Novautek Technologies Group Limited - Proxy Solicitation & Information Statement 2016

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

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

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實力建業集團有限公司

(Incorporated in Bermuda with limited liability) (Stock Code: 519)

MAJOR TRANSACTION IN RELATION TO ACQUISITION OF PROPERTY AND NOTICE OF SPECIAL GENERAL MEETING

Unless the context otherwise requires, all capitalised terms used in this circular have the meanings set out in the section headed “Definitions” of this circular.

A letter from the Board is set out from pages 3 to 8 of this circular.

A notice convening the SGM to be held at Taichi Room, Unit 3810, 38/F., China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong on Thursday, 7 April 2016, at 10:00 a.m. is set out on pages 33 to 34 of this circular. A form of proxy for the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s principal place of business at Units 3402-3, 34th Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM, or any adjournment thereof, should you so wish.

For identification purpose only

18 March 2016

			Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			1
LETTER FROM THE		BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
APPENDIX I	–	FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . .	9
APPENDIX II	–	UNAUDITED FINANCIAL INFORMATION OF
		THE PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
APPENDIX III	–	VALUATION REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
APPENDIX IV	–	UNAUDITED PRO FORMA FINANCIAL
		INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . . . . . . . . .	21
APPENDIX V	–	GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
NOTICE OF SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			33

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the meanings set out below.

“Acquisition” the proposed acquisition of the Property by the Purchaser pursuant to the terms of the Agreements “Agreements” the Provisional Agreement and the Formal Agreement “associate(s)” has the meaning ascribed thereto under the Listing Rules “Board” the Board of Directors “Company” Applied Development Holdings Limited （實力建業集團有限公司*）, a company incorporated in Bermuda, the issued Shares of which are listed on the Main Board of the Stock Exchange (stock code: 519) “Completion” completion of the Acquisition in accordance with the terms and conditions of the Agreements “connected person(s)” has the meaning ascribed thereto under the Listing Rules “Director(s)” the director(s) of the Company “Disposal” the proposed disposal of the entire issued share capital of Severn Villa Limited, an indirect wholly owned subsidiary of the Company which holds Flat A and B on 1st Floor, Flat B on 2nd Floor, Flat B on 3rd Floor and Roof B, the whole of Garden B, part of Garden A, and car parking spaces numbered 1-5 and 7 of Severn Villa, No.3 Severn Road, Hong Kong and a shareholder’s loan owing by Severn Villa Limited to Applied Investment (Asia) Limited, details of which are set out in the announcement of the Company dated 16 February 2016

“Formal Agreement” the formal sale and purchase agreement entered into between the Vendor and the Purchaser on 29 February 2016 in relation to the sale and purchase of the Property, which has incorporated the terms and conditions contained in the Provisional Agreement and any other terms mutually agreed between the Vendor and the Purchaser

“Group”

the Company and its subsidiaries

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

DEFINITIONS

“Latest Practicable Date”	16 March 2016, being the latest practicable date prior to the
	despatch of this circular for the purpose of ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mazars”	Mazars CPA Limited, Certified Public Accountants, the auditor of
	the Company
“PRC”	the People’s Republic of China which for the purpose of this
	circular shall exclude Hong Kong, the Macau Special
	Administrative Region and Taiwan
“Property”	Office No. 3316 on 33rd Floor, China Merchants Tower, Shun
	Tak Centre, Nos. 168-200 Connaught Road Central, Hong Kong
“Provisional Agreement”	the provisional agreement for sale and purchase of the Property
	dated 4 February 2016 entered into between the Vendor and the
	Purchaser in respect of the Acquisition
“Purchaser”	Applied Hong Kong Properties Limited, a company incorporated
	in Hong Kong and an indirect wholly owned subsidiary of the
	Company
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“SGM”	the special general meeting of the Company to be convened by
	the Company to consider and approve the Agreements and the
	transactions contemplated thereunder
“Share(s)”	ordinary share(s) of HK$0.01 each in the capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Valuer” or “Crowe Horwath ”	Crowe Horwath (HK) Consulting & Valuation Limited, an
	independent professional property valuer
“Vendor”	Hong Kong EECP Centre Limited, a company incorporated in
	Hong Kong with limited liability
“%”	per cent.

For identification purpose only

LETTER FROM THE BOARD

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實力建業集團有限公司

(Incorporated in Bermuda with limited liability) (Stock Code: 519)

Executive Directors: Registered office: Ms. Wang Jingyu Clarendon House (Chairlady and Managing Director) 2 Church Street Ms. Ng Kit Ling Hamilton HM11 Mr. Tsao Hoi Ho Bermuda Independent Non-executive Directors: Principal Place of Business in Hong Kong: Mr. Su Ru Jia Units 3402-3, 34th Floor Mr. Lo Yun Tai China Merchants Tower Mr. Chan Ming Fai, Terence Shun Tak Centre 168-200 Connaught Road Central Hong Kong 18 March 2016

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION IN RELATION TO ACQUISITION OF PROPERTY

INTRODUCTION

Reference is made to the announcements of the Company dated 4 February 2016 and 2 March 2016 in relation to the Acquisition. It was announced that the Purchaser, an indirect wholly owned subsidiary of the Company, entered into the Provisional Agreement with the Vendor whereby the Purchaser agreed to purchase and the Vendor agreed to sell the Property at a cash consideration of HK$47,148,000.

The purpose of this circular is to provide you with, amongst other things, (i) further details of the Agreements and the transactions contemplated thereunder; (ii) the valuation report of the Property; and (iii) the notice of the SGM.

For identification purpose only

LETTER FROM THE BOARD

THE AGREEMENTS

The principle terms of the Agreements are as follows:

The Provisional Agreement

Date

4 February 2016

Parties

Vendor : Hong Kong EECP Centre Limited, a company incorporated in Hong Kong with limited liability. Purchaser : Applied Hong Kong Properties Limited, an indirect wholly owned subsidiary of the Company.

To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the Vendor and its ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.

The Formal Agreement

The Vendor and the Purchaser have entered into the Formal Agreement on 29 February 2016. The Formal Agreement has incorporated the terms and conditions contained in the Provisional Agreement and any other terms mutually agreed between the Vendor and the Purchaser.

Asset to be acquired

The Property is located at Office No. 3316 on 33rd Floor, China Merchants Tower, Shun Tak Centre, Nos. 168-200 Connaught Road Central, Hong Kong. The Property is being purchased by the Purchaser free from all encumbrances and subject to the existing tenancy. An existing mortgage and an assignment of rental in favour of The Hong Kong and Shanghai Banking Corporation Limited both dated 1 March 2013 will be discharged at the cost of the Vendor at Completion, who shall deliver the relevant discharge to the Purchaser within 21 days after Completion.

