Sinopec Engineering Group Co Ltd. — Capital/Financing Update 2015

Jul 23, 2015

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Prospectus or as to the action to be taken, you should obtain independent professional advice. If you have sold or transferred all your securities in Universe International Holdings Limited (the ‘‘Company’’), you should at once hand the Prospectus Documents to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. Dealings in Shares and the Rights Shares in their nil-paid and fully-paid forms may be settled through CCASS and you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements may affect your rights and interests. A copy of each of the Prospectus Documents, having attached the documents specified in the paragraph headed ‘‘Documents delivered to the Registrar of Companies’’ in appendix III to this Prospectus, have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). Neither the Securities and Futures Commission nor the Registrar of Companies in Hong Kong takes any responsibility as to the contents of any of the Prospectus Documents.

Subject to the granting of the listing of, and the permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in each of their nil-paid and fully-paid forms on the Stock Exchange or such other dates as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

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

UNIVERSE INTERNATIONAL HOLDINGS LIMITED 寰宇國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

(1) RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE IN ISSUE HELD ON THE RECORD DATE AND

(2) CHANGE IN BOARD LOT SIZE

Underwriter

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Capitalised terms used in this cover page shall have the same meanings as those defined in this Prospectus.

The latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares (if any) is 4:00 p.m. on Friday, 7 August 2015. The procedure for acceptance and payment or transfer of the Rights Shares is set out on pages 17 to 18 of this Prospectus.

Dealings in the Rights Shares in the nil-paid form will take place from Tuesday, 28 July 2015 to Tuesday, 4 August 2015 (both days inclusive). If the conditions of the Rights Issue (as described on pages 25 to 26 of this Prospectus) are not fulfilled or the Underwriting Agreement is terminated by the Underwriter, the Rights Issue will not proceed. Any dealing in the nil-paid Rights Shares during the period from Tuesday, 28 July 2015 to Tuesday, 4 August 2015 (both days inclusive), will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

It should be noted that the Underwriting Agreement contains provisions entitling the Underwriter by notice in writing to the Company at any time on or prior to 4:00 p.m. on Wednesday, 12 August 2015 to terminate the obligations of the Underwriter thereunder on the occurrence of certain events including force majeure. These events are set out under the section headed ‘‘Termination of the Underwriting Agreement’’ on pages 8 to 9 of this Prospectus. If the Underwriter terminates the Underwriting Agreement in accordance with the terms thereof, the Rights Issue will not proceed. In addition, the Rights Issue is conditional on all conditions set out on pages 25 to 26 of this Prospectus being fulfilled or waived (as the case may be). In the event that such conditions have not been satisfied or waived by the Underwriter in accordance with the Underwriting Agreement at or before 4:00 p.m. on Wednesday, 12 August 2015, all liabilities of the parties to the Underwriting Agreement shall cease and determine and none of the parties shall have any claim against the other parties save for any antecedent breach of the Underwriting Agreement. In such event, the Rights Issue will not proceed.

obligationsThe UnderwritingthereunderAgreementon the occurrencecontains provisionsof certaingrantingevents, asthemoreUnderwriter,particularlyby describednotice in inwriting,the sectionat anyheadedtime prior‘‘Terminationto the Latestof theTimeUnderwritingfor Termination,Agreementthe’’ rightin thistoProspectus.terminate itsIf the Underwriting Agreement is terminated by the Underwriter or does not become unconditional, the Rights Issue will not proceed.

24 July 2015

• for identification purpose only

CONTENTS

		Page
Definitions . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Termination of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
Expected Timetable	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
Appendix I –	Financial and other information of the Group . . . . . . . . . . . . . . . .	I-1
Appendix II –	Unaudited pro forma financial information of the Group . . . . . .	II-1
Appendix III –	General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1

– i –

DEFINITIONS

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

• ‘‘Announcement’’

the announcement of the Company dated 26 May 2015 in relation to, among other things, the Placing and the Rights Issue

• ‘‘Application Forms’’ collectively, the EAF(s) and the PAL(s)

• ‘‘associate’’ has the meaning ascribed thereto under the Listing Rules

• ‘‘Board’’ the board of Directors

• ‘‘Business Day(s)’’

• any day (excluding a Saturday, Sunday, public holiday and any day on which a tropical cyclone warning no.8 or above or a ‘‘black’’ rainstorm warning signal is hoisted or remains hoisted in Hong Kong at any time between 9:00 a.m. and 12:00 noon and is not lowered or discontinued at or before 12:00 noon) on which licensed banks are generally open for business in Hong Kong throughout their normal business hours

• ‘‘CCASS’’ the Central Clearing and Settlement System established and operated by HKSCC

• ‘‘Circular’’

• the circular of the Company dated 24 June 2015 in relation to, among other matters, the Placing and the Rights Issue

• ‘‘China Everbright Securities’’

• China Everbright Securities (HK) Limited, a licensed corporation to carry on type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance), type 9 (asset management) regulated activities under the SFO, being one of the placing agent to the Placing

• ‘‘close associate’’

• has the meaning ascribed to it under the Listing Rules

• ‘‘Committed Shares’’

• the aggregate of 71,826,340 Rights Shares as agreed to be taken up by Globalcrest and Ever Robust pursuant to the Shareholders Undertaking

• ‘‘Company’’

• Universe International Holdings Limited, a company incorporated in Bermuda with limited liability and the issued shares of which are listed on the Main Board of the Stock Exchange

– 1 –

DEFINITIONS

• ‘‘connected person’’

• has the meaning ascribed thereto under the Listing Rules

• ‘‘Consideration Convertible Notes’’ the zero coupon convertible notes in aggregate principal amount of HK$64 million to be issued by the Company to the vendors of Winston Asia Limited upon completion of the acquisition as contemplated under the relevant sale and purchase agreement, details of which are set out in the announcement of the Company dated 7 May 2015 and the circular of the Company dated 26 June 2015

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘Donvex Capital’’ or

• ‘‘Independent Financial Adviser’’

• Donvex Capital Limited, a corporation licensed to carry on type 6 (advising on corporate finance) regulated activity under the SFO, and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Placing and the Rights Issue

• ‘‘EAF(s)’’ the form(s) of application for excess Rights Shares

• ‘‘Ever Robust’’ Ever Robust Holdings Limited, which held 17,000,000 Shares as at the date of the Underwriting Agreement and held 29,650,000 Shares as at the Latest Practicable Date

• ‘‘Globalcrest’’

• Globalcrest Enterprises Limited, which held 18,913,170 Shares as at the date of the Underwriting Agreement and the Latest Practicable Date

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HKSCC’’ Hong Kong Securities Clearing Company Limited

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

• ‘‘Independent Board Committee’’ a committee of the Board comprising all the independent non-executive Directors established to advise the Independent Shareholders on the Placing and the Rights Issue

• ‘‘Independent Shareholder(s)’’ Shareholder(s) who are not Directors or any of their respective associates

– 2 –

DEFINITIONS

• ‘‘Independent Third Party(ies)’’

• third party(ies) who is/are independent of and not connected with the Company and its connected persons

• ‘‘Last Trading Day’’

• 26 May 2015, being the date of the Announcement

• ‘‘Latest Practicable Date’’

• 21 July 2015, being the latest practicable date prior to the printing of this Prospectus for the purpose of ascertaining certain information for inclusion in this Prospectus

• ‘‘Latest Time for Acceptance’’

• 4:00 p.m., on Friday, 7 August 2015 or such other time as may be agreed between the Company and the Underwriter, being the latest time for the application for Rights Shares (including excess Rights Shares) and if there is a ‘‘black’’ rainstorm warning or a tropical cyclone warning signal number 8 or above in force in Hong Kong on such day (i) at any time before 12:00 noon and no longer in force after 12:00 noon, the Latest Time for Acceptance will be extended to 5:00 p.m. on the same Business Day; and (ii) at any time between 12:00 noon and 4:00 p.m., the Latest Time for Acceptance will be extended to the next business day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.

• ‘‘Latest Time for Termination’’

• 4:00 p.m., on the third Business Day after the Latest Time for Acceptance or such later time or date as may be agreed between the Company and the Underwriter, being the latest time for the Underwriter to terminate the Underwriting Agreement

• ‘‘Listing Rules’’

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

• ‘‘Main Board’’

• Main Board of the Stock Exchange

• ‘‘Non-Qualifying Shareholder(s)’’

• the Overseas Shareholder(s) whom the Board, after making enquiries regarding the legal restrictions under the laws of the relevant places and the requirements of the relevant overseas regulatory bodies or stock exchanges, consider it necessary or expedient to exclude them from the Rights Issue

• ‘‘Option Holder(s)’’ holder(s) of the Outstanding Options

– 3 –

DEFINITIONS

• ‘‘Option Holders’ Undertaking’’

• the irrevocable undertakings signed and delivered to the Company by all the Option Holders as one of the conditions precedent to the obligations of the Underwriter to underwrite the Underwritten Shares pursuant to the Underwriting Agreement

• ‘‘Option Shares’’ the shares of the Company which may fall to be allotted and issued upon the exercise of the subscription rights attached to the Outstanding Options

• ‘‘Outstanding Options’’ an aggregate of 15,088,400 share options granted by the Company under the share options schemes adopted by the Company on 2 December 2013 and which remained outstanding as at the Latest Practicable Date

• ‘‘Overseas Shareholder(s)’’ the Shareholder(s) with registered address(es) (as shown in the register of members of the Company on the Record Date) outside of Hong Kong

• ‘‘PAL(s)’’ provisional allotment letter(s) for the Rights Issue

• ‘‘PRC’’ the People’s Republic of China which, for the purpose of this Prospectus only, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

• ‘‘Placee(s)’’ any individual, corporate, institutional investor(s) or other investor(s) to be procured by or on behalf of the Placing Agent under the Placing

• ‘‘Placing’’ the offer by way of private placing of the Placing Shares by or on behalf of the Placing Agents to the Placee(s), on a best effort basis, on the terms and subject to the conditions set out in the Placing Agreement

• ‘‘Placing Agents’’ collectively, China Everbright Securities and Jun Yang Securities, and each a ‘‘Placing Agent’’

‘‘Placing Agreement’’ the conditional placing agreement entered into between the Company and the Placing Agents dated 26 May 2015 in relation to the Placing

• ‘‘Placing Price’’ HK$0.3411 per Placing Share

– 4 –

DEFINITIONS

• ‘‘Placing Shares’’

• a maximum of 586,350,000 new Shares proposed to be placed pursuant to the Placing Agreement and each a ‘‘Placing Share’’

• ‘‘Prospectus’’ this prospectus containing, among other matters, details of the Rights Issue

• ‘‘Prospectus Documents’’ the Prospectus, the PAL and the EAF

• ‘‘Prospectus Posting Date’’ Friday, 24 July 2015

• ‘‘Qualifying Shareholders’’ Shareholders, other than the Non-Qualifying Shareholders, whose names appear on the register of members of the Company on the Record Date

• ‘‘Record Date’’ Thursday, 23 July 2015

• ‘‘Registrar’’ Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, the Hong Kong branch share registrar and transfer office of the Company in Hong Kong

• ‘‘Rights Issue’’ the issue by way of rights issue to the Qualifying Shareholders on the basis of two (2) Rights Shares for every one (1) Share in issue held on the Record Date at the Subscription Price on the terms and subject to the conditions set out in the Underwriting Agreement and the Prospectus Documents

• ‘‘Rights Shares’’ 596,760,614 new Shares to be allotted and issued pursuant to the Rights Issue

• ‘‘SFO’’

• Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• ‘‘SGM’’

• the special general meeting of the Company held on 13 July 2015 at which the resolutions in respect of the Placing, the Rights Issue and the grant of the Warrant Issue Mandate were passed

• ‘‘Share(s)’’

• ordinary share(s) of HK$0.01 each in share capital of the Company

• ‘‘Shareholder(s)’’

the holder(s) of the issued Shares

– 5 –

DEFINITIONS

• ‘‘Shareholders’ Undertaking’’

• ‘‘Stock Exchange’’

• ‘‘Subscription Price’’

• ‘‘substantial shareholder’’

• ‘‘Takeovers Code’’

• ‘‘Underwriter’’ or ‘‘Jun Yang Securities’’

• ‘‘Underwriting Agreement’’

• ‘‘Underwritten Shares’’

• ‘‘Unlisted Warrants’’

• ‘‘Unlisted Warrant Holder(s)’’

• ‘‘Warrant Issue Mandate’’

• the irrevocable undertaking in relation to the acceptance of Committed Shares by Globalcrest and Ever Robust in favour of the Company and the Underwriter

The Stock Exchange of Hong Kong Limited

• HK$0.202 per Rights Share

• has the meaning as ascribed thereto under the Listing Rules

• The Hong Kong Code on Takeovers and Mergers

• Jun Yang Securities Company Limited, a licensed corporation to carry on type 1 (dealing in securities) regulated activity under the SFO, being one of the Placing Agents to the Placing and the underwriter to the Rights Issue

• the underwriting agreement dated 26 May 2015 and entered into between the Company and the Underwriter in relation to the Rights Issue

• the Rights Shares other than the Committed Shares, being 524,934,274 Rights Shares to be underwritten by the Underwriter pursuant to the Underwriting Agreement

unlisted warrants issued by the Company entitling the holders thereof to subscribe up to an aggregate amount of HK$85,500,000 for a maximum of 34,200,000 new shares of the Company at prevailing subscription price of HK$2.50, subject to adjustments, details of which are set out in the announcement of the Company dated 16 September 2013

holder(s) of the Unlisted Warrants, and to the best knowledge, information and belief of the Directors, each of whom and (to the extent applicable) its ultimate beneficial owner(s) is an Independent Third Party

the specific mandate granted by the Shareholders to the Board at the SGM for the allotment and issue of the Warrant Shares

– 6 –

DEFINITIONS

‘‘Warrant	Shares’’	such number of shares of the Company which may fall to
		be allotted and issued upon the exercise of the subscription
		rights attached to the Unlisted Warrants
‘‘HK$’’		Hong Kong dollars, the lawful currency of Hong Kong
‘‘%’’		per cent.

– 7 –

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriter may terminate the Underwriting Agreement on or before the Latest Time for Termination if prior to the Latest Time for Termination:

• (1) in the reasonable opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:

• (a) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the reasonable opinion of the Underwriter, materially and adversely affect the business or the financial or trading position of the Group as a whole or is materially adverse in the context of the Rights Issue; or

• (b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement), of a political, military, financial, economic or other nature (whether or not ejusdem generic with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of the Underwriter materially and adversely affect the business or the financial or trading position of the Group as a whole; or

• (c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or

• (d) the imposition of any moratorium, suspension or material restriction on trading of the Shares on the Stock Exchange due to exceptional financial circumstances or otherwise; or

• (e) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than 20 consecutive business days, excluding any suspension in connection with the clearance of the Announcement or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue; or

• (2) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities, and a change in currency conditions for the purpose of the Underwriting Agreement includes a change in the system under which the value of the Hong Kong currency is pegged with that of the currency of the United States of America) occurs which in the reasonable opinion of the Underwriter makes it inexpedient or inadvisable to proceed with the Rights Issue; or

– 8 –

TERMINATION OF THE UNDERWRITING AGREEMENT

• (3) this Prospectus in connection with the Rights Issue when published contain information (either as to the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which may in the reasonable opinion of the Underwriter is material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to apply for its provisional allotment of Rights Shares under the Rights Issue.

