THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Guojin Resources Holdings Limited 國金資源控股有限公司* (the “Company”) , you should at once hand this circular and the accompanying proxy form to the purchaser or transferee or to the bank, stockbroker 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 purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of the Company.

(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

(1) CAPITAL REORGANISATION; (2) REDEMPTION OF THE UGENT BONDS; AND

(3) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE

Financial Adviser to the Company

==> picture [156 x 34] intentionally omitted <==

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

Terms used in this cover shall have the same meanings as defined in this circular.

The Shares will be dealt in on an ex-rights basis from Wednesday, 7 September 2011. Dealings in the Rights Shares in the nil-paid form will take place from Monday, 19 September 2011 to Monday, 26 September 2011 (both days inclusive). If the conditions of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated by the Underwriters, the Rights Issue will not proceed. Any persons dealing in the nil-paid Rights Shares will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

A letter from Menlo Capital, the Independent Financial Adviser, is set out on pages 45 to 70 of this circular and a letter of recommendation from the Independent Board Committee to the Independent Shareholders is set out on page 44 of this circular.

A notice convening a special general meeting（“SGM”) of the Company to be held at Regus Conference Centre, 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong at 11:00 a.m. on Monday, 5 September 2011 (or immediately after a special general meeting of the Company approving the Acquisition Agreement which is scheduled to be held on the same day at 10:00 a.m.) is set out on pages SGM-1 to SGM-5 of this circular. Whether or not you are able to attend the SGM in person, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon and return it to the Company’s principal place of business in Hong Kong at Units 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for holding the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

It should be noted that the Underwriting Agreement in respect of the Rights Issue contains provisions entitling the Underwriters by notice in writing to the Company at any time prior to the Latest Time for Termination to terminate the obligations of the Underwriters thereunder on the occurrence of certain events including force majeure. These events are set out under the section headed “Termination of the Underwriting Agreement” on pages 12 to 13 of this circular. If the Underwriters terminate the Underwriting Agreement in accordance with the terms thereof, the Rights Issue will not proceed. In addition, the Rights Issue is conditional on all conditions set out on pages 26 to 27 of this circular being fulfilled. In the event that such conditions have not been satisfied on or before the Latest Time for Termination, all liabilities of the parties to the Underwriting Agreement shall cease and determine and no party shall have any claim against the other party save for any antecedent breach of the Underwriting Agreement, and the Rights Issue will not proceed.

For identification purposes only

12 August 2011

	Page
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Termination of the Underwriting Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44
Letter from Menlo Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45
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 Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SGM – 1

– i –

EXPECTED TIMETABLE

Set out below is the expected timetable for the Rights Issue and the Capital Reorganisation. The expected timetable is subject to change, and any changes will be announced in a separate announcement by the Company as and when appropriate.

2011

The SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11:00 a.m. on Monday, 5 September Announcement of results of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 5 September Last day of dealings in the Shares on a cum-rights basis . . . . . . . . . . . . . . . . Tuesday, 6 September First day of dealings in the Shares on an ex-rights basis . . . . . . . . . . . . . .Wednesday, 7 September Latest time for lodging transfer of the Shares in order to be qualified for the Rights Issue . . . . . . . . . . . . .4:30 p.m. on Thursday, 8 September Book close for Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 9 September to Wednesday, 14 September (both date inclusive) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 14 September Prospectus Posting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 15 September First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . Monday, 19 September Latest time for splitting nil-paid Rights Shares . . . . . . . . . 4:30 p.m. on Wednesday, 21 September Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . Monday, 26 September Latest Time for Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 29 September Latest Time for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5:00 p.m. on Monday, 3 October Underwriting Agreement becomes unconditional (Note 2) . . . . . . .5:00 p.m. on Monday, 3 October Effective time and date of the Capital Reorganisation . . . . . . . . . .5:00 p.m. on Monday, 3 October First day of free exchange of existing certificates for Shares for new certificates for New Shares . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 4 October Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 6 October Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares expected to be despatched on or before . . . . . . . . . . . . . . . . Monday, 10 October Certificates for the Rights Shares expected to be despatched on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 10 October Dealings in fully-paid Rights Shares commence . . . . . . . . . . . 9:00 a.m. on Wednesday, 12 October Last day of free exchange of existing certificates for Shares for new certificates for New Shares . . . . . . . . . . . . . . . . . . . . . . . Friday, 4 November

– 1 –

EXPECTED TIMETABLE

Notes:

All references to time in this circular are references to Hong Kong time. Dates or deadlines specified in this circular are indicative only and may be extended or varied.
The Underwriting Agreement is conditional on, among others, the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulations at the special general meeting of the Company. The special general meeting approving the Acquisition Agreement will be held on the same day as the SGM. Further announcement(s) will be made by the Company on any changes to the above expected timetable, if and when appropriate.

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES

If there is:

a tropical cyclone warning signal number 8 or above; or
a ‘‘black’’ rainstorm warning
(i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the Last Acceptance Date, the Latest Time for Acceptance will be extended to 5:00 p.m. on the same Business Day; or
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the Last Acceptance Date, the Latest Time for Acceptance will be rescheduled to 4:00 p.m. on the next Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m..

If the Latest Time for Acceptance is extended, the ‘‘Expected timetable’’ in this circular may be affected. Further announcement(s) will be made by the Company in such event.

– 2 –

DEFINITIONS

The following expressions used in this circular have the following meanings unless the context requires otherwise:

“Accumulated Losses”

the accumulated losses of the Company immediately before the Capital Reorganisation becomes effective

“Acquisition” the proposed acquisition of the entire issued share capital of the Newco and the entire registered capital of Dongguan De Yue by the Purchaser from the Vendors pursuant to the Acquisition Agreement, details of which were set out in the Acquisition Announcements

“Acquisition Agreement” the sale and purchase agreement dated 23 January 2011 (as amended and restated on 27 July 2011) entered into among the Company, the Purchaser and the Vendors in relation to the Acquisition

“Acquisition Announcements” collectively (i) the announcement of the Company dated 25 January 2011 in relation to, among other things, the Acquisition; (ii) the Announcement; and (iii) the announcement of the Company dated 27 July 2011 in relation to certain amendments of the Acquisition Agreement and the Performance Incentive Agreement

“Acquisition Completion” completion of the Acquisition pursuant to the Acquisition Agreement “AFEX” AFEX International (HK) Limited, a company incorporated under the laws of Hong Kong and an indirect wholly-owned subsidiary of Ugent

“Announcement” the announcement dated 21 June 2011 issued by the company in relation to, among other things, the Capital Reorganisation, the Redemption, the Rights Issue and certain amendment of the Acquisition Agreement “Annual Report” annual report of the Group for the year ended 31 December 2010 “associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors

– 3 –

DEFINITIONS

“Business Day”	a day (other than a Saturday, Sunday and public holidays)
	on which licensed banks are generally open for business in
	Hong Kong throughout their normal business hours
“BVI”	the British Virgin Islands
“Bye-Laws”	the bye-laws of the Company in effect from time to time
“Capital Reduction”	the proposed reduction of the share capital of the Company
	through a cancellation of the paid-up capital of the
	Company to the extent of HK$0.09 on each issued Share
	such that the nominal value of each issued Share will be
	reduced from HK$0.1 to HK$0.01
“Capital Reorganisation”	the proposed share capital reorganisation detailed in the
	section headed “Capital Reorganisation” in the letter from
	the Board in this circular
“CCASS”	the Central Clearing and Settlement System established and
	operated by HKSCC
“Company”	Guojin Resources Holdings Limited (stock code: 630), a
	company incorporated in Bermuda with limited liability
	and the issued shares of which are listed on the Stock
	Exchange
“Completion”	completion of the Redemption and/or the Rights Issue, as
	the context requires
“Completion Date”	the date of the Completion
“connected person(s)”	has the meaning ascribed to it under the Listing Rules
“Conversion Shares”	up to 2,250 million New Shares which may fall to be
	allotted and issued upon full conversion of the Convertible
	Notes at the adjusted conversion price of HK$0.05 (which
	is expected to be adjusted from HK$0.105 as a result of the
	Redemption and the Rights Issue)
“Convertible Notes”	the convertible notes in the principal amount of HK$112.5
	million to be issued by the Company to the Vendors to
	satisfy part of the consideration of the Acquisition

– 4 –

DEFINITIONS

“Director(s)”	the director(s) of the Company
“Dongguan De Yue”	東莞德越電子塑膠製品有限公司(Dongguan De Yue
	Electronic and Plastic Products Company Limited#), a
	wholly-foreign-owned enterprise in the PRC
“Excluded Shareholder(s)”	Overseas Shareholder(s) to whom the Directors, based on
	legal opinions provided by legal advisers in the relevant
	jurisdictions and on account either of legal restrictions
	under the laws of relevant place or the requirements of the
	relevant regulatory body or stock exchange in that place,
	consider it necessary or expedient not to offer the Rights
	Shares
“Group”	the Company and its subsidiaries
“HKSCC”	Hong Kong Securities Clearing Company Limited
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”	the independent board committee of the Board comprising
	Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and
	Mr. Lau Man Tak, being all the independent non-executive
	Directors, having been established for the purpose of,
	among other things, advising the Independent Shareholders
	on the Redemption and the Rights Issue
“Independent Shareholders”	the Shareholders other than the Vendors, Ugent
	Bondholders and their respective associates who are
	required to abstain from voting on the proposed resolutions
	approving the Redemption and the Rights Issue at the SGM
	under the Listing Rules
“Independent Third Party(ies)”	the independent third party(ies) who is/are independent of
	the Company and its connected persons
“Initial Subscriber”	The China Fund Inc., being the initial subscriber to the
	Ugent Bonds
“JEL”	Jackin Enterprises Limited, a company incorporated under
	the laws of the BVI with limited liabilities and wholly
	owned by Ugent

– 5 –

DEFINITIONS

“Kingsway”	Kingsway Financial Services Group Limited, a company
	incorporated in Hong Kong with limited liability and
	a corporation licensed to carry on Type 1 (dealing in
	securities), Type 2 (dealing in futures contracts), Type 4
	(advising on securities), Type 6 (advising on corporate
	finance) and Type 9 (asset management)
“Last Acceptance Date”	the date as the Underwriters and the Company may agree
	as the latest date for acceptance of and payment for Rights
	Shares and application for and payment for excess Rights
	Shares
“Last Trading Day”	17 June 2011, being the last trading day for the Shares
	before the date of the Announcement
“Latest Practicable Date”	10 August 2011, being the latest practicable date prior
	to the despatch of this circular for ascertaining certain
	information referred to in this circular
“Latest Time for Acceptance”	4:00 p.m. on the Last Acceptance Date or such other time as
	may be agreed between the Company and the Underwriters,
	being the latest time for acceptance of and payment for the
	Rights Shares and application for excess Rights Shares
“Latest Time for Termination”	being 5:00 p.m. on the second Business Day immediately
	following the latest day upon which the provisional
	allotments of the nil-paid Rights Shares may be validly
	accepted under the Rights Issue
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Menlo Capital”or “Independent	Menlo Capital Limited, a licensed corporation for type
Financial Adviser”	6 (advising on corporate finance) regulated activity
	under SFO and the independent financial adviser to the
	Independent Board Committee and the Independent
	Shareholders with regard to the Redemption and the Rights
	Issue
“Mr. Lai”	Mr. Lai Chiu Fai, a cousin of Mr. Yip
“Mr. Lee”	Mr. Lee Siew Yuen
“Mr. Yip” or “Vendor 2”	Mr. Yip Wai Lun, Alvin, the Chairman and Managing
	Director of the Company

– 6 –

DEFINITIONS

“Ms. Leung”	Ms. Leung Mei Han, who is the beneficial owner of Ugent
	Bondholder 1
“New Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of
	the Company immediately upon the Capital Reorganisation
	becoming effective
“Newco”	Apex Solution Group Limited, a company incorporated
	in the BVI with limited liability and holds all the entire
	issued share capital of Titron Industries Limited (including
	its subsidiary), Titron Manufacturing Limited, Titron
	International Limited and Titron Precision Limited
	(including its subsidiary) following completion of the
	Reorganisation
“Optima Capital”	Optima Capital Limited, a corporation licensed to carry
	out Type 1 (dealing in securities), Type 4 (advising on
	securities) and Type 6 (advising on corporate finance)
	regulated activities as defined under the SFO
“Overseas Shareholder(s)”	Shareholder(s) whose name(s) appear(s) on the register
	of members of the Company at the close of business on
	the Record Date and whose address(es) as shown on such
	register is (are) outside Hong Kong
“Performance Bonus”	the performance bonus to which the Service Provider
	will be entitled in relation to the services pursuant to the
	Performance Incentive Agreement
“Performance Incentive	the conditional agreement dated 4 March 2011 (as amended
Agreement”	and restated on 27 July 2011) entered into among the
	Company, the Purchaser and the Service Provider in
	relation to the provision of the Services
“Performance Incentive	up to 6,720 million New Shares which may fall to be
Shares”	allotted and issued to the Vendors to satisfy part of the
	Performance Bonus at the adjusted issue price of HK$0.05
	(which is expected to be adjusted from HK$0.105 as a
	result of the Redemption and the Rights Issue)
“PRC”	The People’s Republic of China, for the purpose of
	this circular, excluding Hong Kong, Macau Special
	Administrative Region of the PRC and Taiwan

– 7 –

DEFINITIONS

“Prospectus”	the prospectus to be issued by the Company in relation to
	the Rights Issue
“Prospectus Documents”	the Prospectus, the provisional allotment letter and the form
	of application for excess Rights Shares
“Prospectus Posting Date”	15 September 2011 or such other date as the Underwriters
	may agree in writing with the Company, being the date of
	despatch of the Prospectus Documents to the Qualifying
	Shareholders or the Prospectus for information only (as the
	case may be) to the Excluded Shareholders
“Purchaser”	Energy Best Investments Limited, a company incorporated
	in the BVI with limited liability and a wholly-owned
	subsidiary of the Company, being the purchaser under the
	Acquisition Agreement to be used as the immediate holding
	company of the Target Companies upon the Acquisition
	Completion
“Qualifying Shareholder(s)”	Shareholder(s), other than the Excluded Shareholder(s),
	whose name(s) appear(s) on the register of members of the
	Company on the Record Date
“Record Date”	14 September 2011 (or such other date as the Underwriters
	may agree in writing with the Company) being the date by
	reference to which entitlements to the Rights Issue will be
	determined
“Redemption”	redemption of the Ugent Bonds in accordance with the
	terms of the Ugent Subscription Agreement and the
	Redemption Agreements
“Redemption Agreements”	six agreements each dated 20 June 2011 signed among
	the Company, Ugent and each of the Ugent Bondholders
	respectively in relation to the Redemption
“Redemption Price”	the issue price of HK$0.05 per Redemption Share
“Redemption Shares”	4,151,240,001 New Shares to be issued at the Redemption
	Price under the Redemption

– 8 –

DEFINITIONS

“Registrar”	Tricor Standard Limited at 26/F., Tesbury Centre, 28
	Queen’s Road East, Wanchai, Hong Kong, being the branch
	share registrar of the Company in Hong Kong
“Relevant Period”	the period commercing six months immediately preceding
	21 June 2011, being the date of the Announcement and
	ending on the Latest Practicable Date
“Rights Issue”	the proposed issue of the Rights Shares in the proportion of
	eleven (11) Rights Shares for every ten (10) Shares held on
	the Record Date
“Rights Issue Price”	the subscription price of HK$0.05 per Rights Share
“Rights Share(s)”	the New Shares to be issued and allotted under the Rights
	Issue
“Service Provider”	Atlas Medical Limited, a company incorporated in Hong
	Kong with limited liability and owned as to 50% by Vendor
	1 and 50% by Mr. Yip for the purpose of providing the
	services pursuant to the Performance Incentive Agreement
“SFO”	Securities and Futures Ordinance (chapter 571 of the Laws
	of Hong Kong)
“SGM”	a special general meeting of the Company to be convened
	and held to consider and, if thought fit, to approve the
	Capital Reorganisation, the Redemption and the Rights
	Issue
“Share(s)”	existing ordinary share(s) of HK$0.10 each in the share
	capital of the Company before the Capital Reorganisation
	becoming effective
“Share Options”	all outstanding share options granted by the Company as at
	the Latest Practicable Date
“Shareholder(s)”	holder(s) of the issued Shares
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiaries”	has the meaning ascribed to it under the Listing Rules
“Takeovers Code”	Hong Kong Code on Takeovers and Mergers

– 9 –

DEFINITIONS

“Target Companies”	Newco, Titron Industries Limited and its subsidiary, Titron
	International Limited, Titron Manufacturing Limited, Titron
	Precision Limited and its subsidiary, and Dongguan De Yue
“Ugent”	Ugent Holdings Limited, a company incorporated under
	the laws of the BVI with limited liability and an indirect
	wholly-owned subsidiary of the Company
“Ugent Bonds”	the 12% convertible bonds of Ugent in the principal
	amount of HK$177,000,000 issued by Ugent to the Initial
	Subscriber pursuant to the Ugent Subscription Agreement
“Ugent Bondholder 1”	Qshare Holding Limited, a company incorporated in
	Hong Kong, the entire issued capital of which is held by
	Ms. Leung
“Ugent Bondholder 2”	Integrated Asset Management (Asia) Limited, a company
	incorporated in the BVI with limited liability, the entire
	issued capital of which is held by Mr. Yam Tak Cheung
“Ugent Bondholder 3”	Value Creation Partners Company Limited, a company
	incorporated in Hong Kong, the entire issued capital of
	which is held by Ms. Loh Jiah Yee, Katherine
“Ugent Bondholder 4”	Mr. Lo Ming Chi, Charles
“Ugent Bondholder 5”	Mr. Ou Tian Xiong
“Ugent Bondholder 6”	Ms. Fu Wai Ling
“Ugent Bondholders”	collectively, Ugent Bondholder 1, Ugent Bondholder 2,
	Ugent Bondholder 3, Ugent Bondholder 4, Ugent
	Bondholder 5 and Ugent Bondholder 6
“Ugent Share(s)”	ordinary share(s) of par value US$1.00 each in the share
	capital of Ugent
“Ugent Subscription Agreement”	the subscription agreement dated 6 March 2009 entered into
	between Ugent and the Initial Subscriber in relation to the
	subscription of the Ugent Bonds

– 10 –

DEFINITIONS

“Undertaking”	the irrevocable undertaking dated 20 June 2011 given by
	Mr. Yip in favour of the Company and Kingsway in relation
	to his undertaking to accept or procure the subscription
	of his full entitlement of Rights Shares pursuant to the
	Rights Issue; and that he shall not, without the prior written
	consent of the Company, dispose of, transfer or deal in any
	Shares from the date of the undertaking up to and including
	the Last Acceptance Date
“Underwritten Shares”	all the Rights Shares (other than the 3,300,000 Rights
	Shares to be provisionally allotted to Mr. Yip through his
	interest in Vendor 3) underwritten by the Underwriters
“Underwriters”	together, Kingsway and Mr. Yip
“Underwriting Agreement”	the underwriting agreement dated 20 June 2011 entered into
	between the Company and the Underwriters in relation to
	the Rights Issue
“United States”	the United States of America
“Vendor 1”	Mr. Lye Khay Fong
“Vendor 3”	Titron Group Holdings Limited, a company incorporated in
	the BVI with limited liability and owned as to 46.25% by
	Vendor 1, as to 46.25% by Mr. Yip and as to 7.5% by Mr.
	Lee
“Vendor 4”	Chelin International Limited, a company incorporated in
	Hong Kong with limited liability and owned by Mr. Lai
“Vendors”	collectively, Vendor 1, Vendor 2, Vendor 3 and Vendor 4
“Voluntary Liquidation”	the voluntary liquidation of JEL, details of which are set
	out in the announcement of the Company dated 8 August
	2011
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“US$”	United States dollars, the lawful currency of the United
	States
“%”	per cent.

For reference purpose only, the Chinese names of the PRC entities have been translated into English in this circular. In the event of any discrepancies between the Chinese names and the English translation, the Chinese names shall prevail.

– 11 –

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriters reserve the right to terminate the Underwriting Agreement by giving notice to the Company at any time prior to the Latest Time for Termination:

(i) in the reasonable and good faith opinion of the Underwriters, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the reasonable opinion of any of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(b) the occurrence of any national or international event or change, whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date thereof, of a political, military, diplomatic, financial, economic or other nature (whether or not sui generis with any of the foregoing), or in the nature of any national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of any of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or
(d) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities) occurs which in the reasonable opinion of the Underwriters make them inexpedient or inadvisable to proceed with the Rights Issue; or
(e) the imposition of economic sanction or withdrawal of trading privileges, in whatever form, by the United States or by the European Union (or any member thereof) on Hong Kong or any jurisdiction relevant to the Group; or
(f) a general moratorium on commercial banking activities in Hong Kong declared by the relevant authorities; or

– 12 –

TERMINATION OF THE UNDERWRITING AGREEMENT

(g) any change or development involving a prospective change in taxation or exchange control (or the implementation of any exchange control) in Hong Kong or other jurisdictions relevant to the Group; or
(h) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(i) any matter or event showing any of the warranties, undertakings or provisions contained in the Underwriting Agreement to be untrue, inaccurate or misleading in any material respect when given or repeated or there has been a breach of any of the warranties, undertakings or any other provisions of the Underwriting Agreement; or
(j) any breach by Mr. Yip of any provision in the Undertaking; or
(k) the circular and the Prospectus Documents when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date thereof been publicly announced or published by the Company and which may in the reasonable opinion of any of the Underwriters is material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to accept the Rights Shares provisionally allotted to it; or
(l) any event, act or omission which gives rise to any material liability of the Company arising out of or in connection with any warranties or undertakings in the Underwriting Agreement.

