Virtual Mind Holding Company Limited — Proxy Solicitation & Information Statement 2017

Apr 7, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Runway Global Holdings Company Limited (the “ Company ”), you should at once hand this circular together with the accompanying form of proxy, to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or registered institution in securities or other agents through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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

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.

RUNWAY GLOBAL HOLDINGS COMPANY LIMITED 時尚環球控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1520)

(I) PROPOSED SUBSCRIPTION OF SHARES UNDER SPECIFIC MANDATE; AND (II) NOTICE OF EXTRAORDINARY GENERAL MEETING

Capitalised terms used in this cover page have the same meanings as those defined in this circular unless otherwise stated.

A letter from the Board is set out on pages 5 to 25 of this circular.

A notice convening the EGM to be held on 27 April 2017 at 11:00 a.m. at 14th Floor, PeakCastle, 476 Castle Peak Road, Cheung Sha Wan, Kowloon, Hong Kong is set out on pages EGM-1 to EGM-2 of this circular. A form of proxy for use at the EGM is enclosed with this circular. Whether or not you are able to attend the EGM, you are encouraged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, 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 adjourned meeting (as the case may be). Completion and return of the enclosed form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting (as the case may be) should you so wish.

10 April 2017

CONTENTS

	Page
DEFINITIONS.................................................................................................................	1
LETTER FROM THE BOARD.....................................................................................	5
NOTICE OF EGM...........................................................................................................	EGM-1

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, capitalised terms used shall have the following meanings:

“acting in concert”

has the meaning ascribed thereto in the Takeovers Code

• “associates” has the meaning ascribed to it under the Takeovers Code or the Listing Rules (as appropriate)

• “Board” the board of Directors

• “Business Day” any day (other than a Saturday, Sunday or a day on which a typhoon signal no. 8 or above or black rainstorm signal is hoisted in Hong Kong between 9:00 a.m. to 5:00 p.m.) on which banks in Hong Kong are open for business

• “CEFC China” CEFC China Energy Company Limited* (中國華信能源有限 公司)

• “CEFC Group” CEFC China and its subsidiaries

• “Company” Runway Global Holdings Company Limited (時尚環球控股 有限公司), a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange

• “Completion” the completion of the Subscription in accordance with the terms and conditions of the Subscription Agreement

• “Completion Date” the fifth Business Day after the date on which the conditions of the Subscription Agreement are fulfilled or, where applicable, waived by the Subscriber (or such other date as may be agreed between the Company and the Subscriber in writing)

• “Composite Document” the formal composite offer document proposed to be jointly issued by the Offeror and the Company to the Independent Shareholders in connection with the Offer and in accordance with the Takeovers Code

• “connected persons” has the meaning ascribed to it under the Listing Rules

• “Director(s)” the director(s) of the Company

– 1 –

DEFINITIONS

• “EGM”

• the extraordinary general meeting of the Company to be held and convened for the purpose of approving, amongst other things, the Subscription Agreement and the transactions contemplated thereunder including the allotment and issue of the Subscription Shares under the Specific Mandate or any adjournment thereof

• “Executive” the executive director of the Corporate Finance Division of the SFC or any of his delegates

• “Facility”

• a loan facility in the amount of HK$320,000,000 granted by Guotai Junan Securities in favour of the Offeror, which is guaranteed by Shanghai Huaxin Group (HongKong) Limited (上海華信集團(香港)有限公司), and secured by the charge of the Subscription Shares and the Offer Shares to be acquired by the Offeror pursuant to the Offer

• “First Announcement” the announcement of the Company dated 23 December 2016 in relation to the MOU

• “Guotai Junan Securities”

• Guotai Junan Securities (Hong Kong) Limited, a corporation licensed under the SFO to carry out Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities as defined in the SFO

• “Group” collectively, the Company and its subsidiaries

• “Hong Kong”

• the Hong Kong Special Administrative Region of PRC

• “Independent Board Committee”

• the independent board committee of the Company, comprising all the independent non-executive Directors, namely Mr. Tang Shu Pui Simon, Mr. Tse Yuen Ming and Mr. Hon Ming Sang that has been established to make a recommendation (i) as to whether the Offer is, or is not, fair and reasonable; and (ii) as to acceptance of the Offer

• “Independent Financial Adviser”

• the independent financial adviser to be appointed to the Independent Board Committee in relation to the terms of the Offer and in particular (i) as to whether the Offer is, or is not, fair and reasonable; and (ii) as to acceptance of the Offer

• “Independent Shareholders”

• in respect of the Offer, Shareholders other than the Offeror and parties acting in concert with it, in respect of the Subscription, Shareholders other than Value Convergence Holding Limited and those with material interest in the Subscription, if any

– 2 –

DEFINITIONS

• “Irrevocable Undertakings” the irrevocable undertakings issued by each of the Undertaking Shareholders in favour of the Offeror dated 26 January 2017

• “Joint Announcement” the joint announcement of the Company and the Offeror dated 15 February 2017 in relation to, among others, the Subscription and the Offer

• “Last Trading Day” 26 January 2017, being the last full trading day of the Shares immediately prior to the publication of the Joint Announcement

• “Latest Practicable Date” 6 April 2017, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• “Listing Rules” the Rules Governing the Listing of Securities on the Main Board of the Stock Exchange

• “MOU” the memorandum of understanding dated 23 December 2016 entered into between Shanghai CEFC International Group Co. Ltd.* (上海華信國際集團有限公司) and the Company relating to the possible subscription of the Shares and the possible mandatory general offer to the Shareholders

• “Offer” the unconditional mandatory cash offer to be made by Guotai Junan Securities on behalf of the Offeror, for all the Offer Shares on the terms to be set out in the Composite Document

• “Offer Price” the price at which the Offer will be made, being HK$0.745 per Offer Share

• “Offer Share(s)” all the issued Share(s), other than those already owned by or agreed to be acquired by the Offeror and parties acting in concert with it

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

• “SFC” the Securities and Futures Commission

• “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 share capital of the Company

– 3 –

DEFINITIONS

• “Shareholder(s)” holder(s) of the Share(s)

• “Specific Mandate” the specific mandate to allot and issue the Subscription Shares to be sought at the EGM

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Subscriber” or “Offeror” New Seres CEFC Investment Fund LP, an exempted limited liability partnership registered in the Cayman Islands on 20 January 2017

• “Subscription” the subscription by the Subscriber for the Subscription Shares under the terms and conditions of the Subscription Agreement

• “Subscription Agreement” the conditional subscription agreement dated 26 January 2017 entered into between the Company and the Subscriber in respect of the Subscription

• “Subscription Price” the price which shall be paid by the Subscriber for each Subscription Share, being HK$0.238

• “Subscription Share(s)” 860,000,000 Shares for which the Subscriber will subscribe for and the Company will allot and issue under the Subscription in accordance with the terms and conditions of the Subscription Agreement

• “Takeovers Code” the Code on Takeovers and Mergers

• “Undertaking Shareholders” Mr. Wong Tat Wai Derek, Ms. Tin Yuen Sin Carol and Value Convergence Holdings Limited

• “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

• “%” per cent.

