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 stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Universal Technologies Holdings Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was affected for transmission to the purchaser or transferee.

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

This circular appears for information only and does not constitute an invitation or offer to Shareholders or any other persons to acquire, purchase or subscribe for securities of the Company.

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

(I) MAJOR AND CONNECTED TRANSACTION INVOLVING THE PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY; (II) PROPOSED RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE;

(III) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; (IV) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND

(V) NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

==> picture [32 x 35] intentionally omitted <==

普頓資本有限公司 PROTON CAPITAL LIMITED

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

Terms used in this cover shall have the same meanings as defined in this circular.

It should be noted that the Shares will be dealt in on an ex-entitlement basis from Friday, 12 April 2019. Dealings in the Rights Shares in their nil-paid form will take place from Monday, 29 April 2019 to Tuesday, 7 May 2019 (both dates inclusive). If the conditions of the Rights Issue are not fulfilled or waived (as applicable) on Tuesday, 21 May 2019 (or such later time as the Company may determine), the Rights Issue will not proceed. Any persons contemplating dealings in the Shares prior to the date on which the conditions of the Rights Issue are fulfilled or waived (as applicable), and/or dealings in the nil-paid Rights Shares, are accordingly subject to the risk that the Rights Issue may not become unconditional or may not proceed.

A letter from the Board is set out on pages 10 to 45 of this circular.

A letter from the Independent Financial Adviser is set out on pages 48 to 74 of this circular.

A notice convening the EGM to be held at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong on Wednesday, 10 April 2019 at 11:00 a.m. is set out on pages EGM-1 to EGM-4 of this circular. Whether or not you are able to attend the EGM in person, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar and transfer office in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not later than 48 hours before the time appointed for the holding of the EGM or any adjourned meeting thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or at any adjourned meeting thereof if you so wish and, in such event, the relevant form of proxy shall be deemed to be revoked.

The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares and is subject to the fulfilment of conditions (including the Minimum Proceeds Condition). Please refer to the section headed “Conditions of the Rights Issue” in this circular. Shareholders and potential investors of the Company should note that: (a) if the conditions to the Rights Issue are not satisfied, the Rights Issue will not proceed; and (b) the Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event the Rights Issue is not fully subscribed, any Rights Shares not taken up by the Qualifying Shareholders or transferees of nil-paid Rights Shares will not be issued by the Company and the size of the Rights Issue will be reduced accordingly.

22 March 2019

CONTENT

		Page
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
Definitions . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the	Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the	Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . .	46
Letter from the	Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . .	48
Appendix IA –	Financial Information of the Group . . . . . . . . . . . . . . . . . . . .	IA-1
Appendix IB –	Unaudited Pro Forma Statement of
	Adjusted Consolidated Net Tangible
	Assets of the Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IB-1
Appendix IIA –	Financial Information of the Target Company . . . . . . . . . . . .	IIA-1
Appendix IIB –	Unaudited Financial Information relating
	to the Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	IIB-1
Appendix III –	Unaudited Pro Forma Financial Information of
	the Enlarged Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Appendix IV –	Valuation Report on the Properties . . . . . . . . . . . . . . . . . . . . .	IV-1
Appendix V –	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	V-1
Notice of EGM	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

– i –

EXPECTED TIMETABLE

The expected timetable for the Rights Issue and the Placing set out below is for indicative purposes only and it has been prepared on the assumption that all the conditions of the Rights Issue and the Placing will be fulfilled.

Events

2019

Expected dispatch date of the circular, proxy form and
notice of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 22 March
Latest time for lodging transfer of Shares to qualify for
attendance and voting at the EGM . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Tuesday, 2 April
Closure of register of members of the Company for
determining entitlements to attend and vote
at the EGM (both dates inclusive) . . . . . . . . . . . . . . . . . . . . From Wednesday, 3 April to
Wednesday, 10 April
Latest time for lodging forms of proxy for
the purpose of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . 11:00 a.m. on Monday, 8 April
Expected date and time of the EGM . . . . . . . . . . . . . . . 11:00 a.m. on Wednesday, 10 April
Announcement of results of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 10 April
Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . Thursday, 11 April
Last day of dealings in the Shares on a cum-rights basis
relating to the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 11 April
Commencement of dealings in the Shares on
an ex-rights basis relating to the Rights Issue . . . . . . . . . . . 9:00 a.m. on Friday, 12 April
Latest time for the Shareholders to lodge transfer of Shares
in order to qualify for the Rights Issue . . . . . . . . . . . . . . 4:30 p.m. on Monday, 15 April
Closure of register of members of the Company for
determination of entitlements to the Rights Issue
(both dates inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . From Tuesday, 16 April to
Wednesday, 24 April
Record Date for determining entitlements to the Rights Issue . . . . . . . Wednesday, 24 April
Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . Thursday, 25 April
Expected dispatch date of the Prospectus Documents . . . . . . . . . . . . . . . Thursday, 25 April
First day of dealings in nil-paid Rights Shares . . . . . . . . . . . 9:00 a.m. on Monday, 29 April
Latest time for splitting nil-paid Rights Shares . . . . . . . . . . . 4:30 p.m. on Thursday, 2 May

– ii –

EXPECTED TIMETABLE

Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . 4:00 p.m. on Tuesday, 7 May Latest time for acceptance and payment for Rights Shares and application for excess Rights Shares . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 10 May
(If there is any Untaken Shares available under the Rights Issue) Placing period commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 14 May
Placing period ends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 16 May Long stop date for the Placing and latest time for the Rights Issue to become unconditional . . . . . . . . . . . . . 6:00 p.m. on Tuesday, 21 May
Placing Completion and the simultaneous allotment of the Rights Shares and the Placing Shares . . . . . . . . . . . . . . . . . . . . . Wednesday, 22 May
Announcement of the allotment results of the Rights Issue and the Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 22 May
Refund cheques, if any, to be dispatched (if the Rights Issue does not become unconditional and in respect of unsuccessful or partially successful application for excess Rights Shares) on or before . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 23 May
Certificates for fully paid Rights Shares to be dispatched on or before (if the Rights Issue becomes unconditional) . . . . . . . . . . . Thursday, 23 May
Commencement of dealings in fully-paid Rights Shares and, if applicable, the Placing Shares . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 24 May

All times and dates in this circular refer to Hong Kong local times and dates. Dates or deadlines specified in the expected timetable above or in other parts of this circular are indicative only and may be extended or varied. Any changes to the expected timetable will be published or notified to the Shareholders and the Stock Exchange as and when appropriate in accordance with the Listing Rules.

– iii –

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

The latest time for acceptance of and payment for the Rights Shares and application and payment for excess Rights Shares will not take place at the time indicated above if there is a tropical cyclone warning signal number 8 or above, or a “black” rainstorm warning issued by the Hong Kong Observatory:

(i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the Latest Time for Acceptance. Instead the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will be extended to 5:00 p.m. on the same Business Day; or
(ii) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the Latest Time for Acceptance. Instead the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m..

If the latest time for acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares does not take place on the Latest Time for Acceptance, the dates mentioned in this section may be affected. An announcement will be made by the Company in such event as soon as practicable.

– iv –

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms or expressions shall have the meanings set out below:

“Acquisition” the acquisition of the Sale Interests by the Company from the Vendor pursuant to the terms and conditions of the Acquisition Agreement
“Acquisition Agreement” the sale and purchase agreement dated 15 February 2019 entered into between the Company (as purchaser), the Vendor and the Target Company in respect of the Acquisition
“acting in concert” having the meaning ascribed thereto under the Takeovers Code
“Affluent Vast” a company incorporated in the BVI with limited liability and a controlled corporation wholly and beneficially owned by Ms. Zhu
“Announcement” the announcement of the Company dated 15 February 2019 relating to the Acquisition, the Right Issue and the Placing (including the Specific Mandate)
“associate(s)” having the meaning ascribed thereto under the Listing Rules
“Board”
the board of Directors
“BVI” the British Virgin Islands
“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC

“circular” or “this circular” this circular of the Company for dispatch to the Shareholders containing details in relation to, among other things, the Acquisition, the Rights Issue, the Placing (including the Specific Mandate) and the Increase in Authorised Share Capital

“connected person(s)” having the meaning ascribed thereto under the Listing Rules
“Company”

Universal Technologies Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange with stock code: 1026

– 1 –

DEFINITIONS

“Completion”
the completion of the Acquisition in accordance with the terms and conditions of the Acquisition Agreement
“Consideration”
the consideration payable by the Company to the Vendor for the Acquisition in the aggregate amount of RMB576,000,000 (equivalent to approximately HK$673,286,400)
“Condition(s)” the condition(s) precedent set out in the Acquisition Agreement which must be satisfied or waived for Completion to take place
“controlling shareholder”
having the meaning ascribed thereto under the Listing Rules
“Director(s)”
the director(s) of the Company
“EAF(s)”
the form(s) of application for use by the Qualifying Shareholders who wish to apply for excess Rights Shares
“Eastcorp”

Eastcorp International Limited, a company incorporated in the BVI with limited liability, the holder of 200,000,000 Shares (representing 9.43% of the issued share capital of the Company) and a controlled corporation wholly-owned by Ms. Zhu (via Affluent Vast and Ever City)

“EGM”
the extraordinary general meeting of the Company convened to be held for the purpose of considering, and if thought fit, approving, among other things, the Acquisition Agreement, the Rights Issue, the Placing (including the Specific Mandate) and the Increase in Authorised Share Capital

“Ever City”

Ever City Industrial Development Limited, a company incorporated in Hong Kong with limited liability, the holder of 320,380,000 Shares (representing 15.11% of the issued share capital of the Company) and a controlled corporation wholly-owned by Ms. Zhu (via Affluent Vast)
“Group”

the Company and its subsidiaries

“HKSCC”

Hong Kong Securities Clearing Company Limited

“HK$”

Hong Kong dollars, the lawful currency of Hong Kong

– 2 –

DEFINITIONS

“Hong Kong”
“Increase in Authorised Share Capital”
“Independent Board Committee”
“Independent Financial Adviser” or “TC Capital”
“Independent Shareholders”
“Independent Third Party(ies)”
“Independent Valuer” or “Grant Sherman”

Hong Kong Special Administrative Region of the PRC

the proposed increase in the authorised share capital of the Company from HK$50,000,000 divided into 5,000,000,000 Shares to HK$200,000,000 divided into 20,000,000,000 Shares, subject to the approval as an ordinary resolution of the Shareholders at the EGM

the independent committee established by the Board comprising all the independent non-executive Directors, namely, Dr. Cheung Wai Bun, Charles, J.P., Mr. David Tsoi and Mr. Chao Pao Shu George, for the purpose of making recommendation to the Independent Shareholders regarding the terms of the Acquisition, the Rights Issue and the Placing (including the Specific Mandate)

TC Capital International Limited, licensed corporation to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO, appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders regarding the terms of the Acquisition, the Rights Issue and the Placing (as to the Placing Price and the Placing Commission only)

Shareholders other than (a) Ms. Zhu and her associates including Ever City and Eastcorp; (b) Mr. Zeng; (c) any other Shareholders who have a material interest in the Acquisition and; (d) any other Shareholders who are required by the Listing Rules to abstain from voting (or voting in favour) in respect of any Relevant Resolution at the EGM

third party(ies) independent of and not connected with the Company and its connected persons

Grant Sherman Appraisal Limited, the independent valuer appointed by the Company to provide a valuation on the Properties for inclusion in this circular

– 3 –

DEFINITIONS

“Irrevocable Undertakings”
“Last Trading Day”
“Latest Practicable Date”
“Latest Time for Acceptance”
“Listing Committee”
“Listing Rules”
“Mall”
“Mr. Zeng”
“Mr. Zhang”
the irrevocable undertakings dated 14 February 2019 given by the Participating Shareholders to the Company, whereby the Participating Shareholder undertook to maintain their respective current beneficial shareholding in 837,920,000 Shares up to and including the Record Date and to lodge acceptance for all the 1,675,840,000 Rights Shares provisionally allotted to it with full payment by the Latest Time for Acceptance
15 February 2019, being the last trading day of the Shares on the Stock Exchange before the release of the Announcement
19 March 2019, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information referred to in this circular
4:00 p.m. on Friday, 10 May 2019 (or such other time or date as may be determined by the Company), being the latest time for acceptance of the offer of and payment for, the Rights Shares
having the meaning ascribed thereto under the Listing Rules
the Rules Governing the Listing of Securities on the Stock Exchange
東山錦軒現代城 (Dongshan Jinxuan Modern Mall*), a commercial complex situated at Nos. 4 and 6 Nonglinxia Road, Yuexiu District, Guangzhou, the PRC which is connected to Dongshankou metro station of Guangzhou Metro
Mr. Zeng Xiangyang （曾向陽）, one of the ultimate beneficial owners of Property C Lessee, which is in turn the 60% shareholder of Property A Owner
Mr. Zhang Yu （張瑜）, the 100% legal and beneficial owner of the Vendor and an Independent Third Party

– 4 –

DEFINITIONS

“Non-Qualifying Shareholder(s)” those Overseas Shareholder(s) whom the Board, based on legal opinions provided by the Company’s legal advisers, consider it necessary or expedient not to offer the Rights Issue to such Shareholder(s) on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place
“Overseas Shareholder(s)” Shareholder(s) with registered address(es) (as shown on the register of members of the Company on the Record Date) which is/are outside Hong Kong
“PAL(s)” the provisional allotment letter(s) for the Rights Issue
“Participating Shareholders” Ever City, Eastcorp and Mr. Zhang Songming
“PKF”
“Placees”
“Placing”
PKF Hong Kong Limited, the reporting accountant of the financial information of the Target Group for inclusion in this circular professional, institutional and other investors to be selected and procured by the Placing Agents to subscribe for the Placing Shares under the Placing as contemplated by the Placing Agreement the best effort placing of the Placing Shares by the Placing Agents on the terms and subject to the conditions of the Placing Agreement
“Placing Agents” the placing agents of the Placing, namely, Celestial Capital Limited, Yue Xiu Securities Company Limited and Fulixin Securities Limited, whether collectively or any one or more of them (as the context may require)
“Placing Agreement”
the placing agreement dated 15 February 2019 entered into between the Company and the Placing Agents regarding the Placing of the Placing Shares by the Placing Agents
“Placing Commission”
the commission payable by the Company to the Placing Agents pursuant to the terms of the Placing Agreement, which is equal to 2.0% of the Placing Price multiplied by the number of Placing Shares successfully placed by the relevant Placing Agent
“Placing Completion”

the completion of the Placing

“Placing Price”

HK$0.23 per Placing Share

– 5 –

DEFINITIONS

“Placing Shares”
“Posting Date”
“Property A”
“Property B”
“Property C”
“Properties”
“Properties Owners”

such number of new Shares to be issued and allotted to the Placees by the Company through the Placing, being up to the number of unsubscribed Rights Shares not taken up by Qualifying Shareholders whether under PAL(s) or EAF(s) during the Rights Issue

Thursday, 25 April 2019 (or such other date as may be determined by the Company), being the date of dispatch of the Prospectus Documents to the Qualifying Shareholders (or the Prospectus to the Non-Qualifying Shareholders for information only, as the case may be)
the properties with gross floor area of 10,885.78 sq.m. located at Level One (portion), Level Two (entire), Level Three (entire) and Level Four (portion) of the Mall, together with 95 car parking spaces, as more particularly described in the section headed “INFORMATION OF THE TARGET GROUP AND THE PROPERTIES” of the letter from the Board of this circular, which are legally and beneficially owned by Property A Owner prior to the entering into of the Property A Acquisition Contract
the properties with gross floor area of 935.26 sq.m. located at Level One (portion) of the Mall, as more particularly described in the section headed “INFORMATION OF THE TARGET GROUP AND THE PROPERTIES” of the letter from the Board of this circular, which are legally and beneficially owned by Ms. Zhu prior to the entering into of the Property B Acquisition Contract
the properties with gross floor area of not less than 6,867 sq.m. located at Basement One (entire), Level Five (portion) and Level Six (portion) of the Mall, as more particularly described in the section headed “INFORMATION OF THE TARGET GROUP AND THE PROPERTIES” of the letter from the Board of this circular, which are legally and beneficially owned by Property C Owner
collectively, Property A, Property B and Property C
collectively, Property A Owner, Property B Owner and Property C Owner

– 6 –

DEFINITIONS

“Property A Owner”
廣州市錦城房地產發展有限公司 (Guangzhou Jincheng Property Development Co., Ltd.*), a company established in the PRC with limited liability and the legal and beneficial owner of Property A prior to the entering into of the Property A Acquisition Contract
“Property B Owner” or “Ms. Zhu”
Ms. Zhu Fenglian, an executive Director and a substantial shareholder of the Company holding 520,380,000 Shares (representing approximately 24.54% of the issued share capital of the Company) in aggregate through Affluent Vast, Ever City and Eastcorp, and the legal and beneficial owner of Property B prior to the entering into of the Property B Acquisition Contract
“Property C Owner”
中共廣東省委辦公廳機關服務中心 (Administrative Service Center, General Office, Guangdong Provincial Committee of the Communist Party of China), the legal and beneficial owner of Property C
“PRC” The People’s Republic of China
“Prospectus”
the prospectus to be dispatched to the Shareholders in connection with the Rights Issue
“Prospectus Documents”
collectively, the Prospectus, the PAL and the EAF
“Qualifying Shareholder(s)”
Shareholder(s) whose name(s) appear(s) on the register of members of the Company on the Record Date, other than the Non-Qualifying Shareholder(s)
“Relevant Resolution(s)”

the resolution(s) to be proposed at the EGM approving the Acquisition Agreement and the transactions contemplated thereunder, the Rights Issue and the Placing (including the Specific Mandate)

“Record Date”
Wednesday, 24 April 2019 (or such other date as may be determined by the Company), being the date for determining entitlements of Shareholders to participate in the Rights Issue
“Registrar”

Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, the Hong Kong branch share registrar of the Company

– 7 –

DEFINITIONS

“Rights Issue” proposed offer for subscription of up to 4,240,897,716 Rights Shares by way of rights issue at the Subscription Price to be made by the Company to the Qualifying Shareholders on the basis of two (2) Rights Shares for every one (1) Share in issue and held on the Record Date “Rights Share(s)” up to 4,240,897,716 Shares to be allotted and issued pursuant to the Rights Issue

“RMB” Renminbi, the lawful currency of the PRC
“Sale Interests” collectively, the Sale Shares and the Sale Loans
“Sale Loans” the entire loans owing by the Target Group to the Vendor or its affiliates on Completion
“Sale Shares” the entire issued share capital of the Target Company, which was wholly, legally and beneficially owned by the Vendor prior to the entering into of the Acquisition Agreement
“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong
“Share(s)” ordinary share(s) of HK$0.01 each in the issued share capital of the Company
“Share Option(s)” the outstanding option(s) to subscribe for new Share(s) granted under the Share Option Scheme
“Share Option Scheme” the share option scheme adopted by the Company on 12 August 2010
“Shareholder(s)” holder(s) of the Share(s) “Specific Mandate” the specific mandate to allot, issue and deal with the Placing Shares to be proposed for approval by the Shareholders at the EGM
“sq.m.” square meters

“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription Price” HK$0.23 per Rights Share “substantial shareholder(s)” having the meaning ascribed thereto under the Listing Rules

– 8 –

DEFINITIONS

“Takeovers Code”

the Hong Kong Code on Takeovers and Mergers

“Target Company”

Chevalier Earth Group Limited, a company incorporated in the BVI with limited liability, which is legally and beneficially owned as to 100% by the Vendor prior to the entering into of the Acquisition Agreement according to the information provided by the Vendor

“Target Group”

collectively, the Target Company and its subsidiaries

“Target Group Restructuring” restructuring of the Target Group including the completion of the Underlying Contracts and the vesting of Property A and Property B unto the Target Group
“Underlying Contracts”
collectively, the Property A Acquisition Contract, the Property B Acquisition Contract and the Property C Participation Contract
“Vendor”
Billion Eminence Investment Limited, a company incorporated in the BVI with limited liability and the vendor of the Acquisition, which is legally and beneficially owned as to 100% by Mr. Zhang according to the information provided by the Vendor
“%” per cent.

The English names of the Chinese entities marked with “*” are translations of their Chinese names and are included in this circular for identification purpose only, and should not be regarded as their official English translation. In the event of any inconsistency, the Chinese names of the Chinese entities prevail.

Unless otherwise specified, amounts denominated in RMB have been translated, for illustration purpose only, into HK$, and vice versa, in this circular at the rate of RMB1.00 = HK$1.1689.

No representation is made that any amounts in RMB and HK$ can be or could have been converted at the relevant dates at the above rates or at any other rates at all.

– 9 –

LETTER FROM THE BOARD

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

Executive Directors: Mr. Chen Jinyang (Chairman) Mr. Chau Cheuk Wah (Chief Executive Officer) Ms. Zhu Fenglian Ms. Zhang Haimei

Registered Office: Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Non-executive Director: Mr. Xuan Zhensheng

Independent non-executive Directors:

Dr. Cheung Wai Bun, Charles, J.P. Mr. David Tsoi Mr. Chao Pao Shu George

Head office and principal place of business in Hong Kong: Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan Hong Kong

22 March 2019

To the Shareholders

Dear Sir or Madam,

(I) MAJOR AND CONNECTED TRANSACTION INVOLVING THE PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY; (II) PROPOSED RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE;

(III) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; AND

(IV) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

Reference is made to the Announcement in relation to the Acquisition, the Rights Issue, the Placing (including the Specific Mandate) and the Increase in Authorised Share Capital.

The purpose of this circular is to provide you with, among other things, (i) further information on the Acquisition, the Rights Issue, the Placing (including the Specific Mandate), the Increase in Authorised Share Capital and other information prescribed by the Listing Rules; (ii) the recommendation of the Independent Board Committee regarding the

– 10 –

LETTER FROM THE BOARD

terms of the Acquisition, the Rights Issue and the Placing (including the Specific Mandate); (iii) the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders regarding the terms of the Acquisition, the Rights Issue and the Placing (as to the Placing Price and the Placing Commission only); and (iv) the notice convening the EGM.

(I) PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY

The principal terms of the Acquisition Agreement are set out below:

ACQUISITION AGREEMENT

Date: 15 February 2019 Parties: (1) The Company, as purchaser (2) The Vendor (3) The Target Company

Based on the information provided by the Vendor; (i) the Vendor is a company incorporated in the BVI and is an investment holding company legally, beneficially and wholly-owned by Mr. Zhang; (ii) Mr. Zhang is a merchant principally engaged in education equipment and software business; and (iii) the Target Company is a company incorporated in the BVI and is an investment holding company legally, beneficially and wholly-owned by the Vendor. To the best knowledge of the Directors after reasonable enquiry, save for entering into the Acquisition Agreement, Mr. Zhang does not have any relationship (business or otherwise) with the Company and any of its connected person. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Vendor and its ultimate beneficial owner (i.e. Mr. Zhang) is an Independent Third Party.

Subject matter of the Acquisition

Pursuant to the Acquisition Agreement, the Vendor has conditionally agreed to sell, and the Company has conditionally agreed to purchase from the Vendor, free from encumbrances, the Sale Interests (comprising the Sale Shares and the Sale Loans).

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LETTER FROM THE BOARD

The Sale Shares represent the entire issued share capital of the Target Company as at the date of the Acquisition Agreement and at Completion. The Sale Loans represent the entire amount (if any) owing by the Target Group to the Vendor or its affiliates on Completion.

Consideration

The total Consideration for the Sale Interests is RMB576,000,000 (equivalent to approximately HK$673,286,400), which shall be settled by the Company in cash as to:

(a) RMB518,400,000, being 90% of the Consideration, within one month after Completion (or such later date as the parties may agree); and
(b) RMB57,600,000, being the remaining 10% of the Consideration, within twelve months after Completion (or such later date as the parties may agree).

The Consideration is equivalent to the total acquisition costs of RMB 576,000,000 payable by 廣州市衡信宇軒實業發展有限公司 (Guangzhou Hengxin Yuxuan Industrial Development Limited) (“ GZ Holdco* ”), an indirect wholly-owned subsidiary of the Target Company, pursuant to the Underlying Contracts.

Pursuant to the terms of the Acquisition Agreement, the Consideration is notionally allocated as to RMB448,300,000 and RMB127,700,000 to Property A and Property B, respectively, which are equivalent to the acquisition costs payable by GZ Holdco for Property A and Property B, respectively, and no consideration is notionally allocated to the Property C Participation Contract as no consideration is payable by GZ Holdco for the Property C Participation Contract despite the fact that such contract is one of the subjects of the Acquisition.

Completion of the Acquisition Agreement is subject to the Company having sufficient funding to finance the payment of the Consideration at Completion. As disclosed in the Announcement, the Company proposed to launch the Rights Issue and the Placing which are conditional upon the raising of aggregate minimum gross proceeds of HK$710,000,000 which is sufficient to cover the Consideration. If the Company does not manage to raise minimum gross proceeds of HK$710,000,000 through the Rights Issue and the Placing, it does not intend to proceed with the Completion of the Acquisition Agreement.

Basis for determination of the Consideration

The Consideration was determined after arm’s length negotiation between the Vendor and the Company with reference to the market value of Property A and Property B as at 31 December 2018 as assessed by the Independent Valuer.

On the basis of the aforesaid and that the Consideration is equivalent to the total acquisition costs payable by GZ Holdco pursuant to the Underlying Contracts, the Directors (including the independent non-executive Directors, whose views are now set

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out in the letter from the Independent Board Committee as contained in this circular) are of the view that the Consideration is fair and reasonable insofar as the Company and its Shareholders (including the Independent Shareholders) are concerned.

Conditions precedent

Completion is conditional upon fulfilment or waiver (as the case may be) of the following Conditions:

(a) the Company having completed its due diligence over the Target Group (including the Underlying Contracts and the Properties) and being satisfied with its results in its absolute discretion;
(b) the Company having obtained a legal opinion from qualified PRC legal advisers regarding the Target Group in form and substance satisfactory to the Company in its absolute discretion;
(c) the obtaining of all approvals, completion of all filings, waiting periods having expired or terminated and all applicable statutory and legal obligations having been complied with, in each case as may be necessary and expedient in connection with the entering into and the implementation of the Acquisition Agreement;
(d) no events having occurred between the date of the Acquisition Agreement and Completion which may result in any material adverse effect on the Target Group (including the Underlying Contracts and the Properties);
(e) all warranties given by the Vendor being true, accurate and not misleading at all times between the date of the Acquisition Agreement and Completion;
(f) (where applicable) the obtaining of any required approvals, confirmations, waivers or consents from all third parties or regulatory authorities in respect of the Acquisition Agreement and the transactions contemplated thereunder;
(g) the Company being satisfied in its absolute discretion with the completion of the Target Group Restructuring, including the completion of the Underlying Contracts, the vesting of title of Property A and Property B unto the Target Group and the repayment of any mortgage loan and discharge of encumbrances over the relevant properties;
(h) the Company having sufficient funding to finance the payment of the Consideration at Completion; and
(i) the Company having complied with the requirements under the Listing Rules including the obtaining of the approval of Independent Shareholders at the EGM in respect of the Relevant Resolution(s).

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LETTER FROM THE BOARD

Save for and except Conditions (h) and (i) above which cannot be waived by any party in any event, all the other Conditions can be waived at the absolute discretion of the Company. The Company has no intention to waive Condition (g). Based on the information provided by the Vendor, it is expected that the Target Group Restructuring will be completed in May 2019. As at the Latest Practicable Date, none of the Conditions set out above has been satisfied.

The long stop date for the fulfillment or waiver of the Conditions is 31 May 2019 (or such later date as the parties may agree in writing) (the “ Acquisition Long Stop Date ”). If any of the Conditions are not fulfilled or waived on or before the Acquisition Long Stop Date, then unless the Acquisition Long Stop Date is extended by mutual consent of the parties, the Acquisition Agreement shall terminate and no party shall have any claim in relation to the Acquisition Agreement, without prejudice to the rights of any party in respect of any antecedent breaches.

The Completion

Completion shall take place on any day within fifteen business days after the fulfilment or waiver (if applicable) of the last Condition, or such other date as the parties to the Acquisition Agreement may agree in writing.

INFORMATION OF THE TARGET GROUP AND THE PROPERTIES

Based on the information provided by the Vendor, (i) the Target Company is an investment holding company incorporated in the BVI with limited liability whose sole asset is the entire issued share capital of Heng Hui Property Investment Limited (“ HK Holdco ”); (ii) HK Holdco is an investment holding company incorporated in Hong Kong with limited liability whose sole asset is the entire equity interest in 廣州市頤城投資控股有限公司 (Guangzhou Yicheng Investment Holdings Limited) (“ Nansha Holdco* ”); (iii) Nansha Holdco is a company established in the PRC with limited liability whose scope of business includes investment holding, consultancy and property development, operation, agency and management and whose sole asset is the entire equity interest in GZ Holdco; and (iv) GZ Holdco is a company established in the PRC with limited liability whose scope of business includes consultancy, property management and leasing.

Based on the information provided by the Vendor, on 14 February 2019 (i.e. prior to signing of the Acquisition Agreement), GZ Holdco entered into the following contracts relating to the Mall:

(i) a property acquisition contract to acquire Property A from Property A Owner (the “ Property A Acquisition Contract ”) for the total acquisition cost of RMB448,300,000 (inclusive of net consideration payable by GZ Holdco to Property A Owner of RMB434,825,000, plus tax and duties borne by GZ Holdco in the amount of RMB13,475,000);

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LETTER FROM THE BOARD

(ii) a property acquisition contract to acquire Property B from Ms. Zhu (the “ Property B Acquisition Contract ”) for the total acquisition cost of RMB127,700,000 (inclusive of net consideration payable by GZ Holdco to Ms. Zhu of RMB123,900,000, plus tax and duties borne by GZ Holdco in the amount of RMB3,800,000); and
(iii) a property lease contract (the “ Property C Participation Contract ”, which together with Property A Acquisition Contract and Property B Acquisition Contract are collectively referred to as the “ Underlying Contracts ”) to participate in the leasehold right enjoyed by Property C Lessee under Property C Lease for its remaining term until 31 December 2024. For the avoidance of doubt, no consideration is payable by GZ Holdco for the Property C Participation Contract.

The Mall is a commercial complex situated at Nos. 4 and 6 Nonglinxia Road, Yuexiu District, Guangzhou, the PRC which is connected to Dongshankou metro station of Guangzhou Metro. According to the information provided by the Vendor, the Mall has six storey on or above ground level, namely: (i) Level One (i.e. the ground floor), (ii) Level Two, (iii) Level Three, (iv) Level Four, (v) Level Five, and (vi) Level Six; and three underground levels, namely: (i) Basement One, (ii) Basement Two, and (iii) Basement Three. Level One to Level Six together with Basement One are for retail and commercial use, while Basement Two and Three are underground car parking spaces.

Property A comprises retail shops, cafes, restaurants, beauty salons and fitness centre with a gross floor area of 10,885.78 sq.m. located at Level One (portion), Level Two (entire), Level Three (entire) and Level Four (portion) of the Mall, together with 95 car parking spaces at Basement Two and Three. Property B comprises retail shops with gross floor area of 935.26 sq.m. located at Level One (portion) of the Mall.Property C comprises retail shops, restaurants and tuition centre with gross floor area of not less than 6,867 sq.m. located at Basement One (entire), Level Five (portion) and Level Six (portion) of the Mall.

Based on the information provided by the Vendor, (i) the land use right regarding Property A and Property B runs for 40 years from November 2000 to November 2040; (ii) the Vendor undertakes that the loan mortgages Property A and Property B currently being subject to will be discharged and released prior to Completion; and (iii) on 20 March 2003, 廣州市正信投資發展有限公司 (Guangzhou Zhengxin Investment Development Co., Ltd.) (“ Property C Lessee ”), the 60% shareholder of Property A Owner, entered into a lease contract (“ Property C Lease* ”) to lease Property C from Property C Owner for 20 years until 31 December 2024 at pre-fixed annual rental fees incrementing 4% per year, currently charged at RMB561,898.26 for the year running between 1 January 2019 and 31 December 2019.

Based on the information provided by the Vendor, Property A, Property B and Property C are legally and beneficially owned by Property A Owner, Ms. Zhu and Property C Owner, respectively, and the registered capital of Property A Owner is legally and beneficially owned as to 60% by Property C Lessee, 35% by Property C Owner and 5% by 廣州中海地產有限公司 (Guangzhou Zhong Hai Properties Limited*).

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LETTER FROM THE BOARD

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of Property A Owner, Property C Owner, Property C Lessee and their respective ultimate beneficial owners is an Independent Third Party.

