Novautek Technologies Group Limited - Proxy Solicitation & Information Statement 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your 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(s) or the transferee(s) or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

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

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(Incorporated in Bermuda with limited liability)

(Stock Code: 519)

(1) MAJOR AND CONNECTED TRANSACTION AND (2) NOTICE OF SPECIAL GENERAL MEETING

Independent Financial Adviser to the

Independent Board Committee and the Independent Shareholders

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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 4 to 14 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 15 of this circular. A letter from the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 34 of this circular.

A notice convening the SGM to be held at 10:00 a.m. on 15 August 2018 (Wednesday) at Suite 2418, 24/F., Jardine House, 1 Connaught Place, Central, Hong Kong is set out on pages SGM-1 to SGM-2 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 in Hong Kong at Unit 1801, 18/F, West 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

24 July 2018

CONTENTS

		Page
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM	THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM	THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . .	15
LETTER FROM	THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . .	16
APPENDIX I	– FINANCIAL INFORMATION OF THE GROUP. . . . . . . .	I-1
APPENDIX II	– GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	II-1
NOTICE OF SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		SGM-1

– i –

DEFINITIONS

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

“Board” the board of Directors
“Business Day(s)”
any day other than a Saturday or Sunday or bank holiday in which banks in Hong Kong are ordinarily open for business
“Closing”
the date of the closing of the issue and sale of the Interests and the execution and delivery of the Limited Partnership Agreement
“Company”

Applied Development Holdings Limited (實力建業集團有限公司*), a company incorporated in Bermuda with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 519)

“Conditions”
means the conditions precedent to the Subscription Agreement as set out in this circular
“connected person” has the meaning ascribed to it under the Listing Rules
“Director(s)” director(s) of the Company
“Fund”
“General Partner”
Ruihua International M&A Fund LP, an exempted limited partnership in the Cayman Islands established in accordance with the Exempted Limited Partnership Law (as amended, modified or re-enacted from time to time) of the Cayman Islands Cayman Ruihua Investment Management Limited, a company incorporated in the Cayman Islands with limited liability
“Group” the Company and its subsidiaries
“HK Ruihua”
Hongkong Ruihua Investment Management Limited, a company incorporated in Hong Kong with limited liability and a substantial Shareholder
“HK$”
Hong Kong dollars, the lawful currency of Hong Kong

– 1 –

DEFINITIONS

“Hong Kong”
“Independent Board Committee”
“Independent Financial Adviser”
“Independent Shareholders”
“Initial Limited Partner”
“Interest”
“Jiangsu Ruihua”
“Latest Practicable Date”
“Limited Partner(s)”
“Limited Partnership Agreement”
“Listing Rules”

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

an independent committee of the Board, comprising all the independent non-executive Directors, formed for the purpose of advising the Independent Shareholders in respect of the Subscription
Pulsar Capital Limited, a corporation licensed to conduct type 1 (Dealing in Securities) and type 6 (Advising on Corporate Finance) regulated activities as defined under the SFO, being the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Subscription
Shareholders other than Shareholders who have material interest in the Subscription
a Limited Partner who has agreed to withdraw from the Fund upon one or more additional persons becoming Limited Partners, and which is a natural person and a director of the General Partner and HK Ruihua
interest in the Fund
江蘇瑞華投資控股集團有限公司 (Jiangsu Ruihua Investment Development Co., Limited*), a company established in the People’s Republic of China, and the indirect holding company of the General Partner
20 July 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular
the limited partner(s) of the Fund, including the Subscriber
the amended and restated exempted limited partnership agreement dated 14 June 2018 and entered into by and among the General Partner, the Limited Partner(s) and the Initial Limited Partner

the Rules Governing the Listing of Securities on the Stock Exchange

– 2 –

DEFINITIONS

“Partner(s)”

collectively, the General Partner and the Limited Partner(s), each a “Partner”

“Proposed Fund Size” HK$2 billion, being the aggregate amount which is expected to be raised from the Partner(s)
“SGM”
a special general meeting of the Company to be convened for the purpose of considering, and if thought fit, approving, among other things, the Subscription
“Share(s)” share(s) of HK$0.01 each in the capital of the Company
“Shareholder(s)” the holder(s) of Share(s)
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscriber”
Applied Investment (Asia) Limited, a company incorporated in the Hong Kong and a wholly-owned subsidiary of the Company
“Subscription”
the subscription of the Interest by the Subscriber pursuant to the terms of the Subscription Agreement and becoming a Limited Partner of the Fund pursuant to the terms of the Limited Partnership Agreement
“Subscription Agreement”
the subscription agreement dated 14 June 2018 entered into between the Subscriber and the Fund (acting by its General Partner)
“substantial shareholder”

has the meaning ascribed to it under the Listing Rules

“%”
per cent
English names of companies are transliterations of Chinese names and are included for identification purposes only.

– 3 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 519)

Executive Directors: Registered office: Mr. Yao Wei Rong (Chairman) Clarendon House Mr. Yuen Chi Ping (Chief Executive Officer) 2 Church Street Ms. Ng Kit Ling Hamilton HM11 Bermuda

Non-executive Director: Mr. Guo Shun Gen Principal place of business in Hong Kong: Independent Non-executive Directors: Unit 1801, 18/F Mr. Lau Chi Keung West Tower Mr. Yu Tat Chi, Michael Shun Tak Centre Mr. Chiu Kit Man, Calvin 168-200 Connaught Road Central Hong Kong

24 July 2018

To the Shareholders

Dear Sir/Madam,

(1) MAJOR AND CONNECTED TRANSACTION AND (2) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

The Board is pleased to announce that on 14 June 2018 (after trading hours), the Subscriber (an indirect wholly-owned subsidiary of the Company) entered into the Subscription Agreement with the Fund (acting by the General Partner) pursuant to which the Subscriber has conditionally agreed to make an investment into the Fund.

For identification purpose only

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with (i) further details of the Subscription; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders regarding the Subscription; (iii) the advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the Subscription; and (iv) the notice of the SGM and forms of proxy.

THE SUBSCRIPTION AGREEMENT

The principal terms of the Subscription Agreement are as follows:

Date : 14 June 2018 Subscriber : Applied Investment (Asia) Limited, a wholly-owned subsidiary of the Company
Other party : the Fund (acting by the General Partner) Subscriber’s : the Subscriber has conditionally agreed to become a Limited Commitment Partner of the Fund and invest up to HK$600,000,000 (with a minimum commitment of HK$200,000,000) in the Fund. The Group will take into account, among other things, the working capital of the Group and other available investment opportunities in the market to determine the final amount to be committed by the Subscriber.

The commitment of the Subscriber was determined after arm’s length negotiations between the General Partner and the Subscriber with reference to (i) the prospect of the Fund; (ii) financial resources available to the Group; and (iii) the expected duration of the Fund. The Company has considered the track record and experience of Jiangsu Ruihua as disclosed in the paragraph headed “Reasons for and benefits of the Subscription” below and is optimistic of the prospect of the Fund. Having considered the available cash flow of the Group and the duration of the Fund, the Group has decided to commit HK$200,000,000 to HK$600,000,000 to the Fund to diversify the Group’s investment portfolio with prospect of a higher return. The Subscriber’s commitment will be funded by internal resources of the Group.

Conditions Precedent to the Subscription Agreement

The Fund’s obligations under the Subscription Agreement and any obligations of the Subscriber to pay or contribute to the Fund under the Subscription Agreement and the Limited Partnership Agreement shall be conditional upon the following Conditions being satisfied:

(1) the passing of resolution(s) by the Independent Shareholders at the SGM approving the execution of the Subscription Agreement, the Limited Partnership Agreement and the transactions contemplated thereunder;

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LETTER FROM THE BOARD

(2) the Company having obtained all necessary approvals and consents in relation to the execution of the Subscription Agreement, the Limited Partnership Agreement and the transactions contemplated thereunder;
(3) the representations and warranties of the Subscriber contained in the Subscription Agreement being true and correct at Closing; and
(4) all proceedings in connection with the transactions contemplated under the Subscription Agreement and all documents and instruments incidental to such transactions shall be satisfactory in substance and form to the General Partner, and the Fund shall have received all such counterpart originals or certified or other copies of such documents as the General Partner may request.

The General Partner may in its absolute discretion at any time waive in writing any of the above Conditions (other than Conditions (1) and (2) above which cannot be waived). If any of the Conditions above shall not have been fulfilled (or waived) prior to 30 September 2018 (or such other date as may be agreed by the parties in writing), then the Subscriber shall not be bound to proceed with the Subscription.

LIMITED PARTNERSHIP AGREEMENT

The principal terms of the Fund as set out in the Limited Partnership Agreement are as follows:

Fund	:	Ruihua International M&A Fund LP, a Cayman Islands	Ruihua International M&A Fund LP, a Cayman Islands
		exempted limited partnership acting by	the General
		Partner.
Principal Purpose	:	The investment strategy of the Fund is	to focus on
and Investment		investments equities of private and public	companies in
Policy		certain industries inside or outside of China including,
		but not limited to, Telecommunications,	Media and
		Technology, macro-health, high-end	equipment
		manufacturing, energy-saving environmental protection
		and new materials. The Group understands from the
		General Partner that the Fund will invest in	a portfolio of
		equities to lower the risk of investment and	will consider,
		among other things, the following factors before making
		an investment:

(i) the prospect of the relevant industry, such as the potential growth and the market scale of the relevant industry;

– 6 –

LETTER FROM THE BOARD

(ii) the capability of the management and the existing shareholding structure of the relevant company;
(iii) whether the business model of the relevant company is innovative, the profitability of the relevant company can be sustained and the investment will be value adding to the growth of the relevant company; and
(iv) the relevant terms of the investment.

