Imperium Financial Group Limited — Proxy Solicitation & Information Statement 2015

Jul 6, 2015

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in China National Culture Group Limited, you should at once hand this Circular together with the enclosed form of proxy to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale was effected for transmission to the purchaser or the transferee. This Circular appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company 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.

CHINA NATIONAL CULTURE GROUP LIMITED 中國國家文化產業集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 745)

(1) PROPOSED SHARE CONSOLIDATION;

(2) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL;

(3) PROPOSED CHANGE IN BOARD LOT SIZE;

(4) PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.10 PER OFFER SHARE;

(5) CLOSURE OF REGISTER OF MEMBERS; AND

(6) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial adviser to the Company

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Underwriter of the Open Offer

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

A letter from the Board is set out on pages 11 to 35 of this Circular. The recommendation of the Independent Board Committee to the Independent Shareholders is set out on page 36 of this Circular. A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 37 to 68 of this Circular.

A notice convening the EGM to be held at Jasmine Room, 3/F., Ramada Hong Kong Hotel, 308 Des Voeux Road West, Hong Kong at 9:00 a.m. on Thursday, 23 July 2015 is set out on pages EGM-1 to EGM-4 of this Circular. A form of proxy for use at the EGM is enclosed.

Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Registrar at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so desire.

The Open Offer is subject to the satisfaction of certain conditions as described under the section headed “Conditions of the Open Offer”. In particular, it is subject to the Underwriter not terminating the Underwriting Agreement (see the section headed “Termination of the Underwriting Agreement” herein) on or before the Latest Time for Termination. Accordingly, the Open Offer may or may not become unconditional and may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares and/or the Consolidated Shares up to the date when the conditions of the Open Offer are fulfilled.

7 July 2015

CONTENTS

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
TERMINATION OF THE UNDERWRITING AGREEMENT. . . . . . . . . . . . . . . . . . 9
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . 36
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER. . . . . . . . . . . . . . . 37
APPENDIX I — FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . I-1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL	II-1
INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX III — GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . III-1
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EGM-1

— i —

DEFINITIONS

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

• “acting in concert”

• has the meaning as ascribed thereto under the Takeovers Code

• “Announcement”

• the announcement of the Company dated 8 June 2015 in relation to, among other things, the proposed Share Consolidation, the proposed Increase in Authorised Share Capital, the proposed Change in Board Lot Size, and the proposed Open Offer

• “Application Form(s)” the application form(s) to be issued to the Qualifying Shareholders in respect of their assured entitlements under the Open Offer

• “associate(s)” has the meaning as ascribed thereto under the Listing Rules

• “Board”

• the board of Directors

• “Business Day”

• a day (excluding Saturday, Sunday, public holiday 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 generally open for business

• “CCASS”

• the Central Clearing and Settlement System established and operated by HKSCC

• “Change in Board Lot Size”

• the proposed change in board lot size of the Shares and/or the Consolidated Shares for trading on the Stock Exchange from 2,000 Shares to 10,000 Consolidated Shares

• “Circular”

• the circular of the Company dated 7 July 2015 in relation to, among other things, further details regarding the Share Consolidation, the Increase in Authorised Share Capital, the Change in Board Lot Size and the Open Offer

• “close associate(s)”

• has the meaning as ascribed thereto under the Listing Rules

• “Company”

China National Culture Group Limited, a company incorporated in Cayman Islands with limited liability, the Shares of which are listed on the main board of the Stock Exchange

— 1 —

DEFINITIONS

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

• “Consolidated Share(s)” Share(s) of HK$0.02 each in the issued share capital of the Company upon completion of the Share Consolidation

• “controlling Shareholder(s)” has the meaning as ascribed thereto under the Listing Rules

• “core connected person(s)” has the meaning as ascribed thereto under the Listing Rules

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

• “EGM” the extraordinary general meeting of the Company to be held at 9:00 a.m. on Thursday, 23 July 2015 to consider and, if thought fit, approve, among other things, the Share Consolidation, the Increase in Authorised Share Capital and the Open Offer

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

• “HKSCC” Hong Kong Securities Clearing Company Limited

• “Hong Kong” the Hong Kong Special Administrative Region of the PRC

• “Increase in Authorised Share Capital”

• the proposed increase in the authorised share capital of the Company from HK$100,000,000 divided into 5,000,000,000 Consolidated Shares of HK$0.02 each to HK$1,000,000,000 divided into 50,000,000,000 Consolidated Shares of HK$0.02 each by the creation of 45,000,000,000 unissued Consolidated Shares immediately following the Share Consolidation becoming effective

• “Independent Board comprising all independent non-executive Directors established Committee” to advise the Independent Shareholders in respect of the Open Offer

• “Independent Financial Adviser” or “Opus Capital”

• Opus Capital Limited, a corporation licensed under the SFO to conduct type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Open Offer

— 2 —

DEFINITIONS

• “Independent Shareholder(s)”

• “Last Trading Day”

• “Latest Practicable Date”

• “Latest Time for Acceptance”

• “Latest Time for Termination”

• “Listing Committee”

• “Listing Rules”

• “Non-Qualifying Shareholder(s)”

• “Offer Share(s)”

• any Shareholder(s) other than the controlling Shareholders and their respective associates or, where there are no controlling Shareholders, the Directors (excluding the independent nonexecutive Directors) and the chief executive of the Company and their respective associates

• 8 June 2015, being the last day on which the Shares were traded on the Stock Exchange immediately preceding the publication of the Announcement

• 3 July 2015, being the latest practicable date prior to the printing of this Circular for ascertaining certain information contained herein

• 4:00 p.m. on Wednesday, 19 August 2015 or such other time as may be agreed between the Company and the Underwriter, being the latest time for application for, and payment for the Offer Shares as described in the Prospectus

• 4:00 p.m. on Monday, 24 August 2015, being the third Business Day following the Latest Time for Acceptance (or such other time or date as the Underwriter and the Company may agree in writing)

• has the meaning as ascribed thereto under the Listing Rules

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

• Overseas Shareholder(s), to whom the Directors, based on legal opinion(s) provided by the legal adviser(s) to the Company, consider it necessary or expedient not to offer the Open Offer on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place

Consolidated Share(s) to be issued and allotted under the Open Offer, being 4,907,205,000 Offer Shares proposed to be offered to the Qualifying Shareholders pursuant to the Open Offer on the basis of one (1) Offer Share for every one (1) Consolidated Share held on the Record Date

— 3 —

DEFINITIONS

• “Open Offer”

• the proposed issue of one (1) Offer Share for every one (1) Consolidated Share in issue and held on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents

• “Overseas Shareholder(s)” Shareholder(s) whose name(s) appear(s) on the register of members of the Company on the Record Date and whose address(es) as shown on such register is/are outside Hong Kong

• “PRC” or “China”

• the People’s Republic of China, but for the purpose of this Circular shall exclude Hong Kong, Macau Special Administrative Region of the PRC and Taiwan

• “Prospectus” the prospectus to be despatched to the Shareholders on the Prospectus Posting Date containing details of the Open Offer in such form as may be agreed between the Company and the Underwriter

• “Prospectus Documents” the Prospectus and the Application Forms

• “Prospectus Posting Date”

• Wednesday, 5 August 2015 or such other date as the Underwriter may agree in writing with the Company, being the date of despatch of the Prospectus Documents to the Qualifying Shareholders or the Prospectus for information only to the NonQualifying Shareholders

• “Qualifying Shareholder(s)” Shareholder(s) whose name(s) is/are registered on the register of the members of the Company on the Record Date, other than the Non-Qualifying Shareholder(s)

• “Record Date”

• Tuesday, 4 August 2015 (or such other date as the Underwriter may agree in writing with the Company), as the date by reference to which entitlements to the Open Offer are expected to be determined

• “Registrar”

• the branch share registrar of the Company in Hong Kong, being Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong

• “SFC”

• the Securities and Futures Commission of Hong Kong

• “SFO”

• the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong, as modified and amended from time to time

— 4 —

DEFINITIONS

• “Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company prior to the Share Consolidation

• “Share Consolidation” the proposed consolidation of every two (2) Shares of HK$0.01 each into one (1) Consolidated Share of HK$0.02 each

• “Share Option Scheme” the share option scheme adopted by the Company on 29 August 2014

• “Shareholder(s)” the holder(s) of Shares or Consolidated Shares, as the case may be

• “Shortfall Underwritten the Underwritten Shares not validly accepted by the Qualifying Shares” Shareholders on or before the Latest Time for Acceptance

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Subscription Price” HK$0.10 per Offer Share

• “substantial shareholder(s)” has the meaning as ascribed thereto under the Listing Rules

• “Takeovers Code” the Hong Kong Code on Takeovers and Mergers

• “US$”

• United States dollar(s), the lawful currency of the United States

• “Underwriter” Astrum Capital Management Limited, a licensed corporation to carry on type 1 (dealing in securities), type 2 (dealing in futures contracts), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

• “Underwriting Agreement” the underwriting agreement dated 8 June 2015 entered into between the Company and the Underwriter in relation to the underwriting arrangement in respect of the Open Offer

• “Underwritten Shares” 4,907,205,000 Offer Shares being underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement

• “%” per cent

Note: Certain amounts and percentage figures included in this Circular have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.

— 5 —

EXPECTED TIMETABLE

The expected timetable for the Share Consolidation, the Increase in Authorised Share Capital, the Change in Board Lot Size and the Open Offer is set out below:

Event 2015
Latest time for return of proxy form of the EGM
(not less than 48 hours prior to time of the EGM) . . . . . . . . . . 9:00 a.m. on Tuesday, 21 July
Date of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Thursday, 23 July
Announcement of results of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 23 July
Effective date of the Share Consolidation and
the Increase in Authorised Share Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 24 July
Commencement of dealings in the Consolidated Shares . . . . . . . . . 9:00 a.m. on Friday, 24 July
Original counter for trading in Shares (in board lots of
2,000 Shares) (in the form of existing share certificates)
temporarily closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 24 July
Temporary counter for trading in the Consolidated Shares,
in board lots of 1,000 Consolidated Shares
(in the form of existing share certificates) opens . . . . . . . . . . . . 9:00 a.m. on Friday, 24 July
First day for the free exchange of existing certificates of
the Shares into new share certificates of the Consolidated
Shares commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 24 July
Last day of dealings in the Consolidated Shares on
a cum-entitlement basis of the Open Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 24 July
First day of dealings in the Consolidated Shares on
an ex-entitlement basis of the Open Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 27 July
Latest time for lodging transfers of the Consolidated
Shares in order to qualify for the Open Offer . . . . . . . . . . . . . .4:30 p.m. on Tuesday, 28 July
Register of members closes (both dates inclusive) . . . . . . . . . . . . . . . . . .Wednesday, 29 July to
Tuesday, 4 August
Record Date for the Open Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday, 4 August
Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 5 August

— 6 —

EXPECTED TIMETABLE

Despatch of the Prospectus Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 5 August Designated broker starts to stand in the market to provide matching services for the sale and purchase of odd lots of the Consolidated Shares . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 7 August Original counter for trading in the Consolidated Shares in new board lots of 10,000 Consolidated Shares (in the form of new share certificates) re-opens . . . . . . . . . . . . 9:00 a.m. on Friday, 7 August Parallel trading in the Consolidated Shares (in the form of both existing share certificates and new share certificates) commences . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 7 August Latest Time for Acceptance . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 19 August Latest Time for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . .4:00 p.m. on Monday, 24 August Designated broker ceases to stand in the market to provide matching services for the sale and purchase of odd lots of the Consolidated Shares . . . . . . . . . . . . . . . .4:00 p.m. on Thursday, 27 August Temporary counter for trading in board lots of 1,000 Consolidated Shares (in the form of existing share certificates) closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:00 p.m. on Thursday, 27 August Parallel trading in the Consolidated Shares (in the form of new and existing certificates) ends . . . . . . .4:00 p.m. on Thursday, 27 August Announcement of the results of the Open Offer . . . . . . . . . . . . . . . . . . . . . . . Friday, 28 August Despatch of certificates for the Offer Shares . . . . . . . . . . . . . . . . . . . . . . . . Monday, 31 August Despatch of refund cheques if the Open Offer is terminated . . . . . . . . . . . . . Monday, 31 August Last day of free exchange of existing certificates for new certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . . . . . . . Monday, 31 August Expected first day of dealings in the Offer Shares . . . . . . . . 9:00 a.m. on Tuesday, 1 September Note:

All times and dates in this Circular refer to Hong Kong local times and dates. Shareholders should note that the dates and deadlines specified in this Circular for events in the timetable for (or otherwise in relation to) the Open Offer are indicative only and may be extended or varied by agreement between the Company and the Underwriter.

In the event that any special circumstances arise, the Board may extend, or make adjustment to, the timetable if it considers appropriate. Any extension or adjustment to the expected timetable will be published or notified to the Shareholders and the Stock Exchange as and when appropriate.

— 7 —

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE

The Latest Time for Acceptance will not take place at 4:00 p.m. on Wednesday, 19 August 2015 if there is a tropical cyclone warning signal number 8 or above, or a “black” rainstorm warning, if such circumstances is:

• (i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the date of the Latest Time for Acceptance, the Latest Time for Acceptance will not take place at 4:00 p.m. on the date of the Latest Time for Acceptance, but will be extended to 5:00 p.m. on the same day instead;

• (ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance, the Latest Time for Acceptance will not take place on the date of the Latest Time for Acceptance, but will be rescheduled to 4:00 p.m. on the following business day which does not have either of those warnings in force at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance does not take place on the date of the Latest Time for Acceptance, the dates mentioned in the section headed “Expected Timetable” in this Circular may be affected. An announcement will be made by the Company in such event.

— 8 —

TERMINATION OF THE UNDERWRITING AGREEMENT

Notwithstanding anything contained in the Underwriting Agreement, if at any time prior to the Latest Time for Termination:

• (1) the success of the Open Offer would be materially and adversely affected by the development, occurrence or enforcement of:

• (a) any new law or regulation or any change in existing laws or regulations which in the reasonable opinion of the Underwriter has or is likely to have a material adverse effect on the financial position of the Group as a whole; or

• (b) any significant change (whether or not permanent) in local, national or international economic, financial, political or military conditions which in the reasonable opinion of the Underwriter is or would be materially adverse to the success of the Open Offer; or

• (c) any significant change (whether or not permanent) in local, national or international securities market conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Underwriter is or would be materially adverse to the success of the Open Offer, or makes it impracticable or inadvisable or inexpedient to proceed therewith; or

• (d) any suspension of dealings in the Shares for any period longer than five consecutive Business Days after the date of the Underwriting Agreement (other than as a result of the Open Offer); or

• (e) any moratorium, suspension or material restriction on trading in shares or securities generally on the Stock Exchange due to exceptional financial circumstances or otherwise at any time prior to the Latest Time for Termination; or

• (2) any breach of any of the warranties, representations and undertakings of the Company as set out in the Underwriting Agreement in any material respect by the Company comes to the knowledge of the Underwriter; or

• (3) any event occurs or any matter arises on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of such representations, warranties and undertakings untrue or incorrect in any material respect in such a manner as would in the absolute opinion of the Underwriter materially and adversely affect the financial position or business of the Group as a whole; or

• (4) there is any such adverse change in the general affairs, management, business, stockholders’ equity or in the financial or trading position of the Group as a whole which in the absolute opinion of the Underwriter is materially adverse to the success of the Open Offer, or

— 9 —

TERMINATION OF THE UNDERWRITING AGREEMENT

• (5) there is any change in the composition of the Board which in the absolute opinion of the Underwriter may affect the management and general affairs of the Company;

then and in any such case, the Underwriter may terminate the Underwriting Agreement without liability to the Company by giving notice in writing to the Company, served prior to the Latest Time for Termination.

In the event that the Underwriter terminates the Underwriting Agreement, all obligations of each of the parties to the Underwriting Agreement shall cease and no party shall have any claim against any other party in respect of any matter arising out of or in connection with the Underwriting Agreement except for, among others, any antecedent breach of any obligation under the Underwriting Agreement.

— 10 —

LETTER FROM THE BOARD

CHINA NATIONAL CULTURE GROUP LIMITED 中國國家文化產業集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 745)

Executive Directors: Registered Office: Ms. SUN Wei Cricket Square, Hutchins Drive Ms. SHEN Lihong P.O. Box 2681 Grand Cayman KY1-1111 Independent non-executive Directors: Cayman Islands Mr. LIU Kwong Sang Ms. WANG Miaojun Head office and principal Ms. CHEUNG Lai Chun place of business: Room 901 Silver Fortune Plaza 1 Wellington Street Central, Hong Kong

7 July 2015

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED SHARE CONSOLIDATION; (2) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL;

(3) PROPOSED CHANGE IN BOARD LOT SIZE;

(4) PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.10 PER OFFER SHARE;

(5) CLOSURE OF REGISTER OF MEMBERS; AND

(6) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement in relation to, among other things, the proposed Share Consolidation, the Increased in Authorised Share Capital, the Change in Board Lot Size and the Open Offer.

The purpose of this Circular is to provide the Shareholders, among other things, (i) further details of the proposed Share Consolidation, the Increased in Authorised Share Capital, the Change in Board Lot Size and the Open Offer; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Open Offer; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders on the Open Offer; and (iv) the notice of the EGM.

— 11 —

LETTER FROM THE BOARD

PROPOSED SHARE CONSOLIDATION

On 8 June 2015, the Company announced that it proposed to implement the Share Consolidation on the basis that every two (2) issued and unissued Shares of HK$0.01 each would be consolidated into one (1) Consolidated Share of HK$0.02 each.

Conditions of the Share Consolidation

The Share Consolidation is conditional upon

• (i) passing of an ordinary resolution to approve the Share Consolidation by the Shareholders by way of poll at the EGM; and

• (ii) the Listing Committee granting approval to the listing of, and permission to deal in, the Consolidated Shares arising from the Share Consolidation.

The Share Consolidation will become effective on the next Business Day immediately following the fulfillment of the above conditions.

Effect of the Share Consolidation

As at the Latest Practicable Date, the authorised share capital of the Company is HK$100,000,000.00 divided into 10,000,000,000 Shares of HK$0.01 each, of which 9,814,410,000 Shares have been issued and are fully paid or credited as fully paid.

Assuming that there is no change to the issued share capital of the Company between the Latest Practicable Date and the date of the EGM, immediately after the Share Consolidation becoming effective, the authorised share capital of the Company will become HK$100,000,000.00 divided into 5,000,000,000 Consolidated Shares of HK$0.02 each, of which 4,907,205,000 Consolidated Shares will be in issue.

The Company has adopted the Share Option Scheme on 29 August 2014 and has obtained listing approval from the Stock Exchange for the listing of and permission to deal in the Shares which may be issued pursuant to the exercise of options granted thereunder in accordance with the relevant terms of the Share Option Scheme. As at the Latest Practicable Date, no options are outstanding under the Share Option Scheme. As the Company has no outstanding options as at the Latest Practicable Date and the Company has undertaken not to issue any options from the date of the Underwriting Agreement up to the Latest Time for Acceptance (a date after the effective date of the Share Consolidation), no adjustments need to be made to the exercise prices or numbers of the Consolidated Shares to be issued upon exercise of any outstanding options as a result of the Share Consolidation. If any options are granted after the Latest Time for Acceptance, their exercise prices and numbers of the Consolidated Shares to be issued upon exercise of such options will be determined by the Board after taking account of, among others, the Share Consolidation and will be announced by the Company upon the grant of such options.

— 12 —

LETTER FROM THE BOARD

Fractional entitlements to the Consolidated Shares

Fractional Consolidated Shares will be disregarded and not be issued by the Company to the Shareholders. Any fractional entitlements of the Consolidated Shares will be aggregated, sold and retained for the benefit of the Company, if feasible and applicable. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a Shareholder regardless of the number of share certificates held by such Shareholder.

