Kingwisoft Technology Group Company Limited - M&A Activity 2016

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Asian Capital Holdings Limited, you should at once hand this Composite Document and the accompanying Forms of Acceptance to the purchaser(s) or transferee(s) or to the bank or licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s). This Composite Document should be read in conjunction with the accompanying Forms of Acceptance, the contents of which form part of the terms of the Offers contained herein.

The Stock Exchange of Hong Kong Limited and Hong Kong Exchanges and Clearing Limited take no responsibility for the contents of this Composite Document and the Forms of Acceptance, make no representation as to their 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 Composite Document and the Forms of Acceptance.

Jinhui Capital Company Limited (Incorporated in the British Virgin Islands with limited liability)

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(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8295)

COMPOSITE OFFER AND RESPONSE DOCUMENT IN RELATION TO MANDATORY UNCONDITIONAL CASH OFFERS BY CCB INTERNATIONAL CAPITAL LIMITED FOR AND ON BEHALF OF JINHUI CAPITAL COMPANY LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY JINHUI CAPITAL COMPANY LIMITED AND PARTIES ACTING IN CONCERT WITH IT) AND CANCEL ALL OUTSTANDING OPTIONS OF ASIAN CAPITAL HOLDINGS LIMITED

Financial adviser to the Offeror

Financial adviser to the Company

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

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” in this Composite Document.

A letter from CCB International containing, among other things, details of the terms of the Offers is set out on pages 11 to 26 of this Composite Document. A letter from the Board is set out on pages 27 to 34 of this Composite Document.

A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders and the Optionholders in relation to the Offers is set out on pages 35 to 36 of this Composite Document.

A letter from the Independent Financial Adviser containing its advice on the Offers to the Independent Board Committee, the Independent Shareholders and the Optionholders is set out on pages 37 to 60 of this Composite Document.

The procedures for acceptance and settlement of the Offers and other related information are set out in Appendix I to this Composite Document and in the accompanying Forms of Acceptance. Acceptance of the Offers should be received by the Registrar (in relation to the Share Offer) or the company secretary (in relation to the Option Offer) no later than 4:00 p.m. on 31 March 2016 or such later time and/or date as the Offeror may determine and announce, in accordance with the requirements under the Takeovers Code.

Persons including, without limitation, custodians, nominees and trustees, who would, or otherwise intend to, forward this Composite Document and/or the Forms of Acceptance to any jurisdiction outside Hong Kong, should read the details in this regard which are contained in the paragraph headed “Important Note to the Shareholders and the Optionholders outside Hong Kong” in the “Letter from CCB International” in this Composite Document before taking any action. It is the responsibility of each Overseas Holder wishing to accept the Offers to satisfy himself, herself or itself as to the full observance of the laws and regulations of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents and any registration or filing which may be required and the compliance with all necessary formalities, regulatory and/or legal requirements. Overseas Holders are advised to seek professional advice on deciding whether or not to accept the Offers.

The Composite Document will remain on the websites of the Stock Exchange at http://www.hkexnews.hk and the Company at http://www.asiancapital.com.hk as long as the Offers remain open.

10 March 2016

EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM CCB INTERNATIONAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . .	35
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . .	37
APPENDIX I FURTHER TERMS OF THE OFFERS. . . . . . . . . . . . . . . . . . . .	61
APPENDIX II FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . .	71
APPENDIX III GENERAL INFORMATION OF THE OFFEROR. . . . . . . . . . .	123
APPENDIX IV GENERAL INFORMATION OF THE GROUP . . . . . . . . . . . . .	128

– i –

EXPECTED TIMETABLE

The timetable set out below is indicative only and may be subject to change. Further announcement(s) will be made in the event of any changes to the timetable as and when appropriate.

2016 Despatch date of this Composite Document and the Forms of Acceptance and commencement date of the Offers (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . 10 March Latest time and date for acceptance of the Offers (Notes 2 and 4) . . . . . . . . . . . . .31 March Closing Date (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 March Announcement of the results of the Offers to be posted on the Stock Exchange’s website (Note 2) . . . . . . . . . . . . . . . . . . . . . . . .31 March Latest date of posting of remittances for the amounts due in respect of valid acceptances received under the Offers (Notes 3 and 4) . . . . . . . . . . . . . . . . .12 April

Notes:

The Offers, which are unconditional, are made on the date of posting of this Composite Document, and are capable of acceptance on and from that date until the Closing Date. Acceptances of the Offers shall be irrevocable and shall not be capable of being withdrawn, except in the circumstances set out in the section headed “Right of Withdrawal” in Appendix I to this Composite Document.
In accordance with the Takeovers Code, the Offers must initially be opened for acceptance for at least 21 days following the date on which this Composite Document is posted. The latest time for acceptance is at 4:00 p.m. on 31 March 2016 unless the Offeror revises or extends the Offers in accordance with the Takeovers Code. An announcement will be published on the website of the Stock Exchange by 7:00 p.m. on 31 March 2016 stating whether the Offers have been extended, revised or expired. In the event that the Offeror decides to extend the Offers and the announcement does not specify the next closing date, at least 14 days’ notice by way of an announcement will be given before the Offers are closed to those Independent Shareholders and the Optionholders who have not accepted the Offers.
Remittances in respect of the cash consideration payable for the Offer Shares or the Options tendered under the Offers will be made as soon as possible, but in any event within seven Business Days following the date of receipt of a duly completed acceptance in accordance with the Takeovers Code.
If there is a tropical cyclone warning signal number 8 or above, or a black rainstorm warning:
(a) in force in Hong Kong at any local time before 12:00 noon but no longer in force after 12:00 noon on the latest date for acceptance of the Offers and the latest date for posting of remittances for the amounts due under the Offers in respect of valid acceptances, the latest time for acceptance of the Offers and the posting of remittances will remain at 4:00 p.m. on the same Business Day; or
(b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the latest date for acceptance of the Offers and the latest date for posting of remittances for the amounts due under the Offers in respect of valid acceptances, the latest time for acceptance of the Offers and the posting of remittances will be rescheduled to 4:00 p.m. on the following Business Day.

All times and dates in this Composite Document and the Forms of Acceptance shall refer to Hong Kong times and dates.

– ii –

DEFINITIONS

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

“acting in concert”

has the meaning ascribed to it under the Takeovers Code

“Allied Target”

Allied Target Holdings Limited, a company incorporated in Hong Kong which is an investment holding company owned as to 70% by Mr. Yeung and 30% by Phillip Capital

“Asian Capital (Corporate Finance)”

Asian Capital (Corporate Finance) Limited, a licensed corporation under the SFO to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities and a wholly-owned subsidiary of the Company

“associate(s)”
has the meaning ascribed to it in the GEM Listing Rules
“Board”

the board of Directors

“Business Day”

a day on which the Stock Exchange is open for the transaction of business

“BVI”

the British Virgin Islands

“CCASS”

the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

“CCB International”

CCB International Capital Limited, a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO, the financial adviser of the Offeror

“Circular”

the circular dated 28 January 2016 issued by the Company in relation to, amongst other things, the Subscription Agreement and the New Shares Placing Agreement

– 1 –

DEFINITIONS

“Closing Date”
“Company”
“Completion”
“Completion Announcement”
“Composite Document”
“connected person(s)”
“Director(s)”
“EGM”
31 March 2016, the closing date of the Offers, which is 21 days after the date on which this Composite Document is posted, or if the Offers are extended, any subsequent closing date of the Offers as extended and announced by the Offeror in accordance with the Takeovers Code

Asian Capital Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on GEM (Stock code: 8295)

the Subscription Completion, the New Shares Placing Completion, the Share Purchase Completion and the Master Link Placing Completion
the joint announcement dated 24 February 2016 issued by the Company and the Offeror in respect of, among other things, the Completion
this composite offer and response document jointly issued by the Offeror and the Company, which sets out among others, details of the Offers in accordance with the Takeovers Code
has the meaning ascribed thereto in the GEM Listing Rules
the director(s) of the Company

the extraordinary general meeting of the Company convened on 18 February 2016 approving, among others, the Subscription Agreement, the New Shares Placing Agreement and the transactions contemplated thereunder, including the allotment and issue of the Subscription Shares and the New Placing Shares under the Specific Mandate

– 2 –

DEFINITIONS

“Encumbrance”

means

(a) any mortgage, charge, pledge, lien, hypothecation, encumbrance or other security arrangement of any kind;
(b) any option, equity, claim, adverse interest or other third party right of any kind;
(c) any arrangement by which any right is subordinated to any right of such third party; or
(d) any contractual right of set-off,

including any agreement or commitment to create or procure to create, or to permit or suffer to be created or subsisted any of the above

“Executive”

the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

“First Announcement”

the announcement dated 10 August 2015 made by the Company in accordance with, among others, Rule 3.7 of the Takeovers Code
“Form(s) of Acceptance”

the WHITE Form of Acceptance and/or the YELLOW Form of Acceptance (as the context may require) in respect of the Offers which accompany(ies) this Composite Document

“GEM”

the Growth Enterprise Market of the Stock Exchange

“GEM Listing Rules”
the Rules Governing the Listing of Securities on GEM
“Group”
the Company and its subsidiaries from time to time
“HK$”
Hong Kong dollar(s), the lawful currency of Hong Kong

“HKSCC”

Hong Kong Securities Clearing Company Limited

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

– 3 –

DEFINITIONS

“Independent Board Committee”
“Independent Financial Adviser” or “Investec Capital”
“Independent Shareholders”
“Independent Third Party(ies)”
“IPO”
“Jinhui” or “Offeror”
“Joint Announcement”
“Kang Bang”
the independent board committee of the Company comprising the non-executive Director, namely Mr. Xin Luo Lin, and all the independent non-executive Directors, namely Mr. Chan Kai Nang, Mr. Tsui Pui Yan and Mr. Yi Xiqun, which has been established to advise the Independent Shareholders and the Optionholders in respect of the Offers pursuant to the Takeovers Code
Investec Capital Asia Limited, a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, the independent financial adviser appointed by the Company to advise the Independent Board Committee, the Independent Shareholders and the Optionholders on the Offers
Shareholders other than the Offeror and parties acting in concert with it
third party(ies) which is/are independent of the Company and its connected person(s)
initial public offering and listing of shares on the Stock Exchange
Jinhui Capital Company Limited, a company incorporated in the BVI on 13 July 2015 with limited liability and is wholly-owned by Zhongzhi Capital
the joint announcement dated 5 January 2016 issued by the Company and the Offeror in respect of, among other things, the Subscription Agreement, the New Shares Placing Agreement, the Share Purchase Agreement, the Master Link Placing Agreement and the Offers

Kang Bang Qi Hui (HK) Company Limited, a company incorporated in Hong Kong on 10 September 2015 with limited liability and is wholly-owned by Zhongzhi Capital

– 4 –

DEFINITIONS

“Last Trading Day”

28 October 2015, being the last trading day of the Shares immediately prior to the suspension of trading in the Shares on the Stock Exchange pending the release of the Joint Announcement

“Latest Practicable Date”
7 March 2016, being the latest practicable date prior to the printing of this Composite Document for ascertaining certain information contained herein
“Master Link”

Master Link Assets Limited, a company incorporated in the BVI with limited liability whose entire issued share capital is beneficially owned by Mr. Yeung

“Master Link Placee(s)”
any professional, institutional or other investor(s) whom the Master Link Placing Agent has procured to purchase and/or the Master Link Placing Agent itself and/or its nominee(s) in the event that the Master Link Placing Agent is required to underwrite any of the Master Link Placing Shares pursuant to its obligations under the Master Link Placing Agreement who (including its ultimate beneficial owners) are regarded as public (as defined under the GEM Listing Rules) and are Independent Third Parties and not acting in concert with Jinhui and/or Kang Bang and their respective associates and/or parties acting in concert with any of them
“Master Link Placing”
the placing of the Master Link Placing Shares pursuant to the terms of the Master Link Placing Agreement
“Master Link Placing Agent”
Freeman Securities Limited, a corporation licensed to carry on type 1 (dealing in securities) regulated activity under the SFO
“Master Link Placing Agreement” the placing agreement dated 5 January 2016 entered into between Master Link and the Master Link Placing Agent in relation to the Master Link Placing
“Master Link Placing Completion”
completion of the Master Link Placing pursuant to the Master Link Placing Agreement
“Master Link Placing Price”
the placing price of HK$0.3876 per Master Link Placing Share

– 5 –

DEFINITIONS

“Master Link Placing Share(s)” an aggregate of 48,000,000 Shares previously owned by Master Link and placed pursuant to the terms of the Master Link Placing Agreement
“Mr. Yeung”
Mr. Yeung Kai Cheung Patrick, an Executive Director and the Executive Chairman of the Company
“New Placing Share(s)” an aggregate of 400,000,000 new Shares placed pursuant to the terms of the New Shares Placing Agreement
“New Shares Placee(s)”
any professional, institutional or other investor(s) whom the New Shares Placing Agent has procured to subscribe for and/or the New Shares Placing Agent itself and/or its nominee(s) in the event that the New Shares Placing Agent is required to underwrite any of the New Placing Shares pursuant to its obligations under the New Shares Placing Agreement who (including its ultimate beneficial owners) are regarded as public (as defined under the GEM Listing Rules) and are Independent Third Parties and not acting in concert with Jinhui and/or Kang Bang and their respective associates and/or parties acting in concert with any of them
“New Shares Placing” the placing of the New Placing Shares pursuant to the terms of the New Shares Placing Agreement
“New Shares Placing Agent”
Haitong International Securities Company Limited, a corporation licensed to carry on type 1 (dealing in securities), type 3 (leveraged foreign exchange trading) and type 4 (advising on securities) regulated activity under the SFO
“New Shares Placing Agreement” the placing agreement dated 5 January 2016 entered into between the Company and the New Shares Placing Agent in relation to the New Shares Placing
“New Shares Placing Completion”
completion of the New Shares Placing pursuant to the New Shares Placing Agreement
“New Shares Placing Price”
the placing price of HK$0.3876 per New Placing Share

– 6 –

DEFINITIONS

“Non-acceptance Options” the Options held by Mr. Yeung, details of which are set out in the paragraphs headed “Undertakings and nonacceptance of the Offers – Non-acceptance Options” in the “Letter from CCB International”
“Non-acceptance Shares” the Shares held by Master Link, the New Shares Placees and the Master Link Placees and to be held by Mr. Yeung upon exercise of the Options held by him, details of which are set out in the paragraphs headed “Undertakings and non-acceptance of the Offers – Non-acceptance Shares” in the “Letter from CCB International”
“Offer Period” has the meaning ascribed to it in the Takeovers Code, being the period commencing from 10 August 2015 and ending on the Closing Date
“Offer Share(s)” all the Share(s) in issue, other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it
“Offers” the Share Offer and the Option Offer
“Option(s)” all outstanding options granted by the Company pursuant to the Pre-IPO Share Option Scheme at an exercise price of HK$0.20 per Share
“Option Offer” the unconditional mandatory cash offer being made by CCB International on behalf of the Offeror to cancel the Options in accordance with the Takeovers Code
“Option Offer Price” the offer price of HK$0.19 per Option under the Option Offer
“Optionholder(s)” holder(s) of the Option(s)
“Overseas Holder(s)” the Shareholder(s) and/or Optionholder(s) whose address(es) as shown on the register of members and the Optionholders of the Company, is (are) outside Hong Kong
“Phillip Capital” Phillip Capital (HK) Limited, a company incorporated in Hong Kong, which is an investment holding company owned as to 85% by Mr. Lim Hua Min

– 7 –

DEFINITIONS

“PRC” or “China” the People’s Republic of China excluding, for the purpose of this Composite Document, Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan
“Pre-IPO Share Option Scheme” the pre-IPO share option scheme adopted by the Company on 7 June 2010
“Purchasers” or “Subscribers”
Jinhui and Kang Bang
“Registrar”
Tricor Investor Services Limited, the Hong Kong branch share registrar and transfer office of the Company
“Relevant Period” the period commencing on the date falling six months preceding 10 August 2015, being the date of commencement of the Offer Period, and ending on the Latest Practicable Date
“Sale Price” the sale price of approximately HK$0.3876 per Sale Share
“Sale Share(s)” 648,345,791 Shares, representing approximately 18.43% of the issued share capital of the Company as at the Latest Practicable Date, acquired by the Purchasers from the Vendors pursuant to the terms and conditions of the Share Purchase Agreement
“SFC”
the Securities and Futures Commission of Hong Kong
“SFO”
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Share(s)”
ordinary share(s) of HK$0.01 each in the share capital of the Company
“Share Offer”
the unconditional mandatory cash offer being made by CCB International on behalf of the Offeror to acquire the Offer Shares in accordance with the Takeovers Code
“Share Offer Price”
the offer price of HK$0.39 per Offer Share under the Share Offer
“Share Purchase” the purchase of the Sale Shares by the Purchasers

– 8 –

DEFINITIONS

“Share Purchase Agreement”
the agreement dated 28 October 2015 entered into among the Vendors, the Purchasers, Mr. Yeung and Zhongzhi Capital in respect of the Share Purchase (as amended and supplemented by the Supplemental Share Purchase Agreement)
“Share Purchase Completion” completion of the Share Purchase pursuant to the Share Purchase Agreement
“Shareholder(s)” holder(s) of the Share(s)
“Specific Mandate” the specific mandate granted to the Directors at the EGM to issue the Subscription Shares and the New Placing Shares
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscription”
the subscription of the Subscription Shares by the Subscribers
“Subscription Agreement” the agreement dated 28 October 2015 entered into among the Company and the Subscribers in respect of the Subscription (as amended and supplemented by the Supplemental Subscription Agreement)
“Subscription Completion”
completion of the Subscription pursuant to the Subscription Agreement
“Subscription Price”
the subscription price of approximately HK$0.298 per Subscription Share
“Subscription Share(s)”
an aggregate of 1,630,756,836 new Shares subscribed by the Subscribers and issued by the Company
“Supplemental Share Purchase Agreement”
the supplemental agreement to the Share Purchase Agreement entered into among the Vendors, the Purchasers, Mr. Yeung and Zhongzhi Capital in respect of the Share Purchase on 5 January 2016
“Supplemental Subscription Agreement”
the supplemental agreement to the Subscription Agreement entered into among the Company and the Subscribers in respect of the Subscription on 5 January 2016

– 9 –

DEFINITIONS

“Takeovers Code”

the Code on Takeovers and Mergers of Hong Kong

“Vendor(s)”
Master Link, Allied Target and Phillip Capital or any one of them
“ WHITE Form of Acceptance” the WHITE form of acceptance and transfer of Shares in respect of the Share Offer
“ YELLOW Form of Acceptance” the YELLOW form of acceptance and cancellation of Options in respect of the Option Offer
“Zhong Hai Sheng Rong” 中海晟融(北京)資本管理有限公司 (Zhong Hai Sheng Rong (Beijing) Capital Management Company Limited[*] ), a company incorporated in the PRC with limited liability and is wholly-owned by Mr. Xie Zhikun
“Zhongzhi Capital”
中植資本管理有限公司 (Zhongzhi Capital Group[] ), a company incorporated in the PRC with limited liability and is owned as to 95% by Zhong Hai Sheng Rong and as to 5% by 北京中海聚融投資管理有限公司 (Beijing Zhong Hai Ju Rong Investment Management Company Limited[] ), respectively
“%” per cent.
denotes an English translation of the Chinese name for identification purposes only. If there is any inconsistency between the Chinese name and the English translation, the Chinese version shall prevail;
All time and date references contained in this Composite Document refer to Hong Kong times and dates;
Certain amounts and percentage figures in this Composite Document have been subject to rounding adjustments;
The singular includes the plural and vice versa, unless the context otherwise requires;
References to any appendix, paragraph and any sub-paragraphs of them are references to the appendices to, and paragraphs of, this Composite Document and any sub-paragraphs of them respectively;
References to any statute or statutory provision include a statute or statutory provision which amends, consolidates or replaces the same whether before or after the date of this Composite Document; and
Reference to one gender is a reference to all or any genders.

– 10 –

LETTER FROM CCB INTERNATIONAL

10 March 2016

To the Independent Shareholders and the Optionholders

Dear Sirs,

MANDATORY UNCONDITIONAL CASH OFFERS BY CCB INTERNATIONAL CAPITAL LIMITED FOR AND ON BEHALF OF JINHUI CAPITAL COMPANY LIMITED TO ACQUIRE ALL THE ISSUED SHARES (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY JINHUI CAPITAL COMPANY LIMITED AND PARTIES ACTING IN CONCERT WITH IT) AND CANCEL ALL OUTSTANDING OPTIONS OF ASIAN CAPITAL HOLDINGS LIMITED

1. INTRODUCTION

Reference is made to the Joint Announcement, the Circular and the Completion Announcement.

On 28 October 2015 (after trading hours), the Company and the Subscribers entered into the Subscription Agreement (as amended and supplemented by the Supplemental Subscription Agreement), pursuant to which, the Company conditionally agreed to issue, and the Subscribers conditionally agreed to subscribe for a total of 1,630,756,836 Subscription Shares for an aggregate consideration of HK$485,965,537 in cash at the Subscription Price of approximately HK$0.298 per Subscription Share, of which Jinhui will subscribe for 1,304,605,469 Subscription Shares for a consideration of HK$388,772,430 and Kang Bang will subscribe for 326,151,367 Subscription Shares for a consideration of HK$97,193,107.

On 28 October 2015 (after trading hours), the Vendors, the Purchasers, Mr. Yeung and Zhongzhi Capital entered into the Share Purchase Agreement (as amended and supplemented by the Supplemental Share Purchase Agreement), pursuant to which, the Vendors conditionally agreed to sell and the Purchasers conditionally agreed to purchase, in aggregate, 648,345,791 Sale Shares, representing approximately 18.43% of the existing issued share capital of the Company as at the Latest Practicable Date. The total consideration for the Sale Shares is HK$251,298,829, equivalent to approximately HK$0.3876 per Sale Share.

– 11 –

LETTER FROM CCB INTERNATIONAL

On 5 January 2016, Master Link entered into the Master Link Placing Agreement with the Master Link Placing Agent, pursuant to which the Master Link Placing Agent agreed to act as placing agent for the purpose of procuring, as agent of Master Link, on a fully underwritten basis, Master Link Placees to purchase 48,000,000 Master Link Placing Shares at the Master Link Placing Price of HK$0.3876 per Master Link Placing Share.

Completion took place on 24 February 2016. Immediately after Completion and as at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Kang Bang) were interested in a total of 2,279,102,627 Shares, representing approximately 64.78% of all the Shares in issue. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror will be required to make the Share Offer to acquire all the Offer Shares. Pursuant to Rule 13.5 of the Takeovers Code, the Option Offer will also be made to cancel all the Options simultaneously with the Share Offer.

This letter sets out, among other things, the details of the Offers, information on the Offeror and the intention of the Offeror regarding the Group. The terms of the Offers and the procedures of acceptances are set out in this letter, Appendix I to this Composite Document and the Forms of Acceptance.

The Independent Shareholders and the Optionholders are strongly advised to carefully consider the information contained in the “Letter from the Board”, the “Letter from the Independent Board Committee” and the “Letter from the Independent Financial Adviser” as set out in this Composite Document before reaching a decision as to whether or not to accept the Offers.

2. THE OFFERS

The Share Offer

CCB International, on behalf of the Offeror and in compliance with the Takeovers Code, hereby makes the Share Offer for all the Offer Shares on the terms set out in this Composite Document in accordance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.39 in cash

The Offer Shares to be acquired under the Share Offer shall be fully paid and free from any liens, charges and Encumbrances and together with all rights and benefits attached and accrued thereto as at the date on which the Share Offer is made, including the rights to receive in full all dividends and distributions that may be declared, made or paid by the Company on or after the date on which the Share Offer is made.

The Share Offer will extend to all Shares in issue on the date on which the Share Offer is made and to any further Shares which are unconditionally allotted or issued after the date on which the Share Offer is made and before the Closing Date, including any Shares which are unconditionally allotted or issued on the exercise of Options, other than those Shares owned by the Offeror and persons acting in concert with it and the Non-acceptance Shares.

– 12 –

LETTER FROM CCB INTERNATIONAL

Comparison of value

The Share Offer Price of HK$0.39 per Offer Share represents:

(a) a premium of approximately 18.18% over the closing price of HK$0.33 per Share as quoted on the Stock Exchange as at 7 August 2015, being the last Business Day prior to the commencement of the Offer Period;
(b) a premium of approximately 2.63% over the closing price of HK$0.38 per Share as quoted on the Stock Exchange on the Last Trading Day;
(c) a premium of approximately 5.41% over the average closing price of HK$0.37 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;
(d) a premium of approximately 5.26% over the average closing price of HK$0.3705 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day;
(e) a premium of approximately 6.56% over the average closing price of HK$0.366 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day;
(f) a discount of approximately 44.29% to the closing price of HK$0.700 per Share as quoted on the Stock Exchange as at the Latest Practicable Date; and
(g) a premium of approximately 952.07% over the audited net asset value of the Company as at 31 December 2014 of approximately HK$0.0371 per Share based on 3,518,396,836 Shares in issue as at the Latest Practicable Date and a premium of approximately 893.17% over the unaudited net asset value of the Company as at 31 December 2015 of approximately HK$0.0393 per Share based on 3,518,396,836 Shares in issue as at the Latest Practicable Date.

Value of the Share Offer

As at the Latest Practicable Date, there were 3,518,396,836 Shares in issue, and the Offeror and parties acting in concert with it in aggregate owned 2,279,102,627 Shares. Assuming no Options have been exercised before the close of the Offers and excluding 774,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in this letter below), 465,024,209 Shares are subject to the Share Offer.

The Share Offer Price is HK$0.39 per Offer Share. On the aforesaid basis, the total consideration of the Share Offer would be approximately HK$181,359,442 based on the Share Offer Price.

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Highest and lowest Share prices

The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Relevant Period were HK$1.020 per Share on 25 January 2016 and HK$0.181 per Share on 4 March 2015 and 9 March 2015, respectively.

The Option Offer

CCB International, on behalf of the Offeror and in compliance with the Takeovers Code, hereby makes the Option Offer on the terms set out in this Composite Document in accordance with the Takeovers Code on the following basis:

For cancellation of each Option with

exercise price of HK$0.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.19 in cash

Value of the Option Offer

As at the Latest Practicable Date, there were 32,100,000 Options, which were granted by the Company on 10 June 2010 pursuant to the Pre-IPO Share Option Scheme and confer rights to the Optionholders to subscribe for the Shares at the exercise price of HK$0.20 per Share during the period between 10 June 2012 and 9 June 2020. As at the Latest Practicable Date, such Options were held as to (a) 10,000,000 Options by Mr. Yeung, an executive Director; (b) 10,000,000 Options by Mr. Chan Hok Leung, an executive Director; (c) 5,000,000 Options by Mr. Xin Luo Lin, a non-executive Director; and (d) 7,100,000 options by certain employees of the Group.

As detailed under the paragraph headed “Undertakings and non-acceptance of the Offers – Options” in this letter below, Mr. Yeung who held an aggregate of 10,000,000 Options has given an unconditional and irrevocable undertaking to the Purchasers that in respect of the 10,000,000 Options granted to him, he will not accept the Option Offer or otherwise make such Options available for acceptance under the Option Offer.

As the exercise price for the Options is below the Share Offer Price, all the Options are in-the-money. The Option Offer Price of HK$0.19 for each Option under the Option Offer represents the Share Offer Price of HK$0.39 per Share less the exercise price of the Options.

Assuming no Option is exercised prior to the close of the Offers and excluding the 10,000,000 Non-acceptance Options held by Mr. Yeung (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in this letter below), as at the Latest Practicable Date, a total of 22,100,000 Options are subject to the Option Offer and the total consideration of the Option Offer would be HK$4,199,000 based on the Option Offer Price.

Total value of the Offers

In the event that no Options have been exercised before the close of Offers and excluding 774,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in this letter below), and assuming full

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acceptance of the Share Offer, the cash consideration payable by the Offeror at the Share Offer Price of HK$0.39 per Offer Share will amount to approximately HK$181,359,442. On this basis, assuming full acceptance of the Option Offer (excluding the 10,000,000 Non-acceptance Options held by Mr. Yeung (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in this letter below)), the total cash consideration payable by the Offeror for the Option Offer will amount to HK$4,199,000. On this basis, the total cash consideration payable by the Offeror under the Offers will amount to approximately HK$185,558,442.

In the event that all the remaining 32,100,000 Options will be exercised in full, an aggregate of 32,100,000 new Shares would fall to be issued before the close of the Offers, representing approximately 0.90% of the enlarged issued share capital of the Company (as enlarged by the new Shares to be allotted and issued as a result of the exercise of Options). Excluding the 10,000,000 new Shares to be issued pursuant to the exercise of Options by Mr. Yeung who has undertaken not to accept the Share Offer, 22,100,000 Shares will be subject to the Share Offer. On this basis, taking into account the 2,279,102,627 Shares owned by the Offeror and the parties acting in concert with it (including Kang Bang) and excluding 784,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in this letter), 487,124,209 Offer Shares will be subject to the Share Offer and the total amount of cash required to effect the Share Offer will be no more than HK$189,978,442.

Financial resources available to the Offeror

The Offers will be funded by internal resources of the Offeror and the bank loan facilities granted to the Offeror by China Merchant Bank Offshore Centre and Banco Luso S.A. Luso International Banking Ltd, respectively. The Offeror does not intend that the payment of interest on, repayment of or security for any liability (contingent or otherwise) will depend to any significant extent on the business of the Group.

CCB International, the financial adviser to the Offeror in relation to the Offers, is satisfied that sufficient financial resources are available to the Offeror to satisfy full acceptances of the Offers.

Undertakings and non-acceptance of the Offers

Non-acceptance Options

Pursuant to the Share Purchase Agreement, Mr. Yeung has unconditionally and irrevocably undertaken to the Purchasers that in respect of the 10,000,000 Options granted to him, he will not accept the Option Offer or otherwise make such Options available for acceptance under the Option Offer. As such, an aggregate of 10,000,000 Non-acceptance Options shall not be subject to the Option Offer.

