THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Universe International Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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

This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase or subscribe for shares or other securities in the Company.

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

(1) PLACING OF NEW SHARES UNDER A SPECIFIC MANDATE; (2) RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE IN ISSUE HELD ON THE RECORD DATE; (3) CHANGE IN BOARD LOT SIZE AND

(4) NOTICE OF SPECIAL GENERAL MEETING

Placing Agents to the Placing Underwriter to the Rights Issue

CHINA EVERBRIGHT SECURITIES (HK) LIMITED

==> picture [131 x 29] intentionally omitted <==

(in alphabetical order)

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

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Capitalized terms used in this cover have the same meanings as those defined in this circular.

A letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 53 to 76 of this circular and a letter of recommendation from the Independent Board Committee to the Independent Shareholders is set out on page 52 of this circular.

A notice convening the SGM to be held at 18/F, Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, N.T., Hong Kong on Monday, 13 July 2015 at 12:00pleaseoffice noonincompleteHongis setKong,theoutenclosedonTricorpagesAbacusformSGM-1ofLimited,proxyto SGM-5inat accordanceLevelof this22,circular.Hopewellwith theA formCentre,instructionsof 183proxyQueenprintedfor use’s thereonRoadat theEast,andSGMHongreturnis enclosed.Kong,it to theasWhethersoonCompanyas orpossible’snotbranchyoubutaresharein ableanyregistrareventto attendnotandthelatertransferSGM,than 48 hours before the time appointed for the holding of the SGM or any adjustment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

It should be noted that the Shares will be dealt in on an ex-rights basis from Thursday, 16 July 2015. Dealings in the Rights Shares in their nil-paid form will take place from Tuesday, 28 July 2015 to Tuesday, 4 August 2015 (both dates inclusive). If the conditions of the Rights Issue are not fulfilled or waived (as applicable) at or before 4:00 p.m. on Wednesday, 12 August 2015 (or such later time as the Company and the Underwriters may agree), the Rights Issue will not proceed. Any persons contemplating dealings in the Shares prior to the date on which the conditions of the Rights Issue are fulfilled or waived (as applicable), and/or dealings in the nil-paid Rights Shares, are accordingly subject to the risk that the Rights Issue may not become unconditional or may not proceed.

terminateAgreementThe Underwritingits’’ inobligationsthisAgreementcircular.thereunderIfcontainsthe Underwritingonprovisionsthe occurrenceAgreementgrantingof certaintheis terminatedUnderwriter,events, byasbythemorenoticeUnderwriterparticularlyin writing,or describeddoesat anynottimebecomein thepriorsectionunconditional,to theheadedLatest the‘‘TimeTerminationRightsfor Termination,Issueof willthe notUnderwritingtheproceed.right to

24 June 2015

for identification purpose only

		Page
Definitions . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Termination of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		8
Expected Timetable	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		52
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		53
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
Notice of SGM . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	SGM-1

– i –

DEFINITIONS

In this circular, 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
‘‘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
‘‘connected person’’
has the meaning ascribed thereto under the Listing Rules

– 1 –

DEFINITIONS

‘‘Consideration Convertible Notes’’
the zero coupon convertible notes of 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
‘‘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 holds 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 Shareholders’’ Shareholder(s) who are not Directors or any of their respective associates
‘‘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

– 2 –

DEFINITIONS

‘‘Latest Practicable Date’’
‘‘Latest Time for Acceptance’’
‘‘Latest Time for Termination’’
‘‘Listing Rules’’
‘‘Main Board’’
‘‘Non-Qualifying Shareholder(s)’’
‘‘Option Holder(s)’’
‘‘Option Holders’ Undertaking’’
19 June 2015, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information for inclusion in this circular
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.
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
the Rules Governing the Listing of Securities on the Stock Exchange
Main Board of the Stock Exchange
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
holder(s) of the Outstanding Options
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

– 3 –

DEFINITIONS

‘‘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 16,800,170 share options granted by the Company under the share options schemes adopted by the Company on 26 November 2003 and 2 December 2013 and which remained outstanding as at the date of the Underwriting Agreement
‘‘Overseas Shareholder(s)’’ the Shareholder(s) with registered address(es) (as shown in the register of members of the Company on the Record Date) are 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 circular only, excludes Hong Kong, the Macao 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 Agent 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 under the Specific Mandate

‘‘Placing Price’’ HK$0.3411 per Placing Share ‘‘Placing Shares’’ a maximum of 586,350,000 new Shares proposed to be placed pursuant to the Placing Agreement and each a ‘‘Placing Share’’

– 4 –

DEFINITIONS

‘‘Prospectus’’
the prospectus containing details of the Rights Issue to be despatched to the Qualifying Shareholders and for information only, the Non-Qualifying Shareholders (if any)
‘‘Prospectus Documents’’ the Prospectus, the PAL(s) and the EAF(s)
‘‘Prospectus Posting Date’’
Friday, 24 July 2015 or such later date as may be agreed between the Underwriter and the Company for the despatch of the Prospectus Documents to the Qualifying Shareholders
‘‘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, or such other date as may be agreed between the Company and the Underwriter for determining entitlements to the Rights Issue
‘‘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 proposed 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’’
not less than 596,760,614 new Shares and not more than 665,160,614 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 convened to be held to consider and approve the Placing, the Rights Issue and the grant of the Warrant Issue Mandate

‘‘Share(s)’’
ordinary share(s) of HK$0.01 each in share capital of the Company

– 5 –

DEFINITIONS

‘‘Shareholder(s)’’
‘‘Shareholders’ Undertaking’’
‘‘Specific Mandate’’
‘‘Stock Exchange’’
‘‘Subscription Price’’
‘‘substantial shareholder’’
‘‘Takeovers Code’’
‘‘Underwriter’’ or ‘‘Jun Yang Securities ’’
‘‘Underwriting Agreement’’
‘‘Underwritten Shares’’
‘‘Unlisted Warrants’’

the holder(s) of the issued Shares

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 specific mandate to be granted by the Shareholders to the Board at the SGM for the allotment and issue of up to a maximum of 586,350,000 Placing Shares

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 not less than 524,934,274 Rights Shares and not more than 593,334,274 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

– 6 –

DEFINITIONS

‘‘Unlisted Warrant Holder(s)’’ 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 ‘‘Warrant Issue Mandate’’ the specific mandate to be granted by the Shareholders to the Board at the SGM for the allotment and issue of up to 68,170,945 Warrant Shares at the adjusted exercise price of HK$1.2542 per Warrant Share or such number of shares of the Company as adjusted in accordance with the terms and conditions of the Unlisted Warrants and the instrument constituting the Unlisted Warrants executed by the Company dated 25 October 2013 ‘‘Warrant Shares’’ such number of shares of the Company which may fall to be allotted and issued upon the exercise of the subscription rights attached to the Unlisted Warrants ‘‘HK$’’ 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) the 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
Latest time for lodging transfer of shares in order to qualify for
attendance and voting at the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on
Wednesday, 8 July
Latest time for lodging forms of proxy for
the SGM (not less than 48 hours) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12:00 noon on
Saturday, 11 July
Closure of register of members of the Company
to determine the qualification for attendance and voting at
the SGM (both dates inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 9 July to
Monday, 13 July
Record date for attendance and voting at the SGM . . . . . . . . . . . . . . . . . . Monday, 13 July
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12:00 noon on
Monday, 13 July
Announcement of poll result of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 13 July
Last day of dealings in Shares on cum-rights basis . . . . . . . . . . . . . . . . Wednesday, 15 July
First day of dealings in Shares on ex-rights basis . . . . . . . . . . . . . . . . . . .Thursday, 16 July
Latest time for lodging transfers of Shares in order
to qualify for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on
Friday, 17 July
Register of members close (both dates inclusive)
to determine the entitlements to the Rights Issue . . . . . . . . . . . . . . . . .Monday, 20 July to
Thursday, 23 July
Record Date for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday, 23 July

– 10 –

EXPECTED TIMETABLE

2015
Last day for trading of the Shares with old board lot size
in the original counter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Thursday, 23 July
Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 24 July
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
Despatch of Prospectus Documents to the Qualifying Shareholders . . . . . . . . . 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

– 11 –

EXPECTED TIMETABLE

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

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 circular may be affected. The Company will notify Shareholders by way of announcement(s) on any change to the expected timetable as soon as practicable.

– 12 –

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 Siu Ming, Daneil (Chairman) Mr Hung Cho Sing Mr Yeung Kim Piu Mr Lam Kit Sun

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Non-Executive Director: Mr Chan Shiu Kwong Stephen

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

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 June 2015

To the Shareholders,

Dear Sirs,

(1) PLACING OF NEW SHARES UNDER A SPECIFIC MANDATE; (2) RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE IN ISSUE HELD ON THE RECORD DATE; (3) CHANGE IN BOARD LOT SIZE AND

(4) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Announcement. The Board proposed to put forward to the Shareholders:

(a) the Placing of up to 586,350,000 Placing Shares at the Placing Price of HK$0.3411 per Placing Share by the Placing Agents to raise approximately HK$200.00 million before expenses; and
for identification purpose only

– 13 –

LETTER FROM THE BOARD

(b) 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.

The Placing and the Rights Issue are not inter-conditional upon each other.

The Rights Issue and the Placing will cause adjustments to the exercise price of the Unlisted Warrants and if the Unlisted Warrants are exercised in full at the adjusted price, the number of Shares falling to be issued will exceed the number of Shares permitted to be issued under the general mandate pursuant to which the Unlisted Warrants were created. Accordingly, the Directors will seek the grant of the Warrant Issue Mandate from the Shareholders.

The purpose of this circular is to provide you with further details of, among other things, (i) the Placing, the Rights Issue and the grant of the Warrant Issue Mandate; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Placing and the Rights Issue; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Placing and the Rights Issue; and (iv) the notice of the SGM.

(1) PLACING OF NEW SHARES UNDER THE SPECIFIC MANDATE

The Placing Agreement

Date: 26 May 2015 Parties: (1) Issuer: the Company (2) Placing agents: (i) China Everbright Securities; and

(ii) Jun Yang Securities

The Placing Agents have conditionally agreed to place up to 586,350,000 Placing Shares, on a best effort basis, at the Placing Price on behalf of the Company. China Everbright Securities is a licensed corporation to carry on business in 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. Jun Yang Securities is a licensed corporation to carry on business in type 1 regulated activity (dealing in securities) under the SFO. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Placing Agents and their respective ultimate beneficial owners are Independent Third Parties.

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LETTER FROM THE BOARD

Placees

The Placing Shares will be placed to the Placees who will be independent individual, corporate and/or institutional investors, and who and (where applicable) whose ultimate beneficial owners are Independent Third Parties. 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.

Placing Shares

The maximum number of the Placing Shares of 586,350,000 represents (i) approximately 196.51% of the existing issued share capital of the Company as at the Latest Practicable Date; (ii) approximately 66.27% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares (assuming that there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the date of allotment and issue of the Placing Shares); and (iii) approximately 39.58% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and Rights Shares (assuming that there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the date(s) of allotment and issue of the Placing Shares and the Rights Shares). The aggregate nominal value of such number of the Placing Shares amounts to HK$5,863,500.

Assuming the maximum number of the Placing Shares is placed, the gross proceeds from the Placing will amount to approximately HK$200.0 million and the net proceeds of the Placing, after deduction of the Placing commission and other related expenses of approximately HK$7.5 million, will be approximately HK$192.5 million. On such basis, the net issue price for each Placing Share will be approximately HK$0.3283.

Placing Price

The Placing Price of HK$0.3411 represents:

(i) a discount of approximately 57.36% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on 26 May 2015, being the date of the Placing Agreement and the Last Trading Day;
(ii) a discount of approximately 15.00% 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 (taking into account the Rights Issue as described in this circular);

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LETTER FROM THE BOARD

(iii) a discount of approximately 54.03% to the average of the closing price per Share of HK$0.742 as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the Last Trading Day;
(iv) a discount of approximately 57.36% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v) a discount of approximately 71.17% 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 Placing Price of HK$0.3411 was arrived at after arm’s length negotiations between the Company and the Placing Agents with reference to the theoretical ex-rights price of approximately HK$0.4013 with a discount of approximately 15.00%, which is based on the Subscription Price and the closing price of the Shares on the Last Trading Day, i.e. HK$0.8. The Board has reviewed all the placing proposals announced by other companies listed on the Stock Exchange for the period of two calendar months immediately prior to the Last Trading Day, and identified an exhaustive list of thirteen placings which are subject to the grant of specific mandate by shareholders (the ‘‘Placing Comparable(s)’’). The placing price of all of the Placing Comparables are set at discounts to market price of the relevant shares, ranging from a discount of approximately 2.09% to approximately 57.3%, with an average discount of approximately 24.08%. As according to the terms of the Placing Agreement, completion of Placing is scheduled to take place after the Record Date for determining the entitlement to the Rights Issue (by when the market price of the Shares will have been adjusted taking into account of the Rights Issue), the Company considers that it is more reasonable to use the theoretical ex-rights price of the Shares, i.e. HK$0.4013 as the basis to determine the Placing Price. Also, given that the Placing Price represents approximately 15.00% discount to the aforesaid theoretical ex-rights price of the Shares which is within the range and below the average discount to the prevailing market price of the Placing Comparables as stated above, the Company is of the view that the Placing Price is fair and reasonable and in the best interest of the Shareholders.

Placing commission

Pursuant to the Placing Agreement, the Company shall pay to each of the Placing Agents a commission of 3.5% of the aggregate Placing Price of the Placing Shares actually placed by such Placing Agent on behalf of the Company, provided that in any event, such commission to be paid by the Company to China Everbright Securities shall not be less than HK$200,000.

