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 a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in China Baoli Technologies Holdings Limited, you should at once hand the Prospectus Documents to the purchaser(s) or transferee(s) or to the bank, stockbroker 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 ‘‘13. Documents delivered to the Registrar of Companies’’ in Appendix III to this Prospectus, has been registered with the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Law of Hong Kong). The Registrar of Companies in Hong Kong, the Stock Exchange and the SFC take no responsibility for the contents of any of these documents. You should read the whole of the Prospectus 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 New Shares and nil-paid Rights Shares’’ in the ‘‘Letter from the Board’’ in this Prospectus.

Subject to the granting of the listing of, and the permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares (in both their nil-paid and fully-paid forms) will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange, or such other dates as determined by HKSCC and you should consult your stockbroker or other licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser for details of those settlement arrangements and how such arrangements may affect your rights and interests. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

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

Distribution of this Prospectus into jurisdictions other than Hong Kong may be restricted by law. Persons who come into possession of this Prospectus should acquaint themselves with and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. 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 the US or any other jurisdiction in which such an offer or solicitation is unlawful. Except as otherwise set out in this Prospectus, the Rights Issue is not being extended to Shareholders with registered addresses in, or investors who are located or resident in any jurisdictions outside Hong Kong. This Prospectus has not been lodged or registered with any of the relevant authorities in any jurisdiction other than Hong Kong.

The securities described in this Prospectus have not been registered under the US Securities Act of 1933, as amended (the ‘‘US Securities Act’’) or the laws of any state in the US and may not be offered or sold within the US, absent registration or an exemption from the registration requirements of the US Securities Act and applicable US state laws. There is no intention to register any portion of the Rights Issue or any securities described in this Prospectus in the US or to conduct a public offering of securities in the US.

==> picture [36 x 53] intentionally omitted <==

China Baoli Technologies Holdings Limited 中國寶力科技控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) NEW SHARES HELD ON THE RECORD DATE

Underwriters to the Rights Issue

Kingkey Securities Group Limited

Koala Securities Limited

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed ‘‘Definitions’’ in this Prospectus, unless otherwise stated.

The Rights Issue is only underwritten on a best effort basis. In the event of under-subscription, any Rights Shares not taken up by the Qualifying Shareholders whether under PAL(s) or EAF(s), or transferees of nil-paid Rights Shares, and not subscribed by subscribers procured by the Underwriters (or either of them, whichever shall be appropriate) will not be issued, and hence, the size of the Rights Issue will be reduced accordingly. Pursuant to the Company’s constitutional documents and the Companies Act, there are no requirements for minimum levels of subscription in respect of the Rights Issue. The Rights Issue is subject to fulfillment or satisfaction of the conditions precedent of the Rights Issue as set out in the section headed ‘‘Letter from the Board — Conditions precedent of the Rights Issue’’ in this Prospectus and the Underwriting Agreement contains provisions granting the Underwriters the right to terminate the obligations of the Underwriters thereunder on the occurrence of certain events including force majeure at or prior to the latest time for the Rights Issue to become unconditional (which is currently expected to be 4: 00 p.m. on Wednesday, 29 September 2021). If the Underwriting Agreement does not become unconditional or if any of the conditions precedent of the Rights Issue are not fulfilled at or prior to the latest time for the Rights Issue to become unconditional, the Rights Issue will not proceed.

Dealings in the Rights Shares in the nil-paid form will take place from Wednesday, 15 September 2021 to Thursday, 23 September 2021 (both days inclusive). If the conditions precedent of the Rights Issue are not fulfilled or the Underwriting Agreement is terminated by the Underwriters, the Rights Issue will not proceed. Any person contemplating dealing in the nil-paid Rights Shares up to the date on which all the conditions precedent of the Rights Issue are fulfilled or waived (as applicable) and the date on which the Underwriters’ right of termination of the Underwriting Agreement ceases, and/or dealings in the nil-paid Rights Shares, shall accordingly bear the risk that the Rights Issue may not become unconditional and/or may not proceed. Any Shareholders or other persons contemplating any dealing in the New Shares and/or the nil-paid Rights Shares are recommended to consult their own professional advisers and exercise caution.

The latest date and time for acceptance of and payment for the Rights Shares and application for and payment for Excess Rights Shares is 4: 00 p.m. on Tuesday, 28 September 2021. The procedures for acceptance and payment and/or transfer of the Rights Shares are set out on pages 18 to 19 of this Prospectus set out in the section headed ‘‘Letter from the Board — Procedures for acceptance and payment or transfer’’ in this Prospectus.

13 September 2021

		Page
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		ii
DEFINITIONS	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
TERMINATION OF THE UNDERWRITING AGREEMENT . . . . . . . . . . . . . . . . . . . .		8
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		10
APPENDIX I	— FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . . . .	I-1
APPENDIX II	— UNAUDITED PRO FORMA FINANCIAL INFORMATION
	OF THE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	II-1
APPENDIX III	— GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1

– i –

EXPECTED TIMETABLE

The expected timetable for the implementation of the Rights Issue is set out below. The expected timetable is for indicative purpose only and may be subject to change, and any such change will be announced by the Company as and when appropriate. The expected timetable has been prepared on the assumption that all the conditions precedent of the Rights Issue will be fulfilled.

Event Time and Date
2021
First day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . 9: 00 a.m. on
Wednesday,15 September
Designated broker starts to stand in the market
to provide matching services for odd lots
of the New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9: 00 a.m. on
Wednesday, 15 September
Latest time for splitting of PALs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4: 30 p.m. on
Friday, 17 September
Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . .Thursday, 23 September
Latest time for acceptance of and payment
for the Rights Shares and application for and
payment for Excess Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4: 00 p.m. on
Tuesday, 28 September
Latest time to terminate the Underwriting Agreement
and for the Rights Issue to become unconditional. . . . . . . . . . . . . . . . . 4: 00 p.m. on
Wednesday, 29 September
Announcement of results of the Rights Issue . . . . . . . . . . . . . . . . Wednesday, 6 October
Despatch of share certificates for fully-paid
Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 7 October
Despatch of refund cheques, if any, for wholly or
partially unsuccessful excess applications or if the
Rights Issue is terminated . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 7 October
Commencement of dealings in fully-paid Rights Shares. . . . . . . . . . . . . . . 9: 00 a.m. on
Friday, 8 October
Designated broker ceases to provide matching services
for odd lots of the New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4: 00 p.m. on
Friday, 29 October

– ii –

EXPECTED TIMETABLE

All times and dates stated in this Prospectus refer to Hong Kong local times and dates. Dates or deadlines specified in the expected timetable above are for indicative purpose only and may be extended or varied by the Company in agreement with the Underwriters and in accordance with the Listing Rules. Any changes to the expected timetable will be published or notified to the Shareholders and the Stock Exchange as and when appropriate.

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

Whenever any part of the expected timetable of the Rights Issue as enlisted in the provisions of the Underwriting Agreement may be interrupted by a typhoon, a black rainstorm warning or Extreme Conditions, the Company shall properly inform the Shareholders of the corresponding contingency arrangements, which contingency arrangements shall include the Latest Time for Acceptance not taking place on the time as scheduled:

(a) if a tropical cyclone warning signal no. 8 or above, a black rainstorm warning and/or Extreme Conditions is in force in Hong Kong at any local time before 12: 00 noon but no longer in force after 12: 00 noon on the day on which the Latest Time for Acceptance is initially scheduled to fall, the Latest Time for Acceptance be extended to 5: 00 p.m. on the same Business Day; or
(b) if a tropical cyclone warning signal no. 8 or above, a black rainstorm warning and/or Extreme Conditions is in force in Hong Kong at any local time between 12: 00 noon and 4: 00 p.m. on the day on which the Latest Time for Acceptance is initially scheduled to fall, the Latest Time for Acceptance be extended to 4: 00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9: 00 a.m. and 4: 00 p.m.

If the Latest Time for Acceptance does not take place on or before 4: 00 p.m. on Tuesday, 28 September 2021, the dates mentioned herein may be affected. The Company will notify the Shareholders by way of announcement(s) on any change to the expected timetable of the Rights Issue as soon as practicable.

– iii –

DEFINITIONS

In this Prospectus, unless the context otherwise requires, the following terms shall have the following meanings:

‘‘acting in concert’’ having the meaning as set out in the Takeovers Code
‘‘Announcement’’ the announcement of the Company dated 14 July 2021 in relation to, among others, the Capital Reorganisation and the Rights Issue
‘‘associate(s)’’ the meaning attributed to it under the Listing Rules
‘‘Board’’ the board of Directors
‘‘Business Day’’ any day (other than a Saturday, Sunday or public holiday or a day on which a typhoon signal no. 8 or above or black rainstorm signal is hoisted or the Extreme Conditions is announced in Hong Kong between 9: 00 a.m. to 5: 00 p.m.) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours
‘‘Capital Reduction’’ the reduction in the issued share capital of the Company through cancellation of the paid up capital of the Company to the extent of HK$0.99 on each of the issued Consolidated Shares such that the par value of each issued Consolidated Share was reduced from HK$1.00 to HK$0.01 and cancellation of fractional Consolidated Share, details of which were set out in the circular of the Company dated 5 August 2021 in relation to the Capital Reorganisation
‘‘Capital the capital reorganisation of the share capital of the Company Reorganisation’’ involving the Share Consolidation, the Capital Reduction, the Share Subdivision and the transfer of the credit arising from the Capital Reduction to the Contributed Surplus Account which has become effective on 1 September 2021
‘‘CCASS’’ the Central Clearing and Settlement System established and operated by HKSCC
‘‘Companies Act’’
the Companies Act 1981 of Bermuda (as amended from time to time)
‘‘Companies (WUMP) the Companies (Winding Up and Miscellaneous Provisions) Ordinance’’ Ordinance, Chapter 32 of the Laws of Hong Kong (as amended from time to time)

– 1 –

DEFINITIONS

‘‘Company’’ China Baoli Technologies Holdings Limited, an exempted company limited by shares in Bermuda with limited liability, the issued Shares of which are listed on the Stock Exchange (Stock Code: 164)

‘‘connected person(s)’’ shall have the meaning ascribed to it in the Listing Rules
‘‘Consolidated ordinary share(s) of par value of HK$1.00 each in the share Share(s)’’ capital of the Company immediately after the Share Consolidation becoming effective but before the Capital Reduction
‘‘Contributed Surplus the contributed surplus account of the Company Account’’
‘‘Director(s)’’ the director(s) of the Company for the time being
‘‘EAF(s)’’ the form(s) of application for Excess Rights Shares in the agreed form for use by such Qualifying Shareholders who wish to apply for any Excess Rights Shares
‘‘Excess Rights any nil-paid Rights Share(s) provisionally allotted but not Share(s)’’ accepted by any of the Qualifying Shareholders or otherwise subscribed for by transferees of nil-paid Rights Shares prior to the Latest Time for Acceptance, any entitlements of the Excluded Shareholders provisionally allotted to a nominee of the Company which are left unsold, and shall include any of the Rights Shares created from the aggregation of fractions of the Rights Shares and the Scale-down PAL Shares (if any) and the Scale-down EAF Shares (if any)
‘‘Excluded those Overseas Shareholders whose address is/are in such Shareholder(s)’’ place(s) outside Hong Kong where the Directors, consider it being necessary or expedient on account of either of the legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place, to whom the Directors decide not to offer the Rights Shares
‘‘Extreme Conditions’’ the extreme conditions as announced by any Hong Kong Government department or body or otherwise, whether or not under or pursuant to the revised ‘‘Code of Practice in Times of Typhoons and Rainstorms’’ issued by the Labour Department in June 2019 in the event of serious disruption of public transport services, or government services, extensive flooding, major landslides or large-scale power outrage after typhoons or incidents similar in seriousness or nature

– 2 –

DEFINITIONS

‘‘First Underwriter’’ Kingkey Securities Group Limited, a licensed corporation carrying out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities under the SFO and its ordinary course of business includes underwriting of securities

‘‘Group’’ collectively, the Company and its subsidiaries
‘‘HKSCC’’ Hong Kong Securities Clearing Company Limited
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC
‘‘Independent Third any person or company and their respective ultimate beneficial Party(ies)’’ owner(s), to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons within the meaning of the Listing Rules
‘‘Last Trading Day’’ 14 July 2021, being the last trading day of the Shares on the Stock Exchange prior to the release of the Announcement
‘‘Latest Practicable 7 September 2021, being the latest practicable date prior to the Date’’ printing of this Prospectus for the purpose of ascertaining certain information contained in this Prospectus
‘‘Latest Time for 4: 00 p.m. on Tuesday, 28 September 2021 or such later time or Acceptance’’ date as may be agreed between the Parties in writing, being the latest time for acceptance of, and payment for, the Rights Shares and application for and payment for Excess Rights Shares as described in the Prospectus Documents
‘‘Latest Time for 4: 00 p.m. on Wednesday, 29 September 2021 or such later time Termination’’ or date as may be agreed between the Parties in writing, which shall be the latest time for termination of the Underwriting Agreement
‘‘Listing Committee’’ has the meaning as defined in the Listing Rules
‘‘Listing Rules’’ the Rules Governing the Listing of Securities on the main board of the Stock Exchange as amended from time to time
‘‘MGO Obligation’’ the obligation to make a mandatory general offer under the Takeovers Code
‘‘New Share(s)’’ ordinary share(s) of par value of HK$0.01 each in the share capital of the Company immediately after the Capital Reorganisation becoming effective

– 3 –

DEFINITIONS

‘‘Overseas such Shareholder(s) whose registered address(es) (as shown in the Shareholder(s)’’ register of members of the Company at the close of business on the Record Date) is/are situate outside Hong Kong
‘‘PAL(s)’’ the provisional allotment letter(s) in respect of the Rights Issue to be issued to the Qualifying Shareholders in respect to their pro rata entitlement under the Rights Issue
‘‘Parties’’ or each a the Company, the First Underwriter and the Second Underwriter ‘‘Party’’
‘‘PRC’’
the People’s Republic of China
‘‘Prospectus’’ the prospectus (including any supplementary prospectus, if any) to be despatched to the Shareholders in connection with the Rights Issue in such form as may be agreed between the Parties
‘‘Prospectus the Prospectus, the PAL and the EAF Documents’’
‘‘Prospectus Posting 13 September 2021 or such other date as may be agreed between Date’’ the Parties in writing, being the date for the despatch of the Prospectus Documents (in case of Excluded Shareholder(s), Prospectus only)
‘‘Public Float the public float requirement under Rule 8.08 of the Listing Rules Requirement’’
‘‘Qualifying the Shareholders whose names appear on the register of members Shareholders’’ of the Company at the close of business on the Record Date, other than the Excluded Shareholders
‘‘Record Date’’ 10 September 2021 or such other date as may be agreed between the Parties in writing, being the date for the determination of the entitlements under the Rights Issue
‘‘Registrar’’ Tricor Secretaries Limited, being the branch share registrar and transfer office of the Company in Hong Kong at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong
‘‘Relevant Proceeds’’ such gross amount as shall be equivalent to the Subscription Price multiplied by the actual number of the Rights Shares the subscription of which is procured by the Underwriter concerned pursuant to the Underwriting Agreement