– 13 –

LETTER FROM THE BOARD

(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

Executive Directors: Mr. YIP Wai Lun, Alvin (Chairman and Managing Director) Ms. LAM Suk Ling, Shirley Mr. LEE Cheuk Yin, Dannis

Registered office: Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda

Independent Non-executive Directors: Mr. LEUNG Ka Kui, Johnny Mr. CHAN Kam Kwan, Jason Mr. LAU Man Tak

Principal place of business: Units 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong

12 August 2011

To the Shareholders, and for information only,

the holders of the Share Options

Dear Sir or Madam,

(1) CAPITAL REORGANISATION;

(2) REDEMPTION OF THE UGENT BONDS; AND (3) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE

INTRODUCTION

On 21 June 2011, the Board announced that, among other things,

(i) the Company intended to put forward for approval by the Shareholders the proposal of the Capital Reorganisation;

For identification purposes only

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LETTER FROM THE BOARD

(ii) the Company, Ugent and each of the Ugent Bondholders, on 20 June 2011, entered into the Redemption Agreements, pursuant to which the Company conditionally agreed to redeem the Ugent Bonds for an aggregate outstanding principal amount of HK$177.0 million and settle the interest accrued or to be accrued up to and including 31 August 2011 of approximately HK$30.6 million by way of the allotment and issue of 4,151,240,001 Redemption Shares at the Redemption Price per Redemption Share, and agreed to settle the interest to be accrued from 1 September 2011 up to and including the date of Redemption in cash on the date of Redemption; and
(iii) the Board proposed to raise approximately HK$82.7 million, before expenses, by issuing not less than 1,654,125,555 Rights Shares, or approximately HK$87.0 million before expenses by issuing not more than 1,739,889,220 Rights Shares at the Rights Issue Price in the proportion of eleven (11) Rights Shares for every ten (10) issued Shares held on the Record Date, which will be fully underwritten by the Underwriters such that (i) Mr. Yip shall underwrite the first 896,589,220 Rights Shares not taken up by the Qualifying Shareholders; and (ii) Kingsway shall underwrite the balance of the Rights Shares not taken up by the Qualifying Shareholders up to a maximum of 840,000,000 Rights Shares.

The Capital Reorganisation, the Redemption and the Rights Issue are inter-conditional with one another. The Capital Reorganisation is subject to, among others, the approval of the Shareholders who are permitted to vote on the proposal under the Listing Rules at the SGM. The Redemption and the Rights Issue are subject to the approval by the Independent Shareholders at the SGM.

The Independent Board Committee comprising all independent non-executive Directors, namely Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and Mr. Lau Man Tak, has been established to advise the Independent Shareholders on the Redemption and the Rights Issue. Menlo Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on the Redemption and the Rights Issue.

The purpose of this circular is to provide you with (i) information on the Capital Reorganisation, the Redemption and the Rights Issue; (ii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders and the letter of advice from Menlo Capital to the Independent Board Committee and the Independent Shareholders in relation to the Redemption and the Rights Issue; (iii) the notice of the SGM; and (iv) other information as required under the Listing Rules.

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LETTER FROM THE BOARD

CAPITAL REORGANISATION

The Company intended to put forward for approval by the Shareholders the proposal of the Capital Reorganisation as follows:

(i) Capital Reduction: the nominal value of each issued Share will be reduced from HK$0.10 to HK$0.01 and the paid-up capital of each issued Share of HK$0.09 will be cancelled;
(ii) Share subdivision: each existing unissued Share of HK$0.10 will be subdivided into 10 New Shares of HK$0.01 each;
(iii) Share premium cancellation: the entire amount standing to the credit of the share premium account of the Company as at the effective date of the Capital Reorganisation will be reduced and cancelled;
(iv) The credit arising from the Capital Reduction and the share premium cancellation will be transferred to the contributed surplus account of the Company; and
(v) The contributed surplus account of the Company will be applied to set off against the Accumulated Losses as permitted by the laws of Bermuda and the Bye-Laws.

Based on the existing number of issued Shares of 1,503,750,505, the credit arising from the Capital Reduction is expected to be approximately HK$135.3 million. As at 31 December 2010, the amounts standing to the credit of the share premium account and the contributed surplus of the Company were approximately HK$379.5 million and HK$15.0 million respectively.

The entire balance of the accumulated losses of the Company amounted to approximately HK$600.6 million as at 31 December 2010.

Upon the Capital Reorganisation becoming effective, the authorised share capital of the Company shall remain HK$400,000,000, which will be divided into 40,000,000,000 New Shares of HK$0.01 each and, of which 1,503,750,505 New Shares will be in issue and fully paid or credited as fully paid. The New Shares will rank pari passu in all respects with each other.

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LETTER FROM THE BOARD

Conditions of the Capital Reorganisation

The Capital Reorganisation is conditional upon:

(i) the passing of the necessary resolutions by the Shareholders who are permitted to vote on the proposal under the Listing Rules approving the Capital Reorganisation at the SGM;
(ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the New Shares in issue arising from the Capital Reorganisation;
(iii) the compliance with the relevant procedures and requirements under the Listing Rules, the Companies Act 1981 of Bermuda (as amended) and the Bye-Laws to effect the Capital Reorganisation; and
(iv) the Rights Issue and the Redemption having become unconditional (other than the condition for the Capital Reorganisation to become unconditional).

Subject to the above conditions, it is expected that the Capital Reorganisation will become effective on the Latest Time for Termination.

Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the New Shares.

Reasons for the Capital Reorganisation

As set out in the audited financial statements of the Company as at 31 December 2010, the Company had net deficit of approximately HK$184.7 million, showing that the capital of the Company is no longer represented by its assets. The Directors believe that it is unlikely that the Company will generate sufficient profits in the immediate future to eliminate this deficit and that it would be inappropriate for the Company to pay dividends while the deficit remains. As at 31 December 2010, the Company had Accumulated Losses of approximately HK$600.6 million. The Company can apply the credit arising from the Capital Reduction and the share premium cancellation to partially offset the Accumulated Losses. When the Company is restored to a positive financial position in future, it will consider to pay dividend if the Board sees appropriate.

The Directors, therefore, consider that the proposed Capital Reorganisation is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

Certificates for the New Shares

Subject to the proposed Capital Reorganisation becoming effective, the Shareholders may submit their existing certificates for the Shares to the Registrar in exchange for certificates for the New Shares free of charge during a certain period upon the Capital Reorganisation becoming effective, from Tuesday, 4 October 2011 to Friday, 4 November 2011. After the expiry of such period, certificates for the Shares will be accepted for exchange only on payment of a fee of HK$2.50 per share certificate (or such higher amount as allowed by the Stock Exchange from time to time). Existing certificates for the Shares will cease to be valid for trading but will continue to be good evidence of legal title to the New Shares.

THE REDEMPTION

Background

On 6 March 2009, Ugent and the Initial Subscriber entered into the Ugent Subscription Agreement in relation to the subscription of the Ugent Bonds. Completion of the subscription took place on 6 April 2009 and the Ugent Bonds were issued to the Initial Subscriber on the same date. The maturity date of the Ugent Bonds is 6 April 2012. The interest rate of the Ugent Bonds of 12% per annum shall be payable semi-annually on 30 September and 31 March each year. Pursuant to the Ugent Subscription Agreement, the Company has given an undertaking to the bondholder that the Company will procure due performance of Ugent of its obligations including, but not limited to, the repayment of the Ugent Bonds in the event that Ugent cannot fulfill its payment obligation under the Ugent Bonds. Details of the subscription of the Ugent Bonds were set out in the announcements of the Company dated 21 January 2009, 10 March 2009 and 6 April 2009 and the circular of the Company dated 21 March 2009.

As at the date of the Redemption Agreements, the principal amounts of the Ugent Bonds held by Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6 were HK$93 million, HK$35 million, HK$14 million, HK$14 million, HK$14 million and HK$7 million respectively and the total outstanding principal amount of the Ugent Bonds amounted to HK$177.0 million. The total interest accrued and to be accrued up to 31 August 2011 is expected to be approximately HK$30,561,999.

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LETTER FROM THE BOARD

The Company proposed to redeem the Ugent Bonds in accordance with the terms of Ugent Subscription Agreement. On 20 June 2011, the Company, Ugent and each of the Ugent Bondholders entered into the Redemption Agreements respectively to set out the terms for the Redemption. Principal terms of the Redemption Agreements are set out as follows.

Date: 20 June 2011

Parties:

(i) Ugent Bondholders (comprising Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6);
(ii) Ugent; and
(iii) the Company

Save as disclosed above, to the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Ugent Bondholders and their ultimate beneficial owners are Independent Third Parties. Each of the Ugent Bondholders has confirmed that it and its beneficial owners are independent of and not acting in concert with each other or the Vendors or Kingsway.

Subject Matter

Pursuant to the Redemption Agreements, the Company shall redeem the Ugent Bonds for an aggregate outstanding principal amount of HK$177.0 million and all accrued interest up to the date of the Redemption. An aggregate amount of approximately HK$207,561,999, representing the aggregate of the entire outstanding principal amount of the Ugent Bonds of HK$177.0 million plus the interest accrued and to be accrued up to and including 31 August 2011 of approximately HK$30,561,999 shall be settled by the allotment and issue of an aggregate of 4,151,240,001 Redemption Shares (based on the Redemption Price of HK$0.05 per Redemption Share), and interest to be accrued from 1 September 2011 up to and including the date of Redemption shall be settled in cash on the date of Redemption.

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LETTER FROM THE BOARD

Set out below is the allocation of the Redemption Shares to the Ugent Bondholders according to their respective interests in the Ugent Bonds (including the principal amount and the accrued interest up to and including 31 August 2011):

Ugent Bondholder 1 Ugent Bondholder 2 Ugent Bondholder 3 Ugent Bondholder 4 Ugent Bondholder 5 Ugent Bondholder 6 Ugent Bondholders	Principal amounts of the Ugent Bonds HK$ 93,000,000 35,000,000 14,000,000 14,000,000 14,000,000 7,000,000 177,000,000	Accrued interest of the Ugent Bonds as at 31 August 2011 HK$ (approximately) 16,058,000 6,043,333 2,417,333 2,417,333 2,417,333 1,208,667 30,561,999	Expected total outstanding amount of the Ugent Bonds for redemption as at 31 August 2011 HK$ (approximately) 109,058,000 41,043,333 16,417,333 16,417,333 16,417,333 8,208,667 207,561,999	Issue and allocation of Redemption Shares upon completion of the Redemption Number of Redemption Shares 2,181,160,000 820,866,667 328,346,667 328,346,667 328,346,667 164,173,333
				4,151,240,001

The Redemption Shares, when issued and fully paid, shall rank pari passu in all respects among themselves and with all the New Shares in issue on the date of allotment and issue of the Redemption Shares and are free from all liens, charges, security interests, encumbrances and adverse claims.

The Redemption Shares will be issued under a specific mandate which is subject to the approval of the Independent Shareholders at the SGM. An application will be made to the Listing Committee of the Stock Exchange for the listing of and permission to deal in, the Redemption Shares.

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LETTER FROM THE BOARD

Redemption Price

The Redemption Price of HK$0.05 per Redemption Share represents:

(i) a discount of approximately 66.4% to the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 67.3% to the average of the closing prices of HK$0.153 per Share for the 10 consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 68.8% to the average of the closing prices of HK$0.160 per Share for the 20 consecutive trading days up to and including the Last Trading Day; and
(iv) a discount of approximately 3.8% to the closing prices of HK$0.052 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

Conditions of the Redemption

The Redemption is conditional upon:

(i) the Listing Committee of the Stock Exchange granting listing of and permission to deal in, the Redemption Shares;
(ii) the Independent Shareholders having passed the necessary resolution(s) to approve the Redemption Agreements and the transactions contemplated thereby (including but not limited to the allotment and issue of the Redemption Shares) at the SGM;
(iii) the warranties given by the Company in the Redemption Agreements remaining true and correct in all material respects;
(iv) all necessary consents and approvals as may be required to be obtained on the part of the Company and Ugent in respect of the Redemption Agreements and the transactions contemplated thereunder having been obtained;

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LETTER FROM THE BOARD

(v) all necessary consents and approvals as may be required to be obtained on the part of the Ugent Bondholders in respect of the Redemption Agreements and the transactions contemplated thereunder having been obtained;
(vi) the Underwriting Agreement having become unconditional (other than the condition for the relevant Redemption Agreement and Capital Reorganisation to become unconditional);
(vii) the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulation at the general meeting of the Company; and
(viii) the Capital Reorganisation having become unconditional (other than the condition for the relevant Redemption Agreement and the Underwriting Agreement to become unconditional).

Save for condition (iii) which can be waived by the Ugent Bondholders, all other conditions are incapable of being waived. Completion of the Redemption shall take place on the third Business Day after the date on which all the conditions are fulfilled or waived (as the case may be) by the Ugent Bondholders. Each of the Redemption Agreements is not inter-conditional to each other. In the event that any of the conditions set out above is not being fulfilled or waived (as the case may be) in full by 5:00 p.m. on the date falling 110 days from the date of the Redemption Agreements (or such other time and date as may be agreed between the Company and the Ugent Bondholders in writing), the Redemption Agreements shall cease and determine and neither party shall have any obligations and liabilities thereunder save for any antecedent breaches of the provisions thereof.

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LETTER FROM THE BOARD

Information on Ugent

Ugent is a company incorporated under the laws of the BVI with limited liability on 18 May 1993. The current issued and paid-up share capital of Ugent is US$10,000, which is wholly owned by Oakview International Limited, a wholly-owned subsidiary of the Company. Ugent is an investment holding company and its principal asset is its investment in JEL, which holds the entire issued share capital of AFEX. AFEX is a company incorporated under the laws of Hong Kong with limited liability on 4 January 2002 and its current issued and paid-up share capital is HK$50,000. AFEX is principally engaged in trading of computer printing and imaging products and holds 100% of the registered capital of 深圳利滿豐源打印耗材有限公司 (Shenzhen Afex Print Image Ltd.[#] ) and 珠海利滿豐源打印耗材有限公司 (Zhuhai Afex Print Image Ltd.[#] ), each of which is a wholly foreign owned enterprise established under the laws of the PRC. AFEX and its subsidiaries are principally engaged in the operations of remanufacturing and sale of computer printing and imaging products.

For the financial year ended 31 December 2010, the Group’s revenue generated from remanufacturing and sale of computer printing and imaging products recorded a sharp decline of 50% as compared with the previous year. The profit for this segment was hit severely by a few factors including (i) the rise in its key feedstock, empty cartridges; (ii) rise in labour costs for the factories located in Shenzhen and Zhuhai; and (iii) high fixed costs due to low utilization of production capacity of the factories. All these factors, in addition to the impairment losses and write-off of inventories, have led to a division loss of HK$197 million for the financial year ended 31 December 2010, despite the implementation of vigorous cost cutting measures such as production base contraction and headcount reduction. The management of the Company believes that the ultimate solution is to dispose of this loss making division. The intention to dispose of Ugent was first disclosed in the announcement of the Company dated 29 July 2010, followed by another announcement on 4 October 2010 which disclosed the entering into of a non-legally binding term sheet in relation to the debt restructuring and disposal of Ugent. However, as disclosed in the announcement dated 10 March 2011, such debt restructuring and disposal of Ugent will not proceed.

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LETTER FROM THE BOARD

Given the unsatisfactory performance of the business relating to remanufacturing and sale of computer printing and imaging products and the cash flow required to sustain the operation, the Directors consider that it may not be feasible to look for interested buyers within a short period of time. Accordingly, the Group is currently in the process of discontinuing the relevant business. On 8 August 2011, the Company announced that the board of directors of JEL resolved to voluntarily liquidate JEL. On the same day, Ugent has approved the Voluntary Liquidation and the appointment of Messrs. Hou Chung Man, and Tang Chung Wah Alan, of SHINEWING Specialist Advisory Services Limited as joint liquidators of JEL. Further announcement will be made by the Company as and when appropriate.

PROPOSED RIGHTS ISSUE

Subject to the Capital Reorganisation becoming effective, the Board proposed to raise approximately HK$82.7 million, before expenses, by issuing not less than 1,654,125,555 Rights Shares, or approximately HK$87.0 million before expenses by issuing not more than 1,739,833,529 Rights Shares at the Rights Issue Price of HK$0.05 per Rights Share.

Issue statistics

Basis of the Rights Issue	:	11 Rights Shares for every 10 Shares
		held on the Record Date
Number of Shares in issue as at	:	1,503,750,505 Shares
the Latest Practicable Date
Number of the Share Options	:	77,916,340 (Note)
Number of Shares to be issued upon full	:	77,916,340 Shares (Note)
exercise of the Share Options
Number of Shares (assuming full exercise	:	1,581,666,845 Shares
of the Share Options on or before the
Record Date)
Number of Rights Shares (assuming no	:	1,654,125,555 Rights Shares
exercise of the Share Options on or
before the Record Date)
Number of Rights Shares	:	1,739,833,529 Rights Shares
(assuming full exercise of Share Options
on or before the Record Date)
Rights Issue Price	:	HK$0.05 per Rights Share with
		nominal value of HK$0.01 each

Note: As disclosed in the Announcement, there were 77,966,968 Share Options remained outstanding as at the date of the Underwriting Agreement. 50,628 Share Options had been lapsed since the date of the Announcement up to and including the Latest Practicable Date.

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LETTER FROM THE BOARD

Assuming no exercise of the Share Options before the Record Date, the nil-paid Rights Shares proposed to be provisionally allotted to Shareholders pursuant to the terms of the Rights Issue is 1.1 times of the total New Shares in issue after the Capital Reorganisation becoming effective and 110% of the total issued share capital of the Company as at the Latest Practicable Date and approximately 52.4% of the total issued share capital of the Company as enlarged by the issue of the Rights Shares, and approximately 22.6% of the total issued share capital as enlarged by the issue of the Redemption Shares and the Rights Shares.

Save as disclosed above, there are no outstanding securities that are convertible or exchangeable into Shares or confer any right on any person to subscribe for Shares as at the Latest Practicable Date.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. The Company will send the Prospectus Documents to Qualifying Shareholders, and the Prospectus, for information only, to the Excluded Shareholders.

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

In order to be registered as a member of the Company on the Record Date, Shareholders must lodge transfer of the Shares (with the relevant share certificate(s)) with the Registrar on Thursday, 8 September 2011.

Rights Issue Price

The Rights Issue Price is HK$0.05 per Rights Share, payable in full when a Qualifying Shareholder accepts his/her/its provisional allotment under the Rights Issue or applies for excess Rights Shares or when a transferee of nil-paid Rights Shares subscribes for the Rights Shares.

The Rights Issue Price represents:

(i) a discount of approximately 66.4% to the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 67.3% to the average of the closing prices of HK$0.153 per Share for the 10 consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 68.8% to the average of the closing prices of HK$0.160 per Share for the 20 consecutive trading days up to and including the Last Trading Day;

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LETTER FROM THE BOARD

(iv) a discount of approximately 48.5% to the theoretical ex-rights price of HK$0.097 per Share based on the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day;
(v) a discount of approximately 3.8% to the closing price of HK$0.052 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(vi) a discount of approximately 2.0% to the theoretical ex-rights price of HK$0.051 per Share based on the closing price of HK$0.052 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

Status of the Rights Issue

The Rights Shares, when fully-paid, shall rank pari passu in all respects with the New 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 Rights Shares.

Conditions of the Rights Issue

The Rights Issue is conditional upon:

(i) the filing and registration on or prior to the Prospectus Posting Date of the Prospectus Documents (and all other documents required to be attached thereto) with the Registrar of Companies in Hong Kong, complying with the requirements of the Companies Ordinance (Cap.32 of the laws of Hong Kong);
(ii) the filing on or as soon as practicable after the Prospectus Posting Date of the Prospectus Documents (and all other documents required to be attached thereto) with the Registrar of Companies in Bermuda, complying with the requirements of the Companies Act 1981 of Bermuda (as amended);
(iii) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) the listing of, and permission to deal in, all the Rights Shares, in their nilpaid and fully paid forms, by not later than, in respect of the Rights Shares in their nilpaid form, the first Business Day after the Prospectus Posting Date and, in respect of the Rights Shares in their fully paid form, the day on which certificates for the Rights Shares are despatched to those entitled thereto under the Rights Issue, and such listing not being revoked prior to 5:00 p.m. on the day which is the second Business Day following the Latest Time for Acceptance;
(iv) compliance by Mr. Yip with all of his obligations under the Underwriting Agreement (except for his obligation to subscribe for the Underwritten Shares) and the Undertaking on or before the Latest Time for Acceptance;

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LETTER FROM THE BOARD

(v) compliance by the Company with all of its obligations under the Underwriting Agreement;
(vi) the passing by no later than the Prospectus Posting Date by the Independent Shareholders at the SGM of all necessary resolution(s) to approve the Rights Issue;
(vii) the obtaining of the permission of the Bermuda Monetary Authority for the issue of the Rights Shares, if necessary;
(viii) the obligations of the Underwriters becoming unconditional and that Underwriting Agreement is not terminated in accordance with its terms;
(ix) the Redemption Agreements having become unconditional (other than the condition for Underwriting Agreement and the Capital Reorganisation to become unconditional);
(x) the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulations approving at the special general meeting of the Company; and
(xi) the Capital Reorganisation having become unconditional (other than the condition for Underwriting Agreement and the Redemption Agreements to become unconditional).

