Time Interconnect Technology Limited

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountants or other professional adviser.

If you have sold or transferred all your shares in Time Interconnect Technology Limited (the “ Company ”), you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly 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.

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1729)

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG; AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

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

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” of this circular.

A letter from the Board is set out on pages 5 to 15 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on page 16 of this circular. A letter from Shang International Finance Limited, the Independent Financial Adviser, containing its advice and recommendation to the Independent Board Committee and the Independent Shareholders is set out on pages 17 to 31 of this circular.

A notice convening the EGM to be held at Meeting Room 04, 1/F, Core Building 1E, Convention Centre 1, Phase 1, No. 1 Science Park East Avenue, Hong Kong Science Park, Shatin, Hong Kong on Monday, 24 September 2018 at 2:30 p.m. or any adjournment thereof is set out on pages 44 to 45 of this circular.

A proxy form for use in the EGM is enclosed. Whether or not you propose to attend the EGM, you are requested to read the notice and to complete the enclosed proxy form in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar of the Company, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong soon as possible and in any event not later than 48 hours before the time appointed for holding of the EGM or any adjournment thereof. Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

7 September 2018

		Pages
Definitions . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the	Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from Shang International Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		17
Appendix I –	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Appendix II –	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
Notice of EGM	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	44

– i –

DEFINITIONS

In this circular, the following expressions shall, unless the context requires otherwise, have the following meanings:

“Acquisition”

the proposed acquisition of the entire equity interest in Huizhou Chuangxiang by the Purchaser from the Vendor on and subject to the terms and conditions of the Agreement and the performance of the transactions contemplated thereunder

“Agreement”
the conditional sale and purchase agreement entered into among the Vendor and the Purchaser on 3 August 2018 (supplemented on 29 August 2018) regarding the proposed Acquisition
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Board” the board of Directors
“Business Day” a day on which banks in Hong Kong are generally open for normal banking business to the public and which is not a Saturday, Sunday or public holiday in Hong Kong
“CAGR” compound annual growth rate
“Chairman” chairman of the Board
“Chief Executive Officer” chief executive officer of the Company
“Company”
Time Interconnect Technology Limited（匯聚科技有限公司）, an exempted company incorporated in the Cayman Islands with limited liability and the Shares of which are listed on the Main Board of the Stock Exchange
“Completion” the completion of the sale and purchase of the entire equity interest in Huizhou Chuangxiang in accordance with the Agreement
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“Consideration”
the sum of RMB145,250,100 payable by the Purchaser to the Vendor under the Agreement
“Director(s)” the director(s) of the Company
“EGM”
the extraordinary general meeting of the Company to be convened and held to consider and, if thought fit, approve the proposed Acquisition

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DEFINITIONS

“Group” the Company and its subsidiaries
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“Huizhou Chuangxiang” Huizhou Chuangxiang Technology Limited（惠州創享科技有限公司）, a company established in the PRC with limited liability (legal person sole investment) and is 100% beneficially owned by the Vendor
“Huizhou Light Engine” or “Vendor”
Huizhou Light Engine Limited（惠州元暉光電股份有限公司）, a WFOE established in the PRC with limited liability, which subsequently became a joint stock limited company and is a connected person of the Company
“Independent Board Committee”
an independent committee of the Board, comprising all the independent non-executive Directors, established for the purpose of advising the Independent Shareholders on, among other matters, the fairness and reasonableness of the proposed Acquisition
“Independent Financial Adviser” or “Shang International Finance”
Shang International Finance Limited（尚融國際金融有限公司）, a licensed corporation permitted to carry on Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, being the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the proposed Acquisition
“Independent Shareholders”
with respect to the Agreement and the transaction contemplated thereunder, the Shareholders excluding Mr. Paul Lo and his associates
“IPO”
the Company’s initial public offering in February 2018
“Latest Practicable Date”
4 September 2018, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein
“Linkz Industries”

Linkz Industries Limited （領先工業有限公司）, a company incorporated in Hong Kong and is a controlling shareholder of the Company owned as to 39.68% by Mr. Paul Lo

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DEFINITIONS

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended, supplemented or otherwise modified from time to time “Mr. Paul Lo” Mr. Lo Chung Wai Paul （羅仲煒）, the Chairman, non-executive Director and a controlling shareholder of the Company “PRC” the People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region and Taiwan “Prospectus” the prospectus of the Company dated 30 January 2018 “Purchaser” Time Interconnect Technology (Huizhou) Limited（匯聚科技（惠州）有限公司）(formerly known as Huizhou TIME Wire Products Limited（惠州匯聚電線製品有限公司）), an indirect wholly-owned subsidiary of the Company “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Shareholder(s)” the holder(s) of the issued Share(s) “Share(s)” ordinary shares in the capital of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “Target Property” a parcel of industrial land with two industrial buildings erected thereon located at No.9 Yuan Hui Road, Chenjiang Area, Zhong Kao Hi-tech Zone, Huicheng District, Huizhou City, Guangdong Province, the PRC “Time Holdings” Time Interconnect Holdings Limited, a company incorporated in the BVI with limited liability and is wholly-owned by Linkz Industries “United Luminous” United Luminous International (Holdings) Limited（為之光電（集團）有限公司）, a company incorporated in Hong Kong which is wholly owned by Mr. Paul Lo

“United Luminous Group” United Luminous and its subsidiaries
“WFOE”

Wholly Foreign Owned Enterprise in the PRC

“HK$” Hong Kong Dollars, the lawful currency of Hong Kong
“km” kilometre

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DEFINITIONS

“RMB” Renminbi, the lawful currency of the PRC “%” per cent

Unless the context requires otherwise, amounts in RMB in this circular have been translated into HK$ at the rate of RMB1 = HK$1.14854. No representation is made that any amounts in HK$ and RMB have been or could be converted at the above rate or at any other rates or at all.

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LETTER FROM THE BOARD

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 1729)

Executive Directors: Mr. Cua Tin Yin Simon (Chief Executive Officer) Mr. Wong Chi Kuen

Non-executive Director:

Mr. Lo Chung Wai Paul (Chairman)

Registered office: P.O. Box 1350 Clifton House 75 Fort Street Grand Cayman KY1-1108 Cayman Islands

Independent non-executive Directors: Mr. Ho Hin Shun Mr. Luk Wai Shing Mr. Chan Chung Shun Eric

Head office and principal place of business in Hong Kong: Unit 601, Photonics Centre, 2 Science Park East Avenue, Hong Kong Science Park, Shatin, Hong Kong

7 September 2018

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG

INTRODUCTION

Reference is made to the announcement of the Company dated 3 August 2018.

On 3 August 2018 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, entered into the Agreement (as supplemented on 29 August 2018) with the Vendor, pursuant to which the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the entire equity interest in Huizhou Chuangxiang at the Consideration of RMB145,250,100 in respect of the proposed Acquisition, the principal terms and conditions of the Agreement are set out below.

The purpose of this circular is to provide you with, among others things, (i) details of the proposed Acquisition; (ii) the letter of recommendation from the Independent Board Committee to the Independent Shareholders; (iii) the letter of advice from Shang International Finance to the Independent Board Committee and the Independent Shareholders; (iv) the valuation report in respect of the Target Property prepared by RHL

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LETTER FROM THE BOARD

Appraisal Limited (an independent professional property valuer) as set out in Appendix I to this circular (the “ Valuation Report ”); (v) other information required to be disclosed under the Listing Rules; and (vi) the notice of the EGM.

PRINCIPAL TERMS OF THE AGREEMENT

Date

3 August 2018 (supplemented on 29 August 2018)

Parties

Purchaser : Time Interconnect Technology (Huizhou) Limited (formerly known as Huizhou TIME Wire Products Limited), an indirect wholly-owned subsidiary of the Company Vendor : Huizhou Light Engine

As at the date of the Agreement, 94% equity interest of Huizhou Light Engine is owned by Light Engine Technologies Limited, a direct wholly-owned subsidiary of United Luminous, which in turn is wholly owned by Mr. Paul Lo, the Chairman, non-executive Director and a controlling shareholder of the Company. Also, Mr. Cua Tin Yin Simon, an executive Director and Chief Executive Officer, holds directorships in certain members of United Luminous Group. Therefore, the Vendor is a connected person of the Company under Rule 14A.07 of the Listing Rules.

Assets to be acquired

Pursuant to the Agreement, the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the entire equity interest in Huizhou Chuangxiang. As at the date of the Agreement, the registered capital of Huizhou Chuangxiang is RMB145,250,100. Pursuant to the Agreement, the Vendor will contribute capital to Huizhou Chuangxiang at an amount equivalent to the registered capital of Huizhou Chuangxiang of RMB145,250,100 by way of asset injection before the Completion. As a result of which, Huizhou Chuangxiang will own the entire interest in the Target Property (please refer to the paragraph headed “Information on Huizhou Chuangxiang and the Target Property” below for further details).

Consideration

The consideration for the proposed Acquisition is approximately RMB145,250,100 (equivalent to approximately HK$166,826,000), which was determined after arm’s length negotiation between the Vendor and the Purchaser having taken into consideration (i) the valuation of the Target Property of approximately RMB146,000,000 as at 31 July 2018 adopting Depreciated Replacement Cost by RHL Appraisal Limited, an independent professional valuer engaged by the Company; and (ii) the factors set out in the paragraph headed “Reasons for and the benefits of the proposed Acquisition” below.

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LETTER FROM THE BOARD

The consideration for the proposed Acquisition shall be payable by the Purchaser to the Vendor in cash upon Completion, of which, approximately HK$76.7 million will be financed by the net proceeds of the IPO, and the balance be financed by the Company’s internal resources, taking into account the Group’s bank balances and cash of approximately HK$279.6 million as at 31 March 2018 and the Group has continued to generate cash from its operations.