Pursuant to the Underwriting Agreement, the Underwriter is also entitled by notice in writing to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

• (1) any material breach of any of the warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter; or

• (2) any event occurring or matter arising on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of the representations, warranties and undertakings contained in the Underwriting Agreement untrue or incorrect in any material respect comes to the knowledge of the Underwriter.

If prior to the Latest Time for Termination any such notice as is referred to above is given by the Underwriter, the obligations of all parties under the Underwriting Agreement (save in respect of any rights and obligations which may accrue under the Underwriting Agreement prior to such termination) shall terminate forthwith. In the event the Underwriter exercises its right to terminate or rescind the Underwriting Agreement as described above, the Rights Issue will not proceed.

– 9 –

EXPECTED TIMETABLE

The expected timetable for the Rights Issue and the change in board lot size are set out below.

Event Time and Date
2015
Effective date and time of change in board lot size
from 5,000 Shares to 15,000 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 24 July
Designated broker starts to stand in the market to provide
matching services for sale and purchase of odd lots of Shares . . . . . . . . . . Friday, 24 July
First day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . Tuesday, 28 July
Latest time for splitting of nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on
Thursday, 30 July
Latest time for dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Tuesday, 4 August
Latest time for Acceptance of and payment for the Rights Shares . . . . . . . . . . . . 4:00 p.m. on
Friday, 7 August
Latest Time for Termination by the Underwriter . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Wednesday, 12 August
Announcement of the results of the Rights Issue . . . . . . . . . . . . . . . . . Thursday, 13 August
Despatch of share certificates for fully-paid Rights Shares
and refund cheques (where appropriate) . . . . . . . . . . . . . . . . . . . . . . Friday, 14 August
Designated broker ceases to stand in the market
to provide matching services for sale and purchase of
odd lots of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 14 August
Expected first day of dealings in fully-paid Rights Shares
on the Stock Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Monday, 17 August

All times and dates in this Prospectus refer to Hong Kong local times and dates. The expected timetable for the Rights Issue set out above is for indicative purposes only. The expected timetable is subject to change, and any such change will be further announced by the Company as and when appropriate.

– 10 –

EXPECTED TIMETABLE

Effect of bad weather on the Latest Time for Acceptance

The Latest Time for Acceptance will not take place if there is a ‘‘black’’ rainstorm warning or a tropical cyclone warning signal number 8 or above:

• i. in force in Hong Kong at any time before 12:00 noon and no longer in force after 12:00 noon on Friday, 7 August 2015. The Latest Time for Acceptance will be extended to 5:00 p.m. on the same Business Day; or

• ii. in force in Hong Kong at any time between 12:00 noon and 4:00 p.m. on Friday, 7 August 2015. The Latest Time for Acceptance will be extended to the next business day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance does not take place on Friday, 7 August 2015, the dates mentioned in the ‘Expected Timetable’ section in this Prospectus may be affected. The Company will notify Shareholders by way of announcement(s) on any change to the expected timetable as soon as practicable.

– 11 –

LETTER FROM THE BOARD

UNIVERSE INTERNATIONAL HOLDINGS LIMITED 寰宇國際控股有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

Executive Directors: Mr Lam Shiu Ming, Daneil (Chairman) Mr Hung Cho Sing Mr Yeung Kim Piu Mr Lam Kit Sun

Non-executive Director: Mr Chan Shiu Kwong Stephen

Independent non-executive Directors: Mr Lam Wing Tai Mr Lam Chi Keung Mr Choi Wing Koon

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head office and principal place of business in Hong Kong: 18th Floor Wyler Centre Phase II 192-200 Tai Lin Pai Road Kwai Chung New Territories Hong Kong 24 July 2015

To the Shareholders,

Dear Sirs,

(1) RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE IN ISSUE HELD ON THE RECORD DATE AND

(2) CHANGE IN BOARD LOT SIZE

INTRODUCTION

Reference is made to the Announcement, in which the Board proposed to put forward to the Shareholders, among other proposals, the Rights Issue on the basis of two (2) Rights Shares for every one (1) Share held on the Record Date at the Subscription Price of HK$0.202 per Rights Share to raise not less than approximately HK$120.55 million before expenses (assuming no further issue of new Shares or repurchase of Shares on or before the Record Date) by issuing not less than 596,760,614 Rights Shares.

• for identification purpose only

– 12 –

LETTER FROM THE BOARD

At the SGM held on 13 July 2015, the resolution to approve the Rights Issue was duly passed by the Independent Shareholders by way of poll.

As at the Record Date, the Company had 298,380,307 Shares in issue. On the basis of two Rights Shares for every one Share held on the Record Date, 596,760,614 Rights Shares will be issued and such Rights Shares (other than the Committed Shares) will be fully underwritten by the Underwriter.

The purpose of this Prospectus is to provide you with further details of the Rights Issue.

THE RIGHTS ISSUE

Under the Rights Issue, the Company proposes to raise approximately HK$120.55 million before expenses by way of the Rights Issue, details of which are set out as follows:

Issue statistics

Basis of the Right Issue:

Two (2) Rights Shares for every one (1) Share in issue held on the Record Date

Subscription Price:

HK$0.202 per Rights Share with nominal value of HK$0.01 each

Number of Shares in issue as at the Latest Practicable Date:

298,380,307 Shares

Number of Rights Shares:

596,760,614 Rights Shares

Number of Committed Shares:

Globalcrest and Ever Robust have undertaken in favour of the Company and the Underwriter to subscribe for the 37,826,340 and 34,000,000 Rights Shares respectively to be issued and allotted to them under the Rights Issue. Details of the Shareholders’ Undertaking are set out under the paragraph headed ‘‘Rights Issue – Irrevocable undertakings given by Globalcrest, Ever Robust and the Option Holders’’ in this Prospectus

Number of Underwritten Shares:

524,934,274 Rights Shares. Taking into account the Shareholders’ Undertaking and the Option Holders’ Undertaking, the Rights Issue is fully underwritten

Enlarged issued share capital of the Company upon completion of the Rights Issue:

895,140,921 Shares (without taking into account the allotment and issue of the Placing Shares)

– 13 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, save for the Outstanding Options and the Unlisted Warrants, the Company has no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares. All Option Holders have irrevocably undertaken to the Company and the Underwriter not to exercise the respective Outstanding Options held by them from the date of the Underwriting Agreement to the close of business on the Record Date.

Reference is also made to the announcement of the Company dated 7 May 2015 relating to the proposed acquisition of further equity interests in Winston Asia Limited. As stated in such announcement, the consideration for such acquisition will be settled by the issue of the Consideration Convertible Notes by the Company. As completion of such acquisition has not yet taken place, the Consideration Convertible Notes have not yet been issued as at the Latest Practicable Date.

The 596,760,614 Rights Shares represent (i) 200% of the Company’s issued share capital as at the Record Date; (ii) approximately 66.67% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares; and (iii) approximately 40.28% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and the Rights Shares.

The aggregate nominal value of the Rights Shares will be HK$5,967,606.14.

Basis of provisional allotment

The basis of the provisional allotment shall be two (2) Rights Shares (in nil-paid form) for every one (1) Share in issue held by the Qualifying Shareholders at the close of business on the Record Date. Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by completing the PAL and lodging the same with a remittance for the Rights Shares being applied for with the Registrar by the Latest Time for Acceptance.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. The Company will send the Prospectus Documents to the Qualifying Shareholders only.

A Qualifying Shareholder must be registered as a member of the Company as at the close of business on the Record Date, and not being a Non-Qualifying Shareholder.

As at the Latest Practicable Date, the Board had not received any information from any Shareholders of their intention to take up the Rights Shares under the Rights Issue save that Globalcrest and Ever Robust have delivered the Shareholders’ Undertaking to the Company and the Underwriter and pursuant to such undertakings, each of the Globalcrest and Ever

– 14 –

LETTER FROM THE BOARD

Robust has irrevocably undertaken to the Company and the Underwriter to accept and pay for the Committed Shares (being all of its provisional allotment under the Rights Issue based on its shareholding in the Company as at the Latest Practicable Date).

Overseas Shareholders

The Prospectus Documents will not be registered under the applicable securities legislation of any jurisdictions other than Hong Kong.

Based on the register of members of the Company, as at the Record Date, the Company had two Overseas Shareholders whose addresses are located in the PRC.

The Company has complied with all necessary requirements specified in Rule 13.36(2)(a) of the Listing Rules (including notes 1 and 2 thereto) and has made enquiry with its legal advisers regarding the feasibility of extending the Rights Issue to the Overseas Shareholders under the laws of the PRC and the requirements of the relevant regulatory bodies or the stock exchanges.

The Company has been advised by its legal advisers on the laws of the PRC that there is no legal restriction under the applicable legislation of the PRC or requirement of any relevant regulatory body or stock exchange with respect to the Rights Issue to the Overseas Shareholders in the PRC. Based on the advice of the Company’s legal advisers on the laws of the PRC, the Directors believe that the Prospectus Documents would not be required to be registered or lodged with the relevant regulatory bodies under the relevant laws and regulations of the PRC and may be despatched to the Overseas Shareholders with registered addresses in the PRC without any restrictions. In view of this, the Directors have decided to extend the Rights Issue to the Overseas Shareholders with registered addresses in the PRC and such Overseas Shareholders, together with the Shareholders with registered addresses in Hong Kong, are Qualifying Shareholders for the purpose of the Rights Issue. The Company will send the Prospectus Documents to such Qualifying Shareholders. Accordingly, there is no Non-Qualifying Shareholder for the purpose of the Rights Issue.

It is the responsibility of the Shareholders, including the Overseas Shareholders, to observe the local legal and regulatory requirements applicable to them for taking up and onward sale (if applicable) of the Rights Shares.

Subscription Price

The Subscription Price is HK$0.202 per Rights Share, payable in full by Qualifying Shareholders upon acceptance of the relevant provisional allotment of Rights Shares or application for the excess Rights Shares or when a transferee of nil-paid Rights Shares applies for the Rights Shares.

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LETTER FROM THE BOARD

The Subscription Price represents:

• (i) a discount of 74.75% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 49.66% to the theoretical ex-rights price of approximately HK$0.4013 per Share based on the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 72.78% to the average closing price of approximately HK$0.742 per Share for the last five consecutive trading days immediately prior to the Last Trading Day;

• (iv) a discount of approximately 53.56% to the closing price of HK$0.435 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

• (v) a discount of approximately 82.92% to the net asset value of approximately HK$1.183 per Share of the Company, based on the unaudited consolidated net asset value of the Group of approximately HK$352,956,000 as at 31 December 2014 and 298,380,307 Shares in issue as at the Latest Practicable Date.

The Subscription Price was arrived at after arm’s length negotiations between the Company and the Underwriter with reference to the market price of the Shares and the prevailing market conditions. The Board has made reference to the rights issues announced by other companies listed on the Stock Exchange for a period of six calendar months immediately prior to the Last Trading Day, and identified an exhaustive list of twelve rights issues which have subscription ratios above 1-for-2 and are also subject to shareholders’ approval (the ‘‘Rights Issue Comparable(s)’’). The subscription prices of all of the Rights Issue Comparables are set at discounts to market price of the relevant shares, ranging from a discount of approximately 4.11% to approximately 89.13%, with an average discount of approximately 69.60% (in calculating the average discount of the Rights Issue Comparable(s), the Company excludes the one with discount rate of 4.11% as it is an extreme case). As regards the Rights Issue, the discount represented by the Subscription Price to the closing price of the Shares on the Last Trading Day of 74.75% is slightly higher than the average discount of the Rights Issue Comparables but is still within the range of discount. Given that (i) there is a need to increase the attractiveness of the Rights Shares to the Qualifying Shareholders and the Underwriter; and (ii) the proposed discount of the Subscription Price to the prevailing market price is within the range of discount of the Rights Issue Comparables, the Directors consider that the Subscription Price is fair and reasonable and in the interests of the Company and Shareholders as a whole.

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LETTER FROM THE BOARD

Status of the Rights Shares

The Rights Shares when allotted, issued and fully paid, shall rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Rights Shares, including the right to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares.

Share certificates for the Rights Shares and refund cheques

Subject to the fulfilment of the conditions of the Rights Issue as set out in the section headed ‘‘Conditions of the Rights Issue’’ below, certificates for all fully-paid Rights Shares are expected to be posted to those entitled thereto by ordinary post at their own risk on or before Friday, 14 August 2015. If the Underwriting Agreement is terminated or not becoming unconditional or applications for the excess Rights Shares are wholly or partially unsuccessful, refund cheques will be despatched on or before Friday, 14 August 2015 by ordinary post at the Shareholders’ own risk.

Procedure for acceptance and payment or transfer

Qualifying Shareholders will find enclosed with this Prospectus a PAL which entitles them to subscribe for the number of Rights Shares shown therein. If the Qualifying Shareholders wish to accept all the Rights Shares provisionally allotted to them as specified in the PAL, they must lodge the PAL in accordance with the instructions printed thereon, together with a remittance for the full amount payable on acceptance, with the Registrar by no later than the Latest Time for Acceptance. All remittances must be made by cheque or cashier’s order in Hong Kong dollars. Cheques must be drawn on an account with, and cashier’s orders must be issued by, a licensed bank in Hong Kong and made payable to ‘‘Universe International Holdings Limited – PA’’ and crossed ‘‘Account Payee Only’’.

It should be noted that unless the duly completed PAL, together with the appropriate remittance, has been received by the Registrar by the Latest Time for Acceptance, whether by the original allottee or any person to whom the nil paid Rights Shares have been validly transferred, the relevant provisional allotment and all rights and entitlements thereunder will be deemed to have been declined and will be cancelled and such Rights Shares will be available for excess application under the EAFs by other Qualifying Shareholders.

If the Qualifying Shareholders wish to accept only part of their provisional allotment or transfer part of their rights to subscribe for the Rights Shares provisionally allotted to them under the PALs or to transfer their rights to more than one person, the original PALs must be surrendered and lodged for cancellation by no later than 4:30 p.m. on Thursday, 30 July 2015 with the Registrar who will cancel the original PALs and issue new PALs in the denominations required, which will be available for collection at the Registrar after 9:00 a.m. on the second Business Day after the surrender of the original PALs.

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LETTER FROM THE BOARD

The PAL contains further information regarding the procedures to be followed for acceptance and/or transfer of the whole or part of the provisional allotment of the Rights Shares by the Qualifying Shareholders. All cheques and cashier’s orders accompanying completed PALs will be presented for payment immediately upon receipt and all interest earned on such monies (if any) will be retained for the benefit of the Company. Completion and return of the PAL will constitute a warranty and representation to the Company that all registration, legal and regulatory requirements of all relevant jurisdictions other than Hong Kong in connection with the PAL and any acceptance of it, have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the representations and warranties. Completion and return of the PAL with a cheque or a cashier’s order in payment for the Rights Shares, whether by a Qualifying Shareholder or by any nominated transferee, will constitute a warranty by the subscriber that the cheque or the cashier’s order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any PAL in respect of which the accompanying cheque and/or cashier’s order is dishonoured on first presentation, and, in such event, the relevant provisional allotment and all rights and entitlements thereunder will be deemed to have been declined and will be cancelled.