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LETTER FROM THE BOARD

Such commission was arrived at after arm’s length negotiations between the Company and the Placing Agents under normal commercial terms and with reference to the prevailing market conditions. The Directors consider that the commission is fair and reasonable, in the interests of the Company and the Shareholders as a whole.

Ranking of Placing Shares

The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Placing Shares.

Conditions of the Placing

Completion of the Placing is conditional upon the fulfilment of the following conditions:

(a) the Stock Exchange granting the listing of, and permission to deal in, the Placing Shares; and
(b) the Specific Mandate being obtained at the SGM.

Each of the Company and the Placing Agents shall use their respective best endeavours to procure the satisfaction of the above conditions by 5:00 p.m. on the date falling 30 days after the date of the SGM (‘‘Long Stop Date’’). If the above conditions are not satisfied by the Long Stop Date, all obligations of the Placing Agents and of the Company shall cease and terminate and none of the parties to the Placing Agreement shall have any claim against the other in relation to the Placing Agreement (save for any antecedent breach of any obligation thereunder).

Completion of the Placing

Completion of the Placing will take place on the later of (i) the third Business Day after the fulfilment of the conditions of the Placing (or such other date as agreed by the parties to the Placing Agreement in writing) or (ii) the Business Day immediately following the Record Date.

Mandate to issue the Placing Shares

The Placing Shares proposed to be issued under the Placing Agreement will be allotted and issued under the Specific Mandate to be obtained at the SGM.

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LETTER FROM THE BOARD

Termination

Jun Yang Securities (for itself and on behalf of China Everbright Securities) may, in its reasonable opinion, after consultation with the Company, terminate the Placing Agreement by notice in writing to the Company at any time prior to 8:00 a.m. on the date of completion of the Placing if:

(1) there is any change in national, international, financial, exchange control, political, economic conditions in Hong Kong which in the reasonable opinion of the Placing Agents would be materially adverse in the consummation of the Placing; or
(2) there is any breach of the warranties, representations and undertakings given by the Company in the Placing Agreement and such breach is considered by the Placing Agents on reasonable grounds to be material in the context of the Placing; or
(3) there is any material change (whether or not forming part of a series of changes) in market conditions which in the reasonable opinion of the Placing Agents would materially and prejudicially affect the Placing or makes it inadvisable or inexpedient for the Placing to proceed; or
(4) any statement contained in all announcements, circulars, interim and annual reports issued by the Company to the Stock Exchange and/or the Shareholders since the publication of the announcement of the Company relating to the interim results of the Company for the six months ended 31 December 2014 has become or been discovered to be untrue, incorrect or misleading in any material respect which in the reasonable opinion of the Placing Agents would be materially adverse in the consummation of the Placing.

Upon termination of the Placing Agreement by Jun Yang Securities (for itself and on behalf of China Everbright Securities) pursuant to the above mentioned factors, all obligations of the Company and the Placing Agents shall cease and no party of the Placing Agreement shall have any claim against the other parties in respect of any matter or thing arising out of or in connection with the Placing Agreement save of any antecedent breach of any obligation under the Placing Agreement.

Application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Placing Shares.

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LETTER FROM THE BOARD

WARNING

Shareholders and potential investors of the Company should note that completion of the Placing is subject to fulfilment of the conditions as set out above and Jun Yang Securities (for itself and on behalf of China Everbright Securities) is entitled to terminate the Placing Agreement under certain circumstances. As the Placing may or may not proceed, Shareholders and potential investors of the Company are reminded to exercise caution when dealing in the Shares.

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is (i) the existing shareholding structure of the Company as at the Latest Practicable Date and (ii) the effect on the shareholding structure of the Company upon completion of the Placing (assuming there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the completion of the Placing):

Globalcrest (Note 1) Ever Robust (Note 2) The Placees (Note 3) Other existing public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 18,913,170 6.34 29,650,000 9.94 – – 249,817,137 83.72 298,380,307 100.00	Upon completion of the Placing Number of Shares Approximate % 18,913,170 2.14 29,650,000 3.35 586,350,000 66.27 249,817,137 28.24 884,730,307 100.00	Upon completion of the Placing Number of Shares Approximate % 18,913,170 2.14 29,650,000 3.35 586,350,000 66.27 249,817,137 28.24 884,730,307 100.00
			100.00

Notes:

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.
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.
It is a term of the Placing Agreement that none of the Placees shall become a substantial shareholder of the Company upon the completion of the Placing.
Certain percentage figures included in the above table have been subject to rounding adjustments. Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding them.

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LETTER FROM THE BOARD

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

On 26 May 2015 (after trading hours), the Company and the Underwriter entered into the Underwriting Agreement regarding the Rights Issue. The terms of the Rights Issue are set out below.

THE RIGHTS ISSUE

Under the Rights Issue, the Company proposes to raise not less than approximately HK$120.55 million and not more than approximately HK$134.36 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:

Not less than 596,760,614 Rights Shares (assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date) and not more than 665,160,614 Rights Shares (assuming that the subscription rights attached to the Unlisted Warrants are exercised in full and Warrant Shares are allotted and issued pursuant thereto on or before the Record Date and there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date)

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LETTER FROM THE BOARD

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 their respective provisional allotment. 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 circular

Number of Underwritten Shares:

Not less than 524,934,274 Rights Shares (assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date) and not more than 593,334,274 Rights Shares (assuming that the subscription rights attached to the Unlisted Warrants are exercised in full and Warrant Shares are allotted and issued pursuant thereto on or before the Record Date and there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date). On such basis, taken 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:
Not less than 895,140,921 and not more than 997,740,921 Shares (without taking into account the allotment and issue of the Placing Shares)

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.

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LETTER FROM THE BOARD

Assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date, the minimum number of 596,760,614 Rights Shares represents (i) 200% of the Company’s issued share capital as at the Latest Practicable 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.

Assuming that the subscription rights attached to the Unlisted Warrants were exercised in full and Warrant Shares are allotted and issued pursuant thereto on or before the Record Date and there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date, the maximum number of 665,160,614 Rights Shares represents: (i) 200% of the issued share capital of the Company on 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 41.99% 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 not less than HK$5,967,606.14 and not more than HK$6,651,606.14.

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. Subject to the passing of the resolution approving the Rights Issue by the Independent Shareholders at the SGM and the registration of the Prospectus Documents in accordance with the applicable laws and regulations, the Company will send the Prospectus Documents to the Qualifying Shareholders.

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

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LETTER FROM THE BOARD

In order to be registered as members of the Company prior to the close of business on the Record Date, investors must lodge any transfers of Shares (together with the relevant share certificates) for registration with Tricor Abacus Limited of Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, no later than 4:30 p.m. on Friday, 17 July 2015.

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 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).

Rights of the Non-Qualifying Shareholders

The Prospectus Documents to be issued in connection with the Rights Issue will not be registered under the applicable securities legislation of any jurisdictions other than Hong Kong.

According to the register of members of the Company as at the Latest Practicable Date, the Company had two Overseas Shareholders whose address are located in the PRC. In this regard, the Company will make enquiries as to whether the issue of Rights Shares to such Overseas Shareholders and other Overseas Shareholders whose names appear on the register of members of the Company on the Record Date may contravene the applicable securities legislation of the PRC or other relevant overseas places or the requirements of the relevant regulatory body or stock exchange and details and results of such enquiries will be included in the Prospectus to be despatched to the Shareholders in connection with, amongst other matters, the Rights Issue. If, after making such enquiries, the Board is of the opinion that it would be necessary or expedient, on account either of the legal restrictions under the laws of PRC and/or the relevant place or any requirement of the relevant regulatory body or stock exchange in that place, not to offer the Rights Shares to such Non-Qualifying Shareholders, the Rights Issue will not be extended to such Non-Qualifying Shareholders. The result of the enquiries and the basis of the exclusion, if any, will be included in the Prospectus.

The Company will send copies of the Prospectus (without the PAL and EAF) to the Non-Qualifying Shareholders for their information only.

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LETTER FROM THE BOARD

The Company shall provisionally allot the Rights Shares which represent the entitlements of the Non-Qualifying Shareholders to a nominee of the Company in nil-paid form and the Company shall procure that such nominee shall endeavour to sell the rights as soon as practicable after dealings in nil-paid Rights Shares commence and in any event on or before the last day of dealings in nil-paid Rights Shares at a net premium (nil-paid). If and to the extent that such rights can be so sold, the nominee of the Company shall account to the Company for the net proceeds of sale (after deducting the expenses of sale, if any), on the basis that the net proceeds after deducting the expenses of sale (if any) attributable to the sale of the Rights Shares that would otherwise have been allotted to the Non-Qualifying Shareholders shall be distributed pro rata to their shareholdings as at the Record Date (but rounded down to the nearest cent) to the Non-Qualifying Shareholders provided that individual amounts of HK$100 or less shall be retained by the Company for its own benefit. Any of such nil-paid rights which are not sold as aforesaid will be dealt with as Rights Shares not taken up.

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.

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 74.75% to the closing price of HK$0.8 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.

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LETTER FROM THE BOARD

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.

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 and refund cheques for the Rights Issue

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, refund cheques will be despatched on or before Friday, 14 August 2015 by ordinary post at the respective Shareholders’ own risk.

Application for excess Rights Shares

Qualifying Shareholders are entitled to apply for any unsold provisional allotment of the Non-Qualifying Shareholders and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders.

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LETTER FROM THE BOARD

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, except that preference will 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.

Shareholders with Shares held by a nominee (or which are held in CCASS) should note that the Board will consider the nominee (including HKSCC Nominees Limited) as one single Shareholder according to the register of members of the Company. Accordingly, such Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to the relevant beneficial owners individually.

For Shareholders whose Shares are held by their nominee(s) (including HKSCC Nominees Limited) and who would like to have their names registered on the register of members of the Company, they must lodge all necessary documents with the Registrar, being Tricor Abacus Limited, for completion of the relevant registration not later than 4:00 p.m. on Friday, 7 August 2015.

Application for the Rights Shares

The Application Forms relating to the Rights Shares will be enclosed with the Prospectus entitling the Qualifying Shareholders to whom they are addressed to subscribe for the Rights Shares as shown therein by completing such form(s) and lodging the same with separate remittance for the Rights Shares being applied for with the Registrar by the Latest Time for Acceptance.

Application for listing

The Company will apply 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.

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LETTER FROM THE BOARD

Subject to the granting of the listing of, and permission to deal in, the Rights Shares on the Stock Exchange, the Rights Shares 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 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 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.

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.

Closure of register of members

For the purpose of determining the entitlement to attend and vote at the SGM, the register of members of the Company will be closed from Thursday, 9 July 2015 to Monday, 13 July 2015, both dates inclusive, and no transfer of Shares will be registered during such period.

The register of members of the Company will also be closed from Monday, 20 July 2015 to Thursday, 23 July 2015, both dates inclusive, to determine the eligibility of the Rights Issue. No transfer of Shares will be registered during such period.

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 hold any Shares.

Number of Underwritten Shares:

Not less than 524,934,274 Rights Shares and not more than 593,334,274 Rights Shares. On such basis, taking into account the Shareholders’ Undertaking and the Option Holders’ Undertaking, the Rights Issue is fully underwritten.

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LETTER FROM THE BOARD

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. 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 provisonally allotted under the Rights Issue; and
(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) will remain as the beneficial owner of the Shares as set out above at the close of business on the Record Date;
(b) will 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

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LETTER FROM THE BOARD

(c) will 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 date of the Underwriting Agreement, the Outstanding Options entitled the Option Holders to subscribe for up to 16,800,170 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.

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

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LETTER FROM THE BOARD

(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
(3) the 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.

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LETTER FROM THE BOARD

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.

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

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LETTER FROM THE BOARD

(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.

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, other than condition (6) above, none of the above conditions 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 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 when 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.

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LETTER FROM THE BOARD

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

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

(a) Assuming (i) no exercise of the subscription rights attached to the Unlisted Warrants on or before the Record Date and (ii) there is no Non-Qualifying Shareholder

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 Latest Pra Number of Shares 18,913,170 29,650,000 – – 249,817,137 298,380,307	at cticable Date Approximate % 6.34 9.94 – – 83.72 100.00	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 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 and after the issue and allotment of the Placing Shares (assuming all Rights Shares are subscribed for by the Qualifying Shareholders) (Note 6) a S R G 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 1	Upon issue of the Rights Shares and after the issue nd allotment of the Placing hares (assuming none of the ights Shares are subscribed for by the Qualifying Shareholders other than lobalcrest 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 ,481,490,921 100.00	Upon issue of the Rights Shares and after the issue nd allotment of the Placing hares (assuming none of the ights Shares are subscribed for by the Qualifying Shareholders other than lobalcrest 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 ,481,490,921 100.00
				100.00				100.00

(b) Assuming that (i) the subscription rights attached to the Unlisted Warrants were exercised in full and Warrant Shares are issued pursuant thereto on or before the Record Date and (ii) there is no Non-Qualifying Shareholder

Globalcrest (Notes 1 and 2) Ever Robust (Notes 2 and 3) The Underwriter (Note 4) The Placees (Note 5) Other existing public Shareholders Total	As the Latest Pr Number of Shares 18,913,170 29,650,000 – – 249,817,137	at acticable Date Approximate % 6.34 9.94 – – 83.72	Upon issue o Shares on o Recor Number of Shares 18,913,170 29,650,000 – – 284,017,137	f the Warrant r before the d Date Approximate % 5.69 8.91 – – 85.40	Upon issue of Shares (assumin Shares are subs the Qualifying Number of Shares 56,739,510 88,950,000 – – 852,051,411 997,740,921	the Rights g all Rights cribed for by Shareholders) Approximate % 5.69 8.91 – – 85.40	Upon issue o Shares (assum the Rights subscribed Qualifying S other than Gl Ever R (Note Number of Shares 56,739,510 63,650,000 593,334,274 – 284,017,137	f the Rights ing none of Shares are for by the hareholders obalcrest and obust) 4) Approximate % 5.69 6.38 59.47 – 28.46	Upon issue o Shares and afte the Placing Sha all Rights subscribed Qualifying S (Notes 5 Number of Shares 56,739,510 88,950,000 – 586,350,000 852,051,411 1,584,090,921	f the Rights r the issue of res (assuming Shares are for by the hareholders) and 6) Approximate % 3.58 5.62 – 37.01 53.79	Upon issue o Shares and a and allotment Shares (assu the Rights subscribed Qualifying other than Gl Ever R (Note 4, Number of Shares 56,739,510 63,650,000 593,334,274 586,350,000 284,017,137 1,584,090,921	f the Rights fter the issue of the Placing ming none of Shares are for by the Shareholders obalcrest and obust) 5 and 6) Approximate % 3.58 4.02 37.46 37.01 17.93
	298,380,307	100.00	332,580,307	100.00		100.00	997,740,921	100.00		100.00		100.00

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LETTER FROM THE BOARD

Notes:

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.
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.
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.
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.