Other than the relevant expenses, including but not limited to professional fees and printing charges incurred, the implementation of the Share Consolidation will have no effect on the consolidated net asset value of the Group, nor will it alter the underlying assets, business, operations, management or financial position of the Company or the interests of the Shareholders, save for any fractional Consolidated Shares to which Shareholders may be entitled. The Directors believe that the Share Consolidation will not have any material adverse effect on the financial position of the Group.

Application for Listing of the Consolidated Shares

An application has been made by the Company to the Listing Division of the Stock Exchange for the listing of, and the permission to deal in, the Consolidated Shares to be in issue upon the Share Consolidation becoming effective. Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other.

Subject to the granting of the listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

None of the Shares are listed or dealt in any other stock exchange other than the Stock Exchange, and at the time the Share Consolidation becoming effective, the Consolidated Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought.

Free exchange of the Consolidated Shares’ certificates and trading arrangement

Subject to the Share Consolidation becoming effective, Shareholders may, during the period from Friday, 24 July 2015 to Monday, 31 August 2015, submit share certificates for the existing Shares to the Registrar to exchange, at the expense of the Company, for new certificates of the Consolidated Shares. Thereafter, each share certificate for the existing Shares will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may be from time to time be specified by the Stock Exchange) for each new share certificate issued for the Consolidated Shares or each share certificate for the existing Shares submitted

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for cancellation, whichever the number of certificates issued or cancelled is higher. With effect from 9:00 a.m. Friday, 28 August 2015, trading will only be in the Consolidated Shares in the form of new share certificates, and the share certificates for the existing Shares will cease to be valid for trading and settlement purpose, but they will continue to be good evidence of legal title and may be exchanged for new share certificates for the Consolidated Shares.

The new share certificates for the Consolidated Shares will be issued in light red color to distinguish from the existing share certificates, which are in blue color.

Odd lots arrangement and matching services

In order to facilitate the trading of odd lots (if any) of the Consolidated Shares, the Company has appointed Astrum Capital Management Limited as an agent to provide matching services for sale and purchase of odd lots of the Consolidated Shares at the relevant market price per Consolidated Share, on a best effort basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares during the period from Friday, 7 August 2015 to Thursday, 27 August 2015 (both dates inclusive). Holders of Shares in odd lots represented by the existing share certificates for the Shares who wish to take advantage of this facility either to dispose of their odd lots of the Shares or to top up their odd lots to a full new board lot may directly or through their broker contact Mr. Yam Tsz Man of Astrum Capital Management Limited at 11/F, 122 QRC, 122-126 Queen’s Road Central, Central, Hong Kong (telephone: (852) 3665 8168 and facsimile: (852) 2559 7800) during such period. Holders of odd lots of the Consolidated Shares should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares are not warranted. Any Shareholder who is in any doubt about the odd lots arrangement, is recommended to consult his/her/its own professional advisers.

PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

In order to accommodate the future expansion and growth of the Group, on 8 June 2015, the Company announced that it proposed to increase the authorised share capital of the Company from HK$100,000,000 divided into 5,000,000,000 Consolidated Shares of HK$0.02 each to HK$1,000,000,000 divided into 50,000,000,000 Consolidated Shares of HK$0.02 each by the creation of an additional 45,000,000,000 unissued Consolidated Shares immediately following the Share Consolidation becoming effective.

The Increase in Authorised Share Capital is conditional upon, among other things, the passing of the relevant resolutions approving the Share Consolidation and the Increase in Authorised Share Capital by the Shareholders at the EGM and the Share Consolidation becoming effective.

PROPOSED CHANGE IN BOARD LOT SIZE

As at the Latest Practicable Date, the Shares are traded in board lot size of 2,000 Shares. On 8 June 2015, the Company announced that it proposed to change the board lot size for trading of the Shares and/or the Consolidated Shares from 2,000 Shares to 10,000 Consolidated Shares conditional upon the Share Consolidation becoming effective.

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Reasons for and benefits of the Share Consolidation and the Change in Board Lot Size

The Share Consolidation will increase the nominal value of the Shares and it is expected to bring about corresponding upward adjustment in the trading price of the Consolidated Shares.

Based on the closing price of HK$0.136 per Share (equivalent to HK$0.272 per Consolidated Share) as at the Latest Practicable Date, the value of each board lot of 10,000 Consolidated Shares, assuming the Share Consolidation had already been effective, would be HK$2,720.

The Share Consolidation together with the Change in Board Lot Size are expected to bring about a corresponding upward adjustment in the trading price per board lot of the Consolidated Shares on the Stock Exchange, which will reduce the overall transaction and handling costs for dealings in the Consolidated Shares as a proportion of the market value of each board lot. Certain brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced shares or tend to discourage individual brokers from recommending low-priced shares to their customers. Therefore, with a higher trading price of the Consolidated Shares and reduction of the transaction and handling costs as a proportion of the market value of each board lot, the Company believes that the Share Consolidation and the Change in Board Lot Size will make investing in Shares more attractive to a broader range of institutional and professional investors and other members of the investing public. As such, the Board believes that the Share Consolidation and the Change in Board Lot Size may attract more investors and extend the shareholders’ base of the Company. In view of the above, the Board considers that the Share Consolidation and the Change in Board Lot Size are in the interests of the Company and the Shareholders as a whole.

PROPOSED OPEN OFFER

Basis of the Open Offer: One (1) Offer Share for every one (1) Consolidated Share held on the Record Date Subscription Price: HK$0.10 per Offer Share Number of Shares in issue as at the Latest 9,814,410,000 Shares Practicable Date: Number of Consolidated Shares in issue 4,907,205,000 Consolidated Shares immediately upon the Share Consolidation having become effective: Number of Offer Shares: 4,907,205,000 Offer Shares The aggregate nominal value of the Offer Shares will be HK$98,144,100.00.

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• Number of Consolidated Shares in issue immediately upon completion of the Open Offer:

9,814,410,000 Consolidated Shares

Underwriter:

Astrum Capital Management Limited

Funds proposed to be raised before expenses:

Approximately HK$490.7 million

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

The Open Offer is fully underwritten by the Underwriter which shall ensure that the Company will maintain the minimum public float requirement in compliance with Rule 8.08(1) of the Listing Rules.

The Offer Shares

4,907,205,000 Offer Shares will be issued and allotted representing approximately 100.00% of the issued share capital of the Company immediately after the Share Consolidation and approximately 50.00% of the issued share capital of the Company as enlarged by the Offer Shares.

Subscription Price

The Subscription Price of HK$0.10 per Offer Share will be payable in full upon application by a Qualifying Shareholder. The Subscription Price represents:

• (a) a discount of approximately 76.4% to the closing price of HK$0.424 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (b) a discount of approximately 77.1% to the average closing price of approximately HK$0.436 per Consolidated Share for the last 5 consecutive trading days as quoted on the Stock Exchange up to and including the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (c) a discount of approximately 77.8% to the average closing price of approximately HK$0.450 per Consolidated Share for the last 10 consecutive trading days as quoted on the Stock Exchange up to and including the Last Trading Day and adjusted for the effect of the Share Consolidation;

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• (d) a discount of approximately 61.8% to the theoretical ex-entitlement price of approximately HK$0.262 per Consolidated Share based on the closing price of HK$0.424 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (e) a premium of approximately 7.5% over the unaudited consolidated net asset value per Consolidated Share of approximately HK$0.093 as at 30 September 2014 (based on 4,907,205,000 Consolidated Shares in issue as at the Last Trading Day and adjusted for the effect of the Share Consolidation); and

• (f) a discount of approximately 63.2% to the closing price of HK$0.272 per Consolidated Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Share Consolidation.

The Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to, among other things, the market price of the Shares (after taking into account the effect of the Share Consolidation) under the prevailing market conditions, liquidity of the Shares, historical financial performance and the financial position of the Group. In particular, the Group recorded a loss attributable to owners of the Company of approximately HK$203.7 million for the year ended 31 March 2014 (representing an increase of approximately 126.6% as compared to the year ended 31 March 2013).

As the Offer Shares are offered to all Qualifying Shareholders, the Directors wish to set the Subscription Price at a level that will attract Qualifying Shareholders to participate in the Open Offer. As all Qualifying Shareholders are entitled to subscribe for the Offer Shares in the same proportion to his/her/its existing shareholding in the Company held on the Record Date, the Directors (including the independent non-executive Directors after considering the advice of the Independent Financial Adviser) consider that the discount of the Subscription Price would encourage the Qualifying Shareholders to take up their entitlements so as to maintain their shareholdings in the Company and participate in the future growth of the Group, particularly in view of:

• (i) the uncertainties in the financial market in Hong Kong as a result of the uncertainties stemming from fluctuating market sentiment, capital flow, trend of interest rate, volatility in money supply in different major economies and different economic decisions made by different countries, the Directors consider it will be difficult to attract the Qualifying Shareholders to reinvest in the Company through the Open Offer if the Subscription Price was not set at a relatively deep discount to the recent historical trading prices of the Shares;

• (ii) the historical trading prices of the Shares showed a downward trend during the past twelve months before the Last Trading Day (i.e. from 9 June 2014 to 8 June 2015), with the highest closing price of the Shares of HK$0.375 on 21 July 2014, 28 July 2014 and 29 July 2014 and lowest closing price of the Shares of HK$0.103 on 19 January 2015 and 22 January 2015;

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• (iii) save for the trading volume of the Shares in April 2015 and May 2015, the average trading volume in the past twelve months before the date of the Announcement were only approximately 2.3% of the total issued Shares;

• (iv) the financial performance of the Group which recorded a loss attributable to owners of the Company of approximately HK$203.7 million for the year ended 31 March 2014 (representing an increase of approximately 126.6% as compared to the year ended 31 March 2013); and

• (v) the Subscription Price represents a premium of approximately 7.5% over the unaudited consolidated net asset value per Consolidated Share of approximately HK$0.093 as at 30 September 2014 (based on 4,907,205,000 Consolidated Shares in issue as at the Last Trading Day and adjusted for the effect of the Share Consolidation).

The Directors (including the independent non-executive Directors after considering the advice of the Independent Financial Adviser) consider the Subscription Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions of the Open Offer

The Open Offer is conditional upon the fulfillment of the following conditions:

• (1) the passing of the following resolutions by way of poll at the EGM: —

• (i) an ordinary resolution to approve the Share Consolidation by the Shareholders;

• (ii) an ordinary resolution to approve the Increase in Authorised Share Capital by the Shareholders; and

• (iii) an ordinary resolution to approve the Open Offer by the Independent Shareholders;

• (2) the Share Consolidation and the Increase in Authorised Share Capital having become effective;

• (3) the delivery to the Stock Exchange and registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Prospectus Documents duly signed by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) not later than the Prospectus Posting Date and otherwise in compliance with the Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong);

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• (4) the posting of the Prospectus Documents to Qualifying Shareholders and the posting of the Prospectus stamped “For Information Only” to the Non-Qualifying Shareholders, if any, for information purpose only on or before the Prospectus Posting Date;

• (5) the Listing Committee granting or agreeing to grant and not having withdrawn or revoked the listing of, and permission to deal in, the Consolidated Shares and the Offer Shares, either unconditionally or subject to such conditions which the Underwriter in its opinion accepts and satisfies (if any);

• (6) compliance with and performance of all undertakings and obligations of the Company under the Underwriting Agreement;

• (7) the obligations of the Underwriter under the Underwriting Agreement not being terminated by the Underwriter in accordance with the terms under the Underwriting Agreement;

• (8) none of the warranties, representations and undertakings of the Company as set out in the Underwriting Agreement being breached, untrue, inaccurate or misleading in any material respect; and

• (9) (if necessary) compliance with any other requirements under the applicable laws and regulations of Hong Kong and Cayman Islands.

Save for conditions in paragraphs (6) and (8) which may be waived by the Underwriter in whole or in part by written notice to the Company, none of the above conditions precedent can be waived by the Company or the Underwriter. As at the Latest Practicable Date, the Underwriter has no intention to waive the conditions in paragraphs (6) and (8). As at the Latest Practicable Date, none of the above conditions have been fulfilled.

If the conditions precedent set out in paragraphs (1) to (9) are not fulfilled and/or waived on or before the Latest Time for Termination, the Underwriting Agreement shall terminate and no party to the Underwriting Agreement will have any claim against any other party for costs, damages, compensation or otherwise save for, among others, any rights or obligations which may accrue under the Underwriting Agreement prior to such termination.

Status of the Offer Shares

The Offer Shares, when allotted, issued and fully-paid, will rank pari passu with the Consolidated Shares then in issue in all respects. Holders of such Offer Shares will be entitled to receive all future dividends and distributions which are declared, made or paid with a record date which falls on or after the date of allotment and issue of the Offer Shares. Dealings in the Offer Shares, which are registered in the register of members of the Company in Hong Kong, will be subject to payment of stamp duty and other applicable fees and charges in Hong Kong.

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Qualifying Shareholders

The Open Offer will only be available to the Qualifying Shareholders. The Company will send the Prospectus Documents to the Qualifying Shareholders and the Prospectus, for information only, to the Non-Qualifying Shareholders. To qualify for the Open Offer, Shareholders must be registered as members of the Company on the Record Date and must be a Qualifying Shareholder.

In order to be registered as members of the Company on the Record Date, Shareholders must lodge any transfers of the Shares/Consolidated Shares (together with the relevant share certificates) with the Registrar for registration no later than 4:30 p.m. on Tuesday, 28 July 2015.

Closure of register of members

The Company’s register of members will be closed from Wednesday, 29 July 2015 to Tuesday, 4 August 2015, both dates inclusive, for the purpose of, among other things, establishing entitlements to the Open Offer. No transfer of Shares or Consolidated Shares will be registered during this period.

Rights of Overseas Shareholders

The Prospectus Documents are not intended to be registered under the applicable securities legislation of any jurisdiction other than Hong Kong.

As at Latest Practicable Date, there are 15 Overseas Shareholders whose addresses as shown on the register of members of the Company are in the PRC, with an aggregate shareholding of 3,910,000 Shares, representing approximately 0.04% of the issued share capital of the Company. In compliance with Rule 13.36(2) of the Listing Rules, the Company will make enquiries regarding the feasibility of extending the Open Offer to the Overseas Shareholders. If, based on legal advice, the Directors consider that it is necessary or expedient not to issue the Offer Shares to the Overseas Shareholders on account either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, the Open Offer will not be available to such Overseas Shareholders. Further information in this connection will be set out in the Prospectus containing, among other things, details of the Open Offer, to be despatched to the Qualifying Shareholders on the Prospectus Posting Date. The Company will send copies of the Prospectus to the NonQualifying Shareholders for their information only, but will not send any Application Form to them.

Overseas Shareholders should note that they may or may not be entitled to the Open Offer. Accordingly, Overseas Shareholders should exercise caution when dealing in the securities of the Company.

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No application for excess Offer Shares

No Qualifying Shareholder is entitled to apply for any Offer Shares which are in excess to his/ her/its entitlement. Any Offer Shares not taken up by the Qualifying Shareholders, and the Offer Shares to which the Non-Qualifying Shareholders would otherwise have been entitled under the Open Offer, will not be available for subscription by other Qualifying Shareholders by way of excess application and will be taken up by the Underwriter.

The Directors hold the view that the Open Offer allows the Qualifying Shareholders to maintain their respective pro rata shareholding in the Company and to participate in the future growth and development of the Group. If application for excess Offer Shares is arranged, the Company will be required to put in additional effort and costs including preparing and arranging the excess application, reviewing the relevant documents, liaising with professional parties and printing of application forms, etc. It is estimated that an additional cost of approximately HK$100,000 to administer the excess application procedures will be incurred, which is not cost effective from the viewpoint of the Company. Given the current loss-making position of the Group, the Board considers that it is important for the Group to minimise all costs which may be incurred during the fund raising. After arm’s length negotiations with the Underwriter, and taking into account that the related administration costs would be lowered in the absence of excess applications, the Directors consider that it is fair and reasonable and in the interests of the Company and the Shareholders as a whole not to offer any excess application to the Qualifying Shareholders.

Fractions of Offer Shares

On the basis of provisional allotment of one (1) Offer Share for every one (1) Consolidated Share held on the Record Date, no fractional entitlements to the Offer Shares will arise under the Open Offer.

Share certificates and refund cheques for the Offer Shares

Subject to the fulfillment of the conditions of the Open Offer, share certificates for all Offer Shares are expected to be posted to the Qualifying Shareholders who have accepted and applied for and paid for the Offer Shares on or before Monday, 31 August 2015 by ordinary post at their own risk. Each Shareholder will receive one share certificate for all allotted Offer Shares. If the Open Offer is terminated, refund cheques are expected to be posted on or before Monday, 31 August 2015 by ordinary post to the applicants at their own risk.

Application for listing of the Offer Shares

The Company will apply to the Listing Committee for the listing of, and permission to deal in, the Offer Shares on the Stock Exchange.

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Subject to the granting of the listing of, and permission to deal in, the Offer Shares on the Stock Exchange, the Offer Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement dates of dealings in Offer Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

All necessary arrangements will be made to enable the Offer Shares to be admitted into CCASS.

Dealings in the Offer Shares which are registered in the branch register of members of the Company in Hong Kong will be subject to the payment of stamp duty, Stock Exchange trading fee, SFC transaction levy, or any other applicable fees and charges in Hong Kong.

Reasons for the Open Offer and the use of proceeds

The Company is an investment holding company and the Group is principally engaged in the advertising media services and film production and distribution business.

Pursuant to the annual report and interim report of the Company for the year ended 31 March 2014 and the six months ended 30 September 2014, seeing the irreversible trend that new media is the growing power in mass media sector and is exerting great impact to the market landscape, the Group will continue its venture in the mobile applications business as well as look for opportunities to extend into other potential businesses such as new media marketing, advertising, e-commerce and culture, movie and entertainment-related businesses.

The Group is actively pursuing opportunities in investment in the culture, movie and entertainment-related businesses, in particular, import and/or distribution of films in China. Through the dedicated team to operate in film importation, distribution, and marketing, the Group is identifying possible investment opportunities in the industry, including but not limited to, film production and distribution in Hong Kong and China. The Board considers that such investments require substantial capital which may exert pressure on the liquidity and profitability of the Group as a result of the relevant finance costs.

The Board is of the view that the Open Offer will enable the Group to strengthen its capital base and enhance its financial position for future strategic investments when suitable opportunities arise. Furthermore, the Open Offer will give the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company and participate in the growth and development of the Group. Accordingly, the Directors are of the view that fund raising through the Open Offer is in the interests of the Company and the Shareholders as a whole. However, those Qualifying Shareholders who do not take up the Offer Shares to which they are entitled should note that their shareholdings in the Company will be diluted.

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The Board considers it is prudent to finance the Group’s long term growth by long term financing, preferably in the form of equity which will not increase the Group’s finance costs. The Board has considered other fund raising alternatives before resolving to the Open Offer, including but not limited to debt financing and rights issue. Debt financing will result in additional interest burden, higher gearing ratio of the Group and subject the Group to repayment obligations. In addition, debt financing may not be achievable on favourable terms in a timely manner. Although rights issue can provide a way out to those Shareholders who do not wish to take up the entitlements by selling nil-paid rights, rights issue will involve extra administrative work and cost for the trading arrangements in relation to the nil-paid rights.

If the Company is to carry out a rights issue instead of the Open Offer, additional administrative work would be involved by the Company for arranging the trading of nil-paid rights and liaising with other parties such as the Registrar of the Company, the Underwriter, financial printer and other professional advisers. It is estimated that the additional costs and expenses of around HK$200,000 would be incurred for such administrative work and the arrangement of trading the nil-paid rights. Given the current loss-making position of the Group, the Board considers that it is important for the Group to minimise all costs which may be incurred during the fund raising.

