PegBio Co., Ltd. - M&A Activity 2017

THIS COMPOSITE DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in CMBC Capital Holdings Limited , you should at once hand this Composite Document and the accompanying Form(s) of Acceptance to the purchaser(s) or the transferee(s) or to the bank, licensed securities dealer or registered institution in securities, or other agent through whom the sale or transfer was effected for onward 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 Composite Document and the accompanying Form(s) of Acceptance, make no representation as to their accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Composite Document and the accompanying Form(s) of Acceptance.

This Composite Document should be read in conjunction with the accompanying Form(s) of Acceptance, the contents of which form part of the terms and conditions of the Offer.

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CMBC International Holdings Limited CMBC Capital Holdings Limited (incorporated in Hong Kong with limited liability) (formerly known as “Skyway Securities Group Limited”) (incorporated in Bermuda with limited liability) (Stock Code: 1141)

CMBC International Investment Limited

(incorporated in the BVI with limited liability)

COMPOSITE DOCUMENT RELATING TO MANDATORY UNCONDITIONAL CASH OFFER BY PLATINUM SECURITIES COMPANY LIMITED ON BEHALF OF CMBC INTERNATIONAL INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CMBC CAPITAL HOLDINGS LIMITED (FORMERLY KNOWN AS “SKYWAY SECURITIES GROUP LIMITED”) (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY CMBC INTERNATIONAL INVESTMENT LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

Financial Adviser to CMBC International Investment Limited Financial Adviser to CMBC Capital Holdings Limited Independent Financial Adviser to the Independent Board Committee of CMBC Capital Holdings Limited

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

A letter from Platinum containing, among other things, principal terms of the Offer is set out on pages 9 to 21 of this Composite Document. A letter from the Board is set out on pages 22 to 26 of this Composite Document.

A letter from the Independent Board Committee to the Independent Shareholders containing its recommendation in respect of the Offer is set out on pages 27 and 28 of this Composite Document. A letter from Optima Capital containing its recommendation to the Independent Board Committee and Independent Shareholders in respect of the Offer and the principal factors considered by it in arriving at its recommendation is set out on pages 29 to 47 of this Composite Document.

The procedures for acceptance and other related information in respect of the Offer are set out in Appendix I to this Composite Document and the accompanying Form(s) of Acceptance. Form(s) of Acceptance for the Offer should be received by the Registrar as soon as possible and in any event not later than 4:00 p.m. on Wednesday, 28 June 2017 (or such later time and/or date as the Offeror may determine and the Offeror may announce in accordance with the Takeovers Code).

7 June 2017

	Page
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM PLATINUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . .	27
LETTER FROM OPTIMA CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
APPENDIX I – FURTHER TERMS AND PROCEDURES
OF ACCEPTANCE OF THE OFFER . . . . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II – FINANCIAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . .	II-1
APPENDIX III – GENERAL INFORMATION OF THE GROUP. . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV – GENERAL INFORMATION OF THE OFFEROR . . . . . . . . . . . . . . .	IV-1
APPENDIX V – DOCUMENTS AVAILABLE FOR INSPECTION. . . . . . . . . . . . . . . .	V-1

– i –

EXPECTED TIMETABLE

The timetable set out below is indicative only and is subject to change. Any changes to the timetable will be jointly announced by the Offeror and the Company.

Event

Time and Date

Despatch date of this Composite Document and

the accompanying Form(s) of Acceptance and
commencement date of the Offer (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 7 June 2017

Offer open for acceptance (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 7 June 2017

Latest time and date for acceptance of the Offer (Note 2) . . . . . . . . . . . . . . . . . . . . . . . .by 4:00 p.m. on Wednesday, 28 June 2017

Closing Date (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 28 June 2017

Announcement of the results of the Offer

(or its extension or revision, if any), to be posted
on the website of the Stock Exchange (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .by 7:00 p.m. on Wednesday, 28 June 2017

Latest date for posting of remittances in respect of

valid acceptances received under the Offer (Note 3) . . . . . . . . . . . . . . . . . . . . . Friday, 7 July 2017

Notes:

The Offer, which are unconditional, are made on the date of posting of this Composite Document, and are capable of acceptance on and from that date until the Closing Date.
The latest time and date for acceptance of the Offer will be at 4:00 p.m. on Wednesday, 28 June 2017 unless the Offeror revises or extends the Offer in accordance with the Takeovers Code. The Offeror and the Company will jointly issue an announcement through the websites of the Stock Exchange and the Company no later than 7:00 p.m. on Wednesday, 28 June 2017 stating whether the Offer have been extended, revised or have expired. In the event that the Offeror decides to revise or extend the Offer, at least 14 days’ notice by way of an announcement will be given before the Offer are closed to those Independent Shareholders who have not accepted the Offer.

– ii –

EXPECTED TIMETABLE

Remittances in respect of the cash consideration (after deducting the seller’s ad valorem stamp duty in respect of acceptances of the Offer) payable for the Offer Shares tendered under the Offer will be despatched to the Independent Shareholders accepting the Offer by ordinary post at their own risk as soon as possible, but in any event within 7 Business Days following the date of receipt by the Registrar of all duly completed acceptance of the Offer and the relevant documents of title of the Offer Shares in respect of such acceptance to render the acceptance under the Offer complete and valid. Acceptance of the Offer shall be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code. Please refer to section 4 headed “Right of withdrawal” in Appendix I to this Composite Document for further information on the circumstances where acceptances may be withdrawn.
If there is a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning signal in force on the Closing Date or the date for posting of remittances and it is (i) not cancelled in time for the trading of Shares on the Stock Exchange to resume in the afternoon, the Closing Date will be postponed to 4:00 p.m. on the next Business Day and the date for posting of remittances will be postponed to the next Business Day which does not have either of those warnings in force in Hong Kong or such other day as the Executive may approve; or (ii) cancelled in time for the trading of Shares on the Stock Exchange to resume in the afternoon, the respective event will remain the same on the scheduled date according to the expected timetable.

All references to dates and times contained in this Composite Document refer to Hong Kong dates and times.

NOTICE TO OVERSEAS SHAREHOLDERS OUTSIDE HONG KONG

The making of the Offer to the Overseas Shareholders may be affected by the laws and regulations of the relevant jurisdictions in which they are residents, citizens or nationals of jurisdictions outside Hong Kong. Overseas Shareholders should obtain appropriate legal advice regarding the implications of the Offer in the relevant jurisdictions or keep themselves informed about and observe any applicable legal or regulatory requirements. It is the responsibility of the Overseas Shareholders and who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of all relevant jurisdictions in connection with the acceptance of the Offer (including but not limited to the obtaining of any governmental, exchange control or other consents and any registration or filing which may be required and the compliance with all other necessary formalities, regulatory and/or legal requirements and the payment of any transfer or other taxes). The Offeror, the Company, their respective ultimate beneficial owners and parties acting in concert, Platinum, Optima Capital, the Registrar or any of their respective directors, officers, advisers, associates, agents or any persons involved in the Offer shall be entitled to be fully indemnified and held harmless by the Overseas Shareholders for any taxes they may be required to pay. For further information, please refer to the paragraph headed “Overseas Shareholders” in the “Letter from Platinum” and the section headed “6. Overseas Shareholders” in Appendix I to this Composite Document.

– iii –

DEFINITIONS

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

“acting in concert”

has the same meaning ascribed to it under the Takeovers Code

“Adjusted NTAV”

the adjusted unaudited pro forma net tangible asset value of the Group after completion of the Reorganisation and before the completion of Subscription, based on net tangible assets value of the Group and adjusted for the disposal of the AFS (as mentioned in the announcement of the Company dated 6 March 2017 in relation to the AFS Disposals), the Special Dividend, the Distribution and the CSPT Disposal

“AFS Disposals”
the disposals of the available-for-sale investments by the Group as disclosed in the announcement of the Company dated 6 March 2017
“associate” has the same meaning ascribed to it under the Listing Rules
“Brilliant Decent” Brilliant Decent Limited, which is a direct wholly-owned subsidiary of China Huarong
“Board” the board of Directors
“Business Day(s)”
a day on which the banks are open for business in Hong Kong, other than Saturdays, Sundays and public holidays and/or a day on which the Stock Exchange is open for the transaction of business
“BVI” the British Virgin Islands
“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC
“China Huarong”

China Huarong Overseas Investment Holdings Company Limited, which is an indirect 51%-owned subsidiary of China Huarong Asset Management Co., Limited (stock code: 2799)

– 1 –

DEFINITIONS

“China Minsheng” or
“Offeror Parent”
China Minsheng Banking Corporation Limited, a joint stock limited company incorporated in the PRC whose shares are listed on the main board of the Stock Exchange (stock code: 1988) and the Shanghai Stock Exchange
“Closing Date”
28 June 2017, being the closing date of the Offer which is 21 days following the date on which this Composite Document was posted (or if the Offer are extended, any subsequent closing date as may be determined by the Offeror and announced by the Offeror in accordance with the Takeovers Code)
“CMBCI” CMBC International Holdings Limited, a limited liability company incorporated in Hong Kong, which is a direct wholly-owned subsidiary of China Minsheng
“Company”
CMBC Capital Holdings Limited (formerly known as “Skyway Securities Group Limited”), a company incorporated in Bermuda with limited liability, the Shares are listed on the Main Board of the Stock Exchange (stock code: 1141)
“Completion Announcement”
the announcement published by the Company dated 31 May 2017 in relation to, among others, the Sale and Purchase Completion and the Subscription Completion
“Composite Document” this composite offer and response document in respect of the Offer jointly despatched by the Offeror and the Company in accordance with the Takeovers Code
“CSPT”
China Soft Power Technology Holdings Limited, a company incorporated in Bermuda with limited liability and the issued CSPT Shares of which are listed on the Main Board of the Stock Exchange (stock code: 139)
“CSPT Disposal”
the disposal of the entire equity interests of Sky Eagle Global Limited by the CSPT Vendor to CSPT Purchaser as detailed in the announcement of the Company dated 28 November 2016 (as amended by the CSPT Supplemental Agreement as detailed in the Joint Announcement) which was completed on 9 May 2017
“CSPT Purchaser”
Celestial Lodge Limited, the wholly owned subsidiary of CSPT as purchaser under the CSPT Disposal

– 2 –

DEFINITIONS

“CSPT Supplemental Agreement” the conditional supplemental agreement dated 7 March 2017 and entered into between the CSPT Purchaser and the CSPT Vendor to amend certain terms of the CSPT Disposal
“CSPT Shares” shares of HK$0.01 each in the share capital of CSPT
“CSPT Vendor” Gold Mission Limited, a company incorporated in the BVI with limited liability and an indirect wholly-owned subsidiary of the Company
“Directors” the director(s) of the Company, from time to time
“Distribution” the declaration of distribution in specie of all the CSPT Shares held by the Group and all the FW Shares held by the Group to the Shareholders whose names are registered on the register of members of the Company on the Record Date as approved by the Independent Shareholders at the SGM held on 28 April 2017 which was completed on 26 May 2017
“Encumbrances” any claim, charge, mortgage, security, lien, option, equity, power of sale, hypothecation or other third party rights, retention of title, right of pre-emption, right of first refusal or security interest of any kind
“Exchange Participant” a person: (a) who, in accordance with the Listing Rules, may trade on or through the Stock Exchange; and (b) whose name is entered in a list, register or roll kept by the Stock Exchange as a person who may trade on or through the Stock Exchange
“Executive”
Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director
“Form(s) of Acceptance”
the accompanying WHITE form(s) of acceptance and transfer for the Offer Shares in respect of the Offer which accompany this Composite Document
“Future World”
Future World Financial Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the issued FW Shares are listed on the Main Board of the Stock Exchange (stock code: 572)
“FW Shares”
the shares of HK$0.001 each in the share capital of Future World

– 3 –

DEFINITIONS

“Group”

the Company and its subsidiaries

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

“HKSCC”
Hong Kong Securities Clearing Company Limited, a whollyowned subsidiary of Hong Kong Exchanges and Clearing Limited
“Hong Kong”

the Hong Kong Special Administrative Region of the PRC

“Independent Board Committee”
the independent board committee of the Board comprising all the independent non-executive Directors, namely, Mr. Chan Kwan Pak, Mr. Siu Gee Tai and Mr. Siu Siu Ling Robert being established for the purpose of advising the Independent Shareholders in respect of the Offer
“Independent Shareholders” all Shareholders other than the Selling Shareholders, the Offeror, their respective associates and parties acting in concert with them (including Brilliant Decent)
“Joint Announcement”
the announcement jointly published by the Offeror and the Company dated 8 March 2017 in relation to, among others, the Subscription Agreement, the Sale and Purchase Agreements, the Distribution, the Share Premium Cancellation, the Special Dividend, the CSPT Supplemental Agreement and the possible Offer pursuant to Rule 3.5 of the Takeovers Code
“Last Trading Day”
7 March 2017, being the last trading day for the Shares immediately prior to the publication of the Joint Announcement
“Latest Practicable Date”
2 June 2017, being the latest practicable date prior to the printing of this Composite Document for ascertaining certain information contained herein
“Listing Rules”
the Rules Governing the Listing of Securities on the Stock Exchange
“MOU”
the memorandum of understanding dated 16 December 2016 entered into among the Selling Shareholders, the Offeror, China Huarong and the Company as disclosed in the MOU Announcement

– 4 –

DEFINITIONS

“MOU Announcement” the announcement dated 16 December 2016 issued by the Company in relation to the entering into of the MOU
“Mr. Lam” Mr. Lam Hoi Sze, one of the Selling Shareholders and the vendor to the Sale and Purchase Agreement I
“Ms. Ai” Ms. Ai Qing, one of the Selling Shareholders and the vendor to the Sale and Purchase Agreements II
“Offeror”
CMBC International Investment Limited (民銀國際投資有限公司), a company incorporated in the BVI, which is an indirect wholly-owned subsidiary of CMBCI
“Offeror Group” the Offeror Parent and its subsidiaries (including the Offeror)
“Offer Period” has the meaning given to it in the Takeovers Code, which have commenced since 16 December 2016, being the date of the MOU Announcement and will end on the Closing Date
“Offer Share(s)” all the Share(s) in issue, other than those Shares already owned or agreed to be acquired by the Offeror and parties acting in concert with it (including Brilliant Decent)
“Offer” the unconditional mandatory cash offer to be made by Platinum on behalf of the Offeror for all the Offer Shares pursuant to Rule 26.1 of the Takeovers Code
“Optima Capital “or Optima Capital Limited, a licensed corporation under the SFO “Independent Financial Adviser” to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Offer
“Overseas Shareholder(s)” Shareholder(s) whose addresses, as shown on the register of members of the Company, are outside Hong Kong
“Platinum” Platinum Securities Company Limited
“PRC”
the People’s Republic of China

– 5 –

DEFINITIONS

“Record Date”
the date for determining the entitlements of the Shareholders to the proposed Distribution and Special Dividend which was 10 May 2017
“Reorganisation” together the CSPT Disposal, the AFS Disposals, the disposal or striking off of subsidiaries of the Company other than the three licensed corporations comprising the Remaining Group, the Distribution and the Special Dividend, immediately after which the Group consists of only the Remaining Group
“Remaining Group” the Company and its subsidiaries immediately after the completion of the Reorganisation and the Subscription Completion, being Skyway Securities Investment Limited, Skyway Futures Limited and Skyway Asset Management Limited
“Registrar” Tricor Tengis Limited, with its registered address at Level 22, Hopewell Centre,183 Queen’s Road East, Hong Kong
“Relevant Period” the period from 16 June 2016, being the date falling 6 months preceding the commencement of the Offer Period, up to and including the Latest Practicable Date
“RMB”
Renminbi, the lawful currency in the PRC
“Sale and Purchase Agreements”
the Sale and Purchase Agreement I and the Sale and Purchase Agreements II collectively
“Sale and Purchase Agreement I”
the conditional sale and purchase agreement dated 7 March 2017 entered into between Mr. Lam as vendor and the Offeror as purchaser in respect of the sale and purchase of 2,527,200,000 Sale Shares by Mr. Lam to the Offeror
“Sale and Purchase Agreements II”
the conditional sale and purchase agreement dated 7 March 2017 and the supplemental agreement dated 13 April 2017, entered into between Ms. Ai as vendor and Brilliant Decent as purchaser in respect of the sale and purchase of 900,000,000 Sale Shares by Ms. Ai to Brilliant Decent
“Sale and Purchase Completion” the completion of the sale and purchase of the Sale Shares pursuant to the Sale and Purchase Agreements on 31 May 2017

– 6 –

DEFINITIONS

“Sale Shares” an aggregate of 3,427,200,000 Shares, legally and beneficially owned by the Selling Shareholders “Selling Shareholders” Mr. Lam and Ms. Ai “SFC” the Securities and Futures Commission “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time “Shares” the ordinary shares of HK$0.01 each in the share capital of the Company “Shareholder(s)” holder(s) of Share(s) “Share Offer Price” the cash amount of HK$0.06 per Share payable by the Offeror to the Independent Shareholders who accept the Offer “Share Premium Account” the share premium account of the Company “Share Premium Cancellation” the cancellation of the entire amount standing to the credit of the Share Premium Account of the Company and the subsequent transfer of the credit arising therefrom to the contributed surplus account of the Company as disclosed in the circular of the Company dated 6 April 2017 and which was completed on 28 April 2017

“SGM” the special general meeting of the Company held on 28 April 2017 at which (among other business) the Independent Shareholders considered and approved, among other things, the Subscription Agreement, the Reorganisation, the Distribution, the Special Dividend, the CSPT Disposal the CSPT Supplemental Agreement and the transactions contemplated thereunder “Special Dividend” the declaration of dividend in the amount of HK$0.03255 per Share to the Shareholders whose names are registered on the register of members of the Company on the Record Date as approved by the Independent Shareholders at the SGM held on 28 April 2017 and paid on 24 May 2017

“Stock Exchange”

The Stock Exchange of Hong Kong Limited

– 7 –

DEFINITIONS

“Subscriber(s)” the Offeror and Brilliant Decent “Subscription” the subscription for the Subscription Shares by the Subscriber(s) pursuant to the Subscription Agreement
“Subscription Agreement” the conditional subscription agreement dated 7 March 2017 and entered into between the Company as issuer and the Subscribers as subscribers in relation to the Subscription
“Subscription Completion” completion of the Subscription pursuant to the Subscription Agreement on 31 May 2017
“Subscription Price” the subscription price of HK$0.032 per Subscription Share “Subscription Shares” a total of 26,950,000,000 new Shares subscribed by the Subscribers and issued by the Company at the Subscription Price
“Takeovers Code” the Hong Kong Code on Takeovers and Mergers “Trading Day(s)” a day when the Stock Exchange is open for trading in Hong Kong
“ WHITE Form(s) of Acceptance” the white form(s) of acceptance and transfer of the Share(s) in respect of the Offer
“US$” United States dollars, the lawful currency of United States “%” per cent

– 8 –

LETTER FROM PLATINUM

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PLATINUM Securities Company Limited

21/F LHT Tower 31 Queen’s Road Central Hong Kong Telephone (852) 2841 7000 Facsimile (852) 2522 2700 Website www.platinum-asia.com

7 June 2017

To the Independent Shareholders

Dear Sir or Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY PLATINUM SECURITIES COMPANY LIMITED ON BEHALF OF CMBC INTERNATIONAL INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CMBC CAPITAL HOLDINGS LIMITED

(FORMERLY KNOWN AS “SKYWAY SECURITIES GROUP LIMITED”) (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY CMBC INTERNATIONAL INVESTMENT LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

The Offeror and the Company jointly issued an announcement dated 8 March 2017 which stated that, (1) on 7 March 2017 (after trading hours) the Offeror and Brilliant Decent had entered into the Sale and Purchase Agreements with the Selling Shareholders, pursuant to which the Offeror and Brilliant Decent had conditionally agreed to purchase and the Selling Shareholders had conditionally agreed to sell the Sale Shares, representing approximately 19.23% of the entire issued share capital of the Company as at the date of the Joint Announcement, for a total cash consideration of HK$205,632,000, equivalent to HK$0.06 per Sale Share; and (2) on 7 March 2017 (after trading hours) the Offeror and Brilliant Decent and the Company had entered into the Subscription Agreement, pursuant to which the Company had conditionally agreed to issue, and the Subscribers have conditionally agreed to subscribe, in cash, for a total of 26,950,000,000 new Shares at the Subscription Price of HK$0.032 per Share for an aggregate consideration of HK$862,400,000, of which 25,000,000,000 Subscription Shares would be subscribed by the Offeror and 1,950,000,000 Subscription Shares would be subscribed by Brilliant Decent.