The Fund shall not (i) enter into any guarantee transactions or counter guarantee transactions; (ii) invest in real estate or entities whose principal business is real estate; (iii) invest in any entities that would result in the Fund being subject to unlimited liability for such entities’ debts and liabilities; and (iv) invest in any investment fund management companies.

The Fund has not made any investment nor held any asset as at the Latest Practicable Date. Other than the fees and expenses in relation to the preparation of the fund documentation and the fees and expenses payable to the administrator in relation to the fund establishment which were accounted to the accounts of the Fund, the Fund has not incurred other fees and expenses as at the Latest Practicable Date.

General Partner

Proposed Fund Size
: Cayman Ruihua Investment Management Limited. Further details of the General Partner is set out in the subparagraph headed “General Partner” under the paragraph headed “Information of the Group and the Parties to the Subscription” below.
: The Fund seeks to raise an aggregate commitment of HK$2 billion. The General Partner shall commit in aggregate an amount equivalent to at least 1% of the aggregate capital commitment of the Fund. As at the Latest Practicable Date, each of the General Partner and the Initial Limited Partner has paid US$1 to the Fund as subscription money. The Subscriber understands from the General Partner that the General Partner will inject 40% of its commitment to the Fund immediately after the Subscriber has made its first drawdown as disclosed in the subparagraph headed “Drawdown” below and the remaining commitment of the General Partner will be made within 12 months from the Closing.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, apart from the Initial Limited Partner who will withdraw as a Limited Partner immediately following the admission of one or more person(s) as Limited Partner, the Subscriber will be the first Limited Partner who has conditionally committed to invest in the Fund. As at the Latest Practicable Date, the Subscriber has agreed to invest up to HK$600,000,000 (with a minimum commitment of HK$200,000,000) to the Fund. It is expected that the Subscriber will be interested in approximately 10% to 30% of the Proposed Fund Size. The General Partner has confirmed to the Subscriber that save as to the amount of commitment, the terms of investment in the Fund are expected to be substantially the same or no less favourable to the Subscriber than those offered to the other Limited Partners pursuant to the Limited Partnership Agreement. The Group understands from the General Partner that the pricing basis of other Limited Partners’ subscription would be the same as that of the Subscriber.

Closing : It is expected that the Closing will occur on the date on which the last of the Conditions is satisfied or waived (if applicable), with staged closings for subsequent commitments by other Limited Partners to be held at the General Partner’s discretion; provided that the final closing will occur no later than twelve months from the Closing.
Investment Period : The period from the Closing and expiring on the third anniversary of such date, unless extended by the General Partner upon its reasonable consideration and assessment of the investments under the Fund (the “ Investment Period ”).
Drawdown : The General Partner shall provide each Partner with a written notice of each drawdown at least 10 Business Days prior to the date on which such drawdown is due and payable until the end of the Investment Period. From and after the end of the Investment Period, the General Partner may issue drawdown notices only with respect to the payment of expenses and the funding of existing investments. Each drawdown will be denominated in Hong Kong Dollars. The first drawdown shall be equal to 40% of the full amount of each Limited Partner’s commitment (and in the case of the Subscriber, this will be 40% of the minimum commitment amount).

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LETTER FROM THE BOARD

Commencement and Duration of the Fund
Management of the Fund
Management Fee
Removal of General Partner
Distributions
: The Fund was established on 27 September 2017 and shall continue until the expiry of five years from the Closing, and the term of the Fund may be extended with the consent of the General Partner up to a maximum of five years depending on the circumstances.
: The business of the Fund shall be carried on and managed by the General Partner. The Limited Partners may be consulted by the General Partner on the conduct of the Fund’s business but shall not otherwise take part in the management of the Fund’s business and shall have no power to bind the Fund.
: The General Partner will be paid a management fee equal to 2% per annum of the aggregate capital commitment from all Limited Partners. The management fee will be payable once each year in advance out of the assets of the Fund, commencing on the first drawdown date and thereafter on 1 January each subsequent year.
: The General Partner may be removed as the general partner of the Fund at any time within 60 days after a determination by a court of competent jurisdiction that the General Partner has engaged in fraud or a felony having a material adverse effect on the Fund or its assets and with the written election of 100% in Interest of the Limited Partners.
: Subject to applicable laws, the General Partner may determine to make distributions during the life of the Fund. During the Investment Period, the General Partner has the discretion to determine whether to make distributions to the Partners, or to re-invest into other portfolio companies. To the extent that distributable cash is not retained by the Fund at the absolute discretion of the General Partner, after the payment of the administration fee, partnership expenses and taxes in the following order of priority:

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LETTER FROM THE BOARD

(i) First, 100% to such Partner until the cumulative amount distributed to such Partner equals 100% of the then-effective capital commitment of such Partner plus an amount equal to the per annum rate of interest announced by the Hongkong and Shanghai Banking Corporation Limited at its Hong Kong main office from time to time as its “prime rate” on such capital commitment at the time of payment; and
(ii) Second, 80% to all Limited Partners (including the General Partner in respect of its Fund Interests acquired as a Limited Partner) in proportion to their sharing percentages and 20% to the General Partner in its capacity as general partner of the Fund as the carried interest.

Upon the termination or winding-up of the Fund due to expiry of the term of the Fund, at the determination of the General Partner, the Fund is otherwise terminated or wound-up with the approval by 66% and 2/3 in Interest, when the Fund does not have any Limited Partner or upon the withdrawal of the General Partner, any remaining assets of the Fund (after paying off creditors as provided by law) shall also be distributed based on the above order of priority. Except in limited circumstances provided for in the Limited Partnership Agreement, no Partner shall have the right to withdraw capital from the Fund or receive any distribution of or return on such Partner’s capital contribution.

Transferability of the Interest
: No assignment, sale, charge, mortgage, pledge, transfer or disposal of all or any part of a Limited Partner’s Interest can be carried out without the prior written consent of the General Partner.
Investment : The Fund may engage an investment consultant in the Consultant future. The Company will comply with applicable disclosure requirements under the Listing Rules, if any, in respect of such appointment.

– 10 –

LETTER FROM THE BOARD

INFORMATION OF THE GROUP AND THE PARTIES TO THE SUBSCRIPTION

The Group and the Subscriber

The Company is an investment holding company and the Group is principally engaged in resort and property development, property investment and investment holding. The Subscriber is an investment holding company incorporated under the laws of Hong Kong with limited liability and a wholly-owned subsidiary of the Company.

General Partner

The General Partner is a company incorporated in the Cayman Islands with limited liability and is the general partner of the Fund, responsible for management of the Fund. Its overall responsibility includes management, control and operation of the businesses and affairs of the Fund. The General Partner will make all decisions on behalf of the Fund with respect to the assets of the Fund. Jiangsu Ruihua (the indirect holding company of the General Partner) and its subsidiaries have extensive experience in management of funds and their performance has been highly accredited by third parties.

As at the Latest Practicable Date, the General Partner was a wholly-owned subsidiary of HK Ruihua, a substantial shareholder of the Company holding approximately 22.35% of the Company’s share capital.

Initial Limited Partner

The Initial Limited Partner is a natural person, who is a director of the General Partner and HK Ruihua. Pursuant to the Limited Partnership Agreement, immediately upon one or more additional persons becoming Limited Partners, the Initial Limited Partner shall withdraw as a Limited Partner and shall accordingly have no further interest or obligation of any kind whatsoever as a Partner of the Fund.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION

Jiangsu Ruihua is established in 2003 and its principal business covers investment through private placement of listed companies shares, private equity fund, financial futures and derivatives, merger and acquisition, business restructuring and overseas asset management. Jiangsu Ruihua has extensive experience in fund management, as at 31 December 2017, the assets under the management of Jiangsu Ruihua and its subsidiaries reached approximately RMB30 billion. Since 2014, Jiangsu Ruihua/its subsidiaries have managed ten funds, of which two (with assets under management of approximately RMB4.55 billion and RMB6.68 billion respectively) have been closed and liquidated with net annualized return rate of 13.5% and 11.43% respectively. The Directors noted that the average annualized return rate of these two funds managed by Jiangsu Ruihua is better than the average annualized return of the Group’s investment in unlisted investment funds (namely, the Class A Shares of Green Asia Restructure SP and Class A Shares of Green Asia Restructure SP II respectively, both being segregated portfolio of Green Asia Restructure Fund SPC), which was approximately 7% (with reference to the fair value as at 30 June 2018).

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LETTER FROM THE BOARD

Furthermore, Jiangsu Ruihua and its affiliates were appraised by third parties in relation to its fund management business over the years, including but not limited to the “Excellent Manager Award” by the private banking division and asset custodian department of Industrial and Commercial Bank of China Limited in 2016 and the “China’s Best Private Equity Fund – Long-Term Winner Award” by the Shanghai securities division of Sinolink Securities Co., Ltd in 2013.

With reference to the investment objective of the Fund as disclosed in the subparagraph “Principal Purpose and Investment Policy” under the paragraph headed “Limited Partnership Agreement” above and the extensive experience and skills of Jiangsu Ruihua and its subsidiaries mentioned in the above paragraphs, the Board is satisfied with the investment policy of the Fund and is confident in having its capital to be managed by the General Partner (being an affiliate of Jiangsu Ruihua). The Board also believes utilizing the idle fund of the Group by participating in the Subscription could allow the Company to capture investment opportunities and diversify the Group’s investment portfolio with prospect of a higher return. The Subscription is also in alignment with the Group’s business plan on carrying out financial investments and enables the Group to implement its strategy for long term return of investment of the Company.

