, 2017. Such dealings will take place when the conditions of the Open Offer remain unfulfilled and the Underwriting Agreement is subject to termination. Any person dealing in the securities of the Company up to the date on which each such condition is fulfilled or waived and up to the latest time for termination (as defined herein) will accordingly bear the risk that the Open Offer may not become unconditional and may not proceed. Any person dealing or contemplating any dealing in the securities of the Company during this period who is in any doubt about his or her position is recommended to consult his or her own professional adviser.

EXCEPT AS OTHERWISE SET OUT HEREIN, THE OPEN OFFER IS NOT BEING MADE TO BENEFICIAL PERSONS IN THE SPECIFIED TERRITORIES. This Offering Circular does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the Convertible Notes and new Shares in the Share Alternative in any jurisdiction in which such an offer or solicitation is unlawful. None of the Convertible Notes, new Shares in the Share Alternative and this Offering Circular will be registered under the securities laws of any of the Specified Territories and none of the Convertible Notes, new Shares in the Share Alternative and this Offering Circular will qualify for distribution under any of the relevant securities laws of any of the Specified Territories. Accordingly, the Offering Documents, the Convertible Notes and new Shares in the Share Alternative may not be offered, sold, pledged, taken up, resold, renounced, transferred or delivered, directly or indirectly, into or within any of the Specified Territories absent registration or qualification under the respective securities laws of such Specified Territories, or exemption from the registration or qualification requirement under applicable rules of such Specified Territories.

Shareholders with registered addresses in any of the Specified Territories and Shareholders who are residents of the Specified Territories are referred to this section and the section headed ‘‘Letter from the Board – The Open Offer – Rights of the Overseas Shareholders and the Excluded Shareholders’’ of this Offering Circular.

Each person applying the Convertible Notes and new Shares in the Share Alternative under the Open Offer will be required to confirm, or be deemed by his or her or its application for the Convertible Notes and new Shares in the Share Alternative to confirm, that he or she or it is aware of the restrictions on offers and sales of Convertible Notes and new Shares in the Share Alternative as described in this Offering Circular.

– i –

NOTICE

NOTICE TO INVESTORS IN AUSTRALIA

This Offering Circular is not an Australian offering circular or other disclosure document and has not been registered, filed with or approved by any Australian regulatory authority under or in accordance with the Corporations Act 2001 (Cth) (or any other Australian law). This Offering Circular may not contain all the information that an offering circular or any other disclosure document prepared under Australian law is required to contain. The Convertible Notes and new Shares in the Share Alternative are not being offered in Australia or to Excluded Shareholders in Australia and this Offering Circular is being sent to them for information only. Application Forms are not being sent to such Shareholders.

NOTICE TO INVESTORS IN NEW ZEALAND

This Offering Circular is not New Zealand product disclosure statements and has not been registered, filed with or approved by any New Zealand regulatory authority under or in accordance with the Financial Markets Conduct Act 2013 (or any other relevant New Zealand law). This Offering Circular does contain all the information that a product disclosure prepared under New Zealand law is required to contain. The Convertible Notes and new Shares in the Share Alternative are not being offered in New Zealand or to Excluded Shareholders in New Zealand, and this Offering Circular is being sent to them for information only. Application Forms are not being sent to the Shareholders in New Zealand.

FORWARD-LOOKING STATEMENTS

Statements in this Offering Circular other than statements of historical fact are or may be forward looking statements. In some cases, forward-looking statements may be identified by the use of words such as ‘‘might’’, ‘‘may’’, ‘‘could’’, ‘‘would’’, ‘‘will’’, ‘‘expect’’, ‘‘intend’’, ‘‘estimate’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘plan’’, ‘‘seek’’, ‘‘continue’’, ‘‘illustration’’, ‘‘projection’’ or similar expressions and the negative thereof. Forward-looking statements in this Offering Circular include, without limitation, statements in respect of the Group’s business strategies, product offerings, market position, competition, financial prospects, performance, liquidity and capital resources, as well as statements regarding trends in the relevant industries and markets in which the Group operates, technological advances, financial and economic developments, legal and regulatory changes and their interpretation and enforcement.

– ii –

NOTICE

The forward-looking statements in this Offering Circular are based on the present expectations of the management of the Group about future events. Management’s present expectations reflect numerous assumptions regarding the Group’s strategy, operations, industry, developments in the credit and other financial markets and trading environment. By their nature, they are subject to known and unknown risks and uncertainties, which could cause actual results and future events to differ materially from those implied or expressed by forward-looking statements. Should one or more of these risks or uncertainties materialise, or should any assumptions underlying forward-looking statements prove to be incorrect, the Group’s actual results could differ materially from those expressed or implied by forward-looking statements. Additional risks not known to the Group or that the Group does not currently consider material could also cause the events and trends discussed in this Offering Circular not to occur, and the estimates, illustrations and projections of financial performance not to be realised.

Prospective investors are cautioned that forward-looking statements speak only as at the date of publication of this Offering Circular. Except as required by applicable law, the Group does no undertake, and expressly disclaims, any duty to revise any forward-looking statement in this Offering Circular, be it as a result of new information, future events or otherwise.

– iii –

CONTENTS

Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	i
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	iv
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Termination of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix I – Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II – Unaudited Pro Forma Financial Information of the Group . . . . . . . . . .	II-1
Appendix III – Principal terms of the Convertible Notes . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1

– iv –

EXPECTED TIMETABLE

The expected timetable for the Open Offer is set out below:

Event		2017
Latest time for application, and payment, for the Convertible Notes or
new Shares in the Share Alternative in assured allotments and
in excess of assured allotments . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . 4:00 p.m.
		on Tuesday,
		12 December
Latest time for Underwriting Agreement to become unconditional . . . . . . .		. . . . . . . 4:00 p.m.
		on Thursday,
		14 December
Announcement of results of the Open Offer . . . . . . . . . . . . . . . . . . . .		. . . . . . . Tuesday,
		19 December
Certificates for the Convertible Notes and new Shares in the Share
Alternative to be despatched on or before . . . . . . . . . . . . . . . . . . . .		. . . . . Wednesday,
		20 December
Refund cheques in respect of wholly or partially unsuccessful
applications for excess Convertible Notes and,
or new Shares in the Share Alternative to be posted on or before	. . . . .	. . . . . Wednesday,
		20 December
Trading in new Shares in the Share Alternative . . . . . . . . . . . . . . . . . .		. . . . . . . 9:00 a.m.
		on Thursday,
		21 December

All times and dates in this Offering Circular refer to Hong Kong local times and dates. Shareholders should note that the dates or deadlines specified in the expected timetable of the Open Offer as set out above, and in other parts of this Offering Circular, are indicative only and may be varied by agreement between the Company and the Underwriter. In the event that any special circumstances arise, the Board may extend, or make adjustments to, the expected timetable if it considers appropriate. Any such extension or adjustment to the expected timetable will be notified to the Shareholders and the Stock Exchange as and when appropriate.

– 1 –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR APPLICATION AND PAYMENT

The latest time for application, and payment for the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments will not take place if there is a tropical cyclone warning signal no. 8 or above, or a ‘‘black’’ rainstorm warning:

• i. in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the Latest Application Date. Instead the latest time for application, and payment for the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments will be extended to 5:00 p.m. on the same Business Day;

• ii. in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the Latest Application Date. Instead the latest time for application, and payment for the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m..

If the latest time for application, and payment for the Convertible Notes or new Shares in the Share Alternative in assured allotments and in excess of assured allotments does not take place on 12 December, 2017, the dates mentioned in this section may be affected. The Company will notify Shareholders by way of announcements on any change to the expected timetable as soon as practicable.

– 2 –

DEFINITIONS

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

• ‘‘AAF(s)’’

the form(s) of application for use by the Qualifying Shareholders to apply for Convertible Notes or new Shares in the Share Alternative in a Qualifying Shareholder’s assured allotment

• ‘‘acting in concert’’

the meaning ascribed thereto in the Takeovers Code

• ‘‘Announcement’’

the announcement of the Company dated 31 October, 2017 in relation to the Open Offer

• ‘‘Application Form(s)’’

• the AAF and the EAF

• ‘‘associate(s)’’

the meaning ascribed thereto under the Listing Rules

• ‘‘Board’’

• the board of Directors

• ‘‘Business Day’’

a day, other than a Saturday or Sunday or public holiday, on which banks are open for business in Hong Kong

• ‘‘Capital Distribution’’

any dividend or distribution, however described, whether of cash or assets in specie or other property by the Company for any financial period, to the Shareholders

• ‘‘Cash Settlement Amount’’

the product of (i) the number of Shares otherwise deliverable upon exercise of the Conversion Rights in respect of the Convertible Notes for which the Company has elected the Cash Settlement Option; and (ii) the arithmetic average of the volume weighted average price of the Shares for each Business Day during the five Business Days latest preceding the date of the relevant notice of conversion by the Noteholder

• ‘‘Cash Settlement Option’’

an option of the Company to pay to the relevant Noteholder an amount of cash in HK$ equal to the Cash Settlement Amount in order to satisfy the Conversion Right of the Noteholder in respect of a Convertible Note

• ‘‘CCASS’’

the Central Clearing and Settlement System established and operated by HKSCC

– 3 –

DEFINITIONS

• ‘‘Company’’

• Paladin Limited (HK Stock Code: 0495), an exempted company incorporated in Bermuda with limited liability, whose Shares are listed on the Main Board of the Stock Exchange

• ‘‘Completion’’ completion of the Open Offer

• ‘‘connected person(s)’’

• the meaning ascribed thereto under the Listing Rules

• ‘‘Convertible Notes’’

• the unsecured zero coupon participating convertible notes due 2024 to be issued and allotted under the Open Offer ranking pari passu with the Existing Convertible Notes

• ‘‘Conversion Price’’

• HK$0.25 per Conversion Share, subject to adjustment provisions

• ‘‘Conversion Right(s)’’

• the right(s) of the holders of the Convertible Notes to convert the Convertible Notes held by them into new Shares

• ‘‘Conversion Share(s)’’

• new Share(s) that may be issued on exercise of Conversion Rights to be attached to the Convertible Notes

• ‘‘controlling shareholder(s)’’

• the meaning ascribed thereto under the Listing Rules

• ‘‘Current Market Price’’

• in respect of the Shares at a particular time on a particular date, the average of the closing prices quoted by the Stock Exchange for the twenty consecutive Trading Days ending on the Trading Day immediately preceding such date

• ‘‘Director(s)’’

• director(s) of the Company

• ‘‘EAF(s)’’

• the form(s) of application for use by the Qualifying Shareholders who wish to apply for the Convertible Notes or new Shares in the Share Alternative in excess of assured allotments

– 4 –

DEFINITIONS

• ‘‘Early Redemption Amount’’

• ‘‘Excluded Shareholder(s)’’

• ‘‘Existing Convertible Notes’’

• ‘‘Fair Market Value’’

the product of (i) the number of Shares deliverable upon exercise of the Conversion Rights in respect of those Convertible Notes then outstanding; and (ii) the arithmetic average of the volume weighted average market price of the Shares for each Business Day during the sixty Business Days ending on the date of the notice from the Company electing to redeem all the Convertible Notes on the redemption date specified therein

the Shareholders whose names appeared on the register of members of the Company at the close of business on the Record Date and whose addresses, as shown on such register, are in one of the Specified Territories, whom the Directors, after making relevant enquiries as required under Rule 13.36(2)(a) of the Listing Rules, consider it necessary or expedient to exclude from the Open Offer on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place

the unsecured zero coupon participating convertible notes due 2024 issued by the Company on 24 November, 2014, as amended or supplemented by a further instrument dated 23 April, 2015, with an outstanding principal amount of HK$12,505,001.50 as at the Latest Practicable Date

with respect to any asset, security, option, warrant or other right on any date, the fair market value of that asset, security, option, warrant or other right as determined by an independent investment bank; provided that (i) the fair market value of a cash dividend paid or to be paid per Share shall be the amount of such cash dividend per Share determined as at the date of announcement of such dividend; and (ii) where options, warrants or other rights are publicly traded in a market of adequate liquidity (as determined by such independent investment bank) the fair market value of such options, warrants or other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights during the period of five Trading Days on the relevant market commencing on the first such Trading Day such options, warrants or other rights are publicly traded

– 5 –

DEFINITIONS

• ‘‘Group’’

• ‘‘HK$’’

• ‘‘HKSCC’’

• ‘‘Hong Kong’’

• ‘‘Independent Third Party(ies)’’

• ‘‘Irrevocable Undertakings’’

• ‘‘Latest Application Date’’

• ‘‘Last Trading Day’’

• ‘‘Latest Practicable Date’’

• ‘‘Latest Time for Application’’

• ‘‘Latest Time for Termination’’

the Company and its subsidiaries

Hong Kong Dollar(s), the lawful currency of Hong Kong

Hong Kong Securities Clearing Company Limited

the Hong Kong Special Administrative Region of the PRC

third party(ies) independent of and not connected with the Company or any of its connected persons

the conditional irrevocable undertaking dated 31 October, 2017 given by each of Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited in favour of the Company and Underwriter pursuant to which they have conditionally undertaken, amongst other things, to apply for their entire assured allotments of Convertible Notes

Tuesday, 12 December, 2017, being the latest day for application and payment for the Convertible Notes or the new Shares in the Share Alternative in assured allotments and in excess of assured allotments, or such other date as may be agreed between the Company and the Underwriter, being the latest date for application and payment for the Convertible Notes or the new Shares in the Share Alternative in assured allotments and in excess of assured allotments

31 October, 2017, being the last trading day of the Shares on the Stock Exchange immediately prior to the publication of the Announcement

24 November, 2017, being the latest practicable date prior to the printing of this Offering Circular for the purpose of ascertaining information contained herein

• 4:00 p.m. on the Latest Application Date

• 4:00 p.m. on 14 December, 2017 or such later time or date as may be agreed between the Underwriter and the Company in writing, being the latest time to terminate the Underwriting Agreement

– 6 –

DEFINITIONS

• ‘‘Listing Committee’’

• ‘‘Listing Rules’’

• ‘‘Macau’’

• ‘‘Maturity Date’’

• ‘‘Noteholder’’

• ‘‘Offering Circular’’

• ‘‘Offering Documents’’

• ‘‘Open Offer’’

• ‘‘Options’’

• ‘‘Optionholders’’

• ‘‘Oung family concert group’’

the listing committee of the Stock Exchange

the Rules Governing the Listing of Securities on the Stock Exchange

the Macau Special Administrative Region of the PRC

• 23 November, 2024 being the tenth anniversary of the date of issue of the Existing Convertible Notes or if that is not a Business Day, the first Business Day thereafter

• the registered holder of an Existing Convertible Note and, or a Convertible Note

this offering circular containing the Open Offer

• this Offering Circular and the Application Forms

the open offer on the basis of assured allotments of one Convertible Note (or one new Share in the Share Alternative) for every five Shares held on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and this Offering Circular

options issued under the Share Option Scheme

holders of outstanding Options

Mr. Oung Da Ming, Andrew and parties acting in concert with him, namely the estate of his late brother Mr. Oung Da Ming, James, his sisters Ms. Lilian Oung and Ms. Margaret Uon, the estate of the late Madam Oung Chin Liang Fung (mother of Mr. Oung Da Ming, Andrew), Dr. Oung Shih Hua, James (nephew of Mr. Oung Da Ming, Andrew), Mr. Oung Shih How (son of Mr. Oung Da Ming, Andrew), Ms. Hsu Ong Hsiao Ling (sister of Mr. Oung Da Ming, Andrew), Ms. King Camille V. (the niece of Mr. Oung Da Ming, Andrew), Mr. Zee Alfred (the nephew of Mr. Oung Da Ming, Andrew) and companies controlled by them, namely Cityguard Holdings Limited, Gold Seal Holdings Limited and Next Level Corporate Limited