No action has been taken to obtain permission of the offering of the Rights Shares or the distribution of the Prospectus Documents in any jurisdiction other than Hong Kong. Accordingly, no person receiving a copy of the Prospectus Documents in any jurisdiction outside Hong Kong may treat it as an offer or invitation to apply for the Rights Shares, unless in the relevant jurisdictions, such an offer or invitation could lawfully be made without compliance with any registration or other legal and regulatory requirements. It is the responsibility of anyone outside Hong Kong wishing to make on his/its behalf an application for the Rights Shares to satisfy himself/itself as to the observance of the laws and regulations of all relevant jurisdiction, including the obtaining of any governmental or other consents, and to pay any taxes and duties required to be paid in such jurisdiction in connection therewith.

If the Underwriter exercises the rights to terminate the Underwriting Agreement at or before the Latest Time for Termination or if the conditions of the Rights Issue are not fulfilled or waived (as applicable), the monies received in respect of acceptances of the Rights Shares will be returned to the Qualifying Shareholders or such other persons to whom the nil-paid Rights Shares shall have been validly transferred, or in case of joint acceptances, to the first-named person, without interest by means of cheques despatched by ordinary post to their respective registered addresses at their own risk as soon as practicable thereafter.

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LETTER FROM THE BOARD

Application for excess Rights Shares

Qualifying Shareholders may apply, by way of excess application, for any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders or otherwise not subscribed for by the nominated transferees of the nil-paid Rights Shares.

Any Qualifying Shareholder wishing to apply for any Rights Shares in addition to his/her/its provisional allotment must complete and sign the EAF as indicated thereon and lodge it, together with a separate remittance for the amount payable on application in respect of the excess Rights Shares applied for, with the Registrar so as to be received by no later than the Latest Time for Acceptance. All remittances must be made by cheque or cashier’s order in Hong Kong dollars. Cheques must be drawn on an account with, and cashier’s orders must be issued by, a licensed bank in Hong Kong and made payable to ‘‘Universe International Holdings Limited – EA’’ and crossed ‘‘ ’’ Account Payee Only .

Application may be made by Qualifying Shareholders completing the EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Directors will allocate the excess Rights Shares at their discretion on a fair and equitable basis and on a pro-rata basis to the excess Rights Shares applied for by the Qualifying Shareholders (to the extent not involving any fractional share), except that preference may be given to applications for less than a board lot of Rights Shares where it appears to the Directors that such applications are made to round up odd-lot holdings to whole-lot holdings and that such applications are not made with intention to abuse the mechanism.

The Shareholders with the Shares held by a nominee company should note that the Board will regard the nominee company as a single shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners of the Shares individually.

The allocation of excess Rights Shares (if any) to the Qualifying Shareholders will be announced by the Company on Thursday, 13 August 2015. If no excess Rights Shares are allotted to the Qualifying Shareholders, it is expected that a cheque for the amount tendered on application will be refunded in full without interest on or before Friday, 14 August 2015. If the number of excess Rights Shares allotted to the Qualifying Shareholders is less than that applied for, a cheque for the amount of the surplus application monies are also expected to be refunded to them without interest on or before Friday, 14 August 2015.

All cheques and cashier’s orders will be presented for payment immediately following receipt and all interest earned on such monies (if any) will be retained for the benefit of the Company. Completion and return of the EAF together with a cheque or cashier’s order in payment for excess Rights Shares applied for will constitute a warranty by the applicant that

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LETTER FROM THE BOARD

the cheque or the cashier’s order will be honoured on first presentation. If any cheque or cashier’s order accompanying a completed EAF is dishonoured on first presentation, without prejudice to the other rights of the Company, such EAF is liable to be rejected.

Completion and return of the EAF by anyone outside Hong Kong will constitute a warranty and representation to the Company that all these local registration, legal and regulatory requirements of such relevant jurisdictions other than Hong Kong in connection with the EAF and any application under it, have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the representations and warranties.

The EAF is for use only by the person(s) to whom it is addressed and is not transferable. All documents, including refund cheques for wholly or partially unsuccessful applications for excess Rights Shares, will be despatched by ordinary post at the risk of the persons entitled thereto to their respective registered addresses as shown in the register of members of the Company on the Record Date.

If the Underwriter exercises the right to terminate the Underwriting Agreement at or before the Latest Time for Termination or if the conditions of the Rights Issue are not fulfilled or waived (where applicable), the monies received in respect of the relevant applications for excess Rights Shares will be returned to the applicants, or in case of joint applicants, to the first-named person, without interest by means of cheques despatched by the ordinary post to their respective addresses at their own risk as soon as practicable thereafter.

Application for listing

The Company has applied to the Listing Committee of the Stock Exchange for the listing of and permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms). Dealings in the Rights Shares on the Stock Exchange will be subject to the payment of stamp duty (if any) in Hong Kong and any other applicable fees and charges in Hong Kong.

No part of the securities of the Company is listed or dealt in on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is proposed to be sought.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS

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LETTER FROM THE BOARD

on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Dealings in the Rights Shares on the Stock Exchange may be settled through CCASS.

Both nil-paid Rights Shares and fully-paid Rights Shares will be traded in board lots of 15,000 Shares.

Qualifying Shareholders who do not take up the Rights Shares to which they are provisionally allotted should note that their shareholdings in the Company will be diluted.

The Underwriting Agreement

Date: 26 May 2015

Underwriter: Jun Yang Securities

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Underwriter and its ultimate beneficial owners are Independent Third Parties. As at the Latest Practicable Date, neither the Underwriter nor its associates held any Shares.

Number of Underwritten Shares:

524,934,274 Rights Shares. Taking into account the Shareholders’ Undertaking and the Option Holders’ Undertaking, the Rights Issue is fully underwritten.

Commission:

The Underwriter will receive a commission in respect of its underwriting of the Rights Issue at 3.5% of the aggregate Subscription Price in respect of the maximum number of the Underwritten Shares as referred to in the Circular. Such underwriting commission rate is within the range of underwriting commissions of the Rights Issue Comparables (from nil to 3.5%).

Undertakings relating to the Rights Shares:

• (i) Globalcrest and Ever Robust have given the Shareholders’ Undertaking in favour of the Company and the Underwriter to apply for 37,826,340 and 34,000,000 Rights Shares respectively to which they are provisionally allotted under the Rights Issue; and

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LETTER FROM THE BOARD

• (ii) all the Option Holders have given the Option Holders’ Undertaking in favour of the Company and the Underwriter not to exercise their respective Outstanding Options on or before the Record Date.

The Board considers that the terms of the Underwriting Agreement and the amount of commission payable by the Company to the Underwriter are fair and reasonable as compared to the market practice and commercially reasonable as agreed between the parties of the Underwriting Agreement.

Irrevocable undertakings given by Globalcrest, Ever Robust and the Option Holders

(1) Shareholders’ Undertaking:

As at the date of the Underwriting Agreement, Globalcrest and Ever Robust were interested in 18,913,170 and 17,000,000 Shares respectively, representing approximately 6.34% and 5.70% of the total issued share capital of the Company on such date. Each of Globalcrest and Ever Robust has irrevocably undertaken to the Company and the Underwriter that it:

• (a) would remain as the beneficial owner of the Shares as set out above at the close of business on the Record Date;

• (b) would not change its registered address in the register of members of the Company (unless such change is to change to an address in Hong Kong); and

• (c) would apply for and pay for the Rights Shares to which it will be provisionally allotted pursuant to the Rights Issue (37,826,340 Rights Shares for Globalcrest and 34,000,000 for Ever Robust), by lodging the duly completed and signed PAL in respect of all such Rights Shares with payment in full therefor with the Registrar before the Latest Time for Acceptance in accordance with the instructions printed on the Prospectus Documents.

(2) Option Holders’ Undertaking:

As at the Latest Practicable Date, the Outstanding Options entitled the Option Holders to subscribe for up to 15,088,400 Shares. Each Option Holder has irrevocably undertaken to the Company and the Underwriter not to exercise the Outstanding Options held by him/her from the date of the Underwriting Agreement to the close of business on the Record Date.

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LETTER FROM THE BOARD

Termination of the Underwriting Agreement

The Underwriter may terminate the Underwriting Agreement on or before the Latest Time for Termination if prior to the Latest Time for Termination:

• (1) in the reasonable opinion of the Underwriter, the success of the Rights Issue would be materially and adversely affected by:

• (a) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may, in the reasonable opinion of the Underwriter, materially and adversely affect the business or the financial or trading position of the Group as a whole or is materially adverse in the context of the Rights Issue; or

• (b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement), of a political, military, financial, economic or other nature (whether or not ejusdem generic with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the reasonable opinion of the Underwriter materially and adversely affect the business or the financial or trading position of the Group as a whole; or

• (c) any material adverse change in the business or in the financial or trading position of the Group as a whole; or

• (d) the imposition of any moratorium, suspension or material restriction on trading of the Shares on the Stock Exchange due to exceptional financial circumstances or otherwise; or

• (e) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than 20 consecutive business days, excluding any suspension in connection with the clearance of the Announcement or the Prospectus Documents or other announcements or circulars in connection with the Rights Issue; or

• (2) any material adverse change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities, and a change in currency conditions for the purpose of the Underwriting Agreement includes a change in the system under which the value of the Hong Kong currency is pegged with that

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LETTER FROM THE BOARD

of the currency of the United States of America) occurs which in the reasonable opinion of the Underwriter makes it inexpedient or inadvisable to proceed with the Rights Issue; or

• (3) this Prospectus in connection with the Rights Issue when published contain information (either as to the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which may in the reasonable opinion of the Underwriter is material to the Group as a whole and is likely to affect materially and adversely the success of the Rights Issue or might cause a prudent investor not to apply for its provisional allotment of Rights Shares under the Rights Issue.

Pursuant to the Underwriting Agreement, the Underwriter is also entitled by notice in writing to rescind the Underwriting Agreement if prior to the Latest Time for Termination:

• (1) any material breach of any of the warranties or undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter; or

• (2) any event occurring or matter arising on or after the date of the Underwriting Agreement and prior to the Latest Time for Termination which if it had occurred or arisen before the date of the Underwriting Agreement would have rendered any of the representations, warranties and undertakings contained in the Underwriting Agreement untrue or incorrect in any material respect comes to the knowledge of the Underwriter.

If prior to the Latest Time for Termination any such notice as is referred to above is given by the Underwriter, the obligations of all parties under the Underwriting Agreement (save in respect of any rights and obligations which may accrue under the Undertaking Agreement prior to such termination) shall terminate forthwith. In the event the Underwriter exercises its right to terminate or rescind the Underwriting Agreement as described above, the Rights Issue will not proceed.

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LETTER FROM THE BOARD

Conditions of the Rights Issue

The Rights Issue is conditional upon:

• (1) the passing by the Independent Shareholders at the SGM of an ordinary resolution to approve the Rights Issue by no later than the Prospectus Posting Date;

• (2) the Stock Exchange granting or agreeing to grant (subject to allotment) the listing of and permission to deal in all the Rights Shares (in their nil-paid and fully-paid forms) by no later than the Prospectus Posting Date and the Stock Exchange not having withdrawn or revoked such listings and permission on or before the Latest Time for Termination;

• (3) the filing and registration of all documents relating to the Rights Issue, which are required to be filed or registered with the Registrar of Companies in Hong Kong in accordance with the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) by no later than the Prospectus Posting Date;

• (4) the posting of the Prospectus Documents to the Qualifying Shareholders on or before the Prospectus Posting Date;

• (5) the compliance with and performance of all the undertakings and obligations of the Company under the Underwriting Agreement by the Latest Time for Termination;

• (6) the delivery to the Company and the Underwriter the copy of (i) the Shareholders’ Undertakings duly executed by each of Globalcrest and Ever Robust and (ii) the Option Holders’ Undertakings duly executed by each Option Holder on or before the date on which the circular in connection with the Rights Issue is posted;

• (7) the compliance with and performance by (i) Globalcrest of its Shareholder Undertaking; (ii) Ever Robust of its Shareholder Undertaking; and (iii) all Option Holders of their respective Option Holders’ Undertakings; and

• (8) the Underwriting Agreement not being terminated by the Underwriter pursuant to the terms of the Underwriting Agreement on or before the Latest Time for Termination.

The Company shall use all reasonable endeavours to procure the fulfillment of all the conditions precedent (save for conditions (6) and (7)) by the respective dates specified above.

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LETTER FROM THE BOARD

None of the above conditions precedent is capable of being waived (other than condition precedent (5) which is capable of being waived by the Underwriter) by any party to the Underwriting Agreement.

If the above conditions are not satisfied by the respective dates specified above (or such later date or dates as the Underwriter may agree with the Company in writing), the Underwriting Agreement shall terminate and no party will have any claim against any other party for cost, damages, compensation or otherwise, and the Rights Issue will not proceed.

As at the Latest Practicable Date, conditions (1), (3) and (6) have been fulfilled.

WARNING OF THE RISK OF DEALINGS IN THE SHARES AND THE NIL-PAID RIGHTS SHARES

The Rights Issue is conditional upon, amongst other conditions, the Underwriting Agreement not having been terminated in accordance with the terms thereof. Accordingly, the Rights Issue may or may not proceed. Any Shareholder or other person contemplating selling or purchasing Shares and/or nil-paid Rights Shares up to the date on which the conditions of the Rights Issue are fulfilled will bear the risk that the Rights Issue may not become unconditional and may not proceed. Shareholders and the public are reminded to exercise caution when dealing in the securities of the Company. Any Shareholder or other person contemplating any dealings in the Shares or nil-paid Rights Shares are recommended to consult their own professional advisers.

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is the shareholding structure of the Company before and after the allotment and issue of the Rights Shares:

Globalcrest (Notes 1 and 2) Ever Robust (Note 2 and 3) The Underwriter (Note 4) The Placees (Note 5) Other existing public Shareholders Total	As the Reco Number of Shares 18,913,170 29,650,000 – – 249,817,137	at rd Date Approximate % 6.34 9.94 – – 83.72	Upon issue of the Rights Shares (assuming all Rights Shares are subscribed for by the Qualifying Shareholders) Number of Shares Approximate % 56,739,510 6.34 88,950,000 9.94 – – – – 749,451,411 83.72 895,140,921 100.00	Upon issue of the Rights Shares (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders other than Globalcrest and Ever Robust) (Note 4) Number of Shares Approximate % 56,739,510 6.34 63,650,000 7.11 524,934,274 58.64 – – 249,817,137 27.91 895,140,921 100.00	Upon issue of the Rights Shares (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders other than Globalcrest and Ever Robust) (Note 4) Number of Shares Approximate % 56,739,510 6.34 63,650,000 7.11 524,934,274 58.64 – – 249,817,137 27.91 895,140,921 100.00	Upon issue of the Rights Shares and after the issue and allotment of the Placing Shares (assuming all Rights Shares are subscribed for by the Qualifying Shareholders) (Note 6) Number of Shares Approximate % 56,739,510 3.83 88,950,000 6.00 – – 586,350,000 39.58 749,451,411 50.59 1,481,490,921 100.00	Upon issue of the Rights Shares and after the issue and allotment of the Placing Shares (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders other than Globalcrest and Ever Robust) (Note 4 & 6) Number of Shares Approximate % 56,739,510 3.83 63,650,000 4.30 524,934,274 35.43 586,350,000 39.58 249,817,137 16.86 1,481,490,921 100.00	Upon issue of the Rights Shares and after the issue and allotment of the Placing Shares (assuming none of the Rights Shares are subscribed for by the Qualifying Shareholders other than Globalcrest and Ever Robust) (Note 4 & 6) Number of Shares Approximate % 56,739,510 3.83 63,650,000 4.30 524,934,274 35.43 586,350,000 39.58 249,817,137 16.86 1,481,490,921 100.00
	298,380,307	100.00	895,140,921	895,140,921	100.00	1,481,490,921		100.00

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Notes:

1. The entire issued share capital of Globalcrest is held by Central Core Resources Limited, the trustee of a discretionary trust under which certain immediate family members of Mr. Lam Shiu Ming, Daneil, an executive Director and chairman of the Company, are discretionary objects.

