ICO Group Limited — Proxy Solicitation & Information Statement 2015

Dec 3, 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, 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 AMCO United Holding Limited (‘‘Company’’), you should at once hand this circular, together with the enclosed proxy form, to the purchasers or transferees or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchasers or transferees.

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

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(Incorporated in Bermuda with limited liability)
(Stock Code : 630)
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MAJOR TRANSACTION: ACQUISITION OF 100% INTEREST IN ACE ENGINEERING; AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening the special general meeting of the Company to be held at 10:30 a.m. on Monday, 21 December 2015 at Regus Conference Centre, 35/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong is set out on pages SGM-1 to SGM-2 of this circular. Whether or not you intend to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Standard Limited of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting in person at the meeting or any adjournment thereof (as the case may be) should you so wish, and in such case, the proxy form previously submitted shall be deemed to be revoked.

4 December 2015

• For identification purposes only

CONTENTS

			Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			4
Appendix I	–	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . .	I-1
Appendix II	–	Financial Information of the Target . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	Unaudited Pro Forma Financial Information of
		the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV	–	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IV-1
Notice of the	SGM	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

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DEFINITIONS

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

• ‘‘ACE Engineering’’ or ‘‘Target’’

ACE Engineering Limited, a company incorporated in Hong Kong with limited liability and is wholly owned by the Vendors, being the subject matter of the Acquisition

• ‘‘Acquisition’’ the acquisition of the Sale Shares

• ‘‘Acquisition Agreement’’

the sale and purchase agreement dated 14 September 2015 entered into between the Purchaser and the Vendors in relation to the Acquisition

• ‘‘Board’’ the board of Directors

• ‘‘Buildings Ordinance’’

Buildings Ordinance (Chapter 123 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

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

• ‘‘Company’’ AMCO United Holding Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Main Board of the Stock Exchange

• ‘‘Completion’’

• completion of the Acquisition in accordance with the terms and conditions of the Acquisition Agreement

• ‘‘Completion Date’’

the fifth Business Day after the last outstanding Conditions (other than the Conditions which are only capable of being fulfilled upon Completion) shall have been fulfilled or waived (or such other date as the Purchaser and the Vendors shall agree in writing) on which Completion is to take place

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DEFINITIONS

‘‘Conditions’’ the conditions precedent to which Completion is subject to as set out in the sub-section headed ‘‘The Acquisition Agreement – Conditions’’ in the letter from the Board to this circular

• ‘‘connected person(s)’’

• has the meaning ascribed thereto under the Listing Rules

• ‘‘Consideration’’

the aggregate sum of HK$20.5 million, being the consideration for the sale and purchase of the Sale Shares

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘Enlarged Group’’ the Group as enlarged by the Acquisition

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HK$’’ Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘Hong Kong’’

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

• ‘‘Independent Third Party(ies)’’

• a party who is not a connected person of the Company and is independent of the Company and its connected persons

• ‘‘Latest Practicable Date’’ 1 December 2015, being the latest practicable date prior to the publication of this circular for the purpose of ascertaining certain information contained in this circular

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

• ‘‘Long Stop Date’’

• 31 December 2015 (or such later date as the Vendors and the Purchaser may agree in writing)

• ‘‘Madam Chung’’ Madam CHUNG Wai Fong, one of the Vendors

• ‘‘Material Adverse Change’’

any change (or effect) which has a material and adverse effect on the financial position, business or prospects or results of operations of the Target as a whole

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DEFINITIONS

‘‘MOU’’

the memorandum of understanding dated 21 May 2015 (as varied and supplemented by the addendum dated 20 August 2015) and entered into between the Company and the Vendors in relation to the proposed Acquisition, details of which are disclosed in the announcements of the Company dated 21 May 2015 and 20 August 2015

• ‘‘Mr. Lee’’

Mr. LEE King Yi, one of the Vendors

• ‘‘Purchaser’’

• Best Reward Global Limited, a company incorporated in the British Virgin Islands with limited liability and a wholly-owned subsidiary of the Company

‘‘Sale Shares’’

• 4,000,000 issued shares in, representing the entire issued share capital of, the Target

• ‘‘SFO’’

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

• ‘‘SGM’’

• a special general meeting of the Company to be held at 10:30 a.m. on Monday, 21 December 2015 at Regus Conference Centre, 35/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong or any adjournment thereof for the Shareholders to consider, and, if thought fit, approve the Acquisition, the Acquisition Agreement and the transactions contemplated thereunder

• ‘‘Share(s)’’ share(s) of the Company of HK$0.01 each

• ‘‘Shareholder(s)’’ holder(s) of the Share(s)

• ‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

• ‘‘Vendors’’ collectively, Mr. Lee and Madam Chung

• ‘‘Vendors’ Warranties’’ the representations, warranties and undertakings given jointly and severally by the Vendors under the Acquisition Agreement

‘‘%’’ per cent.

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LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

Executive Directors: Mr. YIP Wai Lun, Alvin (Chairman and Managing Director) Mr. CHENG Kin Chor Mr. LEUNG Kelvin Ming Yuen

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

Independent non-executive Directors: Mr. WONG Siu Ki Mr. CHAN Ngai Sang Kenny Mr. LI Kwok Fat

Head office and principal place of business in Hong Kong: Unit 1005, 10/F Tower III, Enterprise Square 9 Sheung Yuet Road Kowloon Bay, Kowloon Hong Kong

4 December 2015

To the Shareholders

Dear Sir or Madam

MAJOR TRANSACTION: ACQUISITION OF 100% INTEREST IN ACE ENGINEERING

INTRODUCTION

Reference is made to the announcement of the Company dated 14 September 2015 in which the Company announced that on 14 September 2015, the Purchaser, a wholly-owned subsidiary of the Company, and the Vendors entered into the Acquisition Agreement pursuant to which the Purchaser has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell, the Sale Shares, representing the entire issued share capital of the Target, at the cash Consideration of HK$20.5 million.

• For identification purposes only

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LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among other things, (i) details of the Acquisition Agreement and the transactions contemplated thereunder (including the Acquisition); and (ii) other information as required to be disclosed under the Listing Rules; and (iii) the notice of the SGM.

The major terms of the Acquisition Agreement are set out below.

Date:

14 September 2015

Parties:

Vendors: Mr. LEE King Yi and Madam CHUNG Wai Fong Purchaser: Best Reward Global Limited, a company incorporated in the British Virgin Islands with limited liability and principally engaged in investment holding and a wholly-owned subsidiary of the Company as at the Latest Practicable Date

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Vendors is an Independent Third Party.

Mr. Lee and Madam Chung are the founders and directors of the Target and they are acting as the Technical Director and/or the Authorized Signatory (as the case may be) of the Target under the Buildings Ordinance. Each of Mr. Lee and Madam Chung has over 15 years of experience in building construction and building maintenance and improvement works industry. Mr. Lee and Madam Chung were introduced to the Company by a business acquaintance of Mr. Cheng Kin Chor, an executive Director.

Assets to be acquired

The Purchaser has conditionally agreed to acquire, and the Vendors have conditionally agreed to sell, the Sale Shares, representing the entire issued share capital of the Target, free from all encumbrances, and together with all rights and benefits attaching thereto.

Consideration

The Consideration for the Acquisition payable by the Purchaser to the Vendors is HK$20.5 million which shall be settled in cash in the following manner:

• (i) as to HK$6.15 million, being a refundable deposit (‘‘Deposit’’) upon signing of the Acquisition Agreement; and

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LETTER FROM THE BOARD

• (ii) as to the remaining balance of HK$14.35 million (‘‘Remaining Balance’’) at Completion.

The amounts due from directors of the Target to the Target as at 30 June 2015 were approximately HK$3,099,000. It is a term of the Acquisition Agreement that an amount equal to the amount due from the director of the Target to the Target at Completion (‘‘Director’s Loan’’) comprised in the Remaining Balance shall be paid by the Purchaser to the Target on behalf of such director for the repayment of the Director’s Loan at Completion; and a sum equivalent to the difference between the Remaining Balance and the Director’s Loan shall be paid to the Vendors.

If Completion does not take place as a result of the sole default of the Purchaser, the Vendors may forthwith terminate the Acquisition Agreement by giving notice of termination in writing to the Purchaser to such effect (save and except certain provisions relating to confidentiality, costs and expenses and certain miscellaneous matters which shall continue to have full force and effect), in which event the Vendors shall forthwith be entitled to retain a sum of HK$500,000 out of the Deposit as liquidated damages and shall as soon as practicable and in any event within five Business Days after the date of the notice of termination given by the Vendors refund a sum equivalent to the difference between the Deposit and the sum of HK$500,000 (without interest) to the Purchaser and whereupon neither party thereto shall take any action to claim for damages or to enforce specific performance or any other rights and remedies.

If Completion does not take place as a result of the sole default of any of the Vendors, the Purchaser may forthwith terminate the Acquisition Agreement by giving notice of termination in writing to the Vendors to such effect (save and except certain provisions relating to confidentiality, costs and expenses and certain miscellaneous matters which shall continue to have full force and effect), in which event the Vendors shall forthwith refund the Deposit (without interest), and together pay a sum of HK$500,000 as liquidated damages, to the Purchaser and whereupon neither party thereto shall have any obligations and liabilities thereunder and neither party thereto shall take any action to claim for damages or to enforce specific performance or any other rights and remedies.

Basis of the Consideration

The Consideration was determined after arm’s length negotiations between the Vendors and the Purchaser on normal commercial terms with reference to the audited net profits after taxation of the Target for the year ended 31 March 2015 of approximately HK$1,738,000 as extracted from the statutory financial statements of the Target for the year ended 31 March 2015 taking into account of a price-to-earnings ratio (‘‘P/E Ratio’’) multiple of approximately 15.70.

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LETTER FROM THE BOARD

The P/E Ratio of the Target of approximately 15.70 was determined with reference to the P/E Ratios of other companies in the construction industry, whose shares are listed in Hong Kong with profits for the latest financial year, with the range of the P/E Ratios from approximately 4.24 to 53.21 and taking into account of a discount rate of 30% for lack of marketability and a control premium of 25% to the value of the shares of the Target. As the shares of the Target are not expected to be listed on any stock exchanges in the imminent future, nor is the sale of the shares of the Target restricted, there are no specific factors that may affect the marketability of the equity interest of the Target and therefore a discount rate of 30% for lack of marketability was considered appropriate by the Directors. As the Group will acquire the entire issued share capital of the Target, being an absolute control of the Target, the Directors consider a control premium of 25% is appropriate and such premium is offset against the discount rate of 30% for marketability for determining the P/E Ratio of the Target.

The companies in the industry similar with that of the Target which the Group has made with reference to their P/E Ratios based on the closing stock price of each of the companies below as at 30 June 2015 and their respective profit after taxation for the most recent financial year (excluding non-operating gains and losses) are set out as follows:

• (i) Vantage International (Holdings) Limited (Stock code: 15), which is principally engaged in construction, civil engineering, maintenance and other contract works business and in the property investment and development business in Hong Kong, with the P/E Ratio of approximately 16.26;

• (ii) Yau Lee Holdings Limited (Stock code: 406), which is principally engaged in contracting of building construction, plumbing, renovation, maintenance and fitting-out projects, electrical and mechanical installation, building materials supply, property investment and development and hotel operations, and other activities including computer software development and architectural and engineering services, with the P/E Ratio of approximately 53.21;

• (iii) Grand Ming Group Holdings Limited (Stock code: 1271), which is principally engaged in the business of data centre premises leasing and construction in Hong Kong, with the P/E Ratio of approximately 8.86;

• (iv) New Concepts Holdings Limited (Stock code: 2221), which is principally engaged in foundation works, civil engineering works and general building works in Hong Kong, with the P/E Ratio of approximately 18.23;

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LETTER FROM THE BOARD

• (v) Chinney Alliance Group Limited (Stock code: 385), which is principally engaged in the trading of plastics and chemical products, provision of building related contracting services including engineering contracting services in the air-conditioning industry and provision of maintenance services, provision of superstructure construction works, provision of foundation piling works and sub-structure works, and other activities including distribution of aviation system and other hi-tech products and investment holding, with the P/E Ratio of approximately 4.24;

• (vi) Build King Holdings Limited (Stock code: 240), which is principally engaged in civil engineering work, with the P/E Ratio of approximately 9.73;

• (vii) Nga Chun Holdings Company Limited (Stock code: 1462), which is principally engaged in building services in Hong Kong as a subcontractor, with the P/E Ratio of approximately 20.94; and

• (viii) Wai Kee Holdings Limited (Stock code: 610), which is principally engaged in (1) construction of civil engineering and building projects; (2) production and sale of concrete; (3) production and sale of quarry products; and (4) toll road and property development, with the P/E Ratio of approximately 12.08.

Taking into account the business nature of the Target, the Directors consider that the P/E Ratio of the Target is a fair basis to determine the Consideration and the Consideration is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

The Deposit was funded by the Group’s internal resources and the Remaining Balance will be funded by the Group’s internal resources.

Conditions

Completion is subject to and conditional upon the fulfilment or waiver of the following Conditions:

• (i) the Purchaser having carried out and completed the due diligence review of the Target (whether legal, accounting, financial, operational or other aspects that the Purchaser considers necessary) and being reasonably satisfied with the results of the due diligence review of the Target and its related business, assets, liabilities, activities, operations, financial position, prospects in all respects and any other aspects of the Target that the Purchaser, its agents or professional advisers consider necessary;

• (ii) the Company having complied with the requirements under the Listing Rules in respect of the transactions contemplated under the Acquisition Agreement;

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LETTER FROM THE BOARD

• (iii) the purchase of the Sale Shares and other transactions as contemplated under the Acquisition Agreement having been approved by the Shareholders (who are not required to abstain from voting in such respect under the Listing Rules or otherwise) at the SGM;

• (iv) (if required) all requisite waivers, consents and approvals from any relevant governmental or regulatory authorities or other relevant third parties in connection with the transactions contemplated by the Acquisition Agreement required to be obtained on the part of the parties thereto and the Target having been obtained by the Purchaser;

• (v) the Purchaser being satisfied, from the date of the Acquisition Agreement and at any time before the Completion, that Vendors’ Warranties remain true, accurate and not misleading and that no events have occurred that would result in any breach of any of the Vendors’ Warranties or other provisions of the Acquisition Agreement by the Vendors; and

• (vi) there being no Material Adverse Change up to Completion.

The Purchaser may waive Conditions (i), (v) and (vi) at any time before the Long Stop Date by notice in writing to the Vendors. Save as aforesaid, none of the Conditions is capable of being waived.

If the Conditions shall not have been fulfilled or (if applicable) waived, other than as a result of the default of the Vendors, and/or the Purchaser, at or before 5:00 p.m. on the Long Stop Date, all rights and obligations of the parties under the Acquisition Agreement shall cease and terminate, save and except for (i) certain provisions relating to confidentiality, costs and expenses and certain miscellaneous matters shall remain in full force and effect, and no party shall have any claim against the other save for claim (if any) in respect of such continuing provisions or any antecedent breach thereof; and (ii) the Vendors shall within five Business Days after the Long Stop Date return an amount equal to the Deposit, without interest, to the Purchaser (or it may direct).

Completion

Upon fulfilment or waiver (as the case may be) of all the Conditions set out above, Completion shall take place on the Completion Date.