– 7 –

DEFINITIONS

• ‘‘Overseas Shareholders’’

• Shareholders whose addresses, as shown on the register of members of the Company, were outside Hong Kong as at the close of business on the Record Date

• ‘‘PRC’’ the People’s Republic of China, for the purposes of this Offering Circular, excluding Hong Kong, Macau and Taiwan

• ‘‘Qualifying Shareholder(s)’’ Shareholder(s), other than the Excluded Shareholders, whose name(s) appear(s) on the register of members of the Company as at the close of business on the Record Date

• ‘‘Record Date’’ 21 November, 2017, being the date on which Shareholders were required to be registered on the registrar of Shareholders to be entitled to apply in the Open Offer

• ‘‘Redemption Amount’’ in respect of a Convertible Note, the product of (i) the number of Shares deliverable upon exercise of the Conversion Rights in respect of that Convertible Note and; (ii) HK$0.25

• ‘‘Registrar’’ Computershare Hong Kong Investors Services Limited, being the Hong Kong branch share registrar and transfer office of the Company located at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong

• ‘‘Regulation S’’ Regulation S under the U.S. Securities Act

• ‘‘SFC’’

• the Securities and Futures Commission of Hong Kong

• ‘‘SFO’’

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• ‘‘Share(s)’’

• the share(s) of HK$0.01 nominal value in the capital of the Company

• ‘‘Share Alternative’’

• the share alternative to the Convertible Notes, on the basis of assured allotments of one Share for every five existing Shares held on Record Date

‘‘Share Option Scheme’’ the share option scheme of the Company adopted on 8 December, 2015 and refreshed on 12 December, 2016

– 8 –

DEFINITIONS

• ‘‘Shareholder(s)’’

• ‘‘Specified Territories’’

• ‘‘Stock Exchange’’

• ‘‘Subscription Price’’

• ‘‘subsidiary(ies)’’

• ‘‘Takeovers Code’’

• ‘‘Trading Day(s)’’

• ‘‘Undertaking Shareholders’’

• ‘‘Underwriter’’

• ‘‘Underwriting Agreement’’

• ‘‘U.S.’’ or ‘‘United States’’

• ‘‘U.S. Securities Act’’

• ‘‘%’’

holder(s) of the Share(s)

• Australia, Canada, Malaysia, New Zealand, Papua New Guinea, Singapore, Thailand and the United States

The Stock Exchange of Hong Kong Limited

• the subscription price of HK$0.25 for each unit of the Convertible Note, being the face value of the Convertible Note, or for each new Share in the Share Alternative

• the meaning ascribed to it under the Listing Rules

• the Hong Kong Code on Takeovers and Mergers

• a day on which the Stock Exchange is open for dealing business

Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited, all of whom have given the Irrevocable Undertakings to the Company as set out in this Offering Circular; and Gold Seal Holdings Limited which has given an undertaking pursuant to the Underwriting Agreement as set out in this Offering Circular

• Gold Seal Holdings Limited, a company incorporated in the British Virgin Islands with limited liability and whollyowned by Mr. Oung Da Ming, Andrew, a connected person of the Company

• the agreement dated 31 October, 2017 entered into between the Company and Gold Seal Holdings Limited relating to the underwriting of the Open Offer

• the United States of America, its territories and possessions, any state of the United States, and the District of Columbia

• the U.S. Securities Act of 1933, as amended

per cent

– 9 –

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriter may terminate the arrangements set out in the Underwriting Agreement by notice in writing to the Company at any time prior to 4:00 p.m. on the second Business Day following the Latest Application Date for the Convertible Notes or new Shares in the Share Alternative if there occurs, amongst other things:

• (i) any material change in existing law or regulation or other occurrence of any nature of any local, national or international event or any change of a political, military, financial, economic, currency or other nature affecting local securities market or the occurrence of any combination of circumstances which may, in the opinion of the underwriter, adversely affect the business or the financial or trading position or prospects of the Group or adversely prejudice the success of the Open Offer or the taking up of the Convertible Notes, making it inexpedient or inadvisable for the Company or the Underwriter to proceed with the Open Offer; or

• (ii) any change in market conditions in Hong Kong (including without limitation suspension or material restriction or trading in securities) which affect the success of the Open Offer or otherwise in the opinion of the Underwriter makes it inexpedient or inadvisable or inappropriate for the Company or the Underwriter to proceed with the Open Offer; or

• (iii) any change in the circumstances of the Company or any other members of the Group which may, in the opinion of the Underwriter, adversely affect the prospects of the Company.

Upon giving the notice of termination, all obligations of the Underwriter under the Underwriting Agreement shall cease and terminate and neither party shall have any claim against the other party in respect of any matter or thing arising out of or in connection with the underwriting agreement except for, inter alia, the payment by the Company of any fees incidental to the Open Offer.

If the Underwriting Agreement does not become unconditional or is terminated, the Open Offer will not proceed.

– 10 –

LETTER FROM THE BOARD

PALADIN LIMITED

(Incorporated in Bermuda with limited liability) (Stock code: 495)

Executive Director Dr. Oung Shih Hua, James (Chairman) Non-executive Directors Mr. Chan Chi Ho Mr. Yuen Chi Wah

Independent non-executive Directors Dr. Au Chik Lam Alexander Mr. Liu Man Kin Dickson Mr. Luo Rongxuan

Registered office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Principal place of business: Suite 2304, 23rd Floor, Sun Life Tower The Gateway Harbour City Tsim Sha Tsui Kowloon Hong Kong

28 November, 2017

To the Qualifying Shareholders,

and for information only, the Excluded Shareholders

Dear Sir or Madam,

OPEN OFFER

ON THE BASIS OF ONE (1) CONVERTIBLE NOTE WITH SHARE ALTERNATIVE FOR EVERY FIVE (5) EXISTING SHARES HELD ON THE RECORD DATE

INTRODUCTION

Reference is made to the Announcement. On 31 October, 2017, the Company announced that it proposed to raise approximately HK$67.9 million, before expenses, by way of an Open Offer to Shareholders of Convertible Notes in denominations of HK$0.25 principal amount each, to be issued at face value, with new Shares in the Share Alternative at a Subscription Price of HK$0.25 per Share. Each Convertible Note may be converted into one Share at the initial Conversion Price of HK$0.25 per Conversion Share. The Convertible Notes and new Shares in the Share Alternative are now being offered to the Qualifying Shareholders on the basis of assured allotments of one Convertible Note or one new Share in the Share Alternative for every five existing Shares held on the Record Date, being 21 November, 2017.

The Convertible Notes will have the same terms as, and be fungible with, the Existing Convertible Notes.

– 11 –

LETTER FROM THE BOARD

Qualifying Shareholders may apply for any number of Convertible Notes or of new Shares in the Share Alternative, or a combination of both, but are assured of allocations only up to the numbers in their assured allotments. Qualifying Shareholders will have the right to apply for Convertible Notes or new Shares in the Share Alternative in excess of their assured allotments, or a combination of both, but are not assured of receiving any Convertible Notes or new Shares in the Share Alternative in excess of those in their assured allotments. Allocations of Convertible Notes or of new Shares in the Share Alternative to those who apply for more than their assured allotments will be made on an equitable basis. The Open Offer is fully underwritten by the Underwriter pursuant to the Underwriting Agreement.

The Open Offer is not subject to the shareholders’ approval requirements under Rule 7.24(5) of the Listing Rules.

The purpose of this Offering Circular is to provide you with further details about the Open Offer including (i) the procedures for application and payment for the Convertible Notes or new Shares in the Share Alternative; and (ii) certain financial information of the Group; and (iii) general information of the Group.

THE OPEN OFFER

The principal terms of the Open Offer are set out below:

Issue statistics

Basis of the Open Offer : Assured allotments of one (1) Convertible Note or one (1) new Share in the Share Alternative for every five (5) Shares held on the Record Date

Number of Shares in issue as : 1,358,570,873 Shares at the Latest Practicable Date and the Record Date

Principal amount of : HK$67,928,543.50

Convertible Notes to be

issued (assuming no

election for the Share

Alternative)

– 12 –

LETTER FROM THE BOARD

Conversion Price

• : 100% of the principal amount of the Convertible Notes

The initial Conversion Price of HK$0.25 represents:

• (i) the closing price of HK$0.25 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (ii) a discount of approximately 12.28% to the closing price of HK$0.285 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 13.79% to the average closing price of HK$0.290 per Share as quoted on the Stock Exchange for the latest ten trading days up to and including the Last Trading Day; and

• (iv) a discount of approximately 10.39% to the theoretical ex-entitlement to Open Offer price of approximately HK$0.279 per Share based on the closing price of HK$0.285 per Share as quoted on the Stock Exchange on the Last Trading Day.

Relation to Existing : The Convertible Notes will have the same terms Convertible Notes as, and be fungible with, the Existing Convertible Notes Subscription Price for new : HK$0.25 per Share Shares in the Share Alternative

– 13 –

LETTER FROM THE BOARD

Maximum number of new : 271,714,174 (with an aggregate nominal value of Shares to be issued in the HK$2,717,141.74) Share Alternative (assuming 100% of Qualifying Shareholders elect for the Share Alternative)

Underwriter : Gold Seal Holdings Limited

Principal amount of : Convertible Notes irrevocably undertaken to be applied for by Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited pursuant to the Irrevocable Undertakings, and the principal amount of Convertible Notes undertaken to be applied by Gold Seal Holdings Limited pursuant to the Underwriting Agreement

• Each of Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited has irrevocably undertaken in favour of the Company and the Underwriter to apply for the Convertible Notes (with an aggregate principal amount of HK$11,905,208.25 convertible into 47,620,833 Conversion Shares) in their assured allotments in the Open Offer; and Gold Seal Holdings Limited has undertaken in favour of the Company to apply for the Convertible Notes (with a principal amount of HK$7,969,410.50 convertible into 31,877,642 Conversion Shares) in its assured allotment in the Open Offer

• Principal amount of : The Convertible Notes with a principal amount Convertible Notes to be of HK$48,053,924.75 convertible into underwritten by the 192,215,699 Conversion Shares in full, being the Underwriter total principal amount of Convertible Notes of HK$67,928,543.50 less the aggregate principal a m o u n t o f C o n v e r t i b l e N o t e s o f HK$19,874,618.75 agreed to be applied for by (i) Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited under the Irrevocable Undertakings; and (ii) the Underwriter pursuant to the Underwriting Agreement. Accordingly, the Open Offer is fully underwritten

• Net proceeds to be raised : approximately HK$63.2 million in aggregate, upon Completion equivalent to approximately HK$0.23 per Convertible Note, or new Share in the Share Alternative

– 14 –

LETTER FROM THE BOARD

Outstanding convertible securities of the Company

As at the Latest Practicable Date, the Company had outstanding Existing Convertible Notes with a total principal amount of HK$12,505,001.50 convertible into 50,020,006 Shares and Options exercisable into a further 261,900,000 Shares. Save as disclosed above, the Company has no other outstanding warrants, options or convertible securities or other similar rights which are convertible or exchangeable into Shares.

Basis of assured allotments

The basis of the assured allotments is one (1) Convertible Note, with one (1) new Share in the Share Alternative, for every five (5) existing Shares held by the Qualifying Shareholders as at the close of business on the Record Date.

Application for all or any part of a Qualifying Shareholder’s assured allotments should be made by completing the AAF and lodging the same with a remittance for the Convertible Notes, or new Shares in the Share Alterative being applied for with the Registrar on or before the Latest Application Date.

Conversion Shares

A maximum principal amount of Convertible Notes of HK$67,928,543.50 may be issued pursuant to the Open Offer. The 271,714,174 new Shares that may be allotted and issued upon full exercise of the Conversion Rights under the Convertible Notes at the initial Conversion Price represents 20.00% of the Company’s issued share capital as at the Latest Practicable Date and approximately 16.67% of the enlarged issued share capital of Company immediately upon Completion.

– 15 –

LETTER FROM THE BOARD

Subscription Price

The Subscription Price of HK$0.25 per Share is payable in full by a Qualifying Shareholder upon application under the Open Offer.

The Subscription Price represents:

• (i) the closing price of HK$0.25 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (ii) a discount of approximately 12.28% to the closing price of HK$0.285 per Share, based on the closing price of HK$0.285 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 12.59% to the 5-day average closing price of HK$0.286 per Share, based on the average closing price of HK$0.286 per Share as quoted on the Stock Exchange over the latest five consecutive trading days up to and including the Last Trading Day;

• (iv) a discount of approximately 13.79% to the 10-day average closing price of HK$0.290 per Share, based on the average closing price of HK$0.290 per Share as quoted on the Stock Exchange over the latest ten consecutive trading days up to and including the Last Trading Day;

• (v) a discount of approximately 10.39% to the theoretical ex-entitlement price of approximately HK$0.279 per Share after the Open Offer, based on the closing price of the Share of HK$0.285 per Share quoted on the Stock Exchange on the Last Trading Day; and

• (vi) a discount of approximately 66.67% over the audited net asset value attributable to owners of the Company per Share of approximately HK$0.75 as at 30 June, 2017 (based on the number of Shares in issue as at the Latest Practicable Date).

– 16 –

LETTER FROM THE BOARD

The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to the market price of the Shares prior to and including the Last Trading Day, the capital needs of the Group as detailed in the sections headed ‘‘Reasons for and the benefits of the Open Offer and the proposed use of proceeds’’ below, the financial position of the Group and the prevailing market conditions. Each Qualifying Shareholder is entitled to apply for Convertible Notes, with new Shares in the Share Alternative at the same Subscription Price, with an assured allotment in proportion to his, her or its shareholding held on the Record Date. The terms of the Open Offer, including the Subscription Price which has been set as a discount to the recent closing prices of the Shares, have an objective of encouraging existing Shareholders to apply in full for their assured allotments so as to share in the potential growth of the Company and are considered by the Directors to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole. After deducting all relevant expenses relating to the Open Offer, the net price per Convertible Note, or new Share in the Share Alternative will be approximately HK$0.23.

The Open Offer offers the Qualifying Shareholders the opportunity to maintain their respective pro rata shareholdings in the Company and enables them to participate in the future growth of the Group.

Qualifying Shareholders

The Open Offer is only available to the Qualifying Shareholders. The Company is sending (i) the Offering Documents to the Qualifying Shareholders only; and, (ii) this Offering Circular, for information only, to the Excluded Shareholders but is not sending any Application Form(s) to the Excluded Shareholders.

Those Qualifying Shareholders who do not apply for their entire assured allotments of Convertible Notes, or new Shares in the Share Alternative to which they are entitled should note that their shareholdings in the Company may be diluted upon Completion.

The entitlements of the Qualifying Shareholders to apply for Convertible Notes or new Shares in the Share Alternative in their assured allotments are not transferable or renounceable. There will be no trading in those entitlements on the Stock Exchange.

Rights of the Overseas Shareholders and the Excluded Shareholders

The Offering Documents are not and will not be registered or filed under the applicable securities legislation of any jurisdictions other than Hong Kong. Overseas Shareholders may not be eligible to take part in the Open Offer as explained below.