Non-acceptance Shares

Pursuant to the Share Purchase Agreement, Mr. Yeung has unconditionally and irrevocably undertaken to the Purchasers that if he exercises any of his Options, he will not (i) directly or indirectly, without the prior written consent of the Purchasers, sell, give, transfer,

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assign or dispose of or otherwise create any encumbrance on the new Shares to be issued pursuant to the exercise of such Options in any manner or otherwise make such new Shares available for acceptance under the Share Offer during the period commencing on the date of the Share Purchase Agreement and ending on the date on which the Offers close for acceptance; and (ii) in respect of any new Shares to be issued pursuant to the exercise of such Options, accept the Share Offer or otherwise make such new Shares available for acceptance under the Share Offer.

In addition, Master Link and Mr. Yeung have unconditionally and irrevocably undertaken that, save for the Master Link Placing, during the period commencing on the date of the Share Purchase Agreement and ending on, and including, the date on which the Offers close for acceptance, Master Link will not, and Mr. Yeung will procure Master Link not to, directly or indirectly, sell, give, transfer, assign or dispose of or otherwise create any encumbrance (save for in the ordinary course of maintaining a securities account in Hong Kong) on any of the remaining 326,270,000 Shares held by Master Link upon the Share Purchase Completion in any manner or otherwise make such remaining Shares available for acceptance under the Share Offer. Master Link and Mr. Yeung have also unconditionally and irrevocably undertaken to the Purchasers that save for the Master Link Placing, during the period commencing on the date of the Share Purchase Agreement and ending on, and including, the date that is twelve months after the date of Share Purchase Completion, Master Link will not, and Mr. Yeung will procure Master Link not to, directly or indirectly, without the prior written consent of the Purchasers, sell, give, transfer, assign or dispose of or otherwise create any encumbrance (save for in the ordinary course of maintaining a securities account in Hong Kong) on 50% or more of the 374,270,000 Shares held by Master Link upon the Share Purchase Completion in any manner.

On 5 January 2016, the Company and the New Shares Placing Agent entered into the New Shares Placing Agreement, pursuant to which the New Shares Placing Agent conditionally agreed to place 400,000,000 New Placing Shares, on a fully underwritten basis, to the New Shares Placees at the New Shares Placing Price of HK$0.3876 per New Placing Share. Pursuant to the New Shares Placing Agreement, the New Shares Placing Agent has also unconditionally and irrevocably undertaken to the Company that (a) during the period commencing on the date of the New Shares Placing Completion and ending on the date on which the Share Offer closes for acceptance, each of the New Shares Placees and/or the New Shares Placing Agent as underwriter (as the case may be) will not, directly or indirectly, sell, give, transfer, assign or dispose of or otherwise create any encumbrance (save for in the ordinary course of maintaining a securities account in Hong Kong) on the New Placing Shares in any manner or otherwise make the New Placing Shares available for acceptance under the Share Offer; and (b) in respect of the New Placing Shares, each of the New Shares Placees and/or the New Shares Placing Agent as underwriter (as the case may be) will not accept the Share Offer or otherwise make the New Placing Shares available for acceptance under the Share Offer.

In order to ensure that the Company will maintain sufficient public float as required under the GEM Listing Rules upon Completion, Master Link entered into the Master Link Placing Agreement with the Master Link Placing Agent on 5 January 2016, pursuant to which the Master Link Placing Agent agreed to act as placing agent for the purpose of procuring, as agent

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of Master Link, on a fully underwritten basis, Master Link Placees to purchase 48,000,000 Master Link Placing Shares at the Master Link Placing Price of HK$0.3876 per Master Link Placing Share on the terms and subject to the conditions of the Master Link Placing Agreement. Pursuant to the Master Link Placing Agreement, the Master Link Placing Agent has unconditionally and irrevocably undertaken to Master Link that (a) during the period commencing on the date of the Master Link Placing Completion and ending on the date on which Share Offer closes for acceptance, each of the Master Link Placees and/or the Master Link Placing Agent as underwriter (as the case may be) will not, directly or indirectly, sell, give, transfer, assign or dispose of or otherwise create any encumbrance (save for in the ordinary course of maintaining a securities account in Hong Kong) on the Master Link Placing Shares in any manner or otherwise make the Master Link Placing Shares available for acceptance under the Share Offer; and (b) in respect of the Master Link Placing Shares, each of the Master Link Placees and/or the Master Link Placing Agent as underwriter (as the case may be) will not accept the Share Offer or otherwise make the Master Link Placing Shares available for acceptance under the Share Offer.

On the basis for the aforementioned, assuming no Options have been exercised, an aggregate of 774,270,000 Non-acceptance Shares shall not be subject to the Share Offer. In the event that Mr. Yeung exercised the 10,000,000 Options in full, the 10,000,000 new Shares issued pursuant to the exercise of the Options will not be available for acceptance under the Share Offer and an aggregate of 784,270,000 Non-acceptance Shares shall not be subject to the Share Offer.

Payment

Payment in cash in respect of acceptances of the Offers will be made as soon as possible but in any event within seven Business Days following the date on which the duly completed acceptances of the Offers and the relevant documents of title of the Shares are received by the Offeror to render each such acceptance complete and valid in accordance with the Takeovers Code.

Effect of accepting the Offers

The Offers are unconditional in all respects and are not conditional upon acceptances being received in respect of a minimum number or any other conditions.

The Share Offer

By accepting the Share Offer, Independent Shareholders will sell their Shares free from liens, charges and Encumbrances and together with all rights attaching to them, and all dividends and distributions recommended, declared, made or paid on or after the date on which the Share Offer is made, being the date of this Composite Document. Acceptances of the Share Offer by any Independent Shareholder will be deemed to constitute a warranty by such person that all Shares sold by such person under the Share Offer are free from all liens, charges, options, claims, equities, adverse interests, third-party rights or Encumbrances whatsoever and

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together with all rights accruing or attaching thereto, including, without limitation, the right to receive dividends and distributions declared, made or paid, if any, on or after the date on which the Share Offer is made. Acceptances of the Share Offer shall be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

The Option Offer

By accepting the Option Offer, Optionholders are deemed to have warranted to the Offeror that the Options are free from all liens, claims, Encumbrances and all third party rights and the Options will be cancelled and renounced together with all rights attaching thereto on or after the date on which the Option Offer is made, being the date of this Composite Document. Acceptances of the Option Offer shall be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

Hong Kong stamp duty

In Hong Kong, seller’s ad valorem stamp duty arising in connection with acceptances of the Share Offer will be payable by relevant Independent Shareholders at a rate of 0.1% of the market value of the Offer Shares or consideration payable by the Offeror in respect of the relevant acceptances of the Share Offer, whichever is higher, will be deducted from the cash amount payable by the Offeror to the relevant Independent Shareholder accepting the Share Offer (where the amount of stamp duty is a fraction of a dollar, the stamp duty will be rounded up to the nearest dollar). The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of relevant Independent Shareholders accepting the Share Offer and will pay the buyer’s ad valorem stamp duty in connection with the acceptance of the Share Offer and the transfer of the Shares.

No stamp duty is payable in connection with the acceptance of the Option Offer.

Further terms of the Offers

Further terms of the Offers including, among other things, procedures for acceptance and settlement, the acceptance period and taxation matters are set out in Appendix I to this Composite Document and in the Form(s) of Acceptance.

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3. SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non-acceptance Shares and (b) none of the Options is exercised after the Latest Practicable Date and all the Options are cancelled); and (iii) immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non-acceptance Shares and (b) all the Options are exercised after the Latest Practicable Date):

(i) As at the Latest Practicable Date Number of Shares held Approximate percentage of Shares in issue (%) 1,823,282,102 51.82 455,820,525 12.96 2,279,102,627 64.78 326,270,000 9.27 – – 7,300,000 0.21 5,000,000 0.14 6,000,000 0.17 1,000,000 0.03 19,300,000 0.55 400,000,000 11.37 48,000,000 1.36 445,724,209 12.67 893,724,209 25.40 3,518,396,836 100.00	(i) As at the Latest Practicable Date Number of Shares held Approximate percentage of Shares in issue (%) 1,823,282,102 51.82 455,820,525 12.96 2,279,102,627 64.78 326,270,000 9.27 – – 7,300,000 0.21 5,000,000 0.14 6,000,000 0.17 1,000,000 0.03 19,300,000 0.55 400,000,000 11.37 48,000,000 1.36 445,724,209 12.67 893,724,209 25.40 3,518,396,836 100.00	(ii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) none of the Options is exercised after the Latest Practicable Date and all the Options are cancelled Number of Shares held Approximate percentage of Shares in issue (%) 2,288,306,311 65.04 455,820,525 12.96 2,744,126,836 78.00 326,270,000 9.27 – – – – – – – – – – – – 400,000,000 11.37 48,000,000 1.36 – – 448,000,000 12.73 (Note 3) 3,518,396,836 100.00	(ii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) none of the Options is exercised after the Latest Practicable Date and all the Options are cancelled Number of Shares held Approximate percentage of Shares in issue (%) 2,288,306,311 65.04 455,820,525 12.96 2,744,126,836 78.00 326,270,000 9.27 – – – – – – – – – – – – 400,000,000 11.37 48,000,000 1.36 – – 448,000,000 12.73 (Note 3) 3,518,396,836 100.00	(iii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) all the Options are exercised after the Latest Practicable Date) Number of Shares held Approximate percentage of Shares in issue (%) 2,310,406,311 65.07 455,820,525 12.84 2,766,226,836 77.91 326,270,000 9.19 10,000,000 0.28 – – – – – – – – 10,000,000 0.28 400,000,000 11.27 48,000,000 1.35 – – 448,000,000 12.62 (Note 3) 3,550,496,836 100.00	(iii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) all the Options are exercised after the Latest Practicable Date) Number of Shares held Approximate percentage of Shares in issue (%) 2,310,406,311 65.07 455,820,525 12.84 2,766,226,836 77.91 326,270,000 9.19 10,000,000 0.28 – – – – – – – – 10,000,000 0.28 400,000,000 11.27 48,000,000 1.35 – – 448,000,000 12.62 (Note 3) 3,550,496,836 100.00
2,279,102,627 326,270,000 – 7,300,000 5,000,000 6,000,000 1,000,000	64.78 9.27 – 0.21 0.14 0.17 0.03	2,744,126,836 326,270,000 – – – – –	78.00 9.27 – – – – –	2,766,226,836 326,270,000 10,000,000 – – – –	77.91 9.19 0.28 – – – –
19,300,000 400,000,000 48,000,000 445,724,209	0.55 11.37 1.36 12.67	– 400,000,000 48,000,000 –	– 11.37 1.36 –	10,000,000 400,000,000 48,000,000 –	0.28 11.27 1.35 –
893,724,209 3,518,396,836	25.40 100.00	448,000,000 3,518,396,836	12.73 (Note 3) 100.00	448,000,000 3,550,496,836	12.62 (Note 3) 100.00

Notes:

Master Link, the New Shares Placees and the Master Link Placees have undertaken that they will not accept the Share Offer in respect of the Shares held by them after Completion. None of the New Shares Placees and the Master Link Placees are substantial Shareholders.

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Master Link is wholly and beneficially owned by Mr. Yeung.
In the event that after the completion of the Offers, the public float of the Company falls below 25%, the Director of the Offeror, the new Directors who are nominated by the Offeror to be appointed as Directors and the then director(s) of the Company will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the GEM Listing Rules as soon as possible.
As at the Latest Practicable Date, there were 32,100,000 Options, which were granted by the Company pursuant to the Pre-IPO Share Option Scheme. Such Options were held as to (a) 10,000,000 Options by Mr. Yeung, an executive Director; (b) 10,000,000 Options by Mr. Chan Hok Leung, an executive Director; (c) 5,000,000 Options by Mr. Xin Luo Lin, a non-executive Director; and (d) 7,100,000 Options by certain employees of the Group.
Certain percentages figures included in the above table are subject to rounding adjustments

4. INFORMATION ON THE GROUP

Details of the information on the Group are set out in the “Letter from the Board” in this Composite Document.

5. INFORMATION ON THE OFFEROR, KANG BANG AND ZHONGZHI CAPITAL

Jinhui is an investment holding company and is wholly-owned by Zhongzhi Capital. Kang Bang is an investment holding company and is wholly-owned by Zhongzhi Capital. Zhongzhi Capital is owned as to 95% by Zhong Hai Sheng Rong and as to 5% by 北京中海聚融投資管理有限公司 (Beijing Zhong Hai Ju Rong Investment Management Company Limited), respectively. The ultimate parent company of Zhong Hai Sheng Rong is Zhonghai Sheng Feng (Beijing) Capital Management Limited Company (中海晟豐(北京)資本管理有限公司) (“Zhonghai Sheng Feng”) and the ultimate beneficial owner of which is Mr. Xie Zhikun. The sole director of the Offeror is Ms. Duan Di and the sole director of Zhonghai Sheng Feng, the ultimate parent company of the Offeror, is Ms. Li Yun Xi.

Zhongzhi Capital was founded in 2011 with a registered capital of RMB1 billion. Zhongzhi Capital is one of the leading investment managers in China which focuses on acquisition and investment in industry leading enterprises and listed companies and is one of the largest industry consolidation funds in China. Based on its excellent performance, it was awarded by the CV Awards (投中創新榜), issued by China Venture Investment Consulting Group (投中集團), an investment consulting company in the PRC which provides information, data and intelligence relating to the capital markets, as the China’s top ten most active Chinese private equity investment institution in 2015, China’s top ten venture capital and private equity investment institution with the best investment returns in 2015 and China’s top ten most innovative Chinese private equity investment institution, venture capital and private equity investment institution in 2015. Zhongzhi Capital’s key services include private equity investments in the primary market, private placement, mergers and acquisitions of overseas business and funds and merger and acquisition consulting etc. The business partners it works with includes leading professional institutions.

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6. INTENTION OF THE OFFEROR IN RELATION TO THE GROUP

Business

Overview

Upon Completion, the Offeror became the controlling Shareholder of the Company. As stated in the Joint Announcement, the Offeror intends to continue the existing principal businesses of the Group and activate the business of Asian Capital (Corporate Finance) to carry on type 9 (asset management) regulated activity. On 2 February 2016, Asian Capital (Corporate Finance) and Zhongzhi Capital entered into an investment advisory and management agreement (the “ IAM Agreement ”), pursuant to which Asian Capital (Corporate Finance) is conditionally appointed as an investment manager of Zhongzhi Capital for managing a portfolio of assets under the IAM Agreement. For details, please see the announcements of the Company dated 2 February 2016 and 16 February 2016 and the circular of the Company dated 4 March 2016.

As described in the paragraph headed “Intended use of proceeds of the Subscription and the New Shares Placing” below, the Company and the Subscribers have had some discussions about the intended use of proceeds of the Subscription and the New Shares Placing and possible areas of business development after Completion. The Offeror will, following the close of the Offers, conduct a review on the business activities and financial position of the Group for the purpose of formulating business plans and strategies for the future business development of the Group. Subject to the results of the review and should suitable investment or business opportunities arise, the Offeror may explore other business opportunities for the Company which may involve acquisitions or investments in assets and/or businesses or cooperation with business partners of the Offeror with a view to enhancing the Group’s business growth and asset base as well as broadening its income stream. As at the Latest Practicable Date, save for the IAM Agreement, the Offeror has no plan, and has not engaged in any discussion or negotiation, on any injection of any assets or businesses into the Group.

Intended use of proceeds of the Subscription and the New Shares Placing

The Group will continue to develop the corporate finance activities, underwriting business, securities investments as well as money lending business after Completion. Leveraging on Zhongzhi Capital’s business competitive edge and talent pool, the Group is expected to expand in the investment including mergers and acquisitions as well as asset management businesses in Hong Kong and also will explore the possibility of expansion to other jurisdictions.

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The aggregate gross proceeds of the Subscription and the New Shares Placing is HK$641,005,537 and the aggregate net proceeds of the Subscription and the New Shares Placing is approximately HK$632,000,000 (or equivalent to the weighted average net subscription price of approximately HK$0.311 per new Share subscribed by the Subscribers and the New Shares Placees). Following discussions between the Subscribers and the Company, it is intended that the aggregate net proceeds from the Subscription and the New Shares Placing will be applied in the manner stated below:

(i) Underwriting business: leveraging on Zhongzhi Capital’s competitive strength in the domestic capital market in the PRC, the Group will continue to develop underwriting business and participate in securities offerings (including IPOs, share placements, convertible bond issues and bond issues). It is expected that approximately 50% of the aggregate net proceeds of the Subscription and the New Shares Placing (approximately HK$316,000,000) will be applied towards financing the underwriting business;
(ii) Money lending business: the ability to provide financing to listed companies or its shareholders would be complementary to the existing underwriting business and other associated securities offerings investment opportunities, which could diversify the business of the Group. It is expected that approximately 20% of the aggregate net proceeds of the Subscription and the New Shares Placing (approximately HK$126,400,000) will be applied towards financing the money lending business;
(iii) Proprietary investment business: leveraging on Zhongzhi Capital’s competitive strength in proprietary investment business, the Group will expand its proprietary investment business with a view to supporting and enlarging the scope of its underwriting business. It is expected that approximately 10% of the aggregate net proceeds of the Subscription and the New Shares Placing (approximately HK$63,200,000) will be applied towards financing the proprietary investment business;
(iv) Asset management business: the Group has been actively looking for opportunities to establish an asset management platform with its type 9 (asset management) regulated activity licence. Asset management business and proprietary investment business will complement each other in different aspects and could enhance the overall business synergies of the Group. As Zhongzhi Capital is a leading investment manager in the PRC, the Group intends to actively explore co-operation opportunities in this area. It is expected that approximately 10% of the aggregate net proceeds of the Subscription and the New Shares Placing (approximately HK$63,200,000) will be applied towards financing the asset management business; and
(v) Business expansion: with a view to achieve business expansion, the Group will expand its headquarter in Hong Kong and will explore opportunities to set up offices in other jurisdictions including the PRC, North America, Europe and Asia. It is expected that approximately 10% of the aggregate net proceeds of the Subscription and the New Shares Placing (approximately HK$63,200,000) will be applied towards such expansion plans and working capital requirements.

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As the Group develops its businesses in multiple locations, it will reduce the business risks resulting from the Group’s reliance on a single market, and could enhance the Group’s competitiveness in its core businesses, including underwriting, money lending, investments and asset management with the ability to cover businesses in multiple jurisdictions.

The Group wishes to build a business eco-system to create long term drivers for sustainable growth. Besides the normal business chain of “financing-investment-management-exit”, the Group’s business will be supplemented with value-added services, such as business development, management consultancy and research. Through various channels, the Group will build a business eco-system covering different industries, talent and project resources as well as financing channels and relationship networks.

Proposed change of the Board composition

The Board is currently made up of six Directors, comprising two executive Directors, being Mr. Yeung and Mr. Chan Hok Leung; one non-executive Director, being Mr. Xin Luo Lin; and three independent non-executive Directors, being Mr. Chan Kai Nang, Mr. Tsui Pui Yan and Mr. Yi Xiqun.

The Offeror intends to nominate new Directors to the Board with effect after the close of the Offers. As at the Latest Practicable Date, the Offeror had not reached any final decision as to who will be nominated as new Directors. Any changes to the Board composition will be announced by the Company and made in compliance with the Takeovers Code and the GEM Listing Rules.

The Offeror has no intention to discontinue the employment of the employees (save for the proposed changes in the composition of the Board) or to dispose of or re-deploy the assets of the Group other than those in its ordinary course of business.

7. COMPULSORY ACQUISITION

The Offeror does not intend to avail itself of any power of compulsory acquisition of any Shares after the close of the Offers.

8. MAINTAINING THE LISTING STATUS OF THE COMPANY

The Offeror intends that the Company will remain listed on the Stock Exchange after the close of the Offers.

In the event that after the completion of the Offers, the public float of the Company falls below 25%, the director of the Offeror and the new Directors who are nominated by the Offeror to be appointed as Directors and the then director(s) of the Company will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the GEM Listing Rules as soon as possible following the close of the Offers to ensure that sufficient public float exists for the Shares.

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The Stock Exchange has stated that if, upon completion of the Offers, less than the minimum prescribed percentage applicable to the Company, being 25%, of the Shares are held by the public or if the Stock Exchange believes that (i) a false market exists or may exist in the trading of the Shares; or (ii) there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend trading in the Shares.

The Stock Exchange will also closely monitor all acquisitions or disposals of assets by the Company. Under the GEM Listing Rules, the Stock Exchange has the power pursuant to the GEM Listing Rules to aggregate a series of transactions entered into by the Company within 24 months after a change in control and any such transactions may result in the Company being treated as if it were a new listing applicant and subject to the requirement for new applicants as set out in the GEM Listing Rules.

9. IMPORTANT NOTE TO SHAREHOLDERS AND OPTIONHOLDERS OUTSIDE HONG KONG

The Offers are made in respect of securities of a company incorporated in the Cayman Islands and are subject to the statutory procedural and disclosure requirements of Hong Kong, which may be different from those of other jurisdictions.

The Offeror intends to make the Offers (or any mandatory unconditional cash offers referred to herein) available to all Independent Shareholders and the Optionholders, including those with registered addresses, as shown in the register of members of the Company, outside Hong Kong. The availability of the Offers (or any mandatory unconditional cash offers referred to herein) to persons not resident in Hong Kong and the ability of Overseas Holders to participate in the Offers will however be subject to, and may be limited by, the laws and regulations of their respective jurisdictions.

The making of the Offers to Overseas Holders may be prohibited or limited by the laws of the relevant jurisdictions. Overseas Holders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should observe any applicable legal or regulatory requirements and, where necessary, seek legal advice. It is the responsibility of Overseas Holders who wish to accept the Offers to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Share Offer and/or the Option Offer (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due by such Overseas Holders in respect of such jurisdictions).

– 24 –

LETTER FROM CCB INTERNATIONAL

10. TAX IMPLICATIONS

The Independent Shareholders and the Optionholders are recommended to consult their own professional advisers if they are in any doubt as to the tax implications that may arise from accepting the Offers. It is emphasized that the Offeror, its beneficial owners and parties acting in concert with any of them, the Company, CCB International, Investec Capital, the Registrar or the company secretary of the Company or any of their respective directors or professional advisers or any other parties involved in the Offers or any of their respective agents do not accept any responsibility for any tax effect on, or liabilities of, the Independent Shareholders and Optionholders as a result of their acceptance of the Offers.

11. ACCEPTANCE AND SETTLEMENT

Your attention is drawn to the further details regarding the procedures for acceptance and settlement and acceptance period as set out in Appendix I to this Composite Document and the accompanying Form(s) of Acceptance.

12. GENERAL

To ensure equality of treatment of all Independent Shareholders and the Optionholders, those registered Independent Shareholders or Optionholders who hold the Shares or Options as nominee for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. It is essential for the beneficial owners of the Shares or Options whose investments are registered in the names of nominees to provide instructions to their nominees of their intentions with regard to the Offers.

Attention of the Overseas Holders is drawn to the paragraph headed “Important Note to Shareholders and Optionholders outside Hong Kong” above in this letter.

All documents and remittances to be sent to the Independent Shareholders and Optionholders and will be sent to them by ordinary post at their own risk. Such documents and remittances will be sent to the Independent Shareholders and Optionholders at their respective addresses as they appear in the register of members and register of Optionholders of the Company or in the case of joint holders, to such Independent Shareholder or Optionholder whose name appears first in the register of members, register of Optionholders of the Company. The Offeror, its beneficial owners and parties acting in concert with any of them, the Company, CCB International, Investec Capital, the Registrar or the company secretary of the Company or any of their respective directors or professional advisers or any other parties involved in the Offers will not be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof or in connection therewith.

– 25 –

LETTER FROM CCB INTERNATIONAL

13. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this Composite Document which form part of this Composite Document. You are reminded to carefully read the “Letter from the Board”, the advice of the Independent Board Committee, the recommendation of Investec Capital and other information about the Group which are set out in this Composite Document before deciding whether or not to accept the Share Offer and/or the Option Offer.

Yours faithfully,

For and on behalf of CCB International Capital Limited Gilman Siu

Managing Director

– 26 –

LETTER FROM THE BOARD

==> picture [100 x 56] intentionally omitted <==

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8295)

Executive Directors: Mr. YEUNG Kai Cheung Patrick (Executive Chairman) Mr. CHAN Hok Leung

Registered office: P.O. Box 309, Ugland House Grand Cayman, KY1-1104 Cayman Islands

Non-executive Director: Mr. XIN Luo Lin (Honorary Chairman)

Independent non-executive Directors: Mr. CHAN Kai Nang Mr. TSUI Pui Yan Mr. YI Xiqun

Head office and principal place of business in Hong Kong: Suite 601, Bank of America Tower 12 Harcourt Road Central, Hong Kong

10 March 2016

To the Independent Shareholders and the Optionholders

Dear Sir/Madam,

INTRODUCTION

Reference is made to the Joint Announcement, the Circular and the Completion Announcement.

– 27 –

LETTER FROM THE BOARD

Subscribers conditionally agreed to subscribe for, a total of 1,630,756,836 Subscription Shares for an aggregate consideration of HK$485,965,537 in cash at the Subscription Price of approximately HK$0.298 per Subscription Share, of which Jinhui will subscribe for 1,304,605,469 Subscription Shares for a consideration of HK$388,772,430 and Kang Bang will subscribe for 326,151,367 Subscription Shares for a consideration of HK$97,193,107.

The Board has been informed by the Vendors that on 28 October 2015 (after trading hours), the Vendors, the Purchasers, Mr. Yeung and Zhongzhi Capital entered into the Share Purchase Agreement (as amended and supplemented by the Supplemental Share Purchase Agreement), pursuant to which, the Vendors conditionally agreed to sell and the Purchasers conditionally agreed to purchase, in aggregate, 648,345,791 Sale Shares, representing approximately 18.43% of the existing issued share capital of the Company as at the Latest Practicable Date. The total consideration for the Sale Shares is HK$251,298,829, equivalent to approximately HK$0.3876 per Sale Share.

The Subscription Completion, the New Shares Placing Completion, the Share Purchase Completion and the Master Link Placing Completion took place simultaneously on 24 February 2016.

Immediately after Completion and as at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Kang Bang) were interested in a total of 2,279,102,627 Shares, representing approximately 64.78% of the issued share capital of the Company as at the Latest Practicable Date. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make the Share Offer to acquire all the Offer Shares. Pursuant to Rule 13.5 of the Takeovers Code, the Option Offer will also be made simultaneously with the Share Offer. As the Offeror and parties acting in concert with it are holding more than 50% of the issued share capital of the Company, the Offers are unconditional.

Pursuant to Rule 2.1 and Rule 2.8 of the Takeovers Code, the Independent Board Committee, comprising the non-executive Director, namely Mr. Xin Luo Lin, and all the independent non-executive Directors, namely Mr. Chan Kai Nang, Mr. Tsui Pui Yan and Mr. Yi Xiqun, has been established to advise the Independent Shareholders and the Optionholders as to whether the Offers are or are not fair and reasonable and as to acceptance of the Offers. Save for (i) 5,000,000 Options and 5,000,000 Shares held by Mr. Xin Luo Lin, a non-executive Director; (ii) 6,000,000 Shares held by Mr. Yi Xiqun, an independent non-executive Director; and (iii) 1,000,000 Shares held by Mr. Tsui Pui Yan, an independent non-executive Director as at the Latest Practicable Date, each of the non-executive Directors has no other direct or indirect interest in the Offers.

– 28 –

LETTER FROM THE BOARD

Investec Capital has been appointed as the Independent Financial Adviser of the Company to advise the Independent Board Committee, the Independent Shareholders and the Optionholders in connection with the Offers and as to whether the Offers are or are not fair and reasonable so far as the Independent Shareholders and the Optionholders are concerned and as to the acceptance of the Offers. The appointment of Investec Capital has been approved by the Independent Board Committee in accordance with Rule 2.1 of the Takeovers Code.

Further terms and the procedures of acceptances of the Offers are set out in the “Letter from CCB International” and Appendix I to this Composite Document of which this letter forms part. The purpose of this Composite Document is to provide you with, among other things, information relating to the Company and the Offers, the letter of advice from the Independent Board Committee to the Independent Shareholders and the Optionholders and the letter of advice from the Independent Financial Adviser to the Independent Board Committee, the Independent Shareholders and the Optionholders in relation to the Offers.

THE OFFERS

The terms of the Offers are set out in the “Letter from CCB International” as well as in Appendix I to this Composite Document.

The following information about the Offers is extracted from the “Letter from CCB International” as well as Appendix I to this Composite Document.

The Share Offer

As disclosed in the “Letter from CCB International” in this Composite Document, CCB International, on behalf of the Offeror and in compliance with the Takeovers Code, is making the Share Offer for all the Offer Shares on the terms set out in this Composite Document in accordance with the Takeovers Code on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.39 in cash

Acceptance of the Share Offer shall be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

– 29 –

LETTER FROM THE BOARD

As stated in the “Letter from CCB International” in this Composite Document, as at the Latest Practicable Date, there were 3,518,396,836 Shares in issue, and the Offeror and parties acting in concert with it in aggregate owned 2,279,102,627 Shares. Assuming no Options have been exercised before the close of the Offers and excluding 774,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International” in this Composite Document), 465,024,209 Shares are subject to the Share Offer and the total consideration of the Share Offer would be approximately HK$181,359,442 based on the Share Offer Price.

The Option Offer

As disclosed in the “Letter from CCB International” in this Composite Document, CCB International, on behalf of the Offeror and in compliance with the Takeovers Code, is making the Option Offer on the terms set out in this Composite Document in accordance with the Takeovers Code on the following basis:

For cancellation of each Option with

exercise price of HK$0.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.19 in cash

The Option Offer Price of HK$0.19 for each Option under the Option Offer represents the Share Offer Price of HK$0.39 per Share less the exercise price of the Options. As the exercise price for the Options, being HK$0.20 per Share, is below the Share Offer Price, being HK$0.39, all the Options are in-the-money.