Immediately after Completion, the Target will become a wholly-owned subsidiary of the Company and the financial results of the Target will be consolidated with the results of the Group.

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LETTER FROM THE BOARD

As disclosed in the section headed ‘‘Information about the Target’’ below, as advised by the Vendors, the Target is a registered general building contractor and a registered minor works contractor under the Buildings Ordinance. To maintain the qualification of the Target as a registered general building contractor and a registered minor works contractor, the Target will enter into service contract with each of Mr. Lee, Madam Chung and two other individuals, which are existing employees of the Target, to act as the Technical Director and/or the Authorized Signatory (as the case may be) under the Buildings Ordinance upon Completion. Each such service contract will have a term of two years from the Completion Date (‘‘Employment Term’’).

Mr. Lee will be mainly responsible for managing the construction and maintenance projects of the Target. In addition to the salary payable to him, Mr. Lee will be entitled to a management bonus (‘‘Management Bonus’’) in a sum equal to 5% of the net profit after taxation of the Target for each financial year (or period for an incomplete financial year) during his employment. As the Management Bonus will provide an incentive to Mr. Lee to expand the business of the Target with a view to generating more revenue of the Target, the Management Bonus was determined taking into account that (i) Mr. Lee was one of the founders of the Target with extensive networks with sub-contractors and private developers and he has more than 15 years of experience in the building construction and building maintenance and improvement works industry; and (ii) the importance of Mr. Lee’s role and responsibilities to facilitate the transition of the business of the Target after Completion during the Employment Term and assist the Group to formulate business strategies and implement development and expansion plans of the Target. On such basis, the Directors consider that the Management Bonus is fair and reasonable and in the interest of the Company and the Shareholders as a whole.

The service contract proposed to be entered into between Madam Chung and the Target does not provide for management bonus. The Board will take into account the performance of the Target after Completion in determining whether to award any bonus to Madam Chung and all such bonus, if any, will be granted at the sole discretion of the Board.

INFORMATION ABOUT THE TARGET

The Target is a company incorporated in Hong Kong with limited liability and is principally engaged in building construction, building maintenance and improvement works, project management, renovation and decoration works in Hong Kong. As advised by the Vendors, the Target has an operating history of over 15 years in the industry and the Target is a registered general building contractor and a registered minor works contractor under the Buildings Ordinance. The Target has also been approved by the Hong Kong Housing Authority under the sub-category of Maintenance Works Category in the category of Building Work in Group M1 with the confirmed status and has been on the List of Building Contractors maintained by the Hong Kong Housing Authority.

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LETTER FROM THE BOARD

Business

The Target acts as a main contractor for all of its projects and engages sub-contractors for the relevant project works with supervision of and management by the Target’s project team. The Target’s role as a main contractor includes overall project management and supervision of works conducted by its sub-contractors to ensure their conformity to contractual specification and completion of projects taking place on time and within budget.

Building, maintenance and renovation contracts of the Target are generally negotiated and concluded through bidding process that established collectively by the clients and the contractors, in which the clients solicit and evaluate offers from bidders. From time to time, the Target regularly reviews invitations for tender of construction works from the Hong Kong Housing Authority and private developers, which are generally open for tender for a period ranging from one to three weeks. After assessing various factors, including but not limited to complexity and technical requirements of the works, the Target’s expertise and capacity, required completion time, work specifications, availability of potential sub-contractor engagement and possible safety, environmental and other risk factors associated with such construction project, the management of the Target will then decide whether to make tender submission and prepare the relevant tender submission documents.

Once the tenders of construction works have been awarded to the Target, the Target will act as the main contractor in the building, maintenance and renovation projects by engaging its sub-contractors and making orders for materials and equipment to undergo projects and providing performance bond for indemnity in favour of the developer/management company/tender offeror in the private sector. The Target closely monitors and provides supervision over the works carrying out by its sub-contractors. Generally, based on the amount of work completed, the Target receives progress payment, which is normally made on a monthly basis, pursuant to the terms of each contract.

Major Customers and Suppliers

Major customers of the Target cover both public and private sectors, including government/ public organisations (e.g. the Hong Kong Housing Authority), property/facility management companies, property developers, and other organisations (e.g. incorporated owners of residential and non-residential buildings). Major suppliers of the Target include sub-contractors and suppliers of materials required for the building, maintenance and renovation projects.

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LETTER FROM THE BOARD

Competitions

It is expected that the number of service providers would continue to increase due to the expected bright outlook in the industry in light of the growing demand for building maintenance and renovation services driven by the factors set out in the section headed ‘‘Reasons for and benefits of the Acquisition’’ of this letter from the Board. The markets served by the Target are highly competitive and, for the most part, requires substantial resources and highly skilled and experienced technicians/labour.

Risk factors

The Company has identified various risk factors in respect of the Acquisition as follows:

1. the Target’s revenue is mainly derived from contracts which are non-recurrent in nature and awarded through competitive tendering which the Target does not directly control. There is no assurance that the Target will meet its customers’ tendering requirements in which case the Target may not be granted the tender and its reputation, business operations, financial condition and results of operations may be adversely affected;

2. the Target’s cash flows and liquidity position may fluctuate due to the payment practice applied to projects and the Target may fail to receive progress payment or retention money on a timely basis. If the Target carries out excessive number of significant projects, which require substantial initial setting up costs without sufficient cash inflow from other projects or other suitable sources of funds at a particular point of time, the corresponding cash flow position of the Target may be adversely affected;

3. the Target may take responsibilities for the sub-standard performance or non-performance of such sub-contractors. In the event that there is any violation, whether substantial or minor in nature, of any laws, rules or regulations, by the sub-contractors occurring in the sites for which the Target is responsible, the operations and financial condition of the Target may be adversely affected;

4. the Target is dependent on its key management. Inability to retain its key management and to recruit experienced replacement staff may adversely affect the Target’s business operation; and

5. there is no assurance that the Target is able to maintain its eligibility to tender public works. In the event that any of registrations and certificates of the Target is not renewed or is removed from or suspended in the list or downgraded or demoted to a lower group, the Target’s operations may be adversely affected.

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LETTER FROM THE BOARD

Contracts

As advised by the Vendors, the Target has currently undertaken (i) five building maintenance and/or renovation projects from private sector with the contract sums ranging from approximately HK$4.1 million to HK$39.4 million and the aggregate contract sum of approximately HK$72.5 million; and (ii) one building repair project from the Hong Kong Housing Authority with the contract sum of approximately HK$5.0 million. Hence, the aggregate contract sums from private sector and the Hong Kong Housing Authority amounted to approximately HK$77.5 million and the aggregate estimated paid and payable subcontracting fee of those six existing construction projects undertaken by the Target was approximately HK$65.9 million. As at the Latest Practicable Date, approximately HK$48.4 million of the aggregate contact sums was still outstanding and those six construction projects were pending to be completed.

Material legal and regulatory requirements applicable to the Target

General building contractor

To the best knowledge of the Directors, under section 8B(2) of the Buildings Ordinance, an applicant for registration as general building contractor or as specialist contractor must satisfy the Building Authority on the following aspects:

• (i) if it is a corporation, the adequacy of its management structure;

• (ii) the appropriate experience and qualifications of its personnel;

• (iii) its ability to have access to plant and resources; and

• (iv) the ability of the person appointed to act for the applicant for the purposes of the Buildings Ordinance to understand building works and street works through relevant experience and a general knowledge of the basic statutory requirements.

In considering each application, the Building Authority is to have regard to the qualifications, competence and experience of the following key personnel requirements:

• (i) a minimum of one authorised signatory, being a person appointed by the applicant to act for the applicant for the purposes of the Buildings Ordinance;

• (ii) for a corporation – a minimum of one technical director, being a director from the board of directors of the applicant who is authorised by the board to:

• a. have access to plant and resources;

• b. provide technical and financial support for the execution of building works and street works; and

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LETTER FROM THE BOARD

• c. make decisions for the company and supervise the authorized signatory and other personnel for the purpose of ensuring that the works are carried out in accordance with the Buildings Ordinance; and

• (iii) for a corporation which appoints a director who does not possess the required qualification or experience as technical director to manage the carrying out of building works and street works – an ‘other officer’ or an authorized signatory authorised by the board of directors to assist the technical director.

Under Section 8C(2)(c) of the Buildings Ordinance, a registered contractor should apply to the Building Authority for renewal of registration not earlier than 4 months and not later than 28 days prior to the date of expiry of the registration.

Minor works contractor

To the best knowledge of the Directors, under Section 12(5) of the Building (Minor Works) Regulation (Chapter 123N of the Laws of Hong Kong), an applicant for registration as registered minor works contractor must satisfy the Building Authority on the following aspect:

• (i) appropriate qualifications and experience of at least one of its director;

• (ii) it has access to plants and resources;

• (iii) if it is a corporation, its management structure is adequate;

• (iv) appropriate qualifications and experience of at least one of the persons appointed by the applicant to act for the applicant for the purposes of the Buildings Ordinance and his ability to understand the minor works under application through relevant experience and a general knowledge of the basic statutory requirements; and

• (v) the applicant is suitable for registration in the register.

In considering each application, the Building Authority is to have regard to the qualifications, experience and suitability of the following key personnel of the applicant:

• (i) a minimum of one authorised signatory, being a person appointed by the applicant to act for the applicant for the purposes of the Buildings Ordinance; and

• (ii) for a corporation – a minimum of one director from the board of directors of the applicant, hereinafter referred to as the technical director, who is authorised by the board to:

• a. have access to plants and resources;

• b. provide technical and financial support for the execution of minor works; and

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LETTER FROM THE BOARD

• c. make decisions for the company and supervise the authorized signature and other personnel for the purpose of ensuring that the works are carried out in accordance with the Buildings Ordinance.

Under Section 14(2)(c) of the Building (Minor Works) Regulation (Chapter 123N of the Laws of Hong Kong), a registered minor works contractor should apply to the Building Authority for renewal of registration not earlier than 4 months and not later than 28 days prior to the date of expiry of the registration.

Approved Contractors of the Hong Kong Housing Authority

The Hong Kong Housing Authority prescribes its own requirements for listed contractors to tender for its works. In order to tender for Hong Kong Housing Authority building works, a contractor must be admitted onto the contractor list of Hong Kong Housing Authority under the categories of either Building Work (New Works) or Building Work (Maintenance Works). A contractor under the Building Work (Maintenance Works) category in Group M1 must have to fulfill the requirements under the ‘‘Specific Guidelines for Building Contractors’’ of ‘‘Guide to Registration of Works Contractors and Property Management Services Providers’’ published by the Hong Kong Housing Authority and is subject to, among other things, certain financial criteria, proven relevant record, management and on-site personnel requirements, probation and annual assessment on financial position.

Annual renewal of the status as list contractor by the Hong Kong Housing Authority is subject to satisfactory compliance with the requirements stated in the ‘‘Specific Guidelines for Building Contractors’’ of ‘‘Guide to Registration of Works Contractors and Property Management Services Providers’’ published by the Hong Kong Housing Authority and the payment of a prescribed fee for annual renewal.

In the event that any of the Technical Director and the Authorized Signatory of the Target resigns or ceases to be employed by the Target, the compliance with the relevant requirements under the Buildings Ordinance can be maintained by the other alternate Technical Director or Authorized Signatory and immediate steps to arrange for a replacement of the alternate Technical Director and/or the Authorized Signatory will be taken thereafter. Taking into account that (i) each of Mr. Lee, Madam Chung and two other individuals, who are the Technical Director and/or Authorized Signatory (as the case may be) are required to give not less than six months’ prior written notice to the Target to terminate their employment pursuant to their respective service contracts to be entered into upon Completion; (ii) the Group intends to provide assistance and trainings to the employees of the Target for attaining the relevant professional certification and qualification; and (iii) to the best knowledge of the Directors, the supply of personnel with the relevant experiences and qualifications to act as the Technical Director and/or Authorized Signatory is not scarce in the labour market, the Group is expected to have sufficient time to identify and recruit alternate Technical Director and/or the Authorized Signatory in order to maintain the registrations and qualifications of the Target.

– 15 –

LETTER FROM THE BOARD

Set out below is certain audited financial information of the Target for the two years ended 31 March 2015 as extracted from the accountants’ report as set out in Appendix II to this circular prepared on the basis consistent with the accounting policies adopted by the Group:

			For the	For the
			year ended	year ended
			31 March	31 March
			2014	2015
			HK$’000	HK$’000
Net	profit	before taxation	1,407	760
Net	profit	after taxation	1,407	1,428
				(Note)

• Note: The net profit after taxation for the year ended 31 March 2015 as shown in the section headed ‘‘Basis of the Consideration’’ was extracted from the Target’s statutory financial statements for the year ended 31 March 2015. The difference between the net profit after taxation for the year ended 31 March 2015 as extracted from the Target’s statutory financial statements for the year ended 31 March 2015 and that as set out above and extracted from the accountants’ report set out in Appendix II to this circular was mainly attributable to (i) the timing difference of contract revenue and contract cost recognition in respect of the Target’s construction contracts as reflected under percentage of completion method; and (ii) deferred tax credit recognised in respect of the Target’s unused tax loss.

The audited total assets value and net assets value of the Target as at 30 June 2015 were approximately HK$18,139,000 and HK$3,640,000 respectively.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group is principally engaged in (i) the manufacture and sale of medical devices products; (ii) the manufacturing and sale of plastic moulding products; (iii) the provision of public relations services; and (iv) the provision of human resources management services.

As public awareness of the importance of building upkeep for enhancing property value grows and building renovation and maintenance works can maintain or elevate the value of buildings, the demand for building renovation and maintenance works has continued to increase over the past few years. With an estimated life span of about 50 years, buildings in Hong Kong are commonly made of reinforced concrete and materials depreciate over time. With reference to the Development Bureau, the number of private buildings over 30 years old will increase from 13,000 to 22,000 within ten years’ time by 2018. The building maintenance and renovation services grow in line with the increasing number of ageing buildings in Hong Kong.

– 16 –

LETTER FROM THE BOARD

Apart from residential buildings, revitalisation measures for industrial buildings also provide additional market demand for building renovations. The measures facilitate the redevelopment and wholesale conversion of older industrial buildings with a purpose of providing more floor space for suitable uses such as hotels, office or data centres to meet Hong Kong’s changing social and economic needs. In many of the cases, owners have to engage building renovation experts for altering the structures of their premises and provide additional utilities in order to meet the requirements set down by various regulatory bodies.

The recent release of government green policy makes the already vibrant market getting even more excited. Building renovation participants expect the ‘‘Energy saving plan for Hong Kong’s built environment 2015-2025+’’ released in May 2015 will further boost the market demand for renovation works, as approximately 8,000 buildings being managed by the Government of Hong Kong have to perform alternation, retro-commissioning and retrofitting improvement work for energy saving installations and retrofits in order to comply with the new green standard.

As disclosed in the announcement of the Company dated 21 May 2015, the Directors consider that it is beneficial for the Group to lessen its dependence on its existing manufacturing business segment by diversifying its existing business portfolio so as to broaden its revenue stream and generate stable and sustainable income. Taking into account that the Target has an established track record in the industry of building maintenance and improvement works, the Directors are of the view that the Acquisition represents an opportunity for the Group to take initial step into such business and facilitate the Company with relevant construction specialty to enter into the field of building construction and building maintenance and improvement works.