– 4 –

DEFINITIONS

‘‘Rights Issue’’
the proposed issue of the Rights Shares for subscription by the Qualifying Shareholders on the basis of one (1) Rights Share for every two (2) New Shares held at the close of business on the Record Date at the Subscription Price payable in full on application and otherwise on the terms and subject to the conditions precedent set out in the Underwriting Agreement and the Prospectus Documents
‘‘Rights Share(s)’’ up to 186,078,061 New Share(s) for subscription by the Qualifying Shareholders by way of the Rights Issue
‘‘Scale-down EAF Shares’’
such number of Rights Shares applied for as excess application under the EAF(s) which would, if allotted by the Company, result in either the incurring of an MGO Obligation on the part of the applicant or the failure to comply with the Public Float Requirement on the part of the Company
‘‘Scale-down PAL such number of Rights Shares applied for under the PAL(s) Shares’’ which would, if allotted by the Company, result in either the incurring of an MGO Obligation on the part of the applicant or the failure to comply with the Public Float Requirement on the part of the Company
‘‘Scaling-down’’ the scale-down mechanisms of the Rights Issue as determined by the Company to which any application for the Rights Shares, whether under the PALs or EAFs, or transferees of nil-paid Rights Shares shall be subject to ensure that no application for the Rights Shares or the allotment thereof by the Company shall be at such level which may trigger any MGO Obligation or noncompliance with the Public Float Requirement
‘‘Second Underwriter’’ Koala Securities Limited, a licensed corporation carrying out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities under the SFO and its ordinary course of business includes underwriting of securities
‘‘SFC’’
the Securities and Futures Commission of Hong Kong
‘‘SFO’’
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘Shareholder(s)’’ holder(s) of the Share(s) from time to time
‘‘Share(s)’’ the ordinary share(s) of par value of HK$0.10 each in the share capital of the Company prior to the Capital Reorganisation becoming effective, the Consolidated Share(s) and/or the New Share(s), whichever shall be appropriate

– 5 –

DEFINITIONS

‘‘Share Consolidation’’ the consolidation of every ten (10) Shares into one (1) Consolidated Share, details of which were set out in the circular of the Company dated 5 August 2021 in relation to the Capital Reorganisation
‘‘Share Subdivision’’ the subdivision of every unissued Consolidated Share of HK$1.00 each in the authorised share capital of the Company (including those unissued Consolidated Shares arising from the Capital Reduction) into one hundred (100) New Shares of HK$0.01 each, details of which were set out in the circular of the Company dated 5 August 2021 in relation to the Capital Reorganisation
‘‘Specified Event’’ an event occurring or matter arising on or after the date of execution of the Underwriting Agreement and prior to the Latest Time for Termination which, if it had occurred or arisen before the date of execution of the Underwriting Agreement, would have rendered any of the warranties contained in the Underwriting Agreement untrue or incorrect in any material respect
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘Subscription Price’’ HK$0.40 per Rights Share
‘‘Takeovers Code’’ The Code on Takeovers and Mergers and Share Buy-backs issued by the SFC
‘‘Underwriters’’ or each the First Underwriter and the Second Underwriter an ‘‘Underwriter’’
‘‘Underwriting the underwriting agreement dated 14 July 2021 entered into Agreement’’ between the Company and the Underwriters and as revised, supplemented and/or amended from time to time in accordance with its terms
‘‘Underwritten Shares’’
up to 186,078,061 Rights Shares underwritten by the Underwriters on best effort basis pursuant to the Underwriting Agreement and the Appointment
‘‘United States’’ or ‘‘US’’
the United States of America (including its territories and dependencies, any state in the US and the District of Columbia)
‘‘Untaken Share(s)’’
such number of Rights Shares in respect of which duly completed PAL(s) or EAF(s) have not been lodged for acceptance or not fully paid by the Latest Time for Acceptance, including any Rights Shares to which the Excluded Shareholders would not have otherwise been entitled under the Rights Issue

– 6 –

DEFINITIONS

‘‘HK$’’

‘‘%’’

Hong Kong dollars, the lawful currency of Hong Kong per cent.

For identification purpose only

– 7 –

TERMINATION OF THE UNDERWRITING AGREEMENT

If, prior to the Latest Time for Termination:

(1) in the joint absolute opinion of the Underwriters, the success of the Rights Issue would be materially and adversely affected by:
(a) the introduction of any new law or regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever which may in the joint absolute opinion of the Underwriters materially and adversely affects the business or the financial or trading position or prospects of the Group as a whole or is materially adverse in the context of the Rights Issue; or
(b) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring or continuing before, and/or after the date of the Underwriting Agreement) of a political, military, financial, economic or other nature (whether or not ejusdem generis with any of the foregoing), or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets which may, in the joint absolute opinion of the Underwriters materially and adversely affects the business or the financial or trading position or prospects of the Group as a whole or materially and adversely prejudice the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(2) any adverse change in market conditions (including without limitation, any change in fiscal or monetary policy, or foreign exchange or currency markets, suspension or material restriction on trading in securities) occurs which in the joint opinion of the Underwriters and the Company is likely to materially or adversely affect the success of the Rights Issue or otherwise makes it inexpedient or inadvisable to proceed with the Rights Issue; or
(3) there is any change in the circumstances of the Company or any member of the Group which in the joint absolute opinion of the Underwriters will adversely affect the prospects of the Company, including, without limiting the generality of the foregoing, the presentation of a petition or the passing of a resolution for the liquidation or winding up or similar event occurring in respect of any of member of the Group or the destruction of any material asset of the Group; or
(4) any event of force majeure including, without limiting the generality thereof, any act of God, war, riot, public disorder, civil commotion or unrest, fire, flood, explosion, epidemic, pandemic, terrorism, strike or lock-out which would, in the joint absolute opinion of the Underwriters materially and adversely affects the business or the financial or trading position or prospects of the Group as a whole; or

– 8 –

TERMINATION OF THE UNDERWRITING AGREEMENT

(5) in the joint absolute opinion of the Underwriters, there occurs any other material adverse change in relation to the business or the financial or trading position or prospects of the Group as a whole whether or not ejusdem generis with any of the foregoing; or
(6) any matter which, had it arisen or been discovered immediately before the Prospectus Posting Date and not having been disclosed in the Prospectus Documents, would have constituted, in the joint absolute opinion of the Underwriters, a material omission in the context of the Rights Issue; or
(7) any suspension in the trading of securities generally or the Company’s securities on the Stock Exchange for a period of more than twenty (20) consecutive trading days otherwise than due to or in connection with or in relation to the Underwriting Agreement and/or the Rights Issue and excluding any suspension in connection with the clearance of announcement or other matters in connection with the Underwriting Agreement and/or the Rights Issue; or
(8) the Prospectus Documents when published contains information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the Listing Rules or any applicable regulations) which has not prior to the date of the Underwriting Agreement been publicly announced or published by the Company and which may in the joint absolute opinion of the Underwriters be material to the Group as a whole upon completion of the Rights Issue and is likely to affect materially and adversely the success of the Rights Issue,

the Underwriters shall be entitled to jointly terminate the Underwriting Agreement by joint notice in writing served on the Company on or prior to the Latest Time for Termination (the ‘‘Termination Notice’’). For the avoidance of any doubt, even if the Underwriters, in their respective sole and absolute opinion considers any COVID-19 related event to have caused a material adverse impact over the implementation of the Underwriting Agreement or the Rights Issue, they shall not be entitled to rely on such impact or its aftermath thereof as ground or reason to terminate or rescind the Underwriting Agreement and/or the Rights Issue.

If the Underwriters terminate the Underwriting Agreement, the Rights Issue will not proceed. A further announcement would be made by the Company if the Underwriting Agreement is terminated by the Underwriters.

– 9 –

LETTER FROM THE BOARD

==> picture [36 x 54] intentionally omitted <==

China Baoli Technologies Holdings Limited 中國寶力科技控股有限公司

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

Executive Directors: Registered office: Mr. Zhang Yi (Chairman) Clarendon House Ms. Chu Wei Ning (Chief Executive Officer) 2 Church Street Ms. Lam Sze Man Hamilton HM11 Bermuda

Independent non-executive Directors: Mr. Chan Fong Kong, Francis Principal place of business in Hong Kong: Mr. Chan Kee Huen, Michael Suites 3706–3708, 37/F Mr. Feng Man Dah Sing Financial Centre 248–256 Queen’s Road East, Wanchai Hong Kong

13 September 2021

To the Qualifying Shareholders and, for information purpose only, to the Excluded Shareholders,

Dear Sir or Madam,

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) NEW SHARES HELD ON THE RECORD DATE

INTRODUCTION

References are made to the Announcement, the circular of the Company dated 5 August 2021. The Company proposed the Capital Reorganisation — (i) the Share Consolidation of every ten Shares into one Consolidated Share and (ii) the Capital Reduction. The Capital Reorganisation became effective on 1 September 2021.

Immediately prior to the Capital Reorganisation becoming effective, there were 3,721,561,225 ordinary shares of par value of HK$0.10 each in the share capital of the Company. Upon the Capital Reorganisation becoming effective, the number of issued shares of the Company was consolidated into 372,156,122 New Shares.

– 10 –

LETTER FROM THE BOARD

Reference is made to the Announcement whereby the Board announced that the Company proposed to implement the Rights Issue on the basis of one (1) Rights Share for every two (2) New Shares held on the Record Date at the Subscription Price of HK$0.40 per Rights Share, to raise up to approximately HK$74.43 million before expenses. On the date of the Announcement, the Company and the Underwriters entered into the Underwriting Agreement, pursuant to which, the Underwriters have conditionally agreed to underwrite, on a best effort basis, the Underwritten Shares up to 186,078,061 Rights Shares (assuming no Shares are issued and no repurchase of Shares on or before the Record Date), subject to the terms and conditions set out in the Underwriting Agreement, in particular the fulfilment of the conditions precedent contained therein. From the date of the Announcement and up to 6 September 2021, being the date the register of members of the Company closed for determining entitlement under the Rights Issue, no issue or repurchase of Shares has been conducted. As a result, the total number of issued Shares as at the Latest Practicable Date and the Record Date was 372,156,122 New Shares and the total number of Rights Shares to be issued will be up to 186,078,061 Rights Shares. The Rights Issue will only be available to the Qualifying Shareholders and will not be available to the Excluded Shareholders.

The purpose of this Prospectus is to provide you with, among other things, further details on (i) the Rights Issue and the underwriting arrangement; (ii) the financial information of the Group; and (iii) the general information of the Group.

PROPOSED RIGHTS ISSUE

The Board proposes the Rights Issue, details of which are summarised below:

Rights Issue statistics

Basis of the Rights Issue : One (1) Rights Share for every two (2) New Shares held at the close of business on the Record Date Number of Shares in issue as at : 372,156,122 New Shares the Latest Practicable Date and the Record Date Number of Rights Shares to be : Up to 186,078,061 Rights Shares issued pursuant to the Rights Issue Aggregate nominal value of the : Up to HK$1,860,780.61 Rights Shares Subscription Price : HK$0.40 per Rights Share Net price per Rights Share (i.e. : Approximately HK$0.38 per Rights Share Subscription Price less costs and expenses incurred in the Rights Issue)

– 11 –

LETTER FROM THE BOARD

Total number of issued New : Up to 558,234,183 New Shares Shares upon completion of the Rights Issue Gross proceeds from the : Up to HK$74,431,224.40 before expenses Rights Issue Right of excess applications : Qualifying Shareholders may apply for Rights Shares in excess of their provisional allotment

As at the Latest Practicable Date and the Record Date, the Company has no other outstanding derivatives, options, warrants or securities in issue which confer any rights to subscribe for, convert or exchange into Shares. Therefore, the total number of issued Shares as at the Latest Practicable Date and the Record Date was 372,156,122 New Shares and the total number of Rights Shares to be issued by the Company will be up to 186,078,061 Rights Shares.

As at the Latest Practicable Date, the Board has not received any information or other undertakings from any Shareholders of their intention to take up or not to take up the securities of the Company to be offered to them under the Rights Issue. The Company shall not from the date of the Underwriting Agreement until after the Latest Time for Acceptance issue any Shares or issue or grant any options or other securities convertible into, exchangeable for or which carry rights to acquire any Shares.

As at the Latest Practicable Date, assuming all the Rights Shares are fully subscribed, the 186,078,061 Rights Shares to be issued pursuant to the terms of the proposed Rights Issue represents 50.00% of the total number of issued New Shares and approximately 33.33% of the total number of issued New Shares as enlarged by the allotment and issue of the Rights Shares.

The Rights Issue is only underwritten on a best effort basis. Pursuant to the Company’s constitutional documents and the Companies Act, there are no requirements for minimum levels of subscription in respect of the Rights Issue. Subject to fulfilment or satisfaction of the conditions precedent of the Rights Issue, the Rights Issue shall proceed regardless of its level of acceptances, and up to 186,078,061 Rights Shares are committed to be subscribed subject, however, to any Scaling-down vis-a-vis the MGO Obligation or the Public Float Requirement.

In the event of under-subscription, any Rights Shares not taken up by the Qualifying Shareholders whether under PAL(s) or EAF(s), or transferees of nil-paid Rights Shares, and not subscribed by subscribers procured by the Underwriters (or either of them, whichever shall be appropriate) will not be issued, and hence, the size of the Rights Issue will be reduced accordingly. Investors are advised to exercise caution when dealing in the Shares.

– 12 –

LETTER FROM THE BOARD

Subscription Price

The Subscription Price is HK$0.40 per Rights Share, payable in full upon acceptance of the relevant provisional allotment of Rights Shares and, where applicable, application for Excess Rights Shares under the Rights Issue or when a transferee of nil-paid Rights Shares applies for the Rights Shares.

The Subscription Price represents:

(i) a premium of 25.00% over the closing price of HK$0.32 per New Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 29.82% to the adjusted closing price of HK$0.57 per New Share (after taking into account the effect of the Capital Reorganisation), based on the closing price of HK$0.057 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 31.03% to the adjusted average closing price of HK$0.58 per New Share (after taking into account the effect of the Capital Reorganisation), based on the average closing price of HK$0.058 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days up to and including the Last Trading Day;
(iv) a discount of approximately 31.03% to the adjusted average closing price of approximately HK$0.58 per New Share (after taking into account the effect of the Capital Reorganisation), based on the average closing price of approximately HK$0.058 per Share as quoted on the Stock Exchange for the last ten (10) consecutive trading days up to and including the Last Trading Day;
(v) a discount of approximately 21.57% to the theoretical ex-rights price of approximately HK$0.51 per New Share (after taking into account the effect of the Capital Reorganisation), based on the closing price of HK$0.057 per Share as quoted on the Stock Exchange on the Last Trading Day; and
(vi) a theoretical dilution effect (as defined under Rule 7.27B of the Listing Rules) represented by a discount of approximately 10.34%, represented by the theoretical diluted price of approximately HK$0.52 per New Share (after taking into account the effect of the Capital Reorganisation) to the benchmarked price of approximately HK$0.58 per New Share (taking into account the closing price on the Last Trading Day of HK$0.057 per Share and the average of the closing prices of the Shares as quoted on the Stock Exchange for the five (5) previous consecutive trading days prior to the Last Trading Day of approximately HK$0.058 per Share and adjusted for the effect of the Capital Reorganisation).

– 13 –

LETTER FROM THE BOARD

In addition, for the information of the Shareholders and potential investors of the Company, the audited consolidated net liabilities as at 31 March 2021 per New Share (after taking into account the effect of the Capital Reorganisation) would be equal to approximately HK$1.45, calculated based on the Group’s audited consolidated net liabilities of HK$540,164,000 as at 31 March 2021 and the 372,156,122 New Shares (after taking into account the effect of the Capital Reorganisation) in issue.

The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriters with reference to, among others, (i) the market price of the Shares under the then market conditions; (ii) the financial position of the Group; and (iii) the reasons as discussed in the section headed ‘‘REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS’’ in this Prospectus.