The Company considers that it is administratively expedient and cost-efficient for the Group to manage the entirety of the Mall comprising of Property A, Property B and Property C as compared to only a portion of it, such that the Group can have higher flexibility in providing tenants with the desired area and location. Apart from the Property C Participation Contract, the Company has considered other alternative way including acquisition of the legal title of Property C, but was given to understand that Property C is currently unavailable for sale. As such, GZ Holdco entered into the Property C Participation Contract which, together with the Property A Acquisition Contract and the Property B Acquisition Contract, will enable GZ Holdco to have the overall management of the entire Mall during the term of the Property C Participation Contract. The Property C Participation Contract also gives GZ Holdco a priority right to renew the contract at the same terms from third party upon expiration of the Property C Participation Contract provided that Property C Lessee still enjoy the leasing right by then. Based on the aforesaid, the Company considers that it is appropriate to acquire the leasing right of Property C through the Property C Participation Contract.

The risks associated with the contractual arrangement under the Property C Participation Contract are as follows, which, however, have already been addressed in the Property C Participation Contract:

Default risk from the Property C Lessee – The Property C Participation Contract has set out the rights and obligations of each contracting party and solution in case of any dispute or default from any contracting party; and
Risk of failing to receive rent from tenants of Property C – According to the Property C Participation Contract, upon receipt of rents from existing tenants of Property C by the Property C Lessee, the Property C Lessee is required to remit those portions of rent entitled by GZ Holdco to GZ Holdco’s bank account. Alternatively, GZ Holdco has the right to request the Property C Lessee to transfer all the existing tenancy agreements of Property C to GZ Holdco so that GZ Holdco can collect rent directly. Upon expiration of the existing tenancy agreements, GZ Holdco has the right to enter into new tenancy agreements with tenants of Property C directly. The Company believes that these measures will ensure that GZ Holdco can manage and receive rent from the tenants directly.

In addition, based on the advice from the Company’s legal advisers as to the laws of the PRC, the Property C Participation Contract is legal, valid, binding, enforceable and will not contravene any existing PRC government policies, laws or regulations.

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LETTER FROM THE BOARD

GROUP STRUCTURE OF THE TARGET GROUP

The ownership structure of the Properties before the completion of the Underlying Contracts was as follows:

==> picture [354 x 155] intentionally omitted <==

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

Property C Lease
Property C Lessee Property C Owner
60% 35%
Ms. Zhu
100%
Property A Owner 100%
Property C
100%
Property B
Property A
----- End of picture text -----

The shareholding structure of the Target Group after the completion of the Underlying Contracts but before Completion will be as follows:

==> picture [328 x 314] intentionally omitted <==

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

Mr. Zhang
100%
Vendor
100%
Target Company
100%
HK Holdco
100%
Nansha Holdco
100%
Property C Participation Contract
GZ Holdco
100% 100%
Property A Property B Property C
----- End of picture text -----

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LETTER FROM THE BOARD

The shareholding structure of the Target Group after completion of the Underlying Contracts and Completion will be as follows:

==> picture [328 x 268] intentionally omitted <==

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

The Company
100%
Target Company
100%
HK Holdco
100%
Nansha Holdco
100%
Property C Participation Contract
GZ Holdco
100% 100%
Property A Property B Property C
----- End of picture text -----

FINANCIAL INFORMATION OF TARGET COMPANY AND THE PROPERTIES

As stated in the audited financial information of the Target Company set out in Appendix IIA to this circular, (a) for the period between 27 September 2018 (i.e. the date of incorporation of the Target Company) and 31 December 2018, both the loss before income tax and the loss and total comprehensive loss for the period of the Target Company amounted to HK$14,478; (b) as at 31 December 2018, the Target Company did not have any assets and the net liability of the Target Company amounted to HK$14,378; and (c) no revenue was recorded by the Target Company from the date of incorporation until 31 December 2018 since the Target Company has not conducted any business during the period.

As stated in the unaudited financial information set out in Appendix IIB to this circular:

(i) the rental income received from the Properties for the three years ended 31 December 2016, 2017 and 2018 amounted to HK$30,716,000, HK$36,337,000 and HK$39,556,000, respectively;
(ii) the profit of the Properties before change in fair value of investment property, finance costs and taxation for the three years ended 31 December 2016, 2017 and 2018 amounted to HK$17,337,000, HK$22,507,000 and HK$24,416,000, respectively; and

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(iii) amongst the said profit of the Properties for the year ended 31 December 2018 in the amount of HK$24,416,000, HK$14,063,000 (57.60%), HK$7,425,000 (30.41%) and HK$2,928,000 (11.99%) were attributable to Property A, Property B and Property C, respectively.

The financial information of the Target Company and the Properties are set out in Appendices IIA and IIB to this circular. The above information should be read in conjunction with the full text of Appendices IIA and IIB to this circular including the accompanying notes set forth in the accountant’s report therein.

FINANCIAL EFFECT OF THE ACQUISITION

Upon the Completion, the Target Company will become a wholly-owned subsidiary of the Company and the profit and loss and assets and liabilities of the Target Group will be consolidated to the financial statements of the Group. It is expected that the Company will consolidate the revenue stream from the Target Group derived from the rental income of the Properties after the Completion.

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to this circular, if the Acquisition, Rights Issue and Placing had all taken place on 30 June 2018: (i) under Scenario I (as defined on page 40 of this circular), the consolidated total assets of the Group would have increased from HK$1,739,603,000 to HK$2,706,469,000 and the consolidated total liabilities of the Group would have increased from HK$1,036,370,000 to HK$1,036,384,000, causing the consolidated total equity attributable to shareholders of the Company to increase by 195.47% from HK$494,619,000 to HK$1,461,471,000; and (ii) under Scenario II (as defined on page 40 of this circular), the consolidated total assets of the Group would have increased from HK$1,739,603,000 to HK$2,434,299,000 and the consolidated total liabilities of the Group would have increased from HK$1,036,370,000 to HK$1,036,384,000, causing the consolidated total equity attributable to shareholders of the Company to increase by 140.45% from HK$494,619,000 to HK$1,189,301,000.

Shareholders should note that since the fair value of the assets and liabilities of the Target Company may be different at Completion as compared to their respective values used in the preparation of the unaudited pro forma financial information of the Enlarged Group, the actual amounts of assets and liabilities to be recorded in the financial statements of the Group may be different from the estimated amounts shown in Appendix III to this circular. As the above pro forma information is for illustrative purposes only and because of its hypothetical nature, it may not give a true picture of the results and financial position of the Enlarged Group for any future financial periods or dates.

REASONS FOR AND BENEFITS OF THE ACQUISITION

Property investment and development are the principal businesses of the Group. The Group has been looking for investment opportunities of properties which can offer stable rental income to the Group. The Properties are located at prime location at Guangzhou and at the intersection of route number one and six of Guangzhou Metro.

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The Guangzhou Metro has one exit connected to Basement One of the Mall and two exits connected to Level One of the Mall. Based on the information provided by the Vendor, the occupancy of the commercial area of the Mall (with the exception of the parking spaces) is close to 100%, and the gross rental income received from the Properties for the years ended 31 December 2016, 2017 and 2018 amounted to approximately HK$30,716,000, approximately HK$36,337,000 and approximately HK$39,556,000, respectively.

Based on the assessment of the Independent Valuer, the aggregated market value of Property A and Property B as at 31 December 2018 amounted to approximately RMB580,300,000 (equivalent to approximately HK$678,312,670).

The Directors (including the independent non-executive Directors, whose views are now set out in the letter from the Independent Board Committee as contained in this circular) considered that the Acquisition will generate steady and recurring rental income to the Group and thereby strengthen its income base. In view of the factors and benefits explained above, the Directors (including the independent non-executive Directors, whose views are now set out in the letter from the Independent Board Committee as contained in this circular) considered that the Acquisition and its terms (including the Consideration and the payment terms) are on normal commercial terms, fair and reasonable insofar as the Company and its Shareholders (including the Independent Shareholders) are concerned and the Acquisition is in the interests of the Company and its Shareholders (including the Independent Shareholders) as a whole. Ms. Zhu abstained from voting on the Board’s decision regarding the Acquisition due to Ms. Zhu’s ownership in Property B and her material interest in the Acquisition.

Completion of the Acquisition Agreement is subject to the satisfaction of the conditions precedent set out in the Acquisition Agreement, including but not limited to the independent shareholders’ approval of the Acquisition at the EGM and the sufficiency of funding to finance the payment of the Consideration at Completion, and therefore may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

(II) PROPOSED RIGHTS ISSUE

The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event there is an under-subscription of the Rights Issue, the size of the Rights Issue will be reduced accordingly.

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LETTER FROM THE BOARD

Further details of the Rights Issue are set out below:

Rights Issue statistics

Basis of the Rights Issue: Two (2) Rights Shares for every one (1) Share held on the Record Date

Subscription Price:

HK$0.23 per Rights Share

Number of Shares in issue as at 2,120,448,858 Shares the Latest Practicable Date:

Number of Rights Shares:

Up to 4,240,897,716 Rights Shares (assuming no further issue or repurchase of Shares on or before the Record Date)

Aggregate nominal value of the Rights Shares:

Up to HK$42,408,977.16

Number of enlarged Shares in issue upon completion of the Rights Issue:

Up to 6,361,346,574 Shares (assuming no further issue or repurchase of Shares on or before the Record Date)

Number of Rights Shares undertaken to be taken up:

Gross proceeds to be raised before expenses:
Up to approximately HK$975.41 million

Right of excess applications:

Qualifying Shareholders may apply for the Rights Shares in excess of their provisional allotment

As at the Latest Practicable Date, the Company has 40,000,000 outstanding Share Options, entitling the holders thereof to subscribe for a total of 40,000,000 Shares at the exercise price of HK$0.465. These Share Options are held by Mr. Chen Jinyang (as to 20,000,000 Share Options) and Mr. Chau Cheuk Wah (as to 20,000,000 Share Options), both of whom being executive Directors of the Company. Mr. Chen Jinyang and Mr. Chau Cheuk Wah have irrevocably undertaken to the Company that they will not exercise the subscription rights attaching to the Share Options and not to attempt to

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transfer the Share Options, in each case on or prior to the Record Date. Under the terms of the Share Options, the Share Options are personal to the grantees and not transferable or assignable anyway.

Save for the aforesaid Share Options, the Company has no other outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares.

Assuming there is no change in the issued share capital of the Company from the Latest Practicable Date and up to the Record Date, the maximum number of 4,240,897,716 Rights Shares proposed to be allotted and issued pursuant to the Rights Issue represent (i) 200% of the existing issued share capital of the Company; and (ii) approximately 66.67% of the issued share capital of the Company as enlarged by the allotment and issue of the maximum number of 4,240,897,716 Rights Shares immediately after completion of the Rights Issue.

The Subscription Price

The Subscription Price of HK$0.23 per Rights Share will be payable in full when a Qualifying Shareholder accepts the relevant provisional allotments of the Rights Shares and, where applicable, applies for excess Rights Shares or when a transferee of nil-paid Rights Shares applies for the relevant Rights Shares.

The Subscription Price represents:

(i) a discount of approximately 33.33% to the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 14.28% to the theoretical ex-rights price of HK$0.2683 per Share based on the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 33.33% to the average closing price of HK$0.345 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the five (5) consecutive trading days prior to and excluding the Last Trading Day;
(iv) a discount of approximately 32.85% to the average closing price of HK$0.3425 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the ten (10) consecutive trading days prior to and excluding the Last Trading Day;
(v) a discount of approximately 1.29% to the unaudited net asset value per Share of approximately HK$0.233 based on the unaudited total equity attributable to shareholders of the Company of HK$494,619,000 as at 30 June 2018 and the number of 2,120,448,858 Shares in issue as at 30 June 2018 and the Latest Practicable Date; and

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(vi) a discount of approximately 8% to the closing price of HK$0.25 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Subscription Price was determined with reference to the market price of the Shares under the prevailing market conditions and the amount of funds the Company intends to raise under the Rights Issue.

The Directors (including the independent non-executive Directors, whose views are now set out in the letter from the Independent Board Committee as contained in this circular) considered the terms of the Rights Issue, including the Subscription Price and the subscription ratio, to be fair and reasonable insofar as the Company and the Independent Shareholders are concerned and in the interests of the Company and the Shareholders (including the Independent Shareholders) as a whole.

The net price per Rights Share (i.e. the aggregate Subscription Price assuming full acceptance of the provisional allotment of Rights Shares, after deducting cost and expenses incurred in the Rights Issue) will be approximately HK$0.2289.

Qualifying Shareholders

The Rights Issue will only be available to the Qualifying Shareholders. The Company will send the Prospectus Documents to the Qualifying Shareholders but will only send the Prospectus (without the PAL and the EAF), for information purposes only, to the Non-Qualifying Shareholders.

To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company at the close of business on the Record Date and not be a Non-Qualifying Shareholder. Shareholders with their Shares held by a nominee (or held in CCASS) should note that the Board will consider nominee (including HKSCC Nominees Limited) as one single Shareholder according to the register of members of the Company and are advised to consider whether they would like to arrange for the registration of the relevant Shares in their own names prior to the Record Date.

In order to be registered as members of the Company at the close of business on the Record Date, any relevant transfer documents (together with the relevant share certificates) must be lodged with the Company’s share registrar and transfer office in Hong Kong, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Monday, 15 April 2019.

Closure of register of members

The register of members of the Company will be closed from Tuesday, 16 April 2019 to Wednesday, 24 April 2019 (both dates inclusive) for determining the entitlements to the Rights Issue. No transfer of Shares will be registered during this period.

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Basis of provisional allotments

The basis of the provisional allotment shall be two (2) Rights Shares (in nil-paid form) for every one (1) Share held by the Qualifying Shareholders as at the close of business on the Record Date.

Qualifying Shareholders may apply for all or any part of their respective provisional allotment by lodging a duly completed PAL and a cheque or a banker’s cashier order for the sum payable for the Rights Shares being applied for with the Registrar on or before the Latest Time for Acceptance.

Rights of Overseas Shareholders

Based on the register of members of the Company as at 18 March 2019, there were seven Overseas Shareholders whose addresses were outside Hong Kong and whose registered shareholding amounted to 173,840,101 Shares, of which five Overseas Shareholders holding 171,550,000 Shares had their addresses registered in the PRC and two Overseas Shareholders holding 2,290,101 Shares had their addresses registered in South Korea. The Company has, in compliance with the requirements of Rule 13.36(2)(a) of the Listing Rules, conducted enquiries with its legal advisers in the PRC and South Korea regarding the feasibility of extending the Rights Issue to Overseas Shareholders with registered addresses in the PRC and South Korea. Based on the advice of the legal advisers of the PRC and South Korea, the Prospectus Documents would not be required to be registered under the relevant laws and regulations of the PRC and South Korea and may be dispatched to the Shareholders with addresses in the PRC and South Korea without any restrictions. On that basis, the Company decided to extend the Rights Issue, and to dispatch the Prospectus Documents, to Overseas Shareholders with registered addresses in the PRC and South Korea as at the Record Date, who will be treated as Qualifying Shareholders in addition to all Shareholders with registered addresses in Hong Kong.

The Prospectus Documents are not intended to be registered under the applicable securities legislation of any jurisdiction other than Hong Kong. As mentioned above, based on the latest available register of members of the Company as at 18 March 2019, there were Overseas Shareholders situated in the PRC and South Korea. The Company will continue to ascertain whether there are any other Overseas shareholders in any other jurisdictions(s) on the Record Date. If at the close of business on the Record Date, a Shareholder’s address on the Company’s register of members is in a place outside Hong Kong, such Shareholder may or may not be eligible to take part in the Rights Issue. The Company will comply with Rule 13.36(2)(a) of the Listing Rules and make enquiries regarding the feasibility of extending the offer of the Rights Shares to the Overseas Shareholders, if any. If, based on the legal opinions to be provided by the legal advisers to the Company, the Directors consider that it is necessary or expedient not to offer the Rights Shares to any Overseas Shareholders on account of either the legal restrictions under the laws of the place(s) of their registered address(es) or the requirements of the relevant regulatory body(ies) or stock exchange(s) in such place(s), the Rights Issue will not be extended to such Overseas Shareholders.

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The Company will send the Prospectus to the Non-Qualifying Shareholders for their information only, but will not send any PAL and EAF to them.

Arrangements will be made for the Rights Shares, which would otherwise have been provisionally allotted to the Non-Qualifying Shareholders, to be sold in the market in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence and before dealings in the nil-paid Rights Shares end, if a premium (net of expenses) can be obtained. The proceeds from such sale, less expenses, of more than HK$100 will be paid on pro-rata basis to the relevant Non-Qualifying Shareholders. In view of administrative costs, the Company will retain individual amounts of HK$100 or less for its own benefit. Any unsold entitlement of the Non-Qualifying Shareholders to the Rights Shares and any Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders will be made available for excess applications by the Qualifying Shareholders under the EAF(s).

It is the responsibility of the Shareholders (including the Overseas Shareholders) to observe the local legal and regulatory requirements applicable to them for taking up and onward sale (if applicable) of the Rights Shares. The Non-Qualifying Shareholders, so long as he/she/it is an Independent Shareholder, will be entitled to vote at the EGM regarding the resolution(s) relating to the Rights Issue. Overseas Shareholders and beneficial owners of Shares who are residing outside Hong Kong should note that they may or may not be eligible to take part in the Rights Issue subject to the results of the enquiries made by the Company. The Company reserves the right to treat as invalid any acceptances of or applications for the Rights Shares where it believes that such acceptance or application would violate the applicable securities or other laws or regulations of any territory or jurisdiction. Accordingly, Overseas Shareholders and beneficial owners of Shares who are residing outside Hong Kong should exercise caution when dealing in the Shares.

Status of Rights Shares

The Rights Shares will, when issued and fully paid, rank pari passu in all respects with the Shares then in issue including the right to receive future dividends and distributions which may be declared, made or paid after the completion of the Rights Issue.

Application for excess Rights Shares

Qualifying Shareholders may apply, by way of excess application, for: (i) any unsold entitlements to the Rights Shares of the Non-Qualifying Shareholder(s) (if any); and (ii) any nil-paid Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders or otherwise not subscribed for by transferees of nil-paid Rights Shares.

Application for excess Rights Shares can be made only by duly completing and signing an EAF (in accordance with the instructions printed therein) and lodging the same with a separate cheque or banker’s cashier order for the sum payable for the

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LETTER FROM THE BOARD

excess Rights Shares being applied for with the Company’s share registrar and transfer office in Hong Kong, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong no later than 4:00 p.m. on Friday, 10 May 2019.

The Directors will allocate the excess Rights Shares (if any) at their discretion on a fair and equitable basis on the principle that any excess Rights Shares will be allocated to the applying Qualifying Shareholders on a pro rata basis by reference to the number of the excess Rights Shares applied for under each application, but no reference will be made to the Rights Shares subscribed through applications by PALs or the existing number of Shares held by such Qualifying Shareholders. No preference will be given to applications for topping up odd-lot holdings to whole lot holdings. Pursuant to Rule 7.21(3)(b) of the Listing Rules, the Company is required to take steps to identify the applications for excess Rights Shares made by any controlling shareholder or its associates (together, the “ Relevant Shareholders ”), whether in their own names or through nominees, and to disregard the Relevant Shareholders’ applications for excess Rights Shares to the extent that the total number of excess Right Shares they have applied for exceeds a maximum number equivalent to the total number of Rights Shares offered under the Rights Issue minus the number of Rights Shares taken up by the Relevant Shareholders under their assured entitlement to the Rights Shares. To the best information and knowledge of the Directors after making all reasonable enquiries, the Company has no controlling shareholder as at the Latest Practicable Date.

If the aggregate number of Rights Shares not taken up by the Qualifying Shareholders and/or transferees of nil-paid Rights Shares under PALs is greater than the aggregate number of excess Rights Shares being applied for under EAFs, the Directors will allocate to each Qualifying Shareholder who applies for excess Rights Shares the actual number of excess Rights Shares being applied for.

Shareholders with their Shares held by a nominee (or which are held in CCASS) should note that the Board will consider the nominee (including HKSCC Nominees Limited) as one single Shareholder according to the register of members of the Company. Accordingly, such Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to the relevant beneficial owners individually. Shareholders with their Shares held by a nominee (or which are held in CCASS) are advised to consider whether they would like to arrange for the registration of their relevant Shares under the names of the beneficial owners prior to the Record Date for the purpose of the Rights Issue. Shareholders and investors should consult their professional advisers if they are in doubt as to their status.

For investors whose Shares are held by a nominee (or CCASS) and would like to have their names registered on the register of members of the Company, they must lodge all necessary documents with the Company’s share registrar and transfer office in Hong Kong, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration no later than 4:30 p.m. on Monday, 15 April 2019.

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No fractional entitlement

On the basis of the entitlement to subscribe two (2) Right Shares for every one (1) existing Share held by the Qualifying Shareholders on the Record Date, no fractional entitlements to the Rights Shares will arise from the Rights Issue.

Application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms to be issued and allotted pursuant to the Rights Issue.

The board lot size of the nil-paid Rights Shares shall be the same as that of the fully-paid Rights Shares, i.e. 10,000 Shares in one board lot.

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

Rights Shares will be eligible for admission into CCASS

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both their nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in both their nil-paid and fully-paid forms on the Stock Exchange or such other dates as determined by HKSCC.

Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Shareholders should seek advice from their licensed securities dealer(s) or other professional adviser(s) for details of those settlement arrangements and how such arrangements will affect their rights and interests.

Stamp duty and other applicable fees

Dealings in the Rights Shares in both their nil-paid and fully-paid forms will be subject to the payment of (i) stamp duty, (ii) the Stock Exchange trading fee, (iii) SFC transaction levy and (iv) any other applicable fees and charges in Hong Kong.

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Share certificates and refund cheques for Rights Issues

Subject to the fulfilment and/or waiver (where applicable) of the conditions of the Rights Issue as set out below, share certificates for all fully-paid Rights Shares are expected to be posted to those entitled thereto by ordinary post to their registered address, at their own risks, on or before Thursday, 23 May 2019.

Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before Thursday, 23 May 2019 by ordinary post to the applicants’ registered address, at their own risk.

The Rights Issue on a non-underwritten basis

Subject to the fulfilment and/or waiver (where applicable) of the conditions of the Rights Issue, the Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event that there is an under-subscription of the Rights Issue, the size of the Rights Issue will be reduced accordingly.

The Participating Shareholders have given the Irrevocable Undertakings to undertake to maintain their respective current beneficial shareholding in 837,920,000 Shares up to and including the Record Date and to lodge acceptance for all the 1,675,840,000 Rights Shares provisionally allotted to it with full payment by the Latest Time for Acceptance. In addition, the Rights Issue is conditional upon the conditions set out in the section headed “Conditions of the Rights Issue” in this circular including, amongst other things, compliance of Irrevocable Undertakings by the Participating Shareholders and the gross proceeds from the Rights Issue (or, if the Rights Shares are not fully taken up under the Rights Issue, in aggregate with the Placing) being not less than HK$710,000,000 (the “ Minimum Proceeds Condition ”). As the proposed Rights Issue is subject to conditions, it may or may not proceed.

Subject to the commitment of the Participating Shareholders under the Irrevocable Undertakings as well as the satisfaction of the Minimum Proceeds Condition, there is no minimum amount to be raised under the Rights Issue in order for the Rights Issue to proceed. The legal advisers of the Company have confirmed that there are no applicable statutory requirements regarding minimum subscription levels in respect of the Rights Issue.

Besides, a Shareholder who applies to take up all or part of its entitlement under PAL or apply for excess Rights Shares under EAF may unwittingly incur an obligation to make a general offer under the Takeovers Code, unless a waiver from the Executive (as defined in the Takeovers Code) has been obtained.

The Rights Issue will be made on the term that the Company will, pursuant to Rule 7.19(5) of the Listing Rules, provide for Shareholders to apply on the basis that if the Rights Shares are not fully taken up, the applications of any Shareholder for its

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LETTER FROM THE BOARD

entitlement under the PAL or for excess Rights Shares under the EAF can be scaled down to a level which does not trigger an obligation on part of the relevant Shareholder to make a general offer under the Takeovers Code.

Conditions of the Rights Issue

The Rights Issue is conditional upon the following conditions:

(i) the passing of the necessary resolutions by the Shareholders (or as the case may be, the Independent Shareholders) at the EGM to approve the Acquisition, the Increase in Authorised Share Capital, the Rights Issue and the Placing (including the Specific Mandate);
(ii) the Increase in Authorised Share Capital becoming effective prior to the Posting Date;
(iii) the delivery of the Prospectus to the Stock Exchange and the issue by the Stock Exchange on or before the Posting Date of a certificate authorizing registration of the Prospectus with Hong Kong Companies Registry;
(iv) a duly certified copy of the Prospectus (and other required documents) having been lodged with Hong Kong Companies Registry and Hong Kong Companies Registry issuing a confirmation of registration on or before the Posting Date;
(v) following registration, the posting of the Prospectus Documents to the Qualifying Shareholders (and where applicable, the posting of the Prospectus to the Non-Qualifying Shareholders, if any, for information purposes only) and the publication of the Prospectus Documents on the website of the Stock Exchange on or before the Posting Date;
(vi) the grant of listing of the Rights Shares by the Stock Exchange (either unconditionally or subject only to the allotment and dispatch of the share certificates in respect thereof) and the grant of permission to deal in the Rights Shares (in both their nil-paid and fully-paid forms) by the Stock Exchange (and such permission and listing not subsequently having been withdrawn or revoked);
(vii) there being no breach of the obligations of the Participating Shareholders under the Irrevocable Undertakings prior to the Latest Time for Acceptance;
(viii) the gross proceeds raised by the Company from the Rights Issue (or, if the Rights Shares are not fully taken up under the Rights Issue, in aggregate with the Placing) being not less than HK$710,000,000; and
(ix) all other necessary waivers, consents and approvals (if required) from the relevant governmental or regulatory authorities for the Rights Issue and the transactions contemplated thereunder having been obtained and fulfilled.

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LETTER FROM THE BOARD

None of the above conditions precedent can be waived. If any of the conditions referred to above are not fulfilled at or before 6:00 p.m. on Tuesday, 14 May 2019 (or such later date as the Company may determine), the Rights Issue will not proceed. As at the Latest Practicable Date, none of the conditions set out above has been satisfied.

Depending on the results of acceptance of the Rights Issue, the following scenarios are set out for illustrative purposes:

(1) If all the Rights Shares are fully taken up under the Rights Issue whether through valid acceptances of PAL(s) or EAF(s), the Placing will not proceed.
(2) If the Rights Shares are not fully taken up under the Rights Issue but the Minimum Proceeds Condition is achieved by the Rights Issue on a standalone basis, the Placing will still proceed to allow the Placing Agents to place the Untaken Shares on a best effort basis. Under this scenario, the Placing is not subject to any specific level of acceptance and completion of the Rights Issue shall take place simultaneously with the Placing.
(3) If the Rights Shares are not fully taken up under the Rights Issue and the Minimum Proceeds Condition is not achieved by the Rights Issue on a standalone basis, the Placing Agents will proceed to place the Untaken Shares on a best effort basis under the Placing which commences on the Business Day immediately after the Latest Time for Acceptance. If the gross proceeds of the Placing, when aggregated with the proceeds from the Rights Issue, achieve or exceed the Minimum Proceeds Condition by the close of placing period, both the Rights Issue and the Placing will (assuming all other conditions are also satisfied) complete simultaneously.
(4) If the gross proceeds of the Placing, even when aggregated with the Rights Issue, do not achieve the Minimum Proceeds Condition by the close of the placing period, both the Rights Issue and the Placing will lapse. Refund cheques will be dispatched to the Qualifying Shareholders who applied for Rights Shares through PAL(s) or EAF(s).

As the proposed Rights Issue is subject to the above conditions, it may or may not proceed.

Irrevocable Undertakings

On 14 February 2019, the Participating Shareholders (i.e. Ever City, Eastcorp and Mr. Zhang Songming) entered into the Irrevocable Undertakings in favour of the Company, pursuant to which they irrevocably undertake, among other things, that:

(i) they will subscribe for 1,675,840,000 Rights Shares (the “ Participating Shareholders Undertaken Shares ”) which comprise the full acceptance of their provisional entitlements under the Rights Issue;

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(ii) the Shares comprising their current shareholdings in the Company will remain beneficially owned by them on the Record Date; and
(iii) they will procure that their acceptance of such amount of Rights Shares, which will be provisionally allotted to them in nil-paid form under the Rights Issue, be lodged with the Registrar, with payment in full therefor, by no later than 4:00 p.m. at the Latest Time for Acceptance or otherwise in accordance with the instructions printed on the PAL(s).

Set out below are the number of Shares held by each of the Participating Shareholders as at the Latest Practicable Date and the respective number of Rights Shares they have irrevocably and unconditionally undertaken to accept pursuant to their respective Irrevocable Undertaking:

Participating Shareholders Ever City Eastcorp Mr. Zhang Songming Total:	Number of Shares held as at the Latest Practicable Date 320,380,000 200,000,000 317,540,000 837,920,000	Number of Rights Shares undertaken to be taken up 640,760,000 400,000,000 635,080,000
		1,675,840,000

Save for the Irrevocable Undertakings, the Company has not received any information or irrevocable undertaking from any substantial shareholders (as defined in the Listing Rules) of the Company of their intention to take up the Rights Shares to be provisionally allotted or offered to them under the Rights Issue as at the Latest Practicable Date.

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

The Rights Issue is subject to the fulfilment of conditions including, among other things, the Stock Exchange granting the listing of, and permission to deal in, the Rights Shares in their nil-paid and fully-paid forms. Please refer to the section headed “Conditions of the Rights Issue” in this circular. Shareholders and potential investors of the Company should note that if the conditions to the Rights Issue are not satisfied, the Rights Issue will not proceed.

The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event the Rights Issue is not fully subscribed, any Rights Shares not taken up by the Qualifying Shareholders or transferees of nil-paid Rights Shares will not be issued by the Company and the size of the Rights Issue will be reduced accordingly. Investors are advised to exercise caution when dealing in the Shares or Rights Shares in their nil-paid form.

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Any dealings in the Shares from the date of the Announcement up to the date on which all the conditions of the Rights Issue are fulfilled, and any Shareholders dealing in the Rights Shares in nil-paid form will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Any Shareholders or other persons contemplating any dealings in the Shares or Rights Shares in their nil-paid form are recommended to consult their professional advisers.

(III) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE

On 15 February 2019 (after trading hours), the Company and the Placing Agents entered into the Placing Agreement, pursuant to which the Placing Agents conditionally agreed to effect the Placing by procuring no less than six Placees to subscribe for such number of Placing Shares as is equivalent to the number of Untaken Shares during the Rights Issue at the Placing Price of HK$0.23 per Share on a best effort basis. Under the terms of the Placing Agreement, if all the Rights Shares are already fully taken up in the Rights Issue whether through valid acceptances of PAL(s) or EAF(s), the Placing will not proceed.

THE PLACING AGREEMENT

Date: 15 February 2019 (after trading hours) Parties: (1) The Company (as issuer) (2) Celestial Capital Limited (3) Yue Xiu Securities Company Limited (4) Fulixin Securities Limited

Celestial Capital Limited is a company incorporated in Hong Kong with limited liability and licensed by the SFC to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO. Yue Xiu Securities Company Limited is a company incorporated in Hong Kong with limited liability and licensed by the SFC to carry on Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities) and Type 5 (advising on future contracts) regulated activities under the SFO. Fulixin Securities Limited is a company incorporated in Hong Kong with limited liability and licensed by the SFC to carry on Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activities under the SFO. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Placing Agents and their ultimate beneficial owner(s) are third parties independent of the Company and its connected persons.

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Placing Shares

Pursuant to the Placing Agreement, the Placing Agents conditionally agreed to, as agents for the Company in respect of the Placing Shares, effect the Placing by procuring Placees to subscribe for such number of Placing Shares as is equivalent to the number of unsubscribed Rights Shares not taken up by Qualifying Shareholders whether under PAL(s) or EAF(s) during the Rights Issue calculated below (the “ Untaken Shares ”) at the Placing Price on a best effort basis:

				Total number of Rights
Number of		Number of Rights Shares		Shares taken up by
Untaken	=	available for subscription as	–	Qualifying Shareholders
Shares		at the Record Date		whether under PAL(s) or
				EAF(s)

There are 2,120,448,858 Shares in issue as at the Latest Practicable Date. As disclosed in the section headed “Rights Issue statistics” above in this circular, up to 4,240,897,716 Rights Shares will be offered for subscription under the Rights Issue (assuming no further issue or repurchase of Shares on or before the Record Date). Since the Participating Shareholders have given the Irrevocable Undertakings to commit for their assured entitlement of 1,675,840,000 Rights Shares under the Rights Issue, the Company is assured of gross proceeds of HK$385,443,200 under the Rights Issue even assuming nil acceptance of the Rights Issue by the other Qualifying Shareholders.

