Tsun Yip Holdings Limited — Proxy Solicitation & Information Statement 2018

Jan 16, 2018

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in CNC Holdings Limited (the ‘‘Company’’), you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

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.

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CNC HOLDINGS LIMITED 中國新華電視控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8356)

(1) CONNECTED TRANSACTION PROPOSED SECOND AMENDMENT OF THE TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS; (2) PROPOSED RE-ELECTION OF DIRECTORS AND

(3) NOTICE OF EXTRAORDINARY GENERAL MEETING

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

A letter from the Board is set out on pages 5 to 16 of this circular and a letter from the Independent Board Committee is set out on pages 17 to 18 of this circular. A letter from advice from Nuada Limited, the independent financial adviser to the Independent Board Committee and the Independent Shareholders of the Company is set out on pages 19 to 31 of this circular.

A notice convening the EGM to be held at Suites 2708-2710, 27/F., Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 6 February 2018 at 10:00 a.m. is set out on pages 45 to 47 of this circular. A form of proxy for use at the EGM is enclosed with this circular.

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

17 January 2018

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

– i –

CONTENTS

	Page
Characteristics of GEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	i
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Letter from Nuada Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix I – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Appendix II – Particulars of Directors for Re-election . . . . . . . . . . . . . . . . . . . . . . . . . .	39
Notice of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	45

– ii –

DEFINITIONS

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

• ‘‘Board’’

the board of Directors

• ‘‘Business Day’’

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

• ‘‘CNC China’’

• 中國新華新聞電視網有限公司, a company incorporated in PRC, which owns 100% of the equity interests in CNC HK, a wholly-owned subsidiary of Xinhua News Agency

• （新華社）and a substantial Shareholder of the Company

• ‘‘CNC HK’’

• China Xinhua News Network Co., Limited（中國新華新聞 電視網有限公司）, a company incorporated in Hong Kong and a wholly-owned subsidiary of Xinhua News Agency

• （新華社）and a substantial Shareholder of the Company

• ‘‘Company’’

• CNC Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the GEM

• ‘‘Conversion Period’’

• the period commencing from the date of the issue of the Convertible Bonds and ending upon the Second Extended Maturity Date

• ‘‘Conversion Price’’

• the price at which each Conversion Share shall be issued upon conversion

• ‘‘Conversion Share(s)’’

• new Share(s) falling to be allotted and issued upon exercise of the conversion rights attaching to the Convertible Bonds

• ‘‘Convertible Bonds’’

• the convertible bonds issued by the Company to CNC HK in the principal amount of HK$397,030,210 on 9 December 2011

• ‘‘Director(s)’’

director(s) of the Company

– 1 –

DEFINITIONS

‘‘EGM’’

the extraordinary general meeting of the Company to be convened and held for the Independent Shareholders and/or the Shareholders (as the case may be) to consider and, if thought fit, approve the Second Supplemental Deed and Second Amendment of Terms and transactions contemplated thereunder

• ‘‘First Extended Maturity Date’’

• The extended maturity date of the Convertible Bonds, being 9 December 2017, pursuant to the First Supplemental Deed

• ‘‘First Supplemental Deed’’

• the first supplemental deed dated 9 December 2014 entered into between the Company and the CNC HK in relation to the amendment of certain terms and conditions of the Convertible Bonds in 2014

• ‘‘GEM’’

The Growth Enterprise Market of the Stock Exchange

• ‘‘GEM Listing Rules’’

The Rules Governing the Listing of Securities on GEM

• ‘‘Group’’ the Company and its subsidiaries

• ‘‘HK$’’

Hong Kong dollars, the lawful currency of Hong Kong

• ‘‘Hong Kong’’

• the Hong Kong Special Administrative Region of the PRC

• ‘‘Independent Board Committee’’

an independent committee of the Board comprising all the independent non-executive Directors, formed for the purpose of advising the Independent Shareholders as to the terms of the Second Supplemental Deed and the transactions contemplated thereunder

• ‘‘Independent Financial Adviser’’ or ‘‘Nuada Limited’’

Nuada Limited, a corporation licensed under SFO to carry out type 1 (dealing in securities) and type 6 (advising on corporation finance) regulated activities and the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders with regard to the Second Amendment of Terms

– 2 –

DEFINITIONS

• ‘‘Independent Shareholder(s)’’

• ‘‘Latest Practicable Date’’

• ‘‘PRC’’

• ‘‘Sale and Purchase Agreement’’

• ‘‘Second Amendment of Terms’’

• ‘‘Second Extended Maturity Date’’

• ‘‘Second Maturity Date Extension’’

• ‘‘Second Supplemental Deed’’

• ‘‘SFO’’

• ‘‘Shares’’

• the Shareholder(s) who are not interested or involved in the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder

• 15 January 2018, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular

• The People’s Republic of China excluding Hong Kong, Macau Special Administrative Region of the PRC and Taiwan for the purpose of this circular

• the sale and purchase agreement dated 6 September 2011 entered into between the Company and CNC HK and other vendors in respect of acquisition of Xinhua TV AsiaPacific Operating Co., Limited

• the proposed amendment of terms and conditions of the Convertible Bonds pursuant to the Second Supplemental Deed, in relation to the Second Maturity Date Extension

• the proposed second extended maturity date of the Convertible Bonds, being 9 December 2018, pursuant to the Second Supplemental Deed

• the proposed second extension of the maturity date of the Convertible Bonds to 9 December 2018, pursuant to the Second Supplemental Deed

• the second supplemental deed dated 13 December 2017 entered into between the Company and the CNC HK in relation to the Second Amendment of Terms

The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as amended or otherwise modified from time to time

ordinary shares of the Company

– 3 –

DEFINITIONS

‘‘Shareholder(s)’’	holder(s) of Share(s)
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Takeovers Code’’	The Hong Kong Code on Takeovers and Mergers
‘‘%’’	per cent.

In this circular, the terms ‘‘connected person’’, ‘‘subsidiary’’ and ‘‘substantial shareholder’’ have the meanings given to such terms in the GEM Listing Rules, unless the context otherwise requires.

– 4 –

LETTER FROM THE BOARD

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CNC HOLDINGS LIMITED 中國新華電視控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8356)

Executive Directors: Dr. Jiang Yan Dr. Li Yong Sheng Mr. Liu Da Yong Mr. Zou Chen Dong Mr. Kan Kwok Cheung

Non-executive Directors:

Ms. Tang Li Mr. Law Cheuk Hung

Independent non-executive Directors: Mr. Fan Chun Wah, Andrew, JP Mr. Wu Guo Ming Mr. Kwok Man Wai, SBS, IDS, JP Mr. Wan Chi Keung, Aaron, BBS, JP

Registered office: Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place of business in Hong Kong: Suites 2708-2710 27/F., Everbright Centre 108 Gloucester Road Wanchai Hong Kong

Mr. Wong Chung Yip, Kenneth

17 January 2018

To the Shareholders

Dear Sir or Madam,

(1) CONNECTED TRANSACTION; (2) PROPOSED SECOND AMENDMENT OF THE TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS; AND (3) PROPOSED RE-ELECTION OF DIRECTORS

INTRODUCTION

References are made to the Company’s announcements dated 11 October 2011, 9 December 2011, 10 December 2014 and 13 December 2017 and the circulars dated 19 November 2011 and 6 January 2015 in relation to, amongst other things, the issuance of the Convertible Bonds in 2011 and the amendment of certain terms and conditions of the Convertible Bonds in 2014.

– 5 –

LETTER FROM THE BOARD

The Company entered into the Sale and Purchase Agreement in 2011 with CNC HK and other parties, pursuant to which the Company issued certain Shares and the Convertible Bonds in the principal amount of HK$397,030,210 to CNC HK as the consideration of the acquisition of its interest in Xinhua TV Asia-Pacific Operating Co., Limited. The Convertible Bonds bears interest of 5% per annum and can be convertible into Shares. All outstanding Convertible Bonds was then expected to mature on 9 December 2014 pursuant to the original terms and conditions of the Convertible Bonds, while on 9 December 2014, the Company entered into the First Supplemental Deed with CNC HK, the sole holder of the outstanding convertible bonds with the then outstanding principal amount of HK$277,030,210 as at 9 December 2014, pursuant to which the maturity date of the Convertible Bonds was extended for 3 years to 9 December 2017 and the interest rate of the convertible bonds was amended from 5% per annum to 3% per annum for the extended period, being from 9 December 2014 to 9 December 2017.

As at the date of the First Supplemental Deed, a portion of the Convertible Bonds in the principal amount of HK$120,000,000 had been converted into 612,244,897 Shares, where a principal amount of HK$277,030,210 was then outstanding (the ‘‘Previous Conversions’’). As at the Latest Practicable Date, as a further portion of the Convertible Bonds in the aggregate principal amount of HK$20,000,000 was converted subsequent to the date of the First Supplemental Deed, and taking into account the Previous Conversions, a total principal amount of HK$140,000,000 had been converted into 714,285,714 Shares. As at the Latest Practicable Date, the Convertible Bonds in the principal amount of HK$257,030,210 is still outstanding.

The purpose of this circular is to provide you with, amongst other things, (i) further details of the Second Supplemental Deed and the Second Amendment of Terms; (ii) a letter from the Independent Board Committee to the Independent Shareholders; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Second Supplemental Deed and the Second Amendment of Terms; (iv) re-election of Directors and (v) a notice of the EGM to consider and if thought fit, to approve the resolution in relation to the Second Amendment of Terms and re-election of Directors.