The above conditions of the Rights Issue are incapable of being waived. If any of the above conditions is not fulfilled by the Latest Time for Termination, or where appropriate, the respective dates aforesaid (or such later time as the Underwriters may agree with the Company in writing), or the Underwriting Agreement shall terminate pursuant to the Underwriting Agreement and the obligations of the parties shall forthwith cease and be null and void and none of the parties shall have any right against or liability towards any of the other parties arising out of or in connection with the Underwriting Agreement and the Company shall reimburse to the Underwriters all reasonable costs and expenses as have been properly incurred by it in connection with the Rights Issue.

Rights of Overseas Shareholders

If at the close of business on the Record Date, a Shareholder’s address on the Company’s register of members is in a place outside of Hong Kong, that Shareholder may not be eligible to take part in the Rights Issue. The Prospectus Documents will not be registered or filed under the applicable securities or equivalent legislation of any jurisdiction other than that in Hong Kong and Bermuda.

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LETTER FROM THE BOARD

In compliance with Rule 13.36(2) of the Listing Rules, the Directors will make enquiries as to whether the issue of Rights Shares to the Overseas Shareholder may contravene the applicable securities legislation of the relevant overseas places or the requirements of the relevant regulatory body or stock exchange. If, after making such enquiry, the Directors are of the opinion that it would be necessary or expedient, on account either of the legal restrictions under the laws of the relevant place or any requirement of the relevant regulatory body or stock exchange in that place, not to offer the Rights Shares to such Overseas Shareholders, no provisional allotment of nil-paid Rights Shares or allotment of fully-paid Rights Shares will be made to such Overseas Shareholders. Accordingly, the Rights Issue will not be extended to the Excluded Shareholders.

Arrangements will be made for the Rights Shares, which would be provisionally allotted in nil-paid form to Excluded Shareholders to a nominee of the Company which will arrange for the sale of such nil-paid rights as soon as practicable after the commencement of dealings on the Stock Exchange in Rights Shares in nil-paid form if a net premium can be obtained, and, if and to the extent that such rights can be so sold, the nominee will thereafter account to the Company for the net proceeds of sale (after deducting the expenses of sale if any), which will be distributed by the Company in Hong Kong dollars to the Excluded Shareholders prorata (but rounded down to the nearest cent) to their shareholdings on the Record Date, except that individual amounts of less than HK$100 shall not be so distributed but shall be retained for the benefit of the Company. Any unsold Rights Shares will be available for excess application.

Basis of provisional allotment

The basis of the provisional allotment will be 11 Rights Shares for every 10 Shares in issue and held on the Record Date at the Rights Issue Price payable in full on acceptance and otherwise on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents. For illustration, if a Qualifying Shareholder held 15 Shares on the Record Date, he/she/ it is entitled to subscribe for up to 16 Rights Shares.

Fractional entitlement to the Rights Shares

The Company will not provisionally allot fractions of Rights Shares in nil-paid form to the Qualifying Shareholders otherwise entitled thereto. All fractions of nil-paid Rights Shares will be aggregated and all nil-paid Rights Shares arising from such aggregation will be sold in the market, if a premium (net of expenses) can be achieved, and the Company will retain the proceeds from such sale(s) for its benefit. Any unsold aggregate of fractions of nil-paid Rights Shares will be made available for excess application under the excess application forms.

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LETTER FROM THE BOARD

Application for excess Rights Shares

(i) preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to round up odd-lot holdings to whole-lot holdings and that such applications are not made with intention to abuse this mechanism (the “ Top-up Arrangement ”); and
(ii) subject to the availability of excess Rights Shares after allocation under principle (i) above, the excess Rights Shares will be allocated to the Qualifying Shareholders based on a sliding scale with reference to the number of excess Rights Shares applied by them (i.e. Qualifying Shareholders applying for smaller number of Rights Shares are allocated with a higher percentage of successful application but will receive less number of Rights Shares; whereas Qualifying Shareholders applying for larger number of Rights Shares are allocated with a smaller percentage of successful application but will receive greater number of Rights Shares) and with board lot allocations to be made on best effort basis.

Shareholders with their Shares held by a nominee company should note that the Board will regard the nominee company as a single Shareholder according to the register of members of the Company under the Top-up Arrangement. Accordingly, the aforesaid Top-up Arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually. Beneficial owners who hold their Shares through a nominee company are advised to consider whether they would like to arrange for the registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date.

Share certificates for the fully-paid Rights Shares

Subject to the fulfillment of the conditions of the Rights Issue, share certificates for all fullypaid Rights Shares are expected to be sent by ordinary post to the Qualifying Shareholders who have accepted and applied for (where appropriate), and paid for the Rights Shares in accordance with the timetable at their own risk.

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LETTER FROM THE BOARD

Application for listing of the Rights Shares on the Stock Exchange

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 nil-paid and fully-paid forms.

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, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in their nil-paid and fully-paid forms on the Stock Exchange or such other dates as may be determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Dealings in the Rights Shares in both their nil-paid and fully-paid forms (both in board lots of 2,000), which are registered in the register of members of the Company in Hong Kong will be subject to the payment of stamp duty, Stock Exchange trading fee, transaction levy, investor compensation levy and any other applicable fees and charges in Hong Kong.

UNDERTAKING AND UNDERWRITING ARRANGEMENT

Undertaking

At the Latest Practicable Date, Mr. Yip held 3,000,000 Shares (through his 46.25% interest in Vendor 3). Mr. Yip has given an irrevocable undertaking to the Company and Kingsway that he will accept or procure the subscription of his full entitlement of Rights Shares pursuant to the Rights Issue; and that he shall not, without the prior written consent of the Company, dispose of, transfer or deal in any Shares from the date of the undertaking up to and including the Last Acceptance Date.

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LETTER FROM THE BOARD

Underwriting Agreement

Date: 20 June 2011 Underwriters: (i) Mr. Yip; and (ii) Kingsway Number of Rights Shares Not less than 1,650,825,555 Rights Shares and not more underwritten: than 1,736,589,220 Rights Shares (Note) Commission: 2.5% of the total aggregate Rights Issue Price for the Underwritten Shares

The commission rate was determined after arm’s length negotiation between the Company and the Underwriters by reference to the existing financial position of the Group, the size of the Rights Issue, and the current and expected market conditions. The Directors consider the terms of the Underwriting Agreement including the commission rate are fair and reasonable so far as the Company and the Shareholders are concerned.

Pursuant to the Underwriting Agreement, the Rights Shares will be fully underwritten by the Underwriters such that (i) Mr. Yip shall underwrite the first 896,589,220 Rights Shares not taken up by the Qualifying Shareholders; and (ii) Kingsway shall underwrite the balance of the Rights Shares not taken up by the Qualifying Shareholders up to a maximum of 840,000,000 Rights Shares (Note).

Mr. Yip is the Chairman and Managing Director of the Company and is therefore a connected person of the Company. Accordingly, the transactions contemplated under the Underwriting Agreement (including the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million) constitute a connected transaction under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.31(3)(c) (in respect of the allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip) of the Listing Rules, the allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip under the Underwriting Agreement is exempt from the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.32 (in respect of the payment of the underwriting commission to Mr. Yip) of the Listing Rules, the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million under the Underwriting Agreement is exempt from the Independent Shareholders’ approval.

Note: On the basis of 77,966,968 Share Options remained outstanding as at the date of the Underwriting Agreement, the number of Rights Shares underwritten by the Underwriters shall not be more than 1,736,589,220 Rights Shares and Kingsway shall underwrite up to a maximum of 840,000,000 Rights Shares. 50,628 Share Options had been lapsed since the date of the Announcement up to and including the Latest Practicable Date. Accordingly, the maximum number of Rights Shares underwritten assuming full exercise of the Share Options is 1,736,533,529 and the maximum number of Rights Shares which shall be taken up by Kingsway or the subscribers procured by it (assuming no acceptance by the Qualifying Shareholders other than Mr. Yip) is 839,944,309.

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LETTER FROM THE BOARD

Termination of the Underwriting Agreement

The Underwriters reserve the right to terminate the Underwriting Agreement by giving notice to the Company at any time prior to the Latest Time for Termination:

(i) in the reasonable and good faith opinion of the Underwriters, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the reasonable opinion of any of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(b) the occurrence of any national or international event or change, whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date thereof, of a political, military, diplomatic, financial, economic or other nature (whether or not sui generis with any of the foregoing), or in the nature of any national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of any of the Underwriters materially and adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or
(d) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities) occurs which in the reasonable opinion of the Underwriters make them inexpedient or inadvisable to proceed with the Rights Issue; or
(e) the imposition of economic sanction or withdrawal of trading privileges, in whatever form, by the United States or by the European Union (or any member thereof) on Hong Kong or any jurisdiction relevant to the Group; or
(f) a general moratorium on commercial banking activities in Hong Kong declared by the relevant authorities; or

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LETTER FROM THE BOARD

(g) any change or development involving a prospective change in taxation or exchange control (or the implementation of any exchange control) in Hong Kong or other jurisdictions relevant to the Group; or
(h) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out; or
(i) any matter or event showing any of the warranties, undertakings or provisions contained in the Underwriting Agreement to be untrue, inaccurate or misleading in any material respect when given or repeated or there has been a breach of any of the warranties, undertakings or any other provisions of the Underwriting Agreement; or
(j) any breach by Mr. Yip of any provision in the Undertaking; or
(k) the circular and the Prospectus Documents when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date thereof been publicly announced or published by the Company and which may in the reasonable opinion of any of the Underwriters is material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to accept the Rights Shares provisionally allotted to it; or
(l) any event, act or omission which gives rise to any material liability of the Company arising out of or in connection with any warranties or undertakings in the Underwriting Agreement.

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LETTER FROM THE BOARD

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

The Rights Issue is subject to, among other things, the fulfilment or waiver of the conditions set out in the paragraph headed “Conditions of the Rights Issue” above. In particular, it is subject to the Underwriting Agreement not being terminated in accordance with its terms on or before the second Business Day following the Last Acceptance Date. Accordingly, the Rights Issue may or may not proceed and potential investors and Shareholders are reminded to exercise caution when dealings in the Shares.

Any dealings in the Shares from the Latest Practicable Date up to the date on which all the conditions of the Rights Issue are fulfilled, and any Shareholders dealings in the Rights Shares in nil-paid form will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholder or other person contemplating any dealings in the Shares or Rights Shares in their nil-paid form is recommended to consult their professional advisers.

FUND RAISING EXERCISE OF THE COMPANY

On 15 December 2010, the Company announced that it proposed to raise funds by way of placing. However, the placing has lapsed without completion as announced by the Company on 14 January 2011.

Save as disclosed above, there has not been any fund raising exercise conducted by the Company in the past 12 months immediately preceding the date of the Announcement.

SHAREHOLDING STRUCTURE AS A RESULT OF RIGHTS ISSUE AND REDEMPTION

A. Assuming full exercise of Share Options

Assuming full exercise of Share Options, set out below is a summary of the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after the issue of Redemption Shares and the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip); (iii) immediately after the issue of Redemption Shares, the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip), Conversion Shares upon conversion of the Convertible Notes (save for HK$40 million to be retained) and Performance Incentive Shares to the extent that the Vendors will be interested in 29.99% of the Company; (iv) immediately after the issue of Redemption Shares, the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip), Conversion Shares upon full conversion of the Convertible Notes and a maximum of 6,720 million Performance Incentive Shares; (v) immediately after the issue of Redemption Shares and the Rights Shares (assuming 100% acceptance of Rights Issue); (vi) immediately after the issue of Redemption Shares, the Rights Shares (assuming 100% acceptance of Rights Issue), Conversion Shares upon conversion of the Convertible Notes (save for HK$40 million to be retained) and Performance Incentive Shares to the extent that the Vendors will be interested in 29.99% of the Company; and (vii) immediately after the issue of Redemption Shares, the Rights Shares (assuming 100% acceptance of Rights Issue), Conversion Shares upon full conversion of the Convertible Notes and a maximum of 6,720 million Performance Incentive Shares:

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LETTER FROM THE BOARD

		Immediately after the	issue of Redemption	Shares, the Rights Shares	(assuming 100%	acceptance of Rights Issue), Immediately after the	Conversion Shares issue of Redemption	upon conversion of Shares, the Rights	the Convertible Notes (save Shares (assuming 100%	for HK$40 million acceptance of Rights Issue),	to be retained) and Conversion Shares	Immediately after the Performance Incentive upon full conversion of	issue of Redemption Shares to the extent that the Convertible Notes and	Shares and the Rights Shares the Vendors will be a maximum of	(assuming 100% interested in 29.99% of 6,720 million Performance	acceptance of Rights Issue) the Company(Note 6, 8) Incentive Shares(Note 7, 8)	Number of Number of Number of	Shares % Shares % Shares %	612,238 0.01% 612,238 0.01% 612,238 0.00%		6,300,000 0.08% 1,611,363,537 15.12% 4,857,927,000 29.54%	3,759,000 0.05% 1,579,939,252 14.82% 3,959,008,200 24.08%	– – 5,256,211 0.05% 163,123,800 0.99%	10,059,000 0.13% 3,196,559,000 29.99% 8,980,059,000 54.61%	2,181,160,000 29.19% 2,181,160,000 20.46% 2,181,160,000 13.27%	820,866,667 10.99% 820,866,667 7.70% 820,866,667 4.99%	328,346,667 4.39% 328,346,667 3.08% 328,346,667 2.00%	328,346,667 4.39% 328,346,667 3.08% 328,346,667 2.00%	328,346,667 4.39% 328,346,667 3.08% 328,346,667 2.00%	164,173,333 2.20% 164,173,333 1.54% 164,173,333 1.00%	163,621,075 2.19% 163,621,075 1.53% 163,621,075 0.99%		– – – – – –	3,147,208,061 42.12% 3,147,208,061 29.53% 3,147,208,061 19.14%	7,472,740,375 100.00% 10,659,240,375 100.00% 16,442,740,375 100.00%	4,460,042,470 59.68% 5,280,909,137 49.54% 5,280,909,137 32.12%
Immediately after the	issue of Redemption	Shares, the Rights Shares	(assuming 0%	acceptance of Rights Issue Immediately after the	save for that issue of Redemption	accepted by Mr. Yip), Shares, the Rights Shares	Conversion Shares (assuming 0%	upon conversion of acceptance of Rights Issue	the Convertible Notes (save save for that	for HK$40 million accepted by Mr. Yip),	to be retained) and Conversion Shares	Performance Incentive upon full conversion of	Shares to the extent that the Convertible Notes and	the Vendors will be a maximum of	interested in 29.99% of 6,720 million Performance	the Company(Note 6, 8) Incentive Shares(Note 7, 8)	Number of Number of	Shares % Shares %	291,542 0.00% 291,542 0.00%		1,868,952,757 19.92% 5,754,516,220 35.00%	938,970,252 10.01% 3,957,039,200 24.07%	5,256,211 0.06% 163,123,800 0.99%	2,813,179,220 29.99% 9,874,679,220 60.06%	2,181,160,000 23.25% 2,181,160,000 13.26%	820,866,667 8.75% 820,866,667 4.99%	328,346,667 3.50% 328,346,667 2.00%	328,346,667 3.50% 328,346,667 2.00%	328,346,667 3.50% 328,346,667 2.00%	164,173,333 1.75% 164,173,333 1.00%	77,914,798 0.83% 77,914,798 0.47%		839,944,309 8.95% 839,944,309 5.11%	1,498,670,505 15.98% 1,498,670,505 9.11%	9,381,240,375 100.00% 16,442,740,375 100.00%	4,386,609,613 46.76% 4,386,609,613 26.68%
										Immediately after the	issue of Redemption	Shares and the Rights Shares	(assuming 0%	acceptance of Rights Issue	save for that	accepted by Mr. Yip)	Number of	Shares %	291,542 0.00%		902,889,220 12.08%	1,790,000 0.02%	– –	904,679,220 12.10%	2,181,160,000 29.19%	820,866,667 10.99%	328,346,667 4.39%	328,346,667 4.39%	328,346,667 4.39%	164,173,333 2.20%	77,914,798 1.05%		839,944,309 11.24%	1,498,670,505 20.06%	7,472,740,375 100.00%	3,565,742,946 47.72%
															As at the Latest	Practicable Date	Number of	Shares %	290,000 0.02%		3,000,000 0.20%	1,790,000 0.12%	– –	4,790,000 0.32%	– –	– –	– –	– –	– –	– –	– –		– –	1,498,670,505 99.66%	1,503,750,505 100.00%	1,498,670,505 99.66%
																			Mr. Leung Ka Kui, Johnny (Note 1)	Mr. Yip Wai Lun, Alvin and	his associates (Note 2)	Vendor 1	Mr. Lee (Note 3)	Total Vendors	Ugent Bondholder 1 (Note 4)	Ugent Bondholder 2 (Note 4)	Ugent Bondholder 3 (Note 4)	Ugent Bondholder 4 (Note 4)	Ugent Bondholder 5 (Note 4)	Ugent Bondholder 6 (Note 4)	Other Share Options holders	Kingsway and/or the	subscribers procured by it	Other public Shareholders	Total	Total public Shareholders (Note 5)

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LETTER FROM THE BOARD

B. Assuming no exercise of Share Options

Assuming no exercise of Share Options, set out below is a summary of the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after the issue of Redemption Shares and the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip); (iii) immediately after the issue of Redemption Shares, the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip), Conversion Shares upon conversion of the Convertible Notes (save for HK$40 million to be retained) and Performance Incentive Shares to the extent that the Vendors will be interested in 29.99% of the Company; (iv) immediately after the issue of Redemption Shares, the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip), Conversion Shares upon full conversion of the Convertible Notes and a maximum of 6,720 million Performance Incentive Shares; (v) immediately after the issue of Redemption Shares and the Rights Shares (assuming 100% acceptance of Rights Issue); (vi) immediately after the issue of Redemption Shares, the Rights Shares (assuming 100% acceptance of Rights Issue), Conversion Shares upon conversion of the Convertible Notes (save for HK$40 million to be retained) and Performance Incentive Shares to the extent that the Vendors will be interested in 29.99% of the Company; and (vii) immediately after the issue of Redemption Shares, the Rights Shares (assuming 100% acceptance of Rights Issue), Conversion Shares upon full conversion of the Convertible Notes and a maximum of 6,720 million Performance Incentive Shares:

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LETTER FROM THE BOARD

		Immediately after the	issue of Redemption	Shares, the Rights Shares	(assuming 100%	acceptance of Rights Issue), Immediately after the	Conversion Shares issue of Redemption	upon conversion of Shares, the Rights Shares	the Convertible Notes (save (assuming 100%	for HK$40 million acceptance of Rights Issue),	to be retained) and Conversion Shares	Immediately after the Performance Incentive upon full conversion of	issue of Redemption Shares to the extent that the Convertible Notes and	Shares and the Rights Shares the Vendors will be a maximum of	(assuming 100% interested in 29.99% of 6,720 million Performance	acceptance of Rights Issue) the Company(Note 6, 8) Incentive Shares(Note 7, 8)	Number of Number of Number of	Shares % Shares % Shares %	609,000 0.01% 609,000 0.01% 609,000 0.00%		6,300,000 0.09% 1,576,363,537 15.12% 4,857,927,000 29.84%	3,759,000 0.05% 1,544,939,252 14.82% 3,959,008,200 24.32%	– – 5,256,211 0.05% 163,123,800 1.00%	10,059,000 0.14% 3,126,559,000 29.99% 8,980,059,000 55.16%	2,181,160,000 29.84% 2,181,160,000 20.92% 2,181,160,000 13.40%	820,866,667 11.23% 820,866,667 7.87% 820,866,667 5.04%	328,346,667 4.49% 328,346,667 3.15% 328,346,667 2.02%	328,346,667 4.49% 328,346,667 3.15% 328,346,667 2.02%	328,346,667 4.49% 328,346,667 3.15% 328,346,667 2.02%	164,173,333 2.25% 164,173,333 1.57% 164,173,333 1.01%	– – – – – –		– – – – – –	3,147,208,060 43.06% 3,147,208,060 30.19% 3,147,208,060 19.33%	7,309,116,061 100.00% 10,425,616,061 100.00% 16,279,116,061 100.00%	4,296,421,394 58.78% 5,117,288,061 49.08% 5,117,288,061 31.44%
Immediately after the	issue of Redemption	Shares, the Rights Shares	(assuming 0%	acceptance of Rights Issue Immediately after the	save for that issue of Redemption	accepted by Mr. Yip), Shares, the Rights Shares	Conversion Shares (assuming 0%	upon conversion of acceptance of Rights Issue	the Convertible Notes (save save for that	for HK$40 million accepted by Mr. Yip),	to be retained) and Conversion Shares	Performance Incentive upon full conversion of	Shares to the extent that the Convertible Notes and	the Vendors will be a maximum of	interested in 29.99% of 6,720 million Performance	the Company(Note 6, 8) Incentive Shares(Note 7, 8)	Number of Number of	Shares % Shares %	290,000 0.00% 290,000 0.00%		1,833,952,757 20.05% 5,754,516,220 35.35%	903,970,252 9.88% 3,957,039,200 24.31%	5,256,211 0.06% 163,123,800 1.00%	2,743,179,220 29.99% 9,874,679,220 60.66%	2,181,160,000 23.84% 2,181,160,000 13.40%	820,866,667 8.97% 820,866,667 5.04%	328,346,667 3.59% 328,346,667 2.02%	328,346,667 3.59% 328,346,667 2.02%	328,346,667 3.59% 328,346,667 2.02%	164,173,333 1.80% 164,173,333 1.01%	– – – –		754,236,335 8.25% 754,236,335 4.63%	1,498,670,505 16.38% 1,498,670,505 9.20%	9,147,616,061 100.00% 16,279,116,061 100.00%	4,222,986,841 46.17% 4,222,986,841 25.94%
											Immediately after the	issue of Redemption	Shares and the Rights Shares	(assuming 0% acceptance of	Rights Issue save for that	accepted by Mr. Yip)	Number of	Shares %	290,000 0.00%		902,889,220 12.35%	1,790,000 0.03%	– –	904,679,220 12.38%	2,181,160,000 29.84%	820,866,667 11.23%	328,346,667 4.49%	328,346,667 4.49%	328,346,667 4.49%	164,173,333 2.25%	– –		754,236,335 10.32%	1,498,670,505 20.51%	7,309,116,061 100.00%	3,402,120,174 46.55%
															As at the Latest	Practicable Date	Number of	Shares %	290,000 0.02%		3,000,000 0.20%	1,790,000 0.12%	– –	4,790,000 0.32%	– –	– –	– –	– –	– –	– –	– –		– –	1,498,670,505 99.66%	1,503,750,505 100.00%	1,498,670,505 99.66%
																			Mr. Leung Ka Kui, Johnny (Note 1)	Mr. Yip Wai Lun, Alvin and his	associates (Note 2)	Vendor 1	Mr. Lee (Note 3)	Total Vendors	Ugent Bondholder 1 (Note 4)	Ugent Bondholder 2 (Note 4)	Ugent Bondholder 3 (Note 4)	Ugent Bondholder 4 (Note 4)	Ugent Bondholder 5 (Note 4)	Ugent Bondholder 6 (Note 4)	Other Share Options holders	Kingsway and/or the	subscribers procured by it	Other public Shareholders	Total	Total public Shareholders (Note 5)