– 4 –

LETTER FROM THE BOARD

RUNWAY GLOBAL HOLDINGS COMPANY LIMITED 時尚環球控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1520)

Executive Directors: Mr. Hubert Tien (Chairman) Mr. Chen Gang Mr. Qu Chengbiao Mr. Yeung Kwok Leung Mr. Cheng Tze Kit Larry Mr. Liu Chun Fai

Independent Non-executive Directors: Mr. Tang Shu Pui Simon Mr. Tse Yuen Ming Mr. Hon Ming Sang

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

Principal place of business in Hong Kong: 14th Floor, PeakCastle 476 Castle Peak Road Cheung Sha Wan Kowloon Hong Kong 10 April 2017

To the Independent Shareholders

Dear Sir/Madam,

(I) PROPOSED SUBSCRIPTION OF SHARES UNDER SPECIFIC MANDATE; AND (II) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the Joint Announcement dated 15 February 2017 of the Company and the Offeror in relation to, among others, the Subscription and the Offer.

The purpose of this circular is to provide you with, among other things, relevant information on (i) the Subscription Agreement; and (ii) the notice of the EGM at which a resolution will be proposed to approve the Subscription Agreement and the transactions contemplated thereunder and the grant of the Specific Mandate to allot and issue the Subscription Shares.

A notice convening the EGM setting out the details of the resolution to be proposed at the EGM is set out on pages EGM-1 to EGM-2 of this circular.

– 5 –

LETTER FROM THE BOARD

THE SUBSCRIPTION

On 26 January 2017 (after trading hours), the Company entered into the Subscription Agreement with the Subscriber pursuant to which and subject to the conditions precedent thereunder, the Subscriber has agreed to subscribe for and the Company has agreed to allot and issue an aggregate of 860,000,000 Subscription Shares at a total consideration of HK$204,680,000 at the Subscription Price of HK$0.238 per Subscription Share which shall, on the Completion Date, be free from all liens, charges, security interest, encumbrances and adverse claims.

The principal terms of the Subscription Agreement are summarised below.

Date: 26 January 2017 (after trading hours) Issuer: the Company

Subscriber: New Seres CEFC Investment Fund LP, an exempted limited liability partnership registered in the Cayman Islands

(collectively, the “ Parties ”)

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, as at the Latest Practicable Date, the Subscriber and its ultimate beneficial owner(s) are third parties independent of the Company and its connected persons. For the background for the Subscriber, please refer to the section headed “INFORMATION ON THE OFFEROR” below for details.

The Subscription Shares

The 860,000,000 Subscription Shares represent:

• (i) approximately 103.61% of the total issued Shares as at the Latest Practicable Date; and

• (ii) approximately 50.89% of the total issued Shares as enlarged by the allotment and issue of the Subscription Shares (assuming that there will not be any change in the issued share capital of the Company between the Latest Practicable Date and the Completion Date save for the issue of such Subscription Shares).

The aggregate nominal value of 860,000,000 Subscription Shares is HK$8,600,000.

The Subscription Shares, when allotted and issued, will rank pari passu in all respects with each other and the Shares in issue on the Completion Date, including the right to receive all future dividends and distributions which may be declared, made or paid by the Company on or after the Completion Date.

The Subscription Shares will be allotted and issued pursuant to the Specific Mandate to be sought from the Independent Shareholders at the EGM.

– 6 –

LETTER FROM THE BOARD

Application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares.

The Subscription Price

The Subscription Price of HK$0.238 per Subscription Share represents:

• (i) a discount of 70.25% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 70.32% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day of approximately HK$0.802 per Share;

• (iii) a discount of approximately 70.43% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day of approximately HK$0.805 per Share;

• (iv) a discount of 76.44% to the closing price of HK$1.01 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (v) a premium of approximately 21.43% over the unaudited consolidated net asset value of approximately HK$0.196 per Share as at 30 June 2016 (based on the unaudited consolidated statement of financial position of the Company as at 30 June 2016 and the number of Shares in issue as at 30 June 2016); and

• (vi) a discount of approximately 25.16% over the audited consolidated net asset value of approximately HK$0.318 per Share as at 31 December 2016 (based on the audited consolidated statement of financial position of the Company as at 31 December 2016 and the number of Shares in issue as at 31 December 2016).

The Subscription Price was determined after arm’s length negotiations between the Subscriber and the Company with reference to, among other things, (i) the trading performance of the Shares; (ii) the financial performance of the Company; (iii) the consolidated net asset value per Share of the Company; and (iv) the business and financial performance of the Group (Please refer to the section headed “REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND THE OFFER AND USE OF PROCEEDS” for further details).

(i) the trading performance of the Shares

According to the website of the Stock Exchange, the closing price of the Shares dropped from HK$1.31 on 27 July 2016 to HK$0.8 on 26 January 2017, being the Last Trading Day which represented a decrease of approximately 38.93% during the six month period. The Company is of the view that the drop in the Share price signals the lack of attractiveness of the Shares.

– 7 –

LETTER FROM THE BOARD

According to the website of the Stock Exchange, the average trading volume of the Shares was relatively low and was only approximately 15,028,836 Shares per trading day for the six months between 27 July 2016 to 26 January 2017, being the Last Trading Day which represented only approximately 1.81% of the total number of issued Shares of 830,000,000 Shares as at the Last Trading Day. The relatively low liquidity of the Shares had reduced the attractiveness of the Shares.

(ii) the financial performance of the Company

As disclosed in the annual report of the Company for the year ended 31 December 2015, the revenue of the Company recorded a drop of approximately 2.1% from approximately HK$379,715,000 in 2014 to approximately HK$371,725,000 in 2015. In addition, the profit for the year attributable to owners of the Company had dropped approximately 38.74% from approximately HK$25,679,000 in 2014 to approximately HK$15,732,000 in 2015. The financial performance of the Company continued to be unsatisfactory and the Company reported a loss attributable to owners of the Company of approximately HK$16,984,000 in its interim report for the six months ended 30 June 2016, which is approximately 126.70% larger than that of the corresponding period in 2015. The Company is of the view that the deteriorating financial performance of the Company had negative impact on the attractiveness of the Shares.

(iii) the consolidated net asset value per Share of the Company

As the Company reported a loss making result for the six months ended 30 June 2016, it is not possible to calculate the price to earnings ratio of the Company based on the 2016 interim results. On the other hand, the Subscription Price of HK$0.238 per Subscription Share represents a premium of approximately 21.43% over the unaudited consolidated net asset value of approximately HK$0.196 per Share as at 30 June 2016 (based on the unaudited consolidated statement of financial position of the Company as at 30 June 2016 and the number of Shares in issue as at 30 June 2016). The Subscription Price of HK$0.238 per Subscription Share also represents a premium of approximately 21.43% over the unaudited consolidated net asset value of approximately HK$0.196 per Share as at 30 June 2016 (based on the unaudited consolidated statement of financial position of the Company as at 30 June 2016 and the number of Shares in issue as at 30 June 2016).