The terms of the Acquisition Agreement were determined after arm’s length negotiations between the parties thereto. The Directors consider that the terms of the Acquisition Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

As certain percentage ratios in respect of the Acquisition are more than 25% but all percentage ratios are less than 100%, the Acquisition constitutes a major transaction for the Company under the Listing Rules and is subject to notification, announcement and Shareholders’ approval requirements of Chapter 14 of the Listing Rules.

SGM

The SGM is convened to be held at 10:30 a.m. on Monday, 21 December 2015 at Regus Conference Centre, 35/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, the notice of which is set out on pages SGM-1 to SGM-2 of this circular, for the Shareholder to consider and, if thought fit, approve, among other matters, the Acquisition, the Acquisition Agreement and the transactions contemplated thereunder.

– 17 –

LETTER FROM THE BOARD

In compliance with the Listing Rules, the resolution will be voted on by way of poll at the SGM.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, no Shareholder has any material interest in the Acquisition and no Shareholder is required to abstain from voting on the resolution to be proposed at the SGM.

You will find the enclosed proxy form for use at the SGM. Whether or not you are able to attend the SGM, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof to the office of the Company’s branch share registrar and transfer office in Hong Kong, Tricor Standard Limited of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong. Completion and return of the proxy form will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

RECOMMENDATION

The Directors believe that the terms of the Acquisition are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that all Shareholders to vote in favour of the resolution to be proposed at the SGM.

ADDITIONAL INFORMATION

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

On behalf of the Board AMCO United Holding Limited YIP Wai Lun, Alvin Chairman and Managing Director

– 18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE-YEAR FINANCIAL INFORMATION OF THE COMPANY

Details of the financial information of the Group for each of the year ended 31 December 2012, 31 December 2013 and 31 December 2014 have been set out in the annual reports of the Company for each of the year ended 31 December 2012 (pages 55 to 191), 31 December 2013 (pages 52 to 163) and 31 December 2014 (pages 56 to 159) respectively. Unqualified audit opinion was issued for the audited consolidated financial statements of the Group for each of the year ended 31 December 2012, 31 December 2013 and 31 December 2014. Details of the financial information of the Group for the six months ended 30 June 2015 is set out in the unaudited condensed consolidated financial statements in the interim report of the Company for the six months ended 30 June 2015 (pages 29 to 60). All the annual reports and the interim report of the Company have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.amco-united.com).

The annual report for the year ended 31 December 2012 of the Company was published on 29 April 2013 on the Stock Exchange’s website which can be accessed by the link below:

http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0429/LTN20130429642.pdf

The annual report for the year ended 31 December 2013 of the Company was published on 29 April 2014 on the Stock Exchange’s website which can be accessed by the link below:

http://www.hkexnews.hk/listedco/listconews/SEHK/2014/0429/LTN201404291206.pdf

The annual report for the year ended 31 December 2014 of the Company was published on 29 April 2015 on the Stock Exchange’s website which can be accessed by the link below:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0429/LTN20150429401.pdf

The interim report for the six months ended 30 June 2015 of the Company was published on 17 September 2015 on the Stock Exchange’s website which can be accessed by the link below:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0917/LTN20150917643.pdf

I – 1

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. INDEBTEDNESS OF THE ENLARGED GROUP

As at the close of business on 31 October 2015, being the latest practicable date for the purpose of ascertaining the indebtedness of the Enlarged Group prior to the printing of this circular, the indebtedness of the Enlarged Group was as follows:

(a) Borrowings and bank overdrafts

The Enlarged Group had outstanding borrowings of approximately HK$6,486,000, comprising secured bank term loans of approximately HK$1,486,000 and unsecured borrowing of HK$5,000,000. Bank term loans of approximately HK$1,313,000 were guaranteed by a director of the Target. Bank term loan of approximately HK$123,000 was guaranteed by a director of the Target and the Government of Hong Kong Special Administrative Region (‘‘HKSARG’’). Bank term loan of approximately HK$50,000 was guaranteed by directors of the Target and the HKSARG.

(b) Obligations under finance lease

The Enlarged Group had outstanding obligations under finance lease in respect of a motor vehicle of approximately HK$107,000, which was secured by the relevant motor vehicle and guaranteed by a director of the Target.

(c) Disclaimer

Save as disclosed above and apart from intra-group liabilities and normal trade payables, the Enlarged Group did not have any other mortgages, charges, debentures, loan capital, bank loans and overdrafts, debt securities or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances or acceptance credit, or any guarantees or other contingent liabilities outstanding at the close of business on 31 October 2015.

3. WORKING CAPITAL STATEMENT OF THE ENLARGED GROUP

The Directors are of the opinion that, taking into account the cash flows generated from the operating activities, the financial resources available to the Enlarged Group including internally generated funds, the available credit facilities and the effect of the Acquisition, the working capital available to the Enlarged Group is sufficient for the Enlarged Group’s requirements for at least 12 months from the date of this circular.

I – 2

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

4. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

2015 will be a year of achieving various milestones for the strategic transformation of the Group including sustained cost saving, effective product mix fine-tuning and diversified business development. The implementation of cost saving program since 2013 successfully has maintained the production cost at relatively low level and contribute to overcome short-term headwinds for sustainable growth in the past two years. As set out in the announcement of the Company dated 21 May 2015, the Directors considered that it is beneficial for the Group to lessen its dependence on its existing manufacturing business segment by diversifying its existing business portfolio so as to broaden its revenue stream and generate stable and sustainable income. If the Acquisition materialises, the Enlarged Group will engage in (i) the manufacture and sale of medical devices products (‘‘Medical Devices Business’’); (ii) the manufacture and sale of plastic moulding products (‘‘Plastic Moulding Business’’); (iii) the provision of public relations services (‘‘PR Business’’); (iv) the provision of human resources management services (‘‘HR Business’’); and (v) the provision of construction services in building construction, building maintenance and improvement works, project management, renovation and decoration works (‘‘Building Contract Works Business’’).

Medical Devices Business

Though the Medical Devices Business is a business unit that suffered from the rising cost of production in the past few years, revenue has increased in the interim period of 2015 which was mainly due to increase in sales orders from its key customer in America as a result of the strong demand of customer’s end product. The increase in sales orders began to drive profitability relief during the year of 2014 after sudden drop in customer orders in the year of 2013 which was triggered by recall of one of ultimate customers’ products. As a result, segmental loss of the interim period of 2015 has been narrowed to approximately HK$0.08 million, representing a decrease of approximately 97.3% compared to a loss of approximately HK$2.94 million in the same period last year. The Enlarged Group will continue to bolster the effort to effectively adjust the product mix towards higher profit margin with a view to enhancing the profitability of products.

Plastics Moulding Business

As disclosed in the announcement of the Company dated 12 January 2015, the Group would cease the operation of Plastics Moulding Business by the end of the first quarter of 2015. As set out in the announcement of the Company dated 14 July 2015, in the first half year of 2015, the Group has ceased the production of majority of the products, which have contributed relatively low gross profit margin, however, the Group has been accepting production orders of mould fabrication and some products, which have relatively higher gross profit margin. As at the Latest Practicable Date, the Company has not yet ceased the operation of Plastics Moulding Business. Comparing to other business segments of the Group, the Plastics Moulding Business has considered to be a underperformer with less momentum to grow, and hence it is expected that the Group’s resources will be progressively shifted to other business segments which are more

I – 3

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

profitable over time. The Enlarged Group will closely monitor its on-going performance and will continue the operation of Plastics Moulding Business as long as it still contributes to share appropriate portion of the administration and operation cost of the Enlarged Group.

PR Business and HR Business

In April 2015, the Group has set up an office for both PR Business and HR Business in Central, Hong Kong. The Company has also recruited a team of public relations consultants, who provide public relations services to corporates to assist in building up and maintaining their corporate image and marketing the corporations to the public and media through a series of corporate functions. As at the Latest Practicable Date, the Company had a team of five members for the operation of the PR Business.

In addition, as at the Latest Practicable Date, the Company had a team of eight recruitment consultants and three members to operate the HR Business. Currently, the recruitment consultants have approached several banking and non-banking clients to obtain the job descriptions of the soliciting staff. The recruitment consultants have also conducted interviews with a number of potential candidates to identify their capabilities. Meanwhile, a database for potential candidates has been set up for staff searching and matching purposes. In addition of the existing executive search service, the Enlarged Group is planning to expand the staff outsourcing service, such as payroll and staff secondment services. It is believed that these new services will contribute a steady revenue to the Enlarged Group.

In view of the rising awareness of corporate communications functions and the increasing demand for human resources management, both PR Business and HR Business are believed to become a thrust for the growth of the Enlarged Group’s revenue.

In light of the potential future prospects offered by the Acquisition as stated in the section headed ‘‘Reasons for and benefits of the Acquisition’’ in the letter from the Board to this circular, the Directors are of the view that the Acquisition will likely contribute positively to the Enlarged Group. Nevertheless, the actual effect of the Acquisition on the earnings of the Enlarged Group will depend on the financial performance of the Target in the future.

As at the Latest Practicable Date, the number of employees employed by the Group was thirty and as advised by the Vendors, the Target had seven employees. In view of the intention of the Company in expanding and developing the business of the Target upon Completion by making tenders for construction projects in larger scale as disclosed in the circular of the Company dated 2 November 2015, upon Completion, the Company is expected to recruit a total of eight additional employees in the areas of project management, quality control, accounting and administrative support so as to cater for the operation need in carrying out the proposed construction projects.

I – 4

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

In addition, the Company intends to engage five additional employees in the areas of business development, finance and accounting in order to fulfill the operating demand. In view of the need of office space of the Group, the business expansion and recruitment plan of the Group, the Company intends to purchase offices in Hong Kong. Details of the BFG Acquisition (as defined below) are set out in the section headed ‘‘7. Proposed acquisition after 31 December 2014 being the date on which the latest published audited consolidated accounts of the Group were made up’’ in this appendix. As at the Latest Practicable Date, the Company intended to purchase a commercial office of approximately 1,500 to 2,000 square feet in the area of Admiralty, Central or Sheung Wan in addition to the commercial property held by BFG (as defined below).

Furthermore, as disclosed in the announcements of the Company dated 12 January 2015 and 23 June 2015, the Enlarged Group is currently exploring the opportunities of the business in provision of money lending and other financial related services. During the six months ended 30 June 2015, the Group lodged an application for obtaining a money lenders licence (‘‘Licence’’) to the Registrar of Money Lenders pursuant to the Money Lender Ordinance (Chapter 163 of the Laws of Hong Kong). On 25 August 2015, the Licence has been granted and such money lending business is expected to become a new growth driver for the Enlarged Group’s revenue.

In addition, on 19 November 2015, a wholly-owned subsidiary of the Company entered into an agreement with an independent third party to purchase the entire issued share capital of, and shareholder’s loan to, Zeed Asia Technology Limited (‘‘Zeed Asia’’) at the consideration of HK$3,200,000 and completion of such acquisition took place on the same date immediately after signing of such agreement. Zeed Asia is principally engaged in provision of information technology services.

5. MATERIAL ADVERSE CHANGE

As disclosed in the interim report of the Company for the six months ended 30 June 2015, the Group recorded a loss of approximately HK$9.0 million for the six months ended 30 June 2015 but such net loss decreased significantly by approximately 63.9% as compared with a loss of approximately HK$24.9 million for the corresponding period of 2014. Such loss and the decrease in the net loss for the six months ended 30 June 2015 were primarily attributable to (i) the initial cost of developing the PR Business and HR Business; (ii) the decrease in administrative expenses primarily due to decrease in staff cost and other general administrative costs; (iii) the decrease in finance expenses primarily due to the repayment of all bank loans during the six months ended 30 June 2015; (iv) the absence of the loss in fair value upon the conversion of convertible notes through profit or loss of approximately HK$4.0 million as recognized in the corresponding period of 2014; and (v) the absence of the impairment loss on goodwill in the business of manufacture and sale of plastics moulding products of approximately HK$4.0 million as recognized in the corresponding period of 2014.

I – 5

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

As at the Latest Practicable Date, the Directors confirm that save as disclosed in the interim report of the Company for the six months ended 30 June 2015, there has been no material adverse change in the financial or trading position of the Group since 31 December 2014 (being the date to which the latest published audited financial statements of the Group were made up).

6. EFFECT OF THE ACQUISITION ON THE EARNINGS AND ASSETS AND LIABILITIES OF THE GROUP

Set out in Appendix III to this circular is the unaudited pro forma financial information of the Enlarged Group which illustrates the financial impact of the Acquisition on the assets and liabilities of the Enlarged Group.

As at 30 June 2015, the published unaudited consolidated total assets and total liabilities of the Group amounted to approximately HK$69,866,000 and HK$30,687,000 respectively. As set out in Appendix III to this circular, assuming Completion had taken place on 30 June 2015, the unaudited pro forma consolidated total assets and liabilities of the Group would be increased to approximately HK$85,510,000 and HK$46,331,000 respectively. The revenue of the Target is expected to increase the revenue of the Group after Completion. Upon Completion, the financial results of the Target will be consolidated with those of the Group and the earnings of the Group will be affected by the performance of the Target.

Further details of the financial effect of the Acquisition on the assets and liabilities of the Group together with the bases in preparing the unaudited pro forma financial information are set out in Appendix III to this circular.

7. PROPOSED ACQUISITION AFTER 31 DECEMBER 2014 BEING THE DATE ON WHICH THE LATEST PUBLISHED AUDITED CONSOLIDATED ACCOUNTS OF THE GROUP WERE MADE UP

As disclosed in the announcement of the Company dated 6 October 2015, the Company as the purchaser entered into the sale and purchase agreement dated 6 October 2015 with GET Holdings Limited (a company incorporated in the Cayman Islands and continued in Bermuda with limited liability, the shares of which are listed on Growth Enterprise Market of the Stock Exchange (Stock Code: 8100)) as the vendor in relation to the acquisition (‘‘BFG Acquisition’’) of 200 issued shares in the share capital of Bonus First Group Limited (‘‘BFG’’), representing its entire issued share capital at completion of such acquisition, at a cash consideration of HK$62.0 million. BFG is a company incorporated in the British Virgin Islands with limited liability. The principal business of BFG is investment holding and its principal asset is a commercial property located at Office 503 (also known as Unit 503), 5th Floor, Wing On House, No. 71 Des Voeux Road Central, Hong Kong. As at the Latest Practicable Date, completion of the BFG Acquisition has not yet taken place. Details of the financial information of BFG for the period from 12 March 2015 to 30 September 2015 have been set out in the Company’s circular dated 4 December 2015 (from pages II-1 to II-23), which has been published on the website of the Company at http://www.amco-united.com/. Please visit the Company’s website for more details.

The aggregate of the remuneration payable to and benefits in kind receivable by the Directors will not be varied in consequence of the BFG Acquisition.

I – 6

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(1) ACCOUNTANTS’ REPORT ON THE TARGET

The following is the text of a report, prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountant, ZHONGHUI ANDA CPA Limited, Certified Public Accountants, Hong Kong:

==> picture [115 x 36] intentionally omitted <==

4 December 2015

The Board of Directors

AMCO United Holding Limited

Dear Sirs,

We set out below our report on the financial information relating to ACE Engineering Limited (the ‘‘Target Company’’), which comprises the Target Company’s statements of profit and loss and other comprehensive income, statements of changes in equity and statements of cash flows for each of the three years ended 31 March 2013, 2014 and 2015 and three months ended 30 June 2015 (the ‘‘Relevant Periods’’) and the Target Company’s statements of financial position as at 31 March 2013, 2014 and 2015 and 30 June 2015 (the ‘‘Financial Information’’) for inclusion in a circular issued by AMCO United Holding Limited (the ‘‘Company’’) dated 4 December 2015 (the ‘‘Circular’’) in connection with the proposed acquisition of the entire equity interests of the Target Company (the ‘‘Acquisition’’).