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LETTER FROM THE BOARD

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.

The 294,000,000 Underwritten Shares agreed to be sub-underwritten/subscribed by the abovementioned four sub-underwriters/subscribers in aggregate represents a maximum of approximately 32.84% (assuming that there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date) and a minimum of approximately 29.47% (assuming that the subscription rights attached to the Unlisted Warrants are exercised in full and Warrant Shares are allotted and issued pursuant thereto on or before the Record Date and there is no other change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date) of the enlarged share capital of the Company immediately after completion of the Rights Issue.

It is expected 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.

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.
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.
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.

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LETTER FROM THE BOARD

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
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, the Company had not conducted any other fund raising activities in the past 12 months immediately preceding the Latest Practicable Date.

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LETTER FROM THE BOARD

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 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 net proceeds of the Placing, after deduction of the Placing commission and other related expenses of approximately HK$7.5 million, will be approximately HK$192.5 million. The gross proceeds from the Rights Issue will be not less than approximately HK$120.55 million and not more than approximately HK$134.36 million. The minimum 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 the net proceeds of approximately HK$192.5 million from the Placing as to approximately:

(i) HK$20.0 million for the development of its existing business in trading, wholesale and retail of watch and jewellery products, or, if the acquisition of 79.99% of the enlarged share capital of Winston Asia Limited (details of which is set out below) is not approved by the Shareholders or does not proceed, for the money lending business of the Group;

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LETTER FROM THE BOARD

(ii) not less than HK$60.0 million for the possible acquisition of a target company principally engaged in film and advertising production, provision of public relations services, holding and sponsoring stage performance, concerts and other cultural events in Hong Kong, Taiwan and the People’s Republic of China (‘‘PRC’’) as contemplated under a non-legally binding memorandum of understanding entered into between the Group and a potential vendor as announced in the Company’s announcement dated 13 March 2015 (the ‘‘Potential Acquisition A’’). If the Potential Acquisition A does not proceed, the Company will seek for other investment opportunities in the same industry and, if such opportunities arise, apply the proceeds for such use;
(iii) not less than HK$60.0 million for the possible acquisition of a group of companies principally engaged in the production of frames for eyeglasses and other optical products, as contemplated under a non-legally binding memorandum of understanding entered into between the Group and the potential vendor as announced in the Company’s announcement dated 20 April 2015 (the ‘‘Potential Acquisition B’’). If the Potential Acquisition B does not proceed, the Company will seek for other investment opportunities in the same industry and, if such opportunities arise, apply the proceeds for such use;
(iv) not more than HK$35.0 million for the development of money lending business; and
(v) approximately HK$17.5 million for the working capital of the Group.

The Company intends to apply the minimum net proceeds of approximately HK$114.8 million from the Rights Issue 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 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;

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LETTER FROM THE BOARD

(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 proceeds only with either the Rights Issue or the Placing, the use of proceeds from such fund raising exercise will remain the same as disclosed above and no reallocation is expected to occur.

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 Placing is considered to be material, the Company will seek approval of the Shareholders regarding such change. 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.

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) Trading, wholesale and retail of watch and jewellery products

As disclosed in the announcement of the Company dated 7 May 2015, Fragrant River Entertainment Culture (Holdings) Limited (‘‘Fragrant River’’), a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with the vendors to acquire 79.99% of the enlarged share capital of Winston Asia Limited (together with its subsidiaries, ‘‘Winston Group’’). Winston Group is principally engaged in business activities including the trading of watches, trademark holding, wholesale and retail of watches and jewellery in Hong Kong and PRC. According to the audited consolidated financial statements of Winston Asia Limited for the year ended 31 December 2014, Winston Asia Limited recorded a revenue of approximately HK$49.7 million for the year of 2014. Winston Group currently has over thirty retail shops in the PRC and two in Hong Kong. In view of the growth of retail sales of jewellery and watches in recent years, the management of Winston Group intends to expand the jewellery business and the Company intended to apply approximately HK$20 million for the purchase of jewellery as inventory for the development of the trading, wholesale and retail of jewellery products which may have a synergetic effect with the current trading, wholesale and retail of watches.

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LETTER FROM THE BOARD

The Company is of the view that the risks of the trading, wholesale and retail of watch and jewellery products business in Hong Kong and the PRC are hinged upon the performance of the retail market of watch products in Hong Kong and the PRC.

According to the Reports on Monthly Survey of Retail Sales (the ‘‘Retail Reports’’) released by the Census and Statistics Department of Hong Kong on 2 February 2012 and 2 February 2015, the dollar value of retail sales of jewellery, watches and clocks, and valuable gifts has increased from approximately HK$89.4 billion in 2011 to approximately HK$102.1 billion in 2014, representing a cumulative annual growth rate (‘‘CAGR’’) of approximately 4.5%. This reflects a general growth trend in the retail sales of those luxury products. Also, according to the statistics released by the National Bureau of Statistics of the PRC, (i) the gross domestic product of the PRC has raised from approximately RMB47,957 billion in 2011 to approximately RMB63,646 billion in 2014, which gives rise to a CAGR of approximately 9.89%; and (ii) the total retail sales of consumer goods has been increased from approximately RMB18,122.6 billion in 2011 to approximately RMB26,239.4 billion in 2014, which gives rise a CAGR of approximately 13.13%. This reflects the growth in income of consumers in the PRC and demonstrates that the retail market in the PRC is following an upsurge trend. Based on the aforesaid statistics, the management of the Company is of the view that the outlook of the retail market in the PRC and Hong Kong is positive.

It is the intention of the Group to retain the existing management team of Winston Group to oversee the operation and management of Winston Group after the acquisition. In addition, as announced by the Company in its announcement dated 7 May 2015, the consideration for the acquisition of Winston Group is subject to downward adjustment depending on the performance of Winston Group for the year ending 31 December 2015. As such, the Directors consider that the risk and return of this new business is further protected in this regard.

(b) Film and advertising production, provision of public relations services, holding and sponsoring stage performance, concerts and cultural events

The Company announced the Potential Acquisition A in its announcement dated 13 March 2015. As disclosed in such announcement, the target company (together with its subsidiaries, ‘‘Target Group’’), upon completion of a restructuring, will be principally engaged in film and advertising production, provision of public relations services, holding and sponsoring stage performance, concerts and other cultural events. If such acquisition is materialized, it will enable the Group to complement its existing film production business to similar advertising production business, as well as provision of public relations services in relation to, among others, promotion of films through various events. The Board considers that it would enable the Company to strengthen its current film production ability and cost control and its market position in the film industry, and such close alliance between the Group and the Target Group may have synergetic effect. According to the preliminary negotiation with the potential seller of the Target Group, the Board estimates that the consideration for such acquisition shall not be less than HK$60 million (subject to further negotiation and agreement).

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LETTER FROM THE BOARD

The Company is of the view that the business of the film, advertising and public relation services is subject to economic and financial fluctuations, which results in changes of discretionary spending by consumers in relation to the box office of the film.

(c) Frames for eyeglasses and other optical products

According to the Company’s announcement dated 7 May 2015, the Company entered into the business of retail sale of optical products in Hong Kong through its investment in the chain shop with established and renowned brand name ‘‘茂昌眼鏡 Hong Kong Optical’’. The Board considers that such acquisition would enable the Group to take advantage of the growth in retail of optical products and diversify the revenue sources of the Group.

In addition, the Company also announced the Potential Acquisition B in its announcement dated 20 April 2015, which relates to the potential acquisition of certain interest in a group of companies which are principally engaged in the production of frames for eyeglasses and other optical products. The management of the Company is of the view that if such potential acquisition is materialized, there will be a synergetic effect on the aforesaid wholesale and retail of optical product businesses as the Group can source the optical products from the aforesaid optical products manufacturer and maintains a stable supplier for its retails network in Hong Kong. According to the preliminary negotiation with the potential seller, the Board estimates that the consideration of the Potential Acquisition B would be not less than HK$60 million (subject to further negotiation and agreement).

The management of the Company is of the view that the performance of the business of production of frames for eyeglasses and other optical products is subject to (i) fluctuations in prices, or any unavailability, of the raw materials that are used in the products which may materially and adversely affect the business, results of operations or financial condition; and (ii) decreases in discretionary spending by retail customers of eyeglasses and optical products.

According to the Retail Reports, the dollar value of retail sales by optical shops has increased continuously from approximately HK$2,470 million in 2011 to approximately HK$3,421 million in 2014, representing a CAGR of approximately 11.5%. This reflects a robust growth of the retail sales of optical products in recent years. As such, the management of the Company is of the view that the outlook of the eyeglass and other optical products industry in Hong Kong is positive.

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LETTER FROM THE BOARD

(d) Loan facilities to a non-wholly-owned subsidiary

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 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.

(e) 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 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.

For the businesses (b), (d) and (e) as referred to above, they are existing businesses of the Group, and the Company has acquired competent management experience in such businesses. For the businesses (a) and (c) as referred to above, the Company shall retain the senior management and employees for such new businesses upon completion of the relevant acquisitions.

– 42 –

LETTER FROM THE BOARD

The Board also considers that the Placing and the Rights Issue represents a good opportunity to broaden the shareholders’ base and the capital base of the Company. As such, the Directors (other than the independent non-executive Directors whose view will be formed after considering the opinion of the Independent Financial Adviser regarding the Rights Issue) consider that the terms of the Rights Issue are fair and reasonable and the Placing and Rights Issue are 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 above. 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 pro-rata 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 (i) no Qualifying Shareholder takes up his provisional allotment under the Rights Issue; (ii) the subscription rights attached to the Unlisted Warrants were exercised in full and Warrant Shares are issued pursuant thereto on or before the Record Date; and (iii) there is no other changes to the issued share capital on or before the Record Date, 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 28.46% upon completion of the Rights Issue; and (ii) further decreased to 17.93% 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.

– 43 –

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 theoretical ex-rights price of HK$0.4013 per Share, the value of each board lot of 15,000 Shares would be HK$6,019.5. The Rights Shares will be traded in the board lot of 15,000 Shares.

Based on the closing price of HK$0.8 per Shares as quoted on the Stock Exchange as at the Latest Practicable Date, the market value of each existing board lot is HK$4,000 and the estimated market value of each proposed new board lot is HK$12,000.

– 44 –

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.

For illustration purpose only, based on the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day, taking into account the adjustment effects of the Placing and the Rights Issue, (i) the exercise price of the Outstanding Options granted on 27 June 2012 will be adjusted from HK$0.67 per Option Share to HK$0.3361 per Option Share; and (ii) the exercise price of the Outstanding Options granted on 21 July 2014 will be adjusted from HK$1.738 per Option Share to HK$0.8719 per Option Share. The total number of Option Shares fall to be allotted and issued after the adjustment of subscription price will be 37,618,944 Shares, representing (i) approximately 5.02% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares; and (ii) approximately 2.54% of the existing issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares and the Rights Shares.

– 45 –

LETTER FROM THE BOARD

The actual adjustment will be calculated based on the closing price per Share as quoted on the Stock Exchange on the last day of dealing in Shares on a cum-rights basis. Such adjustment will become effective on the commencement of the day next following the Record Date.

The Placing is not an adjustment event 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.

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 closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day, the adjusted subscription price of the Unlisted Warrants will be adjusted from HK$2.5 per Warrant Share to HK$1.2542 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$1.2542 per Warrant Share, the number of Warrant Shares fall to be allotted and issued after the adjustment of subscription price will be 68,170,945 Shares, representing (i) approximately 7.62% of the issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares; and (ii) approximately 4.60% 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 will become effective on the commencement of the day next following the Record Date.

As regards the Placing, based on the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day, the adjusted subscription price of the Unlisted Warrants will be adjusted from HK$2.5 per Warrant Share to HK$1.5496 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$1.5496 per Warrant Share, the number of Warrant Shares fall to be allotted and issued after the adjustment of subscription price will be 55,175,529 Shares, representing (i) approximately 6.24% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares; and (ii) approximately 3.72% 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.

– 46 –

LETTER FROM THE BOARD

Such adjustment will become effective from the close of business in Hong Kong on the business day immediately preceding the date on which the issue of the Placing Shares is announced.

However, according to the terms and conditions of the Unlisted Warrants, given that the Placing and the Rights Issue are announced on the same day, the adjusted exercise price of the Unlisted Warrants shall only be subject to adjustment as caused by the effect of the Rights Issue.

As the number of Warrant Shares that would fall to be issued upon the exercise of the subscription rights attached to the Unlisted Warrants in full after the adjustment as described above would exceed the number of Shares authorized to be allotted and issued under the general mandate obtained by the Directors on 29 November 2012 pursuant to which the Unlisted Warrants were created and issued, the Board will also propose to seek the Warrant Issue Mandate from the Shareholders at the SGM.