– 9 –

LETTER FROM PLATINUM

Immediately after the Sale and Purchase Completion and Subscription Completion took place on 31 May 2017 and as at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Brilliant Decent) were interested in a total of 30,377,200,000 Shares, representing approximately 66.36% of the issued share capital of the Company. Accordingly under Rule 26.1 of the Takeovers Code, the Offeror is required to make the Offer for all the issued Shares (other than those Shares already owned by or agreed to be acquired by the Offeror and parties acting in concert with it (including Brilliant Decent)).

This letter sets out, among other things, the principal terms of the Offer, together with the information on the Offeror and the Offeror’s intentions regarding the Group. Further details of the Offer are also set out in Appendix I to this Composite Document and the accompanying Form(s) of Acceptance. Your attention is also drawn to the “Letter from the Board”, the “Letter from the Independent Board Committee” to the Independent Shareholders and the “Letter from Optima Capital” to the Independent Board Committee as contained in this Composite Document.

THE OFFER

Principal terms of the Offer

Platinum, for and on behalf of the Offeror and in compliance with the Takeovers Code, hereby unconditionally make the Offer to acquire all the issued Shares (other than those Shares already owned by or agreed to be acquired by the Offeror and parties acting in concert with it (including Brilliant Decent)) in accordance with Rule 26.1 of the Takeovers Code on the following basis:

For each Offer Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.06 in cash

The Share Offer Price of HK$0.06 for each Offer Share is the same as the purchase price that was paid for each Sale Share by the Offeror pursuant to the Sale and Purchase Agreement I.

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

The Offer Shares to be acquired under the Offer shall be fully paid, free from all Encumbrances and with all rights and benefits at any time accruing and attached to them, including the rights to receive all dividends and distributions declared, made or paid (but excluding the Special Dividend and the Distribution) on or after the date on which the Offer is made, i.e., the date of this Composite Document.

The procedures for acceptance and further details of the Offer are set out in Appendix I to this Composite Document and the accompanying Form(s) of Acceptance.

– 10 –

LETTER FROM PLATINUM

Total Consideration for the Offer

As at the Latest Practicable Date, there are 45,778,757,729 Shares in issue. Assuming that there is no change in the issued share capital of the Company prior to making of the Offer and on the basis of the Share Offer Price at HK$0.06 per Share, the entire issued share capital of the Company is valued at approximately HK$2,746.7 million.

On the basis the Offeror and parties acting in concert with it (including Brilliant Decent) own approximately 30,377,200,000 Shares immediately upon the Sale and Purchase Completion and the Subscription Completion, the total consideration of the Offer would be approximately HK$924.1 million which will be the maximum amount payable by the Offeror under the Offer in the event that the Offer is accepted in full.

Comparisons of value

Before taking into account any adjustments to the quoted prices for the Special Dividend, the Share Offer Price of HK$0.06 per Offer Share represents:

(a) a discount of approximately 67.39% to the closing price of the Shares of HK$0.184 per Share as quoted on the Stock Exchange on the last trading day prior to the suspension of trading in the Shares pending the publication of the MOU Announcement;
(b) a discount of approximately 80.95% to the closing price of the Shares of HK$0.315 per Share as quoted on the Stock Exchange on the Last Trading Day;
(c) a discount of approximately 80.65%, 78.95% and 73.80% to the average closing price of the Shares of approximately HK$0.310, HK$0.285 and HK$0.229 per Share for the last 5, 10 and 30 consecutive Trading Days respectively up to and including the Last Trading Day;
(d) a discount of approximately 87.76% to the closing price of the Shares of HK$0.490 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(e) a discount of approximately 1.64% to the audited net asset value attributable to equity holders as at 31 March 2017 of approximately HK$0.061 per Share based on 18,828,757,729 Shares in issue immediately before the Subscription Completion;
(f) a premium of approximately 140.00% over the audited net asset value attributable to equity holders as at 31 March 2017 of approximately HK$0.025 per Share based on 45,778,757,729 Shares in issue as at the Latest Practicable Date; and
(g) a premium of approximately 140.00% over the net tangible asset value (“ NTAV ”) per Share of approximately HK$0.025 upon Subscription Completion based on the NTAV as at 29 May 2017 adjusted with the net proceeds from the Subscription and 45,778,757,729 Shares in issues as at the Latest Practicable Date (Note).

– 11 –

LETTER FROM PLATINUM

Note: Based on the management accounts of the Company as at 29 May 2017 provided by the Company, together with the net proceeds from the Subscription of approximately HK$850.0 million upon Subscription Completion, the net asset value of the Remaining Group amounted to approximately HK$1,186.5 million, and the NTAV of the Remaining Group amounted to approximately HK$1,162.9 million.

As disclosed in the circular of the Company dated 10 April 2017, the Board proposed a Special Dividend of not less than HK$0.021 per Share and the Board further announced on 28 April 2017 that subject to the fulfillment of conditions precedent of the Special Dividend, the exact amount for the Special Dividend is HK$0.03255 per Share. The Special Dividend was, on 24 May 2017 paid to the Shareholders whose names are registered on the register of members of the Company on the Record Date.

Please also refer to the paragraph headed “Market Prices” in Appendix IV to this Composite Document for further information on the market prices of the Shares.

Highest and lowest Share price

During the Relevant Period, the highest closing price quoted on the Stock Exchange was HK$0.520 per Share on both 31 May 2017 and 1 June 2017 and the lowest closing price quoted on the Stock Exchange was HK$0.152 per Share on 9 November 2016.

Confirmation of financial resources available for the Offer

The Offeror intends to finance the consideration payable under the Offer from a bank facility up to HK$1.0 billion granted by China Minsheng, Hong Kong Branch. Such bank facility has been locked up and earnmarked for the sole purpose of the payment for the settlement of full acceptances of the Offer. Any withdrawal of the bank facility can only be allowed by joint instruction of CMBCI and Platinum. The payment of interest on, repayment of or security for any liability (contingent or otherwise) under the said banking facilities will not depend to any significant extent on the business of the Group.

Platinum, as the financial adviser to the Offeror, is satisfied that sufficient resources are, and will remain, available to the Offeror to satisfy the consideration payable upon full acceptance of the Offer.

– 12 –

LETTER FROM PLATINUM

Payment

Payment in cash in respect of acceptance of the Offer will be made as soon as possible but in any event within seven business days (as defined under the Takeovers Code) after the date on which the duly completed acceptance of the Offer and the relevant documents of title in respect of such acceptance are received by or for the Offeror to render each such acceptance complete and valid.

Effect of accepting the Offer

By validly accepting the Offer, Shareholders will sell their tendered Shares to the Offeror free from all encumbrances and together with all rights attached to them, including the rights to receive all dividends and distribution declared, made or paid (but excluding the Special Dividend and the Distribution) by reference to a record date on or after the date on which the Offer is made, that is, the date of posting of this Composite Document by or on behalf of the Offeror in respect of the Offer.

Save for the Special Dividend and the Distribution, from the date of the Joint Announcement up to the Latest Practicable Date, there was no dividend or distribution declared, paid or made by the Company.

The Offer is unconditional in all respects and will remain open for acceptance from the date of this Composite Document until 4:00 p.m. on the Closing Date. Acceptance of the Offer shall be irrevocable once given and cannot be withdrawn except in circumstances set out in Rule 19.2 of the Takeovers Code, details of which are set out in section 4 headed “Right of withdrawal” in Appendix I to this Composite Document.

Overseas Shareholders

The making of the Offer to persons who are not Hong Kong residents may be affected by the laws and regulations of the relevant jurisdictions. The Overseas Shareholders should observe any applicable legal or regulatory requirements and, where necessary, seek legal advice. It is the responsibilities of the Overseas Shareholders who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offer (including but not limited to the obtaining of any governmental, exchange control or other consents and any registration of filing which may be required and the compliance with other necessary formalities, regulatory and/or legal requirements and the payment of any transfer or other taxes due by such Overseas Shareholders in respect of such jurisdictions).

– 13 –

LETTER FROM PLATINUM

According to the register of members of the Company as at the Latest Practicable Date, there were two Overseas Shareholders with registered address located in the PRC. The Offeror was advised by the relevant legal advisers that the Composite Document and the Form(s) of Acceptance may be despatched to such Overseas Shareholders and will do so accordingly. This Composite Document will not be filed, nor approved for its issuance sought, under the applicable securities or equivalent legislation or rules of any jurisdiction other than Hong Kong. Whether or not the Composite Document is sent to the Overseas Shareholders, the Composite Document will be published on the websites of the Company and the Stock Exchange, and will be available for collection in the office of the Registrar.

Acceptance by any Overseas Shareholders will be deemed to constitute a representation and a warranty by such person that such person is permitted under all applicable laws and regulations to receive and accept the Offer, and any revision thereof, and such acceptance shall be valid and binding in accordance with all applicable laws and regulations. Any such person is recommended to seek professional advice on deciding whether or not to accept the Offer. Overseas Shareholders who are in doubt as to the action they should take should consult a licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional advisers.

Hong Kong Stamp duty

The seller’s Hong Kong ad valorem stamp duty on acceptances of the Offer at a rate of 0.1% (or part thereof) of the consideration payable in respect of the relevant acceptance by the Shareholders or if higher, the market value of the Shares, will be deducted from the amount payable to Shareholders who accept the Offer. The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of the relevant Shareholders accepting the Offer and pay the buyer’s Hong Kong ad valorem stamp duty in connection with the acceptance of the Offer and the transfer of the Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).

INFORMATION ON THE OFFEROR AND ITS HOLDING COMPANIES

The Offeror is a company incorporated in BVI, which is a direct wholly-owned subsidiary of CMBC International Investment (HK) Limited, which is in turn a direct wholly-owned subsidiary of CMBCI. Both the Offeror and CMBC International Investment (HK) Limited are established for the purpose of engaging in principal investments of CMBCI.

CMBCI is a direct wholly-owned subsidiary of the Offeror Parent, being China Minsheng, and was established on 11 February 2015 in Hong Kong with the approval of China Banking Regulatory Commission. It has a registered capital of HK$2 billion and is principally engaged in investment banking. As a holding company, CMBCI intends to apply for and obtain relevant business licenses from the regulatory authorities in Hong Kong through the subsidiaries established by it.

– 14 –

LETTER FROM PLATINUM

China Minsheng has an extensive branch network in China. As of the end of 2016, China Minsheng had in total 124 branches in 118 cities, 1,119 sub-branches and outlets.

China Minsheng also has a strong high quality customer base. As of the end of 2016, China Minsheng had 839,200 domestic customers with deposits of the Company, 30.3376 million retail customers with existing deposits and 11,896 domestic customers with general loans of the Company.

INFORMATION ON THE GROUP

The Company is incorporated in Bermuda with limited liability and its Shares are listed on the Main Board of the Stock Exchange. The Group is principally engaged in investment holdings, provision of brokerage, securities margin financing and related services, securities investment and real estate.

The following table is a summary of certain financial information of the Group for each of the two financial years ended 31 March 2016 and 31 March 2017.

	Year ended 31 March	Year ended 31 March
	2016	2017
	HK$ million	HK$ million
	(audited)	(audited)
Revenue	57	88
Gross profit	47	63
Loss before tax	1,929	1,036

– 15 –

LETTER FROM PLATINUM

INTENTION OF THE OFFEROR ON THE REMAINING GROUP

After completion of the Reorganisation and as at the Latest Practicable Date, the Remaining Group comprises the Company, Skyway Securities Investment Limited, Skyway Futures Limited and Skyway Asset Management Limited, which are licensed to engage in Type 1 (dealing in securities), Type 2 (dealing in future contracts), Type 4 (advising on securities) and Type 9 (asset management) regulated activities (as applicable) under the SFO.

As informed by the Offeror, the Offeror intends to continue the principal business of the Remaining Group, being those operated under Type 1 (dealing in securities), Type 2 (dealing in future contracts), Type 4 (advising on securities), and Type 9 (asset management) licences issued under the SFO. The Offeror has no intention to dispose of or re-deploy the assets of the Group. The Offeror aims to enhance the Company’s profitability by offering a one-stop investment banking solution encompassing cross-border and innovative financial products and services. In addition, the Offeror intends to optimise the value of the Remaining Group, which may include but not limited to exploring new business opportunities in the field of brokerage, investment banking, margin financing and asset management, relying on the strong reputation, expertise and capability of China Minsheng and CMBCI. To highlight, the initial business plans contemplated by CMBCI on the Remaining Group are as follows:

To expand the business scale of the Company through enhancing the capital base, broaden product offerings, and expanding the business teams by leveraging China Minsheng’s expertise and resources.
To expand its international network of branches. The Company will be an important platform for the international business development of CMBCI. It is CMBCI’s plan for the Company to steadily develop internationally in Southeast Asia, North America and the EU, with the Company as the core and Hong Kong as the base, to better serve the internationalised business development of its own, and that of China Minsheng’s customers. The Company will be playing an important role in the China Minsheng’s sustainable development and receive comprehensive support from China Minsheng.
To enhance the fundraising ability of the Company, and to improve the current low registered capital of the Company, to provide strong financial support for its overall business development. The Offeror intends the Company to utilise its listing status to raise funds in the future. Furthermore, with the new parentage of CMBCI and China Minsheng, the Company would be able to obtain more credit facilities to support its businesses.
To build an effective business collaboration and referral mechanism for business opportunities in mainland China and Hong Kong. The Offeror intends to make and implement achievable plans to open up the collaboration of mainland China and Hong Kong business opportunities arising from customers of China Minsheng Bank Group for the Company.

– 16 –

LETTER FROM PLATINUM

To improve and upgrade the existing securities service system and support the provision of new securities services and products for the Company. The Offeror expects the Group to serve a larger and more complex customer base and intends for the Company to improve its existing securities service system. China Minsheng will utilise its strong information technology and data service system to support the transformation and upgrading of related systems of the Company.
To promote the integration of the Company into the comprehensive and global financial service system of China Minsheng and CMBCI. China Minsheng has established a diversified financial service system in mainland China, including businesses in leasing, asset management and fund management etc. CMBCI will actively participate in the diversified development of China Minsheng Bank Group through the Company, in particular, CMBCI will actively support the Company in providing services and/or participate in the merger and acquisition of overseas financial businesses.
To further improve the risk management capabilities of the Company by leveraging on China Minsheng’s risk management expertise and experience. CMBCI, adhering to China Minsheng’s stringent, efficient and pragmatic risk management philosophy, will provide guidance to the Company to operate all types of investment banking business in accordance with the principals of legal and compliance perseverance, prudent management, controllability risk and commercial sustainability. China Minsheng will share its database and research resources with the Company to enrich the market risk management concept, expand management tools and enhance the management quality.
To enhance the Company’s brand and reputation. China Minsheng has a very high brand recognition in the world. China Minsheng is one of the Top 500 Banking Brands 2016 released by The Banker magazine, and was ranked at No. 22 with a brand value of US$8.4 billion. Upon completion of the Offer, China Minsheng will spare no effort in building the brand and reputation of the Company. Leveraging China Minsheng’s global reputation and brand, CMBCI will vigorously promote the Company’s reputation, and strengthen its domestic and overseas publicity, to attract more business opportunities.

CMBCI may consider injecting its existing licensed subsidiaries into the Group; however, as at the Latest Practicable Date, there is no arrangement, agreement, understanding or negotiation in connection therewith. Should such corporate action materializes in the future, the Group will follow the disclosure and/or shareholders’ approval requirements of the Listing Rules.

The Offeror intends to hold the Subscription Shares and the Sale Shares as a long-term investment. As disclosed in the Completion Announcement, on 31 May 2017, as part of the Subscription Completion, among other things, the Offeror has executed an undertaking in favour of the Company that it will not dispose of the 25,000,000,000 Subscription Shares for 36 months from the date of Subscription Completion without consent of the Company. Pursuant to the Sale and Purchase Agreement I, the Offerer undertakes, among others, not to dispose of any of the 2,527,200,000 Sale Shares for 36 months from the date of the Sale and Purchase Completion.

LETTER FROM PLATINUM

China Minsheng is principally engaged in commercial and retail banking business providing corporate and personal banking, treasury business, finance leasing, asset management and other financial services but holds any regulated activities (“ RA ”) 1 and 4 licenses through its Hong Kong Branch. Neither the Company nor its subsidiaries are licensed to carry out commercial banking activities and hence China Minsheng does not compete with the Company in respect of commercial banking activities. The Offeror expects immaterial competition from China Minsheng Hong Kong Branch, and even if there is competition it will be normal market competition and does not affect the interest of the Shareholders as a whole, as (i) the Company will be the principal platform for China Minsheng to conduct securities and investment banking businesses in Hong Kong; (ii) the principal business of China Minsheng Hong Kong Branch is commercial banking; (iii) the management of China Minsheng Hong Kong Branch won’t be involved in the management of the Company or its subsidiaries following the Sale and Purchase Completion and the Subscription Completion, nor is it involved in the management of CMBCI and the Offeror; (iv) the Company will have an independent and separate team conducting its RA1 and RA4 activities; and (v) China Minsheng Hong Kong Branch has no securities brokerage, futures or asset management businesses.

CMBCI has two existing licensed subsidiaries including CMBC International Securities Limited (“ CMBCIS ”), who is licensed to carry out RA1 and RA4 activities and is principally involved in providing securities brokerage services, extension of margin financing, and the underwriting of securities offerings, and CMBC International Capital Limited who is licensed to carry out RA1 and RA6 activities and is principally involved in the provision of corporate finance advisory services. The Offeror does not expect the Company to have any competition with CMBCI as (i) CMBCIS is not an Exchange Participant and it will only serve members of the China Minsheng group following the Sale and Purchase Completion and the Subscription Completion, and not to any third parties (including clients and customers of the China Minsheng group (excluding the Remaining Group)); (ii) CMBCIS and the Company will have independent and separate teams carrying out their respective RA1 and RA4 activities; (iii) CMBCI has no plans to carry out RA2 and RA9 activities; and (iv) the Company is not licensed to carry out RA6 activities.

It is expected that there will not be any undue reliance between the Company and China Minsheng upon the Subscription Completion. Although it is viewed that China Minsheng as an important conduit in referring customers, the Company has its own clients and will be actively marketing its products and services seeking for new clients. In addition, as the Company and China Minsheng basically have different scope of business in the sense of that the Company is principally engaged in non-commercial banking business whereas China Minsheng is mainly focused on commercial banking business. The Company and China Minsheng will be under separate management team and the Company will be built as the only overseas business platform of China Minsheng which strives to be a comprehensive investment bank with a leading position in the Greater China region. Save as in connection with the Offeror’s intention regarding the Group as set out above and the proposed board changes as mentioned in this Composite Document, the Offeror has no plans to terminate the employment of employees or other personnel of the Group.

– 18 –

LETTER FROM PLATINUM

Proposed changes to the composition of the Board

As at the Latest Practicable Date, the Board comprises Ms. Lin Yuehe and Mr. Wang Haixong as executive Directors; and Mr. Chan Kwan Pak, Mr. Siu Gee Tai, and Mr. Siu Siu Ling Robert as independent non-executive Directors.

In compliance with Rule 7 of the Takeovers Code, it is intended the following existing executive Directors and independent non-executive Directors as at the Latest Practicable Date will resign with effect from the earliest time permitted under the Takeovers Code (that is, upon the first Closing Date). Ms. Lin Yuehe intends to resign as an executive Director; and Mr. Wang Haixong intends to resign as an executive Director; both with effect from the first Closing Date of the Offer. In addition, Mr. Chan Kwan Pak, Mr. Siu Gee Tai, and Mr. Siu Siu Ling Robert also intend to resign as independent non-executive Directors, all with effect from the first Closing Date of the Offer.

Pursuant to the Subscription Agreement, the Offeror intends to appoint new Directors with effect not earlier than such date as is permitted under the Takeovers Code (that is, with effect from immediately after posting of this Composite Document). Accordingly the Board proposed the appointment of the following individuals as new Directors: (i) Mr. Li Jinze as executive Directors; and (ii) Ren Hailong and Mr. Liao Zhaohui as non-executive Directors; and (iii) Mr. Lee, Cheuk Yin Dannis, Mr. Wu Bin and Mr. Wang Lihua as independent non-executive Directors. The biographies of the new Directors are set out in the joint announcement in relation to the despatch of the Composite Document dated 7 June 2017.

