WH Group Limited - Proxy Solicitation & Information Statement 2014

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in REX Global Entertainment Holdings Limited, you should at once hand this circular together with the accompanying form of proxy to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s).

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

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(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

VERY SUBSTANTIAL DISPOSAL AND NOTICE OF SPECIAL GENERAL MEETING

A notice convening the SGM of REX Global Entertainment Holdings Limited to be held at Suite 2602, 26/F., Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong on Tuesday, 13 January 2015 at 4:30 p.m. is set out on pages 69 to 70 of this circular.

Whether or not you intend to attend and vote at the SGM in person, please complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar of the Company in Hong Kong, Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as practicable and in any event not later than 48 hours before the time appointed for holding of the SGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

23 December 2014

			Pages
Definitions. . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			5
Appendix I	–	Financial information of the Group. . . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix II	–	Financial information of the Disposal Group. . . . . . . . . . . . . . . . . . .	39
Appendix III	–	The unaudited pro forma financial information of
		the Remaining Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	49
Appendix IV	–	General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	62
Notice of Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			69

– i –

DEFINITIONS

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

“associate(s)”

has the same meaning ascribed to it under the Listing Rules;

“Board”

the board of Directors;

“Business Day(s)”
a day on which banks in both the PRC and Hong Kong are open for general banking transactions;
“Chongqing Sunrise”
重慶旭日房地產開發有限公司 (Chongqing Sunrise Property Development Company Limited*), a company incorporated in the PRC with limited liability and a direct wholly-owned subsidiary of Speed Century as at the Latest Practicable Date;
“Chongqing Xujing”
重慶旭景物業管理有限公司 (Chongqing Xujing Property Management Limited*), a company incorporated in the PRC with limited liability and a direct wholly-owned subsidiary of Chongqing Sunrise as at the Latest Practicable Date;
“Company”
REX Global Entertainment Holdings Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange;
“Completion”
the completion of the Disposal and the assignment of the Shareholder Loan in accordance with the terms and conditions of the Sale and Purchase Agreement;
“connected person(s)”
has the same meaning ascribed to it under the Listing Rules;
“Consideration”
the cash consideration of HK$340,000,000, for the Disposal and the assignment of the Shareholder Loan;
“Debts”

the Loan A and the Loan B;

– 1 –

DEFINITIONS

“Directors” directors of the Company; “Disposal” the disposal of the Sale Share by the Company in accordance with the terms and conditions of the Sale and Purchase Agreement; “Disposal Group” comprises subsidiaries of the Company namely (1) Jumbo Wealth, (2) Chongqing Xujing, (3) Yunnan He Da and (4) Mianning Mao Yuan; “Group” the Company and its subsidiaries; “Hondex” Hondex Investments Limited, a substantial Shareholder of the Company; “Hong Kong” Hong Kong Special Administrative Region of the People’s Republic of China; “HK$” Hong Kong dollar, the lawful currency of Hong Kong; “Independent Third Party(ies)” a third party (parties) independent of the Company and the connected persons of the Company, and not a connected person of the Company; “Inter-company Loan” an inter-company loan in the amount of HK$255,792,000 as at 30 September 2014, approximately 92% of which represents the amount of loan outstanding owed by the Disposal Group to the Group as a result of the acquisition of 90% equity interest of Yunnan He Da which held 60% of the equity interest in Mianning Mao Yuan in 2011; “Jumbo Wealth” Jumbo Wealth International Limited, a company incorporated in the British Virgin Islands with limited liability, and a direct wholly-owned subsidiary of the Company as at the Latest Practicable Date; “Latest Practicable Date”

17 December 2014, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular;

– 2 –

DEFINITIONS

“Listing Rules”	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited;
“Loan A”	the debt due from Jumbo Wealth to Hondex, with the
	principal amount and accrued interest of approximately
	HK$180,837,000 as at 30 September 2014;
“Loan B”	the debt due from Jumbo Wealth to an Independent Third
	Party with the principal amount and accrued interest of
	approximately RMB78,117,000 (which is equivalent to
	approximately HK$98,508,000) as at 30 September 2014;
“Long Stop Date”	31 March 2015 (or such other date as agreed between the
	parties to the Sale and Purchase Agreement);
“Mianning Mao Yuan”	冕寧縣茂源稀土科技有限公司(Mianning Mao Yuan
	Rare Earth Technology Company Limited*), a company
	incorporated in the PRC with limited liability, which is
	directly held as to 60% by Yunnan He Da as at the Latest
	Practicable Date;
“PRC”	the People’s Republic of China excluding, for the purpose
	of this circular, Hong Kong, Macau and Taiwan;
“Purchaser”	Penrith Resources Limited, a company incorporated in the
	British Virgin Islands with limited liability;
“Remaining Group”	the Group excluding the Disposal Group after the
	Completion;
“RMB”	Renminbi, the lawful currency of the PRC;
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
“SGM”	a special general meeting of the Company to be convened
	to approve the Sale and Purchase Agreement and the
	transactions contemplated thereunder;

– 3 –

DEFINITIONS

“Sale and Purchase Agreement”

the agreement dated 19 November 2014 entered into between the Company and the Purchaser in relation to: (i) the Disposal; and (ii) the assignment of the Shareholder Loan;

“Sale Share”

one ordinary share of US$1.00 in the share capital of Jumbo Wealth, representing the entire issued share capital of Jumbo Wealth;

“Share(s)”
the ordinary share(s) of HK$0.01 each in the issued share capital of the Company;

“Shareholder(s)”

the holder(s) of the Share(s);

“Shareholder Loan”
the shareholder loan to be granted by the Company to Jumbo Wealth at Completion and to be assigned to the Purchaser pursuant to the Sale and Purchase Agreement, the principal amount of which will be equal to the outstanding principal and interest amount of the Debts as at Completion;

“Speed Century”

Speed Century Investments Limited, a company incorporated in Hong Kong with limited liability, and a direct wholly-owned subsidiary of Jumbo Wealth as at the Latest Practicable Date;
“Stock Exchange”

The Stock Exchange of Hong Kong Limited;

“subsidiary(ies)”

has the same meaning ascribed to it under the Listing Rules;
“Yunnan He Da”
雲南和達投資有限公司 (Yunnan He Da Investments Company Limited*), a company incorporated in the PRC with limited liability, an indirect non wholly-owned subsidiary of the Company, directly held as to 90% by Chongqing Xujing, and holds 60% of the equity interest in Mianning Mao Yuan as at the Latest Practicable Date; and

“%”

per cent.

The English translations of Chinese names or words in this circular, where indicated, are included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

– 4 –

LETTER FROM THE BOARD

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(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

Executive Directors: Registered Office: Wong King Shiu, Daniel Clarendon House Lee Kuang Yeu 2 Church Street Hamilton HM11 Non-executive Directors: Bermuda Ma Kwok Hung, Warren Chow Siu Ngor Principal place of business: Suite 2602, 26/F. Independent non-executive Directors: Sino Plaza Wong Hoi Kuen 255-257 Gloucester Road Chan Chi Yuen Causeway Bay Hung Hing Man Hong Kong 23 December 2014

To the Shareholders and, for information only,

holders of the options of the Company

Dear Sir/Madam,

VERY SUBSTANTIAL DISPOSAL AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the announcement published by the Company on 27 November 2014 in relation to the Disposal.

– 5 –

LETTER FROM THE BOARD

On 19 November 2014, the Company and the Purchaser entered into the Sale and Purchase Agreement pursuant to which (i) the Company conditionally agreed to dispose and the Purchaser conditionally agreed to purchase the Sale Share; and (ii) the Company agreed to assign and the Purchaser agreed to accept the assignment of the Shareholder Loan, at an aggregate cash consideration of HK$340,000,000 in accordance with the terms and conditions of the Sale and Purchase Agreement.

The purpose of this circular is to provide you with information regarding resolution to be proposed at the SGM in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder.

SALE AND PURCHASE AGREEMENT

Set out below are the principal terms of the Sale and Purchase Agreement:

Date: 19 November 2014 Parties: (i) the Company, as vendor; and (ii) the Purchaser, as purchaser. Assets to be disposed of: The Sale Share Consideration: HK$340,000,000

Within 5 Business Days after execution of the Sale and Purchase Agreement, the Purchaser shall pay to the Company HK$10,000,000 as deposit (the “ Deposit ”) and part payment of the Consideration. The balance of the Consideration will be satisfied on the date of Completion in telegraphic transmission or such other method as the Company may direct. The Consideration was determined after arm’s length negotiation between the Purchaser and the Company with reference to, a number of factors, including: (i) the unaudited net asset value of the Disposal Group attributable to the Company (being the net asset value of the Disposal Group (adjusted for waiver of the Inter-company Loan) of approximately HK$265,817,000 less non-controlling interest of the Disposal Group of approximately HK$174,638,000) was approximately HK$91,179,000 as at 30 September 2014; (ii) the business of Mianning Mao Yuan, which is the main operation and asset of the Disposal Group and taking into account the current market situation (such as the price drop and decrease in demand of rare earth products, PRC government policies controlling the supply of rare earth raw materials, historical investment cost of Mianning Mao Yuan and future development cost requirements, etc.); (iii) the Debts, being the outstanding principal amount and the interest accrued as at 30 September 2014 of approximately HK$279,345,000, which is due for repayment on 30 June 2015; and (iv) the current uncertainty surrounding the rare earth industry in China.

– 6 –

LETTER FROM THE BOARD

Completion will be conditional on the full settlement of the Consideration and the Directors consider the above settlement arrangement to be fair and reasonable and in the interest of the Company and its Shareholders.

The Debts and the Shareholder Loan:

The Debts comprise of the Loan A (i.e. the debt due from Jumbo Wealth to Hondex) and the Loan B (i.e. the debt due from Jumbo Wealth to an Independent Third Party), details of which are set out as follows:

(a) The Debts were incurred by Jumbo Wealth during the financial year ended 31 March 2012 and are due for repayment on 30 June 2015. As at the Latest Practicable Date, the interest rate of the Loan A is 5% per annum and the Loan B is interest free.
(b) As at 30 September 2014, the outstanding principal amount of the Debts and interest accrued thereon were estimated to be approximately HK$279,345,000 in aggregate, comprising: (i) approximately HK$180,837,000, being the outstanding principal amount of the Loan A and the interest accrued thereon; and (ii) approximately RMB78,117,000 (which is equivalent to approximately HK$98,508,000), being the outstanding amount of the Loan B and the interest accrued thereon.
(c) The Company provided guarantees in favour of Jumbo Wealth under each of the Debts. In addition, under the Loan A, Hondex has the right to demand the Company to transfer a maximum of 25% equity interest in Mianning Mao Yuan to Hondex in the event of a default to repay the loan by Jumbo Wealth on the relevant maturity date.

Pursuant to the Sale and Purchase Agreement, the Company will grant the Shareholder Loan to Jumbo Wealth at Completion for it to repay the Debts, the principal amount of the Shareholder Loan will be equal to the outstanding principal and interest amount of the Debts as at Completion, so as to release the guarantee provided by the Company in favour of Jumbo Wealth under the Debts. The Company will then assign the Shareholder Loan to the Purchaser at the same time. There will be no loan outstanding from the Disposal Group to the Company upon Completion.

– 7 –

LETTER FROM THE BOARD

Forfeiture and refund of the Deposit:

In the event that the Purchaser fails to perform its obligations for Completion in accordance with the Sale and Purchase Agreement, the Sale and Purchase Agreement shall cease and terminate, and the Company may forfeit the Deposit.

In the event that the Company fails to perform its obligations for Completion in accordance with the Sale and Purchase Agreement, the Sale and Purchase Agreement shall cease and terminate, and the Company shall refund the Deposit to the Purchaser, without interest.