As at the Latest Practicable Date, there were 32,100,000 Options. Assuming no Option is exercised prior to the close of the Offers and excluding the 10,000,000 Non-acceptance Options held by Mr. Yeung who has undertaken not to accept the Option Offer (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International”), a total of 22,100,000 Options are subject to the Option Offer and the total consideration of the Option Offer would be HK$4,199,000 based on the Option Offer Price.

Total value of the Offers

In the event that no Options have been exercised before the close of the Offers and excluding 774,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International” in this Composite Document), and assuming full acceptance of the Share Offer, the cash consideration payable by the Offeror at the Share Offer Price of HK$0.39 per Offer Share will amount to HK$181,359,442. On this basis, assuming full acceptance of the Option Offer (excluding the 10,000,000 Non-acceptance Options held by Mr. Yeung who has undertaken not to accept the Option Offer, details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International”), the total cash consideration payable by the Offeror for the Option Offer will amount to HK$4,199,000. On this basis, the total cash consideration payable by the Offeror under the Offers will amount to HK$185,558,442.

– 30 –

LETTER FROM THE BOARD

In the event that all the 32,100,000 Options will be exercised in full, an aggregate of 32,100,000 new Shares would fall to be issued before the close of the Offers, representing approximately 0.90% of the enlarged issued share capital of the Company (as enlarged by the new Shares to be allotted and issued as a result of the exercise of the Options). Excluding the 10,000,000 new Shares to be issued pursuant to the exercise of the Options by Mr. Yeung who has undertaken not to accept the Share Offer (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International”), 22,100,000 Shares will be subject to the Share Offer. On this basis, taking into account the 2,279,102,627 Shares owned by the Offeror and parties acting in concert with it (including Kang Bang) and excluding 784,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International” in this Composite Document), 487,124,209 Offer Shares will be subject to the Share Offer and the total amount of cash required to effect the Share Offer will be no more than HK$189,978,442.

Further details of the Offers

The Board would like to remind the Optionholders that, in accordance with the terms and conditions of the Pre-IPO Share Option Scheme, any outstanding Options not exercised within one month after the date on which the Share Offer becomes or is declared unconditional will automatically lapse (provided that such Options have not lapsed pursuant to other relevant terms of the Pre-IPO Share Option Scheme). Accordingly, as the Offers are unconditional, the Optionholders who intend to accept the Share Offer should exercise their Options or accept the Option Offer in respect of their Options (as the case may be), before the latest date for acceptance of the Offers on 31 March 2016.

Your attention is drawn to the further details of the Offers as set out in the “Letter from CCB International” and Appendix I to this Composite Document, and the accompanying Form(s) of Acceptance.

INFORMATION OF THE GROUP

The Company was incorporated in the Cayman Islands as an exempted company with limited liability and its Shares are listed on GEM. The principal activity of the Company is investment holding and its subsidiaries are principally engaged in the provision of corporate advisory services and related activities, investment in various types of assets as well as money lending and asset management.

Financial information of the Group is set out in Appendix II to this Composite Document.

– 31 –

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE COMPANY

(i) As at the Latest Practicable Date Number of Shares held Approximate percentage of Shares in issue (%) 1,823,282,102 51.82 455,820,525 12.96 2,279,102,627 64.78 326,270,000 9.27 – – 7,300,000 0.21 5,000,000 0.14 6,000,000 0.17 1,000,000 0.03 19,300,000 0.55 400,000,000 11.37 48,000,000 1.36 445,724,209 12.67 893,724,209 25.40 3,518,396,836 100.00	(i) As at the Latest Practicable Date Number of Shares held Approximate percentage of Shares in issue (%) 1,823,282,102 51.82 455,820,525 12.96 2,279,102,627 64.78 326,270,000 9.27 – – 7,300,000 0.21 5,000,000 0.14 6,000,000 0.17 1,000,000 0.03 19,300,000 0.55 400,000,000 11.37 48,000,000 1.36 445,724,209 12.67 893,724,209 25.40 3,518,396,836 100.00	(ii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) none of the Options is exercised after the Latest Practicable Date and all the Options are cancelled Number of Shares held Approximate percentage of Shares in issue (%) 2,288,306,311 65.04 455,820,525 12.96 2,744,126,836 78.00 326,270,000 9.27 – – – – – – – – – – – – 400,000,000 11.37 48,000,000 1.36 – – 448,000,000 12.73 (Note 3) 3,518,396,836 100.00	(ii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) none of the Options is exercised after the Latest Practicable Date and all the Options are cancelled Number of Shares held Approximate percentage of Shares in issue (%) 2,288,306,311 65.04 455,820,525 12.96 2,744,126,836 78.00 326,270,000 9.27 – – – – – – – – – – – – 400,000,000 11.37 48,000,000 1.36 – – 448,000,000 12.73 (Note 3) 3,518,396,836 100.00	(iii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) all the Options are exercised after the Latest Practicable Date) Number of Shares held Approximate percentage of Shares in issue (%) 2,310,406,311 65.07 455,820,525 12.84 2,766,226,836 77.91 326,270,000 9.19 10,000,000 0.28 – – – – – – – – 10,000,000 0.28 400,000,000 11.27 48,000,000 1.35 – – 448,000,000 12.62 (Note 3) 3,550,496,836 100.00	(iii) Immediately after the completion of the Offers (assuming (a) the Offeror acquired all the Offer Shares other than the Non- acceptance Shares and (b) all the Options are exercised after the Latest Practicable Date) Number of Shares held Approximate percentage of Shares in issue (%) 2,310,406,311 65.07 455,820,525 12.84 2,766,226,836 77.91 326,270,000 9.19 10,000,000 0.28 – – – – – – – – 10,000,000 0.28 400,000,000 11.27 48,000,000 1.35 – – 448,000,000 12.62 (Note 3) 3,550,496,836 100.00
2,279,102,627 326,270,000 – 7,300,000 5,000,000 6,000,000 1,000,000	64.78 9.27 – 0.21 0.14 0.17 0.03	2,744,126,836 326,270,000 – – – – –	78.00 9.27 – – – – –	2,766,226,836 326,270,000 10,000,000 – – – –	77.91 9.19 0.28 – – – –
19,300,000 400,000,000 48,000,000 445,724,209	0.55 11.37 1.36 12.67	– 400,000,000 48,000,000 –	– 11.37 1.36 –	10,000,000 400,000,000 48,000,000 –	0.28 11.27 1.35 –
893,724,209 3,518,396,836	25.40 100.00	448,000,000 3,518,396,836	12.73 (Note 3) 100.00	448,000,000 3,550,496,836	12.62 (Note 3) 100.00

– 32 –

LETTER FROM THE BOARD

Notes:

Master Link, the New Shares Placees and the Master Link Placees have undertaken that they will not accept the Share Offer in respect of the Shares held by them after Completion. None of the New Shares Placees and the Master Link Placees are substantial shareholders.
Master Link is wholly and beneficially owned by Mr. Yeung.
In the event that after the completion of the Offers, the public float of the Company falls below 25%, the director of the Offeror and the new Directors who are nominated by the Offeror to be appointed as Directors and the then director(s) of the Company will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the GEM Listing Rules as soon as possible.
As at the Latest Practicable Date, there were 32,100,000 Options, which were granted by the Company pursuant to the Pre-IPO Share Option Scheme. Such Options were held as to (a) 10,000,000 Options by Mr. Yeung, an executive Director; (b) 10,000,000 Options by Mr. Chan Hok Leung, an executive Director; (c) 5,000,000 Options by Mr. Xin Luo Lin, a non-executive Director; and (d) 7,100,000 Options by certain employees of the Group.
Certain percentages figures included in the above table are subject to rounding adjustments.

INTENTION OF THE OFFEROR IN RELATION TO THE GROUP

Your attention is drawn to the paragraphs headed “Information on the Offeror, Kang Bang and Zhongzhi Capital” and “Intention of the Offeror in relation to the Group” in the “Letter from CCB International”. Also, as set out in the paragraph headed “Proposed change of the Board composition” in the “Letter from CCB International”, the Offeror has no intention to discontinue the employment of the employees (save for the proposed changes in the composition of the Board). The Board is aware of the intention of the Offeror in respect of the Group and is willing to render reasonable co-operation with the Offeror which is in the interests of the Company and the Shareholders as a whole.

PROPOSED CHANGE OF THE BOARD COMPOSITION

Please refer to the paragraph headed “Proposed change of the Board composition” in the “Letter from CCB International” in this Composite Document. Any change to the Board composition will be made in compliance with the Takeovers Code and the GEM Listing Rules and will be announced accordingly.

MAINTAINING THE LISTING STATUS OF THE COMPANY

According to the “Letter from CCB International”, the Offeror intends to maintain the listing of the Shares on the Stock Exchange after the close of the Offers and in the event that after the completion of the Offers, the public float of the Company falls below 25%, the director of the Offeror and the new Directors who are nominated by the Offeror to be appointed as Directors and the then director(s) of the Company will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the GEM Listing Rules as soon as possible following the close of the Offers to ensure that sufficient public float exists for the Shares.

The Stock Exchange has stated that if, upon closing of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25%, of the Shares are held by the public or if the Stock Exchange believes that (i) a false market exists or may exist in the trading of the Shares; or (ii) there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend trading in the Shares.

– 33 –

LETTER FROM THE BOARD

RECOMMENDATIONS

Your attention is drawn to (i) the letter from the Independent Board Committee as set out on pages 35 to 36 of this Composite Document, which contains its advice and recommendations to the Independent Shareholders and the Optionholders in respect of the Offers; and (ii) the letter from the Independent Financial Adviser set out on pages 37 to 60 of this Composite Document, which contains its advice to the Independent Board Committee, the Independent Shareholders and the Optionholders in relation to the Offers and the principal factors considered by it before arriving at its recommendations.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendices to this Composite Document. You are also recommended to read carefully “Further terms of the Offers” set out in Appendix I to this Composite Document and the accompanying Forms of Acceptance for further details in respect of the procedures for acceptance of the Offers.

By order of the Board Asian Capital Holdings Limited YEUNG Kai Cheung Patrick Executive Chairman

– 34 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

10 March 2016

==> picture [100 x 56] intentionally omitted <==

(Incorporated in the Cayman Islands with limited liability) (Stock code: 8295)

To the Independent Shareholders and the Optionholders

Dear Sir/Madam,

INTRODUCTION

We refer to the Composite Document dated 10 March 2016 jointly issued by the Company and the Offeror, of which this letter forms part. Terms used herein shall have the same meanings as defined in the Composite Document unless the context requires otherwise.

We have been appointed to form the Independent Board Committee to consider the terms of the Offers and to advise you as to whether or not, in our opinion, the terms of the Offers are fair and reasonable so far as the Independent Shareholders and the Optionholders are concerned and as to acceptance of the Offers after taking into account the advice from the Independent Financial Adviser.

Investec Capital has been appointed as the Independent Financial Adviser to advise us, the Independent Shareholders and the Optionholders in respect of the terms of the Offers and as to acceptance thereof. Details of its advice and the principal factors taken into consideration in arriving at its recommendation are set out in the “Letter from the Independent Financial Adviser” on pages 37 to 60 of the Composite Document.

We also wish to draw your attention to the sections headed “Letter from CCB International”, the “Letter from the Board” and the additional information set out in the Composite Document, including the appendices to this Composite Document and the accompanying Forms of Acceptance in respect of the terms of the Offers and the acceptance and settlement procedures for the Offers.

– 35 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RECOMMENDATION

Having taken into account the terms of the Offers, the advice and recommendation from Investec Capital, we are of the opinion that the terms of the Offers are fair and reasonable so far as the Independent Shareholders and the Optionholders are concerned and therefore we recommend the Independent Shareholders and the Optionholders to accept the Offers.

Independent Shareholders are reminded to closely monitor the market price and liquidity of the Shares during the Offer Period and consider selling their Shares in the open market during the Offer Period, where possible, rather than accepting the Share Offer, if the net proceeds from the sale of such Shares in the open market would exceed the net amount receivable under the Share Offer. Optionholders should likewise consider exercising their Options in accordance with the terms of the Pre-IPO Share Option Scheme and selling in the market the Shares issued to them, if the net proceeds from the sale of such Shares in the open market would exceed the net amount receivable under the Option Offer.

Notwithstanding our recommendations, the Independent Shareholders and the Optionholders are strongly advised that the decision to realise or to hold their investment is subject to individual circumstances and investment objectives. If in doubt, the Independent Shareholders and the Optionholders should consult their own professional advisers for professional advice. Furthermore, the Independent Shareholders and the Optionholders who wish to accept the Offers are recommended to read carefully the procedures for accepting the Offers as detailed in the Composite Document.

Yours faithfully,

Independent Board Committee Asian Capital Holdings Limited

Mr. Xin Luo Lin

Non-executive Director

Mr. Chan Kai Nang Mr. Tsui Pui Yan Independent non-executive Independent non-executive Director Director

Mr. Yi Xiqun Independent non-executive Director

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from Investec to the Independent Board Committee and the Independent Shareholders and the Optionholders in relation to the Offers, which has been prepared for the purpose of inclusion in this Composite Document.

Investec Capital Asia Limited 3609, 36/F, Two International Finance Centre 8 Finance Street, Central, Hong Kong 香港中環金融街8號國際金融中心二期36樓3609室 Tel/電話: (852) 3187 5000 Fax/傳真: (852) 2501 0171 www.investec.com

10 March 2016

To: The Independent Board Committee, the Independent Shareholders and the Optionholders of Asian Capital Holdings Limited.

Dear Sirs/Madams,

INTRODUCTION

We refer to our appointment as the independent financial adviser to advise the Independent Board Committee, the Independent Shareholders and the Optionholders in respect of the Offers. Details of the Offers are set out in a composite offer and response document dated 10 March 2016 (the “ Composite Document ”) jointly issued by the Company and the Offeror, of which this letter forms a part. Terms in this letter shall have the same meanings as those defined in the Composite Document unless the context otherwise requires.

On 28 October 2015 (after trading hours), the Company and the Subscribers entered into the Subscription Agreement (as amended and supplemented by the Supplemental Subscription Agreement), pursuant to which, the Company conditionally agreed to issue, and the Subscribers conditionally agreed to subscribe for, a total of 1,630,756,836 Subscription Shares for an aggregate consideration of HK$485,965,537 in cash at the Subscription Price of approximately HK$0.298 per Subscription Share, of which Jinhui will subscribe for 1,304,605,469 Subscription Shares for a consideration of HK$388,772,430 and Kang Bang will subscribe for 326,151,367 Subscription Shares for a consideration of HK$97,193,107.

– 37 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Completion took place on 24 February 2016. Immediately following Completion and as at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Kang Bang) became interested in a total of 2,279,102,627 Shares, representing approximately 64.78% of the existing issued share capital of the Company as at the Latest Practicable Date. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make the Share Offer to acquire all the Offer Shares. Pursuant to Rule 13.5 of the Takeovers Code, the Option Offer will also be made to cancel all the outstanding Options simultaneously with the Share Offer. As the Offeror and parties acting in concert with it are holding more than 50% of the issued share capital of the Company, the Offers are unconditional.

Pursuant to Rule 2.1 and Rule 2.8 of the Takeovers Code, the Independent Board Committee which comprises the non-executive Director, namely Mr. Xin Luo Lin, and all the independent non-executive Directors, namely Mr. Chan Kai Nang, Mr. Tsui Pui Yan and Mr. Yi Xiqun, has been established to advise the Independent Shareholders and the Optionholders as to whether the Offers are, or are not, fair and reasonable and as to acceptance of the Offers. In accordance with Rule 2.1 of the Takeovers Code, the Independent Board Committee has approved our appointment as the Independent Finance Adviser to advise it in relation to the Offers to be made by the Offeror.

We are not associated with the Company, the Offeror or any party acting, or presumed to be acting, in concert with any of them and, accordingly, are considered eligible to give independent advice on the Offers.

– 38 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We also act as independent financial adviser to the independent board committee and independent shareholders of the Company in relation to continuing connected transaction of the Group. Under this engagement, we provided independent advisory services to the independent board committee and independent shareholders of the Company pursuant to the GEM Listing Rules, and received a normal advisory fee from the Company for such services. Notwithstanding our relationship with the Company due to the said engagement, we have assessed that such relationship would not affect our independence in providing the advice to the Independent Board Committee and the Independent Shareholders in relation to the Offers to be made by the Offeror.

Apart from normal professional fees payable to us in connection with this appointment and the aforementioned appointment as the independent financial adviser of the Company in relation to continuing connected transaction of the Group, no arrangement exists whereby we will receive any fees or benefits from the Company, the Offeror or any party acting, or presumed to be acting, in concert with any of them.

In formulating our advice and recommendation, we have relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Group (the “ Management ”), which we have assumed to be true, accurate and complete in all material respects. We have reviewed the latest published financial information on the Company and we have discussed with the Directors in respect of their statements set out in Appendix II to the Composite Document that, save as disclosed therein, there has been no material change in the financial or trading position or outlook of the Group since the date of the last published audited accounts of the Group up to and including the Latest Practicable Date. We have also reviewed the trading performance of the Shares on the Stock Exchange. We have sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed by them. We consider that the information we have received is sufficient for us to reach our opinion and advice as set out in this letter. We have no reason to doubt the truth and accuracy of the information provided to us or to believe that any material facts have been omitted or withheld. We have not however, conducted any independent investigation into the business and affairs of the Group, nor have we carried out any independent verification of the information supplied. We have also assumed that all representations contained or referred to in the Composite Document are true as at the Latest Practicable Date, and that Shareholders will be notified of any material changes to such representations as soon as reasonably practicable in accordance with Rule 9.1 of the Takeovers Code.

We have not considered the tax and regulatory implications of Shareholders and Optionholders, of acceptance or non-acceptance of the Offers since these depend on their individual circumstances. In particular, Shareholders and Optionholders who are resident overseas, or subject to overseas taxes or Hong Kong taxation on securities dealings should consider their own tax positions and, if any doubt, consult their own professional advisers.

MANDATORY UNCONDITIONAL CASH OFFERS

As set out in the Composite Document, the Completion took place on 24 February 2016. The Offeror and parties acting in concert with it are interested in an aggregate of 2,279,102,627 Shares, representing approximately 64.78% of the existing issued share capital of the Company

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

as at the Latest Practicable Date. Pursuant to Rules 13.5 and 26.1 of the Takeovers Code, CCB International is making, on behalf of the Offeror, the Offers. The Offers, as made, are not subject to any acceptance and unconditional in all respects.

Principal Terms of the Offers

The Share Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.39 in cash

As at the Latest Practicable Date, the Company had 3,518,396,836 Shares in issue. The Offeror and parties acting in concert with it owned 2,279,102,627 Shares as at Latest Practicable Date and assuming no Options have been exercised before the close of the Offers and excluding 774,270,000 Non-acceptance Shares (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International”), 465,024,209 Shares will be subject to the Share Offer and the total consideration of the Share Offer would be approximately HK$181,359,442 based on the Share Offer Price.

The Option Offer

For cancellation of each Option

with an exercise price of HK$0.20 . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.19 in cash

The Option Offer Price of HK$0.19 per Option represents the difference between the Share Offer Price of HK$0.39 and the exercise price of the Options of HK$0.20.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion and recommendation with regard to the Offers, we have taken into account the following principal factors and reasons:

1. Background information of the Group

The Group is principally engaged in the provision of corporate advisory services and related activities, investment in various types of assets as well as money lending and asset management. Established in 1998, the Group specialises in the provision of a variety of corporate advisory services with a primary focus on companies listed in Hong Kong. The

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

revenue base primarily is organised into the following key segments: (i) corporate advisory income; (ii) placing and underwriting service income/commission; and (iii) securities dealing commission, which contributed approximately 99.3%, 0.5%, 0.2% respectively to the Group’s revenue for the year ended 31 December 2014.

2. Financial information and prospects of the Group

a. Financial information of the Group – financial performance

Set out below is a consolidated financial summary of the Group extracted from (i) the 2014 annual report in relation to the audited financial performance for the year ended 31 December 2014 and 2013 (the “ 2014 Annual Report ”); and (ii) the 2015 second interim report in relation to the unaudited financial performance for the 12 months ended 31 December 2015 (the “ 2015 Second Interim Report ”).

	For the
	12 months	For the	For the
	period ended	year ended	year ended
	31 December	31 December	31 December
	2015	2014	2013
	HK$’000	HK$’000	HK$’000
	(unaudited)	(audited)	(audited)
Revenue	32,265	24,937	31,638
Corporate advisory income	30,110	24,771	27,094
Placing and underwriting
income/arrangement fee	2,155	126	4,346
Securities dealing commission	–	40	198
Revenue and other income	36,356	24,416	40,924
Operating expenses	(27,909)	(26,532)	(30,004)
Profit/(Loss) before tax	8,447	(2,116)	10,920
Profit/(Loss) for the period/year	6,751	(1,331)	8,635

For each of the two years ended 31 December 2013 and 2014

As set out in the 2014 Annual Report, the Group generated revenue of approximately HK$24.9 million for the year ended 31 December 2014, representing a decrease of approximately 21.2% from approximately HK$31.6 million for the year ended 31 December 2013. Revenue was mainly attributable to income from the Group’s corporate advisory service of approximately HK$24.8 million, representing approximately 99.3% of the Group’s revenue for the year ended 31 December 2014. Revenue for the year ended 31 December 2014 from placing and underwriting service amounted to approximately HK$0.1 million, representing approximately 0.5% of the Group’s revenue, as compared to revenue from placing and underwriting service of approximately HK$4.3 million, representing approximately 13.7% of the Group’s revenue for the year ended 31

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

December 2013. Revenue from securities dealing commission contributed approximately HK$0.04 million, representing approximately 0.2% of the Group’s revenue for the year ended 31 December 2014, decreasing from approximately HK$0.2 million for the year ended 31 December 2013.

With reference to the Group’s revenue geographical contribution (based on customers location), based on the 2014 Annual Report, Hong Kong remained as the Group’s main market and revenue driver, accounted for approximately HK$23.4 million of the Group’s revenue for the year ended 31 December 2014, compared to approximately HK$30.2 million of the Group’s revenue for the year ended 31 December 2013, representing a year-on-year decrease of approximately 22.6%. Hong Kong contributed approximately 93.9% and 95.6% of the Group’s revenue for the years ended 31 December 2014 and 2013, respectively. Revenue from the PRC decreased from approximately HK$1.4 million for the year ended 31 December 2013 to approximately HK$1.3 million for the year ended 31 December 2014, which represents approximately 5.1% and 4.4% of the Group’s revenue for the years ended 31 December 2014 and 2013, respectively. Japanese customer has been a new contributor to the Group’s revenue, with a new contribution of approximately HK$0.3 million, which accounts for approximately 1.0% of the Group’s revenue for the year ended 31 December 2014.

The net loss of the Group amounted to approximately HK$1.3 million for the year ended 31 December 2014 as compared to a net profit of approximately HK$8.6 million for the year ended 31 December 2013. Such significant reversal in the Group’s profitability is mainly attributed to the lack of milestone achievements in distressed asset recovery and listings assignments in 2014.

For the 12 months ended 31 December 2015 and year ended 31 December 2014

For the 12 months ended 31 December 2015, based on the 2015 Second Interim Report, revenue and other income at approximately HK$36.4 million was almost 1.5 times of that of 2014, which was mainly driven by all round increases in corporate advisory income, placing income as well as interest income from loans receivables; whilst operating expenses were contained at a period-on-period increase of approximately 5.2% to approximately HK$27.9 million. The resultant pre-tax profit for the 12 months ended 31 December 2015 was approximately HK$8.4 million, compared to a pre-tax loss of approximately HK$2.1 million for the corresponding period in 2014.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

b. Financial information of the Group – financial position

Set out below are the consolidated financial positions of the Group as at 31 December 2015, 2014 and 2013, respectively, extracted from the 2014 Annual Report and the 2015 Second Interim Report.

Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Net current assets Net assets/Total equity Net asset value (the “NAV”) per Share attributable to owners of the Company (Note)	As at 31 December 2015 HK$’000 (unaudited) 3,710 205,779 209,489 – 71,328 71,328 134,451 138,161 HK$0.10	As at 31 December 2014 HK$’000 (audited) 4,351 132,449 136,800 – 6,374 6,374 126,075 130,426 HK$0.09	As at 31 December 2013 HK$’000 (audited) 1,690 140,629
			142,319

			– 13,873
			13,873

			126,756

			128,446 HK$0.09

Note: The NAV per Share attributable to owners of the Company is calculated based on the Shares in issue as at the end of the respective year.

Financial positions of the Group as at 31 December 2013 and 2014

As set out in the 2014 Annual Report, non-current assets of the Group increased from approximately HK$1.7 million as at 31 December 2013 to approximately HK$4.4 million as at 31 December 2014. In relation to the current assets of the Group, the Group’s aggregated current assets valued at approximately HK$132.4 million as at 31 December 2014 and approximately HK$140.6 million as at 31 December 2013, representing a decrease of approximately 5.8%. Such drop was mainly attributable to (i) a fall in value in trade receivables from approximately HK$9.1 million as at 31 December 2013 to approximately HK$2.7 million as at 31 December 2014 and; (ii) a fall in investments at fair value through profit or loss from approximately HK$15.4 million as at 31 December

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2013 to approximately HK$6.3 million as at 31 December 2014. Although other assets and receivables increased approximately 299.7% to approximately HK$9.6 million as at 31 December 2014, there was a fall in value for the Group’s current assets. This, however, was in line with that decrease in current liabilities, which resulted to a relatively stable net current assets value over the two years, being approximately HK$126.8 million as at 31 December 2013 and approximately HK$126.1 million as at 31 December 2014.

The Group did not record any non-current liabilities as at 31 December 2013 and 2014. In relation to the movement of the Group’s current liabilities, it was primarily attributable to the Group’s trade payables and tax payable, which decreased by approximately 81.8% to HK$0.7 million as at 31 December 2014 and approximately 80.5% to HK$0.6 million as at 31 December 2014, respectively.

The Group’s total equity remained stable for the two years ended 31 December 2013 and 2014 at approximately HK$128.4 million and HK$130.4 million respectively.

Financial position of the Group as at 31 December 2014 and 2015

Total assets of the Group had an increase from approximately HK$136.8 million as at 31 December 2014, to approximately HK$209.5 million as at 31 December 2015. Non-current asset decreased from approximately HK$4.4 million as at 31 December 2014 to approximately HK$3.7 million as at 31 December 2015. Current asset balance increased by approximately 55.4%, from approximately HK$132.4 million as at 31 December 2014 to approximately HK$205.8 million as at 31 December 2015. Such increase was mainly attributable to increased amount of cash held by the Company on behalf of its clients. These cash arising from the Company’s normal course of business are held and maintained in segregated trust accounts with a licensed bank.

Total liabilities as at 31 December 2015 amounted to approximately HK$71.3 million, as compared to total liabilities of approximately HK$6.4 million as at 31 December 2014, representing an increase of approximately HK$64.9 million. Among all other liabilities components, trade payables have been subject to a significant increase; however, this is due to increased client cash holdings in segregated trust accounts, which was reflected in similar magnitude increase in the Company’s current asset. As a result, the change in net assets has been moderate, increasing mildly from approximately HK$130.4 million as at 31 December 2014 to approximately HK$138.2 million as at 31 December 2015.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Prospects of the Group

We noted from the 2014 Annual Report that the revenue of the Group decreased by approximately 21.2% from approximately HK$31.6 million for the year ended 31 December 2013 to approximately HK$24.9 million for the year ended 31 December 2014. As reported in the 2015 Second Interim Report, the Group recorded a turnaround profit of approximately HK$6.8 million for the 12 months ended 31 December 2015, as compared to a loss of approximately HK$1.3 million for the corresponding period in 2014. We noted that such turnaround was attributed to the significant increase in revenue contributed by corporate advisory income and placing and underwriting income/arrangement fee, whist operating expenses were kept largely at the 2014 level.

We further understand from the Management that the key influential factor to the Group’s revenue mainly hinges on the performance of the global market, in particular the PRC and Hong Kong markets. With the warnings of irrational exuberance and negative economy news such as worries of continued devaluation of RMB and performance of the PRC slowing economy, the Group has opted to reduce investment in equities to reduce risk exposed and to increase exposure to safer assets classes such as loans receivables for higher interest income. Such change would help contribution to the Group’s overall revenue.

In early October 2015, the International Monetary Fund warned that the global growth would remain moderate in the short run. The PRC stock market turbulences also casted worries in investors’ mind on the PRC’s fundamental economic problems and the effectiveness in steadying the economy with its policies. With higher downside risk and lower global growth adjustments, the future of the markets may look less optimistic than what investors expected in early 2015. The Hang Seng Index has dropped 29.1% from its recent closing high of approximately 28,442 points on 28 April 2015 to approximately 20,160 points on the Latest Practicable Date. In addition, the U.S. Federal Reserve raised interest rate in December 2015 and introduced an impact on funds flow across the global capital markets. For instance, the capital outflow from the market pushed Hong Kong dollar to its lowest level since 2007 in January 2016. Given this back drop, it is generally expected that the capital market environment will be difficult in the foreseeable future. That being said, the asset management business as disclosed in the announcement of the Company dated 2 February 2016 and the circular of the Company dated 4 March 2016 could present more opportunities for the Group to extend its services. Along with the Group focusing in areas that it has expertise in and its reduced high risk exposure towards the market, we believe the near-term prospect of the Group remains largely stable.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

3. Analysis of price performance and trading liquidity

a. Review of trading of the Shares

We have reviewed and analysed the closing prices of the Shares over the period commencing on 1 August 2014[1] up to and including the Last Trading Day (the “ First Review Period ”) and from the date of the Joint Announcement up to and including the Latest Practicable Date (the “ Second Review Period ” together with the First Review Period, the “ Review Period ”) below:

Graph A: The closing price performance of the Company during the Review Period

==> picture [424 x 203] intentionally omitted <==

Source: Bloomberg

As set out in Graph A, during the First Review Period, (i) the highest closing price of the Shares was HK$0.415 on 27 August 2015; and (ii) the lowest closing price of the Shares was HK$0.174 on 1 August 2014. During the Second Review Period, (i) the highest closing price of the Shares was HK$1.02 on 25 January 2016; and (ii) the lowest closing price of the Shares was HK$0.52 on 6 January 2016.

