Hao Wen Holdings Limited - Proxy Solicitation & Information Statement 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all of your shares in Hao Wen Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee, or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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

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HAO WEN HOLDINGS LIMITED 皓文控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8019)

(1) PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE AND

(2) NOTICE OF EXTRAORDINARY GENERAL MEETING

Underwriter to the Rights Issue

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

Capitalised terms used in this cover page shall have the same meanings as those defined in this circular unless otherwise stated.

A letter from the Board is set out on pages 7 to 24 of this circular. The recommendation of the Independent Board Committee to the Independent Shareholders is set out on pages 25 to 26 of this circular. A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 27 to 53 of this circular.

A notice convening the EGM to be held at Jasmine Room, 3/F., BEST WESTERN PLUS Hotel Hong Kong, 308 Des Voeux Road West, Hong Kong on Thursday, 21 January 2016 at 2:00 p.m. or any adjournment thereof is set out on pages EGM-1 to EGM-2 of this circular. A proxy form for use at the EGM is enclosed with this circular. Whether or not you are able to attend the meeting in person, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the Company’s Hong Kong branch share registrar and transfer office, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

The Shares will be dealt in on an ex-rights basis from Monday, 25 January 2016. Dealings in the Rights Shares in the nil-paid form will take place from Wednesday, 3 February 2016 to Monday, 15 February 2016 (both days inclusive). If the conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated, the Rights Issue will not proceed.

Any Shareholders or other persons contemplating transferring, selling or purchasing Shares and/or Rights Shares in their nil-paid form who are in any doubt about their position are recommended to consult their professional advisers. Any Shareholders or other persons dealing in Shares up to the date on which all the conditions to which the Rights Issue is subject are fulfilled (and the date on which the Underwriters’ right of termination of the Underwriting Agreement ceases) and any persons dealing in the nil-paid Rights Shares during the period from Wednesday, 3 February 2016 to Monday, 15 February 2016 (both days inclusive) will accordingly bear the risk that the Rights Issue may not become unconditional and may not proceed.

28 December 2015

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
TERMINATION OF THE UNDERWRITING AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .	6
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . .	25
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . . . . . . . . . . . .	27
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . .	I-1
APPENDIX II – UNAUDITED PRO FORMA FINANCIAL
INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
NOTICE OF EXTRAORDINARY GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

DEFINITIONS

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

“Announcement” the announcement of the Company dated 2 December 2015 in relation to the Rights Issue
“associate” has the meaning ascribed to it under the GEM Listing Rules “Board” the board of Directors “Business Day(s)” a day (other than a Saturday, Sunday or public holiday) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours
“CCASS” the Central Clearing and Settlement System established and operated by HKSCC
“Company” Hao Wen Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on GEM
“connected person” has the meaning as ascribed thereto under the GEM Listing Rules
“Director(s)” the director(s) of the Company “EGM” the extraordinary general meeting of the Company to be convened and held to consider and to approve the Rights Issue and the transactions contemplated hereunder
“Excluded Shareholder(s)” the Overseas Shareholder(s) whose address is/are in a place(s) outside Hong Kong where, the Directors, based on legal opinions provided by legal advisers of the Company, consider it is 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 not to offer the Rights Shares to such Overseas Shareholders
“GEM” the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules” the Rules Governing the Listing of Securities on the GEM
“Group” the Company and its subsidiaries
“HKSCC” the Hong Kong Securities Clearing Company Limited

DEFINITIONS

“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholder(s)”
“Independent Third Party(ies)”
“Last Trading Day”
“Latest Time for Acceptance”
“Latest Practicable Date”
“Latest Time for Termination”
“Listing Committee”
“Overseas Shareholder(s)”
“PAL(s)” or “Provisional Allotment Letter(s)”

the Hong Kong Special Administrative Region of the People’s Republic of China

the independent board committee of the Company comprising all the independent non-executive Directors established to advise the Independent Shareholders in respect of the Rights Issue

Messis Capital Limited, a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue
Shareholders not required under the GEM Listing Rules to abstain from voting on the resolution(s) at the EGM
a party(ies) independent of and not connected with the Company and its connected persons
2 December 2015, being the date of the Underwriting Agreement
the latest time for acceptance for the Rights Shares at 4:00 p.m., on Thursday, 18 February 2016 or such other time as may be agreed between the Company and the Underwriter
24 December 2015, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information referred to in this circular
the latest time for terminating the Underwriting Agreement at 4:00 p.m., on Monday, 22 February 2016, being the second Business Day after the Latest Time for Acceptance or such later time or date as may be agreed between the Company and the Underwriter

has the meaning ascribed thereto under the GEM Listing Rules

the Shareholder(s) with registered address(es) (as shown in the register of members of the Company on the Record Date) are outside of Hong Kong
the provisional allotment letter(s) in respect of the Rights Issue to be issued to the Qualifying Shareholders

DEFINITIONS

“PRC” the People’s Republic of China, for the purpose of this circular excludes Hong Kong, Macau Special Administration Region of the PRC and Taiwan
“Prospectus” the prospectus to be issued by the Company in relation to the Rights Issue
“Prospectus Documents” together, the Prospectus and the PAL “Prospectus Posting Date” Monday, 1 February 2016 or such later date as may be agreed between the Underwriter and the Company for the despatch of the Prospectus Documents to the Qualifying Shareholders (or the Prospectus only in case of Excluded Shareholder(s))
“Qualifying Shareholder(s)” Shareholders whose names appear on the register of members of the Company on the Record Date, other than the Excluded Shareholders
“Record Date” Friday, 29 January 2016, or such other date as may be agreed between the Company and the Underwriter for determining entitlements to the Rights Issue
“Registrar” the share registrar and transfer office of the Company in Hong Kong, being Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong
“Rights Issue” the proposed issue by way of Rights Issue to the Qualifying Shareholders on the basis of six (6) Rights Shares for every one (1) Share held on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents
“Rights Share(s)” not less than 1,533,240,504 new Shares and not more than 1,794,509,862 new Shares to be allotted and issued pursuant to the Rights Issue on the basis of six (6) Rights Shares for every one (1) Share held on the Record Date
“SFO” Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)
“Share(s)” ordinary share(s) of HK$0.02 each in the share capital of the Company
“Shareholder(s)” the holder(s) of the Share(s)

DEFINITIONS

“Share Option(s)”	the outstanding share options to subscribe for an aggregate of
	8,854,893 Shares under the Shares Option Scheme, which remain
	unexercised
“Share Option Scheme”	the share option scheme of the Company adopted by way of
	Shareholders’ resolutions passed on 24 September 2009
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	HK$0.16 per Rights Share
“substantial shareholder(s)”	has the meaning ascribed thereto under the GEM Listing Rules
“Takeovers Code”	the Hong Kong Code on the Takeovers and Mergers
“Underwriter”	Grand China Securities Limited
“Underwritten Shares”	not less than 1,533,240,504 Rights Shares and not more than
	1,794,509,862 Rights Shares being underwritten by the
	Underwriter pursuant to the terms of the Underwriting Agreement
“Underwriting Agreement”	the underwriting agreement dated 2 December 2015 entered into
	among the Company and the Underwriter in relation to the
	underwriting arrangement in respect of the Rights Issue
“Warrant(s)”	34,690,000 outstanding warrants which entitle holders thereof to
	subscribe for 34,690,000 Shares
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“%”	per cent

EXPECTED TIMETABLE

The expected timetable for the Rights Issue and the associated trading arrangement are as follows:

Latest time for lodging proxy forms ...............................................................2:00 p.m. on Tuesday, 19 January 2016 Expected date of the EGM ............................................................................ 2:00 p.m. on Thursday, 21 January 2016 Announcement of results of the EGM ..................................................... Thursday, 21 January 2016 Last day of dealings in the Shares on a cum-entitlement basis ............................................................................Friday, 22 January 2016 First day of dealings in the Shares on an ex-entitlement basis .................. Monday, 25 January 2016 Latest time for lodging transfer of Shares in order to be qualified for the Rights Issue ............................................................4:30 p.m. on Tuesday, 26 January 2016 Register of members of the Company closes (both days inclusive) ........................................................................ Wednesday, 27 January 2016 to Friday, 29 January 2016 Record Date .................................................................................................Friday, 29 January 2016 Register of members of the Company re-opens ......................................... Monday, 1 February 2016 Despatch of the Prospectus Documents ..................................................... Monday, 1 February 2016 First day of dealings in nil-paid Rights Shares ........................................... 9:00 a.m. on Wednesday, 3 February 2016 Latest time for splitting of nil-paid Rights Shares ..............................................4:30 p.m. on Friday, 5 February 2016 Last day of dealings in nil-paid Rights Shares ................................................ 4:00 p.m. on Monday, 15 February 2016 Latest time for Acceptance of, and payment for the Rights Shares ...................................................................................... 4:00 p.m. on Thursday, 18 February 2016 Latest time for the Rights Issue to become unconditional ............................... 4:00 p.m. on Monday, 22 February 2016 Announcement of results of acceptance of the Rights Shares ...................................................................................Friday, 26 February 2016 Despatch of certificates for fully-paid Rights Shares ...................................................................................... Monday, 29 February 2016 Despatch of refund cheques if the Rights Issue terminated ................................................................. Monday, 29 February 2016 Dealings in fully-paid Rights Shares commence ............................................. 9:00 a.m. on Tuesday, 1 March 2016

All times stated in this circular refer to Hong Kong times. Dates stated in this circular for events in the timetable are indicative only and may be extended or varied. Any changes to the anticipated timetable for the Rights Issue will be announced as appropriate.

TERMINATION OF THE UNDERWRITING AGREEMENT

If at any time on or before 4:00 p.m. on the Latest Time for Termination:

(A) the Underwriter shall become aware of the fact that, or shall have reasonable cause to believe that any of the representations, warranties and undertakings in the Underwriting Agreement was untrue, inaccurate, misleading or breached, and in each case the same is (in the reasonable opinion of the Underwriter) material in the context of the Rights Issue; or
(B) there shall be:
(i) any new law or regulation is enacted, or there is any change in existing laws or regulations or any change in the interpretation or application thereof by any court or other competent authority, whether in Hong Kong or elsewhere;
(ii) any change in local, national or international financial, political, industrial or economic conditions;
(iii) any change of an exceptional nature in local, national or international equity securities or currency markets;
(iv) any local, national or international outbreak or escalation of hostilities, insurrection or armed conflict;
(v) any moratorium, suspension or material restriction on trading in securities generally on the Stock Exchange;
(vi) any suspension in the trading of the Shares on the Stock Exchange for a continuous period of 10 trading days (as defined in the GEM Listing Rules); or
(vii) any change or development involving a prospective change in taxation or exchange controls in Hong Kong or elsewhere;

which is or are, in the reasonable opinion of the Underwriter:

(a) likely to have a material adverse effect on the business, financial position or prospects of the Group taken as a whole;
(b) likely to have a material adverse effect on the success of the Rights Issue or the level of Rights Shares to be taken up; or
(c) so material as to make it inappropriate, inadvisable or inexpedient to proceed further with the Rights Issue,

then the Underwriter may, by notice in writing given to the Company on or before 4:00 p.m. on the Latest Time for Termination, rescind the Underwriting Agreement and thereupon all obligations of the Underwriter thereunder shall cease and determine and no party shall have any claim against any other party in respect of any matter or thing arising out of or in connection with the Underwriting Agreement (save for any antecedent breaches thereof) and the Rights Issue shall not proceed.

LETTER FROM THE BOARD

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HAO WEN HOLDINGS LIMITED 皓文控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8019)

Executive Directors: Mr. CHOW Yik (Chairman) Mr. LOK Wing Fu Ms. TSUI Annie

Independent non-executive Directors: Mr. KWOK Pak Yu, Steven Mr. HO Kei Wing, Nelson Ms. MA Sijing

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

Head Office and Principal Place of Business in Hong Kong: Level 20 Infinitus Plaza 199 Des Voeux Road Central Sheung Wan Hong Kong 28 December 2015

To the Shareholders

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

INTRODUCTION

Reference is made to the Announcement in relation to the Rights Issue.

On 2 December 2015 (after trading hours), the Company and the Underwriter entered into the Underwriting Agreement. Pursuant to the Underwriting Agreement, the Underwriter has conditionally agreed to underwrite the Underwritten Shares subject to the terms and conditions set out in the Underwriting Agreement. The Company proposes to raise not less than approximately HK$245.32 million and not more than approximately HK$287.12 million before expenses by issuing not less than 1,533,240,504 Rights Shares and not more than 1,794,509,862 Rights Shares at the Subscription Price of HK$0.16 per Rights Share on the basis of six (6) Rights Shares for every one (1) Share held on the Record Date and payable in full upon application.

LETTER FROM THE BOARD

The purpose of this circular is to provide you, among other things, (i) further details about the Rights Issue; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue; and (iv) a notice convening the EGM.

PROPOSED RIGHTS ISSUE

Basis of the Rights Issue : six (6) Rights Shares for every one (1) Share held on the Record Date Subscription Price : HK$0.16 per Rights Share Number of Shares in issue : 255,540,084 Shares as at the Latest Practicable Date Number of Rights Shares : not less than 1,533,240,504 Rights Shares (assuming no outstanding Share Options and Warrants being exercised on or before the Record Date) not more than 1,794,509,862 Rights Shares (assuming the outstanding Share Options and Warrants being exercised in full on or before the Record Date) The aggregate nominal value of the Rights Shares will not less than approximately HK$30,664,810.08 and not more than approximately HK$35,890,197.24. Number of Shares in issue : not less than 1,788,780,588 Shares (assuming no outstanding immediately upon completion Share Options and Warrants being exercised on or before of the Rights Issue the Record Date) not more than 2,093,594,839 Shares (assuming the outstanding Share Options and Warrants being exercised in full on or before the Record Date)

As at the Latest Practicable Date, the Company has 8,854,893 outstanding Share Options granted under the Share Option Scheme and 34,690,000 outstanding Warrants which in aggregate entitle holders thereof to subscribe for 43,544,893 Shares. Assuming full exercise of the subscription rights attaching to the outstanding Share Options and Warrants on or before the Record Date, an additional 261,269,358 Rights Shares will be issued.

Save as disclosed, the Company has no other outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convertible or exchangeable into Shares as at the Latest Practicable Date.

LETTER FROM THE BOARD

Assuming that there is no change in the issued share capital of the Company and no outstanding Share Options and Warrants being exercised from the Latest Practicable Date and up to the Record Date, the 1,533,240,504 Rights Shares represent (i) 600% of the existing issued share capital of the Company as the Latest Practicable Date; and (ii) approximately 85.71% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares.

Conditions of the Rights Issue

The Rights Issue is conditional upon the fulfillment of the following conditions:

(a) the passing by the Independent Shareholders at the EGM of the necessary resolution(s) approving, among others, the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder, including but not limited to the allotment and issue of the Rights Shares;
(b) the delivery to the Stock Exchange and registration with the Registrar of Companies in Hong Kong respectively one duly certified copy of each of the Prospectus Documents (and all other documents required to be attached thereto) not later than the Prospectus Posting Date and in compliance with the GEM Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of Laws of Hong Kong);
(c) the posting of the Prospectus Documents to the Qualifying Shareholders;
(d) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment), and not having revoked, listing of, and permission to deal in the Rights Shares, in nil-paid and fully-paid forms;
(e) compliance and performance by the Company of all its undertakings and obligations under the Underwriting Agreement; and
(f) the Underwriting Agreement not being terminated by the Underwriter in accordance with the terms of the Underwriting Agreement prior to the Latest Time for Termination.

The Company shall use all reasonable endeavours to procure the fulfilment of the abovementioned conditions (except for condition (f) above) and to do all such acts and things as may be required to carry into effect the Rights Issue.

If the conditions are not satisfied on or before the Latest Time for Termination, the Underwriting Agreement shall terminate and no party will have any claim against the other party save for any any antecedent breach thereof.