Conditions precedent

Completion of the proposed Acquisition is subject to satisfaction or waiver (as the case may be) of the following conditions precedent:

(a) all approvals, consents and waivers for the Acquisition having been obtained from the board of directors and shareholders of the Purchaser;
(b) all approvals, consents and waivers for the Acquisition having been obtained from the board of directors and shareholders of the Vendor;
(c) all necessary approvals, consents and waivers having been obtained from all government bodies (if applicable) and third parties for the Acquisition;
(d) the Purchaser having been satisfied with and accepted the due diligence results for Huizhou Chuangxiang and the Target Property;
(e) the Agreement being approved by the Independent Shareholders in the EGM in accordance with the requirements of the Listing Rules;
(f) the Purchaser having obtained the valuation report issued by an independent valuer acceptable to the Purchaser with respect to the Target Property;
(g) the Vendor having completed the capital contribution to Huizhou Chuangxiang by way of asset injection of the Target Property;
(h) the Vendor having not materially breached any representations, warranties and undertakings made in the Agreement;
(i) prior to the Completion, the Vendor and Huizhou Chuangxiang having not violated any material terms and conditions of the Agreement;
(j) no laws or orders having prohibited any of the transactions contemplated in the Agreement or the ancillary documents; and
(k) the Vendor not having violated any undertakings, obligations and conditions contained in the Agreement which are required to be performed or complied with by it on or before the date of Completion.

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LETTER FROM THE BOARD

The Purchaser may at its absolute discretion waive any of the above conditions (pursuant to the supplemental agreement to the Agreement dated 29 August 2018 conditions (c), (e) and (g) above cannot be waived).

As at the Latest Practicable Date, conditions precedent (a), (b), (d) and (f) have been fulfilled. To the best of the Directors’ knowledge, information and belief, save for an application for approval having been submitted to the relevant government body, the remaining conditions precedent (c), (e), (g), (h), (i), (j) and (k) have yet to be satisfied and none have been waived.

For the avoidance of doubt, the Purchaser has not identified any breach of or violation by the Vendor and/or Huizhou Chuangxiang of the representations, warranties, undertakings or material terms and conditions of the Agreement as at the Latest Practicable Date.

If any of the above conditions has not been satisfied or waived (if applicable) on or before 30 November 2018, the Purchaser may extend the deadline for fulfilling the outstanding condition(s) to a later date or determine the Agreement and the transactions contemplated thereunder and the parties to the Agreement shall not have any rights to claim against the other party, save for (1) any negligence and/or mistake by either party causing the failure to satisfy any of the conditions; or (2) any antecedent breach.

Completion

Completion shall take place within five Business Days after the fulfillment or waiver (as the case may be) of all the conditions precedent of the Agreement (or such other date as may be agreed in writing between the parties to the Agreement).

Upon Completion, Huizhou Chuangxiang will become an indirect wholly-owned subsidiary of the Company and the financial information of Huizhou Chuangxiang will be consolidated into the consolidated financial statements of the Company.

INFORMATION ON HUIZHOU CHUANGXIANG AND THE TARGET PROPERTY

Huizhou Chuangxiang is a company established in the PRC with limited liability (legal person sole investment) and wholly-owned by the Vendor. As at the date of the Agreement, the registered capital of Huizhou Chuangxiang is RMB145,250,100, and Huizhou Chuangxiang is a newly established company for holding the Target Property.

The Target Property comprises a parcel of industrial land with a total site area of approximately 33,393 square metres and two 5-storey reinforced concrete industrial buildings erected thereon with an aggregate gross floor area of approximately 34,196 square metres.

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LETTER FROM THE BOARD

INFORMATION ON THE PURCHASER

The Purchaser is an indirect wholly-owned subsidiary of the Company which is principally engaged in the manufacturing and sales of cable assembly products.

INFORMATION ON THE VENDOR

The Vendor is a joint stock limited company established in the PRC. As at the date of the Agreement and the Latest Practicable Date, 94% of the equity interest of Huizhou Light Engine was owned by Light Engine Technologies Limited, a direct wholly-owned subsidiary of United Luminous, which in turn is wholly owned by Mr. Paul Lo, being the Chairman, non-executive Director and a controlling shareholder of the Company. As at the date of the Agreement and the Latest Practicable Date, to the best knowledge of the Directors, Huizhou Tenghui Equity Investment Partnership （惠州騰暉股權投資合夥企業）, Beijing Ruishi Growth Venture Capital Centre（北京睿石成長創業投資中心）and Huizhou Zhonghui Equity Investment Partnership（惠州中惠股權投資合夥企業）owned the remaining 6% equity interest in Huizhou Light Engine and the ultimate beneficial owners were Jin Zhenghua（金政華）, Jin Yu（金昱）, Ren Qifeng（任奇峰）, Shi Lei（石磊）, Zhou Guohua（周國華）, Ying Huiren（應慧仁）, Tian Jichuan（田吉傳）, Ren Songliu（任頌柳）, Ren Weida（任偉達）, Zhang Xiaolin（張小琳）, Yin Chengbing （尹成冰） and Yu Jianjun （余建軍）. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiry, each of Huizhou Tenghui Equity Investment Partnership, Beijing Ruishi Growth Venture Capital Centre, Huizhou Equity Investment Partnership and their respective beneficial owners are third parties independent of the Company and its connected persons.

The Vendor is principally engaged in the manufacturing of LED related products.

REASONS FOR AND THE BENEFITS OF THE PROPOSED ACQUISITION

The Group currently has one production base located in Huizhou, Guangdong Province for production of cable assembly products. As disclosed in the Prospectus, the Group’s business growth can be constrained by existing production capacity. For the years ended 31 March 2016, 2017 and 2018, the Group’s production lines have been working towards and reached their full capacity and the utilisation rate of the Group’s existing production facility showed an increasing trend, at 92.8%, 94.9% and 113.7%, respectively. The Group planned to look for more space with production plant imminently to meet with the increasing sales orders placed by the customers. The Directors are also of the view that the demand of cable assembly products will become stronger, especially from the data centre and telecommunication sectors. According to the Prospectus, a factory with a target cost of approximately HK$88.6 million was planned to be acquired.

As disclosed in the Prospectus, the Directors had plans to acquire a new factory, and the following criteria should be taken into account: (a) proximity to the Group’s existing factory in Huizhou to better accommodate the conduct of regular inspection and/or factory audit by customers or prospective customers; (b) the plot ratio and green ratio restrictions; (c) stable supply of water and electricity; (d) easy access to highway; and (e) a long remaining land tenure. After the listing of the Company on 13 February 2018, the Directors have been actively in search for appropriate factory that meet the above criteria. Several

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LETTER FROM THE BOARD

factories for sale were visited by the Directors between March and May 2018 but none of them was to the Directors’ satisfaction that they either did not have ideal transportation network, convenient location, meet the quality requirements or have the land for future development.

In June 2018, when the Directors were evaluating the potential factories, Mr. Paul Lo informed the Directors that due to the recent restructuring of production facilities of the Vendor by reducing the production of large lighting (with fixtures) products and focusing more on small size light stripes, tubes and modules, production space will be freed up as production lines in the Target Property will be moved out by the Vendor and the Target Property will become vacant production space. The Directors have then performed site visit and investigation and noted that the Target Property possesses the following:

(i) the Target Property is located about 1.2 km away from the Group’s existing production facility in Huizhou, as compared to about 7 km to 13 km of other factories on sale, the local management of the Purchaser will be enabled to efficiently oversee the operations of the two factories, thereby optimising management expenses and time of travelling;
(ii) the Target Property is relatively new which was completed in 2014 and is equipped with all basic facilities such as air conditioners, lifts, water supply and electrical and mechanical installations while the other factories visited had an age of 3-9 years older than the Target Property;
(iii) different production equipment, such as precision testing machine and equipment can be installed in the Target Property, which are also readily available to cater to the Group’s standard production line layout, no material modification and refurbishment will be required, while the other factories the Directors visited had poorer condition and certain upper floors apparently failed to meet the relevant building requirements such that modification and refurbishment costs will be incurred for rectification if the Group pursues such factories;
(iv) the Target Property has a piece of undeveloped land and is flexible for future production development in case the Group plans to expand or returns the existing factory to the landlord when the lease expires;
(v) the Target Property takes shorter distance to travel to the nearest highway than the other factories considered;
(vi) according to the relevant land transfer contract, the plot ratio shall not be less than 1.4 and the green ratio shall not be greater than 20%;
(vii) the Target Property has a long land tenure to 2061 pursuant to the Land Use Permit; and
(viii) the Directors expect that the Target Property can provide sufficient space to at least double the Group’s existing production area, which would add stability to the Group’s sustainable development in medium term.

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LETTER FROM THE BOARD

The Directors then proceeded with the proposed Acquisition in late June 2018. As disclosed in the Prospectus, it was originally envisaged that a factory with target cost of approximately HK$88.6 million was planned to be acquired to increase the Group’s production capacity by 30%. The Target Property, although costs are nearly double of the original plan, would offer more than 120% of the increased production capacity in terms of increment in gross floor area for production, i.e. about four times of the originally planned increment in capacity. The Company plans to utilise the enlarged capacity by stages within three years following Completion. In the first year, production equipment of 24 production lines will be installed in one of the industrial buildings. In the second year, the first industrial building will be fully equipped with 42 production lines while the second industrial building will also be put into operation. In the third year, the second industrial building is expected to fully operate with a total of 50 production lines.

After Completion, the Group expects to incur approximately HK$125.6 million to acquire equipment and machinery to the Target Property for the addition of 92 production lines and the expected capital expenditures and the source of funds are summarised in the following table:

Purchase of production
equipment
Acquisition of the research and
development equipment,
including new laboratory
and testing equipment
Upgrading production
machinery with automation
system
Total

Expected
capital
expenditures
Source of funds
(HK$’ million)
30.0
approximately HK$10.5 million from
the net proceeds of the IPO, and
approximately HK$19.5 million
from the Group’s internal resources
31.9
approximately HK$11.2 million from
the net proceeds of the IPO, and
approximately HK$20.7 million
from the Group’s internal resources
63.7
approximately HK$22.1 million from
the net proceeds of the IPO, and
approximately HK$41.6 million
from the Group’s internal resources
125.6

Note: the Group’s internal resources include the Group’s bank balances and cash, cash generated from operations and bank facilities.

