WH Group Limited - Capital/Financing Update 2014

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Prospectus or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser. Capitalised terms used herein shall have the same meanings as those defined in the section headed “Definitions” in this Prospectus, unless otherwise stated. If you have sold or transferred all your shares in China Gamma Group Limited, you should at once hand this Prospectus and the accompanying PAL(s) and EAF(s) to the purchaser(s) or other transferee(s) or bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

A copy of this Prospectus, together with copies of the documents specified in the paragraph headed “Documents delivered to the Registrar of Companies” in Appendix I II to this Prospectus, have been registered with the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance. Neither the SFC nor the Stock Exchange nor the Registrar of Companies in Hong Kong takes any responsibility for the contents of any of these documents. You should read the whole of the Rights Issue Documents including the discussions of certain risks and other factors as set out in the paragraph headed “Warning of the risks of dealing in the Shares and the nil-paid Rights Shares ” in the section headed “Letter from the Board” in this Prospectus.

Subject to the granting of the listing of, and permission to deal in, the Rights Shares in both 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 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 on the Stock Exchange . You should consult your stockbroker or other licensed securities dealer , bank manager, solicitor, professional accountant or other professional adviser(s) for details of those settlement arrangements and how such arrangements may affect your rights and interests. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Hong Kong Exchanges and Clearing Limited, the Stock Exchange, HKSCC and the SFC take no responsibility for the contents of the Rights Issue Documents, make no representation as to their 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 the Rights Issue Documents.

The securities described herein have not been registered under the US Securities Act or the laws of any state in the United States and may not be offered or sold within the United States, absent registration or an exemption from the registration requirements of the US Securities Act and applicable state laws. There is no intention to register any portion of the Rights Issue or any securities described herein in the United States or to conduct a public offering of securities in the United States.

Neither this Prospectus nor any copy hereof may be circulated, distributed, forwarded, delivered or redistributed, electronically or otherwise, directly or indirectly, to any US Persons, and may not be relied upon as a basis for any investment decision or for any other purpose by any person within the United States. Any failure to comply with this restriction may constitute a violation of US securities laws.

The Rights Issue and Rights Shares in both nil-paid and fully-paid forms are being offered outside the United States in reliance on Regulation S under the US Securities Act. Each purchaser or subscriber of the nil-paid Rights Shares or fully-paid Rights Shares being offered and sold outside the United States will be deemed to have represented and agreed, among other things, that the purchaser or subscriber is acquiring the nil-paid Rights Shares or fully-paid Rights Shares in an offshore transaction meeting the requirements of Regulation S under the US Securities Act.

This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the nil-paid Rights Shares or fully-paid Rights Shares or to take up any entitlements to the nil-paid Rights Shares or fully-paid Rights Shares in any jurisdiction in which such an offer, invitation or solicitation is unlawful. Except as otherwise set out in this Prospectus, the Rights Issue is not being extended to Non-Qualifying Shareholders with registered addresses in, or investors who are located or resident in, any jurisdictions outside Hong Kong. This Prospectus will not be sent to any Non-Qualifying Shareholder or any US Person. This Prospectus has not been lodged or registered with any of the relevant authorities in any jurisdiction other than Hong Kong.

China Gamma Group Limited 中國伽瑪集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

RIGHTS ISSUE OF RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.068 PER RIGHTS SHARE ON THE BASIS OF 1 RIGHTS SHARE FOR EVERY 2 EXISTING SHARES HELD ON THE RECORD DATE

Joint Underwriters to the Rights Issue

E N L I G H T E N

ENLIGHTEN SECURITIES LIMITED

CEPA ALLIANCE SECURITIES LIMITED

The latest time for acceptance of and payment for the Rights Shares is 4:00 p.m. on Thursday, 4 September 2014. The procedures for acceptance, application or transfer of the Rights Shares are set out on pages 18 to 30 of this Prospectus.

The Underwriting Agreement in respect of the Rights Issue contains provisions granting the Underwriters, by notice in writing to the Company (after consultation with the Company), the right to terminate the Underwriting Agreement on the occurrence of certain events. These events are set out in the section headed “Termination of the Underwriting Agreement” on pages 10 to 11 of this Prospectus.

Shareholders should note that the existing Shares have been dealt in on ex-rights basis from Wednesday, 13 August 2014. The Rights Shares in their nil-paid form will be dealt in from Thursday, 21 August 2014 to Monday, 1 September 2014 (both days inclusive). If prior to the Latest Time for Termination, the Underwriters terminate the Underwriting Agreement or if any of the other conditions of the Rights Issue as set out in the paragraph headed “Conditions to the Rights Issue and the Underwriting Agreement” in the section headed “Letter from the Board” contained in this Prospectus is not fulfilled, the Rights Issue will not proceed. If the Underwriters terminate or rescind the Underwriting Agreement, the Rights Issue will not proceed.

Any dealings in the Shares up to the date on which all the conditions of the Rights Issue are fulfilled (which is expected to be on Thursday, 4 September 2014) and any dealings in the Rights Shares in their nil-paid form between Thursday, 21 August 2014 to Monday, 1 September 2014 (both days inclusive) will accordingly subject to the risk that the Rights Issue may not become unconditional and may not proceed. Any Shareholder or other person contemplating dealing in Shares and/or nil-paid Rights Shares who is in any doubt about his/her/its position is recommended to consult his/her/its own professional adviser(s).

19 August 2014

NOTICE

The Rights Issue is conditional upon the fulfilment of the conditions as described in the paragraph headed “Conditions to the Rights Issue and the Underwriting Agreement” in this Prospectus. If any of the conditions of the Rights Issue is not fulfilled, the Rights Issue will not proceed. It should be noted that the Shares have been dealt in on an ex-rights basis from Wednesday, 13 August 2014. Dealings in the Rights Shares in nil-paid form are expected to take place from Thursday, 21 August 2014 to Monday, 1 September 2014 (both days inclusive). The Rights Issue is conditional upon the Underwriting Agreement becoming unconditional. If the conditions of the Rights Issue are not fulfilled or waived, including the termination of the Underwriting Agreement by the Underwriters, the Rights Issue will not proceed.

Any Shareholder or other person contemplating transferring, selling or purchasing the Shares and/or Rights Shares in their nil-paid forms is advised to exercise caution when dealing in the Shares and/or Rights Shares. Any person who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional adviser(s). Any Shareholder or other person dealing in the Shares or in the nil-paid Rights Shares up to the date on which all the conditions to which the Rights Issue is subject are fulfilled ( including the date on which the Underwriters’ right of termination of the Underwriting Agreement ceases) , will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

EXCEPT AS OTHERWISE SET OUT HEREIN, THE RIGHTS ISSUE DESCRIBED IN THIS PROSPECTUS IS NOT BEING EXTENDED TO SHAREHOLDERS WITH REGISTERED ADDRESSES IN, OR INVESTORS WHO ARE LOCATED OR RESIDENT IN, ANY OF THE JURISDICTIONS OUTSIDE HONG KONG. This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, the nil-paid Rights Shares or fully-paid Rights Shares or to take up any entitlements to the nil-paid Rights Shares or fully-paid Rights Shares in any jurisdiction in which such an offer, invitation or solicitation is unlawful. None of this Prospectus, the PAL and the EAF will be registered under the securities laws of any jurisdiction outside Hong Kong and none of the nil-paid Rights Shares, the fully-paid Rights Shares, this Prospectus, the PAL and the EAF will qualify for distribution under any of the relevant securities laws of any of the jurisdictions outside Hong Kong (other than pursuant to any applicable exceptions as agreed by the Company). Accordingly, the nilpaid Rights Shares and the fully-paid Rights Shares may not be offered, sold, pledged, taken up, resold, renounced, transferred or delivered, directly or indirectly, into or within any jurisdictions outside Hong Kong absent registration or qualification under the respective securities laws of such jurisdictions outside Hong Kong, or exemption from the registration or qualification requirement under applicable rules of such jurisdictions.

– i –

NOTICE

Shareholders with registered addresses in, and investors who are located or resident in, any of the jurisdictions outside Hong Kong are referred to the paragraph headed “Non-Qualifying Shareholders ” under the section headed “Letter from the Board” in this Prospectus.

Each person acquiring the Rights Shares in nil-paid and/or fully-paid forms under the Rights Issue will be required to confirm, or be deemed by his acquisition of the Rights Shares in nil-paid and/or fully-paid forms to confirm, that he is aware of the restrictions on offers and sales of the Rights Shares in nil-paid and/or fully-paid forms described in this Prospectus.

For a description of certain restrictions regarding the taking up of the nil-paid Rights Shares for, and the offering and sale of, the Rights Shares, see the notices below.

NOTICE TO INVESTORS IN AUSTRALIA

This Prospectus is not a disclosure document under the Corporations Act 2001 (Cth) (the “Australian Corporations Act”) and has not been and will not be lodged with the Australian Securities and Investments Commission (“ASIC”) as a disclosure document for the purposes of the Australian Corporations Act and does not purport to include the information required of a disclosure document under the Australian Corporations Act.

The offer of the nil-paid Rights Shares and/or the fully-paid Rights Shares under this Prospectus may only be made to persons to whom it is lawful to offer the nil-paid Rights Shares and/or the fully-paid Rights Shares without disclosure under Chapter 6D of the Australian Corporations Act and Part 7.9 of the Australian Corporations Act (including “sophisticated investors” or “professional investors” within the meaning of sections 708(8) and 708(111) of the Australian Corporations Act respectively) who are a “wholesale client” within the meaning of section 761G of the Australian Corporations Act (“Eligible Investors”), and where such action complies with all applicable laws, regulations and directives and does not require any document to be lodged with ASIC.

The nil-paid Rights Shares and/or the fully-paid Rights Shares may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the nil-paid Rights Shares and/or the fully-paid Rights Shares may be issued, and no draft or definitive offering circular, advertisement or other offering material relating to any of the nil-paid Rights Shares and/or the fully-paid Rights Shares may be distributed in Australia except where disclosure to investors is not required under the Australian Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the nil-paid Rights Shares and/or the fully-paid Rights Shares, you represent and warrant to us that you are an Eligible Investor and that you are not acquiring the nil-paid Rights Shares and/or the fullypaid Rights Shares for the purpose of selling or transferring those securities or granting, issuing or transferring interests in, or options over, them.

– ii –

NOTICE

As any offer of the nil-paid Rights Shares and/or the fully-paid Rights Shares under this Prospectus will be made without disclosure in Australia under the Australian Corporations Act, the offer of the nil-paid Rights Shares and/or fully-paid Rights Shares for resale in Australia within 12 months may require disclosure to investors under the Australian Corporations Act if none of the exemptions under the Australian Corporations Act apply to that resale. Accordingly, any person who acquires the nil-paid Rights Shares and/or the fully-paid Rights Shares pursuant to this Prospectus should not, within 12 months of acquisition of the nil-paid Rights Shares and/or the fully-paid Rights Shares, offer, transfer, assign or otherwise alienate those nil-paid Rights Shares and/or the fully-paid Rights Shares to investors in Australia except in circumstances where disclosure to investors is not required under the Australian Corporations Act or unless a compliant disclosure document is prepared and lodged with ASIC.

We are not licensed to provide financial product advice in relation to the nil-paid Rights Shares and/or the fully-paid Rights Shares. There is no cooling-off regime that applies in respect of your acquisition of the nil-paid Rights Shares and/or the fully-paid Rights Shares. This Prospectus is intended to provide general information only and has been prepared without taking into account any particular person’s objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. Investors should review and consider the contents of this Prospectus and obtain financial advice specific to their situation before making any decision to make an application for the nil-paid Rights Shares and/or the fully-paid Rights Shares.

NOTICE TO INVESTORS IN BELGIUM

This Prospectus is not being distributed in the context of a public offering of investment instruments (offre au public d’instruments de placement/openbare aanbieding van beleggingsinstrumenten) in Belgium within the meaning of Article 3 of Belgian Act of June 16, 2006 on the public offering of investment instruments and the admission of investment instruments to trading on a regulated market (the “Belgian Prospectus Act”). The Rights Shares (in their nilpaid and fully-paid forms) have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Belgium.

This Prospectus and any other material relating to the Rights Shares have not been, and will not be, submitted to the Belgian Financial Services and Markets Authority for approval in Belgium and, accordingly, may not be distributed or caused to be distributed, directly or indirectly, to the public in Belgium.

Such offers, sales and distributions of the Rights Shares (in their nil-paid and fully-paid forms) have been and shall only be made in Belgium to qualified investors (investisseurs qualifiés/ gekwalificeerde beleggers) acting for their own account, as defined in and in accordance with Article 10 of Belgian Prospectus Act and/or to less than 150 non-qualified investors.

– iii –

NOTICE

No steps may be taken which would constitute or result in a public offering of the Rights Shares (in their nil-paid and fully-paid forms) in Belgium as defined in the Belgian Prospectus Act. This Prospectus and any other offering material relating to our Rights Shares (in their nil-paid and fully-paid forms) are confidential, and may not be reproduced or used for any other purpose. Any action contrary to these restrictions may be in violation of the Belgian securities laws.

NOTICE TO INVESTORS IN CANADA

This Prospectus is not, and under no circumstances is it to be construed as, an advertisement or a public offering in Canada of the Rights Shares (in nil-paid and fully-paid forms). The Rights Shares (in nil-paid and fully-paid forms) have not been and will not be qualified under a prospectus filed with any securities commission or similar regulatory authority in any province or territory of Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this Prospectus or the merits of the Rights Shares (in nil-paid or fullypaid form) and any representation to the contrary is an offence. This Prospectus is not, and under no circumstances is it to be construed as, an offer to sell or a solicitation of an offer to buy the Rights Shares (in nil-paid or fully-paid form) in any province or territory of Canada wherein the offer or distribution of the Rights Shares (in nil-paid and fully-paid forms) is prohibited. Any offer or distribution of the Rights Shares (in nil-paid and fully-paid forms) in Canada is required to be made in reliance on and in compliance with exemptions from the requirements to file a prospectus under the securities laws, regulations, instruments and rules (the “Securities Laws”) of each province and territory of Canada wherein the Rights Shares (in nil-paid and fully-paid forms) are offered and distributed. Moreover, the distribution of the Rights Shares (in nil-paid and fullypaid forms) in Canada is required to be made pursuant to the registration requirements under the Securities Laws of each province and territory of Canada wherein the Rights Shares (in nil-paid and fully-paid forms) are offered and distributed and may only be offered and distributed in Canada through a dealer that is properly registered under the Securities Laws of the applicable province and territory or, alternatively, by a dealer that qualifies under and is relying upon a statutory exemption from the dealer registration requirements, or, alternatively, that is qualified under and relying upon a discretionary exemption from the dealer registration requirements granted by the securities commission or similar regulatory authority in each applicable province and territory of Canada wherein the Rights Shares (in nil-paid and fully-paid forms) are offered and distributed by such dealer. Furthermore, the Rights Shares (in nil-paid and fully-paid forms) are subject to resale restrictions and any resale of such Rights Shares must be made in accordance with an exemption from the prospectus requirements and in compliance with the registration requirements of applicable securities laws in the applicable province or territory of Canada wherein such Rights Shares are sold.

– iv –

NOTICE

NOTICE TO INVESTORS IN TAIWAN

The Rights Shares (in nil-paid and fully-paid forms) have not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be sold, issued or offered within Taiwan through a public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Law of Taiwan that requires a registration or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the Rights Shares (in nil-paid and fully-paid forms) in Taiwan.

NOTICE TO INVESTORS IN THE UNITED STATES

This Prospectus may not be circulated, distributed, forwarded, delivered or redistributed, electronically or otherwise, to persons within the United States. The Rights Issue Documents do not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The Rights Shares in both nil-paid and fully-paid forms have not been and will not be registered under the US Securities Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with applicable laws.

