THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in HSC Resources Group Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or the transferee or to the bank, licensed security dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

This circular appears for information only and does not constitute an invitation or offer to Shareholders or any other persons to acquire, purchase, or subscribe for securities of the Company.

HSC Resources Group Limited

鴻盛昌資源集團有限公司

(Formerly known as WINDMILL Group Limited 海鑫集團有限公司)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1850)

(1) PROPOSED CAPITAL REORGANISATION;

(2) PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) ADJUSTED SHARE HELD AT THE CLOSE OF BUSINESS ON THE RECORD DATE ON A NON-UNDERWRITTEN BASIS;

AND

(3) NOTICE OF EGM

Financial Adviser to the Company

ADVENT

宏智融資

Advent Corporate Finance Limited

Placing Agent

ADVENT

宏智證券(香港)

Advent Securities (Bong Kong) Limited

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

MESSIS 大有融資

Capitalised terms used in the lower portion of this cover page shall have the same respective meanings as those defined in the section headed "Definitions" in this circular.

A letter from the Board is set out on pages 8 to 46 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 47 to 48 of this circular. A letter from the Independent Financial Adviser, containing its recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 49 to 76 of this circular.

It should be noted that the Shares will be dealt in on an ex-rights basis from Wednesday, 30 April 2025. Dealings in the Rights Shares in nil-paid form are expected to take place from Thursday, 15 May 2025 to Thursday, 22 May 2025 (both days inclusive). If the conditions of the Rights Issue are not fulfilled, the Rights Issue will not proceed. Any person contemplating dealing in the nil-paid Rights Shares during the period from Thursday, 15 May 2025 to Thursday, 22 May 2025 (both days inclusive) will accordingly bear the risk that the Rights Issue may not become unconditional and/or may not proceed. Any person contemplating dealing in the Shares, the Adjusted Shares and/or the Rights Shares in their nil-paid form are recommended to consult his/her/its own professional advisers.

A notice convening the EGM to be held at 22/F, Euro Trade Centre, 13-14 Connaught Road Central, Central, Hong Kong on Monday, 7 April 2025 at 11:00 a.m. is set out on pages EGM-1 to EGM-4 of this circular. A form of proxy for use at the EGM is also enclosed. Whether or not you are able to attend the EGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon to the Registrar as soon as possible and in any event not less than 48 hours before the time appointed for holding the EGM or the adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptance of the provisionally allotted Rights Shares and is subject to the fulfilment of conditions. Please refer to the section headed "Letter from the Board - Conditions of the Rights Issue" in this circular. In the event that the Rights Issue is not fully subscribed, any Unsubscribed Rights Shares together with the NQS Unsold Rights Shares will be placed to independent places on a best effort basis under the Placing. Any Unsubscribed Rights Shares or NQS Unsold Rights Shares which are not placed under the Placing will not be issued by the Company and the size of the Rights Issue will be reduced accordingly. There is no minimum amount to be raised under the Rights Issue. The Cayman Islands legal adviser of the Company has confirmed that there is no minimum subscription amount required to be raised from the Rights Issue under the laws of the Cayman Islands. Shareholders and potential investors are advised to exercise caution when dealing in the Shares, the Adjusted Shares and/or the nil-paid Rights Shares up to the date when all the conditions to which the Rights Issue is subject are fulfilled.

14 March 2025

CONTENTS

Page

EXPECTED TIMETABLE ii
DEFINITIONS 1
LETTER FROM THE BOARD 8
LETTER FROM THE INDEPENDENT BOARD COMMITTEE 47
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER 49
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 EGM EGM-1

EXPECTED TIMETABLE

The expected timetable for the Capital Reorganisation and the Rights Issue is set out below which is indicative only and has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled. The expected timetable is subject to change and further announcement(s) will be made by the Company should there be any changes to the expected timetable.

Event
Year 2025

Latest time and date for lodging transfers document in order to qualify for attendance and voting at the EGM. 4:30 p.m. on Friday, 28 March

Closure of register of members of the Company for attending the EGM (both days inclusive). Monday, 31 March to Monday, 7 April

Latest time and date for lodging forms of proxy for the EGM. 11:00 a.m. on Saturday, 5 April

Record date for determining attendance and voting at the EGM. Monday, 7 April

Expected date and time of the EGM. 11:00 a.m. on Monday, 7 April

Announcement of results of the EGM. Monday, 7 April

The following events are conditional on the fulfilment of the conditions relating to the implementation of the Capital Reorganisation and the Rights Issue and therefore the dates are tentative only:

Effective date of the Capital Reorganisation. Tuesday, 29 April

Commencement of dealings in the Adjusted Shares. 9:00 a.m. on Tuesday, 29 April

Original counter for trading in Existing Shares in board lot of 10,000 Existing Shares (in the form of existing share certificates) temporarily closes. 9:00 a.m. on Tuesday, 29 April

EXPECTED TIMETABLE

Event
Year 2025

Temporary counter for trading in the Adjusted Shares in board lot of 2,000 Adjusted Shares (in the form of existing share certificates) open 9:00 a.m. on Tuesday, 29 April

First day of free exchange of existing share certificates for the Existing Shares for new share certificates for the Adjusted Shares Tuesday, 29 April

Last day of dealings in the Adjusted Shares on a cum-rights basis relating to the Rights Issue Tuesday, 29 April

First day of dealings in the Adjusted Shares on an ex-rights basis relating to the Rights Issue Wednesday, 30 April

Latest time for the Shareholders to lodge transfer documents of Adjusted Shares in order to be qualified for the Rights Issue 4:30 p.m. on Friday, 2 May

Closure of register of members to determine the entitlements to the Rights Issue (both dates inclusive) Tuesday, 6 May to Monday, 12 May

Record date for the Rights Issue Monday, 12 May

Expected despatch date of the Prospectus Documents to Qualifying Shareholders, and in the case of the Non-Qualifying Shareholders, the Prospectus only Tuesday, 13 May

First day of dealing in nil-paid Rights Shares in board lot of 10,000 Adjusted Shares 9:00 a.m. on Thursday, 15 May

Designated broker starts to stand in the market to provide matching services for odd lot of the Adjusted Shares 9:00 a.m. on Thursday, 15 May

Original counter for trading in the Adjusted Shares in board lot of 10,000 Adjusted Shares (in the form of new share certificates) reopens 9:00 a.m. on Thursday, 15 May

iii -

EXPECTED TIMETABLE

Event
Year 2025

Parallel trading in the Adjusted Shares (in the form of both existing share certificates in board lots of 2,000 Adjusted Shares and new share certificates in board lots of 10,000 Adjusted Shares) commences. 9:00 a.m. on Thursday, 15 May

Latest time for splitting the PAL. 4:30 p.m. on Monday, 19 May

Last day of dealing in nil-paid Rights Shares in board lot of 10,000 Adjusted Shares. Thursday, 22 May

Latest time for lodging transfer documents of nil-paid Rights Shares in order to qualify for the Compensatory Arrangements. 4:00 p.m. on Tuesday, 27 May

Latest Time for Acceptance of and payment for the Rights Shares. 4:00 p.m. on Tuesday, 27 May

Announcement of the number of the Unsubscribed Rights Shares and NQS Unsold Rights Shares subject to the Compensatory Arrangements. Monday, 2 June

Commencement of the Placing Period (if there are any Unsubscribed Rights Shares and NQS Unsold Rights Shares available). Tuesday, 3 June

Designated broker ceases to provide matching services for odd lot of the Adjusted Shares. 4:00 p.m. on Wednesday, 4 June

Temporary counter for trading in the Adjusted Shares in board lot of 2,000 Adjusted Shares (in the form of existing share certificates) closes. 4:10 p.m. on Wednesday, 4 June

iv -

EXPECTED TIMETABLE

Event
Year 2025

Last day for free exchange of existing share certificates for new share certificates for the Adjusted Shares . Friday, 6 June

Latest time of placing of Unsubscribed Rights Shares and NQS Unsold Rights Shares subject to the Compensatory Arrangements . Tuesday, 10 June

Latest Time for the Rights Issue to become unconditional and the Placing Long Stop Date. 4:00 p.m. on Wednesday, 11 June

Rights Issue settlement and Placing completion date . Friday, 13 June

Announcement of results of the Rights Issue (including the results of the Placing and the Net Gain) . Wednesday, 18 June

Despatch of share certificates for fully-paid Rights Shares and/or refund cheques if terminated. Thursday, 19 June

Commencement of dealings in fully-paid Rights Shares. Friday, 20 June

Payment of Net Gain to relevant No Action Shareholders (if any) or Non-Qualifying Shareholders (if any). Thursday, 26 June

All times and dates stated above refer to Hong Kong local times and dates. The expected timetable for the Capital Reorganisation and the Rights Issue set out above and all dates and deadlines specified in this circular are indicative only and may be varied. Any changes to the expected timetable will be announced in a separate announcement by the Company as and when appropriate.

EFFECT OF BAD WEATHER OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE

The Latest Time for Acceptance will not take place as scheduled if there is a tropical cyclone warning signal number 8 or above, or a "black" rainstorm warning or "extreme conditions" caused by super typhoons issued by the Hong Kong Observatory:

(i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the Latest Time for Acceptance falls. Instead, the Latest Time for Acceptance will be extended to 5:00 p.m. on the same Business Day; or

EXPECTED TIMETABLE

(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance. Instead the Latest Time for Acceptance will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warning in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m..

If the Latest Time for Acceptance does not take place on the currently scheduled date, the dates mentioned in the section headed “EXPECTED TIMETABLE” in this circular may be affected. The Company will notify the Shareholders by way of announcement(s) on any change to the excepted timetable as soon as practicable.

vi -

DEFINITIONS

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

"Accumulated Losses" the accumulated losses of the Company

"Adjusted Share(s)" the ordinary share(s) of par value HK$0.01 each in the share capital of the Company immediately upon the Capital Reorganisation becoming effective

"Announcement" the announcement of the Company dated 19 December 2024 in relation to, among other matters, the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated thereunder

"associate(s)" has the same meaning ascribed thereto under the Listing Rules

"Board" the board of Directors

"Business Day(s)" a day(s) (excluding Saturday, Sunday and any day on which a tropical cyclone warning signal no. 8 or above is hoisted or remains hoisted between 9:00 a.m. and 12:00 noon and is not lowered at or before 12:00 noon or on which a "black" rainstorm warning is hoisted or remains in effect between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are open for general business

"Capital Reduction" the proposed reduction of the issued share capital of the Company whereby (i) any fractional Consolidated Share in the issued share capital of the Company arising from the Share Consolidation shall be cancelled; and (ii) the par value of each issued Consolidated Share will be reduced from HK$1.00 to HK$0.01 by cancelling the paid-up share capital of the Company to the extent of HK$0.99 on each issued Consolidated Share

"Capital Reorganisation" the proposed capital reorganisation involving the Share Consolidation, the Capital Reduction and the Share Subdivision

"CCASS" the Central Clearing and Settlement System established and operated by HKSCC

DEFINITIONS

“CCASS Operational Procedures” the Operational Procedures of HKSCC in relation to CCASS, containing the practices, procedures and administrative requirements relating to operations and functions of CCASS, as amended from time to time

“Companies Act” the Companies Act (as revised) of the Cayman Islands, as amended or supplemented from time to time

“Company” HSC Resources Group Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange

“Compensatory Arrangements” the compensatory arrangements pursuant to Rule 7.21(1)(b) of the Listing Rules as described in the paragraph headed “Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements” in this circular

“connected person(s)” has the same meaning ascribed thereto under the Listing Rules

“Consolidated Share(s)” ordinary share(s) of par value HK$1.00 each in the share capital of the Company immediately upon the Share Consolidation becoming effective but prior to the Capital Reduction and the Share Subdivision becoming effective

“controlling shareholder” has the same meaning ascribed thereto under the Listing Rules

“Court” the Grand Court of the Cayman Islands

“Director(s)” the director(s) of the Company

“EGM” the extraordinary general meeting of the Company to be convened and held to consider and, if thought fit, approve, among other things, the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated thereunder

“Existing Share(s)” ordinary share(s) of par value HK$0.20 each in the share capital of the Company, prior to the Capital Reorganisation becoming effective

DEFINITIONS

"General Rules of CCASS"
the terms and conditions regulating the use of CCASS, as may be amended or modified from time to time and where the context so permits, shall include the CCASS Operational Procedures

"Group"
the Company and its subsidiaries

"HK$"
Hong Kong dollar, the lawful currency of Hong Kong

"HKSCC"
the Hong Kong Securities Clearing Company Limited

"Hong Kong"
Hong Kong Special Administrative Region of the People's Republic of China

"Independent Board Committee"
an independent committee of the Board comprising all the independent non-executive Directors, which has been established to advise the Independent Shareholders in respect of the Rights Issue and the Placing Agreement

"Independent Financial Adviser"
Messis Capital Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities and the independent financial adviser appointed by the Independent Board Committee to advise the Independent Board Committee and the Independent Shareholders in respect of the Rights Issue, the Placing Agreement and the transactions contemplated thereunder

"Independent Shareholder(s)"
Shareholder(s) excluding (i) the controlling shareholder and their associates; (ii) all Directors (excluding the independent non-executive Directors) and their respective associates (as defined under the Listing Rules); (iii) those who are involved in or interested in the Rights Issue and the Placing Agreement (as the case may be); and (iv) those that are required under the Listing Rules to abstain from voting at the EGM

"Independent Third Party(ies)"
any person(s) or company(ies) and their respective ultimate beneficial owner(s) whom, to the best of the Directors' knowledge, information and belief having made all reasonable enquiries, are third parties independent of and not connected with the Company and the connected persons of the Company in accordance with the Listing Rules

DEFINITIONS

"Last Trading Day"
19 December 2024, being the last full trading day of the Shares on the Stock Exchange immediately prior to the publication of the Announcement

"Latest Practicable Date"
12 March 2025, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

"Latest Time for Acceptance"
4:00 p.m. on Tuesday, 27 May 2025, or such other time and date as the Company may determine, being the latest time and date for acceptance of and payment for the Rights Shares

"Listing Committee"
the listing committee of the Stock Exchange for considering application for listing and the granting of listing

"Listing Rules"
the Rules Governing the Listing of Securities on the Stock Exchange

"Memorandum and Articles"
the memorandum and articles of association of the Company, as amended, restated or supplemented from time to time

"Net Gain"
the aggregate of any premiums (being the aggregate amount paid by the placees) after deducting the aggregate amount of the Subscription Price for the Placing Shares placed by the Placing Agent under the Placing Agreement

"No Action Shareholder(s)"
Qualifying Shareholder(s) or renouncee(s) or transferee(s) of nil-paid rights under the PAL(s) during the Rights Issue who do not subscribe for the Rights Shares (whether partially or fully) under the PAL(s), or such persons who hold any nil-paid rights at the time such nil-paid rights are lapse, or Non-Qualifying Shareholders (as the case may be)

"Non-Qualifying Shareholder(s)"
those Overseas Shareholder(s) to whom the Directors, based on legal opinions provided by the Company's legal advisers, consider it necessary or expedient not to offer the Rights Shares to such Shareholders on account either of restrictions under the laws of the relevant place or the requirements of a relevant regulatory body or stock exchange in that place

DEFINITIONS

"NQS Unsold Rights Share(s)"	the Rights Shares which would otherwise have been provisionally allotted to the Non-Qualifying Shareholders in nil-paid form that have not been sold by the Company
"Overseas Shareholder(s)"	Shareholders with registered addresses (as shown in the register of members of the Company on the Record Date) which are outside Hong Kong
"PAL(s)"	the provisional allotment letter(s) in respect of the Rights Issue proposed to be issued to the Qualifying Shareholders
"Placee(s)"	professional, individuals, corporate, institutional or other investor(s), who and whose ultimate beneficial owner(s) shall not be a Shareholder and shall be Independent Third Party(ies), procured by the Placing Agent and/or its sub-placing agents to subscribe for the Placing Shares pursuant to the Placing Agreement
"Placing"	the placing of the Placing Shares on a best-effort basis by the Placing Agent and/or its sub-placing agent(s) to the Placees on the terms and conditions of the Placing Agreement
"Placing Agent"	Advent Securities (Hong Kong) Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) regulated activities as defined under the SFO
"Placing Agreement"	the placing agreement dated 19 December 2024 entered into between the Company and the Placing Agent in relation to the placing of the Placing Shares
"Placing Long Stop Date"	4:00 p.m. on Wednesday, 11 June 2025 or such later date as the Company and the Placing Agent may agree in writing
"Placing Period"	the period from Tuesday, 3 June 2025 up to 4:00 p.m. on Tuesday, 10 June 2025, or such other dates as the Company may announce, being the period during which the Placing Agent will seek to effect the Compensatory Arrangements
"Placing Share(s)"	the Unsubscribed Rights Share(s) and the NQS Unsold Rights Share(s)

DEFINITIONS

“PRC”	the People’s Republic of China, and for the purpose of this circular, shall exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan
“Prospectus”	the prospectus to be despatched to the Shareholders by the Company containing details of the proposed Rights Issue
“Prospectus Documents”	the Prospectus and the PAL to be issued by the Company
“Prospectus Posting Date”	Tuesday, 13 May 2025, or such other date as the Company may determine, for the despatch of the Prospectus Documents
“Qualifying Shareholder(s)”	Shareholder(s) who(se) name(s) appear(s) on the register of members of the Company on the Record Date, other than the Non-Qualifying Shareholder(s)
“Record Date”	Monday, 12 May 2025, or such other date as the Company may determine, being the date by reference to which entitlements of the Shareholders to participate in the Rights Issue will be determined
“Registrar”	the branch share registrar of the Company in Hong Kong, Tricor Tengis Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong
“Rights Issue”	the proposed issue by way of rights on the basis of four (4) Rights Shares for every one (1) Adjusted Share held by the Qualifying Shareholders on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Prospectus Documents
“Rights Share(s)”	up to 138,240,000 Adjusted Shares to be allotted and issued pursuant to the Rights Issue (assuming no change in the number of Shares in issue on or before Record Date)
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)”	the Existing Share(s), the Consolidated Share(s) and/or the Adjusted Share(s), as the case may be

DEFINITIONS

“Share Consolidation”	the proposed consolidation of every five (5) issued Existing Shares of par value of HK$0.20 each into one (1) Consolidated Share of par value of HK$1.00 each
“Share Option”	the share option(s) granted by the Company pursuant to the Share Option Scheme
“Share Option Scheme”	the share option scheme adopted by the Company pursuant to a written resolution of the Shareholders passed on 27 March 2017
“Share Subdivision”	the proposed subdivision of each of the authorised but unissued Existing Shares of par value of HK$0.2 each into 20 authorised but unissued Adjusted Shares of HK$0.01 each
“Shareholder(s)”	the holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	HK$0.53 per Rights Share
“substantial shareholder(s)”	has the meaning ascribed thereto under the Listing Rules
“Takeovers Code”	The Code on Takeovers and Mergers and Share Buy-backs issued by the SFC
“Unsubscribed Rights Shares”	the Rights Shares that are not subscribed by the Qualifying Shareholders
“%”	per cent.

LETTER FROM THE BOARD

HSC Resources Group Limited

鴻盛昌資源集團有限公司

(Formerly known as WINDMILL Group Limited 海鑫集團有限公司)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1850)

Executive Directors:
Mr. Li Junheng
Mr. Li Shing Kuen Alexander
Ms. Chau Ngai Mo

Independent Non-executive Directors:
Mr. Li Ka Chun Gordon
Mr. Fu Wing Kwok Ewing
Mr. Ghanshyam Adhikari

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

Head Office and Principal
Place of Business:
Unit 1603, 16/F, Tower 1
Enterprise Square
9 Sheung Yuet Road
Kowloon Bay, Kowloon
Hong Kong

14 March 2025

To the Shareholders,

Dear Sir or Madam,

(1) PROPOSED CAPITAL REORGANISATION;
(2) PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) ADJUSTED SHARE HELD AT THE CLOSE OF BUSINESS ON THE RECORD DATE ON A NON-UNDERWRITTEN BASIS;
AND
(3) NOTICE OF EGM

INTRODUCTION

Reference is made to the Announcement of the Company dated 19 December 2024, in relation to, among other matters, the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated thereunder. The purpose of this circular is to provide you with, among other things, (i) details of the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated thereunder; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in

LETTER FROM THE BOARD

respect of the Rights Issue and the Placing Agreement; (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 the Placing Agreement; (iv) other information required under the Listing Rules; and (v) the notice of the EGM.

(I) PROPOSED CAPITAL REORGANISATION

The Board proposes the Capital Reorganisation to be implemented in the following manner:

(i) the Share Consolidation whereby every five (5) issued Existing Shares of par value of HK$0.20 each will be consolidated into one (1) Consolidated Share of par value of HK$1.00 each;

(ii) the Capital Reduction whereby (a) the total number of Consolidated Shares in the issued share capital of the Company will be rounded down to the nearest whole number by cancelling any fraction of a Consolidated Share in the total number of Consolidated Shares in the issued share capital of the Company immediately following the Share Consolidation, and (b) the par value of each issued Consolidated Share will be reduced from HK$1.00 to HK$0.01 by cancelling the paid-up capital of the Company to the extent of HK$0.99 on each issued Consolidated Share;

(iii) the Share Subdivision whereby immediately following the Capital Reduction, each of the authorised but unissued Existing Shares of par value of HK$0.20 each will be subdivided into 20 Adjusted Shares of par value of HK$0.01 each; and

(iv) the credit arising from the Capital Reduction will be applied towards offsetting the Accumulated Losses. The balance of the credit (if any) after offsetting the Accumulated Losses will be transferred to a distributable reserve account of the Company which may be applied by the Company in any manner as permitted by all applicable laws and the Memorandum and Articles and as the Board considers appropriate.