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$0.3880 (subject to further adjustment in accordance with the terms and conditions of the Consideration Convertible Notes). On the basis of the adjusted initial conversion price of HK$0.3880 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.

– 47 –

LETTER FROM THE BOARD

As regards the Placing, 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$0.4846 (subject to further adjustment in accordance with the terms and conditions of the Consideration Convertible Notes). On the basis of the adjusted initial conversion price of HK$0.4846 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 132,067,684 Shares.

Such adjustment shall become effective on the date of issue of the Placing Shares.

According to the terms of the Consideration Convertible Notes, where more than one event gives or may give rise to an adjustment to the conversion price occurs within such a short period of time that the independent financial adviser considers in good faith that the operation of the adjustment provisions contained in the Consideration Convertible Notes would need to be subject to some modification in order to give the intended commercial result, such modification shall be made to the operation of the adjustment provisions as may be advised by the independent financial adviser to be in its opinion appropriate in order to give such intended result.

According to the opinion of the Independent Financial Adviser, where the Placing and the Rights Issue proceed together, the initial conversion price of the Consideration Convertible Notes shall only be subject to adjustment as caused by the effect of the Rights Issue.

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.

LISTING RULES IMPLICATIONS

The Placing Shares will be allotted and issued pursuant to the Specific Mandate to be sought at the SGM. For the purpose of better corporate governance, the Independent Board Committee will also express its view regarding the fairness and reasonableness of the terms of the Placing in this circular after taking into account the opinion of the Independent Financial Adviser.

– 48 –

LETTER FROM THE BOARD

As the Rights Issue will increase the issued share capital of the Company by more than 50%, under Rule 7.19(2) of the Listing Rules, the Rights Issue is subject to approval of the Independent Shareholders at the SGM by poll in accordance with the requirements of the Listing Rules.

As at the Latest Practicable Date, since the Company has no controlling Shareholder, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour the resolution to approve the Rights Issue at the SGM pursuant to the Listing Rules. As at the Latest Practicable Date, Globalcrest held 18,913,170 issued Shares, representing approximately 6.34% of the entire issued share capital of the Company. 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. Accordingly, Globalcrest will abstain from voting in favour of the resolution to approve the Rights Issue at the SGM. Save as aforesaid, to the best knowledge of the Directors, no other Director or chief executive of the Company is holding any Share.

The Company has established the Independent Board Committee, which comprises all independent non-executive Directors in compliance with the Listing Rules, to advise the Independent Shareholders as to whether the terms of the Placing Agreement and the Rights Issue are fair and reasonable and in the interests of the Shareholders as a whole, and to advise the Independent Shareholders on how to vote, taking into account the recommendations of the Independent Financial Adviser. For disclosure purpose only, Mr. Lam Wing Tai, one of the independent non-executive Directors, is also an independent non-executive director of Jun Yang Solar Power Investment Limited, the holding company of Jun Yang Securities.

In this connection, the Company has appointed Donvex Capital as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

SGM

The SGM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the Rights Issue and for the Shareholders to consider and, if thought fit, approve the Placing. A notice convening the SGM to be held at 18/F, Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, N.T., Hong Kong on Monday, 13 July 2015 at 12:00 noon is set out on pages SGM-1 to SGM-5 of this circular.

– 49 –

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the meeting in person, please complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment thereof should you so wish. In such event, the instrument appointing a proxy will be deemed to be revoked. In accordance with the Listing Rules, Globalcrest will be required to abstain from voting in favour of the resolution for approving the Rights Issue at the SGM and those who are involved in and/or interested in the Rights Issue shall abstain from voting on the relevant resolution in respect of the Rights Issue at the SGM.

Save as disclosed above, no Shareholder is required to abstain from voting on the other resolutions to be proposed at the SGM. In compliance with the Listing Rules, all resolutions as set out in the notice of SGM will be voted on by way of a poll at the SGM.

Subject to the approval of the Rights Issue by the Independent Shareholders at the SGM and the registration of the Prospectus Documents in accordance with the application legislation and the Prospectus Documents will be despatched to the Qualifying Shareholders on or before Friday, 24 July 2015 whereas the Prospectus will be despatched to the Non-Qualifying Shareholders for information only.

RECOMMENDATION

The Independent Board Committee has been formed to advise the Independent Shareholders in connection with the Rights Issue and, for the purpose of better corporate governance, the Placing. Donvex Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

You are advised to read carefully the letter of recommendation from the Independent Board Committee and the letter of advice from the Independent Financial Adviser set out on pages 52 and pages 53 to 76 respectively of this circular. The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the terms of the Placing and the Rights Issue are fair and reasonable so far as the Independent Shareholders are concerned and the Placing and the Rights Issue are in the interests of the Company and the Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the proposed resolutions relating to the Placing and the Rights Issue to be proposed at the SGM.

– 50 –

LETTER FROM THE BOARD

Accordingly, the Directors (including the independent non-executive Directors) consider that the Placing and the Rights Issue are in the interests of the Company and the Shareholders as a whole, therefore, the Directors (including the independent non-executive Directors) recommend the Shareholders to vote in favour of the resolutions relating to the Placing and the grant of the Warrant Issue Mandate and the Independent Shareholders to vote in favour of the resolution relating to the Rights Issue at the SGM.

ADDITIONAL INFORMATION

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

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

– 51 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation, prepared for the purpose of incorporation in this circular, from the Independent Board Committee setting out its recommendation to the Independent Shareholders regarding the Placing and the Rights Issue.

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

24 June 2015

To the Independent Shareholders

Dear Sir or Madam,

(1) PLACING OF NEW SHARES UNDER A SPECIFIC MANDATE; AND (2) RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE IN ISSUE HELD ON THE RECORD DATE

We refer to the circular dated 24 June 2015 (the ‘‘Circular’’) of the Company of which this letter forms part. Unless the context requires otherwise, terms defined in the Circular shall have the same meanings used herein.

We have been appointed by the Board to advise the Independent Shareholders as to whether the terms of the Placing and the Rights Issue are fair and reasonable insofar as the Independent Shareholders are concerned and whether the Placing and the Rights Issue are in the interests of the Company and the Shareholders as a whole and to advise the Independent Shareholders on how to vote. Donvex Capital has been appointed as the Independent Financial Advisor to advise you and us in this respect.

Having taken into account the advice and recommendation of Donvex Capital as set out in its letter of advice to you and us on pages 53 to 76 of the Circular, we consider that the terms of each of the Placing and the Rights Issue are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned. Furthermore, the Placing and the Rights Issue are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the relevant resolutions to be proposed at the SGM to approve each of the Placing and the Rights Issue.

Yours faithfully,

The Independent Board Committee

Mr. Lam Wing Tai Mr. Choi Wing Koon Mr. Lam Chi Keung Independent Non-executive Independent Non-executive Independent Non-executive Director Director Director

for identification purpose only

– 52 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from Donvex Capital Limited setting out their advice to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

==> picture [128 x 79] intentionally omitted <==

Unit 1305, 13th Floor, Carpo Commercial Building 18-20 Lyndhurst Terrace Central Hong Kong

24 June 2015

The Independent Board Committee and the Independent Shareholders of Universe International Holdings Limited

Dear Sirs,

(1) PLACING OF NEW SHARES UNDER A SPECIFIC MANDATE (2) PROPOSED RIGHTS ISSUE ON THE BASIS OF TWO RIGHTS SHARES FOR EVERY ONE SHARE HELD ON THE RECORD DATE

INTRODUCTION

We refer to our engagement as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Rights Issue, details of which are set out in the letter from the Board (the ‘‘Letter from the Board’’) contained in the circular of the Company dated 24 June 2015 to the Shareholders (the ‘‘Circular’’), of which this letter forms part. Terms used herein have the same meanings as those defined in the Circular unless otherwise stated.

On 26 May 2015, the Company announced, among other things, the Placing and the Rights Issue (together with the respective transactions contemplated thereunder). The Company entered into the Placing Agreement with the Placing Agents pursuant to which the Placing Agents had conditionally agreed to place, on a best effort basis, up to 586,350,000 Placing Shares at the Placing Price of HK$0.3411 per Placing Share on behalf of the Company to not less than six Placees who and whose ultimate beneficial owners will be Independent Third Parties. The gross proceeds from the Placing amount to approximately HK$200.0 million and the net proceeds of the Placing, after deduction of the Placing commission and other related expenses of approximately HK$7.5 million, will be approximately HK$192.5 million. The Placing Shares will be allotted and issued pursuant to the Specific Mandate to be sought at the SGM.

– 53 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Company proposed to raise not less than approximately HK$120.6 million and not more than approximately HK$134.4 million before expenses by way of issue of not less than 596,760,614 and not more than 665,160,614 Rights Shares pursuant to the Rights Issue on the basis of two Rights Shares for every one Share in issue on the Record Date at the Subscription Price of HK$0.202 per Rights Share.

As at the date of the Underwriting Agreement, Globalcrest and Ever Robust are 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. Each of Globalcrest and Ever Robust has irrevocably undertaken respectively to the Company and the Underwriter that, among others, it will apply for and pay for the Rights Shares to which it will be entitled pursuant to the Rights Issue (37,826,340 Rights Shares for Globalcrest and 34,000,000 for Ever Robust).

As at the date of the Underwriting Agreement, the Company had Outstanding Options which entitled the holders thereof to subscribe for up to 16,800,170 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.

As the Rights Issue will result in an increase in Company’s issued share capital by more than 50%, the Rights Issue are subject to, among other things, the approval by the Independent Shareholders at the SGM. Pursuant to Rule 7.19(6)(a) of the Listing Rules, any controlling shareholder and their associates, or where there is no such controlling shareholder, the Directors (excluding the independent non-executive Directors), the chief executive and their respective associates will need to abstain from voting in favour of the resolutions relating to the Rights Issue. As at the Latest Practicable Date, the Company had no controlling Shareholder.

As at the Latest Practicable Date, since the Company has no controlling Shareholder, the Directors (excluding the independent non-executive Directors) and the chief executive of the Company and their respective associates, shall abstain from voting in favour of the resolution to approve the Rights Issue at the SGM pursuant to the Listing Rules. As at the Latest Practicable Date, Globalcrest held 18,913,170 issued Shares, representing approximately 6.34% of the entire issued share capital of the Company. 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. Accordingly, Globalcrest will abstain from voting in favour of the resolution to approve the Rights Issue at the SGM. Save as aforesaid, to the best knowledge of the Directors, there is no other Director or chief executive of the Company is holding any Share.

– 54 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising Mr. Lam Wing Tai, Mr. Choi Wing Koon and Mr. Lam Chi Keung, all being independent non-executive Directors, has been established to advise the Independent Shareholders on the Placing and the Rights Issue. We, Donvex Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

As at the Latest Practicable Date, we were independent from and not connected with the Group pursuant to Rule 13.84 of the Listing Rules and accordingly, were qualified to advise the Independent Board Committee and the Independent Shareholders with respect to the Placing and the Rights Issue. Apart from the normal advisory fee payable to us in connection with our appointment as the Independent Financial Adviser, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

BASIS OF OUR OPINION

In formulating our opinion, we consider that we have reviewed sufficient and relevant information and documents and have taken reasonable steps as required under Rule 13.80 of the Listing Rules to reach an informed view and to provide a reasonable basis for our recommendation. We have relied on the information, statements, opinion and representations contained or referred to in the Circular and all information and representations which have been provided by the Company, the Directors and the management of the Company, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so at the date hereof. We have also assumed that all statements of belief, opinion and intention of the Directors as set out in the Letter from the Board contained in the Circular were reasonably made after due and careful inquiry. We have also sought and obtained confirmation from the Company that no material facts have been omitted from the information provided and referred to in the Circular.

The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries, which to the best of their knowledge and belief, that the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no material facts and representations the omission of which would make any statement in the Circular or the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, or its subsidiaries or associates, nor have we considered the taxation implication on the Group or the Qualifying Shareholders as a result of the Placing and the Rights Issue.

– 55 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Our opinion is based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

This letter is issued for the information of the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the Placing and the Rights Issue and, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion to the Independent Board Committee and the Independent Shareholders in respect of the proposed Rights Issue, we have considered the following principal factors and reasons:

1. Background information of the Group

(a) Principal business

(b) Historical financial information

Set out below is a summary of the audited consolidated financial results of the Group for the two financial years ended 30 June 2014 as extracted from the annual report of the Company for the financial year ended 30 June 2014 (the ‘‘Annual Report 2013/14’’) and for the six months ended 31 December 2013 and 2014 respectively as extracted from the interim report of the Group for the six months ended 31 December 2014 (the ‘‘Interim Report 2014/15’’) respectively.

	For the year ended	For the year ended	For the six months	ended
	30 June		31 December
	2013	2014	2013	2014
	HK$’000	HK$’000	HK$’000	HK$’000
Revenue	79,106	205,211	152,729	30,497
Profit (loss)
for the year/
period	(4,677)	(24,327)	5,944	(30,387)

– 56 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

		As at
		30 June	31 December
	2013	2014	2014
Cash and cash equivalents	50,430	84,178	50,944
Net assets	241,153	299,899	352,956

(i) For the financial year ended 30 June 2014

The revenue of the Group increased from approximately HK$79.1 million for the year ended 30 June 2013 (‘‘FY2013’’) to approximately HK$205.2 million for the year ended 30 June 2014 (‘‘FY2014’’). As stated in the Annual Report 2013/14, the increase in revenue for FY 2014 was mainly due to the income from the two new large scale films ‘‘Out of Inferno 3D’’ and ‘‘The White Storm’’ released during FY2014.