The Property is a commercial property, with a gross floor area of approximately 2,062 square feet and is currently leased out with rental agreed at HK$90,000 per month (exclusive of rates, management fee and all other outgoings) for a term of three years commencing from 1 October 2013 and expiring on 30 September 2016, and with a rent-free period from 1 October 2013 to 15 October 2013. The Property is for commercial use. Rental income generated from the Property for the two years ended 30 June 2014 and 2015 and the six months ended 31 December 2015 amounted to approximately HK$765,000, HK$1,080,000 and HK$540,000, respectively. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, the tenant and its ultimate beneficial owners are third

LETTER FROM THE BOARD

parties independent of the Company and connected persons of the Company. An option providing a first right for the tenant to negotiate a renewal for a further term of three years with the Vendor has been granted to the tenant subject to certain terms, including the rent of the Property, to be mutually agreed with the tenant.

Consideration

HK$47,148,000, which has been, or is to be, paid in the following manner:

(a) HK$2,268,200 was paid upon the signing of the Provisional Agreement as an initial deposit;
(b) HK$2,446,600 was paid on 22 February 2016 as a further deposit; and
(c) HK$42,433,200 shall be paid upon Completion on or before 8 April 2016 as the remaining balance of the consideration.

All deposits paid or payable by the Purchaser has been paid or shall be paid to the Vendor’s solicitors as stakeholder who shall not release the same to the Vendor until Completion.

The consideration has been determined after arm’s length negotiations between the parties with reference to (a) the prevailing market value of commercial properties of similar size and age as the Property in the same vicinity; and (b) the prevailing market conditions. The Directors consider that the terms of the Agreements are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

According to the valuation conducted by the Valuer engaged by the Company in respect of the Acquisition, the value of the Property is HK$47,200,000 as at 8 March 2016. The valuation report prepared by the Valuer is set out in Appendix III of this circular.

The Board is of the view that as the tenancy agreement was entered into in 2013 for a term of three years, the existing monthly rental of HK$90,000 is only reflective of the market rental at the time the tenancy agreement was entered into. As rentals of office properties in Hong Kong have been steadily rising in recent years, the Board anticipates that a higher monthly rental reflective of the current market rate with market yield of approximately 3% per annum could be obtained upon the expiration of the current tenancy agreement on 30 September 2016.

The Board wishes to bring to the attention of the Shareholders that as the Agreements entered into in relation to the Acquisition was not intended to be subject to the passing of resolution(s) by the Shareholders at the SGM, in the event the Company fails to obtain approval from the Shareholders at the SGM to approve the Agreements, the deposit and valorem stamp duty paid by the Company in the aggregate amount of approximately HK$8,722,000 will not be refunded for the reason of the Company’s failure to complete the Acquisition.

Completion

Completion shall take place on or before 8 April 2016. The Agreements are not subject to any condition.

LETTER FROM THE BOARD

INFORMATION ON THE PURCHASER AND THE GROUP

The Company is an investment holding company and the Group is principally engaged in resort and property development, property investment and investment holding.

The Purchaser is a company incorporated in Hong Kong and is an indirect wholly owned subsidiary of the Company which is a property holding company.

INFORMATION ON THE VENDOR

The Vendor is a property holding company incorporated in Hong Kong with limited liability. Save for the aforesaid, the Company is not aware of the business activity of the Vendor.

FINANCIAL EFFECT OF THE ACQUISITION

The effect of the Acquisition on the earnings, assets and liabilities of the Group is set out below.

Earnings

Upon Completion, the Property would continue to be held for leasing to generate stable income for the Group and is expected to contribute a positive financial effect on earnings after Completion.

Assets

As at 31 December 2015, the unaudited consolidated total assets of the Group amounted to approximately HK$710,548,000. As referred to in the unaudited pro forma financial information of the Group as set out in Appendix IV to this Circular, the unaudited consolidated total assets of the Group would increase to approximately HK$710,860,000 and cash, including bank deposits, would decrease to approximately HK$292,209,000 if Completion could have taken place on 31 December 2015. The unaudited pro forma financial information of the Group set out in Appendix IV to this circular was prepared without taking into account the impact of the Disposal.

Liabilities

As at 31 December 2015, the unaudited consolidated total liabilities of the Group amounted to approximately HK$74,201,000. As referred to in the unaudited pro forma financial information of the Group as set out in Appendix IV to this Circular, the unaudited consolidated total liabilities of the Group would increase to approximately HK$74,513,000 if Completion could have taken place on 31 December 2015. The unaudited pro forma financial information of the Group set out in Appendix IV to this circular was prepared without taking into account the impact of the Disposal.

LETTER FROM THE BOARD

REASONS FOR THE ACQUISITION

The Company is an investment holding company and the Group is principally engaged in the businesses of resort and property development, property investment and investment holding. The Group has been exploring appropriate investment opportunities and is optimistic about the long-term prospect of the property market in Hong Kong. The Acquisition allows the Group to enlarge and diversify its investment properties portfolio with high quality assets, strengthen the income base of the Group and provide capital appreciation potential to the Group. The Company intends to hold the Property for rental income generation and long-term investment purposes. The Board believes that the Acquisition represents a good investment opportunity in commercial property for the Company and will improve the Company’s operating performance by generating additional rental income for the Company. Accordingly, the Group entered into the Agreements to effect the Acquisition, the terms of which are in the opinion of the Board fair and reasonable and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one of the applicable ratios set forth under Rule 14.07 of the Listing Rules in respect of the Acquisition is more than 25% but less than 75%, the Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

The tenancy agreement attached to the Property is an operating lease and as the total monetary value involved is less than 200% in the scale of the Group’s existing operations conducted through lease arrangements of such kind, the tenancy agreement attached to the Property does not constitute a disclosable transaction of the Company under Rule 14.04(1)(d) of the Listing Rules.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, no Shareholder is required to abstain from voting on the resolution to be proposed at the SGM to approve the Agreements and the transactions contemplated thereunder.

None of the Directors has a material interest in the Agreements and the transaction contemplated thereunder or was required to abstain from voting on the Board resolutions for considering and approving the same.

SGM

A notice convening the SGM to be held at Taichi Room, Unit 3810, 38/F., China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong on Thursday, 7 April 2016, at 10:00 a.m. is set out on pages 33 to 34 of this circular for the purpose of considering and, if thought fit, passing the ordinary resolution in relation to the Agreements and the transactions contemplated thereunder.

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s principal place of business at Units 3402-3, 34th Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong as soon as possible but in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM, or any adjournment thereof, should you so wish.

RECOMMENDATIONS

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

ADDITIONAL INFORMATION

Your attention is also drawn to the information as set out in the appendices to this circular and the notice of the SGM as set out on pages 33 to 34, which form part of this circular.

As the Acquisition is subject to the obtaining of the approval of the Shareholders at the SGM and may or may not proceed, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

By Order of the Board Applied Development Holdings Limited Wang Jingyu Chairlady and Managing Director

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The unaudited consolidated financial statements of the Group for the six months ended 31 December 2015 are disclosed in the Company’s interims report for 2016 despatched to the Shareholder on 15 March 2016 and the audited consolidated financial statements of the Group for each of the three years ended 30 June 2013, 2014 and 2015 are disclosed in the Company’s annual reports for 2013, 2014 and 2015 despatched to the Shareholders on 15 October 2013, 10 October 2014 and 28 October 2015 respectively, which have been published on the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.applieddev.com).