– 17 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, according to the register of members of the Company, the Company had 4,820 Overseas Shareholders with registered addresses in 16 jurisdictions, who collectively held 570,868,091 Shares in aggregate (representing approximately 42.0% of the total number of Shares in issue). The table below sets out the number of Overseas Shareholders in each of the 16 jurisdictions and their aggregate shareholding as at the Record Date:

	Number of	Number of
Jurisdiction(s) of the registered address(es)	Overseas	Shares held
of the Overseas Shareholder(s)	Shareholder(s)	in aggregate
Included in the Open Offer
The British Virgin Islands	1	508,848,531
Cook Islands	2	567
Czech Republic	1	1,782
Fiji	5	12,307
India	1	2,534
Macau	4	21,973
Netherlands	2	2,540
The United Kingdom of Great Britain and
Northern Ireland	22	49,988
Sub-total (Overseas Shareholders
included in the Open Offer)	38	508,940,222
Excluded from the Open Offer
Australia	128	24,956,225
Canada	3	3,834
Malaysia	3	57,500
New Zealand	4,631	36,892,566
Papua New Guinea	2	1,950
Singapore	3	4,172
Thailand	1	1,094
The United States	11	10,528
Sub-total (Overseas Shareholders
excluded from the Open Offer)	4,782	61,927,869
Total (all Overseas Shareholders)	4,820	570,868,091

– 18 –

LETTER FROM THE BOARD

In compliance with Rule 13.36(2)(a) of the Listing Rules, the Board has made enquiries regarding the feasibility of extending the Open Offer to the Overseas Shareholders. Based on relevant local legal advice, the Board is of the view that relevant local legal restrictions and requirements of the relevant regulatory body or stock exchange do not make it necessary or expedient to exclude Overseas Shareholders with registered addresses in the British Virgin Islands, the Cook Islands, the Czech Republic, Fiji, India, Macau, the Netherlands or the United Kingdom of Great Britain and Northern Ireland from the Open Offer, and the Open Offer will be offered to Overseas Shareholders in those jurisdictions.

Based on relevant local legal advice, the Board is of the view that relevant local legal restrictions and requirements of the relevant regulatory body or stock exchange make it necessary or expedient to exclude Overseas Shareholders with registered addresses in Australia, Canada, Malaysia, New Zealand, Papua New Guinea, Singapore, Thailand, and the United States from the Open Offer, and the Open Offer is not being offered to Overseas Shareholders in those jurisdictions for reasons including those summarised below.

The Open Offer can be made available to Australia-registered Shareholders if, amongst other things, an Australian Corporations Act-compliant prospectus is prepared and registered. Given the potential costs of satisfying these conditions and the uncertainty as to how long that might take it is considered necessary or expedient to exclude Overseas Shareholders with registered addresses in Australia from the Open Offer.

The Open Offer can be made available to Shareholders with registered addresses in Canada if amongst other things:

• (i) to the best knowledge of the Company, after reasonable inquiry, the number of beneficial Shareholders resident in Canada does not exceed 10% of all Shareholders and the Shares beneficially held by Shareholders resident in Canada do not exceed 10% of all Shares; the Company must look behind registered addresses to determine beneficial holders of the Shares in Canada using its powers to do so under the SFO;

• (ii) Canadian-registered Shareholders are given the Offering Documents and they are filed with Canadian securities regulators;

• (iii) the Company files notice with Canadian securities regulators certifying that it meets the above conditions; and

• (iv) the Convertible Notes and new Shares in the Share Alternative will be subject to restrictions on resale so that a prospectus may need to be filed in Canada for subsequent trade in Canada or the Convertible Notes and new Shares in the Share Alternative must be traded in reliance on a prospectus exemption, unless certain conditions apply.

– 19 –

LETTER FROM THE BOARD

Given the restrictions on resale and potential costs of satisfying these conditions and the uncertainty as to how long that might take it is considered necessary or expedient to exclude Overseas Shareholders with registered addresses in Canada from the Open Offer.

The Open Offer can be made available to Malaysia-registered Shareholders if, amongst other things, recognition is obtained from and a Malaysian law-compliant disclosure document and other documents are registered with the local securities regulators and a professional adviser is engaged to conduct a suitability assessment on the Malaysian Shareholders. Given the potential costs and the impracticability of complying with these conditions, it is considered necessary or expedient to exclude Overseas Shareholders with registered addresses in Malaysia from the Open Offer.

The Open Offer can be made available to New Zealand-registered Shareholders if, amongst other things, the Company seeks and obtains a specific exemption notice but the Company has been advised that the chances of obtaining an exemption are low. It could also prepare and file a product disclosure statement, which would cause delays of a minimum of about 2 months. Given the potential costs and the impracticability of complying with these conditions, it is considered necessary or expedient to exclude Overseas Shareholders with registered addresses in New Zealand from the Open Offer.

The Open Offer can be made available to Papua New Guinea-registered Shareholders if, the Company seeks and obtains an exemption from, or fully complies with, the local Securities Act 1997 prospectus registration requirements. The costs of exemption are likely to exceed any sums received from Papua New Guinea-registered Shareholders who apply in full for their assured allotments. Given the potential costs it is considered necessary or expedient to exclude Overseas Shareholders with registered addresses in Papua New Guinea from the Open Offer.

The Open Offer can be made available to Singapore-registered Shareholders if, amongst other things, no Singapore-registered Shareholder:

• (i) holds a licence which may restrict or prohibit it from being issued Convertible Notes and new Shares in the Share Alternative; and

• (ii) is a corporation to which any specific provisions of law apply, which provisions of law are not generally applicable to Shareholders, which restrict or prohibit it from being issued Convertible Notes and new Shares in the Share Alternative.

– 20 –

LETTER FROM THE BOARD

In order for the Company lawfully to offer the Convertible Notes in Thailand, it would be necessary for it to apply for and obtain approval from the Office of the Securities and Exchange Commission of Thailand for a public offer, and submit a registration statement and a draft prospectus which shall have become effective before making the offer. The Company has been advised that this is a lengthy and burdensome process. It is therefore considered necessary or expedient to exclude Overseas Shareholders with registered addresses in Thailand from the Open Offer.

Under the federal securities laws in the United States, the Convertible Notes and new Shares in the Share Alternative could be exempt from registration requirements but only if, amongst other things:

• (i) the Convertible Notes and new Shares in the Share Alternative offered to persons in the United States are subject to restrictions on transferability and resale that permit transfer and resale only in compliance with certain laws of the United States; or

• (ii) the Company submits to the U.S. Securities and Exchange Commission a copy of the Offering Documents and the Company submits to the U.S. courts’ jurisdiction for at least six years in relation to any lawsuits that might be brought in relation to the Open Offer.

Given the potential costs and the impracticability of complying with these conditions, it is considered necessary or expedient to exclude Overseas Shareholders with registered addresses in the United States from the Open Offer.

Overseas Shareholders in any doubt about their position should consult their professional advisers.

Accordingly, taking into account the expected timetable for the Open Offer, the Board considered the time and costs required to extend the Open Offer to such Overseas Shareholders, (i) to outweigh the potential benefit to the Overseas Shareholders in the Specified Territories if the Open Offer is extended to them; and (ii) not in the interests of the Company and the Shareholders as a whole.

– 21 –

LETTER FROM THE BOARD

It is the responsibility of any person (including but without limitation as principal nominee, agent, custodian and trustee) receiving a copy of this Offering Circular or the Application Forms outside Hong Kong and wishing to apply for the Convertible Notes or new Shares in the Share Alternative to satisfy himself, herself, or itself as to the full observance of the laws and regulations of the relevant territory or jurisdiction including the obtaining of any governmental or other consents for observing any other formalities which may be required in such territory or jurisdiction, and to pay any taxes, duties and other amounts required to be paid in such territory or jurisdiction in connection therewith. The Company is not responsible for verifying the qualification of such Overseas Shareholders and, or residents in such territory or jurisdiction. The Company shall not be obliged to issue the Convertible Notes or new Shares in the Share Alternative to any such Overseas Shareholders and, or residents, if at the Company’s absolute discretion issuing the Convertible Notes or new Shares in the Share Alternative to them will or might not comply with the relevant laws of such territory or jurisdiction. Any application by any person will be deemed to constitute a representation and warranty from such person to the Company that these local laws and requirements have been complied with. If you are in any doubt as to your position, you should consult your professional advisers.

Accordingly, the Board has decided not to extend the Open Offer to Excluded Shareholders, and the Open Offer does not constitute an offer of securities to them and does not constitute an offer, solicitation or an act in furtherance to trade in the Specified Territories.

The Company will, to the extent reasonably practicable, send copies of this Offering Circular to the Excluded Shareholders for their information only, but no Application Forms will be sent to them.

Status of the new Share

The new Shares in the Share Alternative when allotted, issued and fully paid, shall rank pari passu in all respects with the then existing Shares in issue on the date of allotment and issue of those new Shares, including as to the right to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the new Shares.

Conditions of the Open Offer

The Open Offer is conditional upon, amongst other things, the Underwriting Agreement becoming unconditional and not being terminated.

– 22 –

LETTER FROM THE BOARD

Rounding down

Assured allotments in the Open Offer have been rounded down to the nearest whole number. Applications for fractions of Convertible Notes and, or new Shares in the Share Alternative will not be accepted. Fractional Convertible Notes and, fractions of new Shares in the Share Alternative which would otherwise have been in assured allotments will be aggregated and made available for application by the Qualifying Shareholders who wish to apply for Convertible Notes and, or new Shares in the Share Alternative in excess of their own assured allotments.

Procedures for application and payment

Qualifying Shareholders may apply for any number of Convertible Notes or new Shares in the Share Alternative, or a combination of both.

For each Qualifying Shareholder, an AAF is enclosed with this Offering Circular which entitles Qualifying Shareholders to apply for the amount of the Convertible Notes or new Shares in the Share Alternative as shown therein. If Qualifying Shareholders wish to exercise their rights to apply for all the Convertible Notes or new Shares in the Share Alternative as specified in the enclosed AAF, Qualifying Shareholders must lodge the AAFs in accordance with the instructions printed thereon, together with a remittance for the full amount payable on application, with the Registrar at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong by not later than 4:00 p.m. on Tuesday, 12 December, 2017. All remittances must be made in Hong Kong dollars by cheques or banker’s cashier orders. Cheques must be drawn on an account with, and banker’s cashier orders must be issued by, a licensed bank in Hong Kong and made payable to ‘‘PALADIN LIMITED – OPEN OFFER ACCOUNT’’.

– 23 –

LETTER FROM THE BOARD

It should be noted that unless the relevant AAF, together with the appropriate remittance, has been lodged with the Registrar by not later than 4:00 p.m. on Tuesday, 12 December, 2017 by the relevant Qualifying Shareholder, the relevant offer will lapse.

The AAFs are for use only by the person(s) to whom they are addressed and are not transferable. The AAFs contain the full information regarding the procedures to be followed if the Qualifying Shareholders wish to apply for only part of the Convertible Notes in their assured allotments and, or wish to apply for new Shares in the Share Alternative, or a combination of both.

All cheques and banker’s cashier orders will be presented for payment immediately upon receipt and all interest earned on such monies, if any, will be retained for the benefit of the Company. Completion and return of an AAF together with a cheque or banker’s cashier order in payment for the Convertible Notes and, or new Shares in the Share Alternative applied for will constitute a warranty by the applicant that the cheque or banker’s cashier order will be honoured on first presentation. If any cheque or banker’s cashier order is dishonoured on first presentation, the AAF is liable to be rejected. No receipt will be issued in respect of any application received.

If the conditions of the Open Offer are not fulfilled by the latest time for termination, the Open Offer will not proceed and the application monies, without interest, will be returned to the applicants by means of cheques crossed ‘‘Account Payee Only’’ and despatched by ordinary post to their registered addresses and, in the case of joint applicants, to the registered address of the applicant whose name first appears on the register of members of the Company, at the risk of such applicants, on or before Wednesday, 20 December 2017.

– 24 –

LETTER FROM THE BOARD

Application(s) for Convertible Notes or new Shares in the Share Alternative in excess of assured allotments

Qualifying Shareholders who validly apply for Convertible Notes or new Shares in the Share Alternative in amounts equal to or less than the numbers of Convertible Notes or new Shares in the Share Alternative in their assured allotments are assured of allotments in full of the Convertible Notes or new Shares in the Share Alternative for which they apply. Qualifying Shareholders will have the right to apply for Convertible Notes or new Shares in the Share Alternative in excess of their assured allotments, but are not assured of receiving any Convertible Notes or new Shares in the Share Alternative in excess of those in their assured allotments. Any Convertible Notes or new Shares in the Share Alternative (i) not validly applied for the Qualifying Shareholders in accordance with their assured allotments; (ii) to which the Excluded Shareholders would otherwise have been entitled to apply, will be made available for excess applications by the Qualifying Shareholders. The Directors will allocate the excess Convertible Notes or new Shares in the Share Alternative, if any, at their discretion, but on a fair and equitable basis, to the Qualifying Shareholders who have applied for excess Convertible Notes or new Shares in the Share Alternative on a pro-rata basis with reference to the number of excess Convertible Notes or new Shares in the Share Alternative applied for. If the number of the Convertible Notes and, or new Shares in the Share Alternative applied for exceeds the number of Convertible Notes and, or new Shares in the Share Alternative available in the Open Offer, the Directors will allocate the Convertible Notes or new Shares in the Share Alternative at their discretion, but on a fair and reasonable basis as far as practicable and will give preference to topping-up odd lots to whole board lots.

Investors with their Shares held by a nominee company should note that the Board will regard the nominee company as a single Shareholder according to the register of members of the Company. Accordingly, the Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Convertible Notes or new Shares in the Share Alternative is not being extended to beneficial owners individually.

Certificates for the Convertible Notes and Shares, and refund cheques

Certificates for the Convertible Notes and Shares, and refund cheques for fully paid Convertible Notes and new Shares are expected to be posted by ordinary mail to subscribers, at their own risk, who have been allotted the relevant Convertible Notes or new Shares in the Share Alternative on or before Wednesday, 20 December, 2017. Refund cheques in respect of wholly or partially unsuccessful applications for Convertible Notes or new Shares (including the excess Convertible Notes or new Shares in the Share Alternative, if any) are also expected to be posted to successful applicants on or before Wednesday, 20 December, 2017 by ordinary post at their own risk.

– 25 –

LETTER FROM THE BOARD

Principal terms of the Convertible Notes

The Convertible Notes will be fungible with the Existing Convertible Notes and the principal terms are summarised below:

• Total issue price and : HK$67,928,543.50 (assuming no election for principal amount new Shares in the Share Alternative) upon issue

• Maturity : 23 November, 2024 being the tenth anniversary of the date of issue of the Existing Convertible Notes or if that is not a Business Day, the first Business Day thereafter, subject to the Company’s right of earlier redemption

• Distribution : The Convertible Notes will have no entitlement to interest but if and whenever the Company shall pay or make any cash dividend or distribution of any kind or any distribution of assets in specie (other than distribution of Shares) to its Shareholders (a ‘‘Distribution’’), the Company shall, subject to compliance with relevant laws, rules, regulations and requirements in Hong Kong, (including the Listing Rules and where applicable, shareholders’ approval requirements under the Listing Rules) and Bermuda, at the same time pay or distribute to each Noteholder an amount of cash or other assets the subject matter of the Distribution which is equal to (i) the amount of cash or other assets the subject matter of the Distribution per Share receivable by the Shareholders under the Distribution, multiplied by (ii) the number of Shares which the Noteholder would have become a holder of, had such Noteholder’s Convertible Notes then outstanding been converted on the relevant record date for determining entitlement to the Distribution

– 26 –

LETTER FROM THE BOARD

Conversion Rights and : Conversion Price

Holders of the Convertible Notes will be entitled to convert (at an initial Conversion Price of HK$0.25 per Conversion Share) each Convertible Note into one Share, subject to adjustment provisions which are common for convertible securities of similar type and summarised below

The adjustment events will include certain changes in the share capital of the Company including consolidation, subdivision or reclassification of Shares, capitalisation of profits or reserves, rights issues of Shares or options over Shares, rights issues of other securities and modifications of rights of conversion, etc. Please refer to Appendix III headed ‘‘Adjustments to the Conversion Price’’ for details of the adjustment provisions of the Convertible Notes

Holders of the Convertible Notes will not be required to pay any extra amount should they convert their Convertible Notes into Shares. The certificates for the Shares in respect of the conversion of Convertible Notes shall be available for collection by the relevant Noteholders after ten Business Days following the receipt of the conversion notice by the Registrar