Conditions Precedent:

The conditions precedent to the Disposal are that:

(a) the Purchaser having completed, to its satisfaction with its due diligence review on the Disposal Group which shall include but not limited to the financial, tax, operational and legal aspects;
(b) all requisite relevant governmental approvals, consents, authorisation, registration and filings in connection with the transactions contemplated under the Sale and Purchase Agreement having been obtained, and each such approval, consent, authorisation, registration and filing remaining entirely valid;
(c) the Company having obtained the approval of the Shareholders (or independent Shareholders, if required) as required under the Listing Rules in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder;
(d) all requisite third party consents in connection with the transactions contemplated under the Sale and Purchase Agreement having been obtained, and such consents remaining entirely valid;
(e) each of the two parties to the Sale and Purchase Agreement having obtained all delegations and consents that are necessary to its performance of the obligations, warranties and undertakings in the Sale and Purchase Agreement, including but not limited to its shareholders’ and board approvals of the transactions contemplated under the Sale and Purchase Agreement;
(f) each of the two parties to the Sale and Purchase Agreement having performed its obligations, warranties and undertakings in the Sale and Purchase Agreement;

– 8 –

LETTER FROM THE BOARD

(g) all representations and warranties given by the Company in the Sale and Purchase Agreement remaining true and accurate as at Completion;
(h) there having been no subsisting order signed by any court having jurisdiction or any governmental authority that prohibits or invalidates the transactions contemplated under the Sale and Purchase Agreement, and there having been no law, regulation, rule, Listing Rules or other requirement that restricts, prohibits or invalidates such transactions; and
(i) there having been no litigation or proceedings pending decisions of any court or governmental authority, or any litigations or proceedings threatened by a third party, that purports to restrict, prohibit or invalidate the transactions contemplated under the Sale and Purchase Agreement or to make substantial claims in connection with such transactions.

The Purchaser may waive the conditions set out in paragraphs (a), (g), (h) and (i) above. The Purchaser may also waive the Company’s obligations under paragraphs (e) and (f) above. The Company does not expect any obstacle in having the conditions satisfied.

In the event that any of the conditions has not been satisfied (or waived by the Purchaser as specified above) prior to the Long Stop Date, the parties shall not be bound to proceed with the purchase of the Sale Share, and the Sale and Purchase Agreement shall cease to be of any effect, and the Company shall refund the Deposit to the Purchaser, without interest, save for the clauses set forth in the Sale and Purchase Agreement which are to survive its termination and save in respect of claims arising out of any antecedent breach of the Sale and Purchase Agreement.

Completion:

Subject to the provisions of the Sale and Purchase Agreement, Completion shall take place on the 3rd Business Day after the fulfillment or, where applicable, waiver either in whole or in part (as the case may be) of the abovementioned conditions precedent to the Sale and Purchase Agreement (or such later date as the parties may agree in writing).

At Completion, (a) the Company shall provide the Shareholder Loan to Jumbo Wealth to enable it to repay the Debts; (b) the Company shall assign the Shareholder Loan to the Purchaser; and (c) the Company shall procure the 100% equity interest in Chongqing Xujing to be transferred to and registered under the name of the Purchaser or any entity specified by the Purchaser. The settlement of the Debts and the assignment and settlement of the Shareholder Loan will happen on the date of the Completion at the same time.

Further announcement will be made by the Company at Completion.

– 9 –

LETTER FROM THE BOARD

GROUP STRUCTURE

The simplified corporate chart of the Company, the Disposal Group, Speed Century and Chongqing Sunrise as at the date of the Sale and Purchase Agreement is as follows:

==> picture [146 x 513] intentionally omitted <==

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

The Company
100%
Jumbo Wealth
100%
Speed Century [(Note)]
100%
Chongqing Sunrise [(Note)]
100%
Chongqing Xujing
90%
Yunnan He Da
60%
Mianning Mao Yuan
----- End of picture text -----

– 10 –

LETTER FROM THE BOARD

Note: Speed Century and Chongqing Sunrise are wholly-owned subsidiaries of Jumbo Wealth as at the Latest Practicable Date. Pursuant to the Sale and Purchase Agreement, the Disposal Group shall not include Speed Century and Chongqing Sunrise. Speed Century and Chongqing Sunrise are principally engaged in property business in the PRC. As at the Latest Practicable Date, these two companies only hold minimal assets such as office equipment and maintain limited operation to monitor and consider opportunities in the PRC property market. The Company would like to retain Chongqing Sunrise to continue to pursue property investment opportunities in the PRC. Accordingly, Speed Century is retained in the Remaining Group as the holding company of Chongqing Sunrise. The Purchaser and the Company agreed that the 100% interest held by Jumbo Wealth in Speed Century and Chongqing Sunrise shall be transferred to other subsidiaries of the Company before Completion.

Immediately after Completion, the Company will no longer hold any equity interest in any member of the Disposal Group. The simplified corporate chart of the Company, Speed Century and Chongqing Sunrise will be as follows:

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

The Company
100%
Speed Century
100%
Chongqing Sunrise
----- End of picture text -----

INFORMATION RELATING TO THE PURCHASER

The Purchaser is an investment holding company incorporated in the British Virgin Islands.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner are Independent Third Parties.

INFORMATION RELATING TO THE DISPOSAL GROUP

The Disposal Group comprises subsidiaries of the Company, namely (1) Jumbo Wealth, (2) Chongqing Xujing, (3) Yunnan He Da, and (4) Mianning Mao Yuan.

– 11 –

LETTER FROM THE BOARD

Jumbo Wealth is an investment holding company which is directly wholly-owned by the Company. It indirectly owns 100% interest in the share capital of Chongqing Xujing. Chongqing Xujing directly owns 90% of the equity interest in Yunnan He Da, which in turn holds 60% of the equity interest in Mianning Mao Yuan.

Yunnan He Da is an investment holding company. Mianning Mao Yuan is principally engaged in rare earth refinery and processing business in Sichuan Province, the PRC. The Disposal Group currently does not have any business other than the business engaged by Mianning Mao Yuan.

Unaudited consolidated financial information of the Disposal Group

The unaudited consolidated net loss before and after taxation of the Disposal Group for each of the two financial years ended 31 March 2014 and 2013 are set out below:

	Financial year	ended 31 March
	2014	2013
	HK$’000	HK$’000
Net loss before taxation	31,887,000	162,423,000
Net loss after taxation	31,734,000	163,930,000

Based on the unaudited management accounts of the Disposal Group as at 30 September 2014, (i) the net asset value of the Disposal Group amounted to approximately HK$265,817,000 (adjusted for waiver of the Inter-company Loan); and (ii) the net asset value of the Disposal Group attributable to the Company (adjusted for waiver of the Inter-company Loan and after deducting non-controlling interest) was approximately HK$91,179,000.

– 12 –

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

It is expected that the Group will record a loss of approximately HK$24 million from the Disposal, the detailed calculation of which is set out as follows:

Consideration for the Disposal
Consideration for the assignment of the Shareholder Loan
Less:
The Debts
Net assets of the Disposal Group as at 30 September 2014
(adjusted for waiver of the Inter-company Loan)
Estimated direct expenses in relation to the Disposal
Add:
Non-controlling interest of the Disposal Group as at 30 September 2014
Estimated loss on the Disposal before release of
the cumulative exchange reserve attributable to the Disposal Group
Release of cumulative exchange reserve attributable to
the Disposal Group upon completion of the Disposal
Estimated loss on the Disposal as at 30 September 2014

HK$’000
60,000
280,000
340,000
(279,345)
(265,817)
(2,000)
174,638
(32,524)
8,475
(24,049)

The Consideration is in excess of 28% over the unaudited net asset value of the Disposal Group attributable to the Company (adjusted for waiver of the Inter-company Loan) as at 30 September 2014.

The actual gain or loss to be recorded might or might not be different given that the abovementioned estimate is based on the assets and liabilities of the Disposed Group as at 30 September 2014 which might be different from those on the date of Completion.

Immediately after Completion, the Group will not hold any equity interest in the Disposal Group, and each member of the Disposal Group (i.e. Jumbo Wealth, Chongqing Xujing, Yunnan He Da and Mianning Mao Yuan) will no longer be a subsidiary of the Company.

– 13 –

LETTER FROM THE BOARD

As illustrated in the unaudited pro forma consolidated balance sheet of the Remaining Group as set out in Appendix III to this circular which has been prepared as if the Disposal had been completed on 30 September 2014, after the Disposal, (i) the total assets of the Group would be decreased by approximately HK$657 million; (ii) the total liabilities of the Group would be decreased by approximately HK$450 million; and (iii) the net assets of the Group would be decreased by approximately HK$207 million.

REASONS AND BENEFITS FOR ENTERING INTO THE SALE AND PURCHASE AGREEMENT AND USE OF PROCEEDS

With a view to capturing the opportunities in the rare earth market in China, the Group acquired 90% equity interest of Yunnan He Da which holds 60% of the equity interest in Mianning Mao Yuan at a cash consideration of RMB380 million (equivalent to approximately HK$469 million) at the end of December 2011 (the “ 2011 Acquisition ”), part of which was financed by the Inter-company Loan. Please refer to the circular of the Company dated 24 August 2011 for details of the 2011 Acquisition.

After completion of the 2011 Acquisition, apart from investing approximately HK$11.6 million (as part of the Inter-company Loan) for day-to-day operation of Yunnan He Da and Mianning Mao Yuan, the Company did not inject any further cash into these two companies. Accordingly, the Group incurred a total investment cost of approximately HK$480.6 million (inclusive of the Inter-company Loan to be waived at Completion) in the Disposal Group.

The rare earth refining and processing plant started trial production in February 2012 and sample products were sold. In April 2012, the Group commenced normal sale of products. However, territorial dispute between China and Japan over Diaoyu Islands in mid-2012 caused an unexpected sharp fall in the demand, export volume and prices for rare earth products since August 2012. In 2011, Japan accounted for 66% of the whole Chinese rare earth products export. This together with a change in Chinese government policies controlling the supply of rare earth raw materials disrupted the whole rare earth industry in the PRC. In view of the abrupt deterioration of the business environment, and the uncertain timing of a recovery of the demand for rare earth products, the Group took a prudent approach to procure less rare earth raw materials and reduced its rare earth oxides production. The Group also prudently reviewed the asset value of the rare earth refinery and processing business and recognised an impairment loss of intangible asset of HK$82,346,000 for the financial year ended 31 March 2013. As the prospects of the rare earth market remained uncertain and the demand and price of rare earth products were likely to remain low, upon reviewing the performance of the rare earth refinery and processing business in the second half of financial year 2012/13, the Directors considered the possibilities of restructuring the rare earth refinery and processing business, and made a plan to sell the subsidiaries that engaged in the rare earth refinery and processing business if the asset value would be better reflected by such a sale transaction.

– 14 –

LETTER FROM THE BOARD

Since then, the Company has been actively looking for potential buyers through business partners and its contacts both within and outside of the PRC. Given the uncertainties surrounding the rare earth industry and the continuing softening of rare earth product prices, not many parties were interested in the intended disposal. Only a few potential buyers, including the Purchaser, have shown initial interest in the intended disposal and the Company had various discussions and negotiations with these potential buyers.

During 2013, weak downstream demand for rare earth products due to slow global economic growth and rare earth industry consolidation promoted by the Chinese government have caused the demand and price of rare earth products to remain at low levels. Some of the potential buyers declined to continue with the negotiations.

During this period, in order to reduce the losses incurred by the business, the Group substantially reduced its rare earth oxides production, but increased trading of rare earth resources.

In the first half of financial year 2014/15, in view of the persistent weak downstream demand for rare earth products and relatively high raw material costs, the Group decided to halt its rare earth product production temporarily. The Group also reviewed the net asset value of the rare earth refinery and processing business and recognised an impairment loss on goodwill of HK$22,699,000. Meanwhile, the Company continued discussions of the intended disposal with the Purchaser.

Based on the Company’s understanding, the beneficial owner of the Purchaser has resources investment experience in the south-western part of the PRC and experience in dealing with the local authorities in those regions.

In June 2014, a non-binding letter of intent was entered into with the Purchaser, who has since been conducting due diligence review of the business of the Disposal Group and the possible disposal was subject to further negotiation between the parties.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner did not have any prior relationship or business dealings with (a) the Company and its connected persons; and (b) the original vendor in the 2011 Acquisition.

– 15 –

LETTER FROM THE BOARD

During the six months ended 30 September 2014, the Group recorded a turnover of HK$14,253,000, representing a decrease of 20% compared with the six months ended 30 September 2013. The decline was mainly due to a temporary halt of the Group’s rare earth oxides production and hence there was no contribution from the resources business during the six months ended 30 September 2014. As discussed in the Company’s 2014 interim report, the Group has decided to halt its rare earth oxides production temporarily in order to reduce losses incurred by the business.