The Directors plan to utilise the new production capacity for telecommunication sector, data centre sector and medical equipment sector in response to the market demand, driven by the advancement in technology such as the 5th generation mobile networks (“ 5G ”) and impact of digitalisation. Accordingly, the Directors are of the view that the Target Property is of better value for money in terms of increment of production space per cost. The Group’s revenue increased by 43.2% year-on-year for the year ended 31 March 2018, from approximately HK$864.6 million for the year ended 31 March 2017 to approximately HK$1,238.4 million for the year ended 31 March 2018. Based on the orders on hand and

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LETTER FROM THE BOARD

shipments made since 1 April 2018, the Directors expect that the revenue growth will be significant for the half year ending 30 September 2018 as compared to that for the half year ended 30 September 2017. Customers’ orders to the Group have remained robust and the Group is wary of accepting new orders given that existing production utilisation rate has exceeded the design capacity and it will be detrimental to the Group’s reputation and customer relations in the event of delay in delivery. According to the Prospectus, China Research and Intelligence Co., Ltd. (“ CRI ”), the market research company, suggested that the Group accounted for about 0.2% market share in the PRC cable assembly market in 2016 and CRI forecast that communication equipment and data centre sector and industrial and medical equipment sector of the PRC cable assembly market will grow at a CAGR of 17.7% and 8.4% between 2017 and 2021.

The Directors are of the view that new technologies such as the upcoming 5G and the growing trend of big data processing will both drive the need of building new hardware that require the cable assembly products as well as the Group’s. According to the report with the title “China is poised to win the 5G race” published by Ernst & Young in June 2018 (the “ Report ”), network equipment manufacturers are very confident that 5G will become a reality by 2019 and 5G market could account for RMB1.1 trillion or 3.2% of the PRC’s entire gross domestic product in 2025, generating 8 million jobs and adding RMB2.9 trillion in economic value by 2030. As suggested by the Report, the PRC is already investing heavily on new technologies such as artificial intelligence (AI), connected cars and big data analytics, as part of the strategic push from the national plan. Embracing 5G will drive the expansion of “super-connected era” and the fusion of new technology and real economy. In addition, according to an article appeared in the South China Morning Post on 17 April 2018, Beijing has forecast the country’s total investment on 5G mobile network to reach RMB2.8 trillion from 2020 to 2030, which would mark the most expensive buildout of telecommunication infrastructure on the mainland. The Directors are therefore of the view that the telecommunication sector and data centre sector will continue to thrive, the Group’s products will be supported by customer demands and the enlarged production capacity should be easily taken up when the Group’s existing scale of operations is compared to the market size.

As discussed above, the Directors expect that the revenue growth will be significant for the half year ending 30 September 2018 as compared to that for the half year ended 30 September 2017 as there are strong customer demand. Orders brought forward from previous financial year and new orders received from April 2018 to the Latest Practicable Date amounted to more than HK$950 million, as compared to the Group’s total revenue for the year ended 31 March 2018 amounted to approximately HK$1,238.4 million. Besides, the Group’s revenue grew by 43.2% year-on-year for the year ended 31 March 2018 and the Directors expect that a trend of growth will remain for the year ending 31 March 2019. While the Group will implement the capacity expansion in stages as described above, all the new productions lines can be put into operations once they are set up properly when the demand may not immediately reach the highest level and have room for further production growth. Further, the new production lines will immediately alleviate the Group’s current high tension of production utilisation. The acquisition of the Target Property supports the long term growth of the Group and the Directors are confident that the 120% increment in

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LETTER FROM THE BOARD

capacity will be fully utilised and when the demand of the Group’s products continues to rise in the future, the Group will also develop the vacant land of the Target Property with the aim to further increasing capacity.

The Group’s existing factory is leased and the lease is subject to early termination starting from September 2024. The Target Property, apart from the factory buildings, has a piece of land for future development. The proposed Acquisition enables the Group to formulate its long term business development plan by offering an option for the Group to combine its production lines in the future and adding stability in the Group’s medium to long term business strategy should the landlord decide to terminate the lease when it allows.

Having taken into account these factors and also the basis of determining the consideration as set out in the paragraph headed “Consideration” above, the Directors (including all the independent non-executive Directors after considering the advice from the Independent Financial Adviser) are of the view that the terms of the Agreement are fair and reasonable and are on normal commercial terms, and that the Acquisition is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios (as defined under the Listing Rules) are greater than 5% but less than 25%, the proposed Acquisition constitutes a discloseable transaction for the Company under the Listing Rules. As at the date of the Agreement, (i) 94% equity interest of the Vendor is indirectly owned by United Luminous, a company which is wholly owned by Mr. Paul Lo, the Chairman, non-executive Director and a controlling shareholder of the Company; and (ii) Mr. Cua Tin Yin Simon, an executive Director and Chief Executive Officer, holds directorships in certain members of United Luminous Group, the Vendor is therefore a connected person of the Company and hence the proposed Acquisition also constitutes a connected transaction under the Listing Rules. Accordingly, the proposed Acquisition is subject to the reporting, announcement and the Independent Shareholders’ approval requirements under the Listing Rules.

Save for Mr. Paul Lo and Mr. Cua Tin Yin Simon, being the non-executive Director and an executive Director, respectively, having abstained from voting in respect of the Agreement, none of the Directors had abstained from voting at the meeting of the Board on the resolution to approve the Agreement and the transactions contemplated thereunder.

Mr. Paul Lo and his associates are regarded as having a material interest in the proposed Acquisition and therefore they are required to abstain from voting on the resolution proposed to be passed at the EGM for approving the Agreement and the transactions contemplated thereunder. As at the Latest Practicable Date, Time Holdings, the associate of Mr. Paul Lo, held 1,175,070,000 Shares, representing approximately 63.86% of the issued share capital of the Company. Accordingly, Time Holdings will abstain from voting at the EGM in respect of the resolution proposed to be passed for approving the Agreement and the transactions contemplated thereunder.

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LETTER FROM THE BOARD

To the best of the Director’s knowledge, information and belief after having made all reasonable enquiries, save as disclosed above, no other Shareholders are required to abstain from voting at the EGM.

The Independent Board Committee comprising all independent non-executive Directors, namely Mr. Ho Hin Shun, Mr. Luk Wai Shing and Mr. Chan Chung Shun Eric, has been formed to consider, and to advise the Independent Shareholders on the terms of the Agreement and the transactions contemplated thereunder. None of the members of the Independent Board Committee has any material interest in the Agreement.

The Company has appointed Shang International Finance as the Independent Financial Adviser to make recommendations to the Independent Board Committee and the Independent Shareholders on the terms of the Agreement and the transactions contemplated thereunder.

EGM

The EGM will be convened and held at Meeting Room 04, 1/F, Core Building 1E, Convention Centre 1, Phase 1, No. 1 Science Park East Avenue, Hong Kong Science Park, Shatin, Hong Kong on Monday, 24 September 2018 at 2:30 p.m. to consider and, if thought fit, approve the Agreement and the transactions contemplated thereunder. In compliance with the Listing Rules, the resolution will be voted on by way of poll at the EGM.

A notice convening the EGM is set out on pages 44 to 45 of this circular. A form of proxy for use by the Shareholders at the EGM is enclosed. Whether or not you intend to attend the EGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event no later than 48 hours before the time appointed for holding the EGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment of it, if you so wish.

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 19 September 2018 to Monday, 24 September 2018, both dates inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the EGM, unregistered holders of Shares shall ensure that all transfer documents accompanied by the relevant Share certificates must be lodged for registration with the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, Hong Kong no later than 4:30 p.m. on Tuesday, 18 September 2018.

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LETTER FROM THE BOARD

RECOMMENDATION

Your attention is drawn to (i) the letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in relation to the Agreement and the transactions contemplated thereunder set out on page 16 of this circular; and (ii) the letter from Shang International Finance to the Independent Board Committee and the Independent Shareholders containing its advice in respect of the fairness and reasonableness on the terms of the Agreement and the transactions contemplated thereunder set out on pages 17 to 31 of this circular.

The Directors (including the members of the Independent Board Committee having considered the advice from the Independent Financial Adviser) are of the view that (i) the nature of the Acquisition, though not in the ordinary and usual course of business of the Group, is in line with the strategic development of the Group; (ii) the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (iii) the Acquisition is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the members of the Independent Board Committee having considered the advice from the Independent Financial Adviser) recommend the Independent Shareholders to vote in favour of the resolution approving the Acquisition at the EGM.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

By order of the Board Time Interconnect Technology Limited Cua Tin Yin Simon Executive Director and Chief Executive Officer

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 1729)

7 September 2018

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG

We have been appointed as the Independent Board Committee to advise the Independent Shareholders in respect of the Acquisition, details of which are set out in the letter from the Board contained in the circular of the Company dated 7 September 2018 (the “ Circular ”). Unless the context otherwise requires, terms defined in the Circular shall have the same meanings when used in this letter.

We wish to draw your attention to the letter from the Board on pages 5 to 15 of the Circular and the letter from Shang International Finance to the Independent Board Committee and the Independent Shareholders containing its advice on the Acquisition on pages 17 to 31 of the Circular.

Having taken into account the advice of, and the principal factors and reasons considered by, Shang International Finance in relation to the Acquisition as stated in its letter, we consider that (i) the nature of the Acquisition, though not in the ordinary and usual course of business of the Group, is in line with the strategic development of the Group; (ii) the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (iii) the Acquisition is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Acquisition.

Yours faithfully, For and on behalf of

Independent Board Committee

Mr. Ho Hin Shun

Independent Non-executive Director

Mr. Luk Wai Shing

Independent Non-executive Director

Mr. Chan Chung Shun Eric Independent Non-executive Director

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LETTER FROM SHANG INTERNATIONAL FINANCE

The following is the text of the letter of advice from Shang International Finance Limited, the Independent Financial Adviser, to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, which has been prepared for the purpose of inclusion in this circular.

25th Floor, Central Tower, 28 Queen’s Road Central, Central, Hong Kong

7 September 2018

To: the Independent Board Committee and the Independent Shareholders of Time Interconnect Technology Limited (the “ Company ”)

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG

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 Acquisition, 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 7 September 2018 (the “ Circular ”) to the Shareholders, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

Reference is made to the announcement of the Company dated 3 August 2018. On 3 August 2018 (after trading hours), the Purchaser, a wholly-owned subsidiary of the Company, entered into the Agreement (as supplemented on 29 August 2018) with the Vendor, pursuant to which the Purchaser conditionally agreed to acquire, and the Vendor conditionally agreed to sell, the entire equity interest in Huizhou Chuangxiang at the Consideration of RMB145,250,100 in respect of the proposed Acquisition. Upon Completion, Huizhou Chuangxiang will become an indirect wholly-owned subsidiary of the Company.

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LETTER FROM SHANG INTERNATIONAL FINANCE

Luminous Group, the Vendor is therefore a connected person of the Company and hence the proposed Acquisition also constitutes a connected transaction under the Listing Rules. Accordingly, the proposed Acquisition is subject to the reporting, announcement and the Independent Shareholders’ approval requirements under the Listing Rules.