In determining the Subscription Price, which represents a discount of approximately 29.82% to the adjusted closing price of HK$0.57 per New Share (after taking into account the effect of the Capital Reorganisation) on the Last Trading Day, the Directors have considered, among other things as mentioned above, market price of the Shares traded on the Stock Exchange in the past three months prior to and including the Last Trading Day (the ‘‘Relevant Period’’), as a benchmark to reflect the prevailing market conditions and recent market sentiment. During the Relevant Period, the Shares were traded on the Stock Exchange with an adjusted average closing price of approximately HK$0.58 per New Share (after taking into account the effect of the Capital Reorganisation). The Subscription Price of HK$0.40 per Rights Share represents a discount of approximately 31.03% to the adjusted average closing price of approximately HK$0.58 per New Share (after taking into account the effect of the Capital Reorganisation).

The Directors are of the view that given the Group recorded net liabilities as at 31 March 2021 and a loss of approximately HK$113 million for the year ended 31 March 2021, the Subscription Price which represents a discount of approximately 29.82% to the adjusted closing price of HK$0.57 per New Share (after taking into account the effect of the Capital Reorganisation) on the Last Trading Day is fair and reasonable and in the best interests of the Company and the Shareholders as a whole.

As all Qualifying Shareholders are provided with an equal opportunity to subscribe for their assured entitlements under the Rights Issue for the purpose of maintaining their respective existing shareholding interests in the Company at a relatively low price as compared to the historical market price of the Shares and discount to the recent closing prices of the Shares, the Directors consider that the discount of the Subscription Price will encourage the Qualifying Shareholders to participate in the future growth of the Group. The Qualifying Shareholders who do not wish to take up their provisional entitlements under the proposed Rights Issue are able to sell the nil-paid Rights Shares in the market. The Directors consider that the terms of the Rights Issue, including the Subscription Price, are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 14 –

LETTER FROM THE BOARD

Status of the Rights Shares

The Rights Shares, when allotted, issued and fully paid, shall rank pari passu in all respects with the New Shares then in issue, including the right to receive all dividends and distributions which may be declared, made or paid with a record date which falls on or after the date of allotment of the Rights Shares in their fully-paid form.

Qualifying Shareholders

The Rights Issue will only be available to the Qualifying Shareholders and will not be available to the Excluded Shareholders. The Company has despatched the Prospectus Documents to the Qualifying Shareholders on the Prospectus Posting Date and despatched the Prospectus (without the PAL or the EAF) to the Excluded Shareholders for their information only.

To qualify for the Rights Issue, a Shareholder:

(i) must be registered as a member of the Company at the close of business on the Record Date; and
(ii) is not an Excluded Shareholder.

Shareholders whose Shares are held by nominee companies (or which are deposited in CCASS) should note that the Board will regard a nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Shareholders with their Shares held by nominee companies (or which are deposited in CCASS) are advised to consider whether they would like to arrange for registration of the relevant Shares in the name of the beneficial owner(s) prior to the Record Date.

In order to be registered as members of the Company prior to the close of business on the Record Date so as to qualify for the Rights Issue, any transfer of Shares (together with the relevant Share certificates) must be lodged with the Registrar for registration by 4: 30 p.m. on Friday, 3 September 2021. The latest time for acceptance of and payment for the Rights Shares is expected to be at 4: 00 p.m. on Tuesday, 28 September 2021.

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

Rights of Overseas Shareholders

The Prospectus Documents will not be registered or filed under the applicable securities legislation of any jurisdiction other than Hong Kong. Overseas Shareholders may not be eligible to take part in the Rights Issue as explained below.

– 15 –

LETTER FROM THE BOARD

According to the register of members of the Company as at the Record Date, there were five (5) Overseas Shareholders who collectively held 953,499 New Shares in aggregate, representing approximately 0.26% of the total number of Shares in issue as at the Latest Practicable Date. Amongst these five (5) Overseas Shareholders, one (1) has its registered address situated in the British Virgin Islands (‘‘BVI’’) (the ‘‘BVI Shareholder’’), one (1) has his registered address situated in Canada, one (1) has her registered address situated in Australia, one (1) has his registered address situated in Taiwan and one (1) has his registered address situated in the United States. Save for the above, the Company did not have any other Overseas Shareholders.

In compliance with Rule 13.36(2)(a) of the Listing Rules, the Directors have made enquiries with legal advisers of the BVI, Canada, Australia, Taiwan and the United States, respectively, on whether or not under the laws of the respective relevant overseas jurisdictions, the Rights Issue could be extended to the Overseas Shareholders.

The Company has been advised by its legal adviser of the BVI that there are no restrictions under the securities law or other similar laws in the BVI which would prevent the Company from including the one (1) BVI Shareholder in the Rights Issue. Accordingly, the extension of the Rights Issue to the one (1) BVI Shareholder and the offering of the Rights Shares to it will not violate any applicable law or regulations in the BVI. There are no requirements of the relevant regulatory body or stock exchange in the BVI regarding the Rights Issue to the one (1) BVI Shareholder. It is the responsibility of the one (1) BVI Shareholder to observe the local legal and regulatory requirements applicable to it for taking up and onward sale (if applicable) of the Rights Shares. Based upon such advice, the Directors have decided to extend the Rights Issue to the one (1) BVI Shareholder, and that one (1) BVI Shareholder shall therefore be a Qualifying Shareholder.

For the other four (4) Overseas Shareholders, as at the Latest Practicable Date, based on the advice provided by legal advisers as to the laws of Canada, Australia, Taiwan and the United States, respectively, the Directors are of the view that it is necessary and expedient to exclude the Overseas Shareholder in Canada, Australia, Taiwan and the United States for the purpose of the Rights Issue and such Overseas Shareholder will be regarded as Excluded Shareholders as the extension of the Rights Issue to such Excluded Shareholders would, or might, in the absence of compliance with registration or other exemption requirements or other special formalities or specific requirements, be unlawful or impracticable and the cost to be incurred and time required for complying with the registration and/or other relevant requirements would outweigh the possible benefits to the Company and the Excluded Shareholders. The Company will send a copy of this Prospectus (without the PAL and the EAF) to the Excluded Shareholders for information only.

Accordingly, no person receiving a copy of any of the Prospectus Documents in any territory outside Hong Kong and the BVI may treat it as an offer or invitation to apply for the Rights Shares, unless in a territory such an offer or invitation could lawfully be made without compliance with any registration or other legal or regulatory requirements thereof.

– 16 –

LETTER FROM THE BOARD

It is the responsibility of the Qualifying Shareholders outside Hong Kong wishing to make an application for the Rights Shares to satisfy himself/herself/itself before acquiring any rights to subscribe for the Rights Shares as to the observance of the laws and regulations of all relevant territories, including the obtaining of any governmental or other consents, and to pay any taxes and duties required to be paid in such territory in connected therewith. Any acceptance of or application for Rights Shares by any person will be deemed to constitute a representation and warranty from such person to the Company that these local laws and requirements have been fully complied with. If you are in doubt as to your position, you should consult your own professional advisers. The Company reserves the right to refuse to accept any application for the Rights Shares where it believes that doing so would violate the applicable securities or other laws or regulations of any jurisdiction. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give, or be subject to, any of the above representation and warranty.

Arrangements will be made for the Rights Shares, which would otherwise have been provisionally allotted to the Excluded Shareholders, to be sold in the market as soon as practicable after the commencement of dealings on the Stock Exchange in Rights Shares in nil-paid form and in any event before the last day for dealing in the nil-paid Rights Shares if a premium (net of expenses) can be obtained. In the event that and to the extent that such nil-paid Rights Shares can be sold, the Company will then distribute such proceeds in Hong Kong dollars (after deducting the expenses of sale (if any)) to the Excluded Shareholders pro rata (but rounded down to the nearest cent) to their shareholdings on the Record Date, except that individual amount of HK$100 or less shall not be so distributed but shall be retained for the benefit of the Company.

The Company reserves the right to treat as invalid any acceptance of or applications for 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 should exercise caution when dealing in the New Shares.

Basis of provisional allotments

The Company shall provisionally allot the Rights Shares to the Qualifying Shareholders at the Subscription Price, in the proportion of one (1) Rights Share for every two (2) New Shares held on the Record Date. Application for all or any part of a Qualifying Shareholder’s provisional allotment should be made by completing the PAL and lodging the same with a remittance for the Rights Shares being applied for with the Registrar on or before the Latest Time for Acceptance. Any holdings (or balance of holdings) of less than two (2) New Shares will not entitle their holders to be provisionally allotted a Rights Share. Please refer to the arrangement as referred to in the paragraph headed ‘‘Fractional entitlements’’ below.

Fractional entitlements

In any event, fractions of the Rights Shares will not be provisionally allotted to any of the Qualifying Shareholders. Fractional entitlements will be rounded down to the nearest whole number of Rights Shares. Any Rights Shares created from the aggregation of fractions of the Rights Shares will be made available for excess application by the

– 17 –

LETTER FROM THE BOARD

Qualifying Shareholders as described in the paragraph headed ‘‘Application for Excess Rights Shares’’ below. Should there be no excess application by the Qualifying Shareholders, those Rights Shares created from the aggregation of fraction of the Rights Shares may or may not be taken up by the Underwriters (or either of them, whichever shall be appropriate).

Application for the Rights Shares

The PALs and the EAFs relating to the Rights Shares will be enclosed with this Prospectus entitling the Qualifying Shareholders to whom it is addressed to subscribe for the Rights Shares as shown therein and application by Qualifying Shareholders shall be made by completing such form(s) and lodging the same with separate remittance for the Rights Shares being applied for with the Registrar of the Company by the Latest Time for Acceptance.

Procedures for acceptance and payment or transfer

Qualifying Shareholders should find enclosed with this Prospectus a PAL which entitles the Qualifying Shareholders to whom it is addressed to subscribe for the number of Rights Shares shown therein. If the Qualifying Shareholders wish to accept all the Rights Shares provisionally allotted to them as specified in the PALs, they must lodge the PALs in accordance with the instructions printed thereon, together with a remittance for the full amount payable on acceptance, with the Registrar, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong by no later than 4: 00 p.m. on Tuesday, 28 September 2021. All remittances must be made in Hong Kong dollars by cheques which must be drawn on an account with, or by banker’s cashier orders which must be issued by, a licensed bank in Hong Kong and made payable to ‘‘CHINA BAOLI TECHNOLOGIES HOLDINGS LIMITED – PAL Account’’ and crossed ‘‘ACCOUNT PAYEE ONLY’’.

It should be noted that unless the duly completed PAL, together with the appropriate remittance, has been lodged with the Registrar by not later than 4: 00 p.m. on Tuesday, 28 September 2021, whether by the original allottee or any person to whom the provisional allotment has been validly transferred, the relevant provisional allotment and all rights and entitlements 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 is not obliged to but may, at its sole and absolute discretion, treat a PAL as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the PAL is not completed in accordance with the relevant instructions. The Company may require such incomplete PAL to be completed by the relevant applicants at a later stage.

If a Qualifying Shareholder wishes to accept only part of the provisional allotment or transfer part of his/her/its rights to subscribe for the Rights Shares provisionally allotted to him/her/it under the PAL or to transfer part or all of his/her/its rights to more than one person, the original PAL must be surrendered and lodged for cancellation by not later than 4: 30 p.m. on Friday, 17 September 2021 to the Registrar, who will cancel the original PAL and issue new PALs in the denominations required which will be available for collection from the Registrar at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, after

– 18 –

LETTER FROM THE BOARD

9: 00 a.m. on the second Business Day after the surrender of the original PAL. It should be noted that stamp duty is payable in connection with a transfer of rights to subscribe for the Rights Shares. 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. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give or be subject to any of the above representations and warranties. 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 legislation or other laws or regulations of any jurisdiction.

The PAL contains further information regarding the procedures to be followed for acceptance and/or transfer of the whole or part of the provisional allotment of the Rights Shares by the Qualifying Shareholders. All cheques or banker’s cashier 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 together with a cheque or a banker’s cashier order, whether by a Qualifying Shareholder or by any nominated transferee(s), will constitute a warranty by the applicant that the cheque or the banker’s cashier order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereof, the Company reserves the right to reject any PAL in respect of which the cheque or banker’s cashier order is dishonoured on first presentation, 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 the right to terminate or rescind the Underwriting Agreement or if the conditions precedent of the Rights Issue as set out in the paragraph headed ‘‘Conditions precedent of the Rights Issue’’ below is not fulfilled or waived (as applicable) at or before 4: 00 p.m. on Wednesday, 29 September 2021 (or such later time or date as may be agreed between the Company and the Underwriters in writing), the monies received in respect of acceptances of the Rights Shares will be returned to the Qualifying Shareholders or such other persons to whom the Rights Shares in their nil-paid form have been validly transferred or, in the case of joint acceptances, to the first-named person without interest, by means of cheques despatched by ordinary post at the risk of such Qualifying Shareholders to their registered addresses by the Registrar on or before Thursday, 7 October 2021.

No receipt will be issued in respect of any PAL and/or remittances received.

Application for the Excess Rights Shares

The Company shall make the Excess Rights Shares available for subscription by the Qualifying Shareholders by means of EAF, and the Excess Rights Shares represent:

(i) any nil-paid Rights Shares provisionally allotted but not accepted by any of the Qualifying Shareholders or otherwise subscribed for by transferees of nil-paid Rights Shares prior to the Latest Time for Acceptance;

– 19 –

LETTER FROM THE BOARD

(ii) subject to the provisions of the Underwriting Agreement, any entitlements of the Excluded Shareholders provisionally allotted to a nominee of the Company which are left unsold;
(iii) any of the Rights Shares created from the aggregation of fractions of the Rights Shares; and
(iv) the Scale-down PAL Shares (if any) and the Scale-down EAF Shares (if any).

The Company will, upon consultation with the Underwriters, allocate the Excess Rights Shares (if any) at their discretion on a fair and equitable basis on the following principles:

(i) any Excess Rights Shares will be allocated to Qualifying Shareholders who apply for them on a pro rata basis by reference to the number of the Excess Rights Shares applied for;
(ii) reference will only be made to the number of Excess Rights Shares being applied for but no reference will be made to the Rights Shares comprised in applications by the PALs or the existing number of New Shares held by Qualifying Shareholders;
(iii) if the aggregate number of Rights Shares not taken up by the Qualifying Shareholders and/or transferees of nil-paid Rights Shares under the PALs is greater than the aggregate number of Excess Rights Shares applied for through the EAFs, the Company will allocate to each Qualifying Shareholder who applies for Excess Rights Shares in full application; and
(iv) no preference will be given to topping up odd lots to whole board lots.

Shareholders with their Shares held by a nominee company (or which are deposited in CCASS) should note that the Board will regard such nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually save and except for the beneficial owner(s) which the Company may permit in its absolute discretion. Shareholders with their Shares held by a nominee company (or which are deposited in CCASS) are advised to consider whether they would like to arrange for the registration of the relevant Shares in their own names on or prior to the Record Date for the purpose of the Rights Issue. Shareholders and investors of the Company should consult their professional advisors if they are in any doubt as to their status.

Application for Excess Rights Shares can be made only by duly completing and signing an EAF (in accordance with the instructions printed therein) and lodging the same with a separate cheque or banker’s cashier order for the amount payable for the Excess Rights Shares being applied for with the Registrar at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by not later than 4: 00 p.m. on Tuesday, 28 September 2021. All

– 20 –

LETTER FROM THE BOARD

remittances must be made in Hong Kong dollars by cheques which must be drawn on a bank account with, or by banker’s cashier orders which must be issued by, a licensed bank in Hong Kong and made payable to ‘‘CHINA BAOLI TECHNOLOGIES HOLDINGS LIMITED – EAF Account’’ and crossed ‘‘ACCOUNT PAYEE ONLY’’.