The Group recorded a net loss of approximately HK$24.3 million for FY2014, representing an increase of 420.1% over FY2013. The significant increase in net loss of the Group was mainly due to the Group (i) incurred fair value loss in the issuance of unlisted warrants of approximately HK$81.2 million during FY2014; (ii) an increase of segmental loss of approximately HK$7.7 million from film exhibition, licensing and sub-licensing of film rights as compared to FY2013; net of (iii) gains arising from the disposal and changes in the fair value of the investment securities of approximately HK$35.9 million (which is subject to the applicable tax rate of 16.5%); and (iv) gains from the disposal of the entire issued capital in Universe Property Investment Limited and Joy Talent Investment Limited of approximately HK$43.7 million during FY2014.

As set out in the Annual Report 2013/14, the Group has net assets of approximately HK$299.9 million as at 30 June 2014 in which bank balances and cash contributed approximately HK$84.2 million.

(ii) For the six months ended 31 December 2014

The revenue of the Group decreased from approximately HK$152.7 million for the six months ended 31 December 2013 (‘‘Six Months 2013’’) to approximately HK$30.5 million for the six months ended 31 December 2014 (‘‘Six Months 2014’’). As stated in the Interim Report 2014/15, the decrease in revenue from film exhibition, licensing and sub-licensing of film rights segment from approximately HK$144.4 million for Six Months 2013 to approximately HK$22.5 million during Six Months 2014 as a result of the decrease in number of newly released film and no new self-produced films.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group recorded a net loss of approximately HK$30.4 million for Six Months 2014 against a net profit of approximately HK$5.9 million for Six Months 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 Six Months 2014.

The Group had net assets of approximately HK$353.0 million as at 31 December 2014 of which HK$50.9 million was cash and cash equivalents

2. Reasons for the Placing and Rights Issue and use of proceeds

The estimated net proceeds of the Placing, after deduction of the Placing commission and other related expenses of approximately HK$7.5 million, will be approximately HK$192.5 million. The estimated gross proceeds of the Rights Issue will be not less than approximately HK$120.55 million and not more than approximately HK$134.36 million. The estimated net proceeds from the Rights Issue will be not less than approximately HK$114.8 million. The Company intends to apply the combined net proceeds of approximately HK$307.3 million from the Placing and the Rights issue in the following manner:

(i) HK$20.0 million for the development of its existing business in trading, wholesale and retail of watch and jewellery products, or, if the acquisition of 79.99% of the enlarged share capital of Winston Asia Limited (details of which is set out below) is not approved by the Shareholders or does not proceed, for the money lending business of the Group;
(ii) not less than HK$60.0 million for the possible acquisition of a target company principally engaged in film and advertising production, provision of public relations services, holding and sponsoring stage performance, concerts and other cultural events in Hong Kong, Taiwan and the PRC as contemplated under a nonlegally binding memorandum of understanding entered into between the Group and a potential vendor as announced in the Company’s announcement dated 13 March 2015 (the ‘‘Potential Acquisition A’’). If the Potential Acquisition A does not proceed, the Company will seek for other investment opportunities in the same industry and, if such opportunities arise, apply the proceeds for such use;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(iii) not less than HK$60.0 million for the possible acquisition of a group of companies principally engaged in the production of frames for eyeglasses and other optical products, as contemplated under a non-legally binding memorandum of understanding entered into between the Group and the potential vendor as announced in the Company’s announcement dated 20 April 2015 (the ‘‘Potential Acquisition B’’). If the Potential Acquisition B does not proceed, the Company will seek for other investment opportunities in the same industry and, if such opportunities arise, apply the proceeds for such use;
(iv) not more than HK$85.0 million for the development of money lending business;
(v) 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
(vi) approximately HK$38.9 million for the working capital of the Group.

With reference to our discussion with the management of the Company and information obtained in respect of the use of proceeds, we have taken into consideration of the following:

(a) Trading, wholesale and retail of watch and jewellery products

As disclosed in the announcement of the Company dated 7 May 2015, Fragrant River Entertainment Culture (Holdings) Limited, a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with the vendors to acquire 79.99% of the enlarged share capital of Winston Asia Limited (together with its subsidiaries, ‘‘Winston Group’’). Winston Group is principally engaged in business activities including the trading of watches, trademark holding, wholesale and retail of watches and jewellery in Hong Kong and PRC. According to the audited consolidated financial statements of Winston Asia Limited for the year ended 31 December 2014, Winston Asia Limited recorded revenue of approximately HK$49.7 million for the year of 2014. Winston Group currently has over thirty retail shops in the PRC and two in Hong Kong. In view of the growth of retail sales of jewellery and watches in recent years, the management of Winston Group intends to expand the jewellery business and the Company intended to apply approximately HK$20 million for the purchase of jewellery as inventory for the development of the trading, wholesale and retail of jewellery products which may have a synergetic effect with the current trading, wholesale and retail of watches.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to the Reports on Monthly Survey of Retail Sales (the ‘‘Retail Reports’’) released by the Census and Statistics Department of Hong Kong on 2 February 2012 and 2 February 2015 respectively, the dollar value of retail sales of jewellery, watches and clocks, and valuable gifts has increased from approximately HK$89.4 billion in 2011 to approximately HK$102.1 billion in 2014, representing a cumulative annual growth rate (‘‘CAGR’’) of approximately 4.5%. This reflects a general growth trend in the retail sales of those luxury products. According to the statistics released by the National Bureau of Statistics of the PRC, (i) the gross domestic product of the PRC has raised from approximately RMB47,957 billion in 2011 to approximately RMB63,646 billion in 2014, which gives rise to a CAGR of approximately 9.89%; and (ii) the total retail sales of consumer goods has been increased from approximately RMB18,122.6 billion in 2011 to approximately RMB26,239.4 billion in 2014, which gives rise a CAGR of approximately 13.13%. This reflects the growth in income of consumers in the PRC and demonstrates that the retail market in the PRC is following an upsurge trend. Based on the aforesaid statistics, the management of the Company is of the view that the outlook of the retail market in the PRC and Hong Kong is positive.

(b) Film and advertising production, provision of public relations services, holding and sponsoring stage performance, concerts and cultural events

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the film industry, and such close alliance between the Group and the Target Group may have synergetic effect. According to the preliminary negotiation with the potential seller of the Target Group, the Board estimates that the consideration for such acquisition shall not be less than HK$60 million (subject to further negotiation and agreement).

(c) Frames for eyeglasses and other optical products

In addition, the Company also announced the Potential Acquisition B in its announcement dated 20 April 2015, which relates to the potential acquisition of certain interest in a group of companies which are principally engaged in the production of frames for eyeglasses and other optical products. The management of the Company is of the view that if such potential acquisition is materialized, there will be a synergy effect on the aforesaid wholesale and retail of optical product businesses as the Group can source the optical products from the aforesaid optical products manufacturer and maintains a stable supplier for its retails network in Hong Kong. According to the preliminary negotiation with the potential seller, the Board estimates that the consideration of the Potential Acquisition B would be not less than HK$60 million (subject to further negotiation and agreement).

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(d) Money lending business

As stated in the Interim Report 2014/15, 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 for further development of the money lending business.

(e) Loan facilities to non-wholly-owned subsidiary

As disclosed in the Company’s announcement 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 joint venture agreement, the Group may in its absolute discretion deem fit, provide a loan of up to an aggregate amount of approximately HK$46.7 million 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 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.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(f) Working capital

The Group estimates that the remaining balance of the use of proceeds of approximately HK$38.9 million will be primarily used as to (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. With reference to the Annual Report 2013/14 and discussion with the management of the Company, the proceeds to be utilized as working capital are expected to be fully utilized within one year.

The Directors consider that it is prudent to finance the Group’s long term growth by way of the Rights Issue which will not only strengthen the Group’s capital base and enhance its financial position without increasing finance costs, but will also allow all Qualifying Shareholders the opportunity to participate in the growth of the Group through the Rights Issue at a price lower than the current market price of the Shares. After taking into account of the above, we concur with the Board’s view that fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole.

3. Other fund raising alternatives considered by the Group and the reasons for choosing the Placing and the Rights Issue as funding method

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.

As advised by the Directors, the Board has considered bank borrowings or debt financing as an alternative means of fund raising before resolving to the Placing and the Rights Issue. According to the management of the Company, the Company approached financial institutions for debt financing with amount similar to that of the Placing and the Rights Issue. However, due to the historical financial record and net losses of the Group as stated in the section headed ‘‘Historical financial information’’ above, few financial institutions are willing to undertake debt finance and at a relatively high interest rate to the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Having considered that, (i) debts financing alternatives will incur additional finance costs and thus will increase the Group’s liabilities burden; (ii) the Placing and the Rights Issue could allow the Group to strengthen its capital base and enhance its financial position without facing the increasing interest rates and the increasing liabilities burden; (iii) all the Qualifying Shareholders are offered an equal and fair opportunity to participate in the Rights Issue to maintain their pro rata shareholding interests in the Company and in the future development of the Company; and (v) the Shareholders who do not participate in the fund raising of the Company can dispose of their rights shares entitlements in the market in nilpaid form. We concur with the Directors’ view that the Placing and the Rights Issue allows the Group to strengthen its capital base and enhance its financial position without facing the increasing finance cost, which may facilitate long-term growth of the Group, and thus, we are of the view that the Placing and the Rights Issue is in the interests of the Company and Shareholders as a whole.

4. Principal terms of the Placing

Basis of the Placing

The Placing Agents have conditionally agreed to place up to 586,350,000 Placing Shares, on a best effort basis, at the Placing Price on behalf of the Company. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Placing Agents and their respective ultimate beneficial owners are Independent Third Parties.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Basis of determining the Placing Price

The Placing Price of HK$0.3411 represents:

(i) a discount of approximately 57.36% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on 26 May 2015, being the date of the Placing Agreement and the Last Trading Day;
(ii) a discount of approximately 15.00% 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 (taking into account the Rights Issue as described in the Circular);
(iii) a discount of approximately 54.03% to the average of the closing price per Share of HK$0.742 as quoted on the Stock Exchange for the last five consecutive trading days immediately prior to the Last Trading Day;
(iv) a discount of approximately 57.36% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(v) a discount of approximately 71.17% 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 the 298,380,307 Shares in issue as at the Latest Practicable Date.

The Placing Price of HK$0.3411 was arrived at after arm’s length negotiations between the Company and the Placing Agents with reference to the theoretical exrights price of approximately HK$0.4013 with a discount of approximately 15.0%, which is based on the Subscription Price and the closing price of the Shares on the Last Trading Day.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have reviewed all the placing proposals announced by other companies listed on the Main Board of the Stock Exchange for the period of three calendar months immediately prior to the Last Trading Day, and identified an exhaustive list of thirteen placings which are subject to the grant of specific mandate by shareholders (the ‘‘Placing Comparable(s)’’). Details of which are listed on the below table:

				Premium/
				(discount) to
				closing price
Initial			Expected	on the last	Placing
announcement	Company	Stock code	gross proceeds	trading day	commission
			(HK$ million)	(Approx. %)	(Approx. %)
27-Feb-15	Bestway International Holdings Limited	718	235.2	(51.3)	2.5
10-Mar-15	China Properties Investment Holdings Limited	736	250.0	(15.3)	1.0
26-Mar-15	Emperor Capital Group Limited	717	650.0	(32.4)	3.0
30-Mar-15	China Traditional Chinese Medicine Co.	570	4,007.4	(2.1)	(note)
	Limited
15-Apr-15	Shougang Concord Grand (Group) Limited	730	246.0	(7.9)	2.0
17-Apr-15	New Focus Auto Tech Holdings Limited	360	621.0	(44.1)	(note)
22-Apr-15	Hybrid Kinetic Group Limited	1188	547.5	(15.9)	1.0
28-Apr-15	Kong Sun Holdings Limited	295	1,404.0	(29.0)	2.8
28-Apr-15	China Galaxy Securities Co., Ltd.	6881	23,980.0	(5.7)	(note)
28-Apr-15	China Aluminum Cans Holdings Limited	6898	120.0	(5.5)	6.0
20-May-15	China Strategic Holdings Limited	235	1,050.0	(49.2)	2.5
22-May-15	Brilliant Circle Holdings International Limited	1008	136.0	(3.4)	(note)
26-May-15	Emperor Capital Group Limited	717	834.0	(12.8)	3.0
		Maximum	23,980.0	(51.3)	1.0
		Minimum	120.0	(2.1)	6.0
		Average	2,621.6	(21.1)	2.6
	Company		200.0	(15.0)	3.5

Source: The Stock Exchange

Note: The percentage of placing commission was not mentioned in the respective announcement.

The placing price of all of the Placing Comparables are set at discounts to the closing price on the last trading day of the relevant shares, ranging from a discount of approximately 2.1% to approximately 51.3%, with an average discount of approximately 21.1%. According to the terms of the Placing Agreement, completion of Placing is scheduled to take place after the Record Date for determining the entitlement to the Rights Issue (by when the market price of the Shares will have been adjusted taking into account of the Rights Issue), the Company considers that it is more reasonable to use the theoretical ex-rights price of HK$0.4013, as the basis to determine the Placing Price. Given that the Placing Price represents approximately 15.0% discount to the aforesaid theoretical ex-rights price of the Shares which is within the range and below the average discount to the prevailing market price of the Placing Comparables as stated above, we concur with the Company’s view that the Placing Price is fair and reasonable and in the best interest of the Shareholders.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Placing commission

The placing commission was arrived at after arm’s length negotiations between the Company and the Placing Agents under normal commercial terms and with reference to the prevailing market conditions. As illustrated in the Placing Comparables table as set out above, the placing commissions of the Placing Comparables ranged from 1.0% to 6.0%. Given that the 3.5% placing commission falls within the range of placing commissions of the Placing Comparables, the placing commission is in line with the market practice and therefore we consider that it is fair and reasonable so far as the Independent Shareholders are concerned and is in the interests of the Company and the Shareholders as a whole.