The Rights Shares in both nil-paid and fully-paid forms and the Rights Issue Documents have not been approved or disapproved by the US Securities and Exchange Commission, any securities commission of any state in the United States or any US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Rights Shares in either nil-paid or fully-paid forms, the Rights Issue Documents or the accuracy or adequacy of this Prospectus or any of the other Rights Issue Documents. There will be no public offer of these Rights Shares in either nil-paid or fully-paid forms in the United States.

The Rights Shares are being offered in reliance on Regulation S.

In addition, until 40 days after the commencement of the Rights Issue or the procurement of purchasers by the Underwriters of the Rights Shares not initially taken up, any offer, sale or transfer of the Rights Shares (in nil-paid or fully-paid forms) into the United States by a dealer (whether or not participating in the Rights Issue) may violate the registration requirements of the US Securities Act.

– v –

NOTICE

FORWARD-LOOKING STATEMENTS

All statements in this Prospectus other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements may be identified by the use of words such as “might”, “may”, “could”, “would”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “seek”, “continue”, “illustration”, “projection” or similar expressions and the negative thereof. Forward-looking statements in this Prospectus include, without limitation, statements in respect of the Group’s business strategies, service offerings, market position, competition, financial prospects, performance, liquidity and capital resources, as well as statements regarding trends in the relevant industries and markets in which the Group operates, technological advances, financial and economic developments, legal and regulatory changes and their interpretation and enforcement.

The forward-looking statements in this Prospectus are based on management’s present expectations about future events. Management’s present expectations reflect numerous assumptions regarding the Group’s strategy, operations, industry, developments in the credit and other financial markets and trading environment. By their nature, they are subject to known and unknown risks and uncertainties, which could cause actual results and future events to differ materially from those implied or expressed by forward-looking statements. Should one or more of these risks or uncertainties materialise, or should any assumptions underlying forward-looking statements prove to be incorrect, the Group’s actual results could differ materially from those expressed or implied by forward-looking statements. Additional risks not known to the Group or that the Group does not currently consider material could also cause the events and trends discussed in this Prospectus not to occur, and the estimates, illustrations and projections of financial performance not to be realised.

Prospective investors are cautioned that forward-looking statements speak only as at the date of publication of this Prospectus. Except as required by applicable law, the Group does not undertake, and expressly disclaims, any duty to revise any forward-looking statement in this Prospectus, be it as a result of new information, future events or otherwise.

– vi –

	Pages
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected Timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Termination of the Underwriting Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Rights Issue overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Irrevocable undertakings to subscribe for Rights Shares . . . . . . . . . . . . . . . . . . . . . . .	35
Warning of the risks of dealing in the Shares and the nil-paid Rights Shares . . . . . . . .	37
Shareholders’ approval not required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
Effect of Rights Issue on shareholdings in the Company . . . . . . . . . . . . . . . . . . . . . . .	38
Reasons for the Rights Issue and proposed use of proceeds . . . . . . . . . . . . . . . . . . . . .	39
Additional information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	41
Appendices
Appendix I – Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . .	42
Appendix II – Pro forma statement of adjusted
consolidated net tangible liabilities . . . . . . . . . . . . . . . . . . . . . .	46
Appendix III – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	52

– vii –

DEFINITIONS

Unless the context otherwise requires, terms used in this Prospectus shall have the following respective meanings:

“Announcement”

the announcement of the Company dated 13 July 2014, in relation to, among other things, the proposed Rights Issue

“associate(s)”

has the same meaning ascribed to it under the Listing Rules

“Beneficial Owner”
any beneficial owner of Shares whose Shares are registered in the name of a Registered Owner
“Board”

the board of Directors

“Business Day”

any day on which banks are generally open for business in Hong Kong (excluding Saturday and Sunday)

“CCASS”
the Central Clearing and Settlement System established and operated by HKSCC
“CCASS Clearing Participant”
a person admitted by HKSCC to participate in CCASS as a direct clearing participant or general clearing participant
“CCASS Custodian Participant”
a person admitted by HKSCC to participate in CCASS as a custodian participant
“CCASS Investor Participant”
a person admitted to participate in CCASS as an investor participant who may be an individual or joint individuals or a corporation
“CCASS Participant”
a CCASS Clearing Participant or a CCASS Custodian Participant or a CCASS Investor Participant
“Cepa Alliance”
Cepa Alliance Securities Limited, a registered institution under the SFO, registered to conduct Type 1 (dealing in securities) and Type 4 (advising on securities) regulated activities

– 1 –

DEFINITIONS

“Companies (Winding Up and Miscellaneous Provisions) Ordinance”
the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong)
“Company”
China Gamma Group Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange
“connected person”
has the same meaning ascribed to it in the Listing Rules
“Convertible Note”
the 3-year 1% unsecured convertible note in a principal amount of HK$105,000,000 issued by the Company to Mega Market on 17 October 2011
“Director(s)” director(s) of the Company
“EAF(s)”
the form(s) of application for excess Rights Shares to be sent to the Qualifying Shareholders
“Enlighten Securities”
Enlighten Securities Limited, a registered institution under the SFO, registered to conduct Type 1 (dealing in securities) regulated activities
“Group”

the Company and its subsidiaries

“HKSCC”
Hong Kong Securities Clearing Company Limited
“HK$”
Hong Kong dollar, the lawful currency of Hong Kong
“Hondex”
Hondex Investments Limited, a company incorporated in the British Virgin Islands with limited liability and a substantial shareholder (as defined in the Listing Rules) of the Company
“Hong Kong”

the Hong Kong Special Administrative Region of the People’s Republic of China

“Independent Third Party(ies)”

third party(ies) independent of the Company and any connected person(s) of the Company and not a connected person of the Company

– 2 –

DEFINITIONS

“Intermediary(ies)” in relation to a Beneficial Owner whose Shares are deposited in CCASS and registered in the name of HKSCC Nominees Limited, means the Beneficial Owner’s broker, custodian, nominee or other relevant person who is a CCASS Participant or who has deposited the Beneficial Owner’s Shares with a CCASS Participant
“Irrevocable Undertakings” the VC Irrevocable Undertaking and the Li Irrevocable Undertaking
“IU Share(s)” 1,518,147,585 Shares, being the aggregate number of Shares beneficially owned by the IU Shareholders as at the date of the Irrevocable Undertakings
“IU Shareholders” collectively, VC, Mega Market, Kingly Profits, Mr. Li and Hondex
“Kingly Profits” Kingly Profits Corporation, a company incorporated in the British Virgin Islands with limited liability
“Last Trading Day” 11 July 2014, being the last trading day of the Shares on the Stock Exchange immediately prior to the publication of the Announcement
“Latest Acceptance Date” Thursday, 4 September 2014, being the last day for acceptance and payment of the Rights Shares, or such other date as the Company may determine and notified to the Underwriters in writing
“Latest Lodging Date” 4:30 p.m. on Thursday, 14 August 2014, the latest time for lodging transfer documents of the Shares (together with the relevant shares certificate(s)) in order to qualify for the Rights Issue
“Latest Practicable Date” Thursday , 14 August 2014, being the latest practicable date prior to the printing of this Prospectus for the purpose of ascertaining certain information in this Prospectus

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DEFINITIONS

“latest time for acceptance”
4:00 p.m. on the Latest Acceptance Date
“Latest Time for Termination”
4:00 p.m. on the Latest Acceptance Date
“Li Irrevocable Undertaking” the irrevocable undertaking dated 11 July 2014 made by Mr. Li and Hondex to the Company and the Underwriters, details of which are set out in the section headed “Irrevocable Undertakings to Subscribe for Rights Shares” in this Prospectus
“Listing Committee”

has the same meaning ascribed to it under the Listing Rules

“Listing Rules”

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“Material Adverse Effect” a material adverse effect on the financial conditions of the Group as a whole

“Mega Market”

Mega Market Assets Limited, a company incorporated in the British Virgin Islands with limited liability and a substantial shareholder (as defined in the Listing Rules) of the Company
“Mr. Li” Mr. Li Wing Sang

“New Business” the leisure, hospitality, tourism, entertainment and gaming related businesses, being a new business segment of the Group

“Non-Qualifying the Overseas Shareholders to whom the Directors, after Shareholders” making relevant enquiries, consider it necessary or expedient not to offer the Rights Shares on account of either the legal restrictions under the laws of the relevant jurisdiction or the requirements of the relevant regulatory body or stock exchange in that jurisdiction, being Overseas Shareholders of the Specified Territories

“Overseas Shareholders”

the Shareholders whose names appear on the register of members of the Company as at 5:00 p.m. on the Record Date and whose addresses as shown on such register are outside Hong Kong

– 4 –

DEFINITIONS

“PAL(s)” the renounceable provisional allotment letter(s) issued to the Qualifying Shareholders in respect of their assured entitlements under the Rights Issue
“Posting Date” Tuesday, 19 August 2014 or such other date as the Company may determine and notified to the Underwriters in writing for the despatch of the Rights Issue Documents, provided that such date shall not fall on a date after the expiration of four months from the date of the Underwriting Agreement unless the Company and the Underwriters otherwise agree in writing
“Prospectus” this prospectus
“Qualifying Shareholders” the Shareholders whose names appear on the register of members of the Company as at 5:00 p.m. on the Record Date, other than the Non-Qualifying Shareholders
“Record Date” Monday, 18 August 2014, being the record date by reference to which entitlements to the Rights Issue were determined
“Registered Owner” in respect of a Beneficial Owner, means a nominee, trustee, depository or any other authorised custodian or third party which is the registered holder in the register of members of the Company of the Shares in respect of which the Beneficial Owner is beneficially interested

“Registrar” Tricor Secretaries Limited, the branch share registrar and transfer office of the Company in Hong Kong

“Rights Issue”

the issue of 2,198,840,745 Rights Shares at the Subscription Price on the basis of 1 Rights Share for every 2 existing Shares held on the Record Date payable in full on acceptance, subject to the terms of the Rights Issue Documents

“Rights Issue Documents” the Prospectus, the PAL(s) and the EAF(s) despatched to the Qualifying Shareholders on the Posting Date and any such supplementary prospectus to be despatched to the Qualifying Shareholders (if required)

– 5 –

DEFINITIONS

“Rights Share(s)”	the new Share(s) to be allotted and issued in respect of the
	Rights Issue
“Settlement Date”	Wednesday, 10 September 2014, being the date falling on
	the third Business Day after the Latest Acceptance Date,
	or such later date as the Underwriters may agree with the
	Company in writing
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Share(s)”	ordinary share(s) with nominal value of HK$0.01 each in
	the share capital of the Company
“Shareholder(s)”	holder(s) of the Share(s)
“Share Option(s)”	a right to subscribe for Shares pursuant to the Share Option
	Scheme or any share option granted thereunder
“Share Option Scheme”	the share option scheme of the Company adopted on 22
	August 2011
“Specified Territories”	Canada, Taiwan and the United States
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription Price”	the subscription price of HK$0.068 per Rights Share
“subsidiary(ies)”	has the same meaning ascribed to it under the Listing Rules
“taken up/take up”	those Rights Shares and/or the Underwritten Shares in
	respect of which the relevant PALs and/or EAFs have been
	lodged accompanied by cheques or other remittances for the
	full amount payable in respect thereof
“Underwriters”	Enlighten Securities and Cepa Alliance, and each an
	“Underwriter”

– 6 –

DEFINITIONS

“Underwriting Agreement” the underwriting agreement dated 11 July 2014 and entered into between the Company and the Underwriters in relation to the Rights Issue
“Underwritten Shares” all the Rights Shares to be issued by the Company pursuant to the Rights Issue, other than those taken up by the IU Shareholders, underwritten by the Underwriters pursuant to the terms of the Underwriting Agreement
“United States” or “US” the United States of America (including its territories and dependencies, any state in the US and the District of Columbia)
“US Person(s)” any person(s) or entity(ies) deemed to be a US Person for the purposes of Regulation S under the US Securities Act
“US Securities Act” the US Securities Act of 1933, as amended
“US$” United States dollar , the lawful currency of the United States
“VC” Mr. Chan How Chung, Victor
“VC Irrevocable Undertaking” the irrevocable undertaking dated 11 July 2014 made by VC, Mega Market and Kingly Profits to the Company and the Underwriters, details of which are set out in the section headed “Irrevocable Undertakings to Subscribe for Rights Shares” in this Prospectus

“%”

per cent or percentage.

– 7 –

EXPECTED TIMETABLE

Set out below is an indicative timetable for the implementation of the Rights Issue.

2014

First day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 21 August
Latest time for splitting nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:30 p.m. on
Wednesday, 27 August
Last day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 1 September
Latest time for acceptance of and payment for
Rights Shares and application and payment for
excess Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on
Thursday, 4 September
Latest time for termination of
the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:00 p.m. on
Thursday, 4 September
Announcement of the results of the Rights Issue
to be posted on the Stock Exchange’s website
and the Company’s website on or before . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 10 September
Refund cheques for wholly and partially unsuccessful
excess applications to be posted on or before . . . . . . . . . . . . . . . . . . . . . .Thursday, 11 September
Share certificates for fully-paid Rights Shares to be posted . . . . . . . . . . . . .Thursday, 11 September
Dealing of Rights Shares in fully-paid form commences . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on
Friday, 12 September
Note: All times and dates in this Prospectus refer to Hong Kong local times and dates. Shareholders should note that
the dates or deadlines specified in the expected timetable of the Rights Issue as set out above, and in other
parts of this Prospectus, are indicative only and may be varied by agreement between the Company and the
Underwriters. In the event that any special circumstances arise, the Board may extend, or make adjustment
to, the timetable if it considers appropriate. Any such extension or adjustment to the expected timetable will
be published or notified to the Shareholders and the Stock Exchange as and when appropriate.

– 8 –

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 Rights Shares and for application and payment for excess Rights Shares will not take effect if there is a tropical cyclone warning signal no. 8 or above, or a “black” rainstorm warning:

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 Acceptance Date. In such circumstance, 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 Acceptance Date. In such circumstance, the latest time of 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 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 Acceptance Date, the dates mentioned in the “Expected Timetable” section may be affected. The Company will notify the Shareholders by way of announcement(s) of any change to the expected timetable as soon as practicable.

– 9 –

TERMINATION OF THE UNDERWRITING AGREEMENT

The Underwriting Agreement contains provisions granting the Underwriters, by notice in writing to the Company (after consultation with the Company), the right to terminate the Underwriting Agreement on the occurrence of certain events.

If at or prior to the Latest Time for Termination:

(a) there develops, occurs or comes into force:
(i) the introduction of any new law or any change in existing laws which in the reasonable opinion of the Underwriters have or is likely to have a Material Adverse Effect; or
(ii) any material change in international economic, financial, political or military conditions which in the reasonable opinion of the Underwriters is or may have a Material Adverse Effect; or
(iii) any material change in international stock market conditions (including any moratorium, suspension of or material restriction on trading in securities generally but excluding any trading halt or suspension of trading in respect of the Shares or the Company) which in the reasonable opinion of the Underwriters would materially and adversely affect the Rights Issue or makes it inadvisable or inexpedient to proceed therewith; or
(b) there comes to the notice of the Underwriters any matter or event showing any of the warranties given by the Company under the Underwriting Agreement to be untrue or inaccurate in any material respect which in the reasonable opinion of the Underwriters is materially adverse in the context of the Rights Issue,

then and in any such case the Underwriters may jointly (after consultation with the Company) by notice in writing to the Company given at any time up to the Latest Time for Termination terminate (save as specified below) the Underwriting Agreement and thereupon all obligations of the Company and the Underwriters shall cease and determine, in which event the Company and the Underwriters shall thereupon forthwith give instructions to the Registrar to return all moneys received from subscribers for the Rights Shares and provided further that certain provisions of the Underwriting Agreement shall continue in full force and effect and all costs, charges and expenses which have been reasonably and properly incurred by the Underwriters in connection with the Rights Issue (excluding sub-underwriting fees, if any, and related expenses) shall still be borne and paid by the Company.