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LETTER FROM THE BOARD

Notes:

Mr. Leung Ka Kui, Johnny, is an independent non-executive Director who holds Share Options to subscribe for 1,542 Shares.
Mr. Yip’s associates include Vendor 3 and Mr. Lai. These 3,000,000 Shares are held by Vendor 3 which is owned as to 46.25% by Vendor 1, 46.25% by Mr. Yip and 7.5% by Mr. Lee. The ultimate beneficial owner of Vendor 4, Mr. Lai, is an associate of Mr. Yip.
Mr. Lee owns 7.5% interests in Vendor 3.
The Ugent Bondholders would not be entitled to the Rights Issue.
Kingsway confirms that none of it or the subscribers procured by it will become substantial shareholders of the Company upon completion of the Rights Issue. Kingsway has procured certain independent subscribers as at the Latest Practicable Date.
Save for the Convertible Notes in the principal amount of HK$40 million to be retained by the Vendors for the purpose of satisfying any claims under the warranties pursuant to the Acquisition Agreement, the Vendors undertake to use all reasonable endeavours to exercise the conversion rights attaching to the balance of the Convertible Notes as soon as practicable after the Acquisition Completion provided that any such conversion of the Convertible Notes will not (i) trigger a mandatory offer obligation under Rule 26 of the Takeovers Code by all or any of the Vendors (whether or not such mandatory offer obligation is triggered by the fact that the number of the Conversion Shares to be allotted and issued upon the exercise of the conversion rights attaching to the Convertible Notes, including any Shares acquired or owned by any parties acting in concert with the Vendors or any of them, represents 30% (or such other percentage as may be stated in Rule 26 of the Takeovers Code in effect from time to time) or more of the voting rights at the general meetings of the Company) or otherwise pursuant to other provisions of the Takeovers Code; or (ii) result in the Company being not able to maintain the minimum public float of 25% (or any other percentage as required by the Listing Rules from time to time) of the issued shares of the Company after such conversion.

Pursuant to the terms of the Performance Incentive Agreement, the Performance Incentive Shares will not be issued to the extent that, (i) the Vendors, together with parties acting in concert with them, directly or indirectly control or would be interested in an aggregate of 30% or more of the issued Shares immediately following the issue of the relevant Shares, or if the Vendors would otherwise be obliged to make a mandatory offer obligation under Rule 26 of the Takeovers Code or otherwise pursuant to other provisions of the Takeovers Code; or (ii) the minimum public float requirement of the Company under the Listing Rules will be breached as a result of such issue.

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LETTER FROM THE BOARD

Under both scenarios, the columns under which (i) immediately after the issue of Redemption Shares, the Rights Shares (assuming 0% acceptance of Rights Issue save for that accepted by Mr. Yip), Conversion Shares upon full conversion of the Convertible Notes and a maximum of 6,720 million Performance Incentive Shares; and (ii) immediately after the issue of Redemption Shares, the Rights Shares (assuming 100% acceptance of Rights Issue), Conversion Shares upon full conversion of the Convertible Notes and a maximum of 6,720 million Performance Incentive Shares are for illustration purpose only.
In accordance with the terms and conditions of the Convertible Notes, the Redemption and Rights Issue will result in an adjustment to the conversion price of the Convertible Notes and the issue price of the Performance Incentive Shares. It is agreed among the Company, the Purchaser and the Vendors that in the event the adjusted conversion price is less than HK$0.05 per Conversion Share, the adjusted conversion price shall be fixed at HK$0.05 per Conversion Share. Based on the above, it is expected that the conversion price of the Convertible Notes and the issue price of the Performance Incentive Shares will be adjusted to HK$0.05. Further announcement will be made by the Company as and when appropriate.
The above shareholding table has taken into account the aforesaid adjustment to be made to the conversion price of the Convertible Notes and the issue price of the Performance Incentive Shares.

REASONS FOR THE REDEMPTION AND RIGHTS ISSUE

The Company is an investment holding company and its subsidiaries are engaged in the (i) remanufacturing and sale of computer printing and imaging products; (ii) manufacture and sale of data media products; and (iii) distribution and sale of data media products.

As disclosed in the Annual Report, the Group recorded a turnover of approximately HK$169.9 million for the year ended 31 December 2010, representing a decrease of approximately 23% compared with approximately HK$221.4 million in 2009. The Group’s loss attributable to the owners of the Company amounted to approximately HK$383.4 million in 2010, which was primarily attributable to the raw material price hike and the substantial wage hike in the PRC. As at 31 December 2010, the Group had cash and cash equivalent of approximately HK$37.9 million, net current assets of approximately HK$18.4 million and net liabilities of approximately HK$132.2 million. As stated in the Annual Report, in view of the liquidity constraints encountered by the Group and the need to improve the Group’s overall financial and cash flow positions so as to maintain the Group’s existence as a going concern, the Directors have implemented measures to tighten cost controls over various distribution costs and administrative expenses and are considering various alternatives to enlarge the capital base of the Company in order to provide additional funding to the Group.

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LETTER FROM THE BOARD

Given the unsatisfactory performance of the business relating to remanufacturing and sale of computer printing and imaging products as mentioned in above section, the Group is currently in the process of discontinuing the relevant business in order to minimize its adverse impact on the Group’s financial position and on 8 August 2011, the joint liquidators have been appointed for the Voluntary Liquidation. Nevertheless, the Group will continue to engage in the manufacture and sale of data media products and distribution and sale of data media products. For the year ended 31 December 2010, this segment recorded a turnover of approximately HK$68.3 million and a segment profit of approximately HK$1.9 million. The Group will continue to improve its operational efficiency to improve the profitability of this division.

Having taken into account the current financial position of the Group, particularly the debt obligation of the Ugent Bonds which is due April 2012 and the working capital needs of the Company for the near future, the Board is of the view that the Company has immediate funding need for its existing operation. In addition, with a view to improving its financial performance, the Group has been actively looking for attractive merger and acquisition opportunities in order to extend its business reach and therefore the Company entered into the Acquisition Agreement relating to the Acquisition for a total consideration of HK$120 million which shall be settled as to HK$7.5 million by cash and as to HK$112.5 million by way of allotment and issue of the Convertible Notes to the Vendors (or their nominees) as disclosed in the Acquisition Announcements. To this end, the Board has worked out the proposal involving the Redemption and the Rights Issue to ensure that the Group will be in a much healthier financial position to engage in the business of the Target Companies.

The estimated net proceeds from the Rights Issue will be approximately HK$76.7 million (assuming no exercise of Share Options) or HK$81.0 million (assuming full exercise of Share Options). The Company intends to apply the net proceeds for working capital of the Group and the Target Companies upon the Acquisition Completion.

The terms of the Rights Issue (including the Rights Issue Price) were arrived at after arm’s length negotiation between the Company and the Underwriters with reference to the market prices of the Shares before the date of the Underwriting Agreement, the financial conditions of the Company, existing number of issued Shares, the fund expected to be raised by the Rights Issue and the current and expected market conditions. The Directors consider that under the Rights Issue, each Shareholder is entitled to subscribe for the Rights Shares at the same price in proportion to his/her/its existing shareholding in the Company and the discount of the Rights Issue Price will encourage the Shareholders to participate in the Rights Issue.

Taking into account the outstanding principal amount of the Ugent Bonds and the current financial position of the Company, there will be material adverse impact on the Group’s cash flow if the Company were to repay all the outstanding debts of the Ugent Bonds at maturity. The Board also considers that the Redemption will enlarge the capital base of the Company and will reduce the gearing level of the Group thereby strengthening the financial position of the Group.

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LETTER FROM THE BOARD

Despite the fact that a significant amount of odd lot shares may be resulted from the Rights Issue, having considered the above factors and the agreements were negotiated on arm’s length basis, the Directors consider the terms of the Redemption Agreements and the Rights Issue are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

EFFECT OF ACQUISITION ON CAPITAL REORGANISATION, REDEMPTION AND RIGHTS ISSUE

As disclosed in the Acquisition Announcements, the Company and the Purchaser entered into the Acquisition Agreement with the Vendors pursuant to which the Purchaser conditionally agreed to acquire and the Vendors conditionally agreed to sell the entire issued share capital of the Newco and the registered capital of Dongguan De Yue for a total consideration of HK$120 million. The Target Companies are principally engaged in manufacturing business.

While the Capital Reorganisation is conditional on the Redemption and the Rights Issue having become unconditional, Shareholders’ approval on the Acquisition Agreement is not one of the conditions precedent of the Capital Reorganisation. However, since the Capital Reorganisation, the Redemption and the Rights Issue are inter-conditional with one another and the Redemption and the Rights Issue are conditional on the Acquisition Agreement having been approved by the Shareholders who are allowed to vote, the Capital Reorganisation cannot become effective in the event that the Acquisition Agreement is not approved by the Shareholders who are allowed to vote. In the event that the Acquisition Agreement is not approved resulting in that the Capital Reorganisation, the Redemption and the Rights Issue cannot proceed, the Company will seek alternative ways to improve its financial position.

Before entering into the Redemption Agreements and the Underwriting Agreement respectively, the Ugent Bondholders and the Underwriters have taken into account the existing financial position as well as the prospects and future development of the Group. In view of the benefits arising from the Acquisition, the Shareholders’ approval on the Acquisition Agreement became one of the conditions precedent to the Redemption and the Rights Issue.

Shareholders’ attention is drawn to the circular of the Company dated 12 August 2011 in relation to the Acquisition. The Company will convene the special general meeting to approve the Acquisition on the same day as the SGM. As such, the Board considers that the Shareholders will have sufficient information to decide on the voting in respect of the Redemption, the Rights Issue and the Capital Reorganisation.

The unaudited pro forma statement of adjusted consolidated net tangible assets/ liabilities of the Group as set out in Appendix II of this circular has not taken into account the effect of Acquisition.

– 41 –

LETTER FROM THE BOARD

SGM

The Capital Reorganisation is subject to, among other things, the approval by the Shareholders who are permitted to vote on the proposal under the Listing Rules at the SGM.

The Rights Issue is conditional on, among other things, approval from the Independent Shareholders. In compliance with Rule 7.19(6) of the Listing Rules, the Rights Issue is conditional on the approval of the Shareholders at the SGM where any controlling Shareholders and their associates or where there are no controlling Shareholders, directors (excluding independent nonexecutive directors) and the chief executive of the Company and his/her associates shall abstain from voting in favor. As at the Latest Practicable Date, the Company did not have any controlling Shareholder and Mr. Yip held 3,000,000 Shares (through his 46.25% interest in Vendor 3). Mr. Yip and his associates will abstain from voting in favour of the Rights Issue at the SGM.

As the Redemption and the Rights Issue are inter-conditional with one another and therefore they are subject to the approval of the Independent Shareholders at the SGM. As at the Latest Practicable Date, none of the Ugent Bondholders held any Shares. In the event that any of them held any Shares before the SGM, the Ugent Bondholders and their respective associates are required to abstain from voting on the relevant resolution(s) to approve the Redemption and the Rights Issue at the SGM under the Listing Rules. Further, the Redemption and the Rights Issue are conditional on the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules. Accordingly, the Vendors and their respective associates will abstain from voting to approve the Redemption and the Rights Issue at the SGM. As at the Latest Practicable Date, save for 3,000,000 Shares in which Vendor 1 and Vendor 2 were beneficially interested through their respective 46.25% interests in Vendor 3, Vendor 1 was also beneficially interested in 1,790,000 Shares. As such, the Vendors were interested in an aggregate of 4,790,000 Shares as at the Latest Practicable Date.

– 42 –

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same with the Company’s principal place of business in Hong Kong at Units 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong, as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish. Voting on the proposed resolutions at the SGM will be taken by poll.

RECOMMENDATION

Your attention is drawn to the letter from the Independent Board Committee to the Independent Shareholders set out on page 44 of this circular and the letter from Menlo Capital on pages 45 to 70 of this circular which contains their advice to the Independent Board Committee and the Independent Shareholders on the Redemption and the Rights Issue as well as the principal factors and reasons taken into consideration in arriving at their advice.

The Directors consider that the terms of the Redemption and the Rights Issue are fair and reasonable and are in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend the Independent Shareholders to vote in favour of the proposed resolutions to approve the Redemption and the Rights Issue and the transactions contemplated thereunder at the SGM. You are advised to read the letter from the Independent Board Committee and the letter from Menlo Capital mentioned above before deciding how to vote on the proposed resolutions at the SGM.

ADDITIONAL INFORMATION

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

Yours faithfully, By Order the Board Yip Wai Lun, Alvin

Chairman and Managing Director

– 43 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Rights Issue and the Redemption prepared for the purpose of incorporation in this circular.

(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

12 August 2011

To the Independent Shareholders

Dear Sir or Madam,

(1) REDEMPTION OF THE UGENT BONDS; AND (2) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE

We refer to the circular of the Company dated 12 August 2011 (the ‘ ‘Circular ’’), of which this letter forms part. Unless the context requires otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board as members of the Independent Board Committee to advise you on the terms of the Redemption and the Rights Issue. Menlo Capital has been appointed as the independent financial adviser to advise you and us in this regard. Details of their advice, together with the principal factors and reasons they have taken into consideration in giving such advice, are set out on pages 45 to 70 of the Circular. Your attention is also drawn to the ‘‘Letter from the Board’’ in the Circular and the additional information set out in the appendices thereto.

Having considered the terms of the Redemption and the Rights Issue, and taking into account the advice of Menlo Capital, in particular the principal factors, reasons and recommendation as set out in their letter, we consider that the Redemption and the Rights Issue and the transactions contemplated thereunder are in the interests of the Company and the Shareholders as a whole, and the terms of the Redemption and the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned. We therefore recommend you to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Redemption and the Rights Issue and the transactions contemplated thereunder.

Yours faithfully,

Independent Board Committee

LEUNG Ka Kui, Johnny CHAN Kam Kwan, Jason

LAU Man Tak

Independent non-executive Directors

For identification purposes only

– 44 –

LETTER FROM MENLO CAPITAL

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

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MENLO CAPITAL LIMITED

Room 1807, West Tower, Shun Tak Centre 168 Connaught Road Central, Hong Kong

12 August 2011

To: The Independent Board Committee and the Independent Shareholders of Guojin Resources Holdings Limited

Dear Sir/Madam,

(1) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE; AND (2) REDEMPTION OF THE UGENT BONDS

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Rights Issue and the Redemption, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular of the Company to the Shareholders dated 12 August 2011 (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

On 21 June 2011, the Board announced that, among other things,

(i) the Company intended to put forward for approval by the Shareholders the proposal of the Capital Reorganisation;

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LETTER FROM MENLO CAPITAL

(ii) the Company, Ugent and each of the Ugent Bondholders, on 20 June 2011, entered into the Redemption Agreements, pursuant to which the Company conditionally agreed to redeem the Ugent Bonds for an aggregate outstanding principal amount of HK$177.0 million and settle the interest accrued or to be accrued up to and including 31 August 2011 of approximately HK$30.6 million by way of the allotment and issue of 4,151,240,001 Redemption Shares at the Redemption Price per Redemption Share, and agreed to settle the interest to be accrued from 1 September 2011 up to and including the date of Redemption in cash on the date of Redemption; and
(iii) the Board proposed to raise approximately HK$82.7 million, before expenses, by issuing not less than 1,654,125,555 Rights Shares, or approximately HK$87.0 million before expenses by issuing not more than 1,739,889,220 Rights Shares at the Rights Issue Price in the proportion of eleven (11) Rights Shares for every ten (10) issued Shares held on the Record Date, which will be fully underwritten by the Underwriters such that (i) Mr. Yip shall underwrite the first 896,589,220 Rights Shares not taken up by the Qualifying Shareholders, and (ii) Kingsway shall underwrite the balance of the Rights Shares not taken up by the Qualifying Shareholders up to a maximum of 840,000,000 Rights Shares.

The Capital Reorganisation, the Rights Issue and the Redemption are inter-conditional with one another.

The Rights Issue is conditional on, among other things, approval from the Independent Shareholders. In compliance with Rule 7.19 (6) of the Listing Rules, the Rights Issue is conditional on the approval of the Shareholders at the SGM where any controlling Shareholders and their associates or where there are no controlling Shareholders, directors (excluding independent nonexecutive directors) and the chief executive of the Company and his/her associates shall abstain from voting in favour. As at the Latest Practicable Date, the Company did not have any controlling Shareholder and Mr. Yip held 3,000,000 Shares (through his 46.25% interest in Vendor 3). Mr. Yip, being the Chairman and Managing Director of the Company, together with his associates will abstain from voting in favour of the Rights Issue at the SGM.

As the Rights Issue and the Redemption are inter-conditional with one another and therefore they are subject to the approval of the Independent Shareholders at the SGM. As at the Latest Practicable Date, none of the Ugent Bondholders hold any shares. In the event that any of the Ugent Bondholders hold any shares before the SGM, the Ugent Bondholders and their respective associates are required to abstain from voting on the relevant resolution(s) to approve the Rights Issue and the Redemption at the SGM under the Listing Rules.

– 46 –

LETTER FROM MENLO CAPITAL

Further, the Rights Issue and the Redemption are conditional on the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules. Accordingly, the Vendors and their respective associates will abstain from voting to approve the Rights Issue and the Redemption at the SGM. As at the Latest Practicable Date, save for 3,000,000 Shares in which Vendor 1 and Vendor 2 were beneficially interested through their respective 46.25% interests in Vendor 3, Vendor 1 was also beneficially interested in 1,790,000 Shares. As such, the Vendors were interested in an aggregate of 4,790,000 Shares as at the Latest Practicable Date.

An Independent Board Committee comprising Mr. Leung Ka Kui, Johnny, Mr. Chan Kam Kwan, Jason and Mr. Lau Man Tak, all being independent non-executive Directors, has been established to advise the Independent Shareholders on the Rights Issue and the Redemption. We, Menlo Capital, have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders on (i) whether the terms of the Rights Issue and the Redemption are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Rights Issue and the Redemption are in the interests of the Company and the Shareholders as a whole; (iii) how to vote on the relevant resolution(s) to approve the Rights Issue and the Redemption at the SGM.

BASIS OF OUR OPINION AND RECOMMENDATION

We have relied on the statements, information and representations contained or referred to in the Circular and the information provided and representations made to us by the Directors and the management of the Company. We have assumed that all the statements, information and representations contained or referred to in the Circular and all information provided and representations made by the Directors and the management of the Company for which they are solely responsible, are true and accurate at the time they were provided and made and will continue to be so at the date of the despatch of the Circular. We have no reason to doubt the truth, accuracy and completeness of the information provided and representations made to us by the Directors and the management of the Company.

We consider that the information provided and representations made to us are sufficient for us to form a reasonable basis for our opinion. We are not aware of any reason to suspect any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have performed all the necessary steps as required under Rule 13.80 of the Listing Rules to enable us to reach an informed view and to justify our reliance on the information provided and representations made to us so as to form a reasonable basis for our opinion. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular. The Directors have further confirmed that, having made all reasonable enquiries, and to the best of their knowledge, they believe there are no other facts or representations the omission of which would make any statement in the Circular, including this letter, incorrect or misleading. We have not, however, carried out any independent verification of the information provided and representations made to us by the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs of the Group.

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LETTER FROM MENLO CAPITAL

We have not considered the tax implications on the Qualifying Shareholders of their acceptances or non-acceptances of the Rights Issue since these are particular to their own individual circumstances. Qualifying Shareholders should consider their own tax position with regard to the Rights Issue and, if in any doubt, should consult their own professional advisers in due course.