The said financial statements are hereby incorporated by reference in, and form an integral part of, this circular.

2. INDEBTEDNESS

Borrowings

At the close of business on 31 January 2016, being the latest practicable date for the purpose of preparing this indebtedness statement, the Group had outstanding secured bank borrowings of approximately HK$63,000,000.

Pledge of assets and other securities

At the close of business on 31 January 2016, being the latest practicable date for the purpose of preparing this indebtedness statement, the Group had provided the following securities for the banking facilities granted to Applied Investment (Asia) Limited (“Applied Investment”), a direct wholly owned subsidiary of the Company:

(a) pledge of investment properties with a carrying amount of HK$300,000,000;
(b) all monies earned by the above pledged investment properties of the Group;
(c) property insurance on the pledged investment properties executed by the Group in favour of the bank; and
(d) unconditional and irrevocable corporate guarantee given by the Company in respect of all amounts owing by Applied Investment to the bank under the facilities.

Save as aforesaid or otherwise mentioned herein, and apart from intra-group liabilities and normal trade payables in the ordinary course of business, the Group did not have any other outstanding borrowings, mortgages, charges, debentures, loan capital and overdraft, debt securities or other similar indebtedness, finance leases or hire purchase commitment, liabilities under acceptances or acceptance credits or any guarantees or other material contingent liabilities at the close of business on 31 January 2016, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 30 June 2015, the date to which the latest published audited consolidated financial statements of the Group were made up.

4. WORKING CAPITAL STATEMENT

The Directors are of the opinion that, after taking into account the effects of the Completion and the financial resources available to the Group, the Group has sufficient working capital to satisfy its requirements for at least the next 12 months from the date of publication of this circular in the absence of unforeseen circumstances.

5. FINANCIAL AND TRADING PROSPECT

It is the intention of the Group to continue to principally engage in the businesses of resort and property development, property investment and investment holding upon Completion. Currently, the Group’s investment properties comprise apartment units and car parking spaces in Severn Villa, the Peak, Hong Kong whereas its investment holding portfolio comprise corporate and convertible bonds and equity shares listed on the Stock Exchange. In order to improve the performance of the Group, the Company is seeking to expand these business segments by looking for appropriate investment opportunities with the aim to bring satisfactory return to the Group and the Shareholders.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Property Investment Business

As disclosed in the announcement of the Company dated 16 February 2016, the Group had entered into a sale and purchase agreement in relation to the Disposal. As the Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules, the Disposal is therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules. Details of the apartment units and car parking spaces to be disposed of pursuant to the Disposal are set out in the table below:

Approximate

	Approximate
	Gross
	Floor Area	Occupied/
Residential Unit	(square feet)	Vacant	Terms of Tenancy	Remarks
Unit 1A and 1B on	3,140	Vacant	It is intended that a	The proposed tenancy
1st Floor of Severn			tenancy will be	will include a
Villa			concluded with rent	swimming pool, a
			of no less than	private garden and
			HK$200,000 per	four car parking spaces
			month.
Unit 2B on	1,570	Occupied	Rent is HK$40,000	The tenancy includes
2nd Floor of			per month for a term	one car parking space
Severn Villa			of two years ending
			in 2016.
Unit 3B on	1,570	Occupied	Rent is HK$80,000	The tenancy includes
3rd Floor of			per month for a term	the roof above the unit
Severn Villa			of two years ending	and one car parking
			in 2017.	space

Upon completion of the Disposal, the Group will cease to be interested in the above listed apartment units and car parking spaces of Severn Villa.

Under Rule 14.82 of the Listing Rules, if the assets of a listed issuer consist wholly or substantially of cash or short-dated securities, it will not be regarded as suitable for listing and trading in its securities will be suspended. Upon completion of the Disposal, the Company’s cash level will increase substantially. The Stock Exchange is of the view that the Company would become a cash company by virtue of Rule 14.82 of the Listing Rules upon completion of the Disposal, such that unless such issue is resolved, the Company will not be regarded as suitable for listing and trading of its Shares will be suspended immediately upon completion of the Disposal. If the Company becomes a cash company upon completion of the Disposal, it may apply to the Stock Exchange to lift the suspension once it has a business suitable for listing, but the Stock Exchange will treat such application for lifting of the suspension as if it were a new listing application. The Stock Exchange reserves the right to cancel the listing of the Shares if such suspension continues for more than 12 months. On the assumption that Completion and completion of the Disposal proceed as intended, the cash level of the Group will be

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

increased from HK$343,453,000 as at 31 December 2015 to approximately HK$792,000,000 (representing approximately 83.4% of the then total assets of the Group) and the Group’s other assets would in aggregate amount to approximately HK$157,663,000 (representing approximately 16.6% of the then total assets of the Group) upon Completion and completion of the Disposal.

Under Rule 13.24 of the Listing Rules, an issuer shall carry out a sufficient level of operations or have sufficient assets to warrant the continued listing of the issuer’s securities. The operations of the Company will diminish after completion of the Disposal. The Stock Exchange is of the view that the Company would not have sufficient level of operation and would not have sufficient assets upon completion of the Disposal, and unless such issue is resolved, trading of its Shares will be suspended immediately upon completion of the Disposal.

The Company intends to resolve the abovementioned issues under Rules 14.82 and 13.24 of the Listing Rules prior to completion of the Disposal. The Company is in the progress of negotiating an acquisition to acquire certain commercial properties in Hong Kong, completion of which will significantly lower the cash level of the Company. The Company will disclose details of such proposed acquisition in accordance with the relevant Listing Rules and comply with the requirements of the relevant Listing Rules once a definitive agreement has been entered into.

In view of the abovementioned potential implications, Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

Upon completion of the Acquisition, the Company intends to continue to strengthen its business of property investment. Owing to demands for high grade office space from Mainland enterprises, including large banks, securities firms and corporations, rentals have been steadily rising in recent years and the outlook of investment value of commercial properties in core business districts in Hong Kong remains optimistic. As such, the Company is presently focusing on seizing investment opportunities in office properties located in the Central, Admiralty, Wanchai and Sheung Wan districts which possess medium to long term capital appreciation potential and are expected to generate stable rental income for the Group. The Company’s management expects that the office properties the Group is currently short listing will provide the Group with a stable source of income, the proceeds of which could be used to finance further expansion of the Group’s property investment business. On the contrary, in the short term, less emphasis will be placed by the Company on residential and retail properties investment opportunities as there are signs that these segments of the Hong Kong property market are declining primarily owing to overall escalating supply of residential properties in the next few years brought by government policies and falling number of Mainland tourists due to tighter entry visa restrictions and change of holiday destination preferences. As at the Latest Practicable Date, save for the Acquisition, the Company has not entered into any definitive agreements with any parties in relation to acquisition of investment properties. The Company will disclose details of any further acquisition(s) in accordance with the relevant Listing Rules and comply with the requirements of the relevant Listing Rules in due course.