– 10 –

TERMINATION OF THE UNDERWRITING AGREEMENT

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

The Shares have been dealt in on an ex-rights basis from Wednesday, 13 August 2014. Dealings in the Rights Shares in nil-paid form are expected to take place from Thursday, 21 August 2014 to Monday, 1 September 2014 (both days inclusive). The Rights Issue is conditional upon the Underwriting Agreement becoming unconditional. If the conditions of the Rights Issue are not fulfilled or waived, including the termination of the Underwriting Agreement by the Underwriters, the Rights Issue will not proceed.

Any Shareholder or other person contemplating transferring, selling or purchasing the Shares and/or Rights Shares in their nil-paid form is advised to exercise caution when dealing in the Shares and/or Rights Shares. Any person who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional adviser(s). Any Shareholder or other person dealing in the Shares or in the nil-paid Rights Shares up to the date on which all the conditions to which the Rights Issue is subject are fulfilled (including the date on which the Underwriters’ right of termination of the Underwriting Agreement ceases) will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

– 11 –

LETTER FROM THE BOARD

China Gamma Group Limited 中國伽瑪集團有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

Executive Director: Registered Office: Mr. Wong King Shiu, Daniel Clarendon House 2 Church Street Non-executive Directors: Hamilton HM11 Mr. Ma Kwok Hung, Warren Bermuda Mr. Chow Siu Ngor Principal place of business in Hong Kong: Independent non-executive Directors: Suite 2602, 26/F. Mr. Wong Hoi Kuen Sino Plaza Mr. Chan Chi Yuen 255-257 Gloucester Road Mr. Hung Hing Man Causeway Bay Hong Kong 19 August 2014

To Qualifying Shareholders

Dear Sir or Madam,

RIGHTS ISSUE OF RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.068 PER RIGHTS SHARE ON THE BASIS OF 1 RIGHTS SHARE FOR EVERY 2 EXISTING SHARES HELD ON THE RECORD DATE

INTRODUCTION

The Board announced on 13 July 2014 that, among other things, the Company proposes to raise not less than approximately HK$149.5 million but not more than approximately HK$155.8 million before expenses by way of a rights issue, on the basis of 1 Rights Share for every 2 existing Shares held on the Record Date, at the Subscription Price of HK$0.068 per Rights Share. Qualifying Shareholders are entitled to apply for additional Rights Shares in excess of their respective entitlements under the Rights Issue through excess applications. The Rights Issue will not be available to the Non-Qualifying Shareholders.

– 12 –

LETTER FROM THE BOARD

The Rights Issue is subject to, among other things, the Underwriting Agreement becoming unconditional and not being terminated on the occurrence of certain events, details of which are set out in the section headed “Termination of the Underwriting Agreement” of this Prospectus.

The purpose of this Prospectus is to provide you with further information regarding the Rights Issue, including information on dealings in, transfer of and application for the Rights Shares, and financial information and other information of the Group.

RIGHTS ISSUE OVERVIEW

Issue statistics

Basis of the Rights Issue : One (1) Rights Share for every two (2) existing Shares held as at 5:00 p.m. on the Record Date Subscription Price : HK$0.068 per Rights Share Number of the existing Shares : 4,397,681,490 Shares in issue Number of Rights Shares : 2,198,840,745 Rights Shares Joint Underwriters : Enlighten Securities and Cepa Alliance Enlarged issued share capital : 6,596,522,235 Shares upon completion of the Rights Issue

Under the Rights Issue, the 2,198,840,745 nil-paid Rights Shares provisionally allotted represent 50% of the existing issued share capital of the Company and approximately 33.33% of the issued share capital of the Company as enlarged by the Rights Issue.

– 13 –

LETTER FROM THE BOARD

Subscription Price

The Subscription Price of HK$0.068 per Rights Share is payable in full by a Qualifying Shareholder upon acceptance of the provisional allotment of the Rights Shares under the Rights Issue or, where applicable, application for excess Rights Shares or when a renouncee of any provisional allotment of the Rights Shares or a transferee of nil-paid Rights Shares applies for the Rights Shares. The Subscription Price represents:

(a) a discount of approximately 59.76% to the closing price of HK$0.1690 per Share as quoted on the Stock Exchange on the Last Trading Day;
(b) a discount of approximately 59.48% to the average of the closing prices per Share as quoted on the Stock Exchange for the five previous consecutive trading days up to and including the Last Trading Day of HK$0.1678;
(c) a discount of approximately 58.18% to the average of the closing prices per Share as quoted on the Stock Exchange for the ten previous consecutive trading days up to and including the Last Trading Day of HK$0.1626;
(d) a discount of approximately 49.74% to the theoretical ex-rights price of approximately HK$0.1353 per Share based on the closing price of HK$0.1690 per Share as quoted on the Stock Exchange on the Last Trading Day;
(e) a premium of approximately 16 times to the audited consolidated net asset value attributable to the Shareholders as at 31 March 2014 of approximately HK$0.0042 per Share; and
(f) a discount of approximately 54.36% to the closing price of HK$ 0.1490 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

Each Rights Share has a par value of HK$0.01.

The Subscription Price was determined by the Directors with reference to the market price of the Shares prior to and including the Last Trading Day. Each Qualifying Shareholder is entitled to subscribe for the Rights Shares at the same Subscription Price in proportion to his/her/its shareholding held at 5:00 p.m. on the Record Date.

After taking into consideration the reasons for the Rights Issue as stated in the section headed “Reasons for the Rights Issue and Proposed Use of Proceeds”, the Directors consider the terms of the Rights Issue, including the Subscription Price (and the discounts to the relative values as indicated above), to be fair and reasonable and to be in the interests of the Company and the Shareholders as a whole.

– 14 –

LETTER FROM THE BOARD

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders and will not be available to the Non-Qualifying Shareholders. The Rights Issue Documents are being sent to the Qualifying Shareholders only.

Qualifying Shareholders who take up their pro-rata entitlements in full under the Rights Issue will not suffer any dilution to their shareholding interests in the Company. If a Qualifying Shareholder does not take up his/her/its entitlement under the Rights Issue in full, his/her/its proportionate shareholding in the Company will be diluted.

Basis of provisional allotment

One (1) Rights Share (in nil-paid form) for every two (2) existing Shares held by the Qualifying Shareholders as at 5:00 p.m. on the Record Date. Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by completing a PAL and lodging the same with a remittance for the Rights Shares being applied for.

Distribution of the Rights Issue Documents

The Company will only send this Prospectus accompanied by the other Rights Issue Documents to the Qualifying Shareholders. The Rights Issue Documents will not be sent to any Non-Qualifying Shareholder or any US Person.

Distribution of any of the Rights Issue Documents into jurisdictions other than Hong Kong may be restricted by law or regulation of any jurisdiction. Persons into whose possession the Rights Issue Documents come (including, without limitation, agents, custodians, nominees and trustees) should inform themselves of and observe any such restrictions. Any failure to comply with those restrictions may constitute a violation of the securities laws of any such jurisdiction. Any Shareholder or Beneficial Owner who is in any doubt as to his/her/its position should consult appropriate professional adviser(s) without delay. In particular, subject to certain exceptions as determined by the Company, this Prospectus should not be distributed, forwarded to or transmitted in, into or from the Specified Territory together with the PAL or the EAF.

– 15 –

LETTER FROM THE BOARD

Non- Qualifying Shareholders

As at 5:00 p.m. on the Record Date, according to the register of members of the Company, there were 8 Overseas Shareholders having registered addresses in 5 jurisdictions, namely Australia, Belgium, Canada, Taiwan and the United States . Pursuant to Rule 13.36(2)(a) of the Listing Rules, the Board has made enquiries regarding the legal restrictions under the applicable securities legislation of such jurisdictions and the requirements of the relevant regulatory body or stock exchange with respect to the offer of the Rights Shares to such Overseas Shareholders and is of the opinion that it would be necessary or expedient, on account of either the legal restrictions under the laws of the relevant jurisdiction or any requirement of the relevant regulatory body or stock exchange in those jurisdictions, not to offer the Rights Shares to the Overseas Shareholders of the Specified Territories . The Rights Issue will not be extended to the Non-Qualifying Shareholders and no Rights Shares will be provisionally allotted to them. The Rights Issue Documents will not be registered or filed under the applicable securities legislation of any jurisdiction other than Hong Kong.

Notwithstanding any other provision in this Prospectus or the PAL or the EAF, the Company reserves the right to permit any Shareholder to take up his/her/its entitlement to Rights Shares if the Company, in its absolute discretion, is satisfied that the transaction in question is exempt from or not subject to the legislation or regulations or requirements giving rise to the restrictions in question.

Receipt of any of the Rights Issue Documents or the crediting of nil-paid Rights Shares to a stock account in CCASS does not and will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus and/or a PAL and/ or an EAF must be treated as sent for information only and should not be copied or redistributed. Persons (including, without limitation, agents, custodians, nominees and trustees) who receive a copy of this Prospectus and/or a PAL and/or an EAF or whose stock account in CCASS is credited with nil-paid Rights Shares should not, in connection with the Rights Issue, distribute or send the same in, into or from, or transfer nil-paid Rights Shares to any person in, into or from, any of the Specified Territories. If a PAL or an EAF or a credit of nil-paid Rights Shares in CCASS is received by any person in any such jurisdiction, or by his/her/its agent or nominee, he/she/it should not seek to take up the rights referred to in the PAL or transfer the PAL (or apply for any excess Rights Shares under the EAF) or transfer the nil-paid Rights Shares in CCASS unless the Company determines that such actions would not violate applicable legal or regulatory requirements. Any person (including, without limitation, agents, custodians, nominees and trustees) who does forward this Prospectus or a PAL or an EAF in, into or from any of the Specified Territories (whether under a contractual or legal obligation or otherwise) should draw the recipient’s attention to the contents of this section.

– 16 –

LETTER FROM THE BOARD

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 nilpaid form as soon as practicable after dealings in the nil-paid Rights Shares commence on the Stock Exchange but before the last date for dealings in nil-paid Rights Shares, if a premium (net of expenses) can be obtained. The proceeds of each sale, less expenses and stamp duty, of more than HK$100 will be paid by the Company to the relevant Non-Qualifying Shareholder(s) pro rata to their shareholdings in the Company at 5:00 p.m. on the Record Date in Hong Kong dollars. The Company will retain individual amounts of HK$100 or less for the benefit of the Company. Any unsold entitlements of the Non-Qualifying Shareholders will, as referred to above in this Prospectus, be made available to meet excess applications on EAFs by the Qualifying Shareholders.

The arrangements described in the above paragraph will not apply to any Non-Qualifying Shareholder who is a Shareholder or Beneficial Owner residing in any of the Specified Territories but (in the case of a Shareholder) whose address, or (in the case of a Beneficial Owner) who holds his/her/its interest in Shares through a Registered Owner whose address, was shown in the register of members of the Company at 5:00 p.m. on the Record Date as not being in any of the Specified Territories. Such Shareholders and Beneficial Owners are referred to herein as “Non-Qualifying Beneficial Owners” and may include such Beneficial Owners holding interests in Shares through CCASS (which Shares are registered in the register of members of the Company in the name of HKSCC Nominees Limited, a company incorporated in Hong Kong). The Company is unable to extend the arrangements for Non-Qualifying Shareholders to such Non-Qualifying Beneficial Owners because the Company does not have the necessary information in relation to such NonQualifying Beneficial Owners to make a unilateral determination as to whether those Beneficial Owners are Qualifying Shareholders or Non-Qualifying Shareholders for the purposes of the Rights Issue.

Accordingly, the nil-paid Rights Shares which would otherwise have been available to be taken up by those Non-Qualifying Beneficial Owners will not be sold in the market and the relevant Non-Qualifying Beneficial Owners will not receive the proceeds of any such sale. All Non-Qualifying Beneficial Owners are advised to seek their own legal advice as to whether or not they may be permitted, having regard to their own particular circumstances (including the laws and regulations of the relevant jurisdiction in which they are resident), to sell their nil-paid Rights Shares in the market. Any such nil-paid Rights Shares which are not sold in the market by Non-Qualifying Beneficial Owners will be made available for excess applications on EAFs by Qualifying Shareholders.

– 17 –

LETTER FROM THE BOARD

With respect to Non-Qualifying Shareholders who hold interests in Shares through CCASS, their nominees, custodians or other Intermediaries may sell, on such Non-Qualifying Shareholders’ behalf, their entitlements to the nil-paid Rights Shares in compliance with applicable securities laws and distribute the proceeds thereof as appropriate.

The Company reserves the right to treat as invalid any acceptance of or application for the nil-paid 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 who are residing outside Hong Kong should exercise caution when dealing in the Shares and/or the nil-paid Rights Shares.

Procedures for acceptance, application or transfer

General

Any person (including, without limitation, any agent, custodian, nominee and trustee outside Hong Kong) wishing to take up the Rights Shares (in nil-paid or fully-paid form) under the Rights Issue must satisfy himself/herself/itself as to full observance of the applicable laws of any relevant territory including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories. The attention of Shareholders whose registered addresses are in any of the Specified Territories or who are holding Shares on behalf of persons with such addresses is drawn to the paragraphs headed “Non-Qualifying Shareholders” above.

Each subscriber of Rights Shares will be deemed (by accepting delivery of this Prospectus) to have given each of the following representations and warranties to the Company and the Underwriters and to any person acting on their behalf, unless the Company and the Underwriters waive such requirement in their respective sole discretion in relation to the relevant representation(s) and/or warranty(ies) given to each of them:

he/she/it was a Shareholder as at the Record Date, or he/she/it lawfully acquired or may lawfully acquire rights, directly or indirectly, from such a person;
he/she/it may lawfully be offered, take up, exercise, obtain, subscribe for and receive the rights and/or the Rights Shares in the jurisdiction in which he/she/it resides or is currently located;
subject to certain exceptions, he/she/it is not resident or located in, or a citizen of, the United States;

– 18 –

LETTER FROM THE BOARD

subject to certain exceptions, he/she/it is not accepting an offer to acquire, take up or exercise rights or Rights Shares on a non-discretionary basis for a person who is resident or located in, or a citizen of the United States at the time the instruction to accept was given;
he/she/it is not doing so for the account of any person who is located in the United States, unless:
a. the instruction to purchase or take up the rights or to subscribe for or accept Rights Shares was received from a person outside the United States; and
b. the person giving such instruction has confirmed that it (i) has the authority to give such instruction and (ii) either (A) has investment discretion over such account; or (B) is an investment manager or investment company that is acquiring the Rights Shares in an “offshore transaction” within the meaning of Regulation S under the US Securities Act;
he/she/it is acquiring the rights and/or the Rights Shares in an “offshore transaction” as defined in Regulation S under the US Securities Act;
he/she/it has not been offered the Rights Shares by means of any “directed selling efforts” as defined in Regulation S under the US Securities Act;
he/she/it is not acquiring rights or Rights Shares with a view to the offer, sale, transfer, delivery or distribution, directly or indirectly, of such rights or Rights Shares into the United States; and
he/she/it understands that neither the rights nor the Rights Shares have been or will be registered under the US Securities Act or with any securities regulatory authority of any state, territory, or possession of the United States and the rights or Rights Shares are being distributed and offered outside the United States in reliance on Regulation S under the US Securities Act. Consequently he/she/it understands the rights or Rights Shares may not be offered, sold, pledged or otherwise transferred in or into the United States, except in reliance on an exemption from, or in transactions not subject to, the registration requirements of the US Securities Act.

For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the above representations and warranties.