The Directors consider that the Disposal provides an opportunity to realise the Group’s investment in the Disposal Group and to take away the uncertainty facing the rare earth industry from the Group.

Total Consideration is HK$340,000,000 in which (i) HK$280,000,000 is for the assignment of the Shareholder Loan; and (ii) the remaining proceeds of HK$60,000,000 is for the Disposal. Net proceeds from the Disposal, net of professional fees and relevant expenses, are expected to be HK$58,000,000. The Company intends to apply such net proceeds for the development of and investment in entertainment and gaming business, other new business opportunities and the general working capital of the Remaining Group’s operation. Given the current operation, the Remaining Group will have sufficient working capital for its normal business and no material funding is needed.

The main purpose of the arrangement in relation to the Shareholder Loan is to ensure the Debts will be settled at Completion and therefore, the guarantees provided by the Company in favour of Jumbo Wealth under the Debts will accordingly be released at Completion. This would also substantially reduce the Company’s contingent liabilities.

The Directors further consider that the Disposal will greatly improve the financial position of the Company and hence its ability to focus its resources on opportunities that can provide sustainable and recurring benefits to the Group and thereby maximising the return to the Shareholders. It is expected that the overall cashflow and liquidity position of the Group will also improve upon Completion. The overall cashflow will be improved from the HK$58,000,000 net proceeds from the Disposal and the release of the Debts which will mature in June 2015. The financial position of the Group will also be improved as the Debts and guarantees provided by the Company to the lenders of the Debts will be released and no interest expense will be incurred for the Debts. The liquidity ratio, being the ratio of current assets over current liabilities, was 161% as at 30 September 2014 and it would have been 207% if the Disposal had been completed on 30 September 2014.

Based on the above, the Directors (including the independent non-executive Directors) believe that the terms of the Sale and Purchase Agreement (including the Consideration) are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

– 16 –

LETTER FROM THE BOARD

INFORMATION RELATING TO THE GROUP AND THE REMAINING GROUP

The Group is principally engaged in entertainment and gaming business, property business, gamma ray irradiation services and resources business.

Entertainment and Gaming Business

As underpinned in the Company’s 2014 annual report, the Group has been eyeing on opportunities to diversify into businesses providing steady income stream in order to enhance Shareholders’ return in the long run. Following such strategy of diversification, the Group has proposed to invest in and develop the leisure, hospitality, tourism, entertainment and gaming related businesses (the “ Entertainment and Gaming Business ”), being a new business segment of the Group. The Group has set up an Entertainment and Gaming Division to explore opportunities in the Entertainment and Gaming Business, and our first initiative in this division is to develop the cruise ship business.

As disclosed in the Company’s announcement dated 2 July 2014 (the “ Cruise Ship Announcement ”), the Group and Norvest Global Limited, an Independent Third Party, formed Star Sail Investments Limited (the “ JV Company ”) to acquire a cruise ship at a consideration of HK$93 million (the “ Ship Acquisition ”) by late August 2014. The JV Company was held as to 90% by Norvest Global Limited and as to 10% by the Group. After completion of the Ship Acquisition, the cruise ship was renamed as “REX Fortune”, and the Group commenced its cruise ship business in late August 2014 by way of providing services in respect of certain management functions and core operation of the cruise ship, as envisaged in the Cruise Ship Announcement.

For the purpose of providing such services, a wholly-owned subsidiary of the Company (the “ Manager ”), the JV Company (as the owner of REX Fortune) and the casino operator of REX Fortune (the “ Casino Operator ”, which is an Independent Third Party) (as appropriate) entered into agreements (the “ Management and Operation Agreements ”), pursuant to which, (1) the Manager will provide overall management and operation services in respect of REX Fortune (the “ Ship Management ”); and (2) the Casino Operator will manage the casino operation of REX Fortune (the “ Casino Operation ”), for an initial term of two years (renewable in accordance with the terms and conditions of the Management and Operation Agreements). The Ship Management includes crew management, technical management, commercial management, insurance arrangements etc.. Pursuant to the Management and Operation Agreements, (a) the Manager is entitled to receive (i) the income in connection with the room sales, boat fares, meals, duty free sales, and other services rendered to the customers or patrons of REX Fortune; and (ii) management fees from the Casino Operator (comprising of a basic fee and a performance-based amount in connection with the Casino Operation); and (b) the Manager is required to pay the JV Company a basic fee and a performance-based amount in connection with the Ship Management and the Casino Operation.

– 17 –

LETTER FROM THE BOARD

Since the commencement of the cruise ship business in late August 2014, turnover generated from the division was HK$11,075,000 which represented 77.7% of the Group’s turnover for the six months ended 30 September 2014. The division sustained a loss of approximately HK$3,623,000 for the six months ended 30 September 2014 mainly due to the start-up costs. It is noted that the operation of REX Fortune is ramping up. The profitability of the Entertainment and Gaming Business of the Group is expected to improve when it reaches full scale of operation.

The Company believes that the Entertainment and Gaming Business, after reaching full scale of operation, may be able to provide a stable recurring revenue stream to the Group, and create long-term values to the Shareholders.

Property Business

The Group’s property business includes property development, trading of building materials and provision of renovation services. During the six months ended 30 September 2014, the Group has not launched new property projects for sale and turnover of property business was HK$14,000. Segment loss narrowed down to HK$666,000 as a result of implementation of cost reduction initiatives during the six months ended 30 September 2014.

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

Gamma Ray Irradiation Services

The Group’s gamma ray irradiation business is conducted through 淄博利源高科輻照技術有限公司 (Zibo Liyuan Gamma Ray Technologies Co. Limited*), a 80% owned subsidiary of the Group which is licensed by the Ministry of Environmental Protection of the PRC for the provision of irradiation services by utilising gamma ray technologies. Although global economic recovery remained slow during the six months ended 30 September 2014, demand for food irradiation and sterilisation of medical devices using gamma ray technologies had shown signs of stabilisation. The Group’s marketing effort in strengthening business relation with existing and new customers had borne some fruits. Turnover generated from the gamma ray irradiation services for the six months ended 30 September 2014 grew 11% to HK$3,164,000. Segment loss for the six months ended 30 September 2014 was reduced to HK$967,000.

– 18 –

LETTER FROM THE BOARD

In regards to gamma ray irradiation business, as application of gamma ray technologies in food irradiation has increased in recent years with increasing awareness of domestic food safety and hygiene standard, the Group will endeavour in ongoing services innovation, expansion of its services to new products with high margins, and sourcing of new clients. The Group will also strive to improve the productivity and efficiency of its production facilities.

Resources Business

During the six months ended 30 September 2014, turnover from the segment was nil. The segment reported a loss of approximately HK$22,567,000 after the recognition of an impairment loss.

After Completion, the Company will not own any assets in the resources business segment of the Group. However, the Company believes that the current downturn in the resources industry may provide opportunities for the Company to invest in potential resources projects with attractive valuation. It is expected that after Completion, the Group will continue to review this business segment with reference to the market situation and may further explore opportunities related to the value chain of the resources industry from upstream, midstream to downstream.

Other Operation

During the six months ended 30 September 2014, Hong Kong stock markets improved along with other markets in Asia. Both unrealised and realised gains on equity investments held for trading contributed to a reported gain of HK$12,460,000 to the securities trading and investment business division.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the Disposal are 75% or more, the Disposal constitutes a very substantial disposal of the Company under Chapter 14 of the Listing Rules. Pursuant to Chapter 14 of the Listing Rules, the Sale and Purchase Agreement and the transactions contemplated thereunder are therefore subject to the announcement and Shareholders’ approval requirements.

– 19 –

LETTER FROM THE BOARD

The SGM will be convened and held for the Shareholders to consider and, if thought fit, to approve the Sale and Purchase Agreement and the transactions contemplated thereunder. Hondex and its associate(s), if any, will abstain from voting on the resolution approving the Sale and Purchase Agreement and the transactions contemplated thereunder at the SGM. As at the Latest Practicable Date, Hondex and its associates together held 900,000,000 Shares, representing approximately 12.18% of the total issued share capital of the Company, of which 750,000,000 Shares were held by Hondex and 150,000,000 Shares were held by the ultimate beneficial owner of Hondex.

Completion is conditional upon the satisfaction or, if applicable, waiver of the conditions set out in the section headed “Conditions Precedent” in this circular, including the approval of the Sale and Purchase Agreement and the transactions contemplated thereunder by Shareholders at the SGM. Accordingly, the Disposal may or may not proceed.

Shareholders and potential investors should exercise caution when dealing in the securities of the Company.

RECOMMENDATION

The Board considers that the transactions contemplated under the Sale and Purchase Agreement are on normal commercial terms and the terms of the Sale and Purchase Agreement are fair and reasonable and are in the interests of the Company and its Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

ADDITIONAL INFORMATION

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

Yours faithfully

By order of the Board

REX Global Entertainment Holdings Limited Wong King Shiu, Daniel

Executive Director

– 20 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. THREE YEARS' SUMMARY OF FINANCIAL RESULTS

Financial information of the Group for each of the three years ended 31 March 2012, 2013 and 2014 and the six months ended 30 September 2013 and 2014 are disclosed in the following documents which have been published on the websites of the Stock Exchange (http:// www.hkexnews.hk) and the Company (http://www.aplushk.com/clients/00164rex-ent/index.html) respectively:

annual report of the Company for the year ended 31 March 2012 published on 30 July 2012 (pages 42 to 163);
annual report of the Company for the year ended 31 March 2013 published on 27 June 2013 (pages 40 to 156);
annual report of the Company for the year ended 31 March 2014 published on 4 July 2014 (pages 40 to 160);
interim report of the Company for the six months ended 30 September 2013 published on 5 December 2013 (pages 1 to 24); and
interim report of the Company for the six months ended 30 September 2014 published on 29 October 2014 (pages 1 to 24).

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES AS AT 31 OCTOBER 2014

Borrowings

As at the close of business on 31 October 2014 (being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular), the Group had outstanding indebtedness denominated in Hong Kong dollars of approximately HK$365,893,000. The outstanding indebtedness comprised of (i) secured bank borrowing of approximately HK$10,088,000, (ii) unsecured loan from a company controlled by a substantial Shareholder of HK$33,500,000; (iii) unsecured placing notes bearing interest of 5% per annum with an outstanding amount of HK$20,000,000; (iv) other unsecured borrowings, which included two loans (Loan A and Loan B), Loan A as at 31 October 2014 with outstanding amount of approximately HK$181,587,000 in which loan principal is interest bearing at 5% per annum, Loan B as at 31 October 2014 with outstanding amount of approximately HK$98,508,000 in which loan principal is interest free; and (v) amount due to a non-controlling shareholder of a subsidiary of approximately HK$22,210,000.

– 21 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Banking Guarantee and Facilities

As at 31 October 2014, the Group had pledged a leasehold building and land use rights with carrying value of approximately HK$6,280,000 and HK$11,175,000 respectively to secure the bank loan granted to the Group.

Contingent Liabilities

As at 31 October 2014, the Company had given guarantees to the lenders of Loan A and Loan B in respect of the unsecured borrowings utilised by a subsidiary. In the event of default to repay the Loan A by the subsidiary, the lender of Loan A has the right to demand the Company to transfer a maximum of 25% equity interest in a 54% owned subsidiary of the Group, Mianning Mao Yuan, to it.

Save as aforesaid and apart from intra-group liabilities and normal trade and other payables, the Group did not, as at the close of business on 31 October 2014, have any mortgage, charges, debt securities issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, hire purchase or finance lease commitments, guarantees or other material contingent liabilities.

Subsequent to 31 October 2014, the unsecured placing notes bearing interest of 5% per annum with an aggregate amount of HK$10,000,000 have been issued by the Company.

Save as disclosed above, the Directors have confirmed that there have been no material changes in the indebtedness and contingent liabilities of the Group since 31 October 2014, up to and including the Latest Practicable Date.

3. WORKING CAPITAL

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

4. MATERIAL ADVERSE CHANGE

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

– 22 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

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

The Group is principally engaged in entertainment and gaming business, property business, gamma ray irradiation services and resources business.

Entertainment and Gaming Business

The Group commenced the cruise ship business under the Entertainment and Gaming Division in late August 2014 by way of providing overall management and operation services in respect of the cruise ship “REX Fortune” (the “ Ship Management ”). During the period from 1 October 2014 to 30 November 2014, the total number of guests on board of REX Fortune was over 5,700, and a total rolling amounting to approximately HK$712,880,000 was recorded for the period from 1 October 2014 to 30 November 2014 before REX Fortune went for annual docking and repairs on 24 November 2014, which was completed on 3 December 2014.