2. Pursuant to the Shareholders’ Undertaking, each of Globalcrest and Ever Robust has irrevocably undertaken to the Company and the Underwriter, among other matters, that (1) it will remain as the beneficial owner of such Shares that it owns as at the date of the Underwriting Agreement until the close of business of the Record Date free from all encumbrances; (2) it will apply for and pay for the Rights Shares to which it will be provisionally allotted pursuant to the Rights Issue.

3. Ever Robust is a wholly-owned subsidiary of China Mobile Games and Cultural Investment Limited, a company incorporated in the Cayman Islands with limited liability and whose shares are listed on the Growth Enterprise Market of the Stock Exchange.

4. Pursuant to the Underwriting Agreement, the Underwriter has undertaken to the Company that when it is being called upon to subscribe for or procure subscription for any Underwritten Shares (below, the ‘‘Undertaking’’): (1) the Underwriter shall not subscribe, for its own account, for such number of Underwritten Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the Takeovers Code) with it in the Company to be 29.9% or more of the then issued share capital of the Company; (2) the Underwriter shall ensure that none of the subscribers of the Underwritten Shares will become a substantial shareholder of the Company as a result of such subscription and such subscriber, together with parties acting in concert with it, shall not be holding 29.9% or more of the issued share capital of the Company upon the allotment and issue of the Rights Shares; (3) the Underwriter shall use all reasonable endeavours to procure that each of the subscribers of the Underwritten Shares (including any direct and indirect sub-underwriters), shall be third party independent of, not acting in concert with and not connected with any connected persons of the Company and their respective associates and close associates; and (4) in the event that there is insufficient public float of the Company within the meaning of the Listing Rules immediately upon the allotment and issue of the Rights Shares solely because of the Underwriter’s performance of its underwriting obligations under the Underwriting Agreement, the Underwriter shall take such appropriate steps as may be reasonably required to maintain the minimum public float for the Shares in compliance with Rule 8.08 of the Listing Rules.

On 19 June 2015, the Underwriter entered into four sub-underwriting arrangements with two companies and two individuals in respect of a sub-underwriting of an aggregate of 294,000,000 Underwritten Shares (with one sub-underwriter agreeing to take up 147,000,000 Underwritten Shares, representing approximately 14.73% of the issued share capital of the Company upon allotment and issue of the Rights Shares assuming all Unlisted Warrants are exercised in full and all Warrants Shares are issued on or prior to the Record Date; and each of the other three sub-underwriters agreeing to take up 49,000,000 Underwritten Shares each, representing approximately 4.91% of the issued share capital of the Company upon allotment and issue of the Rights Shares assuming all Unlisted Warrants are exercised in full and all Warrants Shares are issued on or prior to the Record Date). All such sub-underwriters are Independent Third Parties.

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LETTER FROM THE BOARD

The 294,000,000 Underwritten Shares agreed to be sub-underwritten/subscribed by the abovementioned four sub-underwriters/subscribers in aggregate represent approximately 32.84% of the enlarged share capital of the Company immediately after completion of the Rights Issue.

It is a term of the Underwriting Agreement that none of the sub-underwriters/subscribers of the Underwritten Shares will become a substantial shareholder of the Company as a result of such subscription and such subscriber, together with parties acting in concert with it, will not be holding 29.9% or more of the issued share capital of the Company upon the allotment and issue of the Rights Shares. Each of the subscribers of the Underwritten Shares (including any direct and indirect subunderwriters), is/will be third party independent of, not acting in concert with and not connected with any connected persons of the Company and their respective associates and close associates.

1. It is a term of the Placing Agreement that upon completion of the Placing, none of the Placees will become a substantial shareholder of the Company.

2. The Placing Shares, if any, will be allotted and issued after the Record Date, the Placing Shares will not entitle the holders thereof to participate in the Rights Issue.

3. Certain percentage figures included in the above tables have been subject to rounding adjustments. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them.

FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

		Net proceeds		Actual use of the net
Date of	Fund raising	raised	Proposed use of net	proceeds as at the Latest
announcement	activities	(approximately)	proceeds	Practicable Date
10 April 2015 and	Placing of 49,730,000	HK$19.33 million	To use as general working	Utilised as to approximately
22 April 2015	new Shares at a		capital of the Group	HK$19.33 million for
	price of			securities investments
	HK$0.4055 per			business
	Share
28 January 2015 and	Issue of the 6.5%	HK$8.9 million	To finance any potential	Utilised as to (i)
8 April 2015	unsecured loan		investment opportunities	approximately HK$1.3
	notes in the		of the Group that may	million for administrative
	aggregate principal		arise from time to time	expenses; and (ii) the
	amount of		and for the general	remaining of
	HK$9,200,000 due		working capital of the	approximately HK$7.6
	2016 by the		Group	million for securities
	Company			investments business

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LETTER FROM THE BOARD

		Net proceeds		Actual use of the net
Date of	Fund raising	raised	Proposed use of net	proceeds as at the Latest
announcement	activities	(approximately)	proceeds	Practicable Date
9 December 2014 and	Placing of	HK$39.7 million	To use as general working	Utilised as to (i)
18 December 2014	414,415,000 new		capital of the Group	approximately HK$12.7
	Shares at a price			million for administrative
	of HK$0.10 per			expenses; (ii)
	Share			approximately HK$7.0
				million for money
				lending business; and
				(iii) the remaining of
				approximately HK$20.0
				million for securities
				investments business
23 June 2014 and 9	Placing of	HK$33.0 million	To strengthen the financial	Utilised as to (i)
July 2014	343,200,000 new		position of the Group	approximately HK$3.0
	Shares at a price		and provide general	million for administrative
	of HK$0.10 per		working capital of the	expenses; and (ii) the
	Share		Group to meet any future	remaining of
			development and	approximately HK$30.0
			obligations	million for money
				lending business

Save for the above and the Placing which has not yet completed as the Latest Practicable Date, the Company had not conducted any other fund raising activities in the past 12 months immediately preceding the Latest Practicable Date.

REASONS FOR THE PLACING AND RIGHTS ISSUE AND USE OF PROCEEDS

The Group is principally engaged in distribution of films in various videogram formats, film exhibition, licensing and sub-licensing of film rights, leasing of investment properties, securities investment and money lending.

The Board has noted that the revenue of the Group has fluctuated in the past five financial years from a maximum of approximately HK$205.2 million for the year ended 30 June 2014 to a minimum of approximately HK$75.9 million for the year ended 30 June 2012. The business segment of the film exhibition, licensing and sub-licensing of film rights accounted for a major portion of the total revenue of the Group, which represented approximately 85.0% of the total revenue for the financial year ended 30 June 2014. However, films are produced on a project basis and the revenue generated thereunder are not stable, thus causing the fluctuation of the revenue and also the profitability of the Group. In view of the above, it is the goal of the Group to expand its revenue stream and stabilize its revenue through (i) the acquisition of new businesses, which are considered to have a relatively stable income stream, from other parties; and/or (ii) further expansion of the other

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LETTER FROM THE BOARD

existing business segments of the Group. As such, the Group is in the process of negotiating with certain potential vendors for possible acquisitions of some new businesses and further investment in some existing businesses. When the management of the Company is in negotiation with the potential sellers of the aforementioned acquisitions, such potential sellers may have concerns as to whether the Group has sufficient internal resources to proceed with the acquisitions and to develop the businesses. To facilitate further negotiations, it is preferable for the Company to conduct fund raising exercise before the formal acquisition agreements of the aforesaid acquisitions are entered into. As such, the Group proposed to conduct the Placing and the Rights Issue.

The gross proceeds from the Rights Issue will be approximately HK$120.55 million. The net proceeds from the Rights Issue after deducting all relevant expenses are estimated to be not less than HK$114.8 million. The Company intends to apply such net proceeds as to approximately:

• (i) not more than HK$50.0 million for the development of money lending business;

• (ii) not more than HK$43.4 million for the existing business of holding and sponsoring stage performance, concerts and other cultural events as well as the entertainment business in Hong Kong and PRC. Such business operations will be conducted through Round Table Performance Entertainment Limited, a 70% owned subsidiary of the Company, and/or by other members of the Group; and

• (iii) not less than HK$21.4 million for the working capital of the Group.

Furthermore, the proposed usage of the amount totalling not less than HK$38.9 million (including approximately HK$17.5 million from the Placing) for general working capital is as follows:

• (i) approximately HK$1.5 million for auditor remuneration;

• (ii) approximately HK$7.55 million for legal and other professional fee;

• (iii) approximately HK$23.0 million for salaries, staff welfare and other related expenses;

• (iv) approximately HK$3.5 million for rental and management fee; and

• (v) approximately HK$3.35 million for printing and stationery, travelling, utilities and other expenses.

If the Company intends to change any of its use of proceeds, further announcement will be published by the Company. If the change in use of proceeds from the Rights Issue is considered to be material, the Company will seek approval of the Independent Shareholders regarding such change.

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LETTER FROM THE BOARD

The Company will have sufficient working capital in the next 12 months and the Company currently has no further fund raising plans for its general working capital.

The Company assesses the risks, returns and prospects of the aforementioned businesses as follows:

(a) Money lending business

As stated in the interim report of the Group for the six-month ended 31 December 2014, the unaudited loans receivable from customers amounts to approximately HK$68.9 million bearing interest rates ranging from 9% to 12% per annum as at 31 December 2014. The Group seeks to maintain tight control over its loans receivable in order to minimise credit risk by reviewing the borrowers’ or guarantors’ financial positions, and accordingly, no loans receivable were impaired or overdue as at 31 December 2014. In view of (i) the stable interest income generated from the money lending business; and (ii) the growing demand for loan facilities by the existing customers, the Company intends to apply an aggregate of HK$85 million (including approximately HK$35 million from the Placing) for further development of the money lending business.

The risks involved in the money lending business include (i) insufficient funds to finance the operations or expansion plans; (ii) inadequate collateral or guarantees securing the loan to cover the loan receivables; and (iii) inability to effectively manage default risk of the loans and/or failure to maintain a low impaired loan ratio, which may have a material adverse impact on the business, results of operations and financial condition.

(b) Holding and sponsoring stage performance, concerts and other cultural events, as well as developing the entertainment business in Hong Kong and the PRC

As disclosed in the announcement of the Company dated 6 November 2014, a joint venture agreement was entered into between Gold Summit International Limited, a wholly-owned subsidiary of the Company, and Round Table Family Group Limited in relation to the formation of a joint venture company, namely Round Table Performance Entertainment Limited (‘‘Round Table’’) (where the Group held 70% equity interest). Pursuant to the aforesaid joint venture agreement, the Group may in its absolute discretion deem fit, provide a loan of up to an aggregate amount of HK$46,670,000 to Round Table. Round Table is principally engaged in holding and sponsoring stage performance, concerts and other cultural events, as well as developing the entertainment business in Hong Kong and the PRC. The Company intends to apply not more than HK$43.4 million in order to further develop the existing business of holding and sponsoring stage performance, concerts and other

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LETTER FROM THE BOARD

cultural events as well as the entertainment business in Hong Kong and PRC. Such business operations will be conducted through Round Table and/or by other members of the Group.

The Board also considers that the Rights Issue represents a good opportunity to broaden the shareholders’ base and the capital base of the Company. As such, the Directors (including the independent non-executive Directors) consider that the terms of the Rights Issue are fair and reasonable and the Rights Issue is in the interests of the Company and the Shareholders as a whole.

The Company proposed to raise fund for the business development of the Group as detailed in the Circular. The Board is of the view that if fund raising is conducted solely through a placing of new shares, the existing Shareholders will not have the rights to participate in the capital exercise and their shareholding interest would be diluted without having an equal opportunity to maintain their proportionate interests. Meanwhile, if fund raising is conducted solely through a rights issue and considering the amount of fund to be raised (approximately HK$313.05 million in total before expense), the underwriting commitment and thus underwriting risk would be of a scale not acceptable by potential underwriters. The Board has also considered other alternatives for fund raising options for the Group, such as bank borrowing. However, taking into consideration that (i) bank borrowings or debt financing would result in additional interest burden to the Group; and (ii) the Rights Issue offers all the Shareholders equal opportunity to subscribe for their prorata provisional allotment of the Rights Shares and participate in the growth opportunity of the Company, the Board is of the view that the current structure involving a combination of a rights issue and a best-effort placing, which was arrived at after arm’s length negotiations between the Company and the Placing Agents (one of which is also the Underwriter), is fair and reasonable and is in the interests of the Company and the Shareholders as a whole. The management of the Company has also approached three other securities firms but none of them were interested to act as underwriter or placing agent in the Group’s proposed fund raising exercises.

Assuming that no Qualifying Shareholder takes up his provisional allotment under the Rights Issue, the shareholdings of the existing Independent Shareholders (excluding Ever Robust who has undertaken to take up its Committed Shares) will be (i) decreased from approximately 83.72% as at the Latest Practicable Date to 27.91% upon completion of the Rights Issue; and (ii) further decreased to 16.86% upon completion of the Placing and Rights Issue. Qualifying Shareholders who do not elect to subscribe for their provisional allotment under the Rights Issue in full will have their shareholding interests in the Company being diluted for a maximum of approximately 66.7% upon completion of the Rights Issue.

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LETTER FROM THE BOARD

However, the Board considers that such scenario of maximum dilution is unlikely to occur since it assumes that (i) the Independent Shareholders have voted in favour of the Rights Issue at the SGM; but (ii) no Independent Shareholder other than Ever Robust would take up their provisional allotment under the Rights Issue, which is a complete misalignment between the voting behaviour of the Independent Shareholders and their subscription for the Rights Shares.

Having considered: (i) the Rights Issue would provide the fund for the Group to pursue its business development plan; (ii) the Rights Issue would strengthen the capital base of the Group; (iii) the Rights Issue is on the basis that all Qualifying Shareholders have been offered the same opportunity to maintain their proportional interests in the Company and allows the Qualifying Shareholders to participate in the growth of the Company; (iv) the inherent dilutive nature of Rights Issue in general if the existing Shareholder did not take up his/her/its provisional allotment under the Rights Issue; and (v) the discount of the Subscription Price was necessary to encourage the Qualifying Shareholders to participate in the Rights Issue, the Board considers the possible dilution effect on the Independent Shareholders to be acceptable.

(3) CHANGE IN BOARD LOT SIZE AND ODD LOT MATCHING

The board lot size for trading in the Shares of HK$0.01 each in the share capital of the Company on the Stock Exchange will be changed from 5,000 Shares to 15,000 Shares with effect from 9:00 a.m. on Friday, 24 July 2015.