COMPULSORY ACQUISITION

The Offeror does not intend to avail itself of any powers of compulsory acquisition of any Shares outstanding after the close of the Offer.

MAINTAINING THE PUBLIC FLOAT AND THE LISTING STATUS OF THE COMPANY

The Offeror intends to maintain the listing of the Shares on the Main Board of the Stock Exchange after the close of the Offer. The directors of the Offeror, the Directors and the proposed new Director(s) will jointly and severally undertake to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that sufficient public float as required under the Listing Rules exists for the Shares.

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25% of the Shares, are held by the public at all times, or if the Stock Exchange believes that:

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

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

– 19 –

LETTER FROM PLATINUM

PROCEDURES FOR ACCEPTANCE OF THE OFFER

To accept the Offer, Independent Shareholders should complete the accompanying relevant Form(s) of Acceptance in accordance with the instructions printed thereon. The Form(s) of Acceptance form part of the terms of the Offer. The completed Form(s) of Acceptance should then be forwarded, together with the relevant certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) stating the number of Shares in respect of the Offer which you intend to accept, by post or by hand, to:

the Registrar, at Level 22, Hopewell Centre,183 Queen’s Road East, Hong Kong in an envelope marked “CMBC Capital Holdings Limited Share Offer” as soon as possible after the receipt of this Composite Document but in any event no later than 4:00 p.m. on the Closing Date

No acknowledgement of receipt of any Form(s) of Acceptance and the title documents will be given.

Your attention is drawn to section 1 headed “General procedures for acceptance of the Offer” as set out in Appendix I to this Composite Document and the accompanying Form(s) of Acceptance.

Settlement of the Offer

Provided that the accompanying Form(s) of Acceptance, together with the relevant certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are valid, complete and in good order and have been received by:

the Registrar no later than 4:00 p.m. on the Closing Date, a cheque for the amount due to each accepting Independent Shareholder in respect of the Offer Shares tendered under the Offer (less seller’s ad valorem stamp duty payable by him/her/it) will be despatched to the accepting Independent Shareholder by ordinary post at his/her/its own risk as soon as possible but in any event within 7 Business Days after the date of receipt of all relevant documents (receipt of which renders such acceptance complete and valid) by the Registrar

The consideration to which any accepting Independent Shareholder is entitled under the Offer will be paid by the Offeror in full in accordance with the terms of the Offer (save with respect to the payment of seller’s ad valorem stamp duty) set out in this Composite Document (including Appendix I to this Composite Document) and the accompanying Form(s) of Acceptance without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such accepting Independent Shareholder.

– 20 –

LETTER FROM PLATINUM

Tax Implications

Independent Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of their acceptance of the Offer. It is emphasised that none of the Offeror, the Company, their respective ultimate beneficial owners and parties acting in concert with them, Platinum, Optima Capital, the Registrar or any of their respective directors, officers, advisers, associates, agents or any persons involved in the Offer is in a position to advise the Independent Shareholders on their individual tax implications, nor do they accept any responsibility for any taxation effects on, or liabilities of, any person or persons as a result of their acceptance of the Offer.

GENERAL

To ensure equality of treatment of all Independent Shareholders, those Independent Shareholders who hold the Shares as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. In order for the beneficial owners of the Shares, whose investments are registered in nominee names, to accept the Offer, it is essential that they provide instructions of their intentions with regard to the Offer to their nominees.

All documents and remittances will be sent to the Independent Shareholders by ordinary post at their own risk. These documents and remittances will be sent to them at their respective addresses as they appear in the register of members of the Company. None of the Offeror, the Company, their respective ultimate beneficial owners and parties acting in concert with them, Platinum, Optima Capital, the Registrar or any of their respective directors, officers, advisers, associates, agents or any persons involved in the Offer will be responsible for any loss or delay in transmission of such documents and remittances or any other liabilities that may arise as a result thereof.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information regarding the Offer set out in the appendices to this Composite Document and the accompanying Form(s) of Acceptance, which form part of this Composite Document. In addition, your attention is also drawn to the “Letter from the Board”, the “Letter from the Independent Board Committee” and the letter of advice by Optima Capital to the Independent Board Committee in respect of the Offer as set out in the “Letter from Optima Capital” contained in this Composite Document.

Yours faithfully,

For and on behalf of

Platinum Securities Company Limited Li Lan

Director and Co-Head of Corporate Finance

– 21 –

LETTER FROM THE BOARD

==> picture [215 x 43] intentionally omitted <==

CMBC CAPITAL HOLDINGS LIMITED

(formerly known as “Skyway Securities Group Limited”) (incorporated in Bermuda with limited liability)

(Stock Code: 1141)

Executive Directors : Ms. Lin Yuehe (Chairlady) Mr. Wang Haixiong (Chief Executive Officer)

Independent non-executive Directors: Mr. Chan Kwan Pak Mr. Siu Gee Tai Mr. Siu Siu Ling Robert

Registered office: Clarendon House 2 Church Street Hamilton HM11 Bermuda

Head office and principal place of business in Hong Kong: Units 6601A and 6607-6608 Level 66, Int’l Commerce Centre 1 Austin Road West Kowloon, Hong Kong

7 June 2017

To the Independent Shareholders

MANDATORY UNCONDITIONAL CASH OFFER BY PLATINUM SECURITIES COMPANY LIMITED ON BEHALF OF CMBC INTERNATIONAL INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CMBC CAPITAL HOLDINGS LIMITED (FORMERLY KNOWN AS “SKYWAY SECURITIES GROUP LIMITED”) (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY CMBC INTERNATIONAL INVESTMENT LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

– 22 –

LETTER FROM THE BOARD

consideration of HK$205,632,000, equivalent to HK$0.06 per Sale Share; and (2) on 7 March 2017 (after trading hours) the Offeror and Brilliant Decent and the Company had entered into the Subscription Agreement, pursuant to which the Company had conditionally agreed to issue, and the Subscribers have conditionally agreed to subscribe, in cash, for a total of 26,950,000,000 new Shares at the Subscription Price of HK$0.032 per Share for an aggregate consideration of HK$862,400,000, of which 25,000,000,000 Subscription Shares would be subscribed by the Offeror and 1,950,000,000 Subscription Shares would be subscribed by Brilliant Decent. The Sale and Purchase Completion and the Subscription Completion took place on 31 May 2017. For further details of the Sale and Purchase Completion and the Subscription Completion, please refer to the Completion Announcement.

The purpose of this Composite Document is to provide you with, among other matters, information relating to the Company, the Offeror and the Offer as well as to set out the “Letter from the Independent Board Committee” containing its recommendation to the Independent Shareholders in respect of the Offer and the “Letter from Optima Capital” containing its advice to the Independent Board Committee and the Independent Shareholders in respect of the Offer.

MANDATORY UNCONDITIONAL CASH OFFER

Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make a mandatory unconditional cash offer for all the issued Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it).

As at the Latest Practicable Date, the Company had 45,778,757,729 Shares in issue and did not have any other outstanding options, derivatives, warrants or securities which are convertible or exchangeable into Shares and had not entered into any agreement for the issue of such options, derivatives, warrants or securities of the Company.

– 23 –

LETTER FROM THE BOARD

THE OFFER

Principal terms of the Offer

For each Offer Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.06 in cash

The Share Offer Price of HK$0.06 for each Offer Share is the same as the purchase price that was paid for each Sale Share by the Offeror pursuant to the Sale and Purchase Agreement I.

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

The Offer Shares to be acquired under the Offer shall be fully paid, free from all Encumbrances and with all rights and benefits at any time accruing and attached to them, including the rights to receive all dividends and distributions declared, made or paid on or after the date on which the Offer is made, i.e., the date of this Composite Document.

As at the Latest Practicable Date, there are 45,778,757,729 Shares in issue. Save as disclosed above, as at the Latest Practicable Date, there are no other outstanding options, warrants, derivatives or convertible securities which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into Shares.

Further details of the Offer

Further details of the Offer including, among others, the terms and conditions and the procedures for acceptance and settlement are set out in the “Letter from Platinum”, Appendix I to this Composite Document and the accompanying Form(s) of Acceptance.

INFORMATION ON THE GROUP

The Company is a company incorporated in Bermuda with limited liability and its Shares are listed on the Main Board of the Stock Exchange. After completion of the Reorganisation, the Group is principally engaged in the provision of brokerage, securities margin financing and related services, securities investment.

The following table is a summary of certain financial information of the Group for each of the two financial years ended 31 March 2016 and 31 March 2017.

– 24 –

LETTER FROM THE BOARD

	Year ended 31 March	Year ended 31 March
	2016	2017
	HK$ million	HK$ million
	(audited)	(audited)
Revenue	57	88
Gross profit	47	63
Loss before tax	1,929	1,036

Your attention is drawn to Appendices II and III to this Composite Document which contain further financial and general information of the Group.

SHAREHOLDING STRUCTURE OF THE COMPANY

The table below shows the shareholding structure of the Company (i) immediately before Sale and Purchase Completion and Subscription Completion; and (ii) upon Sale and Purchase Completion and Subscription Completion and as at the Latest Practicable Date.

	(i) Immediately before Sale and	(i) Immediately before Sale and	(ii) Immediately upon Sale and	(ii) Immediately upon Sale and
	Purchase Completion and Subscription		Purchase Completion and Subscription
	Completion		Completion
	Approximately		Approximately
	Number of Shares	% of Shares in	Number of Shares	% of Shares in
	held	issue	held	issue
Mr. Lam	2,527,200,000	13.42%	–	–
Ms. Ai Qing	1,160,000,000	6.16%	260,000,000	0.57%
CSPT	3,378,405,829	17.94%	3,378,405,829	7.38%
Offeror	–	–	27,527,200,000	60.13%
Brilliant Decent	–	–	2,850,000,000	6.23%
Subtotal of the Offeror and parties
acting in concert with it	–	–	30,377,200,000	66.36%
Other Shareholders	11,763,151,900	62.47%	11,763,151,900	25.70%
Total	18,828,757,729	100.00	45,778,757,729	100.00

INFORMATION ON THE OFFEROR AND ITS HOLDING COMPANIES

Your attention is drawn to the section headed “Information on the Offeror and its holding companies” in the “Letter from Platinum” on pages 9 to 21 of this Composite Document.

– 25 –

LETTER FROM THE BOARD

INTENTION OF THE OFFEROR ON THE REMAINING GROUP

Your attention is drawn to the paragraph headed “Intention of the Offeror on the Remaining Group” in the “Letter from Platinum” as set out on pages 16 to 19 of this Composite Document, which sets out more information on the intention of the Offeror in respect of the Remaining Group, its business and employees. The Board is aware of the intention of the Offeror in respect of the Group and the proposed appointment of new Directors after despatch of this Composite Document. The Directors, though will resign upon the close of the Offer, are willing to render reasonable cooperation with the Offeror which is in the interests of the Company and the Shareholders as a whole.

MAINTAINING THE LISTING STATUS OF THE COMPANY

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

As mentioned in the “Letter from Platinum”, the Offeror intends the Company to remain listed on the Stock Exchange. The Directors and the new Directors to be appointed to the Board will jointly and severally undertake to the Stock Exchange to take appropriate steps (including but not limited to placing of existing Shares and/or allotment and issue of new Shares) to ensure that sufficient public float exists in the Shares at all times.

RECOMMENDATION

Your attention is drawn to the “Letter from the Independent Board Committee” and “Letter from Optima Capital”, respectively, which set out their recommendations and opinions in relation to the Offer and the principal factors considered by them before arriving at their recommendation.

ADDITIONAL INFORMATION

You are also advised to read this Composite Document together with the accompanying Form(s) of Acceptance and Transfer in respect of the acceptance and settlement procedures of the Offer. Your attention is also drawn to the additional information contained in the appendices to this Composite Document.

Yours faithfully, By order of the Board

CMBC Capital Holdings Limited Lin Yuehe Chairlady

– 26 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [215 x 43] intentionally omitted <==

CMBC CAPITAL HOLDINGS LIMITED

(formerly known as “Skyway Securities Group Limited”) (incorporated in Bermuda with limited liability)

(Stock Code: 1141)

7 June 2017

To the Independent Shareholders

Dear Sir or Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY PLATINUM SECURITIES COMPANY LIMITED ON BEHALF OF CMBC INTERNATIONAL INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CMBC CAPITAL HOLDINGS LIMITED

(FORMERLY KNOWN AS “SKYWAY SECURITIES GROUP LIMITED”) (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY CMBC INTERNATIONAL INVESTMENT LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

We refer to the composite offer document dated 7 June 2017 (the “ Composite Document ”) jointly issued by the Company and the Offeror, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Composite Document unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee and to advise you whether the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned.

Optima Capital has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and to give a recommendation to the Independent Shareholders as to whether or not to accept the Offer. Details of its advice, together with the principal factors taken into consideration in arriving at such advice, is set out on pages 29 to 47 of the Composite Document.

Having considered the terms of the Offer and the advice of Optima Capital, we concur with Optima Capital’s advice and consider that the terms of the Offer are not fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders not to accept the Offer.

– 27 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

However, Independent Shareholders, in particular those who intend to accept the Offer, are reminded to note the recent fluctuation in the price of the Shares. There is no guarantee that the current market price of the Shares will or will not sustain and will or will not be higher than the Offer Price during and after the period for the acceptance of the Offer. The Independent Shareholders who intend to accept the Offer are reminded to closely monitor the market price and the liquidity of the Shares during the period for the acceptance of the Offer and shall, having regard to their own circumstances and investment objectives, consider selling their Shares in the open market, instead of accepting the Offer, if the net proceeds from the sale of such Shares, net of all transaction costs, would be higher than the receivable under the Offer.

Furthermore, Independent Shareholders are reminded that their decisions to dispose of or hold their investment in the Shares are subject to their individual circumstances and investment objectives.

Notwithstanding our recommendation, the Independent Shareholders should consider carefully the terms of the Offer and the “Letter from Optima Capital” in this Composite Document.

Yours faithfully,

For and on behalf of the Independent Board Committee

Mr. Chan Kwan Pak Mr. Siu Gee Tai Mr. Siu Siu Ling Robert Independent non-executive Independent non-executive Independent non-executive Director Director Director

– 28 –

LETTER FROM OPTIMA CAPITAL

The following is the text of a letter of advice from Optima Capital to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in the Composite Document.

Suite 1501 15th Floor Jardine House 1 Connaught Road Central Hong Kong 7 June 2017

To: The Independent Board Committee and
the Independent Shareholders

Dear Sirs,

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in connection with the Offer. Details of the Offer are contained in the Composite Document dated 7 June 2017, of which this letter forms a part. Terms used in this letter shall have the same meanings as those defined in the Composite Document unless the context otherwise requires.

As set out in the letter from Platinum, the Offeror and Brilliant Decent had entered into the Sale and Purchase Agreements with the Selling Shareholders on 7 March 2017 to purchase from the Selling Shareholders the Sale Shares, which represented approximately 19.23% of the entire issued share capital of the Company as at the date of the Joint Announcement for a total cash consideration of HK$205,632,000, equivalent to HK$0.06 per Sale Share. On the same date, the Offeror and Brilliant Decent had also entered into the Subscription Agreement with the Company to subscribe for 25,000,000,000 Subscription Shares and 1,950,000,000 Subscription Shares respectively at the Subscription Price of HK$0.032 per Share for an aggregate consideration of HK$862,400,000.

– 29 –

LETTER FROM OPTIMA CAPITAL

The Sale and Purchase Completion and the Subscription Completion took place on 31 May 2017 and as at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Brilliant Decent) were interested in a total of 30,377,200,000 Shares, representing approximately 66.36% of the issued share capital of the Company. Accordingly, the Offeror is required to make the Offer for all the issued Shares (other than those Shares already owned by or agreed to be acquired by the Offeror and parties acting in concert with it (including Brilliant Decent)) under Rule 26.1 of the Takeovers Code.

The Independent Board Committee, comprising all of the independent non-executive Directors, namely Mr. Chan Kwan Pak, Mr. Siu Gee Tai and Mr. Siu Siu Ling Robert, has been established to make a recommendation to the Independent Shareholders as to whether the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and whether the Independent Shareholders should accept the Offer. The Independent Board Committee has approved our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

We are not associated with the Company, the Offeror or any party acting, or presumed to be acting, in concert with any of them and, accordingly, are considered eligible to give independent advice on the Offer. Apart from normal professional fees payable to us in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company, the Offeror or any party acting, or presumed to be acting, in concert with any of them.

BASIS OF OUR OPINION

In formulating our advice and recommendation, we have relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Company, which we have assumed to be true, accurate and complete at the time they were made and up to the Latest Practicable Date. We have also assumed that all representations contained or referred to in the Composite Document are true, accurate and complete at the time they were made and as at the Latest Practicable Date. Shareholders will be informed as soon as practicable if we become aware of any material change to such information.

We have reviewed the Composite Document, the annual results announcement of the Company dated 1 June 2017 for the year ended 31 March 2017, the annual report of the Company for the year ended 31 March 2016, the interim report of the Company for the six months ended 30 September 2016, and the circular of the Company dated 10 April 2017. We have sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed by them. We consider that the information we have received is sufficient for us to reach our opinion and advice as set out in this letter. We have no reason to doubt the truth and accuracy of the information provided to us or to believe that any material facts have been omitted or withheld. We have not, however, conducted any independent investigation into the business and affairs of the Group or the Remaining Group, nor have we carried out any independent verification of the information supplied.

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LETTER FROM OPTIMA CAPITAL

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

PRINCIPAL TERMS OF THE OFFER

On 7 June 2017, Platinum is making the Offer for and on behalf of the Offeror pursuant to the Takeovers Code on the following terms:

for each Offer Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.06 in cash

As at the Latest Practicable Date, there were 45,778,757,729 Shares in issue. Assuming that there is no change in the issued share capital of the Company prior to the making of the Offer and on the basis of the Share Offer Price at HK$0.06 per Share, the entire issued share capital of the Company is valued at approximately HK$2,746.7 million. On the basis the Offeror and parties acting in concert with it (including Brilliant Decent) owned 30,377,200,000 Shares immediately upon the Sale and Purchase Completion and the Subscription Completion, a total of 15,401,557,729 Shares will be subject to the Offer, and the total consideration of the Offer would be approximately HK$924.1 million which will be the maximum amount payable by the Offeror under the Offer in the event that the Offer is accepted in full.

Save that Ms. Lin Yuehe, the Company’s Chairlady and an executive Director holding 20,000 Shares as at the Latest Practicable Date, had indicated that she did not intend, in respect of her own beneficial shareholdings, to accept the Offer, the Offeror had not received any indication or irrevocable commitment from any Shareholders that they will accept or reject the Offer as at the Latest Practicable Date.

As set out in the letter from Platinum in the Composite Document, the Offeror intends to maintain the listing status of the Company, and the directors of the Offeror, the Directors and the proposed new Directors will jointly and severally undertake to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that sufficient public float as required under the Listing Rules exists for the Shares.

– 31 –

LETTER FROM OPTIMA CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

I. Background to and reasons for the Offer

On 7 March 2017, the Offeror and Brilliant Decent had entered into the Sale and Purchase Agreements with the Selling Shareholders to acquire 19.23% of the entire issued share capital of the Company as at the date of the Joint Announcement for a total consideration of HK$205,632,000, equivalent to HK$0.06 per Sale Share. On the same date, the Offeror and Brilliant Decent had also entered into the Subscription Agreement with the Company to subscribe for a total of 26,950,000,000 new Shares at the Subscription Price of HK$0.032 per Share for a total consideration of HK$862,400,000.

As one of the conditions precedent to the Subscription Completion, the Company has to complete the Reorganisation including but not limited to the Distribution, the Special Dividend, the CSPT Disposal, the AFS Disposals and other reorganisation steps, details of which are contained in the circular of the Company dated 10 April 2017.

Payment of the Special Dividend of HK$0.03255 per Share was made to the Shareholders on 24 May 2017. The completion of the Distribution (i.e. the distribution of 645.805 CSPT Shares and 167.664 FW Shares to the Shareholders for every 10,000 Shares held on the Record Date) took place on 26 May 2017. The Sale and Purchase Completion and the Subscription Completion then took place on 31 May 2017. Upon the Sale and Purchase Completion, the Subscription Completion and the completion of the Reorganisation (the “ Reorganisation Completion ”), the Remaining Group is principally engaged in the financial services business, details of which are set out in the section headed “Information on the Remaining Group” below.