THE SECOND SUPPLEMENTAL DEED

Following the resolution passed by the Board on 8 December 2017 to authorise, among other things, a Director to handle the extension of the Convertible Bonds, on 13 December 2017 (after trading hours), the Company entered into the Second Supplemental Deed with CNC HK, pursuant to which the Company and CNC HK agreed to amend terms and conditions of the Convertible Bonds, where the maturity date of the Convertible Bonds will be extended to 9 December 2018 and the Conversion Period will accordingly be extended to 9 December 2018. The Second Amendment of Terms is arrived at after arm’s length negotiation between the Company and CNC HK.

– 6 –

LETTER FROM THE BOARD

Pursuant to the Second Supplemental Deed, the Second Amendment of Terms is subject to the satisfaction of the following conditions:

• (a) the passing by the Independent Shareholders at the EGM of the necessary resolutions to approve the Second Supplemental Deed and the Second Amendment of Terms;

• (b) the Stock Exchange having approved the Second Amendment of Terms pursuant to the GEM Listing Rules and the Listing Committee granting approval for the listing of, and permission to deal in, the Conversion Shares on the Stock Exchange and the approval not having been subsequently revoked or cancelled; and

• (c) all necessary consents and approvals required to be obtained on the part of the Company and CNC HK in respect of the Second Amendment of Terms having been obtained.

None of the above conditions could be waived by the parties to the Second Supplemental Deed. The effective date of the Second Supplemental Deed shall be on the date when all its conditions precedents are fulfilled.

As at the Latest Practicable Date, so far the Directors are aware, condition (c) above has been satisfied and the other conditions have not been fulfilled.

THE CONVERTIBLE BONDS

Apart from the Second Amendment of Terms, all other terms of the Convertible Bonds will remain unchanged.

The principal terms of the Convertible Bonds as amended pursuant to the Second Supplemental Deed are summarized as follows:

Outstanding principal amount as at HK$257,030,210 the date of the Second Supplemental Deed

Maturity

The Second Extended Maturity Date, being 9 December 2018. To the extent that the Convertible Bonds has not been previously converted, the Company shall repay the outstanding principal amount of the Convertible Bonds on the Second Extended Maturity Date.

Interest rate 3% per annum

– 7 –

LETTER FROM THE BOARD

Conversion rights

Conversion Shares

The Convertible Bonds are convertible at any time, and from time to time, at the option of the holder of the Convertible Bonds, subject to compliance with the Takeovers Code and the GEM Listing Rules and any other statutory and regulatory requirements.

1,311,378,623 Conversion Shares will be issued on full conversion of the Convertible Bonds based on the outstanding principal amount of approximately HK$257,030,210 and the Conversion Price of approximately HK$0.196 per Conversion Share.

The Conversion Shares represent approximately 32.34% of the existing issued share capital of the Company and approximately 24.44% of the issued share capital of the Company as enlarged by the Conversion Shares.

Conversion Price

HK$0.196 per Conversion Share

The Conversion Price of HK$0.196 represents:

• (i) a premium of approximately 216.1% to the closing price of HK$0.062 per Share as quoted on the Stock Exchange on the date of the Second Supplemental Deed;

• (ii) a premium of approximately 177.6% to the average closing price of HK$0.0706 per Share as quoted on the Stock Exchange for the five (5) consecutive trading days prior to the date of the Second Supplemental Deed; and

• (iii) a premium of approximately 256.4% to the closing price of HK$0.055 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

– 8 –

LETTER FROM THE BOARD

The Conversion Price will from time to time be adjusted upon the occurrence of subdivision or consolidation or reclassification of Shares, capitalisation issues, capital distribution (other than distribution paid out of net profits), rights issues at a price which is less than 90% of the then market price of the Shares, issue of securities with rights of conversion into or exchange for or subscription for Shares at a total effective consideration per Share less than 90% of the then market price of the Shares, and any modification of the rights of conversion or exchange or subscription attaching to the aforementioned securities resulting in reduction of the total effective consideration per Share being to less than 90% of the then market price of the Shares.

Transferability

The Convertible Bonds are transferable, provided that none of the Convertible Bonds may be transferred to any connected person of the Company.

Limitations on conversion

No conversion rights will be exercised by any of the holders of the Convertible Bonds if upon such conversion and immediately following the issue of the relevant Conversion Shares, (i) such holder and persons acting in concert (as defined in the Takeovers Code) with it would directly or indirectly control or be interested in an aggregate of 30% (or such other amount as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer) or more of the Shares in issue, or if such holder and persons acting in concert (as defined in the Takeovers Code) with it would otherwise be obligated to make a general offer for the Shares in issue not being owned by them under Rule 26 of the Takeovers Code following such conversion; or (ii) the public float of the Shares will fall below 25% as required under the GEM Listing Rules.

– 9 –

LETTER FROM THE BOARD

Ranking It is expected that the Conversion Shares, when allotted and issued, will rank pari passu in all respects with all Shares in issue on the date of allotment and issue thereof.

Voting rights

Holders of the Convertible Bonds will not be permitted to attend or vote at meetings of the Company.

Listing and trading No application will be made by the Company to the Listing Committee for the listing of the Convertible Bonds.

APPLICATION OF LISTING

No application will be made of the listing of, and permission to deal in, the Convertible Bonds on the Stock Exchange or any other stock exchange.

REASONS FOR THE EXTENSION

The Second Amendment of Terms would allow the Company to refinance its debts under the Convertible Bonds on the same terms for another year, and to provide flexibility to the Company’s working capital management and deployment of its financial resources to fund its operation. Furthermore, CNC HK cannot convert the whole amount of the remaining Convertible Bonds on or before the First Extended Maturity Date without triggering the mandatory offer obligation under Rule 26 of the Takeovers Code.

The Second Amendment of Terms was determined after arm’s length negotiations between the Company and CNC HK, after considering the proposed amendment as a whole package, the net asset value of the Company, the general market conditions and the trading price of the Shares as at the date of Second Supplemental Deed.

– 10 –

LETTER FROM THE BOARD

The Board considers the Second Maturity Date Extension of the Convertible Bonds for a further year is fair and reasonable for the reasons that the Group was in a net current liabilities position and net liabilities as at 30 September 2017 and hence has sought for financial support from CNC HK, which has confirmed to provide financial support to the Group in a reasonable manner under relevant laws and requirements, to maintain the going concern of the Company which allowed the Company to extend the repayment for liabilities due to CNC HK to not earlier than 12 months commencing from 30 September 2017, including the Convertible Bonds, the interests payable for the Convertible Bonds and liabilities due to CNC HK in respect of annual fee for television broadcasting right, carriage fee payment and satellite transmission fee, if the repayment would cause the Company to be unable to settle its liabilities due to other parties when they fall due. As at the Latest Practicable Date, a promissory note issued by the Group in the principal amount of approximately HK$45,040,000 remains outstanding. Also, there may be funding requirements for the operation of the businesses of the Company in the near future. Hence, the Board expects that the Company will not have enough cash to redeem the Convertible Bonds in the next few months or within the forthcoming financial year and the Second Maturity Date Extension would give reasonable time for the Group to improve its business performance and financial position. Thus, the Board considers that the Second Maturity Date Extension is in the best interests of the Company and the Shareholders as a whole.

The Company has considered other financing alternatives to raise funds to repay the Convertible Bond, including but not limited to, bank borrowing and equity financing. However, any equity financing such as placement of Shares or rights issue will result in dilution on the shareholding of the existing Shareholders. As such, the Company considered that other financing alternatives are not the most appropriate means to refinance the Convertible Bonds at the moment.

The Second Amendment of Terms is arrived at after arm’s length negotiation between the Company and CNC HK. The Board considers that the terms and conditions of the Second Supplemental Deed are fair and reasonable, and the Second Amendment of Terms is in the interests of the Company and the Shareholders as a whole. The Directors are of the view that the Second Amendment of Terms will not pose any significant impact on the operations of the Group as a whole.

FINANCIAL EFFECTS OF THE SECOND AMENDMENT OF TERMS

Effect on liquidity

According to the Company’s interim report for the six months ended 30 September 2017, the Group had cash and cash equivalents amounted to approximately HK$104.6 million. Furthermore, the Group recorded net current liabilities of approximately HK$220.4 million and net liabilities of approximately HK$124.7 million as at 30 September 2017. The Second Maturity Date Extension will enable the Group to postpone a substantial cash outflow. In light of the above, the Second Maturity Date Extension would release the liquidity and working capital pressure of the Group.

– 11 –

LETTER FROM THE BOARD

Effect on gearing

As at 30 September 2017, the Group had a gearing ratio of approximately 93.7%, representing the Group’s total borrowings which comprised of promissory note, Convertible Bonds and finance lease payables to the Group’s total assets. The management of the Company expects that there will not be any material adverse changes to the gearing of the Group as a result of the Second Maturity Date Extension subject to the new valuation report which to be prepared by an independent valuer. However, if the conversion rights attaching to the Convertible Bonds are exercised, the gearing position of the Group would be improved.

Effect on finance cost

Assuming no conversion occurred during the extended Conversion Period, the interest payment of approximately HK$7.7 million will have to be paid per year under the Second Amendment of Terms. In addition, the imputed financial interest (finance cost) under the accounting treatment will be accounted in the statement of profit or loss subject to the new effective interest rate from a new valuation report which to be prepared by an independent valuer. As such, the Company expects that there will not be any material adverse effect on the finance cost of the Group as a result of the Second Maturity Date Extension.