An announcement of results of acceptance of and excess applications for the Rights Issue will be published on the websites of the Stock Exchange and the Company on Wednesday, 6 October 2021. If no Excess Rights Shares are allotted to a Qualifying Shareholder who has applied for Excess Rights Shares, the amount tendered on application is expected to be returned by refund cheque to that Qualifying Shareholder in full without interest by ordinary post by the Registrar at his/her/its own risk on or before Thursday, 7 October 2021. If the number of Excess Rights Shares allotted to a Qualifying Shareholder is fewer than that applied for, the surplus application monies without interest are also expected to be returned by refund cheque to that Qualifying Shareholder by ordinary post by the Registrar at his/her/its own risk on or before Thursday, 7 October 2021.

All cheques or banker’s cashier 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 EAF will constitute a warranty and representation to the Company that all registration, legal and regulatory requirements of all relevant jurisdictions in connection with the EAF and any acceptance of it have been, or will be, duly complied with. For the avoidance of doubt, neither HKSCC nor HKSCC Nominees Limited will give or be subject to any of the above representations and warranties. The Company reserves the right to refuse to accept any application for Excess Rights Shares where it believes that doing so would violate the applicable securities legislation or other laws or regulations of any jurisdiction.

Completion and return of the EAF together with a cheque or a banker’s cashier order in payment for the Excess Rights Shares applied for will constitute a warranty by the applicant that the cheque or the banker’s cashier order will be honoured on first presentation. Without prejudice to the other rights of the Company in respect thereto, the Company reserves the right to reject any EAF in respect of which the accompanying cheque or banker’s cashier order is dishonoured on first presentation, and in that event, all rights thereunder will be deemed to have been declined and will be cancelled.

The EAF is for use only by the Qualifying Shareholders to whom it is addressed and is not transferable. All documents, including cheques or banker’s cashier orders for amounts due, will be sent by ordinary post at the risk of the persons entitled thereto to their registered addresses by the Registrar. The Company may, at its discretion, treat an EAF as valid and binding on the person(s) by whom or on whose behalf it is lodged even if the EAF is not completed in accordance with the relevant instructions. The Company may require such incomplete EAF to be completed by the relevant applicants at a later stage.

– 21 –

LETTER FROM THE BOARD

date as may be agreed between the Company and the Underwriters in writing), the monies received in respect of application for Excess Rights Shares will be returned to the Qualifying Shareholders or, in the case of joint acceptances, to the first-named person without interest, by means of cheques despatched by ordinary post at the risk of such Qualifying Shareholders to their registered addresses by the Registrar on or before Thursday, 7 October 2021.

It should be noted that no receipt will be issued in respect of any EAF and/or remittances received.

Share certificates of the Rights Shares and refund cheques for the Rights Issue

Subject to fulfillment of the conditions precedent of the Rights Issue, share certificates for the fully-paid Rights Shares are expected to be posted on or before Thursday, 7 October 2021 to those entitled thereto by ordinary post, at their own risk, to their registered addresses. If the Underwriting Agreement is terminated or not becoming unconditional, refund cheques will be posted on or before Thursday, 7 October 2021 by ordinary post, at the respective Shareholders’ own risk, to their registered addresses. Refund cheques in respect of wholly or partially unsuccessful applications for Excess Rights Shares (if any) are expected to be posted on or before Thursday, 7 October 2021, by ordinary post to the applicants, at their own risk, to their registered addresses. Each Shareholder will receive one share certificate for all allotted Shares.

Scale-down of subscriptions to avoid the triggering of MGO Obligation and non-compliance of Public Float Requirement

Pursuant to the Underwriting Agreement and the Appointment (as defined in the section head ‘‘THE UNDERWRITING AGREEMENT’’ below) but subject to the Maximum Undertakings (as defined in the section headed ‘‘THE UNDERWRITING AGREEMENT’’ below), as the Rights Issue is only underwritten by the Underwriters on a best effort basis, and so as to avoid the unwitting triggering of MGO Obligations and/or any non-compliance with Public Float Requirements, all applications for Rights Shares whether under the PAL(s) or the EAF(s), or by transferees of nil-paid Rights Shares, or by subscribers procured by the Underwriters (or either of them, whichever shall be appropriate) will be made on the basis that the applications are to be scaled-down by the Company to a level which (a) does not trigger an MGO Obligation on the part of the applicant or parties acting in concert with him/her/it; and/or (b) does not result in the noncompliance of the Public Float Requirement on the part of the Company. Any subscription monies for the Scale-down PAL Shares or the Scale-down EAF Shares will be refunded to the applicants, and the Scale-down PAL Shares and the Scale-down EAF Shares will be made available for subscription by other Qualifying Shareholders through the EAF(s).

In addition, under and/or pursuant to the Scaling-down, any application for Rights Shares, whether under PAL(s) or EAF(s), shall be subject to the scale-down mechanisms of the Rights Issue as determined by the Company to levels which do not trigger any MGO Obligation or non-compliance of Public Float Requirement. Such scale-down of applications of Rights Shares shall operate on a fair and equitable basis under the following principles: (a) EAF(s) should be scaled down before PAL(s); and (b) where the

– 22 –

LETTER FROM THE BOARD

scale-down is necessitated by the exceeding of shareholding by a group rather than an individual Shareholder, the allocations of EAF(s) and PAL(s) to members of the affected group should be made on a pro rata basis by reference to the number of New Shares held by the affected applicants on the Record Date, but for avoidance of any doubt, any or any such onward allocation(s) shall be subject to the Scaling-down as well.

Taxation

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

Application for listing

The Company has made an application to the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms) to be allotted and issued pursuant to the Rights Issue. The nil-paid and fully-paid Rights Shares will be traded in the board lots of 5,000 Shares. No part of the equity or debt securities of the Company is listed or dealt in or on which listing or permission to deal is being or is proposed to be sought on any other stock exchange.

Subject to the granting of the listing of, and the permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares (in both their nil-paid and fully-paid forms) will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange, or such other dates as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Shareholders should seek advice from their licensed securities dealer(s) or other professional adviser(s) for details of those settlement arrangements and how such arrangements will affect their rights and interests if they are in any doubt.

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

Arrangement of odd lot trading

In order to facilitate the trading of odd lots (if any) of the New Shares, the Company has appointed VC Brokerage Limited to stand in the market to match the purchase and sale of odd lots of the New Shares at the relevant market price, on a best effort basis. Holders of odd lots of the New Shares who wish to take advantage of this facility either to dispose of

– 23 –

LETTER FROM THE BOARD

their odd lots of the New Shares or to top up to a full board lot may contact Mr. Leung at (852) 2913 6716, 6/F, Centre Point, 181–185 Gloucester Road, Wanchai, Hong Kong during the period from Wednesday, 15 September 2021 at 9: 00 a.m. to Friday, 29 October 2021 at 4: 00 p.m., both days inclusive. Holders of the odd lots of the New Shares should note that the matching of the sale and purchase of odd lots of the New Shares is not guaranteed. Any Shareholder, who is in any doubt about the odd lot facility, is recommended to consult his/ her/its own professional advisers.

THE UNDERWRITING AGREEMENT

On 14 July 2021 (after trading hours), the Company and the Underwriters entered into the Underwriting Agreement in relation to the underwriting and respective arrangements in respect of the Rights Issue.

The Rights Issue is only underwritten by the Underwriters on best effort basis, and the Company irrevocably appoints the Underwriters to conduct the Rights Issue in accordance with the Underwriting Agreement, with the First Underwriter underwriting up to 93,039,031 Rights Shares on best effort basis (the ‘‘First Undertaking’’) and the Second Underwriter underwriting up to 93,039,030 Rights Shares on best effort basis (the ‘‘Second Undertaking’’), though the Underwriters may, subject to having obtained the Company’s prior written approval, agree with each other from time to time prior to the Latest Time for Acceptance to vary (or further vary, whichever shall be appropriate) the First Undertaking and the Second Undertaking to which they are respectively subject to such an extent that eventually, the First Underwriter shall underwrite more than 93,039,031 Rights Shares while the Second Underwriter shall underwrite less than 93,039,030 Rights Shares, or alternatively, the First Underwriter shall underwrite less than 93,039,031 Rights Shares while the Second Underwriter shall underwrite more than 93,039,030 Rights Shares provided that the total number of Underwritten Shares shall not exceed 186,078,061 (the ‘‘Maximum Undertakings’’), and the Underwriters shall rank pari passu with each other, and neither the First Underwriter nor the Second Underwriter shall be any lead underwriter for or with respect to the Rights Issue (collectively, the ‘‘Appointment’’). Subject to the Maximum Undertakings, the First Underwriter shall not be responsible for or accountable to the Company or any other party such part of the Rights Issue and/or such portfolio of the Rights Shares for which the Second Underwriter shall be responsible under or pursuant to the Underwriting Agreement and the Appointment, and likewise, the Second Underwriter shall not be responsible for or accountable to the Company or any other party such part of the Rights Issue and/or such portfolio of the Rights Shares for which the First Underwriter shall be responsible under or pursuant to the Underwriting Agreement and the Appointment.

The terms of the Underwriting Agreement are summarised as below.

– 24 –

LETTER FROM THE BOARD

Underwriting Agreement

Date : 14 July 2021 (after trading hours) Issuer : The Company First Underwriter : Kingkey Securities Group Limited, a licensed corporation carrying out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities under the SFO and its ordinary course of business includes underwriting of securities.

As at the Latest Practicable Date, the First Underwriter does not hold any Shares. The First Underwriter and its ultimate beneficial owners are, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, third parties independent of and not connected with the Company and its connected persons. The First Underwriter confirmed that it has complied with Rule 7.19(1)(a) of the Listing Rules.

Second Underwriter

: Koala Securities Limited, a licensed corporation carrying out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities under the SFO and its ordinary course of business includes underwriting of securities.

As at the Latest Practicable Date, the Second Underwriter does not hold any Shares. The Second Underwriter and its ultimate beneficial owners are, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, third parties independent of and not connected with the Company and its connected persons. The Second Underwriter confirmed that it has complied with Rule 7.19(1)(a) of the Listing Rules.

Number of Rights Shares underwritten by the Underwriters
: up to 186,078,061 Rights Shares underwritten by the Underwriters on a best effort basis pursuant to the terms and conditions of the Underwriting Agreement

Underwriting Commission

: to each underwriter, an underwriting commission which shall be in such amount equivalent to 3.5% of the Relevant Proceeds

– 25 –

LETTER FROM THE BOARD

The terms of the Underwriting Agreement (including the commission rate) were determined after arm’s length negotiations between the Company and the Underwriters by reference to:

(i) The financial position of the Group

As disclosed in the annual report of the Company for the year ended 31 March 2021, the loss for the year attributable to the owners of the Company was HK$111,404,000 and the net liabilities of the Company as at 31 March 2021 was HK$540,164,000. In view of the current challenging financial position of the Group, the Directors considered that it is essential to raise fund to reduce its liabilities and increase funding for the business development of the Group (as described in the section headed ‘‘REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS’’ below);

(ii) The size of the Rights Issue

The net proceeds from the Rights Issue after deducting the expenses are estimated to be not more than approximately HK$70 million. The Company intends to apply the net proceeds from the Rights Issue for the purposes as described in the section headed ‘‘REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS’’ below. Although there is no assurance of the minimum level of acceptances and the Rights Issue is underwritten on a best effort basis, the Underwriters have expressed that they are confident to do their best in underwriting the Rights Shares under the current market conditions if there is no material adverse change in the economic condition;

(iii) The current and expected market condition

Reference was made to the volatility of the stock market in Hong Kong in the past three months prior to and including the Last Trading Day. The Company noted that the Hang Seng Index fluctuated between approximately 28,793.14 and 27,787.46 at closing from 15 April 2021 and up to the Last Trading Day, representing a decrease of approximately 3.5%. The highest and the lowest of the Hang Seng Index during the Relevant Period were approximately 29,490.61 and 26,861.67 on 2 June 2021 and 9 July 2021 respectively, representing a percentage difference of approximately 9.3%. In view of the volatility and the downward trend of the Hang Seng Index, the Directors considered that setting the discount to the then market prices of the Shares would encourage the Shareholders to participate in the Rights Issue;

(iv) The market price of the Company

The Company had also reviewed the daily closing price of the Shares during the Relevant Period. The adjusted closing prices of the New Shares closed at HK$0.56 (after taking into account the effect of the Capital Reorganisation) and HK$0.57 (after taking into account the effect of the Capital Reorganisation) on 15 April 2021 and the Last Trading Day respectively. The adjusted closing prices of the New Shares fluctuated from the lowest of HK$0.18 (after taking into account the effect of the

– 26 –

LETTER FROM THE BOARD

Capital Reorganisation) on 17 May 2021 to the highest of HK$1.4 (after taking into account the effect of the Capital Reorganisation) on 24 May 2021. Nevertheless, the Directors were of the view that setting the discount to the then market prices of the Shares would balance the risk of the volatility of the Shares; and

(v) The then underwriting commission of the market

The Company had made reference to the underwriting commission of rights issue conducted by seventeen listed companies on the Stock Exchange in the last six months since 15 January 2021 and up to the Last Trading Day and found that the underwriting commission of rights issue ranged from 1% to 7.07% (except for one underwriter did not charge any underwriting commission as that underwriter was a company whollyowned by the substantial shareholder of that listed company), the commission rate of which was calculated on the basis of the total subscription price of the rights shares. The Directors considered that the underwriting commission of 3.5% payable to the Underwriters is attractive enough to the Underwriters and is in line with the market practice.

In light of the above, the Directors consider that the terms of the Underwriting Agreement (including the commission rate) are fair and reasonable so far as the Company and the Shareholders as a whole are concerned. None of the Directors has a material interest in the transaction contemplated under the Underwriting Agreement.

Subject to the fulfilment of all the conditions precedent (save and except such conditions precedent (vi) and (xii) which can be waived in accordance with the paragraphs as set out in the paragraph headed ‘‘Conditions precedent of the Rights Issue’’) 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 shall subscribe for or procure the subscription, on a best effort basis, on the terms of the Prospectus Documents (insofar as the same are applicable) for such Untaken Shares.