During the First Review Period, the Group announced five profit alerts, being (i) a profit warning announcement dated 8 October 2014 (the “ 2014 Third Quarter Profit Warning Announcement ”) in relation to the expected loss for the 9 months ended 30 September 2014; (ii) a profit warning announcement dated 6 January 2015 (the “ 2014 Year End Profit Warning Announcement ”) in relation to the expected loss for the year ended 31 December 2014; (iii) a profit warning announcement dated 2 April 2015 (the “ 2015 First Quarter Profit Warning Announcement ”) in relation to the expected after tax loss for the 3 months ended 31 March 2015; (iv) a profit alert announcement dated 9 July 2015 (the “ 2015 Interim Profit Alert

1 The First Review Period commenced on 1 August 2014, as such date was a start of month which was approximately one year prior to the publication of the announcement in relation to the possible issuance of securities by the Company and possible acquisition and the commencement of the Offer Period on 10 August 2015.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Announcement ”) in relation to the expected after-tax profit for the 6 months ended 30 June 2015; and (v) a profit alert announcement dated 8 October 2015 (the “ 2015 Third Quarter Profit Alert Announcement ”) in relation to the expected after-tax profit for the 9 months ended 30 September 2015.

Share price was not hugely affected after the announcement of the 2014 Third Quarter Profit Warning Announcement. More significant changes were observed after the publication of the 2014 Year End Profit Warning Announcement, with the Shares closing at HK$0.237 per Share on 6 January 2015, and decreasing to the lowest closing price of HK$0.181 per Share on 4 March 2015 during the First Review Period. The closing price per Share then rebounded past the HK$0.2 mark on 12 March 2015. The publication of the 2015 Interim Profit Alert Announcement has led the Shares from closing at HK$0.275 per Share on 9 July 2015 immediately prior to such publication to close above the HK$0.3 per Share mark on 10 July 2015. The publication of the 2015 Third Quarter Profit Alert Announcement did not have a major impact on Share Price, as it closed at HK$0.36 per Share immediately prior to the publication of the 2015 Third Quarter Profit Alert Announcement on 8 October 2015 and HK$0.38 per Share at the end of the First Review Period on 28 October 2015. At the request of the Company, the trading in the Shares on the Stock Exchange was suspended on 29 October 2015 pending the publication of the Joint Announcement.

The average closing price during the First Review Period was approximately HK$0.277 per Share (the “ First Review Period Average Closing Price ”). On this basis, the Share Offer Price of HK$0.39 represents a premium of approximately 40.8% over the First Review Period Average Closing Price.

Before publication of the Joint Announcement, the Shares closed lower than the Share Offer Price in 243 out of 253 trading days during the period from 1 August 2014 to 10 August 2015 (being the commencement of the Offer Period). After the publication of the Joint Announcement, the trading in the Shares resumed on 6 January 2016 and closed at HK$0.52 per Share. As at the Latest Practicable Date, the closing price was at HK$0.70 per Share.

During the Second Review Period, which was subsequent to the publication of the Joint Announcement, the highest and lowest closing price was HK$1.02 per Share on 25 January 2016 and HK$0.52 per Share on 6 January 2016, respectively. The average closing price during the Second Review Period was approximately HK$0.80 per Share (the “ Second Review Period Average Closing Price ”). On this basis, the Share Offer Price of HK$0.39 represents (i) a discount of approximately 51.3% over the Second Review Period Average Closing Price; and (ii) a discount of approximately 44.3% over the closing price as at the Latest Practicable Date. We believe the surge in Share price during the Second Review Period and the higher Second Review Period Average Closing Price than the First Review Period Average Closing Price after the publication of the Joint Announcement were primarily due to the publication of the Joint Announcement.

Over the Review Period (excluding the trading suspension period from 29 October 2015 to 5 January 2016), the average closing price was approximately HK$0.34 per Share (the “ Review Period Average Closing Price ”). As such the Share Offer Price of HK$0.39 represents a premium of approximately 14.7% over the Review Period Average Closing Price.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Shareholders should note that the information set out above is not an indicator of the future performance of the Shares and that the price of the Shares may increase or decrease from its closing price as at the Last Practicable Date.

b. Trading liquidity of the Shares

Set out below in table A is the monthly total trading volumes of the Shares and the percentages of the total monthly trading volume to the (i) total issued Shares as at the Last Trading Day; and (ii) public float of the Company during the Review Period:

Table A: Historical trading volume and daily trading liquidity

		Percentage of the
		daily total trading	Percentage of the
		volume of the	daily total trading
	Average daily	Shares to the	volume of the
	trading volume of	total issued	Shares to the
	the Shares	Shares	public float
	(Note 1)	(Note 2)	(Note 3)
	(approximate)	(approximate)	(approximate)
2014
August (from the
commencement of the
First Review Period
i.e. 1 August)	3,378,095	0.23%	0.86%
September	1,771,429	0.12%	0.45%
October	843,809	0.06%	0.21%
November	3,090,500	0.21%	0.78%
December	446,666	0.03%	0.11%
2015
January	1,055,238	0.07%	0.27%
February	856,666	0.06%	0.22%
March	2,815,454	0.19%	0.71%
April	11,764,210	0.80%	2.98%
May	6,319,578	0.43%	1.60%
June	4,295,000	0.29%	1.09%
July	5,556,363	0.38%	1.41%
August	3,060,750	0.21%	0.78%
September	1,197,000	0.08%	0.30%
October (up to Last
Trading Day)	759,500	0.05%	0.19%
November	0	0%	0%
December	0	0%	0%
2016
January (trading
resumed on January 6)	22,472,278	1.53%	5.69%
February	3,267,223	0.67%	3.52%
March (up to Latest
Practicable Date)	10,088,000	0.29%	2.56%
Average (excluding
period of trading
suspension)	4,613,209	0.32%	1.32%

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Notes:

(1) Source: Bloomberg
(2) The calculation is based on the monthly total trading volume of the Shares divided by the total number of issued share capital of the Company as at the Last Trading Day, except for the calculation for February and March 2016. On 24 February 2016, the Company issued new shares amounted to 1,630,756,836 Shares and 400,000,000 Shares pursuant to the Subscription Agreement dated 28 October 2015 and the New Share Placing Agreement dated 5 January 2016, respectively. As a result, the calculation of trading liquidity after 24 February 2016 was based on the total issued capital of the Company as at Latest Practicable Date.
(3) The calculation is based on the monthly total trading volume of the Shares divided by the total number of Shares held by the public (being the total issued shares as at Last Trading Date less the shares held by the Vendors and the Directors) as at the Last Trading Day except for the calculation for February and March 2016. On 24 February 2016, the Company issued new shares amounted to 1,630,756,836 Shares and 400,000,000 Shares pursuant to the Subscription Agreement dated 28 October 2015 and the New Share Placing Agreement dated 5 January 2016, respectively. As a result, the calculation of trading liquidity after 24 February 2016 was based on the public float (being the total issued shares as at Last Trading Date less the shares held by the Vendors, the Subscribers, the Purchaser, the New Shares Placees and the Directors).

As set out in Table A, the highest average daily trading volume of the Shares during the First Review Period was approximately 11.8 million Shares in April 2015, representing approximately 2.98% of the public float. In fact, the average daily trading volume from April 2015 to July 2015 was substantially higher than previous months which coincided with the very active Hong Kong capital markets during that period when daily turnover on the Stock Exchange reached new highs until the PRC stock market crashed in July 2015 and the average trading volume subsided to approximately the same level before April 2015. After the resumption of trading, the average daily trading volume of the Shares in January 2016 was 1.53% of the total issued shares and 5.69% of the public float, which was substantially higher than that during the First Review Period. We noted that the Company issued (i) an announcement dated 29 December 2015 in relation to a positive profit alert (the “ Positive Profit Alert ”); and (ii) the Joint Announcement about the Offers, which could have contributed to the increased trading activity of the Shares.

The lowest monthly average daily trading volume of the Shares during the First Review Period was approximately 446,666 Shares in December 2014, representing 0.11% of the public float. The average daily trading volume of the Shares during the First Review Period was approximately 3.1 million Shares, approximately 0.80% of public float as at the Last Trading Day. The average daily trading volume of the Shares during the First Review Period (excluding April to July 2015 during the aforementioned period of substantially active capital markets in Hong Kong) was approximately 1.7 million Shares, representing approximately 0.44% of the public float.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

c. Share Offer Price comparisons

The closing price of the Shares as quoted on the Stock Exchange on the Last Trading Day was HK$0.38, respectively.

The Share Offer Price of HK$0.39 per Offer Share represents:

(i) a discount of approximately 44.3% to the closing price of HK$0.70 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a premium of approximately 2.63% over the closing price of HK$0.38 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a premium of approximately 5.41% over the average closing price of HK$0.37 per Share as quoted on the Stock Exchange for the last 5 consecutive trading days up to and including the Last Trading Day;
(iv) a premium of approximately 5.26% over the average closing price of HK$0.3705 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day;
(v) a premium of approximately 6.56% over the average closing price of HK$0.366 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day;
(vi) a premium of approximately 18.2% to the closing price of HK$0.33 per Share as quoted on the Stock Exchange on 7 August 2015, (being the last trading day prior to the commencement of the Offer Period); and
(vii) a premium of 290.0% over the unaudited consolidated net asset value of the Company of approximately HK$0.10 per Share as at 31 December 2015 (based on the unaudited consolidated net asset value of the Company as at 31 December 2015 and the number of the issued Shares as at 31 December 2015).

d. Highest and lowest Share price

During the Review Period (i.e. from 1 August 2014 up to the Latest Practicable Date):

(i) the highest closing price of the Shares as quoted on the Stock Exchange was HK$1.02 per Share on 25 January 2016; and
(ii) the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.174 per Share on 1 August 2014;

For the purpose of analysing the fairness and reasonableness of the Share Offer Price, we consider the First Review Period (i.e. from 1 August 2014 up to the date of the Last Trading Day) to be more relevant than the Review Period (i.e. from 1 August 2014 up to the Latest

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Practicable Date) as (i) the Share Offer Price was determined prior to the publication of the Joint Announcement; (ii) the Share price has been subject to a different fundamentals given the potential investors’ expectation due to the announcement of the Share Offer Price in the Joint Announcement and the change in controlling shareholder subsequent to the publication of the Joint Announcement. We consider the price surge and aforesaid different fundamentals subsequent to the publication of the Joint Announcement to be relevant in assessing whether the Share Offer should be accepted, but irrelevant in assessing the fairness and reasonableness of the Share Offer Price as the Share Offer Price was determined before the publication of the Joint Announcement. The market reaction to the Joint Announcement and the Share Offer Price is beyond the control of the parties who negotiated and determined the Share Offer Price.

During the First Review Period:

(i) the highest closing price of the Shares as quoted on the Stock Exchange was HK$0.415 per Share on 27 August 2015; and
(ii) the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.174 per Share on 1 August 2014.

As further analysed under the section headed “3. Analysis of price performance and trading liquidity – a. Review of trading of the Shares”, the Shares have been traded notably below the Share Offer Price for majority of the duration of the First Review Period. The Share Offer Price represents a premium of approximately 2.63% over the closing price of HK$0.38 as quoted on the Last Trading Day. The Share Offer Price also represents a premium of 290.0% and approximately 333.3% over the Group’s unaudited and audited consolidated net asset value per Share attributable to owners of the Company of approximately HK$0.10 as at 31 December 2015 and approximately HK$0.09 as at 31 December 2014, respectively, based on the number of the issued Shares as at 31 December 2015 and 31 December 2014, respectively. On this basis, we consider the Share Offer Price to be fair and reasonable so far as the Independent Shareholders are concerned. With regards to our opinion on whether the Independent Shareholders should accept the Share Offer, please refer to our advice in the second last paragraph of this letter.

4. Peer comparison

In addition to the above analysis, we have set below our analysis on the price-to-earnings ratio (the “ P/E ratio ”) and the price-to-book ratio (the “ P/B ratio ”) of the Company based on the Share Offer Price. As set out in the 2014 Annual Report, for the year ended 31 December 2014, the Group derived its revenue from three main business functions: (i) corporate advisory; (ii) placing and underwriting service; and (iii) securities dealing commission. For the year ended 31 December 2014, being the date to which the latest audited consolidated financial statements of the Group were made up, the Group recorded a loss of approximately HK$1.3 million. On this basis, no P/E ratio was calculated for the purpose of our analysis below.

Based on the audited consolidated statements of financial position as set out in the 2014 Annual Report, the equity attributable to the owners of the Company amounted to approximately HK$130.4 million as at 31 December 2014. On this basis, the implied P/B ratio is calculated to be approximately 4.33.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Despite the P/E ratio is entrenched as the valuation of choice by the investment community, the P/B ratio is still widely used as a valuation metric, as evident in equity research reports for listed companies across various sectors, and it is particularly relevant for business that is capital-intensive or finance-related businesses. Given the Company is in the financial sector and it has underwriting business aside from its advisory business, we believe the use of the P/B ratio is appropriate in the absence of an applicable P/E ratio for the Company.

Having considered the financial performance and position of the Group, we have set forth the following criteria for the purpose of identifying comparable companies, the shares of which are listed on the Main Board and GEM Board of the Stock Exchange: (i) has a corporate advisory business; (ii) over half of the total revenue derived from corporate advisory/security brokerage/securities placing/underwriting as per the latest audited full-year financial statement; (iii) market capitalisation less than HK$3 billion as at the Latest Practicable Date; and (iv) companies with over 90% of revenue derived from Hong Kong as per the latest audited full-year financial statement (together the “ Criteria ”).

We note that (a) over 90% of the Company’s revenue derived from corporate advisory business as per the latest audited full-year financial statement; and (b) as announced by the Company on 2 February 2016 and as per the circular of the Company dated 4 March 2016, the Group may potentially conduct continuing connected transactions with Zhongzhi Capital for provision of investment advisory and management services with proposed annual caps representing a significant portion to the Group’s historical revenue. On the basis that (i) based on our review of information of listed companies on the Stock Exchange, the population of comparable financial services companies with over 90% revenue derived from corporate advisory would be too limited in our view to form a fair list of sample to assess the Share Offer Price; (ii) criteria for selecting the Market Comparables reflect all the business segments of the Group as per the latest audited full-year financial statement; (iii) the proposed provision of investment advisory and management services by the Group to Zhongzhi Capital is new to the Group and despite the level of the proposed annual caps, the performance and revenue to be derived from which are yet to be known, we are of the view that the Comparable Companies selected based on the Criteria are fair and representative samples, despite our observations (a) and (b) above.

Based on the Criteria, we identified 10 comparable companies (the “ Comparable Companies ”) which represent an exhaustive list based on our criteria as far as we aware based on our review of publicly available information on the website of the Stock Exchange on a best effort basis. Shareholders should note that the business, operation and prospect of the Company are not exactly the same as the Comparable Companies and we have not conducted any in-depth investigation into business and operations of the Comparable Companies save for the aforesaid selection criteria. Nevertheless, the Comparable Companies can still be a meaningful reference in assessing the fairness and reasonableness of the Share Offer Price.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The analysis on the Comparable Companies is set out in the table below:

Table B: Analysis on the Comparable Companies

		Market
		capitalisation as
		at the Latest	Price to book
Name of listed company	Principal business	Practicable Date	multiple (“P/B”)
			(Note 1)
		(HK$ million)	(times)
Vinco Financial Group	Principal activity of the group	473.6	22.68
Limited	is the provision of financial
(Stock Code: 8340)	services in Hong Kong.
	Provision of corporate
	finance advisory services in
	HK is the group’s principal
	business
Chanceton Financial Group	Principally engaged in the	904.0	6.53
Limited (“Chanceton”)	provision of corporate
(Stock Code: 8020)	finance advisory services
	mainly to listed and non-
	listed companies in Hong
	Kong and the PRC
Value Convergence	Principally engaged in the	756.5	1.51
Holdings Limited	provision of financial
(Stock Code: 821)	services
Quam Limited (“Quam”)	Principal activity of the group	1,435.8	3.36
(Stock Code: 952)	are a) securities and futures
	dealing, placement services,
	margin financing and
	money lending, the
	provision of fund
	management services and
	wealth management
	services; b) website
	management and related
	services; c) provision of
	advisory service; and d)
	investment holding and
	securities trading

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

		Market
		capitalisation as
		at the Latest	Price to book
Name of listed company	Principal business	Practicable Date	multiple (“P/B”)
			(Note 1)
		(HK$ million)	(times)
Sunwah Kingsway Capital	Principal activities of the	761.9	0.80
Holdings Limited (Stock	group are investment in
Code: 188)	securities, stock, options,
	futures and commodities
	brokerage, provision of
	financial advisory services,
	asset management, money
	lending and other securities
	related financial services
Shenwan Hongyuan HK	Principally engaged in	2,770.6	2.10
Limited (Stock Code:	brokerage business,
218)	corporate finance business,
	asset management business,
	financing and loans
	business and investment
	business
China Fortune Financial	Principal activities of the	423.9	2.76
Group Limited (Stock	group are securities, futures
Code: 290)	and insurance brokerage,
	margin financing, provision
	of corporate finance
	services and money lending
	services
Cash Financial Services	Principally engaged in	1,199.0	2.01
Group Limited (Stock	provision of online and
Code: 510)	traditional brokerage of
	securities, futures and
	options as well as mutual
	funds and insurance-linked
	investment products;
	principal investments of
	securities and options;
	provision of margin
	financing and money
	lending services; and
	provision of corporate
	finance services

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

		Market
		capitalisation as
		at the Latest	Price to book
Name of listed company	Principal business	Practicable Date	multiple (“P/B”)
			(Note 1)
		(HK$ million)	(times)
South China Financial	Principal activities of the	716.5	1.65
Holdings Limited (Stock	group consist of securities,
Code: 619)	bullion, forex and
	commodities broking and
	trading, margin financing,
	money lending, provision
	of corporate advisory and
	underwriting services,
	wealth management and
	investment holding
Southwest Securities	Principal activities of the	1,464.7	2.77
International Securities	group comprise: wealth
Limited (Stock Code:	management, brokerage and
812)	margin financing, insurance
	agency, corporate finance,
	asset management, money
	lending, and proprietary
	trading
		Mean	4.62
		Maximum	22.68
		Minimum	0.80
		Minimum	2.43
The Group			Implied P/B
The Company	principally engaged in the	2,460.8	4.33
(Stock code: 8295)	provision of corporate		(Note 2)
	advisory services and
	related activities,
	investment in various types
	of assets, as well as money
	lending and asset
	management

Source: Most recent full year annual reports available at the Latest Practicable Date

Notes:

(1) P/B ratio is calculated based on the equity attributable to shareholders per share as at the year end of the latest completed financial year divided by the share price as at the Latest Practicable Date.
(2) The implied P/B ratio is calculated based on the Share Offer Price divided by the audited net asset value per Share attributable to owners of the Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As per Table B above, the P/B ratio of the Comparable Companies ranged from approximately 0.80 times to 22.68 times, with an average of approximately 4.62 times. The implied P/B ratio based on the Share Offer Price of approximately 4.33 times is slightly lower than the average but still within range and below the median of the P/B ratio of the Comparable Companies.

In summary, on the basis that (i) the Company has no implied P/E ratio as it was loss making for the year ended 31 December 2014 hence the P/E ratio is not applicable for comparison purpose; and (ii) the implied P/B ratio based on the Share Offer Price of approximately 4.33 times is slightly lower than the average P/B ratio but still within range and below the median of the P/B ratio of the Comparable Companies as shown in Table B above, we consider the Share Offer Price to be fair and reasonable so far as the Independent Shareholders and Optionholders are concerned.

5. The Option Offer

Pursuant to Rule 13.5 of the Takeovers Code, CCB International, on behalf of the Offeror, makes the Option Offer to the Optionholders to cancel their outstanding Options. The Option Offer is extended to all eligible Optionholders in accordance with the Takeovers Code. As at the Latest Practicable Date, the Company has 32,100,000 outstanding Options conferring rights to subscribe for 32,100,100 new Shares which are exercisable at HK$0.20 per Share.

On the basis that (i) the Company has been loss-making in 2014 although recorded a profitability in 2015; (ii) the Company has not paid dividend in recent years and the trading conditions of the market remain unfavourable as discussed in sub-section headed “Going concern and prospects of the Group” above; (iii) the Shares closed lower than the Share Offer Price in 243 out of 253 trading days during the period from 1 August 2014 to 10 August 2015 (the commencement of the Offer Period) as discussed in subsection headed “3. Analysis of price performance and trading liquidity – a. Review of trading of the Shares”; and (iv) the Option Offer Price represents the see through price between the Share Offer Price and the exercise price of the Options, we consider the Option Offer to be fair and reasonable so far as the Optionholders are concerned. Optionholders should note that as stated in the “Letter from CCB International”, all unexercised Options will lapse one month after the date on which the Share Offer becomes or is declared unconditional in all respects.

6. Information on the Offeror, Kang Bang and Zhongzhi Capital

The Offeror is an investment holding company and is wholly-owned by Zhongzhi Capital.

Kang Bang is an investment holding company and is wholly-owned by Zhongzhi Capital.

Zhongzhi Capital is owned as to 95% by Zhong Hai Sheng Rong and as to 5% by 北京中海聚融投資管理有限公司 (Beijing Zhong Hai Ju Rong Investment Management Company Limited), respectively. The ultimate parent company of Zhong Hai Sheng Rong is Zhonghai Sheng Feng (Beijing) Capital Management Limited Company (中海晟豐(北京)資本管理有限公司) and the ultimate beneficial owner of which is Mr. Xie Zhikun. The sole director of the Offeror is Ms. Duan Di and the sole director of Zhonghai Sheng Feng, the ultimate parent company of the Offeror, is Ms. Li Yun Xi.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Zhongzhi Capital was founded in 2011 with a registered capital of RMB1 billion. Zhongzhi Capital is one of the leading investment managers in China which focuses on acquisition and investment in industry leading enterprises and listed companies and is one of the largest industry consolidation funds in China. Based on its excellent performance, it was awarded by the CV Awards (投中創新榜) issued by China Venture Investment Consulting Group (投中集團), an investment consulting company in the PRC which provides information, data and intelligence relating to the capital markets, as China’s top 10 most active Chinese private equity investment institution in 2015, China’s top 10 venture capital and private equity investment institution with the best investment returns in 2015 and China’s top 10 most innovative Chinese private equity investment institution, venture capital and private equity investment institution in 2015. Zhongzhi Capital’s key services include private equity investments in the primary market, private placement, mergers and acquisitions of overseas business and funds and merger and acquisition consulting etc. The business partners it works with includes leading professional institutions.

7. Intention of the Offeror regarding the Group

According to the “Letter from CCB International”, the Offeror became the controlling Shareholder of the Company upon Completion on 24 February 2016. As stated in the Joint Announcement, the Offeror intends to continue the existing principal businesses of the Group and activate the business of Asian Capital (Corporate Finance) to carry on type 9 (asset management) regulated activity. On 2 February 2016, Asian Capital (Corporate Finance) and Zhongzhi Capital entered into an investment advisory and management agreement (the “ IAM Agreement ”), pursuant to which Asian Capital (Corporate Finance) is conditionally appointed as an investment manager of Zhongzhi Capital for managing a portfolio of assets under the IAM Agreement. For details, please see the announcement of the Company dated 2 February 2016 and 16 February 2016 and the circular of the Company dated 4 March 2016.

As described in the paragraph headed “Intended use of proceeds of the Subscription and the New Shares Placing” of the “Letter from CCB International”, the Company and the Subscribers have had some discussions about the intended use of proceeds of the Subscription and the New Shares Placing and possible areas of business development after Completion. The Offeror will, following the close of the Offers, conduct a review on the business activities and financial position of the Group for the purpose of formulating business plans and strategies for the future business development of the Group. Subject to the results of the review and should suitable investment or business opportunities arise, the Offeror may explore other business opportunities for the Company which may involve acquisitions or investments in assets and/or businesses or cooperation with business partners of the Offeror with a view to enhancing the Group’s business growth and asset base as well as broadening its income stream. As at the Latest Practicable Date, save for the IAM Agreement, the Offeror has no plan, and has not engaged in any discussion or negotiation, on any injection of any assets or businesses into the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Proposed change of board composition of the Company

Public float and maintaining the listing status of the Company

The Offeror intends to maintain the listing status of the Shares on the Stock Exchange after the close of the Offers and in the event that after the completion of the Offers, the public float of the Company falls below 25%, the director of the Offeror and the new Directors who are nominated by the Offeror to be appointed as Directors and the then director(s) of the Company will jointly and severally undertake to the Stock Exchange that they will take appropriate steps to restore the minimum public float as required under the GEM Listing Rules as soon as possible following the close of the Offers to ensure that sufficient public float exists for the Shares.

The Stock Exchange has stated that if, at the close of the Offers, less than the minimum prescribed percentage applicable to the listed issuer, being 25% of the issued Shares, are held by the public, or if the Stock Exchange believes that:

(a) a false market exists or may exist in the trading of the Shares; or
(b) there are insufficient Shares in public hands to maintain an orderly market,

it will consider exercising its discretion to suspend trading in the Shares.

OPINIONS AND RECOMMENDATION

Having considered the principal factors and reasons as set out in this letter, in particular:

(i) the Share Offer Price represents a premium to the closing price of the Shares for the majority of the First Review Period and our view that the period after the publication of the Joint Announcement is not relevant in assessing the fairness and reasonableness of the Share Offer Price, the bases and details of which are set out in earlier section of this letter;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) the Share Offer Price represents a premium of approximately 2.63% to the closing price of the Shares as at Last Trading Day of HK$0.38 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) the Share Offer Price represents a significant premium of (a) approximately 333.3% over the audited consolidated net asset value per Share (based on the number of the issued Shares as at 31 December 2014) of the Company of approximately HK$0.09; and (b) 290.0% over the unaudited consolidated net asset value per Share (based on the number of the issued Shares as at 31 December 2015) of the Company of approximately HK$0.10;
(iv) the Share Offer Price represents an implied P/B ratio of approximately 4.33 times which is slightly lower than the average but still within range and below the median of the P/B ratio of the Comparable Companies;
(v) the uncertainty and volatility of the capital market in Hong Kong as influenced by the global funds flow spurred by the interest rate movement of the U.S. Federal Reserve and the slowing PRC economy undergoing structural changes;
(vi) the notable increase in the average daily trading volume of the Shares during April to July 2015 is considered to be an isolated occurrence due to the short-lived stock market boom in 2015, it is noted that the average daily trading volume of the Shares during the First Review Period (excluding April to July 2015) represented approximately 0.44% of the public float. Such thin trading volume has caused Independent Shareholders not being able to dispose of a significant shareholding in the Company in the market without exerting a downward pressure on the market price of the Shares. As such, the Offers represent an alternative exit for the Independent Shareholders and Optionholders to realise their investments in the Shares and Options at the Share Offer Price under the prevailing market environment;
(vii) given the Option Offer Price for cancelling the Options is equivalent to the amount calculated by deducting the relevant exercise price payable on exercise of the relevant Option from the Share Offer Price (i.e. see-through price) as if the relevant Option was exercised in full, our analysis set out in the above for the Share Offer Price also apply to the Option Offer Price; and
(viii) the Option Offer is made with the intention to cancel the Options, and the fact that in accordance with the terms and conditions of the Pre-IPO Share Option Scheme, any outstanding Options not exercised within one month after the date on which the Share Offer becomes or is declared unconditional in all respects will automatically lapse; as such, the time value of the Options are not relevant in determining the Option Offer Price; and that the use of “see-through” price principle without taking into account the time value of options is consistent with the normal practice adopted in Hong Kong in such circumstances,

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

we consider the terms of the Offers to be fair and reasonable so far as the Independent Shareholders and Optionholders are concerned. Accordingly, subject to our advice in below paragraph, we recommend the Independent Board Committee to advise the Independent Shareholders and Optionholders to accept the Offers, respectively.

The Independent Shareholders and Optionholders who hold a positive view on the future prospect of the Group (with the potential new income stream from the proposed continuing connected transaction with Zhongzhi Capital for provision of investment advisory and management services) may consider keeping their Shares and exercising their Options as soon as possible and in accordance with the terms of the Pre-IPO Share Option Scheme and keeping the Shares issued to them, respectively, instead of accepting the Share Offer and Option Offer, respectively. The Independent Shareholders who would like to realise part or all of their investments in the Shares should monitor the market prices of the Shares (which may reflect the potential investors’ expectation due to the announcement of the Share Offer Price in the Joint Announcement, the change in controlling shareholder subsequent to the publication of the Joint Announcement and the potential change in the prospect of the Group should the proposed continuing connected transaction with Zhongzhi Capital for provision of investment advisory and management services be approved) during the Offer Period. In the event that the market price of the Shares exceeds the Share Offer Price during the Offer Period and the sale proceeds after the relevant transaction costs exceed the net amounts receivable under the Share Offer, the Independent Shareholders should consider selling their Shares in the open market instead of accepting the Offers. Optionholders should likewise consider exercising their Options in full or in part as soon as possible and in accordance with the terms of the Pre-IPO Share Option Scheme and selling in the market the Shares issued to them, if the net proceeds from the sale of such Shares in the open market after the relevant costs of exercising the Options and transaction costs would exceed the net amount receivable under the Option Offer. For any outstanding Options not exercised, Optionholders should accept the Option Offer.

For those Independent Shareholders who wish to retain part or all of their investments in the Shares are reminded to consider the intentions of the Offeror after the close of the Offers, details of which are set out under the section headed “7. Intention of the Offeror regarding the Group” of this letter and in the paragraphs headed “Information on the Offeror, Kang Bang and Zhongzhi Capital” and “Intention of the Offeror in relation to the Group” in the “Letter from CCB International” set out in this Composite Document.