As the manager of REX Fortune, the Group is entitled to receive service income and management fees in respect of the Ship Management. During the period from 1 October 2014 to 30 November 2014, the cruise ship business recorded a turnover of approximately HK$23,100,000. This division has started to make a positive contribution to the Group’s financial performance.

The Group is highly confident of the prospect and the long term development of this new business. As the number of government mooring buoys is fixed in Hong Kong, this poses entry barriers to new industry players. In addition, as cruises become a popular type of leisure activity and offer alternative hospitality, the Group’s cruise ship business should benefit from continued growth of tourist arrivals in Hong Kong.

– 23 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Group believes that this new business will enable the Group to tap into the tourism, leisure, entertainment and gaming industries which are rapidly growing in Asia on the back of an increase in consumption power in the region. Robust economic growth in Asia continues to create a large and growing middle class with rising disposable income. The PRC, in particular, has seen its outbound tourism accelerating with rising consumption power of the Chinese tourists on different sorts of leisure activities. The Group is optimistic on continued resilient economic growth in the PRC and in the region in the long term despite short-term volatilities. As such, the Group will focus on exploration of opportunities in investment in and operation of other cruise ships, hotel and gaming related businesses in the region and elsewhere. The Group believes that these developments will provide a stable recurring revenue stream to the Group, and hence will create long-term returns to the Shareholders.

Property Business

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

Gamma Ray Irradiation Services

Resources Business

As for resources business, the Group has been continually exploring into different opportunities in the whole value chain in the industry. Current downturn in the resources industry may provide opportunities to the Group to invest in potential resources projects at attractive valuation.

– 24 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

FOR THE YEAR ENDED 31 MARCH 2012

The Remaining Group’s liquidity and financial resources

As at 31 March 2012, the Remaining Group had cash and cash equivalents of approximately HK$75,000,000 if the Disposal had been completed on 31 March 2012. The Disposal Group acquired the Debts from the Remaining Group in December 2012. Assuming that the Debts were included in the Disposal Group as at 31 March 2012, the Remaining Group’s short term bank borrowings, long term bank and other borrowings, and liability component of convertible note as at 31 March 2012 were HK$9,864,000, HK$56,636,000 and HK$88,848,000 respectively. The gearing ratio of the Remaining Group, being the ratio of the sum of total borrowings and convertible note to total equity, was 518%. The liquidity ratio of the Remaining Group, being the ratio of current assets over current liabilities, was 340% as at 31 March 2012.

The Remaining Group’s borrowings

Amounts due within one year: – Bank borrowing Amounts due over one year: – Amount due to a non-controlling shareholder of a subsidiary – Other borrowing – Convertible note Total borrowings	As at 31 March 2012 HK$’000 9,864 20,330 56,636 105,000
	191,830

– 25 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The unsecured 1% convertible note in the principal amount of HK$105,000,000 with a term of 3 years was issued in October 2011. The amount due to a non-controlling shareholder of a subsidiary was interest-free, unsecured and has no fixed terms of repayment. The bank borrowing is approximately HK$9,864,000 which will mature on 25 September 2012 and the average effective interest rate is approximately 8.17% per annum. The other borrowing was interest-free, unsecured and has no fixed terms of repayment.

The Remaining Group’s currency and interest rate

In terms of the interest rate risk exposures, the Remaining Group does not have any significant interest rate risk as both the borrowings of the Remaining Group and the interest rates thereof currently remain at low levels.

Segmental information and significant investments held and their performance in the Remaining Group

Gamma Ray Irradiation Services

During the financial year ended 31 March 2012, the Remaining Group’s gamma ray irradiation business, through 淄博利源高科輻照技術有限公司 (Zibo Liyuan Gamma Ray Technologies Co. Limited) (“ Zibo Liyuan* ”) which is owned as to 80% by the Company, has recorded a turnover of approximately HK$9,404,000. This segment reported a profit of approximately HK$1,080,000. The jump in operating profit was attributable to an increase in processing capacity during the year, successful marketing strategy and operating leverage.

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Property Development, Rental and Sales

Turnover generated from the property development, rental and sales was approximately HK$16,450,000 for the year under review. Segment loss was HK$7,793,000. The decrease in turnover was mainly attributable to the slowing down of the market generally in view of the macro economic control measures imposed by the Chinese government during the year as well as the decrease in property price. The decrease in segmental loss was due to the fact that in the previous financial year there were substantial amount of expenses incurred by the primary land development project held by 北京友聯房地產開發有限公司 (Beijing Yo Luan Property Development Company Limited*) which was disposed of in February 2011.

The Remaining Group has an entire interest in a land parcel of approximately 5,800 square meters located in Phase III Phoenix Town, No. 500 Hongjin Avenue, Yubei District, Chongqing, the PRC with a total saleable area of approximately 35,000 square meters mainly for residential purpose. The Remaining Group also has commercial properties including shops and car park lots located in Phase I and Phase II at the same location which were for sale in the period. Though the residential project in Yubei District is still at the preliminary stage of development, we do not rule out the possibilities of divesting this project if there are any good opportunities.

Trading of Building Materials and Provision of Renovation Services

The operating environments of building materials trading and renovation services remained weak during the year under review. This segment’s turnover decreased 23% to approximately HK$866,000 and suffered a loss of approximately HK$392,000, which was mainly attributable to an increase in cost of sales.

Securities Trading and Investment

During the year under review, the global stock markets remained volatile amid the influence of European sovereign debt crisis and concerns over global economic recovery. Due to both unrealised and realised gains on equity investments held for trading, this segment reported a profit of HK$14,999,000.

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Material acquisitions and disposals of subsidiaries

As disclosed in the Letter of the Board, the Group completed the acquisition of 90% equity interest in Yunnan He Da, which in turn holds 60% equity interest in Mianning Mao Yuan, in December 2011. Please refer to the Letter from the Board for details of the Disposal Group. Management discussion and analysis of the Disposal Group is not included in this section of Appendix I as this section intends to cover information of the Remaining Group.

On 8 March 2011, the Remaining Group entered into an agreement in relation to a proposed acquisition of a vanadium mining project (the “ Proposed Acquisition ”). On 3 May 2011, the parties entered into a memorandum of understanding in relation to the Proposed Acquisition to replace the said agreement (the “ MOU ”). Details of the MOU and the Proposed Acquisition are set out in the Company’s announcement dated 3 May 2011. No formal sale and purchase agreement was entered into, and the MOU has expired during the year.

Save as disclosed above, the Remaining Group had no material acquisition and disposal of subsidiaries during the year ended 31 March 2012.

Employee and emolument policy

As at 31 March 2012, the Remaining Group employed 54 employees. Remuneration packages are generally structured by reference to market terms and individual merits. Salaries are reviewed periodically based on performance appraisal and other relevant factors. Staff benefits plans maintained by the Remaining Group include medical insurance, hospitalisation scheme, mandatory provident fund and share option scheme. Employees in the PRC are remunerated according to the prevailing market conditions in the locations of their employments.

Future plans for material investments or capital assets

As at 31 March 2012, the Remaining Group had no future plans for material investments or capital assets.

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FOR THE YEAR ENDED 31 MARCH 2013

The Remaining Group’s liquidity and financial resources

As at 31 March 2013, the Remaining Group had cash and cash equivalents of approximately HK$115,000,000 if the Disposal had been completed on 31 March 2013. The Remaining Group’s long term bank and other borrowings, and liability component of convertible note as at 31 March 2013 were HK$66,667,000 and HK$94,823,000 respectively. The gearing ratio of the Remaining Group, being the ratio of the sum of total borrowings and convertible note to total equity was 309% as at 31 March 2013. The liquidity ratio of the Remaining Group, being the ratio of current assets over current liabilities, was 567% as at 31 March 2013.

The Remaining Group’s borrowings

Amounts due over one year: – Amount due to a non-controlling shareholder of a subsidiary – Bank borrowing – Other borrowing – Convertible note Total borrowings	As at 31 March 2013 HK$’000 21,162 9,877 56,790 105,000
	192,829

The unsecured 1% convertible note in the principal amount of HK$105,000,000 with a term of 3 years was issued in October 2011. The amount due to a non-controlling shareholder of a subsidiary was interest-free, unsecured and has no fixed terms of repayment. The bank borrowing is approximately HK$9,877,000 which will mature on 23 September 2014 and the average effective interest rate is approximately 7.76% per annum. The other borrowing was interest-free, unsecured and has no fixed terms of repayment.

– 29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group’s currency and interest rate

Segmental information and significant investments held and their performance in the Remaining Group

Property Business

The Remaining Group’s property business includes property development, rental and sales and trading of building materials and provision of renovation services.

The growth of property market in the PRC slowed down in recent years. In light of the uncertainty of market conditions, the Remaining Group took the opportunity to transact its properties under development which located in Chongqing, the PRC in August 2012. The disposal realised a total proceeds of RMB35,000,000 (equivalent to approximately HK$42,840,000) and recognised a gain of approximately HK$1,656,000.

Total proceeds generated from the Remaining Group’s property business was HK$50,886,000 including the proceeds of disposing of subsidiaries holding properties in China, turnover of property development, rental and sales and trading of building materials and provision of renovation services, which were approximately HK$42,840,000, HK$8,018,000 and HK$28,000 for the year respectively. Segment loss from property development, rental and sales narrowed down to HK$2,185,000 while loss for trading of building materials and provision of renovation services was HK$774,000.

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Gamma Ray Irradiation Services

Gamma ray irradiation is a proven effective means of cold pasteurisation of food and sterilisation of medical products. The Remaining Group’s gamma ray irradiation business is conducted through Zibo Liyuan, a 80% owned subsidiary of the Remaining Group which is licensed by the Ministry of Environmental Protection of the PRC for provisioning of irradiation services by utilising gamma ray technologies. Turnover generated from the gamma ray irradiation services for the financial year was HK$5,941,000 (2012: HK$9,404,000). This segment reported a loss of HK$2,515,000 (2012: Profit of HK$1,080,000). During the financial year under review, an increase in competition which resulted in a decline in margins amidst weaker market demand have affected the operating performance of the business. As such, the Remaining Group has increased its marketing efforts, including conducting more seminars to expand customer base during the year. Despite moderate competition may happen in the short term, the Remaining Group believes there will be long term sustainable growth in this industry.

Other Operation

During the year under review, Hong Kong stock markets remained volatile amid sluggish global economies. Due to both unrealised and realised gains on equity investments held for trading, the securities trading and investment business reported a profit of HK$3,076,000.

Material acquisitions and disposals of subsidiaries

On 17 August 2012, Fame Plus International Limited, a wholly-owned subsidiary of the Company, entered into a sale and purchase agreement with Mr. Guo Qingguo (“ Mr. Guo ”), pursuant to which Fame Plus International Limited has conditionally agreed to sell and Mr. Guo has conditionally agreed to purchase the entire issued share capital of Unique Gold Investments Limited at a consideration of RMB10,000,000. Unique Gold Investments Limited owned the entire equity interest in 重慶鳳弘吉實業有限責任公司 (Chongqing Feng Hong Ji Enterprise Company Limited) (the “ Project Company* ”). In addition, when the above-mentioned agreement has been entered into, Mr. Guo shall pay RMB25,000,000 to the Project Company to settle and repay the current debts and other relevant debts between Chongqing Sunrise and the Project Company. Details of the transaction are set out in the Company’s announcement dated 17 August 2012. The transaction has been completed on 17 August 2012.

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Save as disclosed above, the Remaining Group had no material acquisition and disposal of subsidiaries during the year ended 31 March 2013.

Employee and emolument policy

As at 31 March 2013, the Remaining Group employed 42 employees. Remuneration packages are generally structured by reference to market terms and individual merits. Salaries are reviewed periodically based on performance appraisal and other relevant factors. Staff benefits plans maintained by the Remaining Group include medical insurance, hospitalisation scheme, mandatory provident fund and share option scheme. Employees in the PRC are remunerated according to the prevailing market conditions in the locations of their employments.

Future plans for material investments or capital assets

As at 31 March 2013, the Remaining Group had no future plans for material investments or capital assets.