In this connection, we, Shang International Finance, have been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition. We do not, by this letter, warrant the merits of the Acquisition and the transactions contemplated under the Agreement, other than to form an opinion, for the purpose of the Listing Rules. We are not associated with the Group including the Purchaser, the Vendor, and any of their respective associates who are interested or involved in the Acquisition, and accordingly, are considered eligible to give independent advice in respect of the Acquisition. Apart from normal professional fees payable to us for this appointment, no arrangement exists whereby we will receive any fees or benefits from any party abovementioned.

BASIS OF OUR OPINION

In formulating our opinions and recommendations to the Independent Board Committee and the Independent Shareholders, we have relied on the accuracy of the information, opinions and representations contained or referred to in the Circular (or otherwise provided to us by the Directors and the management of the Group (the “ Management ”)), and have assumed that all information, opinions and representations contained or referred to in the Circular (or otherwise provided to us by the Directors and the Management) were true, accurate and complete in all respects at the time when they were made and up to the date of this letter. We have also assumed that all statements of belief, opinions and intention made by the Directors in the Circular (or otherwise provided to us by the Directors and the Management) are reasonably made after due enquiry. We have no reason to doubt that any relevant information has been withheld or omitted, nor are we aware of any fact or circumstance which would render the information provided and representations and opinions made to us untrue, inaccurate or misleading.

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LETTER FROM SHANG INTERNATIONAL FINANCE

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular (or otherwise provided to us by the Directors and the Management) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular (or otherwise provided to us by the Directors and the Management) have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading. We consider that we have received sufficient information to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in the Circular to provide a reasonable basis for our opinions and recommendations. We consider that we have performed all the necessary steps as required under Rule 13.80 of the Listing Rules to enable us to reach an informed view and to justify our reliance on the information provided and representations made to us so as to form a reasonable basis for our opinions. We have, among other things:

(a) reviewed the announcement of the Company dated 3 August 2018 in relation to the Acquisition, the Letter from the Board, the annual report of the Company for the year ended 31 March 2018 (“ Annual Report ”) and the Prospectus;
(b) reviewed the Agreement and other relevant information and documents in relation to the Acquisition;
(c) conducted site visit to the Target Property;
(d) reviewed the PRC legal opinion prepared by Shu Jin Law Firm (the “ PRC Legal Adviser ”) in relation to Huizhou Chuangxiang as the target company and the Target Property (the “ PRC Legal Opinion ”);
(e) reviewed the valuation report of the Target Property (the “ Valuation Report ”) prepared by RHL Appraisal Limited (the “ Independent Valuer ”), and discussed with the Independent Valuer, among other things, the underlying methodology, basis and assumptions adopted for the valuation, its scope of work and relevant valuation experience; and
(f) discussed with the Directors and the Management, among other things, the background, reasons for and benefits of the Acquisition, the basis of the major terms of the Agreement and so forth.

We have not, however, for the purpose of this exercise, conducted any independent detailed verification or audit into the Target Property, the businesses or future prospects of the Group, Huizhou Chuangxiang, or their respective subsidiaries or associates, nor have we investigated the legal title or any liabilities against the subject matters relating to the Acquisition. Our opinion was necessarily based on the legal, financial, economic, market and other conditions in effect, and the information made available to us as at the Latest Practicable Date.

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LETTER FROM SHANG INTERNATIONAL FINANCE

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinions and recommendations to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, we have considered the following principal factors and reasons:

I. Background and financial information of the Group

The Company is an investment holding company, and its subsidiaries are principally engaged in manufacture and sales of cable assembly products. The following table summarises the results of operation and financial positions of the Group for the three years ended 31 March 2018 (“ FY2016 ”, “ FY2017 ” and “ FY2018 ” respectively):

	For the year ended 31	For the year ended 31	March
	2018	2017	2016
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Revenue	1,238,374	864,571	911,593
Gross profit	272,995	156,644	142,556
Profit for the year	132,120	81,684	71,599
	As at 31 March
	2018	2017	2016
	HK$’000	HK$’000	HK$’000
	(audited)	(audited)	(audited)
Total assets	882,906	502,047	545,944
Total liabilities	424,184	380,785	352,261
Net assets	458,722	121,262	193,683
Bank balances and cash	279,623	42,823	68,038

Source: The Annual Report and the Prospectus published by the Company on the website of the Stock Exchange

(i) Financial results for FY2017 compared with FY2016

The Group’s revenue recorded a decrease of approximately HK$47.0 million or 5.2%, from approximately HK$911.6 million for FY2016 to approximately HK$864.6 million for FY2017. As disclosed in the Prospectus, the decrease was mainly due to different sales performance of different market sectors and the overall decrease in units of products sold. It is disclosed that, in terms of sales performance in each of the market sectors, (i) the Group’s telecommunication sector recorded decrease in revenue from approximately HK$630.6 million for FY2016 to approximately HK$486.2 million for FY2017, as a result of the reduction in sales volume of cable assemblies relating to telecommunication products of approximately 26.1% from customers and the general depreciation of RMB (as the currency of sales) to HK$ (as the Group’s reporting currency); (ii) its data centre sector recorded increase in revenue from approximately HK$154.2 million for FY2016 to approximately HK$278.5 million for FY2017, which

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LETTER FROM SHANG INTERNATIONAL FINANCE

was mainly due to the increase in sales volume of cable assemblies associated with this sector by approximately 139.7% in relation to the delivery schedule of products to the Group’s major customers in the sector; (iii) revenue generated from its industrial equipment sector remained flat at approximately HK$62.0 million and HK$61.7 million for FY2016 and FY2017 respectively; and (iv) its medical equipment sector recorded decrease in revenue from approximately HK$64.8 million for FY2016 to approximately HK$38.1 million for FY2017 due to the decrease in sales volume by approximately 91.3%.

The Group recorded an increase in net profit of approximately HK$10.1 million or 14.1%, from approximately HK$71.6 million for FY2016 to approximately HK$81.7 million for FY2017. The increase was primarily due to the combined effect of the increase in the Group’s gross profit by approximately HK$14.1 million, the increase in its other income by approximately HK$1.0 million, the decreased distribution and selling expenses and the decreased administrative expenses by approximately HK$1.2 million and HK$2.7 million respectively, and the increased imputed financial guarantee income by approximately HK$1.1 million. The increase was partially offset by the increased other losses and the increased research and development expenses.

As at 31 March 2017, the Group had net assets of approximately HK$121.3 million. Total assets of the Group were approximately HK$502.0 million comprising mainly (i) property, plant and equipment of approximately HK$99.8 million; (ii) trade and other receivables of approximately HK$226.2 million; and (iii) inventories of approximately HK$123.1 million; while its total liabilities were approximately HK$380.8 million comprising mainly (i) trade and other payables of approximately HK$227.7 million; (ii) unsecured short-term bank borrowings of approximately HK$78.4 million; and (iii) amount due to ultimate holding company of approximately HK$65.3 million, as at 31 March 2017. As at the same date, the Group had bank balances and cash of approximately HK$42.8 million.

(ii) Financial results for FY2018 compared with FY2017

The Group’s revenue recorded a significant increase of approximately HK$373.8 million or 43.2%, from approximately HK$864.6 million for FY2017 to approximately HK$1,238.4 million for FY2018. As referred to the Annual Report, all of the Group’s business sectors have different degrees of increase in revenue during FY2018, and the increase in revenue was mainly driven by higher sales in data centre, telecommunication and medical equipment sectors. Among which, it is noted that (i) the revenue of the Group’s data centre sector achieved a significant growth rate of approximately 105.2% from approximately HK$278.6 million for FY2017 to approximately HK$571.6 million for FY2018, which was mainly attributable to the growth in demand for products from one of the Group’s major customers; (ii) its telecommunication sector recorded an increase in revenue of approximately HK$47.9 million for FY2018 driven by the sales of the fifth generation mobile networks (“ 5G ”) products in the last quarter of the same financial year; and (iii) its medical equipment sector recorded increase in revenue of approximately 63.0% primarily attributable to the robust demand for products from existing and new customers during FY2018.

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LETTER FROM SHANG INTERNATIONAL FINANCE

The net profit of the Group increased by approximately HK$50.4 million, from approximately HK$81.7 million for FY2017 to approximately HK$132.1 million for FY2018. Such increase was mainly due to (i) the increase in the Group’s gross profit of approximately HK$116.4 million or 74.3% for FY2018, which was in line with the growing trend of the increased revenue of the Group during the same financial year and mainly attributable to the change in product mix to products with relatively higher selling price, including those sold to data centre and medical equipment sectors; and (ii) the other income and other gains recorded during the relevant financial year. Such increase in the net profit for FY2018 was partially offset by (i) the listing expenses of approximately HK$24.4 million; and (ii) the increase in research and development expenses of approximately HK$12.7 million incurred by the Group during the relevant financial year.

As at 31 March 2018, the Group had net assets of approximately HK$458.7 million. Total assets of the Group were approximately HK$882.9 million comprising mainly (i) property, plant and equipment of approximately HK$110.1 million; (ii) trade and other receivables of approximately HK$277.3 million; (iii) inventories of approximately HK$195.3 million; and (iv) pledged bank deposits of approximately HK$18.0 million; while its total liabilities were approximately HK$424.2 million comprising mainly (i) trade and other payables of approximately HK$364.7 million; (ii) unsecured short-term bank borrowings of approximately HK$41.5 million; and (iii) taxation payable of approximately HK$17.5 million, as at 31 March 2018. As at the same date, the Group had bank balances and cash of approximately HK$279.6 million.

II. Industry prospects

As referred to the Annual Report, the Group primarily manufactures and supplies a wide variety of copper and optical fibre cable assemblies which are produced in accordance with the specifications and designs of individual customer. The products of the Company are used by a number of established PRC and international customers in a variety of market sectors including telecommunications, data centre, industrial and medical equipment.

Referring to the section headed “Industry overview” in the Prospectus, both the global and China’s cable assembly market will maintain a consistent growth during 2017 to 2021. Over the years, the industrial and medical equipment segment, which accounted for approximately 60.4% of the global cable assembly market in 2016, contributed the largest market share amongst all segments. Due to the rapid and continuous development of auto technologies in global industrial facilities, household appliances and medical equipment, the global market size of industrial and medical equipment segment is expected to have a moderate growth during 2017 to 2021, at a CAGR of approximately 5.8%.