– 19 –

LETTER FROM THE BOARD

Action to be taken by registered Shareholders

Subscription for all Rights Shares provisionally allotted

For each Qualifying Shareholder, a PAL is enclosed with this Prospectus which entitles such Qualifying Shareholder to subscribe for the number of the Rights Shares shown thereon. If Qualifying Shareholder(s) wish(es) to exercise his/her/their right to subscribe for all the Rights Shares provisionally allotted to him/her/them as specified in the PAL, he/she/they must lodge the PAL in accordance with the instructions printed thereon, together with a remittance for the full amount payable on acceptance, with the Registrar by not later than 4:00 p.m. on the Latest Acceptance Date. All remittances must be made in Hong Kong dollars and cheques must be drawn on an account with, and cashier’s orders must be issued by, a licensed bank in Hong Kong and made payable to “ China Gamma Group Limited – PAL Account ” and crossed “ Account Payee Only ”. Such payment will constitute acceptance of the terms of the PAL and the Prospectus and subject to the memorandum of association and the bye-laws of the Company. No receipt will be issued for sums received on application. Share certificate(s) for any Rights Share in respect of which the application is accepted will be sent to the Qualifying Shareholders, and in the case of joint Qualifying Shareholders, to the first named Qualifying Shareholder, by ordinary post at their own risk at the address stated overleaf on or before Thursday, 11 September 2014.

It should be noted that unless the PAL, together with the appropriate remittance, has been lodged with the Registrar by 4:00 p.m. on the Latest Acceptance Date, whether by the original allottee or any person in whose favour the rights have been validly transferred, that provisional allotment and all rights thereunder will be deemed to have been declined and will be cancelled and such Rights Shares will be available for application under the EAFs by the Qualifying Shareholders. The Company may, at its discretion, treat a PAL as valid and binding on the person(s) by whom or on whose behalf it is lodged even if not completed in accordance with the relevant instructions.

All cheques and cashier’s orders will be presented for payment following receipt and all interest earned on such monies will be retained for the benefit of the Company. Completion and return of the PAL will constitute a warranty and representation to the Company that all registration, legal and regulatory requirements of all relevant jurisdictions in connection with the PAL and any acceptance of it have been, or will be, duly complied with. Any PAL in respect of which the accompanying cheque or cashier’s order is dishonoured on first presentation is liable to be rejected, and in that event the provisional allotment and all rights thereunder will be deemed to have been declined and will be cancelled. If the Underwriters exercise their rights to terminate the Underwriting Agreement before the Latest Termination Time and/or if any of the conditions mentioned in the section headed “Conditions to the Rights Issue and the Underwriting Agreement” is not fulfilled and/or waived (as the case may be), the monies received in respect of the relevant provisional allotments will be returned to the relevant persons without interest by means of cheques despatched by ordinary post at the risk of such persons as soon as practicable thereafter.

– 20 –

LETTER FROM THE BOARD

The Company reserves the right to refuse to accept any application for Rights Shares where it believes that doing so would violate the applicable securities or other laws or regulations of any jurisdiction.

Transfers and “splitting” of nil-paid Rights Shares

The nil-paid Rights Shares can be traded on the Stock Exchange. A Qualifying Shareholder can accept all of his/her/its provisional allotment of Rights Shares, or sell all of his/her/its provisional allotment on the Stock Exchange or accept only part of his/her/its provisional allotment and sell the remaining part on the Stock Exchange.

If a Qualifying Shareholder wishes to accept only part of his/her/its provisional allotment or transfer a part of his/her/its rights to subscribe for the Rights Shares provisionally allotted to him/ her/it under the PAL or to transfer his/her/its rights to more than one person, the original PAL must be surrendered and lodged for cancellation together with a covering letter stating clearly the number of split PALs required and the number of nil-paid Rights Shares to be comprised in each split PAL (which, in aggregate, should be equal to the number of Rights Shares provisionally allotted to such holder as stated in Box B of the original PAL), by no later than 4:30 p.m. on Wednesday, 27 August 2014 to the Registrar, who will then cancel the original PAL and issue new PALs in the denominations required, which will be available for collection at the Registrar after 9:00 a.m. on the second business day after the surrender of the original PAL . This process is commonly known as “splitting” the nil-paid Rights Shares.

Having “split” the nil-paid Rights Shares, a Qualifying Shareholder who wishes to accept the provisional allotment of Rights Shares represented by a new PAL should do so in accordance with the instructions given above in relation to the subscription for all the Rights Shares provisionally allotted.

If a Qualifying Shareholder wishes to transfer all of his/her/its nil-paid Rights Shares under a PAL (or a split PAL, as the case may be) to another person, he/she/it should complete and sign Form B in the PAL and hand the PAL to the person to or through whom he/she/it is transferring his/ her/its nil-paid Rights Shares. The transferee must then complete and sign Form C in the PAL and lodge the PAL intact together with a remittance for the full amount payable on acceptance with the Registrar to effect the transfer by no later than 4:00 p.m. on the Latest Acceptance Date. It should be noted that Hong Kong stamp duty is payable in connection with the transfer of your rights to subscribe for the relevant Rights Shares and the transferee(s) of such rights.

The Company reserves the right to refuse to register any transfer in favour of any person in respect of which the Company believes such transfer may violate applicable legal or regulatory requirements.

– 21 –

LETTER FROM THE BOARD

Important notice and representations and warranties relating to registered Shareholders in any of the Specified Territories

Any registered Shareholder accepting and/or transferring a PAL or requesting registration of the Rights Shares comprised therein represents and warrants to the Company that, except where proof has been provided to the satisfaction of the Company that such person’s use of the PAL will not result in the contravention of any applicable legal or regulatory requirements in any jurisdiction: (i) such person is not accepting and/or transferring the PAL, or requesting registration of the relevant nil-paid Rights Shares or the fully-paid Rights Shares from within any of the Specified Territories; (ii) such person is not in any of the Specified Territories or in any territory in which it may otherwise violate any applicable legal or regulatory requirements to make or accept an offer to acquire the Rights Shares or to use the PAL in any manner in which such person has used or will use it; (iii) such person is not acting on a non-discretionary basis for a person resident in any of the Specified Territories at the time the instruction to accept or transfer was given; and (iv) such person is not acquiring the Rights Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any of the Rights Shares into any of the Specified Territories. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited is subject to any of the above representations and warranties.

The Company may treat as invalid any acceptance or purported acceptance of the allotment of Rights Shares comprised in, or transfer or purported transfer of, a PAL if it: (a) appears to the Company to have been executed in, or despatched from, any of the Specified Territories and the acceptance may involve a breach of the laws of the relevant places or Specified Territories, or the acceptance is otherwise in a manner which may involve a breach of the laws or other regulatory requirements of any jurisdiction, or if it or its agents believe the same may violate any applicable legal or regulatory requirements; (b) provides an address in any of the Specified Territories for delivery of definitive share certificates for Rights Shares or provides an address for delivery of definitive share certificates in any other jurisdiction outside Hong Kong in which it would violate any applicable legal or regulatory requirements to deliver such certificates; or (c) purports to exclude the representation and/or warranty required by the paragraph immediately above.

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LETTER FROM THE BOARD

Action to be taken by Beneficial Owners whose Shares are held by a Registered Owner (other than Shares deposited in CCASS)

Subscription for Rights Shares provisionally allotted and transfers and “splitting” of nil-paid Rights Shares

If you are a Beneficial Owner whose Shares are registered in the name of a Registered Owner and you wish to subscribe for the Rights Shares provisionally allotted to you, or sell your nil-paid Rights Shares or “split” your nil-paid Rights Shares and accept part of your provisional allotment and sell the remaining part, you should contact the Registered Owner and provide the Registered Owner with instructions or make arrangements with the Registered Owner in relation to the acceptance, transfer and/or “splitting” of the rights to subscribe for Rights Shares which have been provisionally allotted in respect of the Shares in which you are beneficially interested.

Important notice and representations and warranties relating to Beneficial Owners in any of the Specified Territories whose Shares are held by a Registered Owner (other than CCASS)

Any Beneficial Owner accepting and/or transferring a PAL or requesting registration of the Rights Shares comprised therein represents and warrants to the Company that, except where proof has been provided to the satisfaction of the Company that such person’s use of the PAL will not result in the contravention of any applicable legal or regulatory requirements in any jurisdiction: (i) such person is not accepting and/or renouncing the PAL, or requesting registration of the relevant nil-paid Rights Shares or the fully-paid Rights Shares from within any of the Specified Territories; (ii) such person is not in any of the Specified Territories or in any territory in which it may otherwise violate any applicable legal or regulatory requirements to make or accept an offer to acquire the Rights Shares or to use the PAL in any manner in which such person has used or will use it; (iii) such person is not acting on a non-discretionary basis for a person resident in any of the Specified Territories at the time the instruction to accept or transfer was given; and (iv) such person is not acquiring the Rights Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any of the Rights Shares into any of the Specified Territories.

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LETTER FROM THE BOARD

The Company may treat as invalid any acceptance or purported acceptance of the allotment of Rights Shares comprised in, or transfer or purported transfer of, a PAL if it: (a) appears to the Company to have been executed in, or despatched from, any of the Specified Territories and the acceptance may involve a breach of the laws or other regulatory requirements of the relevant places, or the acceptance is otherwise in a manner which may involve a breach of the laws or other regulatory requirements of any jurisdiction, or if it or its agents believe the same may violate any applicable legal or regulatory requirements; (b) provides an address in any of the Specified Territories for delivery of definitive share certificates for Rights Shares or provides an address for delivery of definitive share certificates in any other jurisdiction outside Hong Kong in which it would violate any applicable legal or regulatory requirements to deliver such certificates; or (c) purports to exclude the representation and/or warranty required by the paragraph immediately above.

Action to be taken by Beneficial Owners holding interests in Shares through CCASS

Subscription for Rights Shares provisionally allotted and transfers and “splitting” of nil-paid Rights Shares

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered in the name of HKSCC Nominees Limited, and you wish to subscribe for the Rights Shares provisionally allotted to you, or sell your nil-paid Rights Shares or “split” your nil-paid Rights Shares and accept part of your provisional allotment and sell the remaining part, you should (unless you are a CCASS Investor Participant) contact your Intermediary and provide your Intermediary with instructions or make arrangements with your Intermediary in relation to the acceptance, transfer and/or “splitting” of the rights to subscribe for Rights Shares which have been provisionally allotted in respect of the Shares in which you are beneficially interested.

Such instructions and/or arrangements should be given or made in advance of the relevant dates stated in the “Expected Timetable” in this Prospectus and otherwise in accordance with the requirements of your Intermediary in order to allow your Intermediary sufficient time to ensure that your instructions are given effect. The procedure for acceptance, transfer and/or “splitting” by CCASS Participants of the Rights Shares provisionally allotted to CCASS stock accounts in respect of the Shares registered in the name of HKSCC Nominees Limited shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS.

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LETTER FROM THE BOARD

The procedures for acceptance, transfer and/or “splitting” of Rights Shares provisionally allotted to Beneficial Owners who have been admitted to participate in CCASS as CCASS Investor Participants shall be in accordance with “Operating Guide for Investor Participants” and any other requirements of CCASS. Beneficial Owners who have been admitted to participate in CCASS as CCASS Investor Participants should contact CCASS and provide CCASS with instructions or make arrangements with CCASS in relation to the manner in which such Beneficial Owners’ interests in Rights Shares should be dealt with.

Important notice and representations and warranties relating to Beneficial Owners in any of the Specified Territories holding interests in Shares through CCASS

Any Beneficial Owner holding interests in Shares through CCASS and any CCASS Participant who instructs its Intermediary to make an acceptance and/or transfer in accordance with the procedures set out above represents and warrants to the Company that, except where proof has been provided to the satisfaction of the Company that such person’s acceptance will not result in the contravention of any applicable legal or regulatory requirements in any jurisdiction: (i) such person is not accepting and/or renouncing the PAL, or requesting registration of the nil-paid Rights Shares or the fully-paid Rights Shares from within any of the Specified Territories, (ii) such person is not in any of the Specified Territories or in any territory in which it may otherwise violate any applicable legal or regulatory requirements to make or accept an offer to acquire Rights Shares; (iii) such person is not acting on a non-discretionary basis for a person located within any of the Specified Territories at the time the instruction to accept or transfer was given; and (iv) such person is not acquiring Rights Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Rights Shares into any of the Specified Territories. For the avoidance of doubt, HKSCC Nominees Limited, who subscribes for the Rights Shares on behalf of CCASS Participants, is not subject to the above representations and warranties.

The Company may treat as invalid any instruction which appears to the Company to have been despatched from any of the Specified Territories and which may involve a breach of the laws or other regulatory requirements of the relevant places or any instruction which otherwise appears to the Company may involve a breach of the laws or other regulatory requirements of any jurisdiction; or if the Company or its agents believes the same may violate any applicable legal or regulatory requirements; or which purports to exclude the representation and/or warranty required by the paragraph immediately above.

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LETTER FROM THE BOARD

Application for excess Rights Shares

Qualifying Shareholders may apply, by way of excess application, for any unsold entitlements to the Rights Shares of the Non-Qualifying Shareholders had they been Qualifying Shareholders, any unsold Rights Shares created by adding together fractions of the Rights Shares and any nil-paid Rights Shares provisionally allotted but not accepted by the Qualifying Shareholders or otherwise subscribed for by renouncees or transferees of nil-paid Rights Shares. If a Qualifying Shareholder wishes to apply for excess Rights Shares in addition to his provisional allotment, he must complete and sign an EAF (in accordance with the instructions printed therein) and lodge the same with a separate remittance for the excess Rights Shares being applied for, with the Registrar, by no later than 4:00 p.m. on Thursday, 4 September 2014. All remittances must be made in Hong Kong dollars. Cheques must be drawn on an account with, and cashier’s orders must be issued by, a licensed bank in Hong Kong and made payable to “ China Gamma Group Limited – EAF Account ” and crossed “ Account Payee Only ”. The Company may at its discretion treat an EAF as valid and binding on the person(s) by himself/herself/itself/themselves or on whose behalf it is lodged even if not completed in accordance with the relevant instructions. The Registrar will notify the Qualifying Shareholders of any allotment of the excess Rights Shares made to them.

Application for excess Rights Shares can be made only by Qualifying Shareholders and only by completing an EAF (in accordance with the instructions printed therein) and lodging the same with a separate remittance for the excess Rights Shares being applied for. The Board will allocate the excess Rights Shares at its discretion on a fair and equitable basis and as far as practicable on the following principles:

(1) subject to the availability of excess Rights Shares, preference will be given to applications for topping-up odd-lot holdings to whole-lot holdings where it appears to the Directors that such applications are not made with the intention to abuse such mechanism; and
(2) subject to the availability of excess Rights Shares after allocation under principle (1) above, the excess Rights Shares will be allocated to the Qualifying Shareholders based on a sliding scale with reference to the number of the excess Rights Shares applied for by them (i.e. the Qualifying Shareholders applying for a smaller number of Rights Shares will be allocated a higher percentage of the excess Rights Shares they have applied for; whereas the Qualifying Shareholders applying for a larger number of Rights Shares will be allocated a lower percentage of the excess Rights Shares they have applied for (although they will receive a greater number of Rights Shares than those applying for a smaller number)).

The Directors consider the above basis for allocation to be fair and reasonable.

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LETTER FROM THE BOARD

There are no restrictions affecting the remittance of profits or repatriation of capital into Hong Kong from outside Hong Kong.

Important notice and representations and warranties relating to registered Shareholders in any of the Specified Territories

What is set out under the heading “Important notice and representations and warranties relating to registered Shareholders in any of the Specified Territories” on page 22 in the paragraph headed “Procedures for acceptance, application or transfer” of the nil-paid Rights Shares and fullypaid Rights Shares also applies to applications for excess Rights Shares, with appropriate changes to reflect that the context is an application for excess Rights Shares.

Action to be taken by Beneficial Owners whose Shares are held by a Registered Owner (other than Shares deposited in CCASS) who wish to apply for excess Rights Shares

Excess Rights Shares application procedures

If you are a Beneficial Owner whose Shares are registered in the name of a Registered Owner and you wish to apply for excess Rights Shares, you should contact the Registered Owner and provide the Registered Owner with instructions or make arrangements with the Registered Owner in relation to such application. Such instructions and/or arrangements should be given or made in advance of the latest time for application and payment for excess Rights Shares stated in the “Expected Timetable” in this Prospectus and otherwise in accordance with the requirements of the Registered Owner, in order to allow the Registered Owner sufficient time to ensure that your instructions are given effect.