In addition, in view of (i) the historical trading prices of the Shares showed a downward trend during the past twelve months before the date of the Announcement; and (ii) save for the trading volume of the Company in April 2015 and May 2015, the average trading volume in the past twelve months before the date of the Announcement, were only approximately 2% of the total issued Shares, there is uncertainty of the existence of a market to trade the nil-paid rights. The Board intends to invest the resources for the extra administrative work and cost for the trading arrangements in relation to the nil-paid rights to the business development of the Company. In view of the above, the Board considers that raising funds by way of the Open Offer is more cost-effective and efficient as compared to a rights issue.

In assessing the fairness and reasonableness of the Open Offer, the Directors are of the view that:

• (i) the Subscription Price was arrived at after arm’s length negotiation between the Company and the Underwriter with reference to, among other things, the market price of the Shares under the prevailing market conditions and the financial performance of the Group which has been loss making for the past two years;

• (ii) in view of the uncertainties in the financial market in Hong Kong as a result of the uncertainties stemming from fluctuating market sentiment, capital flow, trend of interest rate, volatility in money supply in different major economies and different economic decisions made by different countries, the Directors consider it will be difficult to attract the Qualifying Shareholders to reinvest in the Company through the Open Offer if the Subscription Price was not set at a relatively deep discount to the recent historical trading prices of the Shares;

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• (iii) under the Open Offer, all the Qualifying Shareholders will be offered the same opportunity to maintain their proportionate interests in the Company and to participate in the growth and development of the Company. Should the Qualifying Shareholders participate in the Open Offer, they will subscribe the Offer Shares at a lower price as compared to the historical and prevailing market price of the Shares;

• (iv) the relatively deep discount of the Subscription Price has reflected absence of excess application arrangement to Shareholders with an objective to lower the further investment cost of Shareholders to encourage them to take up their entitlements;

• (v) during the negotiation of the Underwriting Agreement, it has been indicated to the Company that a subscription price with a relatively deep discount to the closing price is necessary to induce the Underwriter to participate in the underwriting of the Underwritten Shares, which is an essential part of the Open Offer;

• (vi) as disclosed above and the paragraph headed “No application for excess Offer Shares”, the absence of nil-paid rights trading and excess application would allow the Company to invest the resources of approximately HK$200,000 and HK$100,000 respectively for the extra administrative work and cost to the business development of the Company;

• (vii) the dilution impact of the Open Offer will only arise if the Qualifying Shareholders did not take up their entitlements under the Open Offer in full. However, the Qualifying Shareholders have the first right to decide whether to accept their entitlements of the Offer Shares after considering (a) the dilution impact of the Open Offer; and (b) the aggregate dilution impact of Open Offer and the previous fund raising activity completed within the last 12 months; and

• (viii) although the Open Offer has an inherent dilutive nature, it is subject to Shareholders’ approval, which means that the Shareholders have a right to disapprove the Open Offer and the Underwriter has also undertaken to the Company that none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will become a substantial Shareholder as a result of the Open Offer.

In view of the foregoing, the Directors consider that the Open Offer structure is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

The gross proceeds from the Open Offer will be approximately HK$490.7 million. The net proceeds from the Open Offer after deducting the estimated expenses are estimated to be approximately HK$479.6 million. The Company intends to apply net proceeds from the Open Offer in the following manner:

• (i) approximately HK$180.0 million for the acquisition of potential targets principally engaged in the mobile application business in the PRC;

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• (ii) approximately HK$180.0 million for potential investment opportunities and/or related funding requirements associated with investment opportunities identified from time to time, including but not limited to, film distribution and production and other entertainment-related projects, such as organising concert and fans events;

• (iii) approximately HK$50.0 million for the development and operation of the Group’s proposed establishment of e-commerce business;

• (iv) approximately HK$30.0 million for repayment of existing debts of the Group; and

• (v) approximately HK$39.6 million for general working capital for existing businesses of the Group.

Acquisition of potential targets principally engaged in the mobile application business in the PRC

The Group has been actively engaged in development of mobile internet business based on established foundation and closely following the O2O path. The Group has constructed a catering business mobile platform which aims at connecting the online and offline operational procedures in traditional catering businesses that would result in forming a data closedloop. The platform has been hugely popular among catering business operators in Hong Kong. The Directors has foreseen the shrinkage of traditional communication channel and its related advertising businesses due to the competition and thrust from the new innovative communication technology and media applied in the modern day advertising business. The Group has thus invested in and the Directors has continued to build on its experience through investment in the new media business in advertising for more than 5 years. The Group has undertaken industry researches and studies and considers that with the change in the preference and shift of usage by users, new media business in advertising continued to provide efficiency and convenience for users, in particular, mobile application having a great potential market for business than the traditional communication media. The Group intends to acquire potential targets with established structure which principally engaged in the similar mobile application business for catering business operators which provide online to offline (O2O) marketing services such as restaurant reservation, out-call services, payment, membership reward and management, restaurant promotion and advertisement, and data analytics services, in the PRC in the second half of 2015.

The Company has preliminary negotiated with not more than 3 parties on possible acquisition targets with established mobile application business in the PRC. The estimated valuation range is between HK$100 million to HK$300 million and the final purchase price will be based on, amongst others, valuation to be undertaken by an independent third party. The Directors will conduct in-depth financial, tax and legal due diligence on the potential acquisition targets as soon as practicable once identified. The Group will also seek for relevant legal opinion whether the possible acquisition targets are in restricted or prohibited businesses under the relevant rules and regulations, such as the Catalogue of Industries for Guiding Foreign Investment, as and when appropriate. Through collaboration of the established industry experts in the PRC, the Group considers the successful experience and platform developed can result in wider success in the PRC market which is more mature in terms of mobile payment platforms, social media and customer usage of mobile application in catering industry.

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Considering the Group has been in negotiations for possible acquisition targets which expect to take place in the second half of 2015 and the Open Offer and other potential fund raising activities would take considerable time to complete, the Directors consider that the Group has imminent funding needs in order to facilitate business development of the Group which will be in the interest of the Company and Shareholders as a whole. At the Latest Practicable Date, no concrete terms have been established nor have any definitive agreements been reached. It is the intention of the Group to acquire a controlling stake in those companies which they are having preliminary discussion with. The Group will update its Shareholders and, where appropriate, publish announcements in accordance with the Listing Rules should such acquisitions be realized.

Potential investment opportunities and/or related funding requirements associated with investment opportunities identified from time to time

As disclosed in the annual report and interim report of the Company for the year ended 31 March 2014 and the six months ended 30 September 2014, the Group is actively pursuing opportunities in investment in the culture, movie and entertainment-related businesses, in particular, import and/or distribution of films in China. The Company has started to be involved in this business segment since January 2015 where it invested HK$12.5 million in the production of a Chinese film through a foreign company.

Through the dedicated team to operate in film importation, distribution, and marketing, the Group is identifying possible investment opportunities in the industry, including but not limited to, film production and distribution in Hong Kong and China. The Group has been involved in the movie production industry since January 2015 and generated a revenue and segment results of approximately HK$14.4 million and HK$1.2 million respectively for year ended 31 March 2015. The Directors consider that with the growing economy and the increasing number of the young affluent population in the PRC, the demand for entertainment, in particular, for foreign and domestic films in China will continue to grow. The Directors have been involved in media, film promotion and distribution, and cultural exchange activities which are set out as follows:

Ms. Sun Wei (“ Ms. Sun ”) was appointed as an executive Director in February 2014. Ms. Sun holds a Bachelor of Arts in English Education degree from Shanghai International Studies University, PRC, a Master of Science degree in Finance from Clark University, United States of America and a Postgraduate Certificate in Professional Accounting from City University of Hong Kong. Ms. Sun has over four years of experience in accounting and administration.

Ms. Sun has been engaging in cultural exchange activities for many years. In recent years, she has been participating in “ 夢飛翔 ”, organized by a Hong Kong charity organization, namely Reading Dreams Foundation Limited ( 閱讀 • 夢飛翔文化關懷慈善基金有限公司 ), and the promotion of the charity auction organized by League of Ordinary Gentlemen ( 百年樹人會 ), in which she has been actively participating in the preliminary planning for a charity premiere. In 2014, she has successfully obtained the memorial events for the 100th anniversary of Beijing’s Summer Palace (Yihe Yuan) from the corresponding cultural event planner in charge. In the same year, the item was successfully auctioned, while she was responsible for the strategic promotion of such event.

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LETTER FROM THE BOARD

Ms. Shen Lihong (“ Ms. Shen ”) was appointed as an executive Director in May 2014. Ms. Shen graduated with a Bachelor degree in law from the University of Yangzhou in June 2007, and a Master degree in public relations from the East China University of Finance in July 2010. Ms. Shen has six years of experience in the media, film industry and investor relations industries. Prior to her directorship in the Company, she was involved in an investment in the Chinese movie “I DO” ( 我願意 ) in 2011. Subsequently, she had assisted and successfully implemented product placement and advertisement in several movies.

Together with the dedicated team in the film related entertainment business, Ms. Sun and Ms. Shen fostered from the past experience including the previous acquisition and lead the team to pursue for possible investment opportunities. The Company intends to either acquire companies which are involved in film production and distribution business or to explore establishing a subsidiary to invest directly in film projects in the second half of 2015. The Company is currently in preliminary negotiation with not more than 2 parties on possible investments or possible acquisition targets which are involved in Chinese film production and distribution business in the Asia Pacific Region. The estimated valuation range is between HK$150 million to HK$200 million and the final purchase price will be based on, amongst others, valuation to be undertaken by an independent third party. The Directors will conduct in-depth financial, tax and legal due diligence on the potential acquisition targets as soon as practicable once identified. The Group will also seek for relevant legal opinion whether the possible acquisition targets are in restricted or prohibited businesses under the relevant rules and regulations, such as the Catalogue of Industries for Guiding Foreign Investment, as and when appropriate.

The Group will consider various factors in pursuing investment projects which include, but not limited to, track record in terms of box office, production team and casts. The Group may consider to invest or engage directly in film production or distribution projects, which has a budget of not more than HK$65 million and project timeline of around 9 months or less for each investment project in the Asia Pacific Region, as appropriate, with an aim to establish the Group’s reputation in the investment, nurture the dedicated team of the Group in the business sector as well as improve the Shareholders’ return.

Considering the Group has been in negotiation for possible acquisition targets which expect to take place in the second half of 2015 and the Open Offer and other potential fund raising activities would take considerable time to complete, the Directors consider that the Group has imminent funding needs in order to facilitate business development of the Group which will be in the interest of the Company and Shareholders as a whole. As at the Latest Practicable Date, no concrete terms have been established nor have any definitive agreements been reached. It is the intention of the Group to acquire a controlling stake in those companies which they are having preliminary discussion with. The Group will update its Shareholders and, where appropriate, publish announcements in accordance with the Listing Rules should such acquisitions be realized.

— 27 —

LETTER FROM THE BOARD

Development and operation of the Group’s proposed establishment of e-commerce business

In addition, it is the Company’s strategy to diversify its business in sourcing for viable business ventures to improve its revenue contribution. Accordingly, the Company has decided to embark on its e-commerce business to sell lady’s apparel on-line in view of the positive growth of consumers’ on-line buying pattern. The Group has considered to engage an external consultant to assist the development of the Group’s entire e-commerce business operations. The consultant has around 3 years of experience in self-operating an e-commerce platform and it has also been providing consultancy services regarding e-commerce business. Leveraging on the business connection of the consultant, the Group targets to source inventories of lady’s apparel directly from an independent third party supplier in the PRC. The Group has started its e-commerce business at global online transaction platforms, such as, eBay and Amazon, targeting worldwide customers. The Group considers to further expand its online transaction platform through different channels, among others, setting up the Company’s own website, establish presence at Alibaba and develop mobile app, etc., in the 4th quarter of 2015.

The Directors consider that the e-commerce business allows the Group to enhance its revenue stream with limited capital investments. The Group will be able to devote majority of the funds in the sourcing of inventories and the Group will be able to adjust the resources to be invested in the e-commerce business promptly depending on the performance of the business. The Group has recently purchased a system known as “Multi Market Place Sales & Inventory System” totalling approximately HK$2 million to commence its e-commerce trading business. It is also in the process of acquiring a server platform for an estimated amount of HK$10 million for online trading.

The e-commerce business has commenced with the purchase of inventories but no revenue has yet to be generated. The proceeds of approximately HK$50 million is intended for inventory acquisition, website development and expansion program and digital marketing costs. Considering the Group has commenced its e-commerce trading business and the Open Offer and other potential fund raising activities would take considerable time to complete, the Directors consider that the Group has imminent funding needs in order to facilitate business development of the Group which will be in the interest of the Company and Shareholders as a whole.

Repayment of existing debts of the Group

The Board has been working to reduce the funding costs of the Group and improve its gearing. As at the Latest Practicable Date, the Group intends to apply part of the net proceeds to repay the interest bearing promissory notes of the Group of approximately HK$44,977,000 which will be matured in 30 September 2015.

— 28 —

LETTER FROM THE BOARD

General working capital for existing businesses of the Group

The Group plans to set aside the remaining portion of the net proceeds from Open Offer of approximately HK$39.6 million for the purpose of its daily administrative expenses such as office overheads, legal and professional fees and business networking expenditures incurred in conducting any potential investment projects. As disclosed in the 2014 Interim Report, the total administration expenses for the six months ended 30 September 2014 was approximately HK$16.6 million, and will result in approximately HK$33.2 million for the year if extrapolated to a full year basis.

Based on the unaudited consolidated management accounts of the Group, the Group’s bank and cash balances amounted to approximately HK$34 million as at 31 May 2015. The management of the Group periodically monitors and reviews the Group’s current assets and liabilities to ensure there is sufficient working capital for the Group’s daily operation.

As at the Latest Practicable Date, the Group has yet to identify any potential investment

opportunities.

In the event that no investment and acquisitions can be finalised, the Company will allocate the HK$360 million estimated net proceeds for developing the existing business of “film production and distribution business” through either vertical or horizontal acquisitions, cooperative arrangements and joint ventures if and when there are any business opportunities, in order to develop the Group’s business in the industry and thus increase the Group’s revenue. The Group continues to actively pursuing opportunities in investment in the culture, movie and entertainment-related business and the rapid growth of the economy, together with the affluent, stylist and young population in the Asia Pacific region will drive the expansion in the market.

In estimating the fund raising scale of the Open Offer, the Group has determined with reference to its financial position, business development, financial resources available to the Group and its anticipated funding needs for the next 12 months. Based on current information available to the Group as stated above, the Company estimates that the net proceeds from the Open Offer shall be sufficient for the Group’s funding requirements for the next 12 months after considering the Group’s proposed business development, its potential investment and/ or acquisition opportunities, debt repayment obligation of the Group and its general working capital requirement. It should be noted that the Group may consider to adjust the percentage of equity interest to be acquired and/or the size of investment to be made by the Group subject to the then financial resources available to the Group should suitable investment opportunities arise. Therefore, as at the Latest Practicable Date, save for the Open Offer, the Company has no intention to conduct any equity fund raising activities in the next twelve months.

The estimated net price per Offer Share (assuming no further issue of new Shares or repurchase of Shares on or before the Record Date) after deducting the related expenses of the Open Offer will be approximately HK$0.098.

— 29 —

LETTER FROM THE BOARD

Underwriting Agreement

Date:

8 June 2015

Underwriter: Astrum Capital Management Limited

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Underwriter and its ultimate beneficial owner(s) are third parties independent of and not connected with the Company and its connected persons.

• Number of Underwritten Shares:

The Underwriter has conditionally agreed pursuant to the Underwriting Agreement to underwrite 4,907,205,000 Offer Shares

Underwriting commission:

2% of the aggregate Subscription Price of the maximum amount of Offer Shares agreed to be underwritten by the Underwriter as determined on the Record Date

Undertaking of the Company:

The Company shall not issue any new Shares or Consolidated Shares (save for Consolidated Shares to be issued under Share Consolidation) or issue or grant any options or other securities which carry rights to acquire or convert into Shares or Consolidated Shares or repurchase its own Shares or Consolidated Shares from the date of the Underwriting Agreement until the Latest Time for Acceptance

The terms of the Underwriting Agreement including the underwriting commission are agreed after arm’s length negotiation between the Company and the Underwriter by reference to the existing financial position of the Group, the size of the Open Offer, the Subscription Price, the current and expected market condition and prevailing market rate.

In particular, the Group recorded a loss attributable to owners of the Company of approximately HK$203.7 million for the year ended 31 March 2014 (representing an increase of approximately 126.6% as compared to the year ended 31 March 2013). The underwriting commission mentioned above shall not be payable if the Underwriting Agreement does not become unconditional or if it is terminated by the Underwriter, but the Company shall pay all reasonable legal fees and other reasonable out-of-pocket expenses (excluding sub-underwriting and related expenses) of the Underwriter in respect of the Open Offer.

In the course of considering the Open Offer, the Company has approached a number of securities houses as underwriters. During the negotiation of the Underwriting Agreement, the Underwriter has offered the Company with the most competitive terms, including the underwriting commission. Therefore, the Company considers that the terms of the Underwriting Agreement is consistent with the market practices.

— 30 —

LETTER FROM THE BOARD

The Directors (including the independent non-executive Directors after considering the advice of the Independent Financial Adviser) consider that the terms of the Underwriting Agreement including the underwriting commission are fair and reasonable so far as the Company and the Shareholders are concerned.

The Underwriter may enter into sub-underwriting arrangement with sub-underwriter(s) or appoint any person to be sub-agent(s) on its behalf for the purpose of arranging for the subscription of the Underwritten Shares with selected subscribers with such authority and rights as the Underwriter has pursuant to its appointment under the Underwriting Agreement.

As at the Latest Practicable Date, the Company does not have any Shareholder holding more than 10% of the issued share capital of the Company.

Conditions of the Underwriting Agreement

The conditions of the Underwriting Agreement have been set out in the section headed “Proposed Open Offer – Conditions of the Open Offer” above.

Termination of the Underwriting Agreement

Information on the termination of the Underwriting Agreement has been set out in the section headed “Termination of the Underwriting Agreement” in this Circular.

SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structures of the Company (for illustration purpose only) (i) as at the Latest Practicable Date; (ii) immediately after the Share Consolidation becoming effective but before completion of the Open Offer; and (iii) immediately after completion of the Open Offer:

Public Shareholders Underwriter, sub-underwriter(s) and subscribers procured by any of them_(Note)_	As at the Latest Practicable Date No. of Shares Approximate % 9,814,410,000 100.00 — — 9,814,410,000 100.00	Immediately after the Share Consolidation becoming effective but before the completion of the Open Offer No. of Consolidated Shares Approximate % 4,907,205,000 100.00 — — 4,907,205,000 100.00	Immediately after completion of the Open Offer	Immediately after completion of the Open Offer	Immediately after completion of the Open Offer
			Assuming all the Offer Shares are subscribed for by the Qualifying Shareholders No. of Consolidated Shares Approximate % 9,814,410,000 100.00 — — 9,814,410,000 100.00	Assuming none of the Offer Shares are subscribed for by the Qualifying Shareholders No. of Consolidated Shares Approximate % 4,907,205,000 50.00 4,907,205,000 50.00 9,814,410,000 100.00
					100.00

— 31 —

LETTER FROM THE BOARD

Note:

Pursuant to the Underwriting Agreement, the Underwriter has undertaken to the Company in the Underwriting Agreement that it will take all steps as shall be appropriate, including the making of sub-underwriting arrangements and/or placing down the Offer Shares acquired by it under the Underwriting Agreement, such that

• (i) each of the Underwriter or subscribers to be procured by the Underwriter together with parties acting in concert with them shall not be holding 30% or more of the voting rights of the Company nor trigger a mandatory offer obligation under Rule 26 of Takeovers Code on the part of the Underwriter in respect of performing its obligations under the Underwriting Agreement immediately upon the allotment and issue of the Offer Shares;

• (ii) the Underwriter shall use its reasonable endeavours to ensure that the subscribers for the Underwritten Shares shall be third parties independent of and not connected with the Company and its connected persons or core connected persons and their respective associates or close associates and the subscribers for the Underwritten Shares are not acting in concert with the Company and its associates;

• (iii) none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will become a substantial shareholder of the Company holding 10% or more shareholding in the Company as a result of the subscription of the Underwritten Shares; and

• (iv) the Underwriter shall and shall cause the sub-underwriters to procure independent subscribers and/or placees to take up such number of Shortfall Underwritten Shares as necessary to ensure that the Company will comply with the public float requirement under 8.08(1) of the Listing Rules upon completion of the Open Offer.