No director is regarded to have any material interest in the Subscription Agreement, the Limited Partnership Agreement and the transactions contemplated thereunder. Notwithstanding the above, to avoid a perception of conflict of interest, each of Mr. Yao Wei Rong and Mr. Guo Shun Gen, being employees of affiliates of Jiangsu Ruihua and who are Directors, had voluntarily abstained from voting on the board resolutions to approve the Subscription Agreement, the Limited Partnership Agreement and the transactions contemplated thereunder. With reference to (i) the terms of other private equity funds generally in the market (including the rates of management fee and distribution mechanism); and (ii) the confirmation from the General Partner that the other Limited Partners shall be subject to the substantially the same terms under the Limited Partnership Agreement, the Board (including the independent non-executive Directors after taking into account the advice of the Independent Financial Adviser and the views of whom are set out in the Letter from the Independent Board Committee in this circular, but excluding each of Mr. Yao Wei Rong and Mr. Guo Shun Gen who are in support of the Company entering into the Subscription Agreement and the Limited Partnership Agreement but voluntarily abstained from voting on the board resolution for the reasons described above) considers that the terms of the Subscription Agreement and the Limited Partnership Agreement and the transactions contemplated thereunder are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

FINANCIAL EFFECT OF THE SUBSCRIPTION

Except for the transaction costs and future performance of the Fund, there is no gain or loss associated with the Subscription. There are no material changes in the total assets and liabilities of the Group immediately after the Subscription. The Subscriber’s interests in the Fund will be classified as financial assets at fair value through profit or loss.

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LETTER FROM THE BOARD

IMPLICATIONS UNDER THE LISTING RULES

As one or more of the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules) in relation to the Subscription based on the maximum investment amount of HK$600,000,000 exceed 25% but are all less than 100%, the Subscription constitutes a major transaction for the Company under the Listing Rules, and is therefore subject to the reporting, announcement and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Further, as at the Latest Practicable Date, the General Partner was a wholly-owned subsidiary of HK Ruihua, a substantial shareholder of the Company holding approximately 22.35% of the Company’s issued share capital, the General Partner is therefore a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the Subscription and entering into of the Limited Partnership Agreement with the General Partner also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirements.

SGM

The SGM will be convened to consider and, if thought fit, approve the Subscription. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, apart from the General Partner and its associates (who as at the Latest Practicable Date were interested in 559,865,959 Shares, representing approximately 22.35% of the issued share capital of the Company), no Shareholder has material interest in the Subscription as at the Latest Practicable Date.

Therefore, the General Partner and its associates shall abstain from voting at the resolution(s) considering and approving the Subscription. Save as disclosed above, no other Shareholder is required to abstain from voting on the resolution(s) in relation to the approval of the Subscription at the SGM.

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 Unit 1801, 18/F, West 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.

– 13 –

LETTER FROM THE BOARD

CLOSURE OF REGISTER OF MEMBERS.

The register of members of the Company will be closed from 10 August 2018 (Friday) to 15 August 2018 (Wednesday) (both days inclusive) for the purpose of determining the entitlement to attend and vote at the SGM, during which period no transfer of Share(s) will be registered. In order to be eligible to attend and vote at the SGM, all completed transfer documents accompanied by the relevant share certificate(s) must be lodged with Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for registration not later than 4:30 p.m. on 9 August 2018 (Thursday). Shareholders whose names appear on the register of members of the Company on 15 August 2018 (Wednesday) shall be entitled to attend and vote at the SGM.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising all independent non-executive Directors has been formed to advise the Independent Shareholders as to whether the terms of the Subscription are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole, and to advise the Independent Shareholders on how to vote (to the extent applicable), taking into account the recommendation of the Independent Financial Adviser. The letter from the Independent Board Committee containing its advice to the Independent Shareholders in respect of the Subscription is set out on page 15 of this circular. Pulsar Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription. The text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 34 of this circular.

RECOMMENDATIONS

The Directors (including the independent non-executive Directors who have considered the advice of the Independent Financial Adviser) believe that the terms of the Subscription are fair and reasonable, are on normal commercial terms 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 Subscription.

FURTHER 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 SGM-1 to SGM-2, which form part of this circular.

Yours faithfully, By order of the Board

Applied Development Holdings Limited Yao Wei Rong

Chairman and Executive Director

– 14 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

24 July 2018

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(Incorporated in Bermuda with limited liability)

(Stock Code: 519)

To the Independent Shareholders

Dear Sir or Madam,

(1) MAJOR AND CONNECTED TRANSACTION

We refer to the circular of the Company dated 24 July 2018 (the “ Circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalised terms used herein have the same meanings as defined in the Circular.

We have been appointed by the Board to consider the terms of the Subscription and to advise the Independent Shareholders as to whether they are fair and reasonable, whether they are on normal commercial terms or better and whether they are in the interests of the Company and the Shareholders as a whole. Pulsar Capital Limited has been appointed as the independent financial adviser to advise us and you in this regard. Details of its advice, together with the principal factors and reasons it has taken into consideration in giving its advice, are contained in its letter set out on pages 16 to 34 of the Circular. Your attention is also drawn to the Letter from the Board and the additional information set out in the appendices to the Circular.

Having considered, among other matters, the terms of the Subscription Agreement, the Limited Partnership Agreement and the advice of Pulsar Capital Limited, we consider the terms of the Subscription are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable so far as the Independent Shareholders are concerned, the entering into the Subscription Agreement and the Limited Partnership Agreement is in the interests of the Company and the Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Subscription.

Yours faithfully,

Independent Board Committee Mr. Lau Chi Keung Mr. Yu Tat Chi, Michael Mr. Chiu Kit Man, Calvin Independent Non-executive Independent Non-executive Independent Non-executive Director Director Director

For identification purpose only

– 15 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

24 July 2018

The following is the full text of a letter of advice from Pulsar Capital Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Subscription, which has been prepared for the purpose of incorporation in this circular.

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Pulsar Capital Limited Unit 318, 3/F, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong

To the Independent Board Committee and the Independent Shareholders

Applied Development Holdings Limited

Unit 1801, 18th Floor West Tower Shun Tak Centre 168-200 Connaught Road Central Hong Kong

Dear Sir or Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF INTEREST IN A FUND

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscription. Details of the Subscription, which is pursuant to the terms of the Limited Partnership Agreement and the Subscription Agreement, are set out in the “Letter from the Board” (the “ Letter from the Board ”) contained in the circular of the Company dated 24 July 2018 (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

Reference is made to the announcement of the Company dated 14 June 2018. On 14 June 2018, the Subscriber (a wholly-owned subsidiary of the Company) entered into the Subscription Agreement with the Fund (acting by the General Partner) pursuant to which the Subscriber has conditionally agreed to make an investment of up to HK$600,000,000 (with a

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

minimum commitment of HK$200,000,000) to the Fund, representing up to approximately 30% of the Proposed Fund Size. Following the acceptance of the Subscription Agreement by the General Partner and the fulfilment of the Conditions in accordance with the terms of the Subscription Agreement, the Subscriber will be admitted as a Limited Partner to the Fund by entering into the Limited Partnership Agreement.

LISTING RULES IMPLICATION

Discloseable transaction

Connected transaction

As at the Latest Practicable Date, the General Partner is a substantial shareholder of the Company holding approximately 22.35% of the Company’s share capital and is therefore a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the Subscription also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and Independent Shareholders’ approval requirements.

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all independent non-executive Directors (namely Mr. Lau Chi Keung, Mr. Yu Tat Chi, Michael and Mr. Chiu Kit Man, Calvin) has been formed to advise the Independent Shareholders as to whether the terms of the Subscription are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and whether the Subscription is in the interest of the Company and the Shareholders as a whole, and to advise the Independent Shareholders on how to vote in respect of the resolution to be proposed at the SGM for approving the Subscription, taking into account the recommendation of the Independent Financial Adviser.

INDEPENDENT FINANCIAL ADVISER

As the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders with regards to (i) whether the terms of the Subscription are on normal commercial terms, (ii) fair and reasonable so far as the Independent Shareholders are concerned; (iii) whether the Subscription are in the interests of the Company and the Independent Shareholders as a whole; and (iv) how the independent Shareholders should vote in respect of the resolution to be proposed at the SGM for approving the Subscription.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As at the Latest Practicable Date, Pulsar Capital Limited did not have any relationships or interests with the Group that could reasonably be regarded as relevant to the independence of Pulsar Capital Limited. In the last two years prior to the Latest Practicable Date, there was no engagement between the Group and Pulsar Capital Limited. Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser, no arrangements exist prior to the Latest Practicable Date whereby we had received any fees or benefits from the Group. Accordingly, we are qualified to give independent advice in respect of the Subscription and the transactions contemplated thereunder.

BASIS OF OUR OPINION

In formulating our opinion, we have reviewed, amongst others, (i) the Limited Partnership Agreement; (ii) the Subscription Agreement; (iii) the annual reports of the Company for the years ended 30 June 2016 and 2017; (iv) the announcement of the Company dated 14 June 2018; (v) the Circular; and (vi) other relevant public information. We have relied on the statements, information, opinions and representations contained or referred to in the Circular and/or provided to us by the Company, the Directors and the management of the Company (the “ Management ”). We have assumed that all statements, information, opinions and representations contained or referred to in the Circular and/or provided to us were true, accurate and complete at the time they were made and continued to be so as at the date of the Circular. The Directors collectively and individually accept full responsibility, including particulars given in compliance with the Listing Rules for the purpose of giving information with regards to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and that there are no other facts the omission of which would make any statement in the Circular misleading.