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Resort and Property Development Business

Following the disposal of the resort and property development projects in the British Virgin Islands and the Panama as referred to in the Company’s announcement dated 23 December 2015 (for further details please refer to the circular issued by the Company on 4 December 2015), the Group will continue to look for resort and property development business opportunities in the PRC and Hong Kong, which are markets the Company’s management are more familiar with. However, in light of the recent slowdown of the PRC and Hong Kong economy, the Board will remain prudent and take into account the financial conditions of the Group in deciding on undertaking any new resort/property development projects. As at the Latest Practicable Date, no specific investment opportunity in resort/property development project has been identified.

Despite the recent general downturn in market sentiments, the Board remains optimistic about the property market in Hong Kong in the long run and believes the current market condition provides an opportunity for the Company to capture premium property investment opportunities at lower prices and thereby maximizing returns to Shareholders. Facing with uncertainties of the global economy, the Board will also remain cautious in its investment strategy and will continue to seek new opportunities aiming to enhance the profitability and the Shareholders’ value of the Company.

Investment Holding Business

The Group has been engaging in the investment holding business as part of its treasury management activities in effectively utilising surplus funds on hand to earn income. The Group mainly invested in equity securities listed on the Stock Exchange as well as in corporate and convertible bonds. For listed equity securities, the Group’s investment strategy is to target for stocks with good value appreciation potential whether in short, medium or long term and/or good dividend yield. For corporate bonds, the Group is to target for bonds with good interest yield and low default risk, and for convertible bonds, the Group is to target for convertible bonds with good interest yield, low default risk and good upside potential upon shares conversion. As at the Latest Practicable Date, the carrying value of the Group’s corporate and convertible bonds portfolio amounted to approximately HK$82,098,000 with coupon rate ranging from 8% to 10.125% per annum and provides stable interest income of over HK$500,000 per month to the Group. The Company will continue with its treasury management activities and it is expected that the investment holding assets held will continue to generate stable income to the Group.

UNAUDITED FINANCIAL INFORMATION OF THE PROPERTY

APPENDIX II

PROFIT AND LOSS STATEMENT OF THE PROPERTY

Pursuant to Rule 14.67(6)(b)(i) of the Listing Rules, a profit and loss statement of the Property for each of the three years ended 30 June 2013, 2014 and 2015 and the six months ended 31 December 2015 (the “Relevant Period”) on identifiable net income stream and valuation in relation to the Property must be reviewed by the auditor or reporting accountant to ensure that such information has been properly compiled and derived from the underlying books and records.

The property is currently let to a third party. Except for the tenancy agreement of the Property with commencement date on 1 October 2013 (the “Tenancy Agreement”), despite requests made by the Group with the Vendor, the Vendor has not agreed to grant permission for the Group to gain full access to the underlying books and records or other financial information regarding the direct costs and other expenses for the preparation of the financial information of the Property for the Relevant Period. The Group is unable to comply with the disclosure requirement under Rule 14.67(6)(b)(i) of the Listing Rules.

The Company has therefore applied to the Stock Exchange for a waiver from strict compliance with the Rule 14.67(6)(b)(i), such that the following information be disclosed instead.

The financial information of the Property for the Relevant Period set out below has been prepared by the Directors solely based on the terms of the Tenancy Agreement and the experience of the Group and/or the Company’s management in the property industry. Accordingly, it may not give a true picture of the performance of the Property actually occurred during the Relevant Period.

Pursuant to the Tenancy Agreement, which has a fixed term of three years with commencement date on 1 October 2013 and a rent-free period from 1 October 2013 to 15 October 2013, the monthly rentals exclusive of management fee and air-conditioning charges are HK$90,000. Gross rental income for the three years ended 30 June 2013, 2014 and 2015 and six months ended 31 December 2015 thus amounted to nil, HK$765,000, HK$1,080,000 and HK$540,000 respectively. The tenant is responsible for Government rates with the latest quarterly charge being HK$14,850, management fee and airconditioning charges with the latest monthly charge being HK$11,669, and utilities expenses, all service management and maintenance charges (save and except those of a capital or non-recurring nature) and all other outgoings while the landlord is responsible for Government rent (being HK$1,000 per annum since the commencement of the lease term from 31 December 1980, which have not been reviewed by Mazars) and property tax.

Save for the above limited information, the Directors are unable to ascertain the amount of any other expenses in relation to the Property and expected that monthly expenses paid and payable by the landlord in respect of the Relevant Period were insignificant. Accordingly, no other expenses such as depreciation, repair and maintenance, and finance costs were included in the above estimation. The information set out above is prepared using accounting policies which are materially consistent with those of the Company.

UNAUDITED FINANCIAL INFORMATION OF THE PROPERTY

APPENDIX II

Notes:

In accordance with Listing Rules 14.67(6)(b)(i), the Directors engaged Mazars, the auditor of the Company to conduct certain agreed upon procedures in respect of the rental income of the Property, in accordance with the Hong Kong Standard on Related Services 4400 “Engagements to Perform Agreed-Upon Procedures Regarding Financial Information” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The procedures were performed solely to assist the Directors in evaluating the accuracy of the gross rental income from the Property, and are summarised as follows:

Mazars obtained the schedule setting out the address, names of lessor and lessee, rental period, monthly rent, rental incentives and gross rental income for the three years ended 30 June 2013, 2014 and 2015 and six months ended 31 December 2015 from the management of the Company (the “Gross Rental Income Summary”) and checked the arithmetical accuracy of the gross rental income for the three years ended 30 June 2013, 2014 and 2015 and six months ended 31 December 2015. The Gross Rental Income Summary was prepared by and was the sole responsibility of the Directors.
From the Gross Rental Income Summary, Mazars agreed the address, names of the lessor and lessee, rental period, rental incentives and monthly rent (the “Particulars”) to the Tenancy Agreement provided by the Vendor.

Mazars reports its findings below:

a. With respect to procedure 1, Mazars found the gross rental income for the three years ended 30 June 2013, 2014 and 2015 and six months ended 31 December 2015 included in the Gross Rental Income Summary to be arithmetically accurate.
b. With respect to procedure 2, from the Gross Rental Income Summary, Mazars found the Particulars to be in agreement with the Tenancy Agreement.

Because the above procedures do not constitute an assurance engagement performed in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA, the auditor of the Company does not express any assurance on the gross rental income and the Gross Rental Income Summary.

Had the auditor performed additional procedures or had the auditor performed an assurance engagement of the gross rental income and the Gross Rental Income Summary in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by HKICPA, other matters might have come to the auditors’ attention that would have been reported to the Directors.

The Directors consider the omission of a profit and loss statement for the Property’s net income stream for the Relevant Period would not render this circular materially incomplete or misleading or deceptive.

VALUATION REPORT

APPENDIX III

The following is the text of a letter and valuation certificate prepared for the purpose of incorporation in this circular received from Crowe Horwath in connection with their opinion of value of the Property as at 8 March 2016.

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18 March 2016

Applied Development Holdings Ltd.