FOR THE YEAR ENDED 31 MARCH 2014

The Remaining Group’s liquidity and financial resources

As at 31 March 2014, the Remaining Group had cash and cash equivalents of approximately HK$92,000,000 if the Disposal had been completed on 31 March 2014. The Remaining Group’s short term bank borrowing, long term bank and other borrowings and liability component of convertible note as at 31 March 2014 were HK$10,063,000, HK$52,044,000 and HK$101,272,000 respectively. The gearing ratio, being the ratio of the sum of total borrowings and convertible note to total equity, was 1,622% as at 31 March 2014. The liquidity ratio, being the ratio of current assets over current liabilities, was 120% as at 31 March 2014.

– 32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Remaining Group’s borrowings

Amounts due within one year: – Bank borrowing Amounts due over one year: – Amount due to a non-controlling shareholder of a subsidiary – Other borrowing – Placing notes – Convertible note Total borrowings	As at 31 March 2014 HK$’000 10,063 21,839 33,500 20,000 105,000
	190,402

The unsecured 1% convertible note in the principal amount of HK$105,000,000 with a term of 3 years was issued in October 2011. The amount due to a non-controlling shareholder of a subsidiary was interest-free, unsecured and has no fixed terms of repayment. The bank borrowing is approximately HK$10,063,000 which will mature on 23 September 2014 and the average effective interest rate is approximately 7.48% per annum. The other borrowing was interest-free, unsecured and has no fixed terms of repayment. The unsecured placing notes bearing interest of 5% per annum with an outstanding amount of HK$20,000,000 will be repayable in year 2020.

The Remaining Group’s currency and interest rate

– 33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Segmental information and significant investments held and their performance in the Remaining Group

Property Business

The Remaining Group’s property business includes property development, rental and sales and trading of building materials and provision of renovation services.

During the year under review, the Remaining Group has been devoting resources to land bank acquisitions. The land market in China was heated up with more transactions taking place. While competition was very intense in auctions, the Remaining Group sought to identify premium land sites at the right opportunity and refrained from making aggressive bids. The Remaining Group continues to focus on exploring mixed use property development and investment in China. During the year under review, the Remaining Group has not launched new property projects for sale and turnover of property business was HK$1,011,000, of which turnover from trading of building materials and provision of renovation services amounted to HK$1,011,000. Segment loss narrowed down to HK$694,000.

Gamma Ray Irradiation Services

The Remaining Group’s gamma ray irradiation business is conducted through Zibo Liyuan. Turnover generated from the gamma ray irradiation services for the financial year was HK$5,906,000. This segment reported a loss of HK$2,565,000.

During the year under review, slow global economic recovery and weak export demand have affected the operating performance of the business. In response to weak demand, the Remaining Group has expanded its services to new products with high margins, such as agricultural, health food, seafood and chemical products. The Remaining Group also strengthened business relation with existing and new customers to increase business volume. In addition, the Remaining Group increased its marketing efforts to tap into potential domestic customers, including conducting market research on various products application, as well as seminars for food and drug safety bureau, and food and drug enterprises in China.

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Rare Resources Business

The Remaining Group has been continually exploring into different opportunities related to value chain of resources from upstream, midstream to downstream. Current downturn in the resources industry may provide opportunities to the Remaining Group to invest in potential resources projects at attractive valuation.

Other Operation

During the year under review, Hong Kong stock markets remained range-bound amid slowing Chinese economy. Due to both unrealised and realised gains on equity investments held for trading, the securities trading and investment business reported a loss of HK$176,000.

Material acquisitions and disposals of subsidiaries

The Remaining Group had no material acquisition and disposal of subsidiaries during the year ended 31 March 2014.

Employee and emolument policy

As at 31 March 2014, the Remaining Group employed 38 employees. Remuneration packages are generally structured by reference to market terms and individual merits. Salaries are reviewed periodically based on performance appraisal and other relevant factors. Staff benefits plans maintained by the Remaining Group include medical insurance, hospitalisation scheme, mandatory provident fund and share option scheme. Employees in the PRC are remunerated according to the prevailing market conditions in the locations of their employments.

Future plans for material investments or capital assets

As at 31 March 2014, the Remaining Group had no future plans for material investments or capital asset.

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014

The Remaining Group’s liquidity and financial resources

The Remaining Group had cash and cash equivalents of HK$163 million as at 30 September 2014 if the Disposal had been completed on 30 September 2014. Long-term bank and other borrowings and liability component of the convertible note as at 30 September 2014 were HK$62,223,000 and HK$104,666,000 respectively. The gearing ratio of the Remaining Group, being the ratio of the sum of total borrowings and convertible note to total equity, was 126% as at 30 September 2014. The liquidity ratio of the Remaining Group, being the ratio of current assets over current liabilities, was 207% as at 30 September 2014. Subsequent to 30 September 2014, the convertible note in the principal amount of HK$105,000,000 has been fully exercised by the relevant noteholders, the gearing and liquidity ratio of the Remaining Group have been improved to 28% and 749% respectively.

The Remaining Group’s borrowings

Amounts due within one year: – Convertible note Amounts due over one year: – Amount due to a non-controlling shareholder of a subsidiary – Bank borrowing – Other borrowing – Placing notes Total borrowings	As at 30 September 2014 HK$’000 105,000 22,209 10,088 33,500 20,000
	190,797

– 36 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The unsecured 1% convertible note in the principal amount of HK$105,000,000 with a term of 3 years has been fully exercised by the relevant noteholders, and an aggregate of 729,673,382 Shares have been issued and allotted accordingly subsequent to 30 September 2014. The amount due to a non-controlling shareholder of a subsidiary was interest-free, unsecured and has no fixed terms of repayment. The bank borrowing is approximately HK$10,088,000 which will mature on 16 September 2016 and the average effective interest rate is approximately 7.38% per annum. The other borrowing was interest-free, unsecured and has no fixed terms of repayment. The unsecured placing notes bearing interest of 5% per annum with an outstanding amount of HK$20,000,000 will be repayable in year 2020.

The Remaining Group’s currency and interest rate

The Remaining Group’s transactions are denominated in HK$ and RMB. The Remaining Group did not enter into any foreign exchange forward contracts to hedge against exchange rates fluctuations. Foreign exchange risk arising from the normal course of operations is considered to be minimal and the management will closely monitor the fluctuation in the currency and take appropriate actions when condition arises. In terms of the interest rate risk exposures, the Remaining Group does not have any significant interest rate risk as both the borrowings of the Remaining Group and the interest rates thereof currently remain at low levels.

Segmental information and significant investments held and their performance in the Remaining Group

Please refer to the paragraph headed “Information relating to the Group and the Remaining Group” in the Letter from the Board in this circular.

Material acquisitions and disposals of subsidiaries

As disclosed in the Company’s announcement dated 2 July 2014, Oceanic Eagle Limited (“ Oceanic Eagle ”), a wholly-owned subsidiary of the Company, formed a joint venture company (“ JV Company ”) with Norvest Global Limited to acquire a cruise ship at a consideration of HK$93 million, and the JV Company was held as to 90% by Norvest Global Limited and as to 10% by Oceanic Eagle. Save as disclosed above, the Remaining Group had no material acquisition and disposal of subsidiaries during the six months ended 30 September 2014.

– 37 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Employee and emolument policy

As at 30 September 2014, the Remaining Group employed 325 employees. Remuneration packages are generally structured by reference to market terms and individual merits. Salaries are reviewed periodically based on performance appraisal and other relevant factors. Staff benefits plans maintained by the Remaining Group include medical insurance, hospitalisation scheme, mandatory provident fund and share option scheme. Employees in the PRC are remunerated according to the prevailing market conditions in the locations of their employments.

Future plans for material investments or capital assets

As at 30 September 2014, the Remaining Group had no future plans for material investments or capital assets.

– 38 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

SUMMARY OF UNAUDITED CONSOLIDATED FINANCIAL INFORMATION

Set out below are the unaudited consolidated balance sheets of Jumbo Wealth International Limited (“ Jumbo Wealth ”), Chongqing Xujing Property Management Limited (“ Chongqing Xujing ”), Yunnan He Da Investments Company Limited (“ Yunnan He Da ”) and Mianning Mao Yuan Rare Earth Technology Company Limited (“ Mianning Mao Yuan ”) (hereinafter collectively referred to as the “ Disposal Group ”) as at 31 March 2012, 2013 and 2014 and 30 September 2014 and the unaudited consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows of the Disposal Group for the years ended 31 March 2012, 2013 and 2014 and the six months ended 30 September 2013 and 2014 (the “ Relevant Periods ”) and explanatory notes (the “ Financial Information ”). The Financial Information has been presented on the basis set out in Note 2 and prepared in accordance with the accounting policies adopted by the Group and paragraph 68(2) (a)(i) of Chapter 14 of the Listing Rules. The Financial Information is prepared by the Directors solely for the purpose of inclusion in this Circular in connection with the Disposal. The Company’s reporting accountant, Ting Ho Kwan & Chan CPA Limited, was engaged to review the financial information of the Disposal Group set out in Appendix II in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” and with reference to Practice Note 750 “Review of Financial Information under the Hong Kong Listing Rules for a Very Substantial Disposal” issued by the Hong Kong Institute of Certified Public Accountants. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable the reporting accountant to obtain assurance that the reporting accountant would become aware of all significant matters that might be identified in an audit. Accordingly, the reporting accountant does not express an audit opinion. The reporting accountant has issued an unmodified review report.

– 39 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

UNAUDITED CONSOLIDATED INCOME STATEMENTS

FOR THE YEARS ENDED 31 MARCH 2012, 2013 AND 2014

AND THE SIX MONTHS ENDED 30 SEPTEMBER 2013 AND 2014

Turnover Other income Cost of sales Impairment loss on intangible asset Impairment loss on goodwill Administrative expenses Loss from operations Finance costs Loss before taxation Taxation Loss for the year/period Attributable to: Equity shareholders of the Company Non-controlling interests	Year ended 31 March 2012 2013 2014 HK$’000 HK$’000 HK$’000 6 34,536 34,101 – 3,716 250 6 38,252 34,351 (6) (37,843) (34,930) – (82,346) – – – – (22,817) (69,217) (9,812) (22,817) (151,154) (10,391) – (11,269) (21,496) (22,817) (162,423) (31,887) – (1,507) 153 (22,817) (163,930) (31,734) (12,328) (94,152) (29,642) (10,489) (69,778) (2,092) (22,817) (163,930) (31,734)	Six months ended 30 September 2013 2014 HK$’000 HK$’000 13,953 – – 524 13,953 524 (13,146) – – – – (22,699) (9,824) (658) (9,017) (22,833) (22,535) (4,422) (31,552) (27,255) 635 – (30,917) (27,255) (29,980) (27,315) (937) 60 (30,917) (27,255)	Six months ended 30 September 2013 2014 HK$’000 HK$’000 13,953 – – 524 13,953 524 (13,146) – – – – (22,699) (9,824) (658) (9,017) (22,833) (22,535) (4,422) (31,552) (27,255) 635 – (30,917) (27,255) (29,980) (27,315) (937) 60 (30,917) (27,255)
			524 – – (22,699) (658)
			(22,833) (4,422)
			(27,255) –
			(27,255)

			(27,315) 60
			(27,255)

– 40 –

APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED 31 MARCH 2012, 2013 AND 2014

AND THE SIX MONTHS ENDED 30 SEPTEMBER 2013 AND 2014

Loss for the year/period Other comprehensive income (expenses): Item that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of overseas subsidiaries – net movement in exchange reserve Total comprehensive expense for the year/period Attributable to: Equity shareholders of the Company Non-controlling interests Total comprehensive expense for the year/period	Year ended 31 March 2012 2013 2014 HK$’000 HK$’000 HK$’000 (22,817) (163,930) (31,734) (217) 285 1,503 (23,034) (163,645) (30,231) (12,429) (94,166) (31,402) (10,605) (69,479) 1,171 (23,034) (163,645) (30,231)	Six months ended 30 September 2013 2014 HK$’000 HK$’000 (30,917) (27,255) 1,493 196 (29,424) (27,059) (31,744) (27,559) 2,320 500 (29,424) (27,059)	Six months ended 30 September 2013 2014 HK$’000 HK$’000 (30,917) (27,255) 1,493 196 (29,424) (27,059) (31,744) (27,559) 2,320 500 (29,424) (27,059)
			(27,059)