The Shares are currently traded in board lots of 5,000 Shares each and the market value of each board lot was HK$4,000 (based on the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day). In order to increase the value of each board lot of the Shares so that the value of each board lot of the Shares will not be less than HK$2,000, as well as to reduce transaction and registration costs incurred by the Shareholders and investors of the Company, the Board proposes to change the board lot size for trading of the Shares from 5,000 to 15,000 with effect from 9:00 a.m. on Friday, 24 July 2015. Upon the change in board lot size becoming effective, the Shares will be traded in board lot of 15,000 Shares and the estimated market value per board lot of the Shares will be HK$12,000 (based on the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day).

Based on the ex-rights price of HK$0.291 per Share (based on the closing price of HK$0.47 per Share as quoted on the Stock Exchange on 15 July 2015, i.e. the last day of dealings in Shares on a cum-rights basis), the value of each board lot of 15,000 Shares would be HK$4,365. The Rights Shares will be traded in the board lot of 15,000 Shares.

Based on the closing price of HK$0.435 per Shares as quoted on the Stock Exchange as at the Latest Practicable Date, the market value of each existing board lot is HK$2,175 and the estimated market value of each proposed new board lot is HK$6,525.

– 33 –

LETTER FROM THE BOARD

The change in board lot size will not result in any change in the relative rights of the Shareholders. The Directors consider that the change in board lot size is in the interest of the Company and the Shareholders as a whole.

To alleviate the difficulties in trading odd lots of the Shares arising from the change in board lot size of the Shares, the Company has appointed Jun Yang Securities as an agent to provide matching services to the Shareholders who wish to top up or sell their holdings of odd lots of the Shares during the period from 9:00 a.m. on Friday, 24 July 2015 to 4:00 p.m. on Friday, 14 August 2015 (both dates inclusive). Holders of the Shares in odd lots represented by the existing share certificates for the Shares who wish to take advantage of this facility either to dispose of their odd lots of the Shares or to top up their odd lots to a full new board lot may directly or through their broker contact Mr. Kwok Ka Yiu of Jun Yang Securities at Unit 2103, 21/F, Tower 1, Lippo Centre, 89 Queensway, Admiralty Hong Kong (telephone: (852) 2530 4088 and facsimile: (852) 2530 4054) during such period. Holders of the Shares in odd lots should note that successful matching of the sale and purchase of odd lots of the Shares is not guaranteed. The Shareholders are recommended to consult their professional advisers if they are in doubt about the above facility.

(4) ADJUSTMENTS IN RELATION TO THE OUTSTANDING OPTIONS, UNLISTED WARRANTS AND CONSIDERATION CONVERTIBLE NOTES

Adjustment to Outstanding Options

Adjustments to the number of Shares falling to be issued upon the exercise of the subscription rights attached to the Outstanding Options and the related exercise price are required under the relevant rules of the share option scheme of the Company, the provision of Rule 17.03(13) of the Listing Rules and the supplementary guidance set out by the Stock Exchange on 5 September 2005 upon the issue of the Rights Shares.

Based on the closing price of HK$0.47 per Share as quoted on the Stock Exchange on Wednesday, 15 July 2015, i.e. the last day of dealings in Shares on a cum-rights basis, the exercise price of the Outstanding Options granted on 21 July 2014 will be adjusted from HK$1.738 per Option Share to HK$1.077 per Option Share. The total number of Option Shares fall to be allotted and issued after the adjustment of subscription price will be 24,348,782 Shares, representing (i) approximately 2.72% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares; and (ii) approximately 1.64% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and the Rights Shares.

Such adjustment will become effective upon completion of the Rights Issue.

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LETTER FROM THE BOARD

Adjustment to Unlisted Warrants

Adjustments to the subscription price per Warrant Share under the Unlisted Warrants are also required under terms and conditions of the Unlisted Warrants as a result of each of the Placing and the Rights Issue.

As regards the Rights Issue, based on the average closing price of HK$0.742 per Share as quoted on the Stock Exchange for the five consecutive trading days immediately, preceding the date of the Announcement, the subscription price of the Unlisted Warrants will be adjusted from HK$2.5 per Warrant Share to HK$1.29 per Warrant Share (subject to further adjustment in accordance with the terms and conditions of the Unlisted Warrants). On the basis of the adjusted exercise price of HK$1.29 per Warrant Share, the number of Warrant Shares fall to be allotted and issued after the adjustment of subscription price will be 66,279,069 Shares, representing (i) approximately 7.40% of the issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares; and (ii) approximately 4.47% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and the Rights Shares, and will remain below 20% of the Company’s issued share capital upon at all time and comply with requirements under Rule 15.02 of the Listing Rules.

Such adjustment has become effective on the commencement of the day next following the Record Date.

Consideration Convertible Notes

Pursuant to the proposed acquisition of further equity interests in Winston Asia Limited as announced by the Company in its announcement dated 7 May 2015, the consideration for such acquisition will be satisfied by the Company issuing the Consideration Convertible Notes, which are convertible into Shares at an initial conversion price of HK$0.75 per conversion share. Notwithstanding completion of such acquisition had not yet taken place and the Consideration Convertible Notes have not yet been issued, it is a term in the sale and purchase agreement relating to such acquisition that the said initial conversion price of HK$0.75 per conversion share shall be subject to adjustment if any adjustment event takes place between the date of the relevant sale and purchase agreement and the completion date of the acquisition. As each of the Placing and the Rights Issue is an adjustment event to the initial conversion price of HK$0.75 per conversion share, the conversion price will be adjusted before the final issue of the Consideration Convertible Notes.

As regards the Rights Issue, based on the average closing price of HK$0.732 per Share as quoted on the Stock Exchange for the fifteen consecutive dealing days immediately preceding the date of the Announcement, the adjusted conversion price per conversion share will be adjusted from HK$0.75 to HK$0.388 (subject to further adjustment in accordance with the terms and conditions of the Consideration Convertible Notes). On the basis of the

– 35 –

LETTER FROM THE BOARD

adjusted initial conversion price of HK$0.388 per conversion share, the number of conversion shares falling to be issued under the Consideration Convertible Notes in the aggregate principal amount of HK$64,000,000 will be 164,948,453 Shares.

Such adjustment will become effective on the date of allotment and issue of the Rights Shares.

General

The Company has engaged the Independent Financial Adviser to certify the above adjustments to (i) the number of underlying Shares of the Outstanding Options and the exercise price of the Outstanding Options; (ii) the exercise price of the Unlisted Warrants; and (iii) the conversion price of the Consideration Convertible Notes. The Company will also notify the Option Holders, the Unlisted Warrant Holders and the vendors to the proposed acquisition of further equity interests in Winston Asia Limited of such adjustments.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in Appendices I to III to this Prospectus.

On behalf of the Board Universe International Holdings Limited Lam Shiu Ming, Daneil Chairman and Executive Director

– 36 –

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION INCORPORATED BY REFERENCE

Financial information and management discussion and analysis of the Group for each of the three years ended 30 June 2014, 2013, 2012 and the six months ended 31 December 2014 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.uih.com.hk/).

The unaudited consolidated financial statements, including the notes thereto, and the management discussion and analysis of the Group for the six months ended 31 December 2014 has been set out in pages 2 to 48 and pages 49 to 52 respectively of the interim report 2014 of the Company which are incorporated by reference into this Prospectus and are available on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the interim report 2014:

http://www.hkexnews.hk/listedco/listconews/SEHK/2015/0318/LTN20150318316.pdf

The audited consolidated financial statements, including the notes thereto, and the management discussion and analysis of the Group for the year ended 30 June 2014 has been set out in pages 70 to 214 and pages 8 to 25 respectively of the annual report 2014 of the Company which are incorporated by reference into this Prospectus and are available on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the annual report 2014:

http://www.hkexnews.hk/listedco/listconews/SEHK/2014/1016/LTN20141016216.pdf

The audited consolidated financial statements, including the notes thereto, and the management discussion and analysis of the Group for the year ended 30 June 2013 has been set out in pages 60 to 186 and pages 10 to 19 respectively of the annual report 2013 of the Company which are incorporated by reference into this Prospectus and are available on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the annual report 2013:

http://www.hkexnews.hk/listedco/listconews/SEHK/2013/1031/LTN20131031155.pdf

The audited consolidated financial statements, including the notes thereto, and the management discussion and analysis of the Group for the year ended 30 June 2012 has been set out in pages 50 to 162 and pages 10 to 15 respectively of the annual report 2012 of the Company which are incorporated by reference into this Prospectus and are available on the Stock Exchange’s website (http://www.hkexnews.hk). Please also see below quick link to the annual report 2012:

http://www.hkexnews.hk/listedco/listconews/SEHK/2012/1031/LTN20121031175.pdf

I – 1

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

2. STATEMENT OF INDEBTEDNESS

Borrowings

As at the close of business on 30 June 2015, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this Prospectus, the Group had total borrowings of approximately HK$9,500,000, comprising (i) the obligations under non-interest bearing finance leases of approximately HK$132,000; and (ii) an unsecured loan note of approximately HK$9,368,000 which is interest bearing at 6.5% per annum.

Litigations and Contingent Liabilities

As at the close of business on 30 June 2015, the Group has the following material litigations and contingent liabilities:

• (a) A court action was commenced in the Court of First Instance of the Hong Kong Special Administrative Region on 17 April 2002 by The Star Overseas Limited (‘‘Star’’), an independent third party, against Universe Entertainment Limited (‘‘UEL’’), an indirect wholly-owned subsidiary of the Company.

By the above action, Star alleges that a sum of US$935,872 (equivalent to HK$7,299,799) was payable by UEL to Star as its share of the revenue of the movie entitled ‘‘Shaolin Soccer’’ (the ‘‘Movie’’).

Pursuant to an order (the ‘‘Order’’) made by the High Court of Hong Kong on 21 February 2003, UEL was ordered and had paid to Star a sum of HK$5,495,700, being part of the licence fee of the Movie received by UEL from Miramax Films (being the licencee of the Movie) and which was also part of the sum claimed by Star. Pursuant to the Order, UEL is also liable to pay Star interest in the sum of HK$350,905 and some of the costs of the application leading to the making of the Order, all of which have been settled. As the Order has not disposed of all the claims of US$935,872 (equivalent to HK$7,299,799) by Star, UEL is entitled to continue to defend the claim by Star for recovering the remaining balance in the sum of approximately HK$1,804,099 (HK$7,299,799 less HK$5,495,700).

On 30 April 2002, UEL issued a Writ of Summons against Star for the latter’s wrongful exploitation of certain rights in the Movie co-owned by both parties. UEL claimed to recover all losses and damages suffered by UEL as a result of such wrongful exploitation.

I – 2

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

On 9 September 2002, Universe Laser & Video Co. Limited (‘‘ULV’’), an indirect wholly owned subsidiary of the Company, issued a Writ of Summons against Star for the latter’s infringement of the licensed rights in the Movie held by ULV. ULV claimed to recover all of its loss and damages suffered as a result of the said infringement.

In the opinion of legal counsel, it is premature to predict the outcome of the claim against UEL. The Board is of the opinion that the outcome of the said claim against UEL will have no material financial impact on the Group for the Period.

• (b) On 1 September 2008, Koninklijke Philips Electronics N.V. (‘‘KPE’’) issued a Writ of Summons against among other persons, the Company, ULV and Mr. Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Video Compact Disc owned by KPE.

In the opinion of legal counsel, it is premature to predict the outcome of the said claim made against the Company, ULV and Mr. Lam Shiu Ming, Daneil. The Board is of the opinion that the outflow of economic benefits cannot be reliably estimated and accordingly no provision for any liability that may result has been made in the unaudited condensed consolidated interim financial information.

• (c) On 8 January 2010, KPE issued a Writ of Summons against among other persons, the Company, ULV and Mr. Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Digital Video Disc owned by KPE.

In June 2012, the action was discontinued against the Company and Mr. Lam Shiu Ming, Daneil. The claim made against ULV has been agreed with KPE and settled by ULV and appropriate legal costs provision was recognised accordingly in the consolidated financial statements for the year ended 30 June 2012.

No additional provision has been made in the unaudited condensed consolidated interim financial information for the Period. Based on the consultation with legal counsel, no further material outflow of economic benefits will be incurred for ULV.

I – 3

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

• (d) Universe Artiste Management Limited (‘‘UAM’’) commenced Court of First Instance Action against Kwong Ling and Oriental Prosperous Int’l Entertainments Limited (collectively the ‘‘Defendants’’) on 30 June 2014 claiming inter alia for a declaration that UAM is entitled to extend/renew the term of the Artist Management Contract of the Defendants with UAM (the ‘‘Artist Management Contract’’) for 5 years as from 3 May 2014 to 2 May 2019.

The Defendants filed their defence and counterclaim on 29 September 2014. By such counterclaim, the Defendants claiming against UAM inter alia for a declaration that the Artist Management Contract was void and unenforceable, the Artist Management Contract to be rescinded, damages for breach of the Artist Management Contract and for breach of fiduciary duties, a declaration that UAM is liable to account to the Defendants and an order for payment of all sums found to be due by UAM to the Defendants.

In the opinion of legal counsel, it is premature to predict the outcome of the said claim against UAM. The Board considers that the amounts of counterclaim by the Defendants against UAM is insignificant to the Group as a whole.

Disclaimer

Save as aforesaid and apart from intra-group liabilities and normal accruals and other payables in the ordinary course of the business, as at the close of business on 30 June 2015, the Group did not have other outstanding mortgages, charges, or other loan capital, bank overdrafts, loans or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptance or acceptance credits, guarantees or other material contingent liabilities.

The Directors confirmed that there has been no material changes in the indebtedness and contingent liabilities of the Group since 30 June 2015 and up to and including the Latest Practicable Date.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the existing cash and bank balances, other internal resources available and the estimated net proceeds from the Placing and the Rights Issue, the Group has sufficient working capital for its present requirements and for at least 12 months from the date of this Prospectus in the absence of unforeseen circumstances.

I – 4

FINANCIAL AND OTHER INFORMATION OF THE GROUP

APPENDIX I

4. MATERIAL ADVERSE CHANGE

Save for the fact that the Group has recorded a net loss for the six months period ended 31 December 2014 (the ‘‘Period’’) against a net profit for the six months period ended 31 December 2013, which is mainly due to the recognition of the fair value loss arising from the investment securities and the recognition of the share based payment expenses of approximately HK$19.0 million and approximately HK$9.4 million, respectively during the Period as disclosed in the interim report of the Company for the six months ended 31 December 2014, the Directors are not aware of any material adverse change in the financial position or trading position of the Group since 30 June 2014, being the date to which the latest published audited financial statements of the Group was made up.

5. BUSINESSES ACQUIRED AFTER 30 JUNE 2014

On 6 November 2014, Gold Summit International Limited, a wholly-owned subsidiary of the Company, and Round Table Family Group Limited entered into a joint venture agreement to jointly invest in Round Table Performance Entertainment Limited, which is principally engaged in holding and sponsoring stage performance, concerts and other cultural events, as well as developing the entertainment business in Hong Kong and the PRC. The aggregate amount of capital contribution was HK$3,330,000, which was contributed as to as to HK$2,330,000 by Gold Summit International Limited and as to HK$1,000,000 by Round Table Family Group Limited.