– 27 –

LETTER FROM THE BOARD

Redemption at the option of : At any time after issue and prior to the day that the Company is five Business Days prior to the Maturity Date, the Company may redeem all the Convertible Notes on the redemption date at a redemption price equal to the Early Redemption Amount. On the Maturity Date, all then outstanding Convertible Notes will automatically be converted into Shares. The redemption price will be calculated based on the market price of the Shares and not subject to adjustment for occurrence of any events described under the sub-heading ‘‘Distributions’’

Notwithstanding the automatic conversion of all outstanding Convertible Notes on the Maturity Date, in the event that automatic conversion of all outstanding Convertible Notes on the Maturity Date will cause the public float of the Shares to fall below the minimum prescribed percentage required under the Listing Rules, the Company will have an option, at any time upon issue of a written notice to the relevant Noteholders no later than two Business Days prior to the Maturity Date, to redeem the Convertible Notes by paying to the relevant Noteholders an amount of cash in Hong Kong dollars equal to the Redemption Amount. The Company shall pay to the relevant Noteholders the Redemption Amount not less than ten Business Days but no later than fifteen Business Days following the issue of such notice

Status : The Convertible Notes will on issue constitute direct, senior, unconditional, unsubordinated and unsecured obligations of the Company ranking equally with the Existing Convertible Notes. The payment obligations of the Company under the Convertible Notes shall at all times rank at least equally with all its other present and future unsecured and unsubordinated obligations

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LETTER FROM THE BOARD

• Cash Settlement Option : Notwithstanding the Conversion Right of each Noteholder in respect of each Convertible Note, upon election of the Noteholder for conversion of any Convertible Note, in the event that the issue of new Shares upon conversion of the Convertible Notes will cause the public float of the Shares to fall below the minimum prescribed percentage, the Company shall exercise the Cash Settlement Option, at any time upon issue of a written notice to the relevant Noteholders (within five Business Days after receipt of a conversion notice from the relevant Noteholders), to pay to the relevant Noteholders an amount of cash in Hong Kong dollars equal to the Cash Settlement Amount in order to satisfy such conversion right in full or in part. The Company shall pay to the relevant Noteholders the Cash Settlement Amount not less than ten Business Days but no later than fifteen Business Days following the issue of such notice

• Conversion arrangement and : A Noteholder must complete and sign a procedures conversion notice, and lodge such notice together with relevant certificate(s) of the Convertible Notes at the office of the Registrar in Hong Kong. Share certificate(s) in respect of the conversion will be available for collection at the office of the Registrar by the tenth Business Day after receipt of the conversion notice and the certificate(s) of the Convertible Notes

No charges will be levied for the conversion of Convertible Notes

Transferability : The Convertible Notes may be transferred or assigned from time to time

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LETTER FROM THE BOARD

Ranking of the Conversion : The Conversion Shares, when allotted and issued Shares upon exercise of the Conversion Rights, shall rank pari passu in all respects with all other then issued Shares as at the date of the relevant conversion notice and shall be entitled to all dividends and other distributions the record date of which falls on a date on or after the date of the relevant conversion notice Voting : Noteholders will not be entitled to attend or vote at any meetings of the Company by reason only of being Noteholders Listing : No application will be made to the Stock Exchange to list the Convertible Notes, but it is a condition of the issue of the Convertible Notes that a listing is granted in respect of the Shares falling to be issued upon conversion of the Convertible Notes and those under the Share Alternative

The Company has applied to the Stock Exchange for the listing of, and permission to deal in, the Shares falling to be issued upon conversion of the Convertible Notes and the new Shares to be issued under the Share Alternative

Further issues : The terms of the Convertible Notes will not prohibit further issues of notes or other debt obligations ranking pari passu or in priority to the Convertible Notes

Application for listing

Application has been made the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the new Shares to be allotted and issued upon exercise of the Conversion Rights and the new Shares in the Share Alternative. None of the securities of the Company is listed or dealt in on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is proposed to be sought. No application will be made for the listing of, and permission to deal in, the Convertible Notes on the Stock Exchange or any other stock exchanges.

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LETTER FROM THE BOARD

The Convertible Notes will not be eligible for admission to CCASS

No application will be made for the admissibility, deposit, clearance or settlement of the Convertible Notes in CCASS. No transfer, clearing or settlement services will be provided by HKSCC in respect of the Convertible Notes. Subject to the granting of listing of, and permission to deal in, the new Shares on the Stock Exchange, the new Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the new Shares in the Share Alternative or issuable on exercise on Conversion Rights under the Convertible Notes or such other date as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the general rules of CCASS and CCASS operational procedures in effect from time to time.

Taxation

Qualifying Shareholders are recommended to consult their professional advisers if they are in any doubt as to the tax implications of the application for, acquisition, holding or disposal of, or dealings in the Convertible Notes and, or Shares in the Share Alternative. It is emphasised that none of the Company, the Directors or any other parties involved in the Open Offer accepts responsibility for any tax effects or liabilities of holders of the Convertible Notes or Shares in the Share Alternative resulting from the application for, acquisition, purchase, holding or disposal of, or dealing in the Convertible Notes, or Shares in the Share Alternative.

UNDERWRITING ARRANGEMENT

The principal terms of the Underwriting Agreement are summarised as follows:

Underwriting Agreement

Date : Tuesday, 31 October, 2017 (executed after trading hours) Issuer : The Company Underwriter : Gold Seal Holdings Limited, an investment holding company incorporated in the British Virgin Islands with limited liability and a Shareholder. It is not in its ordinary course of business to underwrite the issue of securities. It is wholly-owned by Mr. Oung Da Ming, Andrew

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LETTER FROM THE BOARD

• Principal amount of : The Convertible Notes with a principal amount Convertible Notes of HK$48,053,924.75 convertible into to be underwritten 192,215,699 Conversion Shares in full, being the by the Underwriter total principal amount of the Convertible Notes of HK$67,928,543.50 less the aggregate principal amount of Convertible Notes of HK$19,874,618.75 for the entire amount allotments of (i) Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited to be applied for in full under the Irrevocable Undertakings; and (ii) the Underwriter pursuant to the Underwriting Agreement. Accordingly, the Open Offer is fully underwritten

• Commission : A commission of 3% of the amount underwritten will be charged by the Underwriter. The underwriting commission is determined with reference to market practice. The Directors (including the independent non-executive Directors) consider the underwriting commission to be in line with the market rate

The Underwriter will underwrite all the Convertible Notes, excluding the Convertible Notes to be applied for by the Undertaking Shareholders. All the legal costs incurred in the preparation of the Underwriting Agreement will be borne by the Company. The Board considers that the terms of the Underwriting Agreement including the underwriting commission rate are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

The Company, through its advisers, approached three potential underwriters to assess whether it was feasible to engage an independent underwriter to underwrite the Open Offer. The response from all of them was that they had no interest in underwriting an open offer by the Company based on the proposed terms of the Open Offer. The Directors therefore approached Gold Seal Holdings Limited, a substantial Shareholder, to underwrite the Open Offer.

Undertakings

As at the Latest Practicable Date, Gold Seal Holdings Limited, Dr. Oung Shih Hua, James, Mr. Oung Da Ming, Andrew and Next Level Corporate Limited held 11.73%, 0.96%, 5.52% and 11.04% of the existing issued Shares respectively, and Next Level Corporate Limited also held Existing Convertible Notes with a total principal amount of HK$12,500,000 (convertible into 50,000,000 Shares upon exercise of the conversion rights in full). Each of the Undertaking Shareholders has undertaken to the Company that it and, or he will apply in full for its and, or his entire assured allotment of Convertible Notes under the Open Offer and will not elect for the Share Alternative, and not to sell any Shares, Convertible Notes or Existing Convertible Notes held or convert any Convertible Notes or Existing Convertible Notes held until the Open Offer has either been closed or terminated.

Conditions precedent of the Underwriting Agreement

The Underwriting Agreement is conditional upon, amongst other things, the Stock Exchange granting a listing for the Shares falling to be issued upon conversion of the Convertible Notes and the new Shares falling to be issued under the Share Alternative.

In the event the conditions have not been satisfied on or before Tuesday, 12 December, 2017 (or such later date as the Underwriter and the Company may agree), all liabilities of the parties to the Underwriting Agreement shall cease and determine and neither party shall have any claim against the other save in respect of certain costs, fees and expenses.

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LETTER FROM THE BOARD

EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY ARISING FROM THE OPEN OFFER

As at the Latest Practicable Date, the Oung family concert group was beneficially interested in an aggregate of 906,540,908 issued Shares, representing approximately 66.73% of the issued share capital of the Company. As at the Latest Practicable Date, the Company had outstanding Existing Convertible Notes with a total principal amount of HK$12,505,001.50 (convertible up to 50,020,006 Shares) and outstanding Options for which 261,900,000 new Shares will fall to be issued upon exercise in full. Save as disclosed above, the Company has no other outstanding warrants, options or convertible securities or other similar rights which are convertible or exchangeable into Shares.

Effects on the shareholding structure arising from the Open Offer

The tables below show certain possible effects of the Open Offer on the shareholding structure of the Company immediately upon Completion:

Cityguard Holdings Limited (notes 1 & 2) Mr. Oung Da Ming, Andrew (note 2) Gold Seal Holdings Limited (note 2) Dr. Oung Shih Hua, James (note 2) Sward Finance Limited (note 2) Next Level Corporate Limited (notes 2 & 4) Goldenfield Equities Limited (note 3) Other Optionholders (note 5) Public (note 6) Total Oung family concert group	Shares held 508,848,531 75,000,000 159,388,211 13,104,166 200,000 150,000,000 29,449,000 – 422,580,965	A % 37.45% 5.52% 11.73% 0.96% 0.01% 11.04% 2.17% 0.00% 31.10%	s at the Latest Underlying Shares to be held upon the conversion of Existing Convertible Notes – – – – – 50,000,000 – – 20,006	Practicable Da % 0.00% 0.00% 0.00% 0.00% 0.00% 99.96% 0.00% 0.00% 0.04%	te Underlying Shares to be held upon the exercise of the Options – 26,190,000 – 26,190,000 – – – 209,520,000 –	% 0.00% 10.00% 0.00% 10.00% 0.00% 0.00% 0.00% 80.00% 0.00%	Assuming all Shareholders apply for full assured allotment of Convertible Notes and convert all Convertible Notes into Shares immediately (other than the Undertaking Shareholders who will not convert their Convertible Notes into Shares immediately), or elects for Share Alternative for 100% of assured allotments Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options % 610,618,237 39.37% – 0.00% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 26,190,000 10.00% 159,388,211 10.28% 31,877,642 24.61% – 0.00% 13,104,166 0.85% 2,620,833 2.02% 26,190,000 10.00% 240,000 0.02% – 0.00% – 0.00% 150,000,000 9.67% 80,000,000 61.77% – 0.00% 35,338,800 2.28% – 0.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% 507,097,158 32.70% 20,006 0.02% – 0.00% 1,550,786,572 100.00% 129,518,481 100.00% 261,900,000 100.00% 1,008,350,614 65.02% 129,498,475 99.98% 157,140,000 60.00%	Assuming all Shareholders apply for full assured allotment of Convertible Notes and convert all Convertible Notes into Shares immediately (other than the Undertaking Shareholders who will not convert their Convertible Notes into Shares immediately), or elects for Share Alternative for 100% of assured allotments Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options % 610,618,237 39.37% – 0.00% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 26,190,000 10.00% 159,388,211 10.28% 31,877,642 24.61% – 0.00% 13,104,166 0.85% 2,620,833 2.02% 26,190,000 10.00% 240,000 0.02% – 0.00% – 0.00% 150,000,000 9.67% 80,000,000 61.77% – 0.00% 35,338,800 2.28% – 0.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% 507,097,158 32.70% 20,006 0.02% – 0.00% 1,550,786,572 100.00% 129,518,481 100.00% 261,900,000 100.00% 1,008,350,614 65.02% 129,498,475 99.98% 157,140,000 60.00%	Assuming all Shareholders apply for full assured allotment of Convertible Notes and convert all Convertible Notes into Shares immediately (other than the Undertaking Shareholders who will not convert their Convertible Notes into Shares immediately), or elects for Share Alternative for 100% of assured allotments Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options % 610,618,237 39.37% – 0.00% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 26,190,000 10.00% 159,388,211 10.28% 31,877,642 24.61% – 0.00% 13,104,166 0.85% 2,620,833 2.02% 26,190,000 10.00% 240,000 0.02% – 0.00% – 0.00% 150,000,000 9.67% 80,000,000 61.77% – 0.00% 35,338,800 2.28% – 0.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% 507,097,158 32.70% 20,006 0.02% – 0.00% 1,550,786,572 100.00% 129,518,481 100.00% 261,900,000 100.00% 1,008,350,614 65.02% 129,498,475 99.98% 157,140,000 60.00%	Assuming all Shareholders apply for full assured allotment of Convertible Notes and convert all Convertible Notes into Shares immediately (other than the Undertaking Shareholders who will not convert their Convertible Notes into Shares immediately), or elects for Share Alternative for 100% of assured allotments Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options % 610,618,237 39.37% – 0.00% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 26,190,000 10.00% 159,388,211 10.28% 31,877,642 24.61% – 0.00% 13,104,166 0.85% 2,620,833 2.02% 26,190,000 10.00% 240,000 0.02% – 0.00% – 0.00% 150,000,000 9.67% 80,000,000 61.77% – 0.00% 35,338,800 2.28% – 0.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% 507,097,158 32.70% 20,006 0.02% – 0.00% 1,550,786,572 100.00% 129,518,481 100.00% 261,900,000 100.00% 1,008,350,614 65.02% 129,498,475 99.98% 157,140,000 60.00%	Assuming all Shareholders apply for full assured allotment of Convertible Notes and convert all Convertible Notes into Shares immediately (other than the Undertaking Shareholders who will not convert their Convertible Notes into Shares immediately), or elects for Share Alternative for 100% of assured allotments Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options % 610,618,237 39.37% – 0.00% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 26,190,000 10.00% 159,388,211 10.28% 31,877,642 24.61% – 0.00% 13,104,166 0.85% 2,620,833 2.02% 26,190,000 10.00% 240,000 0.02% – 0.00% – 0.00% 150,000,000 9.67% 80,000,000 61.77% – 0.00% 35,338,800 2.28% – 0.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% 507,097,158 32.70% 20,006 0.02% – 0.00% 1,550,786,572 100.00% 129,518,481 100.00% 261,900,000 100.00% 1,008,350,614 65.02% 129,498,475 99.98% 157,140,000 60.00%	Assuming all Shareholders apply for full assured allotment of Convertible Notes and convert all Convertible Notes into Shares immediately (other than the Undertaking Shareholders who will not convert their Convertible Notes into Shares immediately), or elects for Share Alternative for 100% of assured allotments Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options % 610,618,237 39.37% – 0.00% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 26,190,000 10.00% 159,388,211 10.28% 31,877,642 24.61% – 0.00% 13,104,166 0.85% 2,620,833 2.02% 26,190,000 10.00% 240,000 0.02% – 0.00% – 0.00% 150,000,000 9.67% 80,000,000 61.77% – 0.00% 35,338,800 2.28% – 0.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% 507,097,158 32.70% 20,006 0.02% – 0.00% 1,550,786,572 100.00% 129,518,481 100.00% 261,900,000 100.00% 1,008,350,614 65.02% 129,498,475 99.98% 157,140,000 60.00%
	1,358,570,873	100.00%	50,020,006	100.00%	261,900,000	100.00%	1,550,786,572	100.00%	129,518,481	100.00%	261,900,000	100.00%
	906,540,908	66.73%	50,000,000	99.96%	157,140,000	60.00%	1,008,350,614	65.02%	129,498,475	99.98%	157,140,000	60.00%