Conditions precedent of the Rights Issue

Completion of the Rights Issue and effectuating the Appointment under and pursuant to the Underwriting Agreement are conditional upon:

(i) the Capital Reorganisation having been completed with the New Shares having been issued and allotted to holders of the Shares and other parties who are so entitled (if any);
(ii) the Company having delivered to the Stock Exchange for authorisation and having registered with the Companies Registry respectively one copy each of the Prospectus Documents duly signed and certified by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the Directors (and all other documents required to be attached thereto) and otherwise in compliance with the Listing Rules and the Companies (WUMP) Ordinance not later than the Prospectus Posting Date;

– 27 –

LETTER FROM THE BOARD

(iii) the posting of the Prospectus Documents to the Qualifying Shareholders and the posting of the Prospectus and a letter in the agreed form to the Excluded Shareholders, if any, for information purpose only explaining the circumstances in which they are not permitted to participate in the Rights Issue on or before the Prospectus Posting Date;
(iv) the Listing Committee having granted, and not having revoked or withdrawn, the listing of and permission to deal in the Rights Shares in both their nil-paid and fully-paid forms either unconditionally or subject to such conditions which the Underwriters jointly accept and the satisfaction of such conditions (if any and where relevant) by no later than the Prospectus Posting Date;
(v) the obligations of the Underwriters having become unconditional and the Underwriting Agreement not having been terminated in accordance with its terms;
(vi) the Company having complied with and performed all its functions, undertakings and obligations in and under the Underwriting Agreement as well as the representations and warranties of the Company in and under the Underwriting Agreement;
(vii) the Company having complied with all applicable laws and regulations;
(viii) each Party having obtained all necessary consent and/or approval for entering into the Underwriting Agreement or the transactions contemplated therein;
(ix) the entering into of binding agreements by the Underwriters (or either of them, whichever shall be appropriate) with certain subscriber(s) procured by the Underwriters (or either of them, whichever shall be appropriate) and/or subunderwriter(s), which shall be Independent Third Parties, for placing and/or subunderwriting the Rights Shares, such that neither the Underwriters (or either of them, whichever shall be appropriate) nor any of the subscriber(s) procured by the Underwriters (or either of them, whichever shall be appropriate) and/or subunderwriter(s) and/or party or parties acting in concert (having the meaning as set out in the Takeovers Code) with the respective subscribers or any of the connected persons or associates of the respective subscribers shall be interested in 30% or more of the issued share capital of the Company as enlarged by the Rights Issue;
(x) each condition to enable the Rights Shares in their nil-paid or fully-paid forms to be admitted as eligible securities for deposit, clearance and settlement in CCASS having been satisfied on or before the Business Day prior to the commencement of trading of the Rights Shares (in their nil-paid and fully-paid forms, respectively) and no notification having been received by the Company from the HKSCC by such time that such admission or facility for holding and settlement has been or is to be refused;
(xi) there being no Specified Event occurring on or before the Latest Time for Termination; and

– 28 –

LETTER FROM THE BOARD

(xii) the Underwriters having received from the Company all the documents as set out in the Underwriting Agreement in such form and substance satisfactory to the Underwriters as soon as practicable after the date of the Underwriting Agreement, and not later than 4: 00 p.m. on the Business Day immediately before the Prospectus Posting Date.

Apart from the conditions precedent as set out in (vi) and (xii) above which can be waived in whole or in part by the Underwriters jointly (but not severally, and in any event, none of the conditions precedent above can be waived by the Company whatsoever) by notice in writing to the Company prior to the Latest Time for Termination, all other conditions precedent are incapable of being waived by any Party. The Parties shall use their respective best endeavours to procure the satisfaction and/or fulfilment of all the conditions precedent (save and except such conditions precedent which have been waived by the Underwriters jointly in accordance with the foregoing provisions of this paragraph) by the Latest Time for Termination or such other date as the Parties may agree in writing and in particular, the Company shall furnish such information, supply such documents, pay such fees, give such undertakings and do all such acts and things as may be necessary in connection with the listing of the Rights Shares (in their nil-paid or fully-paid forms) or to give effect to the Rights Issue and the arrangements contemplated in or under the Underwriting Agreement.

If any of the conditions precedent (save and except such conditions precedent which have been waived by the Underwriters jointly in accordance with the above paragraph) are not satisfied in whole by the Latest Time for Termination or such other date as the Parties may agree in writing, the Underwriting Agreement shall terminate (save and except the clauses of fees and expenses, indemnity and certain clauses which shall remain in full force and effect) and no Party shall have any claim against the other Parties for costs, damages, compensation or otherwise save for any antecedent breaches.

As at the Latest Practicable Date, the conditions precedent (i) and (viii) has been satisfied and none of the other conditions precedent has been satisfied or fulfilled. Further, conditions precedent (vi) and (xii) have not been waived by the Underwriters up to date.

– 29 –

LETTER FROM THE BOARD

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

For illustration purposes only, assuming no New Shares (other than the Rights Shares) will be issued and no repurchase of Shares on or before the completion of the Rights Issue, set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after completion of the Rights Issue (assuming all Qualifying Shareholders have taken up the Rights Shares and there is no Excluded Shareholders); and (iii) immediately after completion of the Rights Issue (assuming none of the Qualifying Shareholders have taken up the Rights Shares and all the Untaken Shares are taken up by the Underwriters and/or their subscriber(s) procured by them):

Shareholders Directors Zhang Yi (Note 1) Lam Sze Man (Note 2) Chan Kee Huen, Michael (Note 2) Public Shareholders The Underwriters and/or their subscriber(s) procured by them (Note 3) Other public Shareholders Total	(i) As at the Latest Practicable Date Number of Shares Approximate % 21,542,750 5.7886% 27,750 0.0075% 2,500 0.0007% — — 350,583,122 94.2032% 372,156,122 100.0000%	Immediately after completion of the Rights Issue (ii) Assuming all Qualifying Shareholders have taken up the Right Shares and there is no Excluded Shareholders) (iii) Assuming none of the Qualifying Shareholders have taken up the Rights Shares and all the Untaken Shares are taken up by the Underwriters and/or their subscriber(s) procured by them) Number of Shares Approximate % Number of Shares Approximate % 32,314,125 5.7886% 21,542,750 3.8591% 41,625 0.0075% 27,750 0.0050% 3,750 0.0007% 2,500 0.0004% — — 186,078,061 33.3333% 525,874,683 94.2032% 350,583,122 62.8022% 558,234,183 100.0000% 558,234,183 100.0000%	Immediately after completion of the Rights Issue (ii) Assuming all Qualifying Shareholders have taken up the Right Shares and there is no Excluded Shareholders) (iii) Assuming none of the Qualifying Shareholders have taken up the Rights Shares and all the Untaken Shares are taken up by the Underwriters and/or their subscriber(s) procured by them) Number of Shares Approximate % Number of Shares Approximate % 32,314,125 5.7886% 21,542,750 3.8591% 41,625 0.0075% 27,750 0.0050% 3,750 0.0007% 2,500 0.0004% — — 186,078,061 33.3333% 525,874,683 94.2032% 350,583,122 62.8022% 558,234,183 100.0000% 558,234,183 100.0000%
			100.0000%

Notes:

8,000 Shares are beneficially owned by Mr. Zhang Yi, the executive Director, and 21,534,750 Shares are beneficially owned by One Faith Investments Limited, which is beneficially and wholly owned by Mr. Zhang Yi.
Ms. Lam Sze Man is the executive Director, and Mr. Chan Kee Huen, Michael is the independent non-executive Director.
According to the Underwriting Agreement, each Underwriter shall ensure that (i) each subscriber of the Untaken Shares procured by it shall be an Independent Third Party; (ii) no subscriber, together with any party acting in concert with it, will hold 30% (or such percentage which will trigger any MGO Obligation under the Takeovers Code) or more of the voting rights of the Company; and (iii) the Public Float Requirement remains to be fulfilled by the Company upon completion of the Rights Issue. Each of the Underwriters further undertakes that no subscriber, together with any party acting in concert with it, will hold in aggregate 10% or more of the voting rights of the Company immediately after the Rights Issue.

– 30 –

LETTER FROM THE BOARD

Pursuant to the Underwriting Agreement, in the event of the Underwriters (or either of them, whichever shall be appropriate) being called upon to subscribe for or procure subscription for the Untaken Shares pursuant to the Underwriting Agreement and the Appointment but subject to the Maximum Undertakings, the Underwriters (or the Underwriter concerned, whichever shall be appropriate) shall confirm with the Company the actual number of Untaken Shares as at the Latest Time for Acceptance, and shall procure for subscription therefor on best effort basis whilst using its best endeavours to ensure that (1) each of the subscribers of the Untaken Shares procured by the Underwriters (or the Underwriter concerned, whichever shall be appropriate) shall be an Independent Third Party and not connected with the Company, any of the Directors or chief executive or substantial Shareholders or their respective associates; (2) the Public Float Requirements be fulfilled by the Company upon completion of the Rights Issue; and (3) the Underwriters (or the Underwriter concerned, whichever shall be appropriate) or each subscriber procured by the Underwriters (or the Underwriter concerned, whichever shall be appropriate) (together with parties acting in concert with the respective subscribers or any of the connected persons or associates of the respective subscribers) shall not hold in aggregate 30% or more of the voting rights of the Company immediately after the Rights Issue.

INFORMATION ON THE UNDERWRITERS

The First Underwriter is a company incorporated in Hong Kong with limited liability. It is principally engaged in dealing in securities and its ordinary course of business includes underwriting of securities. As at the Latest Practicable Date, it is a licensed corporation carrying out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities under the SFO.

The Second Underwriter is a company incorporated in Hong Kong with limited liability. It is principally engaged in dealing in securities and its ordinary course of business includes underwriting of securities. As at the Latest Practicable Date, it is a licensed corporation carrying out type 1 (dealing in securities) and type 4 (advising on securities) regulated activities under the SFO.

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

The Group is principally engaged in multi-media technologies business, gamma ray services, tourism and hospitality business and other operations — securities trading and investment.

As disclosed in the Company’s annual report for the year ended 31 March 2021, the bank and other borrowings of the Company amounted to HK$297,244,000 which are current liabilities to be expiring within 1 years from 31 March 2021. The Company also recorded net liabilities of HK$540,164,000 as at 31 March 2021.

Given the imminent need of funds to settle the outstanding liabilities owing by the Company to its creditors, as well as to maintain its operations, the Board considers that the Rights Issue will provide a good opportunity for the Company to raise funds to strengthen its capital base and improve its financial position, and also allow all outstanding Shareholders to maintain their proportional shareholdings in the Company.

– 31 –

LETTER FROM THE BOARD

The Board has considered other fund raising alternatives before resolving to the Rights Issue, including but not limited to debt financing and equity financing. However, debt financing will put further pressure on the financial position of the Group, and will result in additional interest burden, higher gearing ratio of the Group and subject the Group to repayment obligations. Also, due to the financial position of net liabilities of the Company, it might be hard to get a reasonable terms of loan offered by financial institutions.

The Board considers that using the form of equity is a better alternative than debt financing as it would not result in additional interest burden and will improve the gearing of the Group. The Board considers that placing or subscription of new Shares or convertible securities will dilute the shareholding of the existing Shareholders without giving the chance to the existing Shareholders to participate, and placees or subscribers might require a higher discount on issue price as a result of the current financial position of the Company.

Having considered the above factors, the Board considers that Rights Issue is preemptive in nature, which allows the Group to improve its liquidity and capital base while mitigate dilution effect to the existing Shareholders. Qualifying Shareholders can maintain their proportional shareholdings in the Company through participation in the Rights Issue. The Rights Issue also allows the Qualifying Shareholders to (a) increase their respective shareholding in the Company by acquiring additional rights entitlement in the open market (subject to the availability) and through excess applications; or (b) reduce their respective shareholding in the Company by disposing of their rights entitlements in the open market (subject to the market demand). Also, compared to an open offer, the Rights Issue allows the trading of rights entitlements. Further, the Rights Issue will enable the Group to strengthen its capital base and to enhance its financial position without increasing its debt or finance costs.

As the Rights Issue is underwritten on a best effort basis, there is no assurance of the minimum level of acceptances. Nevertheless, after discussing with the Underwriters, they are confident to do their best in underwriting the Rights Shares under the current market conditions if there is no material adverse change in the economic condition.

Assuming there will be full subscription under the Rights Issue, the gross proceeds from the Rights Issue will be up to approximately HK$74.43 million. The net proceeds from the Rights Issue, after deducting professional fees and all other relevant expenses, are estimated to be not more than approximately HK$70 million. Assuming the net proceeds from the Rights Issue will amount to approximately HK$70 million, the Company intends to apply such net proceeds as to approximately (i) 20% (approximately HK$14 million) of net proceeds for the reimbursement for trade and other payables accounts, in particular with regard to long-term outstanding payables; (ii) 10% (approximately HK$7 million) of net proceeds for the payment for the annual license fee for train media platform; (iii) 50% (approximately HK$35 million) of net proceeds for the repayment for bank and other borrowings, in particular to settle the borrowings with close maturity date and relatively high finance costs; and (iv) the remaining 20% (approximately HK$14 million) of net proceeds for the Group’s general working capital (including but not limited to (a) the operating cashflow for business collaboration with Chun Mian Network Technology (Shanghai) Co., Ltd.* (純免網絡科技（上海）有限公司) (as disclosed in the announcement of

– 32 –

LETTER FROM THE BOARD

the Company dated 8 June 2021) to expand its scale of convergence media business; and (b) payment for daily operating expenses such as rental, salaries, legal and professional expenses). In the event that there is an under-subscription of the Rights Issue, the net proceeds of the Rights Issue will be utilised in proportion to the above uses.

If the Rights Issue is undersubscribed and the net proceeds from which is insufficient to repay the Group’s outstanding debt as at 30 June 2021, the Company will (i) negotiate with the creditors to extend the terms of loan; (ii) re-negotiate with banks and creditors the terms to lower the interest rate; and (iii) utilise the cash generated from businesses to support the business development such as business collaboration with Chun Mian Network Technology (Shanghai) Co., Ltd.* (純免網絡科技（上海）有限公司) and other operating expenses.

Set out below is the list of the Group’s outstanding debt as at 30 June 2021 and the proposed means of settlement:

			Amount due/		Proposed means
		Nature	to be due	Maturity date	of settlement
			HK$(’000)
			Approximately
i)	Loan from Chongqing	Short-term loan	146,526	27 March 2019	Debt capitalisation (terms
	Tongnan Government				and settlement details to
	and interest payable				be discussed with
					Chongqing Tongnan
					Government)
ii)	Loan from third parties	Short-term loan	35,000	Within the next	Proceeds of approximately
	(Note 1)			6 months	HK$35 million from
					Rights Issue (Note 2)
iii)	Loan from other third	Short-term loan	148,952	Within the next	Extension of repayment
	parties			12 months	date/debt capitalisation
					(terms and settlement
					details to be discussed
					with creditors)
iv)	Amount due to	Short-term loan	86,379	Not specified	Debt capitalisation (terms
	shareholders and				and settlement details to
	directors				be discussed with the
					shareholders and
					directors)
v)	Convertible Loan	Long-term loan	10,442	By the end of	Fund raising from other
				third quarter	fund raising activities in
				of 2022	the coming 12 months

Notes:

Loans which will be due in the coming 6 months or with relatively high finance costs.
In the event that the Rights Issue is under-subscribed and the repayment of HK$35 million is insufficient, the Company will seek extension of the loans from its lenders or discuss with the lenders on debt capitalisation.

– 33 –

LETTER FROM THE BOARD

As disclosed in the announcement of the Company dated 1 April 2021, the Company planned to conduct a rights issue with the gross proceeds for about HK$298 million. Accordingly, the Company has approached various financial institutions in relation to the underwriting of fund raising exercise. In light of the uncertainty of COVID-19 pandemic, most of the underwriters generally adopt a more conservative strategy in the underwriting business. After discussion, two of the underwriters have expressed their interest and are willing to accept the underwriting arrangement, and the terms and conditions as set out in the Underwriting Agreement. The Company will continue and use its best endeavours to look for other fund raising opportunities including debt financing and equity financing in the coming twelve months. Save for the proposed Rights Issue, the Company does not have any concrete plan in relation to any form of fund raising exercise as at the Latest Practicable Date.

The expenses in relation to the Rights Issue (including the underwriting commission, financial advisory fee, printing, translation, registration, legal, accounting, levy, and documentation charges) are estimated to be approximately HK$4.43 million which are payable by the Company.

In light of the above, the Board is of the view that the terms of the Underwriting Agreement are fair and reasonable and the Rights Issue is in the interests of the Company and the Shareholders as a whole.

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

The Company has not conducted any equity fund raising activity in the past twelve months immediately preceding the Latest Practicable Date.

ADJUSTMENTS IN RELATION TO THE OTHER SECURITIES OF THE COMPANY

As at the Latest Practicable Date, the Company does not have any share options, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into any Shares.