EFFECT ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon full conversion of the Convertible Bonds at a conversion price of HK$0.196 is as follows:

CNC HK Shunleetat (BVI) Limited (Note) Public	As at the Latest Practicable Date Number of Shares % 1,188,621,377 29.31% 69,000,000 1.70% 2,797,728,570 68.99% 4,055,349,947 100.00%	Immediately upon full conversion of the Convertible Bonds (at the Conversion Price) Number of Shares % 2,500,000,000 46.58% 69,000,000 1.29% 2,797,728,570 52.13% 5,366,728,570 100.00%	Immediately upon full conversion of the Convertible Bonds (at the Conversion Price) Number of Shares % 2,500,000,000 46.58% 69,000,000 1.29% 2,797,728,570 52.13% 5,366,728,570 100.00%
			100.00%

Note:

Mr. Kan Kwok Cheung, an executive Director, through his interest in Shunleetat (BVI) Limited, is interested in 69,000,000 Shares as at the Latest Practicable Date.

– 12 –

LETTER FROM THE BOARD

FUND RAISING ACTIVITIES IN THE PERIOR 12 MONTHS PERIOD

The Company has not conducted any equity fund raising activities during the 12 months immediately preceding the date of this announcement.

INFORMATION ON THE GROUP AND CNC HK

The Company is an investment holding company and the Shares of which are listed on the GEM Board of the Stock Exchange. The Group is principally engaged in the provision of civil engineering services for the public sector in Hong Kong and television broadcasting business in the Asia-Pacific region (excluding the PRC) in return for advertising and related revenue.

CNC HK is a company incorporated in Hong Kong and a wholly-owned subsidiary of CNC China. Its principal business is investment holding. CNC HK is the only company which has been granted the rights to develop the television broadcasting network by PRC government and Xinhua News Agency.

GEM LISTING RULES IMPLICATIONS

Pursuant to Rule 34.05 of the GEM Listing Rules, any alteration in the terms of convertible debt securities after issue must be approved by the Stock Exchange, except where the alteration takes effect automatically under the existing terms of such convertible debt securities. The Company has applied to the Stock Exchange for its approval of the Second Amendment of Terms contemplated under the Second Supplemental Deed pursuant to Rule 34.05 of the GEM Listing Rules.

As at the Latest Practicable Date, CNC HK is interested in 1,188,621,377 Shares, representing approximately 29.31% of the issued share capital of the Company. Accordingly, CNC HK is a substantial Shareholder and a connected person of the Company under Rule 20.07(1) of the GEM Listing Rules. Accordingly, the Second Amendment of Terms as contemplated under the Second Supplemental Deed constitutes a connected transaction of the Company under the GEM Listing Rules.

As the Second Amendment of Terms does not fall into any exemption under Rule 20.71 of the GEM Listing Rules, the Second Amendment of Terms is subject to the reporting, announcement and shareholders’ approval requirements of Chapter 20 of the GEM Listing Rules. CNC HK has material interest in the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder, accordingly, CNC HK and its associates will be required to abstain from voting in the EGM for approval of the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder. Save as disclosed above, no other Shareholder has a material interest in the Second Supplemental Deed and is required to abstain from voting in the EGM.

– 13 –

LETTER FROM THE BOARD

RE-ELECTION OF DIRECTORS

The Board currently consists of twelve Directors, namely Dr. Jiang Yan, Dr. Li Yong Sheng, Mr. Liu Da Yong, Mr. Zou Chen Dong, Mr. Kan Kwok Cheung, Ms. Tang Li, Mr. Law Cheuk Hung, Mr. Fan Chun Wah, Andrew, JP, Mr. Wu Guo Ming, Mr. Kwok Man Wai, SBS, IDS, JP, Mr. Wan Chi Keung, Aaron, BBS, JP and Mr. Wong Chung Yip, Kenneth.

According to Article 83(3) of the Articles of Association, any Directors appointed to fill a casual vacancy on the Board or as an addition to the existing Board shall hold office until the first general meeting of the Shareholders (in case of filling a casual vacancy) or until the next following annual general meeting of the Company (in case of an addition to the Board), and shall then be eligible for re-election at the meeting.

In accordance with Article 83(3) of the Articles of Association, Dr. Jiang Yan, Mr. Liu Da Yong, Ms. Tang Li, Mr. Law Cheuk Hung, Mr. Fan Chun Wah, Andrew, JP and Mr. Wu Guo Ming, shall retire from office at the EGM and being eligible, shall offer themselves for re-election at the EGM.

Pursuant to Rule 17.46A of the GEM Listing Rules, a listed issuer shall disclose the details required under Rule 17.50(2) of the GEM Listing Rules of any directors proposed to be re-elected or proposed new director in the notice or accompanying circular to its shareholders of the relevant general meeting, if such re-election and appointment is subject to shareholders’ approval at the relevant general meeting. The requisite details of the above six retiring Directors are set out in Appendix II to this circular.

EGM AND PROXY ARRANGEMENT

The EGM will be held at Suites 2708-2710, 27/F., Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong at 10:00 a.m. on Tuesday, 6 February 2018 for the Independent Shareholders to consider and, if thought fit, approve the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder and Shareholders to consider and, if thought fit, to approve the re-election of Directors of the Company. The notice of the EGM is set out on pages 45 to 47 of this circular. The voting on such resolution will be conducted by way of poll in accordance with Rule 17.47(4) of the GEM Listing Rules.

Apart from Dr. Jiang Yan, Dr. Li Yong Sheng, Mr. Liu Da Yong, Mr. Zou Chen Dong and Ms. Tang Li, each of whom is a Director nominated by CNC HK and concurrently holds managerial position in CNC HK and/or Xinhua News Agency（新華社）, none of the Directors have a material interest in the Second Supplemental Deed and none of them were required to abstain from voting on the Board resolutions in relation to the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder.

– 14 –

LETTER FROM THE BOARD

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

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, there is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon any Shareholder; and (ii) no obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from Wednesday, 31 January 2018 to Tuesday, 6 February 2018, both days inclusive, for the purpose of determining Shareholders’ entitlement to attend and vote at the EGM.

In order to qualify for attending and voting at the EGM, all share transfer documents accompanied by the relevant share certificates must be lodged 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 for registration no later than 4:30 p.m. on Tuesday, 30 January 2018.

RECOMMENDATION

Taking into account the reasons set out above, the Board (excluding all independent nonexecutive Directors, whose views are set out in the section headed ‘‘Letter from the Independent Board Committee’’ in this circular), consider that, while the Second Amendment of Terms are not in the ordinary and usual course of business of the Group, the Second Amendment of Terms is fair and reasonable, on normal commercial term, and in the best interests of the Company and the Shareholders as a whole, and therefore, they recommend the Independent Shareholders to vote in favor of the proposed resolution as set out in the notice of EGM.

The Directors consider that the re-election of Directors is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors also recommend the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM for re-election of Directors.

– 15 –

LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the (i) letter from the Independent Board Committee as set out on pages 17 to 18 of this circular which contains recommendations of the Independent Board Committee to the Independent Shareholders regarding the resolution to approve the Second Supplemental Deed, the Second Amendment of Terms and transactions contemplated thereunder; and (ii) the letter from Nuada Limited set out in pages 19 to 31 of this circular which contains its recommendations to the Independent Board Committee and the Independent Shareholders in respect of the Second Supplemental Deed, the Second Amendment of Terms and transactions contemplated thereunder and the principal factors and reasons considered by Nuada Limited in arriving at its recommendations.

Yours faithfully For and on behalf of the Board of CNC Holdings Limited Li Yong Sheng Vice-chairman & CEO

– 16 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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CNC HOLDINGS LIMITED 中國新華電視控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8356)

17 January 2018

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION AND PROPOSED SECOND AMENDMENT OF THE TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS

INTRODUCTION

We refer to the circular of the Company of even date (the ‘‘Circular’’), of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in the Circular.

We have been appointed by the Board to advise you on the terms of the Second Supplemental Deed, the Second Amendment of Terms and the transaction contemplated thereunder. Nuada Limited has been appointed as independent financial adviser to advise you and us in this regard. Details of their advice, together with the principal factors and reasons they have taken into consideration in giving such advice, are set out on pages 19 to 31 of the Circular. Your attention is also drawn to the letter from the Board in the Circular and the additional information set out in the appendix thereto.

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

RECOMMENDATION

Having considered the terms of the Second Supplemental Deed, the Second Amendment of Terms, the transactions contemplated thereunder and taking into account the independent advice of Nuada Limited and the relevant information contained in the letter from the Board, while the Second Amendment of Terms are not in the ordinary and usual course of business of the Group, we are of the opinion that the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder are fair and reasonable, on normal commercial terms, and in the interests of the Company and the Independent Shareholders as a whole.

Accordingly we recommend that you vote in favour of the ordinary resolution to be proposed at the EGM to approve the Second Supplemental Deed, the Second Amendment of Terms and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of

Independent Board Committee of CNC Holdings Limited Mr. Fan Chun Wah, Andrew Mr. Wu Guo Ming Mr. Kwok Man Wai

Mr. Wan Chi Keung, Aaron Mr. Wong Chung Yip, Kenneth Independent non-executive Directors

– 18 –

LETTER FORM NUADA LIMITED

The following is the text of a letter of advice to the Independent Board Committee and the Independent Shareholders from Nuada Limited dated 17 January 2018 prepared for the purpose of inclusion in this circular.