Further to the above, the respective terms of the Subscription and the Offer were negotiated in tandem as they are parts and parcels of the transactions contemplated under the Subscription Agreement and affect the Subscriber’s total investment in the Company. The Directors consider the Subscription and the Offer are in the interests of the Shareholders as a whole because:

• (i) it provides the Subscriber with its required minimum shareholding interest in the Company;

• (ii) it provides the Company with sufficient funds for its existing business operations and business development plans as set out in the section headed “REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND THE OFFER AND USE OF PROCEEDS” below; and

– 8 –

LETTER FROM THE BOARD

• (iii) it provides an alternative to Shareholders who do not share the Directors’ view on the envisaged benefits of the Subscription to exit at the Offer Price which is close to the recent market price of the Shares.

The Company has not been approached by any other investor other than the Subscriber. In light of the need of the significant sum of funds in a relatively short period of time and the strong background of the Subscriber, the Company considers the introduction of the Subscriber as the strategic investor to the Company represents a good opportunity for it to satisfy its funding needs while leveraging on a successful brand in PRC for its future growth. The Company also considered the time cost and the difficulties in identifying a sizeable strategic investor willing to invest such significant sum of funds in the Company given its imminent capital needs in opting for the Subscriber (Please refer to the section headed “REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND THE OFFER AND USE OF PROCEEDS” for further details).

Based on the abovementioned, the Directors consider that the Subscription Price is fair and reasonable under the current market conditions and the Subscription is in the interest of the Company and the Shareholders as a whole. Please also refer to the section headed “FINANCIAL INFORMATION ON THE GROUP” for analysis based on the latest published accounts of the Group for the year ended 31 December 2016.

The total Subscription Price amounts to HK$204,680,000 which shall be payable, at Completion, in Hong Kong dollar by delivering a lawyer cheque, bank draft or bank promissory note issued by a licensed bank in Hong Kong by the Subscriber to the Company, or by a telegraphic transfer made to the designated account of the Company. The Company shall inform the Subscriber in writing details of such account five Business Days before Completion.

Conditions precedent

Completion is conditional upon the satisfaction of the following:

• (a) the warranties given by the Company and the Subscriber on the date of the Subscription Agreement and the Completion Date being and remaining true, accurate and not misleading in all material aspects, as such warranties being made on the date of the Subscription Agreement and the Completion Date with reference to the facts and circumstances then respectively existing;

• (b) (i) the current listing of the Shares on the Stock Exchange not being withdrawn; (ii) the Shares remaining traded on the Stock Exchange prior to the Completion Date (except for any temporary suspension for not more than seven consecutive trading days or other periods which the Subscriber may give its written consent, or any temporary suspension related to transactions contemplated under the Subscription Agreement); and (iii) neither the Stock Exchange nor SFC, prior to the Completion Date, indicating opposition to the relevant continuing listing due to reasons related to or arising from transactions contemplated under the Subscription Agreement;

– 9 –

LETTER FROM THE BOARD

• (c) in accordance with the Listing Rules, the Takeovers Code, the articles of association of the Company and applicable laws (as the case may be), the passing by the Independent Shareholders all necessary resolutions for approving, including but not limited to (i) the Subscription Agreement and the transactions thereunder; and (ii) the allotment and issue of the Subscription Shares under a specific mandate;

• (d) the Stock Exchange granting approval for the listing of and permission to deal in the Subscription Shares, which is not withdrawn afterwards before Completion;

• (e) all necessary consent, confirmation, permit, approval, license and authorisation (if any) for the entering into or completion of the transaction contemplated under the Subscription Agreement by the Company and/or the Subscriber having been obtained from all relevant government, regulatory and other authorities of Hong Kong, PRC or other countries (including but not limited to SFC and the Stock Exchange);

• (f) the Company having confirmed in writing that transactions contemplated under the Subscription Agreement will not result in the Company being regarded by the Stock Exchange as a cash company under Rule 14.82 of the Listing Rules, which the Stock Exchange agrees with; and

• (g) the Subscriber having been reasonably satisfied with the results of the due diligence performed on the Group in accordance with the Subscription Agreement in all respects. If the Subscriber does not notify the Company in writing, on or before the end of the due diligence period (i.e. 15 March 2017), that it is not satisfied with the due diligence results on the Group, the condition precedent set out in this sub-paragraph would be deemed to be fulfilled.

The Subscriber shall have the absolute discretion to waive the condition precedent as set out in paragraph (g) above (with respect to its satisfaction with the due diligence results on the Group).

In the event that the conditions precedent of the Subscription Agreement as set out above are not fulfilled (or waived, where applicable) on or before 30 September 2017 (or such later date as may be agreed between the Subscriber and the Company in writing) (the “ Long Stop Date ”), the Company and the Subscriber shall not be required to proceed with Completion and save for provisions relating to notice, confidentiality, governing law and other miscellaneous items, the terms under the Subscription Agreement shall cease to have any force and effect, and neither the Company nor the Subscriber shall have any rights of claim against the other party, save for any antecedent breaches of the terms thereof.

To the best of the Directors’ knowledge, information and belief, there is no such consent, confirmation, permit, approval, license and authorisation required for the entering into or completion of the transaction contemplated under the Subscription Agreement as referred to in paragraph (e) above other than those already disclosed in this circular.

– 10 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, condition precedent (g) above has been fulfilled and none of the other conditions precedent have been fulfilled or waived.

Completion

Subject to the conditions of the Subscription Agreement being fulfilled (or, where applicable, waived by the Subscriber) on or before the Long Stop Date, Completion shall take place on the Completion Date.

EQUITY FUND RAISING ACTIVITIES OF THE COMPANY DURING THE PAST TWELVE MONTHS

References are made to the announcements of the Company dated 19 August 2016 and 2 September 2016 in relation to the placing of a total of 120,000,000 new Shares by the Company (the “ Placing ”). The gross and net proceeds from the Placing were approximately HK$62,400,000 and approximately HK$61,000,000, respectively. The net proceeds from the Placing of approximately HK$61,000,000 were used as intended as to (i) approximately HK$51,000,000 for the purchase of raw materials and/or goods for the manufacturing and trading business of the Group; and (ii) as to approximately HK$10,000,000 as the general working capital of the Group.

Save for the above, the Company did not carry out any equity fund raising activities in the 12 months period immediately preceding the Latest Practicable Date.

POSSIBLE UNCONDITIONAL MANDATORY CASH OFFER

Immediately prior to the entering into of the Subscription Agreement, none of the Subscriber and parties acting in concert with the Subscriber are interested in any Shares. Immediately after Completion, the Offeror (i.e. the Subscriber) and the parties acting in concert with it will be interested in 860,000,000 Shares, representing approximately 50.89% of the entire issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares.

Pursuant to Rule 26.1 of the Takeovers Code, immediately following the Completion, the Offeror will be required to make an unconditional mandatory cash offer for the Offer Shares, being all the issued Shares (other than those already acquired or agreed to be acquired by the Offeror and parties acting in concert with it).

– 11 –

LETTER FROM THE BOARD

Principal terms of the Offer

Immediately following Completion, Guotai Junan Securities will, on behalf of the Offeror, make an unconditional mandatory cash offer for all issued Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) on the terms to be set out in the Composite Document in accordance with the Takeovers Code on the following terms:

For every Offer Share accepted under the Offer ...................................................... HK$0.745 in cash

The Offer Price of HK$0.745 per Offer Share was determined with reference to the historical Share price performance prior to the Last Trading Day as well as prior to the date of the First Announcement and after considering the attractiveness of the Offer Price to the Independent Shareholders.