LETTER FROM THE BOARD

Subscription Price

The subscription price of HK$0.16 per Rights Share is payable in full when a Qualifying Shareholder accepts his/her/its provisional allotment under the Rights Issue or when a transferee of nilpaid Rights Shares subscribes for the Rights Shares.

The Subscription Price represents:

(a) a discount of 50.00% to the closing price of HK$0.32 per Share as quoted on the Stock Exchange on the date of the Underwriting Agreement and on the Last Trading Day;
(b) a discount of approximately 12.57% to the theoretical ex-entitlement price of approximately HK$0.183 per Share based on the closing price of HK$0.32 per Share as quoted on the Stock Exchange on the Last Trading Day;
(c) a discount of approximately 50.92% to the average closing price of approximately HK$0.326 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to and including the Last Trading Day;
(d) a discount of approximately 53.22% to the average closing price of approximately HK$0.342 per Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to and including the Last Trading Day; and
(e) a discount of 60.00% to the closing price of HK$0.40 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Subscription Price was determined after arm’s length negotiations between the Company and the Underwriter with reference to, among others, (i) the prevailing market price of the Shares prior to the Last Trading Day; (ii) the poor share price performance of the Share in the past six months; (iii) the continuous loss-making performance of the Group since 2008, except 2012. After deducting all relevant expenses relating to the Rights Issue, the net price per Rights Share will be approximately HK$0.157.

Basis of provisional allotments

The basis of the entitlement shall be six (6) Rights Shares for every one (1) Share held on the Record Date by the Qualifying Shareholders. The basis of entitlement was determined based on the funding needs of the Company as disclosed in the paragraph headed “ REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS ” and the willingness of the Underwriter to underwrite the maximum subscription sum under the Underwriting Agreement. Acceptance for all or any part entitlement of a Qualifying Shareholder should be made by completing the Provisional Allotment Letter and lodging the same with a remittance for the Rights Shares being accepted for.

Closure of register of members for the Rights Issue

The register of members of the Company will be closed from Wednesday, 27 January 2016 to Friday, 29 January 2016, both days inclusive, to determine the entitlement to the Rights Issue. No transfer of Shares will be registered during the book closure period.

LETTER FROM THE BOARD

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders.

To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company on the Record Date and not being the Excluded Shareholder.

Shareholders whose Shares are held by nominee companies should note that the Board will regard a nominee company as a single Shareholder according to the register of members of the Company. Shareholders with their Shares held by nominee companies are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date. In order to be registered as members of the Company prior to the close of business on the Record Date, Shareholders must lodge any transfers of Shares (together with the relevant share certificates) for registration with the Registrar at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, no later than 4:30 p.m. on Tuesday, 26 January 2016.

Overseas Shareholders and Excluded Shareholders

The Prospectus Documents will not be registered under the applicable securities legislation of any jurisdiction other than Hong Kong. Overseas Shareholders on the Record Date, if any, may not be eligible to take part in the Rights Issue as explained below.

The Company will send the Prospectus only to the Excluded Shareholders, if any, for their information.

Based on the latest available register of members of the Company, 11 Shareholders had address(es) which is/are outside Hong Kong. In the event that there are Overseas Shareholder(s) on the Record Date, the Company will make enquiries as to whether the offer or issue of Rights Shares to the Overseas Shareholders may contravene the applicable securities legislation of the relevant overseas jurisdictions or the requirements of the relevant regulatory bodies or stock exchanges pursuant to Rule 17.41(1) of the GEM Listing Rules. If after making such enquiry, the Board is of the opinion that it will be necessary or expedient not to offer the Rights Shares to such Overseas Shareholders, the Rights Issue will not be available to such Overseas Shareholders. Accordingly, the Rights Shares will not be offered to the Excluded Shareholders and no application for the Rights Shares will be accepted from the Excluded Shareholders.

Arrangements will be made for the Rights Shares which would otherwise have been provisionally allotted to the Excluded Shareholders to be sold in the market in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence and before dealings in nil-paid Rights Shares end, if a premium (net of expenses) can be obtained. The net proceeds of such sale, less expenses, of more than HK$100 shall distribute pro rata to the Excluded Shareholders the net proceeds of sale provided that individual amounts of HK$100 or less and the proceeds generated on such sale of the Rights Shares shall be retained by the Company for its own benefit.

Any unsold entitlement of the Excluded Shareholders, together with any Rights Shares provisionally allotted but not accepted, will be taken up by the Underwriter.

LETTER FROM THE BOARD

Ranking of the Rights Shares

The Rights Shares, when allotted, issued and fully paid, will rank pari passu in all respects with the Shares then in issue. Holders of fully-paid Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid after the date of allotment of the Rights Shares in their fully-paid form.

No application for excess Rights Shares

Considering that the Rights Issue will give the Qualifying Shareholders an equal and fair opportunity to maintain their respective pro rata shareholding interests in the Company, if application for excess Rights Shares is arranged, the Company will be required to put in additional effort and costs to administer the excess application procedures. Accordingly, no excess Rights Shares will be offered to the Qualifying Shareholders and any Rights Shares not taken up by the Qualifying Shareholders will be underwritten by the Underwriter.

Fractional entitlements to the Rights Shares

On the basis of six (6) Rights Shares for every one (1) Share held on the Record Date, no fractional entitlements to the Rights Shares will arise under the Rights Issue.

Application for listing

The Company will apply to the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares, in both their nil-paid and fully-paid forms.

No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirement of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement dates of the dealings in the Rights Shares in both their nil-paid and fully-paid forms or such other dates 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. Shareholders should seek advice from their stockbrokers or other professional advisers for details of those settlement arrangements and how such arrangements will affect their rights and interests.

The nil-paid Rights Shares shall have the same board lot size as the Shares, i.e. 20,000 Shares per each board lot. Dealing in the Rights Shares will be subject to the payment of the stamp duty and other applicable fees and charges in Hong Kong.

LETTER FROM THE BOARD

Share certificates for the Rights Shares and refund cheques

Subject to the fulfillment of the conditions set out in the paragraph headed “ Conditions of the Rights Issue ” in this circular, share certificates for all fully-paid Rights Shares are expected to be posted on or before Monday, 29 February 2016 to those entitled thereto by ordinary post at their own risk. If the Rights Issue is terminated, refund cheques will be despatched on or before Monday, 29 February 2016 by ordinary post at their own risk.

UNDERWRITING AGREEMENT

Date	:	2 December 2015 (after trading hours)
Underwriter	:	Grand China Securities Limited
Number of Underwritten Shares	:	not less than 1,533,240,504 Rights Shares (assuming no
		outstanding Share Options and Warrants being exercised on
		or before the Record Date)
		not more than 1,794,509,862 Rights Shares (assuming the
		outstanding Share Options and Warrants being exercised in
		full on or before the Record Date)
Commission	:	1.5% of the total Subscription Price on the Underwritten
		Shares as at the Record Date

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, the Underwriter and their respective ultimate beneficial owners are Independent Third Parties. As at the date of the Underwriting Agreement, the Underwriter is not interested in any Shares.

The Company will pay the Underwriter an underwriting commission of 1.5% of the total Subscription Price on the Underwritten Shares as at the Record Date. The commission rate was determined after arm’s length negotiation between the Company and the Underwriter by reference to the market rate, the size of the Rights Issue and the current and expected market condition. The Directors (including the independent non-executive Directors) are of the view that the terms of the Underwriting Agreement, including the commission, accord with the market practice, and are fair and reasonable so far as the Company and the Shareholders are concerned.

ALTERNATIVE FINANCING MEANS AND TERMS OF THE RIGHTS ISSUE

Before conducting the Rights Issue, the Company had contacted a commercial bank to explore the possibility of arranging a loan. Given the reasons that (i) the Hong Kong Monetary Authority had issued guidance restricting banks to provide loans to money lenders in order to control the second and third mortgage business in Hong Kong and (ii) the Company does not have sufficient acceptable collaterals to secure the bank loan, such enquiry was unsuccessful. Afterwards, the Company resorted to several securities firms and out of which, only the Underwriter had shown the interest to underwrite the proposed Rights Issue.

LETTER FROM THE BOARD

The Directors (excluding the independent non-executive Directors who will express their view after considering the advice of the Independent Financial Adviser) consider that each Qualifying Shareholder will be entitled to subscribe for the Rights Shares at the same Subscription Price in proportion to his/her/its shareholding held on the Record Date and the terms of the Rights Issue, including the Subscription Price which has been set as a discount to the recent closing prices of the Shares with an objective of encouraging existing Shareholders to take up their entitlements so as to share in the potential growth of the Company, to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole. Further, Shareholders who do not want to participate in the Rights Issue could dispose the nil-paid Rights Shares in the secondary market. The Directors believe that given the weak share price performance in the Share, it is anticipated that participation in the Rights Issue together with application for excess Rights Shares by Shareholders will be low. As such, there is no excess application mechanism being incorporated in the structure of the Rights Issue.

Having considered the above, the Directors consider that the terms of the Rights Issue are the best available option in the current market condition given the share price performance, financial performance and position, and business prospects of the Group.

SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structures of the Company (for illustration purpose only) (i) as at the Latest Practicable Date and (ii) immediately after completion of the Rights Issue:

Scenario 1:

Assuming no outstanding Share Options and Warrants being exercised on or before the Record Date:

Underwriter, sub-underwriter(s) and subscribers procured by any of them_(Note)_ Public Shareholders Total	As at the Latest Practicable Date No. of Shares Approximate % – – 255,540,084 100.00 255,540,084 100.00	Upon completion of the Rights Issue (assuming all of the Rights Shares are subscribed for by the Qualifying Shareholders) No. of Shares Approximate % – – 1,788,780,588 100.00 1,788,780,588 100.00	Upon completion of the Rights Issue (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders) No. of Shares Approximate % 1,533,240,504 85.71 255,540,084 14.29 1,788,780,588 100.00	Upon completion of the Rights Issue (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders) No. of Shares Approximate % 1,533,240,504 85.71 255,540,084 14.29 1,788,780,588 100.00
				100.00

LETTER FROM THE BOARD

In the event that all Qualifying Shareholders do not accept the Rights Issue and thus the Underwriter is obligated to take up the Underwritten Shares, the maximum dilution effect on the Qualifying Shareholders’ shareholding interests will be approximately 85.71%.

Scenario 2:

Assuming the outstanding Share Options and Warrants being exercised in full on or before the Record Date:

Underwriter, sub-underwriter(s) and subscribers procured by any of them_(Note)_ Share Options holders Warrants holders Public Shareholders Total	As at the Latest Practicable Date No. of Shares Approximate % – – – – – – 255,540,084 100.00 255,540,084 100.00	Upon completion of the Rights Issue (assuming all of the Rights Shares are subscribed for by the Qualifying Shareholders) No. of Shares Approximate % – – 61,984,251 2.96 242,830,000 11.60 1,788,780,588 85.44 2,093,594,839 100.00	Upon completion of the Rights Issue (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders) No. of Shares Approximate % 1,794,509,862 85.71 8,854,893 0.42 34,690,000 1.66 255,540,084 12.21 2,093,594,839 100.00	Upon completion of the Rights Issue (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders) No. of Shares Approximate % 1,794,509,862 85.71 8,854,893 0.42 34,690,000 1.66 255,540,084 12.21 2,093,594,839 100.00
				100.00

Note: The Underwriter has irrevocably undertaken to the Company that (i) the Underwriter will not trigger a mandatory offer obligation under Rule 26 of Takeovers Code on the part of the Underwriter in respect of performing its obligations under the Underwriting Agreement; (ii) the Underwriter shall use its reasonable endeavours to ensure that the subscribers for Underwritten Shares shall be third parties independent of and not connected with the Company and its connected persons and are not acting in concert with the Underwriter and its associates; (iii) none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will be a substantial shareholder as a result of the Rights Issue; and (iv) the Underwriter shall and shall cause the sub-underwriters to procure independent subscribers and/or placees to take up such number of Rights Shares as necessary to ensure that the Company will comply with the public float requirement under the GEM Listing Rules upon completion of the Rights Issue.

On 2 December 2015, the Underwriter has signed a sub-underwriting agreement with Black Marble Securities Limited in relation to the sub-underwriting of 42% of the Underwritten Shares, representing 643,961,012 Rights Shares (assuming no outstanding Share Options and Warrants being exercised on or before the Record Date and no acceptance by Qualifying Shareholders under the Rights Issue) and 753,694,142 Rights Shares (assuming the outstanding Share Options and Warrants being exercised in full and new Shares have been allotted and issued pursuant thereto on or before the Record Date and no acceptance by Qualifying Shareholders under the Rights Issue) of the Rights Issue.

LETTER FROM THE BOARD

On 2 December 2015, the Underwriter has signed a sub-underwriting agreement with Luk Fook Securities (HK) Limited in relation to the sub-underwriting of 28% of the Underwritten Shares, representing 429,307,341 Rights Shares (assuming no outstanding Share Options and Warrants being exercised on or before the Record Date and no acceptance by Qualifying Shareholders under the Rights Issue) and 502,462,761 Rights Shares (assuming the outstanding Share Options and Warrants being exercised in full and new Shares have been allotted and issued pursuant thereto on or before the Record Date and no acceptance by Qualifying Shareholders under the Rights Issue) of the Rights Issue.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the sub-underwriters is an Independent Third Party and as informed by the Underwriter, such sub-underwriting arrangements are in compliance with the undertakings as stated in note 1 above. Further, as informed by the Underwriter, the Underwriter and/or sub-underwriters are in the course of identifying potential investors for subscription of the Underwritten Shares. It is expected that the concrete arrangement will be in place before the despatch of the Prospectus Documents and details of the concrete arrangement will be disclosed in the Prospectus. Further, the Company will take the appropriate steps to ensure that sufficient public float be maintained upon the completion of the Rights Issue in compliance with Rule 11.23(7) of the GEM Listing Rules.

ADJUSTMENTS IN RELATION TO THE OUTSTANDING SHARE OPTIONS AND WARRANTS

As at the Latest Practicable Date, the Company has 8,854,893 outstanding Share Options granted under the Share Option Scheme and 34,690,000 outstanding Warrants which in aggregate entitle holders thereof to subscribe for 43,544,893 Shares. The Rights Issue may cause adjustments to the exercise price and/or the number of the Shares to be issued pursuant to the terms and conditions of the Share Options and the Warrants. Further details of such adjustment, if required to be made, will be disclosed in further announcement(s).

FUND RAISING ACTIVITIES DURING THE PAST 24 MONTHS

Date of		Approximate net	Intended use	Actual use of
announcement	Event	Proceeds	of net proceeds	proceeds
30 April 2014	Placing of unlisted	HK$10.8 million	General working capital	Used as intended
	warrants under	(including
	general mandate	subscription price of
		the warrants and
		proceeds from the
		exercise of certain
		warrants)

LETTER FROM THE BOARD

Date of		Approximate net	Intended use	Intended use	Actual use of
announcement	Event	Proceeds	of net proceeds		proceeds
23 May 2014	Placing of	HK$197.1 million	(i)	approximately HK$38 million	Used as intended
	convertible bonds	(including the net		for the expansion of production
	and bonus warrant	proceeds from the		capacity of the biomass fuel
		conversion of the		project;
		convertible bonds
		and proceeds from	(ii)	approximately HK$42 million	Used as intended
		the exercise of		for the development of money
		certain bonus		lending business;
		warrants)
			(iii)	approximately HK$70 million	Used as intended
				for future acquisitions; and
			(iv)	approximately HK$47.1 million	Used as intended
				for general working capital.
3 June 2015	Placing of new	HK$86.4 million	(i)	approximately HK$46.4 million	Used as intended
	shares under			for the operation of money
	general mandate			lending business; and
			(ii)	approximately HK$40.0 million	approximately
				for general working capital of	HK$38.4 million
				the Group.	used as intended

Based on the above, a total of approximately HK$97.9 million was intended to be used as general working capital of the Group and the amount has been used as follows:

	Approximately
	HK$’million
Further investment in the money lending business	13.7
Acquisition of associates and unlisted financial assets	18.2
Acquisition of listed financial assets	34.0
General working capital	30.4
Total	96.3

Saved as disclosed above, the Company has not conducted any other fund raising activities in the past 24 months immediately preceding the Latest Practicable Date.