The purpose of this letter is issued to the Independent Board Committee and the Independent Shareholders regarding the Rights Issue and the Redemption for their information only, 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 purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS TAKEN INTO ACCOUNT

In assessing the Rights Issue and the Redemption, we have taken into our consideration the following principal factors and reasons in arriving at our recommendation:

1. Business Review of the Company

According to the Annual Report, the Group’s main business, namely, the remanufacturing and sales of computer printing and imaging products, being 43% of the Group’s sales, recorded a sharp decline in sales of 50% in 2010. Operating environment for this segment remained extremely competitive in the year. This was particularly the case on the price front as the market was swamped by low value new-mould products. Profit for this segment was hit severely by a few factors, including (i) the rise in its key feedstock, namely empty cartridges; (ii) labour costs, as the Group’s factories are located in the Pearl River Delta (Shenzhen and Zhuhai), the hike was bigger in magnitude nationally; and (iii) high fixed costs as the utilization of production capacity of the factories is low. The business division of manufacturing and sales of data media products registered an increase of 35% in turnover for the year ended 31 December 2010. The business division of distribution of data media products experienced a decline in turnover which has led to a loss of HK$1 million of the division. The Group held embarked on trading activities for mineral products and recorded a turnover of approximately HK$16 million. The activities in that line of business have not proceeded further due to the lack of trading opportunities that would provide the Group with attractive return on minimized credit exposure.

– 48 –

LETTER FROM MENLO CAPITAL

With a view to improving the Group’s financial performance, the Group has been actively looking for attractive merger and acquisition opportunities in order to extend its business reach. As disclosed in the Acquisition Announcements, the Company therefore entered into the Acquisition Agreement relating to the Acquisition for a total consideration of HK$120 million.

2. Financial Summary

Below is a summary of the audited financial results of the Group for each of the three years ended 31 December 2010 as extracted from the Annual Report and the annual report of the Group for the year ended 31 December 2009 (the “2009 Annual Report”):

Table A – Summary of the audited financial results of the Group

	For the year ended 31 December	For the year ended 31 December	For the year ended 31 December
	2010	2009	2008
	(Audited)	(Audited)	(Audited)
	HK$’000	HK$’000	HK$’000
Turnover	169,925	221,394	455,531
– Remanufacture and sale of
computer printing and
imaging products	73,739	148,080	310,298
– Manufacture and sale of data
media products	67,880	50,255	104,095
– Distribution of data media
products	12,303	23,059	41,138
– Trading and mining of mineral
resources	16,003	–	–
Loss for the year attributable to
owners of the Company	(383,368)	(278,003)	(159,787)

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LETTER FROM MENLO CAPITAL

		As 31 December
	2010	2009	2008
	(Audited)	(Audited)	(Audited)
	HK$’000	HK$’000	HK$’000
Current assets	108,084	268,580	441,750
Non-current assets	33,472	123,203	147,162
Current liabilities	89,715	161,728	374,126
Non-current liabilities	183,999	244,959	36,334
Capital deficiency/Equity
attributable to owners of
the Company	(131,615)	(14,904)	178,452

Source: Annual Report and 2009 Annual Report

As set out above, the Group recorded a turnover of approximately HK$170.0 million for the year ended 31 December 2010, representing a decrease of approximately HK$51.5 million or approximately 23.2% from the preceding financial year. The Group recorded a loss attributable to owners of the Company of approximately HK$383.4 million for the year ended 31 December 2010 as compared with that of HK$278.0 million for the year ended 31 December 2009. As explained in the Annual Report, the Group’s profitability was mainly impacted by the raw material price hike, namely empty cartridge prices during the year. Like all manufacturers in China, the Group was also hit by the substantial wage hike, which was not only stipulated by law nationally, but was also on a structural uptrend in the medium term.

For the year ended 31 December 2009, the Group recorded a turnover of approximately HK$221.4 million, representing a decrease of approximately 51.4% as compared with approximately HK$455.5 million in 2008. The Group’s loss attributable to the owners of the Company amounted to approximately HK$278.0 million in 2009 as compared with approximately HK$159.8 for the preceding financial year. According to the 2009 Annual Report, the increase in net loss was mainly attributable to (i) the decline in turnover of the business of recycled toner cartridge and computer media production as affected by the financial crisis and disposal of certain subsidiaries and (ii) impairment loss amounted to approximately HK$82 million due to the decreased trend in selling prices of remanufacture of monochrome toner cartridge products.

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LETTER FROM MENLO CAPITAL

As at 31 December 2010, the Group had audited current assets of approximately HK$108.1 million, audited current liabilities of approximately HK$89.7 million. Cash and cash equivalent amounted to approximately HK$37.9 million. As at 31 December 2010, the capital deficiency attributable to owners of the Company amounted to approximately HK$131.6 million.

Pursuant to the announcement of the Company dated 8 August 2011 in relation to, among other things, the profit warning, based on the unaudited management accounts and other relevant information currently available, the Group is expected to record (i) a substantial drop of its turnover for the six months ended 30 June 2011 as compared with the turnover for the corresponding period ended 30 June 2010; and (ii) a considerable loss for the six months ended 30 June 2011. However, it is expected that the loss for the six months ended 30 June 2011 would not exceed that for the corresponding period of last year. The substantial drop in the turnover was mainly attributable to the scaling down of the Group’s operations on remanufacture and sale of computer printing and imaging products during the period under review. The aforesaid operations have substantially reduced during the review period because the related sales volume has contracted significantly in face of the gross loss incurred by this division as caused by the lack of economy of scale. In addition, during the period under review the Group failed to identify opportunities in trading of minerals that would provide the Group with reasonable return on minimized credit exposure.

3. Reasons for the Rights Issue

As set out in the Table A, the Group recorded continual loss for each of the three years ended 31 December 2010. As at 31 December 2010, the Group had capital deficiency attributable to owners of the Company of HK$131.6 million. As stated in the Annual Report, in view of the liquidity constraints encountered by the Group and the need to improve the Group’s overall financial and cash flow positions so as to maintain the Group’s existence as a going concern, the Directors have implemented measures to tighten cost controls over various distribution costs and administrative expenses and are considering various alternatives to enlarge the capital base of the Company in order to provide additional funding to the Group.

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LETTER FROM MENLO CAPITAL

According to the Annual Report, the Group’s main business, namely the remanufacturing and sales of computer printing and imaging products recorded a sharp decline in sales of 50% in 2010. Segment loss of this division amounted to approximately HK$197.3 million for the year ended 31 December 2010. Although the Group had implemented cost saving measures from the second half of 2010, the management of the Company believed that the ultimate solution was to dispose this entire division to interested third party. The intention to dispose was first revealed in the announcement dated 29 July 2010 of the Company. It was further disclosed in the announcement dated 4 October 2010 of the Company that a non-legally binding term sheet in relation to the debt restructuring and disposal of Ugent was entered into with Martin Currie Inc. However, as disclosed in the announcement dated 10 March 2011 of the Company, such debt restructuring and disposal of Ugent will not be proceeding.

Further from the Annual Report, we note that the Group will continue to engage in the manufacture, sale and distribution of data media products. For the year ended 31 December 2010, this segment recorded a turnover of approximately HK$68.3 million and a segment profit of approximately HK$1.9 million. The Group will continue to improve the operational efficiency so as to improve the profitability of this division.

With a view to improving the Group’s financial performance, the Group has been actively looking for attractive merger and acquisition opportunities in order to extend its business reach. As stated in the Annual Report, the Group remained to be interested to capitalize on the experience and knowledge acquired in 2010 in mining project investments to look for new mining investments with ready production and positive cash flows. In addition, as disclosed in the Acquisition Announcements, the Company entered into the Acquisition Agreement relating to the Acquisition for a total consideration of HK$120 million which shall be settled as to HK$7.5 million by cash and as to HK$112.5 million by way of allotment and issue of the Convertible Notes to the Vendors (or their nominees). The Rights Issue and the Redemption are conditional upon the Acquisition Agreement having been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulation at the special general meeting.

The estimated net proceeds from the Rights Issue will be approximately HK$76.7 million (assuming no exercise of the Share Options) or HK$81.0 million (assuming full exercise of the Share Options). The Company intends to apply the net proceeds for working capital of the Group and the Target Companies upon the Acquisition Completion.

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LETTER FROM MENLO CAPITAL

Having taken into account that (i) the Group recorded continual loss for each of the three years ended 31 December 2010 and capital deficiency attributable to owners of the Company of HK$131.6 million as at 31 December 2010; (ii) the Group is expected to record a substantial drop of its turnover for the six months ended 30 June 2011 as compared with the turnover for the corresponding period ended 30 June 2010 and a considerable loss for the six months ended 30 June 2011; (iii) the Group is currently in the process of dispose of its remanufacturing and sale of computer printing and imaging products which recorded significant segment loss in 2010; (iv) the Group will continue to engage in the manufacture and sale of data media products and distribution and sale of data media products; (v) the Group has been actively looking for attractive merger and acquisition opportunities in order to extend its business reach; and (vi) the benefits from the Acquisition as disclosed in the Acquisition Announcements, in particular, considering that the Acquisition provides a good opportunity for the Group to improve its income stream and turn around its business through participating in the global medical devices industry, we therefore concur with the Directors’ view that the net proceeds from the Rights Issue used for working capital of the Group and the Target Companies will satisfy the immediate funding need of the Group for its existing operation and future development and improve the financial position of the Group.

We understand from the Directors that they have considered other fund raising alternatives for the Group, such as bank borrowings and placing of new Shares. On 15 December 2010, the Company announced that it proposed to raise funds by way of placing. However, the placing has lapsed without completion as announced by the Company on 14 January 2011. In addition, after taking into account the benefits and cost of each of the alternatives, the Directors believe that the Rights Issue allows the Group to strengthen its balance sheet without facing substantial financing costs represented by relative high interest rates. The Directors are also of the view that the Rights Issue is in the interests of the Company and the Shareholders as a whole as it offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company and continue to participate in the future development of the Group should they wish to do so.

Upon our enquiry, the Directors further advised us that although both an open offer and a rights issue would allow all Shareholders to participate in the enlargement of the capital base of the Company and to maintain their proportionate shareholding interests in the Company, a rights issue would allow those Shareholders who would not participate in the fund raising of the Company to dispose of their rights shares entitlements in the market in nil-paid form.

Having considered the above, we are of view that the Rights Issue is an appropriate and feasible financing method current available to the Company to satisfy its funding need for existing operation and future development and is in the interests of the Company and the Shareholders as a whole.

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LETTER FROM MENLO CAPITAL

4. Principal Terms of the Rights Issue

The table below summaries the principal terms of the Rights Issue:

Basis of the Rights Issue : 11 Rights Shares for every 10 Shares held on the Record Date Number of Shares in issue as at : 1,503,750,505 Shares the Latest Practicable Date Number of the Share Options : 77,916,340 (Note) Number of Shares to be issued upon : 77,916,340 Shares (Note) full exercise of the Share Options Number of Shares (assuming full : 1,581,666,845 Shares exercise of the Share Options on or before the Record Date) Number of Rights Shares (assuming : 1,654,125,555 Rights Shares no exercise of the Share Options on or before the Record Date) Number of Rights Shares (assuming : 1,739,833,529 Rights Shares full exercise of the Share Options on or before the Record Date) Rights Issue Price : HK$0.05 per Rights Share with nominal value of HK$0.01 each

Note: As disclosed in the Announcement, there were 77,966,958 Share Options remained outstanding as at the date of the Underwriting Agreement. 50,628 Share Options had been lapsed since the date of the Announcement up to and Including the Latest Practicable Date.

– 54 –

LETTER FROM MENLO CAPITAL

The Rights Issue is conditional upon the fulfillment of the conditions set out in the paragraph headed “Conditions of the Rights Issue” in the Letter from the Board. If any of the conditions of the Rights Issue is not fulfilled by the Latest Time for Termination, or where appropriate, the respective dates aforesaid (or such later timer as the Underwriters may agree with the Company in writing), or the Underwriting Agreement shall terminate pursuant to the Underwriting Agreement and the obligations of the parties shall forthwith cease and be null and void and none of the parties shall have any right against or liability towards any of the other parties arising out of or in connection with the Underwriting Agreement and the Company shall reimburse to the Underwriters all reasonable costs and expenses as have been properly incurred by its in connection with the Rights Issue.

The Rights Issue Price represents:

(i) a discount of approximately 66.4% to the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 67.3% to the average of the closing prices of HK$0.153 per Share for the 10 consecutive trading days up to and including the Last Trading Day;

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LETTER FROM MENLO CAPITAL

(iii) a discount of approximately 68.8% to the average of the closing prices of HK$0.160 per Share for the 20 consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 48.5% to the theoretical ex-rights price of HK$0.097 per Share based on the closing price of HK$0.149 per Share as quoted on the Stock Exchange on the Last Trading Day;
(v) a discount of approximately 3.8% to the closing prices of HK$0.052 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(vi) a discount of approximately 2.0% to the theoretical ex-rights price of HK$0.051 per Share based on the closing price of HK$0.052 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

According to the Letter from the Board, the terms of the Rights Issue (including the Rights Issue Price) were arrived at after arm’s length negotiation between the Company and the Underwriters with reference to the market prices of the Shares before the date of the Underwriting Agreement, the financial conditions of the Company, existing number of issued Shares, the fund expected to be raised by the Rights Issue and the current and expected market conditions. The Directors consider under the Rights Issue, each Shareholders is entitled to subscribe for the Rights Shares at the same price in proportion to his/her/ its existing shareholding in the Company and the discount of the Rights Issue Price will encourage the Shareholders to participate in the Rights Issue.

In order to assess the fairness and reasonableness of the Rights Issue Price, we set out the following information for analysis:

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LETTER FROM MENLO CAPITAL

(a) Review of Share price performance

The following chart illustrates the closing price of the Shares, based on the closing price of the Shares quoted on the Stock Exchange in each of the 13 months during the period commencing from 2 July 2010 up to and including the Latest Practicable Date (the “ Review Period ”):

Chart A: Share price performance

==> picture [320 x 272] intentionally omitted <==

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

HK$
0.6
0.5
0.4
0.3
0.2
Rights Issue Price of HK$0.05 Per Rights Share
0.1
0.0
Closing price Rights Issue Price
02/07/2010 02/08/2010 01/09/2010 04/10/2010 01/11/2010 01/12/2010 03/01/2011 01/02/201101/03/2011 01/04/201103/05/2011 01/06/2011 04/07/2011 01/08/2011
----- End of picture text -----

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

Note:

Trading in the Shares on the Stock Exchange was suspended from 27 July 2010 to 29 July 2010, 24 August 2010 to 28 September, on 4 October 2010, from 24 January 2011 to 25 January 2011 and 20 June 2011 to 21 June 2011.

– 57 –

LETTER FROM MENLO CAPITAL

During the Review Period, the closing price of the Shares was generally in a downward trend with a price ranged from HK$0.52 to HK$0.049 per Share. The Rights Issue Price represents a discount of approximately 90.4% to the highest closing price and a premium of approximately 2.0% over the lowest closing price respectively. We note that it is a common market practice that, in order to enhance the attractiveness of a rights issue exercise and to encourage the existing shareholders to participate in a rights issue, the rights issue price normally represents a discount to the prevailing market prices of the relevant shares. Hence, we consider that the setting of the Rights Issue Price at a lower level is acceptable.

(b) Review on trading liquidity of the Shares

For the purpose of assessing the trading liquidity of the Company, the following chart and table show the trading volume of the Shares during the Review Period:

Chart B: Trading volume of the Shares

==> picture [326 x 265] intentionally omitted <==

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

100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
02/07/201002/08/201001/09/201004/10/201001/11/201001/12/201003/01/201101/02/201101/03/201101/04/201103/05/201101/06/20114/7/20111/8/2011
----- End of picture text -----

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

Note:

Trading in the Shares on the Stock Exchange was suspended from 27 July 2010 to 29 July 2010, 24 August 2010 to 28 September, on 4 October 2010, from 24 January 2011 to 25 January 2011 and 20 June 2011 to 21 June 2011.

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LETTER FROM MENLO CAPITAL

Table B: Trading volume of the Shares

				Percentage of
				average
			Percentage of	daily trading
			average	volume to
			daily trading	total
			volume to	number of
			total	Shares held
			number of	by public
		Average	Shares in	Shareholders
	Total trading	daily trading	issue as at	as at
	volume for	volume for	the Latest	the Latest
	the month/	the month/	Practicable	Practicable
	period	period	Date	Date
		(Note 1)	(Note 2)	(Note 3)
2010
July	171,737,376	9,540,965	0.63%	0.64%
August	125,708,188	7,856,762	0.52%	0.52%
September	60,044,000	30,022,000	2.00%	2.00%
October	395,056,000	20,792,421	1.38%	1.39%
November	227,876,000	10,358,000	0.69%	0.69%
December	67,686,000	3,076,636	0.20%	0.21%
2011
January	103,362,000	5,440,105	0.36%	0.36%
February	24,866,000	1,381,444	0.09%	0.09%
March	103,076,705	4,481,596	0.30%	0.30%
April	32,952,000	1,830,667	0.12%	0.12%
May	22,944,000	1,147,200	0.08%	0.08%
June	198,823,107	11,045,728	0.73%	0.74%
July	59,874,000	2,993,700	0.20%	0.20%
August (up to and
including the Latest
Practicable Date)	16,044,000	2,005,500	0.13%	0.13%

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

– 59 –

LETTER FROM MENLO CAPITAL

Notes:

Average daily trading volume is calculated by dividing the total trading volume for the month/period by the number of trading days during the month/period which exclude any trading day on which trading of the Shares on the Stock Exchange was suspended for the whole trading day.
Based on 1,503,750,505 Shares in issue as at the Latest Practicable Date.
Based on 1,498,670,505 Shares held by public Shareholders as at the Latest Practicable Date.

As illustrated from the Table B above, we note that the average daily trading volume of the Shares during the Review Period were relatively thin, representing less than 2% to total number of Shares in issue as at the Latest Practicable Date. In view of the thin average daily trading volume of the Shares during the Review Period, with an average daily trading volume ranging between approximately 1,147,200 Shares to approximately 30,022,000 Shares, representing approximately 0.08% to approximately 2.00% of the total number of Shares in issue as at the Latest Practicable Date, we consider that the setting of the Rights Issue Price at a lower level is reasonable and that the Rights Issue Price would attract the Qualifying Shareholders to subscribe for the Rights Shares.

(c) Comparison with other rights issue transactions

We have identified and reviewed, on a best effort basis, 26 rights issue transactions of the companies listed on the main board of the Stock Exchange (the “ Comparables ”) from 1 January 2011 to the Last Trading Day (the “ Comparables Review Period ”), which is considered exhaustive, for comparison purpose. We are of the view that the Comparables Review Period being around half year prior to and including the Last Trading Day would provide us with the most recent relevant market information. It should be noted that the business nature, scale of operations and future prospects of the Company is not the same as and/or substantially different from that of the Comparables and as such, the Comparables may only be used to provide a general reference for recent rights issue transactions by companies listed on the main board of Stock Exchange. The terms of the respective transactions are summarised in the table below:

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LETTER FROM MENLO CAPITAL

Table C: The Comparables

						Discount of
					Discount of	rights issue
					rights issue	price to the
					price to	theoretical
					closing	ex-entitlement
					price on	price on
			Entitlement	Underwriting	Last	Last
Announcement date	Company name	Stock code	basis	commission	Trading Day	Trading Day
			(number of	(%)	(%)	(%)
			rights share(s)
			for number
			of shares)
5 January 2011	Easyknit Enterprises	616	1 for 2	1.00	34.00	25.50
	Holdings Limited
6 January 2011	Heritage International	412	1 for 2	2.50	35.06	26.47
	Limited
12 January 2011	Capital VC Limited	2324	1 for 2	3.00	28.57	21.05
21 January 2011	Sheng Yuan Holdings	851	2 for 5	1.50	46.84	38.24
	Limited
31 January 2011	Nam Hing Holdings Limited	986	26 for 1	3.00	92.80	32.30
31 January 2011	Hanny Holdings Limited	275	8 for 1	2.50	90.16	50.50
10 February 2011	The Wharf (Holdings)	4	1 for 10	1.25	31.00	29.00
	Limited
16 February 2011	China Properties Investment	736	30 for 1	3.00	83.61	13.92
	Holdings Limited
28 February 2011	Kantone Holdings Limited	1059	2 for 5	2.50	24.81	19.35
8 March 2011	Pacific Plywood Holdings	767	30 for 1	2.50	88.89	20.00
	Limited
18 March 2011	China State Construction	3311	1 for 5	2.50	16.67	14.29
	International Holdings
	Limited
29 March 2011	Cinda International	111	1 for 5	0.50	38.90	34.50
	Holdings Limited
8 April 2011	Willie International	273	8 for 1	2.50	82.88	73.70
	Holdings Limited
8 April 2011	Radford Capital Investment	901	4 for 1	2.50	55.13	19.72
	Limited

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LETTER FROM MENLO CAPITAL

						Discount of	Discount of
					Discount of	rights issue
					rights issue	price to the
					price to	theoretical
					closing	ex-entitlement
					price on		price on
			Entitlement	Underwriting	Last		Last
Announcement date	Company name	Stock code	basis	commission	Trading Day	Trading Day
			(number of	(%)	(%)		(%)
			rights share(s)
			for number
			of shares)
18 April 2011	China Star Entertainment	326	3 for 1	2.50	54.55		23.08
	Limited
18 April 2011	Bao Yuan Holdings Limited	692	22 for 1	3.00	83.05		17.49
3 May 2011	CITIC Resources	1205	3 for 10	1.50	25.81		21.10
	Holdings Limited
6 May 2011	Media China Corporation	419	1 for 2	3.00	25.00		18.18
	Limited
6 May 2011	21 Holdings Limited	1003	8 for 1	2.00	88.80		46.80
18 May 2011	Midas International	1172	1 for 1	1.00	45.40		29.30
	Holdings Limited
25 May 2011	Central China Real Estate	832	21.4 for 100	1.50	21.20		18.20
	Limited
26 May 2011	Waytung Global	21	1 for 2	1.00	33.33		11.17
	Group Limited
31 May 2011	Vitop Bioenergy	1178	1 for 3	4.00	48.98		41.86
	Holdings Limited
2 June 2011	Emperor Capital	717	2 for 1	2.00	39.64		17.96
	Group Limited
2 June 2011	Simsen International	993	20 for 1	2.50	87.12		25.00
	Corporation Limited
9 June 2011	China Agri-Products	149	30 for 1	2.50	87.09		17.72
	Exchange Limited
			Range	0.50 to 4.00	16.67 to 92.80	11.17 to 73.70
			Average	2.20	53.43		27.17
21 June 2011	The Company	630	11 for 10	2.50	66.40		48.50

Source: the website of the Stock Exchange

– 62 –

LETTER FROM MENLO CAPITAL

As illustrated in the Table C, we note that the rights issue price of the Comparables ranged from discounts of approximately 16.67% to 92.80% to the respective closing price of their shares on the last trading day (the “ LTD Range ”) prior to the release of their respective announcements. We noted that, in the case of the Company, the discount of approximately 66.4% to the closing price of the Shares on the Last Trading Day as represented by the Rights Issue Price (the “ LTD Discount ”) falls within the LTD Range and is higher than the average discount of approximately 53.43% of the LTD Range.