Furthermore, with the rise of 5G mobile communication network, emerging 4K videos and increasing demand in data centre due to higher and popular application of cloud computing, internet games and big data analysis, the global market of cables for communication equipment and data centre segment will achieve significant growth during 2017 to 2021. The market size of this segment is expected to reach approximately US$39.0 billion in 2021, at a CAGR of approximately 16.2% from 2017 to 2021, as disclosed in the Prospectus.

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LETTER FROM SHANG INTERNATIONAL FINANCE

It is also believed by the Company that the PRC government’s initiative to promote the use of telecommunication equipment and data centre will boost the revenue of the Group. The Directors therefore are of the view that the Group will strive for rapid business development to face the rapidly changing market and will make further advances in its businesses, in terms of new products, product mix which in return will increase gross margin in the future.

On the basis above, we are of the view that the Acquisition so as the expansion of the production capacity will allow the Group to capture more opportunities derived by the strong demand growth, and the Acquisition will enable the Group to achieve higher growth by capturing more sales. We therefore concur with the Directors that the Acquisition would benefit the Group’s development in the view of the potential market demand.

III. Information of the Vendor

As stated in the Letter from the Board, the Vendor is principally engaged in the manufacturing of LED related products.

IV. Information of Huizhou Chuangxiang and the Target Property

Huizhou Chuangxiang is a company established in the PRC with limited liability (legal person sole investment) and is wholly-owned by the Vendor. As at the date of the Agreement, the registered capital of Huizhou Chuangxiang is RMB145,250,100, and Huizhou Chuangxiang is a newly established company for holding the Target Property.

Pursuant to the Agreement, the Vendor will contribute capital to Huizhou Chuangxiang at an amount equivalent to the registered capital of Huizhou Chuangxiang of RMB145,250,100 by way of asset injection before the Completion. As a result of which, Huizhou Chuangxiang will own the entire interest in the Target Property. As confirmed by the PRC Legal Adviser, the Target Property is legally held by the Vendor as at the Latest Practicable Date, and the Vendor as the legal owner of the Target Property is entitled to transfer, lease mortgage or dispose of the Target Property freely in the market.

As stated in the Letter from the Board, the Target Property comprises a parcel of industrial land with a total site area of approximately 33,393 square metres and two 5-storey reinforced concrete industrial buildings erected thereon with an aggregate gross floor area of approximately 34,196 square metres. As confirmed by the PRC Legal Adviser, the Vendor is applying for title subdivision for the Target Property while there is no legal impediment for the Vendor to apply for the title subdivision and obtain a separate land use right certificate for the Target Property as at the Latest Practicable Date.

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LETTER FROM SHANG INTERNATIONAL FINANCE

V. Reasons for and benefits of the Acquisition

As stated in the Letter from the Board, the Group currently has one production base located in Huizhou, Guangdong Province for production of cable assembly products. The Group’s business growth can be constrained by existing production capacity. For FY2016, FY2017 and FY2018, the Group’s production lines have been working towards and reached their full capacity and the utilisation rate of the Group’s existing production facility showed an increasing trend, at 92.8%, 94.9% and 113.7%, respectively. The Group planned to look for more space with production plant imminently to meet with the increasing sales orders placed by the customers.

Referring to the Letter from the Board, it is disclosed in the Prospectus that the Directors had plans to acquire a new factory, and the following criteria should be taken into account: (a) proximity to the Group’s existing factory in Huizhou to better accommodate the conduct of regular inspection and/or factory audit by customers or prospective customers; (b) the plot ratio and green ratio restrictions; (c) stable supply of water and electricity; (d) easy access to highway; and (e) a long remaining land tenure (collectively as the “ Requirements ”). We are given to understand that the Directors have been actively in search for appropriate factory that meets the Requirements. Several factories for sale were visited by the Directors but none of them was to the Directors’ satisfaction that they either did not have ideal transportation network, convenient location, meet the quality requirements or have the land for future development. Whereas as stated in the Letter from the Board, the Directors, after performing site visit and investigation, considered that the Target Property possesses the following:

(i) the Target Property is located about 1.2 km away from the Group’s existing production facility in Huizhou, as compared to about 7 km to 13 km of other factories on sale, the local management of the Purchaser will be enabled to efficiently oversee the operations of the two factories, thereby optimising management expenses and time of travelling;
(ii) the Target Property is relatively new which was completed in 2014 and is equipped with all basic facilities such as air conditioners, lifts, water supply and electrical and mechanical installations while the other factories visited had an age of 3-9 years other than the Target Property;
(iii) different production equipment, such as precision testing machine and equipment can be installed in the Target Property, which are also readily available to cater to the Group’s standard production line layout, no material modification and refurbishment will be required, while the other factories the Directors visited had poorer condition and certain upper floors apparently failed to meet the relevant building requirements such that modification and refurbishment costs will be incurred for rectification if the Group pursues such factories;
(iv) the Target Property has a piece of undeveloped land and is flexible for future production development in case the Group plans to expand or returns the existing factory to the landlord when the lease expires;

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LETTER FROM SHANG INTERNATIONAL FINANCE

(v) the Target Property takes shorter distance to travel to the nearest highway than the other factories considered;
(vi) according to the relevant land transfer contract, the plot ratio shall not be less than 1.4 and the green ratio shall not be greater than 20%;
(vii) the Target Property has a long land tenure to 2061 pursuant to the Land Use Permit; and
(viii) the Directors expect that the Target Property can provide sufficient space to at least double the Group’s existing production area, which would add stability to the Group’s sustainable development in medium term.

It is noted that the Vendor has undergone recent restructuring of production facilities and the Target Property will become vacant production space for the Acquisition. The Directors advised us that the Target Property is considered the best alternative, given the Target Property (a) has fulfilled the Requirements to serve the Group’s imminent need for expanding the existing production capacity and achieve more sales; and (b) is of better value for money in terms of increment of production space per cost, as compared with the factory originally planned to acquire and disclosed in the Prospectus.

It is further noted from the Directors that the Group’s existing factory is leased and the lease is subject to early termination starting from September 2024. The Target Property, apart from the factory buildings, has a piece of land for future development. The proposed Acquisition enables the Group to formulate its long term business development plan by offering an option for the Group to combine its production lines in the future and adding stability in the Group’s medium to long term business strategy should the landlord decide to terminate the lease when it allows.

Referring to the Letter from the Board, the Target Property would offer more than 120% of increased production capacity (the “ 120% Production Capacity ”) in terms of increment in gross floor area for production. We are given to understand that the Company plans to utilise the enlarged capacity by stages within three years following Completion:

in the first year, production equipment of 24 production lines will be installed in one of the two industrial buildings, upon which the Target Property is expected to firstly generate approximately 31% in production capacity among the 120% Production Capacity to the Group;
in the second year, the first industrial building will be fully equipped with 42 production lines and the second industrial building will also be put into operation, upon which the Target Property is expected to further generate approximately 41% in production capacity among the 120% Production Capacity to the Group; and
in the third year, the second industrial building is expected to be fully operate with a total of 50 production lines, upon which the Target Property is expected to generate the remaining approximate 48% in production capacity among the 120% Production Capacity to the Group.

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LETTER FROM SHANG INTERNATIONAL FINANCE

It is noted that the Directors plan to utilise the new production capacity for telecommunication sector, data centre sector and medical equipment sector. As advised by the Directors, the Group had revenue of approximately HK$630.9 million during the four months ended 31 July 2018 representing an increase of approximately 59.9% as compared to the revenue for corresponding period of the preceding financial year, which demonstrates the continued customer demand. The Directors also advised us that the Group had secured outstanding sales orders amounted to approximately HK$227.5 million as at 31 July 2018 which, aggregating the revenue for the four months ended 31 July 2018, represented approximately 69.3% of the Group’s revenue for the year ended 31 March 2018. It is further noted in the Letter from the Board that the Directors expect the revenue growth will be significant for the half year ending 30 September 2018 as compared to that for the corresponding period of the preceding financial year. These indicate that the customer demand for the Group’s products is growing notably. With regard to such increase, the Directors are of the view that the previous target factory disclosed in the Prospectus with only 30% extra production capacity is not able to cope with the rapid growth in sales of the Group.

Having considered that (i) the Group reached its full production capacity and the utilisation rate of its existing production facility was already more than 100% for FY2018; (ii) the potential market demand for the Group’s products as illustrated under the paragraph headed “Industry prospects” above; (iii) the sales performance of the Group and the expected production capacity to be brought by the Target Property within the three years as aforementioned; (iv) the Target Property is considered as the best alternative to serve the imminent need for expanding the Group’s production capacity and achieving more sales; and (v) the Acquisition benefits the Group’s business in the long run by reducing its business risk that could be arisen from the termination of the existing lease where its existing factory locates, we concur with the Directors’ view that the Acquisition is in the interests of the Company and the Shareholders as a whole.

VI. Principal terms of the Agreement

As set out in the Letter from the Board, the principal terms of the Agreement (as supplemented on 29 August 2018) are summarised as below:

(i) Assets to be acquired

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LETTER FROM SHANG INTERNATIONAL FINANCE

As confirmed by the PRC Legal Adviser, the Target Property is legally held by the Vendor as at the Latest Practicable Date, and the Vendor as the legal owner of the Target Property is entitled to transfer, lease mortgage or dispose of the Target Property freely in the market. Though the Vendor is applying for title subdivision for the Target Property, the PRC Legal Adviser confirmed that there is no legal impediment for the Vendor to apply for the title subdivision and obtain a separate land use right certificate for the Target Property as at the Latest Practicable Date.

(ii) Consideration

The Consideration for the Acquisition is approximately RMB145,250,100 (equivalent to approximately HK$166,826,000), which was determined after arm’s length negotiation between the Vendor and the Purchaser having taken into consideration (i) the valuation of the Target Property of approximately RMB146,000,000 as at 31 July 2018 adopting depreciated replacement cost approach by the Independent Valuer; and (ii) the factors set out in the paragraph headed “Reasons for and the benefits of the proposed Acquisition” in the Letter from the Board.

(a) Registered capital of Huizhou Chuangxiang

As previously mentioned, the Vendor will contribute capital to Huizhou Chuangxiang at an amount equivalent to the registered capital of Huizhou Chuangxiang of RMB145,250,100 by way of asset injection before the Completion, and Huizhou Chuangxiang is a newly established company for holding the Target Property.