3402-3, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong

Dear Sirs,

RE: Valuation of Office No. 3316 on 33rd Floor, China Merchants Tower, Shun Tak Centre, Nos. 168-200 Connaught Road Central, Hong Kong

In accordance with an instruction for us to the above property interests held by Applied Development Holdings Ltd. (the “Company”), we confirm that we have carried out inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the capital value of such property interests as at 8 March 2016 (the “Valuation Date”) for circular purpose of major transaction of the Company only.

Valuation Basis

Our valuation is carried out on a Market Value basis, which is defined as “the estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing where the parties had each acted knowledgeably, prudently and without compulsion.”

This valuation is complied with the HKIS Valuation Standards published by the Hong Kong Institute of Surveyors (“HKIS”), the RICS Valuation – Professional Standards published by the Royal Institution of Chartered Surveyors (“RICS”) and International Valuation Standards (“IVS”) published by the International Valuation Standards Council. We have also complied with all the requirements set out in Chapter 5 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).

Valuation Assumptions

Our valuation has been made on the assumption that the owner sells the property on the open market without the benefit or burden of a deferred term contract, leaseback, joint venture, management agreement or any similar arrangement, which would serve to affect the value of the property interests.

VALUATION REPORT

APPENDIX III

No allowance has been made in our valuation neither for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free of encumbrances, restrictions and outgoings of onerous nature which could affect their values.

Valuation Methodology

We have valued the property interests by both Direct Comparison Approach and Income Approach. Direct Comparison Approach consists of comparisons based on prices realized from comparable properties. Comparable properties of similar size, location and character are selected and then analyzed and carefully weighed against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of capital value.

We have also valued the property interests by the Income Approach where appropriated. Income Approach takes into account the current passing rent of the property and the reversionary potentials of the tenancies, and we capitalized the existing tenancy and assembled it with the reversionary interest, which has been derived by discounting the market rent on vacant possession basis as assessed by the comparison method with appropriate property yield(s).

There is no material difference on the values of the property interests between Direct Comparison Approach and Income Approach.

Title Investigation

We have caused searches at the Land Registry in Hong Kong. We have not, however, searched the original documents to verify ownership or any amendment which did not appear on the copies handed to us. All documents have been used for reference only. We assume no responsibility for matters legal in nature nor do we render any opinion as to the title to the property that is assumed to be good and marketable.

We have relied to a considerable extent on the information and advice given or made available to us by the Company and relevant government authorities on such matters as planning approvals, statutory notices, easements, tenures, particulars of occupancy, tenancy agreement, gross floor area and all other relevant matters.

Site Inspection

Site inspection of the property was carried by Mr. Leo M Y Lo on 8 March 2016. The staff responsible for the inspection has about 12 years of experience in the real property sector in Hong Kong. We have inspected the exterior and certain common parts of the property. We have not inspected those parts of the property which were covered, unexposed or inaccessible and such parts have been assumed to be in reasonable condition. We have not carried out on-site measurements to verify the correctness of the areas in respect of the property but have assumed that the area(s) shown on the title documents and floor plan(s) handed to us are correct. All documents and contracts have been used as reference only and all dimensions, measurements and areas are approximations.

VALUATION REPORT

APPENDIX III

In the course of our inspection, we did not notice any serious defects. However, we have not carried out any structural survey or any tests on the building services. Therefore, we are not able to report whether the property is free of rot, infestation or any other structural defects. We have not carried out investigations on the site to determine the suitability of the ground conditions, the services, etc. for the existing or future redevelopment. We have not carried out any investigation into past or present uses, either of the property or of any neighboring land, to establish whether there is any contamination or potential for contamination to the property from these uses or sites, and have therefore assumed that none exists.

Limitation of Liabilities

We have had no reason to doubt the truth and accuracy of the information provided to us by the Company. We have also sought confirmation from the Company that no material factors have been omitted from the information supplied. We consider that we have been provided with sufficient information to arrive an informed view, and we have no reason to suspect that any material information has been withheld.

Unless otherwise stated, all monetary amount is stated in Hong Kong Dollars (“HK$”).

Our findings or conclusion of value of the property in this report are valid only for the stated purpose and at the Valuation Date, and for the sole use of the Company. We or our personnel shall not be required to give testimony or attendance in court or to any government agency by reason of this report, and the valuer accepts no responsibility whatsoever to any other person.

Neither the whole nor any part of this report or any reference made hereto may be included in any published documents, circular or statement, or published in any way, without our written approval of the form and context in which it may appear.

Our liability for loss or damage shall be limited to such sum as we ought reasonably to pay having regard to our responsibility for the same on the basis that all other consultants and specialists, where appointed, shall be deemed to have provided to the Company contractual undertakings in respect of their services and shall be deemed to have paid to the Company such contribution as may be appropriate having regard to the extent of their responsibility for such loss or damage.

The Company is required to indemnify and hold us and our personnel harmless from any claims, liabilities, costs and expenses (including, without limitation, attorney’s fees and the time of our personnel involved) brought against, paid or incurred by us at a time and in any way based on the information made available in connection with our engagement except to the extent that any such losses, expenses, damages or liabilities are ultimately determined to be the result of gross negligence, misconduct, willful default or fraud of our engagement team in conducting its work. This provision shall survive even after the termination of this engagement for any reason.

VALUATION REPORT

APPENDIX III

We enclose herewith our valuation certificate.

Yours faithfully,

For and on behalf of

Crowe Horwath (HK) Consulting & Valuation Limited

Leo M Y Lo

MRICS, MHKIS Director

Note:

Mr. Leo M Y Lo, Director of Crowe Horwath (HK) Consulting & Valuation Limited. Mr. Lo is a member of Royal Institution of Chartered Surveyors (MRICS) and member of Hong Kong Institute of Surveyors (MHKIS). Mr. Lo has over 12 years’ experience in valuation of properties in the People’s Republic China, Hong Kong and Asia Pacific regions, Europe and America.

Encl.

VALUATION REPORT

APPENDIX III

VALUATION CERTIFICATE

Property

Description and tenure

Occupancy details

Market value in existing state as at 8 March 2016

Office No. 3316 on Shun Tak Centre is a composite 33rd Floor, China development comprising 2 office Merchants Tower, towers (including China Merchants Shun Tak Centre, Tower and West Tower) of 31-storey Nos.168-200 each from 9/F to 39/F over a 12-storey Connaught Road podium includes B/F, B1, B2, G/F to 8/ Central, Hong Kong F for composite uses, including retail, carparks, taxi stands, bus terminal, 29/378 of helicopter landing pad and HK-Macau 378/33888 equal and Ferry Terminal. undivided shares of Inland Lot No. 8517 The property is erected on a corner site which is located at the waterfront to the north of Connaught Road Central.

According to the Occupation Permit No. H43/86 dated on 21 April 1986, the subject building was completed in 1986.

According to information HK$47,200,000 provided by the Company, (HONG KONG the property has been leased DOLLARS at a monthly rental income FORTY SEVEN of HK$90,000 exclusive of MILLION rates and management fee TWO HUNDRED for a term of 3 years THOUSAND) commencing from 1 October 2013 until 30 September 2016. The tenant has an option to renew the lease for a further term of 3 years, subject to certain terms, including the rent of the property, to be mutually agreed between the landlord and tenant.