Besides, we note from the Table C that the rights issue price of the Comparables ranged from a discount of approximately 11.17% to 73.70% to the respective theoretical ex-entitlement price of their shares on the last trading day (the “ TERP Range ”) prior to the release of their respective announcements. We noted that, in the case of the Company, the discount of approximately 48.5% to the theoretical exentitlement price of the Shares as represented by the Rights Issue Price (the “ TERP Discount ”) falls within the TERP Range and is higher than the average discount of approximately 27.17% of the TERP Range.

We are aware each of the LTD Discount and TERP Discount represents a deeper discount as compared to the average discount of the Comparables. Nonetheless, we note that it is common for the listed issuers in Hong Kong to offer high discount of the rights issue prices with high offer ratio to the shareholders in order to enhance the attractiveness of the rights issue. Having considered that the Group had recorded continual loss for each of the three years ended 31 December 2010 and capital deficiency attributable to owners of the Company of HK$131.6 million as at 31 December 2010, we are given to understand that the Company needs to set the Rights Issue Price at a deep discount with a high offer ratio to enhance the attractiveness of the Rights Issue. In view of that (i) the LTD Discount falls within the LTD Range; (ii) the TERP Discount falls within the TERP Range; (iii) it is common for the listed companies on the main board of the Stock Exchange to issue rights shares at a discount to the market price in order to enhance the attractiveness of a rights issue transaction; (iv) all Qualifying Shareholders are offered an equal opportunity to subscribe for the Rights Shares at the Rights Issue Price which generally represents discount to market price; and (v) the possibility of participating in the future benefits which may be brought about by business expansion of the Group and the improvement of the financial position of the Group from the Rights Issue, we consider the Rights Issue Price is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Group and the Shareholders as a whole.

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LETTER FROM MENLO CAPITAL

5. Underwriting Agreement

Mr. Yip is the Chairman and Managing Director of the Company and is therefore a connected person of the Company. Accordingly, the transactions contemplated under the Underwriting Agreement (including the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million) constitute a connected transaction under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.31(3)(c) (in respect of the allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip) of the Listing Rules, the allotment and issue of the maximum of 896,589,220 Underwritten Shares to Mr. Yip under the Underwriting Agreement is exempt from the reporting, announcement and Independent Shareholder’s approval requirements under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.32 (in respect of the payment of the underwriting commission to Mr. Yip) of the Listing Rules, the payment of the underwriting commission to Mr. Yip of approximately HK$1.1 million under the Underwriting Agreement is exempt from the Independent Shareholders’ approval.

With reference to the Letter from the Board, the underwriting commission of 2.5% (“ Underwriting Commission ”) was determined after arm’s length negotiation between the Company and the Underwriters by reference to the existing financial position of the Group, the size of the Rights Issue, and the current and expected market conditions. From the Table C in the paragraph headed “Comparison with other rights issue transactions” of this letter, we noted that the Underwriting Commission falls within the range of commissions of 0.50% to 4.00% received by underwriters in other rights issue transactions and is close to the average level of the Comparables at 2.20%. Given the above, we are of the view that the Underwriting Commission is in line with the market and is fair and reasonable.

Upon the giving of notice under the Underwriting Agreement, the Underwriting Agreement shall terminate and the obligations of the parties shall forthwith cease and be null and void and none of the parties shall have any right against or liability towards any of the other parties arising out of or in connection with the Underwriting Agreement. We consider that the terms of the Underwriting Agreement in the present case is in line with the market practice and is fair and reasonable as far as the Independent Shareholders are concerned.

– 64 –

LETTER FROM MENLO CAPITAL

6. Application for Excess Rights Shares

Qualifying Shareholders are entitled to apply for any unsold entitlements of the Excluded Shareholders and any nil-paid Rights Shares provisionally allotted but not accepted, by completing the form of application for excess Rights Shares and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis and on the principles as set out in the paragraph headed “Application for excess Rights Shares” in the Letter from the Board. We have compared the basis in allocating the excess Rights Shares with the arrangements of those Comparables in the Table C and noted that the basis is common with the Comparables and hence are acceptable.

7. Background and Reasons for the Redemption

On 6 March 2009, Ugent and the Initial Subscriber entered into the Ugent Subscription Agreement in relation to the subscription of the Ugent Bonds. Completion of the subscription took place on 6 April 2009 and the Ugent Bonds were issued to the Initial Subscriber on the same date. The maturity date of the Ugent Bonds is 6 April 2012. The interest rate of the Ugent Bonds of 12% per annum shall be payable semi-annually on 30 September and 31 March each year. Pursuant to the terms of the Ugent Subscription Agreement, the Company has given an undertaking to the bondholder that the Company will procure due performance of Ugent of its obligations including, but not limited to, the repayment of the Ugent Bonds in the event that Ugent cannot fulfill its payment obligation under the Ugent Bonds. Details of the subscription of Ugent Bonds were set out in the announcements of the Company dated 21 January 2009, 10 March 2009 and 6 April 2009, and the circular of the Company dated 21 March 2009.

As at the date of the Redemption Agreements, the principal amounts of Ugent Bonds held by Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6 were HK$93 million, HK$35 million, HK$14 million, HK$14 million, HK$14 million and HK$7 million respectively and the total outstanding principal amount of the Ugent Bonds amounted to HK$177.0 million. The total interest accrued and to be accrued up to 31 August 2011 is expected to be approximately HK$30,561,999.

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LETTER FROM MENLO CAPITAL

Taking into account that the (i) debt obligation of the Ugent Bonds will be due April 2012 and the Company shall repay an aggregate outstanding principal amount of HK$177.0 million and accrued interest at maturity; (ii) the Group recorded continual loss for each of the three years ended 31 December 2010 and had capital deficiency attributable to owners of the Company of HK$131.6 million as at 31 December 2010; (iii) the Group is expected to record a substantial drop of its turnover for the six months ended 30 June 2011 as compared with the turnover for the corresponding period ended 30 June 2010 and a considerable loss for the six months ended 30 June 2011; (iv) the funding need and working capital needs of the Group for its existing operation and future development ; and (v) the Company have considered to raise funds by way of placing on 15 December 2010. However, the placing has lapsed without completion as announced by the Company on 14 January 2011, we concur with the Directors that there will be material adverse impact on the Group’s cash flow if the Company were to repay all the outstanding debts of the Ugent Bonds at maturity. In the event that the Redemption does not proceed, the Company will have to identify other financing alternatives and there will be an uncertainty that the terms of which are comparable or more favorable. Having considered that the Redemption will enlarge the capital base of the Company and reduce the gearing level of the Group thereby strengthening the financial position of the Group, we are of the view that the Redemption is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

8. Terms of the Redemption Agreements

On 20 June 2011, the Company, Ugent and each of the Ugent Bondholders (comprising Ugent Bondholder 1, Ugent Bondholder 2, Ugent Bondholder 3, Ugent Bondholder 4, Ugent Bondholder 5 and Ugent Bondholder 6) entered into the Redemption Agreements respectively to set out the terms for the Redemption.

Pursuant to the Redemption Agreements, the Company shall redeem the Ugent Bonds for an aggregate outstanding principal amount of HK$177.0 million and all accrued interest up to the date of the Redemption. An aggregate amount of approximately HK$207,561,999, representing the aggregate of the entire outstanding principal amount of the Ugent Bonds of HK$177.0 million plus the interest accrued and to be accrued up to and including 31 August 2011 of approximately HK$30,561,999 shall be settled by the allotment and issue of an aggregate of 4,151,240,001 Redemption Shares (based on the Redemption Price of HK$0.05 per Redemption Share), and the interest to be accrued from 1 September 2011 up to and including the date of Redemption shall be settled in cash on the date of Redemption.

– 66 –

LETTER FROM MENLO CAPITAL

The Redemption Shares to be issued on the date of Redemption represent approximately 2.8 times of the existing share capital of the Company, and approximately 73.4% of the total issued share capital of the Company as enlarged by the issue of the Redemption Shares, and approximately 56.8% of the total issued share capital as enlarged by the issue of the Redemption Shares and the Rights Shares (assuming no exercise of the Share Options). The Redemption Shares, when issued and fully paid, shall rank pari passu in all respects among themselves and with all the New Shares in issue on the date of allotment and issue of the Redemption Shares and are free from all liens, charges, security interests, encumbrances and adverse claims. The Redemption Shares will be issued under a specific mandate which is subject to the approval of the Independent Shareholders at the SGM.

Ugent Bondholder 1 is wholly owned by Ms. Leung, who is the controlling shareholder of Optima Capital being the financial adviser to the Company in respect of the Capital Reorganisation, the Redemption and the Rights Issue. Save for that, neither Ms. Leung nor Optima Capital or any of its beneficial owners are connected, financially or otherwise, with the Company or any of its subsidiaries. Save for aforesaid, to the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, the Ugent Bondholders and their ultimate beneficial owners are Independent Third Parties. Each of the Ugent Bondholders has confirmed that it and its beneficial owners are independent of and not acting in concert with each other or the Vendors or Kingsway.

The Redemption, the Capital Reorganisation and the Rights Issue are inter-conditional with one another. The conditions to the completion of the Redemption are set out in the paragraph headed “Conditions of the Redemption” in the Letter from the Board.

We have discussed with the management of the Company the Redemption Price set out in the Redemption Agreements and are given to understand that the Redemption Price of HK$0.05 per Redemption Share was arrived at after arm’s length negotiation between the Company and the Bondholders with reference to the Rights Issue Price and financial conditions of the Company, in particular, the continued loss recorded for the recent years and the capital deficiency attributable to owners of the Company of HK$131.6 million as at 31 December 2010.

We note that the debt obligation of the Ugent Bonds will be due April 2012 and the Company shall repay an aggregate outstanding principal amount of HK$177.0 million and accrued interest at maturity. In the event that the Redemption does not proceed, the Company will have to identify other financing alternatives and there will be an uncertainty that the terms of which are comparable or more favorable than the Redemption. Having considered the above, we are of the opinion that the terms of the Redemption (including the Redemption Price) are fair and reasonable and is in the interest of the Company and the Shareholders as a whole.

– 67 –

LETTER FROM MENLO CAPITAL

9. Dilution Effect on the Shareholding Interests of the Independent Shareholders

As shown in the table regarding the shareholding structure as a result of Rights Issue and Redemption on the basis of no exercise of Share Option in the Letter from the Board, upon completion of the Rights Issue and the Redemption, the interests of the Independent Shareholders will be diluted from approximately 99.66% to approximately 9.20% assuming no exercise of the Share Options and 0% acceptance of the Rights Issue save for that accepted by Mr. Yip.

Given that (i) the inherent dilutive nature of rights issue in general; (ii) the Group’s current financial conditions, in particular, the continued loss recorded for the recent years and the capital deficiency attributable to owners of the Company of HK$131.6 million as at 31 December 2010; (iii) all Qualifying Shareholders are offered an equal opportunity to subscribe for the Rights Shares at the Rights Issue Price which represents a discount to market price and the possibility of participating in the future benefits which may be brought about by business expansion of the Group and the improvement of the financial position of the Group from the Rights Issue; and (iv) the Rights Issue and the Redemption will enlarge the capital base of the Company and have positive effect on the Group’s financial position, we are of the view that such potential dilution of the Rights Issue and the Redemption is acceptable.

10. Financial Effects of the Rights Issue and the Redemption

(a) Net asset value

Upon completion of the Rights Issue, the Company would receive estimated net proceeds of approximately HK$76.7 million (assuming no exercise of the Share Options) or HK$81.0 million (assuming full exercise of the Share Options) in cash. In addition, the consolidated total liabilities of the Group will be reduced by not less than approximately HK$177.0 million upon completion of the Redemption. As illustrated in Appendix II – Unaudited pro forma financial information of the Group to the Circular (“ Appendix II ”), we note that the unaudited pro forma net tangible asset value of the Group will be increased by approximately HK$257.9 million (assuming no exercise of the Share Options) or HK$262.1 million (assuming full exercise of the Share Options), which is mainly due to the net proceeds from the Rights Issue and the Redemption.

– 68 –

LETTER FROM MENLO CAPITAL

(b) Gearing

As at 31 December 2010, the Group had total liabilities of approximately HK$273.7 million and total assets of approximately HK$141.6 million. The gearing ratio of the Group as at 31 December 2010 was approximately 1.9 times, representing the ratio of total liabilities to total assets. As the total capital base of the Group would be enlarged and the total liabilities would be reduced upon the completion of the Rights Issue and the Redemption, the gearing position of the Group would be substantially improved.

(c) Liquidity

According to the Annual Report, the Group had current assets of HK$108.1 million and current liabilities of HK$89.7 million as at 31 December 2010. The bank balances and cash of the Group amounted to approximately HK$37.9 million as at 31 December 2010. The estimated net proceeds from the Rights Issue of approximately HK$76.7 million (assuming no exercise of the Share Options) or HK$81.0 million (assuming full exercise of the Share Options) is expected to enhance the Group’s current assets. Hence, the cash position and financial liquidity of the Company will be strengthened upon completion of the Rights Issue.

On such basis, we consider that the Rights Issue and the Redemption will have positive effect on (i) the net asset value; (ii) the gearing ratio; and (iii) the financial liquidity of the Group. In this regard, we are of the view that the Rights Issue and the Redemption are in the interests of the Company and the Shareholders as a whole.

11. Conditions of the Rights Issue and the Redemption

The Rights Issue and the Redemption are conditional upon the fulfillment of the conditions set out in the paragraphs headed “Conditions of the Rights Issue” and “Conditions of the Redemption” in the Letter from the Board. Shareholders should note that the Rights Issue and the Redemption are conditional upon the Acquisition Agreement have been approved by the Shareholders who are allowed to vote and not required to abstain from voting under the Listing Rules and/or other applicable laws and regulation at the special general meeting. Accordingly, the Rights Issue and the Redemption may or may not proceed. It is proposed that the Company will convene the special general meetings to approve (i) the Acquisition; and (ii) the Redemption, Rights Issue and Capital Reorganisation on the same day.

– 69 –

LETTER FROM MENLO CAPITAL

RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that the terms of the Rights Issue and the Redemption are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the relevant resolution(s) at the SGM to approve the Rights Issue, the Redemption and the respective transactions contemplated thereunder.

Yours faithfully, For and on behalf of Menlo Capital Limited Michael Leung Director

– 70 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR FINANCIAL INFORMATION OF THE GROUP

Financial information of the Group for each of the three years ended 31 December 2008, 2009 and 2010 are disclosed in the annual reports of the Company for the years ended 31 December 2008 (pages 53 to 163), 2009 (pages 48 to 163) and 2010 (pages 46 to 171) respectively, and are published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.guojinresources.com). The auditor of the Company has issued a qualified opinion on the Group’s financial statements for the financial years ended 31 December 2008 and unqualified opinion on the financial statements for the year ended 31 December 2009 and 2010.

2. INDEBTEDNESS

(a) Borrowings

As at the close of business on 30 June 2011, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding indebtedness of approximately HK$210,502,000, comprising unsecured borrowings of approximately HK$6,674,000, obligations under finance leases of approximately HK$278,000 and secured but unguaranteed convertible bonds of principal amount of approximately HK$177,000,000 and related accrued interest of approximately HK$26,550,000.

(b) Pledge of assets

As at the close of business on 30 June 2011, the Group had pledged its motor vehicle with aggregate carrying value of HK$340,000 to secure finance lease obligations.

(c) Pledge of shares

As at the close of business on 30 June 2011, the Group had pledged the shares of AFEX International (HK) Ltd, a wholly owned subsidiary of the Company, to secure the convertible bonds with carrying value of HK$203,550,000.

(d) Contingencies

The Group did not have any material contingent liabilities or guarantees as at 30 June 2011.

I – 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(e) Disclaimer

Save as aforesaid and apart from intra-group liabilities, as at the close of business on 30 June 2011, the Group had no debt securities, term loans, mortgages, charges, debentures, loan capital, bank loans and overdrafts or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credit, hire purchase or finance lease commitments, guarantees or other material contingent liabilities.

Save as aforesaid, the Directors confirm that there has been no material change to the indebtedness and contingent liabilities of the Group since 30 June 2011 and up to the Latest Practicable Date.

3. WORKING CAPITAL

Subject to the successful completion of the Rights Issue with the estimated net proceeds from the issuance of not less than 1,654,125,555 and not more than 1,739,833,529 Rights Shares at a subscription price of HK$0.05 and the successful completion of the redemption of the Ugent Bonds of an aggregate amount of HK$207,561,999 by the issuance and allotment of 4,151,240,001 Redemption Shares, the Directors are of the opinion that, after taking into account the present internal resources available, the existing available credit facilities, the estimate net proceeds from the Rights Issue and the completion of the Redemption, the Group shall have sufficient working capital for its present requirements for at least the next twelve months from the date of this circular, in the absence of unforeseen material circumstances.

4. MATERIAL ADVERSE CHANGE

Since 31 December 2010 (being the date to which the latest published audited consolidated financial statements of the Group were made up), the Group has continued to suffer operating losses from remanufacture and sale of computer printing and imaging products division as a result of which the liquidity (including its cash position) of the Group was further worse off. An announcement on profit warning was issued by the Company on 8 August 2011, details of which are set out in the section headed “Announcement in respect of profit warning” in this appendix.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2010.

5. BUSINESS REVIEW FOR THE YEAR ENDED 31 DECEMBER 2010

For the year ended 31 December 2010, the Group recorded a turnover of approximately HK$170 million, representing a decrease of approximately 23% compared with approximately HK$221 million in 2009. The Group’s loss attributable to the owners of the Company amounted to approximately HK$383 million in 2010 (2009: approximately HK$278 million). Basic loss per share in 2010 was approximately HK28.0 cents as compared with basic loss per share of approximately HK28.9 cents in 2009.

I – 2

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Impacting the Group’s profitability was mainly the raw material price hike, namely empty cartridge prices in the year under review. And like all manufacturers in China, the Group was also hit by the substantial wage hike, which is not only stipulated by law nationally, but also on a structural uptrend in the medium term.

Manufacture and sales of data media products

This division is principally engaged in the manufacturing and sale of 3.5” floppy disks. As stated in the Annual Report, this division registered an increase of 35% in turnover for the year. Notwithstanding this, the management had taken a critical review of the outlook of this line of business and had expected that the products might come to its end of life and see a decreasing in demand in over an 18 months time. In this regard, a provision on the inventories amounting to approximately HK$8 million was made for the year ended 31 December, 2010. This had resulted in a decrease in profit for the division, to approximately HK$2 million from approximately HK$3 million of the year before.

The Company has been closely monitoring this division to optimise its scale of operation and maximise profitability. The business remains stable subsequent to the last year end. In its continuous monitoring of the underlying business trend, the Company is striving to improve the operational efficiency in this division to counter the effect of a possible decrease in demand in the future.

The distribution of data media products

For the year under review, this division experienced a decline in turnover, at approximately HK$12 million down from approximately HK$23 million a year ago. This has led to the division into a loss of approximately HK$1 million.

Trading and mining of mineral resources

During the year under review, the Group held embarked on trading activities for mineral products and recorded a turnover of approximately HK$16 million in this regard. The activities in this line of business have not proceeded further due to the lack of trading opportunities that would provide the Group with attractive return on minimized credit exposure. The Group will continue to look for suitable opportunities to broaden its business spectrum.

I – 3

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Remanufacturing and sales of computer printing and imaging products

2010 was another a difficult year for the Group as its main business, namely, the remanufacturing and sales of computer printing and imaging products, being approximately 43% (2009: approximately 67%) of the Group’s sales, recorded a sharp decline in sales of approximately 50% in 2010. Operating environment for this segment remained extremely competitive in the year. This was particularly the case on the price front as the market was swamped by low value new-mould products. Profit for this segment was hit severely by a few factors: a) the rise in its key feedstock; empty cartridges b) labour costs, as our factories are located in the Pearl River Delta (Shenzhen and Zhuhhai), the hike was bigger in magnitude nationally; and c) high fixed costs as the utilization of production capacity of the factories is low. In light of the weak sales, the Group also made impairment losses on inventories for obsolete inventories amounting to approximately HK$24 million (2009: approximately HK$82 million), to account for the sluggish sales in 2010 and write-off of inventories amounting to approximately HK$33 million (2009: Nil). These factors have led to a division loss to approximately HK$197 million (2009: approximately HK$148 million).

6. BUSINESS TREND AND TRADING PROSPECTS OF THE GROUP

The Group is principally engaged in (i) remanufacturing and sales of computer printing and imaging products; (ii) manufacturing and sales of data media products; and (iii) distribution of data media products.