Following the Sale and Purchase Completion and the Subscription Completion and as at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Brilliant Decent) were interested in a total of 30,377,200,000 Shares, representing approximately 66.36% of the issued share capital of the Company. Accordingly, the Offeror is required to make the Offer for all the issued Shares (other than those Shares already owned by or agreed to be acquired by the Offeror and parties acting in concert with it (including Brilliant Decent)) under Rule 26.1 of the Takeovers Code.

Platinum is making the Offer for and on behalf of the Offeror on 7 June 2017.

– 32 –

LETTER FROM OPTIMA CAPITAL

II. Information on the Remaining Group

1. Principal business of the Remaining Group

Upon the Reorganisation Completion, the Remaining Group is principally engaged in (i) dealing in and advising on securities and future contracts under Type 1, Type 2 and Type 4 licences under the SFO (the “ Brokerage Business ”); (ii) the proprietary trading business including investments and trading in equity and fixedincome securities and assets as well as derivatives (the “ Proprietary Trading Business ”); and (iii) the asset management business under Type 9 licence under the SFO (the “ Asset Management Business ”). Detailed plan of the Remaining Group is set out in the section headed “Offeror’s intention on the Remaining Group” below. Set out below is the simplified group structure of the Group as at the Latest Practicable Date:

==> picture [429 x 250] intentionally omitted <==

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

Company
Skyway Securities Skyway Futures
Investment Limited Limited
Skyway Asset
Management Limited
----- End of picture text -----

– 33 –

LETTER FROM OPTIMA CAPITAL

2. Financial position

Set out below is the audited consolidated financial position of the Remaining Group as at 31 March 2017 as extracted from the annual results announcement of the Company dated 1 June 2017 for the year ended 31 March 2017:

	As at
	31 March 2017
	HK$’000
*Non-current assets*	447,891
Property, plant and equipment	4,210
Investment property	410,000
Goodwill	16,391
Intangible assets	7,244
Other non-current assets	10,046
*Current assets*	1,287,385
Accounts receivable	698,057
Investments at fair value through profit or loss	379,107
Cash and bank balances – segregated accounts	75,655
Cash and bank balances – house accounts	132,324
Prepayments, deposits and other receivables	2,242
*Current liabilities*	241,392
Accounts payable	106,103
Other payables and accruals	47,884
Bank borrowings	8,455
Bank overdrafts	44,908
Tax payables	34,042
*Non-current liabilities*	345,035
Promissory notes	27,056
Deferred tax liabilities	361
Bank borrowings	169,807
Notes payable	147,811
Net asset value (“NAV”)	1,148,849

– 34 –

LETTER FROM OPTIMA CAPITAL

As at 31 March 2017, the total assets of the Remaining Group amounted to approximately HK$1,735.3 million, which mainly consisted of (i) investment property of approximately HK$410.0 million; (ii) accounts receivable of approximately HK$698.1 million; (iii) investments at fair value through profit or loss of approximately HK$379.1 million; (iv) cash and bank balances of approximately HK$208.0 million; and (v) other assets of approximately HK$40.1 million in aggregate. As advised by the Company, the investment property had already been disposed of on 9 May 2017 pursuant to the CSPT Disposal, and the investments at fair value through profit or loss refer to all the CSPT Shares and all the FW Shares held by the Group which had been distributed to the Shareholders on 26 May 2017. The total liabilities of the Remaining Group amounted to approximately HK$586.4 million, which mainly consisted of (i) accounts payable of approximately HK$106.1 million; (ii) short-term and longterm bank borrowings of approximately HK$178.3 million; (iii) notes payable of approximately HK$147.8 million; and (iv) other liabilities of approximately HK$154.2 million. The NAV of the Remaining Group amounted to approximately HK$1,148.8 million.

Based on the management accounts of the Company as at 29 May 2017, together with the net proceeds from the Subscription of approximately HK$850.0 million upon the Subscription Completion, the NAV of the Remaining Group amounts to approximately HK$1,186.5 million, and the net tangible asset value (“ NTAV ”) of the Remaining Group amounts to approximately HK$1,162.9 million.

III. Information about the Offeror and its holding company

The Offeror is incorporated in the BVI with limited liability, which is a direct whollyowned subsidiary of CMBC International Investment (HK) Limited, which is in turn a direct wholly-owned subsidiary of CMBCI. Both the Offeror and CMBC International Investment (HK) Limited are established for the purpose of engaging in principal investments of CMBCI. CMBCI is a direct wholly-owned subsidiary of China Minsheng and was established on 11 February 2015 in Hong Kong with the approval of China Banking Regulatory Commission. It has a registered capital of HK$2 billion and is principally engaged in investment banking. As a holding company, CMBCI intends to apply for and obtain relevant business licenses from the regulatory authorities in Hong Kong through the subsidiaries established by it.

– 35 –

LETTER FROM OPTIMA CAPITAL

China Minsheng and its subsidiaries mainly provide corporate and personal banking, treasury business, finance leasing, asset management and other financial services in the PRC. China Minsheng is China’s first national joint-stock commercial bank initiated and funded mainly by non-state-owned enterprises. As of the end of September 2016, it has grown into a large-scale commercial bank with more than RMB5.6 trillion of total assets and close to 60,000 employees. In the Top 1000 World Banks ranking released by The Banker magazine in July 2016, China Minsheng was ranked No. 33. China Minsheng was ranked No. 221 in the Global 500 list published by Fortune magazine in July 2016. Meanwhile, the investment banking business of the group of China Minsheng has been widely recognised in China and the brand influence continues to improve. In the past year, it won two awards “China Top 10 Investment Banks 2016” and “China Best Cross-border Financing Bank 2016”. China Minsheng has an extensive branch network in China. As of the end of 2016, China Minsheng had in total 124 branches in 118 cities, 1,119 sub-branches and outlets. China Minsheng also has a strong high quality customer base. As of the end of 2016, China Minsheng had 839,200 domestic customers with deposits of the company, approximately 30.3 million retail customers with existing deposits and 11,896 domestic customers with general loans of the company.

IV. Offeror’s intention on the Remaining Group

As set out in the letter from Platinum, the Offeror intends to continue the principal business of the Remaining Group, being the Brokerage Business, the Proprietary Trading Business and the Asset Management Business. The Offeror has no intention to dispose of or re-deploy the assets of the Remaining Group. The Offeror aims to enhance the Company’s profitability by offering a one-stop investment banking solution encompassing cross-border and innovative financial products and services. In addition, the Offeror intends to optimise the value of the Remaining Group, which may include but not limited to exploring new business opportunities in the field of brokerage, investment banking, margin financing and asset management, relying on the strong reputation, expertise and capability of China Minsheng and CMBCI. As extracted from the letter from Platinum, the initial business plans contemplated by CMBCI on the Remaining Group are as follows:

a) To expand the business scale of the Company through enhancing the capital base, broaden product offerings, and expanding the business teams by leveraging China Minsheng’s expertise and resources.
b) To expand its international network of branches. The Company will be an important platform for the international business development of CMBCI. It is CMBCI’s plan for the Company to steadily develop internationally in Southeast Asia, North America and the EU, with the Company as the core and Hong Kong as the base, to better serve the internationalised business development of its own, and that of China Minsheng’s customers. The Company will be playing an important role in the China Minsheng’s sustainable development and receive comprehensive support from China Minsheng.

– 36 –

LETTER FROM OPTIMA CAPITAL

c) To enhance the fundraising ability of the Company, to improve the current low registered capital of the Company, and to provide strong financial support for its overall business development. The Offeror intends the Company to utilise its listing status to raise funds in the future. Furthermore, with the new parentage of CMBCI and China Minsheng, the Company would be able to obtain more credit facilities to support its businesses.
d) To build an effective business collaboration and referral mechanism for business opportunities in mainland China and Hong Kong. The Offeror intends to make and implement achievable plans to open up the collaboration of mainland China and Hong Kong business opportunities arising from customers of China Minsheng Bank Group for the Company.
e) To improve and upgrade the existing securities service system and support the provision of new securities services and products for the Company. The Offeror expects the Group to serve a larger and more complex customer base and intends for the Company to improve its existing securities service system. China Minsheng will utilise its strong information technology and data service system to support the transformation and upgrading of related systems of the Company.
f) To promote the integration of the Company into the comprehensive and global financial service system of China Minsheng and CMBCI. China Minsheng has established a diversified financial service system in mainland China, including businesses in leasing, asset management and fund management etc. CMBCI will actively participate in the diversified development of China Minsheng Bank Group through the Company, in particular, CMBCI will actively support the Company in providing services and/or participate in the merger and acquisition of overseas financial businesses.
g) To further improve the risk management capabilities of the Company by leveraging on China Minsheng’s risk management expertise and experience. CMBCI, adhering to China Minsheng’s stringent, efficient and pragmatic risk management philosophy, will provide guidance to the Company to operate all types of investment banking business in accordance with the principals of legal and compliance perseverance, prudent management, controllability risk and commercial sustainability. China Minsheng will share its database and research resources with the Company to enrich the market risk management concept, expand management tools and enhance the management quality.

– 37 –

LETTER FROM OPTIMA CAPITAL

h) To enhance the Company’s brand and reputation. China Minsheng has a very high brand recognition in the world. China Minsheng is one of the Top 500 Banking Brands 2016 released by The Banker magazine, and ranked at No. 22 with a brand value of US$8.4 billion. Upon completion of the Offer, China Minsheng will spare no effort in building the brand and reputation of the Company. Leveraging China Minsheng’s global reputation and brand, CMBCI will vigorously promote the Company’s reputation, and strengthen its domestic and overseas publicity, to attract more business opportunities.

CMBCI may consider injecting its existing licensed subsidiaries into the Group; however, as at the Latest Practicable Date, there was no arrangement, agreement, understanding or negotiation in connection therewith. Should such corporate action materialise in the future, the Group will follow the disclosure and/or Shareholders’ approval requirements of the Listing Rules.

Business delineation within the China Minsheng group

As advised by the Subscribers, China Minsheng is principally engaged in commercial and retail banking business, provision of corporate and personal banking, treasury business, finance leasing, asset management and other financial services but it does not hold any licences in respect of the regulated activities under the SFO save for its Hong Kong branch (“ CMBHK ”) which holds Type 1 (dealing in securities) and Type 4 (advising on securities) licences under SFO (the “ Licences ”). CMBCI, as a direct wholly-owned subsidiary of China Minsheng, has two licensed subsidiaries including CMBC International Securities Limited (“ CMBCIS ”) and CMBC International Capital Limited (“ CMBCIC ”) with different business focuses. We summarise below the principal businesses of, and type of the Licences held by, each of the Remaining Group, CMBHK, CMBCIS and CMBCIC (collectively, the “ Four Entities ”):

			Type	of Licences	of Licences
	Principal businesses	Type 1	Type 2	Type 4	Type 6	Type 9
Remaining	The Brokerage Business, the Proprietary	√	√	√		√
Group	Trading Business, and the Asset
	Management Business
CMBHK	Commercial banking business	√		√
CMBCIC	Provision of corporate finance advisory	√			√
	services
CMBCIS	Provision of securities brokerage services,	√		√
	extension of margin financing, and
	underwriting of securities offerings to
	members of the China Minsheng group only

– 38 –

LETTER FROM OPTIMA CAPITAL

Notwithstanding that the Licences held by each of the Four Entities overlap one another, we concur with the view of the Board that no direct competition that may jeopardise the interests of the Company and the Shareholders as a whole will arise among them having considered that:

(i) as shown on the table above, the principal businesses of CMBHK and CMBCIC are different from that of the Remaining Group;
(ii) though CMBCIS is engaged in similar businesses as the Remaining Group, the delineation of the customers and their roles within the China Minsheng group are distinct given CMBCIS will only serve the members of the China Minsheng group as it is not an Exchange Participant whilst the Remaining Group will serve all other customers in particular the existing clients of the China Minsheng group;
(iii) it is the intention of China Minsheng that the Company will be its principal platform to conduct securities and investment banking businesses in Hong Kong upon the Subscription Completion; and
(iv) the Company and China Minsheng will be under separate management team.

Proposed change of Board composition

As stated in the letter from Platinum in the Composite Document, the Offeror has proposed to appoint new Directors to the Board with effect from the date immediately after the posting of the Composite Document. All the existing executive Directors and independent non-executive Directors will resign from the Board with effect from the first Closing Date of the Offer.

Listing status of the Company

As at the Latest Practicable Date, the Offeror and parties acting in concert with it (including Brilliant Decent) were interested in 30,377,200,000 Shares, representing approximately 66.36% of the issued share capital of the Company. Accordingly, 15,401,557,729 Shares, representing approximately 33.64% of the issued share capital of the Company, were in the hands of the public.

As set out in the letter from Platinum in the Composite Document, the Offeror intends to maintain the listing status of the Company, and the directors of the Offeror, the Directors and the proposed new Directors will irrevocably jointly and severally undertake to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that sufficient public float as required under the Listing Rules exists for the Shares.

– 39 –

LETTER FROM OPTIMA CAPITAL

V. Analysis of the Share Offer Price

1. Historical price performance of the Shares

The chart below illustrates the daily closing price per Share on trading days from 1 March 2016, covering a period of more than 12 months preceding the date of the Joint Announcement, up to and including the Latest Practicable Date (the “ Review Period ”).

==> picture [398 x 158] intentionally omitted <==

Source: Bloomberg

The Share Offer Price of HK$0.06 per Offer Share is far below the closing price of the Shares throughout the Review Period. The Shares closed at HK$0.315 per Share on 7 March 2017 (being the Last Trading Day and the date of the Sale and Purchase Agreements and the Subscription Agreement). Trading of the Shares was halted on 8 March 2017 pending the release of the Joint Announcement. The Joint Announcement was published on 8 March 2017 and the Shares closed at HK$0.315 per Share on 9 March 2017 (i.e. the trading day immediately following the publication of the Joint Announcement), equivalent to the closing price on the Last Trading Day. After trading hours on 28 April 2017, Company announced that the Shareholders approved the Subscription, the Distribution, the Special Dividend and the CPST Disposal at the SGM. On 2 May 2017 (i.e. the trading day immediately following the publication of the announcement of the poll results of the SGM issued by the Company), the closing price of the Shares was HK$0.4 per Share, far higher than the Share Offer Price. The Shares closed at HK$0.49 per Share on the Latest Practicable Date and the Share Offer Price of HK$0.06 per Offer Share represents a significant discount of approximately 87.76% to the closing price on the Latest Practicable Date.

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LETTER FROM OPTIMA CAPITAL

2. Comparison of the Share Offer Price

The Share Offer Price of HK$0.06 per Offer Share represents:

(a) a discount of approximately 80.95% to the closing price of HK$0.315 per Share as quoted on the Stock Exchange on the Last Trading Day;
(b) a discount of approximately 80.65% to the average closing price of HK$0.310 per Share for the five consecutive trading days immediately prior to and including the Last Trading Day based on the daily closing prices as quoted on the Stock Exchange;
(c) a discount of approximately 78.95% to the average closing price of approximately HK$0.285 per Share for the ten consecutive trading days immediately prior to and including the Last Trading Day based on the daily closing prices as quoted on the Stock Exchange;
(d) a discount of approximately 73.80% to the average closing price of approximately HK$0.229 per Share for the thirty consecutive trading days immediately prior to and including the Last Trading Day based on the daily closing prices as quoted on the Stock Exchange;
(e) a discount of approximately 87.76% to the closing price of HK$0.49 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(f) a discount of approximately 1.64% to the audited NAV attributable to equity holders as at 31 March 2017 of approximately HK$0.061 per Share based on 18,828,757,729 Shares in issue immediately before the Subscription Completion;
(g) a premium of approximately 140.0% over the audited NAV attributable to equity holders as at 31 March 2017 of approximately HK$0.025 per Share based on 45,778,757,729 Shares in issue as at the Latest Practicable Date; and
(h) a premium of approximately 140.0% over the NTAV per Share of approximately HK$0.025 per Share upon the Subscription Completion based on the NTAV of the Remaining Group as at 29 May 2017 adjusted with the net proceeds from the Subscription and 45,778,757,729 Shares in issue as at the Latest Practicable Date.

– 41 –

LETTER FROM OPTIMA CAPITAL

3. Trading liquidity

Set out below is a table showing the trading volume of the Shares during the Review Period:

				*Percentage of*
	*Number*			*average daily trading*
	*of trading*		*Average daily trading*	*volume to the total*
	*days of the*		*volume for the*	*number of issued*
	*Shares in*	*Total trading*	*month/period (the*	*Shares (the “Share*
	*the relevant*	*volume for the*	*“Share Volume”)*	*Liquidity Ratio”)*
	*month/period*	*month/period*	(Note 1)	(Note 2)
*2016*
March	21	632,885,012	30,137,382	0.24%
April	20	1,185,224,650	59,261,233	0.47%
May	21	350,263,050	16,679,193	0.12%
June	21	500,265,800	23,822,181	0.17%
July	19	754,938,525	39,733,607	0.26%
August	22	610,199,400	27,736,336	0.18%
September	21	1,382,595,388	65,837,876	0.42%
October	19	409,827,049	21,569,845	0.14%
November	22	1,214,388,700	55,199,486	0.35%
December	15	1,143,534,820	76,235,655	0.48%
*2017*
January	19	641,948,400	33,786,758	0.20%
February	20	1,178,229,590	58,911,480	0.33%
March	22	2,476,241,579	112,556,435	0.62%
April	17	1,150,536,820	67,678,636	0.36%
May	20	1,494,666,054	74,733,303	0.40%
June (up to the
Latest Practicable
Date)	2	150,739,000	75,369,500	0.16%
Notes:

1. The Share Volume is calculated by dividing the total monthly trading volume for the month/period of the Shares by the number of trading days of the Shares during that month/period.

2. The Share Liquidity Ratio is calculated by dividing Share Volume by the total number of Shares in issue as at the end of each month/period.

– 42 –

LETTER FROM OPTIMA CAPITAL

As illustrated in the monthly statistics set out in the table above, during the Review Period, the Share Volume ranged from approximately 16,679,193 Shares to 112,556,435 Shares with the corresponding Share Liquidity Ratio ranging from approximately 0.12% to 0.62%. Save for March 2017 in which the Share Liquidity Ratio reached the highest of the Review Period of approximately 0.62%, the Share Liquidity Ratios had not exceeded 0.5% throughout the Review Period. In this connection, we are of the view of that the trading of the Shares during the Review Period was generally inactive, and that the Offer would provide an exit opportunity for the Shareholders. However, Shareholders should take into account other factors set out in this letter when determining whether or not to accept the Offer, in particular the substantial discount of the Offer Price to the prevailing market price of the Shares and the future prospects of the Group as detailed in the section headed “Offeror’s intention on the Remaining Group” above.

4. Peer comparison

For the purpose of assessing the fairness and reasonableness of the Offer Price, we have sought to compare (i) the price to NAV ratio (the “ P/NAV Ratio ’’); and (ii) the price to NTAV ratio (the ‘‘ P/NTAV Ratio ’’) against a list of companies (the “ Peer Companies ”) which are principally engaged in businesses similar to the principal businesses of the Remaining Group and are comparable in size to the Company. We have therefore identified a total of 21 Peer Companies selected exhaustively from Bloomberg based on the following criteria: (a) the principal businesses of the Peer Companies include provision of brokerage services, which together with securities margin financing, securities trading, asset management and/or other related businesses (if any), has accounted for not less than half of the total revenue in absolute value for their last audited full financial year as shown in their latest published annual reports; and (b) the shares of the Peer Companies are listed on the main board of the Stock Exchange.