The property has a gross floor area of approximately 2,062 square feet (or 192 square metres) and a saleable area of approximately 1,336.75 square feet (or 124.18 square metres).

The property is held under Government Lease for a term of 75 years and renewable for 75 years commencing from 31 December 1980. The Government Rent payable is HK$1,000 per annum.

Notes:

a) The registered owner of the property is Hong Kong EECP Centre Limited as per memorial dated 20 February 2013 registered vide Memorial No. 13031302520053.
b) The property falls within the area zoned as “Commercial” as per the approved Draft Central District Outline Zoning Plan No. S/H4/15 gazetted under Section 5 of Town Planning Ordinance on 11 December 2015.
c) The property is subject to the following encumbrances:
i) Mortgage in favour of The Hong Kong and Shanghai Banking Corporation Limited registered vide Memorial No. 13031302520068 dated 1 March 2013.
ii) Assignment of Rentals in favour of The Hong Kong and Shanghai Banking Corporation Limited registered vide Memorial No. 13031302520072 dated 1 March 2013.
iii) Carbon Copy Preliminary Sale & Purchase Agreement in favour of Applied Hong Kong Properties Limited registered vide Memorial No. 16022601880019 dated 4 February 2016.

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

A. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

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18 March 2016

Applied Development Holdings Limited Unit 3402-3, 34th Floor China Merchants Tower Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Dear Sirs,

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Applied Development Holdings Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) prepared by the directors of the Company (the “Directors”) for illustrative purpose only. The unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities at 31 December 2015 and related notes as set out on Appendix IV to the circular in connection with the proposed acquisition of a property (the “Acquisition”) dated 18 March 2016 (the “Circular”). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on Appendix IV to the Circular.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of the proposed acquisition of the property on the Group’s consolidated financial position at 31 December 2015 if the Acquisition had taken place on 31 December 2015. As part of this process, information about the Group’s unaudited consolidated financial position at 31 December 2015 has been extracted by the Directors from the Group’s interim report for the six months ended 31 December 2015 on which no audit, review or accountant’s report has been published.

Directors’ responsibility for the unaudited pro forma financial information

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

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Reporting accountant’s independence and quality control

We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants’ responsibilities

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

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

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

The purpose of unaudited pro forma financial information included in a circular is solely to illustrate the impact of a significant event or transaction on the unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the events or transactions at 31 December 2015 would have been as presented.

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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

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

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

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

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

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled by the Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Mazars CPA Limited Certified Public Accountants

Hong Kong

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

B. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. INTRODUCTION

The following is a summary of illustrative unaudited pro forma financial information consists of the unaudited pro forma consolidated statement of assets and liabilities at 31 December 2015 in connection with the proposed acquisition of a property (the “Acquisition”). The unaudited pro forma financial information presented below is prepared to illustrate the financial position of the Group immediately after completion of the Acquisition as at 31 December 2015 as if the Acquisition had been completed on 31 December 2015.

The unaudited pro forma financial information is prepared based on the unaudited consolidated statement of financial position of the Group at 31 December 2015 as extracted from the interim report of the Group for the six months ended 31 December 2015.

The unaudited pro forma financial information is presented after making pro forma adjustments that are directly attributable to the Acquisition and not relating to future events or decisions, factually supportable and clearly identified as to those adjustments which are expected to have / have no continuing effect on the Group.

The unaudited pro forma financial information has been prepared by the Directors in accordance with paragraph 4.29(1) of the Listing Rules, for the purposes of illustrating the effect of the Acquisition, is based on a number of assumptions, estimates and uncertainties. As a result of these assumptions, estimates and uncertainties, it may not give a true picture of the financial position, financial performance and cash flows of the Group had the Acquisition been completed as of 31 December 2015, where applicable, or any future date.

The unaudited pro forma financial information should be read in conjunction with the historical financial information of the Group as set out in the interim report of the Group for the six months ended 31 December 2015 and other financial information included elsewhere in the Circular.

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

2. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE GROUP

The unaudited pro forma consolidated statement of assets and liabilities of the Group as at 31 December 2015 has been prepared based on the unaudited consolidated statement of financial position of the Group as at 31 December 2015, which have been extracted from the interim report of the Company for the period then ended, after making pro forma adjustments relating to the Acquisition that are directly attributable to the transaction and factually supportable.

Non-current assets Investment properties Property, plant and equipment Other assets Available-for-sale investments Current assets Financial assets at fair value through profit or loss Trade and other receivables Bank deposits Bank balances and cash Current liabilities Other payables Interest-bearing borrowings Net current assets Total assets less current liabilities*	The Group at 31 December 2015 (Before Acquisition) HK$’000 (Note 1) 300,000 866 174 271 301,311 65,057 727 250,000 93,453 409,237 777 73,424 74,201 335,036 636,347	Pro forma adjustments HK$’000 HK$’000 (Note 2) (Note 3) 51,556 – – – – – – – 51,556 – – – – – – – (51,556) 312 (51,556) 312 – 312 – – – 312 – – – –	The Group at 31 December 2015 (After Acquisition) HK$’000 351,556 866 174 271
			352,867
			65,057 727 250,000 42,209
			357,993
			1,089 73,424
			74,513
			283,480
			636,347

Maturity: within 3 months

APPENDIX IV UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

3. NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

The balances have been extracted, without adjustments, from the interim report of the Group for the six months ended 31 December 2015.
The adjustment is to reflect the Acquisition at a purchase price of HK$47,148,000 together with other directly attributable costs of acquisition of HK$4,407,580, comprising valorem stamp duty payable of HK$4,007,580 and other expenses of approximately HK$400,000 including legal fee relating to the Acquisition. The Property is classified as investment properties as the Directors intend to hold the Property for rental income generation and long term investment purposes. In respect of the valuation of the Property carried out by an independent valuer, as set out in the Appendix III to this Circular, the Property is valued at HK$47,200,000 as of 8 March 2016. For simplicity, it is assumed that the fair value of investment properties approximates the amount as reflected in the pro forma adjustments. The investment properties are initially measured at cost (inclusive of transaction costs) and subsequently measured at fair value. The subsequent increase in fair value of the investment properties has not been reflected here for the purposes of this pro forma financial information.
The Property is acquired subject to and with the benefit of the Tenancy Agreement. Pursuant to the sales and purchase agreement, the Vendor shall transfer all rental deposits to the Group upon completion of the Acquisition. Accordingly, this adjustment reflects the rental deposits of the tenant transferred from the Vendor to the Group as if the Acquisition took place on 31 December 2015.

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date:

Authorised: 6,000,000,000 Shares Issued and fully paid: 2,087,590,739 Shares	HK$ 60,000,000

	20,875,907.39

All the issued shares in the capital of the Company rank pari passu with each other in all respects including the rights as to voting, dividends and return of capital.

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

There are no arrangements under which future dividends are waived or agreed to be waived.