We have also reviewed other major terms of the Placing Agreement including, but not limited to, the termination of the Placing Agreement and conditions of the Placing Agreement (details of which are set out in the Letter from the Board) and we are not aware of any term which is unusual. As such, we are of the view that the terms of the Placing Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

5. Principal terms of the Rights Issue

Basis of the Rights Issue

The Company proposes to allot and issue not less than 596,760,614 (assuming there is no change to the issued share capital of the Company on or before the Record Date) and not more than 665,160,614 new Shares (assuming there is no change to the issued share capital of the Company other than the issue of new Shares upon the subscription of the Unlisted Warrants on or before the Record Date) to be issued pursuant to the Rights Issue on the basis of two Rights Shares for every one Share in issue on the Record Date.

Each of the Rights Shares (when allotted and fully paid) will rank pari passu in all respects among themselves and with the new Shares then in issue on the date of allotment. Holders of the fully-paid Rights Shares, credited as fully paid, will be entitled to receive all future dividends and distributions which may be declared, made or paid on or after the date of the allotment of the Rights Shares in their fully-paid form.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Basis of determining the Subscription Price

The Subscription Price for the Rights Shares is HK$0.202 per Rights Share and 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 74.75% to the closing price of HK$0.8 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 the 298,380,307 Shares in issue as at the Latest Practicable Date.

The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to the prevailing market price of the Shares and the prevailing market conditions.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

To assess the fairness and reasonableness of the Subscription Price, we have compared the Subscription Price with reference to (i) the recent price performance of the Shares; (ii) the trading liquidity of the Shares; and (iii) the market comparable analysis, as set out below.

(a) Recent price performance of the Shares

In order to assess the fairness and reasonableness of the Subscription Price, we have reviewed the trading price of the Shares for the period from 26 May 2014, being the 12-month period prior to the date of the Underwriting Agreement, up to and including the Latest Practicable Date (the ‘‘Review Period’’). The chart below illustrates the daily theoretical closing price of the Shares versus the Subscription Price of HK$0.202 during the Review Period:

==> picture [342 x 170] intentionally omitted <==

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

Trendline
Subscription Price
HK$0.202
26/5/2014 2/7/20146/8/201411/9/201420/10/201424/11/201431/12/2014 5/2/201516/3/201523/4/20151/6/2015
Closing Price HK$
----- End of picture text -----

Source: The Stock Exchange

As shown in the above chart, we note that the closing price of the Shares shows a general downward trend during the Review Period. During the Review Period, the highest closing price and the lowest closing price of the Shares were HK$2.04 on 8 July 2014 and HK$0.455 on 31 March 2015, respectively. The Subscription Price is lower than the lowest closing price of the Shares during the Review Period, representing a discount of approximately 90.1% and 55.6% to such highest and lowest closing prices of the Shares during the Review Period.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As the Rights Shares are offered to all Qualifying Shareholders, we are advised by the Directors that they would like to set and maintain the Subscription Price at a deep discount to the recent closing prices with an objective to encourage the Qualifying Shareholders to participate in the Rights Issue and accordingly maintain their pro-rata shareholdings in the Company and participate in the future growth of the Group, and they consider the terms of the Rights Issue to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(b) Trading liquidity of the Shares

Regarding the trading liquidity of the Shares, for illustrative purpose, a table showing the average daily volume of the Shares per month/period and the respective percentages of the average daily trading volume as compared to the total number of issued Shares as at the end of the month/period is stated as below:

					Percentage of	Percentage of
					average daily
					trading volume to
				Number of	total number of
	Total trading		Average daily	issued Shares	issued Shares as at
	volume of	Number of	trading volume of	as at the end of	the end of the
	the Shares	trading days	the Shares	the month/period	month/period
2014
May (since 26 May)	251,860,000	5	50,372,000	1,716,049,795		2.9%
June	799,384,427	20	39,969,221	1,728,888,070		2.3%
July	1,489,750,000	22	67,715,909	2,072,088,070		3.3%
August	615,930,000	21	29,330,000	2,072,088,070		1.4%
September	1,246,522,420	21	59,358,210	2,072,088,070		2.9%
October	276,620,000	21	13,172,381	2,072,088,070		0.6%
November	581,280,000	20	29,064,000	2,072,088,070		1.4%
December	275,950,000	21	13,140,476	2,486,503,070		0.5%
2015
January	538,730,000	21	25,653,810	2,486,503,070		1.0%
February	564,050,000	18	31,336,111	2,486,503,070		1.3%
March (before capital
reorganisation)	732,225,000	12	61,018,750	2,486,503,070		2.5%
March (after capital
reorganisation)	67,379,000	10	6,737,900	248,650,307		2.7%
April	145,685,500	19	7,667,658	298,380,307		2.6%
May (up to and
including the Last
Trading Day)	64,604,000	16	4,037,750	298,380,307		1.4%

Source: The Stock Exchange

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As illustrated from the table above, the average daily trading volume as a percentage of the total number of issued Shares ranged from approximately 0.5% to approximately 3.3%. We note that the average daily trading volume of the shares accounted for only a small portion (less than 3.3%) of the total number of issued Shares at the end of each respective month since 26 May 2014. Based on the above, we do not consider the trading of the Shares as active. We concur with the Directors that setting the Subscription Price at a discount to market price could enhance attractiveness of the Rights Issue.

(c) Comparison with other rights issues

To further evaluate the fairness and reasonableness of the terms of the Rights Issue, we have also considered a comparison of rights issues conducted by companies listed on the Main Board of the Stock Exchange. We have identified 13 rights issue transaction comparables announced by other companies that are listed on the Main Board of the Stock Exchange during the three months immediately before the date of the Underwriting Agreement (refer to collectively as the ‘‘Rights Issue Comparables’’). However, two of the Rights Issue Comparables were not suitable for comparison, reasons as stated below. Furthermore, having considered the recent volatility of the Hong Kong stock market and that the Rights Issue Comparables (i) adequately covered the prevailing market conditions and sentiments in the Hong Kong stock market; (ii) were conducted in such period which represented the recent structure of the rights issues in Hong Kong; and (iii) allowed the Shareholders to have general understanding of the recent rights issue transactions being conducted in the Hong Kong stock market, we considered that the size of the Rights Issue Comparables is adequate.

We confirm that the list of Rights Issue Comparables is an exhaustive list and consider the Rights Issue Comparables to be fair, sufficient and representative samples to illustrate the recent trend and terms of the rights issue transactions under common market practice, even though the Independent Shareholders should note that the businesses, operations and prospects of the Company are not the same as the Rights Issues Comparables and we have not conducted any in-depth investigation into their respective businesses and operations. The Rights Issue Comparables are used by us to make a comparison of the Rights Issue to the common market practice of the rights issue conducted by companies listed on the Main Board of the Stock Exchange.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Details of the Rights Issue Comparables are summarised in the following table:

						Premium/
						(discount) of
						subscription
						price to the
						closing price on
				Date of	Basis of	the last trading	Maximum	Underwriting
		Company	Stock code	announcement	entitlement	date	dilution	commission
						(Approx. %)	(Approx. %)	(Approx. %)
		China Strategic Holdings Limited	235	21/05/2015	1 for 2	(49.2)	33.3	2.5
		Eternity Investment Limited	764	15/05/2015	1 for 1	(4.1)	50.0	2.5
		Capital Estate Limited	193	14/05/2015	1 for 2	(34.5)	33.3	2.0
		Shihua Development Company Limited	485	04/05/2015	2 for 1 (with	(85.2)	83.3	2.5
					bonus share 3	(Note 4)
					for 2)
		South China Financial Holdings Limited	619	30/04/2015	1 for 2	(42.5)	33.3	1.0
		Hong Kong Education (Int’l) Investments	1082	24/04/2015	4 for 1 (with	(70.0)	85.7	3.5
		Limited			bonus share 1	(Note 4)
					for 2)
(Note	1)	Landing International Development Limited	582	22/04/2015	10 for 1	(75.9)	90.9	2.5
(Note	2)	Capital Environment Holdings Limited	3989	22/04/2015	1 for 1	(25.0)	50.0	–
(Note	1)	Hanny Holdings Limited	275	09/04/2015	6 for 1	(74.2)	85.7	3.0
		Wai Yuen Tong Medicine Holdings Limited	897	26/03/2015	1 for 2	(31.7)	33.3	2.5
		Emperor Capital Group Limited	717	26/03/2015	1 for 2	(32.4)	33.3	3.0
(Note	1)	Haitong International Securities Group	665	18/03/2015	1 for 1	(33.7)	50.0	1.0
		Limited
(Note	3)	Joy City Property Limited	207	27/02/2015	1 for 2	(5.6)	33.3	–
		Maximum				(4.1)	90.9	3.5
		Minimum				(85.2)	33.3	1.0
		Average				(48.5)	55.6	2.4
		The Company		26/05/2015	2 for 1	(74.8)	66.7	3.5

Source: The Stock Exchange

Note 1: For analysis purpose, we have excluded the underwriting commission of one of the underwriter whom is considered a connected party.

Note 2: The underwriter is a non-wholly owned subsidiary of the controlling shareholder and does not underwrite in its ordinary course of business, as such we have excluded such comparable from our analysis.

Note 3: The rights issue is on a non-underwritten basis, as such we have excluded such comparable from our analysis.

Note 4: The effect of bonus issue associated with the rights issue has been taken into account.

As illustrated in the table above, the discount which the subscription prices of the Rights Issue Comparables represented to the relevant closing prices on the last trading days ranged from a discount of approximately 4.1% to 85.2% with the average being a discount of approximately 48.5%. The Subscription Price, which represents a discount of approximately 74.8% to the closing price of the Shares on the Last Trading Day falls within the range of the Rights Issue Comparables.

– 72 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account of (i) the funding needs of the Group to raise proceeds to further develop its businesses and strengthen its financial position as discussed in the above section headed ‘‘Reason for the Rights Issue and use of proceeds from the Rights Issue’’; (ii) common market practice that the subscription price of a rights issue is normally set at various degrees of discount to the prevailing market prices of the relevant shares in order to enhance the attractiveness of a rights issue and to encourage the existing shareholders to take part in the rights issue; (iii) the discounts of the Subscription Price of the Rights Issue to the closing price per Share on the Last Trading Day falling within the range of discounts represented by the Rights Issue Comparables; (iv) thin trading liquidity of the Shares of the Company since August 2014; (v) the equal opportunity offered by the Rights Issue to all of the Qualifying Shareholders to subscribe for the Rights Shares and hence avoids dilution; and (vi) the Subscription Price is a commercial decision arrived at after arm’s length negotiation between the Company and the Underwriter, we consider that the Subscription Price is fair and reasonable.

Underwriting Commission

Pursuant to the Underwriting Agreement, the Underwriter will receive an underwriting commission calculated as 3.5% of the aggregate Subscription Price of the Underwritten Shares actually issued as determined on the Record Date. To the best of the Directors’ knowledge and information after having made all reasonable enquiries, the Underwriter and its ultimate beneficial owner are independent of and not connected with the Company and its connected person in its ordinary course of business includes underwriting.

As illustrated in the analysis set out in paragraph headed ‘‘Comparison with other rights issues’’ of this letter, the underwriting commission charged by the respective underwriters of the selected companies ranged from 1% to 3.5% on funds raised. The commission rate charged by the Underwriter of 3.5% falls at the higher end of the selected companies. We were informed by the Directors that the Group has considered appointing several underwriters for the Rights Issue. Nevertheless, there was a lack of positive response from them and the Company cannot find an underwriter for the Rights Issue at equal or better terms. The Directors also confirmed that the terms of the Underwriting Agreement were made on an arm’s length basis and are on normal commercial terms which are not unfavourable than terms available from other third parties. Furthermore, to the best of the Directors’ knowledge and information after having made all reasonable enquiries, the Underwriter and its ultimate beneficial owners are third parties independent of and not connected with the Company and its connected persons (as defined in the Listing Rules). Based on the above, we do not see any incentive for the Company to negotiate terms that are unfavorable to itself or the Group for the Underwriter’s benefit. We are of the view that the underwriting commission paid to the Underwriter is fair and reasonable.

– 73 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We have also reviewed other major terms of the Underwriting Agreement including, but not limited to, the payment terms, the termination of the Underwriting Agreement and conditions of the Underwriting Agreement (details of which are set out in the Letter from the Board) and we are not aware of any term which is unusual. As such, we are of the view that the terms of the Underwriting Agreement are fair and reasonable so far as the Independent Shareholders are concerned.

6. Potential dilution effect on the interests of the Independent Shareholders

As the Rights Issue is offered to all Qualifying Shareholders on the same basis, Qualifying Shareholders will be able to maintain their proportional interests in the Company if they take up their allotments under the Rights Issue in full. As set out under the section headed ‘‘Changes in shareholding structure of the Company’’ in the Letter from the Board, assuming that (i) no Qualifying Shareholder takes up his provisional allotment under the Rights Issue; (ii) the subscription rights attached to the Unlisted Warrants were exercised in full and Warrant Shares are issued pursuant thereto on or before the Record Date; and (iii) there is no other changes to the issued share capital on or before the Record Date, 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 28.46% upon completion of the Rights Issue; and (ii) further decreased to 17.93% upon completion of the Placing and Rights Issue. Qualifying Shareholders who do not elect to subscribe for in full their assured entitlements under the Rights Issue will be diluted after completion of the Rights Issue by a maximum of approximately 66.7%.

However, we consider 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 Qualifying Shareholder would take up their provisional entitlements under the Rights Issue, which is a complete misalignment between the voting behaviour of the Independent Shareholders and their subscription for the Rights Shares.