– 43 –

LETTER FROM OPTIMA CAPITAL

The table below sets out the list of the Peer Companies based on the aforesaid selection criteria:

		Market
		capitalisation
		as at the
		Latest
		Practicable	Consolidated		Consolidated	P/NTAV
		Date	NAV	P/NAV Ratio	NTAV	Ratio
	Stock	(Note1)	(Note 2)	(Note 3)	(Note 4)	(Note5)
Company	code	(HK$’million)	(HK$’million)	(times)	(HK$’million)	(times)
Kingston Financial Group Limited	1031	36,487	18,901	1.93	7,617	4.79
China Everbright Limited	165	29,930	39,486	0.76	39,486	0.76
Haitong International Securities
Group Limited	665	24,231	22,449	1.08	22,180	1.09
Goutai Junan International
Holdings Limited	1788	17,812	10,534	1.69	10,531	1.69
Freeman Fintech Corporation
Limited	279	7,592	3,311	2.29	3,310	2.29
Emperor Capital Group Limited	717	4,651	4,898	0.95	4,898	0.95
Bright Smart Securities &
Commodities Group Limited	1428	4,293	2,072	2.07	2,072	2.07
Shenwan Hongyuan (H.K.)
Limited	218	2,532	2,092	1.21	2,088	1.21
Get Nice Financial Group
Limited	1469	3,150	3,550	0.89	3,541	0.89
Get Nice Holdings Limited	64	2,255	5,675	0.40	5,651	0.40
Quam Limited	952	1,742	605	2.88	590	2.95
First Shanghai Investments
Limited	227	1,660	2,780	0.60	2,778	0.60
CASH Financial Services Group
Limited	510	1,302	543	2.40	533	2.44
China Fortune Financial Group
Limited	290	1,339	224	5.98	214	6.26
Value Convergence Holdings
Limited	821	822	700	1.17	698	1.18
South China Financial Holdings
Limited	619	875	1,094	0.80	1,093	0.80
Sheng Yuan Holdings Limited	851	956	166	5.76	156	6.13
Southwest Securities International
Securities Limited	812	569	235	2.42	235	2.42

– 44 –

LETTER FROM OPTIMA CAPITAL

		Market
		capitalisation
		as at the
		Latest
		Practicable	Consolidated		Consolidated	P/NTAV
		Date	NAV	P/NAV Ratio	NTAV	Ratio
	Stock	(Note1)	(Note 2)	(Note 3)	(Note 4)	(Note5)
Company	code	(HK$’million)	(HK$’million)	(times)	(HK$’million)	(times)
Cinda International Holdings
Limited	111	622	765	0.81	763	0.82
GT Group Holdings Limited	263	334	1,422	0.23	1,422	0.23
Lamtex Holdings Limited	1041	329	341	0.96	336	0.98
Mean				1.78		1.95
Maximum				5.98		6.26
Minimum				0.23		0.23
The Company	1141	2,747	1,186	2.32	1,163	2.36

Sources: Bloomberg, the information provided by the Company and the respective last published balance sheets of the Peer Companies.

Notes:

1. The market capitalisation figures of the Peer Companies are based on Bloomberg data as at the Latest Practicable Date. The market capitalisation of the Company is calculated based on the Offer Price of HK$0.06 per Offer Share and 45,778,757,729 issued Shares as at the Latest Practicable Date.

2. The NAV of the Peer Companies represents the total equity as shown in their last published balance sheets. The NAV of the Company to which the Offer is compared represents the NAV of the Remaining Group as at 29 May 2017 adjusted with the net proceeds from the Subscription of HK$850 million upon the Subscription Completion.

3. The P/NAV Ratio represents the market capitalisation divided by the NAV and is subject to rounding errors.

4. The NTAV of the Peer Companies represents the total equity less goodwill and intangible assets as shown in their last published balance sheets. The NTAV of the Company to which the Offer is compared represents the NTAV of the Remaining Group as at 29 May 2017 adjusted with the net proceeds from the Subscription of HK$850 million upon the Subscription Completion.

5. The P/NTAV Ratio represents the market capitalisation divided by the NTAV and is subject to rounding errors.

– 45 –

LETTER FROM OPTIMA CAPITAL

As set out in the table above, the P/NAV Ratio of the Peer Companies ranges from approximately 0.23 times to 5.98 times, with a mean of approximately 1.78 times, while the P/NTAV Ratio ranges from approximately 0.23 times to 6.26 times, with a mean of approximately 1.95 times.

The implied P/NAV Ratio and P/NTAV Ratio of the Offer of approximately 2.32 times and 2.36 times respectively are within the range of the Peer Companies and are above the means of both the P/NAV Ratio and the P/NTAV Ratio of the Peer Companies.

OPINION AND RECOMMENDATION

Based on the above, in particular, the substantial discount of the Share Offer Price to the prevailing market price of the Shares and the future prospects of the Remaining Group, we consider the terms of the Offer are not fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders not to accept the Offer.

Independent Shareholders should note that the Share Offer Price of HK$0.06 per Offer Share is far below the closing price of the Shares as at the Last Trading Day or the Latest Practicable Date. In such case, the Independent Shareholders should instead sell their Shares in the market if the sales proceeds, net of transaction costs, exceed HK$0.06 per Share. Those Independent Shareholders who are attracted to the prospects of the Remaining Group may consider retaining some or all of their Shares. Although the Offeror intends to maintain the listing of the Company, the Independent Shareholders should bear in mind the possibility of a temporary suspension in trading of Shares following the close of the Offer if the public float requirement of 25% is not met. As set out in the section headed “Offeror’s intention on the Remaining Group”, the directors of the Offeror, the Directors and the proposed new Directors will jointly and severally undertake to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that sufficient public float as required under the Listing Rules exists in the Shares.

Independent Shareholders are reminded to monitor carefully and closely the market price and the liquidity of the Shares during and before the end of the Offer Period.

– 46 –

LETTER FROM OPTIMA CAPITAL

The procedures for acceptance of the Offer are set out in Appendix I to the Composite Document. The latest time and date for acceptance of the Offer is 4:00 p.m. on Wednesday, 28 June 2017. Independent Shareholders are urged to read carefully the Composite Document and appendices and act according to the timetable if they wish to accept the Offer.

Yours faithfully, for and on behalf of OPTIMA CAPITAL LIMITED Ng Ka Po Senior Director

Mr. Ng Ka Po is licensed person and responsible officer of Optima Capital Limited registered with the SFC to carry out type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has participated in the provision of financial advisory and independent financial advisory services for various transactions involving companies listed in Hong Kong.

– 47 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

1. GENERAL PROCEDURES FOR ACCEPTANCE OF THE OFFER

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

(a) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Share(s) is/are in your name, and you wish to accept the Offer, you must send the duly completed WHITE Form(s) of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof), by post or by hand, to the Registrar. Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong in an envelope marked “CMBC Capital Holdings Limited Share Offer” to be received by the Registrar no later than 4:00 p.m. on the Closing Date or such later time and/or date as the Offeror may determine and the Offeror and the Company may jointly announce with the consent of the Executive in accordance with the Takeovers Code.
(b) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Offer in respect of your holding of Shares (whether in full or in part), you must either:
(i) lodge your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Offer on your behalf and requesting it to deliver the duly completed WHITE Form(s) of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/ or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or
(ii) arrange for the Shares to be registered in your name by the Company through the Registrar, and send the duly completed WHITE Form(s) of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

1 To be reviewed by the Registrar.

– I-1 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

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

– I-2 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

(e) Acceptance of the Offer will be treated as valid only if the completed WHITE Form(s) of Acceptance is/are received by the Registrar no later than 4:00 p.m. on the Closing Date or such later time and/or date as the Offeror may determine and announce in accordance to the Takeovers Code and the Registrar has recorded that the acceptance and the relevant documents as required under this section have been so received, and is:
(i) accompanied by the relevant share certificate(s) and/or transfer receipt(s) and/ or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if the share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) is/are not in your name, such other documents (e.g. a duly stamped transfer of the relevant Share(s) in blank or in favour of you, the person accepting the Offer, executed by the registered holder) in order to establish your right to become the registered holder of the Offer Shares; or
(ii) from a registered Shareholder or his/her/its personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Offer Shares which are not taken into account under another subparagraph of this paragraph (e)); or
(iii) certified by the Registrar or the Stock Exchange.
(f) If the WHITE Form(s) of Acceptance is executed by a person other than the registered Shareholder, appropriate documentary evidence of authority (e.g. a grant of probate or a certified copy of a power of attorney) to the satisfaction of the Registrar must be produced.
(g) Seller’s ad valorem stamp duty arising in connection with the acceptances of the Offer will be payable by each accepting Independent Shareholder at a rate of 0.1% of (i) the market value of the Offer Shares; or (ii) the consideration payable by the Offeror in respect of the relevant acceptances of the Offer, whichever is higher, and will be deducted from the cash amount payable by the Offeror to such Independent Shareholder on acceptance of the Offer. The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of each Independent Shareholder who accepts the Offer and will pay the buyer’s ad valorem stamp duty in connection with acceptances of the Offer and the transfer of the Offer Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).

– I-3 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

(h) No acknowledgement of receipt of any WHITE Form(s) of Acceptance, share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

2. ACCEPTANCE PERIOD AND REVISIONS

(a) In order to be valid, Form(s) of Acceptance for the Offer must be received by the Registrar in accordance with the instructions printed thereon by 4:00 p.m. on the Closing Date, unless the Offer have previously been revised or extended with the consent of the Executive in accordance with the Takeovers Code. The Offer are unconditional and the Offer will close on the Closing Date.
(b) The Offeror and the Company will jointly issue an announcement through the websites of the Stock Exchange and the Company no later than 7:00 p.m. on the Closing Date stating whether the Offer have been extended, revised or has expired.
(c) The Offeror reserves the right to revise the terms of the Offer in accordance with the Takeover Codes. If the Offeror revises the terms of the Offer (in accordance with the relevant requirements under the Takeovers Code), all Independent Shareholders, whether or not they have already accepted the Offer, will be entitled to accept the revised Offer under the revised terms.
(d) If the Offer are extended or revised, the announcement of such extension or revision will state the next closing date or the Offer will remain open until further notice. In the latter case, at least 14 days’ notice in writing will be given before the Offer are closed to the Independent Shareholders who have not accepted the Offer, and an announcement will be released. The revised Offer must be kept open for at least 14 days thereafter.
(e) If the Closing Date of the Offer is extended, any reference in this Composite Document and in the Form(s) of Acceptance to the Closing Date shall, except where the context otherwise requires, be deemed to refer to the closing date of the Offer as so extended.
(f) Any acceptance of the relevant revised Offer shall be irrevocable unless and until the Independent Shareholders who accept the Offer become entitled to withdraw their acceptance under the paragraph headed “Right of Withdrawal” below and duly do so.

– I-4 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

3. ANNOUNCEMENT

(a) As required under Rule 19 of the Takeovers Code, by 6:00 p.m. on the Closing Date (or such later time and/or date as the Executive may in exceptional circumstances permit), the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the revision, extension or expiry of the Offer. The Offeror must publish an announcement on the Stock Exchange’s website in accordance with the requirements of the Takeovers Code by 7:00 p.m. on the Closing Date stating whether the Offer have been revised, extended, or have expired.
(b) The announcement must state the following:
(i) the total number of Offer Shares for which acceptances of the Offer have been received;
(ii) the total number of Shares, controlled or directed by the Offeror and parties acting in concert with the Offeror before the Offer Period;
(iii) the total number of Shares acquired or agreed to be acquired by the Offeror and parties acting in concert with the Offeror during the Offer Period;
(iv) details of any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which the Offeror and parties acting in concert with the Offeror have borrowed or lent, save for any borrowed securities which have been either on-lent or sold; and
(v) the percentages of the issued share capital of the Company and the percentages of voting rights of the Company represented by these numbers of Shares.
(c) In computing the total number of Offer Shares represented by acceptances, only valid acceptances that are complete, in good order and satisfy the conditions set out in this Appendix and which have been received by the Registrar no later than 4:00 p.m. on the Closing Date, being the latest time and date for acceptance of the Offer, shall be included.
(d) As required under the Takeovers Code and the Listing Rules, any announcement in relation to the Offer, in respect of which the Executive and the Stock Exchange have confirmed that they have no further comments, will be published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.ssgroup. hk).

– I-5 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

4. RIGHT OF WITHDRAWAL

(a) Acceptance of the Offer tendered by the Independent Shareholders, as the case may be, shall be irrevocable and cannot be withdrawn, except in the circumstances set out in subparagraph (b) below.
(b) If the Offeror is unable to comply with the requirements set out in section 3 of this Appendix headed “Announcement” above, the Executive may require pursuant to Rule 19.2 of the Takeovers Code that the Independent Shareholders who have tendered acceptances to the Offer be granted a right of withdrawal on terms that are acceptable to the Executive until the requirements set out in Rule 19 of the Takeovers Code can be met.
(c) In such case, if an accepting Independent Shareholder withdraws his/her/its acceptance, the Offeror shall, as soon as possible but in any event within 10 days thereof, return by ordinary post or by hand and at his/her/its own risk, the relevant share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) lodged with the relevant Form(s) of Acceptance to the relevant Independent Shareholders.

5. SETTLEMENT OF THE OFFER

Provided that valid WHITE Form(s) of Acceptance, together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) are valid, complete and in good order and have been received by the Registrar no later than 4:00 p.m. on the Closing Date, a cheque for the amount due to each accepting Independent Shareholder in respect of the Offer Shares tendered under the Offer (less seller’s ad valorem stamp duty payable by him/her/it) will be despatched to the accepting Independent Shareholder by ordinary post at his/her/its own risk as soon as possible but in any event within 7 Business Days after the date of receipt of all relevant documents (receipt of which renders such acceptance complete and valid) by the Registrar.

Settlement of the consideration to which any accepting Independent Shareholder is entitled under the Offer will be paid by the Offeror in full in accordance with the terms of the Offer (save with respect of the payment of seller’s ad valorem stamp duty) set out in this Composite Document (including this Appendix I) and the accompanying Form(s) of Acceptance, without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Independent Shareholder.

– I-6 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

6. OVERSEAS SHAREHOLDERS

The making of the Offer to the Overseas Shareholders may be affected by the laws and regulations of the relevant jurisdictions in which they are residents. Overseas Shareholders should obtain appropriate legal advice regarding the implications of the Offer in the relevant jurisdictions or keep themselves informed about and observe any applicable legal or regulatory requirements. It is the responsibility of the Overseas Shareholders who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of all relevant jurisdictions in connection with the acceptance of the Offer (including but not limited to the obtaining of any governmental, exchange control or other consents and any registration or filing which may be required and the compliance with all other necessary formalities, regulatory and/or legal requirements and the payment of any transfer or other taxes). The Offeror, the Company, their respective ultimate beneficial owners and parties acting in concert, Platinum, Optima Capital, the Registrar or any of their respective directors, officers, advisers, associates, agents or any persons involved in the Offer shall be entitled to be fully indemnified and held harmless by the Overseas Shareholders for any taxes they may be required to pay.

7. TAX IMPLICATIONS

– I-7 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

8. GENERAL

(a) All communications, notices, Form(s) of Acceptance, certificates of Shares, transfer receipts and other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to settle the consideration payable under the Offer to be delivered by or sent to or from the Independent Shareholders will be delivered by or sent to or from them, or their designated agents, by ordinary post at their own risk, and none of the Company, the Offeror, and their respective ultimate beneficial owners and parties acting in concert with them, Platinum, Optima Capital, the Registrar or any of their respective directors, officers, advisers, associates, agents or any persons involved in the Offer accepts any liability for any loss or any other liabilities whatsoever which may arise as a result thereof.
(b) Acceptance of the Offer by any person or persons will be deemed to constitute a representation and a warranty by such person or persons to the Offeror and Platinum:
(i) that the Offer Shares tendered for acceptance under the Offer (together with all rights accruing or attaching to them as at the date of this Composite Document or subsequently being attached to them, including, without limitation, the rights to receive all future dividends and other distributions declared, made or paid, if any, by the Company, on or after the date of despatch of this Composite Document) are sold by such person or persons free from all Encumbrances; and
(ii) that if such Independent Shareholder accepting the Offer is an Overseas Shareholder, he/she has observed the laws of all relevant jurisdictions in connection therewith, obtained all requisite governmental, exchange control or other consents, complied with other necessary formalities or legal requirements and paid any transfer or other taxes due from him, her or it in connection with such acceptance in all relevant jurisdictions, that he, she or it has not taken or omitted to take any action which will, or which may result in the Offeror, Platinum or any other person acting or being in breach of the legal or regulatory requirements of any jurisdiction in connection with the Offer or his or her or its acceptance and he, she or it is permitted under all applicable laws to accept the Offer and any revision thereof, and that such acceptance is valid and binding in accordance with all applicable laws.
(c) Acceptance of the Offer by any nominee will be deemed to constitute a representation and a warranty by such nominee to the Offeror that the number of Offer Shares in respect of which it is indicated in the Form(s) of Acceptance is the aggregate number of Offer Shares held by such nominee for such beneficial owner who is accepting the Offer.

– I-8 –

FURTHER TERMS AND PROCEDURES OF ACCEPTANCE OF THE OFFERS

APPENDIX I

(d) The provisions set out in the accompanying Form(s) of Acceptance form part of the terms and conditions of the Offer.
(e) The accidental omission to despatch this Composite Document and/or the accompanying Form(s) of Acceptance or either of them to any person to whom the Offer are made shall not invalidate the Offer in any way.
(f) The Offer are, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong.
(g) Due execution of the Form(s) of Acceptance will constitute an authority to the Offeror and/or Platinum and/or such person or persons as any of them may direct to complete, amend and execute any document on behalf of the person or persons accepting the Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as it may direct, the Offer Shares in respect of which such person or persons has/have accepted the Offer.
(h) The Offer are made in accordance with the Takeovers Code.
(i) References to the Offer in this Composite Document and in the Form(s) of the Acceptance shall include any extension and/or revision thereof.
(j) The English text of this Composite Document and of the accompanying Form(s) of Acceptance shall prevail over their respective Chinese text for the purpose of interpretation.

– I-9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. FINANCIAL SUMMARY OF THE GROUP

The following is a summary of the audited consolidated financial information of the Group for the years ended 31 March 2015, 2016 and 2017 as extracted from the published annual financial statements of the Group for the relevant years.

The auditors of the Company for each of the three financial years ended 31 March 2015, 2016 and 2017, Deloitte, did not issue any qualified opinion on the financial statements of the Group for each of the three years ended 31 March 2015, 2016 and 2017.

For each of the three financial years ended 31 March 2015, 2016 and 2017, the Group had no exceptional or extraordinary items because of size, nature or incidence;

The Shares in respect of which the Offer is made is ordinary shares of HK$0.01 each in the issued share capital of the Company and they are to be acquired by the Offeor ex any dividend or other distribution (including the Special Dividend and the Distribution) which has been or may be declared before the date on which the Offer is made, i.e. the date of this Composite Document.

For the avoidance of doubt, the Offer Shares to be acquired under the Offer shall be fully paid, free from all Encumbrances and with all rights and benefits at any time accruing and attached to them, including the rights to receive all dividends and distributions declared, made or paid on or after the date on which the Offer is made, i.e., the date of this Composite Document.

RESULT Continuing operations Revenue (Loss) profit before taxation Taxation Profit (loss) for the year from continuing operations Discontinued operation Loss for the year from discontinued operation (Loss) profit for the year Attributable to: Owners of the Company Non-controlling interests	For the 2017 HK$’000 87,537 (1,036,417) (5,342) (1,041,759) (339) (1,042,098) (1,042,098) – (1,042,098)	year ended 31 2016 HK$’000 57,052 (1,928,594) 55,813 (1,872,781) (2,243) (1,875,024) (1,874,835) (189) (1,875,024)	March 2015 HK$’000 300,700 551,402 (64,345) 487,057 – 487,057 487,057 – 487,057

– II-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

ASSETS AND LIABILITIES Total assets Total liabilities Equity attributable to: Owners of the Company Non-controlling interests	As at 31 March 2017 2016 HK$’000 HK$’000 1,735,276 2,211,857 (586,427) (794,671) 1,148,849 1,417,186 1,148,849 1,414,925 – 2,261 1,148,849 1,417,186	2015 HK$’000 2,719,745 (391,010) 2,328,735 2,328,735 – 2,328,735

2. AUDITED FINANCIAL INFORMATION

The latest audited consolidated financial information of the Group for the year ended 31 March 2017 together with relevant notes to the consolidated financial statements of the Group has been extracted below.