Unit 1805-08, 18/F OfficePlus @Sheung Wan 93-103 Wing Lok Street Sheung Wan, Hong Kong 香港上環永樂街93-103號 協成行上環中心18樓1805-08室

17 January 2018

To the Independent Board Committee and the Independent Shareholders of CNC Holdings Limited

Dear Sirs,

CONNECTED TRANSACTION PROPOSED SECOND AMENDMENT OF THE TERMS AND CONDITIONS OF THE CONVERTIBLE BONDS

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in connection with the proposed second amendment to the terms and conditions of the Convertible Bonds pursuant to the Second Supplemental Deed, details of which are set out in the section headed ‘‘Letter from the Board’’ (the ‘‘Board Letter’’) in the Company’s circular dated 17 January 2018 (the ‘‘Circular’’) to the Shareholders, of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

As stated in the Board Letter, on 13 December 2017, the Company entered into the Second Supplemental Deed with CNC HK, pursuant to which the Company and CNC HK agreed to amend terms and conditions of the Convertible Bonds. Pursuant to the Second Supplemental Deed, the maturity date of the Convertible Bonds will be extended to 9 December 2018 and the Conversion Period will accordingly be extended to 9 December 2018, subject to the conditions precedent contained in the Second Supplemental Deed being satisfied.

– 19 –

LETTER FORM NUADA LIMITED

As disclosed in the Board Letter, CNC HK is interested in 1,188,621,377 Shares, representing approximately 29.31% of the issued share capital of the Company as at the Latest Practicable Date. Accordingly, CNC HK is a substantial Shareholder and a connected person of the Company under Rule 20.07(1) of the GEM Listing Rules. As such, the Second Amendment of Terms as contemplated under the Second Supplemental Deed constitutes a connected transaction of the Company under the GEM Listing Rules. As the Second Amendment of Terms does not fall into any exemption under Rule 20.71 of the GEM Listing Rules, the Second Amendment of Terms is subject to the reporting, announcement and shareholders’ approval requirements of Chapter 20 of the GEM Listing Rules.

The Independent Board Committee, comprising all the independent non-executive Directors has been established to advise the Independent Shareholders as to the terms of the Second Supplemental Deed and the transactions contemplated thereunder. We, Nuada Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the independent Shareholders in this regard.

We are independent from, and are not connected with the Company, its substantial shareholder(s) or connected person(s) as defined under Rule 17.96 of the GEM Listing Rules, and accordingly are considered eligible to give independent advice in connection with the Second Supplemental Deed and the transactions contemplated thereunder. During the past two years immediately preceding and up to the date of our appointment as the Independent Financial Adviser, save for this appointment as the Independent Financial Adviser in respect of the terms of the Second Supplemental Deed and the transactions contemplated thereunder, there were no other engagements between the Group and Nuada Limited. Apart from normal professional fees for our services to the Company in connection this appointment as the Independent Financial Adviser, no other arrangement exists whereby we will receive any fees and/or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. Our appointment as the Independent Financial Adviser has been approved by the Independent Board Committee.

– 20 –

LETTER FORM NUADA LIMITED

BASIS OF THE OPINION

In formulating our opinion to the Independent Board Committee and the Independent Shareholders, we have relied on the accuracy of the statements, information, opinions and representations contained or referred to in the Circular and the information and representations provided to us by the Company, the Directors and the management of the Company. We have no reason to believe that any information and representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render the information provided and the representations made to us untrue, inaccurate or misleading. We have assumed that all information, representations and opinions contained or referred to in the Circular, which have been provided by the Company, the Directors and the management of the Company and for which they are solely and wholly responsible, were true and accurate at the time when they were made and continue to be true up to the Latest Practicable Date.

The Directors collectively and individually accept full responsibility, including particulars given in compliance with the GEM 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 the Circular are accurate and complete in all material respects and not misleading or deceptive, and there are no other facts the omission of which would make any statement in the Circular misleading.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, its subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the entering into of the Second Supplemental Deed and the transactions contemplated thereunder. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date.

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

– 21 –

LETTER FORM NUADA LIMITED

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Second Supplemental Deed and the transactions contemplated thereunder, we have considered the following principal factors and reasons:

1. Background information of the Convertible Bonds

As stated in the Board Letter, the Company entered into the Sale and Purchase Agreement with CNC HK, pursuant to which the Company issued certain Shares and the Convertible Bonds in the principal amount of HK$397,030,210 to CNC HK as the consideration of the acquisition of its interest in Xinhua TV Asia-Pacific Operating Co., Limited. The Convertible Bonds bears interest of 5% per annum and can be convertible into Shares. All outstanding Convertible Bonds was then expected to mature on 9 December 2014 pursuant to the original terms and conditions of the Convertible Bonds, while on 9 December 2014, the Company entered into the First Supplemental Deed with CNC HK, the sole holder of the outstanding convertible bonds with the then outstanding principal amount of HK$277,030,210 as at 9 December 2014, pursuant to which the maturity date of the Convertible Bonds was extended for 3 years to 9 December 2017 and the interest rate of the Convertible Bonds was amended from 5% per annum to 3% per annum for the extended period, being from 9 December 2014 to 9 December 2017.

As at the date of the First Supplemental Deed, a portion of the Convertible Bonds in the principal amount of HK$120,000,000 had been converted into 612,244,897 Shares, where a principal amount of HK$277,030,210 was then outstanding (the ‘‘Previous Conversion’’). As at the Latest Practicable Date, (i) as a further portion of the Convertible Bonds in the aggregate principal amount of HK$20,000,000 was converted subsequent to the date of the First Supplemental Deed, and taking into account the Previous Conversion, a total principal amount of HK$140,000,000 had been converted into 714,285,714 Shares; (ii) the Convertible Bonds with a principal amount of HK$257,030,210 was still outstanding; and (iii) as advised by the management of the Company, CNC HK has no intention to exercise the conversion rights of the Convertible Bonds.

2. The Second Amendment of Terms

As stated in the Board Letter, on 13 December 2017, the Company entered into the Second Supplemental Deed with CNC HK, pursuant to which the Company and CNC HK agreed to amend terms and conditions of the Convertible Bonds, where the maturity date of the Convertible Bonds will be extended to 9 December 2018 and the Conversion Period will accordingly be extended to 9 December 2018.

– 22 –

LETTER FORM NUADA LIMITED

Pursuant to the Second Supplemental Deed, the Second Amendment of Terms is subject to the satisfaction of the following conditions:

• (a) the passing by the Independent Shareholders at the EGM of the necessary resolutions to approve the Second Supplemental Deed and the Second Amendment of Terms;

• (b) the Stock Exchange having approved the Second Amendment of Terms pursuant to the GEM Listing Rules and the Listing Committee granting approval for the listing of, and permission to deal in, the Conversion Shares on the Stock Exchange and the approval not having been subsequently revoked or cancelled; and

• (c) all necessary consents and approvals required to be obtained on the part of the Company and CNC HK in respect of the Second Amendment of Terms having been obtained.

None of the above conditions could be waived by the parties to the Second Supplemental Deed.

As disclosed in the Board Letter, the Second Amendment of Terms is arrived at after arm’s length negotiation between the Company and CNC HK, considering the proposed amendment as a whole, the net asset value of the Company, the general market conditions and the trading price of the Shares as at the date of Second Supplemental Deed. Apart from the Second Amendment of Terms, all other terms of the Convertible Bonds will remain unchanged. Please refer to the subsection headed ‘‘Principal Terms and Conditions of the Convertible Bonds’’ in the Board Letter for the principal terms of the Convertible Bonds as amended pursuant to the Second Supplemental Deed.

3. Business overview of the Group

The Company is an investment holding company and the Shares of which are listed on the GEM Board of the Stock Exchange. According to the Board Letter, the Group is principally engaged in the provision of civil engineering services for the public sector in Hong Kong and television broadcasting business in the Asia-Pacific region (excluding the PRC) in return for advertising and related revenue.

The following table summarises the consolidated financial results of the Group for the two years ended 31 March 2016 (‘‘FY2016’’) and 2017 (‘‘FY2017’’), and the two six-month periods ended 30 September 2016 (‘‘FP2016’’) and 2017 (‘‘FP2017’’).

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LETTER FORM NUADA LIMITED

Summary of the consolidated financial results of the Group

	For the six months	For the six months	ended	For the year ended	For the year ended	For the year ended
	30 September			31 March
	2017		2016	2017		2016
	(unaudited)	(unaudited)		(audited)	(audited)
	HK$’000	HK$’000		HK$’000		HK$’000
Revenue	220,498	225,393		454,447		370,939
Gross profit/(loss)	26,135		2,761	(19,110)		68,651
Loss for the period/year	(24,038)	(35,276)		(104,527)		(46,443)
				As at		As at
			30 September 30 September
				2017		2016
			(unaudited)		(unaudited)
			HK$’000		HK$’000
Cash and cash equivalents				104,630		104,303
Net current (liabilities)/assets			(220,400)			75,723
Total assets				320,730		392,223
Total liabilities				445,440		423,668
(Net liabilities)			(124,710)			(31,445)

For FY2017

The revenue of the Group increased from approximately HK$370.9 million for FY2016 to approximately HK$454.4 million for FY2017, representing an increase of approximately 22.5%. According to annual report of the Company for FY2017 (the ‘‘Annual Report’’), the increase in revenue was mainly due to increase in work from some of the Group’s civil engineering projects. However, the Group recorded a gross loss of approximately HK$19.1 million for FY2017 as compared with a gross profit of approximately HK$68.7 million for FY2016. As disclosed in the Annual Report and according to the management of the Company, such change from gross profit to gross loss was largely due to (i) revenue recognition where large portion of revenue and gross margin derived from certain civil engineering projects has been recognised at the early stage in the prior years; (ii) the adoption of more competitive pricing strategy for newly tendered contracts in order to increase the opportunity of successful tendering in view of increasing competition from other contractors; and (iii) an increase in the cost of construction. Mainly resulted from such decrease in gross profit, the Group recorded a loss of approximately HK$104.5 million for FY2017 as compared with that of approximately HK$46.4 million for FY2016.