The Offer will be extended to all Independent Shareholders in respect of all Shares in issue other than those Shares held by the Offeror and persons acting in concert with it on the date on which the Offer is made, being the date of despatch of the Composite Document.

The Offer Price

The Offer Price of HK$0.745 per Offer Share represents:

• (i) a discount of approximately 1.97% to the closing price of HK$0.76 per Share as quoted on the Stock Exchange on 23 December 2016, being the date of the First Announcement;

• (ii) a discount of approximately 6.88% to the closing price of HK$0.8 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (iii) a discount of approximately 7.11% to the average of the closing prices of the Shares as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day of approximately HK$0.802 per Share;

• (iv) a premium of approximately 0.4% to the average of the closing prices of the Shares of approximately HK$0.742 as quoted on the Stock Exchange for the 30 consecutive trading days up to and including 23 December 2016, being the date of the First Announcement;

• (v) a discount of approximately 26.24% to the closing price of HK$1.01 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• (vi) a premium of approximately 280.10% over the unaudited consolidated net asset value of approximately HK$0.196 per Share as at 30 June 2016 (based on the unaudited consolidated statement of financial position of the Company as at 30 June 2016 and the number of Shares in issue as at 30 June 2016); and

– 12 –

LETTER FROM THE BOARD

• (vii) a premium of approximately 134.28% over the audited consolidated net asset value of approximately HK$0.318 per Share as at 31 December 2016 (based on the audited consolidated statement of financial position of the Company as at 31 December 2016 and the number of Shares in issue as at 31 December 2016).

The Subscription Price and the Offer Price were determined after arm’s length negotiations between the Subscriber and the Company with the trading performance of the Shares at the time as one of the factors of consideration. Based on the then circumstances, the Directors consider the Subscription Price and Offer Price are fair and reasonable and the transactions contemplated under the Subscription Agreement are in the interests of the Company and Shareholders.

The Directors note that the Shares had been trading within the range of HK$0.41 and HK$0.80 in most of the six-month period immediately prior to the date of the Joint Announcement and has risen significantly thereafter. The Directors believe such increase is, to a large extent, attributable to the market’s reception to the Subscription. On the other hand, the Offer provides Shareholders who do not share the Directors’ view on the Subscription an alternative to exit at a price close to the market price without the impact of the transactions contemplated under the Subscription Agreement. The Directors therefore consider the recent Share price increase does not affect their view on the fairness and reasonableness of the Subscription and the Offer. Notwithstanding the recent trading performance of the Shares, the Directors maintain the view that the Offer Price is attractive, fair and reasonable to the Independent Shareholders.

Irrevocable Undertakings

On 26 January 2017, Mr. Wong Tat Wai Derek, Ms. Tin Yuen Sin Carol and Value Convergence Holdings Limited are legally and/or beneficially interested in 129,000,000 Shares, 114,362,000 Shares and 40,308,000 Shares respectively. On 26 January 2017, each of Mr. Wong Tat Wai Derek, Ms. Tin Yuen Sin Carol and Value Convergence Holdings Limited has executed the Irrevocable Undertakings pursuant to which each of them has irrevocably undertaken not to accept the Offer and will not or/and will procure not to sell, transfer or dispose of any Shares held by each of them or rights to such Shares to third parties prior to completion, termination or withdrawal of the Offer. Accordingly, a total of 283,670,000 Shares are subject to the Irrevocable Undertakings.

The Independent Shareholders are encouraged to read the Composite Document carefully, including the advice of the Independent Financial Adviser to the Independent Board Committee and the recommendation from the Independent Board Committee to the Independent Shareholders as to whether the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and its acceptance, before deciding whether or not to accept the Offer.

– 13 –

LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below are the shareholding structure of the Company (i) immediately prior to Completion; and (ii) immediately following Completion but before the Offer:

Mr. Wong Tat Wai Derek Ms. Tin Yuen Sin Carol_(Note 1) Hua Zhen Value Convergence Holdings Limited(Note 2) All Divine Limited(Note 3) Mr. Tang Shu Pui Simon(Note 4)_ Subscriber and parties acting in concert with it Other public Shareholders Total

(ii) Immediately (i) Immediately following Completion prior to Completion but before the Offer Number of approximate Number of approximate Shares % Shares % 129,000,000 15.54% 129,000,000 7.63% 114,362,000 13.78% 114,362,000 6.77% 87,000,000 10.48% 87,000,000 5.15% 40,308,000 4.86% 40,308,000 2.39% 9,000,000 1.09% 9,000,000 0.53% 5,000,000 0.60% 5,000,000 0.30% – – 860,000,000 50.88% 445,330,000 53.65% 445,330,000 26.35% 830,000,000 100.00% 1,690,000,000 100.00%

Notes:

1. Based on the disclosure of interests of Ms. Tin Yuen Sin Carol filed on 28 November 2016, these 114,362,000 Shares are owned as to (i) 4,362,000 Shares beneficially by Ms. Tin Yuen Sin Carol; and (ii) 110,000,000 through Favor Way Investments Limited, a company wholly-owned by Ms. Tin Yuen Sin Carol.

2. These Shares are beneficially owned by Value Convergence Holdings Limited, the holding company of VC Capital Limited, one of the financial advisers to the Company in respect of the Subscription and the Offer.

3. These Shares are beneficially owned by All Divine Limited, which is wholly-owned by Mr. Hubert Tien, an executive Director.

4. These Shares are beneficially owned by Mr. Tang Shu Pui Simon, an independent non-executive Director.

As at the Latest Practicable Date, the Company has no outstanding warrants, options, derivatives, convertibles or other securities in issue which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into the Shares.

– 14 –

LETTER FROM THE BOARD

INFORMATION ON THE OFFEROR

The Offeror is an exempted limited liability partnership registered in Cayman Islands, and its general partner is New Seres International Asset Management (Cayman) Limited, which in turn is owned as to 100% by New Seres Investment Co., Ltd. (新絲綢之路投資有限公司). New Seres Investment Co., Ltd. (新絲綢之路投資有限公司) is owned as to 50% by CEFC Shanghai Financial Services Co., Ltd.* (上海華信金融服務有限公司), as to 40% by Mr. Guo Lin (郭林) and as to 10% by Mr. Zang Jianjun (臧建軍).