As disclosed in the Annual Report, the Group recorded a significant decrease in turnover generated from its major revenue stream (i.e. remanufacturing and sales of computer printer and imaging products) by approximately 50%, which was primarily attributable to the competitive operating environment and substantial increases in prices of raw materials and labour costs. Given the unsatisfactory performance of the business relating to the remanufacturing and sale of computer printing and imaging products and the cash flow required to sustain the operation, the Group is currently in the process of discontinuing the relevant business and on 8 August 2011, Ugent has approved the Voluntary Liquidation and the joint liquidators have been appointed for the Voluntary Liquidation. The Group recorded an increase in turnover generated from manufacturing and sales of data media products by approximately 35% and a decrease in turnover generated from the distribution of data media products by approximately 48% for the year ended 31 December 2010 respectively.

In order to enhance the financial performance of the Group, the Group will continue to improve its operational efficiency to improve the profitability of the division and of manufacturing, sales and distribution of data media products and will continue to look for suitable investment opportunities.

I – 4

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

As disclosed in the Acquisition Announcements, the Company and the Purchaser entered into the Acquisition Agreement with the Vendors to acquire a group of companies mainly engaged in (i) manufacturing and trading of DVD boxes and related components; (ii) manufacturing and trading of plastic products; and (iii) manufacturing and trading of medical devices with a view to positioning itself in the global medical devices industry by applying the existing skills of the Company and broadening its revenue stream.

The Directors believe that the Rights Issue will provide the Company a stronger capital base and working capital for its existing business and the Target Companies’ business as well as additional flexibility for any investment opportunities that may arise in the future. As at the Latest Practicable Date, save for the Acquisition, the Company has not identified any suitable investment opportunities.

7. ANNOUNCEMENT IN RESPECT OF PROFIT WARNING

The substantial drop in the turnover was mainly attributable to the scaling down of the Group’s operations on remanufacture and sale of computer printing and imaging products during the period under review. The aforesaid operations have substantially reduced during the review period because the related sales volume has contracted significantly in face of the gross loss incurred by this division as caused by the lack of economy of scale. In addition, during the period under review the Group failed to identify opportunities in trading of minerals that would provide the Group with reasonable return on minimized credit exposure.

I – 5

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS/LIABILITIES OF THE GROUP

The following is the unaudited pro forma statement of adjusted consolidated net tangible assets/liabilities of the Group which has been prepared to illustrate the effect of the Rights Issue and the redemption of the Ugent Bonds on the audited consolidated net tangible liabilities of the Group as if the Rights Issue and the redemption of the Ugent Bonds had been completed on 31 December 2010.

The details and conditions of the Rights Issue and the redemption of the Ugent Bonds were set out in the sections headed “Proposed Rights Issue” and “The Redemption” in the Letter from the Board of this circular, respectively. As the Rights Issue and the redemption of the Ugent Bonds are inter-conditional with one another and therefore were included in the preparation of the unaudited pro forma statement of adjusted consolidated net tangible assets/liabilities of the Group.

The unaudited pro forma statement of adjusted consolidated net tangible assets/liabilities of the Group is prepared for illustrative purpose only, based on the judgements, estimates and assumptions of the Directors, and because of its nature, it may not give a true picture of the financial position of the Group upon completion of the Rights Issue and the redemption of the Ugent Bonds.

The unaudited pro forma statement of adjusted consolidated net tangible assets/liabilities of the Group is prepared based on the audited consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 December 2010 as extracted from the published audited annual report of the Group for the year ended 31 December 2010 and is adjusted for the effect of the Rights Issue and the redemption of the Ugent Bonds.

Rights Issue of 1,654,125,555 Rights Shares Rights Issue of 1,739,833,529 Rights Shares	Audited consolidated net liabilities of the Group attributable to owners of the Company as at 31 December 2010 HK$’000 (Note 2) (131,615) (131,615)	Adjustment for intangible assets of the Group as at 31 December 2010 HK$’000 (Note 3) 8,915 8,915	Adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 December 2010 HK$’000 (140,530) (140,530)	Estimated net proceeds from the Rights Issue HK$’000 (Note 4) 76,708 80,886	Unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company immediately after completion of the Rights Issue HK$’000 (63,822) (59,644)	Redemption of the Ugent Bonds HK$’000 (Note 5) 181,208 181,208	Unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to owners of the Company immediately after completion of the Rights Issue and redemption of the Ugent Bonds HK$’000 117,386

							121,564

II – 1

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Adjusted consolidated net tangible liabilities of
the Group per share as at 31 December 2010 before
completion of the Rights Issue and the redemption of
the Ugent Bonds (Note 6)
Unaudited pro forma adjusted consolidated net
tangible liabilities of the Group per share immediately
after completion of the Rights Issue (Based on
minimum number of Rights Shares to be issued) (Note 7)
Unaudited pro forma adjusted consolidated net
tangible liabilities of the Group per share immediately
after completion of the Rights Issue (Based on
maximum number of Rights Shares to be issued) (Note 8)
Unaudited pro forma adjusted consolidated net
tangible assets of the Group per share immediately
after completion of the Rights Issue and the redemption of
the Ugent Bonds (Based on minimum number of
Rights Shares to be issued) (Note 9)
Unaudited pro forma adjusted consolidated net
tangible assets of the Group per share immediately
after completion of the Rights Issue and the redemption of
the Ugent Bonds (Based on maximum number of
Rights Shares to be issued) (Note 10)

HK$(0.093)
HK$(0.020)
HK$(0.018)
HK$0.017
HK$0.017

II – 2

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Notes:

1 The issue of Rights Shares to the Qualifying Shareholders are on the basis of the allotment of 11 Rights Shares for every 10 Shares of 1,503,750,505 Shares in issue as at the 31 December 2010 and as at the Latest Practicable Date, being not less than 1,654,125,555 Rights Shares (assuming there is no exercise of the Share Options) and not more than 1,739,833,529 Rights Shares (assuming full exercise of the Share Options, representing 77,916,340 potential Shares to be issued).
2 The audited consolidated net liabilities of the Group attributable to owners of the Company as at 31 December 2010 is extracted from the published audited consolidated financial statements of the Group for the year ended 31 December 2010.
3 Adjustment for intangible assets represents the Group’s intangible assets of approximately HK$8,915,000 as at 31 December 2010 extracted from the published audited consolidated financial statements of the Group for the year ended 31 December 2010.
4 The estimated net proceeds from the Rights Issue are calculated based on 1,654,125,555 and 1,739,833,529 Rights Shares expected to be issued at the subscription price of HK$0.05 per Rights Share, after deducting the estimated underwriting fees and other related expenses of approximately HK$5,998,000 and HK$6,105,000 respectively.
5 Pursuant to the Redemption Agreements between the Company, Ugent and the Ugent Bondholders entered into on 20 June 2011, the Company shall redeem the Ugent Bonds with an aggregate outstanding principal amount of HK$177,000,000 and all accrued interest up to the date of the Redemption by the allotment and issuance of Redemption Share on the Redemption Price of HK$0.05 per Redemption Share.

The adjustment represents the derecognition of the Ugent Bonds with carrying value of approximately HK$181,208,000 as at 31 December 2010, on the assumption as if the redemption completed on 31 December 2010.

Based on the Ugent Bonds’ outstanding principal amount of HK$177,000,000 as at 31 December 2010, accrued interest of approximately HK$15,930,000 as at 31 December 2010 and the Redemption Price of HK$0.05 per Redemption Share, approximately 3,858,600,000 Redemption Shares would be issued on 31 December 2010. Those Redemption Shares do not entitle to Rights Issue on the completion of redemption.

6 The number of Shares used for the calculation of the adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company per share before completion of the Rights Issue and the redemption of the Ugent Bonds is based on 1,503,750,505 Shares in issue as at 31 December 2010.
7 The number of Shares used for the calculation of the unaudited consolidated net tangible liabilities of the Group attributable to owners of the Company per share immediately after completion of the Rights Issue is based on 3,157,876,060 Shares which represents i) 1,503,750,505 Shares in issue as at 31 December 2010 and ii) 1,654,125,555 Rights Shares to be issued.

II – 3

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

8 The number of Shares used for the calculation of the unaudited consolidated net tangible liabilities of the Group attributable to owners of the Company per share immediately after completion of the Rights Issue is based on 3,243,584,034 Shares which represents i) 1,503,750,505 Shares in issue as at 31 December 2010 and ii) 1,739,833,529 Rights Shares to be issued.
9 The number of Shares used for the calculation of the unaudited consolidated net tangible assets of the Group attributable to owners of the Company per share immediately after completion of the Rights Issue and the redemption of the Ugent Bonds is based on 7,016,476,060 Shares which represents i) 1,503,750,505 Shares in issue as at 31 December 2010; ii) 1,654,125,555 Rights Shares to be issued and iii) 3,858,600,000 Redemption Shares would be issued as referred to Note 5.
10 The number of Shares used for the calculation of the unaudited consolidated net tangible assets of the Group attributable to owners of the Company per share immediately after completion of the Rights Issue and the redemption of the Ugent Bonds is based on 7,102,184,034 Shares which represents i) 1,503,750,505 Shares in issue as at 31 December 2010; ii) 1,739,833,529 Rights Shares to be issued and iii) 3,858,600,000 Redemption Shares would be issued as referred to Note 5.
11 Pursuant to the announcement of the Company dated 22 June 2011, a Capital Reorganisation was proposed whereby the nominal value of each issued Share will be reduced from HK$0.10 to HK$0.01 and the paidup capital of each issued Share of HK$0.09 will be cancelled and every unissued Shares of HK$0.10 each in the Company were subdivided into 10 New Shares of HK$0.01 each in the Company. The proposed share capital reduction of issued Shares and share subdivision of unissued Shares does not affect the unaudited pro forma adjusted consolidated net tangible assets/liabilities of the Group and the number of Shares used for the calculation of the unaudited consolidated net tangible assets/liabilities of the Group attributable to owners of the Company per share before and immediately after completion of the Rights Issue and the redemption of the Ugent Bonds, respectively.
12 Other than the redemption of the Ugent Bonds, no adjustment has been made to reflect any trading results or other transactions of the Group entered into subsequent to 31 December 2010. In particular, no pro forma adjustment has been made in relation to the proposed major acquisition as announced by the Company on 26 January 2011.

II – 4

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

2. ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS/LIABILITIES OF THE GROUP

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12 August 2011

The Board of Directors Guojin Resources Holdings Limited Room 3303-3304, Level 33, Tower 1 Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong.

Dear Sirs,

We report on the unaudited pro forma statement of adjusted consolidated net tangible assets/liabilities (the “Unaudited Pro Forma Financial Information”) of Guojin Resources Holdings Limited (the ”Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”), set out on pages II-1 to II-4 under the heading of “Unaudited Pro Forma Financial Information of the Group” of Appendix II of the Company’s circular dated 12 August 2011 (the “Circular”), which has been prepared by the directors of the Company, for illustrative purpose only, to provide information about how the proposed rights issue of not less than 1,654,125,555 rights shares and not more than 1,739,833,529 rights shares at subscription price of HK$0.05 per rights share on the basis of the allotment of 11 rights shares for every 10 shares in issue and held might have affected the audited consolidated net tangible liabilities of the Group presented. The basis of preparation of the Unaudited Pro Forma Financial Information is set out in Appendix II to the Circular.

II – 5

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Respective responsibilities of directors of the Company and reporting accountants

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

It is our responsibility to form 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.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 300 “Accountants’ Reports on Pro Forma Financial Information in Investment Circulars” issued by the HKICPA. Our work consisted primarily of comparing the unadjusted consolidated net tangible assets with source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purpose only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in future and may not be indicative of the financial position of the Group as at 31 December 2010 or any future date.

II – 6

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

SHINEWING (HK) CPA Limited

Certified Public Accountants

Chong Kwok Shing

Practising Certificate Number: P05139

Hong Kong

II – 7

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the 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

Set out below are the authorised and issued share capital of the Company (a) as at the Latest Practicable Date; (b) upon the Capital Reorganisation becoming effective and immediately after the issue of the Rights Shares and the Redemption Shares assuming no exercise of the Share Options on or before the Record Date; and (c) upon the Capital Reorganisation becoming effective and immediately after the issue of the Rights Shares and the Redemption Shares assuming full exercise of the Share Options on or before the Record Date.

(a) As at the Latest Practicable Date

Authorised: HK$ 4,000,000,000 Shares 400,000,000 Issued and fully paid: HK$ 1,503,750,505 Shares 150,375,050.50

III – 1

GENERAL INFORMATION

APPENDIX III

(b) Upon the Capital Reorganisation becoming effective and immediately after the issue of the Rights Shares and the Redemption Shares assuming no exercise of the Shares Options on or before the Record Date

Issued and fully paid: 1,503,750,505 New Shares in issue immediately after the Capital Reorganisation becoming effective but before the completion of the Redemption and the Rights Issue 4,151,240,001 Redemption Shares to be allotted and issued to the Ugent Bondholders 1,654,125,555 Rights Shares to be allotted and issued 7,309,116,061 Shares	HK$ 15,037,505.05 41,512,400.01 16,541,255.55
	73,091,160.61

(c) Upon the Capital Reorganisation becoming effective and immediately after the issue of the Rights Shares and the Redemption Shares assuming full exercise of the Share Options on or before the Record Date

Issued and fully paid: 1,503,750,505 New shares in issue immediately after the Capital Reorganisation becoming effective but before the completion of the Redemption and the Rights Issue 77,916,340 Shares to be allotted and issued upon full exercise of the subscription rights attaching to the Share Options granted by the Company 4,151,240,001 Redemption Shares to be allotted and issued to the Ugent Bondholders 1,739,833,529 Rights Shares to be allotted and issued 7,472,740,375 Shares	HK$ 15,037,505.05 779,163.40 41,512,400.01 17,398,335.29
	74,727,403.75

Issued and fully paid:
1,503,750,505
New shares in issue immediately after
the Capital Reorganisation becoming
effective but before the completion of the
Redemption and the Rights Issue
77,916,340
Shares to be allotted and issued upon
full exercise of the subscription rights
attaching to the Share Options granted
by the Company
4,151,240,001
Redemption Shares to be allotted and
issued to the Ugent Bondholders
1,739,833,529
Rights Shares to be allotted and issued
7,472,740,375
Shares

HK$
15,037,505.05
779,163.40
41,512,400.01
17,398,335.29

74,727,403.75

Issued and fully paid:

All of the Rights Shares to be issued will rank pari passu in all respect with each other, including, in particular, as to dividends, voting rights and capital, and with all the Shares in issue as at the date of allotment and issue of the Rights Shares. The Rights Shares to be issued will be listed on the Stock Exchange.

III – 2

GENERAL INFORMATION

APPENDIX III

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 Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

(d) The Share Options

As at the Latest Practicable Date, the Company had the following outstanding share options of the Company:

		Number of
		Shares which
		may fall to
		be issued upon
		exercise of
	Exercise price	the Share
Date of grant	per Share	Options	Exercise period
25 January 2005 (Note 1)	0.158	192,340	25.1.2005-24.1.2015
29 January 2010 (Note 2)	0.786	57,724,000	29.1.2010-28.1.2012
6 May 2011 (Note 3)	0.2034	20,000,000	6.5.2011-5.5.2013

Notes:

(1) The share options granted to the Directors are exercisable immediately after 25 January 2005.
(2) The share options granted to the employees of the company are exercisable immediately after 29 January 2010.
(3) The share options granted to previous executive directors of the Company are exercisable immediately after 6 May 2011.

Save for the above, at the Latest Practicable Date, the Company had no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares.

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

III – 3

GENERAL INFORMATION

APPENDIX III

3. DISCLOSURE OF INTERESTS OF DIRECTORS

(a) Interests of Directors

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

(i) Interest in Shares and underlying shares of the Company:

Name of Director Nature of interests Mr. Yip Wai Lun, Alvin Beneficial owner Interests in controlled corporation Mr. Leung Ka Kui, Johnny Beneficial owner Mr. Chan Kam Kwan, Jason Beneficial owner	Number of the Shares interested 1,303,878,791 (L) 3,000,000 (L) 1,306,878,791 290,000 (L) –	Number of underlying shares under Share Options – – – 1,542 (L) 1,542 (L)	Total 1,303,878,791 3,000,000 1,306,878,791 291,542 1,542	Approximate percentage of issued share capital 41.29% 0.09%
				41.38% 0.02% 0.00%

(L): denotes long position

(ii) Interest in debenture of the Company:

				Approximate
				percentage of
	Nature of	Amount of		total debenture
Name of Director	interests	debenture held	Class of debenture	of the Company
Mr. Yip Wai Lun, Alvin	Beneficial owner	HK$42,418,905	Freely transferable and	37.71%
			convertible into the Shares

III – 4

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules.

(b) Interests of substantial Shareholders

So far as is known to the Directors, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO and section 336 of the SFO or, who were or were expected, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

			Approximate
		Number of	percentage of
	Nature of	the Shares	issued share
Name	interests	interested	capital
Leung Mei Han	Interest in controlled	2,181,160,000	145.05%
	corporation	(L)
Qshare Holding	Beneficial owner	2,181,160,000	145.05%
Limited		(L)
Choi Koon Shum	Interest in controlled	840,000,000	55.86%
Jonathan	corporation	(L)
Innovation Assets	Interest in controlled	840,000,000	55.86%
Limited	corporation	(L)
Kingsway Financial	Beneficial owner	840,000,000	55.86%
Services Group		(L)
Limited
Kwan Wing Kum,	Interest of spouse	840,000,000	55.86%
Janice		(L)

III – 5

GENERAL INFORMATION

APPENDIX III

			Approximate
		Number of	percentage of
	Nature of	the Shares	issued share
Name	interests	interested	capital
Sun Wah Capital	Interest in controlled	840,000,000	55.86%
Limited	corporation	(L)
Sunwah International	Interest in controlled	840,000,000	55.86%
Limited	corporation	(L)
SW Kingsway Capital	Interest in controlled	840,000,000	55.86%
Group Limited	corporation	(L)
SW Kingsway Capital	Interest in controlled	840,000,000	55.86%
Holdings Limited	corporation	(L)
World Developments	Interest in controlled	840,000,000	55.86%
Limited	corporation	(L)
Integrated Asset	Beneficial owner	820,866,667	54.59%
Management (Asia)		(L)
Limited
Yam Tak Cheung	Interest in controlled	820,866,667	54.59%
	corporation	(L)
Lo Ming Chi Charles	Beneficial owner	328,346,667	21.84%
		(L)
Loh Jiah Yee	Interest in controlled	328,346,667	21.84%
Katherine	corporation	(L)
Ou Tian Xiong	Beneficial owner	328,346,667	21.84%
		(L)
Value Creation	Beneficial owner	328,346,667	21.84%
Partners Company		(L)
Limited
Chelin International	Beneficial owner	306,309,000	20.37%
Limited		(L)

III – 6

GENERAL INFORMATION

APPENDIX III

			Approximate
		Number of	percentage of
	Nature of	the Shares	issued share
Name	interests	interested	capital
Lai Chiu Fai	Interest in controlled	306,309,000	20.37%
	corporation	(L)
Lye Khay Fong	Beneficial owner	286,532,000	19.05%
		(L)
	Interest in controlled	3,000,000	0.20%
	corporation	(L)
	Founder of a	500,000	0.03%
	discretionary trust	(L)
Fu Wai Ling	Beneficial owner	164,173,333	10.92%
		(L)
Chan Ping Che	Beneficial owner	132,336,000	8.80%
		(L)
Xie Song Guang	Beneficial owner	140,000,000	9.31%
		(L)

(L) Long position

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO and section 336 of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

III – 7

GENERAL INFORMATION

APPENDIX III

(c) Competing interests

As at the Latest Practicable Date, none of the Directors or their respective associates was interested in any business apart from the Group’s businesses which competes or is likely to compete, either directly or indirectly, with the business of the Group.

(d) Other interests

Other than the interest of Mr. Yip in the assets subject to the Acquisition Agreement, as at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any assets which have, since 31 December 2010 (being the date to which the latest published audited accounts of the Company were made up), been (i) acquired or disposed of by; or (ii) leased to; or (iii) proposed to be acquired or disposed of by; or (iv) proposed to be leased to, any member of the Group.

Other than the interest of Mr. Yip in the Acquisition Agreement, none of the Directors was materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group.