Accordingly, the Consideration for the Acquisition is of the same amount as the registered capital of Huizhou Chuangxiang (i.e. RMB145,250,100) and thereby we consider the Consideration for the Acquisition is fair in such regard.

(b) Valuation of the Target Property

According to the Valuation Report, the market value of the Target Property as at 31 July 2018 was estimated to be RMB146,000,000. It is noted that the Consideration for the Acquisition represents a very slight discount of approximately 0.5% to the appraised market value of the Target Property.

We have reviewed the Valuation Report and discussed with the Independent Valuer the methodology, basis and assumptions adopted for the valuation of the Target Property:

Valuation methodology, basis and assumptions

We understand from the Independent Valuer that the valuation of the Target Property was carried out on a market value basis, by assuming that the seller sells the property interest on the open market in its existing state without the effect of special terms or circumstances such as a typical

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LETTER FROM SHANG INTERNATIONAL FINANCE

financing, sales and leaseback arrangements, joint ventures, management agreements, special considerations or concessions granted by anyone associated with the sale, or any element of special value, which could serve to affect the value of the appraised property interest. In valuing the Target Property, the Independent Valuer adopted a depreciated replacement cost approach, arriving from the market value of the land in its existing use, plus the current cost of replacement of the improvements less allowance for physical deterioration and all relevant forms of obsolescence and optimisation. We are advised by the Independent Valuer that, due to the specific purposes for which most of the buildings and structures of the Target Property have been constructed, there are no readily identifiable market comparables for overall complexes (which consist of land and buildings). Hence, the buildings and structures of the Target Property have been valued on the basis of its depreciated replacement costs instead of a direct comparison method approach, and the current approach adopted is considered to be fair.

When assessing the market value of the land, a direct comparison approach is adopted by making reference to the comparable market transactions or asking cases as available. Comparable land of similar nature and character in the same district are analysed by the Independent Valuer and carefully weighed against the respective advantages and disadvantages of each land in order to arrive at a fair comparison of market value. We have been furnished by the Independent Valuer with the information of the comparables and conducted related desktop research, and concur with the Independent Valuer that the selection methodology of the comparable land is reasonable.

It is noted that the Independent Valuer, in valuing the Target Property, had assumed that (i) all necessary statutory approvals for the Target Property or the subject building of which the Target Property forms part of their use have been obtained; (ii) transferable land use rights in respect of the Target Property for specific terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid; and (iii) the Target Property is connected to main services and sewers which are available on normal terms. We are given to understand from the Independent Valuer that the above are generally adopted assumptions for property valuations. We are also confirmed by the Independent Valuer that the valuation of the Target Property complies with all the requirements contained in Chapter 5 and Practice Note 12 to the Listing Rules, and the International Valuation Standards 2017 published by the International Valuation Standards Council.

Based on the above, we are of the opinion that the valuation methodology adopted by the Independent Valuer is fair and reasonable, and the valuation of the Target Property is indicative to the Consideration for the Acquisition.

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LETTER FROM SHANG INTERNATIONAL FINANCE

Experience of the Independent Valuer

We have been furnished with the qualifications and experience of the Independent Valuer in relation to the performance of the valuation of the Target Property, and note that it possesses experience in, among others, financial instruments valuations, business valuations, and property valuations with services covering property, plants, machinery, equipment and land parcels. There are two responsible valuers in charge of the Valuation Report. Ms. Serena S. W. Lau, who is a Registered Professional Surveyor (General Practice), a Professional Member of The Royal Institution of Chartered Surveyors, an Associate of Australian Property Institute, a Fellow of The Hong Kong Institute of Surveyors as well as a registered real estate appraiser in the PRC, has over twenty five years of experience in valuation of properties in Hong Kong, Macau, the PRC and the Asia Pacific Region; and Ms. Jessie X. Chen, who is a Registered Professional Surveyor (Valuation) and a Professional Member of The Royal Institution of Chartered Surveyors, has over eight years of experience in valuation of properties in Hong Kong, Macau, the PRC and the Asia Pacific Region.

Based on our studies on the Valuation Report and discussion with the Independent Valuer aforementioned including the valuation methodology, basis and assumptions in preparing the Valuation Report and their qualifications and experience in valuations, nothing has come to our attention that causes us to doubt the fairness and reasonableness of the preparation of the Valuation Report. In the view of the above, we consider that the procedures of the valuation carried out by the Independent Valuer as well as the basis, assumptions and methodology adopted for the Valuation Report are appropriate. The Valuation Report is thereby considered indicative to the consideration of the Target Property.

Having considered the registered capital of Huizhou Chuangxiang and the valuation of the Target Property as analysed above, we concur with the Directors that the Consideration for the Acquisition is determined on normal commercial terms and is fair and reasonable so far as the Company and the Independent Shareholders are concerned.

(iii) Settlement arrangement of the Consideration

As stated in the Letter from the Board, the Consideration for the Acquisition amounted to RMB145,250,100 (equivalent to approximately HK$166,826,000) which shall be payable by the Purchaser to the Vendor in cash upon Completion, of which, approximately HK$76.7 million will be financed by the net proceeds of the IPO, and the balance will be financed by the Company’s internal resources.

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LETTER FROM SHANG INTERNATIONAL FINANCE

Having discussed with the Company, we note that:

(a) as referred to the Annual Report, the Group had bank balances and cash (excluding the pledged bank deposits) of approximately HK$279.6 million as at 31 March 2018, among which, there were unutilised net proceeds from the IPO designated for acquisition of production facility and other uses. We are advised by the Company that, as at 31 July 2018, the Group had bank balances and cash (excluding the pledged bank deposits) of approximately HK$343.4 million, while the unutilised amount of the net proceeds from the IPO designated for acquisition of production facility and other uses were approximately HK$76.7 million and HK$44.8 million respectively. Taking out the approximate HK$44.8 million allocated for other uses, the bank balances and cash (excluding the pledged bank deposits) that could be utilised by the Group for the Acquisition amounted to approximately HK$298.6 million as at 31 July 2018; and
(b) the Group had net cash generated from operating activities of approximately HK$171.7 million during FY2018. The ability to generate cash from its operating activities also serves as a source for funding the Consideration for the Acquisition.

It is noted that the Directors, after due and careful enquiry, are of the opinion that, in the absence of unforeseeable circumstances and after taking into account the internal resources available to the Group, the Group will be able to settle the Consideration for the Acquisition. In light of the above, we therefore concur with the Directors that the Company shall have sufficient financial resources to satisfy the Consideration for the Acquisition and consider the settlement arrangement in cash is acceptable.

Having considered the above, we concur with the Directors that the terms of the Agreement are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

VII. Financial effects of the Acquisition

Based on our discussion with and the representation from the Directors, we understand from the Directors that they have taken into account the following factors when they considered the potential impact of the Acquisition on the financial positions of the Group, where Huizhou Chuangxiang will become an indirect wholly-owned subsidiary of the Company and the financial information of Huizhou Chuangxiang will be consolidated into the consolidated financial statements of the Company upon Completion:

(i) Net assets value

According to the Annual Report, the Group’s audited net assets was approximately HK$458.7 million as at 31 March 2018. As stated in the Letter from the Board, the Consideration for the Acquisition shall be settled by the Purchaser in cash

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LETTER FROM SHANG INTERNATIONAL FINANCE

upon Completion. The Acquisition will then result in a decrease in the bank balances and cash of the Group. However, the effect of which on the Group’s net assets will be offset by the increase in property, plant and equipment immediately upon Completion.

The Directors therefore expect that the Acquisition will not have material impact on the net assets value of the Group.

(ii) Earnings

According to the Annual Report, the Group’s net profit was approximately HK$132.1 million for FY2018. As aforementioned, the Acquisition could support the Group’s future expansion in the cable assembling business by boosting up its existing production capacity and achieve more sales. Since the market of cable assemblies shows an upward trend, the Directors expects that the Acquisition shall have a positive effect on the Group’s future profitability.

It should be noted that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial positions of the Group will be upon Completion.

OPINION AND RECOMMENDATION

Having considered the abovementioned principal factors and reasons, though the Acquisition is not in the ordinary and usual course of business of the Group, we are of the view that the Acquisition is on normal commercial terms, the terms of the Agreement is fair and reasonable so far as the Independent Shareholders are concerned and the entering into the Agreement is in the interests of the Company and the Shareholders as a whole. We therefore advise the Independent Board Committee to recommend, and we ourselves recommend, the Independent Shareholders to vote in favour of the resolution to be proposed at the EGM to approve the Acquisition and the transactions contemplated under the Agreement.

Yours faithfully, For and on behalf of

SHANG INTERNATIONAL FINANCE LIMITED Tina Tian

Managing Director

Note: Ms. Tina Tian is a licensed person registered with the SFC to carry out Type 6 (advising on corporate finance) regulated activity under the SFO and has over ten years of experience in corporate finance industry.

– 31 –

VALUATION REPORT

APPENDIX I

The following is the text of a valuation report, prepared for the purpose of incorporation in this circular received from RHL Appraisal Limited, an independent valuer, in connection with its valuation as at 31 July 2018 of the Property to be acquired by a wholly-owned subsidiary of Time Interconnect Limited.

==> picture [86 x 86] intentionally omitted <==

RHL Appraisal Limited Corporate Valuation & Advisory

T +852 2730 6212 F +852 2736 9284

Room 1010, 10/F, Star House Tsimshatsui, Hong Kong

7 September 2018

The Board of Directors

Unit 601, 6/F, Photonics Centre, 2 Science Park East Avenue, Hong Kong Science Park, Shatin, Hong Kong

Dear Sir/Madam,

INSTRUCTIONS

We refer to your instruction for us to value the property interest (“the Property”) to be acquired by Time Interconnect Technology (Huizhou) Limited (the “Company”), a wholly-owned subsidiary of Time Interconnect Technology Limited (the “Corporate”), located in the People’s Republic of China (“PRC”). We confirm that we have carried out property inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the Property as at 31 July 2018 (the “Valuation Date”).

This letter which forms part of our valuation report explains the basis and methodologies of valuation, clarifying assumptions, valuation considerations, title investigations and limiting conditions of this valuation.

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VALUATION REPORT

APPENDIX I

BASIS OF VALUATION

The valuation is our opinion of the market value (“Market Value”) which we would define as intended to mean the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion.