CEFC Shanghai Financial Services Co., Ltd. (上海華信金融服務有限公司) is owned as to 100% by Shanghai CEFC Financial Holding Co., Ltd. (上海市華信金融控股有限公司), a company owned as to approximately 87.67% by CEFC China, approximately 6.17% by Mr. Su Weizhong (蘇衛忠), approximately 4.93% by Mr. Zheng Xiongbin (鄭雄斌) and approximately 1.23% by Shanghai Zhong’an United Investment Fund Co., Ltd. (上海中安聯合投資基金股份有限公司). CEFC China is in turn indirectly owned as to approximately 99.05% by China CEFC International Equity Investment Co., Ltd. (中國華信國際股權投資有限公司) and its ultimate beneficial owners are Mr. Li Yong (李勇) (approximately 39.3%), Mr. Su Weizhong (蘇衛忠) (approximately 40.1%), Mr. Zheng Xiongbin (鄭雄斌) (approximately 0.8%), Mr. Zang Jianjun (臧建軍) (approximately 18.8%) and Mr. Zhuang Miaozhong (莊苗忠) (approximately 1.0%). CEFC China is principally engaged in the energy and financial sectors. Mr. Guo Lin (郭林) is the chairman of the board of directors of CEFC Shanghai Securities Limited (上海華信證券有限責任公司). CEFC Shanghai Securities Limited (上海華信證券有限責任公司) is a wholly-owned subsidiary of Shanghai CEFC International Group Co. Ltd. (上海華信國際集團有限公司) (see below) and is principally engaged in investment banking, securities brokerage and investment consulting services. Mr. Li Yong (李勇), Mr. Zang Jianjun (臧建軍), Mr. Ye Jianming (葉簡明) and Mr. Chen Qiutu (陳秋途) are the directors of CEFC China. Mr. Li Yong (李勇), Mr. Su Weizhong (蘇衛忠) and Mr. Zhuang Miaozhong (莊苗忠) are the directors of CEFC International Equity Investment Co., Ltd. (中國華 信國際股權投資有限公司) (being the parent company of CEFC China).

Wisely Inc Limited (永事利有限公司) is the limited partner of the Offeror and is owned as to 100% by Shanghai Huaxin Group (HongKong) Limited (上海華信集團(香港)有限公司), which is in turn owned as to 100% by Shanghai CEFC International Group Co. Ltd. (上海華信國際集團有限公 司). Shanghai CEFC International Group Co. Ltd. (上海華信國際集團有限公司) is owned as to approximately 55.67% by CEFC China, as to approximately 30.50% by Shanghai CEFC Financial Holding Co., Ltd. (上海市華信金融控股有限公司) (being a non-wholly-owned subsidiary of CEFC China), and as to approximately 13.83% by China CEFC International Equity Investment Co., Ltd. (中國華信國際股權投資有限公司) (being the parent company of CEFC China).

CEFC China was recognised as one of the Fortune Global 500 in 2015 and 2016, and the World’s 500 Most Influential Brands in 2015.

The Offeror was introduced to the Company by VC Brokerage Limited in late 2016.

– 15 –

LETTER FROM THE BOARD

FINANCIAL INFORMATION ON THE GROUP

Set out below is a summary of consolidated financial information of the Group for the three financial years ended 31 December 2014, 31 December 2015 and 31 December 2016.

		Year ended 31 December
	2014	2015	2016
	Audited	Audited	Audited
	(HK$’000)	(HK$’000)	(HK$’000)
Revenue	379,715	371,725	368,857
Proft/(Loss) before taxation Proft/(Loss) after taxation	31,567 25,679	19,386 15,732	(17,768) (18,769)

The audited consolidated net assets of the Group as at 31 December 2016 was approximately HK$264,152,000.

Following the execution of the Subscription Agreement, on 20 March 2017, the Company published the announcement for its audited annual results for the year ended 31 December 2016. The financial performance of the Company continued to be unsatisfactory and the Company reported a further 0.77% drop in its revenue from approximately HK$371,725,000 for the year ended 31 December 2015 to approximately HK$368,857,000 for the year ended 31 December 2016. Moreover, the Company reported a loss attributable to owners of the Company of approximately HK$18,769,000 for the year ended 31 December 2016, while the Company reported a profit attributable to owners of the Company of approximately HK$15,732,000 for the year ended 31 December 2015. The Company considers that its reduced revenue and loss making position for the year ended 31 December 2016 will continue to dampen the attractiveness of the Shares.

For reference only, the Subscription Price of HK$0.238 per Subscription Share represents a discount of approximately 25.16% over the audited consolidated net asset value of approximately HK$0.318 per Share as at 31 December 2016 (based on the audited consolidated statement of financial position of the Company as at 31 December 2016 and the number of Shares in issue as at 31 December 2016). The increase of net asset value of the Company from 31 December 2015 to 31 December 2016 was mainly due to increase in goodwill resulting from the acquisition of Delta Wealth Finance Limited(“ Delta Wealth ”), a company principally engaged in the provision of money lending services in late 2016. Such increase in goodwill was an accounting treatment but did not arise from the garment business growth of the Group.

– 16 –

LETTER FROM THE BOARD

Based on the above and the reasons as disclosed in the section headed “REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND THE OFFER AND USE OF PROCEEDS”, the Company considers that the discount of the Subscription Price is overall fair and reasonable.

Further financial information of the Group will be set out in the Composite Document to be despatched to the Independent Shareholders.

REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND THE OFFER AND USE OF PROCEEDS

The Group is principally engaged in designing, manufacturing and trading of apparels and loan financing business.

The apparel industry remained difficult in the year of 2015 as stated in the annual report 2015 of the Company. As the global trade environment has further deteriorated, the growth of profit of the Group continues to experience downward pressure. As disclosed in the annual report 2015 of the Company, the net profit after tax of the Company suffered a drop of approximately 38.74% from approximately HK$25,679,000 for the year ended 31 December 2014 to approximately HK$15,732,000 for the year ended 31 December 2015. Further, based on the unaudited condensed consolidated statement of comprehensive income of the Company, the Company has recorded a net loss after tax of approximately HK$16,984,000 for the six months ended 30 June 2016, which increased by approximately 126.7% from that for the six months ended 30 June 2015.

The Directors consider that the unsatisfactory performance of the Company in recent years is in line with the apparel industry downward trend, resulting in challenging business environment for the Company’s apparel business. In particular, the Company has noted, among other things, (i) the unfavorable market environment for the apparel products manufacturing industry in the PRC; and (ii) the cost and benefit imbalances in respect of the apparels manufacturing business of the Group. In view of the challenging industry environment, the Company expects that its apparel business will continue to be under pressure and the revenue generated therefrom is expected to account for a smaller portion in the total revenue of the Company in the future.

Loan financing business

In light of the above, the Company has been exploring new business opportunities and reviewing its operational strategies from time to time such that the business and operational risk of the Group could be controlled or reduced. On 5 September 2016, the Company announced the acquisition of the entire issued share capital of Delta Wealth.

With reference to the statistics of loans and advances granted by authorised institutions as published by the Hong Kong Monetary Authority as a proxy to the credit market growth, the amount of loans and advances granted by authorised institutions for use in Hong Kong has been growing over the years from approximately HK$3,299 billion as at 30 June 2011 to approximately HK$4,948 billion as at 30 June 2016, representing an annual growth rate of approximately 8.4% during the period. In light of the above, the Directors considered that the business of provision of money lending services would have a promising prospect and the expansion into the loan financing business would diversify the Group’s business scope and broaden revenue sources of the Group.

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LETTER FROM THE BOARD

Following the completion of the Company’s acquisition of Delta Wealth in November 2016, the Company has been continuing its apparels business while developing its loan financing business. Since the establishment of the marketing campaign of Delta Wealth, Delta Wealth has received increased number of loan enquiries from potential customers and has been successful in growing the size of its loan portfolio. Following the completion of the acquisition of Delta Wealth, Delta Wealth has recorded a significant loan portfolio size growth. As at 31 December 2016, the loan portfolio size of Delta Wealth had grown to approximately HK$80 million. With the ongoing marketing campaign to further promote its image and reputation, the Company is confident that Delta Wealth will be able to attract more clients outside the existing client pool and to obtain a larger market share in the loan financing industry.