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LETTER FORM NUADA LIMITED

For FP2017

The revenue of the Group was approximately HK$220.5 million for FP2017, representing a slight decrease of approximately 2.2% as compared with that of approximately HK$225.4 million for FP2016. According to interim report of the Company for FP2017 (the ‘‘Interim Report’’), such decrease was mainly due to decrease in work from certain engineering projects of the Group reaching completion or maintenance stage. Nevertheless, the gross profit of the Group increase from approximately HK$2.8 million for FP2016 to approximately HK$26.1 million for FP2017, representing an increase of approximately 8.5 times. As disclosed in the Interim Report and according to the management of the Company, the increases of gross profit was largely due to cost control measures on certain construction projects, which had commanded better gross profit during FP2017. The Group recorded a loss of approximately HK$24.0 million for FP2017 as compared with that of approximately HK$35.3 million for FP2016, which was mainly due to the aforesaid increase in gross profit.

The Group’s cash and cash equivalents and net current liabilities amounted to approximately HK$104.6 million and HK$220.4 million respectively as at 30 September 2017. Total assets of the Group as at 30 September 2017 amounted to approximately HK$320.7 million whereas total liabilities of the Group as at 30 September 2017 amounted to approximately HK$445.4 million, resulting in a net liabilities of approximately HK$124.7 million.

Given that (i) according to the Board Letter, the outstanding principal amount of the Convertible Bonds was approximately HK$257.0 million as at the Latest Practicable Date; (ii) the bank balances and cash of the Group was approximately HK$104.6 million as at 30 September 2017 whereas the outstanding principal amount of the Convertible Bonds is HK$257,030,210; and (iii) the Group recorded losses in recent financial years/periods, we are of the view and concur with the view of the management of the Company that the Group has short term cashflow pressure to repay the outstanding amount of the Convertible Bonds on its original maturity date, i.e. 9 December 2017.

– 25 –

LETTER FORM NUADA LIMITED

4. Reasons for entering into the Second Supplemental Deed

The Convertible Bonds would be mature on 9 December 2017 under its original maturity date. As at the Latest Practicable Date, as advised by the management of the Company, CNC HK has no intention to exercise the conversion rights of the Convertible Bonds. The Second Amendment of Terms would therefore allow the Company to refinance its debts under the Convertible Bonds on the same terms for another year, and to provide flexibility to the Company’s working capital management and deployment of its financial resources to fund its operation.

The Board considers the Second Maturity Date Extension of the Convertible Bonds for a further year is fair and reasonable for the reasons that: (i) as disclosed in the Interim Report, the Group was in a net current liabilities position and net liabilities as at 30 September 2017 and hence has sought for financial support from CNC HK, which has confirmed to provide financial support to the Group in a reasonable manner under relevant laws and requirements, to maintain the going concern of the Company. CNC HK accordingly allowed the Company to extend the repayment for liabilities due to CNC HK to not earlier than 12 months commencing from 30 September 2017, including the Convertible Bonds, the interests payable for the Convertible Bonds and liabilities due to CNC HK in respect of annual fee for television broadcasting right, carriage fee payment and satellite transmission fee, if such repayment would cause the Company to be unable to settle its liabilities due to other parties when they fall due. Also, there may be capital requirements for the operation of the businesses of the Company in the near future. Hence, the Board expects that the Company will not have enough cash to redeem the Convertible Bonds in the next few months or within the forthcoming financial year; and (ii) the Second Maturity Date Extension would give reasonable time for the Group to improve its business performance and financial position. Thus, the Board considers that the Second Maturity Date Extension is in the best interests of the Company and the Shareholders as a whole.

Taking into account (i) the unsatisfactory financial results of the Group in recent periods as stated above; (ii) the insufficiency of internal resources of the Group as stated above; (iii) the analysis of the terms of the Convertible Bonds (as amended by the Second Supplemental Deed) as stated in the paragraph headed ‘‘5. Comparable Analysis’’ below; (iv) the lack of other fund-raising alternatives available to the Company based on the recent financial performance of the Group as stated in paragraph headed ‘‘6. Other fund-raising alternatives’’ below; and (v) the financial effect of the Second Amendment of Terms on the Group as stated in paragraph headed ‘‘7. Financial effect of the Proposed Amendments’’ below, we are of the view and concur with the view of the Board that the terms of the Second Supplemental Deed and the Convertible Bonds (as amended by the Second Supplemental Deed) are fair and reasonable, and the Second Amendment of the Terms are in the interests of the Company and the Shareholders as a whole.

– 26 –

LETTER FORM NUADA LIMITED

5. Comparable Analysis

In order to assess the fairness and reasonableness of the terms of the Convertible Bonds (as amended by the Second Supplemental Deed), we have searched for relevant convertible bonds/notes issued by other issuers listed on the Stock Exchange (the ‘‘Comparable(s)’’) as announced during the one-month period prior to and including 13 December 2017, being the date of the Second Supplemental Deed, and identified an exhaustive list of 19 Comparables. Notwithstanding the differences between the listed issuers of the Comparables and the Group in terms of business nature, financial performance, financial position as well as funding requirements, we consider that the Comparables can provide a general reference in relation to the terms of convertible bonds issued under recent market condition and sentiment. Also taking into account the sample size of 19 Comparables, we consider that the comparison period of one month is appropriate. Details of the Comparables are set out in the table below:

					Premium over/
	Date of initial	Stock			(discount) to the	Interest rate
No.	announcement	Code	Name of company	Principal amount	closing price	per annum
					(Note 1)
				(HK$ million)	(%)	(%)
1.	14 November 2017	1808	Enterprise Development	86.0	(18.5)	0.0
			Holdings Limited
2.	16 November 2017	6836	Tianyun International	70.2	12.9	6.0
			Holdings Limited
3.	17 November 2017	8078	HMV Digital China	150.0	9.6	8.0
			Group Limited
4.	17 November 2017	851	Sheng Yuan Holdings Limited	110.0	27.3	8.0
5.	19 November 2017	555	REXLot Holdings Limited	167.5	15.5	3.0
6.	23 November 2017	8086	DX.com Holdings Limited	100.0	(19.6)	2.5
7.	24 November 2017	1360	Mega Expo Holdings Limited	168.0	1.1	0.0
8.	28 November 2017	2700	Green International	41.0	0.0	0.0
			Holdings Limited
9.	28 November 2017	729	FDG Electric	100.0	32.9	8.0
			Vehicles Limited

– 27 –

LETTER FORM NUADA LIMITED

							Premium over/
	Date of initial	Stock					(discount) to the	Interest rate
No.	announcement	Code	Name of company			Principal amount	closing price	per annum
							(Note 1)
						(HK$ million)	(%)	(%)
10.	29 November 2017	2023	China Ludao Technology			37.8	(1.2)	0.0
			Company Limited
11.	29 November 2017	981	Semiconductor Manufacturing			507.0	17.9	2.0
			International Corporation
12.	30 November 2017	351	Asia Energy Logistics			100.0	14.9	5.5
			Group Limited
13.	4 December 2017	1269	China First Capital			800.0	(7.1)	7.00 and 8.00
			Group Limited					(Note 2)
14.	4 December 2017	445	China Fire Safety Enterprise			2,469.9	(20.4)	0.1
			Group Limited
15.	7 December 2017	1039	Fortunet E-Commerce			78.0	(9.8)	13.0
			Group Limited
16.	7 December 2017	1460	ICO Group Limited			119.2	(13.0)	0.0
17.	7 December 2017	377	Huajun Holdings Limited			30.0	1.5	10.0
18.	8 December 2017	8153	Code Agriculture			23.0	4.1	4.0
			(Holdings) Limited
19.	13 December 2017	377	Huajun Holdings Limited			218.0	13.3	10.0
						Mean	3.2	4.6
				Maximum/highest premium			32.9	13.0
					Minimum/highest discount		(20.4)	0.0
	13 December 2017	8356	The Company			257.0	216.1	3.0

Source: The official website of the Stock Exchange (www.hkex.com.hk)

– 28 –

LETTER FORM NUADA LIMITED

Notes:

1. Each of the premiums/discounts is calculated based on (i) the conversion price of the Comparable; and (ii) the closing price of the relevant share on the last trading date as disclosed in the relevant announcement.

2. These convertible bonds shall bear interest on the outstanding principal amount thereof from and including the date of issue up to and including the second anniversary of the issue date at the rate of (a) 7% per annum for the period from and including the date of issue up to and excluding the first anniversary of the date of issue; and (b) 8% per annum for the period from the first anniversary of the date of issue up to and including the date of maturity. For the purpose of calculating the average interest rate of the Comparables, an interest rate of 7% is adopted.