C O N S O L I DAT E D S TAT E M E N T O F P RO F I T O R L O S S A N D OT H E R COMPREHENSIVE INCOME

For the year ended 31 March 2017

Notes Continuing operations Revenue 4 Cost of services Gross profit Net loss on investments at fair value through profit or loss Other income Other gains and losses 4 Administrative expenses Other expenses Finance costs 5 Impairment loss in respect of goodwill 11 Impairment loss in respect of intangible assets 13	2017 HK$’000 87,537 (24,133) 63,404 (67,852) 17,650 (311,731) (73,901) – (24,337) (535,054) (104,596)	2016 HK$’000 (Restated) 57,052 (9,786) 47,266 (1,509,211) 56,539 (378,675) (40,857) (80,234) (23,422) – –

– II-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes Loss before taxation 6 Taxation 7 Loss for the year from continuing operations Discontinued operation 8 Loss for the year from discontinued operation Loss and total comprehensive expense for the year attributable to: Owner of the Company Non-controlling interests Loss per share (HK cents per share) 10 From continuing and discontinued operations – Basic – Diluted From continuing operations – Basic – Diluted	2017 HK$’000 (1,036,417) (5,342) (1,041,759) (339) (1,042,098) (1,042,098) – (1,042,098) (6.73) (6.73) (6.73) (6.73)	2016 HK$’000 (Restated) (1,928,594) 55,813 (1,872,781) (2,243) (1,875,024) (1,874,835) (189) (1,875,024) (18.53) (18.53) (18.51) (18.51)

– II-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2017

Notes Non-current assets Property, plant and equipment Investment property Goodwill 11 Contingent consideration 12 Intangible assets 13 Available-for-sale investments Other assets Current assets Accounts receivable 14 Prepayments, deposits and other receivables Loans receivable Tax recoverable Investments at fair value through profit or loss 15 Cash and bank balances – Segregated accounts – House accounts Current liabilities Accounts payable 16 Other payables and accruals Bank borrowings 17 Bank overdrafts 17 Tax payables Net current assets Total assets less current liabilities	2017 HK$’000 4,210 410,000 16,391 – 7,244 – 10,046 447,891 698,057 2,242 – – 379,107 75,655 132,324 1,287,385 106,103 47,884 8,455 44,908 34,042 241,392 1,045,993 1,493,884	2016 HK$’000 594 – 551,445 67,934 135,973 358,218 8,956
		1,123,120
		425,684 4,654 7,000 5,187 406,355 158,729 81,128
		1,088,737
		192,302 16,474 80,000 66,286 2,500
		357,562
		731,175
		1,854,295

– II-4 –

APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

Notes Non-current liabilities Bank borrowings 17 Notes payable 18 Promissory notes 19 Deferred tax liabilities Net assets Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	2017 HK$’000 169,807 147,811 27,056 361 345,035 1,148,849 180,198 968,651 1,148,849 – 1,148,849	2016 HK$’000 – 147,073 260,010 30,026
		437,109
		1,417,186

		126,641 1,288,284
		1,414,925 2,261
		1,417,186

– II-5 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

NOTES:

1. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis, except for investment property and certain financial instruments that are measured at fair values at the end of each reporting period.

2. APPLICATION OF NEW AND AMENDMENTS TO HKFRSS

Amendments to HKFRSs that are mandatorily effective for the current year

The Group has applied the following amendments to HKFRSs issued by the HKICPA for the first time in the current year:

Amendments to HKFRS 10,	Investment entities: Applying the consolidation
HKFRS 12 and HKAS 28	exception
Amendments to HKFRS 11	Accounting for acquisitions of interests in joint
	operations
Amendments to HKAS 1	Disclosure initiative
Amendments to HKAS 16	Clarification of acceptable methods of depreciation and
and HKAS 38	amortisation
Amendments to HKAS 16	Agriculture: Bearer plants
and HKAS 41
Amendments to HKFRSs	Annual improvements to HKFRSs 2012 – 2014 cycle

The application of the amendments to HKFRSs in the current year has had no material impact on the Group’s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

– II-6 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. SEGMENT INFORMATION

The financial information reported to executive directors of the Company, being the chief operating decision markers, for the purpose of resources allocation and assessment of segment performance focuses on types of goods or services delivered or provided.

Specifically, the Group’s reportable and operating segments under HKFRS 8 are as follows:

the brokerage and other related activities segment represents new business line of provision of brokerage services, proprietary trading, securities margin financing services and futures and options contracts dealing services to clients commencing in November 2015;
the securities investment segment represents investment and trading activities in listed equity securities, warrants, convertible bonds and interest bearing notes;
the provision of finance segment represents provision of short-term loan financing activities, of which the management has been proactively looking for the potential borrowers during the year; and
the real estate segment represents trading properties, property investment and letting of properties.

The supply and procurement segment was discontinued in the current year. The segment information reported does not include any amounts for the discontinued operation, which are described with more details in note 8. Accordingly, the segment information for the year ended 31 March 2016 has been restated.

The following is an analysis of the Group’s revenue and results by operating and reportable segments:

For the year ended 31 March 2017

Brokerage and other related activities HK$’000 Continuing operations Segment revenue 83,705 Segment results (460,403) Unallocated other income Unallocated other gains and losses Unallocated expenses Finance costs Loss before taxation	Securities investment HK$’000 – (160,612)	Provision of finance HK$’000 – –	Real estate HK$’000 3,832 9,720	Total HK$’000 87,537

				(611,295) 12,584 (370,263) (43,106) (24,337)
				(1,036,417)

– II-7 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

For the year ended 31 March 2016 (Restated)

Continuing operations Segment revenue Segment results Unallocated other income Unallocated other gains and losses Unallocated expenses Finance costs Loss before taxation	Brokerage and other related activities HK$’000 36,040 (22,793)	Securities investment HK$’000 3,220 (1,499,931)	Provision of finance HK$’000 17,492 17,607	Real estate HK$’000 300 5,300	Total HK$’000 57,052

					(1,499,817) 50,140 (355,816) (99,679) (23,422)
					(1,928,594)

Geographical information

The Group’s continuing operations are carried out in Hong Kong.

The Group’s revenue from continuing operation from external customers and its noncurrent assets are located in Hong Kong.

Information about major customers

During the year ended 31 March 2017 and 2016, there was no customer that contributed over 10% of the total revenue of the Group.

– II-8 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

4. REVENUE, OTHER GAINS AND LOSSES

Revenue represents interest income from provision of finance and securities margin financing, dividend and interest income from securities investments, commission income from brokerage and related services and rental income during the year.

An analysis of revenue, other gains and losses is as follows:

Revenue Commission income from brokerage and related services Commission income from underwriting, sub-underwriting, placing and sub-placing Rental income Interest income from provision of finance and securities margin financing Dividend income on investment in listed equity securities Interest income on investment in convertible bonds Continuing operations Other gains and losses Impairment loss reserved (recognised) in respect of accounts receivable and gain on recovery of bad debts Impairment loss recognised in respect of other receivables Impairment loss recognised in respect of AFS investments Change in fair value of contingent consideration_(note 12) Change in fair value of investment property Loss on early settlement of promissory notes(note 19)_ (Loss) gain on disposal of property, plant and equipment Loss on disposal of AFS investments Net exchange gain 5. FINANCE COSTS	2017 HK$’000 20,106 6,737 3,832 56,862 – – 87,537 39,072 – (12,468) (67,934) 7,000 (41,428) (25) (235,750) (198) (311,731)	2016 HK$’000 5,821 4,255 300 43,456 2,604 616
		57,052

		(22,642) (233) (327,782) – – – 366 (28,400) 16
		(378,675)

Continuing operations Interests on: Notes payable_(note 18) Promissory notes(note 19)_ Borrowings and bank overdrafts Total borrowing costs	2017 HK$’000 8,238 4,067 12,032 24,337	2016 HK$’000 8,219 7,185 8,018
		23,422

– II-9 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

6. LOSS BEFORE TAXATION FROM CONTINUING OPERATIONS

Loss before taxation from continuing operations is arrived at after charging: Staff costs (including directors’ remuneration): Wages and salaries Retirement benefits contributions Equity-settled share option expense Total staff costs Auditor’s remuneration Depreciation of property, plant and equipment Amortisation of intangible assets (included in cost of sales) Minimum lease payments in respect of land and buildings Equity-settled share option expense for consultants (included in other expenses) 7. TAXATION Continuing operations Current tax: Hong Kong Profits Tax Over provision in prior years Deferred tax Current year	2017 HK$’000 18,798 678 – 19,476 2,813 1,111 24,133 12,051 – 2017 HK$’000 (34,564) (443) (35,007) 29,665 (5,342)	2016 HK$’000 13,067 528 1,988 15,583 2,835 188 9,786 3,957 80,234 2016 HK$’000 (3,053) – (3,053) 58,866 55,813

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for both years.

– II-10 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

8. DISCONTINUED OPERATION

During the year ended 31 March 2017, the Group entered into sale agreements to dispose of its 100% equity interest in Poly Resources (Asia) Limited and Poly Forestry International Limited (collectively the “Disposing Subsidiaries”) that carried out all of the Group’s supply and procurement operation at a consideration of HK$863,000. The disposal was completed on 29 September 2016, on which date the Group lost control of the Disposing Subsidiaries. There was no gain or loss resulted from the disposal since the net assets of the Disposing Subsidiaries are mainly bank balance and cash, of which amount is same as the consideration.

The loss for the year from the discontinued operation is set out below. The comparative figures in the consolidated statement of profit or loss and other comprehensive income has been restated to represent the supply and procurement operation as a discontinued operation.

	2017	2016
	HK$’000	HK$’000
Loss for the year	(339)	(2,243)

The results of the discontinued operation for the current and preceding years were as follows:

Other income and losses Administrative expenses Loss before taxation Taxation Loss for the year	2017 HK$’000 – (339) (339) – (339)	2016 HK$’000 662 (2,905) (2,243) – (2,243)

During the current and preceding years, the net operating cash flows contributed by supply and procurement operation to the Group are insignificant.

9. DIVIDEND

The Board does not recommend the payment of a dividend for the year ended 31 March 2017 and 2016.

Subsequent to the end of the reporting period, a special dividend of HK$0.03255 per ordinary share, in aggregate amount of approximately HK$612,867,000, has been proposed by the directors of the Company and approved in the special general meeting (“SGM”) on 28 April 2017. Details are set out in note 20(d).

– II-11 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

10. LOSS PER SHARE

From continuing and discontinued operations

The calculation of basic and diluted loss per share attributable to owners of the Company is based on the following data:

Loss for the purpose of basic and diluted loss per share (loss for the year attributable to owners of the Company) Number of shares Weighted average number of ordinary shares for the purpose of basic and diluted loss per share	2017 HK$’000 (1,042,098) 2017 ’000 15,476,230	2016 HK$’000 (1,874,835) 2016 ’000 10,115,275

From continuing operations

The calculation of the basic and diluted loss per share from continuing operations attributable to the owners of the Company is based on the following information:

Loss figures are calculated as follow: Loss for the year attributable to the owners of the Company Add: Loss for the year from discontinued operation Loss for the purpose of basic and diluted loss per share from continuing operations	2017 HK$’000 (1,042,098) 339 (1,041,759)	2016 HK$’000 (1,874,835) 2,243 (1,872,592)

The denominators used are the same as those detailed above for the basic and diluted loss per share.

From discontinued operation

Basic and diluted loss per share from the discontinued operation is HK0.002 (2016: HK0.022) cents per share, based on the loss for the year from discontinued operation of HK$339,000 (2015: HK$2,243,000) and the denominators detailed above for the basic and diluted loss per share.

The computation of diluted loss per share for the year ended 31 March 2016 and 2017 does not assume the exercise of the Company’s outstanding share options and warrants since their exercise would result in a decrease in loss per share.

– II-12 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

11. GOODWILL

GOODWILL
COST At 1 April 2015 Arising on acquisition of subsidiaries At 31 March 2016 and 2017 IMPAIRMENT At 1 April 2015 and 2016 Impairment loss recognised in the year At 31 March 2017 CARRYING VALUES At 31 March 2017 At 31 March 2016	HK$’000 – 551,445
	551,445
	– 535,054
	535,054
	16,391

	551,445

For the purposes of impairment testing, goodwill has been allocated to a group of cash generating units (CGU), comprising Skyway Securities Investment Limited (“Skyway Securities”) and its subsidiaries, Skyway Credit Service Limited (“Skyway Credit Service”) and Skyway Asset Management Limited and Skyway Futures Limited (“Skyway Futures”), representing “the brokerage and other related activities segment”, which is the lowest level within the Group at which the goodwill is monitored for internal management purposes.

The aggregate carrying amount of the CGU comprises goodwill of HK$551,445,000 (2016: HK$551,445,000), trading rights of HK$960,000 (2016: HK$960,000) and customers’ relationship of HK$6,284,000 (2016: HK$135,013,000) of which the impairment for trading rights and the customers’ relationship have been assessed individually as set out in note 13. The basis of the recoverable amount of the CGU and its major underlying assumptions are summarised below:

The recoverable amount of the CGU has been determined by the fair value less cost of disposal in respect of the above entities comprising the CGU. The fair value less cost of disposal was assessed by the management based on a business valuation performed by an independent professional qualified valuer using the income approach which uses cash flow projections covering a 5-year period and discount rate of 13.6% (2016: 13.5%), which is within level 3 fair value hierarchy. The cash flow projections has taken into account the deteriorating financial performance of the brokerage and other related activities due to the unfavourable changes in recent months and the actual net cash flows generating thereon worse than those estimated in the previous impairment assessment. Accordingly, the cash flow projection have been revised downwards. The cash flows beyond the 5-year period are extrapolated assuming 3% growth rate (2016: using a steady 3.5% growth rate). This growth rate is based on the expectation of long-term inflation in Hong Kong. The cash flows and discount rate reflect assumptions that market participants would use when pricing the CGU. Other key assumptions for the cash flow projections relate to the estimation of cash inflows/outflows which include estimated income generated from the CGU, such estimation is based on the past performance of the CGU and the expectation on the market development. The Subsequent events relating to the change of Shareholders and other corporate exercise have not been considered as those are not related to the CGU. As disclosed in note 20, these Subsequent events have not been completed at the end of the reporting period.

– II-13 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

For the purpose of impairment assessment, the fair value less cost of disposal of the CGU amounting to HK$23,635,000 has been determined by excluding the financial instruments held by the relevant entities within the CGU. By comparing the aforesaid aggregate carrying amount of the CGU with the fair value less cost of disposal of the CGU, the management determined that the recoverable amount of the CGU is estimated to be less than the aggregate carrying amounts of goodwill, trading rights and customers’ relationship and impairment losses of HK$535,054,000 (2016: nil) in respect of goodwill are recognised in profit or loss during the year ended 31 March 2017.

12. CONTINGENT CONSIDERATION

	2017	2016
	HK$’000	HK$’000
Profit guarantee	–	67,934

Profit guarantee represents the guarantee jointly and severally from Mr Lam Hoi Sze, Mr Ng Siu Fan, Ms. Lee Chau Man Ada, Mr. Lin Haimiao and Ms. Yiu Ka Fung Susan (collectively “Vendors”) to the Group that the average of two years’ aggregate audited net profits before tax of Skyway Securities and Skyway Futures for the two financial years ended 31 December 2015 and 31 December 2016 respectively shall not be less than HK$120,000,000 per financial year (the “Profit Guarantee”). In the event of breach of non-fulfilment of the Profit Guarantee, the Vendors shall pay the Group 10 times the shortfall between HK$120,000,000 and the average of the two years’ aggregate audited net profit before tax of Skyway Securities and Skyway Futures for the two financial years ended 31 December 2015 and 31 December 2016. The fair value of Profit Guarantee as at 31 March 2016 was estimated based on the valuation carried out by an independent professional valuer, Roma Appraisals Limited.

During the year ended 31 March 2017, the Profit Guarantee was fulfilled and no payment in respect of the Profit Guarantee was entitled to the Group. Accordingly, the Profit Guarantee has been derecognised and the decrease in the fair value is recognised in the profit or loss during the year ended 31 March 2017.

– II-14 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

13. INTANGIBLE ASSETS

COST At 1 April 2015 Acquired on acquisition of subsidiaries At 31 March 2016 and 2017 AMORTISATION AND IMPAIRMENT At 1 April 2015 Charge for the year At 31 March 2016 Charge for the year Impairment loss recognised in the year At 31 March 2017 CARRYING VALUES At 31 March 2017 At 31 March 2016	Trading rights HK$’000 – 960 960 – – – – – – 960 960	Customers relationship HK$’000 – 144,799 144,799 – 9,786 9,786 24,133 104,596 138,515 6,284 135,013	Total HK$’000 – 145,759
			145,759
			– 9,786
			9,786 24,133 104,596
			138,515
			7,244

			135,973

Trading rights represents rights that confer eligibility of the Group to trade on the Stock Exchange and The Hong Kong Futures Exchange Limited (“HKFE”). The trading rights have no foreseeable limit to period that the Group can use to generate net cash flows, accordingly, the trading rights are considered as having indefinite useful lives.

Customers relationship represents the customers’ networks of brokerage and related business. Amortisation for customers’ relationship with finite useful lives is recognised on a straight-line basis over its estimated useful lives of 6 years. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

In view that the cash flows generated from brokerage and other related activities are less than expected, the directors of the Company has carried out an impairment assessments of the trading rights and customers’ relationship at 31 March 2017. The management considered that there is no impairment on the trading rights based on their estimated recoverable amount. The recoverable amount of the customers’ relationship is determined based on the fair value less cost of disposal. The fair value less cost of disposal was assessed by the management with reference to the valuation of the customers’ relationship performed by an independent professional qualified valuer using the income approach which is based on the cash flows generated by the customers’ relationship at a discount rate of 13.6% (2016: nil). The fair value measurement is classified as Level 3. As the carrying amount of customers’ relationship exceeded its recoverable amount, the Group has recognised an impairment of HK$104,596,000 (2016: nil) in profit or loss.

The trading rights and customers’ relationship also formed part of the assets included in the CGU for which goodwill impairment is assessed and details are set out in note 11.

– II-15 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

14. ACCOUNTS RECEIVABLE

Accounts receivable arising from the ordinary course of business of securities brokerage services dealing in securities transactions: – Clearing house – Cash clients – Margin clients – A broker Accounts receivable arising from the ordinary course of business of dealing in futures and options contracts: – HKFE Clearing Corporation Limited (“HKCC”) – A broker	2017 HK$’000 13,572 23,313 647,879 2,007 686,771 5,206 6,080 698,057	2016 HK$’000 10,037 31,383 373,098 –
		414,518
		678 10,488
		425,684

Accounts receivable arising from the business of dealing in securities

The Group seeks to maintain tight control over its outstanding accounts receivable and has procedures and policies to assess its clients’ credit quality and defines credit limits for each client. All client acceptances and credit limit are approved by designated approvers according to the clients’ credit worthiness.

The normal settlement terms of accounts receivable from clients and clearing house, except for accounts receivable due from margin clients, arising from the ordinary course of business of securities brokerage services are two trading days after the trade date.

Accounts receivable due from cash clients are secured by clients’ securities, which are publicly traded equity securities listed in Hong Kong. The fair values of the securities as at 31 March 2017 approximate HK$812,078,000 (2016: HK$277,436,000). As at 31 March 2017, 88% (2016: 86%) of the balance were secured by sufficient collateral on an individual basis. Included in the accounts receivable from cash clients are debtors with a carrying amount of approximately HK$16,587,000 (2016: HK$23,133,000) as at 31 March 2017, which are past due at the end of reporting period but which the directors of the Company consider not to be impaired as there has not been a significant change in credit quality and a substantial portion of the carrying amount is subsequently settled. The accounts receivable from cash clients with a carrying amount of approximately HK$6,726,000 (2016: HK$8,250,000) are neither past due nor impaired and the directors of the Company are of the opinion that the amount are recoverable. Cash client receivables which were past due but not impaired bear interest at interest rates by reference to Hong Kong prime rate plus certain basis points based on management’s discretion.

– II-16 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Accounts receivable due from margin clients are repayable on demand and carry interest at Hong Kong Prime Rate plus 4% to 8% (2016: 4% to 8%) per annum during the year ended 31 March 2017. They are generally included in “Neither past due nor impaired” category. The fair values of the pledged securities as at 31 March 2017 approximate HK$3,366,705,000 (2016: HK$2,000,772,000). Securities are assigned with specific margin ratios for calculating their margin values. Additional funds or collateral are required if the amount of accounts receivable outstanding exceeds the eligible margin value of securities deposited. As at 31 March 2017, 92% (2016: 85%) of the balance were secured by sufficient collateral on an individual basis. Management has assessed the market value of the pledged securities of each individual customer that has margin shortfall as at the year end, and considered that an impairment of Nil (2016: HK$22,523,000) is necessary. The collateral held can be repledged by the Group up to 140% of the margin receivable amounts in the search of short-term financing, if necessary. The amount of collateral being repledged by the Group as at 31 March 2017 could be referred to note 17. The corresponding collateral held can be sold at the Group’s discretion to settle any outstanding amounts owed by the margin clients.