To pair with the growth of Delta Wealth, the Company is of the view that it is important for it to keep the loan financing reserve at a level which allows it to realise loan financing opportunities as and when it arises. If the Company does not have sufficient fund available at the material time, the Company may fail to grasp such loan financing opportunities. As at 24 January 2017, the cash and balance of the Company amounted to only approximately HK$23.2 million, which was to be shared between, among other things, the Company’s apparels business, loan financing business and the administrative and general expenses of the Group. The Company considers that the lack of resources may limit its future growth in the loan financing business.

As at the Latest Practicable Date, the Company has been approached by certain potential clients indicating their interest in personal and/or mortgage financing services of Delta Wealth, which in aggregate amount to approximately HK$70 million. The Company is currently reviewing loan applications of the potential clients and will, subject to the Delta Wealth’s credit policy, grant such loans to the potential clients within three months after Completion. If the Company is unable to obtain such resources in a timely manner, the Company may lose its business and its reputation may be adversely affected.

As at the Latest Practicable Date, Delta Wealth has been finalising its negotiations with these potential clients regarding certain possible loans. Based on the latest business negotiations, the interest rate for these possible loans would range from approximately 15% per annum to approximately 18% per annum (for first mortgages) and from approximately 20% per annum to approximately 24% per annum (for sub mortgages) respectively, which are within the range of those previously granted by Delta Wealth.

As a result of the success of its recent marketing campaign, Delta Wealth has been receiving increasing enquiries for loan application since 2017. The Company is confident that even if Delta Wealth could not secure those potential clients for the mortgage loans mentioned above due to mismatch in timing of the Completion, it would still be able to allocate the proceeds for further new loans within a short period of time.

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LETTER FROM THE BOARD

In addition, faced with keen competition in the loan financing market, the Company would like to allocate more resources into the loan financing market in order to keep pace with the market situation and for further development so as to further increase its market share in the loan financing business. As such, to cope with the further growth in its loan financing business which generally attain a more favorable gross profit margin as compared to the existing business of the Group, the Company considers it is appropriate to strengthen its cash position for the potential business opportunities.

The Company is confident that with the proceeds from the Subscription, the Company will be able to further increase its loan portfolio and market share in the loan financing industry.

Securities business

On 25 January 2017, the Group entered into a sale and purchase agreement with a vendor in relation to the acquisition of the entire share capital of Prior Securities Limited (“ Prior Securities ”) and Prior Asset Management Limited (“ Prior Asset ”). Prior Securities is licensed to carry out type 1 (dealing in securities) regulated activity under the SFO. Prior Asset is licensed to carry out type 4 (advising on securities) and type 9 (asset management) regulated activities under the SFO. The acquisition of Prior Securities and Prior Asset did not in aggregate constitute a notifiable transaction of the Company under Chapter 14 of the Listing Rules.

The acquisition of Prior Securities and Prior Asset had been proceeded with after considering, among other things, (i) the business portfolio of the Company would be diversified; (ii) certain existing key staff of Prior Securities and Prior Asset would be retained to operate the business after acquisition by the Company; (iii) the Board has sufficient expertise in the management of financial services business; (iv) the Company is satisfied with the preliminary due diligence result of Prior Securities and Prior Asset; and (v) based on the Company’s research on the Hong Kong securities industry, there is ample growth potential in the financial services businesses in general. Based on the above, the Company considers that the entry into the financial services market is fair and reasonable and is in the interest of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, the acquisition of Prior Securities and Prior Asset have not yet been completed. Depending on the then market environment and the business performance of Prior Securities and Prior Asset, further capital needs may be required in the future for the operation of the financial services business. As at the Latest Practicable Date, save for disclosed herein, the Company has not yet identified capital needs of any particular nature and has no further plans for future fund raising for the financial services business of the Group. Following the completion of the above acquisition, Prior Securities and Prior Asset will formulate their marketing strategy to retain and deal with potential and existing clients.

– 19 –

LETTER FROM THE BOARD

Future prospects of the Group

CEFC Group, being the parent group of the Offeror, is a large-scale and nationwide financial service provider. As stated in the section headed “Information on the Offeror”, CEFC China was recognised as one of the Fortune Global 500 in 2015 and 2016, and the World’s 500 Most Influential Brands in 2015. CEFC China, together with its subsidiaries, provides a full range of licensed and multifunctional financial services in the PRC, including securities, money lending, asset management, banking, trust, insurance, funds and investments.

Upon Completion, the Group will have a much larger capital base which is believed to help increase the Group’s competitiveness in the existing business as well as financial service sector. The strong financing capability is believed to be one of the key factors to gain clients’ confidence and expand asset management business. It is expected that the Subscription will enable the Company to raise the funds for its business development.

Therefore, riding on the brand name, financial experience, capacity, the extensive network of CEFC Group and the business scale of CEFC Group in the PRC, the Company is optimistic that the introduction of the Offeror to the Company as its strategic investor would enhance the Company’s brand awareness and competitiveness as well as provide a solid ground for the Group’s growth in the financial services industry by way of, among others, having a stronger capital base to pursue more potential business opportunities, and having a stronger brand recognition brought by having CEFC Group as the Company’s major shareholders.

Alternative fundraising activities considered

In meeting the funding requirement for its business development, the Company has considered alternative fund raising possibilities including but not limited to the issue of convertible securities of the Company. Nevertheless, having taken into account (i) the convertible securities may bear interest which may increase the financial burden of the Company; (ii) the convertible securities may be required to be repaid at maturity should the holder(s) of the convertible securities decide(s) not to exercise the conversion right attached thereto; and (iii) the issue of Shares would enable shareholders with strong backgrounds be introduced to the Company, the Company is of the view that the issue of convertible securities of the Company may not be able to provide the required fund in a timely manner when required.

The Company has also considered the possibility of borrowings. Nevertheless, in light of (i) the significant amount of the funds required; (ii) the declining performance of the Company’s financial performance; and (iii) the interest which may increase the financial burden of the Company, the Company is of the view that it may not be able to secure the funds required with a favourable term. The Company has also explored other pre-emptive fund raising options, including but not limited to open offer or rights issue. However, having considered that (i) the Company may not be able to introduce any strategic investor with a strong background at completion; and (ii) the Subscription is expected to be less time consuming compared with open offer and/or rights issue, the Company did not proceed with such alternatives.

After considering the above factors, the Company decided to proceed with the negotiation with the Subscriber regarding the Subscription and the Offer.

– 20 –

LETTER FROM THE BOARD

Potential dilution effect

The Board also notes that as set out on page 14 of this circular, the shareholding interest of the public Shareholders would be diluted from approximately 53.65% as at the Latest Practicable Date to approximately 26.35% immediately following Completion. The structure of the Subscription aims to provide the Subscriber with its required minimum shareholding interest in the Company as the Subscriber has stated in the course of negotiation that it would not accept any lower shareholding interest in the Company. In light of the potential dilution impact on the shareholding, the Company has endeavoured to negotiate and has successfully agreed with the Subscriber for the Offer Price without taking into account the dilution effect upon Completion which provides an alternative to Shareholders who do not share the Directors’ view on the envisaged benefits of the Subscription to exit at the Offer Price which is close to the recent market price of the Shares.