The Target Company, which is engaged in building construction, building maintenance and improvement works, project management, renovation and decoration works in Hong Kong, was incorporated in Hong Kong on 26 June 2000 with limited liability.

The statutory financial statements of the Target Company were prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). The statutory financial statements of the Target Company were audited by Alan Chan & Company, Certified Public Accountants registered in Hong Kong.

For the purpose of this report, the directors of the Target Company have prepared the financial statements of the Target Company for the Relevant Periods in accordance with HKFRSs (‘‘Underlying Financial Statements’’).

II – 1

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

We have performed an independent audit on the Underlying Financial Statements in accordance with Hong Kong Standards on Auditing issued by the HKICPA and have examined the Underlying Financial Statements for the Relevant Periods in accordance with Auditing Guideline 3.340 ‘‘Prospectus and the Reporting Accountant’’ issued by the HKICPA.

The Financial Information of the Target Company for the Relevant Periods set out in this report has been prepared from the Underlying Financial Statements. No adjustments were considered necessary to the Underlying Financial Statements in preparing our report for inclusion in the Circular.

The preparation of the Underlying Financial Statements are the responsibility of the directors of the Target Company. The directors of the Company are responsible for the contents of the Circular in which this report is included. It is our responsibility to compile the Financial Information set out in this report from the Underlying Financial Statements, to form an independent opinion on the Financial Information and to report our opinion to you.

OPINION

In our opinion, the Financial Information gives, for the purpose of this report, a true and fair view of the financial position of the Target Company as at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015; and of the performance and cash flows of the Target Company for the Relevant Periods.

COMPARATIVE FINANCIAL INFORMATION

For the purpose of this report, the directors of the Target Company have prepared the comparative financial information of the Target Company for the three months ended 30 June 2014 in accordance with the HKFRSs (the ‘‘Comparative Financial Information’’). We have reviewed the Comparative Financial Information in accordance with Hong Kong Standard on Review Engagements 2400 ‘‘Engagements to Review Financial Statements’’ issued by the HKICPA. A review consists principally of making enquiries of the Target Company management and applying analytical procedures to the Comparative Financial Information and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the Comparative Financial Information.

REVIEW CONCLUSION

On the basis of our review which does not constitute an audit, we are not aware of any material modifications that should be made to the Comparative Financial Information.

II – 2

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

FINANCIAL INFORMATION

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes Turnover 7 Cost of service Gross profit Other income 8 Administrative expenses Operating profit Finance costs 9 Profit before tax Income tax 11 Profit and total comprehensive income for the year/period 12	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 47,662 37,095 24,200 (38,643) (32,362) (20,136) 9,019 4,733 4,064 67 176 507 (5,263) (3,148) (3,612) 3,823 1,761 959 (434) (354) (199) 3,389 1,407 760 (760) – 668 2,629 1,407 1,428	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 5,774 9,968 (4,448) (7,833) 1,326 2,135 159 49 (769) (1,009) 716 1,175 (55) (64) 661 1,111 – (186) 661 925	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 5,774 9,968 (4,448) (7,833) 1,326 2,135 159 49 (769) (1,009) 716 1,175 (55) (64) 661 1,111 – (186) 661 925
			2,135 49 (1,009)
			1,175 (64)
			1,111 (186)
			925

II – 3

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

STATEMENTS OF FINANCIAL POSITION

Notes NON-CURRENT ASSETS Property, plant and equipment 15 Deferred tax assets 16 CURRENT ASSETS Trade receivables 17 Prepayments, deposits and other receivables 18 Gross amounts due from customers for contract work 19 Amounts due from directors 20 Bank and cash balances CURRENT LIABILITIES Trade payables 21 Accruals and other payables Gross amounts due to customers for contract work 19 Amount due to a related company 22 Bank borrowings 23 Finance lease payables 24 Current tax liabilities NET CURRENT (LIABILITIES)/ ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITY Finance lease payables 24 NET (LIABILITIES)/ASSETS CAPITAL AND RESERVE Share capital 25 Reserves TOTAL EQUITY	2013 HK$’000 (Audited) 37 – 37 5,706 5,029 1,943 2,124 2,411 17,213 1,866 – 3,090 – 11,792 – 622 17,370 (157) (120) – (120) 4,000 (4,120) (120)	At 31 March 2014 HK$’000 (Audited) 249 – 249 6,609 374 1,092 2,862 1,116 12,053 6,659 150 217 – 3,819 40 – 10,885 1,168 1,417 130 1,287 4,000 (2,713) 1,287	2015 HK$’000 (Audited) 185 668 853 10,217 955 50 3,110 403 14,735 8,287 238 661 144 3,413 40 – 12,783 1,952 2,805 90 2,715 4,000 (1,285) 2,715	At 30 June 2015 HK$’000 (Audited) 169 482
				651
				11,277 1,292 85 3,099 1,735
				17,488
				9,347 240 1,062 144 3,586 40 –
				14,419
				3,069
				3,720
				80
				3,640
				4,000 (360)
				3,640

II – 4

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

STATEMENTS OF CHANGES IN EQUITY

At 1 April 2012 Profit and total comprehensive income for the year At 31 March 2013 At 1 April 2013 Profit and total comprehensive income for the year At 31 March 2014 At 1 April 2014 Profit and total comprehensive income for the year At 31 March 2015 At 1 April 2015 Profit and total comprehensive income for the period At 30 June 2015 Three months ended 30 June 2014 At 1 April 2014 Profit and total comprehensive income for the period At 30 June 2014	Share capital HK$’000 (Audited) 4,000 – 4,000 4,000 – 4,000 4,000 – 4,000 4,000 – 4,000 Share capital HK$’000 (Unaudited) 4,000 – 4,000	Accumulated losses HK$’000 (Audited) (6,749) 2,629 (4,120) (4,120) 1,407 (2,713) (2,713) 1,428 (1,285) (1,285) 925 (360) Accumulated losses HK$’000 (Unaudited) (2,713) 661 (2,052)	Total HK$’000 (Audited) (2,749) 2,629 (120) (120) 1,407 1,287 1,287 1,428 2,715 2,715 925 3,640 Total HK$’000 (Unaudited) 1,287 661 1,948

II – 5

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

STATEMENTS OF CASH FLOWS

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs Interest income Depreciation Operating profit before working capital changes Change in trade receivables Change in prepayments, deposits and other receivables Change in gross amounts due from customers for contract work Change in amounts due from directors Change in trade payables Change in accruals and other payables Change in gross amounts due to customers for contract work Change in amount with a related company Cash generated from/(used in) operations Income tax paid Interest paid Net cash generated from/(used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Purchase of property, plant and equipment Net cash generated from/(used in) investing activities	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 3,389 1,407 760 434 354 199 (19) (34) (106) 9 64 64 3,813 1,791 917 (535) (903) (3,608) (4,918) 4,655 (581) (1,943) 851 1,042 (1,212) (738) (248) (2,482) 4,793 1,628 (471) 150 88 3,090 (2,873) 444 3,328 – 144 (1,330) 7,726 (174) – (622) – (434) (351) (195) (1,764) 6,753 (369) 19 34 106 (14) (76) – 5 (42) 106	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 661 1,111 55 64 – (24) 16 16 732 1,167 (2,255) (1,060) 866 (337) (495) (35) (7) 11 327 1,060 33 2 83 401 – – (716) 1,209 – – (54) (63) (770) 1,146 – 24 – – – 24	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 661 1,111 55 64 – (24) 16 16 732 1,167 (2,255) (1,060) 866 (337) (495) (35) (7) 11 327 1,060 33 2 83 401 – – (716) 1,209 – – (54) (63) (770) 1,146 – 24 – – – 24
			1,167 (1,060) (337) (35) 11 1,060 2 401 –
			1,209 – (63)
			1,146
			24 –
			24

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of bank loans Bank loans raised Finance lease charges paid Repayment of finance lease payables Net cash generated from/(used in) financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR/ PERIOD CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD ANALYSIS OF CASH AND CASH EQUIVALENTS Bank and cash balances Bank overdrafts	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (1,428) (6,228) (1,868) 1,574 – 852 – (3) (4) – (30) (40) 146 (6,261) (1,060) (1,613) 450 (1,323) 1,569 (44) 406 (44) 406 (917) 2,411 1,116 403 (2,455) (710) (1,320) (44) 406 (917)	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) (883) (858) 279 1,409 (1) (1) (10) (10) (615) 540 (1,385) 1,710 406 (917) (979) 793 309 1,735 (1,288) (942) (979) 793	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) (883) (858) 279 1,409 (1) (1) (10) (10) (615) 540 (1,385) 1,710 406 (917) (979) 793 309 1,735 (1,288) (942) (979) 793
			540
			1,710 (917)
			793
			1,735 (942)
			793

II – 7

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

NOTES TO FINANCIAL INFORMATION

1. General Information

The Target Company was incorporated in Hong Kong on 26 June 2000 with limited liability. The address of its registered office and principal place of business is Unit 1213, 12/F., Metro Loft, 38 Kwai Hei Street, Kwai Chung, Hong Kong.

The Target Company is principally engaged in building construction, building maintenance and improvement works, project management, renovation and decoration works in Hong Kong.

The Financial Information is presented in Hong Kong dollars (‘‘HK$’’), which is the same as the functional currency of the Target Company.

2. Basis of Preparation

The Financial Information contained in this report does not constitute the Target Company’s statutory financial statements for either of the years ended 31 March 2013, 2014 and 2015 but is derived from those financial statements. Further information relating to these statutory financial statements required to be disclosed in accordance with section 436 the Hong Kong Companies Ordinance is as follows:

As the Target Company is a private company, it is not required to deliver its financial statements to the Registrar of Companies, and has not done so.

Target Company’s auditor has reported on those financial statements for all three years. The auditor’s reports were unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis; and did not contain a statement under either sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

3. Adoption of Hong Kong Financial Reporting Standards

The Target Company had adopted all the HKFRSs issued by the HKICPA that are relevant to its operations and effective for its accounting year beginning on 1 April 2015. HKFRSs comprise Hong Kong Financial Reporting Standards (‘‘HKFRS’’); Hong Kong Accounting Standards (‘‘HKAS’’); and Interpretations.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The Target Company has not applied the new and revised HKFRSs that have been issued but are not yet effective. The Target Company has already commenced an assessment of the impact of these new and revised HKFRSs but is not yet in a position to state whether these new and revised HKFRSs would have a material effect on the results of operations and financial position of the Target Company.

4. Significant Accounting Policies

The Financial Information has been prepared in accordance with HKFRSs issued by HKICPA and applicable disclosures required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and by the Hong Kong Companies Ordinance.

The Financial Information has been prepared under the historical cost convention. The significant accounting policies applied in the preparation of the Financial Information are set out below.

Functional and presentation currency

The Financial Information is presented in Hong Kong dollars, rounded to the nearest thousand, which is the Target Company’s presentation currency and functional currency.

Finance leases

Leases that transfer substantially all rewards and risks of ownership of assets to the Target Company, are accounted for as finance leases. At the inception of a finance lease, the cost of the leased asset is recognised at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the profit or loss.

Operating leases

Leases that do not substantially transfer to the lessees all the risks and rewards of ownership of assets are accounted for as operating leases. Lease payments (net of any incentives received from the lessor) are recognised as an expense on a straight-line basis over the lease term.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the statement of financial position when the Target Company becomes a party to the contractual provisions of the instruments.

Financial assets are derecognised when the contractual rights to receive cash flows from the assets expire; the Target Company transfers substantially all the risks and rewards of ownership of the assets; or the Target Company neither transfers nor retains substantially all the risks and rewards of ownership of the assets but has not retained control on the assets. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

Trade and other receivables

Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. An allowance for impairment of trade and other receivables is established when there is objective evidence that the Target Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowances is the difference between the receivables’ carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate computed at initial recognition. The amount of the allowance is recognised in profit or loss.

Impairment losses are reversed in subsequent periods and recognised in profit or loss when an increase in the receivables’ recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the receivables at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents represent cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term highly liquid investments which are readily convertible into known amounts of cash and subject to an insignificant risk of change in value. Bank overdrafts which are repayable on demand and form an integral part of the Target Company’s cash management are also included as a component of cash and cash equivalents.

Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under HKFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Target Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless the Target Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Trade and other payables

Trade and other payables are stated initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits will flow to the Target Company and the amount of revenue can be measured reliably.

• a) Revenue from construction contracts is recognised under the percentage of completion method, measured by reference to the percentage of contract costs incurred to date to the estimated total contract costs for each contract. When the outcome of a construction contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that is probable to be recoverable; and

• b) Interest income is recognised on a time-proportion basis using the effective interest method.

Employee benefits

• a) Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the end of the reporting period.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

• b) Pension obligations

The Target Company contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Target Company and employees are calculated as a percentage of employees’ basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Target Company to the funds.

• c) Termination benefits

Termination benefits are recognised at the earlier of the dates when the Target Company can no longer withdraw the offer of those benefits and when the Target Company recognises restructuring costs and involves the payment of termination benefits.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the Target Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

The depreciable amount of an item of property, plant and equipment is allocated on a systematic basis over its estimated useful life using the straight-line method. The principal annual rates used for depreciation are as follows:

Furniture and fixtures	20%
Office equipments	20%
Motor vehicles	20%

Construction contracts

When the outcome of a construction contract can be estimated reliably, contract costs are recognised as an expense by reference to the stage of completion of the contract at the end of each reporting period. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Construction contracts in progress at the end of each reporting period are recorded in the end of each reporting period at the amount of costs incurred plus recognised profits less recognised losses and progress billings, and are presented in the end of each reporting period as ‘‘Gross amounts due from customers for contract work’’. When progress billings exceed costs incurred plus recognised profits less recognised losses, the surplus is recorded in the end of each reporting period as ‘‘Gross amounts due to customers for contract work’’. Progress billings not yet paid by the customer are included in the end of each reporting period under ‘‘Trade receivables’’.

Taxation

Income tax represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Target Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Financial Information and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the deferred tax is also recognised in other comprehensive income or directly in equity.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Target Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Target Company intends to settle its current tax assets and liabilities on a net basis.

Related parties

A related party is a person or entity that is related to the Target Company.

• (A) A person or a close member of that person’s family is related to the Target Company if that person:

• (i) has control or joint control over the Target Company;

• (ii) has significant influence over the Target Company; or

• (iii) is a member of the key management personnel of the Target Company or of a parent of the Target Company.

• (B) An entity is related to the Target Company if any of the following conditions applies:

• (i) The entity and the Target Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

• (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

• (iii) Both entities are joint ventures of the same third party.

• (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

• (v) The entity is a post-employment benefit plan for the benefit of employees of either the Target Company or an entity related to the Target Company. If the Target Company is itself such a plan, the sponsoring employers are also related to the Target Company.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

• (vi) The entity is controlled or jointly controlled by a person identified in (A).

• (vii) A person identified in (A)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

• (viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Target Company or to a parent of the Target Company.