Important notice and representations and warranties relating to Beneficial Owners in any of the Specified Territories whose Shares are held by a Registered Owner (other than CCASS)

What is set out under the heading “Important notice and representations and warranties relating to Beneficial Owners in any of the Specified Territories whose Shares are held by a Registered Owner (other than CCASS)” on pages 23 to 24 in the paragraph headed “Procedures for acceptance, application or transfer” of the nil-paid Rights Shares and fully-paid Rights Shares also applies to applications for excess Rights Shares, with appropriate changes to reflect that the context is an application for excess Rights Shares.

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LETTER FROM THE BOARD

Action to be taken by Beneficial Owners holding interest in Shares through CCASS who wish to apply for excess Rights Shares

Excess Rights Shares application procedures

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered in the name of HKSCC Nominees Limited, and you wish to apply for excess Rights Shares, you should (unless you are a CCASS Investor Participant) contact your Intermediary and provide your Intermediary with instructions or make arrangements with your Intermediary in relation to the application for excess Rights Shares. Such instructions and/or arrangements should be given or made in advance of the date stated in the “Expected Timetable” in this Prospectus as the latest time for application and payment for excess Rights Shares and otherwise in accordance with the requirements of your Intermediary, in order to allow your Intermediary sufficient time to ensure that your instructions are given effect. The procedure for application for excess Rights Shares shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS.

The procedures for application for excess Rights Shares by Beneficial Owners who have been admitted to participate in CCASS as CCASS Investor Participants shall be in accordance with the “Operating Guide for Investor Participants” and any other requirements of CCASS. Beneficial Owners who have been admitted to participate in CCASS as CCASS Investor Participants should contact CCASS to provide CCASS with instructions or make arrangements with CCASS in relation to any applications for excess Rights Shares.

Important notice and representations and warranties relating to Beneficial Owners in any of the Specified Territories holding interests in Shares through CCASS

What is set out under the heading “Important notice and representations and warranties relating to Beneficial Owners in any of the Specified Territories holding interests in Shares through CCASS” on page 25 above in the paragraph headed “Procedures for acceptance, application or transfer” of the nil-paid Rights Shares and the fully-paid Rights Shares also applies to applications for excess Rights Shares, with appropriate changes to reflect that the context is an application for excess Rights Shares.

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LETTER FROM THE BOARD

Important notice for Beneficial Owners

Beneficial Owners with their Shares held by a Registered Owner, or which are held in CCASS, should note that the Board will regard the Registered Owner (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Accordingly, the Shareholders should note that the aforesaid arrangement for the allocation of the excess Rights Shares will not be extended to the Beneficial Owners individually (including those Beneficial Owners holding the Shares through HKSCC Nominees Limited). HKSCC Nominees Limited will allocate the excess Rights Shares it receives to the relevant CCASS Participants prorata to the number of excess Rights Shares each has applied for, or in such other manner as HKSCC considers fair and appropriate, which is pursuant to the allocation basis as stipulated in Rule 8.10.4(ix) of the CCASS Operational Procedures.

If no excess Rights Shares are allotted to the Qualifying Shareholder who has applied for excess Rights Shares, it is expected that a cheque for the amount tendered on application in full without interest will be despatched to his/her/its registered address by ordinary post at his/her/ its own risk on or before Thursday, 11 September 2014. If the number of excess Rights Shares allotted to the Qualifying Shareholder is less than that applied for, it is expected that a cheque for the amount of the surplus application monies, without interest, will be despatched to his/her/ its registered address by ordinary post at his/her/its own risk on or before Thursday, 11 September 2014.

All cheques and cashier’s orders will be presented for payment immediately following receipt and all interest earned on such monies (if any) will be retained for the benefit of the Company. Completion and return of an EAF will constitute a warranty and representation to the Company that all registration, legal and regulatory requirements of all relevant jurisdictions in connection with EAF and any acceptance of it, have been, or will be, duly complied with. Completion and return of an EAF together with a cheque or cashier’s order in payment for the excess Rights Shares applied for will constitute a warranty by the applicant that the cheque or the cashier’s order will be honoured on first presentation. If any cheque or cashier’s order accompanying a completed EAF is dishonoured on first presentation, without prejudice to the other rights of the Company, such EAF is liable to be rejected.

An EAF is for use only by the person(s) to whom it is addressed and is not transferable. All documents, including cheques or cashier’s orders for the amount due, will be despatched by ordinary post at the risk of the persons entitled thereto to their respective registered addresses as shown in the register of members of the Company on the Record Date.

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LETTER FROM THE BOARD

If the Underwriting Agreement is terminated and/or if any of the conditions in the section headed “Conditions to the Rights Issue and the Underwriting Agreement” is not fulfilled and/or waived (as the case may be), the monies received in respect of applications for excess Rights Shares will be returned to the applicants, or in case of joint applicants, to the first-named person, without interest by means of cheques despatched by ordinary post to their respective addresses at their own risk as soon as practicable thereafter.

Fractions of the Rights Shares

The Company will not provisionally allot and will not accept application for any fraction of the Rights Shares. No odd-lot matching services will be provided. All fractions of the Rights Shares will be aggregated (rounded down to the nearest whole number). All nil-paid Rights Shares arising from such aggregation will be provisionally allotted (in nil-paid form) to Enlighten Securities (or if so selected by the Company, a nominee of the Company), and Enlighten Securities (or if so selected by the Company, a nominee of the Company) shall use its reasonable endeavours to sell the nilpaid Rights Shares on the Stock Exchange and the proceeds will be retained by the Company for its own benefit, if a premium (net of expenses) can be obtained. Any unsold Rights Shares arising from such aggregation will be made available for excess application by the Qualifying Shareholders.

Status of the Rights Shares

The Rights Shares (when allotted, issued and fully paid) will rank pari passu in all respects with the existing Shares in issue. Holders of fully-paid Rights Shares will be entitled to receive all future dividends and distributions which may be declared, made or paid with a record date falling after the date of allotment and issue of the Rights Shares in their fully-paid form.

Certificates for the Rights Shares and refund cheques

Subject to the fulfilment of the conditions of the Rights Issue as set out below, certificates for all fully-paid Rights Shares are expected to be sent by ordinary post on Thursday, 11 September 2014 to those persons who have validly accepted and, where applicable, applied for, and paid for the Rights Shares, at their own risk.

Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be sent by ordinary post on or before Thursday, 11 September 2014 to the applicants at their own risk.

The first day of dealing in the Rights Shares in their fully-paid form is expected to commence on Friday, 12 September 2014.

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LETTER FROM THE BOARD

Application for listing

As at the Latest Practicable Date, an application had been made to the Listing Committee for the listing of, and permission to deal in, the Rights Shares in both nil-paid and fully-paid forms. Nil-paid Rights Shares are expected to be traded in board lots of 25,000 (as the Shares are currently traded on the Stock Exchange in board lots of 25,000). No part of the Shares is listed or dealt in, or for which listing or permission to deal is being or is proposed to be sought, on any other stock exchange. Dealings in the Rights Shares in their nil-paid form will commence on Thursday, 21 August 2014 and will end on Monday, 1 September 2014 (both days inclusive).

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

Rights Shares will be eligible for admission into CCASS

Subject to the granting of listing of, and permission to deal in, the Rights Shares in both nilpaid and fully-paid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both 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 on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter.

All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Shareholders should consult their stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser(s) for details of those settlement arrangements and how such arrangements will affect their rights and interests.

Taxation

Shareholders are advised to consult their professional advisers if they are in any doubt as to the taxation implications of the receipt, purchase, holding, exercising, disposing of or dealing in, the nil-paid Rights Shares or the Rights Shares, and regarding the Non-Qualifying Shareholders, their receipt of the net proceeds, if any, from sales of the nil-paid Rights Shares on their behalf.

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LETTER FROM THE BOARD

UNDERWRITING AGREEMENT

Underwriting Agreement

Date:

11 July 2014

Underwriters:

(1) Enlighten Securities and (2) Cepa Alliance

Number of Rights Shares:

2,198,840,745 Rights Shares (assuming no new Shares are issued (other than the Rights Shares) and no repurchase of Shares on or before the Record Date); and 2,291,340,745 Rights Shares (assuming new Shares are issued on or before the Record Date pursuant to the full exercise of all outstanding Share Options, but otherwise no other Shares (other than the Rights Shares) are issued and no repurchase of Shares on or before the Record Date)

Number of
Underwritten Shares:

all the Rights Shares to be issued by the Company pursuant to the Rights Issue, other than those taken up by the IU Shareholders, underwritten by the Underwriters pursuant to the terms of the Underwriting Agreement

Respective Underwriting Commitment of the Underwriters:
Enlighten Securities has the obligation to subscribe or procure subscribers for 70% of all the Underwritten Shares not taken up and Cepa Alliance has the obligation to subscribe or procure subscribers for 30% of all the Underwritten Shares not taken up

Commission:

1% of the aggregate Subscription Price of the total Underwritten Shares according to the respective underwriting commitment of the Underwriters, which amounts to not less than approximately HK$979,000 but not more than approximately HK$1,042,000 in total

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, each of the Underwriters and their respective ultimate holding companies are Independent Third Parties.

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LETTER FROM THE BOARD

Subject to the fulfilment of the conditions (or any waiver, as the case may be, by the Underwriters) contained in the Underwriting Agreement and provided that the Underwriting Agreement is not terminated prior to the Latest Time for Termination in accordance with the terms thereof, the Underwriters have agreed to subscribe or procure the subscription for all Underwritten Shares that are not taken up by the Qualifying Shareholders according to their respective underwriting commitment.

The Board considers that the Underwriting Agreement is on normal commercial terms and is fair and reasonable so far as the Shareholders are concerned.

Conditions to the Rights Issue and the Underwriting Agreement

The Rights Issue is conditional upon (i) the Underwriting Agreement becoming unconditional and not being terminated in accordance with its terms; and (ii) permission to deal in and listing of all the Rights Shares (in their nil-paid and fully-paid forms) being granted by the Stock Exchange and not being withdrawn or revoked.

The obligations of the Underwriters to subscribe or procure subscribers for the Underwritten Shares pursuant to the Underwriting Agreement are conditional upon the happening of the following events by no later than the dates and times (where relevant) specified below respectively (or, in each case, such later date or time as the Underwriters may agree with the Company in writing):

(a) the issue and publication of the Announcement within two Business Days of the date of the Underwriting Agreement;
(b) if required, the Bermuda Monetary Authority having given, in form satisfactory to the Company, all necessary consents, approvals and authorisations in connection with the Rights Shares and the Rights Issue including, without limitation, the increase in the authorised share capital of the Company (if required) and the issue and free transferability of the Rights Shares in accordance with their terms;
(c) the posting on or before the Posting Date of the Rights Issue Documents to the Qualifying Shareholders;
(d) on or before the Latest Acceptance Date, the Listing Committee granting or agreeing in principle to grant (subject to allotment), and not having revoked the grant of, listing of and permission to deal in the Rights Shares in both nil-paid and fully-paid forms; and

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LETTER FROM THE BOARD

(e) on or before the Latest Acceptance Date, the IU Shareholders or their respective associates or nominees (including the relevant CCASS participant(s), if applicable) having taken up and paid for the Rights Shares provisionally allotted to them in respect of the IU Shares, by way of accepting the provisional allotments of such Rights Shares, accompanied by cheque or other remittances for the respective amounts payable on acceptance.

If the conditions set out above are not fulfilled (or waived in whole or in part by the Underwriters) by the relevant dates and times specified therein (or, in each case, such later date or time as the Underwriters may agree with the Company in writing), then all liabilities of the parties to the Underwriting Agreement will cease and determine and no party will have any claim against the others (except in respect of any antecedent breaches), save that certain provisions of the Underwriting Agreement shall continue in full force and effect and save that all out-ofpocket expenses (excluding sub-underwriting fees, if any, and related expenses) as may have been reasonably and properly incurred by the Underwriters in connection with the proposed Rights Issue shall be borne by the Company and paid, or, where appropriate, reimbursed, to the Underwriters, within seven (7) Business Days, on demand.

As at the Latest Practicable Date, condition (a) above has been fulfilled. Condition (b) above is not applicable, as no approvals are required from the Bermuda Monetary Authority, as advised by the Company’s Bermuda counsel.

If the Underwriting Agreement does not become unconditional or is terminated in accordance with its terms, the Rights Issue will not proceed.

Termination of the Underwriting Agreement

If at or prior to the Latest Time for Termination:

(a) there develops, occurs or comes into force:
(i) the introduction of any new law or any change in existing laws which in the reasonable opinion of the Underwriters have or is likely to have a Material Adverse Effect; or
(ii) any material change in international economic, financial, political or military conditions which in the reasonable opinion of the Underwriters is or may have a Material Adverse Effect; or

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LETTER FROM THE BOARD

(iii) any material change in international stock market conditions (including any moratorium, suspension of or material restriction on trading in securities generally but excluding any trading halt or suspension of trading in respect of the Shares or the Company) which in the reasonable opinion of the Underwriters would materially and adversely affect the Rights Issue or makes it inadvisable or inexpedient to proceed therewith; or
(b) there comes to the notice of the Underwriters any matter or event showing any of the warranties given by the Company under the Underwriting Agreement to be untrue or inaccurate in any material respect which in the reasonable opinion of the Underwriters is materially adverse in the context of the Rights Issue,

IRREVOCABLE UNDERTAKINGS TO SUBSCRIBE FOR RIGHTS SHARES

As at the date of the Underwriting Agreement, the IU Shareholders hold an aggregate of 1,518,147,585 Shares, representing approximately 34.52% of the existing issued share capital of the Company.

VC Irrevocable Undertaking

VC, Mega Market and Kingly Profits have jointly and severally, irrevocably and unconditionally represented, warranted and undertaken under the VC Irrevocable Undertaking to and with the Company and the Underwriters, that:

(a) each of VC, Mega Market and Kingly Profits owns beneficially, at the time of execution of the VC Irrevocable Undertaking, and will on the Record Date own beneficially 157,550,000, 665,097,585 and 95,500,000 Shares (collectively “VC IU Shares”), respectively;

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LETTER FROM THE BOARD

(b) each of them shall not, and shall procure that its/his associates or nominees (including the CCASS participant(s) holding any VC IU Shares on its/his behalf) shall not, within the period commencing on the date of the VC Irrevocable Undertaking and ending on the Settlement Date transfer or otherwise dispose of or create any rights in respect of any of the VC IU Shares or dispose of, directly or indirectly, any interest in any company which is beneficially interested in any of the VC IU Shares; and
(c) subject to the Company despatching the Rights Issue Documents to the Qualifying Shareholders, each of them shall take up and pay for or shall procure that there are taken up and paid for by its/his associates or nominees (including the CCASS participant(s) holding any VC IU Shares on its/his behalf), at or before 4:00 p.m. on the Latest Acceptance Date in accordance with the terms of the Rights Issue Documents, all the Rights Shares which will be provisionally allotted to it/him and its/ his associates or nominees (including the CCASS participant(s) holding any VC IU Shares on its/his behalf) in respect of the VC IU Shares pursuant to the Rights Issue.

Mega Market has undertaken under the VC Irrevocable Undertaking that it shall not exercise any of its conversion rights under the Convertible Note from the date of the VC Irrevocable Undertaking up to and including the Settlement Date.