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LETTER FROM THE BOARD

Cityguard Holdings Limited (notes 1 & 2) Mr. Oung Da Ming, Andrew (note 2) Gold Seal Holdings Limited (note 2) Dr. Oung Shih Hua, James (note 2) Sward Finance Limited (note 2) Next Level Corporate Limited (notes 2 & 4) Goldenfield Equities Limited (note 3) Other Optionholders (note 5) Public Total Oung family concert group	Shares held 508,848,531 75,000,000 159,388,211 13,104,166 200,000 150,000,000 29,449,000 – 422,580,965	(other apply in any Conve % 37.45% 5.52% 11.73% 0.96% 0.01% 11.04% 2.17% 0.00% 31.10%	Assuming no Shareholders than the Undertaking Shareholders) the Open Offer, and no conversion of rtible Notes taken up by the Underwriter Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options – 0.00% – 15,000,000 4.66% 26,190,000 224,093,341 69.65% – 2,620,833 0.81% 26,190,000 – 0.00% – 80,000,000 24.87% – – 0.00% – – 0.00% 209,520,000 20,006 0.01% – 321,734,180 100.00% 261,900,000 321,714,174 99.99% 157,140,000	Assuming no Shareholders than the Undertaking Shareholders) the Open Offer, and no conversion of rtible Notes taken up by the Underwriter Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options – 0.00% – 15,000,000 4.66% 26,190,000 224,093,341 69.65% – 2,620,833 0.81% 26,190,000 – 0.00% – 80,000,000 24.87% – – 0.00% – – 0.00% 209,520,000 20,006 0.01% – 321,734,180 100.00% 261,900,000 321,714,174 99.99% 157,140,000	Assuming no Shareholders than the Undertaking Shareholders) the Open Offer, and no conversion of rtible Notes taken up by the Underwriter Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % Underlying Shares to be held upon the exercise of the Options – 0.00% – 15,000,000 4.66% 26,190,000 224,093,341 69.65% – 2,620,833 0.81% 26,190,000 – 0.00% – 80,000,000 24.87% – – 0.00% – – 0.00% 209,520,000 20,006 0.01% – 321,734,180 100.00% 261,900,000 321,714,174 99.99% 157,140,000	% 0.00% 10.00% 0.00% 10.00% 0.00% 0.00% 0.00% 80.00% 0.00%	Assuming no Shareholders (other than the Undertaking Shareholders) apply and conversion of all Convertible Notes taken up (other than those the subject of the Irrevocabl Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % 508,848,531 32.81% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 351,603,910 22.67% 31,877,642 24.61% 13,104,166 0.85% 2,620,833 2.02% 200,000 0.01% – 0.00% 150,000,000 9.67% 80,000,000 61.77% 29,449,000 1.90% – 0.00% – 0.00% – 0.00% 422,580,965 27.25% 20,006 0.02% 1,550,786,572 100.00% 129,518,481 100.00% 1,098,756,607 70.85% 129,498,475 99.98%	Assuming no Shareholders (other than the Undertaking Shareholders) apply and conversion of all Convertible Notes taken up (other than those the subject of the Irrevocabl Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % 508,848,531 32.81% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 351,603,910 22.67% 31,877,642 24.61% 13,104,166 0.85% 2,620,833 2.02% 200,000 0.01% – 0.00% 150,000,000 9.67% 80,000,000 61.77% 29,449,000 1.90% – 0.00% – 0.00% – 0.00% 422,580,965 27.25% 20,006 0.02% 1,550,786,572 100.00% 129,518,481 100.00% 1,098,756,607 70.85% 129,498,475 99.98%	Assuming no Shareholders (other than the Undertaking Shareholders) apply and conversion of all Convertible Notes taken up (other than those the subject of the Irrevocabl Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % 508,848,531 32.81% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 351,603,910 22.67% 31,877,642 24.61% 13,104,166 0.85% 2,620,833 2.02% 200,000 0.01% – 0.00% 150,000,000 9.67% 80,000,000 61.77% 29,449,000 1.90% – 0.00% – 0.00% – 0.00% 422,580,965 27.25% 20,006 0.02% 1,550,786,572 100.00% 129,518,481 100.00% 1,098,756,607 70.85% 129,498,475 99.98%	Assuming no Shareholders (other than the Undertaking Shareholders) apply and conversion of all Convertible Notes taken up (other than those the subject of the Irrevocabl Shares held % Underlying Shares to be held upon the conversion of Existing Convertible Notes and Convertible Notes % 508,848,531 32.81% – 0.00% 75,000,000 4.84% 15,000,000 11.58% 351,603,910 22.67% 31,877,642 24.61% 13,104,166 0.85% 2,620,833 2.02% 200,000 0.01% – 0.00% 150,000,000 9.67% 80,000,000 61.77% 29,449,000 1.90% – 0.00% – 0.00% – 0.00% 422,580,965 27.25% 20,006 0.02% 1,550,786,572 100.00% 129,518,481 100.00% 1,098,756,607 70.85% 129,498,475 99.98%	in the Open Offer, by the Underwriter e Undertakings) Underlying Shares to be held upon the exercise of the Options % – 0.00% 26,190,000 10.00% – 0.00% 26,190,000 10.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% – 0.00% 261,900,000 100.00% 157,140,000 60.00%	in the Open Offer, by the Underwriter e Undertakings) Underlying Shares to be held upon the exercise of the Options % – 0.00% 26,190,000 10.00% – 0.00% 26,190,000 10.00% – 0.00% – 0.00% – 0.00% 209,520,000 80.00% – 0.00% 261,900,000 100.00% 157,140,000 60.00%
	1,358,570,873	100.00%	321,734,180	100.00%	261,900,000	100.00%	1,550,786,572	100.00%	129,518,481	100.00%	261,900,000	100.00%
	906,540,908	66.73%	321,714,174	99.99%	157,140,000	60.00%	1,098,756,607	70.85%	129,498,475	99.98%	157,140,000	60.00%

Notes:

1. Cityguard Holdings Limited is a wholly-owned subsidiary of Five Star Investments Limited. Five Star Investments Limited is directly and indirectly (through Basurto Holdings Limited) owned as to 67% by the estate of Ms. Oung Chin Liang Fung, grandmother of Dr. Oung Shih Hua, James, and 33% by Ms. Lilian Oung, his aunt. Basurto Holdings Limited is held by Mr. Oung Da Ming, Andrew on trust for the estate of his deceased mother, Ms. Oung Chin Liang Fung (as to 67%) and his sister, Ms. Lilian Oung (as to 33%).

2. These Shareholders are members of the Oung family concert group. Gold Seal Holdings Limited is an investment holding company incorporated in the British Virgin Islands with limited liability and is solely owned by Mr. Oung Da Ming, Andrew. As at the Latest Practicable Date, the Oung family concert group was beneficially interested in an aggregate of 906,540,908 Shares, representing approximately 66.73% of the existing issued share capital of the Company.

3. Goldenfield Equities Limited is a presumed concert party of the Oung family concert group under paragraphs (1) and (8) of the definition of acting in concert under the Takeovers Code but it is not included in the calculation of the Shares held by the Oung family concert group in respect of the Company due to differences of opinion with the Oung family concert group. Its directors are Mr. Oung Da Ming, Andrew, his sister, Ms. Lilian Oung and his nephew, Dr. Oung Shih Hua, James. It is owned as to 40% by Ms. Lilian Oung, 40% by her son Mr. Chen Te Kuang Mike, and 20% by Dr. Oung Shih Hua, James.

4. Next Level Corporate Limited is owned as to 25% by Mr. Oung Da Ming, Andrew, 25% by his son, Mr. Oung Shih How, 25% by Dr. Oung Shih Hua, James, and 25% by Anglo Chinese Nominees, Limited which holds its shares in Next Level Corporate Limited as bare trustee for Basurto Holdings Limited. Next Level Corporate Limited is the owner of equity derivatives relating to Shares and a chargee of Shares.

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LETTER FROM THE BOARD

1. As at the Latest Practicable Date, each of Mr. Chan Chi Ho and Mr. Yuen Chi Wah, the non-executive Directors of the Company, held 26,190,000 Options. 104,760,000 Options were held by members of the Oung family concert group (not including the Options held by Mr. Oung Da Ming, Andrew and Dr. Oung Shih Hua, James), and the remaining 52,380,000 Options were held by directors of subsidiaries of the Group.

2. If the issue of new Shares upon conversion of the Convertible Notes will cause the public float of the Shares to fall below the minimum prescribed percentage, the Company shall exercise the Cash Settlement Option to satisfy such Conversion Right. Conversion of Convertible Notes held by the Oung family concert group is therefore not expected to cause the public float of the Shares to fall below the minimum prescribed percentage required under the Listing Rules.

Potential dilution effect

The Open Offer is being made on the basis of one (1) Convertible Note with one (1) new Share in the Share Alternative for every five (5) existing Shares held on the Record Date. The Board considers that any potential dilution impact should be balanced against the following factors:

• (1) Qualifying Shareholders have the choice whether to accept the Open Offer or not;

• (2) the Open Offer offers Qualifying Shareholders a chance to subscribe for their pro-rata Convertible Notes with new Shares in the Share Alternative for the purpose of maintaining their respective existing shareholding interests in the Company at a relatively low price as compared to the prevailing market price of the Shares; and

• (3) those Qualifying Shareholders who choose to accept the Open Offer in full can maintain their respective existing shareholding interests in the Company after the Open Offer.

Having considered the above, the Board considers the potential dilution effect on the shareholding interests of the Qualifying Shareholders, which may only happen when the Qualifying Shareholders do not subscribe for their pro-rata Convertible Note with new Shares in the Share Alternative, to be acceptable. Having taken into account the terms of the Open Offer, the Directors consider that the terms of the Open Offer are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Furthermore, the Open Offer also offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company, and enables the Qualifying Shareholders to maintain their proportionate interests in the Company to participate in the future development of the Company should they wish to do so. Those Qualifying Shareholders who do not apply for the Convertible Note and, or new Shares in the Share Alternative to which they are entitled should note that their shareholdings in the Company will be diluted upon Completion.

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LETTER FROM THE BOARD

REASONS FOR AND THE BENEFITS OF THE OPEN OFFER AND THE PROPOSED USE OF PROCEEDS

The principal activities of the Group are (i) property investment; and (ii) research and development of high technology systems and applications.

The Directors have assessed the financing requirements of the Group and have concluded that it would be prudent to raise additional funds now by means of the Open Offer. In assessing the financing requirements of the Group, the Board gave particular consideration to the expected capital investment in the foreseeable future. Based on the estimated Group’s cash and bank balances as at 30 September, 2017 of approximately HK$323,169,000 and taking into account (a) repayment of amounts due to related parties shown as current liabilities as at 30 September, 2017 of HK$64,431,000 (which includes HK$1,837,000 for redemption of convertible redeemable preference shares held by Goldenfield Equities Limited); (b) other borrowings in relation to the redemption of convertible redeemable preference shares held by Independent Third Parties as at 30 September, 2017 of HK$110,000; (c) repayment of secured bank borrowings shown as current liabilities as at 30 September, 2017 of HK$107,247,000; (d) projected investment for technology operations; (e) net operation costs for the next 18 months; and (f) the estimated net proceeds of the proposed Open Offer, it is expected that the Group will have a net cash deficit of approximately HK$25.4 million. As it is expected that part of projected investment for technology operations and repayment of secured bank borrowings stated above will take place after twelve months from the date of this Offering Circular, it is expected that the Group will have sufficient working capital for its present requirements and for at least the next twelve months commencing from the date of this Offering Circular (after taking into account the financial resources available to the Group and the estimated net proceeds from the Open Offer). On this basis, the Directors consider that the Group has no plan to conduct any further fundraising activities in the next twelve months.

The Board considers that the Open Offer will enable the Group to strengthen its capital base and provide capital to support the investment for technology operations.

– 37 –

LETTER FROM THE BOARD

The terms of the Open Offer are designed to be similar to the Company’s open offer made in 2014, which offered all Shareholders unlisted Existing Convertible Notes with the option to subscribe for new Shares. The Convertible Notes will be fungible with the Existing Convertible Notes, and therefore the terms of Convertible Notes will be substantially identical to the terms of the Existing Convertible Notes. (Please refer to the section headed ‘‘The Open Offer’’ above and Appendix III for details.) The Directors are of the view that the terms of the Open Offer are not different to any significant extent from an open offer which offers Shares with a Convertible Note alternative. If public Shareholders were to subscribe for the Convertible Notes, notwithstanding that they are not to be listed, they are able to realise their investment through the conversion of their Convertible Notes and the subsequent sale of the Shares falling to be issued to them upon conversion. In view of the above, the Directors consider it appropriate to follow the terms of the previous open offer in 2014 for the Open Offer as a matter of consistency.

Under Rule 7.23 of the Listing Rules, an open offer is an acceptable method to raise funds from shareholders whereby existing shareholders’ pre-emptive rights are preserved in the context of a new issue of securities by a listed issuer. During an open offer, shareholders may realise the value of their entitlements through trading some of their securities and then subscribing for all or a portion of their entitlement under the open offer. Given this and the terms of the Open Offer, the Directors do not consider that the extra expense of providing a short period of trading in nilpaid letters is justified. In addition, the Board has considered the potential dilutive effect arising from the Open Offer. (Please refer to the sub-section headed “Potential dilutive effect” above for details.) In view of the above, the Board has decided to structure the fund raising as an open offer, rather than a rights issue or a placing which will, upon Completion, give rise to an immediate dilutive effect on the Shareholders.

During the period from January, 2016 to March, 2017, the Group invested in an associate known as Imagica Technology Inc. which is owned as to 49% by the Group and as to 51% by an Independent Third Party, and established three more subsidiaries to conduct research and development, software and hardware design for the manufacture and sales of a range of high technology products including:

• portable x-ray systems used in inspection devices for security and counter terrorism applications;

• accurate positioning and image sensing technologies to be integrated into semiautomated agriculture vehicles and advanced driver assistance systems (‘‘ADAS’’);

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LETTER FROM THE BOARD

• advanced algorithm and software solutions used in ADAS, for example, systems for identifying objects, vehicles and people in difficult lighting conditions, forward collision warning systems, lane departure and driver awareness systems, and for surveillance and intelligent traffic markets, for example, advance camera and video systems for traffic monitoring purpose; and

• image sensors such as line scan sensors used in spectroscopy and document scanners, and other sensors used in security applications.

The gross proceeds from the Open Offer are expected to be approximately HK$67.9 million. The net proceeds from the Open Offer after deduction of related expenses are estimated to be approximately HK$63.2 million. All of the net proceeds will be applied to the subsidiaries mentioned above for the development of video-processing and related artificial intelligent software for supporting the abovementioned high technology products. In particular, it is intended that approximately HK$7.8 million will be used for the purchase of land within the next twelve months from the date of this Offering Circular, followed by approximately HK$39.0 million which will be applied for the construction of facilities, and the remaining balance will be used in a toward funding of operation costs for the next two years.

In view of the above, the Directors consider the Open Offer is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As the Open Offer will not increase the issued share capital or market capitalisation of the Company by more than 50%, pursuant to Rule 7.24(5) of the Listing Rules, the Open Offer itself is not subject to the Shareholders’ approval.

The Underwriter is a substantial Shareholder of the Company and is solely owned by Mr. Oung Da Ming, Andrew, a connected person of the Company. Accordingly, the Underwriter is a connected person of the Company as defined under the Listing Rules and the transactions between the Company and the Underwriter as contemplated under the Underwriting Agreement constitute a connected transaction of the Company. Pursuant to Rule 14A.92(2)(b) of the Listing Rules, as (i) the arrangements have been made in relation to excess applications in compliance with Rule 7.21 of the Listing Rules; and (ii) the Underwriting Agreement is on normal commercial terms and the underwriting commission payable less than HK$10,000,000, and all applicable percentage ratios specified in the Listing Rules are less than 25%, the Underwriting Agreement is subject to reporting and announcement requirements but exempted from the circular and independent shareholders’ approval requirements under Rule 14A.76(2) of the Listing Rules.