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

GENERAL INFORMATION

APPENDIX V

3. DISCLOSURE OF INTERESTS

(a) Directors’ interests in the securities of the Company and its associated corporation

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company or its associated corporation(s) (within the meaning of Part XV of the SFO), as recorded in the register required to be kept by the Company under section 352 of the SFO, or which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules (“Model Code”) set out in Appendix 10 of the Listing Rules, were as follows:

Interests in the Shares or underlying shares

		Number of Shares
		held by
	Beneficially	controlled		Approximate %
Name of Director	owned	corporation	Total	of issued Shares
Wang Jingyu	–	465,725,959	465,725,959	22.309%
(“Ms. Wang”)		(Note)
Ng Kit Ling	15,000	–	15,000	0.001%

Note: These shares were held by Millennium Capital Asia Limited, a company which was wholly owned by Peak Access International Limited, which in turn was beneficially owned by Ms. Wang.

As at the Latest Practicable Date, none of the Directors were interested in any share options granted under the share option scheme of the Company adopted on 15 November 2012.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the Shares, underlying shares and debentures of the Company or any of its associated corporation(s) (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company under section 352 of the SFO, or which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO or the Model Code.

GENERAL INFORMATION

APPENDIX V

(b) Substantial Shareholders’ interests

As at the Latest Practicable Date, save as disclosed above, so far as was known to the Directors or chief executive of the Company based on the register maintained by the Company pursuant to Part XV of the SFO, no persons (not being a Director or chief executive of the Company) had any interest, directly or indirectly, or short position in the Shares and underlying shares of the Company which would fall to be disclosed under Divisions 2 and 3 of Part XV of the SFO, nor were recorded in the register required to be kept by the Company under section 336 of the SFO, nor were there any persons, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or held any option in respect of such capital.

4. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or his or her respective associates was considered to have an interest in a business which competed or was likely to compete, either directly or indirectly, with the business of the Group other than those business to which the Directors or his or her associates were appointed to represent the interests of the Company and/or the Group.

5. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS OF THE GROUP

As at the Latest Practicable Date,

(a) none of the Directors were materially interested in any contract or arrangement subsisting and which was significant in relation to the business of the Group; and
(b) none of the Directors had any interest, direct or indirect, in any assets which had been 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 since 30 June 2015, the date to which the latest published audited consolidated financial statements of the Company were made up.

6. MATERIAL CONTRACTS

The following are contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Company or any of its subsidiaries) entered into by the members of the Group within the two years immediately preceding the date of this circular and which is or may be material:

(a) the Provisional Agreement;
(b) the Formal Agreement;

GENERAL INFORMATION

APPENDIX V

(c) a sale and purchase agreement dated 27 January 2016 entered into among Applied Investment (Asia) Limited, Applied International Holdings Limited, Horoy Qianhai International Holdings Limited, Severn Villa Limited and the Company in relation to the disposal of the entire issued share capital of Severn Villa Limited and a shareholder’s loan owing by Severn Villa Limited to Applied Investment (Asia) Limited to Horoy Qianhai International Holdings Limited;
(d) a placing agreement dated 15 December 2015 entered into between the Company and Get Nice Securities Limited as placing agent for the placing of an aggregate of 347,930,000 shares in the Company;
(e) an agreement dated 9 November 2015 entered into between the Company and Glory Paradise Group Limited in relation to the disposal of the entire issued share capital of and shareholder’s loan to Applied Enterprises Limited and Beachside Investments Limited; and
(f) a loan agreement dated 24 June 2014 entered into between the Company and Get Nice Finance Company Limited in relation to the grant of an unsecured loan of HK$10 million from Get Nice Finance Company Limited, at an interest rate of 12% per annum, for a term of three months.

7. LITIGATION

High Court Action No. 424/2011

Ms. Wong Kar Gee, Mimi (“Ms. Wong”), a former director of the Company, originally commenced the claim for various arrears of salaries and other allowances, non-executive director’s fee and reimbursements in respect of the investment properties in the Labour Tribunal against the Company. After a preliminary hearing, the Labour Tribunal transferred the claim to the High Court in February 2011 for a total sum of the claim of approximately HK$3.5 million.

On 31 May 2011, Ms. Wong lodged a statement of claim to the High Court against the Company for an aggregate amount of approximately HK$1.5 million and the related interest and costs (the “Statement of Claims”).

On 21 August 2012, Ms. Wong’s lawyer took out a summons application for leave to amend the Statement of Claims in which the claim amount was adjusted to approximately HK$3 million with further interest and related costs to be charged.

On 20 February 2013, the High Court provisionally struck out the claim as Ms. Wong failed to appear at the case management conference. Ms. Wong applied appeal to the High Court to restore the claim.

On 26 February 2014, the High Court made decision to restore Ms. Wong’s claim with no conditions attached.

On 11 March 2014, the Company applied appeal to the High Court against the restoration.

GENERAL INFORMATION

APPENDIX V

On 19 August 2015, the High Court dismissed the appeal and the Company should pay Ms. Wong her costs of and occasioned by the appeal, to be taxed.

After the application of re-commencement of the claim by Ms. Wong, the hearing date of the claim is fixed on 30 June 2016.

The Directors consider that the claim from Ms. Wong is without merit and have been advised by the Group’s lawyers that the Group holds strong positions in this claim and therefore no provision for the claims is considered necessary. The Directors consider that such litigation will not have any material adverse impact on the operation or financial position of the Group.

8. SERVICE CONTRACTS

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

9. EXPERTS’ QUALIFICATION AND CONSENT

The following are the qualifications of the experts who have given an opinion or advice contained in this circular:

Name Qualification Crowe Horwath professional property valuer Mazars Certified Public Accountants

Each of Crowe Horwath and Mazars has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its report or letter or opinion as set out in this circular and references to name in the form and context in which it appears in this circular.

As at the Latest Practicable Date, each of Crowe Horwath and Mazars had no shareholding directly or indirectly in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for shares in any member of the Group, nor did it have any interest, directly or indirectly, in any asset acquired or disposed of by or leased to any member of the Group or proposed to be acquired or disposed of by or leased to any member of the Group since 30 June 2015, the date to which the latest published audited financial statements of the Company were made up.

10. GENERAL

(a) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda;
(b) the branch share registrar and transfer office of the Company in Hong Kong is Computershare Hong Kong Investor Services Limited, which situates at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong;

GENERAL INFORMATION

APPENDIX V

(c) the company secretary of the Company is Ms. Ng Kit Ling, who is an Executive Director and a director of various subsidiaries of the Company, she is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and a fellow of The Association of Chartered Certified Accountants in the United Kingdom, she also holds a Master of Science in Accountancy degree from The Hong Kong Polytechnic University;
(d) the auditor of the Company is Mazars; and
(e) in the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (except Saturdays, Sundays and public holidays) at the principal place of business of the Company in Hong Kong at Units 3402-3, 34th Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong from the date of this circular up to and including the date of the SGM:

(a) the Memorandum of Association and Bye-laws of the Company;
(b) the valuation report issued by the Valuer, the text of which is set out in Appendix III of this circular;
(c) the unaudited pro forma financial information of the Group, the text of which is set out in Appendix IV of this circular;
(d) the written consent referred to in the section headed “EXPERTS’ QUALIFICATION AND CONSENT” in this appendix;
(e) the material contracts referred to in the section headed “MATERIAL CONTRACTS” in this appendix;
(f) the annual reports of the Company for each of the two years ended 30 June 2014 and 2015;
(g) the interim report of the Company for the six months ended 31 December 2015;
(h) the Provisional Agreement;
(i) the Formal Agreement;
(j) a copy of each circular of the Company issued pursuant to the requirements of Chapter 14 and/or 14A of the Listing Rules which has been issued since the date of the latest published audited accounts; and
(k) this circular.