If the Rights Issue does not achieve the Minimum Proceeds Condition on a standalone basis, the Placing will be conditional upon the raising of the minimum gross proceeds of HK$710,000,000 under the Rights Issue and the Placing in aggregate. Therefore, assuming nil acceptance of the Rights Issue by the other Qualifying Shareholders (except the Participating Shareholders), the Placing Completion is subject to, amongst other things, the successful placing of a minimum of 1,411,116,522 Placing Shares raising gross proceeds of at least HK$324,556,800 in order for the Placing to become unconditional and thereby proceed to Placing Completion.

The maximum number of 2,565,057,716 Placing Shares is the maximum number of Untaken Shares in the Rights Issue assuming nil acceptance of the Rights Issue by the other Qualifying Shareholders (except the Participating Shareholders), i.e. maximum 4,240,897,716 Rights Shares offered under the Rights Issue, minus 1,675,840,000 Rights Shares committed to be taken up by the Participating Shareholders under the Irrevocable Undertakings.

Assuming that (i) there will be no change in the issued share capital of the Company between the Latest Practicable Date and the date of Placing Completion; and (ii) no Qualifying Shareholders (except the Participating Shareholders) take up any of the Rights Shares, the maximum number of 2,565,057,716 Placing Shares represents: (i) approximately 120.97% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 54.74% of the issued share capital of the Company as enlarged by the allotment and issue of the Placing Shares only. The

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maximum number of 2,565,057,716 Placing Shares have an aggregate market value of approximately HK$884,944,912 based on the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the date of the Placing Agreement, and an aggregate nominal value of HK$25,650,577 based on par value of HK$0.01 per Share. If taking into account of the Rights Issue, the maximum number of 2,565,057,716 Placing Shares have an aggregate market value of approximately HK$688,204,985 in view of the theoretical ex-rights price of HK$0.2683 per Share based on the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the date of the Placing Agreement.

The Placing Shares will rank, upon issue, pari passu in all respects with the Shares then in issue on the date of allotment and issue of the Placing Shares.

Placees

The Placees shall be professional, institutional and other investors. The Placing Agents shall ensure that the Placees, and whose ultimate beneficial owner(s), shall be third party(ies) independent of the directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or any of their respective associates. The Placing Agents will ensure that none of the Placees (when aggregated with their respective associates) will become a substantial shareholder of the Company as a result of the Placing. Further, the Placing Agents will ensure that none of the Placees (whether individually or together with their respective associates) will become a substantial shareholder of the Company as defined under the Listing Rules.

Commission

Upon Placing Completion, the Company will pay to each Placing Agent the Placing Commission, which is equal to 2.0% of the Placing Price multiplied by the number of Placing Shares successfully placed by the relevant Placing Agent.

For the avoidance of doubt, the Placees shall, on top of the Placing Price, pay all such brokerage fees, SFC transaction levy, Stock Exchange trading fee and stamp duty (if any) as may be notified by the Placing Agents in relation to each such Placing Share.

Placing Price

For the avoidance of doubt, the Placing will be proceeded only if the Rights Shares are not fully subscribed. The Placing Price of HK$0.23 per Placing Share, which is equivalent to the Subscription Price under the Rights Issue, represents:

(i) a discount of approximately 33.33% to the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the date of the Placing Agreement;

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(ii) a discount of approximately 14.28% to the theoretical ex-rights price of HK$0.2683 per Share based on the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the date of the Placing Agreement, if taking into account of the Rights Issue;
(iii) a discount of approximately 33.33% to the average closing price of HK$0.345 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the five (5) consecutive trading days prior to and excluding the date of the Placing Agreement;
(iv) a discount of approximately 32.85% to the average closing price of HK$0.3425 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the ten (10) consecutive trading days prior to but excluding the date of the Placing Agreement;
(v) a discount of approximately 1.29% to the unaudited net asset value per Share of approximately HK$0.233 based on the unaudited total equity attributable to shareholders of the Company of HK$494,619,000 as at 30 June 2018 and the number of 2,120,448,858 issued Shares as at 30 June 2018 and the Latest Practicable Date; and
(vi) a discount of approximately 8% to the closing price of HK$0.25 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

The Placing Price was negotiated on an arm’s length basis between the Company and the Placing Agents and was determined with reference to the prevailing market price of the Shares and the Subscription Price under the Rights Issue.

The Directors (including the independent non-executive Directors) considered that the terms of the Placing (including the Placing Price and the Placing Commission) are on normal commercial terms and are fair and reasonable based on the prevailing market conditions. Therefore, and also taking into account the reasons set out in the section headed “Reasons for the Rights Issue and the Placing and the Use of Proceeds” of this circular, the Directors (including the independent non-executive Directors) considered that the Placing is in the interests of the Company and the Shareholders as a whole.

Conditions to the Placing

The obligations of the Placing Agents and the Company under the Placing Agreement are conditional upon the following conditions being fulfilled (or being waived by the Placing Agents in writing, if applicable):

(a) none of the representations, warranties or undertakings by the Company contained in the Placing Agreement being or having become untrue, inaccurate or misleading in any material respect at any time before the Placing Agreement would otherwise become unconditional, and no fact or circumstance having arisen and nothing having been done or omitted to be

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done which would render any of such representations, warranties or undertakings of the Company untrue or inaccurate in any material respect if it was repeated as at the time of Placing Completion;

(b) the Placing Agreement not having been terminated in accordance with the provisions thereof at any time before the Placing Agreement would otherwise become unconditional;
(c) the duly passing of the resolution(s) at the EGM by the Shareholders (or as the case may be, the Independent Shareholders) approving the Placing Agreement and the transactions contemplated thereunder (including the Specific Mandate);
(d) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in, the Placing Shares and such approval not being withdrawn prior to the Placing Completion; and
(e) the gross proceeds raised by the Company from the Rights Issue and the Placing being not less than HK$710,000,000 in aggregate.

Condition (a) above may be waived by the Placing Agents in their absolute discretion. The other conditions to the Placing Agreement may not be waived by the Company or the Placing Agents in any event. As at the Latest Practicable Date, none of the conditions set out above has been satisfied.

The timetable of the Placing is driven by the timetable of the Rights Issue. Under the terms of the Placing Agreement, if there is any Untaken Shares available under the Rights Issue, the placing period shall commence on Tuesday, 14 May 2019 (subject to change), i.e. the Business Day immediately after the Latest Time for Acceptance. The placing period shall end on Thursday, 16 May 2019 (subject to change). The long stop date for the fulfilment of conditions of the Placing Agreement shall be 6:00 p.m. on the third Business Day after the last day of the placing period (the “ Placing Long Stop Date ”), i.e. Tuesday, 21 May 2019 (subject to change). The Company will seek Independent Shareholders’ approval for any extension of the Placing Long Stop Date.

For the avoidance of doubt, if all the Rights Shares are fully subscribed under the Rights Issue (whether under the PAL(s) or EAF(S)), the Placing will not proceed.

Rescission

If any of the following events occur at any time prior to 6:00 p.m. on the Placing Long Stop Date, the Placing Agents may (after such consultation with the Company and/or its advisers as the circumstances shall admit or be necessary), by giving a written notice to the Company, at any time prior to the date of completion of the Placing provided that such notice is received by the Company prior to 6:00 p.m. on the Placing Long Stop Date, rescind the Placing Agreement without liability to the other parties and, subject to clauses in the Placing Agreement which survives termination, the Placing Agreement shall thereupon cease to have effect and none of the parties to the

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Placing Agreement shall have any rights or claims by reason thereof save for any rights or obligations which may accrue under the Placing Agreement prior to such termination:

(a) in the reasonable opinion of the Placing Agents there shall have been since the date of the Placing Agreement such a change in national or international financial, political or economic conditions or taxation or exchange controls as would be likely to prejudice materially the consummation of the Placing; or
(b) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any matter whatsoever which may adversely affect the business or the financial or trading position or prospects of the Group as a whole; or
(c) any material breach of any of the representations and warranties by the Company comes to the knowledge of the Placing Agents or any event occurs or any matter arises on or after the date of the Placing Agreement and prior to the date of completion of the Placing which if it had occurred or arisen before the date of the Placing Agreement would have rendered any of such representations and warranties untrue or incorrect in any material respect or there has been a material breach by the Company of any other provision of the Placing Agreement; or
(d) any moratorium, suspension or restriction on trading in shares or securities generally on the Stock Exchange due to exceptional financial circumstances; or
(e) there is any adverse change in the financial position of the Company which in the reasonable opinion of the Placing Agents is material in the context of the Placing.

Completion of the Placing

Subject to fulfilment or waiver (as the case may be) of the conditions as set out in the section headed “The Placing Agreement – Conditions to the Placing” of this circular, Placing Completion shall take place on the Business Day immediately after the satisfaction or waiver of all conditions to the Placing Agreement. If any of such conditions have not been fulfilled by the Placing Long Stop Date or become incapable of being fulfilled (unless extended by mutual consent of the Company and the Placing Agents), then the Placing will lapse and all rights, obligations and liabilities of the Company and the Placing Agents in relation to the Placing shall cease and determine, save in respect of any accrued rights or obligations under the Placing Agreement or antecedent breach, in each case prior to termination.

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REASONS FOR THE RIGHTS ISSUE AND THE PLACING AND THE USE OF PROCEEDS

The expected gross and net proceeds from the Rights Issue and the Placing are set out below, based on the different scenarios arising from different acceptance ratios of the Rights Issue and the Placing (i.e. Scenarios I, II and III as defined below in this circular for illustrative purpose only):

	Scenario I	Scenario II	Scenario III
	HK$	HK$	HK$
	(approximately)	(approximately)	(approximately)
Rights Issue
Gross proceeds	975.41 million	385.44 million	385.44 million
Net proceeds	970.64 million	380.88 million	380.88 million
Net price per Rights Share	0.2289	0.2273	0.2273
Placing
Gross proceeds	Nil	324.56 million	589.96 million
Net proceeds	Nil	317.59 million	577.42 million
Net price per Placing Share	Nil	0.2251	0.2251

The net proceeds of the Rights Issue and the Placing are intended to be used in the following sequence:

(i) approximately HK$673.29 million for settlement of the Consideration; and
(ii) the balance of between approximately HK$25.18 million (assuming that the Minimum Proceeds Condition is just achieved) and approximately HK$297.35 million (assuming full acceptance under the Rights Issue) for the development of fund investment and management businesses of the Group in Hong Kong and the PRC (“ Fund Management Business ”).

In the event that the Acquisition cannot be completed, the Company will apply the net proceeds originally intended for the Acquisition for the acquisition of other investment properties which may be identified by the Company from time to time.

For the purpose of engaging in the financial services business, the Group completed the acquisition of the entire issued share capital of Hooray Asset Management Limited (“ HAML ”) in June 2017. HAML is a company incorporated in Hong Kong with limited liability and a corporation licensed by the SFC to conduct Type 9 (asset management) regulated activities under the SFO.

To leverage on the policy of encouraging inbound foreign investment in the PRC, the Group set up Ruijin Equity Investment Fund Management (Shenzhen) Company Limited (“ Ruijin ”), a wholly-owned subsidiary of the Company in QianHai, Shenzhen, to undertake China-Hong Kong cross-border fund management and financial services. Ruijin obtained the Qualified Foreign Limited Partnership (“ QFLP ”) license in

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LETTER FROM THE BOARD

December 2016, which allows Ruijin to participate in the private equity and venture capital markets in the PRC. Given the Group’s business focuses on financial services, property investment and development and public utilities which are all capital-intensive in nature, the Group intends to use Ruijin as the vehicle to invest in non-controlling interests (or limited partnership shares) in bigger projects in China with synergy with the Group’s principal business activities, while maintaining the strategic role of fund manager (or general partnership shares). As such, instead of investing a big sum (of, say, over HK$200 million) in a single project, the Company can invest into multiple projects with smaller investment amount (of, say, between HK$50 million and HK$80 million each), resulting in a more balanced and diversified risk and return portfolio for the Group in the long run.

The theoretical diluted price, the benchmarked price and the theoretical dilution effect (as those terms are defined under Rule 7.27B of the Listing Rules) for the Rights Issue and the Placing under the Specific Mandate are HK$0.2683 per Share, HK$0.345 per Share and 22.23%, respectively. During the 12 month period immediately preceding the date of the Announcement, the Company has not undertaken (whether by reference to the date of announcement or the date of share issue) any rights issue, open offer or specific mandate placing.

The Company, after considering other funding alternatives as elaborated in the section headed “Other fund raising alternatives considered by the Company” in this letter, initially intended to finance the Acquisition and the Fund Management Business via Rights Issue on fully underwritten basis.

Since January 2019, the Company had invited five brokerage companies for underwriting the Rights Issue. All of them rejected the Company’s invitation mainly due to volatile market and the low trade volume of the Shares, but expressed interest in acting as placing agent on best effort basis. As such, the Company subsequently decided to conduct the Rights Issue on non-underwritten basis and to adopt the Placing (with the Minimum Proceeds Condition) simultaneously in order to ensure sufficient funds could be raised. Since if the Company could proceed with the Rights Issue on fully underwritten basis, any Rights Shares not taken up will be placed / taken by the underwriter at the Subscription Price, the Company considers that the placing obligation of the Placing Agents are more or less similar to an underwriter of Rights Issue (except that the Placing Agents are on best effort basis) and it is appropriate to set the Placing Price at HK$0.23, which is equivalent to the Subscription Price, taking into account of the dilution impact and the benefits from the proposed uses of proceeds.

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LETTER FROM THE BOARD

OTHER FUND-RAISING ALTERNATIVES CONSIDERED BY THE COMPANY

The Directors have considered alternative fund raising methods which include, among other things, debt financing such as bank borrowing and equity financing such as placing of new shares and open offer.

In respect of equity financing, as opposed to the Rights Issue, placing of new Shares can only raise funds in a relatively smaller size and does not allow the Shareholders to maintain their respective shareholdings in the Company, whereas open offer does not provide Shareholders with the flexibility to increase their shareholding interests in the Company by acquiring additional rights entitlements in the open market or reduce their shareholding interests in the Company by liquidate their entitlement rights by disposing such nil-paid Rights Shares during the prescribed period of time for economic benefits (if they do not wish to subscribe for the Rights Shares).

FUND-RAISING ACTIVITIES OF THE COMPANY FOR THE PAST TWELVE MONTHS

The Company has not conducted any fund-raising activities in the past twelve months immediately preceding the date of the Announcement.

CHANGES IN SHAREHOLDING STRUCTURE

As at the Latest Practicable Date, the Company has 2,120,448,858 Shares in issue. Set out below are the shareholding structures of the Company as at the Latest Practicable Date and under the following three scenarios arising from different acceptance ratios of the Rights Issue and the Placing (for illustration purpose only), in each case assuming that there is no other changes in the issued share capital of the Company between the Latest Practicable Date and the date of completion of the Rights Issue and the Placing:

(i) assuming full acceptance by the Qualifying Shareholders of the Rights Issue whether under PAL(s) or EAF(s) leaving no Untaken Shares to be placed in the Placing (“ Scenario I ”);
(ii) assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the minimum 1,411,116,522 Placing Shares to render the Rights Issue and Placing unconditional (“ Scenario II ”); and

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LETTER FROM THE BOARD

(iii) assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the maximum 2,565,057,716 Untaken Shares (“ Scenario III ”):

Participating Shareholders Ever City (Note) Eastcorp (Note) Mr. Zhang Songming Public shareholders Mr. Zeng Placees Other public shareholders Total	As at the Latest Practicable Date 320,380,000 15.11% 200,000,000 9.43% 520,380,000 24.54% 317,540,000 14.98% 100,000,000 4.72% – – 1,182,528,858 55.76% 2,120,448,858 100.00%	As at the Latest Practicable Date 320,380,000 15.11% 200,000,000 9.43% 520,380,000 24.54% 317,540,000 14.98% 100,000,000 4.72% – – 1,182,528,858 55.76% 2,120,448,858 100.00%	Scenario I 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 300,000,000 4.72% – – 3,547,586,574 55.76% 6,361,346,574 100.00%	Scenario I 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 300,000,000 4.72% – – 3,547,586,574 55.76% 6,361,346,574 100.00%	Scenario II 961,140,000 18.46% 600,000,000 11.52% 1,561,140,000 29.98% 952,620,000 18.29% 100,000,000 1.92% 1,411,116,522 27.10% 1,182,528,858 22.71% 5,207,405,380 100.00%	Scenario II 961,140,000 18.46% 600,000,000 11.52% 1,561,140,000 29.98% 952,620,000 18.29% 100,000,000 1.92% 1,411,116,522 27.10% 1,182,528,858 22.71% 5,207,405,380 100.00%	Scenario III 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 100,000,000 1.57% 2,565,057,716 40.32% 1,182,528,858 18.59% 6,361,346,574 100.00%	Scenario III 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 100,000,000 1.57% 2,565,057,716 40.32% 1,182,528,858 18.59% 6,361,346,574 100.00%
	520,380,000 317,540,000 100,000,000 – 1,182,528,858	24.54% 14.98% 4.72% – 55.76%	1,561,140,000 952,620,000 300,000,000 – 3,547,586,574	24.54% 14.98% 4.72% – 55.76%	1,561,140,000 952,620,000 100,000,000 1,411,116,522 1,182,528,858	29.98% 18.29% 1.92% 27.10% 22.71%	1,561,140,000 952,620,000 100,000,000 2,565,057,716 1,182,528,858	24.54% 14.98% 1.57% 40.32% 18.59%
	2,120,448,858	100.00%	6,361,346,574	100.00%	5,207,405,380	100.00%	6,361,346,574	100.00%

Note:

Ms. Zhu, Affluent Vast and Ever City are deemed to be interested in 520,380,000 Shares, representing 24.54% of the total issued share capital of the Company, which comprises (a) 320,380,000 Shares directly held by Ever City; and (b) 200,000,000 shares held by Eastcorp. Ever City is wholly and beneficially owned by Affluent Vast. Affluent Vast is wholly and beneficially owned by Ms. Zhu. Therefore, Ever City is deemed to be a controlled corporation of Affluent Vast and Ms. Zhu. Eastcorp is wholly and beneficially owned by Ever City. Therefore, Eastcorp is deemed to be a controlled corporation of Ever City, Affluent Vast and Ms. Zhu.

POSSIBLE ADJUSTMENTS TO THE SHARE OPTIONS

As at the Latest Practicable Date, the Company has 40,000,000 outstanding Share Options entitling the holders thereof to subscribe for a total of 40,000,000 Shares. As a result of the Rights Issue, it is expected that the exercise price, and/or the number of Shares, of the outstanding Share Options will be adjusted in accordance with the terms and conditions of Share Option Scheme. Other than the outstanding Share Options, the Company does not have any warrants, options, or other securities exchangeable or convertible into Shares as at the Latest Practicable Date. The Company will engage the Company’s auditors to review and determine the relevant adjustments and make further announcements on the appropriate adjustments and the date(s) they are expected to take effect in due course.

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LETTER FROM THE BOARD

(IV) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

As at the Latest Practicable Date, the Company’s authorised share capital is HK$50,000,000 divided into 5,000,000,000 Shares. In order to facilitate the Rights Issue and the Placing, to accommodate the future expansion and growth of the Group and to provide the Company with greater flexibility for future expansion in the share capital of the Company, the Company proposed that the authorised share capital of the Company be increased to HK$200,000,000 dividend into 20,000,000,000 Shares. The proposed Increase in Authorised Share Capital is subject to the approval of the Shareholders by way of an ordinary resolution at the EGM.

The Board is of the view that the Increase in Authorised Share Capital will provide flexibility to the Company for future fundraising and expansion in the share capital of the Company, and is therefore in the interest of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

(I) The Acquisition

As certain applicable percentage ratios under the Listing Rules in respect of the Acquisition are more than 25% but less than 100%, the Acquisition constitutes a major transaction for the Company and is subject to the reporting, announcement, circular and shareholders’ approval requirements under Chapter 14 of the Listing Rules.

Ms. Zhu, an executive Director and a substantial shareholder of the Company holding 520,380,000 Shares (representing approximately 24.54% of the issued share capital of the Company) in aggregate through Ever City and Eastcorp, is the legal and beneficial owner of Property B. As such, Ms. Zhu is a connected person of the Company. The Acquisition constitutes a connected transaction for the Company and is subject to the reporting, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. As Ever City and Eastcorp have a material interest in the Acquisition, they are required to abstain from voting in respect of the resolution(s) relating to the Acquisition at the EGM.

Based on the information provided by the Vendor, as at the Latest Practicable Date, Mr. Zeng, one of the ultimate beneficial owners of Property C Lessee (which is in turn the 60% shareholder of Property A Owner) owns 100,000,000 Shares (representing approximately 4.72% of the issued share capital of the Company). As Mr. Zeng has a material interest in the Acquisition, he is required to abstain from voting in respect of the resolution(s) relating to the Acquisition at the EGM.

(II) The Rights Issue

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LETTER FROM THE BOARD

conditional on the approval by shareholders in general meeting by a resolution on which any controlling shareholders and their associates or, where there are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the issuer and their respective associates shall abstain from voting in favour. As at the Latest Practicable Date, the Company has no controlling shareholder. Ever City and Eastcorp (being controlled corporations and associates of Ms. Zhu, an executive Director) are holding 520,380,000 Shares and are required to abstain from voting in favour of the resolution relating to the Rights Issue at the EGM. As part of the net proceeds of the Rights Issue will be applied for satisfaction of the Consideration, Mr. Zeng (one of the ultimate beneficial owners of Property C Lessee, which is in turn the 60% shareholder of Property A Owner) is considered to have a material interest in the Rights Issue and is required, and he has also provided an irrevocable undertaking to the Company, to abstain from voting in respect of the resolution(s) relating to the Rights Issue at the EGM.

The Prospectus Documents or the Prospectus, whichever being appropriate, will be dispatched to the Qualifying Shareholders and, for information only, the Non-Qualifying Shareholders in due course.

(III) The Placing

As the Placing Shares will be allotted and issued under the Specific Mandate to be obtained at the EGM, the Placing is subject to the Shareholders’ approval. As part of the net proceeds of the Placing will be applied for satisfaction of the Consideration, Ever City, Eastcorp and Mr. Zeng are considered to have a material interest in the Placing and are required, and have provided irrevocable undertakings to the Company, to abstain from voting in respect of the resolution(s) relating to the Placing at the EGM.

(IV) The Increase in Authorised Share Capital

The Increase in Authorised Share Capital is conditional upon, among other things, the approval by the Shareholders by way of an ordinary resolution at the EGM. As none of the Shareholders or their associates would have any interest in the Increase in Authorised Share Capital, no Shareholder would be required, or have undertaken, to abstain from voting in respect of the resolution(s) relating to the Increase in Authorised Share Capital at the EGM.

GENERAL

The Group is principally engaged in investment holding, property investment and development, building management and water supply and related services.

The Independent Board Committee comprising all the independent non-executive Directors has been established to provide recommendations to the Independent Shareholders in connection with the Acquisition, the Rights Issue and the Placing (including the Specific Mandate). TC Capital is appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Acquisition, the Rights Issue and the Placing (as to the Placing Price and the Placing Commission only).

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LETTER FROM THE BOARD

The EGM will be convened and held by the Company to consider, and if thought fit, to approve the Acquisition Agreement, the Rights Issue, the Placing (including the Specific Mandate) and the Increase in Authorised Share Capital. In compliance with the Listing Rules, all resolutions will be voted on by way of poll at the EGM. As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, save for Ms. Zhu and her associates (i.e. Ever City and Eastcorp) and Mr. Zeng (one of the ultimate beneficial owners of Property C Lessee, which is in turn the 60% shareholder of Property A Owner), no other Shareholder is required to abstain from voting on the Relevant Resolutions at the EGM.

Subject to the approval of the Rights Issue by the Independent Shareholders at the EGM, the Prospectus containing further information regarding, among other things, the Rights Issue, including information on acceptances of the Rights Shares and other information in respect of the Group, and the PAL(s) and the EAF(s) are expected to be dispatched to the Qualifying Shareholders on or before Thursday, 25 April 2019. The Company will, to the extent reasonably practicable and legally permitted and subject to the advice of legal advisers in the relevant jurisdictions in respect of applicable local laws and regulations, send the Prospectus to the Non-Qualifying Shareholders for their information only.

EGM

A notice convening the EGM to be held at 11:00 a.m. on Wednesday, 10 April 2019, at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong is set out on pages EGM-1 to EGM-4 of this circular for the purposes of considering and, if thought fit, approving the Increase in Authorised Share Capital, the Acquisition, the Rights Issue, the Placing (including the Specific Mandate) together with the transactions contemplated thereunder.

A proxy form 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 enclosed proxy form in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Hong Kong Registrars Limited, at 17M Floor, 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 proxy form shall 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 and in such event, the instrument appointing a proxy shall be deemed to be revoked.

RECOMMENDATION

The Directors (including the independent non-executive Directors, whose views are now set out in the letter from the Independent Board Committee as contained in this circular) are of the view that the Acquisition is in the ordinary course of business of the Group and although the Rights Issue is not in the ordinary course of business of the Group, the terms of the Increase in Authorised Share Capital, the Acquisition Agreement, the Rights Issue and the Placing (including the Specific Mandate) are on normal commercial terms and are fair and reasonable and insofar as the Company and its Shareholders (including the Independent Shareholders) are concerned, and are in the interests of the Company and the

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LETTER FROM THE BOARD

Shareholders (including the Independent Shareholders) as a whole. Accordingly, the Directors (including the independent non-executive Directors, whose views are now set out in the letter from the Independent Board Committee as contained in this circular) recommend the Shareholders/Independent Shareholders (as the case may be) to vote in favour of the resolutions to be proposed at the EGM to approve the Increase in Authorised Share Capital, the Acquisition Agreement, the Rights Issue and the Placing (including the Specific Mandate).

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice of the EGM.

By order of the Board UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED Chen Jinyang

Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

The following is the text of the letter of recommendation, prepared for the purpose of incorporation in this circular, from the Independent Board Committee to the Independent Shareholders regarding the Acquisition, the Rights Issue and the Placing (including the Specific Mandate):

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

22 March 2019

To the Independent Shareholders

Dear Sir or Madam,

(I) MAJOR AND CONNECTED TRANSACTION INVOLVING THE PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY;

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

We refer to the circular of the Company dated 22 March 2019 (this “ circular ”) of which this letter forms part. Unless the context specifies otherwise, capitalized terms used herein have the same meanings as defined in this circular.

We have been appointed by the Board to advise the Independent Shareholders as to whether the terms of the Acquisition, the Rights Issue and the Placing (including the Specific Mandate) are fair and reasonable insofar as the Independent Shareholders are concerned. TC Capital International Limited has been appointed as the Independent Financial Adviser to advise you and us in this respect.

Having taken into account the principal reasons and factors considered by, and the advice of, the Independent Financial Adviser as set out in its letter of advice to you and us on pages 48 to 74 of this circular, we are of the opinion that the Acquisition is in the ordinary course of business of the Group and although the Rights Issue is not in the ordinary course of business of the Group, the Acquisition (including the terms and conditions of the Acquisition Agreement), the Rights Issue and the Placing (including the Specific Mandate) are on normal commercial terms, is in the interests of the Company and the Shareholders as a whole and the terms of which are fair and reasonable insofar as the Company and the Independent Shareholders are concerned.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM to approve the Acquisition, the Rights Issue and the Placing Agreement (including the Specific Mandate).

Yours faithfully, For and on the behalf of the Independent Board Committee Dr. Cheung Wai Bun, Charles, J.P. Mr. David Tsoi Mr. Chao Pao Shu George Independent Non-Executive Directors

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Acquisition and the Rights Issue for inclusion in this circular.

22 March 2019

The Independent Board Committee and the Independent Shareholders Universal Technologies Holdings Limited

Dear Sir/Madam,

(I) MAJOR AND CONNECTED TRANSACTION INVOLVING THE PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY; AND (II) PROPOSED RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Acquisition Agreement, the Rights Issue and the transactions contemplated thereunder, details of which are set out in the “Letter from the Board” (the “ Letter from the Board ”) contained in the circular of Universal Technologies Holdings Limited (the “ Company ”) issued to the Shareholders dated 22 March 2019 (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular, unless otherwise specified. As stated in the Letter from the Board, on 15 February 2019 (after trading hours), the Company (as purchaser), the Vendor and the Target Company entered into the Acquisition Agreement, pursuant to which the Vendor has conditionally agreed to sell, and the Company has conditionally agreed to purchase from the Vendor, the Sale Interests for the total cash consideration of RMB576.0 million (equivalent to approximately HK$673.3 million).

Completion of the Acquisition Agreement is subject to the Company having sufficient funding to finance the payment of the Consideration at Completion. As stated in the Letter from the Board, the Company proposed to launch the Rights Issue and the Placing which are conditional upon the raising of aggregate minimum gross proceeds of HK$710 million which is sufficient to cover the Consideration. If the Company does not manage to raise minimum gross proceeds of HK$710 million through the Rights Issue and the Placing, it does not intend to proceed with the Completion of the Acquisition Agreement.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the Letter from the Board, the Board proposed to raise gross proceeds of up to approximately HK$975.4 million (before expenses) on the basis of two (2) Rights Shares for every one (1) Share held on the Record Date by issuing up to 4,240,897,716 Rights Shares (assuming no further issue or repurchase of Shares on or before the Record Date) at the Subscription Price of HK$0.23 per Rights Share. The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event there is an under-subscription of the Rights Issue, the size of the Rights Issue will be reduced accordingly.

Listing Rules’ Implication

As at the Latest Practicable Date, Ms. Zhu, an executive Director and a substantial shareholder of the Company holding 520,380,000 Shares (representing approximately 24.54% of the issued share capital of the Company) in aggregate through Ever City and Eastcorp, is the legal and beneficial owner of Property B. As such, Ms. Zhu is a connected person of the Company. The Acquisition constitutes a connected transaction for the Company and is subject to the reporting, announcement, circular and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. As Ever City and Eastcorp have a material interest in the Acquisition, they are required to abstain from voting in respect of the resolution(s) relating to the Acquisition at the EGM.

As stated in the Letter from the Board, based on the information provided by the Vendor, as at the Latest Practicable Date, Mr. Zeng, one of the ultimate beneficial owners of Property C Lessee (which is in turn the 60% shareholder of Property A Owner) owns 100,000,000 Shares (representing approximately 4.72% of the issued share capital of the Company). As Mr. Zeng has a material interest in the Acquisition, he is required to abstain from voting in respect of the resolution(s) relating to the Acquisition at the EGM.

In accordance with Rule 7.19A(1) of the Listing Rules, as the Rights Issue will increase the issued share capital of the Company by more than 50%, the Rights Issue is subject to the approval of the minority Shareholders at the EGM by way of poll. Pursuant to Rule 7.27A(1) of the Listing Rules, where minority shareholders’ approval is required for a rights issue under Rule 7.19A of the Listing Rules, the rights issue must be made conditional on the approval by shareholders in general meeting by a resolution on which any controlling shareholders and their associates or, where there are no controlling shareholders, directors (excluding independent non-executive directors) and the chief executive of the issuer and their respective associates shall abstain from voting in favour. As at the Latest Practicable Date, the Company has no controlling shareholder. Ever City and Eastcorp (being controlled corporations and associates of Ms. Zhu, an executive Director) are holding 520,380,000 Shares and are required to abstain from voting in favour of the resolution relating to the Rights Issue at the EGM. As part of the net proceeds of the Rights Issue will

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

be applied for satisfaction of the Consideration, Mr. Zeng (one of the ultimate beneficial owners of Property C Lessee, which is in turn the 60% shareholder of Property A Owner) is considered to have a material interest in the Rights Issue and is required, and he has also provided an irrevocable undertaking to the Company, to abstain from voting in respect of the resolution(s) relating to the Rights Issue at the EGM.

We have been appointed by the Company to advise (i) the Independent Board Committee and the Independent Shareholders as to whether or not the terms of the Acquisition Agreement, the Rights Issue and the transactions contemplated thereunder are on normal commercial terms, in the ordinary and usual course of business of the Company, fair and reasonable insofar as the Independent Shareholders are concerned and in the interests of the Company and the Independent Shareholders as a whole; and (ii) whether the Independent Shareholders should vote in favour of the Acquisition Agreement, the Rights Issue and the transactions contemplated thereunder.