Li Irrevocable Undertaking

Each of Mr. Li and Hondex have jointly and severally, irrevocably and unconditionally represented, warranted and undertaken under the Li Irrevocable Undertaking to and with the Company and the Underwriters, that:

(a) each of Mr. Li and Hondex owns beneficially, at the time of execution of the Li Irrevocable Undertaking, and will on the Record Date own beneficially 100,000,000 and 500,000,000 Shares (collectively “Li IU Shares”), respectively;
(b) each of them shall not, and shall procure that its/his associates or nominees (including the CCASS participant(s) holding any Li IU Shares on its/his behalf) shall not, within the period commencing on the date of the Li Irrevocable Undertaking and ending on the Settlement Date transfer or otherwise dispose of or create any rights in respect of any of the Li IU Shares or dispose of, directly or indirectly, any interest in any company which is beneficially interested in any of the Li IU Shares; and

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LETTER FROM THE BOARD

(c) subject to the Company despatching the Rights Issue Documents to the Qualifying Shareholders, each of them shall take up and pay for or shall procure that there are taken up and paid for by its/his associates or nominees (including the CCASS participant(s) holding any Li IU Shares on its/his behalf), at or before 4:00 p.m. on the Latest Acceptance Date in accordance with the terms of the Rights Issue Documents, all the Rights Shares which will be provisionally allotted to it/him and its/his associates or nominees (including the CCASS participant(s) holding any Li IU Shares on its/his behalf) in respect of the Li IU Shares pursuant to the Rights Issue.

Save for the above Irrevocable Undertakings, as at the Latest Practicable Date, the Board has not received any information from any other substantial shareholders of the Company of their intention to take up the Rights Shares to be provisionally allotted to them.

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

SHAREHOLDERS’ APPROVAL NOT REQUIRED

The Rights Issue is not required to be approved by the Shareholders in general meeting.

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LETTER FROM THE BOARD

EFFECT OF RIGHTS ISSUE ON SHAREHOLDINGS IN THE COMPANY

Set out below are the changes in the shareholding structure of the Company arising from the Rights Issue assuming there is no change in the shareholding structure of the Company from the Latest Practicable Date to the completion of the Rights Issue and that there are no Non-Qualifying Shareholders.

VC (Note 1) Mr. Li (Note 2) The Directors (Note 3) The Underwriters (Note 4) Public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % of the total issued Shares 987,997,585 22.4 7 600,000,000 13.64 6,700,000 0.15 0 0 2,802,983,905 63.7 4 4,397,681,490 100.00	Shareholding immediately after completion of the Rights Issue Assuming 0% taken up by the Qualifying Shareholders other than the IU Shareholders Assuming 100% taken up by all Qualifying Shareholders Number of Shares Approximate % of the total issued Shares Number of Shares Approximate % of the total issued Shares 1,447,071,377 21.9 4 1,481,996,377 22.4 7 900,000,000 13.64 900,000,000 13.64 6,700,000 0.10 10,050,000 0.15 1,439,766,953 21.83 0 0 2,802,983,905 42. 49 4,204,475,858 63.7 4 6,596,522,235 100.00 6,596,522,235 100.00	Shareholding immediately after completion of the Rights Issue Assuming 0% taken up by the Qualifying Shareholders other than the IU Shareholders Assuming 100% taken up by all Qualifying Shareholders Number of Shares Approximate % of the total issued Shares Number of Shares Approximate % of the total issued Shares 1,447,071,377 21.9 4 1,481,996,377 22.4 7 900,000,000 13.64 900,000,000 13.64 6,700,000 0.10 10,050,000 0.15 1,439,766,953 21.83 0 0 2,802,983,905 42. 49 4,204,475,858 63.7 4 6,596,522,235 100.00 6,596,522,235 100.00
			100.00

Notes:

(1) VC has a personal interest in 227,400,000 Shares, and is taken to be interested in (i) 665,097,585 Shares and 486,561,631 underlying Shares of the Company held by Mega Market; and (ii) 95,500,000 Shares held by Kingly Profits. Kingly Profits is wholly owned by Smart Ease Corporation, which in turn, is wholly owned by VC.

Mega Market is interested in 665,097,585 Shares and 486,561,631 underlying Shares of the Company derived from the Convertible Note in the principal amount of HK$105,000,000 issued by the Company at an adjusted conversion price of HK$0.2158 per Share. Mega Market is beneficially wholly owned by VC. Mega Market has undertaken under the VC Irrevocable Undertaking that it shall not exercise any of its conversion rights under the Convertible Note from the date of the VC Irrevocable Undertaking up to and including the Settlement Date. As a result of the Rights Issue, the conversion price of the outstanding Convertible Note will be adjusted in accordance with the terms and conditions of the Convertible Note. Further announcements will be made by the Company on the adjustment and its effective date as and when appropriate.

(2) Mr. Li has a personal interest in 100,000,000 Shares, and is taken to be interested in 500,000,000 Shares held by Hondex. Hondex is wholly owned by Mr. Li.
(3) This represents the aggregate shareholding of the Directors.
(4) Pursuant to the Underwriters’ underwriting obligations pursuant to the Underwriting Agreement.

– 38 –

LETTER FROM THE BOARD

REASONS FOR THE RIGHTS ISSUE AND PROPOSED USE OF PROCEEDS

The estimated net proceeds of the Rights Issue will be approximately HK$ 146.5 million after deduction of all estimated expenses. The Company intends to apply the net proceeds of the Rights Issue in the following manner:

(a) As at the close of business of 30 June 2014, the Group had a total outstanding indebtedness of approximately HK$517,070,000 (the details of which are set out under the paragraph headed “Indebtedness” in Appendix I to this Prospectus), including the Convertible Note in the principal amount of HK$105,000,000. Pursuant to the terms and conditions of the Convertible Note, any Convertible Note not converted according to its terms and conditions will be redeemed by the Company on 17 October 2014 at its principal amount outstanding together with all accrued and unpaid interest thereon. As the maturity date of the Convertible Note is approaching, the Directors consider that it is in the interest of the Company and its Shareholders to apply 50% to 70% of the net proceeds of the Rights Issue to settle the redemption amount for the Convertible Note (or a part thereof).
(b) While the Group continues to invest in key areas including property, gamma ray irradiation services and resources business, it also attaches importance to new opportunities which may generate steady income stream. Therefore, the Group proposes to invest in and develop the New Business.

The Group’s first initiative in the New Business is made through its minority investment in Star Sail Investments Limited (the “JV Company”) which is in the process of acquiring a cruise ship. As disclosed in the Company’s announcement on 2 July 2014, the JV Company was established with Norvest Global Limited, and the JV Company will be held 90% by Norvest Global Limited and 10% by the Group. It is the current intention that the JV Company will appoint a member of the Group as manager (the “Manager”) for certain management functions and core operation of the cruise ship (“Cruise Ship Operation Services”), the terms and conditions of which are under negotiation. The cruise ship is expected to be delivered to the JV Company by 31 August 2014. The Group wishes to commence operation of the cruise ship as soon as practicable after completion of the acquisition of the cruise ship by the JV Company.

– 39 –

LETTER FROM THE BOARD

In order for the Manager to be able to provide the Cruise Ship Operation Services, it has to establish a team of personnel with relevant experience through recruitment and, if appropriate, other forms of engagement and to set up a reserve for related operating expenses, such as fuel, port facilities and repair and maintenance costs. The Group intends to apply approximately 20% to 25% of the net proceeds of the Rights Issue to finance such initial working capital requirement of the Manager. The Group does not expect to incur material capital expenditures for providing the Cruise Ship Operation Services, other than the capital commitment of the Group in relation to the JV Company.

Should the Company do not proceed with the business of providing the Cruise Ship Operation Services as discussed above because it is considered not in compliance with the applicable guidance of the Stock Exchange regarding gaming activities (as discussed below) or for any other reason, the Company intends to apply the said 20% to 25% of the net proceeds of the Rights Issue in setting up a new business unit to develop the New Business including the recruitment of suitable personnel, office expenses, professional fees, project scoping studies and related expenses.

To the extent that the New Business involves the carrying out of gaming activities, the Company is fully aware of the need to comply with the applicable guidance of the Stock Exchange which requires the Company to ensure that (a) the gaming activity is not unlawful under the Gambling Ordinance (Chapter 148 of the Laws of Hong Kong) (the “Gambling Ordinance”); and (b) the gaming activity should not violate any applicable laws in the areas where such activity operates.

Shareholders should be aware that under the applicable guidance issued by the Stock Exchange, should the gaming activities involved in the New Business (i) fail to comply with the applicable laws in the areas where such activities operate; and/ or (ii) contravene the Gambling Ordinance, the Company or its business may be considered unsuitable for listing under Rule 8.04 of the Listing Rules. Depending on the circumstances of the case, the Stock Exchange may direct the Company to take remedial action, and/or may suspend dealings in, or may cancel the listing of, the Company’s securities on the Stock Exchange pursuant to Rule 6.01 of the Listing Rules.

– 40 –

LETTER FROM THE BOARD

(c) The Company intends to apply any remaining amount of the net proceeds of the Rights Issue for general corporate purposes including operating expenses such as employee benefit expenses, office expenses and utilities, professional fees and general administration costs.

The estimated expenses of the Rights Issue (including the underwriting commission, printing, registration, translation, legal, accounting and documentation charges) are estimated to be approximately HK$3 million and will be payable by the Company. The net subscription price per Rights Share upon full acceptance of the relevant provisional allotment of Rights Shares is expected to be approximately HK$0.067 per Rights Share.

The Board considers that it is in the best interest of the Company and its shareholders as a whole to reduce the existing debts of the Group and to finance the Group’s business diversification and expansion by way of the Rights Issue, which will not only strengthen the Group’s capital base and reduce its finance costs, but will also allow all Qualifying Shareholders the opportunity to maintain their respective pro rata shareholding interests in the Company by participating in the Rights Issue.

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

ADDITIONAL INFORMATION

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

Yours faithfully

By order of the Board

China Gamma Group Limited Wong King Shiu, Daniel Executive Director

– 41 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. THREE YEARS’ SUMMARY OF FINANCIAL RESULTS

Financial information of the Group for each of the three years ended 31 March 2012, 2013 and 2014 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.aplushk.com/ clients/00164chinagamma/index.html) respectively:

annual report of the Company for the year ended 31 March 2012 published on 30 July 2012 (pages 42 to 163);
annual report of the Company for the year ended 31 March 2013 published on 27 June 2013 (pages 40 to 156); and
annual report of the Company for the year ended 31 March 2014 published on 4 July 2014 (pages 40 to 160).

2. INDEBTEDNESS

As at the close of business on 30 June 2014, being the latest practicable date for the purpose of this indebtedness statement, the Group had a total outstanding indebtedness of approximately HK$517,070,000, comprising (i) unsecured 1% Convertible Note with principal amount of HK$105,000,000; (ii) secured bank borrowing of HK$10,000,000; (iii) unsecured loan from a company controlled by a substantial shareholder of HK$33,500,000; (iv) unsecured placing notes bearing interest of 5% per annum with an outstanding amount of HK$20,000,000; (v) unsecured other borrowings included two loans (“Loan A” and “Loan B”), Loan A with outstanding amount of approximately HK$228,941,000 in which loan principal is interest bearing at 5% per annum, Loan B with outstanding amount of approximately HK$97,646,000 in which loan principal is interest free; and (vi) amount due to a non-controlling shareholder of a subsidiary of approximately HK$21,983,000.

As at 30 June 2014, the Group had pledged a leasehold building and land use rights with carrying value of approximately HK$6,354,000 and HK$11,241,000 respectively to secure the bank loan granted to the Group.

As at 30 June 2014, the Company had given guarantees to the lenders of Loan A and Loan B in respect of other unsecured borrowings utilised by a subsidiary. In the event of default to repay the Loan A by the subsidiary, the lender of Loan A has the right to demand the Company to transfer a maximum of 25% equity interest in a 54% owned subsidiary of the Group, Mianning Mao Yuan Rare Earth Technology Company Limited, to it.

– 42 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as aforesaid or as otherwise disclosed herein and apart from intra-group liabilities, at the close of business on 30 June 2014, the Group did not have any outstanding indebtedness, any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or similar indebtedness, liabilities under acceptances or acceptable credits, debentures, mortgagees, charges, hire purchase commitments, guarantees or other material contingent liabilities.

The Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 30 June 2014.

3. WORKING CAPITAL

The Directors are of the opinion that, after taking into account the internal financial resources of the Group, the present available banking facilities and the estimated net proceeds from the Rights Issue, the Group will have sufficient working capital for its normal business for at least the next 12 months from the date of this Prospectus.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 March 2014, being the date to which the latest published audited consolidated financial statements of the Company were made up.

5. BUSINESS TRENDS AND FINANCIAL AND TRADING PROSPECTS OF THE GROUP

While the Group continues to invest in key areas including property, gamma ray irradiation services and resources business, it also attaches importance to new opportunities which may generate steady income stream. Therefore, the Group proposes to invest in and develop the New Business.

The Group’s first initiative in the New Business is made through its minority investment in Star Sail Investments Limited (the “JV Company”) which is in the process of acquiring a cruise ship. As disclosed in the Company’s announcement on 2 July 2014, the JV Company was established with Norvest Global Limited, and the JV Company will be held 90% by Norvest Global Limited and 10% by the Group. It is the current intention that the JV Company will appoint a member of the Group as manager for certain management functions and core operation of the cruise ship, the terms and conditions of which are under negotiation. The cruise ship is expected to be delivered to the JV Company by 31 August 2014. The cruise ship is a nine-deck cruise ship, and

– 43 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

features with over 200 passenger rooms which can accommodate over 600 passengers. It provides various entertainment and gaming facilities and on-board activities, services and amenities such as restaurants, lounge, beauty salons and retail shopping. The Group wishes to commence operation of the cruise ship as soon as practicable after completion of the acquisition of the cruise ship by the JV Company. The Group’s investment in the JV Company and the carrying out of such cruise ship business by the Company would be subject to compliance with the applicable guidelines of the Stock Exchange regarding gaming activities.

As for property business, the Group will continue to focus on mixed use property development and investment in China to cater for end-users’ demand for high quality residential and commercial properties as urbanization continues to drive demand for property in China. The Group will continue to devote resources to land bank acquisitions and seek to identify premium land sites at the right opportunity. The Group will also explore opportunities in property development and investment in other regions to support the development of our other businesses.

The Group’s gamma ray irradiation business is conducted through 淄博利源高科輻照技術有限公司 (Zibo Liyuan Gamma Ray Technologies Co. Limited*), a 80% owned subsidiary of the Group which is licensed by Ministry of Environmental Protection of the PRC for the provision of irradiation services by utilising gamma ray technologies. Although global economic recovery remains slow, demand for food irradiation and sterilisation of medical devices using gamma ray technologies has shown signs of stabilisation recently. The Group’s marketing effort in strengthening business relation with existing and new customers has borne some fruits. As application of gamma ray technologies in food irradiation has increased in recent years with increasing awareness of domestic food safety and hygiene standard, the Group will endeavor in ongoing services innovation and expansion of its services to new products with high margins, such as health food, drugs and chemicals. The Group will also strive to improve the productivity and efficiency of its production facilities.

As for resources business, the Group started to rationalise the resources business in 2013 by considering the possibilities of restructuring the rare earth refinery and processing business, and made a plan to sell a group of subsidiaries that engaged in the rare earth refinery and processing business if the assets value would be better reflected by such a sale transaction rather than through continuing use. As discussed in the Company’s 2014 annual report, a potential buyer, who is an independent third party, had been identified and negotiation for the sale is in progress. On 25 June 2014, a letter of intent has been entered into between the potential buyer and a subsidiary of the Group. The potential buyer is currently conducting due diligence of the said business and the possible sale will be subject to further negotiation, satisfaction of certain conditions and corporate approvals. Currently no binding agreements have been reached between the parties.

The English translation of Chinese names or words are for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

– 44 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Financial Review

For the year ended 31 March 2014, the Group recorded a turnover of HK$41,018,000 (2013: HK$48,523,000), representing a decrease of 15% compared with the previous financial year. The decrease was mainly attributable to no property projects for sale during the year.