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

Shareholders and potential investors of the Company should note that the proposed Rights Issue is conditional upon, among others, the Underwriting Agreement having become unconditional and the Underwriters not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the paragraph headed ‘‘Conditions Precedent of the Rights Issue’’ and ‘‘Termination of the Underwriting Agreement’’ in this Prospectus). Accordingly, the Rights Issue may or may not proceed.

– 34 –

LETTER FROM THE BOARD

Any Shareholder or other person dealing in the New Shares and/or the nil-paid Rights Shares up to the date on which all the conditions precedent to which the Rights Issue are fulfilled or waived (as applicable) (and 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.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the New Shares and/or the nil-paid Rights Shares. Any party (including the Shareholders and potential investors of the Company) 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).

LISTING RULES IMPLICATION

As the Rights Issue will not increase the number of issued Shares or the market capitalisation of the Company by more than 50%, the Rights Issue is not conditional upon approval by the Shareholders pursuant to Rule 7.19A of the Listing Rules.

ADDITIONAL INFORMATION

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

Yours faithfully, For and on behalf of the Board of China Baoli Technologies Holdings Limited Zhang Yi Chairman

– 35 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements of the Group for the three financial years ended 31 March 2019, 2020 and 2021 are disclosed in the following documents which have been published on the website of the Stock Exchange (www.hkexnews.hk) and the website of the Company (http://www.aplushk.com/clients/00164chinabaoli/index.html):

(i) The audited financial information of the Group for the year ended 31 March 2021 is disclosed in the annual report of the Company for the year ended 31 March 2021 published on 29 July 2021, from pages 59 to 244: https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0729/2021072900769.pdf
(ii) The audited financial information of the Group for the year ended 31 March 2020 is disclosed in the annual report of the Company for the year ended 31 March 2020 published on 8 September 2020, from pages 59 to 224: https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0908/2020090800537.pdf
(iii) The audited financial information of the Group for the year ended 31 March 2019 is disclosed in the annual report of the Company for the year ended 31 March 2019 published on 31 July 2019, from pages 71 to 227: https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0731/ltn20190731451.pdf

2. INDEBTEDNESS STATEMENT OF THE GROUP

As at 31 July 2021, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Prospectus, the Group had aggregate outstanding borrowings of approximately HK$421.39 million, comprising secured margin account payable of approximately HK$47.40 million, unsecured other borrowings of approximately HK$233.95 million, secured other borrowings of approximately HK$15.61 million, unsecured placing notes of approximately HK$30.00 million, convertible loan of approximately HK$11.63 million, aggregate lease liability of approximately HK$2.70 million and amounts due to shareholders and directors of approximately HK$80.10 million.

Current Margin account payable — secured Other borrowings — secured Other borrowings — unsecured Placing notes — unsecured Lease liability Amounts due to shareholders and directors Non-current Convertible loan Lease liability Total	HK$’000 47,400 15,615 233,954 30,000 1,536 80,097 11,628 1,160
	421,390

– I-1 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Pledge of assets

At the close of business on 31 July 2021, the Group’s listed securities with carrying amount of approximately HK$0.33 million were pledged to secure the margin account payable granted to the Group.

At the close of business on 31 July 2021, the Group has pledged 100% equity interests of Hong Kong Made (Media) Limited, an indirect wholly-owned subsidiary of the Company, to secure an other borrowing with principal amount of HK$15.61 million.

Contingent liabilities

At the close of business on 31 July 2021, the Group has the following outstanding contingent liabilities:

(i) On 20 August 2013, the Company entered into the placing agreement with the placing agent. Pursuant to the placing agreement, the placing notes carry interest at 5.0% per annum and are to be redeemed on the seventh anniversary from the respective issue dates of the placing notes.

One creditor purportedly a beneficial owner of placing notes commenced court action against the Company for recovery of her alleged outstanding debt due by the Company to her under the placing notes. Nevertheless, the note holders of placing notes have not commenced any court action against the Company. Such creditor’s alleged debt amount includes the principal of HK$10 million and outstanding interest of approximately HK$1.26 million. On 16 March 2020, the placing agent was added by such creditor as the 2nd defendant in the Amended Writ of Summons and Amended Statement of Claim.

On 4 December 2020, the Company filed and served a Writ of Summons and Statement of Claim against the placing agent. All parties filed and served their Mediation Certificates confirming that all parties accepted to conduct mediation for resolving all disputes in the above action. All parties agreed to attend the mediation conference to be held on 13 September 2021.

(ii) On 28 September 2017, Allied Jumbo Investments Limited, an indirectly wholly-owned subsidiary of the Company, as the purchaser (the ‘‘Purchaser’’), 宇龍計算機通信科技（深圳）有限公司 (Yulong Computer Telecommunication Scientific (Shenzhen) Co., Ltd), as the vendor (the ‘‘Vendor’’), Baoli Yota Technologies (Shenzhen) Limited (寶力優特科技（深圳）有限公司) (‘‘Baoli Yota’’) and the Company entered into a framework agreement (the ‘‘Framework Agreement’’) in relation to the acquisition of 20% equity interest in the Baoli Yota (the ‘‘Acquisition’’). Pursuant to the Framework Agreement, the Purchaser or Baoli Yota shall pay in aggregate of RMB80 million to the Vendor in two tranches, the Purchaser shall take up the obligation of the Vendor to pay the unpaid registered capital in Baoli

– I-2 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Yota of RMB12 million, and the Company had joint liability for the obligations of Baoli Yota and the Purchaser. Baoli Yota was principally engaged in manufacture and sales of mobile phone and the operations of which were ceased in mid-2019. The Company has recently received an arbitral award (the ‘‘Arbitral Award’’) made by the Shenzhen Court of International Arbitration (the ‘‘Shenzhen Court’’), in relation to the claim filed by the Vendor against the other three parties to the Framework Agreement in the Shenzhen Court for breaching the Framework Agreement. Pursuant to the Arbitral Award, the Vendor and Baoli Yota shall continue to perform the Framework Agreement and the Purchaser, Baoli Yota and the Company shall also pay the consideration and interest incurred thereon, together with costs and other relieves. The Shenzhen Court enforced for bankruptcy and liquidation against Baoli Yota on 21 April 2021. In light of this, the Company is in the course of seeking legal advice with the Group’s legal adviser, and will vigorously contest the claim and take necessary legal actions to protect its legal rights and interests. Details of the Arbitral Award was set out in the announcement of the Company dated 29 June 2021.

Save as aforesaid or otherwise disclosed herein, and apart from intra-group liabilities and normal trade and other payables and contract liabilities, as at 31 July 2021, the Group did not have any other loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances (other than normal trade bills) or acceptance credits, debentures, mortgages and charges, hire purchase commitments, guarantees or other material contingent liabilities.

To the best knowledge of the Directors, having made all reasonable enquiries, the Directors are not aware of any material adverse change in the Group’s indebtedness position and contingent liabilities since 31 July 2021.

3. WORKING CAPITAL STATEMENT

The Directors are of the opinion that, after due and careful enquiry, taking into account of (i) the present available resources; (ii) the estimated maximum net proceeds of approximately HK$70 million from the Rights Issue assuming all Rights Shares will be taken up by Shareholders, and (iii) no facilities are shown to be required by the Company’s working capital forecast, the Group would not have sufficient working capital for at least the next twelve months from the date of this Prospectus in the absence of extension of borrowings and/or obtaining re-financing. If the maximum net proceeds from the Rights Issue are raised, there will be shortfall in working capital during the next twelve months from the date of this Prospectus.

The major factor leading to the insufficiency of working capital is that certain major borrowings of the Group will fall due within the next twelve months from the date of this Prospectus while the future operating cash inflow of the Group is insufficient to match the repayment schedule of borrowings and relevant interest payment.

– I-3 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

To address the working capital sufficiency issue, the Directors will (i) propose to further raise fund of approximately HK$345 million; (ii) devote its best effort to negotiate a loan capitalisation amounting to approximately HK$227.74 million; and (iii) devote its best effort to secure the advertising contracts with the customers in the multi-media technologies business of approximately HK$141.94 million.

Taking into account the successful implementation of all the measures mentioned above, the Directors are of the view that the Group would have sufficient working capital for at least the next twelve months from the date of this Prospectus.

The Company has received a letter from the auditor of the Company confirming that the Directors have made such statement after due and careful enquiry.

4. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2021, being the date to which the latest published audited consolidated financial statements of the Group were made up.

5. FINANCIAL AND TRADING PROSPECT OF THE GROUP

The Group is principally engaged in multi-media technologies business, gamma ray business, tourism and hospitality business, and other operations — securities trading and investment. Diversification is the core business strategy of the Group. The Group is committed to achieving long-term sustainable growth of its businesses in preserving and enhancing the Shareholders’ value. The Group is focused on looking for attractive investment opportunities to strengthen and widen its business scope. The Group has maintained a prudent and disciplined financial management to ensure its sustainability.

Multi-Media Technologies Business

The Group runs a multi-media advertising platform via different media channels using the knowhow and expertise it has developed and accumulated over the years. Brand owners can disseminate information on such platform developed and provided by the Group.

Advertisers, which are the Group’s customers, will send requests for multi-media contents to the Group. The Group will discuss, fine-tune and finalise the multi-media contents for publication. They will contact different media distribution channels, which are the Group’s suppliers, about the details and ways of publications. Once agreements are made, the media distribution channels will publish the multi-media contents as discussed. Those multi-media contents will finally reach audiences or end users. They may response to those multi-media contents, which ultimately reflect on the financial performance of the advertisers.

– I-4 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group targets companies from all industries, as long as they wish to place multi-media contents on different media distribution channels.

For the year ended 31 March 2021, the audited revenue generated from the multimedia technologies business was approximately HK$50.79 million, representing an increase of approximately 27.13% as compared with approximately HK$39.95 million in last corresponding period.

The Group has a team of 20 full-time employees in order to operate the multimedia technologies business. The team consists of 7 management roles, including one chief executive, one operation manager, one general manager, one vice manager, one market planning manager, one design supervisor, and an assistant of the managing director. They are responsible for leading the staff of this business segment for working towards the goals of the Group.

Despite the fact that there will be ongoing challenges and uncertainties for the economy in the post-pandemic period, the performance of the multi-media technologies business have demonstrated the Group’s business strategy in diversification has begun to yield positive impacts across the Group’s businesses.

As disclosed in the announcement of the Company dated 8 June 2021, a subsidiary of the Group entered into a business collaboration with Chun Mian Network Technology (Shanghai) Co., Ltd.* (純免網絡科技（上海）有限公司) to jointly establish a joint venture (the ‘‘JV Company’’) in the PRC. The Group and the JV Company will conduct a series of cooperation and exploration in convergence media digital advertising and marketing business, innovatively integrate the emerging online shopping trend in cross-border duty-free e-commerce industry on the train media platform and to interact with the train patronage through mobile online-media marketing, influencer/KOL live streaming and others. The JV Company has strong strategic value as not only Chun Mian Network Technology (Shanghai) Co., Ltd. is the exclusive operator in mainland China authorised by China Duty Free Shop (Hong Kong) Group Co., Limited (中國免稅店（香港）集團公司) to engage in cross-border e- commerce bonded import goods, establishment of duty-free experience stores and other businesses, but also it has strong partnerships with many world renowned dutyfree groups and supply chain companies. With the current macro-environment, market and policy circumstances, the Group aims to expand its scale of convergence media business via the new online/offline duty-free importing e-commerce marketing platform services.

Gamma Ray Business

The Group is primarily engaged in providing irradiation sterilisation processing services to manufacturers of medical devices and food in the PRC.

Due to the sudden increase in the demand for the sterilisation of medical products under the pandemic situation and there were a lot of practitioners entered into the market which caused keen competition in the pricing, the management is actively seeking opportunities to diversify the application of gamma ray technologies of the

– I-5 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Group to different aspect for widening the income stream of the Group. The Group is working with some reputable large-sized enterprises in mainland China in relation to the provision of real-time assessment and selection services in beneficiation and production of metal ores. The Group will utilise its gamma ray technologies combined with its authorised technology named “dry grinding and dry separation” to further develop its technology “gamma ray dry grinding and dry separation”, and provide such technology to mainland enterprises so as to enhance the efficiency and productivity of the mining and beneficiation process. With the technologies to be provided to mainland enterprises, the Company is expected to widen the revenue stream from irradiation sterilisation processing service to gamma ray dry grinding and dry separation service.

The feasibility study in relation to the real time application of the technology has been completed, and further discussion of the details of application of such technology will be made with the mainland enterprises.

For the year ended 31 March 2021, the audited revenue generated from the gamma ray business was approximately HK$4.15 million, representing a decrease of approximately 11.32% as compared with approximately HK$4.68 million in last corresponding period.

The Group has a total of 31 staff in operating this business segment, in which there are two senior engineers, one senior economist, two engineers and two technical consultants. They are mainly responsible for research and development of the usage of gamma ray, as well as the control and maintenance of relevant equipment.

Tourism and Hospitality Business

The Group has been closely monitoring the developments of the pandemic and will position itself to pursue and capture suitable business opportunities in the tourism and hospitality industry as and when they arise.

No revenue has been recognised in this business segment for the year ended 31 March 2021.

Other Operations — Securities Trading and Investment

The Group’s business strategy is focused on looking for attractive investment opportunities, including but not limited to investing into securities trading and investment.

The Company currently adopts a wait and see attitude securities investment strategy, thus no revenue has been recognised in this business segment for the year ended 31 March 2021.

The Company will from time to time change its investment strategy according to the market conditions. It will explore opportunities and invest in other securities or investment as and when appropriate.

– I-6 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Prospect

To make the businesses more resilient, the Group will continue to allocate substantial resources to multi-media technologies business segment and the gamma ray segment under the Group’s long-term strategy. Through accelerating the diversification of the business channels, such as expanding its scale of convergence media business via the new online/offline duty-free importing e-commerce marketing platform services, and enhancing the development of multi-media technologies platform and gamma ray dry grinding and dry separation technology, the Company is confident that the operations and results of the Group will continue to improve in the post-pandemic period. Looking ahead, the Group will continue to explore potential strategic investment and cooperation opportunities with an aim of creating synergies for the Group in various aspects including technological development, product portfolio, channel expansion and/or cost control. The Company is confident that the operations and results of the Group will continue to improve in the near future upon control of the COVID-19 pandemic and the Group will continue to generate value to the Shareholders.

The Directors are from time to time reviewing the business development of the Company. As at the Latest Practicable Date, the Company has not entered or signed any agreement, arrangement, understanding or undertaking to dispose of or downsize its existing businesses. However, the Company cannot rule out the possibility that it will revisit its business strategy, and restructure its existing business as and when appropriate. Also, the Company has no intention or has not entered into any agreement to acquire new business as at the Latest Practicable Date.

– I-7 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(A) UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE LIABILITIES OF THE GROUP

The unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company (the ‘‘Unaudited Pro Forma Financial Information’’) has been prepared by the Directors in accordance with paragraph 29 of Chapter 4 of the Listing Rules to illustrate the effect of the Rights Issue on the unaudited consolidated net tangible liabilities of the Group attributable to owners of the Company as if the Rights Issue had taken place on 31 March 2021.

The Unaudited Pro Forma Financial Information is prepared based on the audited consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 March 2021, as extracted from the audited consolidated financial statements of the Group for the year ended 31 March 2021 dated 30 June 2021, and is adjusted for the effect of the Rights Issue as if the Rights issue had taken place on 31 March 2021.

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only, and because of its hypothetical nature, it may not give a true picture of the unaudited consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 March 2021 or at any future dates immediately after the Rights Issue been completed.