Yours faithfully, For and on behalf of

Investec Capital Asia Limited Alexander Tai Managing Director Head of Corporate Finance

Mr. Alexander Tai of Investec Capital Asia Limited is a responsible officer of Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO. He has been active in the field of corporate finance advisory for over 20 years, and has been involved in and completed various corporate finance advisory transactions.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

1. PROCEDURES FOR ACCEPTANCE OF THE OFFERS

To accept the Offers, you should complete and sign the Form(s) of Acceptance in accordance with the instructions printed thereon, which instructions form part of the Offers.

A. The Share Offer

(a) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in your name, and you wish to accept the Share Offer, you must send the White Form of Acceptance duly completed and signed together with the relevant share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by post or by hand, marked “ Asian Capital Holdings Limited Share Offer ” on the envelope, in any event not later than 4:00 p.m., on the Closing Date or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code.
(b) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Share Offer whether in full or in part of your Shares, you must either:
(i) lodge your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Share Offer on your behalf and requesting it to deliver in an envelope marked “ Asian Capital Holdings Limited Share Offer ” the duly completed and signed White Form of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or
(ii) arrange for the Shares to be registered in your name by the Company through the Registrar, and deliver in an envelope marked “ Asian Capital Holdings Limited Share Offer ” the duly completed and signed White Form of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

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FURTHER TERMS OF THE OFFERS

APPENDIX I

(iii) if your Shares have been lodged with your licensed securities dealer/registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Share Offer on your behalf on or before the deadline set by HKSCC Nominees Limited. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer/registered institution in securities/custodian bank for the timing on the processing of your instruction, and submit your instruction to your licensed securities dealer/registered institution in securities/custodian bank as required by them; or
(iv) if your Shares have been lodged with your investor participant’s account maintained with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System on or before the deadline set by HKSCC Nominees Limited.
(c) If the share certificate(s) and/or transfer receipts and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are not readily available and/or is/are lost and you wish to accept the Share Offer in respect of your Shares, the White Form of Acceptance should nevertheless be duly completed and signed and delivered in an envelope marked “ Asian Capital Holdings Limited Share Offer ” to the Registrar together with a letter stating that you have lost one or more of your share certificate(s) and/or transfer receipts and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Registrar as soon as possible thereafter. If you have lost your share certificate(s), you should also write to the Registrar for a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.
(d) If you have lodged transfer(s) of any of your Shares for registration in your name and have not yet received your share certificate(s), and you wish to accept the Share Offer in respect of your Shares, you should nevertheless complete and sign the White Form of Acceptance and deliver it in an envelope marked “ Asian Capital Holdings Limited Share Offer ” to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable instruction and authority to each of CCB International and/or the Offeror and/or any of their respective agent(s) to collect from the Company or the Registrar on your behalf the relevant share certificate(s) when issued and to deliver such certificate(s) to the Registrar and to authorise and instruct the Registrar to hold such share certificate(s), subject to the terms and conditions of the Share Offer, as if it was/they were delivered to the Registrar with the White Form of Acceptance.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

(e) You have to insert the total number of Shares for which the Share Offer is accepted on the White Form of Acceptance.
(i) If no number is specified or, the total number of Shares specified is greater than the number of Shares tendered, as supported by the Share certificate(s), transfer receipt(s) and/or any other documents of title (and/or satisfactory indemnity or indemnities required in respect thereof), you are deemed to have accepted the Share Offer in respect of the Shares as shall be equal to the number of the Shares tendered by you, as supported by the Share certificate(s), transfer receipt(s) and/or any other documents of title; and
(ii) if the number specified in the White Form of Acceptance is smaller than the number of Shares tendered, as supported by the Share certificate(s), transfer receipt(s) and/or any other documents of title, you are deemed to have accepted the Share Offer in respect of the Shares as shall be equal to the number of the Shares specified in the White Form of Acceptance.
(f) Acceptance of the Share Offer will be treated as valid only if the duly completed and signed White Form of Acceptance is received by the Registrar by no later than 4:00 p.m. on the Closing Date or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code and the Registrar has recorded that the White Form of Acceptance and any relevant documents required have been so received, and is:
(i) accompanied by the relevant Share certificate(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if those Share certificate(s) is/are not in your name, such other documents (e.g. a duly stamped transfer of the relevant Share(s) in blank or in your favour executed by the registered holder) in order to establish your right to become the registered holder of the relevant Shares; or
(ii) from a registered Shareholder or his personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Shares which are not taken into account under the other subparagraph of this paragraph (f)); or
(iii) certified by the Registrar or the Stock Exchange. If the White Form of Acceptance is executed by a person other than the registered Shareholder, appropriate documentary evidence of authority (such as grant of probate or certified copy of power of attorney) to the satisfaction of the Registrar must be produced.
(g) In Hong Kong, seller’s ad valorem stamp duty arising in connection with acceptances of the Share Offer will be payable by relevant Independent Shareholders at a rate of 0.1% of the market value of the Offer Shares or consideration payable

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FURTHER TERMS OF THE OFFERS

APPENDIX I

by the Offeror in respect of the relevant acceptances of the Share Offer, whichever is higher, will be deducted from the cash amount payable by the Offeror to the relevant Independent Shareholder accepting the Share Offer (where the amount of stamp duty is a fraction of a dollar, the stamp duty will be rounded up to the nearest dollar). The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of relevant Independent Shareholders accepting the Share Offer and will pay the buyer’s ad valorem stamp duty in connection with the acceptance of the Share Offer and the transfer of the Shares.

(h) No acknowledgement of receipt of any WHITE Form of Acceptance, share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.
(i) The address of the Registrar is Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

B. The Option Offer

(a) If you accept the Option Offer, you should complete and sign the YELLOW Form of Acceptance in accordance with the instructions printed thereon, which form part of the terms and conditions of the Option Offer.
(b) The duly completed and signed YELLOW Form of Acceptance should be sent, together with the certificate(s) of the Options and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) stating the number of Options in respect of which you intend to accept the Option Offer, to the company secretary of the Company at Suite 601, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong, marked “ Asian Capital Holdings Limited Option Offer ” on the envelope, as soon as possible and in any event so as to reach the company secretary of the Company at the aforesaid address by no later than 4:00 p.m. on the Closing Date.
(c) No stamp duty is payable in connection with the acceptance of the Option Offer.
(d) No acknowledgement of receipt of any YELLOW Form of Acceptance, the certificate(s) of the Options and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

2. SETTLEMENT

A. The Share Offer

(a) Provided that a valid WHITE Form of Acceptance and the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title and/or transfer receipt(s) (and/or any satisfactory indemnity or indemnities required in respect thereof) have been received by the Registrar no later than the latest time for acceptance, a cheque for the amount due to each accepting Shareholder, less the seller’s ad valorem stamp duty payable by him, will be despatched to such Shareholder by ordinary post at his own risk as soon as possible but in any event within seven Business Days following the date on which all the relevant documents are received by the Registrar to render such acceptance complete and valid.
(b) Settlement of the consideration to which any Shareholders are entitled under the Share Offer will be implemented in full in accordance with the terms of the Share Offer (save with respect of the payment of seller’s ad valorem stamp duty), without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Shareholders.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

B. The Option Offer

(a) Provided that a valid YELLOW Form of Acceptance and the relevant certificate(s) of the Options and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) have been received by the company secretary of the Company no later than the latest time for acceptance, a cheque for the amount due to each accepting holder of Options in respect of the Options tendered by him under the Option Offer will be despatched to such holder of Options by ordinary post at his own risk as soon as possible but in any event within seven Business Days of the date on which all the relevant documents are received by the company secretary of the Company to render such acceptance complete and valid.
(b) Settlement of the consideration to which any Optionholders are entitled under the Option Offer will be implemented in full in accordance with the terms of the Option Offer, without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Optionholders.

3. ACCEPTANCE PERIOD AND REVISIONS

(a) Unless the Offers have previously been revised or extended with the consent of the Executive, all acceptances of the Share Offer and the Option Offer must be received by the Registrar (as regards the Share Offer) and by the company secretary of the Company (as regards the Option Offer) respectively by 4:00 p.m. on Thursday, 31 March 2016, being the Closing Date. The Offers are unconditional.
(b) If the Offers are extended or revised, the announcement of such extension or revision shall state the next Closing Date or that the Offers will remain open until further notice. For the latter case, at least 14 days’ notice in writing will be given to the Shareholders and the Optionholders who have not accepted the Offers before the Offers are closed, and an announcement in respect thereof shall be released. If the Offeror revises the terms of the Offers, all Independent Shareholders and/or Optionholders, whether or not they have already accepted the Offers, will be entitled to accept the revised Offers under the revised terms.
(c) If the Closing Date is extended, any reference in this Composite Document and in the Form(s) of Acceptance to the Closing Date shall, except where the context otherwise requires, be deemed to refer to the Closing Date so extended.

4. NOMINEE REGISTRATION

To ensure equality of treatment of all Independent Shareholders and Optionholders, those registered Independent Shareholders or Optionholders who hold the Shares, Options as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. It is essential for the beneficial owners of the Shares and Options whose investments are registered in the names of nominees to provide instructions to their nominees of their intentions with regard to the Offers.

– 66 –

FURTHER TERMS OF THE OFFERS

APPENDIX I

5. ANNOUNCEMENTS

(a) By 6:00 p.m. on Thursday, 31 March 2016 (or such later time and/or date as the Executive may in exceptional circumstances permit) which is the Closing Date, the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the expiry, revision or extension of the Offers. The Offeror must post an announcement on the Stock Exchange’s website by 7:00 p.m. on the Closing Date stating the results of the Offers and whether the Offers have been revised or extended.

The announcement must state the total number of Shares and rights over Shares and Options:

(i) for which acceptances of the Offers have been received;
(ii) held, controlled or directed by the Offeror or persons acting in concert with it before the Offer Period; and
(iii) acquired or agreed to be acquired during the Offer Period by the Offeror or persons acting in concert with it.

The announcement must also include details of any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which the Offeror or any person acting in concert with it has borrowed or lent (save for any borrowed Shares which have been either on-lent or sold) and specify the percentages of the issued share capital of the Company and the percentages of voting rights of the Company represented by these numbers.

(b) In computing the total number of Shares and Options represented by acceptances, only valid acceptances that have been received by the Registrar (as regards the Share Offer) and by the company secretary of the Company (as regards the Option Offer) no later than 4:00 p.m. on the Closing Date shall be included.
(c) As required under the Takeovers Code, all announcements in respect of the Offers must be made in accordance with the requirements of the Takeovers Code and the GEM Listing Rules.

6. RIGHT OF WITHDRAWAL

(a) Acceptance of the Offers tendered by any Independent Shareholders and Optionholders shall be irrevocable and cannot be withdrawn, except in the circumstances set out below.
(b) If the Offeror is unable to comply with the requirements set out in the paragraph headed “Announcements” above, as set out in Rule 19.2 of the Takeovers Code, the Executive may require that the Independent Shareholders and the Optionholders who have tendered acceptances to the Offers be granted a right of withdrawal on terms that are acceptable to the Executive until the requirements set out in that rule are met.

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FURTHER TERMS OF THE OFFERS

APPENDIX I

(c) In such case, if the Independent Shareholders and the Optionholders withdraw their acceptances, the Offeror, Registrar or the company secretary of the Company (as the case may be) shall, as soon as possible but in any event within ten days thereof, return by ordinary post the share certificate(s), certificate(s) of Options, and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the Shares and/or Options lodged with the Form(s) of Acceptance to the relevant Independent Shareholders and Optionholders.

7. GENERAL

(a) All communications, notices, Form(s) of Acceptance, Share certificates, certificates of Options (if any), transfer receipts, other documents of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to settle the consideration payable under the Offers to be delivered by or sent to or from the Independent Shareholders and/or Optionholders will be delivered by or sent to or from them, or their designated agents by post at their own risk, and the Offeror, its beneficial owners, the Company, CCB International, Investec Capital, the Registrar or the company secretary of the Company, any of their respective directors and professional advisers and any other parties involved in the Offers and any of their respective agents do not accept any liability for any loss or delay in postage or any other liabilities that may arise as a result thereof.
(b) The provisions set out in the Form(s) of Acceptance form part of the terms of the Offers.
(c) The accidental omission to despatch this Composite Document and/or Form(s) of Acceptance or any of them to any person to whom the Offers are made will not invalidate the Offers in any way.
(d) The Offers are, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong.
(e) Due execution of the Form(s) of Acceptance will constitute an authority to the Offeror, CCB International or such person or persons as the Offeror may direct to complete, amend and execute any document on behalf of the person or persons accepting the Share Offer and/or the Option Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as it may direct, the Shares in respect of which such person or persons has/have accepted the Share Offer or of cancelling the Options in respect of which such person or persons has/have accepted the Option Offer.

– 68 –

FURTHER TERMS OF THE OFFERS

APPENDIX I

(f) Acceptance of:
(i) the Share Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror and the Company that the Shares under the Offers are free from all third party rights and Encumbrances whatsoever and together with all rights accruing or attaching thereto including the rights to receive in full all dividends and distributions recommended, declared, made or paid on or after the date on which the Share Offer is made; and
(ii) the Option Offer by any person or persons will be deemed to constitute a warranty by such person or persons to the Offeror and the Company that the Options are free from all third party rights and Encumbrances whatsoever and will be renounced together with all rights accruing or attaching thereto on or after the date on which the Option Offer is made.
(g) References to the Offers in this Composite Document and the Form(s) of Acceptance shall include any revision and/or extension thereof.
(h) The making of the Offers to the Overseas Holders may be prohibited or affected by the laws of the relevant jurisdictions. The Overseas Holders should inform themselves about and observe any applicable legal or regulatory requirements. It is the responsibility of each Overseas Holders who wishes to accept the Share Offer and/or the Option Offer to satisfy himself/herself/itself as to the full observance of the laws and regulations of all relevant jurisdictions in connection therewith, including, but not limited to the obtaining of any governmental, exchange control or other consents and any registration or filing which may be required and the compliance with all necessary formalities, regulatory and/or legal requirements. Such Overseas Holders shall be fully responsible for the payment of any transfer or other taxes and duties due by such Overseas Holders in respect of the relevant jurisdictions. The Overseas Holders are recommended to seek professional advice on deciding whether or not to accept the Offers.
(i) Acceptances of the Offers by any persons will be deemed to constitute a warranty by such persons that such persons are permitted under all applicable laws and regulations to receive and accept the Offers, and any revision thereof, and such acceptances shall be valid and binding in accordance with all applicable laws and regulations. Any such persons will be responsible for any such issue, transfer and other applicable taxes or other governmental payments payable by such persons.
(j) Subject to the Takeovers Code, the Offeror reserves the right to notify any matter (including the making of the Offers) to all or any Independent Shareholders and Optionholders with registered address(es) outside Hong Kong or whom the Offeror or CCB International knows to be nominees, trustees or custodians for such persons by announcement in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any such Independent Shareholders and Optionholders to receive or see such notice, and all references in this Composite Document to notice in writing shall be construed accordingly.

– 69 –

FURTHER TERMS OF THE OFFERS

APPENDIX I

(k) In making their decision, the Independent Shareholders and the Optionholders must rely on their own examination of the Offeror, the Group and the terms of the Offers, including the merits and risks involved. The contents of this Composite Document, including any general advice or recommendation contained herein together with the Form(s) of Acceptance shall not be construed as any legal or business advice on the part of the Offeror, its beneficial owners, the Company, CCB International or Investec Capital or their respective professional advisers. The Independent Shareholders and Optionholders should consult their own professional advisers for professional advice.
(l) The English texts of this Composite Document and the Form(s) of Acceptance shall prevail over their respective Chinese texts for the purpose of interpretation in case of inconsistency.

– 70 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. FINANCIAL SUMMARY

The following is a summary of (i) the audited financial results of the Group for each of the three financial years ended 31 December 2014 and the unaudited financial results of the Group for the six months ended 30 June 2015 and twelve months ended 31 December 2015; and (ii) the audited assets and liabilities as at 31 December 2012, 2013 and 2014 and the unaudited assets and liabilities as at 30 June 2015 and 31 December 2015, as extracted from the relevant annual reports and interim reports of the Company. As disclosed in the announcement of the Company dated 27 January 2016, the Board has resolved to change the financial year end date of the Company from 31 December to 31 March.

For each of the three financial years ended 31 December 2012, 2013 and 2014, no dividend was declared or paid and there were no exceptional items because of size, nature or incidence in respect of the consolidated financial statements of the Company during each of the three years ended 31 December 2012, 2013 and 2014. The Group did not record any non-controlling interests for each of the three financial years ended 31 December 2012, 2013 and 2014.

The consolidated financial statements of the Group for the years ended 31 December 2012, 2013 and 2014 were audited by PricewaterhouseCoopers, Certified Public Accountants, Hong Kong. The auditor of the Company has not issued any qualified opinion on the Group’s financial statements for each of the three financial years ended 31 December 2012, 2013 and 2014.

– 71 –

APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

REVENUE Net investment income/(loss) Net interest income Other income and gains Revenue and other income Operating expenses PROFIT/(LOSS) BEFORE TAX Income tax (expense)/credit PROFIT/(LOSS) FOR THE PERIOD/YEAR Other comprehensive income TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD/YEAR EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY Basic (HK cents) Diluted (HK cents)	Twelve months ended 31 December 2015 HK$’000 (Unaudited) 32,265 129 3,812 150 36,356 (27,909) 8,447 (1,696) 6,751 – 6,751 0.47 0.44	Six months ended 30 June 2015 HK$’000 (Unaudited) 13,980 158 907 – 15,045 (12,898) 2,147 (452) 1,695 – 1,695 0.12 0.11	Year 2014 HK$’000 (Audited) 24,937 (2,478) 1,696 261 24,416 (26,532) (2,116) 785 (1,331) – (1,331) (0.09) (0.09)	ended 31 December 2013 2012 HK$’000 (Audited) HK$’000 (Audited) 31,638 17,627 8,363 1,870 923 1,634 – – 40,924 21,131 (30,004) (22,709) 10,920 (1,578) (2,285) (41) 8,635 (1,619) – – 8,635 (1,619) 0.60 (0.12) 0.60 (0.12)

– 72 –

APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

NON-CURRENT ASSETS Plant and equipment Intangible asset Deposits Total non-current assets CURRENT ASSETS Trade receivables Loans receivables Prepayments, deposits and other receivables Investments at fair value through profit or loss Deferred tax assets Cash held on behalf of clients Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade payables Other payables and accruals Tax payable Deferred tax liabilities Total current liabilities NET CURRENT ASSETS Net assets EQUITY Equity attributable to owners of the Company Issued capital Reserves Total equity Total assets Total equity and liabilities	As at 31 December 2015 HK$’000 (Unaudited) 2,744 866 100 3,710 3,117 – 1,589 137 217 60,250 140,469 205,779 61,575 7,079 2,674 – 71,328 134,451 138,161 14,541 123,620 138,161 209,489 209,489	As at 30 June 2015 HK$’000 (Unaudited) 3,259 866 100 4,225 6,254 27,846 31,061 166 180 45 96,308 134,014 562 3,698 1,393 – 5,653 128,361 132,586 14,515 118,071 132,586 138,239 138,239	As at 31 December 2014 2013 2012 HK$’000 (Audited) HK$’000 (Audited) HK$’000 (Audited) 3,385 724 941 866 866 866 100 100 100 4,351 1,690 1,907 2,658 9,066 1,260 7,000 – – 2,572 2,395 7,258 6,273 15,423 26,877 – – – 45 6 41 113,901 113,739 85,085 132,449 140,629 120,521 702 3,847 369 5,036 6,426 2,586 615 3,149 1,928 21 451 – 6,374 13,873 4,883 126,075 126,756 115,638 130,426 128,446 117,545 14,515 14,400 14,400 115,911 114,046 103,145 130,426 128,446 117,545 136,800 142,319 122,428 136,800 142,319 122,428	As at 31 December 2014 2013 2012 HK$’000 (Audited) HK$’000 (Audited) HK$’000 (Audited) 3,385 724 941 866 866 866 100 100 100 4,351 1,690 1,907 2,658 9,066 1,260 7,000 – – 2,572 2,395 7,258 6,273 15,423 26,877 – – – 45 6 41 113,901 113,739 85,085 132,449 140,629 120,521 702 3,847 369 5,036 6,426 2,586 615 3,149 1,928 21 451 – 6,374 13,873 4,883 126,075 126,756 115,638 130,426 128,446 117,545 14,515 14,400 14,400 115,911 114,046 103,145 130,426 128,446 117,545 136,800 142,319 122,428 136,800 142,319 122,428
				1,907
				1,260 – 7,258 26,877 – 41 85,085
				120,521
				369 2,586 1,928 –
				4,883
				115,638
				117,545

				14,400 103,145
				117,545

				122,428

				122,428

– 73 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

2. AUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE YEAR ENDED 31 DECEMBER 2014

The following is the audited consolidated financial information of the Group for the year ended 31 December 2014 as extracted from the annual report of the Group for the year ended 31 December 2014.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

Note REVENUE 5 Net investment (loss)/income 5 Net interest income 5 Other income and gains 5 Revenue and other income 5 Operating expenses (LOSS)/PROFIT BEFORE TAX 6 Income tax credit/(expense) 9 (LOSS)/PROFIT FOR THE YEAR Other comprehensive income TOTAL COMPREHENSIVE INCOME FOR THE YEAR (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY 12 Basic (HK cents) Diluted (HK cents)	2014 HK$’000 24,937 (2,478) 1,696 261 24,416 (26,532) (2,116) 785 (1,331) – (1,331) (0.09) (0.09)	2013 HK$’000 31,638 8,363 923 – 40,924 (30,004) 10,920 (2,285) 8,635 – 8,635 0.60 0.60

Details of the dividends for the year are disclosed in note 11 to the consolidated financial statements.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Statement of Financial Position

As at 31 December 2014

Note NON-CURRENT ASSETS Plant and equipment 13 Intangible asset 14 Deposits Total non-current assets CURRENT ASSETS Trade receivables 16 Other assets and receivables 17 Investments at fair value through profit or loss 18 Cash held on behalf of clients 19 Cash and cash equivalents 20 Total current assets CURRENT LIABILITIES Trade payables 21 Other payables and accruals 22 Tax payable Deferred tax liabilities 23 Total current liabilities NET CURRENT ASSETS Net assets EQUITY Equity attributable to owners of the Company Issued capital 24 Reserves 26(a) Total equity Total assets Total equity and liabilities	2014 HK$’000 3,385 866 100 4,351 2,658 9,572 6,273 45 113,901 132,449 702 5,036 615 21 6,374 126,075 130,426 14,515 115,911 130,426 136,800 136,800	2013 HK$’000 724 866 100
		1,690
		9,066 2,395 15,423 6 113,739
		140,629
		3,847 6,426 3,149 451
		13,873
		126,756
		128,446

		14,400 114,046
		128,446

		142,319

		142,319

– 75 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

Note At 1 January 2013 Total comprehensive income for the year Equity-settled share option arrangements 25 At 31 December 2013 and 1 January 2014 Total comprehensive income for the year Allotment of new shares pursuant to pre-IPO share option scheme Equity-settled share option arrangements 25 At 31 December 2014	Issued capital HK$’000 (note 24) 14,400 – – 14,400 – 115 – 14,515	Attributable to owners Share premium account Contributed surplus HK$’000 HK$’000 (note 26(a)) (note 26(a)) 65,898 9,000 – – – – 65,898 9,000 – – 3,566 – – – 69,464 9,000	of the Company Share option reserve Retained profits HK$’000 HK$’000 (note 25) 5,913 22,334 – 8,635 2,266 – 8,179 30,969 – (1,331) (1,373) – 1,003 – 7,809 29,638	Total HK$’000 117,545 8,635 2,266 128,446 (1,331) 2,308 1,003 130,426

– 76 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

Note CASH FLOWS FROM OPERATING ACTIVITIES (Loss)/profit before tax Adjustments for: Interest income 5 Gain on disposal of plant and equipment 5 Depreciation 6 Impairment loss on trade receivables 6 Fair value loss on investments at fair value through profit or loss, net 6 Equity-settled share option expense 6 Decrease/(increase) in trade receivables (Increase)/decrease in other assets and receivables Decrease in investments at fair value through profit or loss (Increase)/decrease in cash held on behalf of clients (Decrease)/increase in trade payables (Decrease)/increase in other payables and accruals Cash generated from operations Hong Kong profits tax paid Net cash flows (used in)/from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of plant and equipment 13 Proceeds from the disposal of plant and equipment Interest received (Decrease)/increase in time deposits with original maturity of more than three months when acquired 20 Net cash flows (used in)/from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from placing of shares 25(a) Net cash flows from financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 20 Time deposits 20 Cash and cash equivalents as stated in the consolidated statement of financial position Time deposits with original maturity of more than three months when acquired 20 Cash and cash equivalents as stated in the consolidated statement of cash flows	2014 HK$’000 (2,116) (1,696) (261) 768 2,393 722 1,003 813 4,015 (7,177) 8,428 (39) (3,145) (1,390) 1,505 (2,179) (674) (3,818) 650 1,696 (33,706) (35,178) 2,308 2,308 (33,544) 87,122 53,578 7,244 106,657 113,901 (60,323) 53,578	2013 HK$’000 10,920 (923) – 326 – 1,015 2,266 13,604 (7,806) 4,863 10,439 35 3,478 3,840 28,453 (613) 27,840 (109) – 923 6,819 7,633 – – 35,473 51,649 87,122 5,089 108,650 113,739 (26,617) 87,122

– 77 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Statement of Financial Position

As at 31 December 2014

Note NON-CURRENT ASSETS Investments in subsidiaries 15 CURRENT ASSETS Due from subsidiaries 15 Prepaid tax Other assets and receivables 17 Cash and cash equivalents 20 Total current assets CURRENT LIABILITIES Due to subsidiaries 15 Other payables and accruals 22 Tax payable Total current liabilities NET CURRENT ASSETS Net assets EQUITY Issued capital 24 Reserves 26(b) Total equity Total assets Total equity and liabilities	2014 HK$’000 22,809 22,809 11,964 97 650 85,149 97,860 – 223 – 223 97,637 120,446 14,515 105,931 120,446 120,669 120,669	2013 HK$’000 22,353
		22,353 36,684 – 319 57,847
		94,850
		101 97 54
		252
		94,598
		116,951

		14,400 102,551
		116,951

		117,203

		117,203

– 78 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes to the Consolidated Financial Statements

31 December 2014

1. CORPORATE INFORMATION

Asian Capital Holdings Limited is a limited liability company incorporated in the Cayman Islands on 5 January 2010 as an exempted company with limited liability under the Companies Law, Cap 22 (Law 3 of 1961 as consolidated and revised) of the Cayman Islands. The registered address of the Company is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

The shares of the Company have been listed on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) since 18 June 2010 (the “Listing”).

The principal activity of the Company is investments holding.

The Company and its subsidiaries (collectively referred to as the “Group”) are principally engaged in the provision of corporate advisory services and related activities, as well as investment in various types of assets.

As at 31 December 2014, the directors considered that there was no immediate holding company and ultimate holding company.

2.1 BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for investments at fair value through profit or loss, which have been measured at fair value. These financial statements are presented in Hong Kong dollars, which is also the Group’s functional currency. All values are rounded to the nearest thousand except when otherwise indicated.

The preparation of the consolidated financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

2.2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

The Group has adopted the below revised HKFRSs for the first time for the current year’s consolidated financial statements.

Amendment to HKAS 32, ‘Financial instruments: Presentation’ on offsetting financial assets and financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amendment does not have a significant effect on the Group’s consolidated financial statements.

Amendments to HKAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non-financial assets. This amendment removes certain disclosures of the recoverable amount of cash generating units which have been included in HKAS 36 by the issue of HKFRS 13.

Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the Group.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following as set out below:

HKFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income (“OCI”) and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually uses for risk management purposes.

Contemporaneous documentation is still required but is different to that currently prepared under HKAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The Group is yet to assess HKAS 9’s full impact.

HKFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces HKAS 18 ‘Revenue’ and HKAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The Group is yet to assess the impact of HKAS 15.

There are no other HKFRSs or HK(IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the Group.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The results of subsidiaries are included in the Company’s profit or loss to the extent of dividends received and receivable. The Company’s investments in subsidiaries are stated at cost less any impairment losses, if any.

Inter-company transactions and balances between Group companies are eliminated.

Acquisitions of businesses not under common control are accounted for using the acquisition method. The consideration transferred in a business combination is the fair values at the acquisition date of the assets transferred, the liabilities incurred (including contingent consideration arrangement) and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are expensed in the income statement as incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the Group’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If after assessment, the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the Group’s previously held interest in the acquiree (if any), the excess is recognised immediately in income statement as a bargain purchase gain. Subsequently, goodwill is subject to impairment testing.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at fair value at the acquisition date and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gain on bargain purchase. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Measurement period does not exceed one year from the acquisition date.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets), the asset’s recoverable amount is estimated. An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount.

An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

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

An impairment loss is charged to profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;

(b) the party is an entity where any of the following conditions applies:
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;

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(v) the entity is controlled or jointly controlled by a person identified in (a); and
(vi) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Plant and equipment and depreciation

Plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The cost of an item of plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Furniture, fixtures and equipment 20% to 50% Motor vehicles 20%

Where parts of an item of plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for on a prospective basis.

Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessee, rentals payable under operating leases net of any incentives received from the lessor are charged to profit or loss on the straight-line basis over the lease terms.

Investments and other financial assets

Initial recognition and measurement

Financial assets within the scope of HKAS 39 are classified as financial assets at fair value through profit or loss and loans and receivables. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

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The Group’s financial assets include trade receivables, deposits and other receivables, investments at fair value through profit or loss, cash held on behalf of clients and cash and cash equivalents.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of sale in the near term. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in revenue in consolidated statement of comprehensive income within “Net investment income/(loss)” in the period in which they arise. These net fair value changes do not include any dividends or interest earned on these financial assets. Interest income is recognised on an accrual basis using the effective interest rate method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset.

Financial assets designated upon initial recognition at fair value through profit or loss are designated at the date of initial recognition and only if the criteria under HKAS 39 are satisfied.