In addition, the Group has a policy for determining the allowance for impairment of accounts receivable without sufficient collateral based on the evaluation of collectability and aging analysis of accounts and on management’s judgement including the creditworthiness, collateral and the past collection history of each client. In determining the recoverability of the accounts receivable, the Group considers any change in the credit quality of the accounts receivable from the date the credit was initially granted up to the reporting date and the fair values of the collateral held.

Movement in the allowances for impairment loss on accounts receivable are as follows:

Balance at 1 April 2015 Impairment loss recognised during the year Balance at 31 March 2016 Impairment loss reversed during the year Balance at 31 March 2017	Cash clients HK$’000 – 119 119 (119) –	Margin clients HK$’000 – 22,523 22,523 (22,523) –	Total HK$’000 – 22,642 22,642 (22,642) –

Subsequent to the end of the reporting period, the Group received settlements of all previously impaired account receivables of HK$39,072,000, of which HK$16,430,000 were impaired before the acquisition of Skyway Securities and Skyway Futures. Accordingly, a reversal of allowance for impairment loss on account receivables amounting to HK$22,642,000 was recognised in the profit or loss while a gain on recovery of bad debts amounting to HK$16,430,000 was recognised in profit or loss.

– II-17 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

In respect of accounts receivable from cash clients which are past due but not impaired at the end of reporting period, the ageing analysis is summarised as follows:

Less than one month More than one month and within three months More than three months Total	2017 HK$’000 1,763 1,619 13,205 16,587	2016 HK$’000 2,376 7,031 13,726
		23,133

The Group offset certain accounts receivable and accounts payable when the Group currently has a legally enforceable right to set off the balances; and intends to settles on a net basis, or to realise the balances simultaneously.

Accounts receivable arising from the business of dealing in futures and options contracts

Under the settlement arrangement with HKCC, all open positions held at HKCC are treated as if they were closed out and re-opened at the relevant closing quotation as determined by HKCC. Profits or losses arising from this “mark-to-market” settlement arrangement are included in accounts receivables with HKCC.

In accordance with the agreement with the broker, mark-to-market profits or losses are treated as if they were settled and are included in accounts receivables with a broker.

The accounts receivable are neither past due nor impaired.

Accounts receivable from HKCC and brokers represent transactions arising from the business of dealing.

15. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Held for trading: Equity securities listed in Hong Kong Designated as at FVTPL: Convertible bonds	2017 HK$’000 379,107 – 379,107	2016 HK$’000 406,355 –
		406,355

– II-18 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The fair values of the listed equity securities investments were determined based on the quoted market closing prices available on the Stock Exchange. Details of the Group’s investments at FVTPL are as follows:

Stock code Company name % of shareholding in the respective investee as at 31 March 2017 139 China Soft Power Technology Holdings Limited (“CSPT”) 11.8% 572 Future World Financial Holdings Limited (“FW”) 4.9% 1004 China Smarter Energy Group Holdings Limited – 1282 China Goldjoy Group Limited – 1370 Hengshi Mining Investments Limited – 263 GT Holdings Limited –	Net (loss) gain on investments at FVTPL HK$’000 (163,653) 104,830 574 (429) 4,210 (916) (55,384)	Fair value as at 31 March 2017 HK$’000 189,692 189,415 – – – – 379,107	Fair value as at 31 March 2016 HK$’000 369,056 36,173 – 1,126 – –
			406,355

In addition, during the year ended 31 March 2017, one of the investees of the Group declared distribution in specie of the convertible notes issued by Up Energy Development Group Limited (“Up Energy”), a company listed in the Stock Exchange (the “Distribution”) to all the shareholders of such investee. Prior to the Distribution, the investee held principal amount of HK$230 million of the convertible notes. Prior to the Distribution, the investee held principal amount of HK$230 million of convertible notes. The Distribution was completed on 25 April 2016. The Group designated the entire convertible notes received from the Distribution as financial assets designated at fair value through profit and loss at initial recognition. The fair value of the convertible notes of HK$12,468,000, with principal amount of approximately HK$33 million held by the Group, was determined by reference to a valuation carried out on the distribution date by an independent qualified valuer, Peak Vision Appraisals Limited, which is not connected with the Group. Subsequent to the Distribution, Up Energy received winding up petitions filed by its creditor and currently under liquidation and second delisting stage under Practice Note 17 to the Listing Rules. Accordingly, the fair value of convertible notes issued by Up Energy is negligible at 31 March 2017.

– II-19 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

16. ACCOUNTS PAYABLE

Trade payables arising from supply and procurement business Accounts payable arising from the ordinary course of business of securities brokerage services and dealing in futures and options contracts: – Cash clients – Margin clients – Clearing house	2017 HK$’000 – 65,045 41,058 – 106,103	2016 HK$’000 857 74,508 113,614 3,323
		192,302

Trade payables arising from supply and procurement business

Trade payables are non-interest bearing and are normally settled on 60 days term. An aged analysis of trade payables presented based on invoice date, is as follows:

			2017	2016
			HK$’000	HK$’000
Over	180	days	–	857

Accounts payable arising from the business of dealing in securities

The accounts payable balances arising from the ordinary course of business of securities brokerage services are normally settled in two trading days after the trade date except for the money held on behalf of clients at the segregated bank accounts which are repayable on demand. No aging analysis is disclosed as, in the opinion of directors of the Company, an aging analysis does not give additional value in view of the nature of this business.

Accounts payable arising from the business of dealing in futures and options contracts

Settlement arrangements with clients follow the same settlement mechanism with HKCC or a broker as disclosed in note 14 and profits or losses arising from mark-to-market settlement arrangement were included in accounts payables with clients.

Accounts payable to clients are non-interest bearing. The settlement terms of accounts payable are one day after trade day. No aging analysis is disclosed as, in the opinion of directors of the Company, an aging analysis does not give addition value in view of the nature of this business.

– II-20 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

17. BANK BORROWINGS AND BANK OVERDRAFTS

Secured bank loans Mortgaged bank loans The carrying amounts of the above borrowings are repayable: Within one year Within a period of more than one year but not exceeding two years Within a period of more than two years but not exceeding five years With a period of more than five years Less: Amount due within one year shown under current liabilities Amount shown under non-current liabilities	2017 HK$’000 638 177,624 178,262 8,455 8,143 25,800 135,864 178,262 (8,455) 169,807	2016 HK$’000 80,000 – 80,000 80,000 – – – 80,000 (80,000) –

Bank borrowings and overdrafts are secured by marketable securities and investment property. The mortgaged bank loans are also guaranteed by a substantial shareholder. Bank borrowings and overdrafts carry variable interest rates ranging from 2.3% to 5% (2016: 2.3% to 4%) per annum.

18. NOTES PAYABLE

On 8 November 2012, the Company entered into a placing agreement with a placing agent (the “Placing Agent”), pursuant to which the Company agreed to place, through the Placing Agent, on a best effort basis, the notes up to an aggregate principal amount of HK$100,000,000 to be issued by the Company in the denomination of HK$10,000,000 each to independent third parties (the “Placing”). Details of the Placing were set out in the Company’s announcement dated 8 November 2012. The Placing was completed and the Company had issued placing notes in the aggregate principal amount of HK$100,000,000. The placing notes carry interest at 5% per annum and are to be redeemed on the seventh anniversary from the respective issue dates of the placing notes.

In 2013, the Company further issued notes in the aggregate principal amount of HK$50,000,000 to independent third parties. The notes carry interest at 5% per annum and are to be redeemed on the seventh anniversary from the respective issue dates of the notes.

As at 31 March 2017, the aggregate principal amount of the notes payable was HK$150,000,000 (2016: HK$150,000,000).

– II-21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The movement of the notes payable for the years ended 31 March 2017 and 2016 are set out

below:

At the beginning of the year Interest charged at effective interest rate from 5% to 5.91% (2016: 5% to 5.91%) per annum (note 5) Interest payable At the end of the year	2017 HK$’000 147,073 8,238 (7,500) 147,811	2016 HK$’000 146,375 8,219 (7,521) 147,073

19. PROMISSORY NOTES

On 7 May 2015 and 11 May 2015, the Company entered the sale and purchase agreement with Vendors in relation to acquisitions of Skyway Securities and Skyway Futures, pursuant to which the Company agreed to issue an unsecured 3 years promissory note with total face value of HK$550,000,000 on the completion date as part of the consideration for the acquisitions. The promissory notes bear interest rate of 2.5% per annum and will be redeemed on the third anniversary from the issue date. The Company might repay all or part of the principal amount of the promissory notes at any time without penalty provided that the Company shall have given not less than one business day notice to the promissory note holder. The early repayment option was not closely related to the host contract and the fair value determined as negligible at 4 November 2015 and 31 March 2016 by an independent professional valuer. The fair values of promissory notes were in aggregation of HK$520,204,000 at 4 November 2015 based on the valuation carried out by an independent professional valuer.

On 3 May 2016, the Company entered into the subscription agreement with Capital Union Inc., an existing holder of promissory notes, pursuant to which Capital Union Inc. has conditionally agreed to subscribe for and the Company has conditionally agreed to allot and issue 1,450,000,000 new shares at the subscription price of HK$0.18 per subscription share. There was no net proceeds from the subscription as the subscription was settled by way of set off against the outstanding promissory notes. The transaction was completed on 13 May 2016. The early settlement of the promissory notes has resulted in a loss of HK$41,428,000, being the difference between the carrying amount of the promissory notes amounting to HK$260,172,000 and the fair value of the shares amounting to HK$301,600,000 based on the market price of the Company’s share on 13 May 2016, recognised in the profit or loss for the year ended 31 March 2017.

In addition, upon the acquisition of subsidiaries, the Company has issued promissory notes in the principal amount of HK$29,000,000 as a part of the consideration during the current year. The promissory notes bear interest rate of 2% per annum and will be redeemed on the second anniversary from the issue date. The Company may at its option early repay the promissory notes with outstanding interest accrued thereon in whole or in part in integral multiples of principal amount of HK$1 million by giving a prior ten business day’s written notice to the bondholder. The early repayment option is not closely related to the host contract and the fair value is determined as negligible by an independent professional valuer. The fair value of promissory notes is HK$25,885,000 at 15 July 2016 and the effective interest rate ranges from 7.84% to 8.08% per annum based on the valuation carried out by an independent professional valuer.

– II-22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

As at 31 March 2017, the aggregate principal amount of promissory notes was HK$29,000,000 (31 March 2016: HK$285,000,000).

The movement of the promissory notes are set out below:

On 4 November 2015 Early settlement of promissory notes Interest charged at effective interest rate at 6.3% Interest paid At 31 March 2016 Early settlement of promissory notes Issue of promissory note Interest charged at effective interest rates Interest paid At 31 March 2017	HK$’000 520,204 (265,000) 7,185 (2,379) 260,010 (260,172) 25,885 4,067 (2,734) 27,056

20. EVENTS AFTER THE REPORTING PERIOD

(a) Group reorganisation

As disclosed in the Company’s announcement dated 7 March 2017 and circular dated 10 April 2017, on 7 March 2017, two of the Company’s substantial shareholder, Mr. Lam Hoi Sze and Ms. Ai Qing (the “Selling Shareholders”), entered into the sale and purchase agreement with CMBC International Investment Limited (the “Offeror”), an indirect whollyowned subsidiary of China Minsheng Banking Corporation Limited whose shares are listed on the Stock Exchange, and Brilliant Decent Limited (“Brilliant Decent”), an indirect owned subsidiary of China Huarong Asset Management Co., Limited whose shares are listed on the Stock Exchange, pursuant to which the Mr. Lam Hoi Sze conditionally agreed to sell 2,527,200,000 sales of the Company to the Offeror and Ms. Ai Qing conditionally agreed to sell 900,000,000 sales of the Company to Brilliant Decent, both at the price of HK$0.06 per share. The shares selling by the Selling Shareholders represent approximately 19% of the shares in issue at 31 March 2017.

In addition, on 7 March 2017, the Company, the Offeror and Brilliant Decent entered into a subscription agreement that the Company agreed to issue 26,950,000,000 new ordinary shares of the Company, at the price of HK$0.032 per share for an aggregate consideration of HK$862,400,000, of which 25,000,000,000 new shares will be subscribed by the Offeror and 1,950,000,000 new shares will be subscribed by Brilliant Decent (the “Subscription”). The Subscription is subject to the fulfillment of the agreed conditions, including but not limited to, the striking off or disposal of the Group companies other than the three licensed corporations comprising Skyway Securities and Skyway Futures (the “Remaining Group”), archiving certain financial targets by the Group and obtaining approval from the Stock Exchange, SFC and independent shareholders of the Company at the special general meeting. Accordingly, the Group does not consider that the operations other than the Remaining Group to be discontinued at 31 March 2017.

– II-23 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Upon the completion of the above transactions, the Offeror will be interested in approximately 61.21% of the enlarged issued shares capital of the Company and will become the controlling shareholder of the Company. The transactions were approved in the SGM on 28 April 2017 and completed on 31 May 2017.

(b) Disposal of Sky Eagle and Metro Victor

On 28 November 2016 and 7 March 2017, Gold Mission, entered into the sale and purchase agreement and a supplemental agreement with Celestial Lodge Limited, a company wholly owned by CSPT who is also a substantial shareholder of the Company, respectively, in relation to the sale of one share in the share capital of the Sky Eagle (“CSPT Disposal”), representing 100% of the entire issued share capital of Sky Eagle and a loan amounting to approximately HK$181,000,000 at cash consideration of HK$227,000,000 of which HK$22,000,000 will be paid as deposit. The only significant asset of Sky Eagle and its subsidiary, Metro Victor is the investment property. The CSPT Disposal is subject to the fulfillment of the agreed conditions, including but not limited to obtaining approval from the Stock Exchange and independent shareholders of the Company at the SGM. Details are set out in the Company’s announcements dated on 28 November 2016 and 7 March 2017 and circular dated 10 April 2017.

At 31 March 2017, none of the conditions of the CSPT Disposal are fulfilled nor approved in the SGM. Accordingly, the Group continues to classify the property as investment property in the consolidated statement of financial position as at 31 March 2017. The CSPT Disposal was approved in the SGM on 28 April 2017 and completed in 9 May 2017.

(c) Distribution in Specie in listed securities

As disclosed in the Company’s announcement dated 7 March 2017 and 28 April 2017 and circular dated 10 April 2017, the Group proposed and distributed in specie of all the shares of CSPT and FW held by the Group (the “Distribution”) to the shareholders whose names are registered on the register of members of the Company on 10 May 2017. As at 31 March 2017, the Group held 1,215,971,647 shares of CSPT and 315,692,000 shares of FW with carrying amounts of approximately HK$189,692,000 and HK$189,415,000. The Distribution was completed on 26 May 2017.

(d) Special Cash Dividend

As disclosed in the Company’s announcements dated 7 March 2017 and 28 April 2017 and circular dated 10 April 2017, the Group proposed and distributed a special dividend of HK$0.03255 per share to be paid in cash to the shareholders whose names are registered on the register of members of the Company on 10 May 2017, subject to the fulfillment of the conditions precedent set out in the circular dated 10 April 2017. The special dividend in aggregate amount of approximately HK$612,867,000 was paid on 24 May 2017.

(e) Exercise of share options

In April 2017, all of the outstanding share options at 31 March 2017 were exercised by the option holders. Upon the exercise of these share options, 808,943,000 new ordinary shares of the Company were issued and the net proceeds from the exercise of share options was approximately HK$187,818,000.

– II-24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. MATERIAL CHANGE

The Directors confirm that there had been no material change in the financial or trading position or outlook of the Group since 31 March 2017, being the date to which the latest published audited financial statements of the Group were made up, and up to the Latest Practicable Date, save for the events subsequent to 31 March 2017 as disclosed in the annual results announcement of the Company for the year ended 31 March 2017 dated 1 June 2017 which include (i) the exercise of all of the outstanding 808,943,000 share options for aggregate net proceeds of HK$187,818,000 in April 2017; (ii) the completion of the CSPT Disposal on 9 May 2017; (iii) the completion of the Distribution on 26 May 2017; (iv) the payment of the Special Dividend on 24 May 2017; and (v) the completion of the Subscription on 31 May 2017.

4. INDEBTEDNESS

As at the close of business on 30 April 2017, being the latest practicable date for the purpose of preparing this indebtedness statement prior to the printing of this circular, the total indebtedness of the Group is as follows:

Borrowings

As at the close of business on 30 April 2017, the Group had total borrowings of approximately HK$394.7 million, which include unguaranteed and unsecured notes with carrying amount of HK$147.9 million (the nominal value is HK$150.0 million carried at 5% per annum and will mature in 2019 and 2020), unguaranteed and unsecured promissory notes with carrying amount of HK$27.2 million (the aggregate principal amount is HK$29.0 million carried at 2% per annum and will mature in 2018), guaranteed and secured bank overdrafts of HK$42.6 million and guaranteed mortgaged bank loans of HK$177.0 million. The bank overdrafts are secured by marketable securities and a property. Mortgaged bank loans are guaranteed by a substantial Shareholder.

– II-25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Financial guarantees

As at the close of business on 30 April 2017, the Company had a corporate guarantee to a bank in respect of a banking facility granted to its subsidiary.

Facilities

As at the close of business in 30 April 2017, the Group had an aggregate available bank facilities of approximately HK$535.0 million, in which approximately HK$42.6 million was utilized.

Disclaimer

Save as aforesaid, apart from intra-group and normal trade and other payables, the Group did not have any outstanding bank overdrafts, loans, debt securities, borrowings or other similar indebtedness, liabilities under acceptances and acceptance credits, debentures, mortgages, charges, finance lease, hire purchases commitments, which were either guaranteed, unguaranteed, secured or unsecured, guarantees or other material contingent liabilities at the close of business on 30 April 2017.

To the best knowledge of the Directors, having made all reasonable enquires there has been no material change in indebtedness or contingent liabilities of the Group since 30 April 2017 and up to the Latest Practicable Date.

– II-26 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

1. RESPONSIBILITY STATEMENT

Mr. Lam accepts full responsibility for the accuracy of the information contained in this Composite Document (other than the information relating to the Offeror, China Huarong, their respective associates and parties acting in concert with them) and confirms having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in this Composite Document (other than the opinions expressed by the directors of the Offeror) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement in this Composite Document misleading.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than the information relating to the Offeror, China Huarong, their respective associates and parties acting in concert with them (excluding for this purpose of the Group)) and confirm having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than the opinions expressed by the directors of the Offeror) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document the omission of which would make any statement in this Composite Document misleading.

2. SHARE CAPITAL

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

Authorised HK$ 100,000,000,000 Shares 1,000,000,000.00 Issued and fully paid 45,778,757,729 Shares 457,787,577.29

The Company had no outstanding options, derivatives, warrants or securities which are convertible or exchangeable into Shares as at the Latest Practicable Date.

All Shares in issue rank pari passu in all respects with each other including rights to dividends, voting and return of capital. Save for (1) the 26,950,000,000 Subscription Shares issued and allotted in accordance with the Subscription Agreement, and (2) the 803,943,000 new Shares issued and allotted upon exercise of Options, the Company has not issued any Shares since 31 March 2017, the date to which the latest audited financial statements of the Company were made up.

– III-1 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

3. DISCLOSURE OF INTERESTS

(a) Interests in the Offeror

As at the Latest Practicable Date, none of the Company nor any of its Directors had any interest in the equity share capital or any convertible securities, warrants, options or derivatives of the Offeror, and no such person (including the Company) had dealt in the equity share capital or any convertible securities, warrants, options or derivatives of the Offeror during the Relevant Period.

(b) Directors’ interests in the Shares

As at the Latest Practicable Date, save as disclosed below, none of the Directors had any interests in the Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company.