Market Value is understood as the value of an asset or liability estimated without regard to costs of sale or purchase and without offset for any associated taxes or potential taxes.

The market value is the best price reasonably obtainable in the market by the seller and the most advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as a typical financing, sale and leaseback arrangements, joint ventures, management agreements, special considerations or concessions granted by anyone associated with the sale, or any element of special value.

VALUATION METHODOLOGY

We have valued the Property by adopting Depreciated Replacement Cost. We would define “Depreciated Replacement Cost” for this purpose to be our opinion of the market value of the land in its existing use, plus the current cost of replacement of the improvements less allowance for physical deterioration and all relevant forms of obsolescence and optimization.

When assessing the market value of the land, Direct Comparison Approach is adopted by making reference to the comparable market transactions/asking cases as available. Comparable properties of similar size, scale, nature, character and location are analysed and carefully weighed against all the respective advantages and disadvantages of each property in order to arrive at a fair comparison of market value.

VALUATION CONSIDERATIONS

In valuing the property interest, we have complied with all the requirements contained in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited and the International Valuation Standards 2017 published by the International Valuation Standards Council.

VALUATION ASSUMPTION

In our valuation, unless otherwise stated, we have assumed that:

i. all necessary statutory approvals for the Property or the subject building of which the Property forms part of their use have been obtained;

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VALUATION REPORT

APPENDIX I

ii. transferable land use rights in respect of the Property for specific terms at nominal annual land use fees have been granted and that any premium payable has already been fully paid; and
iii. the Property is connected to main services and sewers which are available on normal terms.

TITLE INVESTIGATION

We have been shown copies of various documents relating to the Property. However, we have not examined the original documents to verify the existing titles to the Property or any amendment which does not appear on the copies handed to us. We have relied considerably on the information given by the Company’s PRC legal advisers, Shu Jin Law Firm, concerning the validity of the titles to the Property.

LIMITING CONDITIONS

We have conducted on-site inspections to the Property on 1 August 2018 by our staff Mr. Charlie Chan (BSc in Land Surveying).

We have not carried out detailed on-site measurement to verify the correctness of the areas in respect of the Property but have assumed that the areas shown on the documents handed to us are correct. All dimensions, measurements and areas are approximate.

We have not carried out any site investigation to determine the suitability of the ground conditions or the services for any property development erected or to be erected thereon. Nor did we undertake archaeological, ecological or environmental surveys for the Property. Our valuation is prepared on the assumptions that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. Should it be discovered that contamination, subsidence or other latent defects exists in the Property or on adjoining or neighboring land or that the Property had been or is being put to contaminated use, we reserve right to revise our opinion of value.

We have relied to a very considerable extent on the information provided by the Corporate and have accepted advices given to us on such matters including, in particular, but not limited to tenure, planning approvals, statutory notices, easements, particulars of occupancy, size and floor areas and all other relevant matters in the identification of the Property. The plans including but not limited to location plan, site plan, lot index plan, outline zoning plan, building plan if any, in the report are included to assist the reader to identify the Property for reference only and we assume no responsibility for their accuracy.

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

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VALUATION REPORT

APPENDIX I

We do not accept a liability for any interpretation which we have placed on such information which is more properly the sphere of the legal advisers of the Corporate. Neither have we verified the correctness of any information supplied to us concerning the Property.

REMARKS

We have valued the Property in Renminbi (RMB).

We enclose herewith the “Property Particulars and Opinion of Value”.

Serena S. W. Lau Jessie X. Chen FHKIS, AAPI, MRICS, RPS(GP), MBA(HKU) MRICS, MSc (Real Estate), BEcon Managing Director Associate Director

Ms. Serena S. W. Lau is a Registered Professional Surveyor (GP) with over 25 years’ experience in valuation of properties in Hong Kong, Macau, the PRC and the Asia Pacific Region. Ms. Lau is a Professional Member of The Royal Institution of Chartered Surveyors, an Associate of Australian Property Institute, a Fellow of The Hong Kong Institute of Surveyors as well as a registered real estate appraiser in the PRC.

Ms. Jessie X. Chen is a Registered Professional Surveyor (Valuation) with over 8 years’ experience in valuation of properties in Hong Kong, Macau, the PRC and the Asia Pacific Region. Ms. Chen is a Professional Member of The Royal Institution of Chartered Surveyors.

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VALUATION REPORT

APPENDIX I

PROPERTY PARTICULARS AND OPINION OF VALUE

Particulars of Market Value as at Property Description and tenure occupancy 31 July 2018 RMB A parcel of industrial land with The Property comprises a As advised, the 146,000,000 two industrial buildings erected parcel of industrial land with Property is currently (RENMINBI ONE thereon located within the a total site area of owner-occupied. HUNDRED AND industrial complex known as approximately 33,393.00 sq.m. FORTY SIX Huizhou Light Engine Limited（ (359,442 sq.ft.) and two MILLION ONLY) 惠州元暉光電股份有限公司）, No.9 5-storey reinforced concrete Yuan Hui Road, Chenjiang industrial buildings erected Area, Zhong Kai Hi-tech thereon completed in about Industrial Development Zone, 2014. Huicheng District, Huizhou City, Guangdong Province, the The total gross floor area of PRC the Property is approximately （位於中華人民共和國廣東省惠州市 34,196.08 sq.m. (368,087 惠城區仲愷高新區陳江元暉路9號之 sq.ft.). 一幅工業土地及其上兩棟工業建築） The land use rights of the Property have been granted for a term expiring on 2 August 2061 for industrial use.

Notes:

Pursuant to a Stated-owned Land Use Right Grant Contract dated 2 August 2011, the land use rights of the subject land with a site area of approximately 130,000.00 sq.m. have been agreed to be transferred to Huizhou Light Engine Limited （惠州元暉光電股份有限公司）(“Light Engine”) for a term of 50 years for industrial use.
Pursuant to a Stated-owned Land Use Right Certificate – Hui Fu Guo Yong (2014) Di No.13021850027（惠府國用(2014)第13021850027號）, the land use rights of the subject land with a site area of approximately 129,997.20 sq.m. have been granted to Light Engine for a term expiring on 2 August 2061 for industrial use, portion of which with site area of 33,393.00 sq.m. is attribute to the Property.
Pursuant to two Building Ownership Certificates, the building ownership of the Property with a total gross floor area of approximately 34,196.08 sq.m. has been vested in Light Engine for industrial use. Details of such certificates are listed as follows:

Building Ownership Certificates Block No. Storey 粵房地權證惠州字第1100358190號 A-2 5 粵房地權證惠州字第1100358150號 A-4 5 Total:	Approx. Gross Floor Area (sq.m.) 17,098.04 17,098.04
	34,196.08

The company is applying for title subdivision for the property with site area of 33,393.00 sq.m. As advised by the Company’s PRC legal adviser, Shu Jin Law Firm, Light Engine is entitled to transfer, lease, mortgage or dispose of the land parcel which the Property forms part of freely in the market. There is no legal impediment for the company to apply for title subdivision and further obtaining a separate land use right certificate for the Property. And as advised by Shu Jiu Law Firm, it is expected that there is no additional land premium payable by the Company.

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VALUATION REPORT

APPENDIX I

The Property is situated at the east of Yuanhui Road（元暉路）and the south of Qiaoguang Road（僑光路）in the eastern part of Zhong Kai Hi-tech Industrial Development Zone. The subject locality mainly comprises industrial complexes and various newly developed residential and commercial developments.
We have been provided with a legal opinion dated 31 July 2018 by the Corporate’s PRC legal adviser, Shu Jin Law Firm, regarding the legal title of the Property, which contains, inter alia, the followings:
(i) the Property is legally held by Light Engine as at the Valuation Date;
(ii) Light Engine, as the legal owner of the Property as at the Valuation Date, is entitled to transfer, lease, mortgage or dispose of the Property freely in the market; and
(iii) the Property is free from any mortgage or third parties’ encumbrance.

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GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the 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. DISCLOSURE OF INTERESTS

(i) Directors’ and chief executives’ interests and short positions in shares, underlying shares and debentures of the Company or any associated corporations

As at the Latest Practicable Date, the interests or short positions of each of the Directors and the chief executive in the shares of the Company, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which will have to be 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 he is taken or deemed to have taken under such provisions of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be recorded in the register referred to therein or which will be required pursuant to the Model Code to be notified to the Company and the Stock Exchange are set out as follows:

Long position in shares of the Company

		Number of	Approximate
Name of		shares held/	percentage of
Director	Capacity/Nature	interested	interest
Mr. Paul Lo	Interest of a controlled	1,175,070,000	63.86%
(Note)	corporation/others

Note: Mr. Paul Lo beneficially owns the entire issued share capital of Nickson Holdings Limited (“ Nickson Holdings ”). Nickson Holdings and Mr. Paul Lo hold 20.14% and 39.68% of the issued ordinary share capital of Linkz Industries, respectively, and Time Holdings is wholly-owned by Linkz Industries. Accordingly, Mr. Paul Lo, is deemed, or taken to be, interested in all the shares held by Time Holdings for the purpose of the SFO. Mr. Paul Lo beneficially owns 2.84% of the issued shares capital of Gold Peak Industries (Holdings) Limited (“ Gold Peak ”).

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GENERAL INFORMATION

APPENDIX II

Long position in shares of associated corporation of the Company

			Number of	Approximate
Name of associated	Name of	Nature of	shares held/	percentage of
corporation	Director	interest	interested	interest
Linkz Industries	Mr. Cua Tin Yin	Others	12,838,618	0.70%
	Simon (Note)

Note: Mr. Cua Tin Yin Simon is the executive Director, holding 1.09% of the issued ordinary share capital of Linkz Industries. Mr. Cua is also holding 0.011% of the issued share capital of Gold Peak.