(a) Conversion price

The conversion prices of the Comparables severally represent from a discount of approximately 20.4% to a premium of approximately 32.9%, with an average premium of approximately 3.2%. The conversion price per Conversion Share of HK$0.196 represents a premium of approximately 216.1% over the closing price per Share on the date of the Second Supplemental Deed, which is above the average and maximum premium represented by the Comparables.

(b) Interest rate

The interest rates of the Comparables range from nil to 13.0%, with an average interest rate of approximately 4.6%. The interest rate of 3% per annum of the Convertible Bonds for the extended period is below the average interest rate represented by the Comparables.

(c) Conclusion

Based on the above analysis of the Comparables, we consider that the principal terms of the Convertible Bonds (as amended by the Second Supplemental Deed) are in line with market practice.

Having considered the reasons for and benefits of the Second Amendment of Terms as stated above, including (i) the unsatisfactory financial results of the Group in recent periods; (ii) the insufficiency of internal resources of the Group; and (iii) the lack of other fund-raising alternatives available to the Company based on the recent financial performance of the Group as stated in paragraph headed ‘‘6. Other fundraising alternatives’’ below, we are of the view and concur with the view of the management of the Company that the terms of the Second Supplemental Deed and Convertible Bonds (as amended by the Second Supplemental Deed) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 29 –

LETTER FORM NUADA LIMITED

6. Other fund-raising alternatives

As discussed with the management of the Company, we note that the Board has considered other alternative means of fund raising before entering into the Second Supplemental Deed. However, debt financing may be subject to lengthy due diligence and negotiations with banks and, like the Convertible Bonds, would also incur interest burden to the Group. Also, in view of the unsatisfactory financial performance of the Group mentioned above, particularly the net loss for recent financial years and the net liabilities position of the Group, the Board considers that the Company may have difficulties in (a) obtaining bank borrowing; or (b) procuring placing agent for placing of new Shares and/or underwriters for rights issue or open offer of the Company.

In view of the above and our comparable analysis in respect of the term of the Convertible Bonds (as amended by the Second Supplemental Deed), we are of the view and concur with the view of the management of the Company that the entering of the Second Supplemental Deed would be the best financing alternative available to the Company.

7. Financial effect of the Second Amendment of Terms

Pursuant to the Second Supplemental Deed, the Convertible Bonds will bear an interest of 3% per annum on the outstanding principal amount thereof (i.e. HK$257,030,210 as at the Latest Practicable Date) for the extended period. Notwithstanding the finance cost associated with the Convertible Bonds as a result of the Second Amendment of Terms, having considered that (i) the Second Amendment of Terms allow the Group to retain financial resources for its operation; (ii) the unfavourable financial position of the Group pose difficulties in obtaining bank borrowing and procuring securities firms for equity fund raising such as placing, rights issue and/or open offer, in addition to costs associated with such fund raising alternatives; and (iii) the terms of the Second Supplemental Deed (including the interest rate) is fair and reasonable, we consider that the finance cost is justifiable.

– 30 –

LETTER FORM NUADA LIMITED

RECOMMENDATION

Although the entering of the Second Supplemental Deed is not in the ordinary and usual course of business of the Group, taking into account the above principal factors and reasons considered, we are of the opinion that the entering of the Second Supplemental Deed and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Therefore, we recommend (i) the Independent Board Committee to advise the Independent Shareholders; and (ii) the Independent Shareholders to vote in favour of the ordinary resolution in relation to the Second Supplemental Deed and the transactions contemplated thereunder to be presented at the EGM.

Yours faithfully, For and on behalf of Nuada Limited

Po Chan Kevin Wong Executive Director Vice President

Ms. Po Chan is a person licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO and is a responsible officer of Nuada Limited who has over 15 years of experience in corporate finance industry.

Mr. Kevin Wong is a person licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and is a responsible officer of Nuada Limited who has over 13 years of experience in corporate finance industry.

– 31 –

GENERAL INFORMATION

APPENDIX I

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM 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 concerned in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required 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 (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to Rule 5.46 to Rule 5.67 of the GEM Listing Rules, were as follows:

Long position in the Shares:

			Percentage
			of aggregate
			interests to
	Capacity/Nature	Number of	total issued
Name	of interest	Shares held	share capital
Mr. Kan Kwok Cheung	Interest in controlled	69,000,000	1.70%
(Note)	corporation

Note:

Mr. Kan Kwok Cheung is the sole beneficial owner of Shunleetat (BVI) Limited, which was interested in 69,000,000 Shares. Under the SFO, Mr. Kan Kwok Cheung is deemed to be interested in all the Shares held by Shunleetat (BVI) Limited.

– 32 –

GENERAL INFORMATION

APPENDIX I

Save as disclosed above, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required 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 (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to Rule 5.46 to Rule 5.67 of the GEM Listing Rules.

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long position in the Shares:

Name CNC HK CNC China	Number of Shares held Beneficial owner Interest in controlled corporation 1,188,621,377 (Note b) – – 1,188,621,377 (Note b)	Number of underlying Shares under Convertible Bonds (Note a) Total interests Percentage of aggregate interests to total issued share capital Beneficial owner Interest in controlled corporation 1,311,378,623 (Note b) – 2,500,000,000 61.65% – 1,311,378,623 (Note b) 2,500,000,000 61.65%

Notes:

• (a) Details of the Convertible Bonds were set out on pages 7 to 10 of this circular.

(b) CNC HK is wholly and beneficially owned by CNC China. Accordingly, CNC China is deemed to be interested in the 1,188,621,377 Shares and 1,311,378,623 underlying Shares held by CNC HK under the SFO.

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APPENDIX I

GENERAL INFORMATION

As at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares, which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any member of the Group.

(c) Directorship in and employment with substantial Shareholders

Set out below are particulars of the Directors’ directorship in or employment with companies which have interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO:

		Name of
Name of Director	Position	substantial Shareholder
Jiang Yan	Director	CNC HK
		CNC China
Li Yong Sheng	Director	CNC HK
Liu Da Yong	Deputy director of	CNC China
	administration
	department
	Director	CNC HK
Tang Li	Deputy director of financial	CNC China
	assets department
	Director	CNC HK
Kan Kwok Cheung	Director	Shunleetat (BVI) Limited

Save as disclosed above, none of the Directors is a director or employee of a company which has an interest or short position in the Shares and underlying Shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– 34 –

GENERAL INFORMATION

APPENDIX I

3. DIRECTORS’ SERVICE CONTRACTS

Each of the executive Directors has entered into a service contract with the Company for an initial fixed term of three years subject to retirement by rotation and re-election at the annual general meeting pursuant to the articles of association of the Company. The appointment of executive Directors will continue thereafter until terminated by either party giving not less than three months’ prior written notice to the other or the payment of three month salary in lieu of notice.

Each of the non-executive Directors were appointed for a specific term of three years subject to retirement by rotation and re-election at the annual general meeting pursuant to the articles of association of the Company. The appointment of non-executive Directors will continue thereafter until terminated by either party giving not less than three months’ prior written notice to the other or the payment of three month salary in lieu of notice.

Each of the independent non-executive Directors were appointed for a specific term of three years, subject to retirement by rotation and re-election at the annual general meeting pursuant to the articles of association of the Company. The appointment of independent non-executive Directors will continue thereafter until terminated by either party giving not less than three months’ prior written notice to the other or the payment of three month salary in lieu of notice.

As at the Latest Practicable Date, none of the Directors has a service contract with any member of the Group which is not determinable by the relevant employer within one year without payment of compensation, other than statutory compensation.

4. DIRECTORS’ INTERESTS IN CONTRACT OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors was:

• (a) materially interested in any contract or arrangement entered into by any member of the Group which was subsisting at the date of this circular, and which was significant in relation to the business of the Group; or

• (b) had any direct or indirect interest in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 March 2017, being the date to which the latest published audited financial statements of the Group were made up.

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GENERAL INFORMATION

APPENDIX I

5. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors, controlling shareholders of the Company and their respective close associates was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group.

6. EXPERT

The following is the qualification of the expert who has given opinions or advice which are contained in this circular:

Name Qualifications

Nuada Limited A licensed corporation to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities pursuant to the SFO

Nuada Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter and report and references to its name in the form and context in which it appears. The letter of Nuada Limited is given as of the date of the circular for incorporation herein.

As at the Latest Practicable Date, Nuada Limited does not have any shareholding in any member of the Group or 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, as at the Latest Practicable Date, Nuada Limited does not have any direct or indirect interest in any assets which had been since 31 March 2017, the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Group.

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GENERAL INFORMATION

APPENDIX I

7. MATERIAL ADVERSE CHANGE

As disclosed in the interim results announcement of the Company dated 8 December 2017 for the six months ended 30 September 2017, (i) the Group reported a decrease of approximately 2.2% in revenue for the six months ended 30 September 2017 as compared with that for the same period of the previous year, which was mainly due to the fact that increase in work from civil engineering projects with contract number CV/2015/03 was offset by decrease in work from certain engineering projects reaching completion or maintenance stage; (ii) the Group incurred a net loss of approximately HK$24,038,000 during the same period and, as of 30 September 2017, the Group had net current liabilities and net liabilities of approximately HK$220,400,000 and HK$124,710,000 respectively; and (iii) as at 30 September 2017, the promissory note issued by the Group in principal amount of approximately HK$45,040,000 was overdue but the Group had not been able to obtain extension of repayment of such balance. Such promissory note was extended in December 2017 and is outstanding and the Convertible Bonds remained overdue as at the Latest Practicable Date.