The Group evaluates its financial assets at fair value through profit or loss (held for trading) to assess whether the intent to sell them in the near term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due to inactive markets and management’s intent to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets. The reclassification from financial assets at fair value through profit or loss to loans and receivables or held-to-maturity investments depends on the nature of the assets. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation as these instruments cannot be reclassified after initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such assets are subsequently measured at amortised cost using the effective interest rate method less any allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and includes fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance income in profit or loss. The loss arising from impairment is recognised in profit or loss in finance costs for loans and in other expenses for receivables.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

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Impairment of financial assets

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to profit or loss.

Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of HKAS 39 are classified as loans and borrowings. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, directly attributable transaction costs.

The Group’s financial liabilities include trade payables and other payables and accruals.

Subsequent measurement

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.

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Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For financial instruments where there is no active market, the fair value is determined using appropriate valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument which is substantially the same; a discounted cash flow analysis; and option pricing models.

Provisions

Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised either in other comprehensive income or directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilised, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:

(a) corporate advisory income, when the underlying services have been provided or the underlying transactions have been completed, in accordance with the terms of the service agreement;
(b) placing and underwriting service income/commission, when the related services are provided or the relevant significant acts have been completed in accordance with the terms of the agreement or deal mandate; and
(c) securities dealing commission, on a trade date basis, or the right to receive such income have been established.

Share-based payment transactions

The Company operates share option schemes for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (“equity-settled transactions”).

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by using a binomial model, further details of which are given in note 25 to the consolidated financial statements.

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The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Group or the employee are not met. However, if a new award is substituted for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

When the options are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital and/or share premium.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.

Other employee benefits

Pension scheme

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the “MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for all of its employees. Contributions are made based on a percentage of the employees’ basic salaries and are charged to profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme.

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the end of the reporting period. All differences arising on settlement or translation of monetary items are taken to profit or loss. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on retranslation of a non-monetary item is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation differences on item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

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APPENDIX II

Judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Impairment of trade receivables

The Group maintains an allowance for the estimated loss arising from the inability of its customers to make the required payments. The Group makes its estimates based on the ageing of its trade receivable balances, customers’ creditworthiness, and historical write-off experience as well as whether there are possible disputes. If the financial condition of its customers deteriorates and/or disputes arise so that the actual impairment loss may be higher than expected, the Group will be required to revise the basis of making the allowance and its future results will be affected.

4. OPERATING SEGMENT INFORMATION

The Group’s principal businesses are in the provision of corporate advisory services and related activities, as well as investment in various types of assets. Information reported to the Group’s chief operating decision maker, for the purpose of resources allocation and performance assessment, is focused on the operating results of the Group as a whole as the Group’s resources are integrated and no discrete financial information is available. Accordingly, no segment analysis is presented. The Board has been identified as the chief operating decision-maker, who is responsible for making strategic decisions, allocating resources and assessing performance of the operating segments.

Geographical information

(a) Revenue from external customers

Hong Kong Mainland China Japan	2014 HK$’000 23,407 1,280 250 24,937	2013 HK$’000 30,245 1,393 –
		31,638

The revenue information above is based on the location of the customers.

(b) Non-current assets

		2014	2013
		HK$’000	HK$’000
Hong	Kong	4,251	1,590

The non-current asset information is based on the location of assets and excludes financial instruments.

Information about major customer

Revenue from the major customer amounting to 10% or more of the Group’s revenue is set out below:

		2014	2013
		HK$’000	HK$’000
Customer	A	4,610	2,656

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APPENDIX II

5. REVENUE AND OTHER INCOME

An analysis of the Group’s revenue and other income is as follows:

Revenue Corporate advisory income Placing and underwriting service income/commission Securities dealing commission Net investment (loss)/income Net fair value loss on financial assets measured at fair value through profit or loss Realised (loss)/gains on financial assets measured at fair value through profit or loss and other investments Net interest income Interest income from financial assets – Bank deposits – Listed investments – Other interest-bearing assets Other income and gains Gain on disposal of plant and equipment Revenue and other income	2014 HK$’000 24,771 126 40 24,937 (722) (1,756) (2,478) 1,406 101 189 1,696 261 24,416	2013 HK$’000 27,094 4,346 198 31,638 (1,015) 9,378 8,363 794 92 37 923 – 40,924

During the fourth quarter of the current financial year ended 31 December 2014, management performed a review of the nature of the Group’s principal activities and their presentation in the Group’s consolidated financial statements. As a result of the review, whilst management considered that the revenue of the Group had correctly included the fee income from corporate advisory services, placing and underwriting services and securities dealings, as well as gains or losses on investments at fair value through profit or loss, it would be more appropriate to present such gains or losses on investments at fair value through profit or loss on a separate line. Such revised presentation better reveals the nature of the Group’s investment income/(loss) and is more consistent with the current market practice. The gains or losses on investments at fair value through profit or loss recognised for the financial year ended 31 December 2014 were a loss of HK$2,478,000. The corresponding amount for 2013 was an income of HK$8,363,000. There is no impact on the profit or loss, basic and diluted earnings or loss per share for the prior years.

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APPENDIX II

6. (LOSS)/PROFIT BEFORE TAX

The Group’s (loss)/profit before tax is arrived at after charging/(crediting):

		2014	2013
	Note	HK$’000	HK$’000
Depreciation	13	768	326
Minimum lease payments under operating leases on
land and buildings		3,386	2,741
Auditor’s remuneration
Audit fees		610	600
Non-audit fees		140	–
Professional fees		968	4,623
Impairment loss on trade receivables*		2,393	25
Employee benefit expense (including directors’
remuneration (note 7)):
Wages, salaries, allowances and bonuses		12,242	14,692
Equity-settled share option expense		1,003	2,266
Pension scheme contributions
(defined contribution scheme)		277	259

Impairment loss on trade receivables for a total of HK$2,393,000 was provided mainly against receivables from two listed company clients for whom advisory works are ongoing as at the date of approval of these consolidated financial statements. One of the clients has been going through a reverse takeover process with application for new listing submitted to the Stock Exchange in October 2014, and the Group’s collection hinges upon whether the reverse takeover will be approved by the Stock Exchange and the relevant transactions becoming unconditional. The other client is in financial difficulties and is going through a self-restructuring.

7. DIRECTORS’ REMUNERATION

Directors’ remuneration for the year, disclosed pursuant to the Rules Governing the Listing of Securities on the GEM of the Stock Exchange and Section 161 of the Hong Kong Companies Ordinance, is as follows:

Fees Other emoluments: Salaries, allowances, bonuses and benefits in kind Equity-settled share option expense Pension scheme contributions	Group 2014 2013 HK$’000 HK$’000 600 552 4,486 5,605 547 1,113 34 30 5,067 6,748 5,667 7,300	Group 2014 2013 HK$’000 HK$’000 600 552 4,486 5,605 547 1,113 34 30 5,067 6,748 5,667 7,300
		5,605 1,113 30
		6,748
		7,300

Certain directors have been granted share options in respect of their services to the Group, under the Pre-IPO Share Option Scheme of the Company, further details of which are set out in note 25(a) to the financial statements. The fair value of such options which has been recognised in profit or loss over the vesting period, was determined as at the date of grant and the amount included in the financial statements for the current year is included in the above directors’ remuneration disclosures.

During the year, no share options have been granted in respect of the directors’ services to the Group under the Share Option Scheme (2013: Nil). Further details of the Share Option Scheme are set out in note 25(b).

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APPENDIX II

(a) Independent non-executive directors

2014

Mr. Chan Kai Nang Mr. Tsui Pui Yan Mr. Yi Xiqun 2013 Mr. Chan Kai Nang Mr. Tsui Pui Yan Mr. Yi Xiqun	Fees HK$’000 144 144 144 432 Fees HK$’000 132 132 132 396	Equity-settled share option expense HK$’000 78 – 78 156 Equity-settled share option expense HK$’000 159 – 159 318	Total remuneration HK$’000 222 144 222
			588

			Total remuneration HK$’000 291 132 291
			714

There were no other emoluments payable to the independent non-executive directors during the year (2013: Nil).

(b) Executive directors and a non-executive director

2014 Executive directors: Mr. Yeung Kai Cheung Patrick Mr. Chan Hok Leung Non-executive director: Mr. Xin Luo Lin	Fees HK$’000 12 12 24 144 168	Salaries, allowances, bonuses and benefits in kind HK$’000 2,066 2,314 4,380 106 4,486	Equity- settled share option expense Pension scheme contributions Total remuneration HK$’000 HK$’000 HK$’000 130 17 2,225 130 17 2,473 260 34 4,698 130 – 380 390 34 5,078	Equity- settled share option expense Pension scheme contributions Total remuneration HK$’000 HK$’000 HK$’000 130 17 2,225 130 17 2,473 260 34 4,698 130 – 380 390 34 5,078
				4,698 380
				5,078

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2013 Executive directors: Mr. Yeung Kai Cheung Patrick Mr. Chan Hok Leung Non-executive director: Mr. Xin Luo Lin	Fees HK$’000 12 12 24 132 156	Salaries, allowances, bonuses and benefits in kind HK$’000 3,047 2,420 5,467 138 5,605	Equity- settled share option expense Pension scheme contributions Total remuneration HK$’000 HK$’000 HK$’000 265 15 3,339 265 15 2,712 530 30 6,051 265 – 535 795 30 6,586	Equity- settled share option expense Pension scheme contributions Total remuneration HK$’000 HK$’000 HK$’000 265 15 3,339 265 15 2,712 530 30 6,051 265 – 535 795 30 6,586
				6,051 535
				6,586

During the year ended 31 December 2014, there was no arrangement under which any directors waived or agreed to waive any remuneration during the year (2013: Nil).

8. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included two (2013: two) directors, details of whose remuneration are set out in note 7 above. Details of the remuneration of the remaining three (2013: three) highest paid employees who were not directors for the year are as follows:

Salaries, allowances, bonuses and benefits in kind Equity-settled share option expense Pension scheme contributions	Group 2014 2013 HK$’000 HK$’000 2,385 2,204 234 516 51 45 2,670 2,765	Group 2014 2013 HK$’000 HK$’000 2,385 2,204 234 516 51 45 2,670 2,765
		2,765

The remunerations fell within the following bands are as follows:

	Number of employees
	2014	2013
Nil to HK$1,000,000	3	2
HK$1,000,001 to HK$1,500,000	–	1

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

9. INCOME TAX (CREDIT)/EXPENSE

Hong Kong profits tax has been provided at the rate of 16.5% (2013: 16.5%) on the estimated assessable profits arising in Hong Kong during the year.

Group: Current tax Provision for the year Adjustments in respect of prior years Total current tax Deferred tax (note 23) Origination and reversals of temporary differences Total deferred tax Income tax (credit)/expenses	2014 HK$’000 715 (1,070) (355) (430) (430) (785)	2013 HK$’000 1,688 146
		1,834

		451
		451
		2,285

A reconciliation of the tax expense applicable to (loss)/profit before tax at the statutory rate in which the Group is domiciled to the tax expense at the effective tax rate is as follows:

(Loss)/profit before tax Tax at the statutory tax rate Adjustments in respect of prior years Income not subject to tax Expenses not deductible for tax Unused tax losses not recognised Others Tax charge at the Group’s effective rate	2014 HK$’000 (2,116) (349) (1,070) (816) 356 136 958 (785)	2013 HK$’000 10,920

		1,801 146 (183) 521 – –
		2,285

There was no significant unprovided deferred tax in respect of the year and at the end of each reporting period.

10. (LOSS)/PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY

Of the Group’s loss attributable to owners of the Company of HK$1,331,000 (2013: a profit of HK$8,635,000), a profit of HK$184,000 (2013: a profit of HK$3,950,000) has been dealt with in the consolidated financial statements of the Company (note 26(b)).

11. DIVIDENDS

The Board does not recommend payment of a dividend for the year ended 31 December 2014 (2013: Nil).

12. (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculation of basic (loss)/earnings per share amounts is based on the (loss)/profit for the year attributable to ordinary equity holders of the Company, and the weighted average number of 1,446,165,205 shares in issue for the year ended 31 December 2014 (2013: 1,440,000,000 shares).

– 93 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

No adjustment was made to the basic (loss)/earnings per share presented for the years ended 31 December 2014 and 2013 as the share options had anti-dilutive effect on the basic (loss)/earnings per share.

13. PLANT AND EQUIPMENT

Group

31 December 2014 At 31 December 2013 and at 1 January 2014: Cost Accumulated depreciation Net carrying amount At 1 January 2014, net of accumulated depreciation Additions Disposal Depreciation provided during the year At 31 December 2014, net of accumulated depreciation At 31 December 2014: Cost Accumulated depreciation Net carrying amount 31 December 2013 At 31 December 2012 and at 1 January 2013: Cost Accumulated depreciation Net carrying amount At 1 January 2013, net of accumulated depreciation Additions Depreciation provided during the year At 31 December 2013, net of accumulated depreciation At 31 December 2013: Cost Accumulated depreciation Net carrying amount	Furniture, fixtures and equipment HK$’000 1,795 (1,701) 94 94 1,441 – (304) 1,231 2,607 (1,376) 1,231 1,686 (1,642) 44 44 109 (59) 94 1,795 (1,701) 94	Motor vehicles HK$’000 2,424 (1,794) 630 630 2,377 (389) (464) 2,154 3,057 (903) 2,154 2,424 (1,527) 897 897 – (267) 630 2,424 (1,794) 630	Total HK$’000 4,219 (3,495) 724 724 3,818 (389) (768) 3,385 5,664 (2,279) 3,385 4,110 (3,169) 941 941 109 (326) 724 4,219 (3,495) 724

– 94 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

14. INTANGIBLE ASSET

						Group
						2014	2013
						HK$’000	HK$’000
At	1	January	and	31	December	866	866

The intangible asset of the Group represents the cost of a non-refundable club membership.

The directors are of the opinion that the intangible asset has an indefinite useful life. Accordingly, the intangible asset will not be amortised.

15. INVESTMENTS IN SUBSIDIARIES

Unlisted shares, at cost Capital contribution in respect of employee share-based compensation	Company 2014 2013 HK$’000 HK$’000 18,156 18,156 4,653 4,197 22,809 22,353	Company 2014 2013 HK$’000 HK$’000 18,156 18,156 4,653 4,197 22,809 22,353
		22,353

The capital contribution in respect of employee share-based compensation relates to share options granted by the Company to employees of its subsidiary under the Pre-IPO Share Option Scheme of the Company, further details of which are set out in note 25(a) to the consolidated financial statements.

The amounts due from and to subsidiaries included in the Company’s assets and liabilities of HK$11,964,000 (2013: HK$36,684,000) and HK$Nil (2013: HK$101,000), respectively, are unsecured, interest-free and repayable on demand.

Particulars of the principal subsidiaries are as follows:

	Place of	Nominal value of	Percentage of	Percentage of
	incorporation	issued ordinary	equity attributable		Principal
Name	and operations	share capital	to the	Company	activities
			Direct	Indirect
Asian Capital	Hong Kong	HK$10,000,000	–	100	Provision of
(Corporate					corporate
Finance)					advisory
Limited					services
Asian Capital	Hong Kong	HK$10	–	100	Provision of
(Resources)					corporate
Limited					advisory
					services
Best Remedy	The British Virgin	US$20,000	100	–	Investment
Investments	Islands (the				holding
Limited	“BVI”)/
	Hong Kong
Corporate Wise	The BVI/	US$20,000	100	–	Investment
Limited	Hong Kong				holding
Dragon Legend	The BVI/	US$1	100	–	Investment
Investments	Hong Kong				holding
Limited
Well Baly Limited	Hong Kong	HK$10,000	–	100	Investment
					holding

– 95 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

16. TRADE RECEIVABLES

Trade receivables Less: impairment loss on trade receivables Trade receivables – net	Group 2014 2013 HK$’000 HK$’000 5,038 9,091 (2,380) (25) 2,658 9,066	Group 2014 2013 HK$’000 HK$’000 5,038 9,091 (2,380) (25) 2,658 9,066
		9,066

The Group’s normal trading term with its customers is that payment is due upon the issuance of invoices. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management. Trade receivables arising from the provision of corporate advisory, placing and underwriting services are non-interest-bearing. The receivables from brokers arising from securities dealing by the Group’s clients are interest-bearing at the prevailing savings rate offered by banks in Hong Kong and are repayable on demand. The Group does not hold any collateral or other credit enhancements over its trade receivable balances.

An aged analysis of the trade receivables which are not considered to be individually or collectively impaired as at the end of the reporting period, based on the invoice dates and net of provisions, is as follows:

Current to 30 days 31 to 60 days 61 to 90 days Over 90 days (note (a))	Group 2014 2013 HK$’000 HK$’000 1,026 844 896 527 62 158 674 7,537 2,658 9,066	Group 2014 2013 HK$’000 HK$’000 1,026 844 896 527 62 158 674 7,537 2,658 9,066
		9,066

Notes:

(a) The amount for the year ended 31 December 2013 primarily represented an advisory service fee derived from a distressed asset recovery assignment that was concluded in the first quarter of 2013.
(b) All of the above receivables that were past due but not impaired relate to a number of independent customers that have good track records with the Group, or have subsequently settled the amounts due to the Group. The directors are of the opinion that, other than the impairments that have already been made, no provision for impairment is necessary in respect of these receivables as the balances have either been recovered or are still considered fully recoverable. Details of the impairments made are in note 6.

The invoice dates of the above trade receivables are generally the same as the corresponding due dates.

(c) Up to the date of approval of these consolidated financial statements, subsequent settlement of trade receivables as at 31 December 2014 amounted to approximately HK$2,084,000.

– 96 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Movements on the Group’s allowance for impairment of trade receivables are as follows:

At 1 January 2014 Provision for receivables impairment Receivables written off during the year as uncollectible At 31 December 2014	Group 2014 2013 HK$’000 HK$’000 25 – 2,393 25 (38) – 2,380 25	Group 2014 2013 HK$’000 HK$’000 25 – 2,393 25 (38) – 2,380 25
		25

17. OTHER ASSETS AND RECEIVABLES

Prepayments Deposits and other receivables Other interest-bearing assets	Group 2014 2013 HK$’000 HK$’000 597 410 1,975 1,985 7,000 – 9,572 2,395	Company 2014 2013 HK$’000 HK$’000 205 204 445 115 – – 650 319	Company 2014 2013 HK$’000 HK$’000 205 204 445 115 – – 650 319
			319

None of the above assets is either past due or impaired. The financial assets included in the above balances relate to cash held with brokers as well as receivables for which there was no recent history of default.

18. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

								Group
								2014	2013
								HK$’000	HK$’000
Hong	Kong	listed	equity	investments,	at	market	value	6,273	15,423

At 31 December 2014 and 31 December 2013, no individual investment constituted over 10% of the total assets of the Group.

19. CASH HELD ON BEHALF OF CLIENTS

The Group’s licensed subsidiary maintains segregated trust accounts with a licensed bank to hold clients’ monies arising from its normal course of business. The Group has classified the clients’ monies as cash held on behalf of the subsidiary’s clients under the current assets section of the consolidated statement of financial position, and recognised the corresponding payables to the respective clients on the grounds that it is liable for any loss or misappropriation of clients’ monies. The Group is not allowed to use clients’ monies to settle its own obligations.

– 97 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

20. CASH AND CASH EQUIVALENTS

Cash and bank balances Time deposits Less: Time deposits with original maturity of more than three months	Group 2014 2013 HK$’000 HK$’000 7,244 5,089 106,657 108,650 113,901 113,739 (60,323) (26,617) 53,578 87,122	Company 2014 2013 HK$’000 HK$’000 2,187 362 82,962 57,485 85,149 57,847 (49,413) (15,042) 35,736 42,805	Company 2014 2013 HK$’000 HK$’000 2,187 362 82,962 57,485 85,149 57,847 (49,413) (15,042) 35,736 42,805
			57,847 (15,042)
			42,805

21. TRADE PAYABLES

Included in trade payables are clients monies of HK$45,000 (2013: HK$6,000) which are segregated in the trust accounts.

Trade payables excluding clients monies, based on the settlement due dates, are all due within 30 days (2013: due within 30 days) as at the end of the reporting period.

22. OTHER PAYABLES AND ACCRUALS

Other payables Accruals	Group 2014 2013 HK$’000 HK$’000 3,424 5,344 612 1,082 5,036 6,426	Company 2014 2013 HK$’000 HK$’000 – 17 223 80 223 97	Company 2014 2013 HK$’000 HK$’000 – 17 223 80 223 97
			97

Other payables are non-interest-bearing and have an average term of one month to three months (2013: one month).

23. DEFERRED TAX LIABILITIES

The analysis of deferred tax liabilities is as follows:

	Group		Company
	2014	2013	2014	2013
	HK$’000	HK$’000	HK$’000	HK$’000
Deferred tax liabilities:
Deferred tax liability to be
recovered within 12 months	21	451	–	–

– 98 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The gross movement on the deferred income tax account is as follows:

At 1 January Income statement charge (Note 9) At 31 December	Group 2014 2013 HK$’000 HK$’000 451 – (430) 451 21 451	Company 2014 2013 HK$’000 HK$’000 – – – – – –	Company 2014 2013 HK$’000 HK$’000 – – – – – –
			–

The movement in the Group’s deferred tax (assets)/liabilities during the year is as follows:

At 31 December 2013 and 1 January 2014 Charged to the income statement At 31 December 2014 24. SHARE CAPITAL Ordinary shares of HK$0.01 per share Authorised: As at 31 December 2013, 1 January 2014 and 31 December 2014 Issued and fully paid: As at 31 December 2013 and 1 January 2014 Allotment of new shares pursuant to pre-IPO share option scheme As at 31 December 2014	Unused tax losses Fair value gains HK$’000 HK$’000 – 451 (187) (243) (187) 208 Number of shares 10,000,000,000 1,440,000,000 11,540,000 1,451,540,000	Unused tax losses Fair value gains HK$’000 HK$’000 – 451 (187) (243) (187) 208 Number of shares 10,000,000,000 1,440,000,000 11,540,000 1,451,540,000	Total HK$’000 451 (430)
			21

			Nominal value HK$ 100,000,000

			14,400,000 115,400
			14,515,400

Share options

Details of the Company’s Pre-IPO Share Option Scheme and the share options issued under the Pre-IPO Share Option Scheme are included in note 25(a) to the consolidated financial statements.

25. SHARE OPTION SCHEMES

(a) Pre-IPO Share Option Scheme

The Company operates a Pre-IPO Share Option Scheme (the “Pre-IPO Share Option Scheme”) adopted on 7 June 2010 for the purpose of providing incentives and rewards to eligible participants who contributed to the success of the Group’s operations. Eligible participants of the Pre-IPO Share Option Scheme include directors, senior management, certain employees and officers, and consultants of the Group.

The number of share options upon their exercise was equal to 120,000,000 ordinary shares of the Company (the “Shares”), being 10% of the Company’s issued ordinary shares at the date of Listing. The options must be exercised on or after the second anniversary and until the tenth anniversary of the grant date, and the exercise price has been fixed at HK$0.20, being the placing price per Share at the time of Listing.

– 99 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

All the share options granted under the Pre-IPO Share Option Scheme were granted on 10 June 2010 and no further share options can be granted under the Pre-IPO Share Option Scheme thereafter.

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

The following share options were outstanding under the Pre-IPO Share Option Scheme during the year:

At 1 January Forfeited during the year Exercised during the year At 31 December	2014 Weighted average exercise price Number of options HK$ per share ’000 0.2 85,500 0.2 (5,760) 0.2 (11,540) 0.2 68,200	2013 Weighted average exercise price Number of options HK$ per share ’000 0.2 86,150 0.2 (650) – – 0.2 85,500	2013 Weighted average exercise price Number of options HK$ per share ’000 0.2 86,150 0.2 (650) – – 0.2 85,500
			85,500

Out of the 68,200,000 outstanding options (2013: 85,500,000), 37,800,000 options (2013: 25,650,000) were exercisable. Options exercised in 2014 resulted in 11,540,000 shares being issued at a weighted average price of HK$0.2 each. The related weighted average closing price of the shares of the Company immediately before the date on which the options were exercised was HK$0.43 per share.

The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows:

2014

Number of options ’000 6,300 12,600 18,900 30,400 68,200	Exercise price HK$ per share* 0.2 0.2 0.2 0.2	Exercise period 10 June 2012 to 9 June 2020 10 June 2013 to 9 June 2020 10 June 2014 to 9 June 2020 10 June 2015 to 9 June 2020

2013

Number of options ’000 8,550 17,100 25,650 34,200 85,500	Exercise price HK$ per share* 0.2 0.2 0.2 0.2	Exercise period 10 June 2012 to 9 June 2020 10 June 2013 to 9 June 2020 10 June 2014 to 9 June 2020 10 June 2015 to 9 June 2020

The exercise price of the share options is subject to adjustments, inter alia, in case of rights or bonus issues, or other similar changes in the Company’s share capital.

The fair value of the share options granted during the year ended 31 December 2010 was approximately HK$15,000,000 (approximately HK$0.125 each) of which the Group recognised a share option expense of HK$1,003,000 during the year ended 31 December 2014 (2013: HK$2,266,000).

– 100 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The fair value of equity-settled share options granted during the year ended 31 December 2010 was estimated as at the date of grant, using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used:

	2010
Dividend yield (%)	3.60
Expected volatility (%)	87.47
Exercise multiple	3.00
Exit rate (%)	20.00
Risk-free interest rate (%)	2.75

The expected volatility reflects the assumption that the volatility with reference to other similar companies is indicative of future trends, which may also not necessarily be the actual outcome.

No other feature of the options granted was incorporated into the measurement of fair value.

At the end of the reporting period, the Company had 68,200,000 (2013: 85,500,000) share options outstanding under the Pre-IPO Share Option Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 68,200,000 (2013: 85,500,000) additional ordinary shares of the Company and additional share capital of HK$682,000 (2013: HK$855,000) and share premium of HK$12,958,000 (2013: HK$16,245,000) (before issue expenses).

At the date of approval of these financial statements, the Company had 68,200,000 (2013: 85,500,000) share options outstanding under the Pre-IPO Share Option Scheme, which represented approximately 4.7% (2013: 5.9%) of the Company’s shares in issue as at that date.

(b) Share Option Scheme

On 7 June 2010, the Company adopted a share option scheme which became effective on 18 June 2010 (the “Share Option Scheme”) and, unless otherwise cancelled or amended, will remain in force for 10 years from the date of Listing. The Company operates the Share Option Scheme for the purpose of providing incentives and rewards to eligible participants for their contributions to the Group. Eligible participants of the Share Option Scheme include the directors and employees of the Group and other individuals as determined by the directors on the basis of their contribution to the development and growth of the Group.

The maximum number of unexercised share options currently permitted to be granted under the Share Option Scheme and any other share option scheme of the Company is an amount equivalent, upon their exercise, to 10% of the shares of the Company in issue as at the date of approval of the Share Option Scheme. The maximum number of Shares issuable under share options to each eligible participant in the Share Option Scheme and any other share option scheme of the Company within any 12-month period, is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of these limits are subject to shareholders’ approval in a general meeting with such participant and his/her associates abstaining from voting.

Share options granted to a director, chief executive or substantial shareholder of the Company, or to any of their associates, are subject to approval in advance by the independent non-executive directors of the Company (excluding any independent non-executive director who is a prospective grantee). In addition, any share options granted under the Share Option Scheme and any other share option scheme of the Company to a substantial shareholder or an independent non-executive director of the Company, or to any of their associates, in excess of 0.1% of the shares of the Company in issue or with an aggregate value (based on the closing price of the Shares at the date of grant) in excess of HK$5 million, within any 12-month period, are subject to independent shareholders’ approval in advance a general meeting.

The offer of a grant of share options may be accepted within 21 days from the date of offer, upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the directors, and ends on a date which is not later than 10 years from the date upon which the share options is granted or the lapse of the Share Option Scheme, whichever is earlier.

The exercise price of the share options is determinable by the directors, but may not be less than the highest of (i) the closing price of the Shares quoted on the Stock Exchange on the date of grant, which must be a business day, (ii) the average closing price of the Shares quoted on the Stock Exchange for the five business days immediately preceding the date of grant, and (iii) the nominal value of a Share.

– 101 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Share options do not confer rights on the holders to dividends or to vote at shareholders’ meetings.

No share option has been granted since the adoption of the Share Option Scheme.

26. RESERVES

(a) Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity.

The Group’s contributed surplus represents the excess of the nominal value of the shares of the subsidiaries acquired pursuant to the reorganisation prior to the Listing, over the nominal value of the Company’s shares issued in exchange thereafter.

(b) Company

Note At 1 January 2013 Total comprehensive income for the year Equity-settled share option arrangements 25 At 31 December 2013 and 1 January 2014 Total comprehensive income for the year Allotment of new shares pursuant to pre-IPO share option scheme Equity-settled share option arrangements 25 At 31 December 2014	Share premium account Contributed surplus HK$’000 HK$’000 65,630 19,000 – – – – 65,630 19,000 – – 3,566 – – – 69,196 19,000	Share option reserve Retained earnings/ (Accumulated losses) HK$’000 HK$’000 5,913 5,792 – 3,950 2,266 – 8,179 9,742 – 184 (1,373) – 1,003 – 7,809 9,926	Total HK$’000 96,335 3,950 2,266
			102,551 184 2,193 1,003
			105,931

The Company’s contributed surplus represents the excess of the fair value of the shares of the subsidiaries acquired pursuant to the reorganisation prior to the Listing, over the nominal value of the Company’s shares issued in exchange therefor.

The share option reserve comprises the fair value of share options granted which are vested but yet to be exercised, as further explained in the accounting policy for share-based payment transactions in note 2.4 to the consolidated financial statements. The amount will either be transferred to the share premium account when the related options are exercised, or be transferred to retained earnings should the related options expire or be forfeited.

– 102 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

27. OPERATING LEASE ARRANGEMENTS

As lessee

The Group leases its office premises under operating lease arrangements. Leases for properties are negotiated for terms of two to three years (2013: eighteen months to two years).