OUR INDEPENDENCE

As at the Latest Practicable Date, we did not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to the independence of us.

BASIS OF OUR OPINION

In formulating our opinion and recommendation, we have considered, among other things, (i) the Circular; (ii) the Acquisition Agreement; (iii) the annual report of the Company for the year ended 31 December 2017 (the “ 2017 Annual Report ”) and the interim report of the Company for the six months ended 30 June 2018 (the “ 2018 Interim Report ”); (iv) the financial information of the Group and the Target Group and the unaudited financial information of the Properties and the Enlarged Group as set out in Appendices IA, IIA, IIB and III to the Circular, respectively; (v) the valuation report on the Properties prepared by Grant Sherman Appraisal Limited, an independent firm of qualified valuer (the “ Independent Valuer ”), appointed by the Company (the “ Valuation Report ”); and (vi) relevant market data and information available from the website of Stock Exchange and public sources. We have also relied on all relevant information, opinions and facts supplied and represented by the Company, the Directors and the management of the Company. We have also studied the relevant market information and trends of the related industry.

We have assumed that all such information, opinions, facts and representations, which have been provided to us by the Directors or the representatives of the Company, are true, accurate and complete in all respects at the date thereof. The Directors have jointly and severally accepted full responsibility for the accuracy of the information contained in the Circular and have also confirmed that opinions expressed in the Circular have been arrived at after due and careful consideration and there are no material facts not contained in the Circular, the omission of which would make any statement in the Circular misleading. We have no reason to suspect that any material information has been withheld by the Company

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

or is misleading. Therefore, we have no reason to doubt the truth or accuracy of the information provided to us, or to believe that any material information has been omitted or withheld.

We consider that we have reviewed sufficient information currently available to reach an informed view and to justify our reliance on the accuracy of the information contained in the Circular so as to provide a reasonable basis for our recommendation. We have not, however, carried out independent verification of the information provided by the Directors and the management of the Company, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of each of the Group, the Target Company, the Properties and any of their respective subsidiaries and associates.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinions in respect of the Acquisition and the Rights Issue, we have taken into consideration the following principal factors and reasons:

I. THE ACQUISITION AGREEMENT

1. Background information of to the Acquisition

Information of the Group

As stated in the Letter from the Board, the Group is principally engaged in investment holding, properties investment, building management and water supply and related services.

The following tables summarise the financial information of the Group for the two years ended 31 December 2016 and 31 December 2017 (“ FY2016 ” and “ FY2017 ”, respectively) as extracted from the 2017 Annual Report, and the six months period ended 30 June 2017 and 30 June 2018 (“ HY2017 ” and “ HY2018 ”, respectively), as extracted from the 2018 Interim Report:

	For the year ended	For the year ended	For the six months	For the six months
	31 December		ended 30 June
	2016	2017	2017	2018
	HK$’000	HK$’000	HK$’000	HK$’000
	(audited)	_(audited) _	_(unaudited) _	(unaudited)
Revenue from continuing
operations	306,671	248,536	111,718	120,359
– Rental and building
management service income	2,268	2,423	1,130	1,290
– Water supply and related
services income	304,403	246,113	110,588	119,069
(Loss)/profit attributable to
Shareholders of the
Company	(25,171)	2,660	8,077	(11,133)

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	As at 31	As at 31	As at 30
	December	December	June
	2016	2017	2018
	HK$’000	HK$’000	HK$’000
	(audited)	_(audited) _	(unaudited)
Total assets	1,761,250	1,754,598	1,739,603
– cash and bank balances and fixed
deposits	437,635	311,136	322,126
Total liabilities	1,068,032	1,033,037	1,036,370
Net assets	693,218	721,561	703,233

The revenue of the Group was decreased by approximately 19.0% or approximately HK$58.1 million from approximately HK$306.7 million for FY2016 to approximately HK$248.5 million for FY2017 as compared to FY2016. As stated in the 2017 Annual Report, the decrease in revenue for FY2017 was mainly due to the completion of the construction of Taihe Water Plant Phase 2 in 2016, resulting in the decrease in construction service income under build-operate-transfer (“ BOT ”) water plant project from approximately HK$304.4 million in 2016 to approximately HK$246.1 million in 2017. The revenue of the Group for HY2018 was amounted to approximately HK$120.4 million, representing an increase of approximately 7.7% or approximately HK$8.6 million as compared to that for HY 2017. As stated in the 2018 Interim Report, the increase of the revenue was mainly attributable to the increase in revenue in both business segments for HY2018.

The Group recorded a profit attributable to Shareholders of the Company of approximately HK$2.7 million for FY2017 as compared to a loss recorded of approximately HK$25.2 million for FY2016. As stated in the 2017 Annual Report, such turnaround from loss-making to profit was mainly attributable to (i) the absence of net loss from International Payment Solutions Holdings Limited and its subsidiaries which was disposed in December 2016; and (ii) the exchange gain on Renminbi denominated assets of the Group arising from the appreciation of Renminbi. The loss attributable to Shareholders of the Company amounted to approximately HK$11.1 million for HY2018, representing a substantial decrease of approximately 237.8% as compared to a profit recorded of approximately HK$8.1 million for HY2017. As stated in the 2018 Interim Report, the turnaround from profit to loss-making was mainly due to (i) the exchange loss on Renminbi for HY2018, as compared to the exchange gain on Renminbi for HY2017; and (ii) the increase in operating costs, staff costs, administrative expenses and finance costs for HY2018.

The total assets of the Group slightly decreased by approximately 0.4% or approximately HK$6.7 million to approximately HK$1,754.6 million as at 31 December 2017 as compared to the total assets of approximately HK$1,761.3 million as at 31 December 2016 and further decreased approximately 0.9% or approximately HK$15.0 million to approximately HK$1,739.6 million as at 30 June 2018.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Group’s cash and bank balances and fixed deposits decreased by approximately 28.9% or approximately HK$126.5 million from approximately HK$437.6 million as at 31 December 2016 to approximately HK$311.1 million as at 31 December 2017. As stated in the 2017 Annual Report, such substantial decrease in cash and bank balances and fixed deposits was mainly due to the settlement of bank loans by Water Supply Group business, payment of dividend and construction fee under BOT water plant project. As at 30 June 2018, the Group’s cash and bank balances and fixed deposits amounted to approximately HK$322.1 million, representing an increase of approximately 3.5% or approximately HK$11.0 million as compared to that as at 31 December 2017. As stated in the 2018 Interim Report, such increase was mainly due to the net cash inflow generated from operating activities of water supply business.

The total liabilities of the Group as at 31 December 2017 amounted to approximately HK$1,033.0 million, representing a decrease of approximately 3.3% or approximately HK$35.0 million as compared to approximately HK$ 1,068.0 million as at 31 December 2016 and slightly increased of approximately 0.3% or approximately HK$3.3 million to approximately HK$1,036.4 million as at 30 June 2018.

Information of the Vendor

As stated in the Letter from the Board, based on the information provided by the Vendor, the Vendor is a company incorporated in the BVI and is an investment holding company legally, beneficially and wholly-owned by Mr. Zhang and Mr. Zhang is a merchant principally engaged in education equipment and software business. To the best knowledge of the Directors after reasonable enquiry, save for entering into the Acquisition Agreement, Mr. Zhang does not have any relationship (business or otherwise) with the Company and any of its connected person. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, each of the Vendor and its ultimate beneficial owner (i.e. Mr. Zhang Yu) is an Independent Third Party.

Information of the Target Group and the Properties

As stated in the Letter from the Board, based on the information provided by the Vendor, (i) the Target Company is an investment holding company incorporated in the BVI with limited liability whose sole asset is the entire issued share capital of Heng Hui Property Investment Limited (the “ HK Holdco ”); (ii) HK Holdco is an investment holding company incorporated in Hong Kong with limited liability whose sole asset is the entire equity interest in 廣州市頤城投資控股有限公司 (Guangzhou Yicheng Investment Holdings Limited) (the “ Nansha Holdco* ”); (iii) Nansha Holdco is a company established in the PRC with limited liability whose scope of business includes investment holding, consultancy and property development, operation, agency and management and whose sole asset is the entire equity interest in GZ Holdco; and (iv) GZ Holdco is a company established in the PRC with limited liability whose scope of business includes consultancy, property management and leasing.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As stated in the Letter from the Board, based on the information provided by the Vendor, on 14 February 2019 (i.e. prior to signing of the Acquisition Agreement), GZ Holdco entered into the Underlying Contracts, i.e. the three contracts relating to the Mall. Please refer to the paragraph headed “Information of the Target Group and the Properties” in the Letter from the Board for the details of the contracts.

The Mall is a commercial complex situated at Nos. 4 and 6 Nonglinxia Road, Yuexiu District, Guangzhou, the PRC which is connected to Dongshankou metro station of Guangzhou Metro. As stated in the Letter from the Board, the Mall has six storey on or above ground level, namely: (i) Level One (i.e. the ground floor), (ii) Level Two, (iii) Level Three, (iv) Level Four, (v) Level Five, and (vi) Level Six; and three underground levels, namely: (i) Basement One, (ii) Basement Two, and (iii) Basement Three. Level One to Level Six together with Basement One are for retail and commercial use, while Basement Two and Three are underground car parking spaces.

As stated in the Letter from the Board, the Mall is separately owned by three owners, namely 廣州市錦城房地產發展有限公司 (Guangzhou Jincheng Property Development Co., Ltd) (the “ Property A Owner ”), Ms. Zhu Fenglian (the “ Property B Owner ”) and 中共廣東省委辦公廳機關服務中心 (Administrative Service Center, General Office, Guangdong Provincial Committee of the Communist Part of China) (the “ Property C Owner ”) with respect to their ownership of respective properties as follows:

(i) Property A, comprises retail shops, cafes, restaurants, beauty salons and fitness centre with a gross floor area of approximately 10,885.78 square metres located at Level One (portion), Level Two (entire), Level Three (entire) and Level Four (portion) of the Mall together with 95 car parking spaces at Basement Two and Three, which are legally and beneficially owned by the Property A Owner;
(ii) Property B, comprises retail shops with gross floor area of approximately 935.26 square metres located at Level One (portion) of the Mall, which are legally and beneficially owned by the Property B Owner; and
(iii) Property C, comprises retail shops, restaurants and tuition centre with gross floor area of not less than 6,867 square metres located at Basement One (entire), Level Five (portion) and Level Six (portion) of the Mall, which are legally and beneficially owned by the Property C Owner.

As stated in the Letter from the Board, based on the information provided by the Vendor, (i) the land use right of regarding Property A and Property B runs for 40 years from November 2000 to November 2040; (ii) the Vendor undertakes that the loan mortgages Property A and Property B currently being subject to will be discharged and released prior to Completion; and (iii) on 20 March 2003, 廣州市正信投資發展有限公司 (Guangzhou Zhengxin Investment Development Co., Ltd.) (“ Property C Lessee ”), the 60% shareholder of Property A Owner, entered into a lease contract (“ Property C*

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Lease ”) to lease Property C from Property C Owner for 20 years until 31 December 2024 at pre-fixed annual rental fees incrementing 4% per year, currently charged at RMB561,898.26 for the year running between 1 January 2019 and 31 December 2019.

As stated in the Letter from the Board, the Company considers that it is administratively expedient and cost-efficient for the Group to manage the entirety of the Mall comprising of Property A, Property B and Property C as compared to only a portion of it, such that the Group can have higher flexibility in providing tenants with the desired area and location. Apart from the Property C Participation Contract, the Company has considered other alternative way including acquisition of the legal title of Property C, but was given to understand that Property C is currently unavailable for sale. As such, GZ Holdco entered into the Property C Participation Contract which, together with the Property A Acquisition Contract and the Property B Acquisition Contract, will enable GZ Holdco to have the overall management of the entire Mall during the term of the Property C Participation Contract. The Property C Participation Contract also gives GZ Holdco a priority right to renew the contract at the same terms from third party upon expiration of the Property C Participation Contract provided that Property C Lessee still enjoy the leasing right by then. Based on the aforesaid, the Company considers that it is appropriate to acquire the leasing right of Property C through the Property C Participation Contract.

As stated in the Letter from the Board, the risks associated with the contractual arrangement under the Property C Participation Contract are as follows, which, however, have already been addressed in the Property C Participation Contract:

Default risk from the Property C lessee – the Property C Participation Contract has set out the rights and obligations of each contracting party and solution in case of any dispute or default from any contracting party; and
Risk of failing to receive rent from tenants of Property C – according to the Property C Participation Contract, upon receipt of rents from existing tenants of Property C by the Property C Lessee, the Property C Lessee is required to remit those portions of rent entitled by GZ Holdco to GZ Holdco’s bank account. Alternatively, GZ Holdco has the right to request the Property C Lessee to transfer all the existing tenancy agreements of Property C to GZ Holdco so that GZ Holdco can collect rent directly. Upon expiration of the existing tenancy agreements, GZ Holdco has the right to enter into new tenancy agreements with tenants of Property C directly. The Company believes that these measures will ensure that GZ Holdco can manage and receive rent from the tenants directly.

As disclosed in the Letter from the Board, based on the advice from the Company’s legal advisers as to the laws of the PRC, the Property C Participation Contract is legal, valid, binding, enforceable and will not contravene any existing PRC government policies, laws or regulations.

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Taking into account that (i) entering into the Underlying Contracts will allow GZ Holdco an overall management of the entire Mall; (ii) Property C is unavailable for sale; (iii) the priority right to renew the contract at the same terms from third party upon expiration of the Property C participation Contract will allow the Group for the availability of continuing management of the entire Mall; (iv) the risks associated with the contractual arrangement under the Property C Participation Contract have been addressed; and (v) the Property C Participation Contract is legal, valid, binding, enforceable and will not contravene any existing PRC government policies, laws or regulations as advised by the Company’s legal advisers as to the laws of the PRC, we consider that it is appropriate to participate in the leasehold right of Property C through the Property C Participation Contract.

Shareholding structure after the completion of the Underlying Contracts and Completion

After the completion of the Underlying Contracts and Completion, the shareholding structure of the Target Group will be as follows:

==> picture [365 x 295] intentionally omitted <==

Financial information of the Target Company and the Properties

As stated in the audited financial statements of the Target Company set out in Appendix IIA to the Circular, (a) for the period from 27 September 2018 (i.e. the date of incorporation of the Target Company) to 31 December 2018, the loss before income tax and the loss and total comprehensive loss for the period of the Target Company amounted to HK$14,478 and HK$14,478, respectively; (b) as at 31 December 2018, the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Target Company did not have any assets and the net liability of the Target Company amounted to HK$14,378; and (c) no revenue was recorded by the Target Company for the date of incorporation until 31 December 2018 since the Target Company has not conducted any business during the period.

Set out below are the unaudited profit and loss statements of the Properties for the three years ended 31 December 2018 prepared by the Directors based on the information provided by the Vendor as extracted from Appendix IIB to the Circular:

Rental income Rental rights royalty Staff salaries Administrative expenses Profit before change in fair value of investment property, finance costs and taxation	Year ended 31 December 2016 2017 2018 HK$’000 HK$’000 HK$’000 30,716 36,337 39,556 (7,007) (7,189) (7,676) (1,465) (1,779) (2,965) (4,907) (4,862) (4,499) 17,337 22,507 24,416

For the year ended 31 December 2017, the profit before change in fair value of investment property, finance costs and taxation was amounted to approximately HK$22.5 million, representing an increase of approximately 29.8% or approximately HK$5.2 million as compared to the profit of approximately HK$17.3 million last year and further increase of approximately 8.5% or approximately HK$1.9 million to approximately HK$24.4 million for the year ended 31 December 2018. We noted from the above table that the increase of the profit before change in fair value of investment property, finance costs and taxation was mainly attributable to the increase in rental income and decrease in administrative expenses in 2017 and 2018. As advised by the representative of the Company, the increase in rental income for each of the two years ended 31 December 2018 was mainly due to increase in rents which are largely in line with the affordability of tenants after the completion of the shopping mall upgrade projects in 2017.

2. Reasons for and benefits of entering into the Acquisition Agreement

As stated in the Letter from the Board, the property investment and development are the principal businesses of the Group. The Group has been looking for investment opportunities of properties which can offer stable rental income to the Group. The Properties are located at prime location at Guangzhou and at the intersection of route number one and six of Guangzhou Metro. The Guangzhou Metro has one exit connected to Basement One of the Mall and two exits connected to Level One of the Mall. Based on the information provided by the Vendor, the occupancy of the commercial area of the Mall (with the exception of the parking spaces) is close to 100%, and the gross rental income received from the Properties for the years ended 31 December 2016, 2017 and 2018 amounted to approximately HK$30.7 million, approximately HK$36.3 million and approximately

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HK$39.6 million, respectively. Based on the assessment of the Independent Valuer appointed by the Company, the market value of Property A and Property B as at 31 December 2018 amounted to approximately RMB580.3 million (equivalent to approximately HK$678.3 million).

According to the statistics published on the website of National Bureau of Statistics of China (the “ NBS ”), the gross domestic product (the “ GDP ”) of Guangzhou increased from approximately RMB1,542.0 billion in 2013 to approximately RMB2,150.3 billion in 2018, representing a compound annual growth rate (the “ CAGR ”) of approximately 8.7%. According to the Guangzhou Statistical Yearbook (2018) published by the Guangzhou Statistics Bureau, the per capita annual disposable income increased from approximately RMB42,049 in 2013 to approximately RMB55,400 in 2017, representing a CAGR of approximately 7.1% and the investment in real estate development also increased from approximately RMB157.2 billion in 2013 to approximately RMB270.3 billion in 2017, representing a CAGR of approximately 14.5%.

According to a quarterly report released in October 2018 by Savills China Research, the research team of China branch of Savills plc which is a global real estate services provider listed on the London Stock Exchange and is a constituent of the FTSE 205 Index, by the end of 3rd quarter of 2018, the average rent for prime areas in Guangzhou increased to approximately RMB1,161.6 per square metre per month, representing a quarter-to-quarter increase of approximately 0.7%. Yuexiu District, being one of the prime areas in Guangzhou, the shopping mall vacancy rate in Yuexiu District was below 2% in the 3rd quarter of 2018 which was lower than the average vacancy rate for the prime areas in Guangzhou of approximately 4.1%.

As stated in the 2018 Interim Report, in the second half of 2018, the Group will continue to focus on its existing principal businesses of water supply, property investment and development and financial services. The Group will also continue to explore suitable investment and diversification opportunities which may arise from time to time. Thus the Acquisition is in line with the existing business strategy of the Group.

Given that (i) there are optimistic economy and the upward trend of rent for prime areas in Guangzhou; (ii) the entering into the Acquisition Agreement is in line with the business strategy of the Group; (iii) the Properties was profitable in the three years ended 31 December 2018 as shown in the paragraph headed “Financial information of the Target Company and the Properties” above; and (iv) it is available to manage the entirety of the Mall by entering into the Property A Acquisition Contract, Property B Acquisition Contract and Property C Participation Contract which is considered as appropriate as mentioned in the paragraph headed “Information of the Target Group and the Properties” above, we concur with the Directors that the Acquisition is fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

As stated in the Letter from the Board, completion of the Acquisition Agreement is subject to the satisfaction of the conditions precedent set out in the Acquisition Agreement, including but not limited to the independent shareholders’ approval of the Acquisition at the

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EGM and the sufficiency of funding to finance the payment of the Consideration at Completion, and therefore may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

3. Principal terms of the Acquisition Agreement

On 15 February 2019 (after trading hours), the Company (as purchaser), the Vendor and the Target Company entered into the Acquisition Agreement, pursuant to which the Vendor has conditionally agreed to sell, and the Company has conditionally agreed to purchase from the Vendor, the entire issued share capital of the Target Company as at the date of the Acquisition Agreement and at Completion and the entire loans owing by the Target Group to the Vendor or its affiliates on Completion for the total cash consideration of RMB576.0 million (equivalent to approximately HK$673.3 million). Details of the terms of the Acquisition Agreement are stated in the Letter from the Board.

As stated in the Letter from the Board, completion of the Acquisition Agreement is subject to the Company having sufficient funding to finance the payment of the Consideration at Completion. As stated in the Letter from the Board, the Company proposed to launch the Rights Issue and the Placing which are conditional upon the raising of aggregate minimum gross proceeds of HK$710 million which is sufficient to cover the Consideration. If the Company does not manage to raise minimum gross proceeds of HK$710 million through the Rights Issue and the Placing, it does not intend to proceed with the Completion of the Acquisition Agreement.

As stated in the paragraph headed “Conditions precedent” in the Letter from the Board, save for and except conditions (h) and (i) which cannot be waived by any party in any event, all the other Conditions can be waived at the absolute discretion of the Company. As advised by the representative of the Company, the Company has no intention to waive Condition (g) regarding the completion of the Target Group Restructuring as condition (g) is fundamental to ensure all assets under the Acquisition will be held by the Target Company and that the relevant properties are free of encumbrances.

As stated in the Letter from the Board, the Consideration, which is equivalent to the total acquisition costs payable by GZ Holdco pursuant to the Underlying Contracts, was determined after arm’s length negotiation between the Vendor and the Company with reference to the market value of Property A and Property B as at 31 December 2018 as assessed by the Independent Valuer. Based on the Valuation Report prepared by the Independent Valuer, the market value of Property A and Property B as at 31 December 2018 amounted to approximately RMB580.3 million (equivalent to approximately HK$678.3 million).

4. Evaluation of the Consideration

As set out in the Letter from the Board, the Consideration was determined after arm’s length negotiation between the Vendor and the Company with reference to the market value of Property A and Property B as at 31 December 2018 as assessed by the Independent Valuer appointed by the Company.

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In order to assess the basis in determining the Consideration, we have reviewed the Valuation Report of the Property A and Property B prepared by the Independent Valuer and have discussed with the Independent Valuer the methodology of and basis and assumptions adopted for the Valuation. The Valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the values of the property interests and no forced sale situation in any manner. The Independent Valuer adopted (i) the income capitalization approach – the term and reversion method in valuing the Property A without the 95 car parking spaces and the Property B (the “ Valuation Section 1 ”) on the basis of capitalization of the rental income derived from the existing tenancies with due provision for the potential reversionary income of the property interests; and (ii) the market approach in valuing the 95 car parking spaces of Property A (the “ Valuation Section 2 ”).

Valuation Section 1

The Independent Valuer considered that the term and reversion method is the most appropriate for valuing the Valuation Section 1 as there are contractual economic benefits from the existing tenancy agreements as well as the reversionary income. We have discussed with the Independent Valuer whether they have considered the cost approach and the market approach for the Valuation Section 1. For cost approach, it cannot represent the economic benefits contribution by the existing tenancy agreements. For market approach, it cannot represent the economic benefits contribution by the existing tenancy agreements. Furthermore, the Independent Valuer confirmed that the adoption of term and reversion method in valuing Valuation Section 1 is a normal industry practice in valuing such kind of properties based on their expertise and experience.

Upon our review on the valuation model, we noted that the value of Valuation Section 1 is derived from the existing monthly rent, terms of the existing tenancy agreements, year of the land use rights, reversion market rent, term yield and reversion yield. In order to access the fairness of the variance, we have discussed with the Independent Valuer on the followings:

(i) Reversion market rent

In calculating the value of the reversion market rent, the Independent Valuer has calculated the reversion market rent with reference to:

(a) the recent asking rental price of arcade available in the market, or, if not available, as close as possible to the valuation date;
(b) the comparables which are located on the same streets or buildings or streets in the vicinity; and
(c) the comparable properties which share similar nature with the Properties.

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We are advised by the Independent Valuer that there is no direct comparable in the same building and the comparables are extended to the same street or buildings or streets in the vicinity. In light of the above, in order to derive the fair reversion market rent, the Independent Valuer conducted some adjustments on the value of each of the comparables by considering the location, level of the comparables, the building quality and the asking rental price as the asking rental price can be further negotiated between the landlord and the tenant.

(ii) Term yield

In determining the value of term yield of 4%, the Independent Valuer has applied the data from the website of 北京雲房數據技術有限責任公司 (Beijing Yunfang Data Technology Co., Ltd.) (“ Yunfang* ”), one of the PRC properties data provider, regarding the term yield of retail shop in Guangzhou and cross-checked with the calculation from available market date on the sell price and the rental price. The Independent Valuer advised that there is no material difference on the term yield between Yunfang and their calculation.

(iii) Reversion yield

The reversion yield is 4.5% which is higher than the term yield of 0.5%. As advised by the Independent Valuer, it is normal industry practice that the reversion yield is calculated by adding 0.5% to term yield in order to reflect the higher risk in the future.

Valuation Section 2

We have discussed with the Independent Valuer whether they have considered the income approach and the cost approach for the Valuation Section 2. As advised by the Independent Valuer, it is the most appropriate to adopt the market approach as compared with the cost approach and the income approach because the subject assets are publicly traded and there are frequent and/or recent observable asking prices for comparison. Furthermore, the Independent Valuer confirmed that the adoption of the market approach in valuing the Valuation Section 2 is a normal industry practice based on their expertise and experience.

In calculating the value of the car park, the Independent Valuer has calculated with reference to:

(i) the recent asking price of car park available in the market, or, if not available, as close as possible to the valuation date; and
(ii) the car parks are located on the same streets or buildings or streets in the vicinity.

We are further advised by the Independent Valuer that there are adjustments on the asking price in order to derive the fair value as the asking price can be further negotiated between the buyer and seller and is not the final price.

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The Valuer confirmed that the above approach is a normal industry practice based on their expertise and experience.

Besides, we have (i) reviewed the company brochure and track records provided by the Independent Valuer and were satisfied with their experience and expertise; (ii) confirmed with the Independent Valuer that there is no current or prior relationship with the Group, the Vendor, or their respective core connected persons, other than the engagement of appraisals in relation to the Property A and Property B; and (iii) reviewed the terms of engagement and the scope of work of the Independent Valuer and considered that the scope of work is appropriate to the opinion required to be given and without any limitations on the scope of work which might adversely impact on the degree of assurance given by the Independent Valuer’s report, opinion or statement.

Based on our review on the Valuation Report and our discussion with the Independent Valuer regarding the basis, assumptions and methodology of the Valuation, (i) the basis, assumptions and methodology are generally adopted in similar valuation activities and are necessary to arrive at a reasonable estimated value of the Property A and Property B; and (ii) there is no material facts which may lead us to doubt the principal basis, assumptions adopted for or the methodology used in the Valuation. In view of the above, we are satisfied that the Valuation Report and the Valuation are fair and reasonable.

Having considered that (i) entering into the Acquisition Agreement is in line with the business strategy of the Group; (ii) the Consideration is slightly lower than the market value of Property A and Property B as assessed by the Independent Valuer, we are of the view that the entering into the Acquisition Agreement is on normal commercial terms and is fair and reasonable so far as the Company and the Shareholders as a whole are concerned.

II. THE RIGHTS ISSUE

1. Background to and reasons for the Rights Issue and the proposed use of net proceeds

Background information of the Rights Issue

The Board proposed to raise gross proceeds of up to approximately HK$975.41 million (before expenses) on the basis of two (2) Rights Shares for every one (1) Share held on the Record Date by issuing up to 4,240,897,716 Rights Shares (assuming no further issue or repurchase of Shares on or before the Record Date) at the Subscription Price of HK$0.23 per Rights Share. The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. The Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares. In the event there is an under-subscription of the Rights Issue, the size of the Rights Issue will be reduced accordingly. Depending on the results of acceptance of the Rights Issue, different level of the Placing will proceed. Further details of the Rights Issue and the conditions of

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the Rights Issue are stated under the paragraph headed “Proposed Rights Issue” in the Letter from the Board. Further details of the Placing are stated under the paragraph headed “Placing of new shares under Specific Mandate” in the Letter from the Board. Given the Acquisition may also be funded by the Placing while the proceeds of the Placing will not only be applied to the Acquisition, we only assess the fairness and reasonability of the Placing Price and the placing commission which equals to 2.0% (the “ Placing Commission ”).

Reasons for the Rights Issue and the proposed use of net proceeds

Set out below are the expected gross and net proceeds from the Rights Issue and the Placing based on different scenarios arising from different acceptance ratios of the Rights Issue and the Placing as stated in the section headed “Reasons for the Rights Issue and the Placing and the use of proceeds” in the Letter from the Board:

	Scenario I	Scenario II	Scenario III
	HK$	HK$	HK$
	(approximately)	(approximately)	(approximately)
	(Note 1)	(Note 2)	(Note 3)
Rights Issue
Gross proceeds	975.41 million	385.44 million	385.44 million
Net proceeds	970.64 million	380.88 million	380.88 million
Net price per Rights Share	0.2289	0.2273	0.2273
Placing
Gross proceeds	Nil	324.56 million	589.96 million
Net proceeds	Nil	317.59 million	577.42 million
Net price per Placing Share	Nil	0.2251	0.2251

Notes:

assuming full acceptance by the Qualifying Shareholders of the Rights Issue whether under PAL(s) or EAF(s) leaving no Untaken Shares to be placed in the Placing (“ Scenario I ”);
assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders (i.e.: 1,675,840,000 Rights Shares committed by the Qualifying Shareholders under the Irrevocable Undertakings) and assuming successful placing of the minimum 1,411,116,522 Placing Shares to render the Rights Issue and Placing unconditional (“ Scenario II ”); and
assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the maximum 2,565,057,716 Untaken Shares (“ Scenario III ”).

The net proceeds of the Rights Issue and the Placing are intended to be used in the following sequence:

(i) approximately HK$673.29 million for settlement of the Consideration; and

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(ii) the balance of between approximately HK$25.18 million (assuming that the Minimum Proceeds Condition is just achieved) and approximately HK$297.35 million (assuming full acceptance under the Rights Issue) for the development of fund investment and management businesses of the Group in Hong Kong and the PRC (the “ Fund Management Business ”).

As stated in the Letter from the Board, in the event that the Acquisition cannot be completed, the Company will apply the net proceeds originally intended for the Acquisition for the acquisition of other investment properties which may be identified by the Company from time to time.

As provided by the representative of the Company, the unaudited cash and bank balances as at 31 January 2019 amounted to approximately HK$103.5 million which is insufficient to finance the Consideration for the completion of the Acquisition. Therefore, the Company proposed to raise fund through the Rights Issue (or, if the Rights Shares are not fully taken up under the Rights Issue, in aggregate with the Placing) to improve its capital base to fulfill the capital requirements as stated above.

Except the funding of the Consideration, the Group also intended to diversify its businesses to the Fund Management Business. As stated in the 2017 Annual Report, the Group considered that it was well positioned to capitalise its extensive business networks in China by diversifying its businesses into financial services industry, in particular the asset management sector, because of its years of experience in business operations in China and Hong Kong. Therefore, as stated in the Letter from the Board, the Group set up Ruijin Equity Investment Fund Management (Shenzhen) Company Limited (the “ Ruijin ”), a wholly-owned subsidiary of the Company in QianHai, Shenzhen, to undertake China-Hong Kong cross-border fund management and financial services which obtained the Qualified Foreign Limited Partnership (“ QFLP ”) license in December 2016 and completed the acquisition of the entire issued share capital of Hooray Asset Management Limited (the “ HAML ”), a company incorporated in Hong Kong with limited liability and a corporation licensed by the SFC to conduct Type 9 (asset management) regulated activities under the SFO, in June 2017 for the purpose of engaging in the financial services business and leveraging on the policy of encouraging inbound foreign investment in the PRC. The Directors is of the view that entering into the Fund Management Business brings positive effect to the Group by generating revenue from diversified sources and ensure sustainable growth.

As a result of the aforesaid, the Rights Issue enables the Group to settle the Consideration for the expansion of its property investment businesses as well as improve the working capital of the Group for the development of Fund Management Business in Hong Kong and the PRC as stated in the Letter from the Board.

Having taken into account of the above, we are of the view that although the Rights Issue is not in the ordinary and usual course of business of the Company, the Rights Issue is fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Independent Shareholders as a whole.

– 64 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Fund-raising alternatives

As stated in the Letter from the Board, other financing alternatives were considered, including, among other things, (i) debt financing such as bank borrowing; and (ii) equity financing such as placing of new shares and open offer.

As discussed with the management of the Company, the Rights Issue effected on a pro-rata basis gives all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and the Subscription Price at a price lower than the current market level is to attract the Qualifying Shareholders to participate in development of the Company.