NOTICE OF SGM

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實力建業集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 519)

NOTICE IS HEREBY GIVEN THAT a special general meeting (the “Meeting”) of Applied Development Holdings Limited (the “Company”) will be held at Taichi Room, Unit 3810, 38/F., China Resources Building, 26 Harbour Road, Wanchai, Hong Kong on Thursday, 7 April 2016 at 10:00 a.m. for the purpose of considering and, if thought fit, passing with or without modifications the following resolution as an ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

(a) the provisional sale and purchase agreement dated 4 February 2016 and the formal sale and purchase agreement dated 29 February 2016 (together the “Agreements”) entered into between Hong Kong EECP Centre Limited as vendor and Applied Hong Kong Properties Limited as purchaser in relation to the acquisition of an office unit located at Office No. 3316 on 33rd Floor, China Merchants Tower, Shun Tak Centre, Nos. 168-200 Connaught Road Central, Hong Kong (the “Acquisition”), a copy of which has been produced to the Meeting marked “A” and signed by the Chairman of the Meeting for the purpose of identification, and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and
(b) any one or more of the directors of the Company be and is/are hereby authorised to do all other acts and things, to sign and execute all such further documents or agreements or deeds on behalf of the Company (including the affixation of the common seal of the Company where execution under seal is required) and to do such acts and things and to take such steps which is/are of an administrative nature as he/she/they may consider necessary, appropriate, desirable or expedient to give effect to or in connection with the implementation of and giving effect to the Agreements and the transactions contemplated thereunder.”

By Order of the Board Applied Development Holdings Limited Wang Jingyu Chairlady and Managing Director

Hong Kong, 18 March 2016

For identification purpose only

NOTICE OF SGM

Executive Directors: Registered office: Ms. Wang Jingyu Clarendon House (Chairlady and Managing Director) 2 Church Street Ms. Ng Kit Ling Hamilton HM11 Mr. Tsao Hoi Ho Bermuda Independent non-executive Directors: Principal Place of Business in Hong Kong: Mr. Su Ru Jia Units 3402-3, 34th Floor Mr. Lo Yun Tai China Merchants Tower Mr. Chan Ming Fai, Terence Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Notes:

Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint another person as his/her/its proxy to attend and vote instead of him/her/it. On a poll, votes may be given either personally or by proxy. A proxy need not be a member of the Company. A member of the Company who is the holder of two or more shares of the Company may appoint more than one proxy to represent him/her/it and vote on his/her/its behalf at the Meeting.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her/its attorney duly authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to sign the same.
A form of proxy for use at the Meeting is enclosed. Whether or not you intend to attend the Meeting in person, you are encouraged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the Meeting or any adjournment thereof, should he/she/it so wish. In such event, the instrument appointing such a proxy shall be deemed to be revoked.
The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a certified copy of such power or authority shall be deposited at the principal place of business of the Company at Units 3402-3, 34th Floor, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong not less than 48 hours before the time for holding the Meeting or adjourned meeting at which the person named in such instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.
In the case of joint holders of shares, any one of such holders may vote at the Meeting, either in person or by proxy, in respect of such share as if he/she/it were solely entitled thereto, but if more than one of such joint holders are present at the Meeting in person or by proxy, the persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.
The ordinary resolution set out herein and is to be passed at the Meeting will be taken by way of poll.
If Typhoon Signal No. 8 or above, or a “black” rainstorm warning is in effect any time after 9:00 a.m. on the date of the Meeting, the Meeting will be postponed. The Company will post an announcement on the website of the Company at www. applieddev.com and on the HKExnews website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk to notify shareholders of the date, time and place of the rescheduled meeting.

In the event of inconsistency, the English text of this notice shall prevail over the Chinese text thereof.

AI assistant

Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2016

49267_rns_2016-03-17_34fa13e0-2588-417a-8857-6b5e1d6cd923.pdf

實力建業集團有限公司

MAJOR TRANSACTION IN RELATION TO ACQUISITION OF PROPERTY AND NOTICE OF SPECIAL GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

實力建業集團有限公司

MAJOR TRANSACTION IN RELATION TO ACQUISITION OF PROPERTY

INTRODUCTION

THE AGREEMENTS

The Provisional Agreement

Date

Parties

The Formal Agreement

Asset to be acquired

Consideration

Completion

INFORMATION ON THE PURCHASER AND THE GROUP

INFORMATION ON THE VENDOR

FINANCIAL EFFECT OF THE ACQUISITION

Earnings

Assets

Liabilities

REASONS FOR THE ACQUISITION

LISTING RULES IMPLICATIONS

SGM

RECOMMENDATIONS

ADDITIONAL INFORMATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS

Borrowings

Pledge of assets and other securities

3. MATERIAL ADVERSE CHANGE

4. WORKING CAPITAL STATEMENT

5. FINANCIAL AND TRADING PROSPECT

Property Investment Business

Approximate

Resort and Property Development Business

Investment Holding Business

PROFIT AND LOSS STATEMENT OF THE PROPERTY

Applied Development Holdings Ltd.

Valuation Basis

Valuation Assumptions

Valuation Methodology

Title Investigation

Site Inspection

APPENDIX III

Limitation of Liabilities

Leo M Y Lo

VALUATION CERTIFICATE

Property

Description and tenure

Occupancy details

A. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

Directors’ responsibility for the unaudited pro forma financial information

Reporting accountant’s independence and quality control

Reporting accountants’ responsibilities

Opinion

B. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. INTRODUCTION

2. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES OF THE GROUP

3. NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

1. RESPONSIBILITY STATEMENT

2. SHARE CAPITAL

3. DISCLOSURE OF INTERESTS

(a) Directors’ interests in the securities of the Company and its associated corporation

(b) Substantial Shareholders’ interests

4. COMPETING INTERESTS

5. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS OF THE GROUP

6. MATERIAL CONTRACTS

7. LITIGATION

High Court Action No. 424/2011

8. SERVICE CONTRACTS

9. EXPERTS’ QUALIFICATION AND CONSENT

10. GENERAL

11. DOCUMENTS AVAILABLE FOR INSPECTION

實力建業集團有限公司

ORDINARY RESOLUTION

Novautek Technologies Group Limited Proxy Solicitation & Information Statement 2016