Save as disclosed above and in this circular, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2017, being the date to which the latest published audited financial statements of the Group was made up.

8. MISCELLANEOUS

The English texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts for the purpose of interpretation.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours at the office of the Company at Suites 2708-2710, 27/F., Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong, during 10:00 a.m. to 4:00 p.m. on any Business Day from the date of this circular up to and including the date of the EGM, being not less than 14 days:

• (a) the memorandum and articles of association of the Company;

• (b) the annual reports of the Company for each of the two financial years ended 31 March 2016 and 31 March 2017;

• (c) First Supplemental Deed;

• (d) Second Supplemental Deed;

• (e) Sale and Purchase Agreement;

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GENERAL INFORMATION

APPENDIX I

• (f) the written consent of the expert referred to in the paragraph headed ‘‘Expert’’ in this Appendix;

• (g) the letter from the Independent Board Committee, the text of which is set out on pages 17 to 18 in this circular;

• (h) the letter of advice from Nuada Limited to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 19 to 31 in this circular; and

• (i) this circular.

– 38 –

PARTICULARS OF DIRECTORS FOR RE-ELECTION

APPENDIX II

Detail of the Directors who will retire from office at the EGM and being eligible, will offer themselves for re-election at the EGM, are set out below:

(1) DR. JIANG YAN (‘‘DR. JIANG’’)

Dr. Jiang Yan, aged 49, obtained a Doctorate of philosophy in Science from University of Science and Technology of China（中國科學技術大學）in 2003. Dr. Jiang joined Xinhua News Agency after his graduation from university in 1990 and held the positions of the deputy officer and the officer of Scientific Editorial Office of International Department of Xinhua News Agency（新華社國際部科技編輯室副主任及主任）. He had been the vice-president of Xinhua News Agency European Regional Bureau（新華社歐洲總分社副社長）since 2009, and had been re-designated as the deputy officer of International Department of Xinhua News Agency（新華社 國際部副主任）from 2015 to 2017. Dr. Jiang is currently the chairman of the board and the chief executive officer of CNC China. Apart from the positions held in Xinhua News Agency, Dr. Jiang took a temporary post as the deputy general secretary of Cheng Jiang County of Yun Nan Province of the PRC（雲南澄江縣中共縣委副書記）. He had also held the positions as the Deputy Secretary of Chinese Society for Science and Technology Journalism（中國科技新聞學 會副秘書長）and the Secretary of The Beijing Press Association – Science Field（北京科技記協 秘書長）, and was a member of the International Journalists Alliance – Science Field*（世界科技 記者聯盟）. As at the Latest Practicable Date, Dr. Jiang is a director of both CNC HK and CNC China.

As at the Latest Practicable Date, the Company has entered into a service contract with Dr. Jiang for an initial term of three years and subject to rotation and re-election pursuant to the GEM Listing Rules and the Articles of Association of the Company. Dr. Jiang is entitled to an annual salary of HK$12,000 and he is eligible for a discretionary bonus which will be determined by the Board with reference to the duties and responsibilities of Dr. Jiang in the Company and the prevailing market conditions.

As at the Latest Practicable Date, save as disclosed above, Dr. Jiang (i) does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company; (ii) does not have and is not deemed to have any interest in the shares of the Company within the meaning of Part XV of the SFO; (iii) has not held any other directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; and (iv) does not hold any other positions in the Group.

Save as otherwise disclosed above, Dr. Jiang has confirmed that there is no information which should be brought to the attention of the Shareholders in connection with his appointment as an executive Director and there is no other information that should be disclosed pursuant to any of the requirements in Rule 17.50(2)(h) to (v) of the GEM Listing Rules.

– 39 –

PARTICULARS OF DIRECTORS FOR RE-ELECTION

APPENDIX II

(2) MR. LIU DA YONG (‘‘MR. LIU’’)

Mr. Liu Da Yong, aged 43, obtained a Bachelor degree of Law in Armed Police College in 2007. Mr. Liu joined Xinhua News Agency in 2005 and held the positions of assistant editor of Xinhua News Agency Audio News Desk（新華音像中心）and the legal specialist of Xinhua News Agency Audio and Video News Desk（新華社音視頻部）from 2005 to 2010. Mr. Liu was the head of the legal department of CNC China from 2013 to 2017. He is currently the Deputy Director of Administration Department of CNC China. As at the Latest Practicable Date, Mr. Liu is a deputy director of administration department of CNC China and a director of CNC HK.

As at the Latest Practicable Date, the Company has entered into a service contract with Mr. Liu for an initial term of three years and subject to rotation and re-election pursuant to the GEM Listing Rules and the Articles of Association of the Company. Mr. Liu is entitled to an annual salary of HK$12,000 and he is eligible for a discretionary bonus which will be determined by the Board with reference to the duties and responsibilities of Mr. Liu in the Company and the prevailing market conditions.

As at the Latest Practicable Date, save as disclosed above, Mr. Liu (i) does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company; (ii) does not have and is not deemed to have any interest in the shares of the Company within the meaning of Part XV of the SFO; (iii) has not held any other directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; and (iv) does not hold any other positions in the Group.

Save as otherwise disclosed above, Mr. Liu has confirmed that there is no information which should be brought to the attention of the Shareholders in connection with his appointment as an executive Director and there is no other information that should be disclosed pursuant to any of the requirements in Rule 17.50(2)(h) to (v) of the GEM Listing Rules.

(3) MS. TANG LI (‘‘MS. TANG’’)

Ms. Tang Li, aged 40, obtained a master of business administration in executive management degree in Royal Roads University in 2010. Ms. Tang joined Xinhua News Agency in 2009 and held the positions of accountant of Xinhua News Agency Audio News Desk（新華 音像中心）and was re-designated as the accountant of Xinhua News Agency Audio and Video News Desk（新華社音視頻部）in 2010. She was the Planning and Finance Director of CNC China from 2013 to 2017. She is currently the Deputy Director of Financial Assets Department of CNC China. As at the Latest Practicable Date, Ms. Tang is a deputy director of financial assets department of CNC China and a director of CNC HK.

– 40 –

PARTICULARS OF DIRECTORS FOR RE-ELECTION

APPENDIX II

As at the Latest Practicable Date, there is no service contract between the Company and Ms. Tang. The appointment of Ms. Tang is for a term of three years and is subject to rotation and reelection pursuant to the GEM Listing Rules and the Articles of Association of the Company. She is entitled to an annual director’s fee of HK$12,000.

As at the Latest Practicable Date, save as disclose above, Ms. Tang (i) does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company; (ii) does not have and is not deemed to have any interest in the shares of the Company within the meaning of Part XV of the SFO; (iii) has not held any other directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; and (iv) does not hold any other positions in the Group.

Save as otherwise disclosed above, Ms. Tang has confirmed that there is no information which should be brought to the attention of the Shareholders in connection with her appointment as a non-executive Director and there is no other information that should be disclosed pursuant to any of the requirements in Rule 17.50(2)(h) to (v) of the GEM Listing Rules.

(4) MR. LAW CHEUK HUNG (‘‘MR. LAW’’)

Mr. Law Cheuk Hung, aged 60, has been the administration manager of Tsun Yip Waterworks Construction Company Limited (‘‘TYW’’) and Tsun Yip Civil Construction Company Limited (‘‘TYC’’) since December 2012 and further been appointed as a director of TYW and TYC since November 2015. Mr. Law is experienced in office administration and tender estimate relating to construction projects and has over 34 years of experience in civil construction works for various companies prior to joining the Group. Mr. Law obtained a diploma in civil engineering and a higher certificate in civil engineering from The Hong Kong Polytechnic University (formerly known as Hong Kong Polytechnic) in 1978 and 1980 respectively.

As at the Latest Practicable Date, there is no service contract between the Company and Mr. Law. The appointment of Mr. Law is for a term of three years and is subject to rotation and reelection pursuant to the GEM Listing Rules and the Articles of Association of the Company. He is entitled to an annual director’s fee of HK$12,000.

As at the Latest Practicable Date, save as disclosed above, Mr. Law (i) does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company; (ii) does not have and is not deemed to have any interest in the shares of the Company within the meaning of Part XV of the SFO; (iii) has not held any other directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; and (iv) does not hold any other positions in the Group.

– 41 –

PARTICULARS OF DIRECTORS FOR RE-ELECTION

APPENDIX II

Save as otherwise disclosed above, Mr. Law has confirmed that there is no information which should be brought to the attention of the Shareholders in connection with his appointment as a non-executive Director and there is no other information that should be disclosed pursuant to any of the requirements in Rule 17.50(2)(h) to (v) of the GEM Listing Rules.