In respect of debt financing, most assets of the Group have already been pledged to banks to secure the banking facilities of its subsidiaries engaging in water supply business in the PRC. In view of the amount of funds required by the Company for the Acquisition and for the asset management business, it is unlikely for the Group to obtain additional loans in the required amount in the absence of additional collaterals. In addition, as discussed with the management of the Company, debt financing may not be feasible for the Group as (i) debt financing may further incur financial expense for the Group; (ii) increase in the leverage of the Group may expose the Group to higher financial risk, especially in interest rate hikes; and (iii) debt financing is normally for fixed term and the successfulness of renewal application upon maturity is subject to uncertainties such as the lender’s stress test over the borrower and the lender’s reserve requirement ratio and lending policy which may change from time to time.

In respect of equity financing, as opposed to the Rights Issue, placing of new Shares can only raise funds in a relatively smaller size and does not allow the Shareholders to maintain their respective shareholding in the Company, whereas open offer does not provide the flexibility to the Shareholders who wish to subscribe the Rights Share to increase their shareholding interests in the Company by acquiring additional rights entitlements in the open market or to the Shareholders who opt not to subscribe the Rights Shares to reduce their shareholding interests in the Company by disposing their nil-paid Rights Shares during the prescribed period of time for economic benefits.

3. Evaluation of the Subscription Price

In order to access the fairness and reasonableness of the Subscription Price, which is equivalent to the Placing Price, we set out the following informative analysis for illustrative purpose only.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

A. Historical price movement analysis

The Subscription Price, which is equivalent to the Placing Price, represents:

(i) a discount of approximately 33.33% to the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 14.28% to the theoretical ex-rights price of HK$0.2683 per Share based on the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 33.33% to the average closing price of HK$0.345 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the five consecutive trading days prior to and including the Last Trading Day;
(iv) a discount of approximately 32.94% to the average closing price of HK$0.343 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the ten consecutive trading days prior to and including the Last Trading Day; and
(v) a discount of approximately 1.29% to the unaudited net asset value per Share of approximately HK$0.233 based on the unaudited total equity attributable to Shareholders of the Company of HK$494,619,000 as at 30 June 2018 and the number of 2,120,448,858 issued Shares as at 30 June 2018 and the Latest Practicable Date.

Set out below illustrates the daily closing prices of the Shares during the period from 20 February 2018, being a year preceding the Last Trading Day up to and including the Last Trading Day (the “ Historical Price Period ”).

==> picture [368 x 207] intentionally omitted <==

Source: the website of the Stock Exchange (http://www.hkex.com.hk)

– 66 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

During the Historical Price Period, the lowest closing price and the highest closing price of the Shares as quoted on the website of the Stock Exchange were HK$0.202 recorded during the period of 19 November 2018 to 21 November 2018 (the “ Lowest Closing Price ”) and HK$0.385 recorded on 2 March 2018 (the “ Highest Closing Price ”). The average closing price during the Historical Price Period was HK$0.289 per Share (the “ Average Closing Price ”).

It is noted that the Subscription Price, which is equivalent to the Placing Price, within the range of the Lowest Closing Price and the Highest Closing Price but below the Average Closing Price during the Historical Price Period.

B. Historical trading volume and liquidity analysis

Set out below are (i) the average daily trading volume of the Shares in each month during the Historical Price Period; (ii) the respective percentages of the average daily trading volume of the Shares as compared to the number of total issued Shares; and (iii) the respective percentages of the average daily trading volume of the Shares as compared to the total issued Shares held by the public as at the Latest Practicable Date during the Historical Price Period.

				% of the average
				daily trading
			% of the average	volume to the
		Average daily	daily trading	total number of
		trading	volume to the	issued Shares
	Number of	volume of the	total number of	held by the public
	trading days	Shares	issued Shares	Shareholders
		(No. of Shares)	(Note 1)	(Note 2)
2018
February
(beginning from
20 February)	7	241,429	0.011%	0.019%
March	21	307,619	0.015%	0.024%
April	19	728,947	0.034%	0.057%
May	21	913,810	0.043%	0.071%
June	20	490,500	0.023%	0.038%
July	21	337,143	0.016%	0.026%
August	23	280,435	0.013%	0.022%
September	19	100,000	0.005%	0.008%
October	21	78,095	0.004%	0.006%
November	22	95,000	0.004%	0.007%
December	19	147,895	0.007%	0.012%
2019
January	22	173,265	0.008%	0.014%
February (up to
the Last
Trading Day)	8	60,000	0.003%	0.005%

– 67 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

Notes:

The total number of issued Shares was 2,120,448,858 as at the Latest Practicable Date.
The total number of issued Shares held by public Shareholders was 1,282,528,858 as at the Latest Practicable Date.

As illustrated in the table above, the average daily trading volume to the total number of the issued Shares ranged from approximately 60,000 Shares to approximately 913,810 Shares, representing approximately 0.003% to approximately 0.043% of the total number of the issued Shares as at the Latest Practicable Date, and approximately 0.005% to 0.071% of the total number of Shares held by the public Shareholders during the Historical Price Period.

During the Historical Price Period, the average daily trading volume to the total number of the issued Shares held by public Shareholders was approximately 0.015% of total number of Shares in issue as at the Latest Practicable Date which indicates the Shares were generally illiquid in the open market. Given the relatively thin trading liquidity of the Shares, it would be difficult for the Shareholders to acquire/dispose of the Shares in the open market without creating an upward/downward pressure on the price of the Shares. In addition, we also noted that 92 trading days out of the total of 245 trading days during the Historical Price Period had no trading, representing approximately 37.6% of the trading days during the Historical Price Period had no trading on the Shares. It means that the trading of the Shares is not considered as active.

C. Rights Issue comparable analysis

In order to further assess the fairness and reasonableness of the terms of the Rights Issue, we have identified an exhaustive list of 7 rights issue transactions (the “ Comparables ”) announced by other companies listed on the Stock Exchange for the period from six months immediately prior to the date of the Announcement (the “ Comparable Review Period ”). Shareholders should note that the subject companies in the Comparables may have different principal activities, market capitalisations, profitability and financial positions as compared to those of the Company. Although the circumstances surrounding such Comparables may be different from those relating to the Company, we consider that the Comparable Review Period is adequate and fair and reasonable to capture the prevailing market conditions in relation to rights issue transactions which the Comparables, for illustrative purpose only, serve as a general reference for prevailing market practices in relation to rights issue transactions conducted by the companies listed in the Stock Exchange.

– 68 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

						Premium/	Premium/
						(Discount) of	(Discount) of
						the	the
						subscription	subscription
					Premium/	price over the	price over the
					(Discount) of	average share	average share
				Premium/	the	price for the	price for the
				(Discount) of	subscription	five previous	ten previous
				the	price over the	consecutive	consecutive
				subscription	theoretical	trading days	trading days		Underwriting/
				price over the	ex-right share	up to and	up to and		related
				share price on	price on the	including the	including the		commission,
Date of	Company		Basis of	the last	last trading	last trading	last trading	Maximum	as the case
announcement	name	Stock code	entitlement	trading day	day	day	day	dilution effect	may be
				(%)	(%)	(%)	(%)	(%)	(%)
				(Note 1)	(Note 1)	(Note 1)	(Note 1)	(Note2)
27 January 2019	i-Cable	1097	3 for 4	(13.00)	(8.30)	(13.00)	(13.00)	42.86	n/a (note 3)
	Communication
	Limited
15 January 2019	GT Group	263	4 for 1	(27.77)	(6.98)	(22.4)	(24.1)	80.00	3.00
	Holdings
	Limited
11 January 2019	Chen Xing	2286	1 for 5	(5.66)	(5.06)	(4.46)	(3.85)	16.67	2.30 (note4)
	Development
	Holdings
	Limited
28 December 2018	Alco Holdings	328	1 for 4	(13.86)	(11.41)	(12.30)	(13.09)	20.00	n/a (note 3)
	Limited
13 November 2018	Sunway	58	1 for 2	(17.72)	(12.75)	(17.20)	n/a	33.33	2.50
	International
	Holdings
	Limited
9 November 2018	i-Cable	1097	1 for 1	(38.40)	(23.80)	(31.00)	(26.40)	50.00	1.75
	Communication
	Limited
8 November 2018	TSC Group	206	1 for 1	(6.30)	(4.30)	(8.20)	(6.30)	50.00	0.80
	Limited
4 September 2018	Master Glory	275	3 for 1	1.18	0.29	1.18	n/a	75.00	n/a (note 3)
	Group Limited
		Average		(15.50)	(9.04)	(13.43)	(14.46)	45.98	2.07
		Minimum		(38.40)	(23.80)	(31.00)	(26.40)	16.67	0.80
		Maximum		1.18	0.29	1.18	(3.85)	80.00	3.00
	The Company		2 for 1	(33.33)	(14.28)	(33.33)	(32.94)	66.67	2.00 (note 5)

Source: the website of the Stock Exchange (http://www.hkex.com.hk)

Notes:

Based on the respective figures disclosed in the announcement of each of the Comparables.
The potential maximum dilution effect of each rights issue is calculated as: (number of rights shares to be issued under the basis of entitlement)/(number of shares held for the entitlement for the rights shares under the basis of entitlement plus number of rights shares to be issued under the basis of entitlement) times 100%.
The rights issues of the respective comparable companies were on non-underwritten basis.

– 69 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

According to the announcement of Chen Xing Development Holdings Limited, the underwriter will receive a fixed underwriting commission of HK$1.3 million, plus a discretionary bonus of 0.25% on the total amount to be raised. Based on the 42,175,989 underwritten shares and the subscription price of HK$1.5 per rights share, the maximum commission is calculated as approximately 2.30%
As stated in the Letter from the Board, the Rights Issue will proceed on a non-underwritten basis irrespective of the level of acceptances of the provisionally allotted Rights Shares while the Company will pay to each Placing Agent the Placing Commission upon Placing Completion, which is equal to 2.0% of the Placing Price multiplied by the number of successfully placed Placing Shares which are the unsubscribed Rights Shares not taken up by Qualifying Shareholders whether under PAL(s) or EAF(s) during the Rights Issue.

As set out in the table above, the subscription price of the rights issue of the Comparables as compared to (i) their respective closing price on their respective last trading day, ranging from a discount of approximately 38.40% to a premium of approximately 1.18% (the “ Comparable LTD Range ”) with an average of a discount of approximately 15.50%; (ii) their respective theoretical ex-rights price per share on their respective last trading day from a discount of approximately 23.8% to a premium of approximately 0.29% (the “ Comparable TERP Range ”) with an average of a discount of approximately 9.14%; (iii) their respective average closing price for the five previous consecutive trading days up to and including their respective last trading day, ranging from a discount of approximately 31.00% to a premium of approximately 1.18% (the “ Comparable ACP5 Range ”) with an average of a discount of approximately 13.43%; and (iv) their respectively average closing price for the ten previous consecutive trading days up to and including their respective last trading day, ranging from a discount of approximately 26.40% to a discount of approximately 3.85% (the “ Comparable ACP10 Range ”) with an average of a discount of approximately 14.46%.

The Subscription Price of HK$0.23 per Rights Share represents (i) a discount of approximately 33.33% to the closing price per Share on the Last Trading Day (the “ Rights Issue LTD ”); (ii) a discount of approximately 14.28% to the theoretical ex-rights price of HK$0.2683 per Share based on the closing price of HK$0.345 per Share as quoted on the Stock Exchange on the Last Trading Day (the “ Rights Issue TERP ”); (iii) a discount of approximately 33.33% to the average closing price of HK$0.345 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the five (5) consecutive trading days prior to and including the Last Trading Day (the “ Rights Issue ACP5 ”); and (iv) a discount of approximately 32.94% to the average closing price of HK$0.343 per Share based on the closing prices of the Shares as quoted on the Stock Exchange for the ten (10) consecutive trading days prior to and including the Last Trading Day (the “ Rights Issue ACP10 ”). We noted that the Rights Issue LTD and the Rights Issue TERP are within the Comparable LTD Range and the Comparable TERP Range, respectively while the Rights Issue ACP5 and the Rights Issue ACP10 are outside the Comparable ACP5 Range and the Comparable ACP10 Range.

– 70 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As demonstrated in the above table, the maximum dilution effect of the Rights Issue of approximately 66.67% falls within the range of the maximum dilution effect of the Comparables from approximately 16.67% to approximately 80.00% and is above the average of the maximum dilution effect of the Comparables of approximately 45.98%.

As stated in the Letter from the Board, the Company will pay to each Placing Agent the Placing Commission which is equal to 2.00% of the Placing Price multiplied by the number of Placing Shares successfully placed by the relevant Placing Agent upon Placing Completion. We noted from the above table that the Placing Commission falls within the range of the underwriting/related commission of the Comparables, as the case may be, from 0.80% to 3.00% and is slightly below the average of approximately 2.07%.

We noted that 7 out of the 8 Comparables, representing approximately 87.5%, were set at a discount to the prevailing market prices of the relevant shares in order to enhance the attractiveness of a rights issue and to encourage the existing shareholders to participate in the rights issue.

Taking into account that (i) the Subscription Price, which is equivalent to the Placing Price, falls within the range of the Lowest Closing Price and the Highest Closing Price during the Historical Price Period; (ii) the liquidity of the Shares during the Historical Price Period was relatively low, in particular, 92 trading days out of total of 245 trading days during the Historical Price Period had no trading; (iii) the subscription price of a rights issue in the recent market practice set at a discount to the prevailing market prices is to enhance the attractiveness of a rights issue during the Comparables Review Period; (iv) the Placing Commission falls within the range of the underwriting/related commission of the Comparables, as the case may be, and is slightly below the average of the underwriting/related commission of the Comparables, as the case may be; and (v) the Rights Issue offers all the Qualifying Shareholders an equal opportunity to subscribe for their pro-rata provisional entitlement of the Rights Shares and avoid dilution and participate as fully as they wish, we consider that the Subscription Price, the Placing Price and the Placing Commission are fair and reasonable so far as the Independent Shareholders are concerned.

III. POTENTIAL DILUTION EFFECTS ON THE SHAREHOLDING OF EXISTING SHAREHOLDERS

(i) assuming full acceptance by the Qualifying Shareholders of the Rights Issue whether under PAL(s) or EAF(s) leaving no Untaken Shares to be placed in the Placing (“ Scenario I ”);

– 71 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

(ii) assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the minimum 1,411,116,522 Placing Shares to render the Rights Issue and Placing unconditional (“ Scenario II ”); and
(iii) assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the maximum 2,565,057,716 Untaken Shares (“ Scenario III ”):

Participating Shareholders Ever City (Note) Eastcorp (Note) Mr. Zhang Songming Public shareholders Mr. Zeng Placees Other public shareholders Total	As at the Latest Practicable Date 320,380,000 15.11% 200,000,000 9.43% 520,380,000 24.54% 317,540,000 14.98% 100,000,000 4.72% – – 1,182,528,858 55.76% 2,120,448,858 100.00%	Scenario I 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 300,000,000 4.72% – – 3,547,586,574 55.76% 6,361,346,574 100.00%	Scenario 961,140,000 600,000,000 1,561,140,000 952,620,000 100,000,000 1,411,116,522 1,182,528,858 5,207,405,380	II 18.46% 11.52% 29.98% 18.29% 1.92% 27.10% 22.71% 100.00%	Scenario 961,140,000 600,000,000 1,561,140,000 952,620,000 100,000,000 2,565,057,716 1,182,528,858 6,361,346,574	III 15.11% 9.43%
						24.54% 14.98% 1.57% 40.32% 18.59%
						100.00%

Note: Ms. Zhu, Affluent Vast and Ever City are deemed to be interested in 520,380,000 Shares, representing 24.54% of the total issued share capital of the Company, which comprises (a) 320,380,000 Shares directly held by Ever City; and (b) 200,000,000 shares held by Eastcorp. Ever City is wholly and beneficially owned by Affluent Vast. Affluent Vast is wholly and beneficially owned by Ms. Zhu. Therefore, Ever City is deemed to be a controlled corporation of Affluent Vast and Ms. Zhu. Eastcorp is wholly and beneficially owned by Ever City. Therefore, Eastcorp is deemed to be a controlled corporation of Ever City, Affluent Vast and Ms. Zhu.

Possible Adjustments to the Share Options

As stated in the Letter from the Board, as at the Latest Practicable Date, the Company has 40,000,000 outstanding Share Options entitling the holders thereof to subscribe for a total of 40,000,000 Shares. As a result of the Rights Issue, it is expected that the exercise price, and/or the number of Shares, of the outstanding Share Options will be adjusted in accordance with the terms and conditions of Share Option Scheme. Other than the outstanding Share Options, the Company does not have any warrants, options, or other securities exchangeable or convertible into Shares as at the Latest Practicable Date. The Company will engage the Company’s auditors to review and determine the relevant adjustments and make further announcements on the appropriate adjustments and the date(s) they are expected to take effect in due course.

– 72 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Taking into account, in particular, (i) all Qualifying Shareholders are offered with an equal opportunity to participate in the Rights Issue; (ii) the Rights Issue offers the Qualifying Shareholders to maintain their respective pro-rata shareholding interest of the Company at discount as compared to the historical and prevailing market price of the Shares; (iii) the Qualifying Shareholders have the opportunity to sell their nil-paid rights to subscribe for the Rights Share in the market and receive economic benefits accordingly; and (iv) the Subscription Price is set at a discount to the prevailing market prices in order to enhance the attractiveness of the Rights Issue, we are of the view that the potential dilution effect on the existing shareholding interests of the Independent Shareholders is acceptable.

IV. POSSIBLE FINANCIAL EFFECT OF THE ACQUISITION AND THE RIGHTS ISSUE

As stated in the Letter from the Board, upon completion of the Acquisition, the Target Company will become a wholly-owned subsidiary of the Company and the profit and loss and assets and liabilities of the Target Company will be consolidated into the financial statements of the Group.

Based on the unaudited pro forma financial information of the Enlarged Group as set out in Appendix III to this circular, if the Acquisition and the Rights Issue and the Placing had all taken place on 30 June 2018: (i) then under Scenario I, the consolidated total assets of the Group would have increased from HK$1,739,603,000 to HK$2,706,469,000 and the consolidated total liabilities of the Group would have increased from HK$1,036,370,000 to HK$1,036,384,000, causing the consolidated total equity attributable to shareholders of the Company to increase by approximately 195.47% from HK$494,619,000 to HK$1,461,471,000; and (ii) under Scenario II, the consolidated total assets of the Group would have increased from HK$1,739,603,000 to HK$2,434,299,000 and the consolidated total liabilities of the Group would have increased from HK$1,036,370,000 to HK$1,036,384,000, causing the consolidated total equity attributable to shareholders of the Company to increase by approximately 140.45% from HK$494,619,000 to HK$1,189,301,000.

In light of the possible financial effect of the Acquisition and the Rights Issue on the consolidated net assets attributable to shareholders of the Company, we are of the view that the Acquisition and the Rights Issue would have positive impact on the Group’s financial position immediately upon the completion of the Acquisition, the Rights Issue and the Placing. Therefore, we are of the view that the Acquisition and the Rights Issue are in the interests of the Company and the Shareholders as a whole.

Shareholders should note that the aforementioned analyses are for illustrative purpose only and do not purport to represent how the financial position of the Enlarged Group will be upon the completion of the Acquisition and the Rights Issue.

– 73 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having taken into account the above principal factors and reasons, we consider that, the Acquisition is in the ordinary and usual course of business of the Group and although the Rights Issue is not in the ordinary and usual course of business of the Group, the terms of the Acquisition Agreement and the Rights Issue are on normal commercial terms, fair and reasonable insofar as the Independent Shareholders are concerned and the Acquisition and the Rights Issue are in the interests of the Company and the Independent Shareholders. Accordingly, we would recommend (i) the Independent Board Committee to advise the Independent Shareholders; and (ii) the Independent Shareholders vote in favour, of the resolution(s) to be proposed at the EGM in this regard.

Yours faithfully, For and on behalf of TC Capital International Limited Edward Wu

Chairman

Note: Mr. Edward Wu has been a responsible officer of Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance since 2005. He has participated in and completed various advisory transactions in respect of connected transactions of listed companies in Hong Kong.

The English translation of the Chinese name(s) in this letter, where indicated with * is included for information purpose only and should not be regarded as the official English name(s) of such Chinese names.

– 74 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IA

1. FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group for each of the three years ended 31 December 2015, 2016 and 2017 and the six months ended 30 June 2018 are disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (www.uth.com.hk):

pages 49 to 135 of the annual report of the Company for the year ended 31 December 2015 (http://www3.hkexnews.hk/listedco/listconews/SEHK/2016/0421/ LTN201604211015.pdf)
pages 70 to 157 of the annual report of the Company for the year ended 31 December 2016 (http://www3.hkexnews.hk/listedco/listconews/SEHK/2017/0427/ LTN201704272408.pdf)
pages 61 to 151 of the annual report of the Company for the year ended 31 December 2017 (http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/0427/ LTN201804272289.pdf)
pages 4 to 44 of the interim report of the Company for the six months ended 30 June 2018 (http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/0918/ LTN20180918648.pdf)

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 January 2019, being the latest practicable date for the purpose of this indebtedness statement, the Group had outstanding bank borrowings of RMB395,550,000 (equivalent to approximately HK$461,745,000) which are secured by trade receivables, equity interests in several subsidiaries, land use right under service concession arrangement, guarantee by several subsidiaries of the Company, guarantee by the non-controlling shareholders of subsidiaries, guarantee by Dongguan New Century Science and Education Development Limited, Ms. Zhu Fenglian and her spouse and had unsecured government loans of RMB1,727,000 (equivalent to approximately HK$2,016,000).

Save as aforesaid above and apart from intra-group liabilities and normal trade bills payables arising in the ordinary course of business, as at the Latest Practicable Date, the Group did not have any (i) debt securities of the Group issued and outstanding, or authorised or otherwise created but unissued; (ii) term loans; (iii) other borrowings or indebtedness in the nature of borrowing of the Group including bank overdrafts and liabilities under acceptances (other than normal trade bills) or acceptance credits or hire purchase commitments; (iv) mortgages and charges of the Group; or (v) guarantees or contingent liabilities.

– IA-1 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX IA

3. SUFFICIENCY OF WORKING CAPITAL

After taking into account the Group’s existing cash and bank balances, internal resources and the expected cash flow from the Group’s ordinary and usual course of business but without taking into account the cash requirement needed for financing the Consideration for the Acquisition, the Directors are of the opinion that the working capital available to the Group is sufficient for the Group’s requirements for at least twelve months from the date of this circular.

After taking into account the Group’s existing cash and bank balances, internal resources, the expected cash flow from the Group’s ordinary and usual course of business and the achievement of the Minimum Proceeds Condition through the Rights Issue and, if applicable, the Placing, the Directors are of the opinion that the working capital available to the Group is sufficient for the Group’s requirements for at least twelve months from the date of this circular, including the cash requirement needed for financing the Consideration for the Acquisition.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position or prospects of the Group since 31 December 2017, being the date to which the latest audited consolidated financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECTS OF THE ENLARGED GROUP

Since early 2018, the global economy has seen a period of instability and fluctuation due to the combined effect of intensified expectation on US interest hike, geopolitical tension in middle-east and North Asia and the rise of international trade protectionism with trade war launched by the U.S. against China. However, the Group’s businesses are concentrated in the PRC market and have remained stable.

Regarding the Group’s water supply business in Qingyuan City, the population and economic activity of Qingyuan City are expected to accelerate with the implementation of “Guangzhou-Qingyuan integration” and the national policy of “Guangdong-Hong Kong-Macao Bay Area”. As such, the Company expects the water supply business will continue to provide a stable source of income for the Group.

Regarding the property investment and development business of the Group, in the past few years, the Group had adjusted its investment portfolio from time to time in view of the changing market while at the same time took a cautious approach in searching for prospective properties which could bring stable return to the Group. In view that the Properties are located at prime location in Guangzhou, a first-tier city in the PRC, with almost 100% occupancy, the Company expects that after Completion, the Acquisition will allow the Group to enrich its existing investment portfolio and bring about stable return to the Group in future.

– IA-2 –

APPENDIX IB

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

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

The following is the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group as at 30 June 2018 (the “Unaudited Pro Forma Financial Information”) which has been prepared by the Directors in accordance with paragraph 4.29 of the Listing Rules to illustrate the effects of the Rights Issue and the Placing (including the specific mandate) on the unaudited consolidated net tangible assets of the Group attributable to Shareholders of the Company as if the Rights Issue and the Placing (including the specific mandate) had taken place on 30 June 2018.

The Unaudited Pro Forma Financial Information is prepared based on the unaudited consolidated net tangible assets of the Group attributable to Shareholders of the Company as at 30 June 2018, as extracted from the published interim report of the Group for the six months period ended 30 June 2018, after incorporating the unaudited pro forma adjustments described in the accompanying notes.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purpose only and because of its hypothetical nature, may not give a true picture of the consolidated net tangible assets of the Group attributable to Shareholders of the Company had the Rights Issue and the Placing (including the specific mandate) been completed as at 30 June 2018 or at any future date.

For the purpose of the Unaudited Pro Forma Financial Information, the followings are two possible scenarios of the acceptance ratios of the Rights Issue and the Placing:

(i) assuming full acceptance by the Qualifying Shareholders of the Rights Issue whether under PAL(s) or EAF(s) leaving no Untaken Shares to be placed in the Placing (“Scenario I”); and
(ii) assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the minimum 1,411,116,522 Placing Shares to render the Rights Issue and Placing unconditional (“Scenario II”).

– IB-1 –

APPENDIX IB

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

Scenario I: Maximum Number of 4,240,897,716 Rights Shares to be Issued leaving no Untaken Shares to be placed in Placing

Based on
4,240,897,716
Rights Shares at
Subscription Price
of HK$0.23 per
Rights Share

Unaudited
consolidated net
tangible assets of
the Group
attributable to
Shareholders of the
Company as at
30 June 2018
Estimated net
proceeds from
the Rights Issue
Unaudited pro
forma adjusted
consolidated net
tangible assets of
the Group
attributable to
Shareholders of the
Company after
completion of the
Rights Issue
Unaudited
consolidated net
tangible assets of
the Group
attributable to
Shareholders of the
Company per Share
as at 30 June 2018
Unaudited pro
forma adjusted
consolidated net
tangible assets of
the Group
attributable to
Shareholders of the
Company per Share
after completion of
the Rights Issue
HK$’000
HK$’000
HK$’000
HK$
HK$
Note (1)
Note (2)
Note (4)
Note (5)
17,291
970,640
987,931
0.008
0.155

Scenario II: Minimum Number of 1,675,840,000 Rights Shares to be issued to Participating Shareholders and 1,411,116,522 Placing Shares to be placed in Placing to achieve the Minimum Proceeds Condition

			Unaudited pro		Unaudited pro
			forma adjusted		forma adjusted
			consolidated net		consolidated net
	Unaudited		tangible assets of	Unaudited	tangible assets of
	consolidated net		the Group	consolidated net	the Group
	tangible assets of		attributable to	tangible assets of	attributable to
	the Group		Shareholders of the	the Group	Shareholders of the
	attributable to	Estimated net	Company after	attributable to	Company per Share
	Shareholders of the	proceeds from	completion of the	Shareholders of the	after completion of
	Company as at	the Rights Issue	Rights Issue and the	Company per Share	the Rights Issue
	30 June 2018	and the Placing	Placing	as at 30 June 2018	and the Placing
	HK$’000	HK$’000	HK$’000	HK$	HK$
	Note (1)	Note (3)		Note (4)	Note (6)
Based on
1,675,840,000
Rights Shares at
Subscription Price
of HK$0.23 per
Rights Share and
1,411,116,522
Placing Shares at
Placing Price
of HK$0.23 per
Placing Share	17,291	698,470	715,761	0.008	0.137

– IB-2 –

APPENDIX IB

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

Notes:

The unaudited consolidated net tangible assets of the Group attributable to Shareholders of the Company as at 30 June 2018 is based on the unaudited consolidated net tangible assets of the Group attributable to the Shareholders of the Company as at 30 June 2018 of HK$494,619,000, less intangible assets of HK$378,291,000 and goodwill of HK$99,037,000 were extracted from the published interim report of the Group for the six months period ended 30 June 2018.
The estimated net proceeds from the Rights Issue are based on 4,240,897,716 Rights Shares at HK$0.23 per Rights share on the basis of two (2) Rights Share for every one (1) existing Share held as at the Latest Practicable Date, after deduction of the related expenses of approximately HK$4,766,000 to be incurred by the Company.
The estimated net proceeds from (i) the Rights Issue are based on the minimum number of 1,675,840,000 Rights Shares at HK$0.23 per Rights share on the basis of two (2) Rights Share for every one (1) existing Share held as at the Latest Practicable Date; (ii) the Placing are based on 1,411,116,522 Placing Shares at HK$0.23 per Placing share; and (iii) after deduction of the related expenses of approximately HK$11,530,000 to be incurred by the Company.
The unaudited consolidated net tangible assets of the Group attributable to Shareholders of the Company per Share as at 30 June 2018 is calculated by having the unaudited consolidated net tangible assets of the Group attributable to Shareholders of the Company as at 30 June 2018 divided by 2,120,448,858 Shares in issue as at the Latest Practicable Date.
The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the Shareholders of the Company per Share as at 30 June 2018 is calculated by having the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to Shareholders of the Company as at 30 June 2018 divided by the number of Shares of 6,361,436,574 as if the Rights Issue of 4,240,897,716 Shares was completed on 30 June 2018, but does not take into account of any Shares which may be issued upon the exercise of options granted under the Share Option Scheme or any Shares which may be granted and issued or repurchased by the Company pursuant to the general mandate and the repurchase mandate.
The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the Shareholders of the Company per Share as at 30 June 2018 is calculated by having the unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to Shareholders of the Company as at 30 June 2018 divided by the number of Shares of 5,207,405,380 as if the Rights Issue of 1,675,840,000 Shares and the Placing of 1,411,116,522 Shares were completed on 30 June 2018, but does not take into account of any Shares which may be issued upon the exercise of options granted under the Share Option Scheme or any Shares which may be granted and issued or repurchased by the Company pursuant to the general mandate and the repurchase mandate.
No adjustment has been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Group entered into subsequent to 30 June 2018.

– IB-3 –

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

APPENDIX IB

B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT

The following is the text of a report received from the reporting accountants, PKF Hong Kong Limited, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

大信梁學濂（香港）會計師事務所有限公司

Accountants & business advisers

26/F, Citicorp Centre 香港 18 Whitfield Road 銅鑼灣 Causeway Bay 威菲路道18號 Hong Kong 萬國寶通中心26樓

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

To the Directors of Universal Technologies Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Universal Technologies Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted net tangible assets of the Group as at 30 June 2018, and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages 1 to 3 of Appendix IB to the circular issued by the Company dated 22 March 2019 (the “Circular”), in connection with the proposed rights issue and placing (including the specific mandate) of the Company. The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described on pages 1 to 3 of Appendix IB to the Circular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the proposed rights issue and placing (including the specific mandate) on the Group’s financial position as at 30 June 2018 as if the proposed rights issue and placing (including the specific mandate) had taken place at 30 June 2018. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s financial statements for the period ended 30 June 2018, on which a review report has been published.

– IB-4 –

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

APPENDIX IB

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

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

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the “Code of Ethics for Professional Accountants” issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms that Perform Audits and Review of Financial Statements, and Other Assurance and Related Services Engagements” issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

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

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

– IB-5 –

APPENDIX IB

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

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

The purpose of Unaudited Pro Forma Financial Information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the proposed rights issue and placing (including the specific mandate) at 30 June 2018 would have been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial Information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

the related pro forma adjustments give appropriate effect to those criteria; and
the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

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

Opinion

In our opinion:–

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and

– IB-6 –

APPENDIX IB

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE GROUP

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

PKF Hong Kong Limited Certified Public Accountants

Tsui Kar Lam Karen

Practising Certificate Number P06426

Hong Kong 22 March 2019

– IB-7 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

The following is the text of a report set out on pages IIA-1 to IIA-16, received from the Company’s reporting accountants, PKF Hong Kong Limited, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

大信梁學濂（香港）會計師事務所有限公司

Accountants & business advisers

26/F, Citicorp Centre 香港 18 Whitfield Road 銅鑼灣 Causeway Bay 威菲路道18號 Hong Kong 萬國寶通中心26樓

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION OF CHEVALIER EARTH GROUP LIMITED TO THE DIRECTORS OF UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED

INTRODUCTION

We report on the historical financial information of Chevalier Earth Group Limited (the “Target Company”) set out on pages IIA-4 to IIA-16, which comprises the statement of financial position as at 31 December 2018, and the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the period from 27 September 2018 (date of incorporation) to 31 December 2018 (the “Relevant Period”) and a summary of significant accounting policies and other explanatory information (together, the “Historical Financial Information”). The Historical Financial Information set out on pages IIA-4 to IIA-16 forms an integral part of this report, which has been prepared for inclusion in the circular of Universal Technologies Holdings Limited (the “Company”) dated 22 March 2019 (the “Circular”) in connection with the proposed acquisition of the entire issued share capital of the Target Company by the Company (the “Acquisition”).