WARNING OF THE RISKS OF DEALING IN SHARES AND CONSOLIDATED SHARES

Shareholders and potential investors should note that the Open Offer is conditional upon the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Open Offer may or may not proceed. Shareholders and potential investors should exercise extreme caution when dealing in the Shares and Consolidated Shares, and if they are in any doubt about their position, they should consult their professional advisers.

Shareholders should note that the Shares and Consolidated Shares will be dealt in on an ex-entitlement basis commencing from Monday, 27 July 2015 and that dealings in the Shares and Consolidated Shares will take place while the conditions to which the Underwriting Agreement is subject to remain unfulfilled. Any Shareholder or other person dealings in the Shares and Consolidated Shares up to the date on which all conditions to which the Open Offer are subject to are fulfilled (which is expected to be at 4:00 p.m. on Monday, 24 August 2015), will accordingly bear the risk that the Open Offer cannot become unconditional and may not proceed. Any Shareholder or other person contemplating to sell or purchase any Shares and Consolidated Shares, who is in any doubt about his/her/its position, is recommended to consult his/her/its own professional adviser.

— 32 —

LETTER FROM THE BOARD

FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST TWELVE MONTHS

Save as disclosed below, the Company has not conducted any other fund raising activities in the past twelve months immediately preceding the Latest Practicable Date:

Date of

announcement

Fund raising activity

Net proceeds

(approximately)

Intended use of proceeds

Actual use of proceeds

7 August 2014 and Top-up placing of HK$207.99 million 25 July 2014 existing shares and top-up subscription of new shares under general mandate

• (i) as to approximately (i) as to approximately HK$150 million to HK$150 million for the repay the existing repayment of promissory debts; notes;

• (ii) as to approximately (ii) (a) as to approximately HK$40 million for HK$13 million for the the development of development of its movie its movie and media and media operation; operation; and

• (b) the remaining balance

• (iii) as to approximately of approximately HK$27 HK$17.99 million for million has not yet been the general working utilised and remains in the capital purposes. bank for the intended uses; and

• (iii) (a) as to approximately HK$10 million for the repayment of promissory notes;

(b) as to approximately HK$3.7 million for payment of professional fee;

(c) as to approximately HK$1.4 million for the Group’s salaries and directors’ remuneration;

(d) the remaining balance of approximately HK$2.89 million for settlement of tax liabilities, other payables, expenses on daily operations and investment in listed securities.

— 33 —

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

In accordance with Rule 7.24(5) of the Listing Rules, the Open Offer must be made conditional on approval by the Shareholders in general meeting by a resolution on which any controlling shareholders of the Company and their respective associates or, where there are no controlling shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Open Offer. Since there is no controlling shareholder as at the Latest Practicable Date, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Open Offer in accordance with Rule 7.24(5) of the Listing Rules.

As at the Latest Practicable Date, the Company does not have any controlling Shareholders (as defined in the Listing Rules) and there was no Director or chief executive of the Company holding any Share in the Company.

Save as disclosed above, there are no other particulars of voting arrangement under Rule 2.17(2) of the Listing Rules.

The Independent Board Committee and the Independent Financial Adviser

The Independent Board Committee, comprising all of the independent non-executive Directors, has been established to advise the Independent Shareholders in respect of the Open Offer. With the approval of the Independent Board Committee, Opus Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

GENERAL

The notice convening the EGM to be held at Jasmine Room, 3/F., Ramada Hong Kong Hotel, 308 Des Voeux Road West, Hong Kong at 9:00 a.m. on Thursday, 23 July 2015 is set out on pages EGM-1 to EGM-4 of this Circular. A form of proxy for use at the EGM is enclosed. Whether or not you intend to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Registrar, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for the holding of the EGM or any adjournment thereof. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so desire.

Upon approval of the Open Offer by the Independent Shareholders at the EGM and the Share Consolidation and the Increase in Authorised Share Capital, the Prospectus Documents setting out details of the Open Offer will be despatched to the Qualifying Shareholders as soon as practicable and the Prospectus will be despatched to the Non-Qualifying Shareholders for information only.

— 34 —

LETTER FROM THE BOARD

RECOMMENDATION

The Board considers that the terms of the Share Consolidation and Increase in Authorised Share Capital are fair and reasonable and in the interest of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the relevant resolutions to be proposed at the EGM in relation to the Share Consolidation and Increase in Authorised Share Capital.

The Independent Board Committee comprising all the independent non-executive Directors, has been established to advise the Independent Shareholders as to whether the terms of the Open Offer are fair and reasonable and in the interest of the Company and the Shareholders as a whole and to advise the Independent Shareholders on how to vote at the EGM. Opus Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

Shareholders are advised to read carefully the letter from the Independent Board Committee on page 36 of this Circular. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, the text of which is set out on pages 37 to 68 of this Circular, considers that the terms of the Open Offer and the Underwriting Agreement are fair and reasonable insofar as the Company and the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the resolution to approve the Open Offer and the Underwriting Agreement at the EGM.

The Directors consider that the terms of the Open Offer are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommends the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM.

ADDITIONAL INFORMATION

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

Yours faithfully, On behalf of the Board CHINA NATIONAL CULTURE GROUP LIMITED SUN Wei Director

— 35 —

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

7 July 2015

CHINA NATIONAL CULTURE GROUP LIMITED 中國國家文化產業集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 745)

To the Independent Shareholders

Dear Sir or Madam,

PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.10 PER OFFER SHARE

We refer to the circular of the Company dated 7 July 2015 (the “Circular”), of which this letter forms part. Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

We have been appointed by the Board as the members of the Independent Board Committee, to advise the Independent Shareholders as to whether, in our opinion, the terms of the Open Offer are fair and reasonable so far as the Independent Shareholders are concerned. None of the members of the Independent Board Committee have any direct or indirect interest in the Open Offer and the Underwriting Agreement.

Details of the Open Offer are set out in the “Letter from the Board” set out on pages 11 to 35 of the Circular. Opus Capital has been appointed as independent financial adviser to advise the Independent Board Committee and Independent Shareholders in respect of the terms of the Open Offer. Details of its advice, together with the principal factors taken into consideration in arriving at such, are set out in its letter set out on pages 37 to 68 of the Circular.

Having considered the terms of the Open Offer, taking into account the information contained in the Circular and the advice of the Independent Financial Adviser, we are of the opinion that the terms of the Open Offer are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant resolution approving the Open Offer at the EGM.

Yours faithfully,

For and on behalf of

The independent board committee of

China National Culture Group Limited

LIU Kwong Sang WANG Miaojun CHEUNG Lai Chun

Independent non-executive Directors

— 36 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is the text of a letter received from Opus Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Open Offer for the purpose of inclusion in this Circular.

==> picture [207 x 32] intentionally omitted <==

18TH Floor, Fung House 19-20 Connaught Road Central Central, Hong Kong

7 July 2015

To: The Independent Board Committee and the Independent Shareholders of China National Culture Group Limited

Dear Sirs,

PROPOSED OPEN OFFER ON THE BASIS OF ONE OFFER SHARE FOR EVERY ONE CONSOLIDATED SHARE HELD ON THE RECORD DATE AT HK$0.10 PER OFFER SHARE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Open Offer, details of which are set out in the letter from the Board (the “ Letter from the Board ”) contained in the circular dated 7 July 2015 issued by the Company to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

Reference is made to the Announcement whereby the Company announced the proposed Share Consolidation and Change in Board Lot Size (details of which are highlighted in the Letter from the Board under the section headed “Proposed Share Consolidation” and “Proposed Change in Board Lot Size” respectively). The Company also proposes to raise approximately HK$490.7 million, before expenses, by way of an open offer of 4,907,205,000 Offer Shares at a subscription price of HK$0.10 per Offer Share on the basis of one (1) Offer Share for every one (1) Consolidated Share held on the Record Date.

The Open Offer is fully underwritten by the Underwriter, on the terms and subject to the conditions set out in the Underwriting Agreement. We understand from the Company that the terms of the Underwriting Agreement were agreed after arm’s length negotiation between the Company and the Underwriter by reference to the existing financial position of the Group, the size of the Open Offer, the current and expected market condition and prevailing market rate. The Open Offer is conditional upon, amongst other things, the passing of the resolution(s) at the EGM to approve the Open Offer and the Share Consolidation becoming effective.

— 37 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Since the Open Offer will increase the issued share capital of the Company by more than 50%, in accordance with Rule 7.24(5) of the Listing Rules, the Open Offer must be made conditional on, amongst other things, the approval by the Independent Shareholders at which any controlling Shareholders and their associates or, where there are no controlling Shareholders, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting on the resolution(s) relating to the Open Offer and the transactions contemplated thereunder.

Since there is no controlling Shareholder as at the Latest Practicable Date, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company, and their respective associates shall abstain from voting in favour of the Open Offer in accordance with Rule 7.24(5) of the Listing Rules.

As at the Latest Practicable Date, the Company does not have controlling Shareholders (as defined in the Listing Rules) and there was no Director or chief executive of the Company holding any Shares in the Company.

INDEPENDENT BOARD COMMITTEE

The Independence Board Committee, comprising Mr. Liu Kwong Sang, Ms. Wang Miaojun and Ms. Cheung Lai Chun, all being the independent non-executive Directors, has been established by the Company to advise and make recommendations to the Independent Shareholders in respect of the Open Offer. Our appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders has been approved by the Independent Board Committee in this respect.

Our role as the Independent Financial Adviser is to advise the Independent Board Committee and the Independent Shareholders as to: (i) whether the terms of the Open Offer are fair and reasonable and in the interest of the Company and the Shareholders as a whole; and (ii) how the Independent Shareholders should vote on the relevant resolution(s) in relation to the Open Offer at the EGM.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationship with, or interest in, the Company or any other parties that could reasonably be regarded as relevant to our independence. Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser, no arrangements exist whereby we had received or will receive any fees or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent pursuant to Rule 13.84 of the Listing Rules.

— 38 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our advice and recommendation to the Independent Board Committee and the Independent Shareholders, we have reviewed, amongst other things, the Underwriting Agreement, the Company’s annual report for the financial year ended 31 March 2014 (the “ 2014 Annual Report ”), the Company’s interim report for the six months ended 30 September 2014 (the “ 2014 Interim Report ”), the Company’s results announcement for the financial year ended 31 March 2015 (the “ 2015 Results Announcement ”) and other information as set out in the Circular.

We have relied on the accuracy of the statements, information, opinions and representations contained or referred to in the Circular and the information and representations made to us by the Company, the Directors and the management of the Company (collectively, the “ Management ”). We have assumed that all information and representations contained or referred to in the Circular and provided to us by the Management, for which they are solely and wholly responsible, are true, accurate and complete in all respects and not misleading or deceptive at the time when they were provided or made and will continue to be so up to the Latest Practicable Date. Shareholders will be notified of material changes as soon as possible, if any, to the information and representations provided and made to us after the Latest Practicable Date and up to and including the date of the EGM. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiries and careful consideration and there are no other facts not contained in the Circular, the omission of which make any such statement contained in the Circular misleading. We have no reason to suspect that any relevant information have been withheld, or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Management, which have been provided to us.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. However, we have not carried out any independent verification of the information provided by the Management, nor have we conducted any independent investigation into the business, financial conditions and affairs of the Group or its future prospect.

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

The Directors have collectively and individually accepted full responsibility, including particulars given in compliance with the Listing Rules, for the accuracy of the information contained in the Circular and have confirmed, after having made all reasonable enquires, which to the best of their knowledge and belief, that the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other matters of facts, the omission of which would make any statement herein or the Circular misleading.

— 39 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

This letter is issued to the Independent Board Committee and the Independent Shareholders solely in connection for their consideration of the Open Offer, and except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purpose without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Open Offer, we have taken into consideration the following principal factors and reasons:

Business overview of the Group

The principal activity of the Company is investment holding. The Group is principally engaged in the advertising media services and film production and distribution business.

Set out below are the audited consolidated financial results of the Group for the two financial years ended 31 March 2015, as extracted from the 2015 Results Announcement:

Table 1: Highlights of the financial results of the Group

	Audited	Audited
	Year ended	31 March
	2015	2014
	(HK$ million)	(HK$ million)
Revenue	20.43	2.95
Loss after taxation	(159.99)	(203.70)
— From operating activities	(159.99)	(191.73)
— From discontinued operations	—	(11.97)

Source: 2014 Annual Report and 2015 Results Announcement

During the financial year ended 31 March 2014 (“ FY2014 ”), the Group ceased business in the building construction segment and renovation, repairs and maintenance segment. Its existing business is in the provision of advertising media services, which includes: (i) the provision of rail transit value-added services through liquid-crystal-display (LCD) displays located at the ticketing offices of each station in the PRC; and (ii) the provision of advertising and valueadded services through mobile devices and digital media network of LCD and flat panel screens in retail chain network in Hong Kong.

For the financial year ended 31 March 2015 (“ FY2015 ”), the Group recorded revenue of approximately HK$20.43 million, representing increase of approximately 592.27% as compared to FY2014. As stated in the 2015 Results Announcement and as discussed with the Management, the increase in revenue in FY2015 was mainly due to the Group’s involvement in movie production business segment since January 2015 and the increase in customers in advertising segment.

— 40 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the 2014 Interim Report, a wholly-owned subsidiary of the Company has been actively engaged in development of mobile internet business based on the existing established foundation and closely following the O2O (online-to-offline) path. The platform has launched interactive features like online order placings and online table bookings which resulted in the platform being hugely popular among catering business operations. Furthermore, seeing the irreversible trend that new media (i.e. content containing interactive user feedback and creative participation that are available on-demand through the internet and accessible on digital devices) is the growing power in mass media section and is exerting great impact to the overall market landscape, the Group will continue its venture in the mobile application business as well as look for opportunities to extend into other potential business such as new media marketing, advertising and culture, movie and entertainment-related business to improve the financial position of the Group.

Set out below are highlights of the financial position of the Group as at 31 March 2014 and 2015, which is extracted from the 2015 Result Announcement:

Table 2: Highlights of the financial position of the Group

	Audited	Audited
	Year ended	31 March
	2015	2014
	(HK$ million)	(HK$ million)
Cash and cash equivalent	46.42	2.18
Current assets	100.93	4.66
Current liabilities	63.54	16.45
Net current assets/(liabilities)	37.39	(11.79)
Promissory notes	43.88	193.78
Net assets	301.77	184.50

Source: 2014 Annual Report and 2015 Results Announcement

The net assets of the Group increased by approximately 63.56% from approximately HK$184.50 million as at 31 March 2014 to approximately HK$301.77 million as at 31 March 2015. This was mainly attributable to the increase in financial assets held for trading and the increase in cash and cash equivalent.

The significant increase in available cash and cash equivalent of the Group to approximately HK$100.93 million as at 31 March 2015 from approximately HK$2.18 million as at 31 March 2014 was mainly due to the completion of a placing exercise, under which the Company raised net proceeds of approximately HK$207.99 million in August 2014 (the “ Placement ”). As at the Latest Practicable Date, approximately HK$27.00 million from the Placement (representing approximately 12.98% of the Placement proceeds) intended for the development of its movie and media operation has yet to be utilised. Nevertheless it is the intention of the Group to undertake the Open Offer to raise additional funds for potential investment opportunities in mobile application business, film distribution and production and other entertainment-related projects to generate revenue to improve the financial position of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

REASONS FOR THE OPEN OFFER AND USE OF PROCEEDS

As stated in the Letter from the Board, the Group will continue its venture in the mobile application business and is actively pursuing investment opportunities in the culture, movie and entertainment-related businesses, including but not limited to, film production and distribution in Hong Kong and China. The Board considers that such investments require substantial capital which may exert pressure on the liquidity and profitability of the Group as a result of the relevant finance costs.

The net proceeds to be raised from the Open Offer, being approximately HK$479.6 million, are intended to be applied as follows:

• (i) as to approximately HK$180.0 million for the acquisition of potential targets principally engaged in the mobile application business in the PRC;

• (ii) as to approximately HK$180.0 million for potential investment opportunities and/or related funding requirements associated with investment opportunities identified from time to time, including but not limited to, film distribution and production and other entertainment-related projects, such as organising concerts and fans events;

• (iii) as to approximately HK$50.0 million for the development and operation of the Group’s proposed establishment of its e-commerce business;

• (iv) as to approximately HK$30.0 million for repayment of existing debts of the Group; and

• (v) as to the balance of approximately HK$39.6 million for general working capital for the existing businesses of the Group.

Acquisition of potential targets principally engaged in the mobile application business in the PRC

We understand from the Management that the Company intends to acquire companies engaged in mobile applications with an established structure given the Board is of the view on the positive impact which new media has on the market landscape. As the Group’s existing catering business mobile platform, which aims to connect the online and offline operational procedures in traditional catering business, proves to be hugely popular within the catering industry in Hong Kong, the Group intends to acquire potential targets with established structure which are principally engaged in the similar mobile application business for catering business operators in the PRC.

The Company is currently in preliminary negotiation with not more than 3 parties on possible acquisition targets. As discussed with the Management, the estimated valuation range is between HK$100 million and HK$300 million and the final purchase price will be based on, amongst others, valuation to be undertaken by an independent third party. As stated in the Letter from the Board, through collaboration of the established industry experts of the PRC, the Group considers the successful experience and platform development can result in wider success in the PRC market, which is more mature in terms of mobile payment platforms, social media and customer usage of mobile application in the catering industry.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, no concrete terms have been established nor any definitive agreements been reached. It is the intention of the Group to acquire a controlling stake in those companies which the Company is having preliminary discussion with. The Company will update its Shareholders and, where appropriate, make announcement(s) in accordance with the Listing Rules, should such acquisition materialises.

Potential investment opportunities and/or related funding requirements associated with investment opportunities identified from time to time

In terms of culture, movie and entertainment-related businesses, we understand from the Management that the Company has been involved in this business segment since January 2015 where it invested HK$12.5 million in the production of a Chinese film through a foreign company. As stated in the Letter from the Board, through the dedicated team to operate in the film importation, distribution and marketing, the Group is identifying possible investment opportunity in the industry, including but not limited to, film production and distribution in Hong Kong and China.

As stated in the 2015 Results Announcement, the Group has been involved in the movie production industry since January 2015 and generated revenue and segment results of approximately HK$14.4 million and HK$1.2 million respectively in FY2015. As discussed with the Management, Ms. Sun Wei (“ Ms. Sun ”) and Ms. Shen Lihong (“ Ms. Shen ”) both have several years of experience in media and film related business (details of Ms. Sun and Ms. Shen’s experience are highlighted in the Letter from the Board under the section headed “Reasons for the Open Offer and the use of proceeds”).

As discussed with the Management, the Company intends to either acquire companies which are involved in film production and distribution business or to explore establishing a subsidiary to invest directly in film projects. The Company is currently in preliminary negotiation with not more than 2 parties on possible acquisition targets which are involved in Chinese film production and distribution business. As discussed with the Management, the estimated valuation range is between HK$150 million to HK$250 million.

As at the Latest Practicable Date, no concrete terms have been established nor any definitive agreements been reached. It is the intention of the Group to acquire a controlling stake in those companies which the Company is having preliminary discussion with. The Company will update its Shareholders and, where appropriate, make announcement(s) in accordance with the Listing Rules, should such acquisition materialises.