Despite the dilution effect by the Rights Issue of a maximum of approximately 66.7%, having taken into account: (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 entitlements 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, we consider the possible dilution effect on the Independent Shareholders to be acceptable.

– 74 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

7. Financial effect of the Placing and the Rights Issue

(a) Net tangible asset

According to the unaudited pro forma statement of consolidated net tangible assets of the Group (the ‘‘Pro Forma Financial Information’’) set out in Appendix II to the Circular, the unaudited consolidated net tangible assets of the Group was approximately HK$350.1 million as at 31 December 2014. The unaudited pro forma adjusted consolidated net tangible assets of the Group would increase to (i) approximately HK$657.4 million as at 31 December 2014 on the basis that a minimum of 596,760,614 Rights Share are issued and 586,350,000 Placing Shares are issued; and (ii) approximately HK$671.2 million as at 31 December 2014 on the basis that a maximum of 665,160,614 Rights Share are issued and 586,350,000 Placing Shares are issued.

(b) Working capital

Upon the completion of the Placing and Rights Issue, the cash and bank balance of the Group will be increased as a result of the net proceeds from the Placing and the Rights Issue. Accordingly, the working capital and liquidity position of the Group will be improved as a result of the Placing and Rights Issue.

In light of above, we consider the Placing and the Rights Issue are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

RECOMMENDATION

Having considered the above-mentioned principal factors and reasons, which include:

(i) financial information of the Group including the current cash position and indebtedness;
(ii) the use of proceeds from the Placing and the Rights Issue is consistent with the principal businesses and development plan of the Group;
(iii) the Placing and the Rights Issue are the most viable fund raising method as compared to debt financing;
(iv) the Placing Price which is below the average discount of the Placing Comparables are considered fair and reasonable;

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(v) the discount of the Subscription Price to the market price is necessary to encourage the Qualifying Shareholders to participate in the Rights Issue due to past share price performance of the Company;
(vi) 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
(vii) the underwriting commission of the Placing and Rights Issue is fair and reasonable;

we consider that, despite the inherent dilution effect to the Qualifying Shareholders who do not participate in the Rights Issue, the Placing, the Rights Issue, the Placing Agreement and the Underwriting Agreement are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolutions to approve the Placing and the Rights Issue, the Placing Agreement and the Underwriting Agreement to be proposed at the SGM.

Yours faithfully, For and on behalf of Donvex Capital Limited Doris Sy Director

– 76 –

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 50 to 52 respectively of the interim report 2014 of the Company which are incorporated by reference into this circular 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 215 and pages 8 to 25 respectively of the annual report 2014 of the Company which are incorporated by reference into this circular 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 circular 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 circular 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 April 2015, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this circular, the Group had total borrowings of approximately HK$9,256,550, comprising (i) the obligations under noninterest bearing finance leases of approximately HK$56,550; and (ii) an unsecured loan note of HK$9,200,000 which is interest bearing at 6.5% per annum.

Litigations and Contingent Liabilities

As at the close of business on 30 April 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 April 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 April 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 circular 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 self-produced 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 sub-licensing 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 Shares (effective on 17 March 2015) (the ‘‘Share Consolidation’’ and the Shares upon completion of the Share Consolidation, the ‘‘Consolidated Shares’’), the Placing and 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:

II – 1

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

SCENARIO 1: MINIMUM NUMBER OF 596,760,614 RIGHTS SHARES TO BE ISSUED

ASSETS Non-current assets Property, plant and equipment Investment properties Other intangible assets Film rights and films in progress Investment in an associate Investments in joint ventures Loan receivable from a joint venture Loans receivable Film deposits Deferred income tax assets Available-for-sale financial assets Current assets Inventories Accounts receivable Loans receivable Deposits paid, prepayments and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents Total assets EQUITY Capital and reserves attributable to the equity holders of the Company Share capital Share premium Other reserves Retained earnings Total shareholders’ equity Non-controlling interest Total equity	Unaudited As at 31st December 2014 HK$’000 1,482 25,060 1,858 30,016 4,869 824 8,032 7,000 37,311 372 55,032 171,856 2,623 8,725 61,930 40,811 92,849 50,944 257,882 429,738 49,730 194,669 92,957 14,600 351,956 1,000 352,956	Pro forma adjustments (Note b) Placing (Note c) Rights Issue HK$’000 HK$’000 192,503 114,796 5,863 5,968 186,640 108,828	Total HK$’000 1,482 25,060 1,858 30,016 4,869 824 8,032 7,000 37,311 372 55,032
			171,856
			2,623 8,725 61,930 40,811 92,849 358,243
			565,181
			737,037
			61,561 490,137 92,957 14,600
			659,255 1,000
			660,255

II – 2

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

LIABILITIES Non-current liabilities Obligations under finance lease Deferred income tax liabilities Current liabilities Accounts payable Other payables and accrued charges Deposits received Amount due to the ultimate holding company Obligations under finance lease Taxation payable Total liabilities Net tangible assets attributable to the shareholders of the Company (Note a) Unaudited consolidated net tangible assets attributable to the shareholders of the Company prior to the Share Consolidation and Placing and the Rights Issue per share (HK$) (Note d) Unaudited consolidated net tangible assets attributable to the shareholders of the Company immediately after implementation of the Share Consolidation and prior to the Placing and Rights Issue per share (HK$) (Note e) Unaudited pro forma adjusted consolidated net tangible assets attributable to the shareholders of the Company after implementation of the Share Consolidation, completion of the Placing and the Rights Issue (HK$) (Note f)	Unaudited As at 31st December 2014 HK$’000 45 1,645 1,690 3,608 32,644 36,408 1 17 2,414 75,092 76,782 350,098 0.14 1.41	Pro forma adjustments (Note b) Placing (Note c) Rights Issue HK$’000 HK$’000 192,503 114,796	Total HK$’000 45 1,645
			1,690
			3,608 32,644 36,408 1 17 2,414
			75,092
			76,782
			657,397
			0.46

II – 3

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

SCENARIO 2: MAXIMUM NUMBER OF 665,160,614 RIGHTS SHARES TO BE ISSUED

ASSETS Non-current assets Property, plant and equipment Investment properties Other intangible assets Film rights and films in progress Investment in an associate Investments in joint ventures Loan receivable from a joint venture Loans receivable Film deposits Deferred income tax assets Available-for-sale financial assets Current assets Inventories Accounts receivable Loans receivable Deposits paid, prepayments and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents Total assets EQUITY Capital and reserves attributable to the equity holders of the Company Share capital Share premium Other reserves Retained earnings Total shareholders’ equity Non-controlling interest Total equity	Unaudited As at 31st December 2014 HK$’000 1,482 25,060 1,858 30,016 4,869 824 8,032 7,000 37,311 372 55,032 171,856 2,623 8,725 61,930 40,811 92,849 50,944 257,882 429,738 49,730 194,669 92,957 14,600 351,956 1,000 352,956	Pro forma adjustments (Note b) Placing (Note c) Rights Issue HK$’000 HK$’000 192,503 128,612 5,863 5,968 186,640 122,644	Total HK$’000 1,482 25,060 1,858 30,016 4,869 824 8,032 7,000 37,311 372 55,032
			171,856
			2,623 8,725 61,930 40,811 92,849 372,059
			578,997
			750,853
			61,561 503,953 92,957 14,600
			673,071 1,000
			674,071

II – 4

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

LIABILITIES Non-current liabilities Obligations under finance lease Deferred income tax liabilities Current liabilities Accounts payable Other payables and accrued charges Deposits received Amount due to the ultimate holding company Obligations under finance lease Taxation payable Total liabilities Net tangible assets attributable to the shareholders of the Company (Note a) Unaudited consolidated net tangible assets attributable to the shareholders of the Company prior to the Share Consolidation and Placing and the Rights Issue per share (HK$) (Note d) Unaudited consolidated net tangible assets attributable to the shareholders of the Company immediately after implementation of the Share Consolidation and prior to the Placing and Rights Issue per share (HK$) (Note q) Unaudited pro forma adjusted consolidated net tangible assets attributable to the shareholders of the Company after implementation of the Share Consolidation, completion of the Placing and the Rights Issue (HK$) (Note h)	Unaudited As at 31st December 2014 HK$’000 45 1,645 1,690 3,608 32,644 36,408 1 17 2,414 75,092 76,782 350,098 0.14 1.24	Pro forma adjustments (Note b) Placing (Note c) Rights Issue HK$’000 HK$’000 192,503 128,612	Total HK$’000 45 1,645
			1,690
			3,608 32,644 36,408 1 17 2,414
			75,092
			76,782
			671,213
			0.44

II – 5

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 Placing is approximately HK$192,503,000 which is calculated based on the number of 586,350,000 shares to be issued at the Placing Price of HK$0.3411 per placing share after deduction of estimated related expenses of approximately HK$7,500,000.

Note c:

The estimated proceeds less related expenses from the Rights Issue of approximately HK$114,796,000 and HK$128,612,000 are calculated based on the minimum number of 596,760,614 Rights Shares and maximum number of 665,160,614 Rights Shares, respectively, 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 d:

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 Placing and Rights Issue.

Note e:

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 f:

Based on 1,431,760,921 shares, comprising (i) 248,650,307 Consolidation Shares, (ii) 586,350,000 Placing Shares to be issued and (iii) 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 g:

Based on 282,850,307 Consolidated Shares, assuming that the Unlisted Warrants as at 31 December 2014 had been exercised and the Share Consolidation had been completed on 31 December 2014. The calculation takes no account of any proceeds from the exercise of Unlisted Warrants.

Note h:

Based on 1,534,360,921 shares, comprising (i) 248,650,307 Consolidation Shares, (ii) 34,200,000 Shares to be issued upon exercise of the Unlisted Warrants, (iii) 586,350,000 Placing Shares to be issued and (iv) 665,160,614 Rights Issue to be issued, assuming that the Unlisted Warrants are exercised in full on or before the Latest Practicable Date.

Note i:

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.

II – 6

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

==> picture [66 x 47] intentionally omitted <==

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

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-6 of the Company’s circular dated 24 June 2015, in connection with the proposed placing of shares and 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-6.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the proposed placing of shares and rights issue on the Group’s financial position as at 31 December 2014 as if the proposed placing of shares and 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 – 7

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 circular 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 placing of shares and 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 – 8

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 June 2015

II – 9

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; (ii) immediately following completion of the Placing and the Rights Issue (assuming no Warrant Shares are allotted and issued on or before the Record Date); and (iii) immediately following completion of the Placing and the Rights Issue (assuming all Warrant Shares are allotted and issued on or before the Record Date) 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

III – 1

GENERAL INFORMATION

APPENDIX III

(ii) Immediately following the completion of the Placing and Rights Issue (assuming no exercise of the subscription rights attached to the Unlisted Warrants on or before the Record Date)

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

(iii) Immediately following the completion of the Placing and the Rights Issue
(assuming the subscription rights attached to the Unlisted Warrants were exercise in full and Warrant Shares are issued on or before the Record Date)

Authorised: 10,000,000,000 Shares of HK$0.01 each Issued and fully paid/to be issued: 298,380,307 Shares in issue as at the Latest Practicable Date 586,350,000 Placing Shares to be issued (Note 1) 34,200,000 Warrants Shares to be issued (Note 2) 665,160,614 Rights Shares to be issued 1,584,090,921 Shares in issue and fully paid immediately upon completion of the Placing and Rights Issue	HK$ 100,000,000.00
	2,983,803.07 5,863,500.00 342,000.00 6,651,606.14
	15,840,909.21

Notes:

Assuming the maximum number of Placing Shares is placed.
Assuming that all subscription rights attached to the Unlisted Warrants are exercised at the prevailing subscription price of HK$2.50 per Warrant Share.

III – 2

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 will apply to the Listing Committee for the listing of and permission to deal in the Placing Shares, the Rights Shares (in both their nil-paid and fully-paid forms) and the adjusted number of the Warrant Shares. 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 16,800,170 Outstanding Options and 34,200,000 Unlisted Warrants, 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 – 3

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:

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	3,783,770	60,523,280	6.76%
		(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 – 4

GENERAL INFORMATION

APPENDIX III

(ii) These 3,783,770 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 (assuming there is no change in the issued share capital of the Company from the Latest Practicable Date to the Record Date) 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 circular, 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 – 5

GENERAL INFORMATION

APPENDIX III

(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.

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
Jun Yang Securities Company	beneficial owner	593,334,274	593,334,274	59.47%
Limited (Note i)
Golden Moral Investments	interest of a controlled	593,334,274	593,334,274	59.47%
Limited (Note i)	corporation
Jun Yang Solar Power	interest of controlled	593,334,274	593,334,274	59.47%
Investments Limited	corporations
(Note i)
Mr. Ng Tang (Note ii)	beneficial owner	5,335,342
	interest of a controlled	69,745,134	75,080,476	25.16%
	corporation
Victor Meg Limited (Note ii)	beneficial owner	69,745,134	69,745,134	23.37%
Globalcrest Enterprises Limited	beneficial owner	56,739,510	56,739,510	6.34%
(Note iii)
Central Core Resources	Trustee (other than	56,739,510	56,739,510	6.34%
Limited (Note iii)	a bare trustee)
Ever Robust Holdings Limited	beneficial owner	63,650,000	63,650,000	7.11%
(Note iv)
China Mobile Games and	interest of a controlled	63,650,000	63,650,000	7.11%
Culture Investment Limited	corporation
(Note iv)

III – 6

GENERAL INFORMATION

APPENDIX III

Notes:

(i) These 593,334,274 Shares represent the maximum number of Underwritten Shares that Jun Yang Securities Company Limited as the Underwriter is required to subscribe for pursuant to the Underwriting Agreement. As such, Jun Yang Securities Company Limited is interested in 593,334,274 Shares under the SFO. 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. The percentage holding is calculated based on the expected number of issued Shares upon completion of the Rights Issue (assuming all Unlisted Warrants are exercised in full and all Warrant Shares are issued prior to the Record Date) comprising 997,740,921 Shares.
(ii) 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 in which Victor Meg Limited and Mr. Ng are interested 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 to be created and issued by the Company. 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 and has not taken into the expected adjustment to the conversion price of the Consideration Convertible Notes as a result of the Placing and the Rights Issue.
(iii) 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 each of Globalcrest Enterprises Limited and Central Core Resources 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 (assuming there is no change in the issued share capital of the Company from the Latest Practicable Date to the Record Date) comprising 895,140,921 Shares.
(iv) 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 (assuming there is no change in the issued share capital of the Company from the Latest Practicable Date to the Record Date) comprising 895,140,921 Shares.