Loss from operations for the year ended 31 March 2014 amounted to HK$24,463,000 (2013: HK$168,562,000). Net loss attributable to equity shareholders of the Company for the year was reduced to HK$51,471,000 (2013: HK$143,475,000), which was mainly attributable to the absence of impairment loss on and amortisation of intangible asset in this year. Impairment loss on intangible asset and amortisation of intangible asset of the rare earth refinery and processing business recognised for the year ended 31 March 2013 was HK$82,346,000 and HK$50,364,000 respectively.

As at 31 March 2014, the total assets, net assets and cash and cash equivalents of the Group were HK$925,268,000, HK$196,179,000 and HK$33,453,000 respectively.

The Directors have confirmed that there have been no material changes subsequent to 31 March 2014.

– 45 –

PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

APPENDIX II

I UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

The following is an illustrative and unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group attributable to the equity shareholders of the Company which has been prepared on the basis of the notes set out below, for the purpose of illustrating the effect of the Rights Issue as if it had taken place on 31 March 2014. This unaudited pro forma statement of adjusted consolidated net tangible liabilities has been prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the financial position of the Group had the Rights Issue been completed as at 31 March 2014 or at any future date.

					Unaudited
				Unaudited	pro forma
				pro forma	adjusted
				adjusted	consolidated net
				consolidated net	tangible liabilities
				tangible liabilities	of the Group
	Audited	Consolidated net		of the Group	upon completion
	consolidated net	tangible liabilities		upon completion	of the
	liabilities	of the Group		of the	Rights Issue
	of the Group	attributable to		Rights Issue	attributable to
	attributable to	the equity		attributable to	the equity
	the equity	shareholders of		the equity	shareholders of
	shareholders of	the Company		shareholders of	the Company
	the Company	per Share	Estimated net	the Company	per Share
	as at 31 March	as at 31 March	proceeds from	as at 31 March	as at 31 March
	2014	2014	the Rights Issue	2014	2014
	HK$’000	HK$	HK$’000	HK$’000	HK$
	(Note 1)	(Note 2)	(Note 3)		(Note 4)
Rights Issue of 2,198,840,745
Rights Shares at
subscription price of
HK$0.068 per Rights Share	401,659	0.0934	146,521	255,138	0.0393

– 46 –

APPENDIX II

PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

Notes:

The audited consolidated net tangible liabilities of the Group attributable to the equity shareholders of the Company as at 31 March 2014 of HK$401,659,000 is based on the consolidated net assets attributable to the equity shareholders of the Company of approximately HK$17,952,000 less goodwill and intangible asset of approximately HK$198,581,000 and HK$221,030,000 (54% on HK$409,314,000, being intangible asset attributable to the equity shareholders of the Company) respectively as extracted from the published audited report of the Group for the year ended 31 March 2014.
The calculation of consolidated net tangible liabilities of the Group attributable to the equity shareholders of the Company per share is based on 4,298,681,490 Shares in issue as at 31 March 2014.
The estimated net proceeds from the Rights Issue are calculated based on 2,198,840,745 Rights Shares to be issued at the subscription price of HK$0.068 per Rights Share and after deduction of the estimated related expenses which are directly attributable to the Rights Issue of approximately HK$3,000,000.
The unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to the equity shareholders of the Company per Share immediately after completion of the Rights Issue is calculated based on 6,497,522,235 Shares which comprise 4,298,681,490 Shares in issue as at 31 March 2014 and 2,198,840,745 Rights Shares expected to be issued on the completion of the Rights Issue as at 31 March 2014, but does not take into account of any Shares which may be issued upon the exercise of options granted under the Share Option Scheme, any Shares which may be issued upon the conversion of the outstanding Convertible Note or any Shares which may be granted and issued or repurchased by the Company pursuant to the general mandate and the repurchase mandate subsequent to 31 March 2014.
No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible liabilities of the Group to reflect any trading results or other transactions of the Group entered into subsequent to 31 March 2014.

– 47 –

APPENDIX II

PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

II ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

The following is the text of a report, prepared for the sole purpose of inclusion in this Prospectus, received from the reporting accountants of the Company namely Ting Ho Kwan & Chan, Certified Public Accountants, Hong Kong.

==> picture [207 x 61] intentionally omitted <==

==> picture [30 x 83] intentionally omitted <==

19 August 2014

The Board of Directors

China Gamma Group Limited

Suite 2602, 26/F, Sino Plaza 255-257 Gloucester Road Causeway Bay, Hong Kong

Dear Sirs,

INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION

TO THE DIRECTORS OF CHINA GAMMA GROUP LIMITED

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of China Gamma Group Limited (the “Company”) and its subsidiaries (collectively the “Group”) by the directors for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group as at 31 March 2014 and related notes (the “Unaudited Pro Forma Financial Information”) as set out in Section I of Appendix II to the prospectus issued by the Company (the “Prospectus”). The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described in Section I of Appendix II to the Prospectus.

– 48 –

APPENDIX II

PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the rights issue on the Group’s financial position as at 31 March 2014 as if the transaction had taken place at 31 March 2014. 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 year ended 31 March 2014, on which an audit report has been published.

Directors’ Responsibility for the Unaudited Pro Forma Financial Information

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

Reporting Accountant’s Responsibilities

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

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements (HKSAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, issued by the HKICPA. This standard requires that the reporting accountant 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.

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.

– 49 –

APPENDIX II

PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

The purpose of Unaudited Pro Forma Financial Information included in the Prospectus 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 event or transaction at 31 March 2014 would have been as presented.

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

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

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s 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.

– 50 –

APPENDIX II

PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

TING HO KWAN & CHAN

Certified Public Accountants (Practising)

– 51 –

GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This Prospectus, 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 and belief the information contained in this Prospectus is accurate and complete in all material respects and not misleading or deceptive, and there are no other facts the omission of which would make any statement herein misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; and (ii) immediately after completion of the Rights Issue are set out as follows:

As at the Latest Practicable Date

Authorised share capital: 15,000,000,000 Shares Issued and paid-up share capital: 4,397,681,490 Shares Immediately after completion of the Rights Issue Authorised share capital: 15,000,000,000 Shares Issued and paid-up share capital: 4,397,681,490 Shares 2,198,840,745 Rights Shares 6,596,522,235 in total	HK$ (approximately) 150,000,000

	43,976,815

	HK$ (approximately) 150,000,000

	43,976,815 21,988,407
	65,965,222

– 52 –

GENERAL INFORMATION

APPENDIX III

As at the Latest Practicable Date, all the Share Options granted under the Share Option Scheme have lapsed or have been exercised. Accordingly, as at the Latest Practicable Date, there is no outstanding Share Option.

As at the Latest Practicable Date, there was a Convertible Note in the principal amount of HK$105,000,000 outstanding with the rights to convert into 486,561,631 Shares at the conversion price of HK$0.2158 (subject to further adjustment) during the period commencing on 17 October 2011 and expiring on the third anniversary of the date of issue of the Convertible Note provided that such part of the principal amount of the Convertible Note has not previously been converted or redeemed or purchased or cancelled, subject to the terms and conditions of the Convertible Note. Mega Market, the holder of the Convertible Note, has undertaken under the VC Irrevocable Undertaking (see the section headed “VC Irrevocable Undertaking” in the “Letter from the Board” of this Prospectus) that it shall not exercise any of its conversion rights under the Convertible Note from the date of the VC Irrevocable Undertaking up to and including the Settlement Date.

Save as disclosed above, as at the date of this Prospectus, the Company had no other outstanding convertible securities, options or warrants in issue which would otherwise confer any right to subscribe for, convert or exchange into the existing Shares.

None of the securities of the Company is listed or dealt in on any stock exchange other than the Stock Exchange and no application is being made or is currently proposed or sought for the Shares or Rights Shares or any other securities of the Company to be listed or dealt in on any other stock exchange.

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

3. BIOGRAPHICAL DETAILS OF DIRECTORS AND MEMBERS OF THE SENIOR MANAGEMENT

(a) Business address

The business address of all the Directors and senior management is same as the principal place of business of the Company at Suite 2602, 26/F., Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong.

– 53 –

GENERAL INFORMATION

APPENDIX III

(b) Biographical details of Directors and Senior Management

Executive Director

Mr. Wong King Shiu, Daniel , aged 54, joined the Board on 13 January 2012. Prior to that, Mr. Wong has been the vice president of the Group since 2010. He is responsible for the overall strategic management, development and marketing of the resources projects. Mr. Wong has over 13 years of experience in natural resources industry and served as an executive director in a various natural resources company which is listed in Hong Kong. He also has extensive experience in the management and development of natural resources projects in China.

Non-executive Directors

Mr. Ma Kwok Hung, Warren , aged 57, joined the Board on 24 July 2006. He had been an executive director of the Company since 24 July 2006 and had been redesignated to non-executive director of the Company with effect from 23 May 2008. Prior to that, Mr. Ma served as an executive director and a company secretary of a Hong Kong listed company for over 7 years. He has over 25 years of accounting experience and is an associate member of both the Hong Kong Institute of Certified Public Accountants and the Institute of Chartered Accountants in England and Wales and a fellow member of the Association of Chartered Certified Accountants.

Mr. Chow Siu Ngor , aged 59, joined the Board on 30 April 2006. He had been an independent non-executive director of the Company since 30 April 2006 and had been redesignated to non-executive director of the Company with effect from 20 November 2007. He is a practi sing solicitor in Hong Kong. Mr. Chow graduated from the Chinese University of Hong Kong in 1981 with an honors degree in Social Science. He then obtained an honors degree in Laws from the University of Birmingham in England in 1987. Mr. Chow was admitted as a solicitor of the Supreme Court of Hong Kong in 1990 and has been in private practice since then. Currently, Mr. Chow is a Partner of King & Wood Mallesons, Solicitors, Hong Kong. He serves as an independent non-executive director of CCT Fortis Holdings Limited (formerly known as CCT Telecom Holdings Limited), CCT Land Holdings Limited (formerly known as CCT Tech International Limited) and REXLot Holdings Limited, all of which are listed companies in Hong Kong.

– 54 –

GENERAL INFORMATION

APPENDIX III

Independent non-executive Directors

Mr. Wong Hoi Kuen , aged 53, joined the Board on 13 February 2006. He is a practising certified public accountant in Hong Kong and a chartered accountant in the United Kingdom. Mr. Wong is a fellow member of both the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants and an associate member of the Institute of Chartered Accountants in England and Wales. He also serves as an independent non-executive director of Sino Resources Group Limited, a listed company in Hong Kong.

Mr. Chan Chi Yuen , aged 47, joined the Board on 30 April 2006. He holds a bachelor degree in Business Administration and a master of science degree in Corporate Governance and Directorship. He is a fellow member of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants and an associate member of the Institute of Chartered Accountants in England and Wales. Mr. Chan is a practi sing certified public accountant and has extensive experience in accounting, taxation, financial management, corporate finance and corporate governance. He is currently an executive director of Noble Century Investments Holdings Limited and South East Group Limited, and an independent non-executive director of Asia Energy Logistics Group Limited, China Sandi Holdings Limited, Jun Yang Solar Power Investments Limited, Media Asia Group Holdings Limited, New Times Energy Corporation Limited (redesignated from non-executive director with effect from 18 May 2012) and U-RIGHT International Holdings Limited, all of which are listed on The Stock Exchange of Hong Kong Limited. Mr. Chan was an executive director of Kong Sun Holdings Limited from February 2007 to November 2009 and from December 2011 to September 2013, and an independent non-executive director of Superb Summit International Timber Company Limited (now renamed as Superb Summit International Group Limited) from April 2007 to June 2010, The Hong Kong Building and Loan Agency Limited from October 2009 to February 2011 and Richly Field China Development Limited from February 2009 to August 2010, all of which are listed companies in Hong Kong.

Mr. Hung Hing Man , aged 44, joined the Board on 31 March 2009. He holds a masters degree in Business Administration from the University of Western Sydney. He is a fellow member of the Association of Chartered Certified Accountants, the Hong Kong Institute of Certified Public Accountants and the Taxation Institute of Hong Kong and a member of the Society of Chinese Accountants and Auditors. Mr. Hung is currently a proprietor of a certified public accountants firm. He has over 17 years of working experience in corporate finance, accounting, auditing and taxation sectors. Mr. Hung was an independent non-executive director of Eternity Investment Limited from May 2010 to November 2011, and is currently an independent non-executive director of Madex International (Holdings) Limited, all of which are listed companies in Hong Kong.

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GENERAL INFORMATION

APPENDIX III

Senior Management

Mr. Lau Hok Yuk , aged 48 , is a Company Secretary of the Company. Mr. Lau holds a Master Degree of Business Administration from the University of Strathclyde in the United Kingdom. He is a Fellow Certified Public Accountant and a Fellow of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants in the United Kingdom. He is also a Chartered Financial Analyst in the United States of America, an associate member of the Taxation Institution of Hong Kong as well as a Certified Tax Advisor. Mr. Lau has over 25 years of working experience in the areas of financial control, corporate finance, business development and administration, legal and compliance, procurement and logistics, trading, investor relationship and human resources.

Mr. Gu Zhong Xiang , aged 72, is the senior engineer of rare resources division of the Group and is responsible for the sales and development of rare earth products. He is a Professor-level Senior Engineer. Mr. Gu graduated from Department of Modern Chemistry, University of Science and Technology of China. He has over 42 years of experience in natural resources industry and specialises in sales, development and analysis for the rare earth products. He cooperated with Bureau of Geology Survey on Non-ferrous Metal of Guangdong Province（廣東省有色地勘局）in the inspection ion-absorbed rare earths resources in the South China. He has involved in the foundation of several rare earth refinery and processing enterprises in Shaanxi Province and Sichuan Province of China, including a Japanese-funded enterprise. During this period, Mr. Gu engaged in rare earth processing technology development and product analysis testing. He is also a standing director of 陝西省稀土協會 (Shaanxi Province Rare Earth Society).

Mr. Li Ming Dong , aged 51, is the senior engineer of rare resources division of the Group and is responsible for the planning and coordinating the production of the rare earth refinery business in Xichang. Mr. Li graduated from Department of Chemistry, Peking University. He has over 25 years of experience in natural resources industry and specialises in operation and planning for the rare earth refinery.

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GENERAL INFORMATION

APPENDIX III

4. INFORMATION OF THE GROUP

The Group is principally engaged in rare resources refinery and processes business, gamma ray irradiation services, property development, rental and sales, trading of building materials and provision of renovation services, and securities trading and investments.

The Company has been considering a diversion of the Group’s business by the investment in and development of the leisure, hospitality, entertainment and gaming related businesses , being a new business segment of the Group . The Company is fully aware of its obligations to comply with all applicable laws and regulations, and any applicable guidance of the Stock Exchange, in developing the leisure, hospitality, tourism, entertainment and gaming related businesses.

5. EQUITY FUND RAISING ACTIVITIES OF THE COMPANY DURING THE PAST 12 MONTHS

Details of the fund raising activities of the Company during the past 12 months immediately preceding the Latest Practicable Date are set out below:

(a) Date of
announcement	(b) Description	(c) Net proceeds	(d) Actual use of proceeds
20 August 2013	Proposed placing of notes in the	HK$18,457,000	as to approximately 35% for the
	aggregate principal amount of up to		general working capital of the Group
	HK$300 million during a 12-month		(including operating expenses such
	placing period. As at the Latest		as employee benefit expenses, office
	Practicable Date, the notes in the		expenses and utilities, professional
	principal amount of HK$20 million		fees and general administration
	have been placed. (Note)		costs) and approximately 65% for
			refinancing of existing debts
19 September 2013	Subscription of new Shares under general	N/A	Capitalisation of loan
	mandate by way of capitalisation of
	loan

Note:

The placing period will expire on 19 August 201 4 and the Company was, as of the Latest Practicable Date, in discussion with the relevant placing agent on the renewal of the placing period. On 15 August 2014, the Company and the relevant placing agent entered into a placing agreement to renew the placing period up to and including 31 August 2015. Please refer to the announcement of the Company dated 15 August 2014 for further details.