Development and operation of the Group’s proposed establishment of e-commerce business

As discussed with the Management, it is the Company’s strategy to diversify its business in sourcing for viable business ventures to improve its revenue contribution. Accordingly, the Company has decided to embark on its e-commerce business to sell lady’s apparel online in view of the positive growth of consumers’ on-line buying pattern. The Group has recently purchased a system known as “Multi Market Place Sales & Inventory System” totaling approximately HK$2 million to commence its e-commerce trading business. It is also in the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

process of acquiring a server platform for an estimated amount of HK$10 million for online trading. The Group plans to source inventories from an independent third party and will also be exploring on possible co-operation arrangement with the said party where the party is proposed to be appointed as an external consultant on the Group’s entire e-commerce business operations. The Management advised that the e-commerce business has commenced with the purchase of inventories but no revenue has yet to be generated. The proceeds of approximately HK$50 million is intended for inventory acquisition, website development and expansion program and digital marketing costs.

As stated in the Letter from the Board, the Group has considered to engage an external consultant to assist in the development of the Group’s entire e-commerce business operations. The consultant has around 3 years of experience in self-operating an e-commerce platform and it has also been providing consultancy services regarding e-commerce business. Leveraging on the business connection of the consultant, the Group targets to source inventories of lady’s apparel directly from an independent third party supplier in the PRC. The Group has started its e-commerce business at global online transaction platforms, such as, eBay and Amazon, targeting worldwide customers. The Group considers to further expand its online transaction platform through different channels, among others, setting up the Company’s own website, establish presence at Alibaba and develop mobile apps, etc., in the 4th quarter of 2015.

As stated in the Letter from the Board, the Directors will conduct in-depth financial, tax and legal due diligence on the potential acquisition targets as soon as practicable once identified. The Group will also seek for relevant legal opinion whether the possible acquisition targets are in restricted or prohibited businesses under the relevant rules and regulations, such as the Catalogue of Industries for Guiding Foreign Investment, as and when appropriate.

Repayment of existing debts of the Group

The Group has no bank borrowings but has promissory notes with an outstanding amount of approximately HK$44.98 million as at 31 May 2015 with an annual interest rate of 2%. Furthermore as stated in the 2014 Interim Report, the promissory notes will mature on 30 September 2015. As it is the intention of the Group to reduce their funding costs, the repayment of these promissory notes is reasonable.

General working capital for existing business of the Group

As stated in the Letter from the Board, the Group plans to set aside the remaining portion of the net proceeds of the Open Offer amounting to approximately HK$39.6 million for its daily administrative expenses, such as office overheads, legal and professional fees and business networking expenditures incurred in conducting any potential investment projects. As disclosed in the 2014 Interim Report, the total administration expenses for the six months ended 30 September 2014 was approximately HK$16.6 million, and will result in approximately HK$33.2 million for the year if extrapolated to a full year basis. Therefore, we are of the view that applying approximately HK$39.6 million of net proceeds from the Open Offer as working capital is acceptable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, the Group has yet to identify any potential investment opportunities. However, as stated in the Letter from the Board, the Group has been in negotiation with possible acquisition targets and the Group has commenced its e-commerce trading business, and as the Open Offer and other potential fund raising activities would take considerable time to complete, we concur with the Directors’ view that the Group has imminent funding needs in order to facilitate business development of the Group.

The Board is of the view that the Open Offer will enable the Group to strengthen its capital base and enhance its financial position for future strategic investments when suitable opportunities arise. Furthermore, the Open Offer will give the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company and participate in the growth and development of the Group. Accordingly, the Directors are of the view that fund raising through the Open Offer is in the interests of the Company and the Shareholders as a whole. However, those Qualifying Shareholders who do not take up the Offer Shares to which they are entitled should note that their shareholdings in the Company will be diluted.

Market outlook of mobile application business

The Directors are of the view that the new media is a growing trend in mass media sector and a key growth area for the Group. The Group has been actively engaged in the development of mobile internet business based on established foundation and closing following the O2O path. Furthermore, it is the intention of the Company to acquire potential targets with established structure which are principally engaged in mobile application business for catering business operations in the PRC. We set out below that market outlook of the mobile application business segment and in particular in the catering business in the PRC.

According to a press release by Gartner, Inc., an information technology research company, mobile apps will be downloaded more than 268 billion times by 2017 and given that 46% apps users report having to pay for their apps, this will generate potential revenue of more than US$77 billion in the apps market globally by 2017, making apps one of the most popular computing tools for users across the globe.

Set out in the chart below is the worldwide mobile app store revenue from 2012 to 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 1: Worldwide mobile app store revenue

==> picture [346 x 225] intentionally omitted <==

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

40,000
36,887
35,000
30,000 27,664 28,935
26,990
25,000 24,314 23,771
20,240
20,000
15,375
15,000 14,001
10,694
10,000 7,139 7,856 6,772
5,000 4,591 2,819 4,375
2,111 1,851
712 467 1,037
0
2011 2012 2013 2014 2015 2016 2017
Paid For In-App Purchases Advertising
US$ million
----- End of picture text -----

Source: Gartner

As shown in the chart above, worldwide revenue of mobile apps store increased from approximately US$7.9 trillion in 2011 to approximately US$32.2 trillion in 2014 for in-app purchases and paid-for revenue, representing a compounded annual growth rate (the “ CAGR ”) of approximately 60.0%. It is expected to continue growing in the upcoming years, reaching a revenue of approximately US$65.8 trillion by 2017, reflecting an estimated CAGR of approximately 42.5% from 2011.

We also set out in the chart below the global apps download trend from 2012 to 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 2: Worldwide apps download trend

==> picture [346 x 224] intentionally omitted <==

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

300,000
253,914
250,000
28,935
211,313
200,000
167,054
150,000
127,704
100,000 82,876
57,331
50,000
2,819
6,654 2,111 9,186 1,851 11,105 12,574 13,488 14,778
0
2012 2013 2014 2015 2016 2017
Free Download Paid Download
Downloads in millions
----- End of picture text -----

Source: Gartner

As shown in the chart above, with the increasing trend of free downloads over the years of 2012 to 2017, paid downloads are also rising in tandem albeit at a smaller amount. Nevertheless the paid downloads have increased from approximately 6.6 trillion times in 2012 to approximately 11.1 trillion times in 2014, representing a CAGR of approximately 29.2%. The frequency of download is expected to increase to approximately 14.8 trillion times by 2017, representing an estimated CAGR of approximately 17.3% from 2012.

Market outlook of mobile application business in food and beverages section

O2O, an abbreviation for online-to-offline, is now an increasingly popular business model in the PRC that combines the online shopping and the front line transactions. O2O is a business model allocating customers through an online platform and directing such customers to consume through a physical store. Hence, the business model is particularly suitable for consumer goods and services, such as food and beverages, fitness, movies and beauty salon.

We set out in the chart below the China O2O market structure in 2014.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 3: China O2O market structure in 2014

==> picture [329 x 182] intentionally omitted <==

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

Darenting Activity, 2%
Wedding, 1%
Cosmetology, 3%
Hotels, 25%
Food & Bevorage, 43%
Leisure
Entertainment, 26%
----- End of picture text -----

Source: China O2O Industry Report 2014

According to the China O2O Industry Report 2014 issued by Charlton Mansfield, the food and beverage section constituted approximately 43% of the China O2O market in 2014. The gross merchandise value for the food & beverage sector in 2013 was approximately RMB66.5 billion, and it is expected to increase to approximately RMB201.7 billion in 2017, representing a CAGR of approximately 32%.

Chart 4: China O2O platform accessibility Chart 5: Access to O2O on mobile devices

==> picture [421 x 176] intentionally omitted <==

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

PC Device, Other 3.40%
29%
Browsers 16.50%
Mobile Device, Specialized APP 29.30%
71%
3rd Party Platform 50.80%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
PC Device Mobile Device
----- End of picture text -----

Source: China O2O Industry Report 2014

Source: China O2O Industry Report 2014

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As seen in Chart 4 above, the use of mobile devices to access O2O platform is more favourable amongst the users nowadays in the PRC, where approximately 71% of platform accessibility is via mobile devices. As stated in Chart 5 above, research has shown that the majority of mobile device users’ access to O2O through third party platform since a third party platform exposes the users to a variety of categories by just a single platform, thus simplifying the procedures.

In light of the current favourable conditions for the global mobile application industry and the positive outlook of the O2O industry in the PRC, particularly in the food and beverage sector, we are of the view that the such positive outlook is supportive of the potential growth in the existing businesses of the Group and their business strategy in the mobile application business segment in the food and beverage sector.

In light of the above, we are of the view that the current favourable conditions for the global mobile application industry is positive and supportive of the potential growth in the existing businesses of the Group and their business strategy in the mobile application business segment.

Market outlook of film industry business

The Directors are of the view that there are good potential and promising prospects in the business contemplated by the Group with the opening up of the entertainment and movie market in the PRC. We set out below that market outlook of the film industry business segment.

According to the annual “Theatrical Market Statistics Report for 2014” by the Motion Picture Association of America, Inc. (the “ MPAA ”), global box office receipts for all films released around the world reached approximately US$36.4 billion in 2014, representing an increase of approximately 1% over the previous record in 2013, which was mainly due to an increase in international box office (US$26.0 billion). Growth continued to be driven by a dramatic expansion in the Asia Pacific region, which was up by approximately 12% overall, including China, which jumped approximately 34% and became the first international market to exceed US$4 billion in box office.

Set out in the chart below is the global box office for all films released in each country around the world.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 6: Global box office – All Films

==> picture [426 x 358] intentionally omitted <==

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

$40.0
$35.9 $36.4
$34.7
$35.0 $32.6
$31.6
$30.0
$25.0 $25.0 $26.0
$21.0 $22.4 $23.9 (70%) (72%)
$20.0 (69%) (69%)
(66%)
$15.0
$10.0
$5.0
$10.6 $10.2 $10.8 $10.9 $10.4
$0.0
2010 2011 2012 2013 2014
U.S./Canada International
% Change % Change
2014 vs. 2014 vs.
US$ Billion 2010 2011 2012 2013 2014 2013 2010
U.S./Canada $10.6 $10.2 $10.8 $10.9 $10.4 -5% -2%
International $21.0 $22.4 $23.9 $25.0 $26.0 4% 24%
Total $31.6 $32.6 $34.7 $35.9 $36.4 1% 15%
US$ Billion
----- End of picture text -----

Source: MPAA

As shown in the chart above, international box office was up approximately 24% in 2014 as compared to 2010, whilst global box office was up approximately 15% for the corresponding period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Chart 7: International box office by region – All Films

$0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 2012 2011 2010 $10.4 EMBA Asia Pacific US$ million $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8 US$ Billion 2010 2011 2012 Europe, Middle East & Africa $10.4 $10.8 $10.7 Asia Pacific $8.5 $9.0 $10.4 Latin America $2.1 $2.6 $2.8 Total $21.0 $22.4 $23.9	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.4 $8.5 $2.1 $10.8 $9.0 $2.6 $10.7 $10.4 $2.8	$10.9 $11.1 $3.0 $10.6 $12.4 $3.0	$10.9 $11.1 $3.0 $10.6 $12.4 $3.0	$10.9 $11.1 $3.0 $10.6 $12.4 $3.0	$10.9 $11.1 $3.0 $10.6 $12.4 $3.0
			EMBA			Asia Pacific
				2011 $10.8 $9.0 $2.6 $22.4			2012 $10.7 $10.4 $2.8 $23.9

Source: MPAA

Table 3: Top 20 international box office markets – All Films (in US$ billion)

1.	China	$4.8
2.	Japan	$2.0
3.	France	$1.8
4.	U.K.	$1.7
5.	India	$1.7
6.	South Korea	$1.6
7.	Germany	$1.3
8.	Russia	$1.2
9.	Australia	$1.0
10.	Mexico	$0.9

11.	Brazil	$0.8
12.	Italy	$0.8
13.	Spain	$0.7
14.	Netherlands	$0.3
15.	Turkey	$0.3
16.	Venezuela	$0.3
17.	Argentina	$0.2
18.	Sweden	$0.2
19.	Taiwan	$0.2
20.	Indonesia	$0.2

Source: HIS, local sources, MPAA

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In 2014, the Asia Pacific region (US$12.4 billion) increased approximately 12% as compared to 2013, driving the international increase and remained the largest region in terms of international box office for the second year in a row. Chinese box office increased approximately 34% to approximately US$4.8 billion, becoming the first market outside U.S./Canada to exceed US$4 billion in box office revenue.

As the Group is currently focusing on Chinese film production with distribution in the Asia Pacific region with its initial investment foray in a Chinese film project with a foreignowned company in January 2015, and in light of the positive outlook in particular in the Asia Pacific region, we are of the view that the current outlook in the film industry is positive and supportive of the potential growth in the film and entertainment-related businesses of the Group.

Market outlook of e-commerce business

The Group is currently developing its e-commerce business as one of its business segments. We set out below the market outlook of the e-commerce business segment.

Set out in the chart below is the business-to-consumer (“ B2C ”) e-commerce sales worldwide from 2012 to 2017.

Chart 8: B2C e-commerce sales worldwide 2012-2017

==> picture [346 x 203] intentionally omitted <==

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

2,500 2,356
2,143
2,000 1,922
1,700
1,471
1,500
1,233
1,058
1,000
500
0
2012 2013 2014E 2015E 2016E 2017E 2018E
Sales in US$ billion
----- End of picture text -----

Source: http://ecommercenews.eu/key-e-commerce-trends-in-2015

As shown in the chart above, worldwide e-commerce store sales increased from approximately US$1.06 trillion in 2012 to approximately US$1.47 trillion in 2014, representing a CAGR of approximately 17.91%. It is expected to continue growing in the future years, reaching a revenue of approximately US$2.36 trillion by 2018, reflecting an estimated CAGR of approximately 14.27% from 2012.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 4: E-commerce sales share worldwide, by region, 2013-2018

	2013	2014	2015	2016	2017	2018
North America	34.9%	32.9%	31.7%	31.1%	30.7%	30.6%
Asia-Pacific	28.3%	31.2%	33.4%	35.1%	36.4%	37.0%
Western Europe	26.4%	25.4%	24.6%	23.9%	23.3%	22.7%
Latin America	4.2%	4.3%	4.2%	4.1%	3.9%	3.7%
Central & Eastern Europe	4.1%	4.0%	3.8%	3.5%	3.3%	3.2%
Middle East & Africa	2.2%	2.3%	2.3%	2.4%	2.4%	2.5%

Source: Emarketer, July 2014

The B2C e-commerce sales worldwide reached approximately US$1.47 trillion in 2014, recorded an increase of nearly 20% from 2013. As shown in the table above, Asia Pacific is the leading region for e-commerce sales in 2015 and represents approximately 33.4% of the total, compared with approximately 31.7% in North America and approximately 24.6% in Western Europe. This demonstrates the continuous growth in the Asia Pacific region, which augurs well for the Group’s development of its e-commerce business. Accordingly we are of the view that the outlook of e-commerce industry appears positive and encouraging.

According to the 2015 Global Retail E-Commerce Index Report by AT Kearney, 2014 has brought a continuation of the impressive growth of retail e-commerce around the world. Sales increased by more than 20% worldwide in 2014 to almost US$840 billion, as online retailers continued expanding to new geographies and physical retailers entered new markets through e-commerce as evidenced in the chart below:

Chart 9: Global e-commerce sales

==> picture [369 x 202] intentionally omitted <==

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

US$ Billion
1,600 1,506.0
1,400 1,328.0
1,155.7
1,200
994.5
1,000
839.8
800 649.8
600
400
200
0
2013 2014 2015 F 2016 F 2017 F 2018 F
----- End of picture text -----

Source: Euromonitor

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As shown in the chart above, global e-commerce retail sales increased from approximately US$694.8 billion in 2013 to approximately US$839.8 billion in 2014, and is estimated to increase to US$1.51 trillion in 2018, representing a CAGR of approximately 16.73% from 2013 to 2018.

In view of the various positive data on e-commerce sales and in particular e-commerce retail sales as stated above, we are of the view that the outlook of the e-commerce industry appears positive and encouraging.

Other financing alternatives available to the Group

As highlighted in the Letter form the Board, when formulating the structure of the Open Offer, the Directors have considered various fund raising alternatives for the Group including but not limited to debt financing and rights issue. Taking into account the benefits and costs of each of the alternatives, the Board considers that the Open Offer is in the interest of the Company and the Shareholders as a whole as it gives the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company and participate in the growth and development of the Group.

As stated in the Letter from the Board, the Board considers it is prudent to finance the Group’s long term growth by long term financing, preferably in the form of equity which will not increase the Group’s finance costs. The Board believes that debt financing will result in additional interest burden, higher gearing ratio of the Group and subject the Group to repayment obligations. In addition, debt financing may not be achievable on favourable terms in a timely manner.

The Open Offer will be fully underwritten by the Underwriter on the terms and subject to the conditions set out in the Underwriting Agreement. We consider that entering into the Underwriting Agreement will ensure the Group to raise the required funding under the Open Offer and remove a certain degree of uncertainty as compared to best-efforts placements, which is in the interest of the Company and the Independent Shareholders as a whole.

Although rights issue is similar to open offer, the rights issue enables the qualifying shareholders to trade in the nil-paid rights in the market for economic benefits. However, the arrangement for trading of the nil-paid rights arised from the rights issue would involve additional administration work and costs to the Group for the trading arrangement of nilpaid rights. As stated in the Letter from the Board, in view of: (i) the historical trading prices of the Shares showed a downward trend during the past twelve months before the date of the Announcement; and (ii) save for the trading volume of the Company in April 2015 and May 2015, the average trading volume in the past twelve months before the date of the Announcement, was only approximately 2% of the total issued Shares, there is uncertainty of the existence of a market to trade the nil-paid rights. The Board intends to invest the resources for the extra administrative work and cost for the trading arrangements in relation to the nilpaid rights to the business development of the Company. As stated in the Letter from the Board, it is estimated that the additional costs and expenses of approximately HK$200,000 would be incurred for such administrative work and the arrangement of trading the nil-paid rights. In view of the above, the Board considered that raising funds by way of the Open Offer is more cost effective and efficient as compared to a rights issue.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition, we have discussed with the Management regarding the current structure of the Open Offer. The Management are of the view that in the event the Subscription Price is increased and the allotment ratio is lowered, the attractiveness of the Qualifying Shareholder to subscribe for the Offer Shares will likely decrease. Given that a deep discount of the Subscription Price: (i) can provide an incentive for the Qualifying Shareholders to subscribe for the Offer Shares as the Company has funding needs to raise such amount of proceeds to finance principally investments in mobile applications and entertainment-related businesses; and (ii) is in line with the market practice as discussed in the section headed “Comparison with the Open Offer Comparables” below, we are of the view that the current structure of the Open Offer is fair and reasonable.

Having taken into account the financial needs of the Group, the possible benefits of the Open Offer and the availability of and comparison with other financing alternatives, we concur with the Directors that the Open Offer is in the interests of the Company and the Shareholders as a whole.

PRINCIPAL TERMS OF THE OPEN OFFER

The Company proposes to raise approximately HK$490.7 million, before expenses, by way of an open offer of 4,907,205,000 Offer Shares at a subscription price of HK$0.10 per Offer Share on the basis of one (1) Offer Share for every one (1) Consolidated Share held on the Record Date. The following table summarises the major terms of the Open Offer:

Basis of the Open Offer: One (1) Offer Share for every one (1) Consolidated Share held on the Record Date Subscription Price: HK$0.10 per Offer Share Number of Shares in issue as at the 9,814,410,000 Shares Latest Practicable Date: Number of Consolidated Shares in 4,907,205,000 Consolidated Shares issue as at immediately upon the Share Consolidation having become effective: Number of Offer Shares: 4,907,205,000 Offer Shares The aggregate nominal value of the Offer Shares will be HK$98,144,100.00 Number of Consolidated Shares in 9,814,410,000 Consolidated Shares issue immediately upon completion of the Open Offer:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the Letter from the Board, as at the Latest Practicable Date, the Company has no derivatives, outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares or Consolidated Shares.

The Open Offer is fully underwritten by the Underwriter which shall ensure that the Company will maintain the minimum public float requirement in compliance with Rule 8.08(1) of the Listing Rules.