Taking into account that (i) the Subscription Price represents a premium of approximately 21.43% over the unaudited consolidated net asset value per Share as at 30 June 2016 (based on the unaudited consolidated statement of financial position of the Company as at 30 June 2016 and the number of Shares in issue as at 30 June 2016); (ii) the Group is experiencing declining financial performance; (iii) the unfavourable business environment of the designing, manufacturing and trading of apparels business of the Group; and (iv) the abovementioned reasons and intentions of the Offeror for the Subscription, the Directors consider that the Subscription Agreement is entered into on normal commercial terms and the terms of the Subscription Agreement are fair and reasonable and the Subscription is in the interests of the Company and the Shareholders as a whole.

Use of proceeds

The gross proceeds and net proceeds (after deducting all relevant costs and expenses) of the Subscription is expected to amount to HK$204,680,000 and approximately HK$195,720,000, respectively, representing a net price of approximately HK$0.228 per Subscription Share.

The Company intends to utilise the net proceeds of approximately HK$195,720,000 as follows:

• (i) as to approximately HK$117,432,000 for the loan financing business of the Group including but not limited to:

• (a) as to approximately HK$103,432,000 for principal of the loans to be made to the clients which is expected to comprise loans of larger principal amount and longer term (e.g. mortgage loans);

• (b) as to approximately HK$9,000,000 for the expansion of the sales and customer service team and the overheads for the loan financing business; and

• (c) as to approximately HK$5,000,000 for the Company’s marketing campaign which had fueled the growth of the Company’s loan financing business; and

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LETTER FROM THE BOARD

• (ii) as to approximately HK$78,288,000 for development of the financial services business of the Group including but not limited to:

• (a) as to approximately HK$38,000,000 for the Company’s grant of the securities margin financing loans;

• (b) as to approximately HK$28,900,000 for the settlement of the outstanding consideration for the acquisition of Prior Securities and Prior Asset; and

• (c) as to approximately HK$11,388,000 for the business development of Prior Securities and Prior Asset which includes the costs relating to the increase in staff headcount, new office(s) and renovation.

Following the launch of its marketing campaign in late 2016, the amount of loans made by the Group has been increasing, and the Company has recently received more enquiries from its potential customers indicating their interests in loan financing services. In view of this, the Company is positive about the business prospect of its loan financing business and intends to apply the proceeds from the Subscription for its business expansion.

To provide a broader spectrum of its financial services business, the Company also intends to expand its securities business into margin financing to promote its competitiveness following Completion and the completion of the acquisition of Prior Securities and Prior Asset in 2017 and further capital is required for, inter alia, the statutory capital requirement and the expansion and operating costs.

The Board is of the view that the abovementioned capital needs are largely dependent on the market development and the actual needs from existing and potential customers of the Group. Subject to the approval of SFC regarding the change of substantial shareholders of Prior Securities and Prior Asset, the completion of acquisition of Prior Securities and Prior Asset is expected to take place shortly after the Completion and the outstanding consideration for the acquisition of Prior Securities and Prior Asset of approximately HK$28,900,000 will be settled at that time. Depending on the then market environment, the Company expects to commence its expansion into the securities margin financing business within three months after Completion and the net proceeds from the Subscription shall be applied for the business accordingly.

The Company expects that the amount of securities margin financing being provided by Prior Securities would reach an amount of approximately HK$38,000,000 in three months’ time after commencement of the securities margin financing business after considering, among other things, (i) the typical size of the securities margin loan portfolio of securities firms in the industry, which is far higher than that of Prior Securities; and (ii) the Company’s plan to build up a securities margin financing portfolio comprising 10 clients with average loan outstanding amount of HK$3.8 million each within 3 months from completion of the acquisition of Prior Securities which, in the view of the experienced management of Prior Securities, is an achievable target. As such, the Company considers that the estimated securities margin loan portfolio size is fair and reasonable for a startup company such as Prior Securities. Accordingly, the Company is of the view that equity fund raising would allow Prior Securities to increase its liquid capital to a sufficient level for margin financing and securities business development.

– 22 –

LETTER FROM THE BOARD

According to “Financial Review of the Securities Industry for the half year ended 30 June 2016” published by SFC in September 2016, the total number of active margin clients increased from 241,948 on 31 December 2015 to 254,934 on 30 June 2016, representing an increase of approximately 5.37% over the period. Further, at the end of June 2016, outstanding margin loans totalled $153.3 billion, up 6% from the end of 2015. In light of the recent growth in both the total number of active margin clients and the outstanding margin loans, the Company is optimistic about the future business prospect of Prior Securities.

The Company also considers that the expansion into the securities margin financing business would provide a diversified source of revenue from clients with different risk appetite. The Company is optimistic that with the introduction of margin financing services, Prior Securities could become a more diversified financial service company and bring synergy with Prior Securities’ existing brokerage business.

It is expected that the proceeds from the Subscription can satisfy the Company’s expected funding needs for the next 12 months from the Latest Practicable Date.

OFFEROR’S INTENTION ON THE GROUP

As disclosed above, the existing business of the Group included designing, manufacturing and trading of apparels and loan financing business. Furthermore, the Group has also entered into an agreement to acquire the entire share capital of Prior Securities and Prior Asset with a view to expanding its scope of business to include the securities related and asset management business. The Company has been constantly reviewing its business plans based on the performance of its existing businesses and the growth potential of other business segments. The Company will continue to monitor the performance and operation of its business operations and the market situation of different business segments and may update its business plans as and when necessary. Notwithstanding the challenging industry environment, the Company has no intention to dispose of its apparel business at this juncture. Nevertheless, it may from time to time be necessary to adjust the operation mode and the scale of the apparel business to meet market changes and operational needs.

The Offeror intends to continue the existing businesses of the Group following the close of the Offer. Leveraging on the experience of CEFC Group in the investment and financial sectors, the Offeror will explore the possible business opportunities in the investment and financial sectors, such as the areas of securities, asset management, financial services and other investments in Hong Kong, the PRC and/or overseas counties. Subject to further investigation in the business opportunities in the investment and financial related areas, the Offeror will present suitable propositions to the Company in due course, which may or may not include any assets and/or business acquisitions or disposals, fund raising, restructuring and/or diversification of businesses with a view to enhancing the value of the Group. Upon closing of the Offer, the Offeror will conduct a detailed review of the operations of the Group and formulate business strategies for the Group’s long term development.

– 23 –

LETTER FROM THE BOARD

Notwithstanding the above, as at the Latest Practicable Date, no investment or business opportunity had been identified by the Offeror for the Group nor had the Offeror entered into any agreement, arrangements, understandings, negotiations or discussions in relation to the injection of any assets or business into the Group, and the Offeror had no intention to discontinue the employment of the employees or to dispose of or re-deploy the assets of the Group other than those in its ordinary course of business.

PROPOSED CHANGE OF COMPOSITION OF THE BOARD

The Board currently comprises nine Directors, comprising six executive Directors, namely Mr. Hubert Tien, Mr. Chen Gang, Mr. Qu Chengbiao, Mr. Yeung Kwok Leung, Mr. Cheng Tze Kit Larry and Mr. Liu Chun Fai; and three independent non-executive Directors, namely Mr. Tang Shu Pui Simon, Mr. Tse Yuen Ming and Mr. Hon Ming Sang.