			(27,559) 500
			(27,059)

– 41 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

UNAUDITED CONSOLIDATED BALANCE SHEETS

AS AT 31 MARCH 2012, 31 MARCH 2013, 31 MARCH 2014 AND 30 SEPTEMBER 2014

Note Non-current assets Property, plant and equipment Land use rights Goodwill Intangible asset Current assets Inventories Trade and other receivables Cash and cash equivalents Assets classified as held for sale 3 Current liabilities Trade and other payables Amounts due to the Remaining Group Liabilities directly associated with the assets classified as held for sale 3 Net current (liabilities)/assets Non-current liabilities Other borrowing Net assets	As at 31 March 2012 2013 HK$’000 HK$’000 110,316 – 5,444 – 171,537 – 533,785 – 821,082 – 35,589 – 16,032 – 2,660 2 54,281 2 – 735,204 54,281 735,206 107,948 122 483,434 129,706 591,382 129,828 – 538,063 591,382 667,891 (537,101) 67,315 53,021 – 230,960 67,315	2014 HK$’000 – – – – – – – – – 758,175 758,175 124 207,675 207,799 513,292 721,091 37,084 – 37,084	As at 30 September 2014 HK$’000 – – – –
			–
			– – –
			– 715,363
			715,363
			125 255,792
			255,917 449,421
			705,338
			10,025 –
			10,025

– 42 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

			As at
	As at 31 March		30 September
2012	2013	2014	2014
HK$’000	HK$’000	HK$’000	HK$’000

Equity Capital and reserves attributable to the equity shareholders of the Company Share capital Reserves Non-controlling interests Total equity	– (11,486) (11,486) 242,446 230,960	– (105,652) (105,652) 172,967 67,315	– (137,054) (137,054) 174,138 37,084	– (164,613)
				(164,613) 174,638
				10,025

– 43 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED 31 MARCH 2012, 2013 AND 2014

AND THE SIX MONTHS ENDED 30 SEPTEMBER 2013 AND 2014

Attributable to equity shareholders of the Company

Balance at 1 April 2011 Loss for the year Other comprehensive expense Total comprehensive expense Acquisition of subsidiaries Balance at 31 March 2012 and 1 April 2012 Loss for the year Other comprehensive income (expense) Balance at 31 March 2013 and 1 April 2013 Loss for the year Other comprehensive income (expense) Balance at 31 March 2014 and 1 April 2014 Loss for the period Other comprehensive income (expense) Balance at 30 September 2014 Balance at 31 March 2013 and 1 April 2013 Loss for the period Other comprehensive income (expense) Balance at 30 September 2013	Share capital HK$’000 – – – – – – – – – – – – – – – – – – –	Exchange reserve HK$’000 (42) – (101) (101) – (143) – (14) (157) – (1,760) (1,917) – (244) (2,161) (157) – (1,764) (1,921)	Accumulated losses HK$’000 985 (12,328) – (12,328) – (11,343) (94,152) – (105,495) (29,642) – (135,137) (27,315) – (162,452) (105,495) (29,980) – (135,475)	Total HK$’000 943 (12,328) (101) (12,429) – (11,486) (94,152) (14) (105,652) (29,642) (1,760) (137,054) (27,315) (244) (164,613) (105,652) (29,980) (1,764) (137,396)	Non- controlling interests HK$’000 – (10,489) (116) (10,605) 253,051 242,446 (69,778) 299 172,967 (2,092) 3,263 174,138 60 440 174,638 172,967 (937) 3,257 175,287	Total HK$’000 943 (22,817) (217)
						(23,034) 253,051
						230,960 (163,930) 285
						67,315 (31,734) 1,503
						37,084 (27,255) 196
						10,025

						67,315 (30,917) 1,493
						37,891

– 44 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED 31 MARCH 2012, 2013 AND 2014 AND THE SIX MONTHS ENDED 30 SEPTEMBER 2013 AND 2014

OPERATING ACTIVITIES Loss from operations Adjustments for: Depreciation of property, plant and equipment Amortisation of intangible asset Amortisation of land use rights Impairment loss on intangible asset Impairment loss on goodwill Exchange differences Operating cash (outflows)/ inflow before movements in working capital (Increase)/decrease in inventories (Increase)/decrease in trade and other receivables (Decrease)/increase in trade and other payable Increase/(decrease) in amounts due to the Remaining Group NET CASH (USED IN)/ GENERATED FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Payment for purchase of property, plant and equipment Acquisition of subsidiaries CASH USED IN INVESTING ACTIVITIES	Year ended 31 March 2012 2013 2014 HK$’000 HK$’000 HK$’000 (22,817) (151,154) (10,391) 1,538 7,516 – 13,537 50,364 – 27 112 – – 82,346 – – – – – 1,056 6,793 (7,715) (9,760) (3,598) (12,878) 7,743 5,831 (5,191) (277) (15,062) (36,085) 8,797 13,859 15,928 62 (1,164) (45,941) 6,565 (134) (4,514) (9,025) – (468,478) – – (472,992) (9,025) –	Six months ended 30 September 2013 2014 HK$’000 HK$’000 (9,017) (22,833) – – – – – – – – – 22,699 6,914 248 (2,103) 114 – – (14,343) 22,114 16,300 (18,689) 92 (3,450) (54) 89 – – – – – –	Six months ended 30 September 2013 2014 HK$’000 HK$’000 (9,017) (22,833) – – – – – – – – – 22,699 6,914 248 (2,103) 114 – – (14,343) 22,114 16,300 (18,689) 92 (3,450) (54) 89 – – – – – –
			114 – 22,114 (18,689) (3,450)
			89
			– –
			–

– 45 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

FINANCING ACTIVITIES New other borrowing raised Repayment of other borrowings Advance from the Remaining Group NET CASH GENERATED FROM FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR/PERIOD EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT END OF THE YEAR/PERIOD	Year ended 31 March 2012 2013 2014 HK$’000 HK$’000 HK$’000 53,021 – – – – (20,000) 468,478 – 20,000 521,499 – – 2,566 (2,460) (134) 97 2,660 203 (3) 3 4 2,660 203 73	Six months ended 30 September 2013 2014 HK$’000 HK$’000 – – (20,000) (50,327) 20,000 50,327 – – (54) 89 203 73 3 – 152 162	Six months ended 30 September 2013 2014 HK$’000 HK$’000 – – (20,000) (50,327) 20,000 50,327 – – (54) 89 203 73 3 – 152 162
			–
			89 73 –
			162

– 46 –

APPENDIX II FINANCIAL INFORMATION OF THE DISPOSAL GROUP

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED 31 MARCH 2012, 2013 AND 2014

AND THE SIX MONTHS ENDED 30 SEPTEMBER 2013 AND 2014

1. GENERAL INFORMATION

Jumbo Wealth, a direct wholly-owned subsidiary of the Company, was incorporated in the British Virgin Islands with limited liability on 28 September 2010. The address of its registered office is at Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands. Jumbo Wealth and its indirectly owned subsidiaries including Chongqing Xujing, Yunnan He Da and Mianning Mao Yuan, which were incorporated in the PRC with limited liability, are hereafter collectively referred to as the Disposal Group.

Jumbo Wealth is an investment holding company which indirectly owns 100% equity interest in Chongqing Xujing. Chongqing Xujing directly owns 90% equity interest in Yunnan He Da, which owns 60% equity interest in Mianning Mao Yuan.

Jumbo Wealth, Chongqing Xujing and Yunnan He Da are principally engaged in investment holding. Mianning Mao Yuan is principally engaged in rare earth refinery and processing business in Sichuan Province, the PRC.

On 19 November 2014, the Company entered into the Sale and Purchase Agreement with the Purchaser for the proposed disposal of the entire equity interest in the Disposal Group and Shareholder Loan due by Jumbo Wealth to the Company for an aggregate consideration of HK$340,000,000 (the “ Disposal ”).

Upon completion of the Disposal, the Disposal Group will cease to be the subsidiaries of the Company.

The Financial Information is presented in Hong Kong dollars, which is also the functional currency of Jumbo Wealth.

– 47 –

FINANCIAL INFORMATION OF THE DISPOSAL GROUP

APPENDIX II

2. BASIS OF PREPARATION OF THE FINANCIAL INFORMATION

The Financial Information of the Disposal Group for the Relevant Periods has been prepared in accordance with paragraph 68(2)(a)(i) of Chapter 14 of the Listing Rules, and solely for the purposes of inclusion in the circular of the Company in connection with the Disposal.

The amounts included in the Financial Information of the Disposal Group have been recognised and measured in accordance with the relevant accounting policies of the Company adopted in the preparation of the consolidated financial statements of the Company and its subsidiaries for the Relevant Periods, which conform with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”). The Financial Information does not contain sufficient information to constitute a complete set of financial statements as defined in Hong Kong Accounting Standard (“ HKAS ”) 1 “Presentation of Financial Statements” nor an interim report as defined in HKAS 34 “Interim Financial Reporting” issued by the HKICPA.

3. ASSETS/LIABILITIES CLASSIFIED AS HELD FOR SALE

The assets and liabilities classified as held for sale as at 31 March 2013, 31 March 2014 and 30 September 2014 are as follows:

Property, plant and equipment Intangible asset Land use rights Goodwill Inventories Trade and other receivables Cash and cash equivalents Assets classified as held for sale Trade and other payables Other borrowings Deferred taxation Liabilities directly associated with the assets classified as held for sale Net assets directly associated with the assets classified as held for sale	As at 31 March 2013 2014 HK$’000 HK$’000 111,961 114,073 401,735 409,314 5,340 5,441 171,748 174,989 27,890 22,585 16,329 31,700 201 73 735,204 758,175 (116,757) (186,907) (419,799) (325,002) (1,507) (1,383) (538,063) (513,292) 197,141 244,883	As at 30 September 2014 HK$’000 114,361 410,347 5,455 152,731 22,642 9,665 162 715,363 (168,690) (279,345) (1,386) (449,421) 265,942

– 48 –

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Basis of preparation of the pro forma financial information of the Remaining Group

The following is an illustrative pro forma consolidated balance sheet, pro forma consolidated income statement, pro forma consolidated statement of comprehensive income and pro forma consolidated statement of cash flows (the “ Pro Forma Financial Information ”) of the Remaining Group, the Group excluding the Disposal Group, which have been prepared by the Directors to illustrate the effect of the proposed disposal of the entire equity interest in the Disposal Group and Shareholder Loan due by Jumbo Wealth to the Company as if it was completed on 30 September 2014 for the pro forma consolidated balance sheet and had taken place on 1 April 2013 for the pro forma consolidated income statement, pro forma consolidated statement of comprehensive income and pro forma consolidated statement of cash flows in accordance with Rules 4.29 and 14.68(2)(a)(ii) of the Listing Rules.

The Pro Forma Financial Information has been prepared for illustrative purposes only, and because of its nature, it may not give a true picture of the financial position of the Remaining Group as at 30 September 2014 or at any future date or the financial result and cash flow of the Remaining Group for the year ended 31 March 2014 or for any future period.

The pro forma consolidated balance sheet of the Remaining Group is prepared based on the unaudited condensed consolidated balance sheet of the Group as at 30 September 2014, which has been extracted from the published interim report of the Company for the six months ended 30 September 2014, with the pro forma adjustments as explained in the notes below, as if the Disposal was completed on 30 September 2014. The pro forma consolidated income statement, the pro forma consolidated statement of comprehensive income and the pro forma consolidated statement of cash flows of the Remaining Group are prepared based on the audited consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the year ended 31 March 2014 extracted from the annual report of the Company for the year ended 31 March 2014, with the pro forma adjustments as explained in the notes below, as if the Disposal was completed on 1 April 2013.