Effect of the Capital Reorganisation

As at the date of this circular, the authorised share capital of the Company is HK$40,000,000 divided into 200,000,000 Existing Shares of par value of HK$0.20 each, of which 172,800,000 Existing Shares have been issued and fully paid or credited as fully paid. Immediately following the Capital Reorganisation, the authorised share capital of the Company will be HK$40,000,000 divided into 4,000,000,000 Adjusted Shares of par value of HK$0.01 each, and the aggregate nominal value of the issued share capital of the Company will be approximately HK$345,600 (assuming that no further Existing Shares are issued or repurchased from the date of this circular until the effective date of the Capital Reorganisation). Based on the number of the Existing Shares in issue as at the date of this circular, a credit of approximately HK$34,214,400 will arise as a result of the Capital

LETTER FROM THE BOARD

Reduction, which will be applied towards offsetting Accumulated Losses as at the effective date of the Capital Reorganisation.

Assuming no Existing Shares are issued or repurchased from the date of this circular, the share capital structure of the Company will be as follows:

	As at the date of this circular	Immediately after the Capital Reorganisation becoming effective
Authorised share capital	HK$40,000,000	HK$40,000,000
Par value per share	HK$0.2	HK$0.01
Number of authorised shares	200,000,000	4,000,000,000
Amount of issued share capital	HK$34,560,000	HK$345,600
Number of issued shares	172,800,000	34,560,000
Amount of unissued share capital	HK$5,440,000	HK$39,654,400
Number of unissued shares	27,200,000	3,965,440,000

Note: The above share capital structure of the Company is for illustration purpose only.

The Adjusted Shares in issue immediately following the Capital Reorganisation becoming effective will rank pari passu in all respects with each other and the Capital Reorganisation will not result in any change in the relative rights of the Shareholders, save that fractional Consolidated Shares will be disregarded and not issued to the Shareholders but all such fractional Consolidated Shares will be aggregated and, if possible, sold for the benefit of the Company. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a holder of the Consolidated Shares regardless of the number of share certificates held by such holder. Shareholders concerned about losing out on any fractional entitlement are recommended to consult their licensed securities dealer, bank manager, solicitor, professional accountant or other professional advisor and may wish to consider the possibility of buying or selling Existing Shares in a number sufficient to make up an entitlement to receive a whole number of Adjusted Shares.

Currently, the Shares are traded on the Stock Exchange in the board lot size of 10,000 Shares. Upon the Capital Reorganisation becoming effective, the board lot size for trading in the Adjusted Shares will remain as 10,000 Adjusted Shares.

Other than the expenses to be incurred in relation to the Capital Reorganisation, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Group, save for any fractional Adjusted Shares will not be allocated to the Shareholders who may otherwise be entitled. The Directors are of the view that the Capital Reorganisation will not have any material adverse effect on the financial position of the Group and are in the interest of the Company and the Shareholders as a whole.

10 -

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company has outstanding scheme mandate limit under the Share Option Scheme which was approved by a resolution of the Shareholders passed on 27 March 2017 is 4,000,000 Existing Shares. As no Share Option has been granted, the remaining unutilised scheme mandate limit is 4,000,000. The Company has no intention to grant or vest any Share Option(s) on or before the Record Date.

Save for the Share Options, the Company has no outstanding warrants, options or convertible securities in issue or other similar rights entitling holders thereof to convert into or exchange into or subscribe for new Shares as at the Latest Practicable Date.

Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional upon:

(i) the passing of the necessary resolution(s) by the Shareholders approving the Capital Reorganisation at the EGM;

(ii) if required under the Companies Act an order being made by the Court confirming the Capital Reduction;

(iii) if applicable, the compliance with all relevant procedures and requirements under the laws of the Cayman Islands (where applicable) and the Listing Rules to effect the Share Reorganisation compliance with any terms and conditions which the Court may impose in relation to the Capital Reduction;

(iv) if required under the Companies Act, registration by the Registrar of Companies in the Cayman Islands of a copy of the order of the Court confirming the Capital Reduction and the minute containing the particulars required by the Companies Act with respect to the Capital Reduction;

(v) the compliance with all relevant procedures and requirements under the applicable laws of the Cayman Islands and the Listing Rules to effect the Capital Reorganisation; and

(vi) the Stock Exchange granting the listing of, and permission to deal in, the Adjusted Shares in issue and to be issued upon the Capital Reorganisation becoming effective.

The Capital Reorganisation will become effective when the conditions mentioned above are fulfilled. Upon the approval by the Shareholders of the Capital Reorganisation at the EGM, the legal advisers to the Company (as to the Cayman Islands law), if required under the Companies Act, will apply to the Court for hearing date(s) to confirm the Capital Reduction and a further announcement will be made by the Company as soon as practicable after the Court hearing date(s) is confirmed (if applicable).

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LETTER FROM THE BOARD

As at the Latest Practicable Date, none of the above conditions have been fulfilled.

On 11 March 2024, the Cayman Islands government issued the Companies (Amendment) Act, 2024 (the “Amendment Act”). The Amendment Act seeks to amend the Companies Act to address various matters, including the streamlining of the share capital reduction process. The Amendment Act introduces a new alternative method for share capital reduction in addition to the existing court-sanctioned procedure. A Cayman Islands exempted company, such as the Company, may reduce its share capital by a special resolution of members supported by a solvency statement from its directors. The solvency statement must be made no more than 30 days before the date of the special resolution for reducing share capital. The effective date of the Amendment Act is yet to be announced as of the date of the circular. If the Amendment Act becomes effective before the Capital Reorganization takes effect, subject to compliance with the solvency requirement as described and any other applicable requirements, the Company may no longer be required to obtain the approval of the Court for the Capital Reduction. If this becomes the case, the Company will make further announcement on the implication of such changes to the Capital Reorganisation.

Odd lots arrangements and matching services

In order to alleviate the difficulties arising from the existence of odd lots of the Adjusted Shares arising from the Capital Reorganisation, the Company has appointed Advent Securities (Hong Kong) Limited as an agent to stand in the market to provide matching services for sale and purchase of odd lots of the Adjusted Shares on a best effort basis. Shareholders who wish to take advantage of this facility either to dispose of their odd lots of the Shares or to top up their odd lots to a full new board lot should directly or through their brokers contact Mr. Cho Pak Keung of Advent Securities (Hong Kong) Limited at Unit A–C, 11/F, Kee Shing Centre, 74–76 Kimberley Road, Kowloon, Hong Kong or at telephone number (852) 2510 0603 from 9:00 a.m. on Thursday, 15 May 2025 to 4:00 p.m. on Wednesday, 4 June 2025 (both days inclusive).

Holders of odd lots of the Adjusted Shares should note that successful matching of the sale and purchase of odd lots of the Adjusted Shares is not guaranteed. Any Shareholder who is in any doubt about the odd lots arrangements is recommended to consult his/her/its own professional advisers.

To alleviate the difficulties in trading odd lots of the Shares arising from the Rights Issue, the Company will appoint an agent to provide matching services to the Shareholders who wish to top up or sell their holdings of odd lots of the Shares during the period from 9:00 a.m. on Thursday, 15 May 2025 to 4:00 p.m. on Wednesday, 4 June 2025 (both dates inclusive). Holders of the Shares in odd who wish to take advantage of this facility either to dispose of their odd lots of the Shares or to top up their odd lots to a full new board lot may directly or through their broker during such period. The Shareholders are recommended to consult their professional advisers if they are in doubt about the above facility.

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LETTER FROM THE BOARD

Exchange of Share Certificates

Subject to the Capital Reorganisation having become effective, Shareholders may, on or after Tuesday, 29 April 2025 and until Friday, 6 June 2025 (both days inclusive), submit the existing share certificates for the Existing Shares to the Registrar in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, in exchange, at the expense of the Company, for new share certificates for the Adjusted Shares. Thereafter, existing share certificates for Existing Shares will continue to be good evidence of legal title and may be exchanged for new share certificates for Adjusted Shares at the expense of the Shareholders on payment of a fee of HK$2.50 (or such higher amount as may be allowed by the Stock Exchange from time to time) for each existing share certificate cancelled or each new share certificate issued for Adjusted Shares (whichever is higher) but are not acceptable for trading, settlement and registration.

The new share certificates for the Adjusted Shares will be issued in another colour in order to distinguish them from the existing share certificates.

Application for listing and dealings

Application will be made to the Stock Exchange for the granting of the listing of, and permission to deal in, the Adjusted Shares arising from the Capital Reorganisation and all necessary arrangements will be made for the Adjusted Shares to be admitted into CCASS.

Subject to the granting of the listing of, and permission to deal in, the Adjusted Shares on the Stock Exchange upon the Capital Reorganisation becoming effective, as well as compliance with the stock admission requirements of the HKSCC, the Adjusted Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as 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 settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements will be made for the Consolidated Shares to be admitted into CCASS established and operated by HKSCC.

None of the Existing Shares or debt securities are listed or dealt in on any other stock exchange other than the Stock Exchange, and at the time the Capital Reorganisation becomes effective, the Adjusted Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought.

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LETTER FROM THE BOARD

Closure of register of members

The register of members of the Company will be closed from Monday, 31 March 2025 to Monday, 7 April 2025 (both dates inclusive) for determining the identity of the Shareholders entitled to attend and vote at the EGM. No transfer of Shares will be registered during this period.

Reasons for the Capital Reorganisation

Under Rule 13.64 of the Listing Rules, where the market price of the securities of an issuer approaches the extremities of HK$0.01 or HK$9,995.00, the issuer may be required either to change the trading method or to proceed with a consolidation or splitting of its securities. Further, the "Guide on Trading Arrangements for Selected Types of Corporate Actions" issued by the Hong Kong Exchanges and Clearing Limited on 28 November 2008 and updated in September 2024 has further stated that (i) market price of the shares at a level less than HK$0.1 each will be considered as trading at extremity as referred to under Rule 13.64 of the Listing Rules; and (ii) taking into account the minimum transaction costs for a securities trade, the expected board lot value should be greater than HK$2,000.

For the past 3 months, the share price of the Company has been trading at or close to HK$0.1, and the closing price of the existing Shares as at the Latest Practicable Date is HK$0.179 per Share. The value of each existing board lot has been less than HK$2,000. Based on the closing price of HK$0.179 per Share as at the Latest Practicable Date and the existing board lot size of 10,000 Shares, the Board resolved to propose the Share Consolidation, resulting in HK$0.895 per Consolidated Share (which will be higher than the extremity of HK$0.10 as mentioned in the Guide) and HK$8,950 per board lot of 10,000 Consolidated Shares with the view to complying with the trading requirements under the Listing Rules that the expected board lot value will be greater than HK$2,000.

The Board considers that the proposed Share Consolidation would bring about a corresponding upward adjustment in the trading price per Consolidated Share on the Stock Exchange. Further, the Share Consolidation would reduce the overall transaction and handling costs of dealings in the Shares as a proportion of the market value of each board lot, since most of the banks/securities houses will charge minimum transaction costs for each securities trade. In view of the above reasons, the Board considers that the Share Consolidation is justifiable notwithstanding the potential costs and impact arising from the creation of odd lots to Shareholders. Accordingly, the Board is of the view that the Share Consolidation is beneficial to and in the interests of the Company and the Shareholders as a whole.

Under the Companies Act and the Memorandum and Articles, the Company may not issue Shares at a discount to the nominal value of such Shares. In order to facilitate possible fundraising activities in the future, it is necessary to implement the Capital Reorganisation to lower the par value of the Shares, giving greater flexibility to the Company to issue new Shares in the future. Immediately after completion of the Share

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Consolidation but before implementation of the Capital Reduction and the Share Subdivision, the nominal value of the Consolidated Shares will be HK$1.00 per Consolidated Share. The Capital Reduction and the Share Subdivision will keep the nominal value of the Adjusted Shares at a lower level of HK$0.01 per Adjusted Share, which allows greater flexibility in the pricing for any issue of new Shares in the future.

The credit arising from the Capital Reduction will enable the Company to set off its Accumulated Losses. The balance of the credit (if any) after offsetting the Accumulated Losses will be transferred to a distributable reserve account of the Company which may be applied by the Company in any manner as permitted by all applicable laws and the Memorandum and Articles and as the Board considers appropriate. It will give greater flexibility to the Company to declare dividends and/or to undertake any corporate exercise which requires the use of distributable reserves in the future, subject to the Company's performance and when the Board considers that it is appropriate to do so in the future.

The Board is of the opinion that the proposed Capital Reorganisation will give greater flexibility to the Company to (i) conduct fundraising exercise to raise capital; (ii) declare dividends; and/or (iii) undertake any corporate exercise which requires the use of distributable reserves in the future, subject to the Company's performance and when the Board considers that it is appropriate to do so in the future.

As at the date of this circular, save as disclosed in this circular, the Company currently (i) does not have any agreement, arrangement, understanding, intention, or negotiation (either concluded or in process) on any potential fundraising activities which will involve issue of equity securities of the Company; (ii) has no other plan or intention to carry out any future corporate actions in the next twelve months which may have an effect of undermining or negating the intended purpose of the Capital Reorganisation; and (iii) the Company does not have any concrete fundraising plan for the upcoming 12 months.

In view of the above reasons, the Directors are of the view that the Capital Reorganisation is in the best interests of the Company and its Shareholders as a whole.

Shareholders and potential investors of the Company should note that the Capital Reorganisation is conditional upon satisfaction of conditions set out in the paragraph headed "Conditions of the Capital Reorganisation" in this circular. Therefore, the Capital Reorganisation may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities, the Adjusted Shares and/or nil-paid Rights Shares of the Company. If they are in doubt, they should consult their professional advisers.

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LETTER FROM THE BOARD

(II) PROPOSED RIGHTS ISSUE

The Board proposes, subject to the Capital Reorganisation becoming effective, to conduct the Rights Issue on the basis of four (4) Rights Shares for every one (1) Adjusted Share held by the Qualifying Shareholders as at the Record Date. Details of the Rights Issue are set out below:

Rights Issue statistics

Basis of the Rights Issue:	Four (4) Rights Shares for every one (1) Adjusted Share held by the Qualifying Shareholders at the close of business on the Record Date
Subscription Price:	HK$0.53 per Rights Share
Net price per Rights Shares (i.e. Subscription Price less cost and expenses incurred in the Rights Issue):	Approximately HK$0.101 per Rights Share (on the basis that all the Rights Shares will be taken up)
Number of Shares in issue as at the Latest Practicable Date:	172,800,000 Existing Shares
Number of Adjusted Shares in issue upon the Capital Reorganisation becoming effective:	34,560,000 Adjusted Shares (assuming there is no change in number of Shares in issue up to the effective date of the Capital Reorganisation)
Number of Rights Shares (Shares to be issued pursuant to the Rights Issue):	Up to 138,240,000 Adjusted Shares (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)
Total number of Adjusted Shares in issue upon completion of the Rights Issue:	Up to 172,800,000 Adjusted Shares (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)
Gross proceeds from the Rights Issue (before deducting the necessary expenses):	Up to approximately HK$73.27 million before expenses (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)
Net proceeds from the Rights Issue (after deducting the estimated expenses of approximately HK$69.80 million):	Up to approximately HK$69.80 million after expenses (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company has outstanding scheme mandate limit under the Share Option Scheme which was approved by a written resolution of the Shareholders passed on 27 March 2017 is 4,000,000 Existing Shares. As no Share Option has been granted, the remaining unutilised scheme mandate limit is 4,000,000. The Company has no intention to grant or vest any Share Option(s) on or before the Record Date.

Assuming no change in the number of Shares in issue on or before the Record Date, other than the Capital Reorganisation becoming effective, the aggregate 138,240,000 Rights Shares to be issued pursuant to the terms of the Rights Issue represent 400% of the total number of issued Adjusted Shares upon the Capital Reorganisation becoming effective and approximately 80% of the total number of issued Adjusted Shares as enlarged by the issue of the Rights Shares (assuming full acceptance by the Qualifying Shareholders).

The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares.

As at the Latest Practicable Date, the Board has not received any information from any Shareholders of their intention to take up the Rights Shares to be provisionally allotted to them under the Rights Issue.

Shareholders and potential investors are advised to exercise caution when dealing in the Shares and the nil-paid Right Shares.

Subscription Price

The Subscription Price of HK$0.53 per Rights Share is payable in full by a Qualifying Shareholder upon acceptance of the relevant provisional allotment of the Rights Shares under the Rights Issue, or where a transferee of the nil-paid Rights applies for the Rights Shares.

The Subscription Price represents:

(i) a discount of approximately 40.78% to the closing price of HK$0.895 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the closing price of HK$0.179 per Existing Share as quoted on the Stock Exchange on the Latest Practicable Date;

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(ii) a discount of approximately 24.29% to the closing price of HK$0.7 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the closing price of HK$0.14 per Existing Share as quoted on the Stock Exchange on the Last Trading Day;

(iii) a discount of approximately 23.19% to the theoretical average closing price of approximately HK$0.69 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the average closing price of HK$0.138 per Existing Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;

(iv) a discount of approximately 23.36% to the theoretical average closing price of approximately HK$0.6915 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the average closing price of HK$0.1383 per Existing Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;

(v) a discount of approximately 93.78% to the unaudited consolidated net asset value per Adjusted Share of approximately HK$8.52 as at 31 October 2024 (based on 172,800,000 Existing Shares in issue as at the Last Trading Day); and

(vi) a theoretical dilution effect (as defined under Rule 7.27B of the Listing Rules) of a discount of approximately 19.43%, represented by the theoretical diluted price of approximately HK$0.564 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) to the theoretical benchmarked price of HK$0.70 per Adjusted Share (as defined under Rule 7.27B of the Listing Rules, taking into account the higher of (i) the closing price of the Adjusted Share as quoted on the Stock Exchange on the Last Trading Day; and (ii) the average closing price of the Shares as quoted on the Stock Exchange for the five (5) consecutive trading days prior to the date of this circular and adjusted for the effect of the Capital Reorganisation).

The Subscription Price was determined with reference to, among other things, (i) the market price of the Shares under the prevailing market conditions; (ii) the current business performance and financial position of the Group; and (iii) the reasons for and benefits of proposed Rights Issue as discussed in the section head "Reasons for the Rights Issue and the Use of Proceeds", and the amount of funds the Company intends to raise under the Rights Issue.

Under the Rights Issue, each Qualifying Shareholder is entitled to subscribe for the Rights Shares at the same price in proportion to his/her/its existing shareholding in the Company. The Company considers that the discount of the Subscription Price to the current market price (taking into account the effect of the Capital Reorganisation) will encourage them to participate in the Rights Issue, minimising dilution impact.

LETTER FROM THE BOARD

When determining the Subscription Price, the Directors have considered, among other things, the closing prices of the Shares traded on the Stock Exchange from 18 October 2024 to 19 December 2024, being the past three months prior to and including the Last Trading Day (the “Review Period”), as a benchmark to reflect the prevailing market conditions and recent market sentiment. The Directors consider that the Review Period is sufficient as it is intended to identify the most prevailing market price and recent trading performance of the Shares under the market conditions and sentiment close enough to that of the Rights Issue. During the period of 20 December 2024 to the Latest Practicable Date, the closing prices of the Shares on the Stock Exchange ranged from HK$0.12 per Existing Share to HK$0.19 per Existing Share. The Subscription Price represents a discount of approximately 44.21% to the closing price of HK$0.95 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the highest closing price of the Shares of HK$0.19 per Existing Share after the Review Period. The Board is not aware of any specific reasons that may have contributed to the recent rising trend of the closing prices nor significant price fluctuations during such period. The Review Period is not intended to extend further into the past nor any date after the Last Trading Day to cover the Company’s Share price that is under market conditions and sentiment that may be different and therefore not relevant for comparison purpose. Thus, the Directors consider that it is fair and reasonable and in the interests of the Company and its Shareholders to set the Subscription Price with reference to the prevailing market conditions during the Review Period and the other factors as set out above.

During the Review Period, the closing prices of the Shares on the Stock Exchange ranged from HK$0.132 per Existing Share to HK$0.222 per Existing Share, with the average closing price during the Review Period being around HK$0.179 per Existing Share. The Directors noted that there was a general downward trend of the closing prices of the Shares on the Stock Exchange during the Review Period. Additionally, the Board is not currently aware of any specific reasons that may have contributed to the significant price fluctuations during the Review Period.

Furthermore, the latest unaudited consolidated net asset value of the Group amount to approximately HK$294.44 million as of 31 October 2024. The Directors observed that the market capitalisation of the Group consistently fell considerably short of its net asset value during the Review Period, where the market capitalisation of the Group during the Review Period ranged from approximately HK$22.81 million to approximately HK$38.36 million, which represented a discount of approximately 92.25% and 86.97% respectively to the unaudited consolidated net asset value attributable to the Shareholders. This substantial disparity reflects a lack of market confidence in the Group’s financial performance, position, and future prospects. As a result, the market value of the Shares no longer accurately reflects the underlying net asset value.

The Directors have taken into account various factors while deciding on the Subscription Price despite it being lower than the average closing price per Share and the high end of the closing price per Share during the Review Period. The Directors considered the challenge of raising funds through equity due to (i) the Shares’ recent market

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performance, which has been in a downward trend; and (ii) the current market sentiment of the shares of listed companies in Hong Kong.

Given these factors, only a discounted price of the Shares would be attractive to the Qualifying Shareholders to participate in the Rights Issue, enabling the Company to raise sufficient capital.

The Company has also exhaustively conducted a search of recent proposed rights issue exercises, announced by the companies listed on the Main Board of the Stock Exchange within the six months prior to the Last Trading Day to understand the trend of the recent market practice regarding rights issue exercises. The Company has identified a total of 10 rights issue comparables (the "Comparables") during the respective period.