			Percentage of
		Total number of	interest in the
Name of Director	Nature of Interest	shares held	Offeror
Ms. Lin Yuehe	Beneficial Owner	20,000	0.001%
		(Long position)

(c) Other interests

As at the Latest Practicable Date:

(i) no Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company was owned or controlled by a subsidiary of the Company or by a pension fund (if any) of any member of the Group or by an adviser to the Company as specified in class (2) of the definition of associate under the Takeovers Code (including the Independent Financial Adviser);
(ii) there were no Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company which the Company and any Directors had borrowed or lent.
(iii) no person who owned or controlled any Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company had irrevocably committed himself/herself to accept or not to accept the Offer.

– III-2 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

(iv) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code.
(v) no Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options or derivatives of Company were managed on a discretionary basis by fund managers connected with the Company.
(vi) save for that Ms. Lin Yuehe holds 20,000 Shares, none of the Directors had any interests in any Shares, convertible securities, warrants, options or other derivatives of the Company and Ms. Lin Yuehe did not intend, in respect of her own beneficial shareholdings, to accept the Offer.

4. DEALING IN SECURITIES OF THE COMPANY

(a) During the Relevant Period, none of the Directors had dealt in any Shares or other securities of the Company carrying voting rights or convertible securities, warrants, options or derivatives of the Company.
(b) During the Relevant Period,
(i) the Company and the Directors did not deal in any interest in the equity share capital or any convertible securities, warrants, options and derivatives of the Offeror;
(ii) none of the subsidiaries of the Company or a pension fund (if any) of any member of the Group or an adviser to the Company as specified in class (2) of the definition of associate under the Takeovers Code (including the Independent Financial Adviser) had dealt in any interest in the Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company;
(iii) no person, with whom the Company or any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of associate under the Takeovers Code has an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code had dealt in the Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company;
(iv) no fund managers connected with the Company had dealt in the Shares or other securities of the Company carrying voting rights or any convertible securities, warrants, options and derivatives of the Company.

– III-3 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

5. LITIGATION

As at the Latest Practicable Date, none of the Company nor any of its subsidiaries was engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against the Company or any of its subsidiaries.

6. MATERIAL CONTRACTS

The following contracts, not being contracts entered into in ordinary course of business of the Group, have been entered into by the members of the Group within two years preceding the date of the MOU Announcement of the Company dated 16 December 2016 up to the Latest Practicable Date which are, or maybe, material:

the conditional sale and purchase agreement dated 7 May 2015 entered into between the Company and the vendors in relation to the sale and purchase of the shares in Skyway Securities Investment Limited and Skyway Futures Limited and the shareholders’ loan, representing the 81% shareholding of the issued share capital of each of Skyway Securities Investment Limited and Skyway Futures Limited in consideration of 2,106,000,000 consideration Shares are promissory notes in the principal amount of HK$445,500,000.
the conditional sale and purchase agreement dated 11 May 2015 entered into between the Company and Yiu Ka Fung Susan in relation to the sale and purchase of the shares in Skyway Securities Investment Limited and Skyway Futures Limited and the shareholders’ loan, representing the 19% shareholding of the issued share capital of each of Skyway Securities Investment Limited and Skyway Futures Limited in the consideration of 484,000,000 consideration Shares and promissory notes in the principal amount of HK$104,500,000.
the share subscription agreement dated 2 July 2015 made between Freewill Holdings Limited and Ultron Prime Limited in relation to the subscription of 80,000,000 Shares in Freewill Holdings Limited at consideration of HK440,000,000.
an agreement dated 15 September 2015 entered into between Joint Global Limited, Mission Investments Holdings Limited and the other investee shareholders in relation to the exchange of shares in HEC Capital Limited and shares in Joint Global Limited with no additional consideration paid or received for the swap.
the sale and purchase agreement dated 4 March 2016 and entered into between Central Wealth Financial Group Limited (now known as “Future World Financial Holdings Limited”) and Gold Mission Limited for the sale and purchase of the share in Sky Eagle Global Limited and the sale loan in the consideration of cash consideration of HK$7,000,000, HK$1,300,000,000 by consideration Shares and the remaining balance of HK$29,000,000 by promissory notes in the principal amount of HK$29,000,000.

– III-4 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

the conditional placing agreement entered into between the Company and Skyway Securities Investment Limited dated 3 May 2016 in relation to placing of up to 2,550,000,000 placing shares at the placing price of HK$0.18 per placing Share in a best effort basis and subsequently terminated on 31 July 2016.
the conditional agreement dated 3 May 2016 and entered into between the Company and Capital Union Inc., in respect of the subscription of 1,450,000,000 new shares of the Company at consideration of HK$261,000,000 settle by way of set off against the total outstanding principal amount of the promissory notes of HK$285,000,000.
the CSPT Disposal Agreement and the CSPT Supplemental Agreement.
the Subscription Agreement.

7. EXPERT AND CONSENT

The following are qualifications of expert who has given opinion, letter or advice which are contained in this Composite Document:

Name

Qualification

Optima Capital a licensed corporation to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, the expert named above did not have any shareholding in any member of the Group nor any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, or had any interest, either directly or indirectly, in any assets which had been, since 31 March 2017 (the date to which the latest published audited financial statements of the Company were made up), 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.

The expert named above has given and has not withdrawn its written consent to the issue of this Composite Document with copy of its letter and the references to its name included herein in the form and context in which they are respectively included.

– III-5 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

8. ADDITIONAL DISCLOSURE OF INTERESTS AND DEALINGS IN SECURITIES

(a) As at the Latest Practicable Date, no benefit (other than statutory compensation) had been given or would be given to any Directors as compensation for loss of office or otherwise in connection with the Offer.
(b) As at the Latest Practicable Date, there was no agreement or arrangement between any of the Directors and any other person which was conditional or dependent on the outcome of the Offer or otherwise connected with the Offer.
(c) As at the Latest Practicable Date, there was no material contract entered into by the Offeror or any party acting in concert with it in which any Director had a material personal interest.

9. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, save as Mr. Wang Haixiong (“Mr. Wang”), none of the Directors had any service contracts with the Company or any of its subsidiaries or associated companies in force which (i) (including both continuous and fixed term contracts) have been entered into or amended within 6 months preceding the date of the Joint Announcement; (ii) are continuous contracts with a notice period of 12 months or more; or (iii) are fixed term contracts with more than 12 months to run irrespective of the notice period.

The details of Mr. Wang’s service contract are as follows:

Pursuant to the director’s service agreement between the Company and Mr. Wang, he has been appointed with effect from 22 July 2016 and will continue until it is terminated in accordance with the terms of the aforesaid service agreement. The directorship of Mr. Wang will be subject to retirement by rotation and reelection pursuant to the Company’s Bye-Laws. Mr. Wang is entitled to receive a director’s remuneration of HK$80,000 per month on a 13 months basis per year which has been approved by the Remuneration Committee based on his qualifications, experience, level of responsibilities undertaken, contribution to the Company and prevailing market conditions. Mr. Wang will be eligible for discretionary bonus each year and might be entitled to be granted share options of the Company and shares under the share award scheme of the Company. The director’s remuneration of Mr. Wang is subject to annual review by the Remuneration Committee and the Board.

– III-6 –

GENERAL INFORMATION OF THE GROUP

APPENDIX III

10. MISCELLANEOUS

(a) The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
(b) The principal place of business of the Company in Hong Kong is located at Units 6601A and 6607-6608, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong.
(c) The company secretary of the Company is Mr. Ng Kwok Leung.
(d) The branch share registrar of the Company in Hong Kong is Tricor Tengis Limited situated at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(e) The registered office of Optima Capital is at Suite 1501, 15th floor, Jardine House, 1 Connaught Place, Central, Hong Kong.
(f) The English text of this Composite Document and the accompanying Form(s) of Acceptance and Transfer shall prevail over their respective Chinese text for the purpose of interpretation.

– III-7 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

1. RESPONSIBILITY STATEMENT

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

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

2. MARKET PRICES

(a) The highest and lowest closing prices of the Shares as quoted on the Stock Exchange during the Relevant Period were HK$0.520 per Share on both 31 May 2017 and 1 June 2017 and HK$0.152 per Share on 9 November 2016, respectively.
(b) The table below sets out the closing prices of the Shares as quoted on the Stock Exchange on the last trading day of each of the calendar months during the Relevant Period on which trading of the Shares took place:

	Closing Price
Date	of Shares
	(HK$)
30 June 2016	HK$0.2340
28 July 2016	HK$0.2750
31 August 2016	HK$0.2190
30 September 2016	HK$0.2079
31 October 2016	HK$0.1710
30 November 2016	HK$0.1770
30 December 2016	HK$0.2050

– IV-1 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

	Closing Price
Date	of Shares
	(HK$)
27 January 2017	HK$0.190
28 February 2017	HK$0.255
7 March 2017 (Last Trading Day)	HK$0.315
31 March 2017	HK$0.335
28 April 2017	HK$0.405
31 May 2017	HK$0.520
2 June 2017 (Latest Practicable Date)	HK$0.490

(c) The closing price of the Shares on the Stock Exchange on the last trading day prior to the suspension of trading in the Shares pending the publication of the MOU Announcement was HK$0.184.
(d) The closing price of the Shares on the Stock Exchange on the Last Trading Day was HK$0.315.
(e) The closing price of the Shares on the Stock Exchange on the Latest Practicable Date was HK$0.490.

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, save as disclosed below, none of the Offeror, the directors of the Offeror, CMBCI, nor any person acting in concert with any of them, owns or controls any Shares, convertible securities, warrants, options or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in respect of any Shares:

		Number of	Percentage of
Name of		Shares	holding
Shareholders	Capacity	Long Position	Long Position
China Minsheng	Interest of controlled corporation	27,527,200,000	60.13
CMBCI	Interest of controlled corporation	27,527,200,000	60.13

– IV-2 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

		Number of	Percentage of
Name of		Shares	holding
Shareholders	Capacity	Long Position	Long Position
CMBC International	Interest of controlled corporation	27,527,200,000	60.13
Investment (HK)
Limited
The Offeror	Beneficial Owner	27,527,200,000	60.13
China Huarong Asset	Interest of controlled corporation	2,850,000,000	6.23
Management Co.,
Limited
China Huarong	Interest of controlled corporation	2,850,000,000	6.23
Ministry of Finance	Interest of controlled corporation	2,850,000,000	6.23
of People’s
Republic of China
Sun Siu Kit	Interest of controlled corporation	2,850,000,000	6.23
Brilliant Decent	Beneficial Owner	2,850,000,000	6.23
Limited
China Huarong	Interest of controlled corporation	2,850,000,000	6.23
Overseas
Investment
Holdings Co
Limited

4. ARRANGEMENTS IN CONNECTION WITH THE OFFER

As at the Latest Practicable Date:

(a) there was no agreement or arrangement to which the Offeror is a party which relates to the circumstances in which the Offeror may or may not invoke or seek to invoke a condition to the Offer;
(b) no agreement, arrangement or understanding (including any compensation arrangement) exists between the Offeror or any person acting in concert with it and any of the Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the outcome of the Offer;

– IV-3 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

(c) there was no agreement, arrangement or understanding that any securities of the Company, acquired in pursuance of the Offer would be transferred, charged or pledged to any other persons;
(d) no benefit (other than statutory compensation) has been or will be given to any Director as compensation for loss of office or otherwise in connection with the Offer.

5. ADDITIONAL DISCLOSURE OF INTERESTS

As at the Latest Practicable Date:

(a) save as disclosed in the section headed “Disclosure of Interests” in this appendix, none of the Offeror, the directors of the Offeror, CMBCI nor any person acting in concert with any of them, owns or controls any Shares, convertible securities, warrants, options or derivatives of the Company in respect of such securities;
(b) neither the Offeror, CMBCI, nor any person acting in concert with any of them had borrowed or lent any Shares, convertible securities, warrants, options or other relevant securities (as defined under Note 4 to Rule 22 of the Takeovers Code) in respect of any Shares;
(c) none of the Offeror, CMCBI or any persons acting in concert with any of them is a party to any arrangement (whether by way of option, indemnity or otherwise) of any kind referred to in Note 8 to Rule 22 of the Takeovers Code with any other persons in relation to the Shares; and
(d) no person has irrevocably committed themselves to accept or reject the Offer.

6. DEALINGS IN SECURITIES

During the Relevant Period:

(a) save for the Sale and Purchase Agreement I and the Subscription Agreement, none of the Offeror, CMCBI, nor any person acting in concert with any of them had dealt for value in the Shares, convertible securities, warrants, options or derivatives of the Company;
(b) none of the directors of the Offeror have dealt for value in the Shares, convertible securities, warrants, options or derivatives of the Company; and
(c) no person who had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror, CMCBI or any person acting in concert with any of them, had dealt for value in any Shares, convertible securities, warrants, options or derivatives of the Company.

– IV-4 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

7. CONSENTS AND QUALIFICATIONS

(a) The following are the qualifications of the expert who has given opinions or advice which are contained in this Composite Document:

Name

Qualification

Platinum

a licensed corporation by SFC to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

(b) The above expert has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion of its advice, letters and/or reports (as the case may be) and references to its name and logo in the form and context in which it appears.

8. GENERAL

(a) The principal members of Offeror’s concert group are (i) the Offeror; (ii) CMBC International Investment (HK) Limited; (iii) CMBCI; (iv) China Minsheng; (v) Brilliant Decent; (vi) China Huarong; (vi) China Huarong Asset Management Co., Limited; (vii) Ministry of Finance of People’s Republic of China; and (viii) Mr. Sun Siu Kit.
(b) Set out below are details of the Offeror, CMCBI, and other corporate members of the Offeror’s concert group and their respective directors:

(i) The Offeror

Registered Address

The directors of the Offeror

Corporate Registrations Limited of Sea Meadow Shek Yeung, Eric House, Blackburne Highway (P.O. Box 116), Li Jianyang Road Town, Tortola, BVI

(ii) CMBCI

Registered Address

The directors of CMBCI

23/F, COSCO Tower, Grand Millenium Plaza, Hong Qi 183 Queen’s Road Central, Hong Kong Wang Hang Wong Stacey Martin Li Jinze Shi Jie

– IV-5 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

(iii) CMBC International Investment (HK) Limited

Registered Address

23/F, COSCO Tower, Grand Millenium Plaza, 183 Queen’s Road Central, Hong Kong

The directors

Li Jinze Li Jianyang

(iv) China Minsheng

Registered Address

No. 2 Fuxingmennei Avenue, Xicheng District, Beijing, China

The directors

Hong Qi Liang Yutang Zheng Wanchun Zhang Hongwei Lu Zhiqiang Liu Yonghao Shi Yuzhu Wu Di Yao Dafeng Song Chunfeng Tian Zhiping Weng Zhenjie Liu Jipeng Li Hancheng Xie Zhichun Cheng Hoi-chuen Peng Xuefeng Liu Ningyu

(v) Brilliant Decent

Registered Address

Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands

The directors

Ren Yubing Siu Kwan Guo Yiyuan

– IV-6 –

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

(vi) China Huarong

Registered Address

The directors

Suite 3701-10, Jardine House, 1 Connaught YANG Hongwei Place, Central, Hong Kong SUN Siu Kit FU Qunming SONG Zhanju YANG Baochun YUAN Liangsheng LI Binglin JIANG Rongjian

(vii) China Huarong Asset Management Co., Limited

Registered Address The directors Clarendon House, 2 Church Street, Hamilton LAI Xiaomin HM 11, Bermuda KE Kasheng WANG Lihua WANG Keyue LI Yi WANG Cong DAI Lijia ZHOU Langlang SONG Fengming TSE Hau Yin LIU Junmin SHAO Jingchun

(c) The registered office of Platinum is at 21/F, LHT Tower, 31 Queen’s Road Central, Hong Kong.
(d) The address of Mr. Sun Siu Kit is Flat B, 27/F, Block 1, Harbourfront Landmark, 11 Wan Hoi Street, Hung Hom, Kowloon, Hong Kong.
(e) The English language text of this Composite Document and the Form(s) of Acceptance shall prevail over their respective Chinese language text.

– IV-7 –

DOCUMENTS AVAILABLE FOR INSPECTION

APPENDIX V

Copies of the following documents are available for inspection on the websites of the SFC (www.sfc.hk) and the Company (www.ssgroup.hk) and, during normal business hours from 9: 00 a.m. to 5: 00 p.m. (other than Saturdays, Sundays and public holidays), at the Company’s Hong Kong principal office address at Units 6601A and 6607-6608, Level 66, International Commerce Centre, 1 Austin Road West, Kowloon, Hong Kong from the date of this Composite Document until the close of the Offer:

(a) the memorandum of association and bye-laws of the Company;
(b) the memorandum of association and articles of association of the Offeror;
(c) the annual reports of the Company for the two years ended 31 March 2015 and 31 March 2016;
(d) the annual results announcement of the Company for the year ended 31 March 2017;
(e) the “Letter from Platinum”, the text of which is set out in this Composite Document;
(f) the “Letter from the Board”, the text of which is set out in this Composite Document;
(g) the “Letter from the Independent Board Committee”, the text of which is set out in this Composite Document;
(h) the “Letter from Optima Capital”, the text of which is set out in this Composite Document;
(i) the material contracts referred to in the section headed “Material Contracts” in Appendix III;
(j) the written consents referred to in the section headed “Expert and Consent” in Appendix III and the section headed “Consents and Qualifications” in Appendix IV; and
(k) the service contract between the Company and Mr. Wang Haixiong.

– V-1 –

AI assistant

PegBio Co., Ltd. — M&A Activity 2017

50676_rns_2017-06-06_8f8b4ce6-89ca-4740-8a11-04037f850ead.pdf

CMBC International Investment Limited

CONTENTS

EXPECTED TIMETABLE

Event

Time and Date

Notes:

EXPECTED TIMETABLE

NOTICE TO OVERSEAS SHAREHOLDERS OUTSIDE HONG KONG

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM PLATINUM

PLATINUM Securities Company Limited

MANDATORY UNCONDITIONAL CASH OFFER BY PLATINUM SECURITIES COMPANY LIMITED ON BEHALF OF CMBC INTERNATIONAL INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CMBC CAPITAL HOLDINGS LIMITED

INTRODUCTION

LETTER FROM PLATINUM

THE OFFER

Principal terms of the Offer

Total Consideration for the Offer

Comparisons of value

LETTER FROM PLATINUM

Highest and lowest Share price

Confirmation of financial resources available for the Offer

LETTER FROM PLATINUM

Payment

Effect of accepting the Offer

Overseas Shareholders

LETTER FROM PLATINUM

Hong Kong Stamp duty

INFORMATION ON THE OFFEROR AND ITS HOLDING COMPANIES

LETTER FROM PLATINUM

INFORMATION ON THE GROUP

INTENTION OF THE OFFEROR ON THE REMAINING GROUP

LETTER FROM PLATINUM

LETTER FROM PLATINUM

LETTER FROM PLATINUM

Proposed changes to the composition of the Board

COMPULSORY ACQUISITION

MAINTAINING THE PUBLIC FLOAT AND THE LISTING STATUS OF THE COMPANY

LETTER FROM PLATINUM

PROCEDURES FOR ACCEPTANCE OF THE OFFER

Settlement of the Offer

LETTER FROM PLATINUM

Tax Implications

GENERAL

ADDITIONAL INFORMATION

Platinum Securities Company Limited Li Lan

LETTER FROM THE BOARD

CMBC CAPITAL HOLDINGS LIMITED

(Stock Code: 1141)

INTRODUCTION

LETTER FROM THE BOARD

MANDATORY UNCONDITIONAL CASH OFFER

THE OFFER

Principal terms of the Offer

Further details of the Offer

INFORMATION ON THE GROUP

SHAREHOLDING STRUCTURE OF THE COMPANY

INFORMATION ON THE OFFEROR AND ITS HOLDING COMPANIES

INTENTION OF THE OFFEROR ON THE REMAINING GROUP

MAINTAINING THE LISTING STATUS OF THE COMPANY

RECOMMENDATION

ADDITIONAL INFORMATION

CMBC CAPITAL HOLDINGS LIMITED

MANDATORY UNCONDITIONAL CASH OFFER BY PLATINUM SECURITIES COMPANY LIMITED ON BEHALF OF CMBC INTERNATIONAL INVESTMENT LIMITED TO ACQUIRE ALL THE ISSUED SHARES IN CMBC CAPITAL HOLDINGS LIMITED

Yours faithfully,

INTRODUCTION

LETTER FROM OPTIMA CAPITAL

BASIS OF OUR OPINION

PRINCIPAL TERMS OF THE OFFER

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Background to and reasons for the Offer

PegBio Co., Ltd. M&A Activity 2017