We have no reason to believe that any statements, information, opinions or representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render the statements, information, opinions or representations provided to us untrue, inaccurate or misleading. We have assumed that all the statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular and/or provided to us by the Company and the Management have been reasonably made after due and careful enquiry and have relied on such statements, information, opinions and representations. We consider that we have been provided with, and have reviewed sufficient information to reach an informed view, and to provide a reasonable basis for our opinion. We have not, however, conducted independent investigation into the business, financial conditions and affairs or future prospects of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation, we have considered the principal factors and reasons as follows:

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1. Background of the Group

1.1 Principal businesses of the Group

We refer to the Company’s annual reports for the years ended 30 June 2016 (“ 2016 Annual Report ”) and 30 June 2017 (“ 2017 Annual Report ”), as well as its interim report for the six months ended 31 December 2017 (“ 2018 Interim Report ”), the Group is principally engaged in (i) resort and property development; (ii) property investment and (iii) investment holding.

1.2 Financial information of the Group

Consolidated Statement of Comprehensive Income

Set out below is a summary of the Group’s consolidated statement of comprehensive income for the two years ended 30 June 2017 and for the six months ended 31 December 2017:

Revenue – Property investment – Investment holding – Resort and property development Profit (Loss) for the year attributable to equity holders of the Company	For the year ended 30 June 2016 2017 HK$’000 HK$’000 (audited) (audited) 2,590 11,499 5,032 2,794 – – 7,622 14,293 370,036 290,980	For the six months ended 31 December 2016 2017 HK$’000 HK$’000 (unaudited) (unaudited) 5,691 2,452 1,996 – – – 7,687 2,452 43,984 (425)

Source: 2017 Annual Report and 2018 Interim Report of the Group

For the two years ended 30 June 2017

Revenue for the year ended 30 June 2017 was HK$14.3 million, representing an increase of 87.5% from HK$7.6 million for the year ended 30 June 2016. The increase was mainly contributed by the rental income generated by investment properties.

(a) Property investment

The Group’s investment properties located in Hong Kong generated rental income totaling HK$11.5 million for the year ended 30 June 2017, which showed a significant increase of 344% over the previous year of HK$2.6 million. The Group’s investment properties comprise the office properties in Lippo Centre and China Merchants Tower which were valued at HK$503.0 million and HK$52.0 million respectively at 30 June 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(b) Investment holding

During the year ended 30 June 2017, the Group recorded a total investment income of approximately HK$2.8 million, which demonstrated a decrease of 44.5% over the previous year of HK$5.0 million on all investments in corporate bonds, equity securities and other investments.

(c) Resort and property development

No revenue has been earned by the resort and property development segment as the properties under development was not yet completed.

The Group reported a profit for the year attributable to owners of the Company of HK$290.9 million for the year ended 30 June 2017, representing a decrease of approximately 21.4% as compared to HK$370.0 million for the year ended 30 June 2016. The decline in profit was primarily attributable to the fact that a nonrecurring gain on disposal of subsidiaries amounting to HK$31.9 million was recognised during the year 2016, but no such non-recurring gain was recognised during the year 2017. The financial impact as a result of such fact was partially offset by (i) the net gain arising from the acquisition of a subsidiary amounting to HK$171.7 million and (ii) the increase in fair value of investment properties amounting to HK$115.0 million for the year 2017.

For the six months ended 31 December 2017

Revenue for the six months ended 31 December 2017 was HK$2.5 million, representing a decrease of 67.5% from HK$7.7 million for the six months ended 31 December 2016.

(a) Property investment

The Group’s investment properties contributed a total of rental income of HK$2.5 million for the six months ended 31 December 2017 as compared to HK$5.7 million for the six months ended 31 December 2016. The increase in fair value for the six months ended 31 December 2017 was HK$7 million as compared to HK$41 million for the six months ended 31 December 2016.

(b) Investment holding

No revenue has been earned by the Investment holding segment for the period.

(c) Resort and property development

No revenue has been earned by the resort and property development segment for the period.

The Group recorded a loss of HK$0.4 million for the six months ended 31 December 2017 as compared to the profit of HK$44.0 million recorded for the six months ended 31 December 2016. The turnaround of the Group’s results is mainly attributable to (i) the increase in fair value of investment properties of HK$7 million as compared to HK$41 million for the corresponding period in 2016; (ii) decrease in revenue of HK$5.2 million and (iii) the increase of finance cost of HK$8.3 million for the six months ended 31 December 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Consolidated Statement of Financial Position

Set out below is a summary of the Group’s consolidated statement of financial position as at 30 June 2016 and 2017, and 31 December 2017 respectively:

Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Total equity Total borrowings	As at 30 June 2016 2017 HK$’000 HK$’000 (audited) (audited) 440,449 755,371 521,001 1,202,931 961,450 1,958,302 2,336 116,272 2,941 594,884 5,277 711,156 956,173 1,247,146 – 392,968	As at 31 December 2017 HK$’000 (audited) 710,296 1,407,472
		2,117,768

		116,272 588,643
		704,915

		1,412,853

		411,618

Source: 2017 Annual Report and 2018 Interim Report of the Group

As at 30 June 2016 and 2017

At 30 June 2017, the Group had current assets and current liabilities of HK$1,202.9 million and HK$594.9 million respectively, whereas those were HK$521.0 million and HK$2.9 million respectively at 30 June 2016. It represented a current ratio of about 2.0 times at 30 June 2017 while that of 177.2 times at 30 June 2016. The Group’s total equity and the total bank and other borrowings as at 30 June 2017 amounted to HK$1,247.1 million and HK$393.0 million respectively, whereas those were HK$956.2 million and nil respectively at 30 June 2016. It represented a gearing ratio of approximately 31.5% at 30 June 2017.

As at 30 June 2017 and 31 December 2017

At 31 December 2017, the Group had current assets and current liabilities of HK$1,407.5 million and HK$588.6 million respectively, whereas those were HK$1,202.9 million and HK$594.9 million respectively at 30 June 2017. It represented a current ratio of about 2.4 times at 31 December 2017 while that of 2.0 times at 30 June 2017. The Group’s total equity and the total bank and other borrowings as at 31 December 2017 amounted to HK$1,412.9 million and HK$411.6 million respectively, whereas those were HK$1,247.1 million and HK$393.0 million respectively at 30 June 2017. It represented a gearing ratio of approximately 29.1% at 31 December 2017 while that of 31.5% at 30 June 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Principal Terms of the Limited Partnership Agreement

2.1 Purpose of the Fund

The purpose of the Fund is primarily to invest principally in equities of private and public companies in certain industries inside or outside of China including, but not limited to, Telecommunications Media and Technology, macro-health, high-end equipment manufacturing, energy-saving environmental protection and new materials in order to achieve appreciation in the value of such capital assets.

2.2 Commencement and Duration of the Fund

The Fund was established on 27 September 2017 and shall continue until the expiry of five years from the Closing, and the term of the Fund may be extended with the consent of the General Partner up to a maximum of five years depending on the circumstances.

2.3 Proposed Fund Size

The Fund seeks to raise an aggregate commitment of HK$2.0 billion. The General Partner shall commit in aggregate an amount equivalent to at least 1% of the aggregate capital commitment of the Fund.

The General Partner has confirmed to the Subscriber that save as to the amount of commitment, the terms of investment in the Fund offered to the Subscriber are expected to be substantially the same or no less favourable to those offered to other Limited Partners pursuant to the Limited Partnership Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2.4 Management of the Fund and Management Fee

The business of the Fund shall be carried on and managed by the General Partner. The Limited Partners may be consulted by the General Partner on the conduct of the Fund’s business but shall not otherwise take part in the management of the Fund’s business and shall have no power to bind the Fund.

The General Partner will be paid a management fee equal to 2% per annum of the aggregate capital commitment from all Limited Partners. The management fee will be payable once each year in advance out of the assets of the Fund, commencing on the first drawdown date and thereafter on 1 January each subsequent year.

We have discussed with the Management and understand that the management fee is determined after arm’s length negotiation among the parties under the Limited Partnership Agreement, with reference to (i) the nature of the investment by the Fund; (ii) the expected level of management activities required from the General Partner over the term of the Fund; and (iii) the market range of management fee obtained from market comparables.

2.5 Distributions

Subject to applicable laws, the General Partner may determine to make distributions during the life of the Fund. During the Investment Period, the General Partner has the discretion to determine whether to make distributions to the Partners, or to re-invest into other portfolio companies. To the extent that distributable cash is not retained by the Fund at the absolute discretion of the General Partner, after the payment of the administration fee, partnership expenses and taxes in the following order of priority:

(i) First, 100% to such Partner until the cumulative amount distributed to such Partner equals 100% of the then-effective capital commitment of such Partner plus an amount equal to the per annum rate of interest announced by the Hongkong and Shanghai Banking Corporation Limited at its Hong Kong main office from time to time as its “prime rate” on such capital commitment at the time of payment; and
(ii) Second, 80% to all Limited Partners (including the General Partner in respect of its Fund Interests acquired as a Limited Partner) in proportion to their sharing percentages and 20% to the General Partner in its capacity as general partner of the Fund as the carried interest.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Given that (i) the distributions are in accordance with the Partner’s aggregate capital contributions to all Partners at the same time and same rate; (ii) an additional amount equal to the per annum rate of interest (as the “prime rate”) on the Partner’s capital commitment at the time of payment as part of the distributions to such Partner; and (iii) the Limited Partners will further receive 80% of the excessive distributions after the first portion, the Directors consider and we concur that the distribution clause is fair and reasonable so far as the Independent Shareholders are concerned and on normal commercial terms.