Although the Comparables include rights issues in different scale, engaged in different business or have different financial performance and funding needs from the Company, having considered (i) all of the Comparables and the Group are listed on the Main Board of the Stock Exchange; (ii) including transactions conducted by the Comparables with different funding needs and business represents a more comprehensive overall market sentiment in the Company's comparable analysis; (iii) the respective period for the selection of the Comparables has generated a reasonable and meaningful number of sample size of 10 Hong Kong listed issuers to reflect the market practice regarding recent rights issue; and (iv) the 10 Comparables identified during the aforementioned period were exhaustively included without any artificial selection or filtering so the Comparables represent a true and fair view of the recent market trends for rights issue conducted by other Hong Kong listed issuers in the Main Board of the Stock Exchange. Therefore, the Company considers that the Comparables are indicative in assessing the fairness and reasonableness of the terms of the Rights Issue (including the Subscription Price).

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LETTER FROM THE BOARD

Details of 10 Comparables are set out below:

Stock Code	Company Name	Premium/(discount) of the subscription price over/to the theoretical ex-rights price based on the closing price per share on the last trading day (%)	Premium/(discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the last trading day (%)
1468	Kingkey Financial International (Holdings) Ltd	-2.56	-4.28
6829	Dragon Rise Group Holdings Limited	-48.70	-48.20
1676	Gaodi Holdings Ltd	37.90	38.90
1029	IRC Ltd	-15.00	-17.20
727	Crown International Corporation Limited	0.00	12.25
2680	Innovax Holdings Ltd	-67.39	-68.35
639	Shougang Fushan Resources Group Ltd	1.96	2.52
103	Shougang Century Holdings Ltd	8.20	7.84
2339	Beijingwest Industries International Ltd	-13.85	-13.85
1865	Trendzon Holdings Group Ltd	-14.30	-17.40
Average		-11.37	-10.78

The premium/discount of subscription price over/to the theoretical ex-rights price based on the closing price per share on the last trading day prior to the announcement of the respective Comparables generally ranged from a premium of approximately $8.20\%$ to a discount of approximately $67.39\%$ with an average of approximately $11.37\%$.

LETTER FROM THE BOARD

Taking into consideration the discount of the Subscription Price of approximately 24.29% to the closing price of HK$0.7 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the closing price of HK$0.14 per Existing Share as quoted on the Stock Exchange on the Last Trading Day falls within the range of that of the Comparables.

The subscription price of the Comparables ranged from a premium of approximately 38.90% to a discount of approximately 68.35%, with an average discount of approximately 10.78% over/to their respective average closing prices per share for the five consecutive trading days including and up to the last trading day. The discount of approximately 23.19% of the Company's Subscription Price of HK$0.53 per Rights Share to the theoretical average closing price of HK$0.69 per Adjusted Share for the five consecutive trading days including and up to the Last Trading Day falls within the range of that of the Comparables, the Directors consider that the discount of the Subscription Price is in line with market practice.

The Directors (excluding the members of the Independent Board Committee, whose opinion will be provided after taking into account the advice of the Independent Financial Adviser) consider that the terms of the Rights Issue, including the Subscription Price, are fair, reasonable and in the best interests of the Company and the Shareholders as a whole.

Non-underwritten basis

Subject to the fulfilment of the conditions of the Rights Issue, the Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event of an undersubscription of the Rights Issue, any Unsubscribed Rights Shares together with the NQS Unsold Rights Shares will be placed on a best effort basis by the Placing Agent to independent Places under the Placing. Any Unsubscribed Rights Shares or NQS Unsold Rights Shares remain not placed under the Placing will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

There is no minimum amount to be raised under the Rights Issue. There are no applicable statutory requirements under the laws of the Cayman Islands regarding minimum subscription levels in respect of the Rights Issue.

As the Rights Issue will proceed on a non-underwritten basis, Shareholder who applies to take up all or part of his/her/its entitlement under the PAL may unwittingly incur an obligation to make a general offer for the Shares under the Takeovers Code. Accordingly, the Rights Issue will be made on terms that the Company will provide for the Shareholders (other than HKSCC Nominees Limited) to apply on the basis that if the Rights Shares are not fully taken up, the application of any Shareholder for his/her/its assured entitlement under the Rights Issue will be scaled down to a level which does not trigger an obligation on part of the relevant Shareholder to make a general offer under the Takeovers Code in accordance to the note to Rule 7.19(5)(b) of the Listing Rules.

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Conditions of the Rights Issue

The Rights Issue is conditional upon the following conditions being fulfilled:

(i) the Capital Reorganisation having become effective;

(ii) the passing by more than 50% of the votes cast by the Independent Shareholders by way of poll of all necessary resolutions to be proposed at the EGM for the transactions contemplated under the Rights Issue to be effective in compliance with the Listing Rules, including but not limited to approving, confirming and/or ratifying the Rights Issue, including the allotment and issue of the Rights Shares in their nil-paid and fully-paid forms;

(iii) the delivery of the Prospectus Documents to the Stock Exchange and the issue by the Stock Exchange on or before the Posting Date of a certificate authorising registration of the Prospectus Documents with the Registrar of Companies in Hong Kong;

(iv) the filing and registration of all the Prospectus Documents (together with any other documents required by applicable law or regulation to be annexed thereto) with the Registrar of Companies in Hong Kong by no later than the Prospectus Posting Date;

(v) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus and a letter in the agreed form to the Non-Qualifying Shareholders, if any, for information purpose only explaining the circumstances in which they are not permitted to participate in the Rights Issue on or before the Prospectus Posting Date;

(vi) the grant of listing of the Rights Shares (in both nil-paid and fully paid forms) by the Stock Exchange (either unconditionally or subject only to the allotment and despatch of the share certificates in respect thereof) and the grant of permission to deal in the nil-paid Rights Shares and the fully-paid Rights Shares by the Stock Exchange (and such permission and listing not subsequently having been withdrawn or revoked);

(vii) the Placing Agreement not being terminated pursuant to the terms thereof and remain in full force and effect;

(viii) all other necessary waivers, consent and approvals (if required) from the relevant governmental or regulatory authorities for the Rights Issue and the transaction contemplated thereunder having been obtained and fulfilled; and

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(ix) none of the representations, warranties or undertakings contained in the Placing Agreement being or having become untrue, inaccurate or misleading in any material respect at any time before the Placing completion date, and no fact or circumstance having arisen and nothing having been done or omitted to be done which would render any of such undertakings, representations or warranties untrue or inaccurate in any material respect if it was repeated as at the time of the Placing completion date.

As at the Latest Practicable Date, none of the above conditions have been fulfilled.

None of the above conditions precedent can be waived. If any of the above conditions are not satisfied at or before 4:00 p.m. on Wednesday, 11 June 2025 (or such later date as the Company may determine), the Rights Issue will not proceed.

As the proposed Rights Issue is subject to the above conditions, it may or may not proceed.

Status of the Rights Shares

The Rights Shares (when allotted, fully-paid or credited as fully paid and issued) will rank pari passu in all respects among themselves and with the Adjusted Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the fully-paid Rights Shares will be entitled to receive all future dividends and distributions which may be declared, made or paid on or after the date of allotment and issue of the fully paid Rights Shares. Dealings in the Rights Shares in both their nil-paid and fully-paid forms will be subject to payment of stamp duty, Stock Exchange trading fee, transaction levy, investor compensation levy or any other applicable fees and charges in Hong Kong.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. To qualify for the Rights Issue, Shareholder must be registered as a member of the Company on the Record Date and not be a Non-Qualifying Shareholder.

Shareholders with their Shares held by a nominee (or held in CCASS) should note that the Board will consider the said nominee (including HKSCC Nominees Limited) as one single Shareholder according to the register of members of the Company and are advised to consider whether they would like to arrange for the registration of the relevant Shares in their own names prior to the Record Date.

In order to be registered as members of the Company prior to the closing of business on the Record Date, all transfers of Adjusted Shares (together with the relevant share certificates and instruments of transfer) must be lodged with the Company's branch share registrar, Tricor Tengis Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, by 4:30 p.m. on Friday, 2 May 2025.

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Subject to the Capital Reorganisation becoming effective and the registration of the Prospectus Documents in accordance with the applicable laws and regulations, the Company will despatch the Prospectus Documents to the Qualifying Shareholders on the Prospectus Posting Date and will despatch the Prospectus only (without the PAL) to the Non-Qualifying Shareholder for their information only.

Qualifying Shareholders who do not take up the Rights Shares to which they are entitled and Non-Qualifying Shareholders should note that their shareholdings in the Company will be diluted.

It is expected that the last day of dealings in the Adjusted Shares on a cum-rights basis is Tuesday, 29 April 2025, and the Adjusted Shares will be dealt with on an ex-rights basis from Wednesday, 30 April 2025.

Rights of the Overseas Shareholders (if any)

The Prospectus Documents are not intended to be registered or filed under the applicable securities legislation of any jurisdiction other than Hong Kong. Overseas Shareholders may not be eligible to take part in the Rights Issue as explained below.

According to the register of members of the Company as at the Latest Practicable Date, there was no other Overseas Shareholder.

The Company will comply with Rule 13.36(2)(a) of the Listing Rules make enquiries regarding the feasibility of extending the offer of the Rights Issue to Overseas Shareholders, if any. If, based on the legal advice to be provided by the legal advisor of the Company, the Board considers that it would be necessary or expedient not to offer the Rights Shares to Overseas Shareholders on account of either the legal restrictions under the laws of the relevant jurisdiction or the requirements of the relevant regulatory body or stock exchange in such relevant jurisdiction, the Rights Issue will not be extended to such Overseas Shareholders. In such circumstances, the Rights Issue will not be extended to the Non-Qualifying Shareholders. The basis for excluding the Non-Qualifying Shareholders, if any, from the Rights Issue will be set out in the Prospectus to be issued.

The Company will send the Prospectus and a letter explaining the circumstances in which the Non-Qualifying Shareholders are not permitted to participate in the Rights Issue to the Non-Qualifying Shareholders for their information only but will not send the PAL to them.

Arrangements will be made for the Rights Shares which would otherwise have been provisionally allotted to the Non-Qualifying Shareholders, to be sold in the market in their nil-paid form as soon as practicable after dealings in the Rights Shares in their nil-paid form commence and before dealings in the Rights Shares in their nil-paid form end, if a premium (net of expenses) can be obtained. The proceeds of such sale, less expenses and stamp duty, of more than HK$100 will be paid to the Non-Qualifying Shareholders pro rata

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to their shareholdings held on the Record Date. In light of administrative costs, the Company will retain individual amounts of HK$100 or less for its own benefit.

Overseas Shareholders should note that they may or may not be entitled to the Rights Issue, subject to the results of enquiries made by the Directors pursuant to Rule 13.36(2)(a) of the Listing Rules. The Company reserves the right to treat as invalid any acceptance of or applications for Rights Shares where it believes that such acceptance or application would violate the applicable securities or other laws or regulations of any territory or jurisdiction. Accordingly, the Overseas Shareholders should exercise caution when dealing in the Shares.

Closure of register of members

The register of members of the Company will be closed from Tuesday, 6 May 2025 to Monday, 12 May 2025 (both dates inclusive) for determining the Shareholders' entitlements to the Rights Issue.

No transfer of Shares will be registered during the above book closure periods.

Basis of provisional allotments

The basis of the provisional allotment shall be four (4) Rights Shares (in nil-paid form) for every one (1) Adjusted Share held by the Qualifying Shareholders as at close of business on the Record Date. There will be no excess application arrangements in relation to the Rights Issue.

Acceptance for all or any part of a Qualifying Shareholder's provisional allotment should be made only by lodging a duly completed PAL with a remittance for the Rights Shares being accepted with the Registrar by the Latest Time for Acceptance.

Arrangement on odd lot trading

In order to facilitate the trading of odd lots (if any) of the Shares as a result of the Rights Issue, the Company will appoint a securities firm to provide matching services, on a best effort basis, to those Shareholders who wish to top up or sell their holdings of odd lots of the Shares. Further details in respect of the arrangement of odd lot trading will be set out in the Prospectus.

Shareholders should note that the matching of the sale and purchase of odd lots of Shares is not guaranteed. Shareholders who are in any doubt about the odd lot matching arrangement are recommended to consult their own professional advisers.

LETTER FROM THE BOARD

Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements

The Company will make arrangements described in Rule 7.21(1)(b) of the Listing Rule to dispose of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares by offering the Unsubscribed Rights Shares and the NQS Unsold Rights Shares to independent places for the benefit of Shareholders to whom they were offered by way of the Rights Issue. There will be no excess application arrangements in relation to the Rights Issue. On 19 December 2024, the Company entered into the Placing Agreement with the Placing Agent in relation to the placing of Unsubscribed Rights Shares and the NQS Unsold Rights Shares to independent places on a best effort basis.

Pursuant to the Placing Agreement, the Company appointed the Placing Agent to place the Placing Shares during the Placing Period to independent places on a best effort basis, any premium over the Subscription Price for those Rights Shares that is realised will be paid to those No Action Shareholders and Non-Qualifying Shareholders on a pro rata basis. The Placing Agent will on a best effort basis, procure, by not later than Tuesday, 10 June 2025, places to subscribe for all (or as many as possible) of those Unsubscribed Rights Shares and the NQS Unsold Rights Shares. Any Unsubscribed Rights Shares and the NQS Unsold Rights Shares remain not placed after completion of the Placing will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

Net Gain (if any) will be paid (without interest) to the No Action Shareholders as set out below on a pro rata basis (but rounded down to the nearest cent):

(i) for No Action Shareholders, the relevant Qualifying Shareholders (or such persons who hold any nil-paid rights at the time such nil-paid rights are lapsed) whose nil-paid rights are not validly applied for in full, by reference to the extent that Shares in his/her/its nil-paid rights are not validly applied for; and

(ii) for Non-Qualifying Shareholders, the relevant Non-Qualifying Shareholders with reference to their shareholdings in the Company on the Record Date.

If and to the extent in respect of any Net Gain, any No Action Shareholders or Non-Qualifying Shareholders become entitled on the basis described above to an amount of

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HK$100 or more, such amount will be paid to the relevant No Action Shareholders and Non-Qualifying Shareholders in Hong Kong Dollars only and the Company will retain individual amounts of less than HK$100 for its own benefit.

Placing Agreement for Unsubscribed Rights Shares and the NQS Unsold Rights Shares

On 19 December 2024 (after trading hours of the Stock Exchange), the Company and the Placing Agent entered into the Placing Agreement, pursuant to which the Placing Agent has agreed to procure Placee(s), on a best effort basis, to subscribe for the Unsubscribed Rights Shares and the NQS Unsold Rights Shares. Details of the Placing Agreement are summarised below:

Date: 19 December 2024 (after trading hours)

Issuer: The Company

Placing Agent: Advent Securities (Hong Kong) Limited, a licensed corporation to carry out Type 1 (dealing in securities) regulated activities under the SFO, was appointed as the Placing Agent to procure, on the best effort basis, placees to subscribe for the Unsubscribed Rights Shares and NQS Unsold Rights Shares during the Placing Period.

The Placing Agent confirmed that it and its ultimate beneficial owner(s) (i) are not the Shareholder; and (ii) they are Independent Third Parties.

Placing Period: The period commencing from Tuesday, 3 June 2025 and end at 4:00 p.m. on Tuesday, 10 June 2025.

Commission and expenses: The Placing Agent shall be entitled to a commission fee equal to 1.5% of the amount which is equal to the Placing price multiplied by the Placing Shares that have been successfully placed by the Placing Agent.

Placing price: The placing price of each of the Placing Shares shall be not less than the Subscription Price. The final price determination will be dependent on the demand and market conditions of the Placing Shares during the process of placement.

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Placees:

The Placing Shares are expected to be placed to Placee(s), who and whose ultimate beneficial owner(s) shall be Independent Third Party(ies) such that the Placing will not have any implication under the Takeovers Code and no Shareholder will be under any obligation to make a general offer under the Takeovers Code as a result of the Placing.

Ranking of the Placing Shares:

The Placing Shares (when placed, allotted, issued and fully paid), shall rank pari passu in all respects among themselves and with the Adjusted Shares in issue at the date of completion of the Placing.

Conditions Precedent:

The obligations of the Placing Agent and the Company under the Placing Agreement are conditional upon, among others, the following conditions being fulfilled or being waived by the Placing Agent in writing, if applicable):

(i) the Listing Committee of the Stock Exchange having granted the listing of, and the permission to deal in, the Rights Shares;

(ii) none of the representations, warranties or undertakings contained in the Placing Agreement being or having become untrue, inaccurate or misleading in any material respect at any time before the completion, and no fact or circumstance having arisen and nothing having been done or omitted to be done which would render any of such undertakings, representations or warranties untrue or inaccurate in any material respect if it was repeated as at the time of completion; and

(iii) the Placing Agreement not having been terminated in accordance with the provisions thereof.

The Placing Agent may, in its absolute discretion, waive the fulfilment of all or any part of the conditions precedent to the Placing Agreement (other than those set out in paragraph (i) above) by notice in writing to the Company.

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The Company shall use its best endeavours to procure the fulfillment of such conditions precedent to the Placing Agreement by the Placing Long Stop Date. If any of the conditions precedent to the Placing Agreement have not been fulfilled by the Placing Long Stop Date or become incapable of being fulfilled (subject to the Placing Agent not exercising its rights to waive or extend the time for fulfillment of such conditions), then the Placing will lapse and all rights, obligations and liabilities of the Company and the Placing Agent in relation to the Placing shall cease and determine, save in respect of any accrued rights or obligations under the Placing Agreement or antecedent breach thereof.

Termination:

The Placing Agreement shall end on Friday, 13 June 2025 or any other date by mutual written agreement between the Placing Agent and the Company.

The engagement of the Placing Agent may also be terminated by the Placing Agent in case of force majeure resulting in the Company and the Placing Agent being unable to fulfil its duties and responsibilities under the engagement. However, if during the course of the engagement it has come to the Placing Agent's knowledge that there is any material adverse change in the business and operational environment in the Company which, in the sole opinion of the Placing Agent, may make it inadvisable to continue the engagement, the Placing Agent shall have the right to terminate the engagement by written notice to the Company with immediate effect.

The engagement between the Company and the Placing Agent in respect of the Placing Shares (including the commission and expenses payable) was determined after arm's length negotiation between the Placing Agent and the Company and is on normal commercial terms with reference to the market comparables, the existing financial position of the Group, the size of the Rights Issue, and the current and expected market conditions. The Board considers that the terms of Placing Agreement in respect of the Placing Shares (including the commission and expenses payable) are on normal commercial terms.

As explained above, the Unsubscribed Rights Shares and NQS Unsold Rights Shares will be placed by the Placing Agent to Independent Third Parties on a best effort basis for the benefits of the No Action Shareholders. If all or any of the Unsubscribed Rights Shares

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and NQS Unsold Rights Shares are successfully placed, any premium over the Subscription Price will be distributed to the relevant No Action Shareholders.

The Board considered that the Compensatory Arrangements are fair and reasonable and provide adequate safeguard to protect the interests of the Company's minority Shareholders since the Compensatory Arrangements would provide (i) a distribution channel of the Placing Shares to the Company; (ii) an additional channel of participation in the Rights Issue for the Qualifying Shareholders and the Non-Qualifying Shareholders; and (iii) a compensatory mechanism for the No Action Shareholders and the Non-Qualifying Shareholders.

Share certificates and refund cheques for the Rights Issue

Subject to fulfilment of the conditions of the Rights Issue, share certificates for the fully paid Rights Shares are expected to be posted on or before Thursday, 19 June 2025 to those entitled thereto at their registered addresses by ordinary post at their own risk. If the Rights Issue does not become unconditional, refund cheques without interest are expected to be posted on or before Thursday, 19 June 2025 by ordinary post to the respective applicants, at their own risk, to their registered addresses.

No fractional entitlement to the Rights Shares

The Company will not provisionally allot fractions of Rights Shares. All fractions of the Rights Shares will be aggregated (and rounded down to the nearest whole number) and sold by the Company in the open market if a premium (net of expense) can be obtained. Any of these Rights Shares remain not sold in the market will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

Application for listing of the Rights Shares

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms to be issued and allotted pursuant to the Rights Issue. No part of the equity or debt securities of the Company is listed or dealt in, and no listing of or permission to deal in any such securities is being or is proposed to be sought, on any other stock exchanges.

The nil-paid and fully-paid Rights Shares will be traded in board lots of 10,000 Shares.

RIGHTS SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

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 requirements 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

LETTER FROM THE BOARD

CCASS with effect from the respective commencement dates of dealings in the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange or such other dates as 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 licensed securities dealer(s) or other professional adviser(s) for details of those settlement arrangements and how such arrangements will affect their rights and interests.

REASONS FOR THE RIGHTS ISSUE AND THE USE OF PROCEEDS

The Group is a registered fire service installation contractor engaged in installation, maintenance, repair or inspection of fire safety systems for more than 30 years in Hong Kong.

Fire safety systems mainly consist of fire alarm systems, water and gas expression systems, fire hydrant and hose reel systems, emergency lighting systems and portable fire equipment. The Group's services mainly include (i) design, supply and installation of fire safety systems and other engineering and construction related aspects for buildings under construction or re-development (the "Installation Projects"); (ii) maintenance and repair of fire safety systems for built premises (the "Maintenance Projects"); and (iii) trading of fire service accessories including branded fire services equipment under a distributorship agreement with an internationally branded fire service equipment supplier. The net proceeds of the Rights Issue (after deduction of expenses) are expected to amount to approximately HK$69.80 million (assuming no change in the number of Shares in issue on or before the Record Date).

The Group intends to further strengthen its market position in the fire safety system industry in Hong Kong including but not limited to strengthen the financial position by the Rights Issue, which will enable the Company to expand its capital base so that it is able to undertake more sizeable fire safety system projects. The Directors also consider that it is in the interests of the Company and its Shareholders to raise capital to meet the Group's funding requirements by way of the Rights Issue, which will allow all Qualifying Shareholders the opportunity to maintain their respective pro rata shareholding interests in the Company.