The cumulative dilution effect to Shareholders of all of the above fund raising activities is approximately 62.31% and the potential maximum cumulative dilution effect of 94.77% for all of the above fund raising activities and the Rights Issue.

LETTER FROM THE BOARD

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

The Group is principally engaged in sale of biodegradable food containers and disposable industrial packaging for consumer products, trading and manufacturing of biomass fuel and money lending business.

The Board has been actively exploring business opportunities in order to further develop the Group’s existing businesses. The Board considers these businesses and investments are capital intensive and are seeking to meet the capital requirements by conducting the Rights Issue. In view of these, the Board proposes the Rights Issue to strengthen its capital base and provide sufficient surplus capital to support future business development of the Group.

The Company will receive gross proceeds of not less than approximately HK$245.32 million and not more than approximately HK$287.12 million. The estimated net proceeds of the Rights Issue will be not less than approximately HK$240.76 million and not more than approximately HK$281.93 million. The Company intends to apply net proceeds from the Rights Issue in the following manner:

(a) approximately HK$200 million of the net proceeds from the Rights Issue for further development of money lending business; and
(b) approximately HK$40.76 million for any future acquisition or investments, including but not limited to the Potential Acquisition (as defined below).

According to the interim report of the Company for the six months ended 30 June 2015, the Group recorded a segment loss of approximately RMB2.07 million and RMB0.24 million from the businesses of the biodegradable products and the biomass fuel products respectively. On the contrary, the Group recorded a segment profit of approximately RMB2.50 million from money lending business. The net loss of the Group for the six months ended 30 June 2015 was approximately RMB6.94 million.

The Group expects the performance of biodegradable products and the biomass fuel products segments remain challenging. According to the Interim Report, the segment loss of biodegradable products business was as a result of (i) the rises in raw material costs and sub-contracting charges; (ii) the strong Renminbi and (iii) the economic downturn in Europe. Further, the segment loss of biomass fuel products business was due to the fall in price of the energy in the global market.

In view of the above, the Group has been proactively expanding the money lending business in Hong Kong especially the property mortgage loans. As at the Latest Practicable Date, the Group had an existing loan portfolio amounted to approximately RMB85.94 million (the “ Existing Loan Portfolio ”) with interest rate charged between 8% to 34%. The weighted average interest rate from the Existing Loan Portfolio is approximately 11.5% (the “ WAIR ”).

LETTER FROM THE BOARD

In the recent two months, the Company has been receiving increasing number of loan inquiries with loan size ranging from HK$0.2 million to HK$10 million. The Company believes that such trend is mainly attributable to the tightening measures adopted by the Hong Kong Monetary Authority to discourage commercial banks to extend loan facilities to second and third mortgage financing companies, resulting in borrowers switching from small money lenders to money lenders with a strong financial capital. The Company believes that it is well positioned to capture market demand in this opportunity and expand its market shares in the money lending sector quickly. Based on this estimation, the Company believes that it could successfully lend out the proposed amount of HK$200 million of the net proceeds at WAIR within the first half 2016.

It is expected that the Existing Loan Portfolio will generate a total interest income of approximately RMB9.80 million for the financial year ended 31 December 2015. In addition, on the assumption that (i) the Existing Loan Portfolio is successfully rolled over at the existing terms; and (ii) the proceed from the rights issue of HK$200 million (equivalent to approximately RMB160 million) is successfully lent out at WAIR within the first half in 2016, it is predicated that the aggregate interest income to be earned for the financial year ended 31 December 2016 (the “ FY2016 ”) will be approximately RMB19.08 million. Given such an estimate, it is likely that the Company will turnaround from loss to profit for FY2016.

Further, reference is made to the announcement of the Company dated 29 September 2015 in relation to a possible acquisition. As disclosed in the said announcement, the Company entered into a non-legally binding letter of intent with Traders Pacific Inc. (the “ Vendor ”) pursuant to which the Company intended to acquire and the Vendor intended to sell certain percentage in the issued share capital of the target company (the “ Potential Acquisition ”), which together with its subsidiaries is principally engaged in manufacturing and selling of medicine in the PRC. During the negotiation process, the Vendor has indicated that a refundable deposit of approximately HK$10-20 million to be maintained in an escrow account would be required for facilitating further negotiation and/or due diligence, and the rest would be reserved for the cost of due diligence works and possible settlement. The Directors consider such request to be normal requirement in commercial negotiation and that the amount of net proceeds earmarked for future acquisition or investments is fair and reasonable.

Saved as disclosed above, the Company does not have any other expected funding needs for the next 12 months.

Meanwhile, the Directors are of the opinion that the Group has sufficient working capital for its present requirements for at least the next 12 months from the date of this circular after taking into account its internal resources together with the estimated net proceeds from the Rights Issue (the “ Working Capital Forecast ”). The Working Capital Forecast are based on the (i) audited consolidated results of the Group for the year ended 31 December 2014; (ii) management account of the Group for the nine months ended 30 September 2015; and (iii) cash flows forecast of the Group for the period from 1 October 2015 to 31 December 2016.

LETTER FROM THE BOARD

The Working Capital Forecast have been prepared based on the existing events, plans and intentions of the Directors and events anticipated by the Directors. As these plans and intentions are based on assumptions of future events, which by their nature are subject to uncertainty, the Company’s cash flows may differ significantly from the Working Capital Forecast. The Directors do not forecast any unusual income statement and/or cash items, which are unforeseeable and beyond their control during the forecast period. Further, the Working Capital Forecast have been prepared on a consistent basis in all material respects with the accounting policies currently adopted by the Group as set out in the Company’s annual report 2014.

It is assumed that (i) there will be no material changes in existing government policies, or in political, legal (including changes in legislation, regulations or rules), fiscal or economic conditions in the PRC, Hong Kong or any territories or in the industry in which the Group operates or which are otherwise material to our business; (ii) the Working Capital Forecast has been prepared taking into account the Directors’ and key senior management’s continued involvement in the operations of the Group; (iii) the Group will be able to retain its key management and personnel during the period covered by the Working Capital Forecast; and (iv) the Company will not pay any dividend in respect of the years ending 31 December 2015 and 2016.

The Board considers that the Rights Issue would allow all Qualifying Shareholders to participate in the future development of the Company and at the same time offer more flexibility to the Qualifying Shareholders to choose whether to maintain, increase or decrease their respective pro rata shareholdings in the Company by taking up only their respective rights entitlement, acquiring additional rights entitlement or disposing of their rights entitlements in the open market (subject to availability).

The Board also consider that it is prudent to finance the Group’s long term growth by way of the Rights Issue which will not only strengthen the Group’s capital base and enhance its financial position, without having to incur interest expenses as compared to debt financing, but will also allow all Qualifying Shareholders the opportunity to participate in the growth of the Group through the Rights Issue at a deeper discount to the current market price of the Shares. Accordingly, the Board considers that the fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole.

RISK FACTORS

The Directors believe that there are certain risks involved in the operations of the Group which includes, but not limited to, the following. Additional risks and uncertainties not presently known to the Directors, or not expressed or implied below, or the Directors currently consider immaterial, may also adversely affect the Group’s business, operating results and financial condition in a material aspect.

Business and market risk relating to the Group

a) Risks relating to the Group and its business

The Group is primarily engaged in the sale of biodegradable food containers ad disposable industrial packaging for consumer products, trading and manufacturing of biomass fuel and money lending business.

LETTER FROM THE BOARD

The sale of biodegradable food containers and disposable industrial packaging for consumer products

The sale of biodegradable food containers and disposable industrial packaging for consumer products business is highly competitive, with the elements of competition include, but not limited to, price, quality, and brand awareness. The pricing of similar products by competitors may adversely affect the pricing of the products and could resulted in keen competition in price, lower business’ revenue and profitability level or suffer from loss of market share. Significant price fluctuations and shortage of materials used for production including sugar cane dregs, straw wheat stalk, reed and bamboo and rises of labour costs could increase the costs and may adversely affect the performance of the business. The Group has been actively seeking secure appropriate supplies at reasonable cost, but there is a risk that the Group may not be able to operate the business with a sufficient profit margin continuously under a severe competition environment.

Trading and manufacturing of biomass fuel

The Group operates primarily in PRC. Any addition or amendment to existing laws and regulations or any reduction of demand in PRC may affect the Group’s financial position and profitability. In addition, the crude oil price has been falling significantly in 2015. Any unfavorable movement will reduce profitability of the operation.

Money lending business

Money lending business is subject to risks that a customer or counterparty may fail to perform its contractual obligations on payment of interest/the principal or that the value of collateral held to secure the obligations might be inadequate. While the Group has internal policies and procedures designed to manage such risks, these policies and procedures may not be fully effective. Any material customers delay or default on their payments could adversely affect the Group’s financial position and profitability.

Although the Group has adopted the money lending policy and money lending procedure manual which provide guidelines on the handling and/or monitoring of the money lending procedures according to the Money Lenders Ordnance (Chapter 163 of the Laws of Hong Kong), the Group may face the risk of breaching the relevant rules and regulations from time to time, which may result in penalty or other potential liabilities to the Group.

In addition, the exposure to risks associated with the fluctuation of interest rates and change of monetary policies, which may be affected by external factors, such as the economic, political and social conditions both locally and globally, all of which are beyond the Group’s control.

LETTER FROM THE BOARD

b) Risks relating to politics, economics and regulations

The business operations of the Group are primarily based in Hong Kong and the PRC. Accordingly, the Group’s operating results, financial position and prospects could be adversely affected by economic, political and legal developments in those territories. Any changes in the political and economic policies/environments of the those territories (including, but not limited to, government policies, political instability, expropriation, laws, labour activism, war, civil unrest, terrorism, and changes in interest rates, foreign exchange rates, taxation, environmental regulations and import and export duties and restrictions) may adversely affect the Group’s business and results of operations as well as its ability to sustain its expansion strategies and thus future growth.

c) Risks relating to the Share price

The price and trading volume of the shares of the Company are determined by demand and supply by investors for the shares of the Company in the public market price and may be highly volatile. Factors such as variations in the Group’s revenue, earnings and cash flows, changes in or challenges to its business, announcements of new investments, acquisitions or disposals, the depth and liquidity of the market for the Shares, investors’ perceptions of the Group and general political, economic, social and market conditions both globally and in the PRC or Hong Kong could cause the market price of the Shares to change substantially.

d) Risks relating to the Rights Issue

Under the Underwriting Agreement, the Underwriters are entitled to terminate their obligations by giving notice in writing to the Company upon the occurrence of any of the events stated in the section headed “ Termination of the Underwriting Agreement ” in this circular on or before the Latest Time for Termination. Should the Rights Issue proceed as intended, the interest of the existing Shareholders in the Company will be diluted if they do not or cannot, as the case may be, subscribe for the Rights Shares which they are entitled to.

GEM LISTING RULES IMPLICATIONS

In accordance with Rule 10.29(1) of the GEM Listing Rules, the rights issue must be made conditional on approval by shareholders in general meeting by an ordinary resolution whereby any controlling shareholders and their associates or, where there are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the issuer and their respective associates shall abstain from voting in favour of the Rights Issue. Since there is no controlling Shareholder as at the Latest Practicable Date, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Rights Issue in accordance with Rule 10.29(1) of the GEM Listing Rules. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in the Rights Issue. Therefore, no Shareholder is required to abstain from voting in favour of the Rights Issue.

LETTER FROM THE BOARD

WARNING OF THE RISK OF DEALINGS IN THE SHARES AND THE NIL-PAID RIGHTS SHARES

EGM

A notice convening the EGM to be held at Jasmine Room, 3/F., BEST WESTERN PLUS Hotel Hong Kong, 308 Des Voeux Road West, Hong Kong, on Thursday, 21 January 2016 at 2:00 p.m. is set out on pages EGM-1 to EGM-2 of this circular.

A proxy form for use at the EGM is enclosed with this circular. Whether or not you are able to attend the meeting in person, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the Registrar, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and in such event, the instrument appointing a proxy shall be deemed to be revoked.

The resolution(s) proposed to be approved at the EGM will be taken by poll and an announcement will be made by the Company after the EGM on the results of the EGM.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in the Rights Issue. Therefore, no Shareholder is required to abstain from voting in favour of the Rights Issue.

LETTER FROM THE BOARD

RECOMMENDATION

You are advised to read the letter from the Independent Board Committee and the letter from the Independent Financial Adviser set out on pages 25 to 26 and pages 27 to 53 respectively of this circular.

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the terms of the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned and the Rights Issue are in the interests of the Company and the Shareholders as a whole.

Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the proposed resolution(s) approving the Rights Issue at the EGM. Accordingly, the Directors believe that the terms of the Rights Issue are fair and reasonable and in the interests of the Group and the Shareholders as a whole, therefore, the Directors recommend the Independent Shareholders to vote in favour of the proposed resolution(s) approving the Rights Issue at the EGM.

ADDITIONAL INFORMATION

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

By order of the Board Hao Wen Holdings Limited Chow Yik Chairman

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter from the Independent Board Committee, which has been prepared for the purpose of incorporation into this circular, setting out its recommendation to the Independent Shareholders in relation to the Rights Issue.

==> picture [76 x 76] intentionally omitted <==

HAO WEN HOLDINGS LIMITED 皓文控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8019)

28 December 2015

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

We refer to the circular of the Company dated 28 December 2015 (the “ Circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board as the Independent Board Committee to advise the Independent Shareholders as to whether the terms of the Rights Issue are fair and reasonable as far as the Independent Shareholders are concerned.

Messis Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether terms of the Rights Issue are fair and reasonable as far as the Independent Shareholders are concerned and whether it is in the interests of the Company and the Shareholders as a whole. Details of the recommendation, together with the principal factors and reasons taken into consideration in arriving at such recommendation, are set out on pages 27 to 53 of the Circular.

Your attention is also drawn to the letter from the Board set out on pages 7 to 24 of the Circular.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the terms of the Rights Issue and the advice from the Independent Financial Adviser, we are of the opinion that the Rights Issue is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable in so far as the Company and the Independent Shareholders are concerned. Accordingly, we recommend you to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve the Rights Issue.

Yours faithfully,

For and on behalf of the Independent Board Committee Mr. KWOK Pak Yu, Steven Mr. HO Kei Wing, Nelson Independent non-executive Directors

Ms. MA Sijing

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

28 December 2015

To: The Independent Board Committee and the Independent Shareholders of Hao Wen Holdings Limited

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the proposed Rights Issue, details of which are set out in the letter from the Board (the “ Letter ”) contained in the circular of the Company to the Shareholders dated 28 December 2015 (the “ Circular ”), of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

As stated in the Letter, the Company proposes to raise not less than approximately HK$245.32 million and not more than approximately HK$287.12 million before expenses by issuing not less than 1,533,240,504 Rights Shares and not more than 1,794,509,862 Rights Shares at the Subscription Price of HK$0.16 per Rights Share on the basis of six (6) Rights Shares for every one (1) Share held on the Record Date and payable in full upon application. The estimated net proceeds of the Rights Issue will be not less than approximately HK$240.76 million and not more than approximately HK$281.93 million. The Company intends to apply net proceeds from the Rights Issue as to (i) approximately HK$200 million for the further development of its money lending business; and (ii) approximately HK$40.76 million for any future acquisition or investments, including but not limited to the Potential Acquisition (as defined in paragraph A.2 below in this letter).