Impairment of assets

At the end of each reporting period, the Target Company reviews the carrying amounts of its assets except receivables to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Target Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Target Company has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

Events after the end of the reporting period

Events after the reporting period that provide additional information about the Target Company’s position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the financial information. Events after the reporting period that are not adjusting events are disclosed in the notes to the Financial Information when material.

5. Key Sources of Estimation

Key sources of estimation uncertainty

The key assumption concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that has a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is discussed below.

Revenue and profit recognition

The Target Company estimated the percentage of completion of the construction contracts by reference to the proportion that contract costs incurred for work performed to date to the estimated total costs for the contracts. When the final cost incurred by the Target Company is different from the amounts that were initially budgeted, such differences will impact the revenue and profit or loss recognised in the period in which such determination is made. Budget cost of each project will be reviewed periodically and revised accordingly where significant variances are noted during the revision.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Income taxes

Significant estimates are required in determining the provision for income taxes of the Target Company. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Impairment loss for bad and doubtful debts

The Target Company makes impairment loss for bad and doubtful debts based on assessments of the recoverability of the trade and other receivables, including the current creditworthiness and the past collection history of each debtor. Impairments arise where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgement and estimates. Where the actual result is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debt expenses in the year in which such estimate has been changed.

6. Financial Risk Management

The Target Company’s activities expose it to a variety of financial risks: credit risk and liquidity risk. The Target Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Target Company’s financial performance.

(a) Credit risk

The carrying amount of the bank and cash balances, trade and other receivables included in the statement of financial position represents the Target Company’s maximum exposure to credit risk in relation to the Target Company’s financial assets.

The Target Company has no significant concentrations of credit risk.

(b) Liquidity risk

The Target Company’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term. All of the Target Company’s financial liabilities are due within one year.

II – 18

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

The maturity analysis of the Target Company’s financial liabilities is as follows:

At 31 March 2013 Trade payables Bank borrowings At 31 March 2014 Trade payables Accruals and other payables Bank borrowings Finance lease payables At 31 March 2015 Trade payables Accruals and other payables Bank borrowings Finance lease payables At 30 June 2015 Trade payables Accruals and other payables Bank borrowings Finance lease payables	Carrying amount HK$’000 (Audited) 1,866 11,792 13,658 6,659 150 3,819 170 10,798 8,287 238 3,413 130 12,068 9,347 240 3,586 120 13,293	Contractual cash flows HK$’000 (Audited) 1,866 12,226 14,092 6,659 150 3,999 187 10,995 8,287 238 3,443 143 12,111 9,347 240 3,726 132 13,445	Less than 1 year HK$’000 (Audited) 1,866 9,220 11,086 6,659 150 3,011 44 9,864 8,287 238 3,443 44 12,012 9,347 240 2,778 44 12,409	Between 1 and 2 years HK$’000 (Audited) – 2,018 2,018 – – 988 88 1,076 – – – 88 88 – – 517 88 605	Between 2 and 5 years HK$’000 (Audited) – 988
					988
					– – – 55
					55
					– – – 11
					11
					– – 431 –
					431

(c) Fair values

The carrying amounts of the Target Company’s financial assets and financial liabilities as reflected in the statements of financial position approximate their respective fair values.

(d) Interest rate risk

As the Target Company has no significant interest-bearing assets and liabilities, the Target Company’s operating cash flows are substantially independent of changes in market interest rates.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

(e) Categories of financial instruments

Financial assets: Loans and receivables (including cash and cash equivalents) – Trade receivables – Financial assets included in prepayments, deposits and other receivables – Amount due from directors – Bank and cash balances Financial liabilities: Financial liabilities at amortised cost – Trade payables – Accruals and other payables – Bank borrowings	2013 HK$’000 (Audited) 5,706 5,029 2,124 2,411 15,270 1,866 – 11,792 13,658	At 31 March 2014 HK$’000 (Audited) 6,609 374 2,862 1,116 10,961 6,659 150 3,819 10,628	2015 HK$’000 (Audited) 10,217 955 3,110 403 14,685 8,287 238 3,413 11,938	At 30 June 2015 HK$’000 (Audited) 11,277 1,292 3,099 1,735
				17,403
				9,347 240 3,586
				13,173

7. Turnover

The Target Company’s revenue represents amount received and receivable from contract work performed for the Relevant Periods.

Contract services income	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 47,662 37,095 24,200	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 5,774 9,968

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

8. Other Income

Bank interest income Net exchange gain Other interest income Sundry income	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 19 – – – 59 – – 34 106 48 83 401 67 176 507	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) – – – – – 24 159 25 159 49	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) – – – – – 24 159 25 159 49
			49

9. Finance Costs

Bank loans interest Bank factoring interest Bank overdrafts interest Hire purchase interest Other bank interest	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 278 253 115 154 71 21 1 20 53 – 3 4 1 7 6 434 354 199	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 40 33 2 8 12 22 1 1 – – 55 64	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 40 33 2 8 12 22 1 1 – – 55 64
			64

10. Segment Information

The Target Company’s operating segment is provision of construction and maintenance works on civil engineering contracts. Since this is the only operating segment of the Target Company, no further analysis thereof is presented.

The Target Company’s operations and operating assets are substantially located in Hong Kong. Accordingly, no geographical segment information is presented.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Revenue from major customers, each of whom accounted for 10% or more of the total revenue is set out as below:

Customer A Customer B Customer C Customer D Customer E Customer F Customer G Customer H Customer I Customer J	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 12,903 3,021 – 16,198 – – 2,493 5,313 5,376 1,071 4,137 – 4,201 5,223 118 – – 9,837 – 3,036 1,887 – 213 909 – – 96 – – 1,765	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) – – – – 647 – – – * 51 – 2,715 3,992 975 – 618 – – 3,515 – 1,099

• Revenue from these customers did not exceed 10% of total revenue during the year/period. These amounts were shown for comparative purpose.

11. Income Tax

Current tax – Hong Kong Profits Tax: – Under-provision in prior years Deferred tax	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 760 – – – – (668) 760 – (668)	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) – – – 186 – 186	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) – – – 186 – 186
			186

No provision for Hong Kong Profits Tax has been made in the Financial Information since the Target Company has sufficient tax losses brought forward to set off against the assessable profits of the Target Company for the Relevant Periods.

In accordance with an additional assessment of Hong Kong Profits Tax issued by Hong Kong Inland Revenue Department for the years of assessment of 2004/2005 to 2008/2009, the amount of approximately HK$760,000 represented an under-provision of Hong Kong Profits Tax on the revised assessable profits for those years of assessments.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

The reconciliation between the income tax and the product of profit before tax multiplied by the Hong Kong profits tax rate is set out as below:

Profit before tax Tax at domestic income tax rate of 16.5% Tax effect of income not taxable and expenses not deductible Under provision in respect of prior years Tax effect of tax losses not recognised Tax loss (recognised)/utilised Tax charge at the Target Company’s effective tax rate	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 3,389 1,407 760 559 232 125 (5) (12) – 760 – – (554) (220) (125) – – (668) 760 – (668)	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 661 1,111 109 183 – 3 – – (109) (186) – 186 – 186	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 661 1,111 109 183 – 3 – – (109) (186) – 186 – 186
			183 3 – (186) 186
			186

12. Profit for the Year/Period

The Target Company’s profit for the Relevant Periods is stated after charging/ (crediting) the following:

Depreciation Directors’ emoluments – As directors – For management Operating lease charges on land and buildings Auditor’s remuneration Staff costs including directors’ emoluments: Salaries, bonus and allowances Retirement benefits scheme contributions Net exchange gains	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) 9 64 64 – – – 1,034 1,177 1,252 1,034 1,177 1,252 221 183 189 43 60 43 2,388 2,015 2,347 160 77 90 2,548 2,092 2,437 – (59) –	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 16 16 – – 287 379 287 379 45 52 – 43 480 688 12 26 492 714 – –	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) 16 16 – – 287 379 287 379 45 52 – 43 480 688 12 26 492 714 – –
			– 379
			379
			52 43
			688 26
			714
			–

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FINANCIAL INFORMATION OF THE TARGET

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13. Earnings Per Share

Earnings per share have not been presented as its inclusion is not considered meaningful for the purpose of the Financial Information.

14. Dividends

The directors of the Target Company do not recommend the payment of any dividend in respect of the Relevant Periods.

15. Property, Plant and Equipment

Cost At 1 April 2012 Additions Disposals At 31 March 2013 and 1 April 2013 Additions At 31 March 2014, 1 April 2014, 31 March 2015, 1 April 2015 and 30 June 2015	Furniture and fixtures HK$’000 134 9 – 143 – 143	Office equipments HK$’000 620 5 – 625 – 625	Motor vehicles HK$’000 134 – (134) – 276 276	Total HK$’000 888 14 (134)
				768 276
				1,044

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Accumulated depreciation At 1 April 2012 Charge for the year Disposals At 31 March 2013 and 1 April 2013 Charge for the year Disposals At 31 March 2014 and 1 April 2014 Charge for the year Disposals At 31 March 2015 and 1 April 2015 Charge for the period Disposals At 30 June 2015 Carrying amount At 31 March 2013 At 31 March 2014 At 31 March 2015 At 30 June 2015	Furniture and fixtures HK$’000 102 8 – 110 8 – 118 8 – 126 2 – 128 33 25 17 15	Office equipments HK$’000 620 1 – 621 1 – 622 1 – 623 – – 623 4 3 2 2	Motor vehicles HK$’000 134 – (134) – 55 – 55 55 – 110 14 – 124 – 221 166 152	Total HK$’000 856 9 (134)
				731 64 –
				795 64 –
				859 16 –
				875
				37
				249
				185
				169

At 31 March 2014, 31 March 2015 and 30 June 2015 the carrying amount of motor vehicle held by the Target Company under finance leases amounted to approximately HK$221,000, HK$166,000 and HK$152,000 respectively.

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16. Deferred Tax Assets

The movements in deferred tax assets are as follows:

At beginning of the reporting period Credit/(charge) to profit and loss At end of the reporting period	2013 HK$’000 (Audited) – – –	Tax loss At 31 March 2014 2015 HK$’000 HK$’000 (Audited) (Audited) – – – 668 – 668	At 30 June 2015 HK$’000 (Audited) 668 (186)
			482

17. Trade Receivables

The Target Company’s trading terms with its customers are mainly on credit 90 days. Retention monies withheld by customers of contract works are released after the completion of construction period of the relevant contracts or in accordance with the terms specified in the relevant contracts.

An ageing analysis of trade receivables, based on the invoice date, is as follows:

Within 90 days 91 days to 180 days 181 days to 1 year Over 1 year	2013 HK$’000 (Audited) 5,184 45 128 349 5,706	At 31 March 2014 HK$’000 (Audited) 2,786 561 2,817 445 6,609	2015 HK$’000 (Audited) 6,159 919 1,737 1,402 10,217	At 30 June 2015 HK$’000 (Audited) 7,427 549 607 2,694
				11,277

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At 31 March 2013, 2014, 2015 and 30 June 2015 trade receivables of approximately HK$522,000, HK$2,242,000, HK$1,947,000 and HK$1,208,000 respectively were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:

Less than 1 month past due 1 to 3 months past due More than 3 months but less than 12 months past due Over 1 year past due	2013 HK$’000 (Audited) 29 16 136 341 522	At 31 March 2014 HK$’000 (Audited) – 3 1,832 407 2,242	2015 HK$’000 (Audited) 376 286 361 924 1,947	At 30 June 2015 HK$’000 (Audited) 109 25 911 163
				1,208

Included in trade receivables of the Target Company as at 31 March 2013 was factored receivables with recourse amounting to approximately HK$2,038,000. The Target Company continued to recognise the factored receivables in the statement of financial position as the Target Company has retained substantially all the risks and rewards of ownership of the factored receivables, including the risks in respect of default payments, as at the end of each reporting period. (see below note 23)

18. Prepayments, Deposits and Other Receivables

Deposits Other receivables (note)	2013 HK$’000 (Audited) 65 4,964 5,029	At 31 March 2014 HK$’000 (Audited) 144 230 374	2015 HK$’000 (Audited) 69 886 955	At 30 June 2015 HK$’000 (Audited) 96 1,196
				1,292

Note: The balance mainly represented advance payment to sub-contractors.

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19. Gross Amounts Due from/(to) Customers for Contract Work

Contract costs incurred plus recognised profits less recognised losses to date Less: Progress billings Gross amounts due from customers for contract work Gross amounts due to customers for contract work	2013 HK$’000 (Audited) 47,477 (48,624) (1,147) 1,943 (3,090) (1,147)	At 31 March 2014 HK$’000 (Audited) 52,868 (51,993) 875 1,092 (217) 875	2015 HK$’000 (Audited) 43,357 (43,968) (611) 50 (661) (611)	At 30 June 2015 HK$’000 (Audited) 52,517 (53,494)
				(977)
				85 (1,062)
				(977)

In respect of construction contracts in progress at the end of the reporting period, retentions receivable included in trade receivables is approximately HK$175,000, HK$3,024,000, HK$3,301,000 and HK$4,350,000 respectively.

20. Amounts Due From Directors

Amounts due from directors of the Target Company disclosed pursuant to section 383(1)(d) of the Hong Kong Companies Ordinance are as follows:

Name Mr. Lee King Yi (‘‘Mr. Lee’’) Ms. Chung Wai Fong (‘‘Ms. Chung’’)	2013 HK$’000 (Audited) 1,928 196	At 31 March 2014 HK$’000 (Audited) 2,668 194	2015 HK$’000 (Audited) 2,916 194	At 30 June 2015 HK$’000 (Audited) 2,905
				194

All the above advances are unsecured, interest-free and will be settled at completion of the Acquisition.

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Maximum amounts due from directors of the Target Company disclosed pursuant to section 383(1)(d) of the Hong Kong Companies Ordinance are as follows:

Name Mr. Lee Ms. Chung	2013 HK$’000 (Audited) 1,928 196	At 31 March 2014 HK$’000 (Audited) 2,668 194	2015 HK$’000 (Audited) 2,916 194	At 30 June 2015 HK$’000 (Audited) 2,916
				194

21. Trade Payables

An ageing analysis of trade payables as at the end of each of the reporting period, based on the invoice dates, is as follows:

0 to 90 days 91 to 180 days 181 to 365 days Over 365 days	2013 HK$’000 (Audited) 1,596 73 – 197 1,866	At 31 March 2014 HK$’000 (Audited) 5,918 140 396 205 6,659	2015 HK$’000 (Audited) 5,987 187 1,195 918 8,287	At 30 June 2015 HK$’000 (Audited) 7,273 155 227 1,692
				9,347

Retention monies withheld from sub-contractors of contract works are released by the Target Company after the completion of maintenance period of the relevant contracts or in accordance with the terms specified in the relevant contracts.

22. Amount Due to a Related Company

The above advance is unsecured, non-interest bearing and has no fixed repayment terms.