On 17 November 2014, Fragrant River Entertainment Culture (Holdings) Limited, a whollyowned subsidiary of the Company, and 4 vendors entered into a sale and purchase agreement in relation to the acquisition of the 22.13% of the issue of share capital of Winston Asia Limited, a company incorporated in BVI and has a group of subsidiaries which are principally engaged in business activities including the trading of watches, trademark holding, wholesales and retail of watches in Hong Kong and PRC, at a consideration of HK$5,060,000.

On 7 May 2015, Precise Reach Group Limited (‘‘Precise Reach’’）, a wholly-owned subsidiary of the Company, as purchaser, Fairy Fresh International Limited (‘‘Fairy Fresh’’）as vendor and Mr. Poon Chun Yin, the ultimate beneficial owner of Fairy Fresh, as warrantor entered into a sale and purchase agreement in relation to the sale and purchase of (i) the loan in the amount of HK$1,155,000 owing by Hong Kong Optical Company Limited (‘‘Hong Kong Optical’’) to Fairy Fresh; and (ii) 11% of the issued share capital of Hong Kong Optical at an aggregate consideration of HK$1,600,000. On 7 May 2015, Precise Reach as purchaser, Fairy Fresh as vendor and Mr. Poon Chun Yin as warrantor entered into a sale and purchase agreement in relation to the sale and purchase of 80% of the issued share capital of Fine Ocean Limited at a consideration of HK$2,400,000. Each of Hong Kong Optical and Fine Ocean Limited is a company incorporated in Hong Kong with limited liability and is principally engaged in the wholesale and retail of optical products in Hong Kong.

I – 5

APPENDIX I

FINANCIAL AND OTHER INFORMATION OF THE GROUP

On 7 May 2015, Fragrant River Entertainment Culture (Holdings) Limited as purchaser, Victor Meg Limited, Ng Tang and Most Profitable Investment Ltd. as vendors and Ng Tang and Lo Lai Kuen as guarantors entered into a sale and purchase agreement in relation to the acquisition of all the remaining issue share capital of Winston Asia Limited, at a maximum consideration of HK$64,000,000 (subject to adjustments).

Save as disclosed, no business was acquired by the Group after 30 June 2014, being the date to which the latest published audited consolidated financial statements of the Group was made up.

6. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group’s unaudited consolidated revenue for the six months period ended 31 December 2014 (the ‘‘Period’’) decreased by approximately 80.0% over the same period last year to approximately HK$30.5 million. It was mainly due to the decrease in revenue from film exhibition, licensing and sub-licensing of film rights segment from approximately HK$144.4 million for the six months period ended 31 December 2013 to approximately HK$22.5 million during the Period as a result of the decrease in number of newly released film and no new selfproduced films released during the Period under review.

The Group recorded a net loss of approximately HK$30.4 million for the Period against a net profit of approximately HK$5.9 million for the corresponding period last year, which is mainly due to the recognition of the fair value loss arising from the investment securities and the recognition of the share based payment expenses of approximately HK$19.0 million and approximately HK$9.4 million respectively during the Period.

The total box revenue of film exhibition industry in the PRC is increasing in recent years. Due to the high production, advertising and distribution cost, this makes the operating environment of this segment more challenging than before. In response to the above, the Group adopted a cautious approach towards investment in the film exhibition, licensing and sublicensing of film rights which in turn resulted in the decrease in number of newly released films and the absence of new self-produced film released during the Period. Nevertheless, the Group will closely monitor the market environment and continue to evaluate new opportunities in this sector.

I – 6

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

A. STATEMENT OF UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS

The statement of unaudited pro forma adjusted consolidated net tangible assets of the Group prepared in accordance with paragraph 29 of Chapter 4 of the Listing Rules is set out below to illustrate the effects of the Rights Issue on the consolidated net tangible assets of the Group as if every 10 issued and unissued existing Shares have been consolidated into 1 consolidated Share (effective on 17 March 2015) (the ‘‘Share Consolidation’’ and the Shares upon completion of the Share Consolidation, the ‘‘Consolidated Shares’’), and assuming that the Rights Issue had taken place on 31 December 2014.

The statement of unaudited pro forma adjusted consolidated net tangible assets of the Group has been prepared for illustrative purposes only, based on the judgements and assumptions of the Directors of the Company, and because of its hypothetical nature, may not give a true picture of the financial position of the Group following the Rights Issue.

The following statement of unaudited pro forma adjusted consolidated net tangible assets of the Group is based on the unaudited consolidated net tangible assets of the Group as at 31 December 2014, adjusted as described below:

						Unaudited pro
					Unaudited	forma adjusted
					consolidated net	consolidated net
			Unaudited pro	Unaudited	tangible assets	tangible assets
			forma adjusted	consolidated net	per share	per share
	Unaudited		consolidated net	tangible assets	attributable to	attributable to
	consolidated net		tangible assets of	per share	the Shareholders	the Shareholders
	tangible assets of		the Group	attributable to	of the Company	of the Company
	the Group		attributable to	the Shareholders	immediately after	after
	attributable to		the Shareholders	of the Company	implementation of	implementation of
	the Shareholders		of the Company	prior to	the Share	the Share
	of the Company	Estimated net	after completion	the Share	Consolidation and	Consolidation and
	as at 31	proceeds from the	of the Rights	Consolidation and	prior to	completion of the
	December 2014	Rights Issue	Issue	the Rights Issue	the Right Issue	Rights Issue
	HK$’000	HK$’000	HK$’000	HK$	HK$	HK$
	(Note a)	(Note b)		(Note c)	(Note d)	(Note e)
Rights Issue of 596,760,614
Rights Shares to be
issued at subscription
price of HK$0.202 per
Rights Shares	350,098	114,796	464,894	0.14	1.41	0.55

II – 1

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Note a:

The unaudited consolidated net tangible assets of the Group attributable to the shareholders of the Company as at 31 December 2014 represented the total shareholder’s equity amounted to HK$351,956,000 less the other intangible assets of HK$1,858,000, as extracted from the published interim report of the Company for the six months ended 31 December 2014.

Note b:

The estimated proceeds less related expenses from the Rights Issue of approximately HK$114,796,000 is calculated based on the 596,760,614 Rights Shares to be issued at the subscription price of HK$0.202 per Rights Shares and after deduction of estimated related expenses of approximately HK$5,750,000.

Note c:

Based on 2,486,503,070 shares in issue as at 31 December 2014 before implementation of the Share Consolidation and prior to completion of the Rights Issue.

Note d:

Based on 248,650,307 Consolidated Shares, assuming that the Share Consolidation had been completed on 31 December 2014. The calculation takes no account of any shares to be issued upon exercise of Unlisted Warrants.

Note e:

Based on 845,410,921 shares, comprising (i) 248,650,307 Consolidation Shares, and (ii) 596,760,614 Rights Shares to be issued, assuming that none of the Unlisted Warrants are exercised on or before the Latest Practicable Date.

Note f:

No adjustment has been made to the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group to reflect any trading results or other transactions of the Group entered into subsequent to 31 December 2014. In particular, the Unaudited Pro Forma Financial Information has not taken into account the placing of 49,730,000 new shares completed on 22 April 2015 at a placing price of HK$0.4055 per placing share, of which the net proceeds from this placing after deduction of commission and other expenses are approximately HK$19,330,000 and the placing of 586,350,000 new shares announced in the Company’s circular dated on 24 June 2015 at a placing price of HK$0.3411 per placing share, of which the net proceeds from this placing after deduction of commission and other expenses are approximately HK$192,503,000.

II – 2

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION INCLUDED IN A PROSPECTUS

TO THE DIRECTORS OF UNIVERSE INTERNATIONAL HOLDINGS LIMITED

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Universe International Holdings Limited (the ‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’) by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted net tangible assets of the Group as at 31 December 2014, and related notes (the ‘‘Unaudited Pro Forma Financial Information’’) as set out on pages II-1 to II-2 of the Company’s prospectus dated 24 July 2015, in connection with the proposed rights issue of the Company. The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described on pages II-1 to II-2.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the proposed rights issue on the Group’s financial position as at 31 December 2014 as if the proposed rights issue had taken place at 31 December 2014. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s financial information for the period ended 31 December 2014, on which a review report has been published.

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

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

II – 3

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Reporting Accountant’s Responsibilities

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

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’, issued by the HKICPA. This standard requires that the reporting accountant complies with ethical requirements and plans and performs procedures to obtain reasonable assurance about whether the directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

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

The purpose of unaudited pro forma financial information included in a prospectus is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the proposed rights issue at 31 December 2014 would have been as presented.

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

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

• The unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

II – 4

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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

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

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

Opinion

In our opinion:

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

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

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

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 24 July 2015

II – 5

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; and (ii) immediately following completion of the Placing and the Rights Issue is as follows:

(i) As at the Latest Practicable Date

Authorised:		HK$
10,000,000,000	Shares of HK$0.01 each	100,000,000.00
Issued and fully paid:
298,380,307	Shares of HK$0.01 each	2,983,803.07
Immediately following the completion of the Placing and Rights		Issue
Authorised:		HK$
10,000,000,000	Shares of HK$0.01 each	100,000,000.00
Issued and fully paid/to be issued:
298,380,307	Shares as at the Latest Practicable Date	2,983,803.07
586,350,000	Placing Shares to be allotted and issued	5,863,500.00
596,760,614	Rights Shares to be allotted and issued	5,967,606.14
	Shares in issue and fully paid immediately
	upon completion of the Placing and
1,481,490,921	Rights Issue	14,814,909.21

(ii) Immediately following the completion of the Placing and Rights Issue

Note: Assuming the maximum number of Placing Shares is placed.

III – 1

GENERAL INFORMATION

APPENDIX III

All the existing Shares in issue are fully-paid and rank pari passu in all respects including all rights as to dividends, voting and return of capital. The Rights Shares and the Placing Shares (as the case may be), when allotted, issued and fully-paid, will rank pari passu with the existing Shares in issue as at the respective date of their allotment and issue in all respects. Holders of fully-paid Rights Shares will be entitled to receive all future dividends and distributions which may be declared, made or paid on or after the date of allotment of Rights Shares.

The Company has applied to the Listing Committee for the listing of and permission to deal in, among other Shares, the Placing Shares and the Rights Shares (in both their nil-paid and fullypaid forms). No part of the share capital or any other securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or Placing Shares or Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

As at the Latest Practicable Date, there were no arrangements under which future dividends are waived or agreed to be waived.

As at the Latest Practicable Date, save for 15,088,400 Outstanding Options and 34,200,000 Unlisted Warrants (in each case, subject to adjustments), the Company has no outstanding convertible securities, options or warrants and there was no capital of any member of the Group which is under option, or agreed conditionally or unconditionally to be put under option. Pursuant to the proposed acquisition of further equity interests in Winston Asia Limited as announced by the Company in its announcement dated 7 May 2015, the consideration for such acquisition will be satisfied by the Company issuing Consideration Convertible Notes. As completion of such acquisition has not yet taken place, the Consideration Convertible Notes have not yet been issued as at the Latest Practicable Date.

III – 2

GENERAL INFORMATION

APPENDIX III

3. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares (within the meaning of Part XV of the SFO) or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be: (a) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); (b) entered in the register kept by the Company pursuant to Section 352 of the SFO; or (c) notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuer contained in the Listing Rules (‘‘Model Code’’) were as follows:

(a) Interests in Shares – Long positions

			Subtotal number of
			shares and
			underlying shares
			of the Company	Approximate
		Number of shares	held by each	percentage of the
		and underlying	Director/chief	total issued share
Name of Director or chief		shares of the	executive of the	capital of the
executive of the Company	Capacity	Company held	Company	Company
Mr. Lam Shiu Ming,	founder of a	56,739,510
Daneil	discretionary trust	(note i)
	beneficial owner	2,072,000	58,811,510	6.57%
		(note ii)		(note iv)
Mr. Lam Siu Keung, Alvin	beneficial owner	2,072,000	2,072,000	0.69%
		(note iii)		(note v)
Mr. Hung Cho Sing	beneficial owner	2,072,000	2,072,000	0.69%
		(note iii)		(note v)
Mr. Yeung Kim Piu	beneficial owner	2,072,000	2,072,000	0.69%
		(note iii)		(note v)
Mr. Lam Kit Sun	beneficial owner	2,072,000	2,072,000	0.69%
		(note iii)		(note v)

Notes:

• (i) These 56,739,510 Shares are held by Globalcrest Enterprises Limited, which is wholly owned by Central Core Resources Limited. Central Core Resources Limited is the trustee of a discretionary trust founded by Mr. Lam Shiu Ming, Daneil, the chairman of the Board and an executive Director. As such, Mr. Lam Shiu Ming Daneil is deemed to be interested in all the 56,739,510 Shares held by Globalcrest Enterprises Limited. Certain immediate family members of Mr. Lam Shiu Ming, Daneil are discretionary objects of the aforesaid discretionary trust. As at the Latest Practicable Date, Globalcrest Enterprises Limited held 18,913,170 Shares and had irrevocably undertaken to apply for and pay for 37,826,340 Rights Shares to which it will be provisionally allotted pursuant to the Rights Issue.

III – 3

GENERAL INFORMATION

APPENDIX III

• (ii) These 2,072,000 underlying Shares of the Company relate to share options granted by the Company to Mr. Lam Shiu Ming Daneil.

• (iii) These interests are underlying shares of the Company in respect of share options granted by the Company to each of Mr. Lam Siu Keung Alvin, Mr. Hung Cho Sing, Mr. Yeung Kim Piu and Mr. Lam Kit Sun.

• (iv) The percentage holding is calculated based on the expected issued share capital of the Company as enlarged by the issue of the Rights Shares comprising 895,140,921 Shares.

• (v) The percentage holding is calculated based on the issued share capital of the Company as at the Latest Practicable Date comprising 298,380,307 Shares.

Save as disclosed in this Prospectus, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in the shares, underlying shares (within the meaning of Part XV of the SFO) or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be: (a) notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); (b) entered in the register kept by the Company pursuant to Section 352 of the SFO; or (c) notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Other interests

(i) Interests in service contracts

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group (excluding contracts expiring or terminable by any member of the Group within one year without payment of compensation, other than statutory compensation).

(ii) Interests in assets of the Group

As at the Latest Practicable Date, none of the Directors has, or has had, any direct or indirect interest in any assets which have been, since 30 June 2014, being the date to which the latest audited accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to, any member of the Group.

(iii) Interests in contracts or arrangements

Saved for the Shareholder Undertaking signed by Globalcrest, none of the Directors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group.