The Rights Issue is only available to the Qualifying Shareholders and will not be available to the Excluded Shareholders. No excess Rights Shares will be offered to the Qualifying Shareholders and any Rights Shares not taken up by the Qualifying Shareholders will be underwritten by the Underwriter.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The number of Rights Shares to be issued pursuant to the Rights Issue represents 600% of the Company’s existing issued share capital as at the Latest Practicable Date and approximately 85.71% of the issued share capital of the Company as enlarged by the allotment and issue of Rights Shares. As the Rights Issue will increase the issued share capital of the Company by more than 50%, pursuant to Rule 10.29 of the GEM Listing Rules, any controlling Shareholders and their associates or, where there are no controlling Shareholders, the Directors (excluding the independent non-executive Directors), the chief executive of the Company and their respective associates shall abstain from voting in favour of the resolutions relating to the Rights Issue. Since there is no controlling Shareholder as at the Latest Practicable Date, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Rights Issue in accordance with Rule 10.29(1) of the GEM Listing Rules. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, no Shareholder has a material interest in the Rights Issue. Therefore, no Shareholder is required to abstain from voting in favour of the Rights Issue.

The Independent Board Committee, comprising Mr. Kwok Pak Yu, Steven, Mr. Ho Kei Wing, Nelson and Ms. Ma Sijing, all being the independent non-executive Directors, has been established by the Board to advise the Independent Shareholders as to whether the terms of the Rights Issue are fair and reasonable and whether the Rights Issue is in the interests of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote, taking into account the recommendations of the Independent Financial Adviser.

We have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. We have not been appointed as the independent financial adviser to the Company’s other transactions during the last two years. Apart from normal professional fees for our services to the Company in connection with this engagement, no other arrangement exists whereby we will receive any fees and/or benefits from the Group. As at the Latest Practicable Date, we do not have any relationships with or any interests in the Company or any other parties that could reasonably be regarded as relevant to our independence. We are independent under Rule 17.96 of the GEM Listing Rules to act as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in connection with the Rights Issue.

Our role as the Independent Financial Adviser is to (i) give our independent opinion to the Independent Board Committee and the Independent Shareholders as to whether the Rights Issue is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole; and (ii) advise the Independent Shareholders on how to vote in relation to the Rights Issue.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the representations made to us by the Company, the Directors and the management of the Company. We have assumed that all statements, information and representations provided by the Company, the Directors and the management of the Company, for which they are solely responsible, are true and accurate at the time when they were provided and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular the omission of which would make any statement contained in the Circular, including this letter, incorrect or misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group, the Underwriter or their respective subsidiaries or associates. We have not considered the taxation implication on the Group or the Shareholders as a result of the Rights Issue. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of us is to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant stated sources and not be used out of context.

Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion. Nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Rights Issue, we have considered the following principal factors and reasons:

A. Reasons for the Rights Issue

A.1 Business overview of the Group

As stated in the Letter, the Group is principally engaged in sale of biodegradable food containers and disposable industrial packaging for consumer products, trading and manufacturing of biomass fuel and money lending business.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of the key financial information of the Group as extracted from the annual report of the Company for the year ended 31 December 2014 (the “ 2014 Annual Report ”), the interim report of the Company for the six months ended 30 June 2015 (the “ 2015 Interim Report ”) and the third quarterly report of the Company for the nine months ended 30 September 2015 (“ the 2015 Third Quarterly Report ”) respectively.

Table 1: Consolidated statement of profit or loss

Turnover Cost of sales Gross profit Other gains General and administrative expenses Impairment loss on intangible assets Loss from operations Share of results of associates Impairment loss on goodwill Loss on disposal of subsidiaries Finance costs Loss before taxation Income tax expense Loss for the period/year from continuing operations Profit for the year from discontinued operation	For the nine months ended 30 September 2015 2014 (unaudited) (unaudited) RMB’000 RMB’000 34,294 6,125 (27,053) (5,872) 7,241 253 674 14,148 (13,469) (20,464) – – (5,554) (6,063) 326 – (43,544) – – – (120) (212) (48,892) (6,275) (733) – (49,625) (6,275) – – (49,625) (6,275)	Year ended 31 December 2014 2013 (audited) (audited) RMB’000 RMB’000 34,685 56,351 (27,054) (53,433) 7,631 2,918 11,273 5,852 (17,958) (57,596) (12,737) (59,798) (11,791) (108,624) 185 – – – – (3,025) (434) (6,552) (12,040) (118,201) (976) (374) (13,016) (118,575) – 74 (13,016) (118,501)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 2: Extract of segment revenues and results

							(Unaudited)	(Unaudited)	(Unaudited)
						For the nine months ended 30				September
	Biodegradable			products		Biomass fuel products					Money	lending		Consolidated
		2015			2014	2015	2014			2015			2014	2015	2014
	RMB’000		RMB’000			RMB’000	RMB’000		RMB’000			RMB’000		RMB’000	RMB’000
Turnover		1,888			812	25,612	5,313			6,794			–	34,294	6,125
Segment results	(2,459)			(13,020)		(388)	(469)			4,227			–	1,380	(13,489)
							(Audited)
						For the year ended		31	December
					Continuing operations						Discontinued operation
	Biodegradable products				Biomass	fuel products	Money lending				Skin		care products	Consolidated
	2014		2013		2014	2013	2014		2013		2014		2013	2014	2013
	RMB’000		RMB’000		RMB’000	RMB’000	RMB’000	RMB’000			RMB’000		RMB’000	RMB’000	RMB’000
Turnover	811		56,351		30,897	–	2,977			–		–	–	34,685	56,351
Segment results	(5,543)		(13,463)		2,869	–	2,027			–		–	74	(647)	(13,389)

Table 3: Consolidated statement of financial position

	As at 30 June	As at 31	December
	2015	2014		2013
	(unaudited)	(audited)	(audited)
	RMB’000	RMB’000	RMB’000
Cash and bank balances	35,904	29,406		9,024
Total assets	501,705	433,800		52,698
Total liabilities	51,684	43,362		5,440
Total equity	450,021	390,438		47,258

Sources: the 2014 Annual Report, the 2015 Interim Report and the 2015 Third Quarterly Report

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(i) For the year ended 31 December 2014

According to the 2014 Annual Report, the Group recorded revenue of approximately RMB34.69 million for the year ended 31 December 2014, representing a decrease of approximately 38.4% as compared to approximately RMB56.35 million for the year 2013. The decrease in revenue was mainly attributable to the significant decrease in the turnover derived from the sales of biodegradable products by approximately RMB55.54 million from approximately RMB56.35 million in 2013 to approximately RMB0.81 million in 2014 as a result of the rises in raw material prices and labour costs which have weakened the competitiveness of biodegradable containers and disposable industrial packaging products. The strong appreciation of Renminbi and the economic downturn in Europe also have adverse impact on the sales of biodegradable containers and disposable industrial packaging products. In addition, the performance of the newly acquired business of manufacturing and sale of biomass fuel was challenging while the money lending business in Hong Kong expanded during the financial year ended 31 December 2014. Interest income from money lending business and revenue from trading and manufacturing of biomass fuel were approximately RMB2.98 million and RMB30.90 million, respectively, for the year ended 31 December 2014 (2013: nil and nil). As a result, the increase in the revenue generated from income in trading and manufacturing of biomass fuel and the money lending business cannot completely offset the decrease in trading of biodegradable containers in Hong Kong. Due to the decrease in overall cost of sales and the decrease in impairment loss on intangible assets of approximately 49.4% and 78.7%, respectively, the loss for the year ended 31 December 2014 decreased significantly to approximately RMB13.02 million from approximately RMB118.50 million for the year 2013.

As at 31 December 2014, the Group had total assets, total liabilities and total equity of approximately RMB433.80 million, approximately RMB43.36 million and approximately RMB390.44 million, respectively. Cash and bank balances increased from approximately RMB9.02 million as at 31 December 2013 to approximately RMB29.41 million as at 31 December 2014 mainly due to the issuance of two tranches of convertible bonds which raised approximately HK$200 million during the year ended 31 December 2014. According to the 2014 Annual Report, the Directors expected that the Group might depend on further financing from its shareholders and bankers to finance its business operations and to achieve its business objectives. Saved as the finance lease entered by the Group with balance of RMB1.97 million as at 31 December 2014, the Group had no bank and other borrowings as at 31 December 2013 and 2014.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) For the nine months ended 30 September 2015

According to the 2015 Third Quarterly Report, revenue from trading and manufacturing of biomass fuel, interest income on money lending business and revenue from sales of biodegradable products had increased by approximately RMB20.30 million, approximately RMB6.79 million and approximately RMB1.08 million, respectively, as compared to the corresponding period of last year. Although the unaudited revenue of the Group for the nine months ended 30 September 2015 had increased by approximately 5.6 times to approximately RMB34.29 million from approximately RMB6.13 million for the corresponding period of last year and the Group had recorded a gross profit of approximately RMB7.24 million for the six months ended 30 September 2015 as compared to the gross profit of approximately RMB253,000 for the corresponding period of last year, the loss for the period increased to RMB49.63 million for the nine months ended 30 September 2015 from the loss of approximately RMB6.28 million for the corresponding period of last year. We noted that the money lending business was the only segment which had recorded a segment profit.

As at 30 June 2015, the Group had total assets, total liabilities and total equity of approximately RMB501.71 million, approximately RMB51.68 million and approximately RMB450.02 million, respectively. Cash and bank balances increased from approximately RMB29.41 million as at 31 December 2014 to approximately RMB35.90 million as at 30 June 2015 mainly due to the placement of new shares of approximately RMB66.98 million during the period ended 30 June 2015.

According to the 2015 Third Quarterly Report, the Group had cash and cash equivalents amounting to approximately RMB6.14 million as at 30 September 2015. With the limited available resources, the Directors expected that the Group might depend on further financing from its shareholders and bankers to finance its business operations and to achieve its business objectives.

We noted that the Group has recorded loss for each of the 2 years ended 31 December 2014 and the nine months ended 30 June 2015. Among the Group’s three business segments, we note that only the money lending business segment recorded segment profit for the nine months ended 30 September 2015. Segment results for money lending business increased to approximately RMB4.2 million for the nine months ended 30 September 2015 from nil for the corresponding period of last year. We also noted that the results for the other two segments, biodegradable products and biomass fuel products, had recorded negative segment results for the nine months ended 30 September 2014 and 2015.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given the fact that the Group’s cash level amounted to only approximately RMB6.14 million as at 30 September 2015 and that the Directors consider that the further development of the profitable money lending business and any future acquisition or investments, including but not limited to the Potential Acquisition (as defined in paragraph A.2. below in this letter), are capable of strengthening and expanding the revenue stream of the Group upon materialisation as further discussed in paragraph A.2 below in this letter, the Directors consider that the Rights Issue will be able to raise sufficient amount of funding for the Company to achieve the abovementioned objectives, which is in the interests of the Company and the Shareholders as a whole.

A.2 Reasons for the Rights Issue and the use of proceeds

As stated in the Letter, the Board has been actively exploring business opportunities in order to further develop the Group’s existing businesses. The Board considers these businesses and investments are capital intensive and are seeking to meet the capital requirements by conducting the Rights Issue. In view of these, the Board proposes the Rights Issue to strengthen its capital base and provide sufficient surplus capital to support future business development of the Group.

As mentioned in the Letter, the estimated gross proceeds from the Rights Issue will be not less than approximately HK$245.32 million and not more than approximately HK$287.12 million. The estimated net proceeds of the Rights Issue will be not less than approximately HK$240.76 million and not more than approximately HK$281.93 million. The Company intends to apply the net proceeds from the Rights Issue as to (i) approximately HK$200 million for further development of its money lending business; and (ii) approximately HK$40.76 million any future acquisition or investments, including but not limited to the Potential Acquisition (as defined below).

(i) Operation of money lending business

As stated in the Letter, the Group expects the performance of biodegradable products and the biomass fuel products segments remain challenging. According to the 2015 Third Quarterly Report, the segment loss of biodegradable products business was as a result of (i) the rises in raw material costs and sub-contracting charges; (ii) the strong Renminbi and (iii) the economic downturn in Europe. Further, the Board has made a further provision for impairment on the intangible assets in relation to its biodegradable containers and disposable industrial packaging products during the nine months ended 30 September 2015.

In view of the above, the Group has been proactively expanding the money lending business in Hong Kong especially the property mortgage loans. We noted that the Company intends to apply approximately 83.1% of the net proceeds from the Rights Issue to further develop its money lending business. As stated in the Letter, as at the Latest Practicable Date, the Group had an existing loan portfolio amounted to approximately RMB85.94 million (the “ Existing Loan Portfolio ”) with interest rate charged between 8% and 34%. The weighted average interest rate from the Existing Loan Portfolio is approximately 11.5% (the “ WAIR ”).

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We understood from the Directors that in the recent two months, the Group has been receiving an increasing number of loan inquires with loan sizes ranging from HK$0.2 million to HK$10 million. The Company believes that such trend is mainly attributable to the tightening measures adopted by the Hong Kong Monetary Authority to discourage commercial banks to extend loan facilities to second and third mortgage financing companies, resulting in borrowers switching from small money lenders to money lenders with a strong financial capital. The Company believes that it is well positioned to capture market demand in this opportunity and expand its market shares in the money lending sector quickly. Based on this, the Company believes that it could successfully lend out the proposed amount of HK$200 million of the net proceeds at WAIR within the first half 2016.

It is expected that the Existing Loan Portfolio will generate a total interest income of approximately RMB9.80 million for the financial year ended 31 December 2015. In addition, on the assumption that (i) the Existing Loan Portfolio is successfully rolled over at the existing terms; and (ii) the proceeds from the Rights Issue of HK$200 million (equivalent to approximately RMB160 million) is successfully lent out at WAIR within the first half in 2016, it is predicated that the aggregate interest income to be earned for the financial year ended 31 December 2016 (the “ FY2016 ”) will be approximately RMB19.08 million. Given such an estimate, it is likely that the Company will turnaround from loss to profit for FY2016.

(ii) Future acquisition or investments, including but not limited to the Potential Acquisition (as defined below)

Reference is made to the announcement of the Company dated 29 September 2015 in relation to a possible acquisition. As disclosed in the said announcement, the Company entered into a non-legally binding letter of intent with Traders Pacific Inc. (the “ Vendor ”) pursuant to which the Company intended to acquire and the Vendor intended to sell certain percentage in the issued share capital of the target company (the “ Potential Acquisition ”), which together with its subsidiaries is principally engaged in manufacturing and selling of medicine in the PRC.

As stated in the Letter, during the negotiation process, the Vendor has indicated that a refundable deposit of approximately HK$10-20 million to be maintained in an escrow account would be required for facilitating further negotiation and/or due diligence. We understood from the Directors that the Company intends to finance the payment of such refundable deposit by using the net proceeds from the Rights Issue, while the rest of the net proceeds (other than the portion earmarked for the development of the money lending business) would be reserved for the cost of due diligence works and possible settlement of the consideration should the Potential Acquisition materializes.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In connection with the above, we have reviewed the said announcement and noted that the amount of consideration for the Potential Acquisition will be subject to further negotiation and that if the Potential Acquisition materialises, it may constitute a notifiable transaction under the GEM Listing Rules and further announcement(s) will be made by the Company in accordance with all applicable requirements of the GEM Listing Rules as and when appropriate. We have also reviewed the letter of intent relating to the Potential Acquisition and we further understood from the Directors that the amount of net proceeds earmarked for future acquisition and investments (including but not limited to the Potential Acquisition for satisfying the payment of the refundable deposit, the cost of due diligence and the possible settlement of the consideration should the Potential Acquisition materialises) is justifiable having regard to the possible size of the Potential Acquisition (should it materialises and subject to further negotiation) and the amount of refundable deposit requested by the Vendor.

Based on the foregoing, we concur with the view of the Directors that the request for a refundable deposit in relation to the Potential Acquisition is a normal requirement in commercial negotiations and that the amount of net proceeds earmarked for future acquisition or investments is fair and reasonable.