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LETTER FROM THE BOARD

EQUITY FUND-RAISING ACTIVITIES BY THE COMPANY DURING THE PAST 12 MONTHS IMMEDIATELY PRECEDING THE LATEST PRACTICABLE DATE

The Company has not conducted any fundraising exercise during the latest 12 months preceding the date of the Announcement and up to the Latest Practicable Date save for loans borrowed from third parties and, or related parties.

ADJUSTMENTS RELATING TO CONVERTIBLE SECURITIES

Pursuant to the instrument of the Existing Convertible Notes and the terms of the Share Option Scheme, the Open Offer may lead to certain adjustments to (i) the exercise prices and, or number of new Shares to be issued upon exercise of the Options; and, or (ii) the conversion prices and, or number of Shares to be issued upon conversion of the Existing Convertible Notes, respectively. Pursuant to the terms of the Share Option Scheme and the Existing Convertible Notes, the adjustments (if any) to (i) the exercise prices and, or number of new Shares to be issued upon exercise of the Options; and, or (ii) the conversion prices and, or number of Shares to be issued upon conversion of the Existing Convertible Notes, respectively, will become effective subject to certification by the auditors of the Company for the time being or, where applicable, an investment or merchant bank of repute. Announcements will be made by the Company on details of the adjustments (if any) upon receiving the aforesaid certifications.

WARNING OF THE RISKS OF DEALING IN THE SHARES

The entitlements of Qualifying Shareholders to apply for Convertible Notes and, or new Shares in the Share Alternative in their assured allotments are not transferable or renounceable. There will be no trading in those entitlements on the Stock Exchange.

Shareholders and potential investors should note that the Open Offer is conditional upon the Underwriting Agreement having become unconditional and not having been terminated. Accordingly, the Open Offer may or may not proceed.

The Shares have been dealt in on an ex-entitlement basis commencing from Monday, 13 November, 2017 and dealings in the Shares will take place while the conditions to which the Underwriting Agreement is subject remain unfulfilled.

Any dealings in the Shares up to the date on which all the conditions of the Open Offer are fulfilled will bear the risk that the Open Offer may not become unconditional or may not proceed. Shareholders and potential investors should exercise extreme caution when dealing in the Shares, and if they are in any doubt about their position, they should consult their professional advisers.

– 40 –

LETTER FROM THE BOARD

LATEST DEVELOPMENT OF THE GROUP

Your attention is drawn to the Group’s 2017 annual report published on 27 October, 2017 including the independent auditor’s report and the audited financial statements for the financial year ended 30 June, 2017 on both the website of the Company and the website of the Stock Exchange.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this Offering Circular.

Yours faithfully,

By order of the board of Paladin Limited

• Dr. Oung Shih Hua, James Chairman

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

I. FINANCIAL INFORMATION OF THE GROUP

Financial statements of the Group for each of financial years ended 30 June, 2015, 30 June, 2016 and 30 June, 2017 together with the relevant notes thereto are disclosed in the following documents which have been published on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of the Company (http://www.aplushk.com/clients/ 00495paladin/):

• (i) Annual report of the Company for the financial year ended 30 June, 2015 published on 28 October, 2015 (pages 26 to 106), which can be accessed via the link at (http:// www.hkexnews.hk/listedco/listconews/SEHK/2015/1028/LTN20151028145.pdf)

• (ii) Annual report of the Company for the financial year ended 30 June, 2016 published on 28 October, 2016 (pages 27 to 102), which can be accessed via the link at (http:// www.hkexnews.hk/listedco/listconews/SEHK/2016/1028/LTN20161028291.pdf)

• (iii) Annual report of the Company for the financial year ended 30 June, 2017 published on 27 October, 2017 (pages 32 to 116), which can be accessed via the link at (http://www.hkexnews.hk/listedco/listconews/SEHK/2017/1027/LTN20171027267.pdf)

The said financial statements are hereby incorporated by reference in, and form an integral part, of this Offering Circular. The consolidated financial statements of the Group for the three years ended 30 June, 2015, 2016 and 2017 were audited by Deloitte Touche Tohmatsu, the independent auditors of the Company. There is no qualification in the auditors’ report in respect of the consolidated financial statements for each of the three years ended 30 June, 2015, 2016 and 2017.

II. STATEMENT OF INDEBTEDNESS

Borrowings

As at the close of business on 30 September, 2017, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this Offering Circular, the Group had (i) bank loans of approximately HK$107,247,000, which were wholly secured and guaranteed; (ii) an amount due to director of major subsidiaries of the Company of approximately HK$113,000, which was unsecured and unguaranteed; (iii) amounts due to Shareholders of approximately HK$64,318,000, which were unsecured and unguaranteed; and (iv) other borrowings of approximately HK$110,000, which were unsecured and unguaranteed.

As at 30 September, 2017, the Group had pledged (i) leasehold land and buildings; and (ii) a deposit placed for a life insurance policy to secure banking facilities granted to the Group, which banking facilities were also supported by guarantees given by the Company.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Contingent liabilities

Save for the contingent liabilities as set out in Note 32 ‘‘Contingent liabilities’’ in the published annual report of the Company for the year ended 30 June, 2017 of which the status remained unchanged as at 30 September, 2017, there were no other contingent liabilities of the Group as at 30 September, 2017.

General

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Group did not have any debt securities, loan capital issued and outstanding, and authorised or otherwise created but unissued, any other outstanding loan capital, any other borrowing or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities.

III. WORKING CAPITAL SUFFICIENCY

The Directors confirm that taking into consideration the financial resources presently available to the Group and which consist of its internal resources, the estimated net proceeds from the Open Offer and available facilities to the Group, and assuming successful renewal of its borrowings upon expiry, the Group will have sufficient working capital for its present requirements and for at least the next 12 months commencing from the date of this Offering Circular.

The Directors are not aware of any other factors which will have a material impact on the Group’s liquidity.

IV. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position or outlook of the Group since 30 June, 2017, being the date to which the latest published audited consolidated financial statements of the Group were made up, up to and including the Latest Practicable Date.

For details on the Group’s business trend and financial and trading prospects, please refer to the paragraph headed ‘‘V. Financial and Trading Prospects of the Group’’ in this appendix below.

I – 2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

V. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The principal activities of the Group are property investment, and research and development of high technology system and applications.

Properties investment

Turnover of the Group for the year ended 30 June, 2017 comprising rental income from its investment properties amounted to approximately HK$14 million (2016: HK$11 million). The profit for the year decreased by approximately 87% to HK$97 million as compared to that of the corresponding period in 2016. Such decrease is mainly due to the one-off gain of HK$895 million arising from disposal of subsidiaries in relation to the Peak Road project for the year ended 30 June, 2016 which did not occur for the year ended 30 June, 2017.

The Group will continue to seek and explore investment opportunities to strength its investment portfolio.

Research and development

Sensors Integration Technology Limited, a wholly-owned subsidiary of the Company, has planned to conduct research and development of digital camera, camcorder, surveillance, video capturing and processing technology. It generated a revenue of approximately HK$0.5 million for the year ended 30 June, 2017.

The Group will actively expand its business to cover a broader spectrum in the field of high technology products. During the financial year of 2017, the Group together with an independent third party established an associate known as Imagica Technology Inc. which is owned as to 49% by the Group and established 3 subsidiaries namely, Next Level A.I. Solutions, LLC., Navigs Oy and Pexray Oy, to conduct research and development, software and hardware design for the manufacture and sales of a range of high technology products including:

• portable x-ray systems used in inspection devices for security and counter terrorism applications;

• accurate positioning and image sensing technologies to be integrated into semiautomated agriculture vehicles and advanced driver assistance systems (ADAS);

I – 3

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

• advanced algorithm and software solutions used in ADAS, for example, systems for identifying objects, vehicles and people in difficult lighting conditions, forward collision warning systems, lane departure and driver awareness systems, and for surveillance and intelligent traffic markets, for example, advanced camera and video systems for traffic monitoring purpose; and

• image sensors such as line scan sensors used in spectroscopy and document scanners, and other sensors used in security applications.

Looking forward, the Group’s corporate strategy will gradually expand its focus from property investment to high technology development. The Group looks forward to all potential opportunities to expand its high technology business in different areas and diversify its investments.

I – 4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

I. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

The following unaudited pro forma statement of adjusted consolidated net tangible assets of the Group is prepared based on the audited consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June, 2017, as extracted from the published audited annual report of the Company for the year ended 30 June, 2017 and adjusted for the effect of the Open Offer.

The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared by the Directors in accordance with paragraph 29 of Chapter 4 of the Listing Rules and is set out here to illustrate the effect of the Open Offer on the audited consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June, 2017 as if it had taken place on 30 June, 2017. This unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has been prepared for illustrative purpose only and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of the Group attributable to owners of the Company had the Open Offer been completed as at 30 June, 2017 or at any future date.

As there are numerous possible outcomes of the Open Offer, for simplicity and for the purpose of preparation of the pro forma financial information, we have prepared the following scenarios assuming maximum and minimum numbers of Shares that may result from the Open Offer, taking into accounts those undertaking arrangements as described elsewhere in this Offering Circular.

Scenario 1: Assuming every Shareholder applies for full assured allotment of Convertible Notes and converts all Convertible Notes into Shares immediately

			Unaudited
		Unaudited	pro forma
	Effect of estimated	pro forma	adjusted
	net proceeds from	adjusted	consolidated net
Audited	the Open Offer	consolidated net	tangible assets of
consolidated net	on audited	tangible assets of	the Group
tangible assets of	consolidated net	the Group	attributable to
the Group	tangible assets of	attributable to	the owners of
attributable to	the Group	the owners of	the Company as
the owners of	attributable to the	the Company as	at 30 June, 2017
the Company	owners of the	at 30 June, 2017	as adjusted for
as at 30 June,	Company as at	as adjusted for	the Open Offer
2017	30 June, 2017	the Open Offer	per Share
HK$’000	HK$’000	HK$’000	HK$
Note 1	Note 2		Note 3
1,023,178	64,529	1,087,707	0.67

II – 1

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

1. The audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 is based on the net assets of the Group attributable to the owners of the Company amounting to HK$1,023,178,000 extracted from the annual report of the Company for the year ended 30 June, 2017.

2. The estimated net proceeds from the Open Offer are based on the issue of Convertible Notes in denominations of HK$0.25 each and issued at its Subscription Price, amounting to approximately HK$67,929,000 in aggregate, after deducting the estimated related expenses of approximately HK$3,400,000 to be incurred by the Company.

3. Assuming every Shareholder applies for full their assured allotment of Convertible Notes and converts all Convertible Notes into Shares immediately and assuming no conversion or exercise of Existing Convertible Notes or Options and no further issue or repurchase of securities as at 30 June, 2017, 1,614,515,847 Shares are expected to be in issue after the Open Offer, comprising the existing 1,342,801,673 Shares in issue as at 30 June, 2017 and 271,714,174 Shares to be issued to the Shareholders upon the conversion of Convertible Notes. The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer per Share is calculated by dividing the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer by 1,614,515,847 Shares expected to be in issue after the Open Offer.

4. Assuming (i) no Shareholders apply for their assured allotment under the Open Offer other than the Undertaking Shareholders; (ii) conversion of all Convertible Notes underwritten; and (iii) no conversion or exercise of Existing Convertible Notes or Options and no further issue or repurchase of securities, the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer per Share would have been HK$0.67, calculated based on the following:

5. a) Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June, 2017 as adjusted for the Open Offer of HK$1,086,266,000, comprising HK$1,087,707,000 adjusted for the underwriting commission of HK$1,441,000. Estimated expenses in relation to the Open Offer approximately HK$3,400,000 would be deducted from the estimated proceeds received by the Company in the Open Offer as detailed in note 2 of Scenario 1.

6. b) 1,614,515,847 Shares expected to be in issue after the Open Offer as detailed in note 3.

7. No adjustments have been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 June, 2017.

II – 2

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Scenario 2: Assuming every Shareholder applies for full their assured allotment of Convertible Notes and does not convert any of the Convertible Notes taking into account the undertakings by the Undertaking Shareholders

Audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 HK$’000 Note 1 1,023,178	Effect of estimated net proceeds from the Open Offer on audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 HK$’000 Note 2 –	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer HK$’000 1,023,178	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer per Share HK$ Note 3 0.76

Notes:

1. The audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 is based on the net assets of the Group attributable to the owners of the Company amounting to HK$1,023,178,000 extracted from the annual report of the Company for the year ended 30 June, 2017.

2. The estimated net proceeds from the Open Offer would have been HK$64,529,000 as detailed in note 2 of Scenario 1 above. However, as the Convertible Notes contain certain terms which result in (i) the Group exchanging fixed amount of cash for variable numbers of shares; and (ii) requiring the Group to redeem the Convertible Notes in cash, it is accounted for as a financial liability under HKAS 32, the effect of the Open Offer would therefore increase asset and liability of the Group for the same amount which have no net impact on the audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017. For the purpose of preparation of this pro forma financial information, the estimated net proceeds of the Convertible Notes is assumed to be approximated the fair value of the financial liability at initial recognition. The fair value of the financial liability at initial recognition is subject to change at the completion of the Open Offer. Any changes in the fair value of the financial liability at initial recognition will affect the unaudited pro forma adjusted consolidated net tangible assets attributable to the owners of the Company as adjusted for the Open Offer.

3. Assuming every Shareholder applies for full their assured allotments of Convertibe Notes and does not convert any of the Convertible Notes and assuming no conversion or exercise of Existing Convertible Notes or Options and no further issue or repurchase of securities as at 30 June, 2017, 1,342,801,673 Shares are expected to be in issue after the Open Offer, comprising the existing 1,342,801,673 Shares in issue as at 30 June, 2017. The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer per Share is calculated by dividing the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer by 1,342,801,673 Shares expected to be in issue after the Open Offer.

II – 3

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. Assuming (i) no Shareholders apply for their assured allotment under the Open Offer other than the Undertaking Shareholders; (ii) no conversion of any of the Convertible Notes; and (iii) no conversion or exercise of Existing Convertible Notes or Options and no further issue or repurchase of securities, the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June, 2017 as adjusted for the Open Offer per Share would have been HK$0.76, calculated based on the following:

2. a) Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company as at 30 June, 2017 as adjusted for the Open Offer of HK$1,021,737,000, comprising of HK$1,023,178,000 adjusted for the underwriting commission of HK$1,441,000. Estimated expenses in relation to the Open Offer approximately HK$3,400,000 would be deducted from the estimated proceeds received by the Company in the Open Offer as detailed in note 2.

3. b) 1,342,801,673 Shares expected to be in issue after the Open Offer.

4. No adjustments have been made to reflect any trading results or other transactions of the Group entered into subsequent to 30 June, 2017.

II – 4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The following is the text of the independent reporting accountants’ assurance report received from Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, in respect of the Group’s unaudited pro forma financial information prepared for the purpose of incorporation in this Offering Circular.

II. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Paladin Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Paladin Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible assets as at 30 June, 2017 and related notes as set out on II-1 to II-4 of Appendix II to the circular issued by the Company dated 28 November 2017 (the ‘‘Circular’’). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on II-1 to II4 of Appendix II to the Circular.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed open offer of convertible notes with an ordinary share alternative (the ‘‘Open Offer’’) on the Group’s financial position as at 30 June, 2017 as if the Open Offer had taken place at 30 June, 2017. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s consolidated financial statements for the year ended 30 June, 2017, on which an auditor’s report has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

II – 5

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the ‘‘Code of Ethics for Professional Accountants’’ issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 ‘‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements’’ issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the unaudited pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 June, 2017 would have been as presented.

II – 6

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

• (a) the unaudited pro forma financial information has been properly compiled on the basis stated;

• (b) such basis is consistent with the accounting policies of the Group; and

• (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong, 28 November 2017

II – 7

APPENDIX III PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

The Convertible Notes will have the same terms as, and be fungible with, the Existing Convertible Notes.