2.6 Transferability of the Interest

No assignment, sale, charge, mortgage, pledge, transfer or disposal of all or any part of a Limited Partner’s Interest can be carried out without the prior written consent of the General Partner.

3. Reasons for and Benefits of the Subscription

With reference to the investment objective of the Fund and the past experience and skills of Jiangsu Ruihua and its subsidiaries mentioned in the Letter from the Board, the Board is satisfied with the investment policy of the Fund and is confident in having its capital to be managed by the General Partner (being an affiliate of Jiangsu Ruihua), and believes it allows the Company to capture investment opportunities and diversify the Group’s investment portfolio with prospect of a higher return. The Subscription is also in alignment with the Group’s business plan on carrying out financial investments and enables the Group to implement its strategy for long term return of investment of the Company.

We understand from the Directors that Jiangsu Ruihua has extensive experience in fund management, as at 31 December 2017, the assets under the management of Jiangsu Ruihua and its subsidiaries reached approximately RMB30 billion. Since 2014, Jiangsu Ruihua/its subsidiaries have managed ten funds, of which two (with assets under management of approximately RMB4.55 billion and RMB6.68 billion respectively) have been closed and liquidated with net annualized return rate of 13.5% and 11.43% respectively. The Directors noted that the average annualized return rate of these two funds managed by Jiangsu Ruihua is better than the average annualized return of the Group’s investment in unlisted investment funds (namely, the Class A Shares of Green Asia Restructure SP and Class A Shares of Green Asia Restructure SP II respectively, both being segregated portfolio of Green Asia Restructure Fund SPC), which was approximately 7% (with reference to the fair value as at 30 June 2018). As such, the Directors consider and we concur that the Subscription is in the interests of the Company and its Shareholders as a whole.

4. Market Comparables

In order to assess the fairness and reasonableness of the terms of the Limited Partnership Agreement, in particular, the Management Fee, the duration of the Fund and the capital commitment from limited partners, with regard to common features of fund structure, we have, to the best of our knowledge and as far as we are aware, identified 28 announcements in

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

relation to fund formation by companies listed on the Stock Exchange (the “Comparable(s)”) from 6 July 2017 up to the date of the Subscriber entered into the Subscription Agreement with the Fund (i.e. 14 June 2018) which we considered to be (i) exhaustive for comparison purposes based on our research and selection criteria on a best-effort basis, or any omissions beyond our awareness shall not result in material change in the conclusion; and (ii) appropriate to reflect recent market statistics on comparable transactions.

Considering the uniqueness of each fund formation, Independent Shareholders should note that the purposes, operations and investment targets of the Fund pursuant to the terms of the Limited Partnership Agreement may not be the same as those of any of the Comparables. However, we consider common features of fund structure such as management fee, duration of the fund and average capital commitment from limited partners for the fund size are of important reference value to our analysis irrespective of the industry of investment targets. Accordingly, the identification of Comparables aims to provide a general reference for the common features in recent fund formations by companies listed on the Stock Exchange.

Details of our analysis are set out in the table below:

							Average capital
							commitment of
							each limited
			Approximate		Initial		partner
Date of			committed fund	Management fee	duration of	Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund	return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
6 June 2018	Hong Kong	Investment in of an	18,880	1% per annum of	10	No	1.9%
	International	intermediate		the total capital
	Construction	company to		contribution made
	Investment	participate in the		by all limited
	Management	tender to acquire		partners upon
	Group Co.,	and invest in the		establishment
	Limited (687)	target company
8 May 2018	Shougang Concord	Investment in real-	11,800	1.5% of the Fund	8	No	40.0%
	International	estate projects,		Company’s
	Enterprises	industrial carrier		subscribed
	Company Limited	projects, and		registered capital
	(697)	revolving the
		positioning of
		Shougang’s old
		industrial zone
3 May 2018	Semiconductor	Investment in	1,907	Undisclosed	7	No	33.0%
	Manufacturing	companies within
	International	the semiconductor
	Corporation (981)	and semiconductor
		related industries

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

							Average capital
							commitment of
							each limited
			Approximate		Initial		partner
Date of			committed fund	Management fee	duration of	Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund	return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
23 March 2018	TCL Multimedia	Overseas Investment	587	0.5% of the total	8	No	33.3%
	Technology	Fund: Investing in		capital
	Holdings Limited	and holding		commitment of
	(1070)	securities of		the Fund per
		privately held and		quarter during the
		publicly held		first three years,
		companies with a		and 0.375% of
		focus on or serving		the unrealised
		the technology		securities held by
		sector		the Fund per
				quarter on a cost
				basis thereafter
23 March 2018	TCL Multimedia	PRC Investment Fund:	249	2.0% of the total	8	No	33.2%
	Technology	Companies with		capital
	Holdings Limited	technology,		commitment of
	(1070)	materials and		the Fund per
		intellectual property		annum during the
		which are		first three years,
		applicable to the		and 1.5% of the
		production line of		capital invested
		TCL Group or in		by the Fund per
		relation to the		annum thereafter
		businesses of
		display, multimedia
		and
		tele-communication
6 March	Hong Kong	Unquoted investments,	1,500	2.0% of the	3	No	Undisclosed
2018	International	in general by		committed fund
	Construction	subscribing for		size during the
	Investment	investments in new		commitment
	Management	private equity funds		period, and
	Group Co.,	and by buying		thereafter 2.0% of
	Limited (687)	secondary interests		the aggregate
		in existing private		capital
		equity funds, and		contributions
		acquisition of direct		made by each
		holdings in		limited partner
		unquoted companies		less capital
				contributions

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

							Average capital
							commitment of
							each limited
			Approximate		Initial		partner
Date of			committed fund	Management fee	duration of	Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund	return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
26 February	AviChina Industry	Investment	165	Undisclosed	Undisclosed	Undisclosed	33.3%
2018	& Technology	management and
	Company Limited	investment
	(2357)	consulting
1 February	China Resources	Equity investment and	3,540	1.0% of the paid-up	5	No	12.5%
2018	Power Holdings	industry investment		capital of the
	Company Limited			Fund during the
	(836)			first three years,
				and 0.8% of the
				paid-up capital of
				the Fund during
				the remaining
				term
14 December	Anhui Expressway	Develop operating	3,540	2.0% of the	7	No	24.8%
2017	Company Limited	activities in		aggregate paid-in
	(995)	accordance with the		capital
		scope of business of		contribution for
		the Fund		the investment
		Partnership to		deployment
		achieve maximum		period, 1% of the
		economic return		amount of un-
				exited investment
				for the exit
				period, no
				management fee
				for the extended
				period
12 December	Tempus Holdings	Capital appreciation	28	2.0%	5	No	Undisclosed
2017	Limited (6880)	by acquiring,
		holding and
		disposing of
		securities primarily
		in tourism business,
		cross-border
		commercial logistics
		business, consumer
		and healthcare
		business with a
		tourism nexus

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

								Average capital
								commitment of
								each limited
			Approximate		Initial			partner
Date of			committed fund	Management fee	duration of		Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund		return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
30 November	Hong Kong	Investment in the	3,821	1.0%	5		No	49.5%
2017	International	6562 Land Parcel
	Construction	for generating
	Investment	income and capital
	Management	appreciation, and
	Group Co.,	other related
	Limited (687)	activities
24 November	Legend Holdings	Investment in equity	233	2.0%	No fixed		No	Undisclosed
2017	Corporation	and related				term
	(3396)	investment
		instruments listed in
		the markets of Hong
		Kong, China and
		United States
19 November	TUS International	Advancing the	7.8	Undisclosed	3		No	Undisclosed
2017	Limited (872)	commercialization
		potential of research
		discoveries from a
		leading research
		institution in US
15 November	BII Railway	Investment in railway	369	2.0%	5		No	8.7%
2017	Transportation	transportation and
	Technology	related industries
	Holdings
	Company Limited
	(1522)
8 November	China Resources	Equity investments in	2,937	1.5% of the	5		No	16.6%
2017	Pharmaceutical	the PRC		accumulated
	Group Limited	pharmaceutical		paid-up amount
	(3320)	enterprises		for the investment
				period, 1.0% on
				the investment
				costs of the
				existing invested
				projects for the
				exit period, no
				management fee
				for the prolonged
				period

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

							Average capital
							commitment of
							each limited
			Approximate		Initial		partner
Date of			committed fund	Management fee	duration of	Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund	return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
30 October	Guotai Junan	Equity investments	7,694	1.0% of the	15	No	16.6%
2017	Securities Co.,	directly or		committed capital
	Ltd. (2611)	indirectly in		for the investment
		technology and		period, 0.9% for
		innovation		the exit period
		enterprises
23 October	Dah Chong Hong	Investments in	620	Undisclosed	Undisclosed	No	44.0%
2017	Holdings Limited	companies in the
	(1828)	consumer and
		healthcare sectors
18 October	CIMC Enric	Investment in equity	413	2.0%	7	No	22.9%
2017	Holdings Limited	interests of growing
	(3899)	and matured energy
		and environmental
		protection projects
		with proprietary
		technologies,
		economies of scale
		or development
		potential
13 October	Hong Kong	Investment in the	6,030	1.0%	5	No	49.5%
2017	International	6565 Land Parcel
	Construction	for generating
	Investment	income and capital
	Management	appreciation, and
	Group Co.,	other related
	Limited (687)	activities
10 October	Top Spring	Investment in tourism,	5,904	2% of the balance	7	Undisclosed	16.7%
2017	International	cultural and/or real		of the capital
	Holdings Limited	estate related		contribution made
	(3688)	projects		by the limited
				partners to the
				fund