A.3 Fund raising activities during the past 24 months

We noted that the cash and bank balances currently available to the Group were primarily attributable to the recent fund raising activities of the Company. The following table sets out the fund raising activities of the Company during the past 24 months immediately before the Latest Practicable Date:

Date of Approximate announcement Fund raising activity net proceeds Proposed use of proceeds Actual use of proceeds 30 April 2014 Placing of unutilised HK$10.8 million General working capital Used as intended warrants under general (including subscription mandate price of the warrants and proceeds from the exercise of certain warrants)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of

Fund raising activity

announcement

23 May 2014 Placing of convertible bonds and bonus warrants

Approximate net proceeds Proposed use of proceeds HK$197.1 million (i) approximately HK$38 Used as intended (including the net million for the proceeds from the expansion of conversion of the production capacity of convertible bonds and the biomass fuel proceeds from the project; exercise of certain bonus warrants) (ii) approximately HK$42 Used as intended

Actual use of proceeds

(ii) approximately HK$42 Used as intended million for the development of money lending business;
(iii) approximately HK$70 Used as intended million for future acquisitions; and
(iv) approximately Used as intended HK$47.1 million for general working capital Used as intended.

3 June 2015 Placing of new shares HK$86.4 million under general mandate

(i) approximately Used as intended HK$46.4 million for the operation of money lending business; and

(ii) approximately Approximately HK$38.4 HK$40.0 million for million used as intended general working capital of the Group.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the three fund-raising activities mentioned above, a total of approximately HK$97.9 million was intended to be used as general working capital of the Group and the majority of such amount has been used as follows:

	Approximately
	HK$ million
Further investment in the money lending business	13.7
Acquisition of associates and unlisted financial assets	18.2
Acquisition of listed financial assets	34.0
General working capital	30.4
Total	96.3

We noted that most of the proceeds from the fund-raising activities in the past 24 months had been used as intended. The accumulative dilution effect to Shareholders in respect of such fund-raising activities is approximately 62.31%.

A.4 Financing alternative

As stated in the Letter, before conducting the Rights Issue, the Company had contacted a commercial bank to explore the possibility of arranging a loan. Given the reasons that (i) the Hong Kong Monetary Authority had issued guidance restricting banks to provide loans to money lenders in order to control the second and third mortgage business in Hong Kong and (ii) the Company does not have sufficient acceptable collaterals to secure the bank loan, such enquiry was unsuccessful. We have discussed with the Directors concerning the relevant discussion between the Company and such commercial bank and, having considered the financial condition of the Group as discussed in paragraph A.1 above, we concur with the Directors’ view that obtaining debt financing may not be a viable option for the Company under the present circumstances.

Afterwards, the Company resorted to several securities firms, out of which only the Underwriter had shown interest to underwrite the proposed Rights Issue.

Furthermore, the Directors considered that debt financing may be subject to lengthy due diligence and negotiations with banks and would incur interest burden to the Group. If the Company raised not less than HK$240.67 million in the form of debt rather than equity, assuming the debt carried an interest of 5% per annum, being the prime rate from Bank of China as at the Latest Practicable Date, the Company would have to pay not less than approximately HK$12.03 million per year of interest expenses, which would further worsen the Group’s performance given that the Group had already recorded net losses in each of the two financial years ended 31 December 2014 and the nine-month periods ended 30 September 2014 and 2015 respectively. In addition, the Company may need to raise money to repay the loan upon its maturity. Also, the Board considers that it is prudent to finance the Group’s long term growth by long-term financing, preferably in the form of equity.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Our view

Based on all of the above and having considered in particular that:

(i) the Company will be able to expand its profitable money lending business (being the only profitable business segment of the Group for the nine months ended 30 September 2015) by utilising approximately HK$200 million of the proceeds from the Rights Issue for lending out to borrowers in the market and generate interest income;
(ii) before conducting the Rights Issue, the Company had contacted a commercial bank to explore the possibility of arranging a loan but such enquiry was unsuccessful;
(iii) even if the Company had been able to raise not less than HK$240.67 million in the form of debt rather than equity, assuming the debt carried an interest of 5% per annum, being the prime rate from Bank of China as at the Latest Practicable Date, the Company would have to pay not less than approximately HK$12.03 million per year of interest expenses, which would further worsen the Group’s performance given that the Group had already recorded net losses in each of the two financial years ended 31 December 2014 and the nine-month periods ended 30 September 2014 and 2015 respectively. In addition, the future cost of debt financing may rise as a result of the anticipated interest rate rise following the tapering of quantitative easing policy by the Federal Reserve of the United States;
(iv) the amount of net proceeds earmarked for future acquisition and investments (including but not limited to the Potential Acquisition for satisfying the payment of the refundable deposit, the cost of due diligence and the possible settlement of the consideration should the Potential Acquisition materializes) is justifiable having regard to the possible size of the Potential Acquisition (should it materializes and subject to further negotiation) and the amount of refundable deposit requested by the Vendor as discussed above; and
(v) the benefits of financing by way of Rights Issue outweigh that of other financing alternative as discussed in the paragraph A.4 above,

we concur with the Directors’ view that the Rights Issue enables the Group to enhance its capital base and for its business development and is in the interest of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

B. Principal terms of the Rights Issue

B.1 Subscription Price

The Subscription Price is HK$0.16 per Rights Share. As advised by the Directors, the Subscription Price was determined based on arm’s length negotiations between the Company and the Underwriter with reference to (i) the prevailing market price of the Shares prior to the Last Trading Day; (ii) the poor share price performance of the Share in the past six months; and (iii) the continuous loss-making performance of the Group since 2008, except 2012. After deducting all relevant expenses relating to the Rights Issue, the net price pre Rights Share will be approximately HK$0.157.

In order to access the fairness and reasonableness of the Subscription Price, we set out the following analysis for illustrative purpose:

Comparison with prevailing market price

We note that the Subscription Price represents:

(i) a discount of 50% to the closing price of HK$0.32 per Share as quoted on the Stock Exchange on the date of the Underwriting Agreement and on the Last Trading Day;
(ii) a discount of approximately 12.57% to the theoretical ex-entitlement price of HK$0.183 based on the closing price of HK$0.32 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 50.92% to the average closing price of approximately HK$0.326 per Share as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to and including the Last Trading Day;
(iv) a discount of approximately 53.22% to the average closing price of approximately HK$0.342 per Share as quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to and including the Last Trading Day; and
(v) a discount of approximately 60.00% to the closing price of HK$0.40 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we note that the Subscription Price in general represents a substantial discount to the prevailing market price of the Shares.

Comparison with historical closing prices

Set out below is the movements in the daily closing price per Share based on the closing price per Share as quoted on the Stock Exchange (adjusted for the share consolidation of the Company effective from November 2015 where applicable) for a 12-month period from 2 December 2014 up to and including the Last Trading Day (the “ Review Period ”):

==> picture [371 x 230] intentionally omitted <==

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

8
7
6
5
4
8
2
1
Subscription Price of HK$0.16 per Rights Share
0
2/12/2014 2/1/2015 2/2/2015 2/3/2015 2/4/2015 2/5/2015 2/6/2015 2/7/2015 2/8/2015 2/9/2015 2/10/2015 2/11/2015 2/12/2015
----- End of picture text -----

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

During the Review Period, the lowest closing price per Share was HK$0.31 recorded on 27 November 2015 while the highest closing price per Share was HK$6.80 recorded on 31 December 2014. The average daily closing price per Share was approximately HK$2.63 per Share.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We note that the Subscription Price of HK$0.16 per Rights Share is below the daily closing prices per Share throughout the Review Period and represents (i) a discount of approximately 97.65% from the highest closing price; (ii) a discount of approximately 48.39% from the lowest closing price; and (iii) a discount of approximately 93.92% from the average daily closing price during the Review Period.

We also note that the daily closing price per Share in the Review Period demonstrated an overall declining trend as shown in the above diagram.

Review on the trading liquidity of the Shares

The chart of daily trading volume of the Shares during the Review Period is as follows:

==> picture [404 x 130] intentionally omitted <==

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

1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2/12/2014 2/1/2015 2/2/2015 2/3/2015 2/4/2015 2/5/2015 2/6/2015 2/7/2015 2/8/2015 2/9/2015 2/10/2015 2/11/2015 2/12/2015
Shares)
Trading volume (thousand
----- End of picture text -----

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

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

A table showing the average daily trading volume of the Shares per month and the percentages of the average daily trading volume as compared to the total number of Shares in issue as at the respective month-ends during the Review Period is as follows:

				Percentage of
				average daily
				trading volume
			Average	to total number
	Total trading		daily trading	of Shares in
	volume of the	Number of	volume of the	issue as at
	Shares in	trading days in	Shares in	the respective
	the month	the month	the month	month-ends
			(Number of Shares)	(Approximate %)
			(Note 1)	(Note 2)
2014
December	292,348,000	20	14,617,400	0.34
2015
January	157,210,000	20	7,860,500	0.18
February	195,378,000	18	10,854,333	0.25
March	3,423,137,830	21	163,006,563	3.83
April	3,726,723,536	19	196,143,344	4.61
May	2,461,293,500	19	129,543,763	3.04
June	6,312,431,000	22	286,928,682	5.61
July	1,630,390,000	22	74,108,636	1.45
August	460,329,500	21	23,634,738	0.46
September	719,373,000	20	35,968,650	0.70
October	591,765,000	20	29,588,250	0.58
November	235,772,500	21	11,277,262	4.39
December (up to and
including the Last
Trading Day)(Note 3)	511,431	2	255,716	0.10

Notes:

Average daily trading volume is calculated by dividing the total trading volume for the month/ period by the number of trading days during the month/period which exclude any trading day on which trading of the Shares on the Stock Exchange was suspended for the whole trading day.
Based on number of shares in issue stated in the monthly return of equity issuer in issue as at the respective month-end.
The Review Period commenced on 2 December 2014 and ended on the Last Trading Day.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We note that the average number of Shares traded per trading date in each month during the Review Period as a percentage of the total number of issued Shares as at the respective month-ends fluctuated notably, ranging from approximately 0.10% to approximately 5.61%.

Comparison with recent rights issue transactions

We have conducted a search of rights issue transactions announced by companies listed on the Stock Exchange during the six-month period prior to the date of the Underwriting Agreement and have identified, based on such search criteria, 26 rights issues (the “ Rights Issue Comparable(s) ”) for comparison purpose. To the best of our endeavour, we believe that the list of Rights Issue Comparables is an exhaustive list of rights issues meeting the aforesaid search criteria and is a fair and representative sample to be taken as a general reference of the recent market practices in relation to rights issues.

Although the Rights Issue Comparables may be different from the Group in terms of business nature, financial performance, financial position and funding requirements, the Rights Issue Comparables can serve as a market reference for the recent market practice in relation to the subscription prices under other rights issues as compared to the relevant prevailing market share prices and provide an insight to the reasonableness of the Subscription Price in respect of the Rights Issues.

We set out our findings in the following table:

			Premium/
			(discount) of	Premium/
			subscription	(discount) of
			price	subscription
			over/(to)	price over/
			the closing	(to) the
			price on	theoretical
Date of	Company name		the last	ex-rights	Underwriting	Maximum	Excess
announcement	(Stock code)	Basis of entitlement	trading day	price	commission	dilution	application
				(Note 1)		(Note 2)
			(%)	(%)	(%)	(%)	(Yes/No)
23 Nov 2015	China New Economy Fund Limited (80)	1 for 2	(11.32)	(7.84)	3.25	33.33	No
17 Nov 2015	Lai Sun Development Limited (488)	1 for 2	(33.33)	(25.20)	2.00	33.33	Yes
12 Nov 2015	EPI (Holdings) Limited (689)	5 for 1	(65.43)	(23.91)	1.00	83.33	No
28 Oct 2015	China Sandi Holdings Limited (910)	2 for 1	(65.52)	(39.39)	1.50	74.75	No
26 Oct 2015	GR Properties Limited (108)	1 for 2	(25.29)	(18.41)	2.50	33.33	Yes
8 Oct 2015	Well Way Group Limited (8063)	1 for 1	(28.57)	(16.67)	3.50	50.00	Yes
5 Oct 2015	Real Nutriceutical Group Limited (2010)	9 for 40	(30.77)	(26.65)	1.50	18.37	Yes
1 Oct 2015	Greater China Holdings Limited (431)	1 for 2	(45.00)	(35.29)	0.00	33.33	Yes
29 Sep 2015	China Resources and Transportation Group	4 for 1	(82.80)	(49.00)	2.00	80.00	Yes
	Limited (269)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

				Premium/
				(discount) of	Premium/
				subscription	(discount) of
				price	subscription
				over/(to)	price over/
				the closing	(to) the
				price on	theoretical
Date of	Company name			the last	ex-rights	Underwriting	Maximum	Excess
announcement	(Stock code)	Basis of entitlement		trading day	price	commission	dilution	application
					(Note 1)		(Note 2)
				(%)	(%)	(%)	(%)	(Yes/No)
18 Sep 2015	First Credit Finance Group Limited (8215)		12 for 1	(51.40)	(7.55)	3.00	92.31	Yes
10 Sep 2015	Fosun International Limited (656)		56 for 500	0.00	0.00	0.00	10.07	Yes
1 Sep 2015	Fortune Sun (China) Holdings Limited (352)		1 for 5	(28.57)	(24.78)	0.00	16.67	Yes
30 Aug 2015	HNA International Investment Holdings		9 for 5	(20.00)	(8.29)	0.00	64.29	Yes
	Limited (521)
17 Aug 2015	Chong Hing Bank Limited (1111)		1 for 2	(26.03)	(19.00)	2.40	33.33	Yes
6 Aug 2015	Easyknit Enterprises Holdings Limited (616)		20 for 1	(88.00)	(26.15)	1.00	95.24	Yes
31 Jul 2015	Celestial Asia Securities Holdings Limited (1049)		1 for 2	(57.45)	(47.47)	2.50	33.33	Yes
8 Jul 2015	King Fook Holdings Ltd. (280)		2 for 5	(28.57)	(22.08)	2.50	28.57	Yes
26 Jun 2015	Food Idea Holdings Ltd (formerly known as		1 for 2	(46.43)	(36.75)	1.50	33.33	No
	Gayety Holding Limited) (8179)
26 Jun 2015	Vanke Property (Overseas) Ltd. (1036)		1 for 2	(19.92)	(14.19)	0.93	33.33	Yes
26 Jun 2015	King Stone Energy Group Ltd. (663)		1 for 2	(68.00)	(58.62)	2.50	33.33	No
23 Jun 2015	Hua Xia Health Holdings Ltd. (8143)		1 for 5	(48.20)	(7.90)	2.75	16.67	No
23 Jun 2015	AMCO United Holdings Ltd. (630)		3 for 1	(41.22)	(14.71)	3.50	75.00	Yes
14 Jun 2015	China Mobile Games and Cultural		1 for 2	(25.49)	(17.39)	3.50	33.33	Yes
	Investment Ltd. (8081)
11 Jun 2015	Rui Kang Pharmaceutical Group		4 for 1	(38.98)	(11.33)	3.50	80.00	No
	Investments Ltd. (8037)
10 Jun 2015	China Rare Earth Holdings Limited (769)		2 for 5	(58.60)	(50.30)	3.50	28.60%	Yes
9 Jun 2015	Jia Meng Holdings Ltd. (8101)		3 for 1	(57.89)	(25.47)	3.50	75.00	No
	Average		(42.47)	(24.74)	2.08	45.91
	Maximum		0.00	0.00	3.50	95.24
	Minimum		(88.00)	(58.62)	0.00	10.07
2 Dec 2015	The Company		6 for 1	(50.00)	(12.57)	1.00	85.71	No

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

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

The theoretical ex-rights price is calculated by adding the market value of all the issued shares (based on the closing price of the shares on the last trading day) with the gross amount of subscription proceeds expected to be received from the rights issue (before expenses), and then divided by the total number of issued shares as enlarged by the rights issue. For example, in case of every 1 rights share for every 2 existing shares, (2 x closing price on the last trading day) + 1 x (the subscription price)/(2+1).
Maximum dilution effect of each rights issue is calculated as: (number of rights shares and (if any) bonus shares to be issued under the basis of entitlement)/(number of shares held for the entitlement for the rights shares under the basis of entitlement + number of rights shares and (if any) bonus shares to be issued under the basis of entitlement) x 100%. For example, for a rights issue with basis of 1 rights share for every 1 share held with bonus issue on the basis of 1 bonus share for every 1 rights share taken up, the maximum dilution effect is calculated as ((1+1)/(1+1+1))*100) = 66.66%.