III – 4

GENERAL INFORMATION

APPENDIX III

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as is known to any Director or chief executive of the Company based on the disclosure of interest notices filed with the Company, the following persons (not being Directors or chief executive of the Company) had an interests or short positions in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or in any options in respect of such capital:

Long positions in Shares/underlying shares of the Company

			Subtotal Number of	Approximate
		Number of Shares	Shares and	percentage of the
		and underlying	underlying shares	total issued share
		shares of the	of the Company	capital of the
Name	Capacity	Company held	held	Company
		(note vi)	(note vi)
Jun Yang Securities Company	Other	593,334,274 (L)	593,334,274 (L)	59.47%
Limited (note i)		294,000,000 (S)	294,000,000 (S)	29.47%
Golden Moral Investments	Interest of a controlled	593,334,274 (L)	593,334,274 (L)	59.47%
Limited (note i)	corporation	294,000,000 (S)	294,000,000 (S)	29.47%
Jun Yang Solar Power	Interest of controlled	593,334,274 (L)	593,334,274 (L)	59.47%
Investments Limited	corporations	294,000,000 (S)	294,000,000 (S)	29.47%
(note i)
Fordjoy Securities &	Other	147,000,000 (L)	147,000,000 (L)	14.73%
Futures Limited (note ii)
Yuen Shu Ming (note ii)	Interest of a controlled	147,000,000 (L)	147,000,000 (L)	14.73%
	corporation
Mr. Ng Tang (Note iii)	beneficial owner	5,335,342 (L)
	interest of a controlled	69,745,134 (L)	75,080,476 (L)	25.16%
	corporation
Victor Meg Limited (Note iii)	beneficial owner	69,745,134 (L)	69,745,134 (L)	23.37%
Globalcrest Enterprises Limited	beneficial owner	56,739,510 (L)	56,739,510 (L)	6.34%
(Note iv)
Central Core Resources	Trustee (other than a	56,739,510 (L)	56,739,510 (L)	6.34%
Limited (Note iv)	bare trustee)
Ever Robust Holdings Limited	beneficial owner	63,650,000 (L)	63,650,000 (L)	7.11%
(Note v)
China Mobile Games and	interest of a controlled	63,650,000 (L)	63,650,000 (L)	7.11%
Culture Investment Limited	corporation
(Note v)

III – 5

GENERAL INFORMATION

APPENDIX III

Notes

• (i) The long position in respect of 593,334,274 Shares represent the maximum number of Shares that Jun Yang Securities Company Limited, as the underwriter for the Rights Issue, is required to subscribe for pursuant to the underwriting agreement for the Rights Issue. The short position in respect of 294,000,000 Shares represent the number of Shares sub-underwritten or placed by Jun Yang Securities Company Limited to various sub-underwriters as at the Latest Practicable Date. Jun Yang Securities Company Limited is a wholly-owned subsidiary of Golden Moral Investments Limited, which is a wholly-owned subsidiary of Jun Yang Solar Power Investments Limited. By virtue of the provisions of Part XV of the SFO, each of Golden Moral Investments Limited and Jun Yang Solar Power Investments Limited is deemed to be interested in the Shares in which Jun Yang Securities Company Limited is interested. Mr. Lam Wing Tai, an independent non-executive Director, is also an independent non-executive director of Jun Yang Solar Power Investments Limited. The percentage holdings are calculated based on the expected number of issued Shares upon completion of the Rights Issue comprising 997,740,921 Shares. This assumes that all Shares which may fall to be allotted and issued upon the exercise of the subscription rights attached to the unlisted warrants issued by the Company entitling the holders thereof to subscribe up to an aggregate amount of HK$85,500,000 for a maximum of 34,200,000 new Shares are issued prior to the Record Date.

• (ii) Fordjoy Securities and Futures Limited entered into a sub-underwriting letter with Jun Yang Securities Company Limited to take up 147,000,000 Rights Shares under the Rights Issue. Based on the notices of disclosure of interests of Fordjoy Securities and Futures Limited and Mr. Yuen Shu Ming dated 22 June 2015, Fordjoy Securities and Futures Limited is 76% owned by Mr. Yuen Shu Ming. By virtue of the provisions of Part XV of the SFO, Mr. Yuen Shu Ming is deemed to be interested in the Shares in which Fordjoy Securities and Futures Limited is interested. The percentage holdings are calculated based on the expected number of issued Shares upon completion of the Rights Issue comprising 997,740,921 Shares. This assumes that all Shares which may fall to be allotted and issued upon the exercise of the subscription rights attached to the unlisted warrants issued by the Company entitling the holders thereof to subscribe up to an aggregate amount of HK$85,500,000 for a maximum of 34,200,000 new Shares are issued prior to the Record Date.

• (iii) Victor Meg Limited is held as to 40% by Mr. Ng Tang and Mr. Ng Tang is deemed to be interested in the 69,745,134 underlying shares of the Company held by Victor Meg Limited. Other than the underlying shares of the Company held by Victor Meg Limited, Mr. Ng Tang holds 5,335,342 underlying shares of the Company as beneficial owner. The underlying shares of the Company owned by Victor Meg Limited and Mr. Ng represent the maximum number of Conversion Shares that may be allotted and issued to each of them pursuant to the exercise of the conversion rights attached to the Consideration Convertible Notes in accordance with the terms and conditions thereof. The percentage holding is calculated based on the issued share capital of the Company as at the Latest Practicable Date comprising 298,380,307 Shares.

• (iv) As at the Latest Practicable Date, Globalcrest Enterprises Limited held 18,913,170 Shares and had irrevocably undertaken to apply for and pay for 37,826,340 Rights Shares to which it will be provisionally allotted pursuant to the Rights Issue. As Globalcrest Enterprises Limited is wholly owned by Central Core Resources Limited, Central Core Resources Limited is deemed to be interested in all the 56,739,510 Shares held by Globalcrest Enterprises Limited. Central Core Resources Limited is the trustee of a discretionary trust founded by Mr. Lam Shiu Ming, Daneil, the chairman of the Board and an executive Director. Certain immediate family members of Mr. Lam Shiu Ming, Daneil are discretionary objects of the aforesaid discretionary trust. Mr. Lam Shiu Ming Daneil is a director of Globalcrest Enterprises Limited. The percentage holding is calculated based on the expected issued share capital of the Company as enlarged by the issue of the Rights Shares under the Rights Issue comprising 895,140,921 Shares.

• (v) As at the Latest Practicable Date, Ever Robust Holdings Limited held 29,650,000 Shares and had irrevocably undertaken to apply for and pay for 34,000,000 Rights Shares to which it will be provisionally allotted pursuant to the Rights Issue. As the entire issued share capital of Ever Robust Holdings Limited is held by China Mobile Games and Culture Investment Limited, China Mobile Games and Culture Investment Limited is deemed to be interested in all the 63,650,000 Shares held by Ever Robust Holdings Limited. The percentage holding is calculated based on the expected issued share capital of the Company as enlarged by the issue of the Rights Shares under the Rights Issue comprising 895,140,921 Shares.

• (vi) ‘‘L’’ denotes a long position whilst ‘‘S’’ denotes a short position.

III – 6

GENERAL INFORMATION

APPENDIX III

Save as disclosed above, the Directors or chief executive of the Company are not aware of any other persons (not being Directors or chief executive of the Company) as at the Latest Practicable Date, who had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or who was directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group, or in any options in respect of such capital.

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors and their respective close associates had any interest in a business which competes or is likely to compete either directly or indirectly with the business of the Group.

6. QUALIFICATION OF EXPERT AND CONSENT

The following are the qualifications of the experts who have given opinions or advice which are contained in this Prospectus:

Name Qualification PricewaterhouseCoopers Certified Public Accountants

PricewaterhouseCoopers has given and have not withdrawn their written consents to the issue of this Prospectus with the inclusion herein of their respective letters to their names in the form and context in which they appear.

As at the Latest Practicable Date, PricewaterhouseCoopers was not beneficially interested in the share capital of any member of the Group, nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did they have any direct interest in any assets which were, since 30 June 2014 (being the date which the latest published audited consolidated financial statements of the Group were made up) acquired or disposed of by or leased to, or proposed to be acquired or disposed of by or leased to, any member of the Group.

7. MISCELLANEOUS

• (a) The business address of all Directors is 18th Floor, Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong.

• (b) The secretary of the Company is Mr. Lam Kit Sun, who is a fellow and practicing member of the Hong Kong Institute of Certified Public Accountants, a fellow of the Association of Chartered Certified Accountants and an associate of the Hong Kong Institute of Chartered Secretaries.

III – 7

GENERAL INFORMATION

APPENDIX III

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

• (d) As at the Latest Practicable Date, save for the Shareholders’ Undertaking, the Board had not received any information from any substantial shareholders of their intention to take up the Rights Shares to be provisionally allotted or offered to them under the Rights Issue.

• (e) The English text of this Prospectus shall prevail over the Chinese text for the purpose of interpretation.

8. MATERIAL CONTRACTS

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

• (a) the placing agreement dated 16 September 2013 and entered into between the Company as the issuer and Astrum Capital Management Limited as the placing agent, pursuant to which the Company has conditionally agreed to place, through Astrum Capital Management Limited on a best effort basis, the unlisted warrants that entitle the holders thereof to subscribe in cash for up to an aggregate amount of HK$85,500,000 for warrant shares, at initial subscription price of HK$0.250 per warrant share (subject to adjustments). The gross proceeds from the placing of the warrants was HK$0.9 million;

• (b) the subscription agreement dated 14 November 2013 and entered into between the Company as the issuer, and 貴州豐瑞投資有限公司 (in English, for identification purpose only, Guizhou Fengrui Investment Co., Ltd.) and 貴州光大能源發展有限公司 (in English, for identification purpose only, Guizhou Guangda Energy Development Co., Ltd.) as the subscribers, pursuant to which the subscribers have agreed to subscribe for the 5% convertible note in the aggregate principal amount of HK$95,000,000, which is convertible into Shares at HK$0.50 per share (subject to adjustments);

• (c) the joint venture agreement dated 5 December 2013 and entered into between Ample China Development Limited, a wholly-owned subsidiary of the Company and Computech Holdings Limited (which has subsequently changed its name to China Mobile Games and Culture Investment Limited), in relation to the establishment of a joint venture company to be established in Hong Kong or overseas which will be principally engaged in development and sale of computer and mobile phone games. The maximum investment in the joint venture company was HK$40,000,000 and shall be contributed by the joint venture partners in equal shares;

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• (d) the conditional sale and purchase agreement dated 10 December 2013 and entered into between Universe Films (Holdings) Limited (‘‘UFH’’), a direct wholly-owned subsidiary of the Company, as vendor and Mr. Lam Shiu Ming, Daneil (‘‘Mr. Lam’’) as the purchaser in relation to the sale and purchase of the entire issued share capital in Joy Talent Investment Limited at a consideration of HK$6,277,000;

• (e) the conditional sale and purchase agreement dated 10 December 2013 and entered into between Universe Laser & Video Co., Limited（寰宇鐳射錄影有限公司）, an indirect wholly-owned subsidiary of the Company, and UFH as the vendors and Mr. Lam as the purchaser in relation to the sale and purchase of the entire issued share capital in Universe Property Investment Limited（寰宇物業投資有限公司）at a consideration of HK$73,862,000;

• (f) the agreement made between Weluck Development Limited (‘‘Weluck’’), a whollyowned subsidiary of the Company, and Rich Place Investment Limited in relation to the sale and purchase of 171,500,000 shares of China Railsmedia Corporation Limited at a consideration of HK$60,025,000 on 7 January 2014;

• (g) the subscription agreement dated 22 May 2014 and entered into between Weluck as the subscriber and Hydra Capital SPC, a segregated portfolio company as an issuer in relation to a HK$55 million investment in an investment portfolio of Hydra Capital SPC by way of subscription for shares;

• (h) the placing agreement dated 23 June 2014 and entered into between the Company as the issuer and Lucky Securities Company Limited (‘‘Lucky Securities’’) as the placing agent, pursuant to which the Company has conditionally agreed to place, through Lucky Securities on a best effort basis, a maximum aggregate amount of 343,200,000 new Shares at the placing price of HK$0.1 per placing share;

• (i) the joint venture agreement dated 6 November 2014 and entered into between Gold Summit International Limited, a wholly-owned subsidiary of the Company and Round Table Family Group Limited to jointly invest in Round Table Performance Entertainment Limited, which is principally engaged in holding and sponsoring stage performance, concerts and other cultural events, as well as developing the entertainment business in Hong Kong and the PRC. The aggregate amount of capital contribution was HK$3,330,000, which was contributed as to HK$2,330,000 by Gold Summit International Limited and as to HK$1,000,000 by Round Table Family Group Limited;

• (j) the sale and purchase agreement dated 17 November 2014 and entered into between Fragrant River Entertainment Culture (Holdings) Limited (‘‘Fragrant River’’) and 4 vendors in relation to the acquisition of 22.13% of the issue of share capital of Winston Asia Limited at a consideration of HK$5,060,000;

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• (k) the placing agreement dated 9 December 2014 and entered into between the Company as the issuer and Lucky Securities as the placing agent, pursuant to which the Company has conditionally agreed to place, through Lucky Securities on a best endeavour basis, a maximum aggregate amount of 414,415,000 new Shares at the placing price of HK$0.1 per placing share;

• (l) the placing agreement dated 28 January 2015 and entered into between the Company as the issuer and Convoy Asset Management Limited as the placing agent pursuant to which the Company has conditionally agreed to place, through Convoy Asset Management Limited on a best endeavour basis, a maximum aggregate amount of 6.5% per annum notes in an aggregate principal amount of up to HK$50,000,000, maturing on the same calendar date of the 18th month after the issue date of the notes at the placing price equal to 100% of the principal amount of the notes;

• (m) the placing agreement dated 10 April 2015 and entered into between the Company as the issuer and Fordjoy Securities and Futures Limited as the placing agent, pursuant to which the Company has conditionally agreed to place, through Fordjoy Securities and Futures Limited on a best endeavour basis, a maximum aggregate amount of 49,730,000 new Shares at a placing price of HK$0.477 per placing share;

• (n) the sale and purchase agreement dated 7 May 2015 and entered into between Precise Reach Group Limited (‘‘Precise Reach’’), a wholly-owned subsidiary of the Company, as purchaser, Fairy Fresh International Limited (‘‘Fairy Fresh’’) as vendor and Mr. Poon Chun Yin, the ultimate beneficial owner of the vendor, as warrantor in relation to the sale and purchase of (i) the amount of HK$1,155,000 owing by Hong Kong Optical Company Limited (‘‘Hong Kong Optical’’) to Fairy Fresh; and (ii) 11% of the issued share capital of Hong Kong Optical at an aggregate consideration of HK$1,600,000;

• (o) the sale and purchase agreement dated 7 May 2015 and entered into between Precise Reach as purchaser, Fairy Fresh as vendor and Mr. Poon Chun Yin, the ultimate beneficial owner of the vendor, as warrantor in relation to the sale and purchase of 80% of the issued share capital of Fine Ocean Limited at a consideration of HK$2,400,000;

• (p) the sale and purchase agreement dated 7 May 2015 and entered into between Fragrant River, Victor Meg Limited, Ng Tang and Most Profitable Investment Ltd. as vendors and Ng Tang and Lo Lai Kuen as guarantors in relation to the acquisition of all the remaining issue share capital of Winston Asia Limited, at a maximum consideration of HK$64,000,000 (subject to adjustments);

• (q) the Underwriting Agreement; and

• (r) the Placing Agreement.

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9. LITIGATION

• (a) A court action was commenced in the Court of First Instance of the Hong Kong Special Administrative Region on 17 April 2002 by The Star Overseas Limited (‘‘Star’’), an independent third party, against Universe Entertainment Limited (‘‘UEL’’), an indirect wholly-owned subsidiary of the Company.