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APPENDIX II

23. Bank Borrowings

Bank term loans Bank overdrafts Invoice financing loans Factoring loans Analysis of carrying amounts of the bank borrowings shown under current liabilities: – Portions due for repayment within one year – Portions due for repayment after one year which contain a repayment on demand clause Bank borrowings repayable (note): – On demand or within one year – More than one year but not exceeding two years – More than two years but not exceeding five years	2013 HK$’000 (Audited) 4,674 2,455 3,440 1,223 11,792 8,966 2,826 11,792 8,966 1,867 959 11,792	At 31 March 2014 HK$’000 (Audited) 2,826 710 283 – 3,819 2,861 958 3,819 2,861 958 – 3,819	2015 HK$’000 (Audited) 958 1,320 1,135 – 3,413 3,413 – 3,413 3,413 – – 3,413	At 30 June 2015 HK$’000 (Audited) 2,016 942 628 –
				3,586
				2,692 894
				3,586
				2,692 475 419
				3,586

All bank borrowings are denominated in Hong Kong dollars.

Note: The amounts due are based on scheduled repayment dates set out in the loan agreements and ignore the effect of any repayment on demand clause.

At 31 March 2013, the factoring loans of approximately HK$1,223,000 was pledged by trade receivables with an aggregate carrying amount of approximately HK$2,038,000. (see above note 17)

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The guarantees and securities of the bank borrowings at the end of each reporting period are as follows:

– Bank term loans guaranteed by Mr. Lee – Bank borrowings guaranteed by Mr. Lee, Ms. Chung and the Government of the Hong Kong Special Administrative Region (the ‘‘HKSARG’’): Bank term loans Invoice financing loans – Bank term loans guaranteed by Mr. Lee, Ms. Chung and Hong Kong Mortgage Corporation Limited – Bank overdrafts guaranteed by Mr. Lee and Ms. Chung and secured by a property owned by Ms. Chung – Bank borrowings guaranteed by Mr. Lee and Ms. Chung and secured by a property owned by Mr. Lee and Ms. Chung: Factoring loans Bank overdrafts – Invoice financing loans guaranteed by Mr. Lee, Ms. Chung and the HKSARG and secured by a property owned by Ms. Chung – Bank term loans guaranteed by Mr. Lee and the HKSARG – Unsecured bank overdrafts	2013 HK$’000 (Audited) 1,235 1,530 1,979 3,509 655 575 1,223 1,633 2,856 1,461 1,254 247	At 31 March 2014 HK$’000 (Audited) 828 694 283 977 456 – – 710 710 – 848 –	2015 HK$’000 (Audited) 389 167 – 167 – 855 – 465 465 1,135 402 –	At 30 June 2015 HK$’000 (Audited) 1,615
				117 –
				117
				–
				942
				– –
				–
				628
				284
				–

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APPENDIX II

The average effective interest rates at the end of each reporting period were as follows:

Bank overdrafts Bank loans 24. Finance Lease Payables	2013 HK$’000 (Audited) 5.64% – 8.57% 3.78% – 6.96%	At 31 March 2014 HK$’000 (Audited) 5.64% – 6.17% 3.78% – 6.96%	2015 HK$’000 (Audited) 5.64% – 6.17% 3.78% – 4.85%	At 30 June 2015 HK$’000 (Audited) 5.64% – 6.17%
				3.41% – 4.85%

Within one year In the second to fifth years, inclusive After five years Less: Future finance charges Present value of lease obligations Within one year In the second to fifth years, inclusive After five years Present value of lease obligations Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months	Minimum lease payments At 31 March At 30 June 2013 2014 2015 2015 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Audited) – 44 44 44 – 143 99 88 – – – – – 187 143 132 – (17) (13) (12) – 170 130 120 Present value of minimum lease payments At 31 March At 30 June 2013 2014 2015 2015 HK$’000 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) (Audited) – 40 40 40 – 130 90 80 – – – – – 170 130 120 – (130) (90) (80) – 40 40 40	At 30 June 2015 HK$’000 (Audited) 44 88 –
		132 (12)
		120
		120 (80)
		40

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APPENDIX II

All finance lease payables are denominated in Hong Kong dollars.

The Target Company’s finance lease payables are secured by the lessor’s title to the leased motor vehicle included in property, plant and equipment.

It is the Target Company’s policy to lease its motor vehicle under finance lease. The average lease term is 5 years. At 31 March 2014 and 2015 and 30 June 2015, the average effective interest rate was 3.82%. Interest rates are fixed at the contract dates and thus expose the Target Company to fair value interest rate risk.

25. Share Capital

Authorised: 4,000,000 ordinary shares of HK$1.00 each (Note) Issued and fully paid: 4,000,000 ordinary shares (2013: 4,000,000 ordinary shares of HK$1.00 each) (Note)	2013 HK$’000 (Audited) 4,000 4,000	At 31 March 2014 HK$’000 (Audited) N/A 4,000	2015 HK$’000 (Audited) N/A 4,000	At 30 June 2015 HK$’000 (Audited) N/A
				4,000

Note:

Under the Hong Kong Companies Ordinance (Cap. 622), which has been effective on 3 March 2014, the concept of authorised share capital no longer exists. In accordance with section 135 of the Hong Kong Companies Ordinance (Cap. 622), the Target Company’s shares no longer have a par or nominal value with effect from 3 March 2014. There is no impact on the number of shares in issue or the relative entitlement of any of the members as a result of this transaction.

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APPENDIX II

26. Operating Lease Commitments

At the end of each reporting period, the total future minimum lease payment under non-cancellable operating leases of the Target Company are payable as follows:

Within one year In the second to fifth years inclusive	2013 HK$’000 (Audited) 116 77 193	At 31 March 2014 HK$’000 (Audited) 80 – 80	2015 HK$’000 (Audited) 207 136 343	At 30 June 2015 HK$’000 (Audited) 203 87
				290

27. Contingent Liabilities

At the end of each reporting period, the Target Company did not have any significant contingent liability.

28. Related Party Transactions

In addition to those related party transactions and balances disclosed elsewhere in the Financial Information, the Target Company had the following transactions with a related party during the Relevant Periods.

Contract services cost to a related company	Year ended 31 March 2013 2014 2015 HK$’000 HK$’000 HK$’000 (Audited) (Audited) (Audited) – – 1,451	Three months ended 30 June 2014 2015 HK$’000 HK$’000 (Unaudited) (Audited) – –

A director of the Target Company, Mr. Lee, has control over the related company.

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APPENDIX II

29. Subsequent Financial Statements

No audited financial statements have been prepared by the Target Company in respect of any period subsequent to 31 March 2015.

Yours faithfully,

ZHONGHUI ANDA CPA Limited

Certified Public Accountants Pang Hon Chung

Practising Certificate Number P05988 Hong Kong

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APPENDIX II

(2) MANAGEMENT DISCUSSION AND ANALYSIS ON THE TARGET FOR EACH OF THE THREE YEARS ENDED 31 MARCH 2013, 2014 AND 2015 AND THE THREE MONTHS ENDED 30 JUNE 2015

Set out below is the management discussion and analysis of ACE Engineering Limited (the “Target”) for the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015, which is based on detailed financial information of the Target as set out in the Accountants’ Report in Appendix II to this circular.

Business review

The Target is a company incorporated in Hong Kong with limited liability and is principally engaged in building construction, building maintenance and improvement works, project management, renovation and decoration works in Hong Kong. The Target has an operating history of over 15 years in the industry and is a registered general building contractor and a registered minor works contractor under the Buildings Ordinance (Chapter 123 of the Laws of Hong Kong). The Target has also been approved by the Hong Kong Housing Authority under the sub-category of Maintenance Works Category in the category of Building Work in Group M1 with the confirmed status and has been on the List of Building Contractors maintained by the Hong Kong Housing Authority.

Financial review

Revenue

During the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015, the Target continually generated revenue from contract works on building maintenance and renovation for both public and private sectors. For the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, the Target recorded revenue from contract works of approximately HK$47.7 million, HK$37.1 million, HK$24.2 million and HK$9.97 million respectively.

For the year ended 31 March 2014, the Target recorded a drop in revenue as compared with that for the year ended 31 March 2013 primarily due to the net effect of (i) substantial completion of several significant government contracts during the year ended 31 March 2013; and (ii) awards of several new private contracts during the year ended 31 March 2014, certain of which were commenced in the second half of the financial year. For the year ended 31 March 2015, The Target recorded a drop in revenue as compared with that for the year ended 31 March 2014 primarily due to the net effect of (i) substantial completion of several significant private contracts during the year ended 31 March 2014; (ii) awards of several new public and private contracts during the year ended 31 March 2015, certain of which were commenced in the second half of the financial year; and (iii) decrease in growth in tender sum for retention of working capital. For the three months ended 30 June 2015,

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APPENDIX II

the Target recorded a growth in revenue as compared with that for the three months 30 June 2014 primarily due to (i) substantial completion of several significant private contracts during the three months 30 June 2014; and (ii) several significant private contracts newly commenced in 2015 financial year were in full swing during the three months ended 30 June 2015.

As at the Latest Practicable Date, the Target had 6 contracts on hand with estimated or notional contract value of approximately HK$77.5 million. These contracts on hand are expected to be completed in half a year to two years.

Gross profit

For the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, the Target’s cost of service amounted to approximately HK$38.7 million, HK$32.4 million, HK$20.1 million and HK$7.83 million respectively. Cost of service consisted primarily of subcontracting charges, direct material costs, equipment rental charges, insurance costs, government levies and other contract costs.

Gross profit amounted to approximately HK$9.0 million, HK$4.7 million, HK$4.1 million and HK$2.14 million, which yielded gross profit margin of approximately 18.9%, 12.7%, 16.9% and 21.5%, for the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, respectively.

For the year ended 31 March 2014, the Target recorded drop in gross profit and gross profit margin as compared with that for the year ended 31 March 2013 primarily due to (i) certain contracts in the government sector, which yielded lower margins in price, were in full swing during the year ended 31 March 2014; (ii) competitive pricing of certain projects in the private sector; and (iii) rise in subcontracting costs resulting from increased labour costs. For the year ended 31 March 2015, the Target recorded growth in gross profit margin despite the decrease in gross profit with decrease in revenue as compared with that for the year ended 31 March 2014 primarily due to (i) revenue growth in private sector which yielded higher margins in price; (ii) premium pricing of certain contracts in private sector; and (iii) decrease in subcontracting costs as a result of continued effort in controlling and managing the costs. For the three months ended 30 June 2015, the Target recorded relatively stable gross profit margin despite increase in gross profit with increase in revenue as compared with that for the three months ended 30 June 2014 primarily due to the net effect of (i) revenue growth in private sector which yielded higher margins in price; (ii) premium pricing of certain contracts in private sector; and (iii) rise in subcontracting costs resulting from increased labour costs.

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APPENDIX II

Operating profit

For the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, the Target recorded other income of approximately HK$0.1 million, HK$0.2 million, HK$0.5 million and HK$0.05 million respectively. Other income consisted primarily of interest income and sundry income.

For the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, the Target’s administrative expenses amounted to approximately HK$5.3 million, HK$3.1 million, HK$3.6 million and HK$1.01 million respectively. Administrative expenses consisted primarily of staff costs, rental charges, legal and professional fees, depreciation and other office expenses.

Operating profit amounted to approximately HK$3.8 million, HK$1.8 million, HK$1.0 million and HK$1.18 million, which yielded operating profit margin of approximately 8.0%, 4.9%, 4.1% and 11.8%, for the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, respectively.

For the year ended 31 March 2014, the Target recorded drop in operating profit and operating profit margin as compared with that for the year ended 31 March 2013 primarily due to the net effect of (i) decrease in gross profit margin; and (ii) decrease in administrative expenses caused by decreased staff costs benefited from increased management efficiency and streamline of work cycle and manpower, and decreased office expenses achieved under increased cost control. For the year ended 31 March 2015, The Target recorded relatively stable operating profit margin despite decrease in operating profit with decrease in revenue as compared with that for the year ended 31 March 2014 primarily due to the net effect of (i) increase in gross profit margin; and (ii) increase in administrative expenses as a result of increase in staff costs and manpower for skilled and experienced staff. For the three months ended 30 June 2015, the Target recorded relatively stable operating profit margin despite increase in operating profit with increase in revenue as compared with that for the three months ended 30 June 2014 primarily due to (i) relatively stable gross profit margin; and (ii) increase in administrative expenses as a result of increase in staff costs and manpower for skilled and experienced staff.

Net profit

For the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, the Target’s finance costs amounted to approximately HK$0.4 million, HK$0.4 million, HK$0.2 million and HK$0.06 million respectively. Finance costs mainly represented interest charges on bank overdrafts, bank loans and obligations under finance lease.

II – 38

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

For the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, no provision for Hong Kong profits tax has been made as the Target had available tax losses brought forward from prior years to offset against the assessable profits arising in Hong Kong. Income tax expenses for the year ended 31 March 2013 of approximately HK$0.8 million represented under-provision of tax in respect of prior years. Income tax credit for the year ended 31 March 2015 of approximately HK$0.6 million and income tax expense for the three months ended 30 June 2015 of approximately HK$0.19 million represented deferred tax recognized in respect of the Target’s unused tax loss.

Net profit amounted to approximately HK$2.6 million, HK$1.4 million, HK$1.4 million, and HK$0.93 million, which yielded net profit margin of approximately 5.5%, 3.8%, 5.8% and 9.3%, for the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, respectively. The Target’s net profit generally moved in line with operating profit, except for the year ended 31 March 2015 the Target’s net profit and net profit margin increased as compared with that for the year ended 31 March 2014 primarily due to (i) deferred tax credit recognized; and (ii) decrease in finance costs under repayment of bank loans.

Liquidity and financial resources

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the bank and cash balances of the Target amounted to approximately HK$2.4 million, HK$1.1 million, HK$0.4 million and HK$1.7 million respectively, and were mostly held in Hong Kong dollars. As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target had withdrawn bank overdrafts of approximately HK$2.5 million, HK$0.7 million, HK$1.3 million and HK$0.9 million respectively. Please refer to below “Borrowings and capital structure” for details of maturity profile, guarantees and securities, and interest rate structure of bank overdrafts.

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target’s current assets amounted to approximately HK$17.2 million, HK$12.1 million, HK$14.7 million and HK$17.5 million respectively. Current assets comprised bank and cash balances, trade and other receivables, amounts due from customers for contract work and amounts due from directors. As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target’s current liabilities amounted to approximately HK$17.4 million, HK$10.9 million, HK$12.8 million and HK$14.4 million respectively. Current liabilities comprised trade and other payables, amounts due to customers for contract work, amount due to a related company, bank overdrafts and bank loans, obligations under finance lease and current tax liabilities.

II – 39

APPENDIX II

FINANCIAL INFORMATION OF THE TARGET

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target had net current liabilities of approximately HK$0.2 million and net current assets of approximately HK$1.2 million, HK$1.9 million and HK$3.1 million respectively. As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target’s current ratio, calculated by dividing current assets over current liabilities, was approximately 0.99 times, 1.11 times, 1.15 times and 1.22 times respectively. The Target’s liquidity increased over the years and period primarily due to continued cash generated from operations and repayment of bank loans.