As shown on the above table, most of the subscription prices of the Rights Issue Comparables are set at a discount to the respective closing prices per share on the last trading day, ranging from nil to approximately 88.00% with an average discount of approximately 42.47%. In respect of the Rights Issue, the Subscription Price represented a discount of approximately 50.00% to the closing price per Share on the Last Trading Day, which, despite being larger than the average discount of the Rights Issue Comparables, is within the range of discounts of the Rights Issue Comparables. We note that out of the 26 Rights Issue Comparables, 10 (representing more than one-third of the Rights Issue Comparables) set the respective subscription prices of the right shares at a higher discount to the respective closing prices per share on the last trading day than 50.00%.

We also note that the premium/discount to the theoretical ex-rights price per share represented by the Rights Issue Comparables ranged from nil to a discount of approximately 58.62% (the “ TEP Market Range ”), with an average discount of approximately 24.74%. The Subscription Price represented a discount of approximately 12.57% to the theoretical ex-rights price per Share, which falls within the TEP Market Range and represents a lower discount than the corresponding average represented by the Rights Issue Comparables.

We further note that the maximum dilution effect of approximately 85.71% in respect of the Rights Issue falls within the range of the maximum dilution effect of the Rights Issue Comparables.

Our view

Notwithstanding the discount represented by the Subscription Price to the prevailing market price of the Shares and the closing prices per Share during the Review Period, we have taken into account that:

(i) it is a common market practice that the subscription price of a rights issue is normally set at a discount to the prevailing market prices of the relevant shares in order to enhance the attractiveness of a rights issue and to encourage the existing shareholders to participate in the rights issue;
(ii) the discounts represented by the Subscription Price to the closing Share price on the Last Trading Day and to the theoretical ex-rights price are within the corresponding ranges of discounts represented by the Rights Issue Comparables;

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) the Group recorded loss from continuing operations for the financial years ended 31 December 2013 and 2014 and the nine-month periods ended 30 September 2014 and 2015 as referred to in the paragraph A.1 above;
(iv) the daily closing prices per Share in the Review Period demonstrated an overall declining trend;
(v) the trading volume of the Shares during the Review Period, as represented by the average number of Shares traded per trading date in each month during the Review Period as a percentage of the total number of issued Shares as at the respective month-ends, fluctuated notably, ranging from as low as approximately 0.10% only;
(vi) the Rights Issue offers all the Qualifying Shareholders an equal opportunity to subscribe for their pro-rata provisional entitlement of the Rights Shares and hence avoids dilution;
(vii) the Subscription Price was a commercial decision arrived at after arm’s length negotiation between the Company and the Underwriter; and
(viii) as advised by the Directors, during the negotiation of the Underwriting Agreement, it was indicated to the Company that such level of the Subscription Price is necessary to enable the Underwriter to provide the underwriting commitment,

Based on the totality of the foregoing factors, we are of the view that the Subscription Price is on normal commercial terms and is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

B.2 Underwriting commission

Pursuant to the Underwriting Agreement, the Company has agreed to pay the Underwriter an underwriting commission of 1.50% of the aggregate Subscription Price of the Underwritten Shares. According to the Rights Issue Comparables (details of which are set out in the paragraph B.1 above), the underwriting commission of the Rights Issue Comparables ranged from a minimum of nil to a maximum of 3.50%, with an average of approximately 2.08%. As the underwriting commission of the Rights Issue of 1.50% is within the range and below the average of that of the Rights Issue Comparables, we are of the view that the underwriting commission of 1.50% under the Underwriting Agreement is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

B.3 Excess application

As stated in the Letter and according to the Directors, taking into account that the Rights Issue will give Qualifying Shareholders an equal and fair opportunity to participate in the Company’s future development by subscribing for his/her/its entitlements under the Rights Issue, the Directors consider each Qualifying Shareholder will be entitled to subscribe for the Rights Shares at the same Subscription Price in proportion to his/her/its shareholding held on the Record Date and the terms of the Rights Issue, including the Subscription Price which has been set as a discount to the recent closing prices of the Shares with an objective of encouraging existing Shareholders to take up their entitlements so as to share in the potential growth of the Company, to be fair and reasonable and in the best interests of the Company and the Shareholders as a whole. Further, Shareholders who do not want to participate in the Rights Issue could dispose the nil-paid Rights Shares in the secondary market. The Directors believe that given the weak share price performance in the Share, it is anticipated that participation in the Rights Issue together with application for excess Rights Shares by Shareholders will be low. As such, there is no excess application mechanism being incorporated in the structure of the Rights Issue.

Despite the fact that no arrangement for the Qualifying Shareholders to apply for any Rights Shares which are in excess of his/her/its entitlement, we noted that the Company has set the Subscription Price at a considerable discount to the prevailing market price of the Shares as to encourage the Qualifying Shareholders who are positive to the future development of the Company to exercise their rights to subscribe for the Rights Shares.

We consider that the absence of the excess application arrangement may not be desirable from the point of view of those Qualifying Shareholders who wish to take up additional Rights Shares in excess of their assured entitlement. However, we consider that the aforesaid should be balanced against, among others, the following factors: (i) the lack of excess application does not alter the intention of the Rights Issue of encouraging all Qualifying Shareholders to maintain their respective shareholdings in the Company; (ii) the intention of the Directors to set the Subscription Price at a level that would attract the Qualifying Shareholders to participate in the Rights Issue; (iii) all the Qualifying Shareholders are offered opportunities to decide whether to accept the Rights Issue or not; (iv) additional effort and costs will be required to arrange the excess application procedures which is different from the Directors’ intention of minimizing all costs which may be incurred during the fund raising; (v) 8 out of the 26 of Rights Issue Comparables also did not arrange for any excess application mechanisms; and (vi) Qualifying Shareholders who wish to increase their shareholding interests in the Company through the Rights Issue may, subject to availability, acquire additional nil-paid Rights Shares in the market.

In view of the above, although it may be beneficial to allow application for excess Rights Shares for the Qualifying Shareholders who wish to take up additional Rights Shares, we consider that the Rights Issue has already given the opportunity to all Qualifying Shareholders to maintain their proportionate interests in the Company should they so wish by applying for the Rights Shares according to their respective shareholdings in the Company and acquire additional nil-paid Rights Shares in the market, which we consider to be fair and reasonable.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Therefore, based on the foregoing, we are of the view that the absence of the excess application arrangement is acceptable.

B.4 Potential dilution effect of the Rights Issue

Under the scenarios of (1) the outstanding Share Options and Warrants are not exercised on or before the Record Date; and (2) the outstanding Share Options and Warrants are exercised in full on or before the Record date, the following tables set out the shareholding structure of the Company (a) as at the Latest Practicable Date; and (b) immediately after the completion of the Rights Issue:

Scenario 1:

Assuming no outstanding Share Options and Warrants being exercised on or before the Record Date:

					Upon the completion of
			Upon completion of the		the Rights Issue
			Rights Issue (assuming		(assuming none of the
			all Rights Shares are		Rights Shares are
	As at the		subscribed for by the		subscribed for by the
	Latest Practicable	Date	Qualifying Shareholders)		Qualifying Shareholders)
	Number of Shares	%	Number of Shares Approximately %		Number of Shares Approximately %
Underwriter, sub-underwriter(s)
and subscribers procured
by any of them_(Note)_	–	–	–	–	1,533,240,504	85.71
Public Shareholders	255,540,084	100.00	1,788,780,588	100.00	255,540,084	14.29
Total	255,540,084	100.00	1,788,780,588	100.00	1,788,780,588	100.00

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Scenario 2:

Assuming the outstanding Share Options and Warrants being exercised in full on or before the Record Date:

					Upon the completion of
			Upon completion of the		the Rights Issue
			Rights Issue (assuming		(assuming none of the
			all Rights Shares are		Rights Shares are
	As at the		subscribed for by the		subscribed for by the
	Latest Practicable	Date	Qualifying Shareholders)		Qualifying Shareholders)
	Number of Shares	%	Number of Shares Approximately %		Number of Shares Approximately %
Underwriter, sub-underwriter(s)
and subscribers procured
by any of them_(Note)_	–	–	–	–	1,794,509,862	85.71
Share Options holders	–	–	61,984,251	2.96	8,854,893	0.42
Warrants holders	–	–	242,830,000	11.60	34,690,000	1.66
Public Shareholders	255,540,084	100.00	1,788,780,588	85.44	255,540,084	12.21
Total	255,540,084	100.00	2,093,594,839	100.00	2,093,594,839	100.00

Note:

The Underwriter has irrevocably undertaken to the Company that (i) the Underwriter will not trigger a mandatory offer obligation under Rule 26 of the Takeovers Code on the part of the Underwriter in respect of performing its obligations under the Underwriting Agreement; (ii) the Underwriter shall use its reasonable endeavours to ensure that the subscribers for Underwritten Shares shall be third parties independent of and not connected with the Company and its connected persons and are not acting in concert with the Underwriter and its associates; (iii) none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will be a substantial Shareholder as a result of the Rights Issue; and (iv) the Underwriter shall and shall cause the sub-underwriters to procure independent subscribers and/or placees to take up such number of Rights Shares as necessary to ensure that the Company will comply with the public float requirement under the GEM Listing Rules upon completion of the Rights Issue.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the sub-underwriters is an Independent Third Party and as informed by the Underwriter, such sub-underwriting arrangements are in compliance with the undertakings as stated above. Further, as informed by the Underwriter, the Underwriter and/or sub-underwriters are in the course of identifying potential investors for subscription of the Underwritten Shares. It is expected that the concrete arrangement will be in place before the despatch of the Prospectus Documents and details of the concrete arrangement will be disclosed in the Prospectus. Further, the Company will take the appropriate steps to ensure that sufficient public float be maintained upon the completion of the Rights Issue in compliance with Rule 11.23(7) of the GEM Listing Rules.

We are aware of the cumulative potential dilution effect as a result of the Right Issues and those arising from the fund raising activities in the past 24 months immediately preceding the Latest Practicable Date. However, we consider that the foregoing should be balanced against, among others, the following factors:

(i) the Company will be able to expand its profitable money lending business (being the only profitable business segment of the Group for the nine months ended 30 September 2015) by utilizing approximately HK$200 million of the proceeds from the Rights Issue for lending out to borrowers in the market and generate interest income;
(ii) as discussed in paragraphs A.1 to A.4 above, the Rights Issue enables the Group to enhance its capital base and its future business development and is in the interest of the Company and the Shareholders as a whole;
(iii) as discussed in paragraph B.1 above, the Subscription Price is on normal commercial terms and is fair and reasonable so far as the Company and the Independent Shareholders are concerned;
(iv) the relevant resolutions in respect of the previous fund raising activities have been passed by the then Shareholders at the relevant general meetings of the Company;
(v) the Independent Shareholders are offered an opportunity to attend and vote for or against the relevant resolution in relation to the Rights Issue and the Underwriting Agreement at the EGM;
(vi) the Qualifying Shareholders are given an opportunity to elect whether to accept the Rights Issue or not;
(vii) the Qualifying Shareholders who do not wish to take up the Rights Shares have the opportunities to sell their nil-paid rights to subscribe for the Rights Shares in the market for economic benefits;

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(viii) the Rights Issue offers the Qualifying Shareholders an opportunity to subscribe for their Rights Shares for the purpose of maintaining their respective pro-rata shareholding interests in the Company at a discount as compared to the historical and prevailing market price of the Shares; and
(ix) those Qualifying Shareholders who take up their assured entitlements in full under the Rights Issue will be able to maintain their respective pro-rata shareholding interests in the Company after completion of the Rights Issue.

Based on the foregoing, notwithstanding the potential maximum dilution effect of 85.71% on the existing shareholding interests of the Independent Shareholders as a result of the Rights Issue (which will only occur when the Qualifying Shareholders do not subscribe for their pro-rata Rights Shares), the cumulative dilution effect of 62.31% as a result of the fund raising activities of the Company in the past 24 months immediately preceding the Latest Practicable Date and the potential maximum cumulative dilution effect of 94.77% for both abovementioned events, we consider that the Rights Issue is fair and reasonable and in the interest of the Shareholders and the Company as a whole.

C. Possible financial effects of the Rights Issue

Cash resources

According to the 2015 Third Quarterly Report, the Group had cash and cash equivalents amounting to approximately RMB6.14 million as at 30 September 2015. Upon completion of the Rights Issue, it is expected that the Company can raise a net proceed of not less than approximately HK$240.76 million and not more than approximately HK$281.93 million for the further development of money lending business and future acquisition or investments.

Gearing ratio

According to the unaudited pro forma financial information of the Group as set out in Appendix II of the Circular, the audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 30 June 2015 was approximately RMB241.16 million. The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company immediately after the completion of the Rights Issue would be approximately RMB439.60 million as a result of the inflow of net proceeds from the estimated net proceeds from the Rights Issue.

Our view

Based on the foregoing, we consider that the Rights Issue can provide additional liquidity to and enhance the overall financial position of the Company.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having taken into consideration the principal factors and reasons discussed above, we are of the opinion that the Rights Issue is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the relevant resolutions to be proposed at the EGM to approve the Rights Issue.

Yours faithfully, For and on behalf of Messis Capital Limited Robert Siu Matthew Leung Managing Director Associate Director

Note: Mr. Robert Siu is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Messis Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has over 15 years of experience in corporate finance industry. Mr. Matthew Leung is a licensed person registered with the SFC for type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and a responsible officer of Messis Capital Limited for type 6 (advising on corporate finance) regulated activity under the SFO and has over 5 years of experience in corporate finance industry.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. SUMMARY OF FINANCIAL INFORMATION

The financial information of the Group for the years ended 31 December 2014, 2013 and 2012 were disclosed on pages 39 to 124 of the annual report of the Company for the year ended 31 December 2014, on pages 31 to 117 of the annual report of the Company for the year ended 31 December 2013 and on pages 34 to 115 of the annual report of the Company for the year ended 31 December 2012 respectively. All the above reports of the Company have been published on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of the Company (http://www.tricor.com.hk/ webservice/008019).

2. INDEBTEDNESS STATEMENT

As at 30 November 2015, being the latest practicable date prior to the printing of this circular for the purpose of this indebtedness statement, the Group had outstanding finance leases approximately of HK$4.05 million. The finance leases are secured by the lessor’s charge over the leased assets and by the corporate guarantees provided by the Company.

As at 30 November 2015, being the latest practicable date prior to the printing of this circular for the purpose of this indebtedness statement, the Group has no contingent liability arising in the ordinary course of business.

Save as aforesaid, the Group did not have any other bank loans, bank overdrafts and liabilities under acceptances or other similar indebtedness debentures or other loan capital, mortgages, charges, guarantees or other material contingent liability outstanding as at the latest practicable date.

3. WORKING CAPITAL

The Directors are of the opinion that the Group has sufficient working capital for its present requirements for at least the next 12 months from the date of this circular after taking into account its internal resources together with the estimated net proceeds from the Rights Issue.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, except for biomass fuel business as discuss below, the Directors were not aware of any material adverse change in the financial position or trading position of the Group since 31 December 2014, being the date to which the latest published audited financial statements of the Group was made up.

I – 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. FINANCIAL AND BUSINESS PROSPECTS OF THE GROUP

The Group is primarily engaged in the sale of biodegradable food containers and disposable industrial packaging for consumer products, trading and manufacturing of biomass fuel in the PRC and money lending business.

Business review

The biodegradable food containers and disposable industrial packaging products are traded under the brand name “Earth Buddy”. The materials used to produce such products are mainly agricultural waste, such as sugar cane dregs (a side-product of sugar refinery), straw, wheat stalk, reed and bamboo. Our biodegradable products are 100% biodegradable to avoid environmental and aesthetic pollution. In this sense, our biodegradable products are truly environmental friendly as they are produced by recycling waste materials into useful products, unlike some of our competitors, who make their disposable containers by papers, which results in major global deforestation. The rises in raw material costs and subcontracting charges have weakened the competitiveness of our biodegradable containers and industrial packaging products.