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

							Average capital
							commitment of
							each limited
			Approximate		Initial		partner
Date of			committed fund	Management fee	duration of	Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund	return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
18 September	Viva China	Investment in sport	1,770	2% on the actual	8	No	50.0%
2017	Holdings Limited	community		capital
	(8032)	development		contributions of
		projects		the limited
				partners for the
				first five years,
				and 2% per
				annum on the
				total unreturned
				capital
				contributions of
				the limited
				partners thereafter
14 September	Beijing Beida Jade	Investment in target	413	1.08%	5	No	33.0%
2017	Bird Universal	semiconductor
	Sci-Tech	industry chain
	Company Limited	projects
	(8095)
1 September	Zhejiang Yongan	Investment in	354	2% of the aggregate	7	No	33.0%
2017	Rongtong	financial technology		sum of the capital
	Holdings Co., Ltd	sector		contribution made
	(8211)			by all partners
				after deducting
				the amount of
				investment in
				respect of
				withdrawn
				projects for the
				first four years
				and 1.5% of the
				same clause
				thereafter
17 August 2017	Joy City Property	Acquisition of	13,110	Undisclosed	8	No	30.0%
	Limited (207)	property projects
15 August 2017	Shandong Chenming	Investments in Pre-	590	2%	5	No	16.7%
	Paper Holdings	IPO enterprises
	Limited (1812)

– 30 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

							Average capital
							commitment of
							each limited
			Approximate		Initial		partner
Date of			committed fund	Management fee	duration of	Guaranteed	(% of the
announcement	Company	Purpose of the fund	size	per annum	the fund	return	fund size)
	(stock code)		(HK$ million)		(years)
			(Note)
9 August 2017	Beijing Enterprises	Investment in water	27,778	Undisclosed	30	No	33.3%
	Water Group	and water
	Limited (371)	environmental
		projects and
		infrastructure
		projects
1 August 2017	V1 Group Limited	Investment in unlisted	581	2%	7	No	20.0%
	(82)	companies with
		high growth and
		innovative
		industries engaging
		in internet, artificial
		intelligence, and
		medical and health
		care
6 July 2017	Dongjiang	Investment in	649	2%	5	No	50.0%
	Environmental	environmental
	Company Limited	protection industry
	(895)
			Highest	2%	30		50.0%
			Lowest	0%	3		1.9%
			Average	1.62%	7.52		29.3%
14 June 2018	Applied	Investing in debt or	2,000	2% per annum of	5	No
	Development	equity securities in		the aggregate
	Holdings Limited	TMT, macro-health,		capital
	(519)	high-end equipment		commitment from
		manufacturing,		all Limited
		energy-saving		Partners
		environmental
		protection, and new
		material.

Source: Website of the Stock Exchange

Note: For illustrative purpose, the exchange rate of RMB1.00 = HK$1.18 and US$1.00 = HK$7.75 have been used, where applicable, for the committed fund size not denominated in Hong Kong dollars in the announcement of the Comparables.

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As illustrated in the table above, the initial duration of the fund of the Comparables ranges from 3 to 30 years, with an average of approximately 7.52 years. Given that the initial duration of the Fund is 5 years which is within such range and in line with the industry average, we consider that the initial duration of the Fund to be on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

The respective management fee of the Comparables ranges from 0% to 2% per annum with an average of approximately 1.62%. Though the Management Fee of the Fund is 2% per annum which is slightly above the industry average, we noted that almost half of the Comparables (13 out of 28) indicated a management fee of 2% per annum. As such, we consider that the Management Fee of the Fund to be on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

It could be observed that the return of the Comparables were not guaranteed (except those undisclosed), we consider that the clause of no guaranteed return of the Fund to be on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned.

5. Principal Terms of the Subscription Agreement

Pursuant to the Subscription Agreement, the Subscriber has conditionally agreed to become a Limited Partner of the Fund and invest up to HK$600.0 million with a minimum commitment of HK$200.0 million in the Fund. We note that the commitment of the Subscriber was determined after arm’s length negotiations between the General Partner and the Subscriber with reference to (i) the prospect of the Fund; (ii) financial resources available to the Group; and (iii) the expected duration of the Fund. Specifically, after taking into account, among other things, the track record and experience of Jiangsu Ruihua (the indirect holding company of the General Partner), the working capital of the Group and the Fund’s initial duration of five years which is subject to further extension with the consent of the General Partner, the Group has decided to invest a commitment, ranging from HK$200.0 million (or 10% of the Proposed Fund Size) to HK$600.0 million (or 30% of the Proposed Fund Size), to the Fund for diversifying the Group’s investment portfolio with prospect of a higher return. The Subscriber’s commitment will be funded by internal resources of the Group.

Having considered the average capital commitment from limited partners of the Comparables which is approximately 29.3% of the fund size, we concur with the Directors that the maximum commitment amount of the Group being 30% of the Proposed Fund Size is fair and reasonable. We also noted that the terms of the Subscription Agreement are consistent with those of the Limited Partnership Agreement and are administrative in nature. As such, we consider that the terms of the Subscription Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

After taking into account (i) the principal terms of the Limited Partnership Agreement and the Subscription Agreement; (ii) the terms of other private equity funds generally in the market (including the rates of management fee and initial duration); (iii) the confirmation from the

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

General Partner that save as to the amount of commitment, the terms of investment in the Fund offered to the Subscriber are expected to be substantially the same or no less favourable to those offered to other Limited Partners pursuant to the Limited Partnership Agreement; and (iv) the alignment of the Subscription with the Group’s business plan on carrying out financial investments, the Directors considered and we concur that the terms of the Subscription Agreement and the Limited Partnership Agreement and the transactions contemplated thereunder are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

6. Possible Financial Effects

Upon completion of the Subscription, the capital contribution and equity interest in the Fund will be owned as to at least 10% but not more than 30% by the Group as a Limited Partner. Accordingly, the financial results of the Fund will not be consolidated into the financial statements of the Group.

6.1 Earnings

The Fund with designated return will be accounted for as financial assets at fair value through profit or loss by the Group. The financial asset at fair value through profit or loss will be subject to fair value assessment at the end of each reporting period. Any gain or loss will be recognised in the profit and loss statement, which, in turn, may have an impact to the earnings of the Group, though cash flow is not involved in this respect.

6.2 Net assets

As the Group is expected to finance the capital contribution by means of its internal resources, the Management considered that there will not be any material adverse impact to the Group’s net asset value immediately upon the completion of the Subscription.

6.3 Working capital

Pursuant to the Limited Partnership Agreement and the Subscription Agreement, the first drawdown to be borne by the Group shall be equal to 40% of the minimum capital commitment to the Fund, which is equivalent to HK$80 million. We understand from the Directors that the capital contributions to be made by the Group will be financed by internal resources. As disclosed in the 2018 Interim Report, the Group had bank balances and cash of approximately HK$233 million. Accordingly, the Group will have sufficient working capital to meet its requirements for the first drawdown of the minimum capital commitment to the Fund.

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As confirmed by the Directors, the Group will have sufficient working capital to meet its requirements for the next twelve months from the date of the Circular and they do not foresee the payment of minimum commitment to the Fund will have material adverse impact to the working capital of the Group.

6.4 Section summary

Having considered the abovementioned possible financial effects of entering into the Limited Partnership Agreement and the Subscription Agreement, which will have no material adverse impact on the Group, we are of the view that the overall possible financial effects of the Subscription on the Group are acceptable.

RECOMMENDATION

Having considered the above principal factors, we are of the view that (i) the terms and conditions of the Limited Partnership Agreement and the Subscription Agreement are on normal commercial terms and fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Subscription is in the ordinary and usual course of business of the Group and in the interests of the Company and its Shareholders as a whole. Accordingly, we recommend the independent Shareholders, as well as the Independent Board Committee to advise the independent Shareholders, to vote in favour of the resolution approving the Subscription at the SGM.

Yours faithfully, For and on behalf of

Pulsar Capital Limited Bernard Tam Managing Director and Head of Investment Banking

Mr. Bernard Tam is a Responsible Officer of Pulsar Capital Limited licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO. He has over 20 years of experience in corporate finance industry.

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. CONSOLIDATED FINANCIAL STATEMENTS

Audited financial information of the Group for each of the years ended 30 June 2015, 30 June 2016 and 30 June 2017 are disclosed in the following annual reports of the Company published on 27 October 2015, 20 September 2016 and 10 October 2017, respectively, on both the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.applieddev.com):

(i) annual report of the Company for the year ended 30 June 2015 (http://www.hkexnews.hk/listedco/listconews/SEHK/2015/1027/LTN20151027272.pdf);
(ii) annual report of the Company for the year ended 30 June 2016 (http://www.hkexnews.hk/listedco/listconews/SEHK/2016/0920/LTN20160920275.pdf); and
(iii) annual report of the Company for the year ended 30 June 2017 (http://www.hkexnews.hk/listedco/listconews/SEHK/2017/1010/LTN20171010321.pdf).

2. INDEBTEDNESS STATEMENT

Borrowings

At the close of business on 31 May 2018, being the latest practicable date for the purpose of preparing this indebtedness statement, the Group had (i) secured interest-bearing bank borrowing of HK$348,000,000 [(Note)] ; and (ii) unsecured interest-bearing other borrowings of approximately RMB67,320,000 (equivalent to HK$77,418,000).

Note: On 31 May 2018, the Group obtained a new bank loan to replace the original borrowing of HK$348,000,000 with another bank. Notwithstanding the loan proceeds have been deposited into the original bank, the settlement of the original borrowing was only processed on 1 June 2018. For the purpose of this statement, only HK$348,000,000 is presented.