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As at the date of this circular, the Group is currently working on 21 fire safety system projects in Hong Kong, 12 of which require capital funding. These 12 existing projects consist of (i) 10 Installation Projects; and (ii) 2 Maintenance Projects which have been commenced and are expected to contribute approximately HK$292.59 million and HK$14.51 million of revenue to the Group respectively in FY2025. The following are the details of the latest status of the Company's existing projects:

Projects	Customers	Background of the customers	Estimated upcoming payments to contractors/subcontractors (For the year ended 30 April 2025)	Estimated upcoming payments to contractors/subcontractors (For the year ended 30 April 2026)	Estimated upcoming payments to suppliers (For the year ended 30 April 2025)	Estimated upcoming payments to suppliers (For the year ended 30 April 2026)	Estimated upcoming payments from customers (For the year ended 30 April 2026)	Estimated upcoming payments from customers (For the year ended 30 April 2027)	Latest status (calculated by revenue recognized/ total contract sum)	Expected completion time	Amount of proceeds from the 2023 Rights Issue allocated	Amount of proceeds from the Rights Issue to be allocated	Credit terms given by the Company to its customers (number of days after payment application)
			HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million			HK$' million	HK$' million
Project A	Customer A	A Hong Kong incorporated company specializing in civil, building, foundations, electrical and mechanical, facades and interiors works and design	18.9	1.8	12.6	1.2	34.0	5.0	66%	Q4 of 2025	27.1	5.30	45 days
Project B	Customer A	A Hong Kong incorporated company specializing in civil, building, foundations, electrical and mechanical, facades and interiors works and design	98.7	12.1	75.8	4.8	162.0	41.0	90%	Q1 of 2026	51.15	6.05	45 days
Project C	Customer B	A subsidiary of a Hong Kong listed company specialises in design, construction and civil engineering works	0.3	0.0	0.1	0.0	4.4	0.0	100%	Q2 of 2025	0.36	0.00	30 days
Project D	Customer C	A Hong Kong incorporated company specializing in electrical, mechanical and building, civil engineering, curtain walls aluminum windows and claddings and interior fitting-out	13.5	0.8	11.0	0.5	28.4	1.5	98%	Q1 of 2025	3.28	0.00	30 days
Project E	Customer D	A subsidiary of a Hong Kong listed company specialising in design and construction of buildings and civil engineering works	8.2	3.3	5.5	2.2	5.1	15.2	53%	Q3 of 2025	13.32	3.60	30 days
Project F	Customer E	A Hong Kong listed conglomerate which is engaged in railway design, construction, operation, maintenance and investment in Hong Kong, Macau, Mainland China	4.5	2.2	3.3	1.4	8.4	4.0	73%	Q1 of 2026	3.68	0.00	30 days

LETTER FROM THE BOARD

Projects	Customers	Background of the customers	Estimated upcoming payments to contractors/subcontractors (For the year ended 30 April 2025)	Estimated upcoming payments to contractors/subcontractors (For the year ended 30 April 2026)	Estimated upcoming payments to suppliers (For the year ended 30 April 2025)	Estimated upcoming payments to suppliers (For the year ended 30 April 2026)	Estimated upcoming payments from customers (For the year ended 30 April 2026)	Estimated upcoming payments from customers (For the year ended 30 April 2027)	Latest status (calculated by revenue recognized/ total contract sum)	Expected completion time	Amount of proceeds from the 2023 Rights Issue allocated	Amount of proceeds from the Rights Issue to be allocated	Credit terms given by the Company to its customers (number of days after payment application)
Project G	Customer B	A subsidiary of a Hong Kong listed company specialises in design, construction and civil engineering works	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million	HK$' million
Project H	Customer F	A Hong Kong incorporated company specializing in engineering and construction services	0.0	3.9	0.0	2.6	0.0	7.3	0%	Q4 of 2025	N/A	2.57	30 days
Project I	Customer G	A Hong Kong listed company which is engaged in building construction, maintenance, renovation, plumbing and drainage works, electrical and mechanical works	0.0	0.4	0.0	0.3	0.0	0.8	95%	Q1 of 2025	N/A	0.00	30 days
Project J	Customer H	A subsidiary of a Hong Kong listed company specialising in maintenance, interior fitting-out works, construction services and property management	0.0	45.3	0.0	30.2	0.0	6.0	7%	Q4 of 2026	N/A	25.58	30 days
Project K	Customer I	A subsidiary of a Hong Kong listed conglomerate which is engaged in electricity generation and supply, development and construction services	0.0	22.1	0.0	14.8	0.0	41.0	0%	Q1 of 2027	N/A	8.88	30 days
Project L	Customer J	A Hong Kong incorporated company specialising in design, construction and maintenance of data centres	0.0	2.1	0.0	1.4	0.0	3.9	32%	Q4 of 2025	N/A	1.20	30 days
Others		Consists of the Installation Projects to customers specialise in design, construction and civil engineering works in Hong Kong and fitting-out projects to customers of casinos hotels in Macau	36.5	10.4	23.2	8.7	65.3	21.7	N/A	Before 2027	N/A	N/A	N/A
Total			180.6	109.2	131.5	71.3	307.6	156.2			98.89	54.10

LETTER FROM THE BOARD

Notes:

Projects J and L are the Maintenance Projects. Apart from Projects J and L, the others are the Installation Projects, which provide services of design, supply and installation of fire safety systems in both public and private sectors, including but not limited to the Three-runway System of the Hong Kong International Airport, MTR stations and power stations.
Projects A, B, C, D, E and F are the overlapping projects that the proceeds from the previous rights issue that completed on 28 June 2023 (the “2023 Rights Issue”) had previously applied to. Approximately 90.72% of the amount of proceeds from the 2023 Rights Issue (HK$98.89 million out of HK$109.00 million) were used to support these projects.
The Company will use its own resources to fund the remaining costs of the projects after using up the proceeds from the Rights Issue.

The contract period of the aforesaid 10 Installation Projects ranges from 3 months to 2 years. In respect of the Installation Projects, the Company makes payment applications to its installation customers by reference to the percentage of completion of each individual project. The actual completion of the work varies significantly depending on various factors including the master construction progress of the relevant project. The Company makes payment applications to its maintenance customers regularly in every 3 months. As compared to Installation Projects, Maintenance Projects tend to be relatively long-term and stable. The contract period of the aforesaid 2 existing Maintenance Projects is approximately 2 years.

Among the 12 existing projects, 6 of which are overlapping existing projects that the proceeds from the 2023 Rights Issue had previously applied to. Only 3 of the overlapping projects will utilise the proceeds from the current Rights Issue as the other 3 overlapping projects will be completed shortly or at the final stage of work.

Apart from the current projects, the Group has submitted 7 tenders of potential fire safety system projects with the aggregated contract sum of approximately HK$308 million. Once the aforesaid tenders are successfully accepted by the potential clients, the potential projects will be commenced by the first quarter of 2025 the earliest.

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If the 7 tenders are successfully accepted by the potential customers, the amount of the expected upcoming payments that the Company is required to be made are as follows:

	Expected start time	Expected dates that the tenders would be accepted by potential customers	Expected completion time	Upcoming payments to contractors/ subcontractors upon commencement HK$' million	Upcoming payments to contractors/ subcontractors within 1-6 months since commencement HK$' million	Upcoming payments to contractors/ subcontractors within 7-12 months since commencement HK$' million	Upcoming payments to suppliers upon commencement HK$' million	Upcoming payments to suppliers within 1-6 months since commencement HK$' million	Upcoming payments to suppliers within 7-12 months since commencement HK$' million	Amount of proceeds from the Rights Issue to be allocated HK$' million
Tender 1	Dec-25	Dec-25	Q3 of 2027	0.2	0.2	5.4	0.2	0.2	3.6	0.38
Tender 2	Jan-26	Jan-26	Q3 of 2027	0.3	0.3	5.4	0.2	0.2	3.6	0.96
Tender 3	Oct-25	Oct-25	Q4 of 2026	0.3	7.8	16.7	0.2	5.2	11.1	0.56
Tender 4	Sep-25	Sep-25	Q3 of 2027	0.3	6.3	7.5	0.2	4.2	5.0	0.55
Tender 5	Nov-25	Nov-25	Q4 of 2026	0.4	7.6	24.4	0.2	5.1	16.3	0.60
Tender 6	Jul-25	Jul-25	Q3 of 2026	0.4	6.8	25.2	0.2	4.6	16.8	0.60
Tender 7	Sep-25	Sep-25	Q4 of 2027	0.9	9.2	18.0	0.6	6.2	12.0	1.58
Total				2.8	38.2	102.6	1.8	25.7	68.4	5.23

Note: Apart from the above proceeds from the Rights Issue to be allocated among the tenders, the remaining upcoming payments will be funded by the Company's internal resources, taking into account of (i) HK$43 million of expected payment from the customers (other than Project A to Project L) by September 2025; (ii) the recovery of delayed payments in the sum of HK$56 million by July 2025 as mentioned below; and the bank balances and cash of the Group of approximately 16 million as at the Latest Practicable Date.

LETTER FROM THE BOARD

As disclosed in the interim report for the six months ended 31 October 2024 of the Company, the bank balances and cash of the Group amounted to approximately HK$3.18 million as at 31 October 2024. Despite the Company had approximately HK$98.43 million of deposits, prepayments and other receivables under its current assets as at 31 October 2024, such amount is required by the subcontractors and/or suppliers before the commencement of the projects to ensure effective project execution which is under normal business operation and the industry norm, for which around 20–30% of project costs shall be deposited. Such amount will be deducted from the project costs once the projects are commenced. Although the Company had conducted two recent fundraising activities, i.e. the 2023 Rights Issue and placing under general mandate on 17 April 2024, the Company still had approximately HK$76.10 million trade receivables as at 31 October 2024 due to delayed payments from customers and the slight delay on the master construction progress of some Installation Projects (the “Delayed Projects”) because of labor shortage. The Directors are of the view that this is a temporary situation of such tight cashflow problem as this situation will be improved and the Company foresees more revenue will be recognised by the second quarter of 2025 based on the current construction progress of the relevant Delayed Projects are back to normal, as well as the final closing of the 3 overlapping projects as mentioned above. Further, to safeguard there will be no delay in the Company’s construction progress of the forthcoming projects, the management of the Company has implemented the following measures: (i) deploying more comprehensive planning on each project before its commencement and reallocating the labour resources efficiently; (ii) using best endeavours to attract and retain appropriate and suitable personnel. The Company assess the available human resources on a continuous basis and recruit additional personnel to cope with the business development from time to time; (iii) delegating part of the labour intensive installation work to selected subcontractors for flexible manpower management and cost effectiveness; and (iv) the project manager in each forthcoming project carries out more frequent site inspections to monitor the work progress and the site technicians are required to conduct monthly review reports and checklists to avoid delay in work progress. Having considered (i) the temporary situation of tight cashflow; and (ii) the safeguarding measures against the construction progress of the projects in order to timely recover the trade receivables, the Directors are of the view that the Rights Issue is fair and reasonable as it represents an opportunity for the Company to raise additional funding for the business operations of the Group without any interest burden and strengthen the Group’s financial position.

In respect of delayed payments from customers, the Company takes tremendous efforts in safeguarding its working capital by requesting its customers to pay promptly and continuously follow up with outstanding payments from customers, the Group has encountered increased frequency of delayed payments by customers which is mainly attributable to the economic downturn and the prevailing high interest rate environment, which in turn exerted pressure on the working capital of the Group. As at Latest Practicable Date, the amount of delayed payments by the relevant customers was approximately HK$56 million and such delayed payments were overdue ranging from 1 to 8 months. The Company has taken follow up actions to chase the outstanding delayed payments including but not limited to discuss with the relevant customers about the repayment schedule. Based on the current negotiation with the relevant customers and the repayment schedule provided by them, the Company is expected to receive approximately HK$31 million delayed payments by April 2025, HK$20 million of delayed payments by June

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2025 and the remaining HK$5 million will be received by July 2025. The Company will take further actions, such as issuing demand letters to the relevant customers whose delayed payments were overdue over 3 months, and sending statutory demand, for those delayed payment that were overdue over 12 months. The Company will consider to impair the amount for delayed payment that were overdue over 12 months. The Directors are of the view that the delayed payment situation will be improved in the forthcoming period and potential tenders by taking into account of (i) the Company's customers are reputable main contractors railways operator, power stations operator or listed companies who have solid financial background and industry experience that the delayed payments are likely to be recovered; (ii) the Company maintains more than 10 years business relationship with its customers and they rely on the Company's professional services to undertake fire services installation work in both public and private sectors; (iii) the Company has been discussing with its customers for a better financial planning and budgeting of the projects to make payment applications regularly as well as shorten the time for payment applications; and (iv) there is proven track record that the Company is capable of debt recovery and the Company has not made any provision for bad debts for the last three years. In order to safeguard there will be no delay in forthcoming payments from customers, the management of the Company has delegated a team responsible for determination of monitoring procedures to make regularly payment applications and also ensure that follow-up action is taken to recover overdue debts. In addition, the management reviews the recoverable amount of each individual trade and retention receivables, deposits and advance to sub-contractors regularly. Also, the Company will suspend its construction works and allocate any resources until the receivables are fully recovered. In the event that the HK$56 million delayed payments are default, the Company will still have approximately 43 million payments from its customers (other than Project A to Project L) by September 2025 as mentioned above and available banking facilities of approximately HK$ 50-60 million at an interest rate of 5% to operate its business. Therefore, the Directors are of the view that the working capital is improving and is sufficient for business operation.

As disclosed in the annual report of the Company for the year ended 30 April 2024, the proceeds from the 2023 Rights Issue were fully utilized as intended. Approximately 85% of such proceeds were used to support the fire safety systems projects of the Group and the remaining 15% of the proceeds were used for the general working capital of the Group. The financial effect of which was reflected on the substantial increase in the Group's revenue and cost of sales for the year ended 30 April 2024 as compared to those for the year ended 30 April 2023. Taking into consideration the Group's immediately available working capital and the temporary situation of tight cashflow problem the Group is currently encountering as mentioned above, the Board considers that the Group has an imminent funding needs for its business expansion and daily operation.

Assuming full subscription under the Rights Issue, the Company intends to apply the net proceeds of approximately HK$69.80 million from the Rights Issue as follows:

(i) approximately HK$59.33 million (representing approximately 85% of the net proceeds) to support the Group's projects, of which approximately HK$52.35 million for the payment to contractors in the current projects, approximately HK$1.75 million

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for the prepayment to the subcontractors and/or suppliers before the commencement of the forthcoming potential projects and approximately HK$5.23 million for the initial startup costs of the forthcoming potential projects; and

(ii) approximately HK$10.47 million (representing approximately 15% of the net proceeds) for general working capital of the Group, of which approximately HK$8.38 million for the staff costs and approximately HK$2.09 million for other office overhead.

In the event that there is an under subscription of the Rights Issue, the net proceeds will be utilised on a pro rata basis as set out above. In the event that the Rights Issue cannot be proceeded or being terminated, the Company will explore other fundraising alternatives, such as debt financing or seeking for a shareholder's loan.

The Company has considered other fundraising alternatives before resolving to the Rights Issue, including but not limited to debt financing, placing of new Shares and open offer. Debt financing or bank loans would result in additional interest burden to and higher gearing ratio of the Group. Placing of new Shares would only be available to certain places who were not necessarily the existing Shareholders and would dilute the shareholding of the existing Shareholders in the Company. As for open offer, although it is similar to a rights issue in offering qualifying shareholders to participate, it does not allow free trading of rights entitlements in the open market and accordingly, Shareholders must either participate in the offer or lose the benefit of any discount at which the new shares are offered.

In view of the above, the Board (excluding the members of the Independent Board Committee whose opinion will be rendered after considering the advice from the independent financial adviser) considers that as compared to raising fund by other means, raising funds by way of the Rights Issue, which will allow 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 their respective pro rata shareholding interests in the Company and dealing with the Shares, is an appropriate fundraising method and is fair, cost effective, efficient and beneficial to the Company and its shareholders as a whole.

EQUITY FUNDRAISING ACTIVITIES IN THE PAST TWELVE MONTHS

Save for the placing of new shares under general mandate completed on 17 April 2024, the Company has not conducted any equity fundraising activities in the past 12 months immediately preceding the Latest Practicable Date.

39 -

LETTER FROM THE BOARD

Date of initial announcement	Event	Net proceeds raised (approximately)	Intended use of proceeds	Actual use of proceeds as at the date of this circular
17 April 2024	Placing 28,800,000 Shares at the placing price of HK$0.67 each under General Mandate	HK$18.517 million	Approximately HK$3.0 million as repayment of shareholders loan(s), approximately HK$11.0 million for business expansion and the remainder for general working capital.	All net proceeds have been utilised as intended.

TAXATION

Shareholders are advised to consult their professional advisers if they are in doubt as to the taxation implications of the receipt, purchase, holding, exercising, disposing of or dealing in, the nil-paid Rights Shares or the fully-paid Rights Shares and, regarding Non-Qualifying Shareholders, their receipt of the net proceeds, if any, from sales of the nil-paid Rights Shares on their behalf.

It is emphasised that none of the Company, the Directors or any other parties involved in the Rights Issue accepts responsibility for any tax effects or liabilities of, any person resulting from subscribing for, purchasing, holding, exercising, disposing of or dealings in any rights in relation to the Rights Shares in both their nil-paid and fully-paid form.

WARNING OF THE RISKS OF DEALING IN THE EXISTING SHARES, THE ADJUSTED SHARES AND/OR THE NIL-PAID RIGHTS SHARES

Shareholders and potential investors of the Company should note that the Capital Reorganisation are conditional upon satisfaction of conditions set out in the paragraph headed "Conditions of the Capital Reorganisation" in this circular. Therefore, the Capital Reorganisation may or may not proceed.

The Rights Issue is subject to the fulfilment of conditions including, among other things, the Stock Exchange granting the listing of, and permission to deal in, the Rights Shares in their nil-paid and fully-paid Rights Shares. Please refer to the section headed "Proposed Rights Issue – Conditions of the Rights Issue" in this circular.

Shareholders and potential investors of the Company should note that each of the Rights Issue and the Placing is subject to the fulfilment of certain conditions. If any of the conditions of the Rights Issue and/or the Placing are not fulfilled, the Rights Issue and/or the Placing will not proceed.

LETTER FROM THE BOARD

Any Shareholder or other person contemplating transferring, selling, or purchasing Shares is advised to exercise caution when dealing in the Existing Shares, the Adjusted Shares and/or the nil-paid Rights Shares. Any person who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional adviser(s).

Any Shareholder or other person dealing in the Existing Shares, the Adjusted Shares and/or the nil-paid Rights Shares up to the date on which all the conditions to which the Rights Issue is subject are fulfilled or the Placing Long Stop Date, which is expected to be 4:00 p.m. on Wednesday, 11 June 2025, will accordingly bear the risk that the Rights Issue and/or the Placing may not proceed.

INFORMATION ON THE PARTIES

Information on the Group

The Company is an exempted company incorporated under the laws of the Cayman Islands with limited liability whose shares are listed on the Stock Exchange. The Group is a registered fire service installation contractor engaged in installation, maintenance, repair or inspection of fire safety systems for more than 30 years in Hong Kong.

Information on the Placing Agent

Advent Securities (Hong Kong) Limited is a licensed corporation to carry out Type 1 (dealing in securities) regulated activities as defined under the SFO.

41 -

LETTER FROM THE BOARD

EFFECTS ON SHAREHOLDING STRUCTURE

To the best knowledge of the Directors, set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after the Capital Reorganisation becoming effective; (iii) immediately after the Capital Reorganisation becoming effective and the completion of the Rights Issue (assuming full acceptance by all Qualifying Shareholders under the Rights Issue); and (iv) immediately after the Capital Reorganisation becoming effective and the completion of the Rights Issue (assuming (a) no subscription by the Qualifying Shareholders; and (b) all the Placing Shares are placed to Independent Third Parties under the Placing):

Shareholders	As at the Latest Practicable Date		Immediately after the Capital Reorganisation becoming effective		Immediately after the Capital Reorganisation becoming effective and completion of the Rights Issue (assuming full acceptance by the Qualifying Shareholders under the Rights Issue)		Immediately after the Capital Reorganisation becoming effective and completion of the Rights Issue (assuming (a) no subscription by the Qualifying Shareholders; and (b) all the Placing Shares are placed to Independent Third Parties under the Placing)
	Number of Shares	%	Number of Shares	%	Number of Shares	%	Number of Shares	%
Li Junheng (Note 1)	14,390,000	8.33	2,878,000	8.33	14,390,000	8.33	2,878,000	1.67
Public Shareholders
- Places (Note 2)	-	-	-	-	-	-	138,240,000	80.00
- Other public Shareholders	158,410,000	91.67	31,682,000	91.67	158,410,000	91.67	31,682,000	18.33
Sub-total	158,410,000	91.67	31,682,000	91.67	158,410,000	91.67	169,922,000	98.33
Total	172,800,000	100.00	34,560,000	100.00	172,800,000	100.00	172,800,000	100.00

Notes:

As at the date of this circular, the Company has no controlling Shareholder as defined under the Listing Rules. Mr. Li Junheng, the executive director, the chairman of the Group and the chief executive of the Company and his respective associates shall abstain from voting in favour of the resolution(s) in relation to the Rights Issue at the EGM.

LETTER FROM THE BOARD

Pursuant to the terms of the Placing Agreement, the Placing Shares are expected to be placed to placee(s), who and whose ultimate beneficial owner(s) shall be Independent Third Party(ies). None of the placees will become a substantial Shareholder of the Company immediately following the Placing and therefore will not trigger any obligation to make a mandatory general offer under the Takeovers Code.

If a Qualifying Shareholder does not accept the Rights Shares provisionally allotted to him/her/it in full under the Rights Issue, his/her/its proportionate shareholding in the Company will be diluted.