– 49 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

PRO FORMA CONSOLIDATED BALANCE SHEET

Non-current assets Property, plant and equipment Land use rights Goodwill Available-for-sales financial asset Current assets Inventories Trade and other receivables Financial assets at fair value through profit or loss Cash and cash equivalents Assets classified as held for sale Current liabilities Trade and other payables Amounts due to the Remaining Group Convertible note Liabilities directly associated with the assets classified as held for sale	(Unaudited) The Group as at 30 September 2014 HK$’000 20,021 11,216 23,592 9,300 64,129 2,514 64,852 67,314 105,124 239,804 715,363 955,167 39,985 – 104,666 449,421 594,072	Pro forma adjustment HK$’000 (Note 1) – – – – – – – – – – (715,363) (715,363) (125) (255,792) – (449,421) (705,338)	Pro forma adjustment HK$’000 (Note 2) – – – – – – – – – – – – – 255,792 – – 255,792	Pro forma adjustment HK$’000 (Note 3) – – – – – – – – 58,655 58,655 – 58,655 – – – – –	Subtotal of pro forma adjustment HK$’000 – – – – – – – – 58,655 58,655 (715,363) (656,708) (125) – – (449,421) (449,546)	Unaudited pro forma of the Remaining Group HK$’000 20,021 11,216 23,592 9,300
						64,129
						2,514 64,852 67,314 163,779
						298,459 –
						298,459
						39,860 – 104,666 –
						144,526

– 50 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Net current assets Total assets less current liabilities Non-current liabilities Amount due to a non- controlling shareholder of a subsidiary Bank and other borrowings Deferred taxation Net assets Equity Capital and reserves attributable to the equity shareholders of the Company: Share capital Reserves Non-controlling interests Total equity	(Unaudited) The Group as at 30 September 2014 HK$’000 361,095 425,224 22,209 62,223 1,340 85,772 339,452 66,620 94,114 160,734 178,718 339,452	Pro forma adjustment HK$’000 (Note 1) (10,025) (10,025) – – – – (10,025) – 164,613 164,613 (174,638) (10,025)	Pro forma adjustment HK$’000 (Note 2) (255,792) (255,792) – – – – (255,792) – (255,792) (255,792) – (255,792)	Pro forma adjustment HK$’000 (Note 3) 58,655 58,655 – – – – 58,655 – 58,655 58,655 – 58,655	Subtotal of pro forma adjustment HK$’000 (207,162) (207,162) – – – – (207,162) – (32,524) (32,524) (174,638) (207,162)	Unaudited pro forma of the Remaining Group HK$’000 153,933
						218,062
						22,209 62,223 1,340
						85,772
						132,290

						66,620 61,590
						128,210 4,080
						132,290

– 51 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

PRO FORMA CONSOLIDATED INCOME STATEMENT

Turnover Other revenue and gains, net Cost of sales Loss on disposal of subsidiaries Administrative expenses Loss from operations Finance costs Loss before taxation Taxation Loss for the year Loss attributable to: Equity shareholders of the Company Non-controlling interests	(Audited) The Group Year ended 31 March 2014 HK$’000 41,018 1,078 42,096 (41,358) – (25,201) (24,463) (30,294) (54,757) 34 (54,723) (51,471) (3,252) (54,723)	Pro forma adjustment HK$’000 (Note 4) (34,101) (250) (34,351) 34,930 – 9,812 10,391 21,496 31,887 (153) 31,734 29,642 2,092 31,734	Pro forma adjustment HK$’000 (Note 5) – – – – (52,766) – (52,766) – (52,766) – (52,766) (52,766) – (52,766)	Pro forma adjustment HK$’000 (Note 6) – – – – 443 – 443 – 443 – 443 443 – 443	Subtotal of pro forma adjustment HK$’000 (34,101) (250) (34,351) 34,930 (52,323) 9,812 (41,932) 21,496 (20,436) (153) (20,589) (22,681) 2,092 (20,589)	Unaudited pro forma of the Remaining Group HK$’000 6,917 828
						7,745 (6,428) (52,323) (15,389)
						(66,395) (8,798)
						(75,193) (119)
						(75,312)

						(74,152) (1,160)
						(75,312)

– 52 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

PRO FORMA CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Loss for the year Other comprehensive income (expense): Item that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statement of overseas subsidiaries – net movement in exchange reserve Release of exchange reserve upon disposal of subsidiaries Total comprehensive expense for the year Attributable to: Equity shareholders of the Company Non-controlling interests Total comprehensive expense for the year	(Audited) The Group Year ended 31 March 2014 HK$’000 (54,723) 10,482 – (44,241) (43,864) (377) (44,241)	Pro forma adjustment HK$’000 (Note 4) 31,734 (1,503) – 30,231 31,402 (1,171) 30,231	Pro forma adjustment HK$’000 (Note 5) (52,766) – – (52,766) (52,766) – (52,766)	Pro forma adjustment HK$’000 (Note 6) 443 – (443) – – – –	Subtotal of pro forma adjustment HK$’000 (20,589) (1,503) (443) (22,535) (21,364) (1,171) (22,535)	Unaudited pro forma of the Remaining Group HK$’000 (75,312) 8,979 (443)
						(66,776)

						(65,228) (1,548)
						(66,776)

– 53 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS

OPERATING ACTIVITIES Loss from operations Adjustment for: Interest income Dividend income Depreciation of property, plant and equipment Amortisation of land use rights Loss on disposal of subsidiaries Loss on disposal of property, plant and equipment Write-down of inventories Net unrealised losses on financial assets at fair value through profit or loss Exchange differences Operating cash outflows before movements in working capital Decrease/(increase) in inventories (Increase)/decrease in trade and other receivables Decrease in financial assets at fair value through profit or loss Increase/(decrease) in trade and other payable Decrease in amounts due from the Disposal Group CASH GENERATED FROM OPERATION PRC tax paid NET CASH GENERATED FROM OPERATING ACTIVITIES	(Audited) The Group Year ended 31 March 2014 HK$’000 (24,463) (906) (734) 5,216 495 – 50 2,066 4,072 6,872 (7,332) 3,765 (14,197) 15,169 4,840 – 2,245 (98) 2,147	Pro forma adjustment HK$’000 (Note 7) 10,391 – – – – – – – – (6,793) 3,598 (5,831) 15,062 – (13,859) 1,164 134 – 134	Pro forma adjustment HK$’000 (Note 8) – – – – – – – – – – – – 1,164 – – (1,164) – – –	Pro forma adjustment HK$’000 (Note 5) (52,766) – – – – 52,766 – – – – – – – – – – – – –	Pro forma adjustment HK$’000 (Note 6) 443 – – – – (443) – – – – – – – – – – – – –	Pro forma adjustment HK$’000 (Note 9) – – – – – – – – – – – – – – – – – – –	Subtotal of pro forma adjustment HK$’000 (41,932) – – – – 52,323 – – – (6,793) 3,598 (5,831) 16,226 – (13,859) – 134 – 134	Unaudited pro forma of the Remaining Group HK$’000 (66,395) (906) (734) 5,216 495 52,323 50 2,066 4,072 79
								(3,734) (2,066) 2,029 15,169 (9,019) –
								2,379 (98)
								2,281

– 54 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

INVESTING ACTIVITIES Interest received Dividend received Payment for the purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Net proceeds from the Disposal NET CASH GENERATED FROM INVESTING ACTIVITIES FINANCING ACTIVITIES Net proceeds on issue of placing notes Advance from a non-controlling shareholder of a subsidiary Advance to the Disposal Group Repayment of bank and other borrowings Transaction cost on capitalisation of other borrowings Interest paid NET CASH USED IN FINANCING ACTIVITIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR EFFECT OF FOREIGN EXCHANGE RATE CHANGES CASH AND CASH EQUIVALENTS AT END OF THE YEAR	(Audited) The Group Year ended 31 March 2014 HK$’000 906 734 (51) 19 – 1,608 18,457 677 – (44,000) (134) (1,927) (26,927) (23,172) 56,638 60 33,526	Pro forma adjustment HK$’000 (Note 7) – – – – – – – – (20,000) 20,000 – – – 134 (203) (4) (73)	Pro forma adjustment HK$’000 (Note 8) – – – – – – – – – – – – – – – – –	Pro forma adjustment HK$’000 (Note 5) – – – – – – – – – – – – – – – – –	Pro forma adjustment HK$’000 (Note 6) – – – – – – – – – – – – – – – – –	Pro forma adjustment HK$’000 (Note 9) – – – – 57,797 57,797 – – (86,712) – – – (86,712) (28,915) – – (28,915)	Subtotal of pro forma adjustment HK$’000 – – – – 57,797 57,797 – – (106,712) 20,000 – – (86,712) (28,781) (203) (4) (28,988)	Unaudited pro forma of the Remaining Group HK$’000 906 734 (51) 19 57,797
								59,405
								18,457 677 (106,712) (24,000) (134) (1,927)
								(113,639)
								(51,953) 56,435 56
								4,538

– 55 –

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Notes:

The adjustment represents the exclusion of assets and liabilities of the Disposal Group as of 30 September 2014, as extracted from the financial information of the Disposal Group set out in Appendix II to this circular, from the unaudited consolidated balance sheet as at 30 September 2014 as if the Disposal was completed and the Group ceased to control the Disposal Group on 30 September 2014.
The adjustment represents the waiver provided by the Group to the Disposal Group for the balance due from it of approximately HK$255,792,000 on 30 September 2014.
The adjustment represents the consideration received by the Remaining Group and the financial effect for the Disposal as if the Disposal was completed on 30 September 2014.

The pro forma loss on the Disposal is calculated as follows:

Cash consideration Assignment of Shareholder Loan (note a) Consideration after assignment of Shareholder Loan Estimated legal and professional fees and related expenses in relation to the Disposal Consideration after assignment of Shareholder Loan and net of expenses Net asset value of the Disposal Group as at 30 September 2014 Wavier of balance due from the Disposal Group (Note 2) Non-controlling interests as at 30 September 2014 Estimated loss on the Disposal before release of the exchange reserve attributable to the Disposal Group Release of exchange reserve Pro forma loss on the Disposal as at 30 September 2014 (note b)	HK$’000 340,000 (279,345)
	60,655 (2,000)
	58,655 (10,025) (255,792)
	(207,162) 174,638
	(32,524) 8,475
	(24,049)

– 56 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(a) In accordance to the sale and purchase agreement entered into between the Company and the purchaser, the Group proposed to dispose of its entire equity interest in the Disposal Group, together with the Shareholder Loan owed by Jumbo Wealth to the Company at an aggregate consideration of HK$340,000,000 in which HK$280,000,000 is for the assignment of the Shareholder Loan. At 30 September 2014, the carrying amount of the Shareholder Loan is approximately HK$279,345,000.
(b) The final loss on the Disposal may be different from the pro forma amount described above as the carrying amounts of assets and liabilities and Shareholder Loan of the Disposal Group on the actual date of disposal will differ from their carrying amounts as at 30 September 2014. It is also subject to changes as the actual legal and professional fees and related expenses in relation to the Disposal will differ from the assumed amounts used in the preparation of the Pro Forma Financial Information.
The adjustment represents the exclusion of the results of the Disposal Group for the year ended 31 March 2014, as extracted from the financial information of the Disposal Group set out in Appendix II to this circular, from the audited consolidated income statement and consolidated statement of comprehensive income of the Group for the year ended 31 March 2014 as if the Disposal had taken place on 1 April 2013. This adjustment is not expected to have a continuing effect on the Remaining Group.
The adjustment represents the financial effect of the Disposal as if the Disposal had taken place on 1 April 2013. The adjustment is not expected to have a continuing effect on the Remaining Group. The pro forma loss on the Disposal is calculated as follows:

Cash consideration Assignment of Shareholder Loan (note a) Estimated legal and professional fees and related expenses in relation to the Disposal Net asset value of the Disposal Group as at 1 April 2013 Wavier of balance due from the Disposal Group Non-controlling interests as at 1 April 2013 Estimated loss on the Disposal before release of the exchange reserve attributable to the Disposal Group Release of exchange reserve (Note 6) Pro forma loss on the Disposal as at 1 April 2013 (note b)	HK$’000 340,000 (366,712) (2,000) (67,315) (129,706)
	(225,733) 172,967
	(52,766) 443
	(52,323)

– 57 –

APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

(a) In accordance to the sale and purchase agreement entered into between the Company and the purchaser, the Group proposed to dispose of its entire equity interest in the Disposal Group, together with the Shareholder Loan owed by Jumbo Wealth to the Company at an aggregate consideration of HK$340,000,000 in which HK$280,000,000 is for the assignment of the Shareholder Loan. At 1 April 2013, the carrying amount of the Shareholder Loan is approximately HK$366,712,000.
(b) The final loss on the Disposal may be different from the pro forma amount described above as the carrying amounts of assets and liabilities and Shareholder Loan of the Disposal Group on the actual date of disposal will differ from their carrying amounts as at 1 April 2013. It is also subject to changes as the actual legal and professional fees and related expenses in relation to the Disposal will differ from the assumed amounts used in the preparation of the Pro Forma Financial Information.
The adjustment represents the release of exchange reserve of HK$443,000 upon the Disposal at 1 April 2013, as if the Disposal had taken place on 1 April 2013. This adjustment is not expected to have a continuing effect on the Remaining Group.
The adjustment represents the exclusion of the cash flows of the Disposal Group for the year ended 31 March 2014, as extracted from the financial information of the Disposal Group set out in Appendix II to this circular, from the audited consolidated statement of cash flows of the Group for the year ended 31 March 2014 as if the Disposal had taken place on 1 April 2013. This adjustment is not expected to have a continuing effect on the Remaining Group.
The adjustment represents the reclassification of the intra-group cash flows for the amounts due from the Disposal Group of HK$1,164,000, as the Disposal Group is no longer related to the Remaining Group after completion of the Disposal. This adjustment is not expected to have a continuing effect on the Remaining Group.
The cash inflow of the net proceeds from the Disposal of HK$57,797,000 represents the cash consideration of HK$340,000,000 (Note 5) less (i) cash consideration for the assignment of Shareholder Loan HK$280,000,000, (ii) estimated legal and professional fees and related expenses of HK$2,000,000; and (iii) cash and cash equivalents of the Disposal Group as at 1 April 2013 of HK$203,000, as if the Disposal had taken place on 1 April 2013. The cash outflow of the repayment of other borrowings of HK$86,712,000 represents the further advances granted from the Remaining Group to the Disposal Group as Shareholder Loan for the repayment of Debts, as if the Disposal had taken place on 1 April 2013. This adjustment is not expected to have a continuing effect on the Remaining Group.