ADJUSTMENTS TO THE CONVERSION PRICE

Upon the occurrence of any of the following events described below, the Conversion Price will be adjusted as follows:

• (1) Consolidation, subdivision or reclassification: if and whenever there shall be an alteration to the nominal value of the Shares as a result of consolidation, subdivision or reclassification, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such alteration by the following fraction:

A

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

B
----- End of picture text -----

where:

• A is the nominal amount of one Share immediately after such alteration; and

• B is the nominal amount of one Share immediately before such alteration.

Such adjustment shall become effective on the date the alteration takes effect.

III – 1

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

(2) Capitalisation of profits or reserves:

If and whenever the Company shall issue any Shares credited as fully paid to the Shareholders (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be)

• (i) by way of capitalisation of profits or reserves including Shares paid up out of distributable profits or reserves and, or share premium account (save where Shares are issued in lieu of the whole or any part of a specifically declared cash dividend (the ‘‘Relevant Cash Dividend’’), being a dividend which the Shareholders concerned would or could otherwise have received (a ‘‘Scrip Dividend’’) and which would not have constituted a Capital Distribution, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue by the following fraction:

A

B

where:

• A is the aggregate nominal amount of the issued Shares immediately before such issue; and

• B is the aggregate nominal amount of the issued Shares immediately after such issue.

Such adjustment shall become effective on the date of issue of such Shares or if a record date is fixed therefor, immediately after such record date.

• (ii) In the case of an issue of Shares by way of a Scrip Dividend where the Current Market Price of such Shares exceeds the amount of the Relevant Cash Dividend or the relevant part thereof and which would not have constituted a Capital Distribution, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before the issue of such Shares by the following fraction:

A + B

A + C

III – 2

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

where:

• A is the aggregate nominal amount of the issued Shares immediately before such issue;

• B is the aggregate nominal amount of Shares issued by way of such Scrip Dividend multiplied by a fraction of which (i) the numerator is the amount of the whole, or the relevant part, of the Relevant Cash Dividend; and (ii) the denominator is such Current Market Price of the Shares issued by way of Scrip Dividend in respect of each existing Share in lieu of the whole, or the relevant part, of the Relevant Cash Dividend; and

• C is the aggregate nominal amount of Shares issued by way of such Scrip Dividend;

Such adjustment shall become effective on the date of issue of such Shares or if a record date is fixed therefor, immediately after such record date.

(3) Capital Distributions:

• (i) If and whenever the Company shall pay or make any Capital Distribution to the Shareholders (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be) other than in cash only (except to the extent that the Conversion Price falls to be adjusted under condition (2) above), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such Capital Distribution by the following fraction:

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

A – B
A
----- End of picture text -----

where:

• A is the Current Market Price of one Share on the date on which the Capital Distribution is publicly announced; and

• B is the Fair Market Value on the date of such announcement of the portion of the Capital Distribution attributable to one Share.

III – 3

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

Such adjustment shall become effective on the date that such Capital Distribution is actually made or, if later, the first date upon which the Fair Market Value of the Capital Distribution is capable of being determined as provided in these conditions.

• (ii) If and whenever the Company shall pay or make any Capital Distribution in cash only to the Shareholders (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such Capital Distribution by the following fraction:

==> picture [27 x 8] intentionally omitted <==

A

where:

• A is the Current Market Price of one Share on the date on which the Capital Distribution in cash is publicly announced; and

• B is the amount of cash so distributed attributable to one Share.

Such adjustment shall become effective on the date on which such Capital Distribution in cash is actually made or if a record date is fixed therefore, immediately after such record date.

III – 4

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

• (4) Rights issues of Shares or options over Shares: If and whenever the Company shall issue Shares to all or substantially all Shareholders as a class (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be) by way of rights, or issue or grant to all or substantially all Shareholders as a class (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be), by way of rights, of options, warrants or other rights to subscribe for or purchase any Shares, in each case at less than the Current Market Price per Share on the date of the announcement of the terms of the issue or grant, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue or grant by the following fraction:

A + B A + C

where:

• A is the number of Shares in issue immediately before such announcement;

• B is the number of Shares which the aggregate amount (if any) payable for the Shares issued by way of rights or for the options or warrants or other rights issued or granted by way of rights and for the total number of Shares comprised therein would subscribe, purchase or otherwise acquire at such current market price per Share; and

• C is the aggregate number of Shares issued or, as the case may be, comprised in the issue or grant.

Such adjustment shall become effective on the date of issue of such Shares or issue or grant of such options, warrants or other rights (as the case may be) or where a record date is set, the first date on which the Shares are traded ex-rights, ex-options or ex-warrants as the case may be.

III – 5

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

• (5) Rights issues of other securities: If and whenever the Company shall issue any securities (other than Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire any Shares) to all or substantially all Shareholders as a class (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be), by way of rights, or the grant to all or substantially all Shareholders as a class by way of rights, options, warrants or other rights to subscribe for, purchase or otherwise acquire any securities (other than Shares or options, warrants or other rights to subscribe for, purchase or otherwise acquire Shares), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue or grant by the following fraction:

A – B

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

A
----- End of picture text -----

where:

• A is the current market price of one Share on the date on which such issue or grant is publicly announced; and

• B is the Fair Market Value on the date of such announcement of the portion of the rights attributable to one Share.

Such adjustment shall become effective on the date of issue of the securities or grant of such rights, options or warrants (as the case may be) or where a record date is set, the first date on which the Shares are traded ex-rights, ex-options or ex-warrants as the case may be.

III – 6

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

• (6) Issues at less than current market price: If and whenever the Company shall issue (otherwise than as mentioned in condition (4) above) for cash any Shares (other than Shares issued on the exercise of Conversion Rights or on the exercise of any other rights of conversion into, or exchange or subscription for, Shares) or the issue or grant (otherwise than as mentioned in condition (4) above) of options, warrants or other rights to subscribe for, purchase or otherwise acquire any Shares, in each case at a price per Share which is less than the current market price per Share on the date of announcement of the terms of such issue or grant, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue by the following fraction:

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

A + B
C
----- End of picture text -----

where:

• A is the number of Shares in issue immediately before the issue of such additional Shares or the grant of such options, warrants or other rights to subscribe, purchase or otherwise acquire any Shares;

• B is the number of Shares which the aggregate consideration receivable for the issue of such additional Shares would purchase at such current market price per Share; and

• C is the number of Shares in issue immediately after the issue of such additional Shares.

References to additional Shares in the above formula shall, in the case of an issue by the Company of options, warrants or other rights to subscribe for or purchase Shares, mean such Shares to be issued assuming that such options, warrants or other rights are exercised in full at the initial exercise price (if applicable) on the date of the issue or grant of such options, warrants or other rights.

Such adjustment shall become effective on the date of issue of such additional Shares or, as the case may be, the issue or grant of such options, warrants or other rights.

III – 7

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

• (7) Other issues at less than Current Market Price: Save in the case of an issue of securities arising from a conversion or exchange of other securities in accordance with the terms applicable to such securities themselves falling within this condition (7), the issue wholly for cash by the Company in condition (4), (5) or (6) of any securities (other than the Convertible Notes) which by their terms of issue carry rights of conversion into, or exchange or subscription for, Shares to be issued by the Company upon conversion, exchange or subscription at a consideration per Share which is less than the current market price on the date of announcement of the terms of issue of such securities, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such issue by the following fraction:

A + B A + C

where:

• A is the number of Shares in issue immediately before such issue;

• B is the number of Shares which the aggregate consideration (if any) receivable by the Company for the Shares to be issued on conversion or exchange or on exercise of the right of subscription attached to such securities would purchase at such current market price per Share; and

• C is the maximum number of Shares to be issued on conversion or exchange of such securities or on the exercise of such rights of subscription attached thereto at the initial conversion, exchange or subscription price or rate.

Such adjustment shall become effective on the date of issue of such securities.

• (8) Modification of rights of conversion etc.: If and whenever there shall be any modification of the rights of conversion, exchange or subscription attaching to any such securities as are mentioned in condition (7) (other than in accordance with the terms of such securities) so that the consideration per Share (for the number of Shares available on conversion, exchange or subscription following the modification) is less than the Current Market Price for one Share on the date of announcement of the proposals for such modification, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before such modification by the following fraction:

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

A – B
A
----- End of picture text -----

III – 8

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

where:

• A is the Current Market Price of an Share on the date on which such modification is announced; and

• B is the difference between the Fair Market Value of the modification on a per Share basis on the date of such announcement and the consideration received for the modification on a per Share basis of such modification.

Such adjustment shall become effective on the date of modification of the rights of conversion, exchange or subscription attaching to such securities.

• (9) Other offers to Shareholders: If and whenever the Company or any of its subsidiaries issues, sells or distributes any securities in connection with which an offer pursuant to which the Shareholders generally (excluding Shareholders resident in a place outside Hong Kong provided the Directors consider such exclusion to be necessary or expedient on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, as the case may be) are entitled to participate in arrangements whereby such securities may be acquired by them (except where the Conversion Price falls to be adjusted under condition (4), condition (5), condition (6) or condition (7)), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately before issue by the following fraction:

==> picture [49 x 28] intentionally omitted <==

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

A – B
A
----- End of picture text -----

where:

• A is the Current Market Price of one Share on the date on which such issue, sale or distribution is publicly announced; and

• B is the Fair Market Value on the date of such announcement of the portion of the rights attributable to one Share.

Such adjustment shall become effective on the date of issue, sale or delivery of the securities.

III – 9

PRINCIPAL TERMS OF THE CONVERTIBLE NOTES

APPENDIX III

• (10) Other events: If the Company determines, or the Noteholders by written resolution, determine that an adjustment should be made to the Conversion Price as a result of one or more events or circumstances not referred to in this section, the Company shall at its own expense request an independent investment bank to determine as soon as practicable what adjustments (if any) to the Conversion Price would be fair and reasonable to take account thereof, if the adjustments would result in a reduction in the Conversion Price, and the date on which such adjustments should take effect and upon such determination such adjustments (if any) shall be made and shall take effect in accordance with such determination provided that where the circumstances giving rise to any adjustment pursuant to this section have already resulted or will result in an adjustment to the Conversion Price or where the circumstances giving rise to any adjustment arise by virtue of circumstances which have already given rise or will give rise to an adjustment to the Conversion Price, such modifications (if any) shall be made to the operation of the provisions of this section as may be advised by such independent investment bank, to be in its opinion appropriate to give the intended result(s). A written resolution will be obtained through signing by or on behalf of the Noteholders of more than 50% of the principal amount of the Convertible Notes outstanding shall be binding on all Noteholders whether or not they have signed such written resolution.

On any adjustment, the relevant Conversion Price, if not an integral multiple of one Hong Kong cent, shall be rounded down to the nearest Hong Kong cent.

The Conversion Price may not be reduced so that, on conversion of Convertible Notes, Shares would fall to be issued at a discount to their par value (in such case, the reduction shall be limited to such amount so that the Conversion Price is equal to the par value of the Shares) or Shares would be required to be issued in any other circumstances not permitted by applicable laws then in force in Hong Kong.

Where more than one event which gives or may give rise to an adjustment to the Conversion Price occurs within such a short period of time that in the opinion of an independent investment bank, the foregoing provisions would need to be operated subject to some modification in order to give the intended result, such modification shall be made to the operation of the foregoing provisions as may be advised by such independent investment bank to be in its opinion appropriate in order to give such intended result.

No adjustment involving an increase in the Conversion Price will be made, except in the case of a consolidation of the Shares as referred to in condition (1) above or where there has been a proven manifest error in the calculation of the Conversion Price.

III – 10

GENERAL INFORMATION

APPENDIX IV

RESPONSIBILITY STATEMENT

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

SHARE CAPITAL

The authorised and issued share capital of the Company

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; (ii) immediately upon Completion (assuming no issue or repurchase of the Shares from the Latest Practicable Date to Completion); and (iii) after Completion (assuming (a) all Qualifying Shareholders apply for their full assured allotments of Convertible Notes and convert all Convertible Notes into Shares immediately, or elect for new Shares in the Share Alternative for 100% of their assured allotments; and (b) conversion of all the outstanding Existing Convertible Notes and Options at Completion) are as follows:

As at the Latest Practicable Date

Authorised share capital 50,000,000,000 Shares of HK$0.01 each in issue 50,000,000,000 Total authorised share capital Issued share capital 1,358,570,873 Shares of HK$0.01 each in issue 1,358,570,873 Total issued share capital	HK$ 500,000,000
	500,000,000
	HK$ 13,585,708.73
	13,585,708.73

IV – 1

GENERAL INFORMATION

APPENDIX IV

Immediately upon Completion:

Authorised share capital 50,000,000,000 Shares of HK$0.01 each in issue 50,000,000,000 Total authorised share capital	HK$ 500,000,000
	500,000,000

Issued Share capital (Assuming all Qualifying Shareholders apply for their full assured allotments of Convertible Notes and convert all Convertible Notes into Shares immediately, or elect for new Shares in the Share Alternative for 100% of their assured allotments)

Issued share capital 1,358,570,873 Shares of HK$0.01 each in issue 271,714,174 new Shares of HK$0.01 each in issue 1,630,285,047 Total issued share capital After Completion: Authorised share capital 50,000,000,000 Shares of HK$0.01 each in issue 50,000,000,000 Total authorised share capital	HK$ 13,585,708.73 2,717,141.74
	16,302,850.47
	HK$ 500,000,000
	500,000,000

IV – 2

GENERAL INFORMATION

APPENDIX IV

Issued share capital (assuming (i) all Qualifying Shareholders apply for their full assured allotments of Convertible Notes and convert all Convertible Notes into Shares immediately, or elect for new Shares in the Share Alternative for 100% of their assured allotments; and (ii) conversion of all the outstanding Existing Convertible Notes and Options in full at Completion)

1,358,570,873 Shares of HK$0.01 each in issue 271,714,174 new Shares of HK$0.01 each in issue immediately upon Completion 311,920,006 new Shares of HK$0.01 each in issue upon the conversion of all the outstanding Existing Convertible Notes and Options 1,942,205,053 Total issued share capital	HK$ 13,585,708.73 2,717,141.74 3,119,200.06
	19,422,050.53

All the new Shares, when allotted, issued and fully paid, upon Completion and conversion of the Convertible Notes, the Existing Convertible Notes and Options, will rank pari passu in all respects with the Shares then in issue including rights as to dividends, voting and return of capital.

The issued Shares are listed on the Stock Exchange. No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange. No application is being made or is currently proposed or sought for the new Shares or the Convertible Notes or any other securities of the Company to be listed or dealt in on any other stock exchange. There is no arrangement under which future dividends are, or will be, waived or agreed to be waived.

As at the Latest Practicable Date, the Company had outstanding Existing Convertible Notes with a total principal amount of HK$12,505,001.50 convertible into 50,020,006 Shares and Options exercisable into a further 261,900,000 Shares. Save as disclosed herein, the Company had no other outstanding convertible securities, options, warrants or similar rights as at the Latest Practicable Date.

IV – 3

GENERAL INFORMATION

APPENDIX IV

DISCLOSURE OF INTERESTS IN SHARES AND UNDERLYING SHARES

• (i) Interests and short positions of the Directors and chief executive in the Shares and underlying Shares

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were required (i) 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 in which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein; or (iii) pursuant to the Model Code of Securities Transactions by Directors of Listed Companies (the ‘‘Model Code’’) contained in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Long position

Aggregate Shares and, or underlying Shares of HK$0.01 each of the Company:

					Approximate
					percentage of
		Number of	Number of		the Company’s
		issued Shares	underlying		issued share
Name of Director	Capacity	held	Shares	Total	capital
			(note 1)		(note 2)
Dr. Oung Shih Hua, James	Beneficial owner	13,104,166	28,810,833	41,914,999	3.09%
Mr. Chan Chi Ho	Beneficial owner	–	26,190,000	26,190,000	1.93%
Mr. Yuen Chi Wah	Beneficial owner	–	26,190,000	26,190,000	1.93%

Notes:

• (1) These figures represent the new Shares to be issued and allotted by the Company upon exercise of (i) the outstanding Options granted under the Share Option Scheme; and, or (ii) the Convertible Notes undertaken to be subscribed for.