(5) MR. FAN CHUN WAH, ANDREW, JP (‘‘MR. FAN’’)

Mr. Fan Chun Wah, Andrew, JP, aged 39, is a practising certified public accountant in Hong Kong with over 11 years of experience and was appointed as a Justice of the Peace (JP) in 2016. He obtained a bachelor degree of business administration (accounting and finance) from The University of Hong Kong and a bachelor degree in laws from the University of London. He is a practising Certified Public Accountant under the name of C. W. Fan & Co. Prior to which, he served as the Vice President of Citigroup in Hong Kong. Mr. Fan is a member of the Association of Chartered Certified Accountants in the United Kingdom and a member of the Hong Kong Institute of Certified Public Accountants. He is also a committee member of the tenth and eleventh Chinese People’s Political Consultative Conference of the Zhejiang Province and a committee member of the fourth and fifth Chinese People’s Political Consultative Conference of Shenzhen of Guangdong Province, the vice chairman of the United Young Association of Zhejiang Province*（浙江省青年聯合會副主席）, the 23rd chairman of the Hong Kong United Youth Association and the vice chairman of the Hong Kong CPPCC Youth Association.

Mr. Fan is an independent non-executive director of Chuang’s China Investments Limited (Stock Code: 298), Sinomax Group Limited (Stock Code: 1418), Fulum Group Holdings Limited (Stock Code: 1443), Culturecom Holdings Limited (Stock Code: 343) and Nameson Holdings Limited (Stock Code: 1982), the shares of these five companies are listed on the Main Board of the Stock Exchange. Mr. Fan is an independent non-executive director of Omnibridge Holdings Limited (Stock Code: 8462) and Sanbase Corporation Limited (Stock Code: 8501), the shares of these two companies are listed on the GEM of the Stock Exchange. Mr. Fan was an independent non-executive director of Hong Kong Resources Holdings Company Limited (Stock Code: 2882) from August 2015 to May 2017, LT Commercial Real Estate Limited (Stock Code: 112) from March 2013 to December 2016, On Real International Holdings Limited (Stock Code: 8245) from September 2015 to August 2016 and Milan Station Holdings Limited (Stock Code: 1150) from March 2013 to July 2015 respectively.

As at the Latest Practicable Date, there is no service contract between the Company and Mr. Fan. The appointment of Mr. Fan is for a term of three years and is subject to rotation and reelection pursuant to the GEM Listing Rules and the Articles of Association of the Company. He is entitled to an annual director’s fee of HK$144,000.

– 42 –

APPENDIX II

PARTICULARS OF DIRECTORS FOR RE-ELECTION

As at the Latest Practicable Date, save as disclosed above, Mr. Fan (i) does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company; (ii) does not have and is not deemed to have any interest in the shares of the Company within the meaning of Part XV of the SFO; (iii) has not held any other directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; and (iv) does not hold any other positions in the Group.

Save as otherwise disclosed above, Mr. Fan has confirmed that there is no information which should be brought to the attention of the Shareholders in connection with his appointment as an independent non-executive Director and there is no other information that should be disclosed pursuant to any of the requirements in Rule 17.50(2)(h) to (v) of the GEM Listing Rules.

(6) MR. WU GUO MING (‘‘MR. WU’’)

Mr. Wu Guo Ming, aged 54, holds two master degrees and has over 17 years of experience in enterprise management, investment, project operations and capital market operations. Mr. Wu was awarded the qualification of State Senior Corporate Culture Lecturer（國家高級企業文化 師）in 2014 and obtained the required qualification to work in the fund management sectors（基金 從業資格）in 2016. He obtained a bachelor degree of Mathematics from South China Normal University in 1983, a degree of master of Education from South China Normal University in 1988 and a degree of master of Business Administration from Indiana University of Pennsylvania in 1993. Mr. Wu is currently the deputy general manager of Guangdong Ande Investment Company Limited（廣東安德投資有限公司）. Mr. Wu also served as the director and deputy general manager of Guangdong Zhujiang Investment Company Limited（廣東珠江投資股份有限公司） from 2002 to 2003 and as the chairman and president of Guangdong Yingtong Network Investment Company Limited（廣東盈通網路投資有限公司）between 2003 and 2015.

As at the Latest Practicable Date, there is no service contract between the Company and Mr. Wu. The appointment of Mr. Wu is for a term of three years and is subject to rotation and reelection pursuant to the GEM Listing Rules and the Articles of Association of the Company. He is entitled to an annual director’s fee of HK$144,000.

– 43 –

PARTICULARS OF DIRECTORS FOR RE-ELECTION

APPENDIX II

As at the Latest Practicable Date, Mr. Wu (i) does not have any relationship with any Directors, senior management, substantial shareholders or controlling shareholders of the Company; (ii) does not have and is not deemed to have any interest in the shares of the Company within the meaning of Part XV of the SFO; (iii) has not held any other directorship in any other public companies the securities of which are listed on any securities market in Hong Kong or overseas in the past three years; and (iv) does not hold any other positions in the Group.

Save as otherwise disclosed above, Mr. Wu has confirmed that there is no information which should be brought to the attention of the Shareholders in connection with his appointment as an independent non-executive Director and there is no other information that should be disclosed pursuant to any of the requirements in Rule 17.50(2)(h) to (v) of the GEM Listing Rules.

Save as disclosed herein, there is no other matter that needs to be brought to the attention of the Shareholders.

• for identification purpose only

– 44 –

NOTICE OF EGM

==> picture [62 x 63] intentionally omitted <==

CNC HOLDINGS LIMITED 中國新華電視控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8356)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (‘‘EGM’’) of CNC Holdings Limited (the ‘‘Company’’) will be held at Suites 2708-2710, 27/F., Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong on Tuesday, 6 February 2018 at 10:00 a.m., for the purpose of considering and, if though fit, passing the following resolutions:

ORDINARY RESOLUTIONS

1. ‘‘THAT:

2. (a) the supplemental deed dated 13 December 2017 (‘‘Second Supplemental Deed’’) entered into between the Company and a holder of the redeemable convertible bonds issued by the Company on 9 December 2011 in an outstanding principal amount of HK$257,030,210 (the ‘‘Convertible Bonds’’) (a copy of the Supplemental Deed having been produced to the EGM and marked ‘‘A’’ and initialled by the chairman of the EGM for the purpose of identification) in relation to the proposed amendments of terms and conditions of the Convertible Bonds, in relation to the proposed extension of maturity date of the Convertible Bonds to 9 December 2018 pursuant to the Second Supplemental Deed and all transactions contemplated thereunder, be and are hereby approved, confirmed and ratified;

3. (b) Subject to The Stock Exchange of Hong Kong Limited consenting to the alternation to the terms and conditions of the Convertible Bonds, the directors (each a ‘‘Director‘‘ and collectively the ‘‘Directors‘‘）of the Company be and are hereby authorised to exercise all the powers of the Company and take all steps as might in their opinion be desirable, necessary or expedient to give effect to or in connection with the Second Supplemental Deed including without limitation to:

– 45 –

NOTICE OF EGM

  - (a) the execution, amendment, ratification, delivery, submission and/or implementation of any further documents or agreements in relation to the Second Supplemental Deed; and

  - (b) the taking of all necessary actions to implement the transactions contemplated under the Second Supplemental Deed.’’

1. (a) to re-elect Dr. Jiang Yan as executive Director;

2. (b) to re-elect Mr. Liu Da Yong as executive Director;

3. (c) to re-elect Ms. Tang Li as non-executive Director;

4. (d) to re-elect Mr. Law Cheuk Hung as non-executive Director;

5. (e) to re-elect Mr. Fan Chun Wah, Andrew, JP, as independent non-executive Director; and

6. (f) to re-elect Mr. Wu Guo Ming as independent non-executive Director.

Yours faithfully For and on behalf of the Board of CNC Holdings Limited Li Yong Sheng Vice Chairman & CEO

Hong Kong, 17 January 2018

Registered office: Head office and principal place of Cricket Square business in Hong Kong: Hutchins Drive Suites 2708-2710 PO Box 2681 27/F., Everbright Centre Grand Cayman 108 Gloucester Road KY1-1111 Wanchai Cayman Islands Hong Kong

Notes:

(1) The register of members of the Company will be closed from Wednesday, 31 January 2018 to Tuesday, 6 February 2018, both days inclusive, during which period no transfer of shares will be registered. In order to be eligible to attend and vote at the EGM, all completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar and transfer office in Hong Kong, Tricor Investor Services Limited at level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 30 January 2018.

– 46 –

NOTICE OF EGM

• (2) In relation to the proposed resolution no. 2 above, details of the retiring Directors standing for re-election are set out in Appendix II to this circular.

• (3) A member entitled to attend and vote at the EGM is entitled to appoint one or more proxy to attend and, subject to the provisions of the articles of association of the Company, to vote on his/her/its behalf. A proxy need not be a member of the Company but must be present in person at the EGM to represent the member. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.

• (4) A form of proxy for use at the EGM is enclosed with the circular of the Company dated 17 January 2018. Whether or not you intend to attend the EGM in person, you are encouraged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon. Completion and return of a form of proxy will not preclude a member from attending in person and voting at the EGM or any adjournment thereof, should he/she/it so wish.

• (5) In order to be valid, the form of proxy, together with a power of attorney or other authority, if any, under which it is signed, or a certified copy of such power or authority 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, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the EGM or any adjournment thereof.

• (6) In the case of joint holders of shares, any one of such joint holders may vote at the EGM, either in person or by proxy, in respect of such share as if he/she/it was solely entitled thereto, but if more than one of such joint holders are present at the EGM personally or by proxy, that one of the said persons so present whose name stands first on the register of members of the Company in respect of such shares shall alone be entitled to vote in respect thereof.

• (7) Any voting at the EGM shall be taken by poll.

– 47 –