Borrowings and capital structure

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target had Hong Kong dollar denominated interest-bearing bank loans in the aggregate amount of approximately HK$9.3 million, HK$3.1 million, HK$2.1 million and HK$2.7 million respectively. Bank loans comprised term loans, invoice financing loans and factoring loans. As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target’s bank loans were classified as current liabilities as the Target does not have an unconditional right to defer settlement of the bank loans for at least 12 months after the end of each of the reporting period. The outstanding amounts, maturity profile based on scheduled repayment dates and ignore the effect of any repayment on demand clause, and interest rate structure of the bank loans and bank overdrafts were as follows:

Bank loans and bank overdrafts comprised of: Secured bank term loans Secured bank overdrafts Secured invoice financing loans Secured factoring loan Unsecured bank overdrafts	2013 HK$’000 4,674 2,208 3,440 1,223 247 11,792	At 31 March 2014 HK$’000 2,826 710 283 – – 3,819	2015 HK$’000 958 1,320 1,135 – – 3,413	At 30 June 2015 HK$’000 2,016 942 628 – –
				3,586

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APPENDIX II

Bank loans and bank overdrafts repayable – On demand or within one year – More than one year but not exceeding two years – More than two years but not exceeding five years Bank loans carried interest at – Fixed rate ranging from 3.41% to 4.28% per annum – Floating rate ranging from 4.07% to 6.96% per annum Bank overdrafts carried interest at – Floating rate ranging from 5.64% to 8.57% per annum	2013 HK$’000 8,966 1,867 959 11,792 2,489 6,848 9,337 2,455	At 31 March 2014 HK$’000 2,861 958 – 3,819 1,676 1,433 3,109 710	2015 HK$’000 3,413 – – 3,413 791 1,302 2,093 1,320	At 30 June 2015 HK$’000 2,692 475 419
				3,586
				1,899 745
				2,644
				942

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target’s secured bank overdrafts and secured bank loans were guaranteed by directors of the Target, the Government of the Hong Kong Special Administrative Region and Hong Kong Mortgage Corporation Limited, and secured by pledge of properties owned by directors of the Target. As at 31 March 2013, the Target’s secured factoring loan of approximately HK$1.2 million was secured by pledge of the Target’s trade receivables with aggregate values amounted to approximately HK$2.0 million. For further details of guarantees and securities of the bank overdrafts and bank loans, please refer to note 23 to the Accountants’ Report in Appendix II to this circular.

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APPENDIX II

As at 31 March 2014, 31 March 2015 and 30 June 2015, a motor vehicle of the Target was held under finance lease with outstanding principal of approximately HK$0.17 million, HK$0.13 million and HK$0.12 million respectively. The maturity profile of outstanding principal is set out as follows:

Finance lease repayable – Within one year – In the second and fifth years, inclusive	2013 HK$’000 – – –	At 31 March 2014 HK$’000 40 130 170	2015 HK$’000 40 90 130	At 30 June 2015 HK$’000 40 80
				120

As at 31 March 2014, 31 March 2015 and 30 June 2015, the obligations under finance lease was denominated in Hong Kong dollar, carried interest at fixed rate of 3.82% per annum, and was secured by the relevant motor vehicle and guaranteed by a director of the Target.

The directors of the Target represented that their personal guarantee provided and pledge of their own properties in respect of the banking facilities of the Target will be released within three months upon completion of the Acquisition.

As at 31 March 2013, the issued share capital of the Target was HK$4,000,000 comprised of 4,000,000 issued and fully paid ordinary shares of HK$1 each. As at 31 March 2014, 31 March 2015 and 30 June 2015, the share capital of the Target was HK$4,000,000 comprised of 4,000,000 issued and fully paid ordinary shares. There was no material change in the capital structure of the Target.

The Target monitors its capital structure using the gearing ratio, which is calculated as a percentage of its total interest-bearing borrowings (comprising bank overdrafts, bank loans and obligations under finance lease) to its total assets. As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the gearing ratio was approximately 68.4%, 32.4%, 22.7% and 20.4% respectively.

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FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Funding and treasury policy

The Target primarily finances its operations with cash flows generated internally from its operating activities and bank borrowings. The Target adopts a prudent funding and treasury policy towards its overall business operations with an aim to minimize financial risks. To achieve better risk control and efficient cash and funding management, the treasury activities of the Target are centralised. During the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015, the Target did not have any financial instrument used for hedging purpose.

Foreign exchange exposure

As majority of transactions, recognised assets and liabilities of the Target are denominated in Hong Kong dollars, there is no significant exposure to foreign currency exchange risks. The Target had not entered into any foreign currency exchange forward contracts for hedging purposes during the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015.

Interest rate risk exposure

The Target’s interest rate risk relates primarily to cash flow interest rate risk arising from variable-rate bank borrowings. It is the Target’s policy to raise borrowings at floating rate of interests so as to minimise the fair value interest rate risk.

The Target’s cash flow interest rate risk is mainly concentrated on the fluctuation of Standard Bills Rate and Hong Kong Dollar Prime Lending Rate/Best Lending Rate arising from the Target’s Hong Kong dollar denominated borrowings. Since these interest rates are not expected to fluctuate in short term, the Target’s exposure to cash flow interest rate risk is not significant. The exposures to the interest rate risk are monitored on an ongoing basis.

Credit risk exposure

During the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015, the Target is serving mainly reputable clients and government departments like the Hong Kong Housing Society and Hong Kong Housing Authority. These clients are trustworthy that the risk of late payment to the Target is comparatively low. As at 31 March 2013, 2014 and 2015 and 30 June 2015, the Target had no significant concentration of credit risks.

II – 43

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Amounts with directors and related parties transactions

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, amounts due from directors amounted to approximately HK$2.1 million, HK$2.9 million, HK$3.1 million and HK$3.1 million respectively. As at 31 March 2015 and 30 June 2015, amount due to a related party amounted to approximately HK$0.1 million. The balances were unsecured, interest-free and have no fixed terms of repayment.

During the year ended 31 March 2015, subcontracting costs amounting to approximately HK$1.5 million were paid to a related party for certain contract works. Amount due to and transactions with a related party represented amount due to and transactions with a company owned by directors of the Target.

During the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015, saved as remuneration paid to directors of the Target as disclosed in note 12 to the Accountants’ Report in Appendix II to this circular and aforementioned subcontracting charges, no related party transactions were entered into by the Target.

Pursuant to the Acquisition Agreement, the amounts due from directors will be settled at completion of the Acquisition. Since no Shares or office of Director of the Company will be held by directors of the Target upon completion of the Acquisition, such company owned by directors of the Target will not become a related party to the Group upon completion of the Acquisition.

Significant investment, material acquisition and disposal

During the three years ended 31 March 2013, 2014 and 2015 and the three months ended 30 June 2015, the Target did not have any material acquisition and disposal of subsidiaries and associated companies. As at 31 March 2013, 2014 and 2015 and 30 June 2015, the Target did not hold any significant investments or plan for material investments or capital assets in future period.

Pledge of assets

As at 31 March 2013, trade receivables of the Target with aggregate value of approximately HK$2.0 million were pledged to secure the Target’s factoring loans. As at 31 March 2014, 31 March 2015 and 30 June 2015, a motor vehicle of the Target with carrying value of approximately HK$0.22 million, HK$0.17 million and HK$0.15 million respectively was pledged to secure the Target’s obligations under finance lease. Save as disclosed aforesaid, the Target did not have any charge over its assets.

II – 44

FINANCIAL INFORMATION OF THE TARGET

APPENDIX II

Contingent liabilities

As at 31 March 2013, 2014 and 2015 and 30 June 2015, the Target did not have any significant contingent liabilities.

Capital commitments

As at 31 March 2013, 2014 and 2015 and 30 June 2015, the Target did not have any significant capital commitment.

Employees and remuneration policies

The Target remunerates its employees by reference to their qualifications, experiences, responsibilities, profitability of the Target and market conditions. The remuneration of the employees comprises basic salary, discretionary bonus, other allowances and pension scheme contributions. The Target operates a Mandatory Provident Fund Scheme for all qualifying employees in Hong Kong. The assets of the plans are held separately from those of the Target in funds under control of trustees.

As at 31 March 2013, 31 March 2014, 31 March 2015 and 30 June 2015, the Target had 7, 5, 7 and 7 employees respectively. During the years ended 31 March 2013, 31 March 2014 and 31 March 2015 and the three months ended 30 June 2015, total staff costs amounted to approximately HK$2.5 million, HK$2.1 million, HK$2.4 million and HK$0.71 million respectively.

II – 45

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

• A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

• (1) INTRODUCTION TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

Capitalised terms used herein shall have the same meanings as those defined in this Circular, unless the context requires otherwise.

The accompanying unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group (the ‘‘Unaudited Pro Forma Financial Information’’) has been prepared to illustrate the effect of the Acquisition, assuming the transaction had been completed as at 30 June 2015, might have affected the financial position of the Group.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2015 as extracted from the interim report of the Group for the six months ended 30 June 2015 and the audited statement of financial position of the Target Company as at 30 June 2015 as extracted from the accountants’ report as set out in Appendix II of this Circular after making certain pro forma adjustments resulting from the Acquisition.

The Unaudited Pro Forma Financial Information is prepared based on a number of assumptions, estimates, uncertainties and currently available information, and is provided for illustrative purposes only. Accordingly, as a result of the nature of the Unaudited Pro Forma Financial Information, it may not give a true picture of the actual financial position of the Group that would have been attained had the Acquisition actually occurred on 30 June 2015. Furthermore, the Unaudited Pro Forma Financial Information does not purport to predict the Group’s future financial position.

The Unaudited Pro Forma Financial Information should be read in conjunction with the financial information of the Group as set out in Appendix I of this Circular, the financial information of the Target Company as set out in Appendix II of this Circular and other financial information included elsewhere in this Circular.

III – 1

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(2) UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED GROUP

Non-current assets Property, plant and equipment Intangible assets Goodwill Deferred tax assets Current assets Inventories Trade and other receivables Gross amounts due from customers for contract work Amounts due from directors Cash and cash equivalents Current liabilities Trade and other payables Gross amounts due to customers for contract work Amounts due to a related company Bank borrowings Finance lease payables Net current assets Total assets less current liabilities Non-current liabilities Finance lease payables Deferred tax liability NET ASSETS EQUITY Capital and reserve Share capital Reserves Total equity	The Group at 30 June 2015 HK$’000 (Note 1) 3,707 – – – 3,707 188 12,536 – – 53,435 66,159 30,687 – – – – 30,687 35,472 39,179 – – – 39,179 3,065 36,114 39,179	The Target Company at 30 June 2015 HK$’000 (Note 2) 169 – – 482 651 – 12,569 85 3,099 1,735 17,488 9,587 1,062 144 3,586 40 14,419 3,069 3,720 80 – 80 3,640 4,000 (360) 3,640	Total Pro forma adjustments HK$’000 HK$’000 Notes 3,876 – 6,937 3 – 11,068 3 482 4,358 188 25,105 85 3,099 (3,099) 4 (20,500) 3 55,170 3,099 4 83,647 40,274 144 5 1,062 144 (144) 5 3,586 40 45,106 38,541 42,899 80 – 1,145 3 80 42,819 7,065 (4,000) 6 35,754 360 6 42,819	Pro forma Enlarged Group HK$’000 3,876 6,937 11,068 482
				22,363
				188 25,105 85 – 37,769
				63,147
				40,418 1,062 – 3,586 40
				45,106
				18,041
				40,404
				80 1,145
				1,225
				39,179
				3,065 36,114
				39,179

III – 2

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(3) NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

• (1) The balances have been extracted from the unaudited consolidated statement of financial position of the Group as at 30 June 2015 as set out in the interim report of the Company for the six months ended 30 June 2015.

• (2) The column represents the inclusion of assets and liabilities of the Target Company as at 30 June 2015, assuming the Acquisition had taken place on 30 June 2015. The assets and liabilities of the Target Company as at 30 June 2015 are extracted from the accountants’ report of the Target Company as set out in Appendix II to this Circular.

• (3) The adjustment reflects the recognition of goodwill of approximately HK$11,068,000, arising from the acquisition of entire equity interest in the Target Company, as if the Acquisition had been completed on 30 June 2015.

For the preparation of the unaudited pro forma assets and liabilities of the Enlarged Group, the adjusted net assets (‘‘Adjusted Net Assets’’) of the Target Company of approximately HK$9,432,000 (representing net assets of the Target Company as at 30 June 2015 of approximately HK$3,640,000, adding the preliminary value of intangible assets of approximately HK$6,937,000 in relation to the contracts in progress and contractor registrations (the ‘‘Intangible Assets’’), acquired in a business combination, and a deduction of the related deferred tax liability of approximately HK$1,145,000) have been assumed to approximate the fair values of the underlying assets and liabilities of the Target Company at the completion of the Acquisition (‘‘Completion’’).

The directors of the Company have determined the fair value of the identifiable assets and liabilities of the Target Company as at 30 June 2015, in particular, the Intangible Assets, with reference to a valuation report prepared by an independent qualified valuer as at 30 June 2015 using the excess earnings method (the ‘‘IA Valuation’’). This method determines the value of the Intangible Assets as the present values of the profits attributable to the Intangible Assets after deducting the proportion of profits that are attributable to fixed assets, working capital and assembled workforce.

The goodwill of approximately HK$11,068,000 is calculated based on the excess of the acquisition consideration of HK$20,500,000 (‘‘Consideration’’) over the Adjusted Net Assets. Since the actual fair values of assets and liabilities of the Target Company as at the date of Completion would be different from the amounts used in the preparation of the unaudited pro forma assets and liabilities of the Enlarged Group, the actual goodwill arising from the Acquisition to be recognised by the Group might be different from the amount shown in this note.

III – 3

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The goodwill and Intangible Assets arising from the Acquisition as at 30 June 2015 have been assessed for impairment in accordance with Hong Kong Accounting Standard 36 ‘‘Impairment of Assets’’ by the directors of the Company. Based on the IA Valuation, the directors of the Company have concluded that there is no indication of impairment of the goodwill and Intangible Assets arising from the Acquisition as at 30 June 2015, and the Company’s reporting accountant has agreed with the relevant assessments. The Company will adopt consistent accounting policies, principal assumptions and valuation methods as used in the Unaudited Pro Forma Financial Information to assess impairment of the goodwill and Intangible Assets arising from the Acquisition in future financial statements, and the Company’s auditor will perform necessary audit procedures on the carrying amounts of the respective accounting items in accordance with the Hong Kong Standards on Auditing.

• (4) The adjustments represent the settlement of the amounts due from directors of the Target Company of approximately HK$3,099,000 at Completion pursuant to the Acquisition Agreement as if the Acquisition had taken place on 30 June 2015. The settlement of such loan is not a condition precedent for Completion. However, it is a term of the Acquisition Agreement that an amount equal to the amount due from the director of the Target Company to the Target Company at Completion (‘‘Director’s Loan’’) comprised in the remaining balance of the Consideration of HK$14,350,000 (‘‘Remaining Balance’’) shall be paid by the Purchaser to the Target Company on behalf of such director for the repayment of the Director’s Loan at Completion; and a sum equivalent to the difference between the Remaining Balance and the Director’s Loan shall be paid to the Vendors.

• (5) The adjustments represent accounts reclassification upon Completion as if it had taken place on 30 June 2015.

• (6) The adjustments represent the elimination of the issued capital and pre-acquisition reserves of the Target Company.

• (7) Save as set out above, the Unaudited Pro Forma Financial Information does not take into account any trading results or other transactions of the Group and the Target Company subsequent to the date of the financial statements as included in the Unaudited Pro Forma Financial Information.

III – 4

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

B. ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this Circular, from the independent reporting accountant, ZHONGHUI ANDA CPA Limited, Certified Public Accountants, Hong Kong.