POSSIBLE ADJUSTMENT TO OUTSTANDING SHARE OPTIONS

As at the Latest Practicable Date, the Company has outstanding scheme mandate limit under the Share Option Scheme which was approved by a written resolution of the Shareholders passed on 27 March 2017 is 4,000,000 Existing Shares. As no Share Options has been granted, the remaining unutilised scheme mandate limit is 4,000,000. The Company has no intention to grant or vest any Share Option(s) on or before the Record Date.

Pursuant to the terms of the Share Option Scheme, the Rights Issue may lead to adjustments to, among others, the exercise price and/or the number of Shares to be issued upon exercise of the outstanding Share Options under the Share Option Schemes. The Company will notify the holders of such Share Options and the Shareholders by way of announcement (as and when appropriate) regarding adjustments to be made (if any) pursuant to the terms of the Share Option Schemes, and such adjustment will be certified by an independent financial adviser or auditors of the Company (as the case may be).

LISTING RULES IMPLICATIONS

Capital Reorganisation

The Share Consolidation is conditional upon, among other things, the approval by the Shareholders by way of special resolution at the EGM. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, as none of the Shareholders or their associates would have any interest in the Share Consolidation, no Shareholder would be required to abstain from voting in favour of the resolution(s) relating to the Share Consolidation at the EGM.

The Capital Reduction and Share Subdivision are conditional upon, among other things, the approval by the Shareholders by way of special resolution at the EGM. To the best of the Directors' knowledge, information and belief having made all reasonable enquiries, as none of the Shareholders or their associates would have any interest in the Capital Reduction and Share Subdivision, no Shareholder would be required to abstain from voting in favour of the resolution(s) relating to the Capital Reduction and Share Subdivision at the EGM.

LETTER FROM THE BOARD

Rights Issue

In accordance with Rule 7.19A(1) and Rule 7.27A(1) of the Listing Rules, as the Rights Issue will increase the total number of issued Shares of the Company by more than 50% within 12 months period immediately preceding the date of this circular, the Rights Issue is conditional upon the Shareholders’ approval at the EGM, and any controlling shareholders of the Company and their associates, or where there are no controlling shareholders, 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 resolution(s) in relation to the Rights Issue at the EGM. As at the date of this circular, the Company does not have any controlling Shareholders as defined under the Listing Rules. As at the Latest Practicable Date, Mr. Li Junheng (“Mr. Li”), an executive Director, the chairman of the Group and the chief executive of the Company, is beneficially interested in 14,390,000 Shares. Accordingly, Mr. Li is required to abstain from voting in favour of the resolution(s) to approve the Rights Issue and the transaction contemplated thereunder at the EGM. Save as disclosed above, no Shareholder shall abstain from voting in favour of the resolution(s) approving the Rights Issue and the transaction contemplated thereunder at the EGM.

The Rights Issue does not result in a theoretical dilution effect of 25% or more on its own. As such, the theoretical dilution impact of the Rights Issue is in compliance with Rule 7.27B of the Listing Rules.

THE INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising all of the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the Rights Issue. An independent financial adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

Messis Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Rights Issue, the Placing Agreement and the transactions contemplated thereunder are on normal commercial term, fair and reasonable, in the interests of the Independent Shareholders as a whole, and to advise the Independent Shareholders on how to vote.

EGM

The register of members of the Company will be closed from Monday, 31 March 2025 to Monday, 7 April 2025 (both days inclusive) for determining the identity of the Shareholders entitled to attend and vote at the EGM. For the avoidance of doubt, the Non-Qualifying Shareholders are entitled to attend and vote at the EGM.

The EGM will be convened and held to consider and, if thought fit, approve, the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated

LETTER FROM THE BOARD

thereunder. The notice convening the EGM to be held at 22/F, Euro Trade Centre, 13–14 Connaught Road Central, Central, Hong Kong on Monday, 7 April 2025 at 11:00 a.m. is set out on pages EGM-1 to EGM-4 of this circular.

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the meeting in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed (i.e. by 11:00 a.m. on Saturday, 5 April 2025) for holding of the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish.

In compliance with the Listing Rules, all the resolutions to be proposed at the EGM will be voted on by way of poll at the EGM.

Saved as disclosed in this circular, no other Shareholder is required to abstain from voting on the resolution(s) to approve the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated thereunder at the EGM.

DESPATCH OF PROSPECTUS DOCUMENTS

Subject to the approval of the Increase in the Authorised Share Capital and the Share Consolidation by the Shareholders and the Rights Issue by the Independent Shareholders at the EGM, the Prospectus containing further information in relation to the Rights Issue and financial and other information relating to the Group is expected to be despatched by the Company together with the PAL on or before Tuesday, 13 May 2025. A copy of the Prospectus will also be made available on the websites of the Company (https://hscgroup.hk) and the Stock Exchange (www.hkexnews.hk). To the extent reasonably practicable and subject to the advice of legal advisers in the relevant jurisdictions in respect of applicable local laws and regulations, the Company will send copies of the Prospectus to Non-Qualifying Shareholders for their information only but will not send the PAL to them.

RECOMMENDATION

The Independent Board Committee, which comprises all the independent non-executive Directors has been established to advise the Independent Shareholders as to whether the terms of the Rights Issue, the Placing Agreement and the transactions contemplated thereunder are fair and reasonable and in the best interests of the Company and the Shareholders as a whole and to make recommendations to the Independent Shareholders on how to vote at the EGM on the relevant resolutions. Messis Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Your attention is drawn to the letter from the Independent Board Committee set out on pages 47 to 48 of this circular which contains its recommendation to the Independent Shareholders in relation to the Rights Issue, and the letter from the Independent Financial

45 -

LETTER FROM THE BOARD

Adviser set out on pages 49 to 76 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders.

The Directors consider that the terms of the Capital Reorganisation are fair and reasonable and in the best interests of the Company and the Shareholders as a whole. Further, the Directors (including the independent non-executive Directors whose views are expressed in the letter from the Independent Board Committee) consider that the terms of the Rights Issue, the Placing Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors whose views are expressed in the letter from the Independent Board Committee) recommend the Shareholders and the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM.

ADDITIONAL INFORMATION

Your attention is drawn to the Letter from the Independent Board Committee set out on pages 47 to 48 of this circular which contains its recommendation to the Independent Shareholders as to voting at the EGM and the Letter from the Independent Financial Adviser set out on pages 49 to 76 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Capital Reorganisation, the Rights Issue, the Placing Agreement and the transactions contemplated thereunder.

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

By order of the Board

HSC Resources Group Limited

Li Junheng

Chairman

46 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter from the Independent Board Committee setting out its recommendation to the Independent Shareholders in relation to the Rights Issue and the transactions contemplated thereunder.

HSC Resources Group Limited

鴻盛昌資源集團有限公司

(Formerly known as WINDMILL Group Limited 海鑫集團有限公司)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1850)

14 March 2025

To the Independent Shareholders,

Dear Sir or Madam,

(1) PROPOSED CAPITAL REORGANISATION; AND
(2) PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) ADJUSTED SHARE HELD AT THE CLOSE OF BUSINESS ON THE RECORD DATE ON A NON-UNDERWRITTEN BASIS

We refer to the circular of the Company dated 14 March 2025 (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, the Placing Agreement and the transactions contemplated thereunder are on normal commercial terms, in the interests of the Company and the Shareholders as a whole, and the terms of which are fair and reasonable insofar as the Independent Shareholders are concerned. Messis Capital Limited has been appointed as the Independent Financial Adviser to advise us and the Independent Shareholders in this respect.

We wish to draw your attention to (i) the Letter of advice from the Independent Financial Adviser as set out on pages 49 to 76 of the Circular; and (ii) the Letter from the Board as set out on pages 8 to 46 of the Circular and the additional information set out in the appendices to the Circular.

47 -

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account the terms of the Rights Issue, the Placing Agreement and the advice from the Independent Financial Adviser, we are of the opinion that the terms of the Rights Issue and the Placing Agreement and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Company and the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend you to vote in favour of the resolutions to be proposed at the EGM to approve the Rights Issue, the Placing Agreement and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of the

Independent Board Committee of

HSC Resources Group Limited

Mr. Li Ka Chun Gordon
Independent
Non-executive Director

Mr. Fu Wing Kwok Ewing
Independent
Non-executive Director

Mr. Ghanshyam Adhikari
Independent
Non-executive Director

48 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the letter of advice from the Independent Financial Adviser, Messis Capital Limited, to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

MESSIS 大有融資

14 March 2025

Dear Sir/Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) ADJUSTED SHARE HELD AT THE CLOSE OF BUSINESS ON THE RECORD DATE ON A NON-UNDERWRITTEN BASIS

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise 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 from the Board") contained in the circular of the Company dated 14 March 2025 issued to the Shareholders (the "Circular"), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular, unless otherwise specified.

As disclosed in the "Letter from the Board", the Board proposes to effect the Share Consolidation whereby every five (5) issued Existing Shares of par value of HK$0.20 each will be consolidated into one (1) Consolidated Share of par value of HK$1.00 each; the Capital Reduction whereby (a) the total number of Consolidated Share in the issued share capital of the Company will be rounded down to the nearest whole number by cancelling any fraction of a Consolidated Share in the total number of Consolidated Shares in the issued share capital of the Company immediately following the Share Consolidation, and (b) the par value of each issued Consolidated Share will be reduced from HK$1.00 to HK$0.01 by cancelling the paid-up capital of the Company to the extent of HK$0.99 on each issued Consolidated Share.

Upon Capital Reorganisation becoming effective, the Board proposes to conduct the Rights Issue at the Subscription Price of HK$0.53 per Rights Share on the basis of four (4) Rights Shares for every one (1) Adjusted Share held on the Record Date to raise up to approximately HK$73.27 million (before expenses) by issuing up to 138,240,000 Rights Shares (assuming there is no change in the total number of issued Shares up to and including the Record Date other than as a result of the Capital Reorganisation).

As the Rights Issue will increase the total number of issued Shares of the Company by more than 50% within 12 months period immediately preceding the date of the relevant announcement, the Rights Issue is conditional upon the Shareholders' approval at the EGM, and

49 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

any controlling shareholders of the Company and their associates, or where there are no controlling shareholders, 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 resolution(s) in relation to the Rights Issue at the EGM. As of the date of this Circular, the Company does not have any controlling Shareholders as defined under the Listing Rules. Mr. Li Junheng ("Mr. Li"), an executive Director, the chairman of the Group and the chief executive of the Company, is beneficially interested in 14,390,000 Shares. Accordingly, Mr. Li and his respective associates are required to abstain from voting in favour of the resolution(s) to approve the Rights Issue and the transaction contemplated thereunder at the EGM.

The Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders (i) as to whether the terms of the Rights Issue and the Placing Agreement are on normal commercial term, fair and reasonable, in the interests of the Company and the Independent Shareholders as a whole; and (ii) how to vote. We, Messis Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

OUR INDEPENDENCE

As of the Latest Practicable Date, we did not have any relationship with or interest in the Company and any other parties that could reasonably be regarded as relevant to our independence. During the past two years, we have not been appointed as an independent financial adviser for the Company. Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser, no arrangement exists whereby we will receive any fees or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence and we are independent from the Company pursuant to Rule 13.84 of the Listing Rules.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have considered, among other things, (i) the Company's interim report for the six months ended 31 October 2024 ("6M2024"), (ii) the Company's annual report for the financial year ended 30 April 2024 ("FYE2024"); (iii) the Company's annual report for the financial year ended 30 April 2023 ("FYE2023"); (iv) the relevant announcement; and (v) other information as set out in the Circular. We have also relied on all relevant information, opinions and facts supplied and represented by the Company and the management of the Company. We have assumed that all such information, opinions, facts and representations contained or referred to in the Circular, for which the Company is fully responsible, were true and accurate in all material respects as of the date hereof and may be relied upon. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company, and the Company has confirmed that no material facts have been withheld or omitted from the information provided and referred to in the Circular, which would make any statement therein misleading.

50 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out independent verification of the information provided by the management and the representations of the Company, nor have we conducted any form of in-depth investigation into the businesses, affairs, operations, financial position or future prospects of the Company or any of its subsidiaries.

This letter is issued to the Independent Board Committee and the Independent Shareholders solely in connection for their consideration of the Rights Issue and except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose without our prior written consent. Our opinion is based on the financial, economic, market and other conditions in effect and the information made available to us as of the Latest Practicable Date.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In considering whether the terms of the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned, we have taken into account the principal factors and reasons set out below:

1. Background information

The Group is a registered fire service installation contractor engaged in installation, maintenance, repair or inspection of fire safety systems for more than 30 years in Hong Kong. The Group mainly provides (i) design, supply and installation of fire safety systems and other engineering and construction related aspects for buildings under construction or re-development; (ii) maintenance and repair of fire safety systems for built premises; and (iii) trading of fire service accessories including branded fire services equipment under a distributorship agreement with an internationally branded fire service equipment supplier.

	FYE			6M
HK$000	2024	2023	2022	2024
	Audited	Audited	Audited	Unaudited
Revenue	394,537	277,683	231,259	271,478
Other income	979	2,733	7	446
Administrative expenses	(22,218)	(20,093)	(27,795)	(11,557)
Finance costs	(4,020)	(1,665)	(515)	(2,042)
Profit/(Loss) for the year	2,208	7,427	(6,992)	2,018
Net profit margin	0.56%	2.67%	N.A.	0.74%
Total assets	397,064	258,821	194,629	420,409
Total liabilities	123,163	115,369	57,569	125,974
Net assets	273,900	143,452	137,060	294,435

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group's revenue for 6M2024 increased by approximately 19.9% to approximately HK$271.5 million. The change in revenue was mainly due to the increase in revenue from installation services. Revenue increased by approximately 20.1% from approximately HK$231.3 million for FYE2022 to approximately HK$277.7 million for FYE2023 and further increased by approximately 42.1% to approximately HK$394.5 million for FYE2024. The change in revenue was mainly due to the increase in revenue from installation services.

The Group's other income for 6M2024 was approximately HK$0.4 million. Other income for FYE2024 decreased by approximately 64.2% to approximately HK$1.0 million. The change in other income was mainly due to the decrease in government grant. Other income for FYE2023 increased to approximately HK$2.7 million. The change in other income was mainly due to the government grant of approximately HK$2.1 million.

The Group's administrative expenses for 6M2024 decreased by approximately 0.9% to approximately HK$11.6 million mainly due to decrease in legal and professional fees. Administrative expenses for FYE2024 increased by approximately 10.4% to approximately HK$20.1 million. The change in administrative expenses was mainly due to the increase in staff costs including directors emoluments. Administrative expenses for FYE2023 decreased by approximately 27.7% to approximately HK$22.2 million. The change in administrative expenses was mainly due to the increase in staff costs including directors emoluments.

The Group's finance costs for 6M2024 were approximately HK$2.0 million. Finance costs increased by approximately 223.3% from approximately HK$0.5 million for FYE2022 to approximately HK$1.7 million for FYE2023 and increased further by approximately 141.4% to approximately HK$4.0 million for FYE2024. The change in finance costs was mainly attributed to the increase in drawdown of bank borrowings for operation.

The proceeds from the rights issue that completed on 28 June 2023 were fully utilized for supporting certain fire safety systems projects and working capital. The net proceeds from the placing that completed on 17 May 2024 was fully utilized for repayment of shareholders loans, business expansion and working capital.

The Group's bank balances and cash decreased by 80.5% to approximately HK$3.2 million as of 6M2024 from approximately HK$16.3 million as of FYE2024.

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

As disclosed in the "Letter from the Board", the Group intends to strengthen its market position in the fire safety system industry in Hong Kong and strengthen its financial position by the Rights Issue, which will enable the Company to expand its capital base so as to undertake more sizeable fire safety system projects.

The estimated net proceeds from the Rights Issue are approximately HK$69.80 million. The Company intends to use the net proceeds from the Rights Issue as to (i)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

approximately HK$59.33 million (or approximately 85% of the net proceeds) to support the Group's projects, of which approximately HK$52.35 million for the payment to contractors in the current projects, approximately HK$1.75 million for the prepayment to the subcontractors and/or suppliers before the commencement of the forthcoming potential projects and approximately HK$5.23 million for the initial start-up costs of the forthcoming potential projects; and (ii) approximately HK$10.47 million (or approximately 15% of the net proceeds) for general working capital of the Group, of which approximately HK$8.38 million for the staff costs and approximately HK$2.09 million for other office overhead.

The Group is currently working on 21 fire safety system projects in Hong Kong of which 12 require funding. These 12 projects consist of (i) 10 installation projects with contract period ranges from 3 months to 2 years and (ii) 2 maintenance projects with contract period of approximately 2 years, which have been commenced and are expected to contribute significant revenue to the Group in the financial year ending 2025. Of these current projects, 6 of which are projects with customer related to Hong Kong listed companies, and 7 of which are expected to be completed by the end of 2025, 3 by 2026 and 2 by 2027. Of the 7 projects expected to be completed by 2025, 5 of which recognized revenue over total contract sum of over 50%. Of the 3 projects expected to be completed by 2026, 2 of which recognized revenue over total contract sum of over 50%. As such, over half of the projects that required funding recognized revenue over total contract sum of over 50%. The proceeds from the previous rights issue that completed on 28 June 2023 were fully utilized for supporting certain fire safety systems projects and working capital. In particular, proceeds from the previous rights issue were applied to 6 of the Group's 12 projects and 3 of which are overlapping projects to which approximately HK$15.0 million or approximately 21.5% of the estimated net proceeds from the Rights Issue will be applied. As such, majority of the estimated net proceeds from the Rights Issue will be applied to projects other than the overlapping projects.

Further, the Group has submitted 7 tenders of potential fire safety system projects with contract sum in aggregate of approximately HK$308 million. Once the tenders become successful, the potential projects will be commenced the earliest by first quarter of 2025. As disclosed in the "Letter from the Board", subject to the acceptance of the tenders the Company is expected to make series of payments to contractors, subcontractors and suppliers. Other than the proceeds from the Rights Issue, the Company intends to use internal resources such as the expected payment from the customers, recovery of delayed payments and bank balances and cash to fund such payments.

As disclosed in the "Letter from the Board", the Company had deposits, prepayments and other receivables of approximately HK$98.43 million as of 6M24 as required by the subcontractors and/or suppliers before commencement of the projects in accordance with normal business operation and industry norm, and such amount will be deducted from the project costs after commencement. Further, the Company had trade receivables of approximately HK$76.10 million as of 6M24 due to delayed payments from customers and progress of certain projects. The Company foresees such situation will be improved and revenue will be recognized as the delayed projects are back to normal as well as the closing

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of the 3 overlapping projects. The Group has encountered increased frequency of delayed payments by customers which is mainly attributable to the economic downturn and the prevailing high interest rate environment, which in turn exerted pressure on the working capital of the Group. As of the Latest Practicable Date, the delayed payments by customers were approximately HK$56 million. In this connection, the Company has taken up follow up actions to chase the delayed payments and repayment schedule. As such, the Company is expecting to receive the delayed payments in full by July 2025. It is noted that the Company has taken actions to safeguard against delay in the progress of the forthcoming projects such as comprehensive planning before project commencement, efficient labour allocation, frequent site inspections, recruitment of personnel to cope with business development, among others. It will take further actions against delayed payments by customers such as the issue of demand letters, among others.

Having considered the recent business and financial performances of the Group and in particular, the interim status of its balance of cash and cash equivalents and the requirements of the Group's projects, we concur with the Board's view that the Group has an imminent funding need for its business expansion and daily operation.

The Company has considered other fund raising alternatives including but not limited to debt financing, placing of new Shares and open offer. Debt financing or bank loans would result in additional interest. Placing of new Shares would dilute the shareholding of the existing Shareholders. Although open offer similar to a rights issue allows qualifying shareholders to participate, it does not allow free trading of rights entitlements in the open market and accordingly, Shareholders must either participate in the offer or lose the benefit of any discount at which the new shares are offered. The Rights Issue will allow Qualifying Shareholders to participate in the future development of the Company and at the same time offer flexibility to the Qualifying Shareholders to choose whether to maintain their respective pro rata shareholding interests in the Company or trade the relevant nil-paid Rights Shares in the market.

We note that fund raising by new borrowings will likely incur additional interest payments, further increase the Company's finance costs and put pressure on its margins and balance of cash and cash equivalents. The placing of new shares to selected places will dilute Shareholders' shareholdings in the Company. The open offer and rights issue both allow participating Shareholders to retain their respective shareholdings in the Company while rights issue allow non-participating Shareholders to trade their entitlements in the market thus reducing impact from dilution of their shareholdings. Having considered the above, we concur with the Board's view that fund raising by way of the Rights Issue which will offer Qualifying Shareholders the opportunity to maintain their respective pro rata shareholding interests in the Company is appropriate and is fair and beneficial to the Company and its shareholders as a whole.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Major terms of the Rights Issue

Issue statistics

Basis of the Rights Issue
Four (4) Rights Shares for every one (1) Adjusted Share held by the Qualifying Shareholders at the close of business on the Record Date

Subscription Price
HK$0.53 per Rights Share

Net price per Rights Shares (i.e. Subscription Price less cost and expenses incurred in the Rights Issue)
Approximately HK$0.101 per Rights Share (on the basis that all the Rights Shares will be taken up)

Number of Shares in issue as of the date of the Latest Practicable Date
172,800,000 Existing Shares

Number of Adjusted Shares in issue upon the Capital Reorganisation becoming effective
34,560,000 Adjusted Shares (assuming there is no change in number of Shares in issue up to the effective date of the Capital Reorganisation)

Number of Rights Shares (Shares to be issued pursuant to the Rights Issue)
Up to 138,240,000 Adjusted Shares (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)

Total number of Adjusted Shares in issue upon completion of the Rights Issue
Up to 172,800,000 Adjusted Shares (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)

Gross proceeds from the Rights Issue
Up to approximately HK$73.27 million before expenses (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date)

Subscription Price

The Subscription Price of HK$0.53 per Rights Share is payable in full by a Qualifying Shareholder upon acceptance of the relevant provisional allotment of the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Rights Shares under the Rights Issue, or where a transferee of the nil-paid Rights applies for the Rights Shares.