			Unaudited pro		Unaudited pro
			forma adjusted	Audited	forma adjusted
			consolidated net	consolidated net	consolidated net
			tangible liabilities	tangible liabilities	tangible liabilities
	Audited		of the Group	of the Group per	of the Group per
	consolidated net		attributable to	Share attributable	Share attributable
	tangible liabilities		owners of the	to owners of the	to owners of the
	of the Group		Company	Company as at	Company as at
	attributable to		immediately after	31 March 2021	31 March 2021
	owners of the	Estimated net	the completion of	before the	immediately after
	Company as at	proceeds from the	the Rights Issue as	completion of the	the completion of
	31 March 2021	Rights Issue	at 31 March 2021	Rights Issue	the Rights Issue
	HK$’000	HK$’000	HK$’000	HK$	HK$
	(Note 1)	(Note 2)	(Note 3)	(Note 4)	(Note 5)
Based on 186,078,061 Rights
Shares to be issued at the
Subscription Price of
HK$0.40 per Rights Share	(619,835)	70,000	(549,835)	(1.67)	(0.98)

– II-1 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Notes:

(1) The audited consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 March 2021 is calculated based on the consolidated net liabilities of the Group attributable to owners of the Company as at 31 March 2021 of approximately HK$539,413,000 after deducting intangible assets and goodwill attributable to owners of the Company of approximately HK$34,487,000 and HK$45,935,000 respectively as at 31 March 2021, which is extracted from the audited consolidated financial statements of the Group for the year ended 31 March 2021 dated 30 June 2021.
(2) The estimated net proceeds from the Rights Issue of approximately HK$70,000,000 are based on 186,078,061 Rights Shares to be issued at the subscription price of HK$0.40 per Rights Share, after the deduction of the estimated related expenses of approximately HK$4,431,000.
(3) The unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to the owners of the Company immediately after the completion of the Rights Issue represents the audited consolidated net tangible liabilities of the Group attributable to the owners of the Company as at 31 March 2021 plus the net proceeds from the Rights Issue as set out in Note 2.
(4) The calculation of the audited consolidated net tangible liabilities of the Group per share attributable to owners of the Company as at 31 March 2021 before the completion of the Rights Issue is based on the audited consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 March 2021 of approximately HK$619,835,000 as set out in Note 1, divided by 372,156,122 New Shares (assuming that the Capital Reorganisation has completed on that date).
(5) Unaudited pro forma adjusted consolidated net tangible liabilities of the Group per share attributable to owners of the Company as at 31 March 2021 immediately after the completion of the Rights Issue is determined based on the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company immediately after the completion of the Rights Issue of approximately HK$549,835,000 as set out in Note 3 divided by 558,234,183 shares which represents:
(i) 372,156,122 New Shares before the Rights Issue; and
(ii) 186,078,061 Rights Shares to be issued, assuming no Shares are issued and no repurchase of Shares on or before the Record Date and all Rights Shares will be taken up by Shareholders and/or Underwriters.
(6) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible liabilities of the Group attributable to the owners of the Company to reflect any trading results or other transactions of the Group entered into subsequent to 31 March 2021.

– II-2 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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

The following is the text of the independent reporting accountant’s assurance report, received from Asian Alliance (HK) CPA Limited, Certified Public Accountants, Hong Kong, the reporting accountant of the Company, in respect of the Unaudited Pro Forma Financial Information of the Group, prepared for the purpose of inclusion in this Prospectus.

To the Board of Directors of China Baoli Technologies Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of China Baoli Technologies Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of adjusted consolidated net tangible liabilities of the Group attributable to owners of the Company as at 31 March 2021 and related notes (the ‘‘Unaudited Pro Forma Financial Information’’) as set out in pages II-1 to II-2 of Appendix II to the prospectus issued by the Company dated 13 September 2021 (the ‘‘Prospectus’’). The applicable criteria on the basis of which the Directors have compiled the Unaudited Pro Forma Financial Information are described in pages II-1 to II-2 of Appendix II to the Prospectus.

The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the impact of the proposed rights issue by issuing up to 186,078,061 rights shares at the subscription price of HK$0.40 per rights share on the basis of one rights share for every two New Shares held on the record date (the ‘‘Rights Issue’’) on the Group’s financial position as at 31 March 2021 as if the Rights Issue had taken place at 31 March 2021. As part of this process, information about the Group’s financial position has been extracted by the Directors from the consolidated financial statements of the Group for the year ended 31 March 2021, on which an auditor’s report has been published on 30 June 2021.

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 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

– II-3 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

Our Independence and Quality Control

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

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

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 29(7) of Chapter 4 of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountant plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the Unaudited Pro Forma Financial Information in accordance with paragraph 29 of Chapter 4 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.

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 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 2021 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

– II-4 –

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

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 judgement, 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.

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 29(1) of Chapter 4 of the Listing Rules.

Asian Alliance (HK) CPA Limited Certified Public Accountants (Practising) Lam Chik Tong

Practising Certificate Number: P05612

8/F., Catic Plaza
8 Causeway Road Causeway Bay Hong Kong

13 September 2021

– II-5 –

APPENDIX III

GENERAL INFORMATION

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 matters the omission of which would make any statement herein or this Prospectus 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 (assuming full acceptance of the Rights Issue and no further issue or repurchase of Shares from the Latest Practicable Date up to completion of the Rights Issue) are set out as follows:

(i) as at the Latest Practicable Date:

Authorised: 65,000,000,000 New Shares of HK$0.01 each Issued and fully paid up: 372,156,122 New Shares of HK$0.01 each	HK$ 650,000,000
	3,721,561.22

(ii) immediately after completion of the Rights Issue (assuming full acceptance of the Rights Issue and no further issue or repurchase of Shares from the Latest Practicable Date up to completion of the Rights Issue):

Authorised: 65,000,000,000 New Shares of HK$0.01 each Issued and fully paid up:	HK$ 650,000,000

372,156,122 New Shares of HK$0.01 in issue as at the Latest Practicable Date 186,078,061 Rights Shares to be allotted and issued 558,234,183 New Shares in issue and fully paid upon completion of the Rights Issue	3,721,561.22 1,860,780.61
	5,582,341.83

– III-1 –

APPENDIX III

GENERAL INFORMATION

All the New Shares in issue are fully-paid and rank pari passu in all respects including all rights as to dividends, voting and return of capital. The Rights Shares will, when issued and fully paid, rank pari passu in all respects with the New Shares then in issue including the right to receive future dividends and distributions which may be declared, made or paid after the date of the allotment and issue of the Rights Shares in their fully-paid form.

As at the Latest Practicable Date, there were no arrangements under which future dividends are waived or agreed to be waived. As at the Latest Practicable Date, the Company does not have any share options, derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into any Shares.

3. DISCLOSURE OF INTERESTS

(i) Directors’ and chief executives’ interests and short positions in Share, underlying Shares and debentures of the Company and associated corporation

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares or debentures of the Company and its associated corporation (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 otherwise required pursuant to section 352 of the SFO to be entered in the register referred to therein; or were required pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the ‘‘Model Code’’) to be notified to the Company and the Stock Exchange, were as follows:

Interests in the Shares and underlying Shares

			Approximate
			percentage of
			issued share
	Capacity/Nature of	Number of	capital of the
Name of Director	interest	Shares held	Company
			(Note 2)
Mr. Zhang Yi	Interest in controlled	21,534,750	5.786%
	corporation (Note 1)
	Beneficial owner	8,000	0.002%
	Sub-total	21,542,750	5.789%
Ms. Chu Wei Ning	Beneficial owner	3,000,000	0.806%
Ms. Lam Sze Man	Beneficial owner	27,750	0.007%
Mr. Chan Kee Huen, Michael	Beneficial owner	2,500	0.001%

– III-2 –

APPENDIX III

GENERAL INFORMATION

Notes:

These Shares are held by One Faith Investments Limited, which is beneficially and wholly owned by Mr. Zhang Yi.
Based on the number of issued New Shares of 372,156,122 as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interests or short positions 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 notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are 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 which were required, pursuant to the Model Code.

(ii) Substantial shareholders’ interests and short positions in the Shares and underlying Shares of the Company

So far as the Directors are aware of, as at the Latest Practicable Date, there was no person (other than the Directors or chief executive of the Company) who had any interests or short position in the Shares or underlying Shares which would fall to be disclosed under Division 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

4. DIRECTORS’ INTERESTS IN CONTRACTS

As at the Latest Practicable Date:

(a) none of the Directors had entered, or proposed to enter into a service contract with any member of the Group which is not determinable by the Group within one year without payment of compensation, other than statutory compensation;
(b) none of the Directors had any interest, direct or indirect, in any assets which had been, since 31 March 2021, being the date to which the latest published audited consolidated accounts of the Group were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group; and
(c) none of the Directors and their respective associates was materially interested in any contract or arrangement entered into by any member of the Group which was subsisting as at the Latest Practicable Date and was significant in relation to the business of the Group.

– III-3 –

GENERAL INFORMATION

APPENDIX III

5. DIRECTORS’ INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors was considered to have interests in any business apart from the Group’s business, which competes or is likely to compete, either directly or indirectly, with the business of the Group pursuant to the Listing Rules.

6. LITIGATION

(a) On 20 August 2013, the Company entered into a placing agreement with the placing agent. Pursuant to the placing agreement, the placing notes carry interest at 5% per annum and are to be redeemed on the seventh anniversary from the respective issue dates of the placing notes. One creditor purportedly a beneficial owner of placing notes commenced court action against the Company for recovery of her alleged outstanding debt due by the Company to her under the placing notes. Nevertheless, the note holders of placing notes have not commenced any court action against the Company. Such creditor’s alleged debt amount includes the principal of HK$10,000,000 and outstanding interest of approximately HK$1,264,000. On 16 March 2020, the placing agent was added by such creditor as the 2nd defendant in the Amended Writ of Summons and Amended Statement of Claim. On 4 December 2020, the Company filed and served a Writ of Summons and Statement of Claim against the placing agent. All parties filed and served their Mediation Certificates confirming that all parties accepted to conduct mediation for resolving all disputes in the above action. All parties agreed to attend the mediation conference to be held on 13 September 2021.
(b) On 28 September 2017, Allied Jumbo Investments Limited, an indirectly wholly owned subsidiary of the Company, as the Purchaser, Yulong Computer Telecommunication Scientific (Shenzhen) Co., Ltd* (宇龍計算機通信科技（深圳）有限公司), as the Vendor, Baoli Yota and the Company entered into the Framework Agreement in relation to the acquisition of 20% equity interest in Baoli Yota (the ‘‘Acquisition’’). Pursuant to the Framework Agreement, the Purchaser or Baoli Yota shall pay in aggregate of RMB80,000,000 to the Vendor in two tranches, the Purchaser shall take up the obligation of the Vendor to pay the unpaid registered capital in Baoli Yota of RMB12,000,000 and the Company had joint liability for the obligations of Baoli Yota and the Purchaser. Baoli Yota was principally engaged in manufacture and sales of mobile phone and the operations of which were ceased in mid 2019. The Company has recently received the Arbitral Award made by the Shenzhen Court, in relation to the claim filed by the Vendor against the other three parties to the Framework Agreement in the Shenzhen Court for breaching the Framework Agreement. Pursuant to the Arbitral Award, the Vendor and Baoli Yota shall continue to perform the Framework Agreement and the Purchaser, Baoli Yota and the Company shall also pay the consideration and interest incurred thereon, together with costs and other relieves. The Shenzhen Court enforced for bankruptcy and liquidation against Baoli Yota on 21 April 2021. In light of this, the Company is in the course of seeking legal advice with the Group’s legal adviser, and will vigorously contest the

– III-4 –

APPENDIX III

GENERAL INFORMATION

claim and take necessary legal actions to protect its legal rights and interests. Details of the Arbitral Award was set out in the announcement of the Company dated 29 June 2021.

Save as disclosed above, there is no other material litigation expected to result in a significant adverse effect on the financial position of the Group as at the Latest Practicable Date, either collectively or individually. The Company believes that adequate provisions have been made in respect of such litigations.

7. MATERIAL CONTRACTS

Save for the following, there were no material contracts (not being contract(s) entered into in the ordinary course of business) which had been entered into by any member of the Group within two years immediately preceding the Latest Practicable Date and are or may be material:

(a) the share transfer agreements and supplemental agreements dated 13 July 2020 entered into between the Company and Mr. Xu Shang Wu 徐尚武, as the vendor 1, and Ms. Ou Xian Lan 歐憲蘭, as the vendor 2, in relation to the acquisition of an aggregate of 80% of the entire share capital of ShenZhen ZiJun Media Company Limited* (深圳釨駿傳媒有限公司), a company incorporated under the laws of the PRC with limited liability, for an aggregate consideration of RMB1,825,800 (equivalent to approximately HK$2,008,380) which shall be satisfied in cash;
(b) the supplemental agreement dated 14 August 2020 entered into between the Company and KK Culture Holdings Limited, Team Pride Limited, Mr. Sui Chok Lee and Silver Golden Limited, as the vendors, pursuant to which the parties to the supplemental agreement agreed to amend certain terms of the agreements dated 29 March 2019 in relation to the acquisition of the entire issued share capital of Hong Kong Made (Media) Limited and Ample Success Limited for an aggregate consideration of HK$50,000,000 involving the issue of consideration shares under general mandate at the issue price of HK$0.20 per share;
(c) the business collaboration dated 8 June 2021 entered into between a subsidiary of the Group and Chun Mian Network Technology (Shanghai) Co., Ltd.* (純免網絡科技（上海）有限公司) to jointly establish a joint venture (the ‘‘JV Company’’) in the PRC, pursuant to which the Group will hold as to 40% of the JV Company and will become the single largest shareholder of the JV Company. The Group and the JV Company will conduct a series of cooperation and exploration in convergence media digital advertising and marketing business, innovatively integrate the emerging online shopping trend in cross-border duty-free e- commerce industry on the train media platform and to interact with the train patronage through mobile online-media marketing, influencer/KOL live streaming and others. The Group aims to expand its scale of convergence media business via the new online/offline duty-free importing e-commerce marketing platform services. The total amount of capital contribution is RMB1,000,000 and will be made by each JV partner in a pro-rata basis;

– III-5 –

GENERAL INFORMATION

APPENDIX III

(d) the strategic cooperation framework agreements dated 6 July 2021 entered into between the Company and two internationally renowned supplier companies, CML Co., Ltd and Rain Bow Co., Ltd., pursuant to which the Group can have a stable supply of a series of genuine authentic quality beauty, healthcare, cosmetics and skin care products with competitive prices in the market; and
(e) the Underwriting Agreement.

8. PARTICULARS OF DIRECTORS AND SENIOR MANAGEMENT

The business address in Hong Kong of each of the Directors and the senior management of the Company listed below is Suites 3706–08, 37/F, Dah Sing Financial Centre, 248 Queen’s Road East, Wanchai, Hong Kong.

Executive Directors

Mr. Zhang Yi, aged 48, was appointed as an executive Director on 5 September 2016. Mr. Zhang is also the Chairman of the Board. He graduated from Zhejiang University in 1994 with a major in Finance. Mr. Zhang has over 16 years of investment experience in the technology field, with the scope of investment spanning across various regions including Canada, the United States of America, Singapore, the mainland China and Hong Kong. He is in particular familiar with the investment and operations of telecommunications and communications industries. Mr. Zhang has good relations with the telecommunications operators and has accumulated extensive local and overseas network in the industry. Mr. Zhang is currently the chairman of a private company in the mainland China which was founded by Mr. Zhang in 2002. Under his leadership, the company has now developed into an enterprise with large investment scale and wide investment geographical range in real estates, biological medicine, new energy and media, etc. It has a number of projects including a largescale urban complex with a gross area of over a million square meters in Shanghai, Hangzhou and Shenyang. As at the Latest Practicable Date, Mr. Zhang is interested in 21,542,750 Shares (within the meaning of Part XV of the SFO) and does not have any relationship with any Directors, senior management, substantial Shareholders or controlling Shareholders.