• (2) The percentage is calculated based on 1,358,570,873 Shares in issue as at the Latest Practicable Date.

IV – 4

APPENDIX IV

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interest or short position in the shares, underlying shares and debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) which were required (i) 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 in which they were taken or deemed to have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the register maintained by the Company referred to therein; or (iii) pursuant to the Model Code to be notified to the Company and the Stock Exchange.

(ii) Interests and short positions of substantial Shareholders in the Shares and underlying Shares

As at the Latest Practicable Date, so far as was known to the Directors, the persons (other than a director or chief executive of the Company) who had an interest or a short position in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO were as follows:

Long position

Aggregate Shares and, or underlying Shares of HK$0.01 each of the Company:

					Approximate
					percentage of
		Number of	Number of		the Company’s
		issued	underlying		issued share
Name of Shareholder	Capacity	Shares held	Shares held	Total	capital
			(note 6)		(note 7)
Basurto Holdings Limited	Interest of a controlled	508,848,531	–	508,848,531	37.45%
(note 1)	corporation
Cityguard Holdings Limited	Beneficial owner	508,848,531	–	508,848,531	37.45%
(note 2)
Five Star Investments Limited	Interest of a controlled	508,848,531	–	508,848,531	37.45%
(note 3)	corporation
Gold Seal Holdings Limited	Beneficial owner	159,388,211	224,093,341	383,481,552	28.22%
(note 4)
Next Level Corporate Limited	Beneficial owner	150,000,000	80,000,000	230,000,000	16.93%
(note 5)
Mr. Oung Da Ming, Andrew	Beneficial owner	75,000,000	41,190,000	116,190,000	8.55%
	Interest of a controlled	508,848,531	–	508,848,531	37.45%
	corporation (note 1)
	Interest of a controlled	159,388,211	224,093,341	383,481,552	28.22%
	corporation (note 4)
		743,236,742	265,283,341	1,008,520,083	74.23%

IV – 5

GENERAL INFORMATION

APPENDIX IV

Notes:

• (1) Basurto Holdings Limited is held by Mr. Oung Da Ming, Andrew on trust for the estate of his deceased mother, Ms. Oung Chin Liang Fung (as to 67%) and his sister, Ms. Lilian Oung (as to 33%).

• (2) Cityguard Holdings Limited is a wholly-owned subsidiary of Five Star Investments Limited.

• (3) Five Star Investments Limited is directly and individently (through Basurto Holdings Limited) owned as to 67% by the estate of Ms. Oung Chin Liang Fung, grandmother of Dr. Oung Shih Hua, James, and 33% by Ms. Lilian Oung, his aunt. See note (a) above.

• (4) Gold Seal Holdings Limited is solely owned by Mr. Oung Da Ming, Andrew.

• (5) Next Level Corporate Limited is owned as to 25% by Mr. Oung Da Ming, Andrew, 25% by his son, Mr. Oung Shih How, 25% by Dr. Oung Shih Hua, James, and 25% by Anglo Chinese Nominees, Limited which holds its shares in Next Level Corporate Limited as bare trustee for Basurto Holdings Limited. Next Level Corporate Limited is the owner of equity derivatives relating to Shares and a chargee of Shares.

• (6) These figures represent the new Shares to be issued and allotted by the Company upon (i) exercise of the outstanding Options granted under the Share Option Scheme; and, or (ii) conversion of the outstanding Existing Convertible Notes; and, or (iii) conversion of the Convertible Notes undertaken to be subscribed for.

• (7) The percentage is calculated based on 1,358,570,873 Shares in issue as at the Latest Practicable Date.

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

MATERIAL CONTRACTS

As at the Latest Practicable Date, the Underwriting Agreement had been entered into by the Group within the two years preceding the Latest Practicable Date.

Save for the Underwriting Agreement, no material contracts (not being contracts entered into the ordinary course of business) have been entered into by any member of the Group within the two years immediately preceding the date of this Offering Circular which are or may be material.

IV – 6

GENERAL INFORMATION

APPENDIX IV

LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries were engaged in any other litigation or claims of material importance and, so far as the Directors are aware, there was no other 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.

QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has given its opinion, letter, report or advice contained in this Offering Circular:

Name Qualification Deloitte Touche Tohmatsu Certified Public Accountants

As at the date of this Offering Circular, Deloitte Touche Tohmatsu had given and had not withdrawn its written consent to the issue of this Offering Circular with the inclusion herein of its letter, report, advice or opinion, as the case may be, and references to its name in the forms and context in which they appear.

As at the Latest Practicable Date, Deloitte Touche Tohmatsu did not have any shareholding, directly or indirectly, in any member of the Group nor did if 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, Deloitte Touche Tohmatsu did not have any direct or indirect interest in any assets which had been, since 30 June, 2017, the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by, or leased to, or are proposed to be acquired or disposed of by, or leased to, any members of the Group.

IV – 7

GENERAL INFORMATION

APPENDIX IV

GENERAL

• (a) As at the Latest Practicable Date, none of the Directors had entered into any, or proposed to enter into any, service contracts with the Company, or any other member of the Group, save for those expiring or determinable by the relevant company within one year without payment of compensation (other than statutory compensation).

• (b) As at the Latest Practicable Date, none of the Directors had any direct or indirect interests in any assets which have been acquired or disposed of by, or leased to, or which were proposed to be acquired or disposed of by or leased to, any member of the Group since 30 June, 2017 (being the date to which the latest published audited consolidated financial statements of the Company were made up).

• (c) As at the Latest Practicable Date, none of the Directors and their respective associates was interested in any business, apart from the Company’s business, that competes or competed or is or was likely to compete, either directly or indirectly, with the Company’s business and there was no contract or arrangement subsisting at the Latest Practicable Date in which any Director is materially interested and which is significant in relation to the Group’s business.

• (d) As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement which is significant to the business of the Group.

• (e) The English texts of this Offering Circular and the Application Forms shall prevail over their respective Chinese texts in case of inconsistency.

IV – 8

GENERAL INFORMATION

APPENDIX IV

PARTICULARS OF DIRECTORS

(i) Particulars of Directors

		Length of service
Name	Address	as Director
Executive Director:
Dr. Oung Shih Hua, James (‘‘Dr. Oung’’)	12/F, No. 661 Bannan Road,	22 years
	Zhonghe City, Taipei 235,
	Taiwan
Non-executive Directors:
Mr. Yuen Chi Wah (‘‘Mr. Yuen’’)	Room 703, Chi Chun Lau,	3 years
	Fu Ning Street, Kowloon,
	Hong Kong
Mr. Chan Chi Ho (‘‘Mr. Chan’’)	Flat 7, 5th Floor, Block C,	3 years
	Villa Lotto,
	18 Broadwood Road,
	Happy Valley,
	Hong Kong
Independent non-executive Directors:
Dr. Au Chik Lam Alexander (‘‘Dr. Au’’)	11697 Palm Springs CT.	2 years
	Cupertino, CA 95014,
	United States
Mr. Liu Man Kin Dickson (‘‘Mr. Liu’’)	Flat B, 20/F., Block 2,	2 years
	The Zenith,
	258 Queen’s Road East,
	Wan Chai, Hong Kong
Mr. Luo Rongxuan (‘‘Mr. Luo’’)	Room 503, Building 8,	9 months
	No.1 Shucheng Road,
	Luyang District, Hefei,
	Anhui Province, PRC

IV – 9

GENERAL INFORMATION

APPENDIX IV

(ii) Biographical details of Directors

Executive Director

Dr. Oung

Dr. Oung, aged 42, joined the Group in 1995. He holds a Bachelor of Science degree in finance and international business from New York University, a master’s degree in psychology, and a Doctorate of Philosophy in applied psychology from East China Normal University. Dr. Oung is also a designated Fellow at Life Management Institute (FLMI) and is teaching graduate students part time in the PRC. He is currently the chairman of a private technology company.

Dr. Oung is a director of each of Cityguard Holdings Limited, Five Star Investments Limited, Basurto Holdings Limited, Next Level Corporate Limited, and a shareholder and director of Goldenfield Equities Limited.

Cityguard Holdings Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of Five Star Investments Limited, legally and beneficially owns 37.45% of the issued Shares.

Five Star Investments Limited, a company incorporated in the British Virgin Islands with limited liability and a subsidiary of Basurto Holdings Limited.

The shares in Basurto Holdings Limited, a company incorporated in the British Virgin Islands with limited liability, are held by Dr. Oung’s uncle, Mr. Oung Da Ming, Andrew, on trust for the estate of Dr. Oung’s deceased grandmother, Ms. Oung Chin Liang Fung (as to 67%) and Dr. Oung’s aunt, Ms. Lilian Oung (as to 33%).

Next Level Corporate Limited is owned as 25% by Mr. Oung Da Ming, Andrew, 25% by his son, Mr. Oung Shih How, 25% by Dr. Oung and 25% by Anglo Chinese Nominees, Limited which holds its shares in Next Level Corporate Limited as bare trustee for Basurto Holdings Limited. Next Level Corporate Limited is the owner of equity derivatives relating to Shares and a chargee of Shares.

Goldenfield Equities Limited, a company incorporated in the British Virgin Islands with limited liability, owns 2.17% of the issued Shares. Its ultimate beneficial shareholders are so far as the Directors know Mr. Chen Te Kuang Mike who owns 40% of its issued shares, his mother Ms. Lilian Oung who owns 40% of its issued shares, and Dr. Oung who owns 20% of its issued shares.

IV – 10

GENERAL INFORMATION

APPENDIX IV

Non-executive Directors

Mr. Yuen

Mr. Yuen, aged 57, joined the Group as the financial controller in 2007 and was appointed as non-executive Director on 1 August, 2014. He has over 38 years working experience in corporate finance, financial management, auditing, accounting, and acquisitions gained from certain senior related positions in an audit firm in Hong Kong, and possess extensive experience in management in the field of garments, electronic industrial and property development.

Mr. Chan

Mr. Chan, aged 46, first joined the Group as company secretary in 2003 and was appointed as non-executive Director on 1 August, 2014. Prior to joining to the Group, Mr. Chan worked in an international accounting firm and served as its audit manager. He has over 22 years of experience in accounting and financial management. Mr. Chan holds a Bachelor of Arts degree in business studies and a master’s degree in corporate governance from The Hong Kong Polytechnic University. He is a fellow member of both The Hong Kong Institute of Certified Public Accountants and The Association of Chartered Certified Accountants. He also is a member of both The Institute of Chartered Secretaries and Administrators in the United Kingdom and The Hong Kong Institute of Chartered Secretaries.

Independent non-executive Directors

Dr. Au

Dr. Au, aged 73, joined the Group in 2015. Dr. Au holds a Bachelor of Science degree in electrical engineering from The University of California, Los Angeles, a Master of Science degree and a Doctor of Philosophy degree in electrical engineering from Stanford University. Dr. Au has worked in technology industries in the United States and Taiwan for many years. He currently is a founder and chief executive officer of a private company.

IV – 11

GENERAL INFORMATION

APPENDIX IV

Mr. Liu

Mr. Liu, aged 44, joined the Group in 2015 as an independent non-executive Director. He has over 22 years of experience in auditing, tax planning, management consulting and company restructuring. He is currently a sole proprietor of an audit firm and a practising member of the Hong Kong Institute of Certified Public Accountants.

Mr. Luo

Mr. Luo, aged 62, joined the Group in 2017 as an independent non-executive Director. He graduated from the Radio Department of Anhui University, the PRC. Mr. Luo has over 35 years of experience in radio management. He was an engineer in Office of Radio Regulation Committee in Anhui Province and the head of the radio monitoring station, and then he was a director of the infrastructure division of Anhui Economic and Information Technology Commission. He worked at Anhui Economic and Information Technology Commission as a director of the private enterprise division before his retirement in 2014.

Save as disclosed in this Offering Circular, as at the Latest Practicable Date none of the Directors held any position in the Company or any of its subsidiaries nor have any relationship with any other Director, senior management, substantial Shareholder or controlling Shareholder of the Company. Save as disclosed in this Offering Circular and as at the Latest Practicable Date, none of the Directors has held any directorship in other listed companies in Hong Kong or overseas in the past three years.

IV – 12

GENERAL INFORMATION

APPENDIX IV

CORPORATE INFORMATION AND THE PARTIES INVOLVED IN THE OPEN OFFER

Registered office	:	Canon’s Court
		22 Victoria Street
		Hamilton HM12
		Bermuda
Principal office	:	Suite 2304, 23rd Floor, Sun Life Tower
		The Gateway
		Harbour City
		Tsim Sha Tsui
		Kowloon
		Hong Kong
Authorised representatives	:	Dr. Oung Shih Hua, James
		Mr. Chan Chi Ho
Company secretary	:	Mr. Chan Chi Ho
		a fellow member of both The Hong Kong
		Institute of Certified Public Accountants and
		The Association of Chartered Certified
		Accountants, and a member of both The
		Institute of Chartered Secretaries and
		Administrators in the United Kingdom and The
		Hong Kong Institute of Chartered Secretaries
Reporting accountants	:	Deloitte Touche Tohmatsu
		(Certified Public Accountants)
		35/F One Pacific Place
		88 Queensway
		Hong Kong
Principal bankers	:	CITIC Bank International Limited
		61-65 Des Voeux Road Central, Hong Kong
		Wing Lung Bank Limited
		45 Des Voeux Road, Central, Hong Kong
		Hang Seng Bank Limited
		83 Des Voeux Road Central

IV – 13

GENERAL INFORMATION

APPENDIX IV

Hong Kong Share registrar	:	Computershare Hong Kong Investor Services
		Limited
		17th Floor, Hopewell Centre
		183 Queen’s Road East
		Hong Kong
Legal adviser to the Company in	:	David Norman & Co.
relation to the Open Offer		22B, Man On Commercial Building
		12-13 Jubilee Street, Central
		Hong Kong
Principal registrar and transfer	:	Estera Management (Bermuda) Limited
office of the Company in		Canon’s Court
Bermuda, and principal registrar		22 Victoria Street
of Existing Convertible Notes		Hamilton HM12
and Convertible Notes and		Bermuda
transfer office in Bermuda
Hong Kong branch share registrar	:	Computershare Hong Kong Investor
and transfer office, and		Services Limited
Hong Kong branch registrar and		Shops 1712-1716, 17th Floor,
transfer agent of Existing		Hopewell Centre
Convertible Notes and		183 Queen’s Road East
Convertible Notes		Hong Kong
The Underwriter	:	Gold Seal Holdings Limited

EXPENSES

The expenses in connection with the Open Offer, including the financial advising fees, printing, translation, legal and accounting fees, and underwriting commissions are estimated to be approximately HK$4.7 million and are payable by the Company.

IV – 14

GENERAL INFORMATION

APPENDIX IV

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during the normal business hours from 9:00 a.m. to 5:30 p.m. (save for Saturdays and public holidays) at the principal office of the Company in Hong Kong at Suite 2304, 23rd Floor, Sun Life Tower, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong, from the date of this Offering Circular up to and including the Latest Application Date:

• (a) the Bye-laws of the Company;

• (b) the annual reports of the Company for the three years ended 30 June, 2015, 2016 and 2017, respectively;

• (c) the reporting accountants’ assurance report on the compilation of unaudited pro forma financial information of the Group issued by Deloitte Touche Tohmatsu set out in Appendix II of this Offering Circular;

• (d) the material contracts referred to in the section headed ‘‘Material Contracts’’ of this Appendix;

• (e) the written consents referred to in the section headed ‘‘Qualification and Consent of Expert’’ of this Appendix;

• (f) the draft of the instrument creating the Convertible Notes; and

• (g) the Offering Documents.

IV – 15