As disclosed in the "Letter from the Board", the Subscription Price was determined with reference to, among other things, (i) the market price of the Shares under the prevailing market conditions; (ii) the current business performance and financial position of the Group; and (iii) the reasons for and benefits of proposed Rights Issue and the amount of funds the Company intends to raise under the Rights Issue.

A. Comparison of the Subscription Price

The Subscription Price represents:

(i) a discount of approximately 24.29% to the theoretical closing price of HK$0.7 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the closing price of HK$0.14 per Existing Share as quoted on the Stock Exchange on the Last Trading Day;

(ii) a discount of approximately 23.19% to the theoretical average closing price of approximately HK$0.69 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the average closing price of HK$0.138 per Existing Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;

(iii) a discount of approximately 23.36% to the theoretical average closing price of approximately HK$0.6915 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) based on the average closing price of HK$0.1383 per Existing Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;

(iv) a discount of approximately 93.78% to the unaudited consolidated net asset value per Adjusted Share of approximately HK$8.52 as at 31 October 2024 (based on 172,800,000 Existing Shares in issue as at the Latest Practicable Date); and

(v) a theoretical dilution effect (as defined under Rule 7.27B of the Listing Rules) of a discount of approximately 19.43%, represented by the theoretical diluted price of approximately HK$0.564 per Adjusted Share (after taking into account the effect of the Capital Reorganisation) to the theoretical benchmarked price of HK$0.70 per Adjusted Share (as defined under Rule 7.27B of the Listing Rules, taking into account the higher of (i) the closing price of the Adjusted Share as quoted on the Stock Exchange on the Last Trading Day; and (ii) the average closing price of the Shares as

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quoted on the Stock Exchange for the five (5) consecutive trading days prior to the date of the relevant announcement and adjusted for the effect of the Capital Reorganisation).

B. Adjusted historical price of the Adjusted Shares

In order to assess the fairness and reasonableness of the Subscription Price, we have performed a review on the daily adjusted closing prices and trading volume of the Adjusted Shares covering a period from 19 December 2023 to the Last Trading Day (the "Review Period") (being a period of approximately 12 months prior to and including the Last Trading Day) and compared such with the Subscription Price. We consider that Review Period is reasonably long enough to illustrate the historical trend and level of movement of the adjusted closing prices of the Adjusted Shares and is fair to reflect the market assessment on the financial performance of the Group before and after the release of the latest annual results for the financial year ended 2024 and the general market sentiment.

Daily adjusted closing price of the Adjusted Shares

Source: www.hkex.com.hk

As shown in the chart above, during the Review Period, the average adjusted share price was approximately HK$2.32 per Adjusted Share (the "Average Adjusted Share Price"). The daily adjusted closing price ranged from HK$0.66 per Adjusted Share (the "Lowest Adjusted Share Price") to HK$5.80 per Adjusted Share (the

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

"Highest Adjusted Share Price"). The Subscription Price of HK$0.53 represents (i) a discount of approximately 19.70% to the Lowest Adjusted Share Price; (ii) a discount of approximately 90.86% to the Highest Adjusted Share Price; and (iii) a discount of approximately 77.12% to the Average Adjusted Share Price for the Review Period.

We notice that the Highest Adjusted Share Price was recorded on one day of the Review Period and since then the share price has in general trended downward with a few rebounds. During the Review Period, there are a total of 247 trading days and the Adjusted Shares have been traded below the Average Adjusted Share Price for 142 trading days, representing approximately 57.5% of the time during the Review Period.

It is noted that the market capitalization of the Group also exhibited a downward trend during the Review Period. The average market capitalization of the Group was approximately HK$80.1 million which is notably lower than the net assets of the Group of approximately HK$143.5 million as of FYE2023, HK$273.9 million as of FYE2024 and HK$294.4 million as of 6M2024. Given market valuation of the Group has been trading at notable discount to its net asset values, Subscription Price set at discount to recent closing prices of Adjusted Share will therefore result in an even deeper discount to its net asset value per Adjusted Share. As such, the Subscription Price of the Rights Issue represents a deep discount of approximately 93.78% to the unaudited consolidated net asset value per Adjusted Share of the Group as at 31 October 2024.

Further, the Group experienced fluctuations profitability and in particular, it reported net loss of HK$7.0 million for FYE2022, net profits of HK$7.4 million for FYE2023, net profits of HK$2.2 million for FYE2024 and net profits of HK$2.0 million for 6M2024. The single digit net profit margin of the Group reflects to a certain extent the competitive landscape of its business. As disclosed in the "Letter from the Board", the Group has encountered increased frequency of delayed payments by customers which is mainly attributable to the economic downturn and the prevailing high interest rate environment. As such, the general downward trend of the share price and the fact that the market valuation of the Group has been trading at values below its net assets may reflect the lack of confidence in the Group's financial performance and future prospect.

As explained below, it is a common market practice to set the subscription price at a discount to the prevailing market prices of the relevant shares in order to increase the attractiveness of the rights issue and encourage shareholders to participate in it.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

C. Historical trading volume of the Adjusted Shares

The following table sets out the trading volume of the Adjusted Shares during the Review Period:

Month	Total trading volume		No. of trading days	Average daily trading volume of Adjusted Shares	Percentage of average daily trading volume to the total number of Adjusted Shares in issue (Note 2)	Percentage of average daily trading volume to the total number of Adjusted Shares held by Public Shareholders (Note 3)
	No. of Shares	No. of Adjusted Shares
2023
December	77,342,000	15,468,400	7	2,209,771	6.39%	6.97%
2024
January	82,897,000	16,579,400	22	753,609	2.18%	2.38%
February	148,324,500	29,664,900	19	1,561,311	4.52%	4.93%
March	44,706,500	8,941,300	20	447,065	1.29%	1.41%
April	255,659,500	51,131,900	20	2,556,595	7.40%	8.07%
May	156,608,999	31,321,800	21	1,491,514	4.32%	4.71%
June	53,201,000	10,640,200	19	560,011	1.62%	1.77%
July	49,019,800	9,803,960	22	445,635	1.29%	1.41%
August	5,264,000	1,052,800	22	47,855	0.14%	0.15%
September	4,653,000	930,600	19	48,979	0.14%	0.15%
October	22,828,500	4,565,700	21	217,414	0.63%	0.69%
November	14,324,500	2,864,900	21	136,424	0.39%	0.43%
December	3,669,500	733,900	14	52,421	0.15%	0.17%
(up to the Last Trading Day)

Source: www.hkex.com.hk

Notes:

There are 172,800,000 Existing Shares in issue as of the date of this Circular while there will be 34,560,000 Adjusted Shares upon completion of the Capital Reorganisation.
Based on the average daily trading volume of Adjusted Shares divided by a total of 34,560,000 Adjusted Shares in issue as of the Last Trading Day.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the average daily trading volume of Adjusted Shares divided by the number of 31,682,000 Adjusted Shares held by the Public Shareholders as of the Last Trading Day.

During the Review Period, the trading liquidity of the Adjusted Shares remains generally thin with the average daily trading volume ranging from approximately 0.14% to 7.40% of the total number of Adjusted Shares in issue. As such, we consider that it is reasonable for the Subscription Price to be set at a discount to the prevailing adjusted closing prices of the Adjusted Shares in order to attract the Qualifying Shareholders to participate in the Rights Issue.

D. Comparison with recent rights issue exercises

To assess the fairness and reasonableness of the terms of the Rights Issue, we have conducted an analysis on the subscription prices of other recent rights issue exercises. Based on the criteria of (i) rights issues conducted by listed companies on the Stock Exchange; and (ii) rights issues that had issued relevant prospectuses during the three months prior to the Last Trading Day (the "Comparison Review Period"), we have identified an exhaustive list of 14 comparable rights issues (the "Comparables"). We consider that the Comparison Review Period is sufficient as it is intended to identify the most recent rights issue transactions conducted by companies listed on the Stock Exchange under the market conditions and sentiment close enough to that of the Rights Issue thus allowing reasonable comparison of their commercial terms. The Comparison Review Period is not intended to extend further into the past to cover rights issue transactions conducted under market conditions and sentiment that may be different and therefore not relevant for comparison purpose.

Shareholders should, however, note that the businesses, operations and prospect of the Company are not the same as the Comparables such as the differences in their market capitalizations and gross proceeds from their respective rights issue transactions. It is noted that the market capitalization of the Company on the Last Trading Day and gross proceeds of the Rights Issue fall within the range of that of the Comparables. It is also noted that the Comparables intend to apply the proceeds from their respective rights issue transactions to a combination of business operation, debt repayment and working capital while the Company intends for business operation and working capital. Nonetheless, we consider that the terms of the Comparables were determined under similar market conditions and sentiment and hence, the Comparables provide a general reference on the key terms for this type of transaction in Hong Kong. Therefore, we consider that the Comparables are indicative in assessing the fairness and reasonableness of the terms of the Rights Issue (including the Subscription Price).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following table sets forth the details of the Comparables including background information such as business nature, market capitalisation, gross proceeds and key commercial terms such as premium or discount of subscription prices over or to closing prices and theoretical dilution effect of the rights issue transactions which are considered to be relevant for purpose of this comparison:

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day	Gross proceeds	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
			HK$ million	HK$ million
19 December 2024	China 33 Media Group Ltd (8087)	Outdoor digital advertising services & prepaid card business	14	19.40	Debt repayment, working capital	3 for 2	-7.41%	-8.54%	N	N	5.12% Higher of (i) fixed fee of HK$100,000 and (ii) 1.5%

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
29 November 2024	Kingkey Financial International (Holdings) Ltd (1468)	Securities brokerage services	857	417.51	Business operation, debt repayment, working capital	1 for 2	-2.56%	-4.28%	N	Y	1.43% -
28 November 2024	Dragon Rise Group Holdings Limited (6829)	Undertaking foundation works as a subcontractor	57	28.80	Business operation, debt repayment, working capital	1 for 1	-48.70%	-48.20%	Y	N	24.90% Higher of (i) fixed fee of HK$100,000 and (ii) 1.0%
25 November 2024	Gaodi Holdings Ltd (1676)	Packaging and sales of dried seafood	45	29.60	Business operation, working capital	1 for 2	37.90%	38.90%	N	N	0.00 1.0%

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds	Use of proceeds HK$ million	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
21 November 2024	IRC Ltd (1029)	Mining business & production of industrial commodities product including iron ore concentrate	852	362.10	Business operation, debt repayment, working capital	1 for 2	-15.00%	-17.20%	N	Y	6.04% -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
7 November 2024	Crown International Corporation Limited (727)	Property investment & development hotel operations, financial consultancy service, among others	311	155.40	Business operation	1 for 2	0.00%	12.25%	N	Y	0.00 -
7 November 2024	Palinda Group Holdings Ltd (8179)	Wine trading & production and sales of food products	177	71.70	Debt repayment, working capital	1 for 2	-18.70%	-9.42%	N	Y	6.23% -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
6 November 2024	Innovax Holdings Ltd (2680)	Financial and securities services provider	74	12.00	Business operation, working capital	1 for 2	-67.39%	-68.35%	N	N	22.78% 1.0%

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
25 October 2024	V&V Technology Holdings Ltd (8113)	Sale of electronic components for consumer electronic products such as mobile internet devices, network communication system, among others	71	24.20	Business operation, debt repayment, working capital	1 for 2	-31.51%	-26.04%	N	Y	10.50% -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
24 October 2024	China New Consumption Group Ltd (8275)	Foundation contractor, leasing of machinery and money lending business	51	24.00	Business operation, working capital	1 for 2	-5.66%	-7.41%	N	N	2.47% Higher of (i) 3.5% and (ii) fixed fee of HK$250,000
22 October 2024	Shougang Fushan Resources Group Ltd (639)	Mining of coking coal, production and sales of raw and clean coking coal	12,564	427.00	Business operation, working capital	1 for 30	1.96%	2.52%	N	Y	0.00 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/(discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
2 October 2024	Shougang Century Holdings Ltd (103)	Manufacturing and sales of steel cords, sawing wires and hose wires	717	129.30	Debt repayment, working capital	1 for 5	8.20%	7.84%	N	Y	0.00 -
25 September 2024	Beijingwest Industries International Ltd (2339)	Manufacturing, sale and trading of automotive parts and components, among others	112	48.20	Working capital	1 for 2	-13.85%	-13.85%	N	Y	4.62% -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Date of prospectus	Company name (Stock code)	Business	Market capitalisation on the Last Trading Day HK$ million	Gross proceeds HK$ million	Use of proceeds	Basis of entitlement	Premium/ (discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
23 September 2024	Trendzon Holdings Group Ltd (1865)	Infrastructural pipeline construction and related engineering services mainly for gas, water, telecommunications and power industries services, among others	298	102.00	Business operation, debt repayment, working capital	4 for 1	-14.30%	-17.40%	N	N	14.60% 1.0%

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Business	Market capitalisation on the Last Trading Day	Gross proceeds	Basis of entitlement	Premium/(discount) of the subscription price over/to the average closing price for the five consecutive trading days including and up to the Last Trading Day	Underwritten Yes = Y No = N	Excess application Yes = Y No = N	Theoretical dilution effect	Placing fee/ commission
	HK$ million	HK$ million
Maximum	12,564	427.00	Maximum	37.90%	38.90%		24.90%	3.5%/HK$250,000
Minimum	14	12.00	Minimum	-67.39%	-68.35%		0.00%	1.0%/HK$100,000
Average	1,157	132.20	Average	-12.64%	-11.37%		7.05%	1.5%/HK$150,000
Median	145	60.00	Median	-10.63%	-8.98%		4.87%	1.0%/HK$100,000
			The Company	-24.29%	-23.19%	N	19.43%	1.5%

Source: www.hkex.com.hk

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Subscription price

As shown in the table above, the subscription price of the Comparables ranged from a premium of approximately 38.90% to a discount of approximately 68.35%, with an average discount of approximately 11.37% and median discount of approximately 8.98% over/to their respective average closing prices per share for the five consecutive trading days including and up to the last trading day. The discount of approximately 23.19% of the Company's Subscription Price of HK$0.53 per Rights Share to the theoretical average closing price of HK$0.69 per Adjusted Share for the five consecutive trading days including and up to the Last Trading Day falls within the range but deeper than the average and the median discount of that of the Comparables.

The subscription price of the Comparables ranged from a premium of approximately 37.90% to a discount of approximately 67.39%, with an average discount of approximately 12.64% and median discount of approximately 10.63% over/to their respective closing prices per share on the last trading day. The discount of approximately 24.29% of the Company's Subscription Price of HK$0.53 per Rights Share to the closing price of approximately HK$0.70 per Adjusted Share on the Last Trading Day falls within the range but deeper than the average and the median discount of that of the Comparables.

The outliers

Gaodi Holdings Ltd with subscription price at the highest premium to closing prices of share amongst the Comparables, as disclosed in prospectus, determined subscription price in general with reference to market prices and trading performances of their share, business performance and financial position particularly the consecutive loss making performance, the then bearish stock market condition and benefits of the funding, among others. It is considered reasonable to set subscription price at discount to net asset value per share to enhance the attractiveness and encourage participation of shareholders.

Innovax Holdings Ltd with subscription price at the lowest discount to closing prices of share amongst the Comparables, as disclosed in prospectus, determined subscription price in general with reference to market prices and trading performances of their share, prevailing market conditions, financial position in particular, recurrent net loss performance and benefits of the funding, among others. It is considered reasonable to set subscription price at discount to closing prices per share to enhance the attractiveness and encourage participation of shareholders.

Excluding the two Comparables above, subscription price of the remaining Comparables has a narrower range from a premium of approximately 12.25% to a discount of approximately 48.20%, with a lower average discount of

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approximately 10.81% and the same median discount of 8.98% over/to their respective average closing prices per share for the five consecutive trading days including and up to the last trading day. Despite the narrower range, the discount of approximately 23.19% of the Company's Subscription Price per Rights Share to the theoretical average closing price per Adjusted Share for the five consecutive trading days including and up to the Last Trading Day still falls within the range but deeper than the average and the median discount of that of the remaining Comparables.

Excluding the two Comparables above, the subscription price of the remaining Comparables has a narrower range from a premium of approximately 8.20% to a discount of approximately 48.70%, with a lower average discount of approximately 12.29% and the same median discount of approximately 10.63% over/to their respective closing prices per share on the last trading day. Despite the narrower range, the discount of approximately 24.29% of the Company's Subscription Price per Rights Share to the closing price per Adjusted Share on the Last Trading Day still falls within the range but deeper than the average and the median discount of that of the remaining Comparables. As such, the discounts of the Company's Subscription Price per Rights Share to both the theoretical average closing price per Adjusted Share for the five consecutive trading days including and up to the Last Trading Day and the closing price per Adjusted Share on the Last Trading Day still fall within the range but not at the extremes of the Comparables without the outliers.

We note that it is a common market practice to set the subscription price at a discount to the prevailing market prices of the relevant shares or net asset value per share as the case may be in order to enhance the attractiveness of the rights issue transactions and encourage participation of shareholders. The Comparables would consider various factors including market prices and trading performances of their shares which may exhibit a downward share price trend with thin trading volume, their respective financial conditions which may be volatile with reported net losses and funding requirements which may be for business operation, debt repayment or working capital against the backdrop of stock market sentiment. The Comparables would typically offer discount to the prevailing market share prices or net tangible asset value per share in order to make the fund raising transactions attractive to shareholders. The degree of such discount varies depending on funding size, market capitalization of the Comparables and the reasons discussed earlier. In line with the above, the Subscription Price also represents discount to the closing prices per Adjusted Share and net asset value per Adjusted Share. It is noted that 10 out of 14 Comparables set their subscription prices at discount to their respective five-day average closing prices and the last trading day closing prices. The Share price may fluctuate above or below the benchmarked price from time to time. It is noted that Share price closed above the benchmarked price on some trading days after the Last Trading Day and the Subscription Price therefore represents a

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deeper discount to such closing prices that still falls within the range of that of the Comparables and further enhances the attractiveness of the Rights Issue as such will further encourage Qualifying Shareholders to participate in the Rights Issue and capture investment opportunity to acquire Shares in the Company at bargain price.

Placing commission

We also note that it is not uncommon for issuer not to make arrangement for excess application for Qualifying Shareholders to apply for excess rights shares as 6 out of 14 of the Comparables have no such arrangement in place. The Company has entered into the Placing Agreement with the Placing Agent in relation to the placing of Unsubscribed Rights Shares and the NQS Unsold Rights Shares to independent places on a best effort basis. The Placing Agent shall be entitled to a commission equal to 1.5% of the amount that have been successfully placed by the Placing Agent.

It is noted that of the 6 Comparables with placing arrangement, 3 of which offered compensation to placing agents with placing commission only while 3 offered the higher of placing commission and fixed fee. The placing commissions of the Comparables fell between 1.0% and 3.5% and fixed fees between from HK$100,000 to HK$250,000. As such, the placing commission of 1.5% in relation to the Rights Issue falls within the range of that of the Comparables.

In general, discount to closing prices offered by the Subscription Price could enhance the attractiveness of the Rights Issue and encourage Qualifying Shareholders to participate in it. Given market valuation of the Group has already been trading at notable discount to its net asset values, Subscription Price set at discount to recent closing prices of Adjusted Share therefore represents an even deeper discount to its net asset value per Adjusted Share. As discussed earlier, it is common market practice to set the subscription price at a discount to the prevailing market share prices or net asset value per share as the case may be in order to encourage participation of shareholders. Nonetheless, non-participating Shareholders who do not wish to proceed with the Rights Issue for reasons such as the degree of discount to closing prices or net asset value per adjusted Share may trade their entitlements in the market thus reducing impact from dilution of their shareholdings.

Having considered that (i) the general downward trend of the adjusted closing prices of the Adjusted Shares and the Adjusted Shares have been trading at discount to net asset values per adjusted Share; (ii) the thin trading volume of the Adjusted Shares during the Review Period; (iii) the discount to closing prices offered by the Subscription Price falls within the range of that of the Comparables and theoretical dilution effect of the Rights Issue is in compliance with the theoretical dilution limit as defined under the Listing Rules; (iv) the discount to closing prices offered by the Subscription Price could enhance the attractiveness of the Rights Issue and encourage Qualifying Shareholders to participate in it, and (v) the placing commission falls

73 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

within range of that of the Comparables, we are of the view that the Subscription Price is on normal commercial term and is fair and reasonable so far as the Independent Shareholders are concerned.

Possible dilution effect on the shareholding interests of the existing Public Shareholders

The Rights Issue allows the Qualifying Shareholders to maintain their proportionate interests in the Company and to participate in the future development of the Company should they wish to do so. However, those Qualifying Shareholders who do not take up the Rights Shares to which they are entitled should note that their shareholdings in the Company will be diluted upon completion of the Rights Issue and their aggregate shareholding interests in the Company may be reduced by a maximum of approximately 19.43%.

As shown in the table above, the theoretical dilution effect of the Comparables ranged from approximately nil to 24.90%, with an average of 7.05%. The theoretical dilution effect of the Rights Issue of approximately 19.43% falls within range of the Comparables and is greater than the average and the median theoretical dilution effect of the Comparables. In general, the theoretical dilution effect of the Rights Issue is in compliance with the theoretical dilution limit as defined under the Listing Rules.