DIRECTORS’ RESPONSIBILITY FOR THE HISTORICAL FINANCIAL INFORMATION

The sole director of the Target Company is responsible for the preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation and presentation set out in Note 2 to the Historical Financial Information, and for such internal control as the sole director of the Target Company determines is necessary to enable the preparation of Historical Financial Information that is free from material misstatement, whether due to fraud or error.

The directors of the Company are responsible for the contents of the Circular in which the Historical Financial Information of the Target Company is included, and such information is based on accounting policies materially consistent with those of the Company.

– IIA-1 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

REPORTING ACCOUNTANTS’ RESPONSIBILITY

Our responsibility is to express an opinion on the Historical Financial Information and to report our opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 200, “Accountants’ Reports on Historical Financial Information in Investment Circulars” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). This standard requires that we comply with ethical standards and plan and perform our work to obtain reasonable assurance about whether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts and disclosures in the Historical Financial Information. The procedures selected depend on the reporting accountants’ judgement, including the assessment of risks of material misstatement of the Historical Financial Information, whether due to fraud or error. In making those risk assessments, the reporting accountant considers internal control relevant to the entity’s preparation of Historical Financial Information that gives a true and fair view in accordance with the basis of preparation set out in Note 2 to the Historical Financial Information in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our work also included evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the sole director of the Target Company, as well as evaluating the overall presentation of the Historical Financial Information.

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

OPINION

In our opinion, the Historical Financial Information gives, for the purposes of the accountants’ report, a true and fair view of the financial position of the Target Company as at 31 December 2018 and of its financial performance and its cash flows for the Relevant Period in accordance with the basis of preparation set out in Note 2 to the Historical Financial Information.

REPORT ON MATTERS UNDER THE RULES GOVERNING THE LISTING OF SECURITIES ON THE MAIN BOARD OF THE STOCK EXCHANGE AND THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE

Adjustments

In preparing the Historical Financial Information, no adjustments to the Underlying Financial Statements have been made.

Dividends

We refer to note 13 to the Historical Financial Information which states that no dividends have been paid by the Company in respect of the Relevant Period.

– IIA-2 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

No historical financial statements for the Target Company

As at the date of this report, no financial statements have been prepared for the Target Company since its date of incorporation.

PKF Hong Kong Limited

Certified Public Accountants

Tsui Kar Lam Karen

Practising Certificate Number P06426

Hong Kong

22 March 2019

– IIA-3 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

I. HISTORICAL FINANCIAL INFORMATION OF THE TARGET COMPANY

Set out below is the Historical Financial Information which forms an integral part of this accountants’ report.

The financial statements of the Target Company for the Relevant Period, on which the Historical Financial Information is based, were audited by PKF Hong Kong Limited in accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).

The Historical Financial Information is presented in Hong Kong dollars (“HK$”), unless when otherwise indicated.

(A) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the period from 27 September 2018 (date of incorporation) to 31 December 2018

Note Revenue 8 General and administrative expenses Loss before income tax 9 Income tax expense 11 Loss and total comprehensive loss for the period	HK$ – (14,478) (14,478) – (14,478)

– IIA-4 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

(B) STATEMENT OF FINANCIAL POSITION

As at 31 December 2018

Note CURRENT LIABILITY Amount due to the shareholder 14 NET LIABILITY EQUITY Share capital 15 Accumulated loss CAPITAL DEFICIENCY	HK$ (14,378) (14,378) 100 (14,478) (14,378)

(C) STATEMENT OF CHANGES IN EQUITY

For the period from 27 September 2018 (date of incorporation) to 31 December 2018

Issuance of ordinary shares – Note 15 Loss and total comprehensive loss for the period Balance at 31 December 2018	Share capital HK$ 100 – 100	Accumulated loss HK$ – (14,478) (14,478)	Total HK$ 100 (14,478) (14,378)

– IIA-5 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

(D) STATEMENT OF CASH FLOWS

For the period from 27 September 2018 (date of incorporation) to 31 December 2018

CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax and operating loss before working
capital changes
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on issuance of ordinary shares
Advances from the shareholder
NET CASH FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
ANALYSIS OF THE BALANCE OF CASH AND CASH
EQUIVALENTS
Cash and cash equivalents

HK$
(14,478)
(14,478)
100
14,378
14,478
–
–
–

– IIA-6 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

NOTES TO THE HISTORICAL FINANCIAL INFORMATION

1. General information

Chevalier Earth Group Limited (the “Target Company”) is a private company incorporated in the British Virgin Islands with limited liability on 27 September 2018 and its registered office is located at Unit 8, 3/F., Qwomar Trading Complex, Blackburne Road, Port Purcell, Road Town, Tortola, British Virgin Islands.

During the Relevant Period, the Target Company has not yet commenced any business. The commencement of its investment holding business subsequent to the Relevant Period will further be described in Note 17 to the Historical Financial Information.

2. Basis of preparation of Historical Financial Information

No statutory audited financial statements of the Target Company for the Relevant Period have been prepared as it was newly incorporated since 27 September 2018 and there are no statutory audit requirements under the relevant rules and regulations in the British Virgin Islands. The Historical Financial Information in this report was prepared based on management accounts of the Target Company for the Relevant Period. The sole director of the Target Company has prepared the Underlying Financial Statements in accordance with the Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the HKICPA.

When preparing the Underlying Financial Statements, the Target Company’s ability to continue as a going concern has been assessed. The Underlying Financial Statements have been prepared on a going concern basis notwithstanding that the Target Company incurred a net loss of HK$14,478 for the period from 27 September 2018 (date of incorporation) to 31 December 2018 and, as of that date, the Target Company’s total liability exceed its total asset by HK$14,378. As Universal Technologies Holdings Limited (the “Company”) has agreed to continuously provide adequate funds for the Target Company to meet in full its financial obligations as they fall due for the foreseeable future for and up to the date of the completion of the major transaction and for the coming twelve months from 31 December 2018, the sole director of the Target Company is confident that the Target Company will be able to meet its financial obligations when they fall due in foreseeable future and be able to operate on a going concern basis. Accordingly, the Underlying Financial Statements have been prepared on a going concern basis.

Should the Target Company be unable to continue in business as a going concern, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for any further liability which might arise.

– IIA-7 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

3. Application of new and revised Hong Kong Financial Reporting Standards

For the purpose of preparing and presenting the Historical Financial Information for the Relevant Period, the Target Company has, throughout the Relevant Period, consistently adopted HKASs, HKFRSs, amendments and interpretations. The Target Company has not early applied the following new and revised HKFRSs that have been issued but are not yet effective:–

HKFRS 16 Leases[1] HKFRS 17 Insurance Contracts[2] HK(IFRIC)-Int 23 Uncertainty over Income Tax Treatments[1] Amendments to HKAS 28 Long-term Interests in Associates and Joint Ventures[1] Amendments to HKFRS 9 Prepayment features with negative compensation[1] Amendments to HKFRS 10 Sale or Contribution of Assets between and HKAS 28 an Investor and its Associate or Joint Venture[3] Amendments to HKAS 19 Plan Amendment, Curtailment or Settlement[1] Annual Improvements Amendments to HKFRS 3, HKFRS 11, HKAS 12 (2015-2017) and HKAS 23[1]

1 Effective for annual periods beginning on or after 1 January 2019

2 Effective for annual periods beginning on or after 1 January 2021
3 Effective for annual periods beginning on or after a date to be determined

The Target Company is in the process of making an assessment of the impact of the above new and revised standards, amendments and interpretations to standards on the financial statements of the Target Company in their initial applications. So far it has concluded that the adoption of them is unlikely to have a significant impact on the financial statements.

4. Significant accounting policies

(a) Measurement basis

The Historical Financial Information has been prepared in accordance with HKFRSs under the historical cost convention.

(b) Foreign currencies

Items included in the financial statements of the Target Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Hong Kong dollar, which is also the Target Company’s functional currency.

Foreign currency transactions of the Target Company are initially recorded in the functional currency using the exchange rates prevailing at the dates of the transactions.

– IIA-8 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at the end of the reporting period and the exchange differences arising are recognised in profit or loss. Non-monetary items carried at fair value denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined and the exchange differences arising are recognised in profit or loss except for the exchange component of a gain or loss that is recognised directly in equity.

(c) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(d) Income tax

Income tax expense comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the Relevant Period, using tax rates enacted or substantively enacted at the end of the Relevant Period, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilised.

– IIA-9 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Target Company controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The carrying amount of a deferred tax asset is reviewed at the end of Relevant Period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

(e) Provisions and contingent liabilities

Provisions are recognised for liabilities of uncertain timing or amount when the Target Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

(f) Related parties

(a) A person, or a close member of that person’s family, is related to the Target Company if that person:–
(i) has control or joint control over the Target Company;
(ii) has significant influence over the Target Company; or
(iii) is a member of the key management personnel of the Target Company or the Target Company’s parent.

– IIA-10 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

(b) An entity is related to the Target Company if any of the following conditions applies:–
(i) the entity and the Target Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
(ii) one entity is an associate or a joint venture of the other entity (or an associate or a joint venture of a member of the Target Company of which the other entity is a member);
(iii) both entities are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Target Company or an entity related to the Target Company;
(vi) the entity is controlled or jointly controlled by a person identified in (a) above;
(vii) a person identified in (a)(i) above has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of the Target Company of which it is a part, provides key management personnel services to the Target Company or to the Target Company’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

5. Critical accounting judgments and key sources of estimation uncertainty

In the application of the Target Company’s accounting policies, which are described in Note 4, the sole director is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

– IIA-11 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

6. Capital management

The Target Company manages its capital to ensure that the Target Company will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances. The Target Company’s overall strategy remains unchanged throughout the Relevant Period.

The capital structure of the Target Company consists of net debts, which includes the amount due to the shareholder as disclosed in Note 14 and equity attributable to the sole shareholder of the Target Company.

The sole director reviews the capital structure on a regular basis. As part of this review, the sole director considers the cost of capital and the risks associated with the capital. Based on recommendations of the sole director, the Target Company will balance its overall capital structure through new share issues as well as raising of debts.

Further, the existing shareholder of the Target Company and the Company, subject to the completion of the Acquisition, confirmed their willingness to provide sufficient cash and equity support to meet the daily operation requirements to maintain the Target Company as a going concern for the coming twelve months from 31 December 2018.

7. Financial risk management

This note explains the Target Company’s exposure to financial risks and how these risks could affect the Target Company’s future financial performance. Current period profit and loss information has been included where relevant to add further context.

The Target Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk, and liquidity risk. The Target Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Target Company’s financial performance. Risk management is carried out by the senior management of the Target Company.

(a) Market risk

(i) Foreign exchange risk

No sensitivity analysis on foreign currency risk is performed since the Target Company’s has no material foreign currency denominated monetary assets and liabilities at the end of the reporting period.

(ii) Cash flow and fair value interest rate risk

The Target Company does not have significant interest-bearing assets or liabilities. As a result, the Target Company’s results and operating cash flows are substantially independent of changes in market interest rate.

– IIA-12 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

The Target Company considers that there is no significant cash flow interest rate risk and fair value interest rate risk as the Target Company does not have variable rate and fixed rate borrowings.

(b) Credit risk

The Target Company is not exposed to credit risk in the event of the counterparties’ failure to perform their obligations at Relevant Period as the Target Company did not have any financial asset as stated in the statement of financial position.

(c) Liquidity risk

The Target Company has to maintain a suitable level of liquidity to finance the daily operation, capital expenditure and repayment of borrowings. The Target Company’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

(d) Fair value estimation

The sole director considers that the carrying amounts of the financial assets and financial liabilities recognised in the financial statements that are not measured at fair value on a recurring basis approximate their fair values.

During the Relevant Period, the Target Company did not have any financial assets or liabilities measured at fair value.

8. Revenue

The Target Company did not generate any revenue during the Relevant Period.

9. Loss before tax

There are no supporting documents provided by the sole director of the Target Company as to verify the quantum of formation expense and solicitors’ fees incurred by the Target Company. The sole director has agreed to absorb the abovementioned costs incurred during the Relevant Period and no separate disclosure was made for the above expenses.

10. Director’s remuneration and five highest paid employees

(i) Director’s remuneration

No remuneration was paid to the Target Company’s sole director during the Relevant Period and no remuneration was waived by the sole director during the Relevant Period.

– IIA-13 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

(ii) Employees’ remuneration

The Target Company has no employee, thus no remuneration was paid to any employees during the Relevant Period.

11. Taxation

No provision for taxation has been made as the Target Company had no revenue earned during the Relevant Period. No provision for deferred taxation has been made as the amount involved is insignificant.

12. Earnings per share

No earnings per share information is presented as its inclusion, for the purpose of this report, is not considered meaningful.

13. Dividends

No dividends have been paid by the Target Company in respect of the Relevant Period.

14. Amount due to the shareholder

The amount is unsecured, interest-free and repayable on demand.

15. Share capital

HK$

Authorised:–

50,000 shares of a single class with no par value

Issued and fully paid:–

100 ordinary shares

100

The Target Company was incorporated on 27 September 2018 with an authorised share capital to issue a maximum of 50,000 shares of a single class with no par value. On 27 September 2018, 100 ordinary shares were allotted and issued at the subscription price of HK$1.00 each to the sole shareholder to meet the initial capital requirement. Other than the above, there were no changes in the Target Company’s authorised, issued, and fully paid share capital during the Relevant Period.

16. Related party transactions

The Target Company had no other transactions with related parties during the Relevant Period.

– IIA-14 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

17. Events after the Relevant Period

(a) No audited financial statements have been prepared in respect of any period subsequent to 31 December 2018.
(b) On 31 January 2019, the Target Company (as purchaser) and an individual (as seller) entered into a share transfer agreement, pursuant to which the Target Company agreed to purchase and the individual agreed to sell the entire equity interest of Heng Hui Property Investment Limited (“HK Holdco”), for a total consideration of HK$270,000.

HK Holdco is an investment holding company incorporated in Hong Kong with limited liability whose sole asset is the entire equity interest in 廣州市頤城投資控股有限公司 (Guangzhou Yicheng Investment Holdings Limited) (“Nansha Holdco”). Nansha Holdco is a company established in the PRC with limited liability whose scope of business includes investment holding, consultancy and property development, operation, agency and management and whose sole asset is the entire equity interest in 廣州市衡信宇軒實業發展有限公司 (Guangzhou Hengxin Yuxuan Industrial Development Limited) (“GZ Holdco”). GZ Holdco is a company established in the PRC with limited liability whose scope of business includes consultancy, property management and leasing.

The above transactions were completed on 31 January 2019. HK Holdco and its subsidiaries have become wholly-owned subsidiaries of the Target Company (collectively referred as “Target Group”).

(c) On 15 February 2019 (after trading hours), the Company (as purchaser), the sole shareholder of the Target Company (the “Vendor”) and the Target Company entered into a sale and purchase agreement (the “Acquisition Agreement”), pursuant to which the Vendor has conditionally agreed to sell, and the Company has conditionally agreed to purchase from the Vendor, the Sale Interests (comprising the entire issued share capital of the Target Company (the “Sale Shares”) and the entire amount owing by the Target Group to the Vendor or its affiliates on completion of the Acquisition (the “Sale Loans”)) for the total cash consideration of RMB576,000,000 (equivalent to approximately HK$673,286,400). As at the date of this accountant’s report, such agreement has not been completed as certain precedent conditions have not been fulfilled.

Based on the information provided by the Vendor, on 14 February 2019 (i.e. prior to signing of the Acquisition Agreement), GZ Holdco entered into the following contracts relating to the Properties:

(i) a property acquisition contract to acquire Property A from Property A Owner (the “ Property A Acquisition Contract ”) for the total acquisition cost of RMB448,300,000 (inclusive of net consideration payable by GZ Holdco to Property A Owner of RMB434,825,000, plus tax and duties borne by GZ Holdco in the amount of RMB13,475,000);

– IIA-15 –

APPENDIX IIA FINANCIAL INFORMATION OF THE TARGET COMPANY

(ii) a property acquisition contract to acquire Property B from Ms. Zhu (the “ Property B Acquisition Contract ”) for the total acquisition cost of RMB127,700,000 (inclusive of net consideration payable by GZ Holdco to Ms. Zhu of RMB123,900,000, plus tax and duties borne by GZ Holdco in the amount of RMB3,800,000); and
(iii) a property lease contract (the “ Property C Participation Contract ”, which together with Property A Acquisition Contract and Property B Acquisition Contract are collectively referred to as the “ Underlying Contracts ”) to participate in the leasehold right enjoyed by Property C Lessee under Property C Lease for its remaining term until 31 December 2024.

Upon completion of the Acquisition, the Target Company would be the wholly owned subsidiary of the Company. As at the date of this accountant’s report, the Acquisition has not been completed.

– IIA-16 –

UNAUDITED FINANCIAL INFORMATION RELATING TO THE PROPERTIES

APPENDIX IIB

1. UNAUDITED PROFIT AND LOSS STATEMENTS OF THE PROPERTIES

In accordance with Rule 14.67(6)(b)(i) of the Listing Rules, the Company is required to include in this Circular a profit and loss statement for the 3 preceding financial years on the identifiable net income stream in relation to the Properties which must be reviewed by the reporting accountants to ensure that such information has been properly compiled and derived from the underlying books and records.

The unaudited profit and loss statements of the Properties for the 3 preceding financial years ended 31 December 2016, 2017 and 2018 (the “ Relevant Period ”) have been prepared by the Directors based on the information provided by the Vendor set out below:–

Rental income Rental rights royalty Staff salaries Administrative expenses Profit before change in fair value of investment property, finance costs and taxation	Year ended 31 December 2016 2017 2018 HK$’000 HK$’000 HK$’000 30,716 36,337 39,556 (7,007) (7,189) (7,676) (1,465) (1,779) (2,965) (4,907) (4,862) (4,499) 17,337 22,507 24,416

1.1 Property A

Rental income Staff salaries Administrative expenses Profit before change in fair value of investment property, finance costs and taxation	Year ended 31 December 2016 2017 2018 HK$’000 HK$’000 HK$’000 13,555 16,428 18,801 (898) (1,091) (1,818) (2,754) (3,020) (2,920) 9,903 12,317 14,063

– IIB-1 –

APPENDIX IIB

UNAUDITED FINANCIAL INFORMATION RELATING TO THE PROPERTIES

1.2 Property B

Rental income Administrative expenses Profit before change in fair value of investment property, finance costs and taxation	Year ended 31 December 2016 2017 2018 HK$’000 HK$’000 HK$’000 7,923 8,223 8,578 (1,070) (1,064) (1,153) 6,853 7,159 7,425

1.3 Property C

Rental income Rental rights royalty Staff salaries Administrative expenses Profit before change in fair value of investment property, finance costs and taxation	Year ended 31 December 2016 2017 2018 HK$’000 HK$’000 HK$’000 9,238 11,686 12,177 (7,007) (7,189) (7,676) (567) (688) (1,147) (1,083) (778) (426) 581 3,031 2,928

Notes:

The unaudited profit and loss statements of the Properties set out above is prepared using accounting policies which are materially consistent with the accounting policies of the Company.
The exchange rates adopted to translate the unaudited financial information for the 3 years ended 31 December 2016, 2017 and 2018 into HK$ are as follows:–

31	December	2016	RMB	1	=	HK$1.1690
31	December	2017	RMB	1	=	HK$1.1532
31	December	2018	RMB	1	=	HK$1.1840

The Company engaged PKF Hong Kong Limited, the auditor of the Company, to conduct certain agreed upon procedures on the unaudited profit and loss statements of the Properties for the Relevant Period in accordance with Hong Kong Standard on Related Services 4400 “Engagements to Perform Agreed-Upon Procedures Regarding Financial Information” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). The procedures have been determined by and are the responsibility of the Directors. The auditor of the Company performed the procedures as summarised below:–

– IIB-2 –

UNAUDITED FINANCIAL INFORMATION RELATING TO THE PROPERTIES

APPENDIX IIB

(i) the auditor obtained copies of tenancy agreements of the Properties during the Relevant Period provided to the Company by the Vendor;
(ii) the auditor obtained a schedule setting out the floor, names of tenants, lease period, annual rental and the corresponding rental income in respect of each tenancy agreements for the Relevant Period (the “Rental Income Summary”) prepared by the Company and compared the information as shown in the Rental Income Summary with the corresponding information shown in the tenancy agreements of the Properties;
(iii) the auditor obtained a schedule setting out direct operating expenses incurred for the Properties during the Relevant Period (the “Direct Expenses Summary”) prepared by the Company based on the financial information provided by the Vendor and compared the information as shown in the Direct Expenses Summary with the corresponding information shown in the underlying supporting documents of the Properties;
(iv) the auditor recalculated the amounts of the rental income for the Relevant Period presented on the Rental Income Summary based on the information set out in the tenancy agreements of the Properties and the formula stated in the Rental Income Summary;
(v) the auditor recalculated the amounts of the direct operating expenses for the Relevant Period presented on the Direct Expenses Summary based on the information set out in the underlying supporting documents of the Properties and the formula stated in the Direct Expenses Summary;
(vi) the auditor checked the arithmetic accuracy of the total amount of rental income for the Relevant Period shown in the Rental Income Summary;
(vii) the auditor checked the arithmetic accuracy of the total amount of direct operating expenses for the Relevant Period shown in the Direct Expenses Summary; and
(viii) the auditor enquired with the directors of the Company about the accounting policies adopted by the Company in the preparation of the unaudited profit and loss statements of the Properties and compare such policies with the accounting policies of the Company.

The auditor has performed the above agreed-upon procedures set out in the relevant engagement letter with the Company and reported its factual findings based on the agreed-upon procedures to the Company. Pursuant to the terms of the relevant engagement letter between the Company and the auditor, the reported factual findings should not be used or relied upon by any other parties for any purpose. After reviewing the findings reported by PKF Hong Kong Limited, the Directors are of the opinion that the unaudited profit and loss statements of the Properties for the Relevant Period has been properly compiled based on the information from the Rental Income Summary and the Direct Expenses Summary.

The work performed by PKF Hong Kong Limited in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements, Hong Kong Standards on Assurance Engagements or Hong Kong Standards on Investment Circular Reporting Engagements issued by the HKICPA and consequently no assurance has been expressed by PKF Hong Kong Limited on the profit and loss statements of the Properties.

– IIB-3 –

UNAUDITED FINANCIAL INFORMATION RELATING TO THE PROPERTIES

APPENDIX IIB

2. Valuation of the Properties

No valuation of the Properties at 31 December 2016, 2017 and 2018 was disclosed herein as the Directors were unable to obtain any valuation reports as at 31 December 2016, 2017 and 2018 from the Vendor.

– IIB-4 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(A) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Introduction

The following unaudited pro forma consolidated statement of assets and liabilities of the Enlarged Group (“Unaudited Pro Forma Financial Information”) has been prepared in accordance with paragraph 4.29 of the Listing Rules for the purpose of illustrating the effect immediately after the (1) the acquisition of the entire issued share capital of the Chevalier Earth Group Limited (the “Target Company”), (2) the proposed right issue on the basis of two (2) rights shares for every one (1) share held on the Record Date and (3) the proposed placing of new shares under specific mandate by Universal Technologies Holdings Limited (the “Company”) (the “Acquisition”), as if the Acquisition had taken place on 30 June 2018.

This Unaudited Pro Forma Financial Information is prepared by the directors of the Company (the “Directors”) for illustrative purposes only, based on their judgments, estimations and assumptions, and because of its hypothetical nature, it may not give a true picture of the consolidated financial position of the Enlarged Group had the Acquisition been completed on 30 June 2018 or any future dates.

The Unaudited Pro Forma Financial Information has been prepared based on the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2018 which has been extracted from the Company’s interim report for the six months ended 30 June 2018 and the audited statement of financial position of the Target Company as at 31 December 2018 as set out in the Accountant’s Report in Appendix IIA to this Circular, after making pro forma adjustments relating to the Acquisition that are (i) directly attributable to the Acquisition; and (ii) factually supportable as if the Acquisition had been completed on 30 June 2018.

The Unaudited Pro Forma Financial Information has been prepared using the accounting policies materially consistent with those of the Group as set out in the published annual report of the Group for the year ended 31 December 2017.

The Unaudited Pro Forma Financial Information should be read in conjunction with other financial information included elsewhere in this circular.

– III-1 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

For the purpose of the Unaudited Pro Forma Financial Information, the Acquisition refers to the following two possible scenarios of the acceptance ratios of the Rights Issue and the Placing:

(i) assuming full acceptance by the Qualifying Shareholders of the Rights Issue whether under PAL(s) or EAF(s) leaving no Untaken Shares to be placed in the Placing (“Scenario I”); and
(ii) assuming nil acceptance by the Qualifying Shareholders of the Rights Issue other than the Participating Shareholders and assuming successful placing of the minimum 1,411,116,522 Placing Shares to render the Rights Issue and Placing unconditional (“Scenario II”).

– III-2 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited Pro Forma Statement of Assets and Liabilities of the Enlarged Group

Scenario I: Maximum Number of 4,240,897,716 Rights Shares to be Issued leaving no Untaken Shares to be placed in Placing

NON-CURRENT ASSETS Property, plant and equipment Prepaid land lease payments Investment properties Intangible assets Goodwill Deposits paid for acquisition of property, plant and equipment CURRENT ASSETS Inventories Properties under development Debtors Deposits, prepayments and other receivables Prepaid land lease payments Fixed deposits Pledged bank deposit Cash and bank balances DEDUCT:– CURRENT LIABILITIES Bank and other borrowings Trade payables Payable to merchants Deposits received, sundry creditors and accruals Contract liabilities Amounts due to related companies Amount due to the shareholder Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	The Group as at 30 June 2018 HK$’000 Note (1) 503,941 30,330 48,280 378,291 99,037 13,657 1,073,536 4,692 13,469 21,175 16,493 684 76,639 287,428 245,487 666,067 296,717 16,985 3,016 139,063 15,194 25,639 – 6,345 502,959 163,108 1,236,644	The Target Company as at 31 December 2018 HK$’000 Note (2) – – – – – – – – – – – – – – – – – – – – – – 14 – 14 (14) (14)	Pro forma adjustments HK$’000 HK$’000 HK$’000 Note (3) Note (5) Note (6) 673,286 – 673,286 – 970,640 (673,286) (3,774) 970,640 (673,286) (3,774) 14 (14) – – – 970,640 (673,286) (3,774) 970,640 – (3,774)	Unaudited pro forma total of the Enlarged Group HK$’000 503,941 30,330 721,566 378,291 99,037 13,657
				1,746,822
				4,692 13,469 21,175 16,493 684 76,639 287,428 539,067
				959,647
				296,717 16,985 3,016 139,077 15,194 25,639 – 6,345
				502,973
				456,674
				2,203,496

– III-3 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

DEDUCT:– NON-CURRENT LIABILITIES Bank and other borrowings Deferred tax liabilities NET ASSETS REPRESENTING: CAPITAL AND RESERVES Share capital Reserves TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY NON-CONTROLLING INTERESTS TOTAL EQUITY	The Group as at 30 June 2018 HK$’000 Note (1) 469,466 63,945 533,411 703,233 21,205 473,414 494,619 208,614 703,233	The Target Company as at 31 December 2018 HK$’000 Note (2) – – – (14) – (14) (14) – (14)	Pro forma adjustments HK$’000 HK$’000 HK$’000 Note (3) Note (5) Note (6) – – – 970,640 – (3,774) 42,409 928,231 (3,774) 970,640 – (3,774) 970,640 – (3,774)	Unaudited pro forma total of the Enlarged Group HK$’000 469,466 63,945
				533,411
				1,670,085

				63,614 1,397,857
				1,461,471 208,614
				1,670,085

– III-4 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Scenario II: Minimum Number of 1,675,840,000 Rights Shares to be issued to Participating Shareholders and 1,411,116,522 Placing Shares to be placed in Placing to achieve the Minimum Proceeds Condition

NON-CURRENT ASSETS Property, plant and equipment Prepaid land lease payments Investment properties Intangible assets Goodwill Deposits paid for acquisition of property, plant and equipment CURRENT ASSETS Inventories Properties under development Debtors Deposits, prepayments and other receivables Prepaid land lease payments Fixed deposits Pledged bank deposit Cash and bank balances DEDUCT:– CURRENT LIABILITIES Bank and other borrowings Trade payables Payable to merchants Deposits received, sundry creditors and accruals Contract liabilities Amounts due to related companies Amount due to the shareholder Tax payable NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES	The Group as at 30 June 2018 HK$’000 Note (1) 503,941 30,330 48,280 378,291 99,037 13,657 1,073,536 4,692 13,469 21,175 16,493 684 76,639 287,428 245,487 666,067 296,717 16,985 3,016 139,063 15,194 25,639 – 6,345 502,959 163,108 1,236,644	The Target Company as at 31 December 2018 HK$’000 Note (2) – – – – – – – – – – – – – – – – – – – – – – 14 – 14 (14) (14)	Pro forma adjustments HK$’000 HK$’000 HK$’000 Note (4) Note (5) Note (6) 673,286 – 673,286 – 698,470 (673,286) (3,774) 698,470 (673,286) (3,774) 14 (14) – – – 698,470 (673,286) (3,774) 698,470 – (3,774)	Unaudited pro forma total of the Enlarged Group HK$’000 503,941 30,330 721,566 378,291 99,037 13,657
				1,746,822
				4,692 13,469 21,175 16,493 684 76,639 287,428 266,897
				687,477
				296,717 16,985 3,016 139,077 15,194 25,639 – 6,345
				502,973
				184,504
				1,931,326

– III-5 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

DEDUCT:– NON-CURRENT LIABILITIES Bank and other borrowings Deferred tax liabilities NET ASSETS REPRESENTING: CAPITAL AND RESERVES Share capital Reserves TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY NON-CONTROLLING INTERESTS TOTAL EQUITY	The Group as at 30 June 2018 HK$’000 Note (1) 469,466 63,945 533,411 703,233 21,205 473,414 494,619 208,614 703,233	The Target Company as at 31 December 2018 HK$’000 Note (2) – – – (14) – (14) (14) – (14)	Pro forma adjustments HK$’000 HK$’000 HK$’000 Note (4) Note (5) Note (6) – – – 698,470 – (3,774) 30,870 667,600 (3,774) 698,470 – (3,774) 698,470 – (3,774)	Unaudited pro forma total of the Enlarged Group HK$’000 469,466 63,945
				533,411
				1,397,915

				52,075 1,137,226
				1,189,301 208,614
				1,397,915

Notes to Unaudited Pro Forma Statement of Assets and Liabilities of the Enlarged Group

Notes:–

(1) The unaudited consolidated statement of financial position of the Group as at 30 June 2018 was extracted from the published interim report of the Group for the six months period ended 30 June 2018.
(2) The audited statement of financial position of the Target Company as at 31 December 2018 was extracted from Appendix IIA of this Circular.
(3) The estimated net proceeds from the Rights Issue are based on 4,240,897,716 Rights Shares at HK$0.23 per Rights share on the basis of two (2) Rights Share for every one (1) existing Share held as at the Latest Practicable Date, after deduction of the related expenses of approximately HK$4,766,000 to be incurred by the Company.
(4) The estimated net proceeds from (i) the Rights Issue are based on the minimum number of 1,675,840,000 Rights Shares at HK$0.23 per Rights share on the basis of two (2) Rights Share for every one (1) existing Share held as at the Latest Practicable Date; (ii) the Placing are based on 1,411,116,522 Placing Shares at HK$0.23 per Placing share; and (iii) after deduction of the related expenses of approximately HK$11,530,000 to be incurred by the Company.

– III-6 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

(5) For pro forma purpose, it is assumed that Target Group Restructuring and the acquisition of Property A, Property B and Property C Participation Contract (the “Properties”) is completed on 30 June 2018.

The adjustment represents cash payment of consideration of approximately HK$673,286,000 (equivalent to RMB576,000,000) for acquisition of the Properties. The Properties will be classified as investment properties and the Properties will continue to earn rentals and for capital appreciation. In the opinion of the directors of the Company, the acquisition of the Target Company does not constitute a business. Therefore, the transactions were determined by the directors of the Company to be acquisition of assets through acquisition of subsidiaries rather than a business combination as defined in Hong Kong Financial Reporting Standard 3 “Business Combinations”.

Upon completion of the Acquisition, the amount due to the shareholder by the Target Group of HK$14,000 is reallocated to other payables.