Even though the PRC Government has implemented “Pearl River Delta Regional Air Quality Management Plan” which is favourable to the Group’s biomass fuel business, it is hard for our management to solicit contracts from power plants under the depressing global commodity market environment since crude oil is more economical as compared to biomass fuel and it does not violate the Pearl River Delta Regional Air Quality Management Plan.

Furthermore, the rejoin of Iran into the crude oil market had reversed the rebound of the crude oil price in June 2015 from US$62.3 to US$44.4 in November 2015 (source: International Monetary Fund: Monthly Commodity Report). The persistent unfavourable factors impeded the recovery of crude oil market.

The Group has been proactively expanding our money lending business in Hong Kong especially the property mortgage loans. The increase in loan portfolio was mainly attributed to persisting high demand for loan products in the market. The Group monitor the credit risk of the loan portfolio on an ongoing basis. There were no bad debts recorded under the Period review.

Future Prospect

Oil has slumped more than 40% as compared to 2014 and the global oversupply will persist as the Organisation of Petroleum Exporting Countries continues to pump more than its collective quota. The Directors will take a cautious and prudent approach on developing the biomass fuel business in the coming 12 months. Nevertheless, a Pulitzer Prize-winning oil historian expect that global supply and demand will begin to move into balance by late 2016 or 2017. In the long run, the Directors believe that the ban in Pearl River Delta Region will create abundant market opportunities for the Group’s wooden pellet and biomass energy solution businesses and the Group will execute the development plan in the alignment with the market trend of the energy to capitalize on the above opportunities.

I – 2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

In view of the Group’s biodegradable products business, it was facing fierce competition on penetrating and developing its markets. As the price competition has intensified while the manufacturing costs are likely to remain high in forthcoming years, the future of the Group’s biodegradable products business will be challenging. In the light of the aforesaid, the management will closely monitor the performance and consider possible alternatives and revise its strategies accordingly to improve its performance.

The Hong Kong property market prices have been impacted by the tightened control over Hong Kong’s authorised financial institutions, stringent policies on the property market implemented by the Hong Kong Government and the expectation of raising interest rates by US Federal Reserves in 2016, yet the market demand for property mortgage loan products in Hong Kong stays strong. Being the best alternative to banks’ mortgage loan, well experienced in property mortgage loan business, diversified products and services and the Group’s prudent, lasting and effective approach in implementing loan policy, the Directors believe the Group will remain competitive in the property mortgage loan market in Hong Kong. The Group will take a more proactive approach and we are confident that this segment will generate promising returns to our shareholders in the foreseeable future.

The Group will closely monitor the performance and business environment of the biodegradable products, biomass fuel and money lending industries and will regularly review and adjust our business strategies in response to the changes.

I – 3

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

A. REPORT OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The following is the text of a report received from HLB Hodgson Impey Cheng Limited, Certified Public Accountants, Hong Kong, in respect of the unaudited pro forma financial information of the Group for the sole purpose of inclusion in this circular.

==> picture [58 x 58] intentionally omitted <==

國衛會計師事務所有限公司 Hodgson Impey Cheng Limited

31/F, Gloucester Tower The Landmark 11 Pedder Street Central Hong Kong

28 December 2015

The Board of Directors Hao Wen Holdings Limited Level 20, Infinitus Plaza 199 Des Voeux Road Central Sheung Wan HONG KONG

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION INCLUDED IN AN INVESTMENT CIRCULAR

TO THE BOARD OF DIRECTORS OF HAO WEN HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of pro forma financial information of Hao Wen Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) by the directors for illustrative purposes only. The pro forma financial information consists of the pro forma consolidated net tangible assets statement as at 30 June 2015 (the “Pro Forma Financial Information”), and related notes as set out in Appendix II of the circular issued by the Company (the “Circular”). The applicable criteria on the basis of which the directors have compiled the Pro Forma Financial Information are described in Appendix II of the Circular.

The Pro Forma Financial Information has been compiled by the directors of the Company to illustrate the impact of the proposed rights issue on the basis of six rights shares for every one share held on the record date (the “Proposed Rights Issue”) on the Group’s financial position as at 30 June 2015 as if the Proposed Rights Issue had taken place at 30 June 2015. As part of this process, information about the Group’s financial position has been extracted from the Group’s financial statements for the six months ended 30 June 2015, on which no audit or review report has been published.

II – 1

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Directors’ Responsibility for the Pro Forma Financial Information

The directors of the Company are responsible for compiling the Pro Forma Financial Information in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the ‘‘GEM 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 (“HKICPA”).

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.

The 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” 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 7.31(7) of the GEM Listing Rules, on the 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 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 Pro Forma Financial Information in accordance with paragraph 7.31 of the GEM 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 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 Pro Forma Financial Information.

The purpose of Pro Forma Financial Information included in this 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 as at 30 June 2015 would have been as presented.

II – 2

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A reasonable assurance engagement to report on whether the 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 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 Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgement, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the 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 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 Pro Forma Financial Information as disclosed pursuant to paragraph 7.31(1) of the GEM Listing Rules.

Certified Public Accountants

Wong Sze Wai, Basilia

Practising Certificate Number: P05806

Hong Kong, 28 December 2015

II – 3

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

B. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The unaudited pro forma financial information of the Group (the “Unaudited Pro Forma Financial Information”) has been prepared by the Directors in accordance with paragraph 4.29 of the Listing Rules to illustrate the effect of the rights issue (the “Rights Issue”) on the basis of six rights share (“Rights Share”) for every one existing share in issue on the Record Date at HK$0.16 per Rights Share on the unaudited consolidated net tangible assets of the Group attributable to the owners of the Company as if the Rights Issue had taken place on 30 June 2015.

The Unaudited Pro Forma Financial Information is prepared for illustrative purpose only and, because of its hypothetical nature, it may not give a true picture of the financial position of the Group as at the date to which it is made up or at any future date.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited consolidated net tangible assets of the Group attributable to the owners of the Company derived from the unaudited consolidated statement of financial position of the Group as at 30 June 2015, extracted from the interim report of the Company for the six months ended 30 June 2015, with adjustment described below:

Unaudited consolidated net tangible assets of the Group attributable to owners of the Company (note 1) RMB’000 Net assets attributable to Owners of the Company 241,163 Unaudited consolidated net tangible assets of the Group per share attributable to the owners of the Company as at 30 June 2015 before the completion of the Rights Issue_(note 3) Unaudited pro forma adjusted consolidated net tangible assets of the Group per share attributable to the owners of the Company after completion of the Rights Issue(note 4)_	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable Estimated net immediately after proceeds from the completion the Rights Issue of the Rights Issue (note 2) RMB’000 RMB’000 198,434 439,597 RMB cents 94.37 RMB cents 24.58	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable Estimated net immediately after proceeds from the completion the Rights Issue of the Rights Issue (note 2) RMB’000 RMB’000 198,434 439,597 RMB cents 94.37 RMB cents 24.58
		RMB cents 94.37

		RMB cents 24.58

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

(1) The unaudited consolidated net tangible assets (excluding intangible assets and non-controlling interests) of the Group attributable to the owners of the Company as at 30 June 2015 of approximately RMB241,163,000 is calculated based on the share capital and reserves attributable to the owners of the Company as at 30 June 2015 of approximately RMB352,001,000 less intangible assets and goodwill of approximately RMB2,076,000 and RMB108,762,000 (51% on RMB213,259,000, being goodwill attributable to the owners of the Company) as at 30 June 2015 respectively as extracted from the published interim report of the Company for the period ended 30 June 2015.
(2) The estimated net proceed from Rights Issue of approximately RMB198,434,000 is based on 1,533,240,504 Rights Shares to be issued (based on 255,540,084 shares in issue as at the latest practicable date and assuming that no share options would be exercised and no unlisted warrants would be further exercised) at the subscription price of HK$0.16 per Rights Share and after deduction of estimated related expenses, including among others, other professional fees, which are directly attributable to the Rights Issue, of approximately RMB3,758,000.
(3) The unaudited consolidated net tangible assets of the Group per share attributable to the owners of the Company as at 30 June 2015 before the completion of the Rights Issue is determined based on the unaudited consolidated net tangible assets (excluding intangible assets, goodwill and non-controlling interests) of the Group attributable to the owners of the Company as at 30 June 2015 of approximately RMB241,163,000 as disclosed in note (1) above, dividend by 255,540,084 Consolidated Shares of the Company in issue as at 30 June 2015. This amount is calculated based on 5,110,801,686 issued shares (prior to the Shares Consolidation) of the Company as at 30 June 2015 after taking into account the proposed Share Consolidation which will consolidate every 20 shares into 1 consolidated share (“Shares Consolidation”).
(4) Unaudited pro forma adjusted consolidated net tangible assets (excluding intangible assets, goodwill and noncontrolling interests) of the Group per share attributable to the owners of the Company as at 30 June 2015 immediately after the completion of the Right Issue is determined based on the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company immediately after completion of Right Issue of approximately RMB439,597,000, dividend by 1,788,780,588 Consolidated Shares of the Company immediately after the Right Issue, which comprise (i) 255,540,084 shares in issue as at 30 June 2015; and (ii) 1,533,240,504 Rights Shares to be issued pursuant to the Rights Issue (based on 255,540,084 shares in issue as at the latest practicable date and assuming no share options would be exercised and no unlisted warrants will be exercised).
(5) No adjustment has been made to reflect any trading results or other transaction of Group entered into subsequent to 30 June 2015.

II – 5

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

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

==> picture [400 x 113] intentionally omitted <==

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

Authorised: HK$
50,000,000,000 Shares 1,000,000,000.00
Issued and fully paid:
Shares in issue
255,540,084 as at the Latest Practicable Date 5,110,801.68
----- End of picture text -----

(b) The authorised and issued share capital of the Company immediately following completion of the Rights Issue are as follows:
(i) assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date up to the Record Date:

Authorised: 50,000,000,000 Shares Issued and fully paid: Shares in issue 255,540,084 as at the Latest Practicable Date Rights Shares to be issued pursuant 1,533,240,504 to the Rights Issue Shares immediately following 1,788,780,588 completion of the Rights Issue	HK$ 1,000,000,000.00

	5,110,801.68 30,664,810.08
	35,775,611.76

III – 1

GENERAL INFORMATION

APPENDIX III

(ii) assuming that the Share Options and the Warrants are exercised in full and new Shares are allotted and issued pursuant thereto on or before the Record Date and there is no other change in the issued share capital of the Company from the Latest Practicable Date up to the Record Date:

Authorised:		HK$
50,000,000,000	Shares	1,000,000,000.00

Issued and fully paid:
	Shares in issue as at
255,540,084	the Latest Practicable Date	5,110,801.68
	Shares in issue as a result of the full
8,854,893	exercise of the Share Options	177,097.86
	Shares in issue as a result of the full
34,690,000	exercise of the Warrants	693,800.00
	Rights Shares to be issued pursuant
1,794,509,862	to the Rights Issue	35,890,197.24
	Shares immediately
	following completion
2,093,594,839	of the Rights Issue	41,871,896.78

No part of the securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange.

III – 2

GENERAL INFORMATION

APPENDIX III

3. DISCLOSURE OF INTERESTS BY DIRECTORS

Save as disclosed below, as at the Latest Practicable Date, none of the Directors and chief executives of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Stock Exchange pursuant to the Divisions 7 and 8 of Part XV of the SFO (including interests or short positions 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 referred to therein; or (iii) pursuant to the rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by directors, to be notified to the Company and the Stock Exchange.

Interests in the Share Options

		Exercise price			No. of	Approximately %
		per Share		No. of Share	Share	of the issued
Name of director	Date of grant	(HK$)	Exercisable period	Options	issuable	share capital
Chow Yik	28 November 2013	6.38	29 November 2013 to 28	250,000	250,000	0.098
			November 2017

4. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, as at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of SFO, and so far as is known to the Directors or chief executive of the Company, there is no person (other than a Director or a chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were directly or indirectly interested in 10% or more of the nominal value of any class of share capital, including options in respect of such capital, carrying voting rights to vote in all circumstances at general meeting of any other member of the Group:

Long position

			Approximate %
		Number	of total issued
Name	Capacity/nature of interest	of shares	share capital
Grand China Securities Limited	Beneficial owner	1,794,509,862	702.24%
Black Marble Securities Limited	Beneficial owner	643,961,012	252%
New Profit Finance Limited	Interest in controlled corporation	643,961,012	252%
Black Marble Group Limited
(formerly known as Red Honour
Holdings Limited)	Interest in controlled corporation	643,961,012	252%
Lerado Group (Holding) Company Limited	Interest in controlled corporation	643,961,012	252%
Luk Fook Securities (HK) Limited_(Note)_	Beneficial owner	429,307,341	168%

Note:

Based on information provided by the Underwriter relating to the Sub-underwriting agreement made on 2 December 2015 between the Underwriter and Luk Fook Securities (HK) Limited.

III – 3

GENERAL INFORMATION

APPENDIX III

5. INTEREST OF DIRECTORS

As at the Latest Practicable Date, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement subsisting as at the Latest Practicable Date and which was significant in relation to the business of the Group.

As at the Latest Practicable Date, none of the Directors has or had any direct or indirect interest in any assets which have been acquired or disposed by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2014, being the date to which the latest published audited consolidated financial statements of the Group were made up.

6. DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, none of the Directors or their respective associates were interested in any business which competes or is likely to compete, whether directly or indirectly, with the businesses of the Group.

7. DIRECTORS’ SERVICE CONTRACTS

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

8. LITIGATION

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

III – 4

GENERAL INFORMATION

APPENDIX III

9. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have given their opinions and advices which are included in this circular:

Name

Qualification

Messis Capital Limited

a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

HLB Hodgson Impey Cheng Limited Certified Public Accountants

As at the Latest Practicable Date, the experts above have given and has not withdrawn their written consent to the issue of this circular with the inclusion therein of their letters and references to their name and/or their advice in the form and context in which they respectively appear.

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

As at the Latest Practicable Date, the experts above did not have any direct or indirect interest in any assets which have been acquired, or disposed of by, or leased to any member of the Group, or are proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 December 2014 (the date to which the latest published audited consolidated financial statements of the Group were made up).

10. MATERIAL CONTRACTS

The following contracts have been entered into by any member of the Group (not being contracts entered into in the ordinary course of business of the Company) within the two years immediately preceding the issue of this circular and are or may be material:

(i) the placing agreement (“Placing Agreement A”) dated 30 April 2014 entered into between the Company and Yuanta Securities (Hong Kong) Company Limited in relation to the placing, on a best-effort basis, of up to 364,800,000 warrants conferring the right to subscribe for up to 364,800,000 shares in aggregate pursuant to the terms of the Placing Agreement A;

III – 5

GENERAL INFORMATION

APPENDIX III

(ii) the conditional placing agreement (“Placing Agreement B”) dated 23 May 2014 and entered into between the Company and the Tanrich Securities Company Limited in relation to the placing of the convertible bonds, on a best efforts basis, of up to an aggregate principal amount of HK$200,000,000 with entitlement to the bonus warrants on the basis of 1 bonus warrant for every 5 conversion shares allotted and issued upon the exercise of the conversion rights attached to the convertible bonds pursuant to the terms of the Placing Agreement B;
(iii) the sale and purchase agreement (“S&P Agreement”) dated 1 September 2014 entered into between the Mr. Wang Zewei and the Starry Regent Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly owned subsidiary of the Company in respect of the acquisition of 22.5% equity interest in Sincere Smart International Limited by the Purchaser pursuant to the terms and conditions of the S&P Agreement;
(iv) the conditional placing agreement (“Placing Agreement C”) dated 2 June 2015 entered into between the Company and Gransing Securities Co., Limited (“Placing Agent C”) in relation to the placing of up to 601,800,000 new shares by the Placing Agent C on a best effort basis pursuant to the terms of the Placing Agreement C;
(v) the conditional placing agreement (“Placing Agreement D”) dated 2 June 2015 entered into between the Company and Grand China Securities Limited (“Placing Agent D”) in relation to the placing of up to 250,000,000 new shares by the Placing Agent D on a best effort basis pursuant to the terms of the Placing Agreement D; and
(vi) the Underwriting Agreement.