By the above action, Star alleges that a sum of US$935,872 (equivalent to HK$7,299,799) was payable by UEL to Star as its share of the revenue of the movie entitled‘‘Shaolin Soccer’’ (the ‘‘Movie’’).

Pursuant to an order (the ‘‘Order’’) made by the High Court of Hong Kong on 21 February 2003, UEL was ordered and had paid to Star a sum of HK$5,495,700, being part of the licence fee of the Movie received by UEL from Miramax Films (being the licencee of the Movie) and which was also part of the sum claimed by Star. Pursuant to the Order, UEL is also liable to pay Star interest in the sum of HK$350,905 and some of the costs of the application leading to the making of the Order, all of which have been settled. As the Order has not disposed of all the claims of US$935,872 (equivalent to HK$7,299,799) by Star, UEL is entitled to continue to defend the claim by Star for recovering the remaining balance in the sum of approximately HK$1,804,099 (HK$7,299,799 less HK$5,495,700).

On 30 April 2002, UEL issued a Writ of Summons against Star for the latter’s wrongful exploitation of certain rights in the Movie co-owned by both parties. UEL claimed to recover all losses and damages suffered by UEL as a result of such wrongful exploitation.

On 9 September 2002, Universe Laser & Video Co. Limited (‘‘ULV’’), an indirect wholly owned subsidiary of the Company, issued a Writ of Summons against Star for the latter’s infringement of the licensed rights in the Movie held by ULV. ULV claimed to recover all of its loss and damages suffered as a result of the said infringement.

In the opinion of legal counsel, it is premature to predict the outcome of the claim against UEL. The Board is of the opinion that the outcome of the said claim against UEL will have no material financial impact on the Group for the Period.

• (b) On 1 September 2008, Koninklijke Philips Electronics N.V. (‘‘KPE’’) issued a Writ of Summons against among other persons, the Company, ULV and Mr. Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Video Compact Disc owned by KPE.

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In the opinion of legal counsel, it is premature to predict the outcome of the said claim made against the Company, ULV and Mr. Lam Shiu Ming, Daneil. The Board is of the opinion that the outflow of economic benefits cannot be reliably estimated and accordingly no provision for any liability that may result has been made in the unaudited condensed consolidated interim financial information.

• (c) On 8 January 2010, KPE issued a Writ of Summons against among other persons, the Company, ULV and Mr. Lam Shiu Ming, Daneil (one of the Directors), being three of the defendants named therein, in respect of damages arising from alleged infringement of the patents regarding Digital Video Disc owned by KPE.

In June 2012, the action against the Company and Mr. Lam Shiu Ming, Daneil was discontinued. The claim made against ULV has been agreed with KPE and settled by ULV and appropriate legal costs provision was recognised accordingly in the consolidated financial statements for the year ended 30th June 2012.

No additional provision has been made in the unaudited condensed consolidated interim financial information for the Period. Based on the consultation with legal counsel, no further material outflow of economic benefits will be incurred for ULV.

• (d) Universe Artiste Management Limited (‘‘UAM’’) commenced Court of First Instance Action against Kwong Ling and Oriental Prosperous Int’l Entertainments Limited (collectively the ‘‘Defendants’’) on 30 June 2014 claiming inter alia for a declaration that UAM is entitled to extend/renew the term of the Artist Management Contract of the Defendants with UAM (the ‘‘Artist Management Contract’’) for 5 years as from 3 May 2014 to 2 May 2019.

The Defendants filed their defence and counterclaim on 29 September 2014. By such counterclaim, the Defendants claiming against UAM inter alia for a declaration that the Artist Management Contract was void and unenforceable, the Artist Management Contract to be rescinded, damages for breach of the Artist Management Contract and for breach of fiduciary duties, a declaration that UAM is liable to account to the Defendants and an order for payment of all sums found to be due by UAM to the Defendants.

In the opinion of legal counsel, it is premature to predict the outcome of the said claim against UAM. The Board considers that the amounts of counterclaim by the Defendants against UAM is insignificant to the Group as a whole.

Save as disclosed above, as at the Latest Practicable Date, no member of the Group 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 against any member of the Group.

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10. CORPORATE INFORMATION

Registered Office	Clarendon House
	2 Church Street
	Hamilton HM 11
	Bermuda
Head Office and Principal Place	18th Floor
of Business in Hong Kong	Wyler Centre Phase	II
	192-200 Tai Lin Pai	Road
	Kwai Chung
	New Territories
	Hong Kong
Authorised Representatives	Mr Lam Shiu Ming,	Daneil
	18th Floor
	Wyler Centre Phase	II
	192-200 Tai Lin Pai	Road
	Kwai Chung
	New Territories
	Hong Kong
	Mr Lam Kit Sun
	18th Floor
	Wyler Centre Phase	II
	192-200 Tai Lin Pai	Road
	Kwai Chung
	New Territories
	Hong Kong
Company Secretary	Mr Lam Kit Sun (fellow and		practicing member of
	the Hong Kong	Institute	of	Certified	Public
	Accountants, fellow	member	of	the Association of
	Chartered Certified	Accountants,		associate	of The
	Hong Kong Institute	of Chartered		Secretaries)
Auditor	PricewaterhouseCoopers
	22/F, Prince’s Building
	Central, Hong Kong

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Principal Bankers The Hongkong and Shanghai Banking Corporation Limited HSBC Main Building, 1 Queen’s Road, Central Hong Kong OCBC Wing Hang Bank Limited 161 Queen’s Road Central Hong Kong Bank of Communications Co., Ltd. 20 Pedder Street, Central, Hong Kong Branch Share Registrar and Tricor Abacus Limited Transfer Office in Hong Kong Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong 11. PARTIES INVOLVED IN THE RIGHTS ISSUE The Company 18th Floor Wyler Centre Phase II 192-200 Tai Lin Pai Road Kwai Chung New Territories Hong Kong Underwriter Jun Yang Securities Company Limited Unit 2103, 21/F Tower 1, Lippo Centre 89 Queensway, Admiralty Hong Kong Financial adviser Nuada Limited to the Company Unit 1805-08, 18/F, OfficePlus@Sheung Wan 93-103 Wing Lok Street Sheung Wan Hong Kong

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Legal adviser to the Company As to Hong Kong law Leung & Lau Units 7208-10, 72nd Floor The Center 99 Queen’s Road C., Central Hong Kong Independent Financial Adviser Donvex Capital Limited to the Independent Board Unit 1305, 13/F Committee and the Carpo Commercial Building Independent Shareholders 18-20 Lyndhurst Terrace, Central Hong Kong Reporting Accountant PricewaterhouseCoopers 22/F, Prince’s Building Central, Hong Kong

12. PARTICULARS OF DIRECTORS

Executive Directors

Mr LAM Shiu Ming, Daneil, aged 53, is the founder and Chairman of the Group. He is involved in marketing, corporate strategy, business planning and development and overall management of the Group. Mr Lam has 33 years of experience in the film industry in Hong Kong. He was awarded the ‘‘Young Industrialist Awards of Hong Kong’’ by the Federation of Hong Kong Industries in 2002.

Mr. HUNG Cho Sing, aged 74, is mainly responsible for the business development of the Group. He has over 30 years of experience in the film distribution industry. Mr. Hung was the founder of Delon International Film Corporation and has been its General Manager since June 2004. Mr. Hung was the Organizing Committee Chairman of the 11th and 12th Hong Kong Film Awards from 1991 to 1993 and from 1993 to 1995, Mr. Hung was the Chairman of the Board of Directors of Hong Kong Film Awards Association Limited. Mr. Hung is currently the Chairman of Hong Kong Motion Picture Industry Association. In recognition of his contribution to the Hong Kong film industry, Mr. Hung was awarded the Bronze Bauhinia Star (BBS) by the Government of the Hong Kong Special Administrative Region (‘‘HKSAR’’) in 2005. From April 2007 to March 2013, Mr. Hung was appointed by the Government of HKSAR as a member of the Hong Kong Film Development Council. Mr. Hung is also a member of HKSAR Election Committee and since January 2013, he has been appointed by the Government of HKSAR as a non-official member of the Working Group on Manufacturing Industries, Innovative Technology, and Cultural and Creative Industries under the Economic Development Commission. Mr. Hung was a non-executive director of Capital VC Limited (stock code: 2324) from September 2011 to January 2014.

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Currently, Mr. Hung is an independent non-executive director of China Star Entertainment Limited (stock code: 326), an independent non-executive director of Freeman Financial Corporation (stock code: 279), an independent non-executive director of Mascotte Holdings Limited (stock code: 136), and an independent non-executive director of Unity Investments Holdings Limited (stock code: 913) and an independent non-executive director of Sunrise (China) Technology Group Limited (Stock Code: 8226). Mr. Hung joined the Group in October 2013.

Mr YEUNG Kim Piu, aged 54, is mainly responsible for overseeing the operation of artiste management division. Mr Yeung joined the Group in 1993 and has over 17 years of experience in the film distribution industry in Hong Kong.

Mr LAM Kit Sun, aged 38, is the Chief Financial Officer and Company Secretary of the Group. He is responsible for the financial and investments functions of the Group. Prior to joining the Group in 2013, he has over 10 years’ experience in the field of financial reporting, financial management and audit experience in China and Hong Kong. He graduated from The Hong Kong University of Science and Technology with a bachelor’s degree in Business Administration in Accounting. Mr Lam is a fellow and practicing member of the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’), a fellow member of the Association of Chartered Certified Accountants (‘‘ACCA’’), an associate of The Hong Kong Institute of Chartered Secretaries and a non-practicing member of the Chinese Institute of Certified Public Accountants. Currently, Mr Lam is the non-executive director of Kiu Hung International Holdings Limited, the shares of which are listed on the Main Board of the Stock Exchange; Mr Lam was the independent non-executive director of DX.com Holdings Limited from August 2013 to January 2015, the independent nonexecutive director of Get Holdings Limited from October 2013 to April 2015 and was also the Chief Financial Officer and Company Secretary of Finsoft Corporation from September 2013 to January 2015. The shares of each of the said companies are listed on the Growth Enterprise Market of the Stock Exchange (the ‘‘GEM’’). He joined the Group in August 2013.

Non-executive Director

Mr. Chan Shiu Kwong Stephen, aged 59, holds a Master degree in Professional Accounting from Hong Kong Polytechnic University and a Bachelor of Commerce Accounting from Curtin University of Australia. He is currently a Fellow member of Hong Kong Institute of Certified Public Accountants and Fellow member of Certified Public Accountants (Australia); Fellow member of the Institute of Chartered Secretaries and Administrators, Fellow member of the Hong Kong Institute of Company Secretaries and affiliated member of American Society of Appraisers. He has completed a certificate course in PRC accounting and PRC tax law from Chinese University of Hong Kong. Currently, he is also a member of The Association of Hong Kong Professionals and Hong Kong and Kowloon Chiu Chow Public Association.

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Mr. Chan has over 25 years of experience in property development, manufacturing, travel and gaming related industries. He has worked for various multi-national organisations and Hong Kong listed companies and is equipped with profound experience in merger and acquisition transactions, treasury, strategies and risk management, corporate finance, accounting, tax planning and company secretary practice. Since 20 April 2005 and 27 August 2012, Mr. Chan has been appointed as an executive director and company secretary of Neptune Group Limited, a company whose shares are listed on the Main Board of the Stock Exchange. He joined the Group in March 2015.

Independent non-executive Directors

Mr LAM Wing Tai, aged 49, is currently an independent non-executive Director of Jun Yang Solar Power Investments Limited, the shares of which are listed on the Main Board of the Stock Exchange and the company secretary of Dafeng Port Heshun Technology Company Limited (formerly known as Gamma Logistics Corporation), the shares of which are listed on the GEM. He studied accounting at the Australian National University and obtained a Bachelor of Commerce degree in 1991. Mr. Lam is a member of both the CPA Australia and HKICPA. Mr Lam was an executive director of Ngai Shun Holdings Limited from March 2015 to July 2015, the shares of which are listed on the Main Board of the Stock Exchange. He was also an executive director of Hong Kong Life Sciences and Technologies Group Limited (formerly known as ZMAY Holdings Limited), the shares of which are listed on the GEM, from October 2009 to November 2012. He joined the Group in October 2013.

Mr CHOI Wing Koon, aged 38, is currently the financial controller and Company Secretary of Global Energy Resources International Group Limited, the shares of which are listed on the GEM. Mr Choi holds a bachelor’s degree of business administration in accounting awarded by the Hong Kong University of Science and Technology in 1999. Mr. Choi also obtained a master degree of business administration awarded by the University of Hong Kong in 2014. Mr Choi is a fellow of the Association of Chartered Certified Accountants and a member of the HKICPA. Mr. Choi has over 14 years of experience in accounting and company secretarial field. He is currently the independent nonexecutive director of G Neptune Berhad, a company listed on the ACE Market of Bursa Malaysia Securities Berhad. Mr Choi was an independent non-executive director of Zhidao International (Holdings) Limited from January 2012 to September 2014 and the financial controller and company secretary of Taung Gold International Limited from September 2010 to April 2013, each a company whose shares are listed on the Main Board of the Stock Exchange. He joined the Group in December 2013.

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Mr LAM Chi Keung, aged 45, is currently the Chief Financial Officer of m-Finance Limited. He is the independent non-executive director of Convoy Financial Holdings Limited whose shares are listed on the Main Board of the Stock Exchange. He was the group financial controller and company secretary of Ngai Shun Holdings Limited from January 2014 to October 2014 whose shares are listed on the Main Board of the Stock Exchange. Mr Lam holds a bachelor’s degree of science in accounting awarded by Brigham Young University-Hawaii in 1996. Mr Lam also obtained a master’s degree of science in e-commerce from The Chinese University of Hong Kong in 2002. Mr Lam is a fellow of the HKICPA, a holder of the specialist designation in insolvency of the HKICPA, a member of the American Institute of Certified Public Accountants and a certified fraud examiner of the Association of Certified Fraud Examiners. Mr. Lam has around 17 years of experience in accounting and insolvency field. He joined the Group in December 2013.

Company Secretary

Mr LAM Kit Sun is the company secretary of the Company. Please refer to his biographical details set out above.

13. EXPENSES

The expenses in connection with the Rights Issue, including underwriting commission, financial advising fees, printing, registration, translation, legal and accounting fees are estimated to be approximately HK$5.75 million and are payable by the Company.

14. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

A copy of each of the Prospectus Documents and the consent letter as referred to under the paragraph headed ‘‘Qualification and Consent of Expert’’ in this appendix, have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the laws of Hong Kong).

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the Company’s head office at 18th Floor, Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong during 9:30 a.m. to 5:00 p.m. on any day (not being a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are open for general banking business from the date of this Prospectus up to and including the Latest Time for Acceptance:

• (a) the memorandum of association and bye-laws of the Company;

• (b) the annual reports of the Company for the financial years ended 30 June 2013 and 2014;

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• (c) the report on the pro forma financial information of the Group from PricewaterhouseCoopers as set out in appendix II to this Prospectus;

• (d) the written consents referred to in the paragraph headed ‘‘Qualification of Expert and Consents’’ to this Appendix;

• (e) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ to this Appendix;

• (f) the Circular;

• (g) the circular of the Company dated 26 June 2015 in relation to, among other things, the proposed acquisition of further equity interests in Winston Asia Limited; and

• (h) the Prospectus Documents.

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