Ms. Chu Wei Ning, aged 49, was appointed as an executive Director on 8 July 2015. Ms. Chu is also the Chief Executive Officer of the Company, an authorised representative of the Company and a director of various subsidiaries of the Group. She is currently responsible for the strategic investment and business development of the Company. Ms. Chu obtained a bachelor degree in Business Administration from the Chinese University of Hong Kong in May 1994 and a master degree of Business Administration from the University of Texas at Austin with Honors in May 1998. She has been a veteran investment banker and venture capital investment professional with over 16 years of experience. Prior to joining the Company, Ms. Chu has been a founding member and the managing director of a private investment fund which focus on investments in telecommunications, media, and technology. Previously, she also held various capacities in Bank of China International, Bear Stearns Asia Limited and Chase Manhattan Bank (which was subsequently acquired by JP Morgan). She is

– III-6 –

APPENDIX III

GENERAL INFORMATION

currently an independent non-executive director of Bosa Technology Holdings Limited (Stock Code: 8140), a listed company on the GEM of the Stock Exchange. As at the Latest Practicable Date, Ms. Chu is interested in 3,000,000 Shares (within the meaning of Part XV of the SFO) and does not have any relationship with any Directors, senior management, substantial Shareholders or controlling Shareholders.

Ms. Lam Sze Man, aged 38, was appointed as an executive Director on 3 October 2019. Ms. Lam is a director of various subsidiaries of the Group. Ms. Lam obtained a degree of Bachelor of Arts in Accountancy from the Hong Kong Polytechnic University in 2005. She is a member of the Hong Kong Institute of Certified Public Accountants. She has around 13 years of working experience in accounting. As at the Latest Practicable Date, Ms. Lam is interested in 27,750 Shares (within the meaning of Part XV of the SFO) and does not have any relationship with any Directors, senior management, substantial Shareholders or controlling Shareholders.

Independent non-executive Directors

Mr. Chan Fong Kong, Francis, aged 45, was appointed as an independent nonexecutive Director on 23 August 2018. He is also the chairman of the Remuneration Committee, and a member of the Audit Committee and Nomination Committee. He has over 15 years of experience in capital investment, assurance and consultancy services industry. Mr. Chan obtained a Bachelor’s Degree in Commerce, majoring in Accounting and Finance from Deakin University (Melbourne, Australia) in 2000. He is a fellow member of CPA Australia. He is holding the position of director in a local consultancy firm. He is also currently a director of New Territories General Chamber of Commerce; a director, vice president and committee member of Care of Rehabilitated Offenders Association. He is also currently an independent nonexecutive director of Kwoon Chung Bus Holdings Limited (Stock code: 306), which is listed on the Stock Exchange. He was an independent non-executive director of e- Kong Group Limited (now known as Great Wall Belt & Road Holdings Limited) (Stock code: 524) from June 2015 to May 2017, China Best Group Holding Limited (Stock code: 370) from September 2014 to October 2016, Leyou Technologies Holdings Limited (formerly known as Sumpo Food Holdings Limited) (Stock code: 1089) from January 2015 to July 2015 and SingAsia Holdings Limited (Stock code: 8293) from February 2018 to March 2020, all of which are listed on the Stock Exchange. As at the Latest Practicable Date, Mr. Chan does not have any interest in the Shares and underlying Shares (within the meaning of Part XV of the SFO) and does not have any relationship with any Directors, senior management, substantial Shareholders or controlling Shareholders.

Mr. Chan Kee Huen, Michael, aged 69, was appointed as an independent nonexecutive Director on 18 August 2017. He is also the chairman of the Audit Committee and Nomination Committee, and a member of the Remuneration Committee. He has over 35 years of experience in external audit, IT audit, training, accounting and finance, company secretarial and corporate administration, MIS management, internal audit, information security, risk management and compliance. Mr. Chan is currently an independent non-executive director of Lansen Pharmaceutical Holdings Limited

– III-7 –

APPENDIX III

GENERAL INFORMATION

(Stock Code: 503) and Sterling Group Holdings Limited (Stock Code 1825), which are listed companies in Hong Kong. Also, he is the chief executive of C&C Advisory Services Limited. Mr. Chan is a fellow member of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants and a fellow member and specialist in Information Technology of CPA Australia. He was admitted as a certified information systems auditor with the Information Systems Audit and Control Association in 1985. Mr. Chan was an adjunct professor in the School of Accounting and Finance of The Hong Kong Polytechnic University from 2009 to 2014. Mr. Chan worked at CMG Life Assurance Limited (formerly known as Jardine CMG Life Assurance Limited) from 1991 to 1996 and his last position was general manager, compliance and corporate affairs. He was employed by Dao Heng Bank Limited in 1996 as the group auditor (which was subsequently acquired by DBS Bank (Hong Kong) Limited) and he ceased working for the bank in 2004 with his last position as managing director and head of compliance, Hong Kong and Greater China. Mr. Chan was also the group financial controller of Lam Soon (Hong Kong) Limited from 2004 to 2005, the director of quality assurance of the Hong Kong Institute of Certified Public Accountants in 2005 and the deputy general manager of the compliance department of Ping An Insurance (Group) Company of China, Limited from 2006 to 2009. Mr. Chan graduated with a higher diploma in accountancy from Hong Kong Polytechnic (now known as The Hong Kong Polytechnic University) in November 1976 and was awarded the postgraduate diploma in business administration from the University of Surrey in March 1998. As at the Latest Practicable Date, Mr. Chan is interested in 2,500 Shares (within the meaning of Part XV of the SFO) and does not have any relationship with any Directors, senior management, substantial Shareholders or controlling Shareholders.

Mr. Feng Man, aged 53, was appointed as an independent non-executive Director on 13 December 2019. He is also a member of the Audit Committee. Mr. Feng obtained a Bachelor degree in Civil Engineering from the Shanghai Institute of Railway Sciences, Shanghai in 1989, a Master degree in Geotechnical Engineering from China Academy of Railway Sciences, Beijing in 1992 and a Master degree in Geotechnical Engineering from the University of Saskatchewan, Canada in 1999. He is currently a Registered Professional Engineer in Canada. He has experience over a wide range of resource types (oil sands, iron, gold, uranium, copper, tin, etc.), with focus on iron mine development in the last 10 years and project experiences in Canada, China, Africa, South America, Mongolia, Australia, etc.. In addition, he has 25 years of mine infrastructure engineering and engineering management experience. He is currently the general manager of PeiSi Engineering Co. Limited. As at the Latest Practicable Date, Mr. Feng does not have any interest in the Shares and underlying Shares (within the meaning of Part XV of the SFO) and does not have any relationship with any Directors, senior management, substantial Shareholders or controlling Shareholders.

– III-8 –

APPENDIX III

GENERAL INFORMATION

Senior management

Ms. Chau Lan Sze, aged 46, is the chief executive at train media business of the Group and is responsible for all marketing and sales function for the train media business of the Group. She joined the Group since 2019. She has more than ten years of experience in advertising planning and business development in China and Hong Kong. She has numerous experiences in marketing and sales in different train media channels such as Kowloon Canton Railway Through Train and Guangzhou-Shenzhen China Railway High-speed Harmony Series trains.

Company secretary

Ms. Huen Lai Chun, aged 55, was appointed as the company secretary of the Company on 2 September 2015. She is also an authorized representative of the Company. Ms. Huen is an associate member of both of The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute, and also a fellow member of The Association of Chartered Certified Accountants. She has over 10 years of experience in handling secretarial and compliance related matters of listed corporations.

9. EXPERT’S CONSENT AND QUALIFICATION

The following sets out the qualification of the expert who has given opinions, letters or advices included in this Prospectus:

Name Qualification

Asian Alliance (HK) CPA Limited Certified Public Accountants

Asian Alliance (HK) CPA Limited has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its report and reference to its name in the form and context in which it respectively appears.

As at the Latest Practicable Date, Asian Alliance (HK) CPA Limited did not have any shareholding, directly or indirectly, in any member of the Group nor did Asian Alliance (HK) CPA Limited have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Asian Alliance (HK) CPA Limited did not have any direct or indirect interest in any assets which had been, since 31 March 2021 (the date to which the latest published audited financial statements of the Group were made up), acquired, or disposed of by or leased to, or were proposed to be acquired, disposed of by or leased to any member of the Group.

– III-9 –

APPENDIX III

GENERAL INFORMATION

10. CORPORATE INFORMATION AND PARTIES TO THE RIGHTS ISSUE

Registered office of the Company:	Clarendon House
	2 Church Street
	Hamilton HM11
	Bermuda
Principle place of business of the	Suites 3706–3708
Company in Hong Kong:	37/F, Dah Sing Financial Centre
	248–256 Queen’s Road East, Wanchai
	Hong Kong
First Underwriter:	Kingkey Securities Group Limited
	44/F, Convention Plaza Office Tower
	1 Harbour Road
	Wanchai
	Hong Kong
Second Underwriter:	Koala Securities Limited
	Units 01–02, 13/F, Everbright Centre
	108 Gloucester Road
	Wanchai
	Hong Kong
Legal adviser to the Company	WT Law Offices
as to the Rights Issue:	Units 1102–1103
	11/F, Prosperous Building
	48–52 Des Voeux Road Central
	Hong Kong
Legal adviser to the Company	Carey Olsen Hong Kong LLP
as to the Companies Act:	Suites 3610–13, Jardine House
	1 Connaught Place
	Central
	Hong Kong
Hong Kong branch share registrar	Tricor Secretaries Limited
and transfer office:	Level 54, Hopewell Centre
	183 Queen’s Road East
	Hong Kong
Bermuda principal share registrar	MUFG Fund Services (Bermuda) Limited
and transfer office:	4th Floor North, Cedar House
	41 Cedar Avenue
	Hamilton HM12
	Bermuda

– III-10 –

APPENDIX III

GENERAL INFORMATION

Financial adviser to Company:	VC Capital Limited
	7/F, Centre Point
	181–185 Gloucester Road
	Wanchai
	Hong Kong
Auditor:	Asian Alliance (HK) CPA Limited
	8/F, Catic Plaza
	8 Causeway Road
	Causeway Bay
	Hong Kong
Principal banker:	The Hongkong and Shanghai Banking
	Corporation Limited
	1 Queen’s Road Central
	Hong Kong
Authorised representatives:	Ms. Chu Wei Ning and Ms. Huen Lai Chun
	Suites 3706–3708
	37/F, Dah Sing Financial Centre
	248–256 Queen’s Road East
	Wanchai
	Hong Kong
Company Secretary:	Ms. Huen Lai Chun
	Suites 3706–3708
	37/F, Dah Sing Financial Centre
	248–256 Queen’s Road East
	Wanchai
	Hong Kong

11. EXPENSES

12. BINDING EFFECT

This Prospectus, 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 (Chapter 32 of the Laws of Hong Kong), so far as applicable.

– III-11 –

APPENDIX III

GENERAL INFORMATION

13. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES

A copy of each of the Prospectus Documents and the written consent as referred to under the paragraph headed ‘‘9. EXPERT’S CONSENT AND QUALIFICATION’’ in this appendix, have been registered with the Registrar of Companies in Hong Kong pursuant to section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong).

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be made available for inspection during normal business hours at the office in Hong Kong of the Company at Suites 3706–3708, 37/F, Dah Sing Financial Centre, 248–256 Queen’s Road East, Wanchai, Hong Kong during the period of 14 days from the date of this Prospectus:

(i) the memorandum of association and bye-laws of the Company;
(ii) the annual reports of the Company for the three financial years ended 31 March 2019, 2020 and 2021;
(iii) the letter issued by the reporting accountants regarding the unaudited pro forma financial information of the Group as set out in Appendix II to this Prospectus;
(iv) the written consent referred to in the paragraph headed ‘‘9. EXPERT’S CONSENT AND QUALIFICATION’’ in this appendix;
(v) the material contracts of the Company referred to in the paragraph headed ‘‘7. MATERIAL CONTRACTS’’ in this appendix; and
(vi) the Prospectus Documents.

15. LANGUAGE

In case of any inconsistency between the English and Chinese versions of this Prospectus, the English version will prevail.

16. MISCELLANEOUS

(i) As at the Latest Practicable Date, there was no restriction affecting the remittance of profit or repatriation of capital of the Company into Hong Kong from outside Hong Kong.
(ii) As at the Latest Practicable Date, the Company has no significant exposure to foreign exchange liabilities.
(iii) The business address of all Directors and authorised representatives of the Company is Suites 3706–3708, 37/F, Dah Sing Financial Centre, 248–256 Queen’s Road East, Wanchai, Hong Kong.

– III-12 –

AI assistant

WH Group Limited — Capital/Financing Update 2021

49096_rns_2021-09-10_3538554c-4340-47bf-bd5d-78fce2d0b330.pdf

THIS PROSPECTUS IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

China Baoli Technologies Holdings Limited 中國寶力科技控股有限公司

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) NEW SHARES HELD ON THE RECORD DATE

Kingkey Securities Group Limited

Koala Securities Limited

CONTENTS

EXPECTED TIMETABLE

EXPECTED TIMETABLE

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

DEFINITIONS

DEFINITIONS

TERMINATION OF THE UNDERWRITING AGREEMENT

TERMINATION OF THE UNDERWRITING AGREEMENT

China Baoli Technologies Holdings Limited 中國寶力科技控股有限公司

(Stock Code: 164)

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) NEW SHARES HELD ON THE RECORD DATE

INTRODUCTION

LETTER FROM THE BOARD

PROPOSED RIGHTS ISSUE

Rights Issue statistics

LETTER FROM THE BOARD

Subscription Price

LETTER FROM THE BOARD

Status of the Rights Shares

Qualifying Shareholders

Rights of Overseas Shareholders

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Basis of provisional allotments

Fractional entitlements

LETTER FROM THE BOARD

Application for the Rights Shares

Procedures for acceptance and payment or transfer

LETTER FROM THE BOARD

Application for the Excess Rights Shares

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Share certificates of the Rights Shares and refund cheques for the Rights Issue

Scale-down of subscriptions to avoid the triggering of MGO Obligation and non-compliance of Public Float Requirement

LETTER FROM THE BOARD

Taxation

Application for listing

Arrangement of odd lot trading

LETTER FROM THE BOARD

THE UNDERWRITING AGREEMENT

LETTER FROM THE BOARD

Underwriting Agreement

LETTER FROM THE BOARD

(i) The financial position of the Group

(ii) The size of the Rights Issue

(iii) The current and expected market condition

(iv) The market price of the Company

LETTER FROM THE BOARD

(v) The then underwriting commission of the market

Conditions precedent of the Rights Issue

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

LETTER FROM THE BOARD

INFORMATION ON THE UNDERWRITERS

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

LETTER FROM THE BOARD

LETTER FROM THE BOARD

Notes:

LETTER FROM THE BOARD

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

ADJUSTMENTS IN RELATION TO THE OTHER SECURITIES OF THE COMPANY

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

LISTING RULES IMPLICATION

ADDITIONAL INFORMATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS STATEMENT OF THE GROUP

Pledge of assets

Contingent liabilities

APPENDIX I

WH Group Limited Capital/Financing Update 2021