The Subscription Price of HK$0.10 per Offer Share will be payable in full upon application by a Qualifying Shareholder. The Subscription Price represents:

• (a) a discount of approximately 76.4% to the closing price of HK$0.424 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (b) a discount of approximately 77.1% to the average closing price of approximately HK$0.436 per Consolidated Share for the last 5 consecutive trading days as quoted on the Stock Exchange up to and including the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (c) a discount of approximately 77.8% to the average closing price of approximately HK$0.450 per Consolidated Share for the last 10 consecutive trading days as quoted on the Stock Exchange up to and including the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (d) a discount of approximately 61.8% to the theoretical ex-entitlement price of approximately HK$0.262 per Consolidated Share based on the closing price of HK$0.424 per Consolidated Share as quoted on the Stock Exchange on the Last Trading Day and adjusted for the effect of the Share Consolidation;

• (e) a premium of approximately 7.5% over the unaudited consolidated net asset value per Consolidated Share of approximately HK$0.093 as at 30 September 2014 (based on 4,907,205,000 Consolidated Shares in issue as at the Last Trading Day and adjusted for the effect of the Share Consolidation); and

• (f) a discount of approximately 63.24% to the closing price of HK$0.272 per Consolidated Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted for the effect of the Share Consolidation.

As stated in the Letter from the Board, the Subscription Price was arrived at arm’s length negotiation between the Company and the Underwriter with reference to, among other things, the market price of the Shares (after taking into account the effect of the Share Consolidation) under the prevailing market conditions, liquidity of the Shares, historical financial performance and the financial position of the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

ANALYSIS ON THE SUBSCRIPTION PRICE

For the purpose of assessing the fairness and reasonableness of the Subscription Price, we compared the Subscription Price with reference to: (i) the recent price performance of the Shares (adjusted for the effect of the Share Consolidation) and trading liquidity of the Company; and (ii) the market comparable analysis, as follows:

Review on Share price performance

The following table illustrates the highest and lowest adjusted closing prices and the average adjusted closing price of the Shares as quoted on the Stock Exchange in each month during the period commencing from 9 June 2014 up to and including the Last Trading Day (the “ Review Period ”). For illustrative purpose, we have adjusted the closing price of the Shares and assumed that the Share Consolidation took effect from the beginning of the Review Period.

Table 5: Historical daily adjusted closing prices of the Shares during the Review Period

	Highest daily	Lowest daily	Average daily	Number of
	adjusted	adjusted	adjusted	trading days
Month	closing price	closing price	closing price	in each month
	(HK$)	(HK$)	(HK$)
2014
June (from 9 June 2014)	0.280	0.202	0.236	16
July_(Note)_	0.375	0.231	0.285	19
August	0.320	0.275	0.297	21
September	0.295	0.238	0.270	21
October	0.246	0.221	0.234	21
November	0.290	0.223	0.248	20
December	0.255	0.216	0.230	21
2015
January	0.156	0.103	0.129	21
February	0.123	0.112	0.119	18
March	0.158	0.118	0.130	22
April	0.270	0.125	0.149	19
May	0.255	0.176	0.210	19
June (up to and including the
Last Trading Day)	0.231	0.221	0.220	6

Source: Stock Exchange

Note: Trading in the Shares was suspended on 21 July 2014 (with effect from 11:13 a.m.) and resumed on 25 July 2014 (with effect from 9:00 a.m.)

— 57 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

During the Review Period, the adjusted daily closing price of the Shares ranged from HK$0.103 to HK$0.375 per Share. In addition, the following chart highlights the movements of the daily adjusted closing price of the Shares as quoted on the Stock Exchange during the Review Period.

Chart 10: Historical daily adjusted closing prices of the Shares during the Review Period

==> picture [390 x 218] intentionally omitted <==

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

0.4
0.35 Average daily closing price of
HK$0.2138
0.3
0.25
0.2
0.15 Subscription price of HK$0.10
0.1
0.05
0
9/6/20145/7/201431/7/201426/8/201421/9/201417/10/201412/11/20148/12/20143/1/201529/1/201524/2/201522/3/201517/4/201513/5/20158/6/2015
Closing Price (HK$)
----- End of picture text -----

Source: Stock Exchange

We note that the Subscription Price of HK$0.10 falls below the daily adjusted closing prices of the Shares at all times throughout the Review Period and represents: (i) a discount of approximately 73.33% from the highest adjusted closing price; (ii) a discount of approximately 2.91% from the lowest closing price; and (iii) a discount of approximately 53.23% from the average daily adjusted closing price of the Shares of HK$0.2138 during the Review Period.

As all Qualifying Shareholders are entitled to subscribe for the Offer Shares in the same proportion to his/her/its existing shareholding in the Company held on the Record Date, the Directors consider that the discount of the Subscription Price would encourage the Qualifying Shareholders to take up their entitlements so as to maintain their shareholdings in the Company and participate in the future growth of the Group. We concur with the Directors’ view that the Subscription Price is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

— 58 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Review on trading liquidity of the Shares

The average daily number of Shares traded per month, and the respective percentages of the Shares’ monthly trading volume as compared to the then total number of Shares in issue, during the Review Period are tabulated as follows:

Table 6: Historical trading volume of the Shares during the Review Period

				Average
				Volume as a
		Average		percentage
	Number	daily trading		of the then
	of trading	volume (the		total number
	days in each	“Average		of Shares in
Month	month	Volume”)	Issued Share	issue
		(Number of	(Number of
		Shares)	Shares)	(%)
2014
June (from 9 June 2014)	16	120,956,250	7,078,030,000	1.71
July	19	301,778,500	7,140,830,000	4.23
August	21	229,243,814	7,849,830,000	2.92
September	21	159,363,524	8,003,210,000	1.99
October	21	81,931,840	8,003,210,000	1.02
November	20	112,572,933	8,003,210,000	1.41
December	21	45,865,471	8,003,210,000	0.57
2015
January	21	317,786,375	8,003,210,000	3.97
February	18	87,992,111	8,003,210,000	1.10
March	22	251,391,091	9,814,410,000	2.56
April	19	1,314,415,144	9,814,410,000	13.39
May	19	861,436,963	9,814,410,000	8.78
June (up to and including the
Last Trading Day)	6	333,876,667	9,814,410,000	3.40

Source: Stock Exchange

The above table illustrates that the Average Volume in each month from June 2014 up to and including the Last Trading Day ranged from approximately 0.57% to approximately 13.39% of the then total number of Shares in issue. We note that the Average Volume in April and May 2015 were approximately 13.39% and approximately 8.78% of the then total number of Shares in issue, respectively. Save for the trading volume for the two months in 2015, the average trading volume for the remaining ten months during the Review Period was only approximately 2% of the total issued Shares, which is rather thin. The Directors are of the view that they are not aware of any reasons which may have caused the increase in Share price to HK$0.27 on 29 April 2015 and the relatively sizeable trading volume of 6,338,970,630 Shares and 7,265,445,000 Shares on 28 and 29 April 2015 respectively. Accordingly, they have issued an announcement to that effect on 29 April 2015.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Comparison with the Open Offer Comparables

In order to reflect the general trend of open offer transactions in the recent market, we have, on a best effort basis, conducted a search of all recent open offers announced within the six-month period from 9 December 2014 up to the Last Trading Day (the “ Comparison Period ”). We are of the opinion that due to the volatility of the share prices of the companies listed on the Stock Exchange, the Comparison Period reflects a fair and recent period of comparison for the Open Offer. As the capital market changes rapidly, we consider that the Open Offer Comparables (as defined below) reflects the latest market conditions of open offer. During the Comparison Period and based on our research conducted, we identified a total of 31 open offers announced by companies listed on the Stock Exchange (the “ Open Offer Comparables ”). To the best of our knowledge effort and endeavor and based on our search conducted, the list of the Open Offer Comparables is an exhaustive list of comparable open offers for comparison purpose. We also noted that the business activities of the Open Offer Comparables are not directly comparable to those carried out by the Group and the terms of the open offer of the Open Offer Comparables may vary from companies with different financial standings, business performance and future prospects. Since the Open Offer Comparables are the most recent open offer transactions announced to the public, we consider that the Open Offer Comparables could represent the recent trend of the open offer transactions in the prevailing market condition and could provide a general reference in respect of the common market practice on open offers conducted by listed companies in Hong Kong. The details are set out below:

Intentionally left blank

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Table 7: Comparable analysis of the Open Offer Comparables

				Discount of the
				subscription
			Discount of the	price to the
			subscription	theoretical ex-
			price to the	entitlements
			closing price	price per
			per share on	share on the
			the last trading	last trading
			days prior to/	days prior to/
			on the date of	on the date of
			announcements	announcements
			in relation to	in relation to
		Announcement	the respective	the respective	Excess	Underwriting	Basis of
Company Name	Stock Code	date	open offer	open offer	Application	Commission	entitlements
New City Development Group Ltd	456	3-Jun-15	24.3%	20.5%	No	0.00%	1 for 4
APAC Resources Ltd	1104	27-May-15	50.7%	40.7%	Yes	2.00%	1 for 2
National United Resources
Holdings Ltd	254	22-May-15	53.6%	43.5%	No	1.50%	1 for 2
Wealth Glory Holdings Ltd	8269	22-May-15	34.0%	25.5%	No	3.00%	1 for 2
Hailiang International Holdings Ltd	2336	15-May-15	34.1%	25.6%	Yes	0.75%	1 for 2
China Kingstone Mining
Holdings Ltd	1380	14-May-15	61.5%	51.7%	No	3.50%	1 for 2
Mastermind Capital Ltd	905	13-May-15	59.5%	28.1%	No	3.50%	2 for 1
Merdeka Mobile Group Ltd	8163	10-May-15	76.6%	52.1%	Yes	2.50%	2 for 1
China Vehicle Components
Technology Holdings Ltd	1269	5-Apr-15	86.8%	76.6%	Yes	2.00%	1 for 1
Hua Han Bio-Pharmaceutical
Holdings Ltd	587	28-Apr-15	43.5%	33.9%	Yes	2.50%	1 for 2
RCG Holdings Ltd	802	24-Apr-15	78.4%	37.8%	No	2.00%	5 for 1
China Culiangwang Beverages
Holdings Ltd	904	17-Apr-15	77.8%	53.8%	No	2.30%	2 for 1
Century Sunshine Group
Holdings Ltd	509	15-Apr-15	47.4%	37.5%	No	1.50%	1 for 2
Jun Yang Solar Power Investments
Ltd	397	13-Apr-15	25.7%	18.8%	No	2.50%	1 for 2
Seamless Green China (Holdings) Ltd	8150	8-Apr-15	17.1%	12.1%	No	1.50%	1 for 2
Powerwell Pacific Holdings Ltd	8265	31-Mar-15	24.7%	17.9%	No	2.00%	1 for 2
EPI Holdings Ltd	689	31-Mar-15	45.1%	35.3%	No	1.00%	1 for 2
Chinese Energy Holdings Ltd	8009	24-Mar-15	40.5%	25.4%	No	2.50%	1 for 1
Celebrate International Holdings Ltd	8212	18-Mar-15	92.9%	29.7%	Yes	3.00%	30 for 1
Capital VC Ltd	2324	16-Mar-15	76.6%	76.4%	No	1.00%	7 for 1
Heng Fai Enterprises Ltd	185	27-Feb-15	11.5%	10.6%	No	2.50%	1 for 10
Solartech International Holdings Ltd	1166	8-Feb-15	69.7%	27.8%	No	2.50%	5 for 1
Global Energy Resources
International Group Ltd	8192	6-Feb-15	35.1%	26.5%	No	2.5%	1 for 2
Convoy Financial Holdings Ltd	1019	6-Feb-15	71.3%	(38.3%)	No	3.50%	3 for 1
O Luxe Holdings Ltd	860	4-Feb-15	57.7%	(31.8%)	No	0.50%	2 for 1
Prosperity Investment Holdings Ltd	310	16-Jan-15	28.6%	(21.0%)	No	3.00%	1 for 2
Mission Capital Holdings Ltd	1141	19-Dec-14	11.5%	(8.0%)	No	2.50%	1 for 2
Far East Holdings International Ltd	36	18-Dec-14	58.9%	(48.9%)	No	2.50%	1 for 2
Li Ning Co Ltd	2331	17-Dec-14	25.1%	19.0%	Yes	2.50%	5 for 12
Unity Investments Holdings Ltd	913	15-Dec-14	78.1%	41.6%	No	2.50%	4 for 1
Man Sang International Ltd	938	7-Dec-14	11.4%	7.9%	No	1.50%	1 for 2
Average			48.70%	33.04%		2.15%
Maximum			11.40%	7.90%		3.50%
Minimum			92.90%	76.60%		0.00%
The Company	745	8-Jun-2015	76.40%	61.80%		2%	1 for 1

Source: Stock Exchange

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

1. Based on the shareholding on the date of the announcements in relation to the respective open offers and assuming there was no new share being issued and no share being repurchased by the listed companies on or before the respective record dates.

2. The values of the discount of the subscription price to the theoretical closing price on the last trading day and the theoretical ex-entitlement price per share for the Company are based on the Consolidated Shares basis as shown in the sub-section headed “Principal Terms of the Open Offer” of this letter.

As shown in the above table, the subscription prices of the Open Offer Comparables represented discounts ranging from approximately 11.4% to approximately 92.9% with an average of approximately 48.7% to the respective closing prices of their shares on the last trading days prior to/on the date of the release of the respective open offer announcements. Although we note that the discount of approximately 76.4% to the adjusted closing price of the Consolidated Shares on the Last Trading Day is higher than the average of the Open Offer Comparables, the discount of approximately 76.4% to the adjusted closing price of the Consolidated Shares on the Last Trading Day as represented by the Subscription Price nevertheless falls within the range. We consider that the Open Offer offers all the Qualifying Shareholders an equal opportunity to subscribe for their pro-rata entitlement of the Open Offer and hence avoids dilution. In view of the above, we are of the view that the discount of approximately 76.4% to the adjusted closing price of the Consolidated Shares on the Last Trading Day is acceptable.

Furthermore, the subscription prices of the Open Offer Comparables represented discounts ranging from approximately 7.90% to approximately 76.60% with an average of approximately 33.04% to the respective theoretical ex-entitlements prices of their shares on the last trading days prior to/on the date of the release of the respective open offer announcements. Although the discount of approximately 61.8% to the adjusted ex-entitlements price as represented by the Subscription Price is higher than the average of the Open Offer Comparables, such discount nonetheless falls within the range of the Open Offer Comparables. In addition, as discussed with the Management, the Subscription Price was arrived at after arm’s length negotiations between the Company and the Underwriter. As stated in the Letter from the Board, it has been indicated to the Company that the relatively deep discount of the Subscription Price to the closing price is necessary to induce the Underwriter to participate in the underwriting of the Underwritten Shares, which is an essential part of the Open Offer.

Based on the above and having considered in particular that:

• (i) the Company has funding needs for its various potential investments, development of e-commerce business and debt repayment as discussed in the sub-section in this letter headed “ Reasons for the Open Offer and use of proceeds ”;

• (ii) the Subscription Price was arrived at after arm’s length negotiations between the Company and the Underwriter;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (iii) it is a common market practice that the subscription prices of an open offer is normally set at a discount to the prevailing market prices of the relevant shares in order to enhance the attractiveness of an open offer and to encourage the existing Shareholders to participate in the open offer;

• (iv) the discounts represented by the Subscription Price to the adjusted losing price of the Shares on the Last Trading Day and the theoretical adjusted ex-entitlement price falls within the corresponding discounts range of the Open Offer Comparables;

• (v) the Subscription Price falls below the daily adjusted closing price of the Shares during the Review Period;

• (vi) the relatively low trading volume of the Shares save for the two months in April and May 2015;

• (vii) after considering the benefits and drawbacks of other fund raising alternatives, the Open Offer seems to be an appropriate means for the Company to raise funds, in particular as the Open Offer offers all the Qualifying Shareholders an equal opportunity to subscribe for their pro-rata entitlement of the Open Offer and hence avoids dilution; and

• (viii) the entering into the Underwriting Agreement will ensure the Group to raise the required funding under the Open Offer;

we are of the view that the Subscription Price is fair and reasonable so far as the Independent Shareholders are concerned.

Underwriting commission

Pursuant to the Underwriting Agreement, the Underwriter has conditionally agreed to underwrite the Offer Shares not subscribed for by the Qualifying Shareholders on a fully underwritten basis, subject to the terms and conditions of the Underwriting Agreement with an underwriting commission of 2.0% of the aggregate Subscription Price in respect of the number of Underwritten Shares (the “ Underwriting Commission ”). As confirmed by the Directors, the Underwriting Commission was determined after arm’s length negotiations between the Company and the Underwriter with reference to, among other things, the scale of the Open Offer and the market rate.

Based on the table under the sub-section in this letter headed “ Comparison with the Open Offer Comparables ”, we noted that the Underwriting Commission is in line with common market practice and falls within the range of underwriting commissions of 0% to 3.5% with an average of 2.2%. We note that the Underwriting Commission is slightly lower than the average of 2.2%. Accordingly, we consider that the Underwriting Commission is on normal commercial terms and is fair and reasonable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Termination of the Underwriting Agreement

It should be noted that the Open Offer would not proceed if the Underwriter exercises their termination rights under the Underwriting Agreement. Details of the provisions granting the Underwriter such termination rights are included in the Letter from the Board section headed “ Termination of the Underwriting Agreement ”. After reviewing prospectuses of the Open Offer Comparables, we consider such provisions are on normal commercial terms and in line with the market practice.

No application for excess Offer Shares

No Qualifying Shareholder is entitled to apply for any Offer Shares which are in excess to his/ her/its entitlement. Any Offer Shares not taken up by the Qualifying Shareholders, and the Offer Shares to which the Non-Qualifying Shareholders would otherwise have been entitled under the Open Offer, will not be available for subscription by other Qualifying Shareholders by way of excess application and will be taken up by the Underwriter.

The Directors hold the view that the Open Offer allows the Qualifying Shareholders to maintain their respective pro-rata shareholding in the Company and to participate in the future growth and development of the Group. After arm’s length negotiations with the Underwriter, and taking into account that the related administration costs would be lowered in the absence of excess applications, the Directors consider that it is fair and reasonable and in the interests of the Company and the Shareholders as a whole not to offer any excess application to the Qualifying Shareholders.

Pursuant to the Underwriting Agreement, the Underwriter has conditionally agreed to subscribe or procure subscription for the Offer Shares which have not been taken up by the Qualifying Shareholders.

After reviewing the prospectuses of the Open Offer Comparables in relation to the open offer, we noted that the above practice: (i) is in line with the market practice (i.e. 24 out of 31 Open Offer Comparables had no excess application for their open offer exercises); (ii) is able to lower the related administration costs in the absence of excess applications; and (iii) allows the Qualifying Shareholders to maintain their respective pro-rata shareholding, we are of the view that such arrangement is fair and reasonable to the Company and the Shareholders as a whole.