4. LITIGATION

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

III – 8

GENERAL INFORMATION

APPENDIX III

5. CORPORATE INFORMATION AND PARTIES INVOLVED IN THE RIGHTS ISSUE

Registered office of the Company

Clarendon House, 2 Church Street, Hamilton HM11, Bermuda

Head office and principal place of business of the Company in Hong Kong

Room 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong

Branch share registrar and transfer office of the Company in Hong Kong

Tricor Standard Limited 26/F, Tesbury Centre, 28 Queen’s Road East, Hong Kong

Authorised representatives

Yip Wai Lun, Alvin Room 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong

Chan Kwong Leung, Eric, ACIS, ACS Unit 2406, 24/F, Bonham Trade Centre, 50 Bonham Strand, Sheung Wan, Hong Kong

Company secretary

Chan Kwong Leung, Eric, ACIS, ACS

Legal advisers to the Company

(As to Hong Kong Law) Michael Li & Co. 14/F, Printing House, 6 Duddell Street, Central, Hong Kong

III – 9

GENERAL INFORMATION

APPENDIX III

(As to Bermuda Law) Conyers Dill & Pearman 2901 Exchange Square One, 8 Connaught Place, Central, Hong Kong Financial adviser to the Company Optima Capital Limited Suite 1501, 15th Floor, Jardine House, 1 Connaught Place, Central, Hong Kong Independent Financal Adviser Menlo Capital Limited Room 1807, West Tower, Shun Tak Centre, 168 Connanght Road Central, Hong Kong Auditors SHINEWING (HK) CPA Limited Certified Public Accountants 43/F, The Lee Gardens, 33 Hysan Avenue, Causeway Bay, Hong Kong Principal bankers Standard Chartered Bank 15th Floor, Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Hong Kong

III – 10

GENERAL INFORMATION

APPENDIX III

Underwriters	Mr. YIP Wai Lun, Alvin
	Units 3303-3304, Level 33,
	Tower 1, Enterprise Square Five,
	38 Wang Chiu Road,
	Kowloon Bay, Kowloon,
	Hong Kong
	Kingsway Financial Services Group Limited
	5th Floor,
	Hutchison House,
	10 Harcourt Road,
	Central, Hong Kong
Directors
Particulars of Directors
Name	Address
Executive Directors
Mr. YIP Wai Lun, Alvin	Units 3303-3304, Level 33,
(Chairman and Managing Director)	Tower 1, Enterprise Square Five,
Ms. LAM Suk Ling, Shirley	38 Wang Chiu Road,
Mr. LEE Cheuk Yin, Dannis	Kowloon Bay, Kowloon,
	Hong Kong
Independent Non-executive Directors
Mr. LEUNG Ka Kui, Johnny	Units 3303-3304, Level 33,
Mr. CHAN Kam Kwan, Jason	Tower 1, Enterprise Square Five,
Mr. LAU Man Tak	38 Wang Chiu Road,
	Kowloon Bay, Kowloon,
	Hong Kong

Executive Directors

Mr. YIP Wai Lun , Alvin , aged 48, joined the Company as executive director on 27 July 2009 and was first re-designated as Deputy Chairman and Deputy Managing Director of the Company on 2 March 2010, and subsequently re-designated as Chairman and Managing Director of the Company on 29 October 2010. Mr. Yip is responsible for the Group’s strategic planning. Mr. Yip has over 24 years of experience as entrepreneur and key management in a variety of business, ranging from manufacturing and technology to transportation. He has also led in the formation and management of a number of joint ventures and partnership arrangements with multinationals.

III – 11

APPENDIX III

GENERAL INFORMATION

Ms. LAM Suk Ling, Shirley , aged 44, joined the Company as Finance Director on 8 February 2010 and is responsible for overall finance functions of the Group. Ms. Lam has more than 18 years experience of auditing, accounting and financial management. Before joining the Company, she worked for various international audit firms and listed companies. She holds a Master Degree in Business Administration from University of Adelaide, Australia and a Bachelor Degree in Science from Murdoch University, Western Australia. She is qualified as a Certified Public Accountant of Hong Kong Institute of Certified Public Accountants and a Certified Practising Accountant of CPA Australia.

Mr. LEE Cheuk Yin, Dannis , aged 40, joined the Company as executive director on 29 October 2010. Mr. Lee has more than 18 years of accounting and finance experience. Mr. Lee is the non-executive director of Kam Hing International Holdings Limited, a company which shares are listed on the Main Board of the Stock Exchange of Hong Kong Limited (the “Stock Exchange”), and independent non-executive director of Geely Automobile Holdings Limited and Tiangong International Company Limited, both are companies which shares are listed on the Main Board of the Stock Exchange. Mr. Lee was an executive director of AMVIG Holdings Limited from 26 March 2004 to 28 February 2010 and was a nonexecutive director of Norstar Founders Group Limited from 10 October 2003 to 14 January 2009, the shares of both companies are listed on the Main Board of the Stock Exchange. He obtained the Bachelor of Business Administration from Texas A&M University in the United States and is an associate member of the Hong Kong Institute of Certified Public Accountants and a member of the American Institute of Certified Public Accountants.

Independent Non-executive Directors

Mr. LEUNG Ka Kui, Johnny , aged 54, joined the Company as independent nonexecutive director on 28 January 2000 and holds a Bachelor of Laws of the University of London. Mr. Leung is a qualified solicitor in Hong Kong, England & Wales and Singapore, and is a Notary Public and China Appointed Attesting Officer. He has over 26 years of experience in legal field and is the senior partner of Messrs. Johnny K.K. Leung & Co., Solicitors & Notaries. Mr. Leung is currently an independent non-executive director of Celestial Asia Securities Holdings Limited (the shares of which are listed on the Main Board of the Stock Exchange) and Phoenitron Holdings Limited, (the shares of which are listed on the Growth Enterprise Market of the Stock Exchange).

Mr. CHAN Kam Kwan, Jason , aged 37, joined the Company as independent nonexecutive director on 11 August 2004 and holds a Bachelor Degree in Commerce from University of British Columbia, Canada and is a member of the American Institute of Certified Public Accountants. Mr. Chan has over 10 years’ experience in accounting and corporate finance. He has been working in a big-4 multinational audit firm and served a number of listed corporations. Mr. Chan is currently an executive director and the company secretary of China WindPower Group Limited and Wah Nam International Holdings Limited, the shares of which are listed on the Main Board of the Stock Exchange.

III – 12

APPENDIX III

GENERAL INFORMATION

Mr. LAU Man Tak , aged 41, joined the Company as independent non-executive director on 29 October 2010 and holds a bachelor degree in Accountancy from the Hong Kong Polytechnic University. He has more than 15 years of experience in corporate finance, accounting and auditing. He is a fellow member of the Association of Chartered Certified Accountants in the United Kingdom, an associate member of the Hong Kong Institute of Certified Public Accountants and a member of the Hong Kong Securities Institute. Mr. Lau is an executive director of China Grand Forestry Green Resources Group Limited and an independent non-executive director of each of Climax International Company Limited, Golden Resorts Group Limited and Kong Sun Holdings Limited, which are companies listed on the Main Board of the Stock Exchange. He was also a former executive director of Warderly International Holdings Limited from December 2007 to January 2010, the shares of which are listed on the Main Board of the Stock Exchange.

Senior Management

Mr. WONG Yiu Kay , aged 56, is the Plant Manager of the toner cartridge remanufacturing factory in the PRC. He is responsible for overall production operation in the PRC factories. He graduated from the University of East Asia, Macau and has over 29 years’ experience in the industry. Mr. Wong joined the Group in 1995.

Mr. CHEUNG Sze Ming , aged 42, is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and a Fellow Member of the Association of Chartered Certified Accountants and holds a Bachelor Degree in Accountancy from the Hong Kong Polytechnic University. He joined the Group in 2001 and is currently the Chief Financial Officer of the Group responsible for treasury function of the Group. Mr. Cheung has over 18 years’ working experience in international audit firm and listed companies.

Mr. WONG Yick Chuen , Danny , aged 43, is the Assistant General Manager of data media operation. He is responsible for the manufacturing and marketing of the data media products. Mr. Wong graduated from the University of Toronto, Canada, with a Bachelor Degree in Science in 1993. He joined the Group in 1994.

III – 13

GENERAL INFORMATION

APPENDIX III

6. EXPERTS

The following are the qualifications of the experts who have given opinions or advice, which are contained in this circular:

Name

Qualification

Menlo Capital

a licensed corporation to carry out business in type 6 (advising on corporate finance) regulated activity under the SFO

SHINEWING (HK) CPA Limited Certified Public Accountants

As at the Latest Practicable Date, none of the above experts had any direct or indirect shareholdings in any member of the Group, or any right to subscribe for or to nominate persons to subscribe for shares in any member of the Group, or any interests, directly or indirectly, in any assets which have been acquired, disposed of or leased to or which are proposed to be acquired, disposed of or leased to the Company or any of their respective subsidiaries, respectively, since 31 December 2010, the date to which the latest published audited financial statements of the Group were made up.

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 reports and references to its name in the form and context in which they appear.

III – 14

GENERAL INFORMATION

APPENDIX III

7. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Group within the two years immediately preceding the Latest Practicable Date which are or may be material:

(a) the subscription agreement dated 28 August 2009 and entered into between the Company and Mr. Xie Song Guang for the issue of 15% convertible note in the principal amount of HK$50,000,000;
(b) the conditional agreement for the sale and purchase dated 23 November 2009 and entered into among the Company, Clearview Development Limited as vendor and Zhe Wei Limited as purchaser in relation to the disposal by the Group of the entire issued share capital of Jackin Accessories Industrial Company Limited at a consideration of HK$60,000,000;
(c) the placing agreement dated 13 January 2010 (as amended on 14 January 2010) and entered into among the Company, Oriental Patron Securities Limited and China Everbright Securities (HK) Limited in relation to the placing of 210,000,000 Shares at a price of HK$0.95 per Share;
(d) the Acquisition Agreement;
(e) the Performance Incentive Agreement;
(f) the settlement agreement dated 19 April 2011 and entered into among Jackin Purchasing Co. Ltd. (“Jackin PCL”) as purchaser, Guojin Metal Mining Company Limited, Mr. Cui Zhan Lin (“Mr. Cui”) as vendor, SE Metal Resource Corp. (“SE Metal”) and Copper Century Corp. in relation to the settlement of all claims among them arising out of the conditional agreement entered into between Jackin PCL and Mr. Cui dated 18 December 2009 in connection with the proposed acquisition of the entire issued share capital of SE Metal;
(g) the Redemption Agreements; and
(h) the Underwriting Agreement.

III – 15

GENERAL INFORMATION

APPENDIX III

8. SERVICE CONTRACTS

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

9. EXPENSES

The expenses in connection with the Rights Issue, including the underwriting commission, printing, registration, translation, legal, financial advisory and accounting fees, are estimated to be approximately HK$6.0 million and will be payable by the Company.

10. MISCELLANEOUS

(a) The company secretary of the Company is Mr. Chan Kwong Leung, Eric. He is an associate member of the Institute of Chartered Secretaries and Administrators, United Kingdom and the Hong Kong Institute of Chartered Secretaries and a member of the Hong Kong Securities Institute.
(b) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
(c) The head office and principal place of business of the Company in Hong Kong is Units 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong.
(d) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Standard Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong.
(e) The English text of this circular and accompanying form of proxy shall prevail over the Chinese text in case of inconsistency.
(f) The Directors are not aware of any restriction affecting the remittance of profits or repatriation of capital of the Group into Hong Kong from outside Hong Kong.

III – 16

GENERAL INFORMATION

APPENDIX III

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of the Company at Room 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Hong Kong during normal business hours of any business day up to and including the date of the SGM:

(a) the memorandum of association and the bye-laws of the Company;
(b) the published annual reports of the Company for each of the two financial years ended 31 December 2009 and 2010;
(c) the letter of advice from Menlo Capital, the text of which is set out on pages 45 to 70 of the circular;
(d) the written consents referred to in the paragraph headed “Experts” in this appendix;
(e) the accountants’ report on the unaudited pro forma statement of adjusted consolidated net tangible assets/liabilities of the Group issued by SHINEWING (HK) CPA Limited set out in Appendix II to this circular;
(f) each of the material contracts as referred to in the paragraph headed “Material Contracts” in this appendix; and
(g) each of the circulars issued by the Company pursuant to the requirements set out in Chapter 14 and/or Chapter 14A of the Listing Rules since 31 December 2010, being the date to which the latest published audited accounts of the Company were made up.

III – 17

NOTICE OF SGM

(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (“ SGM ”) of Guojin Resources Holdings Limited (the “ Company ”) will be held at Regus Conference Centre, 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong at 11:00 a.m. on Monday, 5 September 2011 (or immediately after a special general meeting of the Company approving the Acquisition Agreement which is scheduled to be held on the same day at 10:00 a.m.) for the purpose of considering and, if thought fit, passing the following resolutions:

SPECIAL RESOLUTION

(1) “ THAT , conditional upon (i) the Listing Committee of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting the listing of, and permission to deal in, the New Shares (as defined below); and (ii) the compliance with the requirements of section 46(2) of the Companies Act 1981 of Bermuda (as amended), with effect from such time and on such date (the “ Effective Date ”) to be determined by the directors (the “ Directors ”) of the Company:
(a) the paid-up capital of each issued share (each a “ Share ”) be reduced from HK$0.10 to HK$0.01 by cancelling HK$0.09 on each issued Share (the “ Capital Reduction ”) so as to form a new issued share of HK$0.01 each;
(b) each authorised but unissued share of the Company of HK$0.10 be subdivided into 10 shares of HK$0.01 each (together with the new issued shares of HK$0.01 each formed in paragraph (a) above, the “ New Shares ”)(the subdivision of the authorised but unissued shares in the manner described, the “ Share Subdivision ”);
(c) the entire amount standing to the credit of the share premium account of the Company as at the Effective Date be cancelled (“ Share Premium Cancellation ”);

For identification purposes only

SGM – 1

NOTICE OF SGM

(d) the credit arising from the Capital Reduction and the Share Premium Cancellation be transferred to the contributed surplus account of the Company and the Directors be and are hereby authorised to apply the amount in the contributed surplus account of the Company in any manner permitted by the laws of Bermuda and the bye-laws of the Company, including, but not limited to offset against accumulated losses of the Company (together with the Capital Reduction, the Share Subdivision and the Share Premium Cancellation are herein referred to as the “ Capital Reorganisation ”); and
(e) any one or more Directors be and is/are hereby authorised to determine the Effective Date as he/she/they consider appropriate and to implement and take all steps and do all acts and things and execute all such documents (including under seal) which he/she/they consider necessary or expedient to give effect to the Capital Reorganisation and the transactions contemplated thereunder.”

ORDINARY RESOLUTIONS

(2) “ THAT
(a) the six conditional agreements (collectively the “ Redemption Agreements ”) all dated 20 June 2011 and entered into among the Company, Ugent Holdings Limited (“ Ugent ”), a wholly owned subsidiary of the Company, and each of Qshare Holdings Limited, Integrated Asset Management (Asia) Limited, Value Creation Partners Company Limited, Mr. Lo Ming Chi, Charles, Mr. Ou Tian Xiong and Ms. Fu Wai Ling (together the “ Ugent Bondholders ”) respectively in relation to the redemption (the “ Redemption ”) of the 12% convertible bonds (the “ Ugent Bonds ”) in the principal amount of HK$177,000,000 issued by Ugent (a copy of each of the Redemption Agreements is marked “A”, “B”, “C”, “D”, “E” and “F” respectively and produced to the SGM and signed by the chairman of the SGM for identification purpose) and the transactions contemplated thereunder be and are hereby ratified, confirmed and approved;
(b) the allotment and issue of new ordinary shares (the “ Redemption Shares ”) of HK$0.01 each in the share capital of the Company at the redemption price of HK$0.05 each to each of the Ugent Bondholders pursuant to the terms and conditions of the Redemption Agreements be and is hereby approved; and
(c) any one or more Directors be and is/are hereby authorised to implement and take all steps and do all acts and things and execute all such documents (including under seal) which he/she/they consider necessary or expedient to give effect to the Redemption Agreements and the transactions contemplated thereunder, including but not limited to the allotment and issue of the Redemption Shares.”

SGM – 2

NOTICE OF SGM

(3) “ THAT , conditional upon (i) the Listing Committee of the Stock Exchange granting or agreeing to grant the listing of, and permission to deal in, the Rights Shares (as defined below)(in their nail-paid and fully-paid forms) and not having withdrawn or revoked such listing and permission; (ii) the filing of all documents relating to the Rights Issue (as defined below) required to be filed with the Registrars of Companies in Bermuda in accordance with the Companies Act 1981 of Bermuda (as amended) and with the Registrar of Companies in Hong Kong in accordance with the Companies Ordinance in Hong Kong; and (iii) the underwriting agreement (the “ Underwriting Agreement ”) dated 20 June 2011 entered into among the Company, Mr. Yip Wai Lun, Alvin (“ Mr. Yip ”) and Kingsway Financial Services Group Limited (together with Mr. Yip, the “ Underwriters ”) (a copy of which is marked “G” and produced to the SGM and signed by the chairman of the SGM for identification purpose) becoming unconditional and not being rescinded or terminated in accordance with its terms:
(a) the Underwriting Agreement and the transactions contemplated thereunder (including but not limited to the underwriting of the Rights Shares (as defined below) not validly applied for by the shareholders (the “ Shareholders ”) of the Company by the Underwriters) be and are hereby approved, confirmed and ratified;
(b) the issue of not less than 1,654,125,555 New Shares and not more than 1,739,833,529 New Shares (the “ Rights Shares ”) by way of rights issue (the “ Rights Issue ”) at the subscription price of HK$0.05 per Rights Share to the Shareholders whose names appear on the register of members of the Company on the Record Date (as defined in the circular of the Company dated 12 August 2011) (the “ Circular ”, a copy of which is marked “H” and produced to the SGM and signed by the chairman of the SGM for identification purpose) excluding those Shareholders whose registered addresses as shown in such register are outside Hong Kong on the Record Date and to whom the Directors, after marking enquiries, on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange of that place, consider it necessary or expedient not to offer the Rights Shares, in the proportion of eleven Rights Shares for every ten Shares then held on the Record Date, on and subject to the terms and conditions set out in the Circular be and is hereby approved; and

SGM – 3

NOTICE OF SGM

(c) any one or more Directors be and is/are hereby authorised to allot and issue the Rights Shares (in their nil-paid and full-paid forms) pursuant to or in connection with the Rights Issue notwithstanding that the same may be offered, allotted or issued otherwise than pro rata to the existing shareholdings of the Shareholders and, in particular, the Directors of the Company may make such exclusions or other arrangements in relation to the Shareholders whose address(es) as shown on the register of members of the Company is/ are outside Hong Kong as they deem necessary or expedient having regard to any restrictions or obligations under the laws of, or the requirements of any recognized regulatory body or any stock exchange in, any territory outside Hong Kong and to implement and take all steps and do all acts and things and execute all such documents (including under seal) which he/she/they consider necessary or expedient to give effect to the Rights Issue and the transactions contemplated thereunder.”

Yours faithfully

For and on behalf of the board of Directors of GUOJIN RESOURCES HOLDINGS LIMITED YIP WAI LUN, ALVIN Chairman of the Board

Hong Kong, 12 August 2011

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Head office and principal place of business in Hong Kong: Units 3303-3304, Level 33 Tower 1, Enterprise Square Five 38 Wang Chiu Road Kowloon Bay, Kowloon Hong Kong

SGM – 4

NOTICE OF SGM

Notes:

Any member entitled to attend and vote at the SGM is entitled to appoint one or more proxies to attend and, in the event of a poll, vote in his/her/its stead. A proxy need not be a member of the Company.
In order to be valid, the form of proxy must be duly lodged at the Company’s principal place of business in Hong Kong at Units 3303-3304, Level 33, Tower 1, Enterprise Square Five, 38 Wang Chiu Road, Kowloon Bay, Kowloon, Hong Kong together with a power of attorney or other authority, if any, under which it is duly signed or a notarially certified copy of that power of attorney or authority, not less than 48 hours before the time for holding the meeting or any adjourned meeting.
Completion and return of a form of proxy will not preclude a member from attending in person and voting at the SGM or any adjournment thereof, should he/she/it so wish, and in such event, the form of proxy shall be deemed to be revoked.
The Voting at the SGM Shall be conducted by way of poll.

SGM – 5

AI assistant

ICO Group Limited — Proxy Solicitation & Information Statement 2011

49938_rns_2011-08-11_ad12a66e-8670-40e9-8669-0202644c2730.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(1) CAPITAL REORGANISATION; (2) REDEMPTION OF THE UGENT BONDS; AND

(3) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE

CONTENTS

EXPECTED TIMETABLE

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

For reference purpose only, the Chinese names of the PRC entities have been translated into English in this circular. In the event of any discrepancies between the Chinese names and the English translation, the Chinese names shall prevail.

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

LETTER FROM THE BOARD

(1) CAPITAL REORGANISATION;

(2) REDEMPTION OF THE UGENT BONDS; AND (3) RIGHTS ISSUE IN THE PROPORTION OF ELEVEN RIGHTS SHARES FOR EVERY TEN SHARES HELD ON THE RECORD DATE

INTRODUCTION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

CAPITAL REORGANISATION

LETTER FROM THE BOARD

Conditions of the Capital Reorganisation

Reasons for the Capital Reorganisation

LETTER FROM THE BOARD

Certificates for the New Shares

THE REDEMPTION

Background

LETTER FROM THE BOARD

Parties:

Subject Matter

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Redemption Price

Conditions of the Redemption

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Information on Ugent

LETTER FROM THE BOARD

PROPOSED RIGHTS ISSUE

Issue statistics

LETTER FROM THE BOARD

Qualifying Shareholders

Rights Issue Price

LETTER FROM THE BOARD

Status of the Rights Issue

Conditions of the Rights Issue

LETTER FROM THE BOARD

Rights of Overseas Shareholders

LETTER FROM THE BOARD

Basis of provisional allotment

Fractional entitlement to the Rights Shares

LETTER FROM THE BOARD

Application for excess Rights Shares

Share certificates for the fully-paid Rights Shares

LETTER FROM THE BOARD

Application for listing of the Rights Shares on the Stock Exchange

UNDERTAKING AND UNDERWRITING ARRANGEMENT

Undertaking

LETTER FROM THE BOARD

Underwriting Agreement

LETTER FROM THE BOARD

Termination of the Underwriting Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

FUND RAISING EXERCISE OF THE COMPANY

SHAREHOLDING STRUCTURE AS A RESULT OF RIGHTS ISSUE AND REDEMPTION

A. Assuming full exercise of Share Options

LETTER FROM THE BOARD

LETTER FROM THE BOARD

ICO Group Limited Proxy Solicitation & Information Statement 2011