Apart from the above, the Company did not carry out any other fund-raising activities during the past 12 months immediately preceding the Latest Practicable Date.

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GENERAL INFORMATION

APPENDIX III

6. DIRECTORS’ INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at the Latest Practicable Date, the interests and short positions of the directors or chief executive of the Company in the Shares, underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or were required pursuant to Section 352 of the SFO to be entered in the register referred to therein; or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transaction by Directors of Listed Issuers, were as follows:

Long position in the Shares in the Company

			Approximate
			Percentage of
			the issued share
		Number of	capital of
Name of Director	Type of interest	Shares held	the Company
			(Note)
Wong King Shiu, Daniel	Beneficial owner	1,200,000	0.03 %
Ma Kwok Hung, Warren	Beneficial owner	500,000	0.01 %
Chow Siu Ngor	Beneficial owner	2,500,000	0.06 %
Chan Chi Yuen	Beneficial owner	2,500,000	0.06 %

Note:

The percentage of the issued share capital of the Company is calculated based on the total number of Shares in issue as at the Latest Practicable Date (i.e. 4,397,681,490 Shares).

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company 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 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 any interests and short positions which they were taken or deemed to have under such provisions of the SFO); or which were required pursuant to Section 352 of the SFO to be entered in the register referred to therein; or as otherwise notified to the Company or the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

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GENERAL INFORMATION

APPENDIX III

As at the Latest Practicable Date, none of the Directors was a director or employee of a company which had an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

7. SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN THE SHARES OR UNDERLYING SHARES OF THE COMPANY

Save as disclosed below, as at the Latest Practicable Date, according to the register of interest kept by the Company under Section 336 of the SFO and so far as was known to the Directors or chief executive of the Company, no other person or companies (other than a Director or chief executive of the Company whose interests are disclosed above) had an interest or a short position in the shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other members of the Group or had any option in respect of such capital:

				Number of
				Rights Shares			Approximate
				to be taken			percentage of
				up under	Number of		the issued
			Number of	the Irrevocable	underlying		share capital
Name of shareholder	Notes	Type of interest	Shares held	Undertakings	Shares held	Total	of the Company
Chan How Chung, Victor	1, 2, 3, 4	Beneficial owner/	987,997,585	459,073,792	486,561,631	1,933,633,008	43.9 7 %
		interest of controlled
		corporation
Mega Market	1, 2, 3, 4	Beneficial owner	665,097,585	332,548,792	486,561,631	1,484,208,008	33.75 %
Assets Limited
Li Wing Sang	1, 5, 7	Beneficial owner/	600,000,000	300,000,000	–	900,000,000	20.47 %
		interest of controlled
		corporation
Wong Ngai	1, 6, 7	Deemed	600,000,000	300,000,000	–	900,000,000	20.47 %
Hondex Investments	1, 5, 7	Beneficial owner	500,000,000	250,000,000	–	750,000,000	17.05 %
Limited

Notes:

The percentage of the issued share capital of the Company is calculated based on the total number of Shares in issue as at the Latest Practicable Date (i.e. 4,397,681,490 Shares).
VC has a personal interest in 227,400,000 Shares, and is taken to be interested in (i) 665,097,585 Shares and 486,561,631 underlying Shares of the Company held by Mega Market; and (ii) 95,500,000 Shares held by Kingly Profits. Kingly Profits is wholly owned by Smart Ease Corporation, which in turn, is wholly owned by VC.

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GENERAL INFORMATION

APPENDIX III

Mega Market is interested in 665,097,585 Shares and 486,561,631 underlying Shares of the Company derived from the Convertible Note in the principal amount of HK$105,000,000 issued by the Company at an adjusted conversion price of HK$0.2158 per Share. Mega Market is beneficially wholly owned by VC. Mega Market has undertaken under the VC Irrevocable Undertaking that it shall not exercise any of its conversion rights under the Convertible Note from the date of the VC Irrevocable Undertaking up to and including the Settlement Date.
These include (i) an aggregate interest in 126,525,000 Rights Shares undertaken to be taken up by VC and Kingly Profits under the VC Irrevocable Undertaking; and (ii) an interest in 332,548,792 Rights Shares undertaken to be taken up by Mega Market under VC Irrevocable Undertaking.
Mr. Li has a personal interest in 100,000,000 Shares, and is taken to be interested in 500,000,000 Shares held by Hondex. Hondex is beneficially wholly owned by Mr. Li.
Ms. Wong Ngai is the spouse of Mr. Li and therefore is deemed to be interested in the 600,000,000 Shares which are beneficially owned by Mr. Li.
These include (i) an aggregate interest in 300,000,000 Rights Shares undertaken to be taken up by Mr. Li and Hondex under the Li Irrevocable Undertaking; and (ii) an interest in 250,000,000 Rights Shares undertaken to be taken up by Hondex under the Li Irrevocable Undertaking.

Other than disclosed above, the Company has not been notified of any persons who had interests or short positions in the Shares, warrants or underlying Shares of the Company, which were required to be recorded in the register of interest required to be kept by the Company pursuant to Section 336 of the SFO.

8. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service agreement with any member of the Group which will not expire or is not determinable within one year without payment of compensation other than statutory compensation.

9. DIRECTORS’ INTERESTS IN THE GROUP’S ASSETS OR CONTRACTS OR ARRANGEMENTS SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors had any interest in any assets which have been, since 31 March 2014 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

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

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GENERAL INFORMATION

APPENDIX III

10. QUALIFICATION AND CONSENT OF EXPERT

The following is the qualification of the expert who has provided its advice for inclusion in this Prospectus:

Name Qualification Ting Ho Kwan & Chan (“THKC”) Certified Public Accountants

THKC has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion of its reports and references to its name in the form and context in which they appear herein.

As at the Latest Practicable Date, THKC did not have any shareholding in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group and THKC did not have any direct or indirect interest in any assets which have been since 31 March 2014 (being the date to which the latest published audited accounts of the Company were made up) acquired or disposed of by or leased to by any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

11. CORPORATE INFORMATION

Registered office Clarendon House 2 Church Street Hamilton HM11 Bermuda Principal place of business Suite 2602, 26/F., Sino Plaza in Hong Kong 255-257 Gloucester Road Causeway Bay, Hong Kong Company secretary Mr. Lau Hok Yuk Authorised representatives Mr. Wong King Shiu, Daniel Mr. Lau Hok Yuk

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GENERAL INFORMATION

APPENDIX III

Auditors

Ting Ho Kwan & Chan Certified Public Accountants (Practising) 9/F., Tung Ning Building 249-253 Des Voeux Road Central Hong Kong

Principal share registrar MUFG Fund Services (Bermuda) Limited and transfer office The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda Branch share registrar Tricor Secretaries Limited and transfer office Level 22 in Hong Kong Hopewell Centre 183 Queen’s Road East Hong Kong Principal bankers The Hongkong and Shanghai Banking Corporation Limited 1 Queen’s Road Central Hong Kong Hang Seng Bank Limited 83 Des Voeux Road Central Central, Hong Kong

Legal advisers to As to Hong Kong Law the Company Baker & McKenzie 23rd Floor, One Pacific Place 88 Queensway Hong Kong As to Bermuda Law Conyers Dill & Pearman 2901 One Exchange Square 8 Connaught Place Central Hong Kong

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GENERAL INFORMATION

APPENDIX III

12. MATERIAL CONTRACTS

As at the Latest Practicable Date, the following contracts (not being contracts in the ordinary course of business of the Company) have been entered into by members of the Group within two years immediately preceding the Latest Practicable Date which are or may be material:

(i) the Underwriting Agreement;
(ii) the commitment letter dated 30 June 2014 entered into among Oceanic Eagle Limited, Norvest Global Limited and Star Sail Investments Limited in relation to the joint venture proposed to be carried out through Star Sail Investments Limited ;
(iii) the subscription agreement dated 19 September 2013 entered into between the Company, Jumbo Wealth International Limited and Hondex Investments Limited (“Hondex”) in relation to the subscription by Hondex for 500,000,000 Shares by way of capitalisation of loan ;
(iv) the placing agreement dated 20 August 2013 entered into between the Company and China Rich Securities Limited in relation to the placing of 7-year 5% unsecured notes in the denomination of HK$2,000,000 each with aggregate principal amount of up to HK$300,000,000 ;
(v) the placing agreement dated 13 March 2013 entered into among Mega Market Assets Limited (“Mega Market”), the Company and Hantec Securities Co., Limited in relation to the placing of 420,000,000 Shares owned by Mega Market ;
(vi) the top-up subscription agreement dated 13 March 2013 entered into between Mega Market and the Company in relation to the subscription by Mega Market for a maximum of 420,000,000 new Shares ; and
(vii) the agreement for the sale and purchase of the entire issued share capital of Unique Gold Investments Limited dated 17 August 2012 entered into between Fame Plus International Limited and Mr. Guo Qingguo .

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GENERAL INFORMATION

APPENDIX III

13. LITIGATIONS

On 24 October 2007, Silver Wind International Limited (“Silver Wind”), a wholly-owned subsidiary of the Company, entered into a conditional agreement (the “Acquisition Agreement”) with Stronway Development Limited (“Stronway Development”), pursuant to which Silver Wind agreed to acquire from Stronway Development the entire equity interest in Winmax Asia Investment Limited (“Winmax Asia”). Under the arrangement, Winmax Asia will in turn acquire the entire equity interest in Beijing Jianxing Real Estate Development Co. (“Jianxing”) along with Jianxing’s standalone villas development project in Beijing known as “新星花園”. The aggregate consideration payable for the acquisition was RMB433,000,000 which was to be settled in cash and two villas. In December 2007, RMB20,000,000 was paid under the Acquisition Agreement to Stronway Development by Silver Wind as deposit (the “Deposit”). Details of the acquisition are set out in the Company’s circular dated 14 December 2007.

In April 2008, on the grounds, amongst other things, that the subject matter under the Acquisition Agreement was frustrated, Silver Wind decided to terminate the Acquisition Agreement and, through its legal representative has served a notice of termination to Stronway Development. In order to protect the position of Silver Wind and to recover, amongst other things, the Deposit from Stronway Development, legal proceedings were instigated against Stronway Development on this matter in the High Court of Hong Kong on 15 April 2008.

As at the date hereof, the legal proceedings against Stronway Development are still pending and there is no significant development.

Save as disclosed above, as at the Latest Practicable Date, no member of the Group is engaged in any litigation or claims of material importance known to the Directors to be pending or threatened against any member of the Group.

14. EXPENSES

The expenses in connection with the Rights Issue, including the financial advisory fee, underwriting commission, printing, registration, translation, legal and accounting charges are estimated to amount to approximately HK$ 3 million and will be payable by the Company.

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GENERAL INFORMATION

APPENDIX III

15. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

A copy of this Prospectus, together with copies of the PAL and EAF and the written consent referred to in the paragraph headed “Qualification and Consent of Expert” in this appendix have been delivered to the Registrar of Companies in Hong Kong for registration as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.

16. LEGAL EFFECT

The Rights Issue Documents and all acceptances of any offer or application contained in such documents are governed by and shall be construed in accordance with the laws of Hong Kong. Where an application is made in pursuance of any such documents, the relevant document(s) shall have the effect of rendering all persons concerned bound by the provisions, other than the penal provisions, of Sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, so far as applicable.

17. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business of the Company at Suite 2602, 26/F., Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong during normal business hours (i.e. from 9:00 a.m. to 12:30 p.m. and from 2:00 p.m. to 5:00 p.m. ) on Monday to Friday unless (i) a tropical cyclone warning signal number 8 or above is hoisted, or (ii) a black rainstorm warning signal is issued, except public holidays, from the date of this Prospectus up to and including 4 September 2014 :

(a) the letter from the Board, the text of which is set out on pages 12 to 41 of this Prospectus;
(b) the annual reports of the Company for the financial year ended 31 March 2013 and 2014;
(c) the accountants’ report on unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group as set out in Appendix II to this Prospectus;
(d) the written consent referred to in the paragraph headed “Qualification and Consent of Expert” in this appendix;
(e) the contracts of the Company listed in the paragraph headed “Material Contracts” in Appendix I II to this Prospectus; and
(f) the memorandum of association and bye-laws of the Company.

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GENERAL INFORMATION

APPENDIX III

18. MISCELLANEOUS

The company secretary of the Company is Mr. Lau Hok Yuk. Mr. Lau is Fellow Certified Public Accountant and a Fellow of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants in the United Kingdom. He is also a Chartered Financial Analyst in the United States of America, an associate member of the Taxation Institution of Hong Kong as well as a Certified Tax Advisor.

The Company’s branch share registrar and transfer office in Hong Kong is Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

The English text of this Prospectus shall prevail over the Chinese text in case of any inconsistency.

– 66 –

AI assistant

WH Group Limited — Capital/Financing Update 2014

49096_rns_2014-08-19_39fab46e-3026-422d-8156-dcba1cb029c5.pdf

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

China Gamma Group Limited 中國伽瑪集團有限公司

RIGHTS ISSUE OF RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.068 PER RIGHTS SHARE ON THE BASIS OF 1 RIGHTS SHARE FOR EVERY 2 EXISTING SHARES HELD ON THE RECORD DATE

Joint Underwriters to the Rights Issue

ENLIGHTEN SECURITIES LIMITED

CEPA ALLIANCE SECURITIES LIMITED

NOTICE

NOTICE

NOTICE TO INVESTORS IN AUSTRALIA

NOTICE

NOTICE TO INVESTORS IN BELGIUM

NOTICE

NOTICE TO INVESTORS IN CANADA

NOTICE

NOTICE TO INVESTORS IN TAIWAN

NOTICE TO INVESTORS IN THE UNITED STATES

NOTICE

FORWARD-LOOKING STATEMENTS

TABLE OF CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

LETTER FROM THE BOARD

China Gamma Group Limited 中國伽瑪集團有限公司

RIGHTS ISSUE OF RIGHTS SHARES AT THE SUBSCRIPTION PRICE OF HK$0.068 PER RIGHTS SHARE ON THE BASIS OF 1 RIGHTS SHARE FOR EVERY 2 EXISTING SHARES HELD ON THE RECORD DATE

INTRODUCTION

LETTER FROM THE BOARD

RIGHTS ISSUE OVERVIEW

Issue statistics

LETTER FROM THE BOARD

Subscription Price

LETTER FROM THE BOARD

Qualifying Shareholders

Basis of provisional allotment

Distribution of the Rights Issue Documents

LETTER FROM THE BOARD

Non- Qualifying Shareholders

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Procedures for acceptance, application or transfer

General

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Action to be taken by registered Shareholders

Subscription for all Rights Shares provisionally allotted

LETTER FROM THE BOARD

Transfers and “splitting” of nil-paid Rights Shares

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Action to be taken by Beneficial Owners whose Shares are held by a Registered Owner (other than Shares deposited in CCASS)

LETTER FROM THE BOARD

Action to be taken by Beneficial Owners holding interests in Shares through CCASS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Application for excess Rights Shares

Action to be taken by Beneficial Owners whose Shares are held by a Registered Owner (other than Shares deposited in CCASS) who wish to apply for excess Rights Shares

LETTER FROM THE BOARD

Action to be taken by Beneficial Owners holding interest in Shares through CCASS who wish to apply for excess Rights Shares

Excess Rights Shares application procedures

LETTER FROM THE BOARD

Important notice for Beneficial Owners

LETTER FROM THE BOARD

Fractions of the Rights Shares

Status of the Rights Shares

Certificates for the Rights Shares and refund cheques

LETTER FROM THE BOARD

Application for listing

Rights Shares will be eligible for admission into CCASS

WH Group Limited Capital/Financing Update 2014