III – 6

GENERAL INFORMATION

APPENDIX III

11. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE

Board of Directors Executive Directors Mr. CHOW Yik (Chairman and Authorised Representative) Mr. LOK Wing Fu Ms. TSUI Annie Independent Non-executive Directors Mr. KWOK Pak Yu, Steven Mr. HO Kei Wing, Nelson Ms. MA Sijing Audit Committee Mr. KWOK Pak Yu, Steven (Chairman) Mr. HO Kei Wing, Nelson Ms. MA Sijing Remuneration Committee Mr. CHOW Yik Mr. KWOK Pak Yu, Steven (Chairman) Mr. HO Kei Wing, Nelson Ms. MA Sijing Nomination Committee Mr. KWOK Pak Yu, Steven (Chairman) Mr. HO Kei Wing, Nelson Ms. MA Sijing Registered office Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Head office and principal place Level 20, Infinitus Plaza of business in Hong Kong 199 Des Voeux Road Central Sheung Wan Hong Kong Principal share registrar and Royal Bank of Canada Trust Company (Cayman) Limited transfer office 4th Floor, Royal Bank House 24 Shedden Road George Town Grand Cayman KY1-1110 Cayman Islands

III – 7

GENERAL INFORMATION

APPENDIX III

Branch share registrar and Tricor Abacus Limited transfer office in Hong Kong Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong Company secretary Ms. Wong Man Yi ACIS, ACS Compliance officer Mr. Chan Yin Tsung AICPA Authorised representatives Mr. Chow Yik Ms. Wong Man Yi Business address of Directors, Level 20, Infinitus Plaza senior management and 199 Des Voeux Road Central authorised representatives Sheung Wan Hong Kong Underwriter Grand China Securities Limited Unit 2005, 20/F, Sino Plaza 255 Gloucester Road Causeway Bay Hong Kong Legal advisers to the Company As to Hong Kong Laws Tang Tso & Lau Solicitors Room 209, 2/F China Insurance Group Building 141 Des Voeux Road Central Hong Kong As to Cayman Islands Laws Conyers Dill & Pearman Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Financial adviser to the Company Amasse Capital Limited Room 1201, 12th Floor Prosperous Building 48-52 Des Voeux Road Central Hong Kong

III – 8

GENERAL INFORMATION

APPENDIX III

Independent Financial Adviser to Messis Capital Limited the Independent Board Room 1606, 16/F., Tower 2 Committee and the Independent Admiralty Centre Shareholders 18 Harcourt Road Hong Kong Auditor and reporting accountant HLB Hodgson Impey Cheng Limited 31st Floor, Gloucester Tower, The Landmark 11 Pedder Street Central Hong Kong Principal bankers The Hongkong and Shanghai Banking Corporation Limited 8/F, Low Block, Grand Millennium Plaza 181 Queen’s Road Central Sheung Wan Hong Kong OCBC Wing Hang Bank Limited 139-141 Des Voeux Road West Sai Ying Pun Hong Kong

12. PROFILES OF DIRECTORS

Executive Directors

Mr. Chow Yik (“ Mr. Chow ”), aged 34, is the Chairman of the board of Director and was appointed to the Board on 11 January 2011. Mr. Chow obtained the degree of Bachelor of Engineering, majoring in Electronic and Communication Engineering, from the City University of Hong Kong. He is highly experienced in commercial businesses. He founded the Vision Century Company in 2003. Moreover, since 2005, Mr. Chow has been the sales director and executive director of the British electronic company, Air Audio Distribution (HK) Ltd. Mr. Chow currently is also the Chairman of the board of directors of Creative Energy Solutions Holdings Limited which has been listed on the Growth Enterprises Market (“GEM”) of The Stock Exchange of Hong Kong Limited.

Mr. Lok Wing Fu (“ Mr. Lok ”), aged 58, and was appointed to the Board on 17 February 2014. He received education in Hong Kong. He has over 20 years’ working experience in marketing and wholesales, staff training and sales management. Before joining the Company, Mr. Lok worked for San Miguel Brewery Hong Kong Limited as a wholesales manager responsible for business development, promotions execution and logistics over 10 years. Currently, Mr. Lok is also a director of Foreverup Company Limited responsible for trading operations to and from United States, Mainland China and Hong Kong.

III – 9

GENERAL INFORMATION

APPENDIX III

Ms. Tsui Annie (“ Ms. Tsui ”), aged 30, was appointed to the Board on 12 October 2015. Ms. Tsui has over 8 years of experience in retail businesses. Ms. Tsui operated a chain fashion business of 7 shops in Hong Kong. She operates a jewellery retail store in Hong Kong. She has extensive management experience in corporate leadership, corporate development, strategic planning and business strategies as well as in critical business decisions. Ms. Tsui has passed Paper 1, Paper 7 and Paper 8 of Licensing Examination for Securities and Futures Intermediaries organized by Hong Kong Securities and Investment Institute.

Independent Non-executive Directors

Mr. Kwok Pak Yu, Steven (“ Mr. Kwok ”), aged 45, and was appointed to the Board on 1 July 2014. He was educated at the University of Toronto, majoring in economics. Mr. Kwok is member of the Chartered Institute of Management Accountants, the Chartered Professional Accountants of Canada and the American Institute of Certified Public Accountants. He is a partner and principal consultant at S. P. Kwok & Co., a management accounting and consulting firm in Vancouver, Canada since 2000. Mr. Kwok has extensive experience in accounting, finance, corporate governance, strategic planning, as well as merger and acquisition.

Mr. Ho Kei Wing, Nelson (“ Mr. Ho ”), aged 47, was appointed to the Board on 1 September 2014. He holds a master’s degree in applied science in electrical engineering from the University of British Columbia (U.B.C.), Canada. Mr. Ho is member of the Association of Professional Engineer (Ontario) of Canada. Before joining the Company, Mr. Ho worked for International Business Machines Corporation, Canada as an Information Technology Architect over 17 years.

Ms. Ma Sijing (“ Ms. Ma ”), aged 44, was appointed to the Board on 24 November 2014. She graduated from中央廣播電視大學(China Central Radio and TV University) specializing in social work and obtained the certificate of accounting professional issued by深圳龍崗財政局 (Shenzhen Longgang Municipal Finance Bureau) in the PRC in May 2005. Ms. Ma is currently the financial controller of a non-governmental organization primarily responsible for the financial and accounting matters in the PRC. Ms. Ma has over 13 years’ experience in financial and accounting in different sectors, such as biotech industries and social services in the PRC.

* for identification purpose only

13. AUDIT COMMITTEE

An audit committee of the Board (“ Audit Committee ”) was established with written terms of reference in compliance with the Rules 5.28 and 5.29 of the GEM Listing Rules and Code Provision C.3.3. The Audit Committee must consist of a minimum of three members, all of whom must be nonexecutive Directors, at least one of whom must have appropriate professional qualification or accounting or related financial management expertise. Mr. KWOK Pak Yu, Steven is the chairman of the Audit Committee whilst Mr. HO Kei Wing, Nelson and Ms. MA Sijing are members of the Audit Committee. The principal duties of the Audit Committee is to review the Company’s consolidated financial statements, annual results, annual report, interim reports and quarterly reports and to advise and comment thereon to the Board. The Audit Committee is also responsible for reviewing and supervising the Group’s financial reporting and internal control procedures.

III – 10

GENERAL INFORMATION

APPENDIX III

14. EXPENSES

The expenses in connection with the Rights Issue, including underwriting commission, printing, registration, legal and accounting fees, are estimated to be approximately HK$4.56 million and will be payable by the Company.

15. MISCELLANEOUS

(i) As at the Latest Practicable Date, there was no restriction affecting the remittance of profits or repatriation of capital of the Company into Hong Kong from outside of Hong Kong and the Group has no exposure to foreign exchange liabilities.
(ii) The English text of this circular shall prevail over the Chinese text in case of any inconsistency.

16. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. on any Business Day at the office of the legal adviser to the Company at Room 209, 2/F., China Insurance Group Building, 141 Des Voeux Road Central, Hong Kong up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;
(b) the annual reports of the Company for the years ended 31 December 2012, 2013 and 2014;
(c) the letter from the Independent Board Committee, the text of which is set out on pages 25 to 26 of this circular;
(d) the letter from the Independent Financial Adviser, the text of which is set out on pages 27 to 53 of this circular;
(e) the accountants’s report on the unaudited pro forma financial information of the Group as set out in Appendix II of this circular;
(f) the material contracts referred to in the paragraph headed “ MATERIAL CONTRACTS ” of this appendix;
(g) the letters of consent referred to under the paragraph headed “ EXPERTS AND CONSENTS ” in this appendix; and
(h) this circular.

III – 11

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [76 x 76] intentionally omitted <==

HAO WEN HOLDINGS LIMITED 皓文控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8019)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Hao Wen Holdings Limited (the “ Company ”) will be held at Jasmine Room, 3/F., BEST WESTERN PLUS Hotel Hong Kong, 308 Des Voeux Road West, Hong Kong on Thursday, 21 January 2016 at 2:00 p.m. for the purpose of considering and if thought fit, passing, with or without modifications, the following resolution which will be proposed as ordinary resolution:

ORDINARY RESOLUTION

“ THAT conditional upon fulfillment or wavier (where applicable) of the conditions of the Underwriting Agreement (as defined below):

(a) the allotment and issue of not less than 1,533,240,504 shares of HK$0.02 each in the share capital of the Company (the “ Shares ”) and not more than 1,794,509,862 Shares (in their nil paid and fully paid form) (the “ Rights Shares ”) by way of rights (the “ Rights Issue ”) at a subscription price of HK$0.16 per Rights Share to the qualifying holders of the Shares (the “ Qualifying Shareholders ”) of the Company whose names appear on the register of members of the Company on Friday, 29 January 2016 (or such later date as the Company and the Underwriter (as defined below) may agree to be the record date for the Rights Issue) (the “ Record Date ”) other than those shareholders with addresses on the Record Date are outside Hong Kong whom the Directors, after making relevant enquiry, consider their exclusion from the Rights Issue 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 (the “ Excluded Shareholders ”) as described in further details in the Company’s circular dated 28 December 2015 and on and subject to such terms and conditions as may be determined by the Directors and otherwise pursuant to and subject to the fulfillment of the conditions set out in the underwriting agreement (the “ Underwriting Agreement ”) including all supplemental agreement(s) relating thereto, if any) (a copy of which has been produced to this meeting marked “A” and signed by the chairman of this meeting for the purpose of identification) dated 2 December 2015 and made between the Company and Grand China Securities Limited as underwriter (the “ Underwriter ”), and the transactions contemplated thereunder, be and are hereby approved;

EGM – 1

NOTICE OF EXTRAORDINARY GENERAL MEETING

(b) any one Director be and is hereby authorised to allot and issue the Rights Shares (in their nil paid and fully paid form) pursuant to or in connection with the Rights Issue notwithstanding that the same may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, the Directors may make such exclusions or other arrangements in relation to Excluded Shareholders as they deem necessary or expedient having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong;
(c) the entering into of the Underwriting Agreement by the Company be and is hereby approved, confirmed and ratified and the performance of the transactions contemplated thereunder by the Company (including but not limited to the arrangements for taking up of the underwritten Rights Shares, if any, by the Underwriter) be and are hereby approved;
(d) any one Director be and is hereby authorised to sign and execute such documents and do all such acts and things incidental to the Rights Issue or as he/she considers necessary, desirable or expedient in connection with the implementation of or giving effect to the Rights Issue, the Underwriting Agreement and the transactions contemplated thereunder or in this resolution.”

By order of the Board Hao Wen Holdings Limited Chow Yik Chairman

Hong Kong, 28 December 2015

Registered Office: Head Office and Principal Place of Business in Hong Kong: Cricket Square Level 20, Infinitus Plaza Hutchins Drive 199 Des Voeux Road Central P.O. Box 2681 Sheung Wan Grand Cayman KY1-1111 Hong Kong Cayman Islands

Notes:

Any member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and, subject to the provisions of the articles of association of the Company, vote instead of him. A proxy need not be a member of the Company.
To be valid, a form of proxy, together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power of attorney or authority must be deposited at the Company’s Hong Kong branch share registrar and transfer office, Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting.
The Shareholders of the Company or their proxies shall produce their identity documents when attending the EGM.

As at the date hereof, the executive Directors are Mr. Chow Yik, Mr. Lok Wing Fu and Ms. Tsui Annie; the independent non-executive Directors are Mr. Kwok Pak Yu, Steven, Mr. Ho Kei Wing, Nelson and Ms. Ma Sijing.

EGM – 2

AI assistant

Hao Wen Holdings Limited — Proxy Solicitation & Information Statement 2015

51217_rns_2015-12-24_aebd7127-827d-4ee0-9c3e-4dfb5017a901.pdf

HAO WEN HOLDINGS LIMITED 皓文控股有限公司

Underwriter to the Rights Issue

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

HAO WEN HOLDINGS LIMITED 皓文控股有限公司

PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

INTRODUCTION

PROPOSED RIGHTS ISSUE

LETTER FROM THE BOARD

Conditions of the Rights Issue

Subscription Price

Basis of provisional allotments

Closure of register of members for the Rights Issue

Qualifying Shareholders

Overseas Shareholders and Excluded Shareholders

Ranking of the Rights Shares

No application for excess Rights Shares

Fractional entitlements to the Rights Shares

Application for listing

Share certificates for the Rights Shares and refund cheques

UNDERWRITING AGREEMENT

ALTERNATIVE FINANCING MEANS AND TERMS OF THE RIGHTS ISSUE

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE COMPANY

Scenario 1:

Scenario 2:

LETTER FROM THE BOARD

ADJUSTMENTS IN RELATION TO THE OUTSTANDING SHARE OPTIONS AND WARRANTS

FUND RAISING ACTIVITIES DURING THE PAST 24 MONTHS

LETTER FROM THE BOARD

REASONS FOR THE RIGHTS ISSUE AND USE OF PROCEEDS

RISK FACTORS

Business and market risk relating to the Group

a) Risks relating to the Group and its business

LETTER FROM THE BOARD

Trading and manufacturing of biomass fuel

Money lending business

LETTER FROM THE BOARD

b) Risks relating to politics, economics and regulations

c) Risks relating to the Share price

d) Risks relating to the Rights Issue

GEM LISTING RULES IMPLICATIONS

EGM

RECOMMENDATION

ADDITIONAL INFORMATION

HAO WEN HOLDINGS LIMITED 皓文控股有限公司

PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

Yours faithfully,

PROPOSED RIGHTS ISSUE ON THE BASIS OF SIX RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

INTRODUCTION

BASIS OF OUR OPINION AND RECOMMENDATION

PRINCIPAL FACTORS AND REASONS CONSIDERED

A. Reasons for the Rights Issue

A.1 Business overview of the Group

A.2 Reasons for the Rights Issue and the use of proceeds

(i) Operation of money lending business

A.3 Fund raising activities during the past 24 months

Date of

Fund raising activity

announcement

Actual use of proceeds

A.4 Financing alternative

Our view

B. Principal terms of the Rights Issue

B.1 Subscription Price

Comparison with prevailing market price

Comparison with historical closing prices

Review on the trading liquidity of the Shares

Comparison with recent rights issue transactions

Our view

B.2 Underwriting commission

B.3 Excess application

B.4 Potential dilution effect of the Rights Issue

Scenario 1:

Hao Wen Holdings Limited Proxy Solicitation & Information Statement 2015

國衛會計師事務所有限公司 Hodgson Impey Cheng Limited