Pledge of assets and other securities

As at the close of business on 31 May 2018, being the latest practicable date for the purpose of preparing this indebtedness statement, the secured interest-bearing bank borrowing is secured by the assets of the Group as follows:

(i) pledge of investment properties of the Group with a carrying amount of HK$510,000,000 at 31 May 2018;
(ii) assignment agreements in respect of rental income of the Group’s investment properties duly executed by the Group in favour of the bank; and
(iii) assignment agreements in respect of insurance of the Group’s investment properties duly executed by the Group in favour of the bank.

– I-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Disclaimers

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 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 May 2018, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular.

3. WORKING CAPITAL

The Directors, after due and careful consideration, are of the opinion that, taking into account the internal resources and banking and other facilities available to the Group, the Group would have sufficient working capital for at least 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECT OF THE GROUP

The Group will continue its principal business in property investment, resort and property development and investment holding, and will continue to look for the best opportunities or investments including but not limited to the investments in property investment, resort and property development and investment holding business.

As to the resort and development sector, after the acquisition of the Wuxi Shengye at the end of June 2017, the pre-sale of the properties under development commenced in October 2017 and completion of the acquisition is expected to take place in 2019. The Board believes that the sales of the properties under development will bring revenue to the Group. The Group will continue to look for resort and property development business opportunities including but not limited to Mainland China and Hong Kong, being markets the Company’s management is more familiar with.

As to the property investment sector, as disclosed Company’s announcements dated 29 November 2017 and 15 February 2018, Advantage Performance Limited, the Company’s wholly owned subsidiary entered into the sale and purchase agreement and termination agreement with Platinum Ocean Consultancy Limited respectively and following the termination agreement, Applied Hong Kong Properties Ltd., entered the property agreement with AHK International Ltd. to dispose of the investment property located at China Merchants Tower for a consideration of HK$63,000,000. Completion of the disposal will take place by 15 March 2018. As at the Latest Practicable Date, the Group held one investment property situated in Lippo Centre in Hong Kong, please refer to the section “Particulars of Investment Properties” in the Company’s 2017 annual report for details of such investment property. The Company will also look for commercial property and hotel investments with an aim to maximise return to Shareholders and believes that the Group’s remaining investment properties will continue to generate rental income to the Group. The Group has been exploring various

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

investment opportunities available in the market recently which includes various commercial properties, boutique hotel and office units. As at the Latest Practicable Date, the Group has been negotiating with third parties in relation to available investment opportunities but no definitive agreement or memorandum of understanding has been entered into by the Group.

As to investment holding sector, the Group further invested HK$120 million in “Green Asia Restructure Fund SPII” (which recorded approximately 7% growth during the period from July 2017 to June 2018) and “Green Asia Restructure Fund SP” (which in respect of the Group’s initial investment of approximately HK$50 million recorded approximately 8% growth during the period from April 2017 to June 2018 and in respect of the Group’s further investment of approximately HK$80 million recorded approximately 6% growth during the period from September 2017 to June 2018). Furthermore, the Company invested in 20% equity interests in Wealth Guide Global Limited (“ Wealth Guide ”) for a nominal value of US$20 together with a shareholder loan of HK$200,000,000, the total assets of Wealth Guide at 31 December 2017 was approximately HK$1,147,000,000, representing an increase of approximately 14.7% compared with 31 December 2017. The Board believes that the investment in an investment holding company as well as the shareholder’s loan will benefit the Group as a whole. The Group will also continue with its investment business, being part of its treasury management activities, in effectively utilizing surplus listed on the Stock Exchange or overseas exchanges, equity-linked notes, convertible bonds as well as in corporate bonds. The Board believes the Subscription allows the Company to capture investment opportunities and diversify the investment portfolio of the Company with prospect of higher return and is in line with its business plan to carry out financial investments and enables the Group to implement its strategy for long term return.

As disclosed in the announcement of the Company dated 15 June 2018, 實力建業(南京) 企業管理有限公司 (Applied Development (Nanjing) Corporate Management Co., Ltd.) entered into a capital injection agreement to inject a sum of RMB110,000,000 into 南京東方頤年養老服務有限公司 (Nanjing Eastern Senior Living Service Co., Ltd., which together with its subsidiaries, the “ Target Group ”), which is principally engaged in services and provision of nursing housing to senior members. Whilst the Group will continue to engage in its principal business, the Group can also engage in the senior services and nursing housing business through the Target Group. According to Jiangsu Province’s “Thirteenth Five-Year Plan” Pension Service Development Plan* 江蘇省“十三五”養老服務業發展規劃, Jiangsu province is one of the provinces in China facing the increase of ageing population and it is estimated that by 2020, the province’s elderly population aged over 60 will reach 19,500,000, which will account for 25% of the total population and will exceed 30% by 2030, the Group therefore believes that the senior and nursing housing business is with growth potential and can establish value added component and complementary basis for the development of the Group’s overall business.

– I-3 –

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

(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 in the shares, underlying shares or debentures 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 (“ Model Code ”) set out in Appendix 10 of the Listing Rules, were as follows:

Long position in the Shares or underlying shares

			Approximate
		Total interest	% of issued
Name of Director	Capacity	in Shares	Shares
Ng Kit Ling	–	15,000	0.001%

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.

– II-1 –

GENERAL INFORMATION

APPENDIX II

(b) Substantial Shareholders’ interests

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the SFO, so far as is known to the Directors, the persons (other than a Director and chief executive of the Company) or entities who had or were deemed or taken to have an interest or a short position in the Shares or the underlying Shares of the Company 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, 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 the Company, or of any other company which is a member of the Group, or in any options in respect of such share capital were as follows:

Long position in Shares and underlying Shares

			Percentage of
			issued share
		Number of	capital of
Name	Capacity	Shares interested	the Company
			(%)
HK Ruihua	Beneficial owner	559,865,959	22.35
Jiangsu Ruihua_(Note)_	Interest of controlled	559,865,959	22.35
	corporation
Mr. Zhang Jianbin_(Note)_	Interest of controlled	559,865,959	22.35
	corporation

Note: HK Ruihua is wholly owned by Jiangsu Ruihua, which is in turn owned by Mr. Zhang Jianbin as to 98.82%. Accordingly, each of Jiangsu Ruihua and Mr. Zhang Jianbin is deemed to be interested in 559,865,959 Shares, representing approximately 22.35% of the total issued share capital of the Company.

Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, no person had or was deemed or taken to have an interest or a short position in the Shares or the 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 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 the Company, or of any other company which is a member of the Group, or any options in respect of such share capital.

As at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or a short position in the Shares and 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.

– II-2 –

GENERAL INFORMATION

APPENDIX II

3. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or his or her respective close associates had any interest in a business, which competes or is 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 close associates were appointed to represent the interests of the Company and/or the Group.

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

As at the Latest Practicable Date,

(a) none of the Directors was materially interested in any subsisting contract or arrangement which was significant in relation to the business of the Group; and
(b) none of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to (or are proposed to be acquired or disposed of by or leased to) any member of the Group since the date of the latest published audited accounts of the Company.

5. 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 Subscription Agreement, pursuant to which the Subscriber has conditionally agreed to become a Limited Partner of the Fund and invest up to HK$600,000,000 (with a minimum commitment of HK$200,000,000) in the Fund;
(b) the Limited Partnership Agreement;
(c) a capital injection agreement dated 15 June 2018 entered into amongst (i) 實力建業 (南京)企業管理有限公司 (Applied Development (Nanjing) Corporate Management Co., Ltd.) (“ Applied Development Nanjing ”), (ii) Yincheng Real Estate Group Co., Ltd. (銀城地產集團股份有限公司), (iii) 江蘇新苑實業投資有限公司 (Jiangsu Xinyuan Industrial Investment Co., Ltd.) and (iv) 南京東方頤年養老服務有限公司 (Nanjing Eastern Senior Living Service Co., Ltd.) (the “ Target Company* ”) in relation to the injection of a sum of RMB110,000,000 by Applied Development Nanjing into the Target Company;

– II-3 –

GENERAL INFORMATION

APPENDIX II

(d) a lease agreement dated 12 December 2017 (as supplemented by a supplemental lease agreement dated 13 December 2017) entered into between 南京鍾山資產經營管理集團有限公司 (Nanjing Zhongshan Asset Management Group Limited) (as landlord) and 南京鍾山銀城養老產業發展有限公司 (Nanjing Zhongshan Yincheng Senior Product Development Company Limited), a direct subsidiary of the Target Company (as tenant) in relation to the rental of certain premises for use of provision of community services and relevant healthcare services, for rental amounts ranging from RMB1,348,507 to RMB2,126,508, for details of the rental amount for each of the 6 month during the term of the lease agreement, please refer to the subparagraph headed “Rent” under the paragraph headed “The Lease Agreement and the Supplemental Lease Agreement” in the announcement of the Company dated 15 June 2018;
(e) a sale and purchase agreement dated 15 February 2018 entered into among (i) Applied Hong Kong Properties Ltd., a wholly-owned subsidiary of the Company (as vendor) and (ii) AHK International Ltd., in relation to the sale of a property held by Applied Hong Kong Properties Ltd. for a consideration of HK$63,000,000;
(f) a loan agreement dated 13 February 2018 entered into among (i) the Company and (ii) On Tai International Credit Limited (桉泰國際信貸有限公司) in relation to the loan by the Company of an amount of HK$40,000,000;
(g) a sale and purchase agreement dated 29 November 2017 entered into among (i) Advantage Performance Limited, a wholly-owned subsidiary of the Company (as vendor) and (ii) Platinum Ocean Consultancy Limited in relation to the sale of the entire issued shares of and shareholder’s loan granted to Genius Wise International Limited for an aggregate consideration of HK$52,000,000 which was subsequently terminated by way of a termination agreement dated 15 February 2018;
(h) a placing agreement dated 6 September 2017 entered into among (i) the Company and (ii) Long Asia Securities Limited (the “ Placing Agent ”), pursuant to which the Placing Agent placed 417,515,000 Shares to no less than six placees, at HK$0.4 per Share;
(i) a share transfer agreement dated 24 February 2017 entered into among (i) the Company (as the purchaser), (ii) 國民信託有限公司 (National Trust) (“ National Trust ”) and Mr. Wang Jing Ning (“ Mr. Wang ”) (each as a vendor) and (iii) 無錫盛業海港股份有限公司 (Wuxi Shengye Haigang Joint Stock Company Limited) (“ Wuxi Shengye ”), pursuant to which the Company (or indirectly through its subsidiary) has conditionally agreed to purchase, and National Trust and Mr. Wang have conditionally agreed to sell 99% and 1% equity interest in Wuxi Shengye respectively, at a total consideration of RMB234,000,000;