(6) For the purpose of the Unaudited Pro Forma Financial Information, the direct expenses and other professional services related to the Acquisition are estimated to be approximately HK$3,774,000 according to respective quotations from the professional parties, which should be charged to the profit or loss.
(7) For the purpose of the Unaudited Pro Forma Financial Information of the Enlarged Group, the consideration and balances arising from the Acquisition stated in RMB have been converted into Hong Kong dollars at the exchange rate of RMB1: HK$1.1689.
(8) No adjustment has been made to the Unaudited Pro Forma Financial Information to reflect any trading results or other transactions of the Group subsequent to 30 June 2018 and of the Target Company subsequent to 31 December 2018.

– III-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(B) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following is the text of a report received from the reporting accountants, PKF Hong Kong Limited, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

大信梁學濂（香港）會計師事務所有限公司

Accountants & business advisers

26/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong

香港銅鑼灣威菲路道18號萬國寶通中心26樓

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

To the Directors of Universal Technologies Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Universal Technologies Holdings Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of assets and liabilities as at 30 June 2018 and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages 1 to 7 of Appendix III to the circular issued by the Company dated 22 March 2019 (the “Circular”). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described on pages 1 to 7 of Appendix III to the Circular.

– III-8 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the Acquisition on the Group’s financial position as at 30 June 2018 as if the Acquisition had taken place at 30 June 2018. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s financial statements for the period ended 30 June 2018, on which a review report has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

Our Independence and Quality Control

Reporting Accountants’ Responsibilities

– III-9 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

The purpose of Unaudited Pro Forma Financial Information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the Acquisition at 30 June 2018 would have been as presented.

the related pro forma adjustments give appropriate effect to those criteria; and
the Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma Financial Information.

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

Opinion

In our opinion:–

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and

– III-10 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

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

PKF Hong Kong Limited Certified Public Accountants

Tsui Kar Lam Karen

Practising Certificate Number P06426

Hong Kong 22 March 2019

– III-11 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

The following is the text of letter, summary of valuation and valuation report, prepared for the purpose of incorporation in this circular, received from Grant Sherman Appraisal Limited, an independent property valuer, in connection with their valuation as at 31 December 2018 of the property interests to be held by the Group in the People’s Republic of China.

==> picture [138 x 57] intentionally omitted <==

Unit 1005, 10/F., Capital Centre, 151 Gloucester Road, Wanchai, Hong Kong

22 March 2019

The Directors Universal Technologies Holdings Limited Room A & B2, 11/F Guangdong Investment Tower, No. 148 Connaught Road Central, Central, Hong Kong

Dear Sirs,

In accordance with instructions of Universal Technologies Holdings Limited for us to value the property interests to be held by Universal Technologies Holdings Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) in the People’s Republic of China (“the PRC”), we confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of such property interest as at the 31 December 2018 (the “Valuation Date”) for the purpose of incorporation into the circular issued by the Company on the date hereof.

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

Market Value is understood as the value of a property estimated without regard to costs of sale or purchase (or transaction) and without offset for any associated taxes or potential taxes.

In valuing the property interests nos. 1 to 3, which are to be held by the Group for investment purpose in the PRC, we have adopted the term and reversion approach by taking into account the current rent passing of the property interest and the reversionary potential

– IV-1 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

of the tenancy(ies). In determining the reversionary potential of the tenancy(ies), we have adopted the market approach with reference to the recent proposed leasing and sale transactions for similar premises in the proximity.

In valuing the property interest no. 4, we have adopted the market approach. The market approach provides an indication of value by comparing the asset with identical or comparable (that is similar) assets for which price information is available.

Our valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the values of the property interests. In addition, no forced sale situation in any manner is assumed in our valuation.

We have been provided with copies of extracts of title documents relating to the properties in the PRC. However, we have not caused title searches to be made for the property interest at the relevant government bureaus in the PRC and we have not inspected the original documents to verify the ownership, encumbrances or the existence of any subsequent amendments which may not appear on the copies handed to us. In undertaking our valuation for the property interest in the PRC, we have relied on the legal opinion (“the PRC legal opinion”) provided by the Group’s PRC legal adviser, Beijing Yingke Law Firm Guangzhou Office.

We have relied to a considerable extent on information provided by the Group and have accepted advice given to us by the Group on such matters as planning approvals or statutory notices, easements, tenure, occupancy, lettings, site and floor areas and in the identification of the property and other relevant matter. We have no reason to doubt the truth and accuracy of the information provided to us by the Company which is material to the valuation. We have also been advised by the Group that no material facts had been concealed or omitted in the information provided to us and have no reason to suspect that any material information has been withheld. All documents have been used for reference only. We consider that we have been provided with sufficient information to reach an informed view.

All dimensions, measurements and areas included in the valuation report are based on information contained in the documents provided to us by the Group and are approximations only. No on-site measurement has been taken.

We have inspected the exteriors, and where possible, the interiors of the property, in the course of our inspection, we did not note any serious defects. However, we have not carried out a structural survey nor have we inspected woodwork or other parts of the structures which are covered, unexposed or inaccessible and we are therefore unable to report that any such parts of the property are free from defect though in the course of our inspections we did not note any serious defects. No tests were carried out on any of the services.

– IV-2 –

APPENDIX IV

VALUATION REPORT ON THE PROPERTIES

We have not carried out investigation to determine the suitability of the ground conditions or the services for any property developments to be erected thereon. Our valuation is on the basis that these aspects are satisfactory and that no extraordinary expense or delay will be incurred during the construction period. Moreover, it is assumed that the utilization of the land and improvements will be within the boundaries of the sites held by the owner or permitted to be occupied by the owner. In addition, we assumed that no encroachment or trespass exits, unless noted in the valuation report.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property interest nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interest are free from encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

In valuing the property interest, we have fully complied with the HKIS Valuation Standards 2017 published by The Hong Kong Institute of Surveyors (HKIS) and the requirements set out in Chapter 5 of and Practice Note 12 to the Rule Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited.

Unless otherwise stated, all money amounts stated are in Renminbi (RMB). The exchange rates used in valuing the property interests are rates as at the Valuation Date, which was RMB1:HK$1.14. There has been no significant fluctuation in the exchange rate for these currencies against Hong Kong Dollars between that date and the date of this letter.

We enclose herewith our summary of valuation together with valuation reports.

Respectfully submitted, For and on behalf of GRANT SHERMAN APPRAISAL LIMITED

Lawrence Chan Ka Wah

MRICS MHKIS RPS(GP)MCIREA MHIREA RICS Registered Valuer Director Real Estate Group

Note: Mr. Lawrence Chan Ka Wah is a member of the Royal Institution of Chartered Surveyors, a member of the Hong Kong institute of Surveyors, Registered Professional Surveyors in the General Practice Section, RICS Registered Valuer and a member of China Institute of Real Estate and Agents, who has over 15 years’ experience in the valuation of properties in Hong Kong, Macau, the PRC and the Asian Rim.

– IV-3 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

SUMMARY OF VALUATION

			Market Value in
			existing state to be
	Market Value in	Interest	attributable to the
	existing state as at	attributable	Group as at
Property	31 December 2018	to the Group	31 December 2018

Group I – Property interests held by Ms Zhu Fenglian and to be held by the Group in the PRC for investment purpose

1.	Units 103 and 106-109 on Level 1	RMB128,100,000	100%	RMB128,100,000
	of the shopping arcade of Dongshan
	Jinxuan Modern Mall, Nos. 4 and 6
	Nonglinxia Road, Yuexiu District,
	Guangzhou City, Guangdong
	Province, the PRC (Approximate
	Gross Floor Area is 935.26 sq.m.)
Group II – Property interests held by Guangzhou Jincheng			Property Development Co., Ltd. and
to	be held by the Group in the PRC for investment purpose
2.	Units 101, 102, 104 and 105 on	RMB132,100,000	100%	RMB132,100,000
	Level 1 of the shopping arcade of
	Dongshan Jinxuan Modern Mall,
	Nos. 4 and 6 Nonglinxia Road,
	Yuexiu District, Guangzhou City,
	Guangdong Province, the PRC
	(Approximate Gross Floor Area is
	1,419.29 sq.m.)
3.	Levels 2 to 4 of the shopping	RMB280,200,000	100%	RMB280,200,000
	arcade of Dongshan Jinxuan
	Modern Mall, Nos. 4 and 6
	Nonglinxia Road, Yuexiu District,
	Guangzhou City, Guangdong
	Province, the PRC
4.	95 carparking spaces on Basement	RMB39,900,000	100%	RMB39,900,000
	Levels 2 and 3 of Dongshan
	Jinxuan Modern Mall, Nos. 4 and 6
	Nonglinxia Road, Yuexiu District,
	Guangzhou City, Guangdong
	Province, the PRC
	Sub-total	RMB 452,200,000		RMB 452,200,000
	Grand Total	RMB580,300,000		RMB580,300,000

– IV-4 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

VALUATION REPORT

Group I – Property interests held by Ms Zhu Fenglian and to be held by the Group in the PRC for investment purpose

Property

Units 103 and 106-109 on Level 1 of the shopping arcade of Dongshan Jinxuan Modern Mall, Nos. 4 and 6 Nonglinxia Road, Yuexiu District, Guangzhou City, Guangdong Province, the PRC (Approximate Gross Floor Area is 935.26 sq.m.)

Description and Tenure

東山錦軒現代城 (Dongshan Jinxuan Modern Mall) (the “Development”) is a 28-storey commercial/residential building completed in about 2003. In which, Basement Level 1, Levels 1 to 6 are designated for commercial use, Basement Levels 2 and 3 are designated for carparking uses.

The property comprises portion on Level 1 of the Development with a total gross floor area of approximately 935.26 sq.m.

Market Value in Particulars of existing state as at Occupancy 31 December 2018 The property is RMB128,100,000 subject to various tenancies with a total Interest attributable monthly rent of RMB to the Group 623,812 exclusive of other operating 100% outgoings. Market Value in The property was existing state occupied by the attributable to the tenants for Group as at commercial uses. 31 December 2018 RMB128,100,000

The land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial uses.

Notes:

Pursuant to 5 Real Estate Ownership Certificates (Document Nos. Yue Fang Di Quan Zheng Sui Zi Nos. 0150060448, 0150060456, 0150060446, 0150060455 and 0150060451), the ownership of the property with a total gross floor area of approximately 935.26 sq.m. is vested in Ms Zhu Fenglian.
As stipulated in the aforesaid Real Estate Ownership Certificates, the land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial use.

The particulars of the Real Estate Ownership Certificates are as below:

Units 103 106 107 108 109 Total	Approximate Gross Floor Area Real Estate Ownership Certificates (sq.m.) (Document Nos.) 126.34 Yue Fang Di Quan Zheng Sui Zi No. 0150060448 339.11 Yue Fang Di Quan Zheng Sui Zi No. 0150060456 307.9 Yue Fang Di Quan Zheng Sui Zi No. 0150060446 79.38 Yue Fang Di Quan Zheng Sui Zi No. 0150060455 82.53 Yue Fang Di Quan Zheng Sui Zi No. 0150060451 935.26

– IV-5 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

According to 7 tenancy agreements, the property is subject to various tenancies with the latest expiry date on 25 December 2023 with a total monthly rent of RMB623,812 exclusive of other operating outgoings.

As advised by the Company, the tenants of the property are independent third parties which are not connected with and are independent of, any of the directors, or any of their respective associates of the Group.

As advised by the Company, Ms Zhu Fenglian is an executive Director and a substantial shareholder of the Company holding 520,380,000 Shares (representing approximately 24.54% of the issued share capital of the Company) in aggregate through Ever City Industrial Development Limited and Eastcorp International Limited, and the legal and beneficial owner of the property.
The property was inspected by our Mr Jimmy Lee (MRICS) on 29 October 2018, the external condition and internal condition of the property were reasonable.
The property is situated along Nonglinxia Road, buildings in the locality are medium to high-rise commercial, residential and hotel developments, the area where the property located is a well developed commercial area, the Guangzhou Metro Dongshankou Station is connecting the basement level 1 of the Development. Taxi, Guangzhou metro and buses are accessible to the property.
The average monthly unit rent of similar retail premises on Level 1 in the locality as at the Valuation Date is in the range of approximately RMB200 per sq.m. to RMB1,000 per sq.m.
We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Beijing Yingke Law Firm Guangzhou Office, which contains, inter alia, the following information:
(a) Ms Zhu Fenglian is the owner of the Property and is entitled to transfer, occupy, lease and mortgage the Property, subject to the limitations in Notes 7(b) and 7(c);
(b) the Property is subject to a mortgage in favour of Bank of China Limited, Guangzhou Zhujiang branch, and the mortgage is legally binding;
(c) the Property is subject to various tenancy agreements, the tenancy agreements are legally binding; and
(d) Save and except the encumbrance in Note 7(b) and 7(c), the Property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the Property.
As per the PRC legal opinion, below legal documents were obtained:

Real Estate Ownership Certificates

Yes

– IV-6 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

VALUATION REPORT

Group II – Property interests held by Guangzhou Jincheng Property Development Co., Ltd. and to be held by the Group in the PRC for investment purpose

Property

Description and Tenure

Market Value in Particulars of existing state as at Occupancy 31 December 2018

Units 101, 102, 104 and The Development is a 105 on Level 1 of the 28-storey commercial/ shopping arcade of residential building completed Dongshan Jinxuan in about 2003. In which, Modern Mall, Nos. 4 and Basement Level 1, Levels 1 to 6 Nonglinxia Road, 6 are designated for Yuexiu District, commercial use, Basement Guangzhou City, Levels 2 and 3 are designated Guangdong Province, the for carparking uses. PRC (Approximate Gross Floor Area is 1,419.29 The property comprises sq.m.) portion on Level 1 of the Development with a total gross floor area of approximately 1,419.29 sq.m.

The property is RMB132,100,000 subject to various tenancies with a total Interest attributable monthly rent of RMB to the Group 479,122 exclusive of other operating 100% outgoings. Market Value in The property was existing state occupied by the attributable to the tenants for Group as at commercial uses. 31 December 2018

RMB132,100,000

The land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial uses.

Notes:

Pursuant to 4 Real Estate Ownership Certificates (Document Nos. Yue Fang Di Quan Zheng Sui Zi Nos. 0140080167 to 0140080170), the ownership of the property with a total gross floor area of approximately 1,419.29 sq.m. is vested in 廣州市錦城房地產發展有限公司 (Guangzhou Jincheng Property Development Co., Ltd.) (“Jincheng Co.”).

As stipulated in the aforesaid Real Estate Ownership Certificates, the land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial use.

The particulars of the Real Estate Ownership Certificates are as below:

Units 101 102 104 105 Total	Approximate Gross Floor Area Real Estate Ownership Certificates (sq.m.) (Document Nos.) 643.76 Yue Fang Di Quan Zheng Sui Zi No. 0140080167 247.14 Yue Fang Di Quan Zheng Sui Zi No. 0140080168 286.47 Yue Fang Di Quan Zheng Sui Zi No. 0140080169 241.92 Yue Fang Di Quan Zheng Sui Zi No. 0140080170 1,419.29

– IV-7 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

According to 8 tenancy agreements, the property is subject to various tenancies with the latest expiry date on 16 October 2024 with a total monthly rent of RMB479,122 exclusive of other operating outgoings.

As advised by the Company, Jincheng Co. is a company established in the PRC with limited liability and the legal and beneficial owner of the property.
The property was inspected by our Mr Jimmy Lee (MRICS) on 29 October 2018, the external condition and internal condition of the property were reasonable.
The property is situated along Nonglinxia Road, buildings in the locality are medium to high-rise commercial, residential and hotel developments, the area where the property located is a well developed commercial area, the Guangzhou Metro Dongshankou Station is connecting the basement level 1 of the Development. Taxi, Guangzhou metro and buses are accessible to the property.
The average monthly unit rent of similar retail premises on Level 1 in the locality as at the Valuation Date is in the range of approximately RMB200 per sq.m. to RMB1,000 per sq.m.
We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Beijing Yingke Law Firm Guangzhou Office, which contains, inter alia, the following information:
(a) Jincheng Co. is the owner of the Property and is entitled to transfer, occupy, lease and mortgage the Property, subject to the limitations in Notes 7(b) and 7(c);
(b) the Property is subject to a mortgage in favour of Bank of China Limited, Guangzhou Zhujiang branch, and the mortgage is legally binding;
(c) the Property is subject to various tenancy agreements, the tenancy agreements are legally binding; and
(d) Save and except the encumbrance in Note 7(b) and 7(c), the Property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the Property.
As per the PRC legal opinion, below legal documents were obtained:

Real Estate Ownership Certificates

Yes

– IV-8 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

VALUATION REPORT

Property

Description and Tenure

Particulars of Occupancy

Market Value in existing state as at 31 December 2018

Levels 2 to 4 of the shopping arcade of Dongshan Jinxuan Modern Mall, Nos. 4 and 6 Nonglinxia Road, Yuexiu District, Guangzhou City, Guangdong Province, the PRC

The Development is a The property is RMB280,200,000 28-storey commercial/ subject to various residential building completed tenancies with a total Interest attributable in about 2006. In which, monthly rent of RMB to the Group Basement Level 1, Levels 1 to 802,866 exclusive of 6 are designated for other operating 100% commercial use, Basement outgoings. Levels 2 and 3 are designated Market Value in for carparking uses. The property was existing state occupied by the attributable to the The property comprises the tenants for Group as at whole on Levels 2 to 4 of the commercial uses. 31 December 2018 Development with a total gross floor area of RMB280,200,000 approximately 9,466.49 sq.m.

The land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial uses.

Notes:

Pursuant to 4 Real Estate Ownership Certificates (Document Nos. Yue Fang Di Quan Zheng Sui Zi Nos. 0140056076, 0140056075, 0140080171 and 0140080172), the ownership of the property with a total gross floor area of approximately 9,466.49 sq.m. is vested in Jincheng Co.

As stipulated in the aforesaid Real Estate Ownership Certificates, the land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial use.

The particulars of the Real Estate Ownership Certificates are as below:

Units 201 202 Level 3 Level 4 Total	Approximate Gross Floor Area Real Estate Ownership Certificates (sq.m.) (Document Nos.) 1,722.43 Yue Fang Di Quan Zheng Sui Zi No. 0140056076 1,632.68 Yue Fang Di Quan Zheng Sui Zi No. 0140056075 3,515.11 Yue Fang Di Quan Zheng Sui Zi No. 0140080171 2,596.27 Yue Fang Di Quan Zheng Sui Zi No. 0140080172 9,466.49

According to various tenancy agreements, the property is subject to various tenancies with the latest expiry date on 30 September 2023 with a total monthly rent of RMB802,866 exclusive of other operating outgoings.

– IV-9 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

As advised by the Company, Jincheng Co. is a company established in the PRC with limited liability and the legal and beneficial owner of the property.
The property was inspected by our Mr Jimmy Lee (MRICS) on 29 October 2018, the external condition and internal condition of the property were reasonable.
The property is situated along Nonglinxia Road, buildings in the locality are medium to high-rise commercial, residential and hotel developments, the area where the property located is a well developed commercial area, the Guangzhou Metro Dongshankou Station is connecting the basement level 1 of the Development. Taxi, Guangzhou metro and buses are accessible to the property.
The average monthly unit rent of similar retail premises on Level 1 in the locality as at the Valuation Date is in the range of approximately RMB200 per sq.m. to RMB1,000 per sq.m.
We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Beijing Yingke Law Firm Guangzhou Office, which contains, inter alia, the following information:
(a) Jincheng Co. is the owner of the Property and is entitled to transfer, occupy, lease and mortgage the Property, subject to the limitations in Notes 7(b) and 7(c);
(b) the Property is subject to a mortgage in favour of Bank of China Limited, Guangzhou Zhujiang branch, and the mortgage is legally binding;
(c) the Property is subject to various tenancy agreements, the tenancy agreements are legally binding; and
(d) Save and except the encumbrance in Note 7(b) and 7(c), the Property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the Property.
As per the PRC legal opinion, below legal documents were obtained:

Real Estate Ownership Certificates

Yes

– IV-10 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

VALUATION REPORT

Market Value in Particulars of existing state as at Property Description and Tenure Occupancy 31 December 2018 4. 95 carparking spaces on The Development is a The property was RMB39,900,000 Basement Levels 2 and 3 28-storey commercial/ occupied for of Dongshan Jinxuan residential building completed carparking uses. Interest attributable Modern Mall, Nos. 4 and in about 2003. In which, to the Group 6 Nonglinxia Road, Basement Level 1, Levels 1 to Yuexiu District, 6 are designated for 100% Guangzhou City, commercial use, Basement Guangdong Province, the Levels 2 and 3 are designated Market Value in PRC for carparking uses. existing state attributable to the The property comprises 95 Group as at carparking spaces on basement 31 December 2018 levels 2 and 3 of the Development. RMB39,900,000 The land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial uses.

Notes:

Pursuant to 95 Real Estate	Pursuant to 95 Real Estate	Ownership Certificates (Document Nos. Yue Fang Di Quan	Ownership Certificates (Document Nos. Yue Fang Di Quan	Ownership Certificates (Document Nos. Yue Fang Di Quan	Ownership Certificates (Document Nos. Yue Fang Di Quan	Zheng Sui Zi
Nos. 0140080681,0140080676, 0140080671, 0140080666, 0140080659, 0140080653,						0140080649,
0140080645,	0140080642,	0140080088,	0140080622,	0140080625,	0140080627,	0140080629,
0140080632,	0140080634,	0140080636,	0140080638,	0140080641,	0140080644,	0140080647,
0140080652,	0140080658,	0140080664,	0140080670,	0140080675,	0140080680,	0140080683,
0140080686,	0140080691,	0140080695,	0140080699,	0140080703,	0140080705,	0140080707,
0140080710,	0140080688,	0140080690,	0140080694,	0140080698,	0140080702,	0140080704,
0140080620,	0140080621,	0140080623,	0140080624,	0140080626,	0140080628,	0140080630,
0140080631,	0140080633,	0140080635,	0140080637,	0140080639,	0140080640,	0140080643,
0140080646,	0140080650,	0140080654,	0140080660,	0140080663,	0140080668,	0140080673,
0140080677,	0140080682,	0140080685,	0140080689,	0140080693,	0140080697,	0140080700,
0140080679,	0140080678,	0140080672,	0140080667,	0140080662,	0140080657,	0140080656,
0140080674,	0140080669,	0140080665,	0140080661,	0140080655,	0140080651,	0140080648,
0140080718,	0140080712,	0140080711,	0140080709,	0140080708,	0140080706,	0140080701,
0140080696, 0140080692, 0140080687 and			0140080684),	the ownership	of the property is vested in
Jincheng Co.

As stipulated in the aforesaid Real Estate Ownership Certificates, the land use rights of the property were granted for a term of 40 years commencing on 27 November 2000 for commercial use.

As advised by the Company, Jincheng Co. is a company established in the PRC with limited liability and the legal and beneficial owner of the property.
The property was inspected by our Mr Jimmy Lee (MRICS) on 29 October 2018, the external condition and internal condition of the property were reasonable.
The property is situated along Nonglinxia Road, buildings in the locality are medium to high-rise commercial, residential and hotel developments, the area where the property located is a well developed commercial area, the Guangzhou Metro Dongshankou Station is connecting the basement level 1 of the Development. Taxi, Guangzhou metro and buses are accessible to the property.

– IV-11 –

VALUATION REPORT ON THE PROPERTIES

APPENDIX IV

The average unit rate selling price of similar underground carparking space in the locality as at the Valuation Date is in the range of approximately RMB350,000 per carparking space to RMB 500,000 per carparking space.
As advised by the Company, the property is leased and occupied by the customers of the Development in hourly and daily basis.
We have been provided with a legal opinion on the property prepared by the Group’s PRC legal adviser, Beijing Yingke Law Firm Guangzhou Office, which contains, inter alia, the following information:
(a) Jincheng Co. is the owner of the Property and is entitled to transfer, occupy, lease and mortgage the Property, subject to the limitations in Notes 7(b) and 7(c);
(b) the Property is subject to a mortgage in favour of Bank of China, Guangzhou Zhujiang branch, and the mortgage is legally binding;
(c) the Property is subject to various tenancy agreements, the tenancy agreements are legally binding; and
(d) Save and except the encumbrance in Note 7(b) and 7(c), the Property is free from any mortgages, charges and legal encumbrances which may cause adverse effects on the ownership of the Property.
As per the PRC legal opinion, below legal documents were obtained:

Real Estate Ownership Certificates

Yes

– IV-12 –

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY STATEMENT

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

2. SHARE CAPITAL

a) Share capital of the Company as at the Latest Practicable Date

Authorised: HK$ 5,000,000,000 Shares of HK$0.01 each 50,000,000.00 Issued and fully paid: 2,120,448,858 Shares of HK$0.01 each 21,204,488.58 b) Share capital of the Company following the implementation of the Increase in Authorised Share Capital only Authorised: HK$ 20,000,000,000 Shares of HK$0.01 each 200,000,000.00 Issued and fully paid: 2,120,448,858 Shares of HK$0.01 each 21,204,488.58

– V-1 –

GENERAL INFORMATION

APPENDIX V

c) Share capital of the Company following the implementation of the Increase in Authorised Share Capital and immediately after completion of the Rights Issue and, if applicable, the Placing with issuance of the maximum 4,240,897,716 new Shares in aggregate: Authorised: HK$
20,000,000,000 Shares of HK$0.01 each 200,000,000.00
Issued and fully paid:
2,120,448,858 Shares of HK$0.01 each currently in issue 21,204,488.58 Rights Shares (and Placing Shares, as the case may be) to be issued pursuant to the Rights Issue (and the Placing, as the case
4,240,897,716 may be) 42,408,977.16 6,361,346,574 63,613,465.74
d) Share capital of the Company following the implementation of the Increase in Authorised Share Capital and immediately after completion of the Rights Issue and the Placing with successful issuance of the minimum 3,086,956,522 new Shares thus achieving the Minimum Proceeds Condition:

Authorised: 20,000,000,000 Shares of HK$0.01 each Issued and fully paid: 2,120,448,858 Shares of HK$0.01 each currently in issue 3,086,956,522 Rights Shares (and Placing Shares, as the case may be) to be issued pursuant to the Rights Issue (and the Placing, as the case may be) 5,207,405,380	HK$ 200,000,000.00

	21,204,488.58 30,869,565.22
	52,074,053.80

All the Shares rank pari passu with each other in all respects including the rights as to voting, dividends and return of capital.

– V-2 –

GENERAL INFORMATION

APPENDIX V

The Rights Shares and Placing Shares, when alloted, issued and fully paid, will rank pari passu with the Shares then in issue in all respects. Holders of such Rights Shares and Placing Shares will be entitled to receive all future dividends and distributions which are declared, made or paid with a record date which falls on or after the date of allotment and issue of the fully-paid Rights Shares and Placing Shares.

The issued Shares are listed on the Stock Exchange. None of the securities of the Company is listed or dealt in, and no listing or permission to deal in the securities of the Company is being or is proposed to be sought, on any other stock exchange.

As at the Latest Practicable Date, no capital of any member of the Group was under option, or agreed conditionally or unconditionally to put under option.

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

As at the Latest Practicable Date, save for the Share Options, the Company has no outstanding convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares.

3. DIRECTORS AND SENIOR MANAGEMENT OF THE COMPANY

(a) Particulars of the Directors and senior management of the Company

Name	Business address
Executive Directors
Mr. Chen Jinyang	Room A & B2, 11th Floor
	Guangdong Investment Tower
	No.148 Connaught Road Central
	Sheung Wan, Hong Kong
Mr. Chau Cheuk Wah	Room A & B2, 11th Floor
	Guangdong Investment Tower
	No.148 Connaught Road Central
	Sheung Wan, Hong Kong
Ms. Zhu Fenglian	Room A & B2, 11th Floor
	Guangdong Investment Tower
	No.148 Connaught Road Central
	Sheung Wan, Hong Kong
Ms. Zhang Haimei	Room A & B2, 11th Floor
	Guangdong Investment Tower
	No.148 Connaught Road Central
	Sheung Wan, Hong Kong

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APPENDIX V

Name Business address Non-Executive Director Mr. Xuan Zhensheng Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan, Hong Kong

Independent Non-Executive Directors

Dr. Cheung Wai Bun, Charles, J.P. Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan, Hong Kong Mr. David Tsoi Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan, Hong Kong Mr. Chao Pao Shu George Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan, Hong Kong

(b) Biographies of the Directors

Executive Directors

Mr. Chen Jinyang

Mr. Chen, aged 47, was appointed as an Executive Director, the Chairman of the Board and an authorized representative of the Group on 18 December 2012, 16 September 2013 and 29 October 2015 respectively. He has substantial experience and knowledge of banking industry and investment business in the PRC.

Mr. Chau Cheuk Wah

Mr. Chau, aged 64, was appointed as the Chief Executive Officer and an Executive Director of the Group on 3 June 2013 and 16 September 2013 respectively. Mr. Chau has 38 years of experience in banking and finance in Hong Kong and China with various global financial institutes. Mr. Chau was graduated from The Chinese University of Hong Kong with a bachelor degree in Business Administration.

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APPENDIX V

Ms. Zhu Fenglian

Ms. Zhu, aged 54, was appointed as an Executive Director of the Group on 19 May 2016. She graduated from the Department of Chinese of Sun Yat-Sen University, China in 1985 with a Bachelor’s degree. She has extensive experience in corporate management. She was formerly the chairperson of Guangdong Boxin Investment Holdings Limited (“ Boxin ”, the shares of which are listed on the Shanghai Stock Exchange with stock code: 600083) from March 2010 to April 2016. She is currently (i) a director, the Chairwoman and Legal Representative of Guangdong Golden Dragon Development Inc. (“ GD ”, the shares of which are listed on the Shenzhen Stock Exchange with stock code: 000712); (ii) the chairperson of Dongguan New Century School; (iii) a director of Ruijin Equity Investment Fund Management (Shenzhen) Company Limited, a wholly-owned subsidiary of the Company; (iv) a director and the general manager of Qinghui Properties Limited (“ Qinghui ”), a 49% owned subsidiary of the Company; (v) a director and the manager of Dongguan Xinhongcheng Enterprise Management Company Limited, a 49% owned subsidiary of the Company; (vi) the Legal Representative and an Executive Director of Qingyuan Jinhong Industrial Company Limited, a wholly-owned subsidiary of Qinghui; (vii) a director of Qingyuan Water Supply Development Company Limited, a wholly-owned subsidiary of Qinghui; (viii) a director of Dongguan Hongshun Shiye Development Company Limited which is a shareholder with 2% interest in Qinghui; and (ix) a director of the following companies, namely, Dongguan Jinshun Real Estate Investment Limited, Dongguan Jincheng Real Estate Investment Limited, Dongguan Yuhe Shiye Limited, Dongguan Securities Limited, Zhongshan Securities Co., Ltd., Hooray Securities Limited, Hooray Capital Limited and Hooray Asset Management Limited.

Ms. Zhu is the substantial shareholder of the Company. Ms. Zhu, Affluent Vast and Ever City are deemed to be interested in 520,380,000 shares of the Company, representing 24.54% of the total issued share capital of the Company, which comprises (a) 320,380,000 shares directly held by Ever City; and (b) 200,000,000 shares held by Eastcorp. Ever City is wholly and beneficially owned by Affluent Vast. Affluent Vast is wholly and beneficially owned by Ms. Zhu. Therefore, Ever City is deemed to be a controlled corporation of Affluent Vast and Ms. Zhu. Eastcorp is wholly and beneficially owned by Ever City. Therefore, Eastcorp is deemed to be a controlled corporation of Ever City, Affluent Vast and Ms. Zhu.

Ms. Zhang Haimei

Ms. Zhang, aged 51, was appointed as a Non-Executive Director of the Group on 23 December 2015 and re-designated as an Executive Director of the Group on 23 April 2018. Ms. Zhang is experienced in financial management. Ms. Zhang obtained a diploma in accounting and possesses the qualification of junior level accounting in the PRC.

Ms. Zhang is currently (i) a supervisor of Dongguan Xinhongcheng Enterprise Management Company Limited and Ruijin Equity Investment Fund Management (Shenzhen) Company Limited, both being subsidiaries of the Company; (ii) a deputy general manager, a director and the financial controller of Guangdong Golden Dragon Development Inc. (“ GD ”) whose shares are listed on

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APPENDIX V

the Shenzhen Stock Exchange (stock code: 000712); and (iii) a member of the supervision committee of Dongguan Securities Limited, a 40% owned associate of GD. Ms. Zhang joined GD in 2003 and has served in various positions in GD, of which Ms. Zhu and her family own shareholding interest through Dongguan New Century Science and Education Development Limited (“ New Century ”).