III – 7

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. QUALIFICATIONS OF EXPERTS, CONSENTS AND THEIR INTERESTS IN ASSETS

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

Name	Qualification
PricewaterhouseCoopers	Certified Public Accountants
Donvex Capital Limited	a corporation licensed to carry out type 6 (advising on
	corporate finance) regulated activity under the SFO

PricewaterhouseCoopers and Donvex Capital have given and have not withdrawn their written consents to the issue of this circular 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, none of PricewaterhouseCoopers and Donvex Capital was beneficially interested in the share capital of any member of the Group, nor did they 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.

III – 8

GENERAL INFORMATION

APPENDIX III

(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.
(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 circular 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);

III – 9

GENERAL INFORMATION

APPENDIX III

(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;
(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 sale and purchase agreement dated 7 January 2014 and entered into between Weluck Development Limited (‘‘Weluck’’), a wholly-owned 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;
(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;

III – 10

GENERAL INFORMATION

APPENDIX III

(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;
(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% 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;

III – 11

GENERAL INFORMATION

APPENDIX III

(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.

9. LITIGATION

(a) A court action was commenced in the Court of First Instance of the Hong Kong Special Administrative Region on 17th 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.

Pursuant to an order (the ‘‘Order’’) made by the High Court of Hong Kong on 21st 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 30th 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.

III – 12

GENERAL INFORMATION

APPENDIX III

On 9th 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.

(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.

(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.

(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.

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GENERAL INFORMATION

APPENDIX III

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.

III – 14

GENERAL INFORMATION

APPENDIX III

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

III – 15

GENERAL INFORMATION

APPENDIX III

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 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
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

III – 16

GENERAL INFORMATION

APPENDIX III

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. 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). Mr. Hung joined the Group in October 2013.

III – 17

GENERAL INFORMATION

APPENDIX III

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 37, 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 Energy 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.

Independent Non-Executive Directors

Mr LAM Wing Tai, aged 48, is currently the executive director of Ngai Shun Holdings Limited, the shares of which are listed on the Main Board of the Stock Exchange. He studied accounting at the Australian National University and obtained a Bachelor of Commerce degree in 1991. Mr Lam is a member of the CPA Australia and a Certified Public Accountant of HKICPA. Mr Lam is 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 Gamma Logistic Corporation, the shares of which are listed on the GEM. 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 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

III – 18

APPENDIX III

GENERAL INFORMATION

field. He is currently the independent non-executive 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.

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 Services 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.

Mr. Chan Shiu Kwong Stephen, aged 58, 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.

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 including American President Lines, Paccess International, Tileman UK, Dairy Farm Cold Storage, Hopewell Construction, Shui On Construction, Wing On Travel and Deloitte and 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.

III – 19

GENERAL INFORMATION

APPENDIX III

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 not less than approximately HK$5.75 million and are payable by the Company.

14. 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 circular up to and including the date of the SGM:

(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;
(c) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 52 of this circular;
(d) the letter of advice from Donvex Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 53 to 76 of this circular;
(e) the report on the pro forma financial information of the Group from PricewaterhouseCoopers, the text of which is set out in appendix II to this circular;
(f) the written consents referred to in the paragraph headed ‘‘Qualification of Experts, Consents and Their Interests in Assets’’ to this Appendix;
(g) the material contracts referred to in the paragraph headed ‘‘Material Contracts’’ to this Appendix; and
(h) this circular.

III – 20

NOTICE OF SGM

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 1046)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (the “Meeting”) of Universe International Holdings Limited (the “Company”) will be held at 18/F, Wyler Centre Phase II, 192-200 Tai Lin Pai Road, Kwai Chung, N.T., Hong Kong on Monday, 13 July 2015 at 12:00 noon for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolutions of the Company:

ORDINARY RESOLUTIONS

(1) ‘‘THAT

(a) the conditional placing agreement entered into between the Company and Jun Yang Securities Company Limited and China Everbright Securities (HK) Limited as placing agents dated 26 May 2015 in relation to the placing of a maximum of 586,350,000 new shares of the Company on a best endeavour basis (‘‘Placing Agreement’’) (the principal terms of the Placing Agreement are summarised in the circular (‘‘Circular’’) to the shareholders of the Company dated 24 June 2015 and a copy of the Placing Agreement has been produced to this meeting marked ‘‘A’’ and signed by the chairman of this meeting for the purpose of identification) and all the transactions contemplated thereunder (including the allotment and issue of the Placing Shares (as defined in the Circular) pursuant thereto) be and are hereby approved;
(b) the directors of the Company be and are hereby specifically authorised to allot and issue the Placing Shares (as defined in the Circular) in accordance with the terms of the Placing Agreement; and

SGM – 1

NOTICE OF SGM

(c) any one director of the Company be and is hereby authorised to sign, execute, perfect, deliver and do all such documents, deeds, acts, matters and things, as the case may be in his or her discretion consider necessary, desirable or expedient to give effect to the Placing Agreement and all the transactions contemplated thereunder (including the allotment and issue of the Placing Shares pursuant thereto) and to agree to such variation, amendment or waiver as are, in the opinion of such director of the Company, in the interest of the Company provided that such variation, amendment or waiver shall not be fundamentally different from the terms as provided in the Placing Agreement.’’
(2) ‘‘THAT subject to and conditional upon:
(i) The Stock Exchange of Hong Kong Limited granting or agreeing to grant (subject to allotment) the listing of, and permission to deal in, all the Rights Shares (as defined below) (in their nil-paid and fully-paid forms) by no later than the Prospectus Posting Date (as defined in the circular (‘‘Circular’’) to the shareholders of the Company dated 24 June 2015); (ii) the filing and registration of all relevant documents with the Registrar of Companies in Hong Kong by no later than the Prospectus Posting Date; and (iii) the Underwriting Agreement (as defined in the Circular) not being terminated by the Underwriter (as defined in the Circular) pursuant to the terms thereof on or before the Latest Time of Termination (as defined in the Circular):
- (a) the issue by way of rights (‘‘Rights Issue’’) of not less than 596,760,614 ordinary shares of HK$0.01 each of the Company and not more than 665,160,614 ordinary shares of HK$0.01 each of the Company (‘‘Rights Shares’’) to the shareholders (‘‘Qualifying Shareholders’’) of the Company whose names appear on the register of members of the Company at the close of business on 23 July 2015 (‘‘Record Date’’) (or such other date as may be agreed in writing between the Company and the Underwriter) other than those Shareholders whose registered addresses as shown on the register of members of the Company are in any place outside Hong Kong and whom the directors of the Company (‘‘Directors’’), based on the enquiry made by the Company, consider it is necessary or expedient not to offer the Rights Shares to such Shareholders (‘‘Non-Qualifying Shareholders’’) on account either of the legal restrictions under the laws of the relevant place(s) or the requirements of the relevant regulatory body(ies) or stock exchange(s) in those place(s), in the proportion of two Rights Shares for every one existing share of the Company then held on the Record Date at the subscription price of HK$0.202 per Rights Share and otherwise on the terms and conditions set out in the Circular be and is hereby approved;

SGM – 2

NOTICE OF SGM

  - (b) the board of Directors (‘‘Board’’) or a committee thereof be and is hereby authorised to allot and issue the Rights Shares (in both their nil-paid form and fully-paid form) pursuant to or in connection with the Rights Issue provided that in the case of Non-Qualifying Shareholders, the Rights Shares shall not be allotted and issued to the Non-Qualifying Shareholders but shall be aggregated and issued to a nominee to be named by the Company and such Rights Shares shall be dealt with on terms set out in the Circular;

  - (c) the Board or a committee thereof be and is hereby authorised to make such other exclusions or other arrangements in relation to the Non-Qualifying Shareholders as he may deem necessary or expedient and generally to do such things or make such arrangements as it may think fit to effect the Rights Issue; and

  - (d) any one Director be and is hereby authorised to do all such acts and things, to sign and execute all such further documents and to take such steps as he/she may in his/her absolute discretion consider necessary, appropriate, desirable or expedient to carry out or to give effect to or in connection with the Rights Issue and the Underwriting Agreement or any transactions contemplated thereunder.’’

(3) ‘‘THAT subject to The Stock Exchange of Hong Kong Limited granting or agreeing to grant (subject to allotment) the listing of, and permission to deal in, all the Warrant Shares (as defined below):
(a) without prejudice to any valid exercise of the general mandate of the Company granted to the board of directors of the Company (‘‘Board’’) on 29 November 2012 for the purpose of allotting and issuing any Warrant Shares prior to the passing of this resolution, the Board be and is hereby authorised to allot, issue and deal with such number of new shares of the Company (‘‘Warrant Shares’’) which may fall to be allotted and issued upon exercise of the subscription rights attached to the unlisted warrants (‘‘Warrants’’) issued by the Company entitling the holders thereof to subscribe in cash up to an aggregate amount of HK$85,500,000 for the Warrant Shares at the adjusted subscription price as described in the circular (‘‘Circular’’) to the shareholders of the Company dated 24 June 2015 with effect from the Record Date (as defined in the Circular) in accordance with the terms and conditions of the warrant instrument dated 25 October 2013 (a copy of which has been produced to this meeting marked ‘‘B’’ and initialed by the chairman of this meeting for the purpose of identification) and such number of Warrant Shares shall be subject to further adjustments as contained in the terms and conditions of the Warrants; and

SGM – 3

NOTICE OF SGM

(b) the Board be and is hereby authorised to sign, execute, perfect, deliver and do all such documents, deeds, acts, matters and things, as the case may be in their discretion consider desirable or expedient to give effect to the issue and allotment of the Warrant Shares and to agree to such variation, amendment or waiver as are, in the opinion of the directors of the Company, in the interest of the Company.’’

By order of the Board of Universe International Holdings Limited Lam Shiu Mang, Daneil Chairman and Executive Director

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

Notes:

A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxy to attend and, subject to the provisions of the bye-laws of the Company, to vote on his/her/its behalf. A proxy need not be a member of the Company but must be present in person at the Meeting to represent the member.
In order to be valid, the form of proxy must be duly completed and signed in accordance with the instructions printed thereon and deposited together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority, at the Company’s Hong Kong branch share registrar and transfer office, Tricor Abacus Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the Meeting or any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the Meeting or any adjournment thereof, should he/she/it so wish and in such event, the form of proxy shall be deemed to be revoked.
In the case of joint holders of shares, any one of such holders may vote at the Meeting, either personally or by proxy, in respect of such share(s) as if he/she/it was solely entitled thereto, but if more than one of such joint holders are present at the Meeting personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such share(s) shall alone be entitled to vote in respect thereof.

SGM – 4

NOTICE OF SGM

As at the date of this notice, the Directors are as follows:

Executive Directors:

Mr Lam Siu 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

SGM – 5

AI assistant

Sinopec Engineering Group Co Ltd. — Proxy Solicitation & Information Statement 2015

14896_rns_2015-06-23_36d9e9d5-f481-4520-baef-b54bb65674bc.pdf

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

(4) NOTICE OF SPECIAL GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

EXPECTED TIMETABLE

EXPECTED TIMETABLE

EXPECTED TIMETABLE

Effect of bad weather on the Latest Time for Acceptance

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

(Stock Code: 1046)

(1) PLACING OF NEW SHARES UNDER A SPECIFIC MANDATE; (2) RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE IN ISSUE HELD ON THE RECORD DATE; (3) CHANGE IN BOARD LOT SIZE AND

(4) NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

(1) PLACING OF NEW SHARES UNDER THE SPECIFIC MANDATE

The Placing Agreement

(ii) Jun Yang Securities

LETTER FROM THE BOARD

Placees

Placing Shares

Placing Price

Placing commission

LETTER FROM THE BOARD

Ranking of Placing Shares

Conditions of the Placing

Completion of the Placing

Mandate to issue the Placing Shares

LETTER FROM THE BOARD

Termination

Application for listing

LETTER FROM THE BOARD

WARNING

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

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

THE RIGHTS ISSUE

Issue statistics

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Basis of provisional allotment

Qualifying Shareholders

LETTER FROM THE BOARD

Rights of the Non-Qualifying Shareholders

LETTER FROM THE BOARD

Subscription Price

LETTER FROM THE BOARD

Status of the Rights Shares

Share certificates and refund cheques for the Rights Issue

Application for excess Rights Shares

LETTER FROM THE BOARD

Application for the Rights Shares

Application for listing

LETTER FROM THE BOARD

Closure of register of members

The Underwriting Agreement

LETTER FROM THE BOARD

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

(1) Shareholders’ Undertaking:

LETTER FROM THE BOARD

(2) Option Holders’ Undertaking:

Termination of the Underwriting Agreement

LETTER FROM THE BOARD

Conditions of the Rights Issue

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

CHANGES IN SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST 12 MONTHS

Sinopec Engineering Group Co Ltd. Proxy Solicitation & Information Statement 2015