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

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GENERAL INFORMATION

APPENDIX II

(ii) Interests of substantial Shareholders

As at the Latest Practicable Date, the following persons/entities (other than the Directors and chief executives of the Company) had or were deemed to have an interest or a short position in the shares or the underlying shares of the Company which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register of the Company required to be kept under Section 336 of the SFO, or who were directly or indirectly, to be 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 the Company or any other member of the Group:

		Number of	Approximate
		shares held/	percentage of
Name	Capacity/Nature	interested	interest
Time Holdings	Beneficial Owner	1,175,070,000	63.86%
Linkz Industries	Interest of controlled	1,175,070,000	63.86%
(Note 1)	corporation
Ms. Ho Hsiu Lan	Interest of spouse	1,175,070,000	63.86%
(Note 2)
Nickson Holdings	Interest of controlled	1,175,070,000	63.86%
(Note 3)	corporation
GP Industries	Interest of controlled	1,175,070,000	63.86%
Limited	corporation
(Note 4)
Gold Peak (Note 5)	Interest of controlled	1,175,070,000	63.86%
	corporation
Datatech Investment	Beneficial Owner	204,930,000	11.14%
Inc.
Mr. Kwong Ping	Interest of controlled	204,930,000	11.14%
Man (Note 6)	corporation
Ms. Chan Kit Sum	Interest of spouse	204,930,000	11.14%
(Note 7)

Notes:

1) Time Holdings is wholly-owned by Linkz Industries. Therefore, Linkz Industries is deemed, or taken to be, interested in all the shares held by Time Holdings for the purpose of the SFO.
2) Ms. Ho Hsiu Lan is the spouse of Mr. Paul Lo. Accordingly, Ms. Ho Hsiu Lan is deemed, or taken to be, interested in all the shares in which Mr. Paul Lo is interested for the purpose of the SFO.
3) Nickson Holdings holds 20.14% of the issued ordinary share capital of Linkz Industries, and Time Holdings is wholly-owned by Linkz Industries. Therefore, Nickson Holdings is deemed to, or taken to be, interested in all the shares held by Time Holdings for the purpose of the SFO.

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GENERAL INFORMATION

APPENDIX II

4) GP Industries Limited (“ GP Industries ”) holds 38.13% of the issued ordinary share capital of Linkz Industries, and Time Holdings is wholly-owned by Linkz Industries. Therefore, GP Industries is deemed, or taken to be, interested in all the shares held by Time Holdings for the purpose of the SFO.
5) Gold Peak holds 85.47% issued share capital of GP Industries. GP Industries holds 38.13% of the issued ordinary share capital of Linkz Industries, and Time Holdings is wholly-owned by Linkz Industries. Therefore, Gold Peak is deemed, or taken to be, interested in all the shares held by Time Holdings for the purpose of the SFO.
6) Mr. Kwong Ping Man beneficially owns the entire issued share capital of Datatech Investment Inc.. Therefore, Mr. Kwong Ping Man is deemed, or taken to be, interested in all the shares held by Datatech Investment Inc. for the purpose of the SFO. Mr. Kwong Ping Man is the sole director of Datatech Investment Inc..
7) Ms. Chan Kit Sum is the spouse of Mr. Kwong Ping Man. Accordingly, Ms. Chan Kit Sum is deemed, or taken to be, interested in all the shares in which Mr. Kwong Ping Man is interested for the purpose of the SFO.

Mr. Cua Tin Yin Simon is a director of Linkz Industries. Mr. Lo Chung Wai Paul is a director of each of Time Holdings, Linkz Industries and Nickson Holdings.

Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, the Company had not been notified by any persons (other than Directors or chief executive of the Company) who had interest or short positions in the shares or underlying shares or debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were required, pursuant to Section 336 of the SFO, to be recorded in the register referred to therein.

(iii) Competing interests

As at the Latest Practicable Date, none of the Directors and their respective associates was considered to have interests in businesses apart from the Group’s businesses which compete, or are likely to compete, either directly or indirectly, with the businesses of the Group pursuant to Rule 8.10 of the Listing Rules.

(iv) Other interests

As at the Latest Practicable Date, save for the Directors who hold positions and/or have interests in the United Luminous Group or its associates set out in the section headed “Listing Rules Implications” in the letter from the Board in this circular, none of the Directors or proposed Directors had any direct or indirect material interest in any assets which have been 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 since 31 March 2018 (the date to which the latest published audited consolidated financial statements of the Group were made up) up to the Latest Practicable Date.

As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting as at the date thereof and which was significant in relation to the business of the Group as at the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX II

3. SERVICE CONTRACTS

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

4. EXPERTS AND CONSENTS

The following is the qualification of the experts who have given opinion or advice which is contained or referred to in this circular:

Shang International Finance a licensed corporation permitted to carry on Type Limited 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

RHL Appraisal Limited a professional property valuer

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and references to its name in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the above experts was not beneficially interested in the share capital of any member of the Group nor has any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group. In addition, each of the above experts did not have any interest, either directly or indirectly, in any assets which have been, since 31 March 2018 (the date to which the latest published audited consolidated financial statements of the Group were made up), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2018 (the date to which the latest published audited consolidated financial statements of the Group were made up).

6. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of the Company at Unit 601, Photonics Centre, 2 Science Park East Avenue, Hong Kong Science Park, Shatin, Hong Kong during normal business hours from the date of this circular up to and including the date of the EGM:

(a) the Agreement;

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GENERAL INFORMATION

APPENDIX II

(b) the letter of recommendation from the Independent Board Committee to the Independent Shareholders, the text of which is set out on page 16 of this circular;
(c) the letter of advice from Shang International Finance to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 17 to 31 of this circular;
(d) the Valuation Report as set out in Appendix I to this circular;
(e) the letters of consent referred to in the section headed “Experts and Consents” in this appendix; and
(f) this circular.

– 43 –

NOTICE OF EGM

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 1729)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT an extraordinary general meeting (the “ EGM ”) of Time Interconnect Technology Limited (the “ Company ”) will be held at Meeting Room 04, 1/F, Core Building 1E, Convention Centre 1, Phase 1, No. 1 Science Park East Avenue, Hong Kong Science Park, Shatin, Hong Kong on Monday, 24 September 2018 at 2:30 p.m. for the following purpose of considering and, if thought fit, passing with or without amendment, the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT :
(a) The sale and purchase agreement (the “ Agreement ”) dated 3 August 2018 entered into between Time Interconnect Technology (Huizhou) Limited（匯聚科技（惠州）有限公司）(the “ Purchaser ”), an indirect wholly-owned subsidiary of the Company, and Huizhou Light Engine Limited（惠州元暉光電股份有限公司）(the “ Vendor ”), pursuant to which the Purchaser conditionally agreed to acquire and the Vendor conditionally agreed to sell the entire equity interest in Huizhou Chuangxiang Technology Limited （惠州創享科技有限公司） at a total consideration of RMB145,250,100 (equivalent to approximately HK$166,826,000), and a copy of which having been produced to this meeting and marked “ A ” and initialed by the chairman of this meeting for the purposed of identification) and the transactions contemplated thereby be and are hereby approved, confirmed and ratified; and
(b) Any one or more directors of the Company be and are hereby authorised to do all such acts and things as they consider necessary and to sign and execute all such documents, and to take all such steps which in their opinion may be necessary appropriate, desirable or expedient for the purpose of giving effect to the Agreement and completing the transactions contemplated thereby.”

By order of the Board Time Interconnect Technology Limited Cua Tin Yin Simon

Executive Director and Chief Executive Officer

Hong Kong, 7 September 2018

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NOTICE OF EGM

Registered office: P.O. Box 1350 Clifton House 75 Fort Street Grand Cayman KY1-1108 Cayman Islands

Head office and principal place of of business in Hong Kong: Unit 601, Photonics Centre, 2 Science Park East Avenue, Shatin, Hong Kong

Notes:

A form of proxy for the meeting is enclosed.
Only members are entitled to attend and vote at the meeting (or at any adjournment thereof).
Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint one or more proxies (who must be an individual) to attend and vote instead of him/her. A proxy need not be a member of the Company.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorized to sign the same.
In order to be valid, the proxy form, together with the power of attorney or other authority (if any) under which it is signed or a certified copy thereof, must be deposited at the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof (as the case may be).
Completion and return of a proxy form shall not preclude a member from attending and voting in person at the meeting or any adjournment thereof (as the case may be) should the member so wish, and in such event, the proxy form shall be deemed to be revoked.
Where there are joint holders of any share of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders be present at any meeting, the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
For determining the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 19 September 2018 to Monday, 24 September 2018, both dates inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the EGM, unregistered holders of Shares shall ensure that all transfer documents accompanied by the relevant Share certificates must be lodged for registration with the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, Hong Kong no later than 4:30 p.m. on Tuesday, 18 September 2018.

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AI assistant

Time Interconnect Technology Limited — Proxy Solicitation & Information Statement 2018

50124_rns_2018-09-07_73d72364-2258-4eaf-b48d-0f8d6c4bbcb9.pdf

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG; AND NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG

INTRODUCTION

PRINCIPAL TERMS OF THE AGREEMENT

Date

Parties

Assets to be acquired

Consideration

LETTER FROM THE BOARD

Conditions precedent

LETTER FROM THE BOARD

Completion

INFORMATION ON HUIZHOU CHUANGXIANG AND THE TARGET PROPERTY

INFORMATION ON THE PURCHASER

INFORMATION ON THE VENDOR

REASONS FOR AND THE BENEFITS OF THE PROPOSED ACQUISITION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

EGM

CLOSURE OF REGISTER OF MEMBERS

RECOMMENDATION

ADDITIONAL INFORMATION

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG

DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO ACQUISITION OF HUIZHOU CHUANGXIANG

INTRODUCTION

LETTER FROM SHANG INTERNATIONAL FINANCE

BASIS OF OUR OPINION

LETTER FROM SHANG INTERNATIONAL FINANCE

PRINCIPAL FACTORS AND REASONS CONSIDERED

I. Background and financial information of the Group

(i) Financial results for FY2017 compared with FY2016

(ii) Financial results for FY2018 compared with FY2017

LETTER FROM SHANG INTERNATIONAL FINANCE

II. Industry prospects

LETTER FROM SHANG INTERNATIONAL FINANCE

III. Information of the Vendor

IV. Information of Huizhou Chuangxiang and the Target Property

V. Reasons for and benefits of the Acquisition

LETTER FROM SHANG INTERNATIONAL FINANCE

LETTER FROM SHANG INTERNATIONAL FINANCE

VI. Principal terms of the Agreement

(i) Assets to be acquired

(ii) Consideration

(a) Registered capital of Huizhou Chuangxiang

(b) Valuation of the Target Property

LETTER FROM SHANG INTERNATIONAL FINANCE

(iii) Settlement arrangement of the Consideration

VII. Financial effects of the Acquisition

(i) Net assets value

(ii) Earnings

OPINION AND RECOMMENDATION

SHANG INTERNATIONAL FINANCE LIMITED Tina Tian

The Board of Directors