Non-Executive Director

Mr. Xuan Zhensheng

Mr. Xuan, aged 49, was appointed as Non-Executive Director of the Group on 23 April 2018. Mr. Xuan obtained a diploma in Economics Management in the PRC, and specialty in accountant qualifications issued by the Ministry of Personnel of PRC.

Mr. Xuan is currently a director of GD, a director and general manager of New Century (a company in which Ms. Zhu and her family own shareholding interest) and a supervisor of Dongguan Shi Yuhe Shiye Limited (a company in which Ms. Zhu and her family own shareholding interest). Mr. Xuan was previously (i) a director, the financial controller and the board secretary of Boxin; and (ii) the chairman of supervision committee of GD in which Ms. Zhu and her family own shareholding interest in GD through New Century.

Independent Non-Executive Directors

Dr. Cheung Wai Bun, Charles, J.P.

Dr. Cheung, aged 82, is an Independent Non-Executive Director, the Chairman of Remuneration Committee and a member of Audit Committee and Nomination Committee of the Company. He was awarded with Honorary Doctorate Degree in Business Administration by John Dewey University in the United States in 1984. He obtained a master degree in Business Administration and a Bachelor of Science degree in Accounts and Finance from New York University in the United States in 1962 and 1960, respectively. Dr. Cheung is a Director and Vice Chairman of Executive Committee of Metropolitan Bank (China) Ltd. He was formerly (i) an Independent Non-Executive Director and the Chairman of Audit Committee of Shanghai Electric Group Company Limited (stock code: 2727); (ii) an Independent Non-Executive Director, the Chairman and subsequently the Co-Chairman of the Board of Grand T G Gold Holdings Limited (stock code: 8299); (iii) an Independent Non-Executive Director of China Taifeng Beddings Holdings Limited (stock code: 873); (iv) an Independent Non-Executive Director and the Chairman of Nomination Committee and Audit Committee of China Financial International Investments Limited (stock code: 721); and (v) an Executive Director and the Chairman of the Board of Roma Group Limited (stock code: 8072). Dr. Cheung was also formerly Independent Non-Executive Director and the Director General of Audit Committee of China Resources Bank of Zhuhai Co. Ltd. Dr. Cheung is currently (i) an Independent Non-Executive Director and the member of Audit Committee, Remuneration Committee and Nomination Committee of Fullsun International Holdings Group Co., Limited (stock code: 627); (ii) an Independent Non-Executive Director and the Chairman of Audit Committee of Pioneer Global Group Limited (stock code: 224) and Modern Dental Group Limited (stock code: 3600); (iii) an Non-Executive Director of

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APPENDIX V

Galaxy Entertainment Group Limited (stock code: 027); and (iv) an independent Non-Executive Director and Chairman of Remuneration Committee of Jiayuan International Group Limited (stock code: 2768), all of which are companies listed on the Main Board of the Stock Exchange. Dr. Cheung is an Independent Non-Executive Director and the Chairman of Nomination Committee of Yin He Holdings Limited (formerly named “Zebra Strategic Holdings Limited”) (stock code: 8260) listed on GEM of the Hong Kong Stock Exchange. He is also a Council Member of the Hong Kong Institute of Directors. He was a former visiting professor of School of Business of Nanjing University, China. He is a member of Hospital Governing Committee of both Kowloon Hospital and Hong Kong Eye Hospital and a member of Regional Advisory Committee of Hospital Authority. He was a former director and advisor of the Tung Wah Group of Hospitals. Dr. Cheung was formerly a Chief Executive & Executive Deputy Chairman of Mission Hills Group.

Dr. Cheung was awarded the Directors of the Year Awards 2002 of “Listed Company Non-Executive Director”. He was elected Outstanding Director Award by the Chartered Association of Directors, Outstanding Management Award by Chartered Management Association, and Outstanding CEO Award by the Asia Pacific CEO Association in December 2010.

Mr. David Tsoi

Mr. Tsoi, aged 71, was appointed as an Independent Non-Executive Director, the Chairman of the Audit Committee and a member of the Remuneration Committee and the Nomination Committee of the Company on 3 June 2013. Mr. Tsoi is the managing director of Alliott, Tsoi CPA Limited. Mr. Tsoi obtained a master’s degree in business administration from the University of East Asia, Macau (currently known as University of Macau) in 1986. He is a fellow member of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants, the Taxation Institute of Hong Kong, the Institute of Chartered Accountants of England and Wales, the Society of Chinese Accountants and Auditors and the CPA Australia, respectively, and a member of Chartered Professional Accountants of British Columbia, Canada. He was formerly (i) an Independent Non-Executive Director of CRRC Corporation Limited (formerly known as CSR Corporation Limited) (stock code: 1766); (ii) an Independent Non-Executive Director, Chairman of Audit Committee, Nomination Committee and Corporate Governance Committee of Anxin-China Holdings Limited (stock code: 1149); (iii) an Independent Non-Executive Director and Chairman of Audit Committee of Enviro Energy International Holdings Limited (stock code: 1102); and (iv) an Independent Non-Executive Director, Chairman of Audit Committee and Remuneration Committee of Loto Interactive Limited (formerly named “ MelcoLot Limited ”) (stock code: 8198). Mr. Tsoi is currently (i) an Independent Non-Executive Director, Chairman of Audit Committee and Remuneration Committee of Green International Holdings Limited (stock code: 2700); (ii) an Independent Non-Executive Director of Guru Online (Holdings) Limited (stock code: 8121); (iii) an Independent Non-Executive Director of Tianli Holdings Group Limited (stock code: 117); (iv) an Independent Non-Executive Director and Chairman of Audit Committee of VPower Group International Holdings Limited (stock code: 1608); and (v) an Independent Non-Executive

– V-7 –

GENERAL INFORMATION

APPENDIX V

Director and Chairman of Audit Committee of Everbright Grand China Assets Limited (stock code: 3699), the shares of which are all listed on the Hong Kong Stock Exchange.

Mr. Chao Pao Shu George

Mr. Chao, aged 72, was appointed as an Independent Non-Executive Director, a member of Audit Committee, Nomination Committee and Remuneration Committee of the Company on 16 September 2013, and further appointed as Chairman of Nomination Committee of the Group on 13 January 2016.

Mr. Chao was formerly an Independent Non-Executive Director, Chairman of Remuneration Committee and member of Audit Committee, Nomination Committee and Corporate Governance Committee of Anxin-China Holdings Limited (stock code: 1149).

Mr. Chao graduated from the College of Air Traffic Control in the United Kingdom. Mr. Chao was a pilot and had many years of experience in aviation industry in the United Kingdom, Hong Kong and China. Prior to his retirement, Mr. Chao had served Hong Kong Government Flying Services (formerly known as Royal Hong Kong Auxiliary Air Force before 1997) and Civil Aviation Administration of China (CAAC). Mr. Chao is currently a consultant and air traffic control specialist of CAAC.

(c) Biographies of the senior management of the Company

Mr. Chen Shaofei

Mr. Chen, aged 44, is the legal representative, chairman and general manager of Qingyuan Water Supply Development Company Limited, a subsidiary of the Group. Mr. Chen graduated from HeFei University of Technology in 1997 majoring in water projects. He is also a senior drainage engineer. Mr. Chen has over 21 years of experience in the water supply industry.

Mr. Zou Xiaowei

Mr. Zou, aged 60, is the legal representative and chairman of Qingxin District Taihe Water Company Limited, and the director of Qingyuan Water Supply Development Company Limited, both of which are the subsidiaries of the Group. Mr. Zou had served as a director and assistant of general manager of Guangdong Golden Dragon Development Inc. (“ GD ”, the shares of which are listed on the Shenzhen Stock Exchange with stock code: 000712).

– V-8 –

GENERAL INFORMATION

APPENDIX V

Mr. Li Xiaorun

Mr. Li, aged 39, is the director and general manager of Qingxin District Taihe Water Company Limited, a subsidiary of the Group. Mr. Li graduated from Nanchang University in 2001 majoring in hydraulic and electric engineering. He is also a senior engineer. Mr. Li has more than 18 years of experience in the water supply industry.

4. DISCLOSURE OF INTEREST

(a) Interests and short positions of the Directors and Chief Executive in the Shares, underlying shares and debentures

As at the Latest Practicable Date, the interests or short positions of the Directors and chief executives of the Company or their associates in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) 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 and short positions which they have taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) have to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “ Model Code ”) to be notified to the Company and the Stock Exchange, were as follows:

Name of Director
Executive Directors:
Mr. Chen Jinyang (Note 1)
Mr. Chau Cheuk Wah
(Note 1)
Ms. Zhu Fenglian

Interests in
ordinary shares
Total
interests in
ordinary
shares
Total
interests in
underlying
shares
Aggregate
interests
% of the
Company’s
issued
share
capital
Personal
interests
Corporate
Interests
–
–
–
20,000,000
(Note 1)
20,000,000
0.94%
–
–
–
20,000,000
(Note 1)
20,000,000
0.94%
–
520,380,000
520,380,000
–
520,380,000
24.54%

Notes:

The interests of Mr. Chen Jinyang and Mr. Chau Cheuk Wah in underlying shares of the Company represent the interests in share options granted to them under the Share Option Scheme.
Ms. Zhu is deemed to be interested in the 520,380,000 Shares attributable to her controlled corporation, Affluent Vast, Ever City and Eastcorp . For more details on the deemed interest of Ms. Zhu, Affluent Vast, Ever City and Eastcorp, please refer to Note 1 to the section headed “(b) Notifiable interests and short positions of substantial shareholders and other persons in the Shares, underlying shares and debentures”.

– V-9 –

GENERAL INFORMATION

APPENDIX V

Save as disclosed above, so far as the Directors were aware as at the Latest Practicable Date, none of the Directors or chief executives of the Company or their associates had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which (i) 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 and short positions which they have taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) have to be notified to the Company and the Stock Exchange pursuant to the Model Code.

(b) Notifiable interests and short positions of substantial shareholders and other persons in the Shares, underlying shares and debentures

So far as the Directors are aware, as at the Latest Practicable Date, persons who have an interest or a short position in the shares or underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follows:

			Approximate
		Number	percentage
Name	Type of interests	of shares	of interests
Ever City (Note 1)	Beneficial owner and	520,380,000	24.54%
	interest in controlled
	corporation
Ms. Zhu (Note 1)	Interest in controlled	520,380,000	24.54%
	corporation
Affluent Vast (Note 1)	Interest in controlled	520,380,000	24.54%
	corporation
Eastcorp (Note 1)	Beneficial owner	200,000,000	9.43%
Mr. Zhang Songming	Beneficial owner	317,540,000	14.98%
Tang Wing Hung (Note 2)	Interest in controlled	160,440,000	7.57%
	corporation
Passion Ease Limited	Beneficial owner	160,440,000	7.57%
(Note 2)

Notes:

Ms. Zhu, Affluent Vast and Ever City are deemed to be interested in 520,380,000 Shares, representing 24.54% of the total issued share capital of the Company, which comprises (a) 320,380,000 Shares directly held by Ever City; and (b) 200,000,000 Shares held by Eastcorp. Ever City is wholly and beneficially owned by Affluent Vast. Affluent Vast is wholly and beneficially owned by Ms. Zhu. Therefore, Ever City is deemed to be a controlled corporation of Affluent Vast and Ms. Zhu. Eastcorp is wholly and beneficially owned by Ever City. Therefore, Eastcorp is deemed to be a controlled corporation of Ever City, Affluent Vast and Ms. Zhu.
These 160,440,000 shares are held by Passion Ease Limited, which is in turn 100% owned by Tang Wing Hung. Tang Wing Hung is deemed to be interested in the entire shareholding held by his controlled corporation, Passion Ease Limited.

– V-10 –

GENERAL INFORMATION

APPENDIX V

Save as disclosed above, so far as the Directors were aware, as at the Latest Practicable Date, there were no other persons who have an interest or a short position in the shares or underlying shares of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO.

5. DIRECTORS’ SERVICE CONTRACTS

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

6. INTEREST IN CONTRACT OR ARRANGEMENT

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

7. INTEREST IN ASSETS

As at the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset acquired or disposed of by or leased to any member of the Group or was proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2017, being the date to which the latest published audited accounts of the Company were made up.

8. COMPETING INTEREST

As at the Latest Practicable Date, none of the Directors had any business or interest that competes or may compete with the business of the Group and had any other conflict of interest with the Group.

9. MATERIAL LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, claim or arbitration of material importance and there was no litigation, claim or arbitration of material importance known to the Directors to be pending or threatened against any member of the Group.

10. MATERIAL CONTRACTS

The following material contracts (not being contracts in the ordinary course of business) have been entered into by members of the Group within the two years preceding the date of this circular and up to the Latest Practicable Date and are or may be material:–

(i) the Acquisition Agreement;
(ii) the Placing Agreement;

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GENERAL INFORMATION

APPENDIX V

(iii) the credit agreement entered into between Shenzhen Huanye Universal Technologies Limited (a wholly-owned subsidiary of the Company) (as borrower) and China Merchants Bank Company Limited (Shenzhen branch) (as lender) and dated 14 September 2017 in relation to a RMB250,000,000 loan which is repayable on the expiry of 12 months after the drawdown date; and
(iv) the sale and purchase agreement entered into between Universal Technologies Capital Holdings Limited (a wholly-owned subsidiary of the Company) (as purchaser) and Ever City Industrial Development Limited (as vendor) regarding the acquisition of the entire issued share capital of Hooray Asset Management Limited for the consideration of HK$9 million, as supplemented and modified by an extension agreement dated 17 March 2017 to extend the long stop date from 19 March 2017 to 19 June 2017.

11. QUALIFICATION AND CONSENT OF EXPERTS

The following are the qualification of the experts who have given opinions or advices contained in this circular:–

Name Qualification

PKF Hong Kong Limited Certified Public Accountant Grant Sherman Appraisal Limited Independent valuer TC Capital International Limited a corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

Each of the experts named above has given and confirmed that it has not withdrawn its written consent to the issue of this circular with the inclusion herein of its letter, report, valuation certificate, advice, opinion and/or references to its name, in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the experts named above was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did it have any interests, either direct or indirect, in any assets which have been, since the date to which the latest published audited consolidated financial statements of the Company were made up (i.e. 31 December 2017), 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.

– V-12 –

GENERAL INFORMATION

APPENDIX V

12. PARTIES INVOLVED IN THE RIGHTS ISSUE AND CORPORATE INFORMATION

Registered office Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Head office and principal place of Room A & B2, 11th Floor business in Hong Kong Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan, Hong Kong Financial adviser to the Company Proton Capital Limited Unit 1001, 10/F Chuang’s Tower 30-32 Connaught Road Central Hong Kong Independent Financial Adviser to TC Capital International Limited the Independent Board Suite 1903-4, 19/F, Tower 6 Committee and the Independent The Gateway, Harbour City Shareholders 9 Canton Road, Kowloon Hong Kong Legal adviser to the Company as Lawrence Chan & Co. to Hong Kong law in relation Unit 2406, 24th Floor to the Rights Issue Alliance Building 133 Connaught Road Central Hong Kong Legal adviser to the Company as Conyers, Dill & Pearman to the laws of the Cayman 29th Floor Islands in relation to the Rights One Exchange Square Issue 8 Connaught Place Central, Hong Kong Auditor and reporting accountant PKF Hong Kong Limited Certified Public Accountants 26/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong Principal banker Dah Sing Bank

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GENERAL INFORMATION

APPENDIX V

Principal share registrar and SMP Partners (Cayman) Limited transfer office Royal Bank House – 3rd Floor 24 Shedden Road P.O. Box 1586 Grand Cayman, KY1-1110 Cayman Islands Hong Kong branch share registrar Hong Kong Registrars Limited and transfer office Shops 1712-16, 17th Floor Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong Authorised representatives Chen Jinyang and Tang Chi Wai Room A & B2, 11th Floor Guangdong Investment Tower No.148 Connaught Road Central Sheung Wan, Hong Kong Company Secretary Tang Chi Wai, FCPA, FCCA, CICPA, FCIS, FCS (PE)

13. EXPENSES

The expenses in connection with the Rights Issue, including professional fees, printing, registration, translation, legal and accounting fees, are estimated to be approximately HK$4.77 million, and are payable by the Company.

14. MISCELLANEOUS

(i) The company secretary of the Company is Mr. Tang Chi Wai. Mr. Tang is also a financial controller and authorised representative of the Company. He is a fellow member of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants, the Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries and Administrators, and a member of the Chinese Institute of Certified Public Accountants.
(ii) The Company’s registered office is at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.
(iii) The Company’s principal place of business in Hong Kong is at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong.
(iv) The principal share registrar and transfer office of the Company is SMP Partners (Cayman) Limited, whose registered office is at Royal Bank House – 3rd Floor, 24 Shedden Road, P.O. Box 1586, Grand Cayman, KY1-1110, Cayman Islands and the Hong Kong branch share registrar and transfer office of the Company is Hong Kong Registrars Limited, whose registered office is at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.
(v) In the event of inconsistency, the English language text of this circular shall prevail over the Chinese language text.

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APPENDIX V

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong from the date of this circular up to and including the date of the EGM:

(i) the memorandum and articles of association of the Company;
(ii) the annual reports of the Company for the three years ended 31 December 2015, 2016 and 2017;
(iii) the interim report of the Company for the six months ended 30 June 2018;
(iv) the letter from the Board, the text of which is set out on pages 10 to 45 of this circular;
(v) the letter from the Independent Board Committee, the text of which is set out on pages 46 to 47 of this circular;
(vi) the letter of advice from the Independent Financial Adviser, the text of which is set out on pages 48 to 74 of this circular;
(vii) the assurance report on the compilation of the unaudited pro forma statement of adjusted consolidated net tangible assets of the Group issued by PKF, the text of which is set out in Appendix IB to this circular;
(viii) accountants’ report on the historical financial information of the Target Company issued by PKF, the text of which is set out in Appendix IIA to this circular;
(ix) unaudited financial information relating to the Properties complied by PKF, the text of which is set out in Appendix IIB to this circular;
(x) the assurance report on the compilation of the unaudited pro forma financial information of the Enlarged Group issued by PKF, the text of which is set out in Appendix III to this circular;
(xi) the valuation report issued by the Independent Valuer dated 22 March 2019 in relation to the Valuation, the text of which is set out in Appendix IV to this circular;
(xii) the material contracts referred to in the paragraph headed “10. Material Contracts” in this appendix, including the Acquisition Agreement and the Placing Agreement;
(xiii) the written consents referred to in the paragraph headed “11. Qualification and consent of experts” in this appendix; and
(xiv) this circular.

– V-15 –

NOTICE OF EGM

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1026)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ EGM ”) of Universal Technologies Holdings Limited (the “ Company ”) will be held at Room A & B2, 11th Floor, Guangdong Investment Tower, No. 148 Connaught Road Central, Sheung Wan, Hong Kong on Wednesday, 10 April 2019 at 11:00 a.m. for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolutions as ordinary resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT
(i) the sale and purchase agreement dated 15 February 2019 (the “ Acquisition Agreement ”, a copy of which has been produced to this meeting marked “A” and signed by the chairman of the meeting for identification purpose) entered into between the Company (as purchaser), Billion Eminence Investment Limited (as vendor) and Chevalier Earth Group Limited (the “ Target Company ”) in respect of the acquisition of the entire issued share capital and shareholders’ loans (if any) of the Target Company, its execution and the transactions contemplated thereunder, be and is hereby approved, confirmed and ratified; and
(ii) any one director of the Company (“ Director ”) be and is authorised to do all such acts and things, to sign and execute such documents or agreements or deeds on behalf of the Company, including under seal of the Company, where applicable, and to do such other things and to take all such actions as he/she considers necessary, appropriate, desirable and expedient for the purposes of giving effect to or in connection with the Acquisition Agreement and all transactions contemplated thereunder, and to agree to such variation, amendments or waiver of matters relating thereto as he/she sees fit.”
“ THAT conditional upon (i) the passing of resolutions regarding the Acquisition, the Placing (as defined below), the Specific Mandate (as defined below) and the Increase in Authorised Share Capital (as defined below); (ii) the Increase in Authorised Share Capital becoming effective; (iii) the filing and registration of the prospectus documents relating to the Rights Issue (as defined below) required to be filed or registered with the Registrar of Companies in Hong Kong in accordance with the Companies (Winding Up and Miscellaneous Provisions)

– EGM-1 –

NOTICE OF EGM

Ordinance in Hong Kong; (iv) the Listing Committee of The Stock Exchange of Hong Kong Limited granting or agreeing to grant the listing of and permission to deal in the Rights Shares (as defined below) in their nil-paid and fully-paid forms; and (v) the gross proceeds raised by the Company from the Rights Issue (or, if the Rights Shares are not fully taken up under the Rights Issue, in aggregate with the Placing) being not less than HK$710,000,000:

(a) the issue by way of rights issue (the “ Rights Issue ”) of up to 4,240,897,716 shares in the Company (the “ Rights Shares ”) at a subscription price of HK$0.23 per share in the Company (“ Share ”) to the shareholders of the Company (the “ Shareholders ”) whose names shall appear on the register of members of the Company at the close of business on 24 April 2019 or such other date as the Company may determine as the record date for determination of the entitlements of the Shareholders to the Rights Issue (the “ Record Date ”), but excluding those Shareholders whose addresses on the register of members of the Company are outside Hong Kong on the Record Date and who are considered necessary or expedient by the Directors to be excluded from the Rights Issue after making enquiries regarding any applicable securities or other laws or regulations of any territory or jurisdiction (the “ Non-Qualifying Shareholders ”) on the basis of two (2) Rights Share for every one (1) existing Share held on the Record Date, be and is hereby approved;
(b) the Directors be and are hereby authorised to issue and allot the Rights Shares pursuant to and in connection with the Rights Issue notwithstanding that (i) the Rights Shares may be offered, allotted or issued otherwise than pro rata to the Shareholders who qualify for the participation in the Rights Issue (the “ Qualifying Shareholders ”) and, in particular, the Directors be and are hereby authorised to make such exclusions or other arrangements in relation to fractional entitlements (where applicable) and/or Non-Qualifying Shareholders as they deem necessary, desirable or expedient having regard to any restrictions or obligations under the articles of association of the Company or the laws of any applicable jurisdiction and/or any rules or regulations of any recognized regulatory body or stock exchanges; and (ii) the Rights Shares which would otherwise have been made available for application by the Qualifying Shareholders or the Non-Qualifying Shareholders (as the case may be) will be made available for subscription under forms of application for excess Rights Shares; and
(c) any one Director be and is hereby authorised to do all such acts and things, including to sign and execute all such documents and to take such steps as such Director in his/her absolute discretion considers necessary, appropriate, desirable or expedient to give effect to or in connection with the Rights Issue and the transactions contemplated thereunder.”

– EGM-2 –

NOTICE OF EGM

“ THAT :
(a) the Placing Agreement dated 15 February 2019 (the “ Placing Agreement ”) (a copy of which has been produced to this meeting marked “B” and signed by the chairman of this meeting for the purpose of identification) entered into between the Company (as issuer) and Celestial Capital Limited, Yue Xiu Securities Company Limited and Fulixin Securities Limited (collectively, the “ Placing Agents ”) in relation to the best effort placing (the “ Placing ”) by the Placing Agents of such number of Shares as is equivalent to the number of unsubscribed Rights Shares not taken up by Qualifying Shareholders whether under their assured entitlements or excess applications during the Rights Issue (the “ Placing Shares ”) at the placing price of HK$0.23 per Placing Share, and all transactions contemplated thereunder and all other matters thereof and incidental thereto and in connection therewith, be and are hereby generally and unconditionally approved, confirmed and ratified in all respects;
(b) conditional upon the Listing Committee granting the listing of, and permission to deal in the Placing Shares and other conditions of the Placing Agreement, the Directors be and are hereby granted a specific mandate (the “ Specific Mandate ”) to exercise the powers of the Company to allot and issue the Placing Shares pursuant to the terms and conditions of the Placing Agreement, such Placing Shares ranking pari passu amongst themselves and with all other fully paid Shares in issue as at the date of allotment and issue thereof in all respects and such Specific Mandate being in additional to and not prejudicing or revoking any other general or specific mandate(s) which has/have been granted or may from time to time be granted to the Directors by the shareholders of the Company; and
(c) the Directors be and are hereby generally and unconditionally authorised to do all such acts or things and execute and deliver all such documents, instruments and agreements which they consider necessary, desirable or expedient to give effect to the transactions contemplated by the Placing Agreement, the allotment and issue of the Placing Shares, and to agree to such variation, amendments or waiver of matters relating thereto as are, in the opinion of the Directors, in the interests of the Company.”
“ THAT :
(i) the authorised share capital of the Company be increased from HK$50,000,000 divided into 5,000,000,000 Shares to HK$200,000,000 divided into 20,000,000,000 Shares by the creation of 15,000,000,000 additional Shares, and that each such new Share, upon issue and fully paid, shall rank pari passu in all respects with the existing issued Shares and have rights and privileges and be subject to the provisions contained in the memorandum and articles of association of the Company (the “ Increase in Authorised Share Capital ”); and

– EGM-3 –

NOTICE OF EGM

(ii) any one Director be and is hereby authorised to do all such acts and things and execute and deliver all such documents, including under the seal of the Company, where applicable, as he/she may consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of the Increase in Authorised Share Capital.”

By order of the Board UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED Chen Jinyang Chairman

Hong Kong, 22 March 2019

Registered Office: Cricket Square Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Head office and principal place in Hong Kong: Room A & B2, 11th Floor Guangdong Investment Tower No. 148 Connaught Road Central Sheung Wan, Hong Kong

Notes:

Any member entitled to attend and vote at the EGM is entitled to appoint another person as his/her proxy to attend and vote instead of him/her. A member who is the holder of two or more shares of the Company may appoint one or more proxies to attend and vote instead of him/her.
A proxy form for use at the EGM is enclosed in the circular of the Company of the same date of this notice. The proxy form must be signed by you or your attorney duly authorised in writing or, in the case of a corporation, must be under its seal or the hand of an officer, attorney or the person duly authorised.
To be valid, this completed and signed proxy form and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof, must be lodged at Hong Kong Registrars Limited, the Company’s branch share register and transfer office in Hong Kong, whose address is 17M Floor, 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 for holding of the EGM or any adjournment thereof (as the case may be).
Where there are joint holders of any Shares, any one of such persons may vote at the EGM either personally, or by proxy, in respect of such Shares as if he were solely entitled thereto, and if more than one of such joint holders are present at the EGM personally or by proxy, the joint holder whose name stands first at the register of members of the Company in respect of the relevant joint holding shall alone be entitled to vote.
The register of members of the Company will be closed from Wednesday, 3 April 2019 to Wednesday, 10 April 2019, both days inclusive, during which period no transfer of shares of the Company will be effected. In order to qualify for the attendance at the EGM, all transfers accompanied by the relevant share certificates must be lodged with the Hong Kong branch share registrar of the Company, Hong Kong Registrars Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Tuesday, 2 April 2019.
Completion and return of the proxy form will not preclude members from attending and voting in person at the meeting or at any adjourned meeting thereof (as the case may be) should they so wish, and in such event, the proxy form shall be deemed to be revoked.

As at the date of this notice, the Board of Directors of the Company comprises four executive Directors namely Mr. Chen Jinyang (Chairman), Mr. Chau Cheuk Wah (Chief Executive Officer), Ms. Zhu Fenglian and Ms. Zhang Haimei; one non-executive Director namely Mr. Xuan Zhensheng; and three independent non-executive Directors namely Dr. Cheung Wai Bun, Charles, J.P., Mr. David Tsoi and Mr. Chao Pao Shu George.

– EGM-4 –

Participating Shareholders Ever City (Note) Eastcorp (Note) Mr. Zhang Songming Public shareholders Mr. Zeng Placees Other public shareholders Total	As at the Latest Practicable Date 320,380,000 15.11% 200,000,000 9.43% 520,380,000 24.54% 317,540,000 14.98% 100,000,000 4.72% – – 1,182,528,858 55.76% 2,120,448,858 100.00%	As at the Latest Practicable Date 320,380,000 15.11% 200,000,000 9.43% 520,380,000 24.54% 317,540,000 14.98% 100,000,000 4.72% – – 1,182,528,858 55.76% 2,120,448,858 100.00%	Scenario I 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 300,000,000 4.72% – – 3,547,586,574 55.76% 6,361,346,574 100.00%	Scenario I 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 300,000,000 4.72% – – 3,547,586,574 55.76% 6,361,346,574 100.00%	Scenario II 961,140,000 18.46% 600,000,000 11.52% 1,561,140,000 29.98% 952,620,000 18.29% 100,000,000 1.92% 1,411,116,522 27.10% 1,182,528,858 22.71% 5,207,405,380 100.00%	Scenario II 961,140,000 18.46% 600,000,000 11.52% 1,561,140,000 29.98% 952,620,000 18.29% 100,000,000 1.92% 1,411,116,522 27.10% 1,182,528,858 22.71% 5,207,405,380 100.00%	Scenario III 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 100,000,000 1.57% 2,565,057,716 40.32% 1,182,528,858 18.59% 6,361,346,574 100.00%	Scenario III 961,140,000 15.11% 600,000,000 9.43% 1,561,140,000 24.54% 952,620,000 14.98% 100,000,000 1.57% 2,565,057,716 40.32% 1,182,528,858 18.59% 6,361,346,574 100.00%
	520,380,000 317,540,000 100,000,000 – 1,182,528,858	24.54% 14.98% 4.72% – 55.76%	1,561,140,000 952,620,000 300,000,000 – 3,547,586,574	24.54% 14.98% 4.72% – 55.76%	1,561,140,000 952,620,000 100,000,000 1,411,116,522 1,182,528,858	29.98% 18.29% 1.92% 27.10% 22.71%	1,561,140,000 952,620,000 100,000,000 2,565,057,716 1,182,528,858	24.54% 14.98% 1.57% 40.32% 18.59%
	2,120,448,858	100.00%	6,361,346,574	100.00%	5,207,405,380	100.00%	6,361,346,574	100.00%

AI assistant

Universal Technologies Holdings Limited — Proxy Solicitation & Information Statement 2019

49633_rns_2019-03-21_e1d442f9-b59f-4cfe-b162-c40a4836020b.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(I) MAJOR AND CONNECTED TRANSACTION INVOLVING THE PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY; (II) PROPOSED RIGHTS ISSUE ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) SHARE HELD ON THE RECORD DATE;

(III) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE; (IV) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND

(V) NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENT

EXPECTED TIMETABLE

Events

EXPECTED TIMETABLE

EXPECTED TIMETABLE

EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

UNIVERSAL TECHNOLOGIES HOLDINGS LIMITED 環球實業科技控股有限公司

(Stock Code: 1026)

(IV) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL

INTRODUCTION

LETTER FROM THE BOARD

(I) PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY

ACQUISITION AGREEMENT

Subject matter of the Acquisition

Consideration

Basis for determination of the Consideration

Conditions precedent

LETTER FROM THE BOARD

The Completion

INFORMATION OF THE TARGET GROUP AND THE PROPERTIES

LETTER FROM THE BOARD

LETTER FROM THE BOARD

GROUP STRUCTURE OF THE TARGET GROUP

FINANCIAL INFORMATION OF TARGET COMPANY AND THE PROPERTIES

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE ACQUISITION

REASONS FOR AND BENEFITS OF THE ACQUISITION

LETTER FROM THE BOARD

(II) PROPOSED RIGHTS ISSUE

Rights Issue statistics

LETTER FROM THE BOARD

The Subscription Price

Qualifying Shareholders

Closure of register of members

Basis of provisional allotments

Rights of Overseas Shareholders

LETTER FROM THE BOARD

Status of Rights Shares

Application for excess Rights Shares

No fractional entitlement

Application for listing

Rights Shares will be eligible for admission into CCASS

Stamp duty and other applicable fees

Share certificates and refund cheques for Rights Issues

The Rights Issue on a non-underwritten basis

Conditions of the Rights Issue

LETTER FROM THE BOARD

Irrevocable Undertakings

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

LETTER FROM THE BOARD

(III) PLACING OF NEW SHARES UNDER SPECIFIC MANDATE

THE PLACING AGREEMENT

Placing Shares

LETTER FROM THE BOARD

Placees

Commission

Placing Price

Conditions to the Placing

Rescission

LETTER FROM THE BOARD

Completion of the Placing

REASONS FOR THE RIGHTS ISSUE AND THE PLACING AND THE USE OF PROCEEDS

LETTER FROM THE BOARD

Universal Technologies Holdings Limited Proxy Solicitation & Information Statement 2019