Having considered (i) the theoretical dilution effect of the Rights Issue falls within range of those of the Comparables and in compliance with the theoretical dilution limit as defined under the Listing Rules; (ii) the proceeds from Rights Issue would be applied to support the existing operations and future business expansion of the Group; (iii) the Rights Issue would strengthen the financial position of the Group; (iv) all Qualifying Shareholders are offered an equal opportunity to maintain their shareholding interests in the Company and allowed to participate in the development of the Company; (v) the inherent dilutive nature of rights issues in general if the existing shareholders do not take up their entitlements thereunder in full; and (vi) Qualifying Shareholders who are not taking up their entitlements are given the flexibility to dispose of the nil-paid Rights Shares in open market, we consider that the potential dilution effect of the Rights Issue is justifiable.

4. Financial Impact of the Rights Issue

(a) Net tangible assets

Based on the unaudited pro forma financial information of the Group set out in Appendix II to this Circular, the unaudited consolidated net tangible assets of the Group attributable to equity holders of the Company as of 31 October 2024 was approximately HK$267.3 million. Upon completion of the Rights Issue, the Group will have unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to equity holders of the Company being approximately HK$337.1 million.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Liquidity

As part of the gross proceeds of approximately HK$73.27 million from the Rights Issue will be used as the general working capital of the Group, the working capital position of the Group would be improved upon completion of the Rights Issue.

(c) Gearing ratio

The gearing ratio (based on total debts at the end of the year/period divided by total equity at the end of the year/period) of the Group as of 31 October 2024 was approximately 17.9%. Upon completion of the Rights Issue, the Group’s gearing ratio would slightly decrease to approximately 14.5%.

After taking into consideration of the above, in particular, the enhancement of net asset value, improvement in liquidity position and the reduction in gearing ratio of the Group, we are of the view that the Rights Issue is in the interest of the Company and the Shareholders as a whole.

RECOMMENDATION

Having considered the principal factors and reasons discussed above, including (i) the Company is in need of funding to support its existing operation and business expansion; (ii) the Subscription Price set at a discount that would attract the Shareholders to participate in the Rights Issue and accordingly maintain their shareholding interests in the Company; (iii) the Shareholders could avoid dilution effect to their shareholding interests in the Company if they choose to take up their full entitlement of the Rights Shares under the Rights Issue; (iv) Shareholders who do not intend to accept the Rights Shares provisionally allotted to them could dispose of their nil-paid Rights Shares in open market; and (v) the potential positive impacts on the financial condition of the Group upon completion of the Rights Issue, we concur with the Board’s view that the Rights Issue and the Placing Agreement are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole.

75 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders and we recommend the Independent Shareholders to vote in favour of the relevant resolutions to approve the Rights Issue and the Placing Agreement at the EGM.

Yours faithfully,
For and on behalf of
Messis Capital Limited

Angus Au-Yeung
Managing Director

Mr. Angus Au-Yeung is a licensed person registered with the Securities and Futures Commission of Hong Kong to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulatory activity under the SFO and has over 20 years of experience in corporate finance industry.

76 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. SUMMARY OF FINANCIAL INFORMATION

Financial information of the Group for each of the three financial years ended 30 April 2022, 2023 and 2024 and the interim result for the six months ended 31 October 2024 were disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkex.com.hk) and the Company's website (https://hscgroup.hk):

annual report of the Company for the year ended 30 April 2022 published on 3 August 2022 (pages 52 to 115); (https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0803/2022080300691.pdf)
annual report of the Company for the year ended 30 April 2023 published on 30 August 2023 (pages 54 to 123); (https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0830/2023083000377.pdf)
annual report of the Company for the year ended 30 April 2024 published on 30 August 2024 (pages 54 to 121); and (https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0830/2024083002500.pdf)
interim result announcement for the six months ended 31 October 2024 of the Company published on 31 December 2024 (pages 2 to 23). (https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1231/2024123101992.pdf)

2. INDEBTEDNESS OF THE GROUP

As at the close of business on 31 January 2025, being the latest practicable date for the purpose of ascertaining information contained in this statement of indebtedness prior to the printing of this circular, the details of the Group's indebtedness are as follows:

Bank borrowings

| | | As at
31 January
2025 |
| --- | --- | --- |
| | Notes | HK$'000 |
| Current liabilities | | |
| Bank borrowings – secured and guaranteed | (a) | 9,100 |
| Bank borrowings under supplier finance arrangements | (b) | 41,361 |
| | | 50,461 |

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Notes:

(a) As at 31 January 2025, bank borrowings were secured by the pledged bank deposits of the Group and corporate guaranteed provided by the Group.

(b) The Group has entered into certain supplier finance arrangements with banks. Under these arrangements, the banks pay suppliers the amounts owed by the Group. The Group's obligations to suppliers are legally extinguished on settlement by the relevant banks.

Lease liabilities

| | As at
31 January
2025
HK$'000 |
| --- | --- |
| Current | 1,023 |
| Contingent liabilities | |
| | As at
31 January
2025
HK$'000 |
| Guarantees in respect of performance bonds in favour of its client | 8,271 |

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Group did not have at the close of business on 31 January 2025 any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, hire purchases commitments, guarantees or other material contingent liabilities.

3. SUFFICIENCY OF WORKING CAPITAL

The Directors are of the opinion that, taking into consideration the Group's present financial resources and the estimated net proceeds from the Rights Issue, the Group has sufficient working capital for its present requirements for at least the twelve (12) months from the date of this circular in the absence of any unforeseen circumstances.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse changes in the financial or trading position of the Group since 30 April 2024 (being the date to which the latest published audited consolidated financial statements of the Group were made up.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is principally engaged in design, supply and installation of fire safety systems for buildings under construction or re-development, maintenance and repair of fire safety systems for built premises and trading of fire service accessories.

According to the Company's interim report for the six months ended 31 October 2024, the Group's revenue for the six months ended 31 October 2024 was approximately HK$271.5 million, representing an increase of 19.9% as compared with that of the corresponding period in 2023. The profit attributable to owners of the Company approximately HK$2.0 million (2023: profit of approximately HK$1.8 million), representing a increase of 11.1% as compared with that of corresponding period in 2023.

In 2024, the economic environment in Hong Kong, Macau and the PRC, as well as the world is recovering and a rebound of business activities and economic conditions is expected. We anticipate that the aforesaid expected recovery is likely to enhance our business performance, and the Group looks forward to commencing more projects and works ancillary to such projects in Hong Kong, which will help the Group to maintain a stable revenue stream in coming year.

Having said that, we will continue to explore the opportunities to further expand and increase its capacity in providing our services by identifying suitable business opportunities with potential customers and the Group has also committed to undertake new installation and maintenance projects for both fire service installation and other engineering businesses.

In addition, the Group will also continually seek potential opportunities to expand and develop our business further to other markets by seeking strategic and financial partners which can potentially assist the Group in various aspects to achieve this goal. Furthermore, the Group will also continue to look at opportunities to strengthen our investor and shareholder base to support our Group's business and expansion plans.

I-3 -

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

For illustrative purpose only, set out below is the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group after completion of the Rights Issue. Although reasonable care has been exercised in preparing the unaudited pro forma financial information, Shareholders who read the information should bear in mind that these figures are inherently subject to adjustments and may not give a complete picture of the Group's financial results and positions for the financial periods concerned.

(A) UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The following is the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group (the "Unaudited Proforma Financial Information") which has been prepared by the Directors in accordance with Rule 4.29 of the Listing Rules to illustrate the effect of the Rights Issue on the consolidated net tangible assets of the Group attributable to equity holders of the Company as if the Rights Issue had been completed on 31 October 2024. As it is prepared for illustrative purpose only, and because of its hypothetical nature, it may not reflect a true picture of the consolidated net tangible assets of the Group attributable to equity holders of the Company had of the Rights Issue been completed as at 31 October 2024 or at any future date.

The Unaudited Pro Forma Information is prepared based on the unaudited consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 as derived from the Group's published interim results announcement for the six months ended 31 October 2024, and is adjusted for the effect of the Rights Issue as if the Rights Issue had been completed as at 31 October 2024.

II-1 -

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

	Unaudited consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 (Note 1) HK$'000	Estimated net proceeds from the Rights Issue (Note 2) HK$'000	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 immediately after completion of the Rights Issue HK$'000	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 per Share immediately after the completion of the Rights Issue (Note 3) HK$
Based on 138,240,000 Consolidated Shares to be issued at the Subscription Price of HK$0.53 per Consolidated Share	267,339	69,800	337,139	1.95

Notes:

The unaudited consolidated net tangible assets of the Group attributable to equity holders of the Company of HK$267,339,000 as at 31 October 2024 is extracted from the unaudited condensed consolidated financial statements of the Group for the six months ended 31 October 2024 set out in the published interim results announcement of the Company.
The estimated net proceeds from the Rights Issue are based on 138,240,000 Rights Shares (calculated on the basis of four Rights Shares for every one consolidated share held as at 31 October 2024, details as disclosed in note 3) to be issued at the subscription price of HK$0.53 per Consolidated Share, after deducting the estimated related expenses of approximately HK$3,467,000 to be incurred by the Group.
The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 per Share immediately after the completion of the Rights Issue is calculated based on the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 of approximately HK$337,139,000 divided by 172,800,000 shares in issue upon completion of the Rights Issue, which comprises 34,560,000 Consolidated shares in issue before the Rights Issue and 138,240,000 Consolidated Shares to be issued under the Rights Issue.

The 34,560,000 Consolidated shares in issue is calculated based on the shares in issue of 172,800,000 as at 31 October 2024 which are adjusted for share consolidation whereby every five issued existing shares would be consolidated into one consolidated share as stipulated in the section "Proposed Share Consolidation" in the Letter from the Board of this circular.

No adjustments have been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Group entered into subsequent to 31 October 2024.
II-2 -

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

(B) REPORTING ACCOUNTANTS' REPORT ON PRO FORMA FINANCIAL INFORMATION

The following is the text of the independent reporting accountants' assurance report received from Global Link CPA Limited, Certified Public Accountants, Hong Kong, the reporting accountants of the Company, in respect of the Group's unaudited pro forma financial information prepared for the purpose of incorporation in this circular.

Global Link CPA Limited

Unit 21A, 15/F, Star House,
3 Salisbury Road, TST, Kowloon, Hong Kong
General Line: (852) 3580 0885
Fax: (852) 3580 0772
Website: https://globallinkcpa.com/

INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

The Board of Directors of HSC Resources Group Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of HSC Resources Group Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") by the directors of the Company for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group attributable to equity holders of the Company as at 31 October 2024 and related notes as set out on in appendix II of the circular issued by the Company dated 14 March 2025 (the "Circular") issued in connection with the proposed rights issue of the Company. The applicable criteria on the basis of which the directors of the Company have compiled the unaudited pro forma financial information are described in appendix II of the Circular.

The unaudited pro forma financial information has been compiled by the directors of the Company to illustrate the impact of the proposed rights issue of the Company on the basis of four rights shares for every one consolidated share held on the record date on a non-underwritten basis (the "Rights Issue") on the Group's financial position as at 31 October 2024 as if the Rights Issue had taken place at 31 October 2024. As part of this process, information about the Group's financial position has been extracted by the directors of the Company from the Group's condensed consolidated financial statements for the six months ended 31 October 2024, on which no audit or review report has been published.

Directors' Responsibility for the Unaudited pro forma Financial Information

The directors of the Company are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars” (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

Our Independence and Quality Management

We have complied with the independence and other ethical requirement 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 Management (“HKSQM”) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, which requires the firm to design, implement and operate a system of quality management including policies or 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 29(7) of Chapter 4 of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the directors of the Company have compiled the unaudited pro forma financial information in accordance with paragraph 29 of Chapter 4 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

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

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of the Rights Issue on unadjusted financial information of the Group as if the Rights Issue had occurred at an earlier date selected for purposes of the

II-4 -

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

illustration. Accordingly, we do not provide any assurance that the actual outcome of the Rights Issue at 31 October 2024 would have been as presented.

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

the related unaudited pro forma adjustments give appropriate effect to those criteria; and
the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

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

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

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

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and

II-5 -

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Global Link CPA Limited
Au Yeung Ming Yin Gordon
Practising Certificate Number: P08219
Certified Public Accountants

Hong Kong
14 March 2025

II-6 -

APPENDIX III

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

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

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; (ii) immediately following the completion of the Capital Reorganisation but before the completion of the Rights Issue; and (iii) immediately following the completion of the Rights Issue (assuming there is no change in the issued share capital of the Company from the Latest Practicable Date up to and including the Record Date other than as a result of the Capital Reorganisation) will be, as follows:

(a) As at the Latest Practicable Date

	Number of Shares	Nominal value of Shares HK$
Authorised	200,000,000	40,000,000
Issued and fully paid	172,800,000	34,560,000

(b) Immediately after the Capital Reorganisation becomes effective

	Number of Shares	Nominal value of Shares HK$
Authorised	200,000,000	40,000,000
Issued and fully paid	34,560,000	345,600

APPENDIX III

GENERAL INFORMATION

	Number of Shares	Nominal value of Shares HK$
Authorised	200,000,000	40,000,000
Issued and fully paid	34,560,000	345,600
Rights Shares to be issued	138,240,000	27,648,000
Shares in issue immediately after the Rights Issue	172,800,000	34,560,000

The Rights Shares, when issued and fully-paid, will be free from all liens, charges, encumbrances and third-party rights, interests or claims of any nature whatsoever and shall rank pari passu in all respects with the Shares then in issue, including as to the right to receive all dividends and distributions which may be declared, made or paid on or after the date of allotment of the fully-paid Rights Shares.

As at the Latest Practicable Date, the Company has outstanding scheme mandate limit under the Share Option Scheme which was approved by a resolution of the Shareholders passed on 27 March 2017 is 4,000,000 Existing Shares. As no Share Options has been granted, the remaining unutilised scheme mandate limit is 4,000,000. The Company has no intention to grant or vest any Share Option(s) on or before the Record Date.

The Rights Shares to be issued will be listed on the Stock Exchange. No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or the Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

As at the Latest Practicable Date, there was no arrangement under which future dividends are waived or agreed to be waived.

III-2 -

APPENDIX III

GENERAL INFORMATION

3. DISCLOSURE OF INTERESTS

(a) Directors' and chief executive's interests in the Company

As at the Latest Practicable Date, the interests or short positions of the Directors and the chief executives of the Company 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 (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions in which they are taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transactions by Directors of the Listed Issuers (the "Model Code") contained in Appendix 10 to the Listing Rules to be notified to the Company and the Stock Exchange were as follows:

Name	Capacity in which the shares were held	Number of shares – long position	Percentage of the issued share capital of the Company
Mr. Li (Note 1)	Beneficial owner	14,390,000	8.33

Note:
1. As at the date of this circular, the Company has no controlling Shareholder as defined under the Listing Rules. Mr. Li, the executive director, the chairman of the Group and the chief executive of the Company and his respective associates shall abstain from voting in favour of the resolution(s) in relation to the Rights Issue at the EGM.

Save as disclosed above, so far as the Directors were aware, as at the Latest Practicable Date, none of the Directors or chief executives of the Company or their associates 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 (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they have taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) have to be notified to the Company and the Stock Exchange pursuant to the Model Code.

APPENDIX III

GENERAL INFORMATION

(b) Interests of substantial Shareholders

So far as the Directors were aware, as at the Latest Practicable Date, there were no other persons who have an interest or a short position in the shares or underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

4. MARKET PRICES

The table below shows the closing prices of the Shares as quoted on the Stock Exchange (i) on the last trading day in the Shares took place at the end of each of the calendar months during the Relevant Period, (ii) on the Last Trading Day, and (iii) on the Latest Practicable Date:

	Closing price per Share HK$
28 June 2024	0.190
31 July 2024	0.224
30 August 2024	0.200
30 September 2024	0.180
31 October 2024	0.217
29 November 2024	0.132
19 December 2024 (the Last Trading Day)	0.140
31 December 2024	0.122
12 March 2025 (the Latest Practicable Date)	0.179

The lowest and highest closing prices per Share recorded on the Stock Exchange during the period commencing on 19 June 2024 (being the date falling six months immediately prior to the date of the Announcement) and ending on the Latest Practicable Date were HK$0.120 on 24 December 2024 and HK$0.270 on 17 July 2024 respectively.

5. DIRECTORS' INTERESTS IN ASSETS, CONTRACTS AND ARRANGEMENTS

As at the Latest Practicable Date, save for the Placing Agreement, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement entered into by any member of the Group which was 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 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 30 April 2024, being the date to which the latest published audited consolidated accounts of the Group were made up.

APPENDIX III

GENERAL INFORMATION

6. DIRECTORS' SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered or was proposing to enter into a service contract with any member of the Group which is not determinable by the Group within one year without payment of compensation, other than statutory compensation.

7. COMPETING INTERESTS

As at the Latest Practicable Date, so far as the Directors are aware, none of the Directors or controlling shareholders or their respective associates had any business or interest which competes or may compete with the business of the Group, or have or may have any other conflicts of interest with the Group.

8. LITIGATION

Neither the Company nor any other member of the Group was engaged in any litigation or arbitration of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened against the Company or any other member of the Group as at the Latest Practicable Date.

9. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors confirm there is no material adverse change in the financial or trading position of the Group since 30 April 2024, being the date to which the latest published audited consolidated financial statements of the Group were made up.

10. QUALIFICATIONS AND CONSENTS OF EXPERTS

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

Name	Qualification
Global Link CPA Limited	Certified Public Accountant
Messis Capital Limited	a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activity

As at the Latest Practicable Date, the above experts had given and had not withdrawn their written consent to the issue of this circular, with the inclusion of the references to their name and/or their opinion or report in the form and context in which they are included.

As at the Latest Practicable Date, (i) each of the above Experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion therein of its letter

III-5 -

APPENDIX III

GENERAL INFORMATION

and references to its name and/or its advice in the form and context in which they respectively appear; (ii) each of the above Experts was 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; and (iii) each of the above Experts 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 30 April 2024 (being the date to which the latest published audited consolidated financial statements of the Group were made up).

11. MATERIAL CONTRACTS

Save for the Placing Agreement, no material contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company or any other its subsidiaries within two years immediately preceding the date of this circular and up to the Latest Practicable Date.

12. CORPORATE INFORMATION

Executive Directors

Mr. Li Junheng
Mr. Li Shing Kuen Alexander
Ms. Chau Ngai Mo

Independent Non-executive Directors

Mr. Li Ka Chun Gordon
Mr. Fu Wing Kwok Ewing
Mr. Ghanshyam Adhikari

Authorised representatives

Mr. Li Shing Kuen Alexander
Mr. Yau Yan Yuen

Company Secretary

Mr. Yau Yan Yuen

Business address of all the Directors and senior management

Unit 1603, 16/F., Tower 1
Enterprise Square
9 Sheung Yuet Road
Kowloon Bay, Kowloon
Hong Kong

Registered office

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

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APPENDIX III

GENERAL INFORMATION

Principal place of business in Hong Kong
Unit 1603, 16/F., Tower 1
Enterprise Square
9 Sheung Yuet Road
Kowloon Bay, Kowloon
Hong Kong

Branch share registrar and transfer office in Hong Kong
Tricor Tengis Limited
17th Floor, Far East Finance Centre
16 Harcourt Road
Hong Kong

Principal bankers
The Hong Kong and Shanghai Banking Corporation Limited
HSBC Main Building
1 Queen's Road Central
Hong Kong

DBS Bank (Hong Kong) Limited
16th Floor, The Center
99 Queen's Road Central
Central
Hong Kong

Auditor
Global Link CPA Limited
Certified Public Accountants
Unit 21A, 15/F, Star House
3 Salisbury Road
Tsim Sha Tsui, Kowloon
Hong Kong

PARTIES INVOLVED IN THE RIGHTS ISSUE

Company
HSC Resources Group Limited
Unit 1603, 16/F., Tower 1
Enterprise Square
9 Sheung Yuet Road
Kowloon Bay, Kowloon
Hong Kong

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APPENDIX III
GENERAL INFORMATION

Legal Advisors to the Company
As to Hong Kong law
ZM Lawyers
20th Floor, Central 88
Nos. 88–98 Des Voeux Road Central
Hong Kong

As to Cayman Island
Conyers Dill & Pearman
29th Floor, One Exchange Square
8 Connaught Place
Central
Hong Kong

Reporting accountant of the Company
Global Link CPA Limited
Certified Public Accountants
Unit 21A, 15/F, Star House
3 Salisbury Road
Tsim Sha Tsui, Kowloon
Hong Kong

Financial adviser to the Company
Advent Corporate Finance Limited
Unit A–C, 11/F
Kee Shing Centre
74–76 Kimberley Road
Kowloon, Hong Kong

Independent Financial Adviser
Messis Capital Limited
Room 1303, 13/F, OfficePlus
No.303 Hennessy Road
Wan Chai, Hong Kong

Placing Agent
Advent Securities (Hong Kong) Limited
Unit A–C, 11/F
Kee Shing Centre
74–76 Kimberley Road
Kowloon, Hong Kong

DIRECTORS AND SENIOR MANAGEMENT OF THE COMPANY

Executive Directors

Mr. Li Junheng (李俊衡), aged 60, has over 26 years’ experience in corporate investment and business management, particularly comprehensive logistics, port cargo internet and large-sale commodity trading digital platforms in China, Asia and Europe. Mr. Li Junheng is currently an executive deputy director of the China Port Logistics

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APPENDIX III

GENERAL INFORMATION

Association. He has significant involvements in the countries along the Belt and Road in respect of planning and layout of ports, road and railway and sea transportation network, and planning of warehousing. Mr Li Junheng is currently an executive director of Kazakhstan Potash Corporation Limited which is listed on the Australia Stock Exchange.