Taking into account the above principal terms of the Open Offer and the Underwriting Agreement, we consider that the terms of the Open Offer and the Underwriting Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

— 64 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

POSSIBLE DILUTION EFFECT OF THE OPEN OFFER

The table below depicts the shareholding structures of the Company (for illustrative purpose only): (i) as at the Latest Practicable Date; (ii) immediately upon after the Share Consolidation becoming effective but before completion of the Open Offer; (iii) immediately after completion of the Open Offer assuming (a) full acceptance by the Qualifying Shareholders; and (b) nil acceptance by the Qualifying Shareholders:

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

Public Shareholders Underwriter, sub-underwriter(s) and subscribers procured by any of them_(Note)_	As at the Latest Practicable Date No. of Shares Approx. % 9,814,410,000 100.00 9,814,410,000 100.00	Immediately after completion of the Open Offer Immediately after the Share Consolidation becoming effective but before the completion of the Open Offer Assuming all the Offer Shares are subscribed for by the Qualifying Shareholders Assuming none of the Offer Shares are subscribed for by the Qualifying Shareholders No. of Consolidated Shares Approx. % No. of Consolidated Shares Approx. % No. of Consolidated Shares Approx. % 4,907,205,000 100.00 9,814,410,000 100.00 4,907,205,000 50.00 4,907,205,000 50.00 94,907,205,000 100.00 9,814,410,000 100.00 1,503,729,744 100.00	Immediately after completion of the Open Offer Immediately after the Share Consolidation becoming effective but before the completion of the Open Offer Assuming all the Offer Shares are subscribed for by the Qualifying Shareholders Assuming none of the Offer Shares are subscribed for by the Qualifying Shareholders No. of Consolidated Shares Approx. % No. of Consolidated Shares Approx. % No. of Consolidated Shares Approx. % 4,907,205,000 100.00 9,814,410,000 100.00 4,907,205,000 50.00 4,907,205,000 50.00 94,907,205,000 100.00 9,814,410,000 100.00 1,503,729,744 100.00
			100.00

Note:

Pursuant to the Underwriting Agreement, the Underwriter has undertaken to the Company in the Underwriting Agreement that it will take all such steps as shall be appropriate, including the making of sub-underwriting arrangements and/or placing down the Offer Shares acquired by it under the Underwriting Agreement, such that

• (i) each of the Underwriter or subscribers to be procured by the Underwriter together with parties acting in concert with them shall not be holding 30% or more of the voting rights of the Company nor trigger a mandatory offer obligation under Rule 26 of Takeovers Code on the part of the Underwriter in respect of performing its obligations under the Underwriting Agreement immediately upon the allotment and issue of the Offer Shares;

• (ii) the Underwriter shall use its reasonable endeavours to ensure that the subscribers for the Underwritten Shares shall be third parties independent of and not connected with the Company and its connected persons or core connected persons and their respective associates or close associates and the subscribers for the Underwritten Shares are not acting in concert with the Company and its associates;

• (iii) none of the persons to be procured by the Underwriter to subscribe for the Underwritten Shares will become a substantial shareholder of the Company holding 10% or more shareholding in the Company as a result of the subscription of the Underwritten Shares; and

• (iv) the Underwriter shall and shall cause the sub-underwriters to procure independent subscribers and/or placees to take up such number of Shortfall Underwritten Shares as necessary to ensure that the Company will comply with the public float requirement under 8.08(1) of the Listing Rules upon completion of the Open Offer.

The Open Offer offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company. For those Qualifying Shareholders who take up their entitlements in full under the Open Offer, their shareholding interests in the Company will remain unchanged after the Open Offer.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For Qualifying Shareholders who do not take up in full their assured entitlements under the Open Offer should note that their shareholdings in the Company will be diluted upon completion of the Open Offer. As shown in the table above, assuming that none of the Qualifying Shareholders has subscribed for the Open Offer, the percentage of shareholding of the public Shareholders will be reduced from approximately 87.80% as at the Latest Practicable Date to approximately 14.63%.

The Open Offer offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company. For those Qualifying Shareholders who take up their entitlements in full under the Open Offer, their shareholding interests in the Company will remain unchanged after the Open Offer.

For Qualifying Shareholders who do not take up in full their assured entitlements under the Open Offer should note that their shareholdings in the Company will be diluted upon completion of the Open Offer. As shown in the table above, assuming that none of the Qualifying Shareholders has subscribed for the Open Offer, the percentage of shareholding of the public Shareholders will be reduced from approximately 87.80% as at the Latest Practicable Date to approximately 14.62%, assuming the outstanding Share Options being exercised in full on or before the Record Date.

Notwithstanding the potential dilution to the Independent Shareholders’ proportional shareholding interests in the Company as discussed above, having taking into account that:

• (a) the Independent Shareholders are given the opportunity to express their view on the terms of the Open Offer and the Underwriting Agreement through their votes at the EGM;

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

• (c) the Open Offer offers the Qualifying Shareholders an opportunity to subscribe for their pro-rata Offer Shares for the purpose of maintaining their respective existing shareholding interests in the Company at a relatively low price as compared to the historical and prevailing market prices of the Shares; and

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

we are of the view that the potential dilution effect on the existing shareholding interest of the Independent Shareholders, which may only result when the Qualifying Shareholders do not subscribe for their pro-rata Offer Shares, is acceptable.

— 66 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As discussed with the Management and the Underwriter, we note that in the event that there is insufficient public float of the Company within the meaning of the Listing Rules immediately upon completion of the Open Offer solely because of the Underwriter’s performance of its obligations pursuant to the Underwriting Agreement, the Underwriter agrees to take such appropriate steps as may be reasonably required to maintain the minimum public float for the Shares in compliance with Rule 8.08(1) of the Listing Rules.

POSSIBLE FINANCIAL EFFECTS OF THE OPEN OFFER

Effect on net tangible asset

With reference to the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group attributable to owners of the Company as set out in the Appendix II to the Circular, the audited pro forma adjusted consolidated net tangible assets value of the Group attributable to the owners of the Company was approximately HK$37.77 million as at 31 March 2015. After taking into account the net proceeds from the Open Offer, the unaudited pro forma adjusted consolidated net tangible assets value of the Group attributable to the owners of the Company will be increased to HK517.39 million.

The audited pro forma adjusted consolidated net tangible assets of the Group per Share as at 31 March 2015 was approximately HK$0.008 per Share after the Share Consolidation. Upon completion of the Open Offer, the total number of Consolidated Shares shall be increased to 9,814,410,000 Shares. The unaudited pro forma adjusted consolidated net tangible assets per Share attributed to the owners of the Company will be approximately HK$0.053 per Share. This represents an increase of approximately 562.5% from HK$0.008 per Share.

Effect on working capital and liquidity

The net proceeds from the Open Offer is estimated to be approximately HK$479.6 million and the working capital will be increased by HK$479.6 million, which will improve the Group’s liquidity position.

Based on the foregoing, although the net tangible assets value per Share of the Group attributed to the equity shareholders of the Company will be diminished, the Open Offer will enhance the net assets value of the Group and improve the liquidity position of the Group. Hence, we are of the view that the Open Offer is in the interest of the Company and the Shareholders as a whole.

RECOMMENDATION

Having taken into consideration of the following principal factors and reasons regarding the Open Offer including:

• (a) The net proceeds of the Open Offer will be used to finance the Group’s potential investments in mobile application and entertainment-related businesses, development of e-commerce business and to repay the Group’s existing debts;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

• (b) the Open Offer would be a preferred method of equity financing as it will allow all the Qualifying Shareholders to maintain their proportionate interests in the Company and to participate in the future growth and development of the Group;

• (c) the discount of the Subscription Price falls within the range of the discount of the subscription prices of the Open Offer Comparables;

• (d) the major terms and conditions of the Underwriting Agreement is in line with the market practice;

• (e) the dilution effect is not prejudicial to the Independent Shareholders’ interests in the Company if they choose to subscribe for their full entitlement of the Offer Shares under the Open Offer; and

• (f) the Open Offer will enhance the net assets value of the Group and improve the liquidity position of the Group;

we are of the view that the terms of the Open Offer are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution(s) to be proposed at the EGM to approve the Open Offer.

Yours faithfully, For and on behalf of

Opus Capital Limited

Alvin Lai Koh Kwai Yim Chief Executive Officer Executive Director

Mr. Alvin Lai is the Chief Executive Officer of Opus Capital and is licensed under the SFO as a Responsible Officer to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities. Mr. Lai has over 15 years of financial industry, investments, corporate finance and legal experience in Asia and Australia. Mr. Lai is a qualified legal practitioner in New South Wales, Australia. Mr. Lai has acted as financial adviser and/or independent financial adviser to many companies and transactions involving fundraising and/or mergers and acquisition in Asia.

Ms. Koh Kwai Yim is the Executive Director of Opus Capital and is licensed under the SFO as a Responsible Officer to conduct Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities. Ms. Koh has over 15 years of corporate finance experience in Asia and has participated in and completed various financial advisory and independent financial advisory transactions.

— 68 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION

The financial information of the Group for each of the three financial years ended 31 March 2012, 2013 and 2014 and the six month ended 30 September 2014 were disclosed on pages 21 to 98 of the 2012 annual report published on 27 July 2012, pages 22 to 100 of the 2013 annual report published on 29 July 2013, pages 22 to 90 of the 2014 annual report published on 30 July 2014 and pages 2 to 19 of the 2014 interim report published on 19 December 2014. The Company’s results announcement for the financial year ended 31 March 2015 was published on 29 June 2015. The aforementioned financial information of the Group has been published on both the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.cncg-media.com).

2. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 May 2015, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this Circular, the Group had outstanding promissory notes of approximately HK$44,977,000.

Save as aforesaid or otherwise disclosed herein, and apart from intra-group liabilities and normal trade payables, the Group did not have any outstanding mortgages, charges, debentures or other loan capital, bank drafts, loans, debt securities or other similar indebtedness, foreign exchange liabilities, liabilities under acceptance or acceptances credits, finance lease, or hire purchase commitments guarantees or other material contingent liabilities at the close of business on 31 May 2015.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the present available resources and the estimated net proceeds from the Open Offer, the Group has sufficient working capital for its normal business for at least the next twelve months from the date of this Circular in the absence of unforeseeable circumstances.

4. MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2015, being the date to which the latest published audited consolidated accounts of the Group were made up, up to and including the Latest Practicable Date.

— I-1 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. BUSINESS TREND AND FINANCIAL AND TRADING PROSPECTS

The Group has received positive reviews on its catering business mobile platform and planned to continue to expand its services offerings and geographical coverage based on its established foundation and/or inorganic growth, if any when appropriate. Seeing the irreversible trend that new media is the growing power in mass media sector and is exerting great impact to the market landscape, the Group will continue its venture in the mobile applications business as well as look for opportunities to extend into other potential businesses such as new media marketing, advertising, e-commerce and culture, movie and entertainment-related businesses.

The Group is actively pursuing opportunities in investment in the culture, movie and entertainment-related businesses, in particular, import and/or distribution of films in China. Through the dedicated team to operate in film importation, distribution, and marketing, the Group is identifying possible investment opportunities in the industry, including but not limited to, film production and distribution in Hong Kong and China. The Board considers that these investments require substantial capital which may exert pressure on the liquidity and profitability of the Group as a result of the relevant finance costs.

The Group has been witnessing the current process of opening up of the culture, entertainment and movie market in Mainland China, and the Group believes there are good potential and promising prospects in the respective businesses contemplated by the Group.

In view of the positive growth of consumers’ on-line buying pattern, the Group has decided to embark on its e-commerce business to sell lady’s apparel on-line. In preparation for the Group’s e-commerce business operation, recently, the Group has purchased a system known as “Multi Market Place Sales & Inventory System” totalling approximately HK$2 million and is in the process of acquiring a server platform for an estimated amount of HK$10 million.

Looking forward, ongoing financial market turmoil and challenging operating environment notwithstanding, the Group will strive to closely monitor and timely identify any investment opportunities that may arise in the areas of culture and entertainment, new media, mobile applications, e-commerce, advertising etc.. The management of the Group is committed to look for business opportunities that would generate long-term returns to Shareholders.

— I-2 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP ATTRIBUTABLE TO OWNERS OF THE COMPANY

The unaudited pro forma financial information of the Group (the “Unaudited Pro Forma Financial Information”) has been prepared in accordance with paragraph 4.29(1) of the Listing Rules set out below to illustrate the effect of the proposed Share Consolidation and the proposed Open Offer on the consolidated net tangible assets of the Group as if they had taken place on 31 March 2015.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the consolidated net tangible assets of the Group attributable to owners of the Company had the proposed Share Consolidation and the proposed Open Offer been completed as at 31 March 2015 or at any future date.

The following Unaudited Pro Forma Financial Information of the adjusted consolidated net tangible assets of the Group attributable to owners of the Company is prepared based on the audited consolidated net tangible assets of the Group attributable to owners of the Company as at 31 March 2015, extracted from the published preliminary result announcement of the Group for the year ended 31 March 2015, with adjustment described below:

Taking into account 9,814,410,000 Shares in issue as at the Latest Practicable Date, and there will be no change in the issued share capital of the Company from the Latest Practicable Date to the date of the Record Date, 4,907,205,000 Offer Shares will be issued under the Open Offer after the Share Consolidation becoming effective.

					Unaudited pro
					forma adjusted
					consolidated net
				Audited	tangible assets
			Unaudited pro	consolidated net	attributable to
	Audited		forma adjusted	tangible assets	owners of the
	consolidated net		consolidated net	attributable to	Company per
	tangible assets		tangible assets	owners of the	Share
	attributable to	Unaudited	attributable to	Company per	immediately
	owners of the	estimated net	owners of the	Share before the	after completion
	Company as at	proceeds from	Company as at	completion of	of the Open
	31 March 2015	the Open Offer	31 March 2015	the Open Offer	Offer
	HK$’000	HK$’000	HK$’000	HK$	HK$
	(Note 1)	(Note 2)		(Note 3)	(Note 4)
Based on 4,907,205,000 Offer Shares
at subscription price of HK$0.10
per Offer Share	37,770	479,621	517,391	0.008	0.053

— II-1 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

• 1) The audited consolidated net tangible assets attributable to owners of the Company as at 31 March 2015 has been extracted from the published preliminary result announcement of the Company for the year ended 31 March 2015.

• 2) The estimated net proceeds from the Open Offer is approximately HK$479,621,000 are based on the 4,907,205,000 Offer Shares to be issued at the Subscription Price of HK$0.10 per Offer Share and after deducting estimated related expenses, including among others, legal and professional fees, which are directly attributable to the Open Offer, of approximately HK$11,100,000.

• 3) The unaudited consolidated net tangible assets of the Group per share attributable to the owners of the Company before the completion of the Open Offer is determined based on the audited consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 March 2015 of approximately HK$37,770,000 as disclosed in note 1 above, divided by 4,907,205,000 Consolidated Shares (assuming the Share Consolidation become effective on 31 March 2015) of the Company in issue as at 31 March 2015.

• 4) The unaudited pro forma adjusted consolidated net tangible assets of the Group after the completion of the Open Offer per share is determined based on the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the Company as at 31 March 2015 for the Open Offer of approximately HK$517,391,000 divided by 9,814,410,000 shares which comprise 4,907,205,000 Consolidated Shares (assuming the Share Consolidated became effective on 31 March 2015) in issue as at 31 March 2015 and 4,907,205,000 Offer Shares to be issued after the completion of the Open Offer.

• 5) No adjustment has been made to reflect any trading results or other transactions of the Group subsequent to 31 March 2015.

— II-2 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA INFORMATION OF THE GROUP

The following is the text of a report, prepared for the sole purpose of inclusion in this circular from the independent reporting accountants of the Company, Elite Partners CPA Limited, Certified Public Accountants, Hong Kong.

The Board of Directors China National Culture Group Limited Room 901, Silver Fortune Plaza, 1 Willingtion Street Central, Hong Kong

Dear Sirs,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of China National Culture Group Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (“Directors”) for illustrative purposes only. The pro forma financial information consists of the unaudited pro forma consolidated net tangible assets as at 31 March 2015, and related notes (the “Unaudited Pro Forma Financial Information”) as set out in Appendix II of the circular issued by the Company. The applicable criteria on the basis of which the directors have complied the Unaudited Pro Forma Financial Information are described in Appendix II of this circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the proposed share consolidation on the basis that every two issued and unissued ordinary shares of HK$0.01 of each the Company will be consolidated into one consolidated share of HK$0.02 each and proposed open offer 4,907,205,000 of the Company (the “Offer Shares”) at a subscription price of HK$0.10 per Offer Share on the basis of three Offer Share for every one existing share (the “Open Offer”) as if the transaction had taken place as at 31 March 2015. As part of this process, information about the consolidated statement of financial position of the Group as at 31 March 2015, as extracted from the published preliminary result announcement of the Company for the year ended 31 March 2015 dated 29 June 2015.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

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

— II-3 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Reporting Accountants’ Responsibilities

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

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

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

The purpose of Unaudited Pro Forma Financial Information included in a prospectus is solely to illustrate the impact of the significant transaction on consolidated net tangible assets of the Group as if the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 31 March 2015 would have been as presented.

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

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

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

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

— II-4 —

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

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

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

Opinion

In our opinion:

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

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

• (c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Your faithfully,

Elite Partners CPA Limited

Certified Public Accountants

Siu Edmund

Practising Certificate Number: P05333

Hong Kong, 7 July, 2015

— II-5 —

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised share capital of the Company as at the Latest Practicable Date is as follows:

Authorised: 10,000,000,000 Shares of HK$0.01 each Issued and fully paid or credited as fully paid: 9,814,410,000 Shares of HK$0.01 each	HK$ 100,000,000
	98,144,100

The authorised and issued share capital of the Company assuming the Share Consolidation and the Increase in Authorised Share Capital having become effective and immediately following completion of the Open Offer are as follows:

Authorised: 50,000,000,000 Consolidated Shares of HK$0.02 each Fully paid Consolidated Shares/Offer Shares in issue or to be issued: 4,907,205,000 Consolidated Shares of HK$0.02 each in use upon Share Consolidation having becoming effective 4,907,205,000 Offers Shares to be issued pursuant to the Open Offer 9,814,410,000 Shares in issue and fully paid immediately upon completion of the Open Offer	HK$ 1,000,000,000
	98,144,100 98,144,100
	196,288,200

— III-1 —

GENERAL INFORMATION

APPENDIX III

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

No capital of any member of the Group was under option, or agreed conditionally or unconditionally to be put under option as at the Latest Practicable Date. All Consolidated Shares and Offer Shares, when allotted and issued, shall rank pari passu with each other and in all respects with each other in all respects including rights to dividends, voting and return of capital. There is no arrangement under which future dividends will be waived or agreed to be waived.

The issued Shares are listed and traded on Stock Exchange. None of the securities of the Company is listed, or dealt in, on any other exchange, nor is any listing of or permission to deal in the securities of the Company being, or proposed to be, sought on any other stock exchange.

3. DISCLOSURE OF INTERESTS

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

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

(b) Substantial shareholders and other persons’ interests in Shares and underlying Shares

As at the Latest Practicable Date, to the best knowledge of the Directors, the following person (other than a Director and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares, which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register of interests required to be kept by the Company pursuant to Section 336 of the SFO, or who was expected, directly or indirectly, to be interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group:

— III-2 —

GENERAL INFORMATION

APPENDIX III

Long Positions in the Consolidated Shares

			Percentage
		Number of	of the
		Consolidated	shareholding
Name of shareholder	Capacity	Shares interested	(approximately)
Astrum Capital Management	Other
Limited_(Note 1)_		4,907,205,000	50%
Major Harvest Investments	Interest held
Limited_(Note 2)_	by controlled
	corporation	4,907,205,000	50%
Autumn Ocean Limited_(Note 2)_	Interest held
	by controlled
	corporation	4,907,205,000	50%
Pan Chik_(Note 2)_	Interest held
	by controlled
	corporation	4,907,205,000	50%
Liu Ming Lai Lorna_(Note 2)_	Interest held by
	spouse	4,907,205,000	50%

Short Positions in the Consolidated Shares

			Percentage
		Number of	of the
		Consolidated	shareholding
Name of shareholder	Capacity	Shares interested	(approximately)
Astrum Capital Management	Other
Limited_(Note 1)_		4,460,000,000	45.44%
Major Harvest Investments	Interest held
Limited	by controlled
	corporation	4,460,000,000	45.44%
Autumn Ocean Limited	Interest held
	by controlled
	corporation	4,460,000,000	45.44%
Pan Chik	Interest held
	by controlled
	corporation	4,460,000,000	45.44%
Liu Ming Lai Lorna	Interest held by
	spouse	4,460,000,000	45.44%

— III-3 —

GENERAL INFORMATION

APPENDIX III

Note:

• (1) Astrum Capital Management Limited entered into the Underwriting Agreement with the Company, pursuant to which Astrum Capital Management Limited agreed to underwrite 4,907,205,000 Underwritten Shares. As at the Latest Practicable Date, Astrum Capital Management Limited has sub-underwritten/placed 4,460,000,000 Underwritten Shares to various sub-underwriter/subscribers.