==> picture [115 x 36] intentionally omitted <==

4 December 2015

The Board of Directors

AMCO United Holding Limited

Dear Sirs,

We have completed our assurance engagement to report on the compilation of pro forma financial information of AMCO United Holding Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities as at 30 June 2015 and related notes (the ‘‘Pro Forma Financial Information’’) as set out in Appendix III of the circular issued by the Company dated 4 December 2015 (the ‘‘Circular’’). The applicable criteria on the basis of which the Directors have compiled the Pro Forma Financial Information are set out in Appendix III of the Circular.

The pro forma financial information has been compiled by the Directors to illustrate the impact of the Acquisition on the Group’s financial position as at 30 June 2015 as if the Acquisition had taken place on 30 June 2015. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s unaudited condensed consolidated financial information for the period ended 30 June 2015. Information about the Target Company’s financial position as at 30 June 2015 has been extracted by the Directors from the accountants’ report of the Target Company as set out in Appendix II to the Circular.

III – 5

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Directors’ Responsibilities for the Pro Forma Financial Information

The Directors are responsible for compiling the 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’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements (‘‘HKSAE’’) 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountant complies with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Pro Forma Financial Information in accordance with paragraph 29 of Chapter 4 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

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

The purpose of Pro Forma Financial Information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction as at 30 June 2015 would have been as presented.

III – 6

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

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

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

• The Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

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

The engagement also involves evaluating the overall presentation of the Pro Forma Financial Information.

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

Opinion

In our opinion:

• (a) the Pro Forma Financial Information has been properly compiled on the basis stated;

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

• (c) the adjustments are appropriate for the purposes of the Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of Chapter 4 of the Listing Rules.

Yours faithfully,

ZHONGHUI ANDA CPA Limited

Certified Public Accountants Pang Hon Chung

Practising Certificate Number P05988 Hong Kong

III – 7

GENERAL INFORMATION

APPENDIX IV

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. DISCLOSURE OF INTERESTS

(i) Interests of Directors

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

Long position in the Shares and underlying Shares

			Approximate %
		Number of Shares	in the total issued
		and/or underlying	share capital of
Name	Capacity	Shares held	the Company
Mr. Yip Wai Lun, Alvin	Interest of a controlled	144,862,976	11.67%
(Note)	corporation

Note: Almeco United Group Limited (‘‘Almeco’’) was the beneficial owner of 34,899,346 Shares. Almeco was wholly owned by Mr. Yip Wai Lun, Alvin. Titron South China Limited (‘‘Titron SC’’) was the beneficial owner of 126,000 Shares. Titron SC was wholly owned by Titron Group Holdings Limited, which was in turn owned as to 42.50% by Mr. Yip Wai Lun, Alvin and 46.25% by Mr. Lye Khay Fong. Atlas Medical Limited (‘‘Atlas’’) was the beneficial owner of 109,837,630 Shares. Atlas was owned as to 50% by each of Mr. Yip Wai Lun, Alvin and Mr. Lye Khay Fong. Accordingly, Mr. Yip Wai Lun, Alvin was deemed to be interested in all the 144,862,976 Shares held by Almeco, Titron SC and Atlas by virtue of the SFO. Mr. Yip Wai Lun, Alvin is a director of Almeco and Atlas.

IV – 1

GENERAL INFORMATION

APPENDIX IV

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had or was deemed to have any interests and short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules.

(ii) Interests of substantial Shareholders

As at the Latest Practicable Date, so far as was known to the Directors, the following parties, other than the Directors or chief executive of the Company, had interests or short positions in the Shares and 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.

			Approximate %
		Number of Shares	in the total issued
		and/or underlying	share capital of
Name	Capacity	Shares held	the Company
Atlas Medical Limited	Beneficial owner	109,837,630	8.85%
(Note 1)
Lye Khay Fong	Interest of a controlled	109,963,630	8.86%
(Notes 1 & 2)	corporation

Notes:

1. Atlas Medical Limited (‘‘Atlas’’) was the beneficial owner of 109,837,630 Shares. Atlas was owned as to 50% by each of Mr. Yip Wai Lun, Alvin and Mr. Lye Khay Fong. Accordingly, each of Mr. Yip Wai Lun, Alvin and Mr. Lye Khay Fong was deemed to be interested in 109,837,630 Shares held by Atlas by virtue of the SFO. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, Mr. Lye Khay Fong is an Independent Third Party and a business partner of Mr. Yip Wai Lun, Alvin.

2. Titron South China Limited (‘‘Titron SC’’) was the beneficial owner of 126,000 Shares. Titron SC was wholly owned by Titron Group Holdings Limited, which was in turn owned as to 42.50% by Mr. Yip Wai Lun, Alvin and 46.25% by Mr. Lye Khay Fong. Accordingly, each of Mr. Yip Wai Lun, Alvin and Mr. Lye Khay Fong was deemed to be interested in 126,000 Shares held by Titron SC by virtue of the SFO.

IV – 2

GENERAL INFORMATION

APPENDIX IV

Save as disclosed above, the Directors were not aware of any party who, as at the Latest Practicable Date, had interests or short positions in the Shares and 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.

3. MATERIAL CONTRACTS

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

• (i) the placing agreement dated 24 March 2014 entered into between the Company and Gransing Securities Co., Limited (‘‘Gransing’’) as the placing agent pursuant to which the Company conditionally agreed to offer for subscription and Gransing agreed to procure not less than six placees to subscribe, failing which, Gransing itself would subscribe for 175,160,000 Shares at a price of HK$0.239 per Share, details of which are disclosed in the announcements of the Company dated 24 March 2014 and 7 April 2014;

• (ii) the placing agreement dated 24 March 2014 entered into between the Company and Gransing as the placing agent pursuant to which the Company conditionally agreed to place through Gransing, on a best endeavour basis, up to 175,160,000 Shares at a price of HK$0.239 per Share to not less than six placees, details of which are disclosed in the announcements of the Company dated 24 March 2014, 30 June 2014, 12 January 2015 and 23 June 2015 and the circular of the Company dated 4 June 2014;

• (iii) the placing agreement dated 31 October 2014 entered into between the Company and SBI China Capital Financial Services Limited (‘‘SBI’’) as the placing agent pursuant to which the Company conditionally agreed to offer for subscription and SBI agreed to procure, placees to subscribe, failing which, SBI itself would subscribe for 226,200,000 Shares at a price of HK$0.118 per Share, details of which are disclosed in the announcements of the Company dated 31 October 2014, 14 November 2014 and 23 June 2015;

• (iv) the underwriting agreement dated 23 June 2015 (‘‘Underwriting Agreement’’) entered into between the Company and SBI as the underwriter in relation to the proposed rights issue of 919,458,963 rights shares at HK$0.435 per rights share on the basis of three rights shares for every one Share in issue, details of which are disclosed in the announcement of the Company dated 23 June 2015;

• (v) the termination agreement dated 6 July 2015 entered into between the Company and SBI in relation to the termination of the Underwriting Agreement, details of which are disclosed in the announcement of the Company dated 6 July 2015;

IV – 3

GENERAL INFORMATION

APPENDIX IV

• (vi) the placing agreement dated 14 July 2015 entered into between the Company and Gransing as the placing agent pursuant to which the Company conditionally agreed to offer for subscription and Gransing agreed to procure not less than six placees to subscribe, failing which, Gransing itself would subscribe for 61,200,000 Shares at a price of HK$0.328 per Share, details of which are disclosed in the announcements of the Company dated 14 July 2015 and 24 July 2015;

• (vii) the placing agreement dated 14 July 2015 (‘‘Placing Agreement’’) entered into between the Company and Gransing as the placing agent pursuant to which the Company has conditionally agreed to offer for subscription and Gransing, has agreed to procure, on a best endeavour basis, not less than six placees to subscribe, up to 612,900,000 Shares at a price of HK$0.328 per Share (‘‘Placing’’), details of which are disclosed in the announcement of the Company dated 14 July 2015;

• (viii) the supplemental placing agreement dated 31 August 2015 supplemental to the Placing Agreement entered into between the Company and Gransing, details of which are disclosed in the announcement of the Company dated 31 August 2015;

• (ix) the confirmation letter dated 27 October 2015 signed by the Company and Gransing in relation to the long stop date of the Placing, details of which are disclosed in the announcement of the Company dated 27 October 2015;

• (x) the Acquisition Agreement; and

• (xi) the sale and purchase agreement dated 6 October 2015 entered into between the Company as the purchaser and GET Holdings Limited (a company incorporated in the Cayman Islands and continued in Bermuda with limited liability, the shares of which are listed on Growth Enterprise Market of the Stock Exchange (Stock Code: 8100)) (‘‘GET’’) as the vendor, pursuant to which the Company conditionally agreed to acquire, and GET conditionally agreed to sell, 200 issued shares in the share capital of Bonus First Group Limited, representing its entire issued share capital at completion of such acquisition, at a cash consideration of HK$62.0 million, details of which are disclosed in the announcement of the Company dated 6 October 2015 and the circular of the Company dated 4 December 2015.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or which may be terminated by the employer within one year without payment of compensation other than statutory compensation).

IV – 4

GENERAL INFORMATION

APPENDIX IV

5. EXPERT AND CONSENT

The following is the qualification of the expert who has been named in this circular or has given opinions, letter or advice contained in this circular:

Name Qualification

ZHONGHUI ANDA CPA Limited Certified Public Accountants, being the reporting accountant for the financial information of the Target and for the unaudited pro forma financial information of the Enlarged Group

ZHONGHUI ANDA CPA Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion therein of its letter and/or reference to its name, in the form and context in which they appear.

As at the Latest Practicable Date, ZHONGHUI ANDA CPA Limited was not beneficially interested in the share capital of any member of the Enlarged Group nor had any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group, nor did it have any interest, either directly or indirectly, in the assets which have been acquired or disposed of by or leased to any members of the Enlarged Group since 31 December 2014, being the date to which the latest published audited consolidated financial statements of the Group were made up.

6. LITIGATION

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

7. DIRECTORS’ COMPETING INTERESTS

To the best knowledge of the Directors, as at the Latest Practicable Date, none of the Directors or their respective close associates had any interests in a business, which competes or is likely to compete, either directly or indirectly, with the business of the Group which would be required to be disclosed under Rule 8.10 of the Listing Rules, as if the Directors were controlling Shareholders.

IV – 5

GENERAL INFORMATION

APPENDIX IV

8. DIRECTORS’ INTERESTS IN CONTRACTS OR ARRANGEMENTS

None of the Directors was materially interested in any contract or arrangement subsisting as at the Latest Practicable Date which is significant in relation to the business of the Enlarged Group, nor had any Director had any direct or indirect interests in any assets which have been acquired or disposed of by or leased to, or are proposed to be acquired or disposed of by or leased to, any member of the Enlarged Group since 31 December 2014, being the date to which the latest published audited consolidated financial statements of the Group were made up.

9. GENERAL

• (a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

• (b) The head office and principal place of business of the Company in Hong Kong is at Unit 1005, 10/F, Tower III, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong.

• (c) The company secretary of the Company is Mr. CHAN Kwong Leung, Eric, who is an associate member of the Hong Kong Institute of Chartered Secretaries.

• (d) The Company’s branch share registrar and transfer office in Hong Kong is Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (e) The English text of this circular shall prevail over the Chinese text.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours (Saturdays and public holidays excepted) from 10:00 a.m. to 1:00 p.m. and from 2:00 p.m. to 5:00 p.m. at Unit 1005, 10/F, Tower III, Enterprise Square, 9 Sheung Yuet Road, Kowloon Bay, Kowloon, Hong Kong from the date of this circular up to and including the date of the SGM:

• (a) the memorandum of association and the bye-laws of the Company;

• (b) the annual reports of the Company for the years ended 31 December 2012, 2013 and 2014 and the interim report of the Company for the six months ended 30 June 2015;

• (c) the accountants’ report on the Target issued by ZHONGHUI ANDA CPA Limited as set out in Appendix II to this circular;

• (d) the unaudited pro forma financial information of the Enlarged Group issued by ZHONGHUI ANDA CPA Limited as set out in Appendix III to this circular;

IV – 6

GENERAL INFORMATION

APPENDIX IV

• (e) the written consent referred to in the section headed ‘‘Experts and Consents’’ in this appendix;

• (f) the material contracts referred to in the section headed ‘‘Material Contracts’’ in this appendix; and

• (g) the circular of the Company dated 4 December 2015 in relation to the BFG Acquisition.

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NOTICE OF THE SGM

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(Incorporated in Bermuda with limited liability)

(Stock Code : 630)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the special general meeting of AMCO United Holding Limited (‘‘Company’’) will be held at 10:30 a.m. on Monday, 21 December 2015 at Regus Conference Centre, 35/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing, the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

‘‘THAT:

• (a) the agreement for sale and purchase dated 14 September 2015 entered into between Best Reward Global Limited, a wholly-owned subsidiary of the Company, as the purchaser, Mr. Lee King Yi and Madam Chung Wai Fong as the vendors in respect of the acquisition of the entire issued share capital of ACE Engineering Limited (a copy of which is marked ‘‘A’’ and signed by the chairman of the meeting for identification purpose has been tabled at the meeting) (‘‘Acquisition Agreement’’) be and is hereby approved, confirmed and ratified and the transactions contemplated thereunder be and are hereby approved; and

• (b) the board of directors (‘‘Board’’) of the Company or a duly authorised committee thereof be and is authorised to do all such acts and things, to sign and execute such documents or agreements or deeds on behalf of the Company and to do such other things and to take all such actions as it considers necessary, appropriate, desirable and expedient for the purposes of giving effect to or in connection with the acquisition of the entire issued share capital of ACE Engineering Limited, the Acquisition Agreement and all transactions contemplated thereunder, and to agree to such variation, amendments or waiver or matters relating thereto (including any variation, amendments or waiver of such documents or any terms thereof, which are not

• For identification purposes only

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NOTICE OF THE SGM

fundamentally different from those as provided in the Acquisition Agreement) as are, in the opinion of the Board or the duly authorised committee, in the interest of the Company and its shareholders as a whole.’’

On behalf of the Board AMCO United Holding Limited YIP Wai Lun, Alvin Chairman and Managing Director

Hong Kong, 4 December 2015

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

Principal place of business in Hong Kong: Unit 1005, 10/F Tower III, Enterprise Square 9 Sheung Yuet Road Kowloon Bay, Kowloon Hong Kong

Notes:

• (1) Any member of the Company entitled to attend and vote at the SGM is entitled to appoint one or, if he/she/it is the holder of two or more shares, more than one proxy to attend and vote instead of him. A proxy needs not be a member of the Company.

• (2) Where there are joint registered holders of any share, any one of such persons may vote at the SGM, either personally or by proxy, in respect of such share as if he/she/it were solely entitled thereto; but if more than one of such joint holders be present at the SGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

• (3) The proxy form and the power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority must be lodged at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Standard Limited of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time appointed for holding the SGM or any adjournment thereof (as the case may be) and in default the proxy form shall not be treated as valid. Completion and return of the proxy form shall not preclude members from attending and voting in person at the SGM or any adjournment thereof (as the case may be) should they so wish, and in such case, the proxy form previously submitted shall be deemed to be revoked.

As at the date of this notice, Mr. Yip Wai Lun, Alvin, Mr. Cheng Kin Chor and Mr. Leung Kelvin Ming Yuen are the executive directors of the Company; and Mr. Wong Siu Ki, Mr. Chan Ngai Sang Kenny and Mr. Li Kwok Fat are the independent non-executive directors of the Company.

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