Mr. Li Shing Kuen Alexander (李誠權), aged 64, is an executive Director, chairman of our Board and our chief executive officer. Mr. Li Shing Kuen Alexander is responsible for the strategic planning and overall management of business operations and development of our Group. Mr. Li Shing Kuen Alexander founded our Group when he acquired Windmill Engineering Company Limited on 30 June 1985. Mr. Li Shing Kuen Alexander was appointed as a Director on 25 August 2016, and re-designated as an executive Director and appointed as chairman of the Board on 29 November 2016. He is also the sole director of Success Chariot Limited, Golden Chariot International Limited and Windmill Engineering Company Limited.

Mr. Li Shing Kuen Alexander has over 33 years of managerial experience in the fire services installation and maintenance industry gained from managing and developing our Group's business. He oversees the project planning, project management and execution of our fire services installation and maintenance projects, directs our business development and acts as a representative in our Group's communications with industry associations, key customers, government representatives and regulatory agencies. Mr. Li Shing Kuen Alexander was awarded the Chief Executive's Commendation for Community Service in 2007, the Medal of Honour (MH) by The Chief Executive of the HKSAR in 2012 and Bronze Bauhinia Star (BBS) by The Chief Executive of the HKSAR in 2019 for his outstanding and dedicated community service in Wan Chai District.

He was appointed as the Chairman of District Fire Safety Committee (Wan Chai District) of the Home Affairs Department from 2010 to 2013, a non-official member of the Advisory Committee under the Fire Safety (Buildings) Ordinance (Chapter 572 of the Laws of Hong Kong) appointed by the Director of Fire Services from 2011 to 2017 and the Chairman of the District Fight Crime Committee (Wan Chai District) of the Home Affairs Department from 2014 to 2019.

Ms. Chau Ngai Mo (鄒藝斌), aged 40, holds a master degree in science international marketing from Sheffield Hallam University, U.K. and also a bachelor's degree in English for business and professional communication from The Hong Kong Polytechnic University. She has over 10 years of experience in strategic planning, business development, and creative solutions.

Independent Non-executive Directors

Mr. Li Ka Chun Gordon (李家俊), aged 32, was appointed as an independent non-executive Director, the member of the Audit Committee, Remuneration Committee and Nomination Committee of the Company on 17 March 2022 and as the chairman of the Remuneration Committee of the Company on 25 April 2022. Mr. Li obtained his bachelor's

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APPENDIX III

GENERAL INFORMATION

degree in Accounting from The University of Hull. Mr. Li has over 8 years of experience in the areas of accounting and financial management in financial institutions and corporations, and led several large audit and financing projects.

Mr. Fu Wing Kwok Ewing (傅榮國), aged 56, is currently the financial controller and company secretary of CT Vision S.L. (International) Holdings Limited (stock code: 994). Mr. Fu worked for a number of international accounting firms and listed companies in Hong Kong. He holds a master degree of business administration from Anglia Ruskin University, U.K. and also a bachelor's degree in science with major in accounting from Bemidji State University, USA. He is a fellow member of Hong Kong Institute of Certified Public Accountants and a member of American Institute of Certified Public Accountants. He has over 30 years of experience in finance, auditing and accounting field.

Mr. Ghanshyam Adhikari, aged 44, obtained his Master Degree in Education from Tribhuvan University and Bachelor's Degree in British Literature from Mahendra Multiple Campus. Mr. Ghanshyam Adhikari has over 15 years of experience in corporate management, marketing and public relations management.

Senior Management

Ms. Ma Man Chi (馬敏姿), aged 38, has been our financial controller since May 2019, responsible for financial reporting, financial planning and analysis, treasury, taxation, internal controls and compliance with financial regulations. Ms. Ma joined the Group in November 2018 as Assistant Financial Controller. She has extensive experience in accounting and auditing, specifically more than 10 years of experience from the engineering and construction industry. Prior to joining the Group, Ms. Ma served PricewaterhouseCoopers and has led audit engagements and capital market transactions for multinational corporations and sizable listed companies in Hong Kong. Ms. Ma is a fellow member of the Hong Kong Institute of Chartered Public Accountants and holds a bachelor's degree of Business Administration in Accounting from the Open University of Hong Kong.

Mr. Tang Wai Yin (鄧偉賢), aged 51, has been our head of Project since October 2020. Mr. Tang joined our Group as a project manager in March 2016 and was promoted to the position of construction manager in March 2018. Mr. Tang is primarily responsible for overall project management which includes quality control, master progress monitoring, value enhancement, overall site administration and site safety.

Mr. Tang graduated from the Hong Kong Polytechnic (now known as The Hong Kong Polytechnic University) with a Higher Certificate in Mechanical Engineering in November 1993. Mr. Tang has over 17 years of experience in the fire engineering field. Mr. Tang is a holder of the Construction Industry Safety Training Certificate. Mr. Tang joined our Group in February 1996 as a project engineer and was responsible for handling various systems of fire services installation, site supervision, design, testing and commissioning. Mr. Tang left our Group in August 2007 and worked for Thorn Security (Hong Kong) Limited as project

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APPENDIX III

GENERAL INFORMATION

engineer and senior project engineer from September 2008 to September 2013. Mr. Tang was our project manager from October 2013 to 2014. He worked for Tyco Fire, Security & Services (Macau) Limited as an assistant project manager from May 2014 to December 2015.

Mr. Lam Tai Ming (林泰銘), aged 54, has been a senior project manager of the Group since April 2014. Mr. Lam is primarily responsible for project execution which includes site supervision, and liaison with customers and relevant site agents, etc.

Mr. Lam has over 21 years of experience in the fire engineering field. Mr. Lam joined the Group in January 1995 as an assistant engineer and he was promoted to his current position in April 2014. Mr. Lam obtained from the Vocational Training Council an Ordinary Certificate in Electrical Engineering in September 1999 and a Higher Certificate in Building Services Engineering in July 2005. Mr. Lam is a holder of the Certificate for Safety and Health Supervisor (Construction) awarded by the Occupational Safety & Health Council in November 1999. He is a Class 3 Registered Fire Service Installation Contractor registered with the Fire Services Department since June 2012, an electrical worker (Grade B) registered with the Electrical and Mechanical Services Department (EMSD). Mr. Lam received from the Labour Department an Attendance Certificate in legal requirements of working in confined space in August 1996 and an Attendance Certificate in construction sites safety regulations in November 1996.

Mr. Sin Kam Hung (洗錦雄), aged 56, has been a project manager of the Group since June 2014. Mr. Sin is primarily responsible for project execution which includes site supervisory, liaison with customers and relevant site agents. Mr. Sin obtained a Higher Certificate in Building Services Engineering from the Vocational Training Council in July 2001. He is an electrical worker (Grade H) registered with the Electrical and Mechanical Services Department (EMSD).

Mr. Sin has over 21 years of experience in fire engineering field. Mr. Sin joined the Group in June 1989 as a technician and he was promoted to project engineer in 1995. Mr. Sin had left the Group in December 2001 and worked for Guardian Property Management Limited as a technical supervisor from February 2002 to October 2005 and The Hong Kong Jockey Club as a technical services engineer from November 2005 to May 2014.

Ms. Leung Wan Yi (梁尹儀), aged 56, has been an administration manager of the Group since November 2016. Ms. Leung is primarily responsible for overseeing daily support operations and performing administrative duties. She joined our Group in October 1986 as a junior accounts clerk and was promoted to accounts clerk in February 1989. She was the account manager from January 2012 to October 2016.

Ms. Leung completed a 9-month full-time business secretarial studies course and received a diploma in business secretarial studies from the Professional & Business Youth Department of the Hong Kong Young Women's Christian Association in May 1986. She attended a higher accounting course organised by Caritas Adult Educational Centre from

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APPENDIX III

GENERAL INFORMATION

July 1986 to January 1987. She obtained a Certificate of Internal QMS Auditor from SGS United Kingdom Limited in April 2003 and a Certificate of Achievement – Integrated Management System: Internal Auditor for ISO 9001, ISO 14001 and OHSAS 18001 from SGS Hong Kong Limited in July 2012.

Company Secretary

Mr. Yau Yan Yuen (邱欣源), aged 37, has been the company secretary of our Group since March 2022. Being the Company Secretary, Mr. Yau plays an important role in supporting the Board by ensuring good information flow within the Board and that Board policy and procedures are followed. Mr. Yau is responsible for advising the Board on corporate governance matters and should also facilitate induction and professional development of Directors. Mr. Yau is a member of the Hong Kong Institute of Certified Public Accountants.

Business address of the Directors

The business address of the Directors is the same as the Company's headquarters and principal place of business in Hong Kong at Unit 1603, 16/F., Tower 1, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong.

15. EXPENSES

The expenses in connection with the Rights Issue, including financial advisory fees, placing commission (assuming nil acceptance of the Rights Shares by the Qualifying Shareholders and the placing of all Unsubscribed Rights Shares and the NQS Unsold Rights Shares by the Placing Agent), printing, registration, translation, legal and accountancy charges are estimated to be approximately HK$3.47 million, which are payable by the Company.

16. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (https://hscgroup.hk) for not less than 14 days from the date of this circular:

(a) the letter of recommendation from the Independent Board Committee, the text of which is set out on pages 47 to 48 of this circular;

(b) the letter from the Independent Financial Adviser, the text of which is set out on pages 49 to 76 of this circular;

(c) the letter issued by the reporting accountants regarding the unaudited pro forma financial information as set out in appendix II to this circular; and

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APPENDIX III
GENERAL INFORMATION

(d) the material contracts, referred in the paragraph headed “11. MATERIAL CONTRACTS” in this appendix.

17. MISCELLANEOUS

(a) As at the Latest Practicable Date, to the best knowledge of the Directors, there was no restriction affecting the remittance of profit or repatriation of capital of the Company into Hong Kong from outside Hong Kong.

(b) As at the Latest Practicable Date, the Group had no exposure to foreign exchange liabilities.

(c) In the event of any inconsistency, the English texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts.

III-13 -

NOTICE OF EGM

HSC Resources Group Limited

鴻盛昌資源集團有限公司

(Formerly known as WINDMILL Group Limited 海鑫集團有限公司)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1850)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM”) of HSC Resources Group Limited (the “Company”) will be held at 22/F, Euro Trade Centre, 13–14 Connaught Road Central, Central, Hong Kong on Monday, 7 April 2025 at 11:00 a.m. for purpose of considering and, if thought fit, passing the following resolutions. Unless otherwise indicated, capitalized terms used herein shall have the same meaning as those defined in the circular of the Company dated 14 March 2025 (the “Circular”):

SPECIAL RESOLUTION

“THAT, subject to and conditional upon (i) an order being made by the Grand Court of the Cayman Islands (“Court”) confirming the Capital Reduction (as defined below) (if applicable); (ii) compliance with any condition which the Court may impose in relation to the Capital Reduction (if applicable); (iii) registration by the Registrar of Companies of the Cayman Islands of a copy of the order of the Court confirming the Capital Reduction and the minute approved by the Court containing the particulars required under the Companies Act (as revised) of the Cayman Islands in respect of the Capital Reduction (if applicable); (iv) compliance with all relevant procedures and requirements under the applicable laws of the Cayman Islands and the Listing Rules to effect the Capital Reorganisation; and (v) the Listing Committee of the Stock Exchange granting approval for the listing of, and permission to deal in, the Adjusted Shares (as defined below), with effect from the date on which these conditions are fulfilled (the “Effective Date”):

(a) the Share Consolidation whereby every five (5) issued Existing Shares of par value of HK$0.20 each will be consolidated into one (1) Consolidated Share of par value of HK$1.00 each;

(b) immediately following the Share Consolidation, (a) any fractional Consolidated Share in the issued share capital of the Company arising from the Share Consolidation be cancelled, and (b) the par value of each issued Consolidated Share be reduced from HK$1.00 to HK$0.01 (such Consolidated Shares as reduced by the paid-up capital pursuant to the Capital Reduction, the “Adjusted Shares”) by cancelling the paid-up capital to the extent of HK$0.99 on each issued Consolidated Share (the “Capital Reduction”);

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NOTICE OF EGM

(c) immediately following the Capital Reduction, each of the authorised but unissued Consolidated Shares of par value of HK$1.00 each be sub-divided into one hundred (100) shares of par value of HK$0.01 each in the share capital of the Company (the “Share Subdivision”, together with the Share Consolidation and the Capital Reduction, the “Capital Reorganisation”), such that after the Capital Reorganisation, the authorised share capital of the Company remain as HK$40,000,000 divided into 4,000,000,000 shares of par value HK$0.01 each;

(d) the credit arising from the Capital Reduction be transferred to a distributable reserve account of the Company which may be utilised by the board (the “Board”) of directors (the “Director(s)”) in accordance with the memorandum and articles of association of the Company and all applicable laws, including, without limitation, eliminating or setting off any accumulated losses of the Company from time to time;

(e) each of the Adjusted Shares of par value HK$0.01 each arising from the Capital Reorganisation shall rank pari passu in all respects with each other and have the rights and privileges and be subject to the restrictions as contained in the memorandum and articles of association of the Company; and

(f) any one of the Directors, the registered office provider and the Cayman Islands counsel of the Company be and are hereby authorised to do all such acts and things (including without limitation arranging for the requisite filings and applications with the Registrar of Companies in the Cayman Islands and the Court) and execute and deliver all such documents, which are ancillary to the Share Consolidation, the Capital Reduction and the Share Subdivision, on behalf of the Company, including under seal where applicable, as they may consider necessary or expedient to give effect to, implement and complete the Share Consolidation, the Capital Reduction and the Share Subdivision.”

ORDINARY RESOLUTION

“THAT subject to the passing of special resolution number 1 above and the satisfaction of the conditions set out in the letter from Letter from the Board under the heading “Conditions of the Rights Issue” in the circular of the Company dated 14 March 2025 (the “Circular”) (including The Stock Exchange of Hong Kong Limited granting and not having revoked the listing of and permission to deal in the Rights Shares (as defined below)):

(a) the allotment and issue by the Company by way of rights (the “Rights Issue”) of a maximum of 138,240,000 Adjusted Shares (assuming no further issue of new Share(s) and no repurchase of Share(s) on or before the Record Date (as defined below)) of par value HK$0.01 each (the “Rights Shares” and each a “Rights Share”) at a subscription price of HK$0.53 per Rights Share to the qualifying shareholders of the Company (the “Qualifying Shareholders”) whose names

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NOTICE OF EGM

appear on the register of members of the Company on 12 May 2025 or such other date as may be determined by the Company for the determination of the entitlements under the Rights Issue (the “Record Date”) (other than those shareholders (the “Non-Qualifying Shareholders”) with registered addresses outside Hong Kong whom the Board, after making reasonable enquiries, considers it necessary or expedient not to offer the Rights Shares to them on account either of legal restrictions or prohibitions under the laws of the relevant jurisdictions or the requirements of the relevant regulatory body or stock exchange in such jurisdictions) on the basis of four (4) Rights Shares for every one (1) Adjusted Share of the Company then held on the Record Date and pursuant to the terms and conditions as set out in the Circular (a copy of which marked “A” is produced to the EGM and initialed by the chairman of the EGM for the purpose of identification) of which this notice convening the EGM forms part, be and is hereby approved;

(b) the terms of, and the Company’s entry into and performance of the placing agreement dated 19 December 2024 entered into between the Company and Advent Securities (Hong Kong) Limited (a copy of which has been produced to the EGM marked “B” and signed by the chairman of the EGM for the purpose of identification), in relation to the placing of the Rights Shares not subscribed by the Qualifying Shareholders and/or the Rights Share(s) which would otherwise has/have been provisionally allotted to the Non-Qualifying Shareholder(s) in nil-paid form that has/have not been sold by the Company at the placing price of not less than the Subscription Price on a best effort basis, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified;

(c) any one of the Directors be and is hereby authorised to allot and issue the Rights Shares (in their nil-paid form and fully-paid form) pursuant to and in connection with the Rights Issue notwithstanding the Rights Shares may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, any Director be and is hereby authorised to make such exclusions or other arrangements in relation to fractional entitlements and/or the Non-Qualifying Shareholders as he/she deems necessary, desirable or expedient having regard to any restrictions or obligations under the memorandum and articles of association of the Company or the laws of, or the rules and regulations of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong; and

(d) any one of the Directors be and is hereby authorised to do all such acts and things, as he/she may in his/her discretion consider necessary, desirable or expedient, for the purposes of or in connection with the implementation of the Rights Issue and the transactions contemplated thereunder, including but not limited to executing and delivering, and (where required) to affix the common seal of the Company to, all such documents, as he/she considers necessary or expedient in his/her opinion to implement and/or give effect to the Rights Issue

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NOTICE OF EGM

and the implementation of all transactions contemplated thereunder, including but not limited to the issue and allotment of Rights Shares and to agree with such variation, amendment or waiver as, in his opinion, appropriate and in the interests of the Company and its shareholders as a whole.”

By order of the Board
HSC Resources Group Limited
Li Junheng
Chairman

Hong Kong, 14 March 2025

Notes:

Any member entitled to attend, speak and vote at the EGM will be entitled to appoint a proxy or, if such member is a holder of two or more shares, proxies to attend, speak and vote in such member’s stead. A proxy need not be a member of the Company but must attend the EGM in person to represent the appointing member.
To be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with any power of attorney or other authority (if any) under which it is signed or a notarially certified copy of such power or authority, at the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.
Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in person at the EGM convened or any adjournment thereof (as the case may be) and in such event the instrument appointing the proxy shall be deemed to be revoked.
Where there are joint holders of any share, any one of such joint holders may vote at the EGM, either in person or by proxy, in respect of such share as if he/she/it were solely entitled thereto, but if more than one of such joint holders be present at the EGM, whether in person or by proxy, the one of the said joint holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
To ascertain shareholders’ eligibility to attend, speak and vote at the EGM, the register of members of the Company will be closed from Monday, 31 March 2025 to Monday, 7 April 2025, both days inclusive, during which period no transfer of shares of the Company will be effected. In order to qualify to attend, speak and vote at the EGM, all transfers of share ownership, accompanied by the relevant share certificates, must be lodged with the Hong Kong branch share registrar and transfer office of the Company, Tricor Tengis Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong not later than 4:30 p.m. on Friday, 28 March 2025.
References to time and dates in this notice are to Hong Kong time and dates.
Any voting at the EGM shall be taken by poll.
As at the date hereof, the Executive Directors are Mr. Li Junheng, Mr. Li Shing Kuen Alexander and Ms. Chau Ngai Mo; and the Independent Non-executive Directors are Mr. Li Ka Chun Gordon, Mr. Fu Wing Kwok Ewing and Mr. Ghanshyam Adhikari.
EGM-4 -

AI assistant

HSC Resources Group Limited — Proxy Solicitation & Information Statement 2025

50214_rns_2025-03-14_5c34182c-29ab-4464-a9cf-478e32dc60aa.pdf

HSC Resources Group Limited

鴻盛昌資源集團有限公司

EFFECT OF BAD WEATHER OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE

HSC Resources Group Limited

鴻盛昌資源集團有限公司

INTRODUCTION

(I) PROPOSED CAPITAL REORGANISATION

Effect of the Capital Reorganisation

Conditions of the Capital Reorganisation

Odd lots arrangements and matching services

Exchange of Share Certificates

Application for listing and dealings

Closure of register of members

Reasons for the Capital Reorganisation

(II) PROPOSED RIGHTS ISSUE

Rights Issue statistics

Subscription Price

Non-underwritten basis

Conditions of the Rights Issue

Status of the Rights Shares

Qualifying Shareholders

Rights of the Overseas Shareholders (if any)

Closure of register of members

Basis of provisional allotments

Arrangement on odd lot trading

Procedures in respect of the Unsubscribed Rights Shares and the NQS Unsold Rights Shares and the Compensatory Arrangements

Placing Agreement for Unsubscribed Rights Shares and the NQS Unsold Rights Shares

Share certificates and refund cheques for the Rights Issue

No fractional entitlement to the Rights Shares

Application for listing of the Rights Shares

RIGHTS SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

REASONS FOR THE RIGHTS ISSUE AND THE USE OF PROCEEDS

EQUITY FUNDRAISING ACTIVITIES IN THE PAST TWELVE MONTHS

TAXATION

WARNING OF THE RISKS OF DEALING IN THE EXISTING SHARES, THE ADJUSTED SHARES AND/OR THE NIL-PAID RIGHTS SHARES

INFORMATION ON THE PARTIES

Information on the Group

Information on the Placing Agent

EFFECTS ON SHAREHOLDING STRUCTURE

Notes:

POSSIBLE ADJUSTMENT TO OUTSTANDING SHARE OPTIONS

LISTING RULES IMPLICATIONS

Capital Reorganisation

Rights Issue

THE INDEPENDENT BOARD COMMITTEE AND THE INDEPENDENT FINANCIAL ADVISER

EGM

DESPATCH OF PROSPECTUS DOCUMENTS

RECOMMENDATION

ADDITIONAL INFORMATION

HSC Resources Group Limited

鴻盛昌資源集團有限公司

MESSIS 大有融資

PROPOSED RIGHTS ISSUE ON THE BASIS OF FOUR (4) RIGHTS SHARES FOR EVERY ONE (1) ADJUSTED SHARE HELD AT THE CLOSE OF BUSINESS ON THE RECORD DATE ON A NON-UNDERWRITTEN BASIS

INTRODUCTION

OUR INDEPENDENCE

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information

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

3. Major terms of the Rights Issue

Issue statistics

Subscription Price

A. Comparison of the Subscription Price

B. Adjusted historical price of the Adjusted Shares

Daily adjusted closing price of the Adjusted Shares

C. Historical trading volume of the Adjusted Shares

Notes:

Subscription price

The outliers

Placing commission

Possible dilution effect on the shareholding interests of the existing Public Shareholders

4. Financial Impact of the Rights Issue

(a) Net tangible assets

(b) Liquidity

(c) Gearing ratio

RECOMMENDATION

1. SUMMARY OF FINANCIAL INFORMATION

HSC Resources Group Limited Proxy Solicitation & Information Statement 2025