• (2) Astrum Capital Management Limited is wholly owned by Major Harvest Investments Limited, which in turn is 80% owned by Autumn Ocean Limited. Autumn Ocean Limited is wholly owned by Mr. Pan Chik. Ms. Liu Ming Lai Lorna is the spouse of Mr. Pan Chik.

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

4. DIRECTORS’ 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 contract expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).

5. DIRECTORS’ INTERESTS IN ASSETS AND CONTRACTS OF THE COMPANY

As at the Latest Practicable Date, none of the Directors has or had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to member of the Group since 31 March 2015, being the date to which the latest published audited accounts of the Group were made up.

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

— III-4 —

GENERAL INFORMATION

APPENDIX III

6. CORPORATE INFORMATION

Board of Directors

Executive Directors Ms. SUN Wei Ms. SHEN Lihong

Independent non-executive Directors Mr. LIU Kwong Sang Ms. WANG Miaojun Ms. CHEUNG Lai Chun

Audit Committee Mr. LIU Kwong Sang (Chairman) Ms. WANG Miaojun Ms. CHEUNG Lai Chun Remuneration Committee Ms. SUN Wei Mr. LIU Kwong Sang (Chairman) Ms. WANG Miaojun Ms. CHEUNG Lai Chun Nomination Committee Ms. SUN Wei Mr. LIU Kwong Sang Ms. WANG Miaojun (Chairman) Ms. CHEUNG Lai Chun

Registered office

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

Head office and principle place Room 901 of business in Hong Kong Silver Fortune Plaza 1 Wellington Street Central Hong Kong Company secretary Mr. LI Wing Sum Steven

Company secretary

Authorised representatives

Ms. SUN Wei Mr. LI Wing Sum Steven

— III-5 —

GENERAL INFORMATION

APPENDIX III

	Auditor	Elite Partners CPA Limited
		Certified Public Accountant
		Suites 2B-4A, 20th Floor
		Tower 5, China Hong Kong City
		33 Canton Road, Tsim Sha Tsui
		Kowloon, Hong Kong
	Principal share registrar and	Royal Bank of Canada Trust Company (Cayman)
	transfer office	Limited
		4th Floor, Royal Bank House
		24 Shedden Road, George Town
		Grand Cayman KY1-1110
		Cayman Islands
	Hong Kong branch share	Tricor Investor Services Limited
	registrar and transfer office	Level 22, Hopewell Centre
		183 Queen’s Road East
		Hong Kong
	Principal bankers	Standard Chartered Bank (Hong Kong) Limited
		Standard Chartered Bank Building
		4-4A Des Voeux Road Central
		Hong Kong
7.	PARTIES INVOLVED IN THE	OPEN OFFER
	The Company	China National Culture Group Limited
		Room 901
		Silver Fortune Plaza
		1 Wellington Street
		Central
		Hong Kong
	Underwriter	Astrum Capital Management Limited
		11/F, 122 QRC
		122-126 Queen’s Road Central
		Central
		Hong Kong
	Financial adviser to the	Akron Corporate Finance Limited
	Company	17AB
		Trust Tower
		68 Johnston Road
		Wanchai
		Hong Kong

— III-6 —

GENERAL INFORMATION

APPENDIX III

Legal adviser to the Company As to Hong Kong Law Patrick Mak & Tse 16th Floor, Nan Fung Tower 173 Des Voeux Road Central Hong Kong Reporting accountants Elite Partners CPA Limited Certified Public Accountants Suites 2B-4A, 20th Floor Tower 5, China Hong Kong City 33 Canton Road, Tsim Sha Tsui Kowloon, Hong Kong Hong Kong branch share Tricor Investor Services Limited registrar and transfer office Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong

8. LITIGATIONS

On 26 June 2015, Wing Hong Construction Limited (in compulsory liquidation) (“ Wing Hong ”), a subsidiary of the Company and ceased to be a subsidiary of the Company since October 2010, initiated legal proceedings against the Company, as the fourth defendant and three other persons, being the first to third defendants, in respect of the alleged claim that the assets amounting to HK$50.6 million had been transferred from Wing Hong to the Company for no legitimate commercial purpose or justification. The legal proceedings were initiated by way of Wing Hong filing a writ of summons on 26 June 2015 in the registry of the High Court of the Hong Kong Special Administrative Region which has been allocated the case reference number HCA1423/2015 (the “ Writ of Summons ”). The Writ of Summons is indorsed with a claim by Wing Hong against the Company and the other three defendants. As disclosed in the Company’s announcement dated 30 June 2015, the directors of the Company consider that such alleged claim will not have any material impacts on the working capital and financial position of the Company. The Company will engage a firm of solicitors to advise and represent the Company in the Writ of Summons. Further announcement will be made, to update the shareholders and the prospective investors, pursuant to the requirements of the Listing Rules and the SFO, as required and where appropriate, on development of the Writ of Summons.

Save as disclosed above, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or claim of material importance and no litigation or claim of material importance is known to the Directors to be pending or threatened by or against any member of the Group.

— III-7 —

GENERAL INFORMATION

APPENDIX III

9. MATERIAL CONTRACTS

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

• (i) the sale and purchase agreement dated 27 March 2014 (as supplemented on 30 September 2014 and 31 December 2014) and entered into between FingerAd Media Company Limited as purchaser and i-Marker Global Corporation as vendor in relation to the proposed acquisition of i-Marker Culture & Media Investments Limited at a consideration of HK$2,000 million, which lapsed on 28 February 2015;

• (ii) the top-up placing and subscription agreement dated 24 July 2014 and entered into between the Company, Huge Leader Holdings Limited as vendor and BOCOM International Securities Limited as placing agent in relation to the top-up placing of 350,000,000 existing shares or up to the maximum of 709,000,000 existing shares at HK$0.30 per top-up placing share and top-up subscription of 350,000,000 new shares or up to the maximum of new 709,000,000 shares at HK$0.30 per topup subscription share; and

• (iii) the Underwriting Agreement.

10. PARTICULAR OF DIRECTORS

Executive Directors

Ms. Sun Wei (“Ms. Sun”) , aged 31, was appointed as an executive Director of the Company in February 2014. Ms. Sun holds a Bachelor of Arts in English Education degree from Shanghai International Studies University, PRC, a Master of Science degree in Finance from Clark University, United States of America and a Postgraduate Certificate in Professional Accounting from City University of Hong Kong. Ms. Sun has over four years of experience in accounting and administration.

Ms. Shen Lihong (“Ms. Shen”) , aged 30, was appointed as an executive Director of the Company in May 2014. Ms. Shen was graduated with a Bachelor degree in law from the University of Yangzhou in June 2007, and a Master degree in public relations from the East China University of Finance in July 2010. Ms. Shen has six years of experience in media, film industry, and investor relations.

Independent non-executive Directors

Mr. Liu Kwong Sang (“Mr. Liu”) , aged 53, has been an independent non-executive Director of the Company since September 2004. Mr. Liu has been practising as a certified public accountant in Hong Kong with more than 25 years of experience in accounting profession. Mr. Liu graduated from the Hong Kong Polytechnic University with a bachelor degree in Accountancy (with honours) and obtained the Master degree

— III-8 —

APPENDIX III

GENERAL INFORMATION

in Business Administration from the University of Linclon, the United Kingdom. He is a fellow member of the Institute of Chartered Accountants in England and Wales, a fellow member of the Association of Chartered Certified Accountants, a fellow member of the Institute of Financial Accountants, the United Kingdom and a fellow member of the Institute of Public Accountants (formerly known as “National Institute of Accountants”), Australia. Mr. Liu is also a fellow member of the Hong Kong Institute of Certified Public Accountants, a fellow member of the Taxation Institute of Hong Kong, a Certified Tax Adviser and a fellow member of the Society of Registered Financial Planners. Mr. Liu acts as independent non-executive directors of Polytec Asset Holdings Limited, securities which is listed on the main board of the Stock Exchange, and of abc Multiactive Limited and of Evershie Gruop Holdings Limited (formerly known as “TLT Lottotainment Group Limited”) whose securities are listed on the GEM board of the Stock Exchange, and of Pacific CMA, Inc. whose securities were previously listed on the American Stock Exchange. He was an independent non-executive director of Dragonite International Limited (formerly known as “Ruyan Group (Holdings) Limited”), a company listed on the main board of the Stock Exchange, for the period from April 2010 to September 2014.

Ms. Wang Miaojun (“Ms. Wang”) , aged 34, was appointed as an independent nonexecutive Director of the Company in February 2014. Ms. Wang holds a bachelor degree in Electronics and Information Engineering from Shenzhen University. Ms. Wang has over 10 years of experience in IT and media industry. Ms. Wang is currently a general manager of the online media department and a director in an online media company. Ms. Wang had extensive experience in operation and management and had held management roles in electronics, IT and media companies and had an established network of relationship within IT industry in the PRC.

Ms. Cheung Lai Chun (“Ms. Cheung”) , aged 58, was appointed as an independent nonexecutive Director of the Company in April 2015. Ms. Cheung was graduated from 福 州大學 (Fuzhou University) with a bachelor’s degree in 化學化工系 (Chemistry and Chemical Engineering) in February 1980. From 1984 to 1991, she worked for 經濟技 術協作單位 (the Economic and Technological Corporate Unit) of the Fujian Provincial Government and was responsible for the corporate operations management. Ms. Cheung further recognized as 經濟師 (Economist) by 福建省人事局 (Fujian Provincial Personnel Department*) in June 1990.

• For identification purposes only

11. MISCELLANEOUS

• (i) The company secretary of the Company is Mr. Li Wing Sum Steven. Mr. Li is fellow member respectively of the Association of Chartered Certified Accountants, the Hong Kong Institute of Certified Public Accountants and the Taxation Institute of Hong Kong and a member of the Hong Kong Institute of Directors.

• (ii) The business address of all Directors and authorized representative of the Company is Room 901, Silver Fortune Plaza, 1 Wellington Street, Central, Hong Kong.

— III-9 —

GENERAL INFORMATION

APPENDIX III

• (iii) The registered office of the Company is located at Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The head office and principal place of business in Hong Kong is located at Room 901, Silver Fortune Plaza, 1 Wellington Street, Central, Hong Kong. The principal share registrar and transfer office of the Company is at Royal Bank of Canada Trust Company (Cayman) Limited, 4th Floor, Royal Bank House, 24 Shedden Road, George Town, Grand Cayman KY1-1110, Cayman Islands.

• (iv) The Hong Kong branch share registrar and transfer office of the Company are Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (v) As at the Latest Practicable Date, there was no restriction affecting the remittance of profit or repatriation of capital of the Company into Hong Kong from outside Hong Kong.

• (vi) The English text of this Circular shall prevail over the Chinese text.

12. EXPERTS AND CONSENTS

The following are the qualification of the experts who have given opinions or advice contained in this Circular:

Name	Qualification
Elite Partners CPA Limited	Certified Public Accountants
(“Elite Partners”)
Opus Capital Limited	a corporation licensed under the SFO to conduct
(“Opus Capital”)	type 1 (dealing in securities) and type 6 (advising
	on corporate finance) regulated activities under
	the SFO

Each of Elite Partners and Opus Capital has given and not withdrawn its written consent to the issue of this Circular with the inclusion of its report and references to its name in the form and context in which it appear.

Elite Partners and Opus Capital do not have any beneficial interest in the share capital in any company in the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any company in the Group.

Elite Partners and Opus Capital do not have or had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2015, being the date to which the latest published audited accounts of the Group were made up.

— III-10 —

GENERAL INFORMATION

APPENDIX III

13. EXPENSES

The expenses in connection with the Open Offer, including financial advisory fees, underwriting commission, printing, registration, translation, legal and accountancy charges and other related expenses, are estimated to amount to approximately HK$11.1 million and are payable by the Company.

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company at Room 901, Silver Fortune Plaza, 1 Wellington Street, Central, Hong Kong during normal business hours on any weekday other than public holidays from the date of this Circular, up to and including the date of the EGM:

• (i) the memorandum and articles of association of the Company;

• (ii) the annual reports of the Company for each of the two financial years ended 31 March 2013 and 2014 and the result announcement of the Company for the year ended 31 March 2015;

• (iii) the interim report of the Company for six months ended 30 September 2014;

• (iv) the accountants’ report on the unaudited pro forma financial information of the Group, the text of which is set out in Appendix II to this Circular;

• (v) the letter of recommendation from the Independent Board Committee, the text of which is set out on page 36 of this Circular;

• (vi) the letter of advice from Independent Financial Adviser, the text of which is set out on pages 37 to 68 of this Circular;

• (vii) the letters of written consent of the experts referred to in the section headed “Experts and Consents” in this appendix;

• (viii) the material contracts referred to in the paragraph headed “Material Contracts” in this appendix; and

• (ix) the Circular.

— III-11 —

NOTICE OF EGM

CHINA NATIONAL CULTURE GROUP LIMITED 中國國家文化產業集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 745)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of China National Culture Group Limited (the “ Company ”) will be held at 9:00 a.m. on Thursday, 23 July 2015 at Jasmine Room, 3/F., Ramada Hong Kong Hotel, 308 Des Voeux Road West, Hong Kong for the purpose of considering and, if thought fit, passing with or without amendments the following resolutions which will be proposed as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

1. “ THAT

subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting approval of the listing of and permission to deal in, the Consolidated Shares (as defined below) with effect from the business day (as defined below) immediately following the date on which this resolution is passed:

• (a) every two (2) issued and unissued ordinary shares of HK$0.01 each in the share capital of the Company be consolidated into one (1) share of HK$0.02 each (the “ Consolidated Share ”) in the share capital of the Company (the “ Share Consolidation ”);

• (b) all of the Consolidated Shares shall rank pari passu in all respects with each other and have the same rights and privileges as regards to dividend, capital, redemption, attendance at meetings, voting, etc. and be subject to the restrictions in respect of ordinary shares contained in the articles of association of the Company;

• (c) all fractional Consolidated Shares will be disregarded and not be issued to the holders of the existing ordinary shares of HK$0.01 each in the share capital of the Company but all fractional Consolidated Shares will be aggregated, sold and retained for the benefit of the Company, if possible and applicable; and

• (d) any one or more of the directors of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents, including under the seal of the Company, where applicable, as he/she/they may consider necessary, desirable or expedient to complete, implement and give effect to any and all of the foregoing arrangements for the Share Consolidation.

For the purpose of this resolution, “business day” means a day (excluding Saturday and other general holidays in Hong Kong 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 generally open for business.”

— EGM-1 —

NOTICE OF EGM

1. “ THAT

2. (a) subject to and conditional upon the Share Consolidation becoming effective, the authorised share capital of the Company be increased from HK$100,000,000 (divided into 5,000,000,000 Consolidated Share of HK$0.02 each) to HK$1,000,000,000 (divided into 50,000,000,000 Consolidated Shares of HK$0.02 each) by the creation of an additional 45,000,000,000 unissued Consolidated Shares of HK$0.02 each immediately following the Share Consolidation becoming effective (the “ Increase in the Authorised Share Capital ”); and

3. (b) any one or more of the directors of the Company be and is/are hereby authorised to do all such acts and things and execute all such documents, including under the seal of the Company, where applicable, as he/she/they may consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of the Increase in the Authorised Share Capital.”

4. “ THAT

conditional upon fulfilment or waiver (where applicable) of the conditions of the Underwriting Agreement (as defined below):

• (a) the allotment and issue of 4,907,205,000 Consolidated Shares in the share capital of the Company (the “ Offer Shares ”) by way of open offer (the “ Open Offer ”) at a subscription price of HK$0.10 per Offer Share on the basis of one (1) Offer Share for every Consolidated Share to the qualifying holders of the Shares (the “ Qualifying Shareholders ”) of the Company whose names appear on the register of members of the Company on Tuesday, 4 August 2015 (or such other date as the Underwriter (as defined below) may agree with the Company) (the “ Record Date ”) other than those shareholders of the Company whose names appear on the register of members of the Company on the Record Date and whose addresses as shown on such register are outside Hong Kong whom the directors of the Company, based on legal advice provided by the Company’s legal advisers, consider it necessary or expedient not to offer the Open Offer to such shareholders on account either of legal restrictions under the laws of the relevant places or the requirements of the relevant regulatory body or stock exchange in those places (the “ Non-Qualifying Shareholders ”) as described in further details in the Company’s circular dated 7 July 2015 and on and subject to such terms and conditions as may be determined by the directors of the company and otherwise pursuant to and subject to the fulfilment of the conditions set out in the underwriting agreement (the “ Underwriting Agreement ” including all supplement agreement(s) relating thereto, if any) (a copy of which has been produced to this meeting marked “ A ” and signed by the chairman of this meeting for the purpose of identification) dated 8 June 2015 and made between the Company and Astrum Capital Management Limited as underwriter (the “ Underwriter ”), and the transactions contemplated thereunder, be and are hereby approved;

— EGM-2 —

NOTICE OF EGM

• (b) any one or more of the directors of the Company be and is/are hereby authorised to allot and issue the Offer Shares pursuant to or in connection with the Open Offer notwithstanding that the same may be offered, allotted or issued otherwise than pro rata to the Qualifying Shareholders and, in particular, the directors of the Company may make such exclusions or other arrangement in relation to the NonQualifying Shareholders as he/she/they may deem necessary or expedient having regard to any restrictions or obligations under the laws of, or the requirement of any recognised regulatory body or any stock exchange in, any territory outside Hong Kong;

• (c) the entering into the Underwriting Agreement by the Company be and is hereby approved, confirmed and ratified and the performance of the transactions contemplated thereunder by the Company (including but not limited to the arrangements for taking up of the underwritten Offer Shares, if any, by the Underwriter) be and are hereby approved; and

• (d) any one or more of the Directors be and is/are hereby authorised to sign and execute such documents and do all such acts and things as he/she/they may consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of or giving effect to the Open Offer, the Underwriting Agreement and the transactions contemplated thereunder.”

On behalf of the Board CHINA NATIONAL CULTURE GROUP LIMITED SUN Wei Director

Hong Kong, 7 July 2015

Registered Office:

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

Head office and principal place of business in Hong Kong:

Room 901 Silver Fortune Plaza 1 Wellington Street Central Hong Kong

— EGM-3 —

NOTICE OF EGM

Notes:

1. A form of proxy to be used for the extraordinary general meeting is enclosed with the circular of the Company despatched to the shareholder of the Company on 7 July 2015.

2. Any shareholder of the Company entitled to attend and vote at the extraordinary general meeting of the Company shall be entitled to appoint another person (who must be an individual) as his/her proxy to attend and vote instead of him/her and a proxy so appointed shall have the same right as the shareholder to speak at the extraordinary general meeting. On a poll votes may be given either personally or by proxy. A proxy need not be a shareholder of the Company. A shareholder may appoint any number of proxies to attend in his/her stead at any one general meeting (or at any one class meeting).

3. The form of proxy shall be in writing under the hand of the appointor or of his attorney authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to sign the same.

4. In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, shall be delivered at the Hong Kong branch registrar of the Company, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for the extraordinary general meeting at which the person named in the form of proxy proposes to vote. Delivery of any form of proxy shall not preclude a shareholder from attending and voting in person at the extraordinary general meeting or poll concerned and, in such event, the form of proxy shall be deemed to be revoked.

5. Where there are joint registered holders of any share, any one of such persons may vote at the extraordinary general meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at the extraordinary general meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register in respect of the relevant joint holding.

As at the date of this notice, the Board comprises Ms. SUN Wei and Ms. SHEN Lihong as executive Directors, and Mr. LIU Kwong Sang, Ms. WANG Miaojun and Ms. CHEUNG Lai Chun as independent non-executive Directors.

— EGM-4 —