At 31 December 2014, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

Within one year In the second to fifth years, inclusive	Group 2014 2013 HK$’000 HK$’000 3,023 1,281 4,119 – 7,142 1,281	Group 2014 2013 HK$’000 HK$’000 3,023 1,281 4,119 – 7,142 1,281
		1,281

28. COMMITMENTS

Except for the operating lease commitments detailed in note 27 above, the Group and the Company did not have any significant commitment as at 31 December 2013 and 31 December 2014.

29. RELATED PARTY TRANSACTIONS

In addition to the transactions detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the years ended 31 December 2013 and 31 December 2014.

(a) During the year ended 31 December 2014, the Group generated corporate advisory income of HK$250,000 from a company, a director of which is also a non-executive director of the Company. The income so derived was determined by reference to market rates and agreed on an arm’s length basis.
(b) Compensation of key management personnel, including executive directors and key management of the Group:

Short term employee benefits Pension scheme contributions Equity-settled share option expense Total compensation paid to key management personnel	2014 HK$’000 4,774 34 476 5,284	2013 HK$’000 5,881 30 967
		6,878

Further details of directors’ emoluments are included in note 7 to the consolidated financial statements.

– 103 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

30. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

2014 Financial assets Deposits Trade receivables Financial assets included in other assets and receivables Investments at fair value through profit or loss Cash held on behalf of clients Cash and cash equivalents Financial liabilities Trade payables Other financial liabilities 2013 Financial assets Deposits Trade receivables Financial assets included in other assets and receivables Investments at fair value through profit or loss Cash held on behalf of clients Cash and cash equivalents Financial liabilities Trade payables Other financial liabilities	Financial assets at fair value through profit or loss – held for trading HK$’000 – – – 6,273 – – 6,273 Financial assets at fair value through profit or loss – held for trading HK$’000 – – – 15,423 – – 15,423	Group Loans and receivables HK$’000 100 2,658 8,979 – 45 113,901 125,683 Group Loans and receivables HK$’000 100 9,066 1,985 – 6 113,739 124,896	Group Loans and receivables HK$’000 100 2,658 8,979 – 45 113,901 125,683 Group Loans and receivables HK$’000 100 9,066 1,985 – 6 113,739 124,896	Total HK$’000 100 2,658 8,979 6,273 45 113,901
				131,956

				Financial liabilities at amortised cost HK$’000 702 3,424
				4,126

				Total HK$’000 100 9,066 1,985 15,423 6 113,739
				140,319

				Financial liabilities at amortised cost HK$’000 3,847 5,344
				9,191

– 104 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

Company Financial assets Due from subsidiaries Financial assets included in prepayments and other receivables Cash and cash equivalents Financial liabilities Due to subsidiaries Other payables	Loans and receivables 2014 2013 HK$’000 HK$’000 11,964 36,684 445 115 85,149 57,847 97,558 94,646 Financial liabilities at amortised cost 2014 2013 HK$’000 HK$’000 – 101 233 17 233 118	Loans and receivables 2014 2013 HK$’000 HK$’000 11,964 36,684 445 115 85,149 57,847 97,558 94,646 Financial liabilities at amortised cost 2014 2013 HK$’000 HK$’000 – 101 233 17 233 118
		94,646

		at amortised cost 2013 HK$’000 101 17
		118

31. FAIR VALUE AND FAIR VALUE HIERARCHY

The carrying amounts and fair values of the Group’s and the Company’s financial instruments are as follows:

Group

	Carrying	amounts		Fair values
	2014		2013	2014	2013
	HK$’000	HK$’000		HK$’000	HK$’000
Financial assets
Investments at fair value through
profit or loss	6,273	15,423		6,273	15,423

Company

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate the fair values:

The fair values of cash and cash equivalents, deposits, trade receivables, trade payables, financial assets included in other assets and receivables, financial liabilities included in other payables and accruals and balances with subsidiaries approximate to their carrying amounts largely due to the short term maturities of these instruments.

The fair values of listed equity investments are based on quoted market prices. The fair values of the unlisted investment are estimated using a valuation technique based upon the recent market transactions and updated for post-transaction events.

– 105 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Fair value hierarchy

The fair value hierarchy of the Group has the following levels:

Level 1: fair values measured based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: fair values measured based on valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: fair values measured based on valuation techniques for which any inputs which have a significant effect on the recorded fair value are not based on observable market data (unobservable inputs)

The assets and liabilities included in the consolidated statement of financial position, except for investments at fair value through profit or loss, are carried at amortised costs. Their carrying values are an appropriate approximation of fair value.

Assets measured at fair value:

Group As at 31 December 2014

Investments at fair value through profit or loss As at 31 December 2013 Investments at fair value through profit or loss	Level 1 HK$’000 6,273 15,423	Level 2 HK$’000 – –	Level 3 HK$’000 – –	Total HK$’000 6,273

				15,423

The Company did not have any other financial assets measured at fair value as at 31 December 2014 and 2013.

During the year, there were no transfers of fair value measurements between Level 1 and Level 2. All of the level 3 assets were disposed in 2013.

The Group is exposed to liquidity risk arising from individual investments classified as fair value through profit or loss (note 18) as at 31 December 2014 and 31 December 2013. The Group’s listed investments are listed in the Stock Exchange but the volume of trade at any moment in time may restrict the liquidity of the investments.

The following table presents the changes in level 3 instruments for the year ended 31 December 2013.

Opening balance Settlements Profit recognised in profit or loss Closing balance Changes in unrealised gains or losses for the year included in profit or loss at the end of the year	Investments at fair value through profit or loss HK$’000 1,768 (2,400) 632 –
	–

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments, comprise of cash and short term deposits. The Group has various other financial assets and liabilities such as trade receivables, other assets and receivables, investments at fair value through profit or loss, trade payables, and other payables and accruals, which arise directly from its operations.

– 106 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The main risks arising from the Group’s financial instruments are credit risk, interest rate risk, liquidity risk and price risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Credit risk

The Group primarily provides services to recognised and creditworthy third parties. Except for providing services to insolvent companies, it is the Group’s policy that advanced and progress payments are generally required for new customers. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts at acceptable level. It is not market practice to obtain collateral.

The credit risk of the Group’s financial assets, which comprise trade receivable, other assets and receivables, arises from default of the counterparties, with a maximum exposure equal to the carrying amounts of these instruments. Collateral is generally not sought on these assets.

Apart from the above, the Group’s credit risk is primarily attributable to other receivables and bank balances. As the other receivables and bank balances are largely due from brokers and authorised institutions, the exposure to credit risk is considered acceptable.

Interest rate risk

The Group’s interest-bearing financial assets are balances with banks and other interest-bearing assets included in other assets and receivables which bear interest at market rates. The interest rate charged on the interest-bearing assets included in other assets and receivables is determined by reference to the Hong Kong Dollar prime rate of an authorised institution in Hong Kong. Depending on the then perceived cash flow requirements, the Group’s policy is to maintain the majority of its funds in demand or short-term bank deposits that are subject to an insignificant risk of changes in interest rate.

Of the bank balances, HK$7,244,000 (2013: HK$5,089,000) is on demand as at 31 December 2014.

At 31 December 2014, it is estimated that a general increase of 100 basis points in interest rates, with all other variables held constant, would increase (2013: increase) the Group’s profit (2013: profit) after tax and increase retained profits by approximately HK$72,000 (2013: HK$51,000). Other components of equity would not be affected by the changes in interest rates. A material decrease in interest rates is not considered reasonably possible because of the low interest rate environment.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of internal funding to meet its working capital requirements.

The Group monitors its risk to a shortage of funds by considering the maturity of both its financial liabilities and financial assets (for example, trade receivables) and projected cash flows from operations.

Because of the short duration of the contractual maturity and low interest rate environment, the carrying value of the Group’s financial liabilities approximates to the value of undiscounted payments. The maturity profile of the Group’s financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, is as follows:

Group Trade payables Financial liabilities included in other payables	On demand HK$’000 702 5,036 5,738	2014 Less than 3 months HK$’000 – – –	Total HK$’000 702 5,036
			5,738

– 107 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Trade payables Financial liabilities included in other payables	On demand HK$’000 1,154 6,426 7,580	2013 Less than 3 months HK$’000 2,693 – 2,693	Total HK$’000 3,847 6,426
			10,273

The maturity profile of the Company’s financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, is as follows:

Company Due to subsidiaries Due to subsidiaries	2014 On demand HK$’000 –

	2013 On demand HK$’000 101

Price risk

Price risk is the risk that the fair values of securities decrease as a result of changes in the levels of equity indices and the value of individual securities. The Group is exposed to price risk arising from individual investments classified as investments at fair value through profit or loss (note 18) as at 31 December 2014 and 31 December 2013. The Group’s listed investments are listed in Hong Kong and are valued at quoted market prices at the end of the reporting period.

The market equity index for the following stock exchanges, at the close of business of the nearest trading day in the year to the end of the reporting period, and their respective highest and lowest points during the year were as follows:

						31	December	High/low	31	December	High/low
							2014	2014		2013	2013
Hong	Kong	–	Hang	Seng	Index		23,605	25,363/21,138		23,306	24,112/19,426

The following table demonstrates the sensitivity to every 10% change in the fair values of the investments, with all other variables held constant and before any impact on tax, based on their carrying amounts at the end of the reporting period.

	Carrying	Change in
	amount of	profit before	Change in
	investments	tax	equity
	HK$’000	HK$’000	HK$’000
2014
Investments at fair value through profit or loss:
– Hong Kong listed equity investments	6,273	627	627
2013
Investments at fair value through profit or loss:
– Hong Kong listed equity investments	15,423	1,542	1,542

– 108 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

A subsidiary of the Group is regulated by the Securities and Futures Commission (the “SFC”) and is required to comply with certain minimum capital requirements according to the rules of the SFC. The required liquid capital according to the rules of the SFC was HK$3,000,000 as at 31 December 2014 and 2013. The Group has an experienced compliance officer and the compliance with the relevant rules and regulations is monitored by the management. The principal roles of the compliance officer are to monitor the financial status and to review internal control of the Group regularly to ensure the Company’s regulated subsidiary is in compliance with related regulations. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2014 and 31 December 2013.

The Group monitors capital using a current ratio, which is current assets divided by current liabilities. The Group’s policy is to maintain the current ratio above one and to obtain additional capital for general working capital and business development purposes as considered necessary by the Board. The current ratios at the end of each reporting period were as follows:

CURRENT ASSETS Trade receivables Other assets and receivables Investments at fair value through profit or loss Cash held on behalf of clients Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade payables Other payables and accruals Tax payable Deferred tax liabilities Total current liabilities Current ratio	2014 HK$’000 2,658 9,572 6,273 45 113,901 132,449 758 4,980 615 21 6,374 20.78	2013 HK$’000 9,066 2,395 15,423 6 113,739
		140,629

		3,847 6,426 3,149 451
		13,873

		10.14

33. APPROVAL OF THE FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorised for issue by the Board on 18 March 2015.

– 109 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION OF THE GROUP FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2015

The following is the unaudited consolidated financial information of the Group for the three months and twelve months ended 31 December 2015 as extracted from the second interim report of the Group for the period ended 31 December 2015.

Condensed Consolidated Statement of Comprehensive Income

For the three months and twelve months ended 31 December 2015

		Three months ended	Three months ended	Twelve months ended	Twelve months ended
		31 December		31 December
		2015	2014	2015	2014
	Notes	HK$’000	HK$’000	HK$’000	HK$’000
		(Unaudited)	(Unaudited)	(Unaudited)	(Audited)
Revenue	3	14,174	6,908	32,265	24,937
Net investment income/(loss)	3	22	(877)	129	(2,478)
Net interest income	3	1,329	938	3,812	1,696
Other income and gains	3	150	261	150	261
Revenue and other income	3	15,675	7,230	36,356	24,416
Operating expenses		(9,797)	(8,152)	(27,909)	(26,532)
Profit/(Loss) before tax	5	5,878	(922)	8,447	(2,116)
Income tax (expense)/credit	6	(945)	784	(1,696)	785
Profit/(Loss) for the period		4,933	(138)	6,751	(1,331)

Total comprehensive
income/(loss) for the
period		4,933	(138)	6,751	(1,331)

Earnings/(Loss) per share
attributable to ordinary
equity holders of the
Company	7
– Basic (HK cents)		0.34	(0.01)	0.47	(0.09)

– Diluted (HK cents)		0.33	(0.01)	0.44	(0.09)

– 110 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Condensed Consolidated Statement of Financial Position

As at 31 December 2015

Notes Non-current assets Plant and equipment 9 Intangible asset Deposits Total non-current assets Current assets Trade receivables 10 Loans receivables 11 Prepayments, deposits and other receivables Investments at fair value through profit or loss Deferred tax assets Cash held on behalf of clients 12 Cash and cash equivalents Total current assets Current liabilities Trade payables 13 Other payables and accruals Tax payable Deferred tax liabilities Total current liabilities Net current assets Net assets Equity Equity attributable to ordinary equity holders of the Company Issued capital 14 Reserves Total equity	31 December 2015 HK$’000 (Unaudited) 2,744 866 100 3,710 3,117 – 1,589 137 217 60,250 140,469 205,779 61,575 7,079 2,674 – 71,328 134,451 138,161 14,541 123,620 138,161	31 December 2014 HK$’000 (Audited) 3,385 866 100
		4,351
		2,658 7,000 2,572 6,273 – 45 113,901
		132,449
		702 5,036 615 21
		6,374
		126,075
		130,426

		14,515 115,911
		130,426

– 111 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Condensed Consolidated Statement of Changes in Equity

For the twelve months ended 31 December 2015

Attributable to ordinary equity holders of the Company	Attributable to ordinary equity holders of the Company	Attributable to ordinary equity holders of the Company	Attributable to ordinary equity holders of the Company	Attributable to ordinary equity holders of the Company
Issued capital HK$’000 14,400 – 115 – 14,515 – 26 – 14,541	Share premium account Contributed surplus HK$’000 HK$’000 65,898 9,000 – – 3,566 – – – 69,464 9,000 – – 816 – – – 70,280 9,000	Share option reserve HK$’000 8,179 – (1,373) 1,003 7,809 – (323) 465 7,951	Retained profits HK$’000 30,969 (1,331) – – 29,638 6,751 – – 36,389	Total HK$’000 128,446 (1,331) 2,308 1,003
				130,426

				6,751 519 465
				138,161

– 112 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Condensed Consolidated Statement of Cash Flows

For the twelve months ended 31 December 2015

Net cash flows from/(used in) operating activities
Net cash flows used in investing activities
Net cash flows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Analysis of balances of cash and cash equivalents
Cash and bank balances
Time deposits
Cash and cash equivalents as stated in the condensed
consolidated statement of financial position
Time deposits with original maturity of more than three
months when acquired
Cash and cash equivalents as stated in the condensed
consolidated statement of cash flows

Twelve months ended
31 December
2015
2014
HK$’000
HK$’000
(Unaudited)
(Audited)
22,678
(674)
(28,905)
(35,178)
519
2,308
(5,708)
(33,544)
53,578
87,122
47,870
53,578
12,541
7,244
127,928
106,657
140,469
113,901
(92,599)
(60,323)
47,870
53,578

– 113 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

31 December 2015

1. CORPORATE INFORMATION

The Company was incorporated in the Cayman Islands on 5 January 2010 as an exempted company with limited liability under the Companies Law, Cap 22 (Law 3 of 1961 as consolidated and revised) of the Cayman Islands. The shares of the Company are listed on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The principal activity of the Company is investment holding. The subsidiaries are principally engaged in the provision of corporate advisory services and related activities, investment in various types of assets as well as money lending and asset management.

2. BASIS OF PREPARATION

On 27 January 2016, the Company announced to change its financial year end date from 31 December to 31 March. As a result, these second interim results covered a period of the twelve months ended 31 December 2015.

The unaudited condensed consolidated interim financial statements for the twelve months ended 31 December 2015 (the “Second Interim Financial Statements”) have been prepared in accordance with the Hong Kong Accounting Standards 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and the applicable disclosure requirements of the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “GEM Listing Rules”).

The principal accounting policies used in the preparation of the Second Interim Financial Statements are consistent with those used in the preparation of the Group’s audited annual financial statements for the year ended 31 December 2014 (the “2014 Annual Financial Statements”). However, the Second Interim Financial Statements do not include all of the information required for annual financial statements and they should be read in conjunction with the 2014 Annual Financial Statements.

The HKICPA has issued a number of new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) and interpretations that are first effective or available for early adoption for the current accounting period of the Company. The adoption of these new and revised HKFRSs has no material effect on the Second Interim Financial Statements, and there have otherwise been no significant changes to the accounting policies applied in these financial statements.

The Second Interim Financial Statements are presented in Hong Kong dollars (“HK$”), which is also the Group’s functional currency. All values are rounded to the nearest thousand (HK$’000) except when otherwise indicated.

Inter-company transactions and balances between Group companies are eliminated.

– 114 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. REVENUE AND OTHER INCOME

An analysis of the Group’s revenue and other income is as follows:

Notes Revenue (a) Corporate advisory income Placing and underwriting income/arrangement fee Securities dealing commission Net investment income/(loss) (a) Net fair value gain/(loss) on financial assets measured at fair value through profit or loss Realised gain/(loss) on financial assets measured at fair value through profit or loss and other investments Net interest income Interest income from financial assets – Bank deposits – Listed investments – Loans receivables (b) Other income and gains Gain on disposal of plant and equipment Revenue and other income	Three months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Unaudited) 12,669 6,906 1,505 – – 2 14,174 6,908 22 (876) – (1) 22 (877) 182 771 – 45 1,147 122 1,329 938 150 261 15,675 7,230	Twelve months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Audited) 30,110 24,771 2,155 126 – 40 32,265 24,937 (51) (722) 180 (1,756) 129 (2,478) 1,043 1,406 43 101 2,726 189 3,812 1,696 150 261 36,356 24,416	Twelve months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Audited) 30,110 24,771 2,155 126 – 40 32,265 24,937 (51) (722) 180 (1,756) 129 (2,478) 1,043 1,406 43 101 2,726 189 3,812 1,696 150 261 36,356 24,416
			24,937
			(722) (1,756)
			(2,478)
			1,406 101 189
			1,696
			261
			24,416

– 115 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

(a) During the fourth quarter of the financial year ended 31 December 2014, management performed a review of the nature of the Group’s principal activities and their presentation in the Group’s consolidated financial statements. As a result of the review, whilst management considered that the revenue of the Group had correctly included the fee income from corporate advisory services, placing and underwriting services and securities dealings, as well as gains or losses on investments at fair value through profit or loss, it would be more appropriate to present such gains or losses on investments at fair value through profit or loss on a separate line. Such revised presentation better reveals the nature of the Group’s investment income/(loss) and is more consistent with the current market practice. It has consistently been adopted for the first quarterly, half-yearly and third quarterly results of 2015 as well as these Second Interim Financial Statements.
(b) During the review of the Group’s unaudited interim financial statements for the six months ended 30 June 2015 (the “2015 First Interim Financial Statements”), management considered it more appropriate to disclose the Group’s loans receivables as a separate item on the condensed consolidated statement of financial position as at 30 June 2015 in view of its materiality. Accordingly, the interest income from other interest-bearing assets presented in the 2014 Annual Financial Statements was renamed as interest income from loans receivables in the 2015 First Interim Financial Statements to better reflect the underlying nature of such item which had become more material for the Group’s results. Such presentation has continued to be adopted for the third quarterly results of 2015 and these Second Interim Financial Statements. The presentation of the corresponding amounts of the interest income for the three months and twelve months ended 31 December 2014 has been re-presented to align with the current period presentation. There is no impact on the Group’s revenue and other income for the three months and twelve months ended 31 December 2014 as a result of the change in presentation.

4. OPERATING SEGMENT INFORMATION

During the reporting period, the Group’s principal businesses were in the provision of corporate advisory services and related activities, investment in various types of assets as well as money lending. Information reported to the Group’s chief operating decision maker, for the purpose of resources allocation and performance assessment, is focused on the operating results of the Group as a whole as the Group’s resources are integrated and no discrete financial information is available. Accordingly, no segment analysis is presented.

5. PROFIT/(LOSS) BEFORE TAX

The Group’s profit/(loss) before tax is arrived at after charging:

	Three months	ended	Twelve months	ended
	31 December		31 December
	2015	2014	2015	2014
	HK$’000	HK$’000	HK$’000	HK$’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Audited)
Depreciation	280	278	1,082	768
Minimum lease payments under
operating leases on land and
buildings	808	810	3,236	3,386
Employee benefit expense (including
directors’ remuneration)	6,253	2,813	17,564	13,522

– 116 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

6. INCOME TAX (EXPENSE)/CREDIT

Hong Kong profits tax has been provided at the rate of 16.5% for the three months and twelve months ended 31 December 2015 and 2014.

Current tax Provision for the period Adjustments in respect of prior periods Total current tax Deferred tax Origination and reversals of temporary differences	Three months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Unaudited) (996) (575) – 1,070 (996) 495 51 289 (945) 784	Twelve months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Audited) (1,696) (715) (238) 1,070 (1,934) 355 238 430 (1,696) 785

There was no significant unprovided deferred tax for the relevant periods.

7. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculations of basic earnings per share for the three months and twelve months ended 31 December 2015 are based on the unaudited consolidated profits of approximately HK$4,933,000 and HK$6,751,000 attributable to ordinary equity holders of the Company for the three months and twelve months ended 31 December 2015 respectively (three months and twelve months ended 31 December 2014: unaudited consolidated loss of HK$138,000 and audited consolidated loss of HK$1,331,000 respectively) and the weighted average number of 1,453,744,348 shares and 1,452,095,616 shares in issue for the three months and twelve months ended 31 December 2015 respectively (three months and twelve months ended 31 December 2014: 1,451,540,000 shares and 1,446,165,205 shares respectively).

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive, potential ordinary shares. The calculations of diluted earnings per share for the three months and twelve months ended 31 December 2015 are based on the unaudited consolidated profits of approximately HK$4,933,000 and HK$6,751,000 attributable to ordinary equity holders of the Company for the three months and twelve months ended 31 December 2015 respectively and the adjusted weighted average number of 1,519,740,000 shares in issue for each of the three months and twelve months ended 31 December 2015 respectively.

No adjustment was made to the basic loss per share presented for each of the three months and twelve months ended 31 December 2014 as share options had anti-dilutive effect on the basic loss per share.

8. DIVIDENDS

The Board does not recommend the payment of an interim dividend for the twelve months ended 31 December 2015 (2014: Nil).

– 117 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

9. PLANT AND EQUIPMENT

During the twelve months ended 31 December 2015, the Group acquired items of plant and equipment with a cost of approximately HK$441,000 (2014: vehicle, plant and equipment with a cost of HK$1,922,000).

10. TRADE RECEIVABLES

The Group’s trade receivables arose generally from the provision of corporate advisory services, placing and underwriting income/arrangement fee and securities dealing commission.

An aged analysis of the Group’s trade receivables which are not considered to be individually or collectively impaired as at the end of the reporting period, based on the invoice dates and net of provisions, is as follows:

Note Current to 30 days 31 to 60 days 61 to 90 days Over 90 days (a)	As at 31 December 2015 HK$’000 (Unaudited) 2,085 952 – 80 3,117	As at 31 December 2014 HK$’000 (Audited) 1,026 896 62 674
		2,658

Note:

(a) Up to the date of this report, subsequent settlement of trade receivables as at 31 December 2015 amounted to approximately HK$2,571,600.

11. LOANS RECEIVABLES

For the reasons given in note 3(b) to the Second Interim Financial Statements, the other assets and receivables presented in the Group’s 2014 Annual Financial Statements were reclassified as (a) loans receivables; and (b) prepayments, deposits and other receivables in the 2015 First Interim Financial Statements to better reflect the underlying nature of these items and their significance to the Group’s overall financial position. Such presentation has continued to be adopted for these Second Interim Financial Statements. The corresponding amount of the other assets and receivables as at 31 December 2014 has been re-presented to align with the current period presentation. There is no impact on the Group’s total current assets and net assets as at 31 December 2014 as a result of the change in presentation.

The Group’s loan receivable as at 31 December 2014 was an interest-bearing asset in relation to an external party. The Group’s loans receivables as at 31 December 2015 went down to nil from approximately HK$27,846,000 as at 30 June 2015 after loans and interest bearing assets in relation to external parties having been fully repaid in the second half of 2015.

– 118 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

12. CASH HELD ON BEHALF OF CLIENTS

The Group’s licensed subsidiary maintains segregated trust accounts with a licensed bank to hold clients’ monies arising from its normal course of business. The Group has classified the clients’ monies as cash held on behalf of clients under the current assets section of the condensed consolidated statement of financial position, and recognised the corresponding payables to the respective clients on the grounds that it is liable for any loss or misappropriation of clients’ monies. The Group is not allowed to use clients’ monies to settle its own obligations.

13. TRADE PAYABLES

Included in trade payables are clients’ monies which are segregated in the trust accounts as described in note 12 to the Second Interim Financial Statements. Aging of the Group’s trade payables excluding clients’ monies as at the end of the reporting period was current to 30 days (31 December 2014: current to 30 days).

14. SHARE CAPITAL

Notes Authorised As at 1 January 2014, 31 December 2014, 1 January 2015 and 31 December 2015 Issued As at 1 January 2014 (Audited) Allotment of new shares pursuant to pre-IPO share option scheme (a) As at 31 December 2014 and 1 January 2015 (Audited) Allotment of new shares pursuant to pre-IPO share option scheme (b) As at 31 December 2015 (Unaudited) Notes:	Number of shares 10,000,000,000 1,440,000,000 11,540,000 1,451,540,000 2,600,000 1,454,140,000	Nominal value HK$ 100,000,000

		14,400,000 115,400
		14,515,400 26,000
		14,541,400

(a) During the twelve months ended 31 December 2014, an aggregate of 11,540,000 new shares were allotted and issued by the Company upon the exercise of the options (the “Pre-IPO Share Options”) granted under the pre-IPO share option scheme of the Company adopted on 7 June 2010 (the “Pre-IPO Share Option Scheme”) by certain grantees at an exercise price of HK$0.20 per share. The weighted average closing price of the shares of the Company immediately before the date on which these Pre-IPO Share Options were exercised was HK$0.43 per share.
(b) During the twelve months ended 31 December 2015, an aggregate of 2,600,000 new shares were allotted and issued by the Company upon the exercise of the Pre-IPO Share Options granted under the Pre-IPO Share Option Scheme by a grantee at an exercise price of HK$0.20 per share. The weighted average closing price of the shares of the Company immediately before the date on which these Pre-IPO Share Options were exercised was HK$0.37 per share.

– 119 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

15. RELATED PARTY TRANSACTIONS

(a) During the twelve months ended 31 December 2014, the Group generated corporate advisory income of HK$250,000 from a company, a director of which was also a non-executive director of the Company. The income so derived was determined by reference to market rates and agreed on an arm’s length basis. Save as disclosed herein and in note 15(b) below, the Group had no other significant related party transactions during the twelve months ended 31 December 2014 and 2015.
(b) Compensation of key management personnel of the Group:

Short-term employees benefits Pension scheme contributions Equity-settled share option expense Total compensation for key management personnel	Three months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Unaudited) 2,911 1,093 9 9 – 126 2,920 1,228	Twelve months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Audited) 6,783 4,774 36 34 332 476 7,151 5,284	Twelve months ended 31 December 2015 2014 HK$’000 HK$’000 (Unaudited) (Audited) 6,783 4,774 36 34 332 476 7,151 5,284
			5,284

16. EVENTS AFTER THE REPORTING PERIOD

(i) As disclosed in the joint announcement issued by the Company and Jinhui Capital Company Limited (“Jinhui”) dated 5 January 2016, the announcement of the Company dated 22 January 2016 and the circular of the Company dated 28 January 2016 (the “Circular”):
(a) on 28 October 2015, the Company entered into a subscription agreement (the “Subscription Agreement”) with the wholly-owned subsidiaries of 中植資本管理有限公司 (Zhongzhi Capital Group*) (“Zhongzhi Capital”), Jinhui and Kang Bang Qi Hui (HK) Company Limited (“Kang Bang”) (collectively, the “Zhongzhi Group”), pursuant to which, the Company conditionally agreed to issue, and Jinhui and Kang Bang (collectively, the “Subscribers”) conditionally agreed to subscribe for, a total of 2,100,000,000 shares of the Company (the “Subscription Shares”). On 5 January 2016, a supplemental agreement (the “Supplemental Subscription Agreement”) was entered into by the parties to amend, among other things, the number of Subscription Shares to be subscribed by the Subscribers and pursuant to which, the Company has conditionally agreed to issue, and the Subscribers have conditionally agreed to subscribe for, a total of 1,630,756,836 Subscription Shares for an aggregate consideration of HK$485,965,537 in cash at the subscription price of approximately HK$0.298 per Subscription Share (the “Subscription”);
(b) on 28 October 2015, Master Link Assets Limited (“Master Link”), Allied Target Holdings Limited (“Allied Target”), Phillip Capital (HK) Limited (“Phillip Capital”), Jinhui, Kang Bang, Mr. Yeung Kai Cheung Patrick (“Mr. Yeung”) and Zhongzhi Capital entered into a share purchase agreement (the “Share Purchase Agreement”), pursuant to which, Master Link, Allied Target and Phillip Capital (collectively, the “Vendors”) conditionally agreed to sell, and Jinhui and Kang Bang (collectively, the “Purchasers”) conditionally agreed to purchase, in aggregate, 511,307,896 shares of the Company (the “Sale Shares”) owned by the Vendors. On 5 January 2016, a supplemental agreement (the “Supplemental Share Purchase Agreement”) was entered into by the parties to amend, among other things, the number of Sale Shares to be sold by Phillip Capital to the Purchasers, increasing the aggregate number of Sale Shares to 648,345,791, for a total consideration of HK$251,298,829, equivalent to approximately HK$0.3876 per Sale Share (the “Share Purchase”);
(c) on 5 January 2016, the Company and Haitong International Securities Company Limited (the “New Shares Placing Agent”) entered into a placing agreement (the “New Shares Placing Agreement”), pursuant to which the New Shares Placing Agent conditionally agreed to place 400,000,000 new shares of the Company (the “New Placing Shares”), on a fully underwritten basis, to placees (the “New Shares Placees”) at the placing price of HK$0.3876 per New Placing Share (the “New Shares Placing”);

– 120 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(d) on 5 January 2016, Master Link entered into a placing agreement (the “Master Link Placing Agreement”) with Freeman Securities Limited (the “Master Link Placing Agent”), pursuant to which the Master Link Placing Agent agreed to act as placing agent for the purpose of procuring, as agent of Master Link, on a fully underwritten basis, placees to purchase 48,000,000 shares of the Company (the “Master Link Placing Shares”) owned by Master Link at the placing price of HK$0.3876 per Master Link Placing Share (the “Master Link Placing”);
(e) completion of the Subscription, the New Shares Placing, the Share Purchase and the Master Link Placing (the “Completion”) is subject to fulfillment and/or waiver, as applicable, of the conditions contained in the Subscription Agreement (as amended and supplemented by the Supplemental Subscription Agreement), the New Shares Placing Agreement, the Share Purchase Agreement (as amended and supplemented by the Supplemental Share Purchase Agreement) and the Master Link Placing Agreement respectively One such condition in the Subscription Agreement and the Share Purchase Agreement requires the Securities and Futures Commission of Hong Kong (the “SFC”) having granted the necessary consent for Jinhui, Kang Bang and their controlling shareholders to become the indirect substantial shareholders of Asian Capital (Corporate Finance) Limited (“Asian Capital (Corporate Finance)”) under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”). The SFC has on 5 February 2016 informed us that such consent has been given; and
(f) subject to and upon Completion, Jinhui will become the controlling shareholder of the Company. Pursuant to the Hong Kong Code on Takeovers and Mergers, Jinhui will be required to make unconditional mandatory cash offers to acquire all the issued shares of the Company (other than those already owned or agreed to be acquired by Jinhui and parties acting in concert with it) and to cancel all the outstanding Pre-IPO Share Options (the “Offers”).
(ii) As disclosed in the Circular, the Group is in the process of applying for and setting up a wholly-owned foreign funded equity investment management enterprise (the “Foreign Enterprise”) in Qianhai, Shenzhen based on the qualification of Asian Capital (Corporate Finance) as a Qualified Foreign Limited Partnership (“QFLP”). The registered capital required for setting up the Foreign Enterprise is approximately US$2 million which will be financed by the Group’s internal resources.
(iii) On 27 January 2016, the Board resolved to change the financial year end date of the Company from 31 December to 31 March. Further details were disclosed in the announcement of the Company dated 27 January 2016.
(iv) On 2 February 2016, Asian Capital (Corporate Finance), a wholly-owned subsidiary of the Company, entered into an investment advisory and management agreement (the “IAM Agreement”) with Zhongzhi Capital, pursuant to which Asian Capital (Corporate Finance) is conditionally appointed as an investment manager of Zhongzhi Capital for managing a portfolio of listed securities under the IAM Agreement. The IAM Agreement is conditional upon the fulfillment of the conditions precedent including completion of the Share Purchase and the Subscription having taken place and approval by independent shareholders of the Company. Further details were disclosed in the announcement of the Company dated 2 February 2016.
(v) Subsequent to 31 December 2015 and up to the date of this report, 15,000,000 new shares have been allotted and issued by the Company pursuant to the exercise of 15,000,000 Pre-IPO Share Options granted under the Pre-IPO Share Option Scheme at the exercise price of HK$0.20 per share.