The Offeror intends to nominate new Directors to the Board with effect from the close of the Offer. As at the Latest Practicable Date, the Offeror had not reached any final decision as to who will be nominated as new Directors. Following the change of the composition of the Board, the Board will also retain the management of different business segments (including but not limited to the apparel business) of the Company which possesses sufficient skills and experience. Any changes to the composition of the Board will be made in compliance with the Takeovers Code and the Listing Rules and a further announcement will be made accordingly.

MAINTENANCE OF THE LISTING STATUS OF THE COMPANY

The Offeror intends to maintain the listing of the Shares on the Stock Exchange after the close of the Offer and will undertake to the Stock Exchange to take appropriate steps as soon as possible following the close of the Offer to ensure that a sufficient public float exists for the Shares.

GENERAL

EGM

A notice convening the EGM to be held at 14th Floor, PeakCastle, 476 Castle Peak Road, Cheung Sha Wan, Kowloon, Hong Kong on Thursday, 27 April 2017 at 11:00 a.m. is set out on pages EGM1 to EGM-2 of this circular.

As at the Latest Practicable Date, Value Convergence Holdings Limited is legally and/or beneficially interested in 40,308,000 Shares. As VC Capital Limited, a wholly-owned subsidiary of Value Convergence Holdings Limited, is one of the Company’s joint financial advisers and will receive fee from the provision of advisory services in the Subscription, Value Convergence Holdings Limited is deemed to have a material interest in the Subscription. Accordingly, in compliance with Rules 2.15 and 2.16 of the Listing Rules, Value Convergence Holdings Limited shall abstain from voting at the EGM on the resolution regarding the Subscription.

– 24 –

LETTER FROM THE BOARD

Save as aforementioned, to the best of the Directors’ knowledge, information and belief, no existing Shareholder has a material interest in the above matters and therefore no Shareholder is required to abstain from voting in relation to the resolution concerning the Subscription Agreement and the transactions contemplated thereunder and the grant of the Specific Mandate at the EGM. As at the Latest Practicable Date, the Subscriber and parties acting in concert with it do not hold any Shares and accordingly will not be entitled to vote on any resolution at the EGM.

A form of proxy for use at the EGM is enclosed. Whether or not you are able to attend the EGM, you are encouraged to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, 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 adjourned meeting (as the case may be). Completion and return of the enclosed form of proxy will not preclude you from attending and voting in person at the EGM or any adjourned meeting (as the case may be) should you so wish.

RESPONSIBILITY STATEMENT

This circular (other than the information relating to the Offeror and parties acting in concert with it), 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 Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge, information and belief, the information (other than the information relating to the Offeror and parties acting in concert with it) 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.

RECOMMENDATION

Having considered the reasons stated under the section headed “REASONS FOR AND BENEFITS OF THE SUBSCRIPTION AND THE OFFER AND USE OF PROCEEDS” above, the Directors (including the independent non-executive Directors) are of the opinion that the terms of the Subscription Agreement and the transactions contemplated thereunder are fair and reasonable and on normal commercial terms, and that the entering into of the Subscription Agreement is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) recommend that all the Independent Shareholders should vote in favour of the resolution proposed at the EGM to approve the Subscription Agreement and the transactions contemplated thereunder and the grant of the Specific Mandate to allot and issue the Subscription Shares.

By order of the Board Runway Global Holdings Company Limited Yeung Kwok Leung Executive Director

– 25 –

NOTICE OF EGM

RUNWAY GLOBAL HOLDINGS COMPANY LIMITED 時尚環球控股有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 1520)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “ Meeting ”) of Runway Global Holdings Company Limited (the “ Company ”) will be held at 11:00 a.m. on 27 April 2017 at 14th Floor, PeakCastle, 476 Castle Peak Road, Cheung Sha Wan, Kowloon, Hong Kong for the purpose of considering and, if thought fit, passing with or without modification the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

“ THAT :

1. (a) the subscription agreement dated 26 January 2017 entered into between the Company and New Seres CEFC Investment Fund LP (the “ Subscriber ”) in relation to the subscription of 860,000,000 ordinary shares of the Company (the “ Subscription Share(s) ”) (the “ Subscription ”) at a subscription price of HK$0.238 per Subscription Share (the “ Subscription Agreement ”) (a copy of the Subscription Agreement has been tabled at the meeting marked “A” and signed by the chairman of the Meeting for identification purpose) and the transactions contemplated thereunder be and is hereby approved, ratified and confirmed;

2. (b) subject to the fulfilment or waiver of the conditions precedent set out in the Subscription Agreement, the grant of the specific mandate (the “ Specific Mandate ”) to the directors of the Company (the “ Director(s) ”) to exercise the powers of the Company to allot and issue the Subscription Shares at HK$0.238 per Subscription Share to the Subscriber pursuant to and in accordance with the terms and conditions of the Subscription Agreement be and is hereby approved, and such Subscription Shares (upon issue) shall rank pari passu in all respects with the then existing issued shares of the Company (the “ Share(s) ”);

3. (c) any one Director be and is hereby authorised to execute all such documents, instruments, agreements and deeds and do all such acts, matters and things that are ancillary to the Subscription, as he/she may in his or her absolute discretion consider necessary or desirable for the purpose of and in connection with the implementation of the Subscription Agreement and the transactions contemplated thereunder, including the allotment and issuance of the Subscription Shares, and to agree to such variations of the terms of the Subscription Agreement and the transactions contemplated thereunder as he or she may in his or her absolute discretion consider necessary or desirable.”

By order of the Board Runway Global Holdings Company Limited Yeung Kwok Leung Executive Director

Hong Kong, 10 April 2017

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NOTICE OF EGM

As at the date hereof, the board of the Company comprises the following Directors:

Executive Directors

Mr. Hubert Tien (Chairman) Mr. Chen Gang Mr. Qu Chengbiao Mr. Yeung Kwok Leung Mr. Cheng Tze Kit Larry Mr. Liu Chun Fai

Independent Non-executive Directors

Head office and principal place of business in Hong Kong

Mr. Tang Shu Pui Simon Mr. Tse Yuen Ming Mr. Hon Ming Sang 14th Floor, PeakCastle 476 Castle Peak Road Cheung Sha Wan Kowloon Hong Kong

Notes:

1. Any shareholder of the Company (the “ Shareholder(s) ”) entitled to attend and vote at the Meeting is entitled to appoint one or, if he/she is the holder of two or more Shares, more than one proxy to attend and vote on his/her behalf in accordance with the articles of association of the Company. A proxy need not be a Shareholder.

2. To be valid, a form of proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of such power or authority must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Investor Service Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for holding of the Meeting or any adjournment thereof.

3. Completion and return of the form of proxy shall not preclude a Shareholder from attending and voting in person at the Meeting or any adjournment thereof and in such event, the form of proxy shall be deemed to be revoked.

4. In the case of joint holders of a Share, any one of such joint holders may vote, either in person or by proxy, in respect of such Share as if he/she was solely entitled thereto; but if more than one of such joint holders are present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the name stands first in the register of shareholders of the Company in respect of the joint holding.

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