– II-4 –

GENERAL INFORMATION

APPENDIX II

(j) a capital injection agreement dated 23 January 2017 entered into amongst (i) the Company, (ii) 南通融匯房地產開發有限公司 (Nantong Ronghui Property Development Limited) and 和融控股集團有限公司 (Herong Holdings Group Limited), and (iii) 鹽城和融房地產開發有限公司 (Yancheng Herong Property Development Limited) (“ Yancheng Herong* ”), in relation to the capital injection of a sum of RMB150,000,000 into Yancheng Herong by the Company (or indirectly through its wholly-owned subsidiary), which was subsequently terminated by way of a termination agreement dated 21 July 2017;
(k) a subscription agreement dated 12 December 2016 entered into among (i) the Subscriber; (ii) China Tian Yuan International Finance Limited (“ Tian Yuan ”); and (iii) Wealth Guide Global Limited (the “ JV ”) pursuant to which (i) the JV agrees to issue 99 new shares and meanwhile, Tian Yuan and the Subscriber agree to subscribe for 79 new shares at US$79.00 and 20 new shares at US$20.00 respectively and thereby to own 80% and 20% respectively of the JV’s enlarged equity interest and (ii) the Subscriber agrees to provide the interest-free and security-free shareholder’s loan of HK$200 million to the JV upon completion; and
(l) a loan agreement dated 18 October 2016 entered into between the Company (as lender) and BP Finance (HK) Limited (as borrower) pursuant to which the Company has agreed to provide a loan of HK$220,000,000 to the borrower.

6. LITIGATION

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

7. 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 (1) year without payment of compensation (other than statutory compensation).

8. 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 or outlook of the Group since 30 June 2017, being the date to which the latest published audited accounts of the Group were made up.

– II-5 –

GENERAL INFORMATION

APPENDIX II

9. EXPERT’S QUALIFICATION AND CONSENT

The following are the qualifications of the expert who has given its opinions and advice which are included in this circular:

Name

Qualification

Pulsar Capital Limited A corporation licensed to conduct type 1 (Dealing in Securities) and type 6 (Advising on Corporate Finance) regulated activities as defined under the SFO

The Independent Financial Adviser 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, the Independent Financial Adviser had no 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 shares in any member of the Group, nor did it have any interest, direct or indirect, 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 2017, the date to which the latest published audited accounts 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, Wan Chai, Hong Kong;
(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; and
(d) in the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

– II-6 –

GENERAL INFORMATION

APPENDIX II

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 Unit 1801, 18th Floor, West 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 material contracts referred to in the section headed “Material Contracts” as set out in this Appendix II;
(c) the letter from the Independent Board Committee to the Independent Shareholders;
(d) the letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders;
(e) the annual reports of the Company for the two financial years ended 30 June 2016 and 2017 respectively; and
(f) this circular.

– II-7 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [180 x 33] intentionally omitted <==

(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 10:00 a.m. on 15 August 2018 (Wednesday) at Suite 2418, 24/F., Jardine House, 1 Connaught Place, Central, Hong Kong for the purpose of considering and, if thought fit, passing with or without modifications the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTIONS

“ THAT
(a) the subscription agreement (the “ Subscription Agreement ”, a copy of which marked “A” has been tabled before the meeting and initialed by the chairman of the meeting for the purpose of identification) entered into between Applied Investment (Asia) Limited (the “ Subscriber ”) and Ruihua International M&A Fund LP (the “ Fund ”, acting by its general partner, Cayman Ruihua Investment Management Limited, the “ General Partner ”) on 14 June 2018 in relation to the conditional investment by the Subscriber in the Fund and all other transactions contemplated thereunder and in connection therewith and any other ancillary documents be and are hereby approved, confirmed and ratified;
(b) the amended and restated exempted limited partnership agreement (“ Limited Partnership Agreement ”, a copy of which marked “B” has been tabled before the meeting and initialed by the chairman of the meeting for the purpose of identification) entered into between the General Partner, the Subscriber and the initial limited partner of the Fund on 14 June 2018 in relation to the operation of the Fund and all other transactions contemplated thereunder and in connection therewith and any other ancillary documents be and are hereby approved, confirmed and ratified;
(c) any director of the Company be and is hereby authorised to do all acts, deeds and things and to sign and execute all documents as he may, at his absolute discretion, deem incidental to, ancillary to or in connection with the matters contemplated in and for completion of the Subscription Agreement and the Limited Partnership Agreement.”

Yours faithfully, By order of the Board

Applied Development Holdings Limited Yao Wei Rong

Chairman and Executive Director

Hong Kong, 24 July 2018

For identification purpose only

– SGM-1 –

NOTICE OF SPECIAL GENERAL MEETING

Executive Directors: Mr. Yao Wei Rong (Chairman) Mr. Yuen Chi Ping (Chief Executive Officer) Ms. Ng Kit Ling

Non-executive Director: Mr. Guo Shun Gen

Independent Non-executive Directors: Mr. Lau Chi Keung Mr. Yu Tat Chi, Michael Mr. Chiu Kit Man, Calvin

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Principal place of business in Hong Kong: Unit 1801, 18/F West Tower 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 register of members of the Company will be closed from 10 August 2018 (Friday) to 15 August 2018 (Wednesday) (both days inclusive) for the purpose of determining the entitlement to attend and vote at the Meeting, during which period no transfer of Share(s) will be registered. In order to be eligible to attend and vote at the Meeting, all completed transfer documents accompanied by the relevant share certificate(s) must be lodged with Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong for registration not later than 4:30 p.m. on 9 August 2018 (Thursday). Shareholders whose names appear on the register of members of the Company on 15 August 2018 (Wednesday) shall be entitled to attend and vote at the Meeting.
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 in Hong Kong at Unit 1801, 18/F, West 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.

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

– SGM-2 –

AI assistant

Novautek Technologies Group Limited — Proxy Solicitation & Information Statement 2018

49267_rns_2018-07-23_f8618413-8d0d-48c5-8498-92aa72cddb01.pdf

(Stock Code: 519)

(1) MAJOR AND CONNECTED TRANSACTION AND (2) NOTICE OF SPECIAL GENERAL MEETING

DEFINITIONS

(Stock Code: 519)

(1) MAJOR AND CONNECTED TRANSACTION AND (2) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

THE SUBSCRIPTION AGREEMENT

Conditions Precedent to the Subscription Agreement

LIMITED PARTNERSHIP AGREEMENT

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INFORMATION OF THE GROUP AND THE PARTIES TO THE SUBSCRIPTION

The Group and the Subscriber

General Partner

Initial Limited Partner

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION

FINANCIAL EFFECT OF THE SUBSCRIPTION

IMPLICATIONS UNDER THE LISTING RULES

SGM

CLOSURE OF REGISTER OF MEMBERS.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

RECOMMENDATIONS

FURTHER INFORMATION

Applied Development Holdings Limited Yao Wei Rong

(1) MAJOR AND CONNECTED TRANSACTION

Yours faithfully,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTION OF INTEREST IN A FUND

INTRODUCTION

LISTING RULES IMPLICATION

Discloseable transaction

Connected transaction

THE INDEPENDENT BOARD COMMITTEE

INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR OPINION

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background of the Group

1.1 Principal businesses of the Group

1.2 Financial information of the Group

Consolidated Statement of Comprehensive Income

For the two years ended 30 June 2017

(a) Property investment

(b) Investment holding

(c) Resort and property development

For the six months ended 31 December 2017

(a) Property investment

(b) Investment holding

(c) Resort and property development

Consolidated Statement of Financial Position

As at 30 June 2016 and 2017

As at 30 June 2017 and 31 December 2017

2. Principal Terms of the Limited Partnership Agreement

2.1 Purpose of the Fund

2.2 Commencement and Duration of the Fund

2.3 Proposed Fund Size

2.4 Management of the Fund and Management Fee

2.5 Distributions

2.6 Transferability of the Interest

3. Reasons for and Benefits of the Subscription

4. Market Comparables

5. Principal Terms of the Subscription Agreement

6. Possible Financial Effects

6.1 Earnings

6.2 Net assets

6.3 Working capital

6.4 Section summary

RECOMMENDATION

1. CONSOLIDATED FINANCIAL STATEMENTS

2. INDEBTEDNESS STATEMENT

Borrowings

Pledge of assets and other securities

Disclaimers

3. WORKING CAPITAL

4. FINANCIAL AND TRADING PROSPECT OF THE GROUP

1. RESPONSIBILITY STATEMENT

2. DISCLOSURE OF INTERESTS

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

Novautek Technologies Group Limited Proxy Solicitation & Information Statement 2018