Save as disclosed above, the Directors are not aware of any significant events requiring disclosure that have taken place subsequent to 31 December 2015 and up to the date of this report.

17. APPROVAL OF THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

The Second Interim Financial Statements were approved and authorised for issue by the Board on 12 February

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

4. STATEMENT OF INDEBTEDNESS

As at the close of business on 31 December 2015, being the latest practicable date for the purpose of this indebtedness statement prior to the publication of this Composite Document, the Group had no outstanding borrowings.

Save as aforesaid and apart from the intra-group liabilities, the Group did not have, at the close of business on 31 December 2015, any outstanding borrowings, mortgages, charges, debentures, loan capital or overdraft, debt securities or other similar indebtedness, finance leases or hire-purchase commitments, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities.

The Directors have confirmed that there has not been any material change in the indebtedness or contingent liabilities of the Group since 31 December 2015.

5. MATERIAL CHANGE

Save for the following events:

the Subscription and the New Shares Placing which would enhance the Group’s financial position with fresh capital to expand its business;
the profit warning for the results of the Group for the first quarter of 2015, the profit alerts for the results of the Group for the interim and the third quarter of 2015 and the positive profit alert for the results of the Group for the twelve months ended 31 December 2015, which suggested that the Group’s financial condition has improved from a loss-making position and returned to profitability;
the support by Zhongzhi Capital to the Group to expand the Group’s investment and asset management business, which could potentially improve the Group’s business outlook and profitability;
the potential continuing connected transaction announced by the Company on 2 February 2016, which, as at the Latest Practicable Date, is subject to approval by the relevant independent shareholders of the Company, and may potentially bring substantial earnings driver to the Group; and
the volatility in the A share and Hong Kong capital markets during 2015 and 2016, as well as the downturn of the capital market in Hong Kong as demonstrated by the year-to-date drop in the level of the Hang Seng Index, which may potentially affect the business outlook of the Group given the industry the Group operates in,

the Directors confirm that there had been no material change in the financial or trading position or outlook of the Group since 31 December 2014, being the date to which the latest published audited consolidated financial statements of the Company were made up, up to and including the Latest Practicable Date.

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GENERAL INFORMATION OF THE OFFEROR

APPENDIX III

1. RESPONSIBILITY STATEMENT

The sole director of the Offeror and the sole director of Zhonghai Sheng Feng (Beijing) Capital Management Limited Company[] (中海晟豐(北京)資本管理有限公司) (“ Zhonghai Sheng Feng* ”), the ultimate parent company of the Offeror, jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than information relating to the Group, the Vendors and parties acting in concert with any of them), and confirm, having made all reasonable enquires, that to the best of their knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Directors) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading.

2. MARKET PRICES

The table below shows the closing price of the Shares quoted on the Stock Exchange on (i) the last day on which trading took place in each of the calendar months during the Relevant Period; (ii) the Last Trading Day; and (iii) the Latest Practicable Date.

	Closing price
Date	of Shares
	(HK$)
28 February 2015	0.190
31 March 2015	0.196
30 April 2015	0.385
31 May 2015	0.390
30 June 2015	0.365
31 July 2015	0.350
7 August 2015 (being the last Business Day immediately
preceding the date of the First Announcement)	0.330
31 August 2015	0.380
30 September 2015	0.370
28 October 2015 (being the Last Trading Day)	0.380
31 October 2015	N/A (note)
30 November 2015	N/A (note)
31 December 2015	N/A (note)
31 January 2016	0.920
29 February 2016	0.530
7 March 2016 (being the Latest Practicable Date)	0.700

Note: Trading of Shares was suspended from 29 October 2015 to 5 January 2016 pending the release of the Joint Announcement.

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GENERAL INFORMATION OF THE OFFEROR

APPENDIX III

3. INTERESTS IN THE COMPANY AND THE OFFEROR AND ARRANGEMENTS IN CONNECTION WITH THE OFFERS

As at the Latest Practicable Date:

(a) save as disclosed in section 3 of Appendix IV, neither the Offeror nor parties acting in concert with it (including Kang Bang) was interested in or owned or controlled any Shares, derivatives, warrants or convertible or exchangeable securities carrying rights to subscribe for, convert or exchange into, Shares;
(b) there was no outstanding derivative in respect of securities in the Company which has been entered into by the Offeror and/or any person acting in concert with it (including Kang Bang);
(c) save for the undertakings provided by Mr. Yeung, Master Link, the New Shares Placees and/or New Shares Placing Agent, and the Master Link Placees and/or Master Link Placing Agent (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International”), the Offeror and/or parties acting in concert with it (including Kang Bang) had not received any irrevocable commitment to accept or reject the Offers;
(d) the number of shares and relevant securities held by the persons who, prior to the posting of this Composite Document, had irrevocably committed themselves to accept or reject the Offers, being Mr. Yeung, Master Link, the New Shares Placees and/or New Shares Placing Agent, and the Master Link Placees and/or Master Link Placing Agent, are set out in the “Shareholding Structure of the Company” in the “Letter from CCB International”;
(e) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any person acting in concert with it (including Kang Bang);
(f) there was no relevant security (as defined in Note 4 to Rule 22 of the Takeovers Code including shares, warrants, options, derivatives or convertible securities) in the Company which the Offeror or any party acting in concert with it (including Kang Bang) borrowed or lent;
(g) the Offeror had no intention to transfer, charge or pledge any Shares or securities acquired in pursuance of the Offers to any other persons nor had the Offeror entered into any such agreement, arrangement or understanding;
(h) save for the undertakings provided by Mr. Yeung, Master Link, the New Shares Placees and/or New Shares Placing Agent, and the Master Link Placees and/or Master Link Placing Agent (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB

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GENERAL INFORMATION OF THE OFFEROR

APPENDIX III

International”), there was no agreement, arrangement or understanding (including any compensation arrangement) existing between the Offeror or any person acting in concert with it (including Kang Bang) and any Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependent upon the Offers; and

(i) there was no agreement or arrangement to which the Offeror was a party which related to the circumstances in which the Offeror may or may not invoke or seek to invoke a condition to the Offers.

4. DEALINGS IN SECURITIES AND ARRANGEMENTS IN RELATION TO DEALINGS

During the Relevant Period:

(a) save for the Sale Shares and the Subscription Shares, none of the Offeror nor parties acting in concert with it (including Kang Bang) had dealt for value in any Shares, derivatives, warrants or convertible or exchangeable securities carrying rights to subscribe for, convert or exchange into, Shares;
(b) to the best of the knowledge of the Offeror, other than the Share Purchase, the Master Link Placing and the New Shares Placing, none of the persons who, prior to the posting of this Composite Document, had irrevocably committed themselves to accept or reject the Offers, being Mr. Yeung, Master Link, the New Shares Placees and the Master Link Placees (details of their shareholders are set out in the “Shareholding Structure of the Company” in the “Letter from CCB International”) had dealt for value in the Shares, convertible securities, warrants, options or derivatives of the Company during the Relevant Period;
(c) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any person acting in concert with it (including Kang Bang);

and as at the Latest Practicable Date:

(d) there was no arrangement of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code existed between the Offeror, or any person acting in concert with the Offeror, and any other person.

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GENERAL INFORMATION OF THE OFFEROR

APPENDIX III

5. CONSENTS AND QUALIFICATIONS OF PROFESSIONAL ADVISERS

The followings are the names and the qualifications of the professional advisers whose letters, opinions or advice are contained or referred to in this Composite Document:

Name Qualifications

CCB International a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO and the financial adviser to the Offeror in respect of the Offers

CCB International has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion herein of its letter, opinions or advice and references to its names in the form and context in which it appear.

As at the Latest Practicable Date, CCB International does not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

6. GENERAL

As at the Latest Practicable Date:

(a) The registered office of the Offeror was situated at OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands.
(b) The address of Ms. Duan, who is the sole director of the Offeror, was No. 24, 4/F, No. 32 Ming Hang Road, Jing Shui Area, Chengzhou, the PRC.
(c) The registered office of Kang Bang was situated at Room 20A, Kiu Fu Commercial Building, 300 Lockhart Road, Wan Chai, Hong Kong.
(d) The registered office of CCB International was situated at 12/F, CCB Tower, 3 Connaught Road Central, Central, Hong Kong.
(e) In the event of inconsistency, the English texts of this Composite Document and the Form(s) of Acceptance shall prevail over their respective Chinese texts.

– 126 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX III

7. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on (i) the website of the SFC at http://www.sfc.hk; and (ii) the website of the Company at http://www.asiancapital.com.hk, from the date of this Composite Document up to and including the Closing Date:

(a) the memorandum and articles of association of the Offeror;
(b) the written consent from CCB International referred to in the paragraph headed “Consent and qualifications of professional adviser” in this Appendix; and
(c) the letter dated 10 March 2016 from CCB International as set out on pages 11 to 26 of this Composite Document.

– 127 –

GENERAL INFORMATION OF THE GROUP

APPENDIX IV

1. RESPONSIBILITY STATEMENT

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than information relating to the Offeror and parties acting in concert with it, the terms of the Offers and the intention of the Offeror in relation to the Group) and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than the opinion expressed by the Offeror and parties acting in concert with it) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement contained herein misleading.

2. SHARE CAPITAL

As at the Latest Practicable Date, the authorised share capital of the Company was HK$100,000,000 divided into 10,000,000,000 Shares, of which 3,518,396,836 Shares had been issued and were fully paid or credited as fully paid.

2,066,856,836 Shares have been issued since 31 December 2014, the date on which the latest audited consolidated financial statements of the Company were made up, and up to the Latest Practicable Date. All the existing issued Shares are fully paid up and rank pari passu in all respects including all rights as to dividends, voting and capital.

As at the Latest Practicable Date, the Company had 32,100,000 outstanding Options conferring rights on the Optionholders to subscribe for up to an aggregate of 32,100,000 Shares, of which all Options have been vested and are currently exercisable.

Save for the Shares and the Options, the Company has no outstanding securities, options, derivatives, warrants and other convertible securities or rights affecting the Shares as at the Latest Practicable Date.

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GENERAL INFORMATION OF THE GROUP

APPENDIX IV

3. DISCLOSURE OF INTERESTS

(a) Directors’ and chief executive’s interests and short positions in the Shares, underlying Shares and debentures of the Company or any associated corporation

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which 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 which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by the Directors to be notified to the Company and the Stock Exchange, were as follows:

Long positions in the Shares and the underlying Shares

			Number of		Approximate
			underlying		percentage of
			Shares		shareholding
		Number of	pursuant to	Aggregate	in the
Name of Director	Capacity	Shares held	share option	interests	Company
Mr. Yeung	Interest of	326,270,000	–	326,270,000	9.27%
	controlled	(Note 1)
	corporation
	Beneficial	–	10,000,000	10,000,000	0.28%
	owner		(Note 2)
Mr. Chan	Beneficial	7,300,000	10,000,000	17,300,000	0.49%
Hok Leung	owner		(Note 2)
Mr. Xin	Beneficial	5,000,000	5,000,000	10,000,000	0.28%
Luo Lin	owner		(Note 2)
Mr. Yi	Beneficial	6,000,000	–	6,000,000	0.17%
Xiqun	owner
Mr. Tsui	Beneficial	1,000,000	–	1,000,000	0.03%
Pui Yan	owner

Notes:

These shares represent 326,270,000 Shares owned by Master Link which is wholly and beneficially owned by Mr. Yeung. By virtue of the SFO, Mr. Yeung is deemed to be interested in the 326,270,000 Shares held by Master Link.
These shares represent the underlying interest in Shares pursuant to the Options granted to the Directors by the Company under the Pre-IPO Share Option Scheme.

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APPENDIX IV

GENERAL INFORMATION OF THE GROUP

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short positions in any Shares, underlying Shares, debentures, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares of the Company or its associated corporations (within the meaning of Part XV of the SFO) 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 which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by the Directors to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders’ interests and short positions in the Shares and underlying Shares

As at the Latest Practicable Date, so far as was known to the Directors, the following persons (other than the Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under Section 336 of the SFO, or who were directly or indirectly interested in 5% 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:

Long positions in the Shares

			Approximate
			percentage of
			shareholding
		Number of	in the
Name of Shareholder	Capacity	Shares held	Company
Master Link (Note 1)	Beneficial owner	326,270,000	9.27%
The Offeror (Note 2)	Beneficial owner	1,823,282,102	51.82%
Zhongzhi Capital (HK) Company Limited	Interest of	1,823,282,102	51.82%
(“Zhongzhi (HK)”) (Note 2)	controlled
	corporation
深圳前海中植金輝投資管理合夥企業(有限	Interest of	1,823,282,102	51.82%
合夥) Shenzhen Qianhai Zhongzhi Jin	controlled
Hui Investment Management	corporation
Partnership Enterprise (Limited
Partnership) (“Shenzhen Zhongzhi*”)
(Note 2)

– 130 –

GENERAL INFORMATION OF THE GROUP

APPENDIX IV

			Approximate
			percentage of
			shareholding
		Number of	in the
Name of Shareholder	Capacity	Shares held	Company
Kang Bang (Note 3)	Beneficial owner	455,820,525	12.96%
常州康邦齊輝投資中心(有限合夥)	Interest of	455,820,525	12.96%
Changzhou Kang Bang Qi Hui	controlled
Investment Centre (Limited	corporation
Partnership) (“Changzhou Kang*
Bang”) (Note 3)
西藏康邦勝博投資有限公司Tibet Kang	Interest of	2,279,102,627	64.78%
Bang Sheng Bo Investment Company	controlled
Limited (“Tibet Kang Bang*”)	corporation
(Notes 2 and 3)
常州京江資本管理有限公司Changzhou	Interest of	2,279,102,627	64.78%
Jing Jiang Capital Management	controlled
Company Limited (“Changzhou Jing*	corporation
Jiang”) (Notes 2 and 3)
Zhongzhi Capital (Notes 2 and 3)	Interest of	2,279,102,627	64.78%
	controlled
	corporation
Zhong Hai Sheng Rong	Interest of	2,279,102,627	64.78%
(Notes 2 and 3)	controlled
	corporation
中海晟豐(北京)資本管理有限公司	Interest of	2,279,102,627	64.78%
Zhonghai Sheng Feng (Beijing) Capital	controlled
Management Limited Company	corporation
(“Zhonghai Sheng Feng”) (Notes 2
and 3)
Mr. Xie Zhikun (“Mr. Xie”)	Interest of	2,279,102,627	64.78%
(Notes 2 and 3)	controlled
	corporation

– 131 –

GENERAL INFORMATION OF THE GROUP

APPENDIX IV

Notes:

Master Link is an investment holding company, the entire issued share capital of which is wholly and beneficially owned by Mr. Yeung.
The Offeror is owned as to 100% by Zhongzhi (HK), which is owned as to 100% by Shenzhen Zhongzhi. Shenzhen Zhongzhi is owned as to 5% by Changzhou Jing Jiang as general partner and 95% by Tibet Kang Bang as limited partner. Changzhou Jing Jiang and Tibet Kang Bang are wholly owned by Zhongzhi Capital which in turn is owned as to 95% by Zhong Hai Sheng Rong. Zhong Hai Sheng Rong is owned as to 99.8% by Zhonghai Sheng Feng which is wholly owned by Mr. Xie. As such, each of Zhongzhi (HK), Shenzhen Zhongzhi, Tibet Kang Bang, Changzhou Jing Jiang, Zhongzhi Capital, Zhong Hai Sheng Rong, Zhonghai Sheng Feng and Mr. Xie are deemed to be interested in the Shares owned by the Offeror by virtue of the SFO.
Kang Bang is owned as to 100% by Changzhou Kang Bang. Changzhou Kang Bang is owned as to 1% by Tibet Kang Bang as general partner and 99% by Changzhou Jing Jiang as limited partner. Changzhou Jing Jiang and Tibet Kang Bang are wholly owned by Zhongzhi Capital which in turn is owned as to 95% by Zhong Hai Sheng Rong. Zhong Hai Sheng Rong is owned as to 99.8% by Zhonghai Sheng Feng which is wholly owned by Mr. Xie. As such, each of Changzhou Kang Bang, Tibet Kang Bang, Changzhou Jing Jiang, Zhongzhi Capital, Zhong Hai Sheng Rong, Zhonghai Sheng Feng and Mr. Xie are deemed to be interested in the Shares owned by Kang Bang by virtue of the SFO.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and chief executive of the Company) who had an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under Section 336 of the SFO, or who was directly or indirectly interested in 5% 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.

(c) Interests in the Offeror

As at the Latest Practicable Date, none of the Company nor any of the Directors had any interest in the shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Offeror.

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GENERAL INFORMATION OF THE GROUP

APPENDIX IV

4. DEALINGS IN SECURITIES OF THE COMPANY

During the Relevant Period,

(a) the following Directors have dealt in the Shares and/or the Options:

					In respect of	In respect of
			Number	Selling		Options
			of	price/	exercised,
			relevant	exercise	any option
			Shares	price per	money paid
Name of Director	Date of dealing	Nature of dealing	dealt	Share	or	received
				(HK$)		(HK$)
Mr. Xin Luo Lin	16 February 2016	Exercise of Options	5,000,000	0.20	1,000,000
Mr. Chan Kai Nang	16 February 2016	Exercise of Options	6,000,000	0.20	1,200,000
	19 February 2016	Sale	60,000	0.77		N/A
	19 February 2016	Sale	60,000	0.71		N/A
	22 February 2016	Sale	220,000	0.67		N/A
	22 February 2016	Sale	80,000	0.66		N/A
	22 February 2016	Sale	60,000	0.65		N/A
	22 February 2016	Sale	740,000	0.64		N/A
	22 February 2016	Sale	40,000	0.63		N/A
	22 February 2016	Sale	660,000	0.62		N/A
	22 February 2016	Sale	1,300,000	0.61		N/A
	23 February 2016	Sale	400,000	0.66		N/A
	23 February 2016	Sale	1,200,000	0.60		N/A
	24 February 2016	Sale	760,000	0.57		N/A
	25 February 2016	Sale	420,000	0.57		N/A
Mr. Yi Xiqun	17 February 2016	Exercise of Options	6,000,000	0.20	1,200,000

save for the sales of the 324,990,000 Sale Shares by Master Link and 70,400,000 Sale Shares by Allied Target under the Share Purchase Agreement, the Master Link Placing Shares placed under the Master Link Placing Agreement and save as disclosed above, none of the Directors have dealt for value in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares;

(b) no subsidiaries of the Company, pension funds of any member of the Group or any advisers to the Company as specified in class (2) of the definition of “associate” under the Takeovers Code had any dealings in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares;
(c) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of “associate” under the Takeovers Code; and
(d) no fund managers connected with the Company had any dealings in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares.

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GENERAL INFORMATION OF THE GROUP

APPENDIX IV

5. DEALINGS IN SECURITIES OF THE OFFEROR

During the Relevant Period, none of the Company nor the Directors had any dealings in the shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Offeror.

6. OTHER DISCLOSURE OF INTERESTS

As at the Latest Practicable Date:

(a) no Shares or any convertible securities, warrants, options or derivatives issued by the Company was owned or controlled by a subsidiary of the Company or by a pension fund (if any) of any member of the Group or by an adviser to the Company as specified in class (2) of the definition of “associate” under the Takeovers Code;
(b) no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code exists between a person who owned or controlled Shares or any convertible securities, warrants, options or derivatives issued by the Company and the Company or any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of “associate” under the Takeovers Code;
(c) no Shares, convertible securities, warrants, options or derivatives of the Company was managed on a discretionary basis by any fund managers connected with the Company;
(d) save for Mr. Yeung who has provided undertakings as disclosed in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International” in this Composite Document, none of the Directors had irrevocably committed himself to accept or reject the Offers. The Directors (other than Mr. Yeung who has provided undertakings as disclosed in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter from CCB International”) are inclined to dispose of their respective beneficial shareholdings and exercise the Options granted to them and will decide, depending on the then market conditions, whether to accept the Offers or dispose of their beneficial shareholdings on-market on the Stock Exchange;
(e) none of the Company or the Directors had borrowed or lent any Shares, convertible securities, warrants, options or derivatives in respect of any Shares;
(f) no benefit (other than statutory compensation) has been or will be given to any Director as compensation for loss of office or otherwise in connection with the Offers;
(g) save for the undertaking provided by the Master Link Placing Agent to Master Link under the Master Link Placing Agreement (details of which are set out in the paragraph headed “Undertakings and non-acceptance of the Offers” in the “Letter

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GENERAL INFORMATION OF THE GROUP

APPENDIX IV

from CCB International” in this Composite Document), there was no agreement or arrangement between any Director and any other person which is conditional on or dependent upon the outcome of the Offers or otherwise connected with the Offers; and

(h) save for the Share Purchase Agreement, no material contracts had been entered into by the Offeror in which any Director had a material personal interest.

7. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries or associated companies which (i) (including both continuous and fixed term contracts) had been entered into or amended within 6 months before the date of the commencement of the Offer Period; or (ii) was a continuous contract with a notice period of 12 months or more; or (iii) was a fixed term contract with more than 12 months to run irrespective of the notice period; or (iv) was not determinable by the employer within one year without payment of compensation (other than statutory compensation).

As at the Latest Practicable Date:

(a) none of the Directors has entered into any service contract or has an unexpired service contract with any member of the Group which is not determinable by such member of the Group within one year without payment of compensation (other than statutory compensation); and
(b) no contracts of significance in relation to the Group’s business to which the Company or its subsidiaries was a party and in which a Director of the Company had a material interest, whether directly or indirectly, subsisted.

8. MATERIAL CONTRACTS

The following contracts (not being contracts in the ordinary course of business) had been entered into by members of the Group within the two years preceding 10 August 2015 (being the date of commencement of the Offer Period) and up to the Latest Practicable Date and were or might be material:

(a) the Subscription Agreement; and
(b) the New Shares Placing Agreement.

9. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration or claims which would materially or adversely affect the operations of the Company and no litigation, arbitration or claim which would materially or adversely affect the operations of the Company was known to the Directors to be pending or threatened by or against any member of the Group.

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GENERAL INFORMATION OF THE GROUP

APPENDIX IV

10. EXPERT’S QUALIFICATION AND CONSENT

The following are the qualifications of the expert who has given opinion or advice which is contained or referred to in this Composite Document:

Name

Qualification

Investec Capital a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO

The Independent Financial Adviser has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion of the text of its letter, report, and/or references to its name in the form and context in which it appears.

As at the Latest Practicable Date, the Independent Financial Adviser did not have any shareholding, direct or indirect, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did it have any direct or indirect interest in any assets which had been, since 31 December 2014, being the date of the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

11. GENERAL

(i) The registered office of the Company is situated at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Its head office and principal place of business in Hong Kong is situated at Suite 601, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.
(ii) The registered office of Investec Capital is situated at Room 3609, 36/F, Two International Finance Centre, 8 Finance Street, Central, Hong Kong.
(iii) The English text of this Composite Document and the Forms of Acceptance shall prevail over the Chinese translation in the case of inconsistency.

12. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on (i) the website of the SFC at http://www.sfc.hk; and (ii) the website of the Company at http://www.asiancapital.com.hk from the date of this Composite Document up to and including the Closing Date:

(a) the memorandum and articles of association of the Company;

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GENERAL INFORMATION OF THE GROUP

APPENDIX IV

(b) the annual reports of the Company for the years ended 31 December 2013 and 31 December 2014;
(c) the interim report of the Company for the six months ended 30 June 2015 and the second interim report of the Company for the twelve months ended 31 December 2015;
(d) the letter from the Board as set out on pages 27 to 34 of this Composite Document;
(e) the letter from the Independent Board Committee as set out on pages 35 to 36 of this Composite Document;
(f) the letter from the Independent Financial Adviser as set out on pages 37 to 60 of this Composite Document;
(g) the material contracts referred to under the paragraph headed “Material contracts” in this Appendix;
(h) the written consent from Investec Capital referred to in the paragraph headed “Expert’s qualification and consent” in this Appendix;
(i) the written consent issued by Asian Capital (Corporate Finance) consenting to the issue of the Composite Document with references to its name in the form and context in which it appears;
(j) the Share Purchase Agreement; and
(k) the Master Link Placing Agreement.

– 137 –

AI assistant

Kingwisoft Technology Group Company Limited — M&A Activity 2016

51374_rns_2016-03-10_4fd0aaa3-27fd-4309-97c6-93f699904e5f.pdf

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Financial adviser to the Company

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

CONTENTS

EXPECTED TIMETABLE

Notes:

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

1. INTRODUCTION

LETTER FROM CCB INTERNATIONAL

2. THE OFFERS

The Share Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.39 in cash

Comparison of value

Value of the Share Offer

Highest and lowest Share prices

The Option Offer

For cancellation of each Option with

Value of the Option Offer

Total value of the Offers

LETTER FROM CCB INTERNATIONAL

Financial resources available to the Offeror

Undertakings and non-acceptance of the Offers

Non-acceptance Options

Non-acceptance Shares

LETTER FROM CCB INTERNATIONAL

LETTER FROM CCB INTERNATIONAL

Payment

Effect of accepting the Offers

The Share Offer

LETTER FROM CCB INTERNATIONAL

The Option Offer

Hong Kong stamp duty

Further terms of the Offers

3. SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM CCB INTERNATIONAL

4. INFORMATION ON THE GROUP

5. INFORMATION ON THE OFFEROR, KANG BANG AND ZHONGZHI CAPITAL

6. INTENTION OF THE OFFEROR IN RELATION TO THE GROUP

Business

Overview

Intended use of proceeds of the Subscription and the New Shares Placing

LETTER FROM CCB INTERNATIONAL

LETTER FROM CCB INTERNATIONAL

Proposed change of the Board composition

7. COMPULSORY ACQUISITION

8. MAINTAINING THE LISTING STATUS OF THE COMPANY

9. IMPORTANT NOTE TO SHAREHOLDERS AND OPTIONHOLDERS OUTSIDE HONG KONG

10. TAX IMPLICATIONS

11. ACCEPTANCE AND SETTLEMENT

12. GENERAL

13. ADDITIONAL INFORMATION

For and on behalf of CCB International Capital Limited Gilman Siu

INTRODUCTION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

THE OFFERS

The Share Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.39 in cash

LETTER FROM THE BOARD

The Option Offer

For cancellation of each Option with

Total value of the Offers

LETTER FROM THE BOARD

Further details of the Offers

INFORMATION OF THE GROUP

SHAREHOLDING STRUCTURE OF THE COMPANY

INTENTION OF THE OFFEROR IN RELATION TO THE GROUP

PROPOSED CHANGE OF THE BOARD COMPOSITION

Kingwisoft Technology Group Company Limited M&A Activity 2016