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APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

The following is the text of a report, prepared for the purpose of incorporation in this circular, received from the independent reporting accountant, Ting Ho Kwan & Chan CPA Limited, Certified Public Accountants, Hong Kong.

==> picture [128 x 64] intentionally omitted <==

TING HO KWAN & CHAN CPA LTD

9/F., Tung Ning Building, 249-253 Des Voeux Road C, Hong Kong

The Board of Directors

REX Global Entertainment Holdings Limited

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

Dear Sirs,

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

We have completed our assurance engagement to report on the compilation of pro forma financial information of REX Global Entertainment Holdings Limited (formerly known as China Gamma Group Limited) (the “ Company ”) and its subsidiaries (collectively the “ Group ”) by the directors for illustrative purposes only. The pro forma financial information consists of the pro forma consolidated balance sheet as at 30 September 2014, the pro forma consolidated income statement, the pro forma consolidated statement of comprehensive income and the pro forma consolidated statement of cash flows for the year ended 31 March 2014 and related notes as set out in Appendix III to the circular issued by the Company dated 23 December 2014 (the “ Circular ”) with respect to the very substantial disposal in relation to the proposed disposal of the entire equity interest in Jumbo Wealth International Limited (“ Jumbo Wealth ”) and its subsidiaries including Chongqing Xujing Property Management Limited (“ Chongqing Xujing ”), Yunnan He Da Investments Company Limited (“ Yunnan He Da ”) and Mianning Mao Yuan Rare Earth Technology Company Limited (“ Mianning Mao Yuan ”) and Shareholder Loan due by Jumbo Wealth to the Company (the “ Disposal ”). The applicable criteria on the basis of which the directors have compiled the pro forma financial information are described on page 49 of the Circular.

The pro forma financial information has been compiled by the directors to illustrate the impact of the Disposal on the Group’s financial position as at 30 September 2014 and the Group’s financial performance and cash flows for the year ended 31 March 2014 as if the Disposal was completed on 30 September 2014 and had taken place on 1 April 2013 respectively. As part of this process, information about the Group’s financial position has been extracted by the directors from the Group’s unaudited consolidated interim financial statements for the six months ended 30 September 2014, and the Group’s financial performance and cash flows have been extracted by the directors from the Group’s consolidated financial statements for the year ended 31 March 2014, on which an audit report have been published.

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THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

APPENDIX III

Directors’ Responsibility for the pro forma financial information

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

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the 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 pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

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

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the 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 pro forma financial information.

The purpose of pro forma financial information included in the Circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction as at 31 March 2014 or 30 September 2014 would have been as presented.

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APPENDIX III

THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

A reasonable assurance engagement to report on whether the pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the directors in the compilation of the 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 pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant's judgment, having regard to the reporting accountant's understanding of the nature of the Group, the event or transaction in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the 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 pro forma financial information has been properly compiled by the directors of the Company on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Yours faithfully,

TING HO KWAN & CHAN CPA LIMITED

Certified Public Accountants

WONG KAM CHUEN

Practising Certificate Number P06175 Hong Kong

23 December 2014

– 61 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

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

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

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

Long position in the Shares in the Company

			Approximate
			percentage of
			the issued
		Number of	share capital of
Name of Director	Type of interest	Shares held	the Company
Wong King Shiu, Daniel	Beneficial owner	1,802,039	0.02%
Ma Kwok Hung, Warren	Beneficial owner	750,000	0.01%
Chow Siu Ngor	Beneficial owner	3,750,000	0.05%
Chan Chi Yuen	Beneficial owner	3,750,000	0.05%

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GENERAL INFORMATION

APPENDIX IV

Long position in share options in the Company

			Approximate
			percentage of
		Number of	the issued
		share options	share capital of
Name of Director	Type of interest	held	the Company
Wong King Shiu, Daniel	Beneficial owner	3,000,000	0.04%
Lee Kuang Yeu	Beneficial owner	3,000,000	0.04%
Ma Kwok Hung, Warren	Beneficial owner	1,000,000	0.01%
Chow Siu Ngor	Beneficial owner	1,000,000	0.01%
Wong Hoi Kuen	Beneficial owner	1,000,000	0.01%
Chan Chi Yuen	Beneficial owner	1,000,000	0.01%
Hung Hing Man	Beneficial owner	1,000,000	0.01%

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company had any interests or short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which they were taken or deemed to have under such provisions of the SFO); or which were required pursuant to Section 352 of the SFO to be entered in the register referred to therein; or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

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

3. DIRECTORS’ SERVICE CONTRACTS

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

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GENERAL INFORMATION

APPENDIX IV

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

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

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

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors or their respective close associates (as defined under the Listing Rules) had any interest in the businesses, other than being a Director, which compete or are likely to compete, either directly or indirectly, with the businesses of the Group (as would be required to be disclosed under Rule 8.10 of the Listing Rules if each of them were a controlling shareholder).

6. QUALIFICATION AND CONSENT OF EXPERT

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

Name

Qualification

Ting Ho Kwan & Chan CPA Limited Certified Public Accountants

Ting Ho Kwan & Chan CPA Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letters and references to its name in the form and context in which they appear herein.

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APPENDIX IV

GENERAL INFORMATION

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

7. MATERIAL CONTRACTS

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

(i) the Sale and Purchase Agreement;
(ii) the placing agreement dated 15 August 2014 entered into between the Company and China Rich Securities Limited in relation to the placing of 7-year 5% unsecured notes in the denomination of HK$2,000,000 each with aggregate principal amount of up to HK$280,000,000;
(iii) the underwriting agreement dated 11 July 2014 entered into among the Company, Enlighten Securities Limited and Cepa Alliance Securities Limited in relation to the issue of 2,198,840,745 rights shares on the basis of one rights share for every two existing Shares held on record date by the qualifying Shareholders as defined in the rights issue prospectus of the Company dated 19 August 2014;
(iv) the commitment letter dated 30 June 2014 entered into among Oceanic Eagle Limited, Norvest Global Limited and Star Sail Investments Limited in relation to the joint venture proposed to be carried out through Star Sail Investments Limited;
(v) the subscription agreement dated 19 September 2013 entered into between the Company, Jumbo Wealth and Hondex in relation to the subscription by Hondex for 500,000,000 Shares by way of capitalisation of loan;
(vi) the placing agreement dated 20 August 2013 entered into between the Company and China Rich Securities Limited in relation to the placing of 7-year 5% unsecured notes in the denomination of HK$2,000,000 each with aggregate principal amount of up to HK$300,000,000;

– 65 –

GENERAL INFORMATION

APPENDIX IV

(vii) the placing agreement dated 13 March 2013 entered into among Mega Market Assets Limited (“ Mega Market ”), the Company and Hantec Securities Co., Limited in relation to the placing of 420,000,000 Shares owned by Mega Market; and
(viii) the top-up subscription agreement dated 13 March 2013 entered into between Mega Market and the Company in relation to the subscription by Mega Market for a maximum of 420,000,000 new Shares.

8. LITIGATIONS

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

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

As at the Latest Practicable Date, the legal proceedings against Stronway Development are still pending and there is no significant development.

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

– 66 –

GENERAL INFORMATION

APPENDIX IV

9. CHANGE OF COMPANY NAME

Subsequent to the passing of the special resolution approving the change of company name of the Company by the Shareholders at the special general meeting of the Company held on 29 October 2014, the English name of the Company has been changed from “China Gamma Group Limited” to “REX Global Entertainment Holdings Limited” and the Company has adopted the Chinese name “御濠娛樂控股有限公司” as secondary name of the Company to replace the Chinese name “中國伽瑪集團有限公司” with effect from 29 October 2014 (“ Change of Company Name ”). The approval by the Registrar of Companies in Bermuda on the Change of Company Name has been obtained. The certificate of incorporation on change of name and the certificate of secondary name have been issued by the Registrar of Companies in Bermuda on 3 November 2014.

On 18 November 2014, the Registrar of Companies in Hong Kong has issued the Certificate of Registration of Alteration of Name of Registered Non-Hong Kong Company under Part 16 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) confirming that the Company has been registered under the name of “REX Global Entertainment Holdings Limited 御濠娛樂控股有限公司” with effect from that date.

10. CHANGE OF STOCK SHORT NAME

The stock short names for trading in the Shares on the Stock Exchange have been changed from “CHINA GAMMA” to “REXGLOBAL ENT” in English and from “中國伽瑪” to “御濠娛樂” in Chinese with effect from 9:00 a.m. on 1 December 2014. The stock code of the Company remains unchanged.

11. GENERAL

(a) The registered office of the Company is situated at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda.
(b) The company secretary of the Company is Mr. Lau Hok Yuk (“ Mr. Lau ”). Mr. Lau holds a Master Degree of Business Administration from the University of Strathclyde in the United Kingdom. He is a Fellow Certified Public Accountant and a Fellow of the Hong Kong Institute of Certified Public Accountants and the Association of Chartered Certified Accountants in the United Kingdom. He is also a Chartered Financial Analyst in the United States of America, an associate member of the Taxation Institution of Hong Kong as well as a Certified Tax Advisor.

– 67 –

GENERAL INFORMATION

APPENDIX IV

12. DOCUMENTS AVAILABLE FOR INSPECTION

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

(a) the annual reports of the Company for the financial year ended 31 March 2012, 2013 and 2014;
(b) the financial information of the Disposal Group as set out in Appendix II to this circular;
(c) the pro forma financial information of the Remaining Group and the auditor’s opinion as set out in Appendix III to this circular;
(d) the written consent referred to in the paragraph head “Qualification and Consent of Expert” in this Appendix;
(e) the memorandum of association and bye-laws of the Company;
(f) a copy of each contract set out in the paragraph headed “Material Contracts” in this Appendix; and
(g) this circular.

– 68 –

NOTICE OF SPECIAL GENERAL MEETING

==> picture [198 x 32] intentionally omitted <==

(Incorporated in Bermuda with limited liability)

(Stock Code: 164)

NOTICE IS HEREBY GIVEN that the special general meeting (the “ Meeting ”) of REX Global Entertainment Holdings Limited (the “ Company ”) will be held at Suite 2602, 26/F., Sino Plaza, 255-257 Gloucester Road, Causeway Bay, Hong Kong on Tuesday, 13 January 2015 at 4:30 p.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as ordinary resolution:

ORDINARY RESOLUTION

“ THAT

(a) the sale and purchase agreement dated 19 November 2014 (the “ Sale and Purchase Agreement ”) entered into between the Company and Penrith Resources Limited (the “ Purchaser ”) in relation to (i) the disposal by the Company of its entire interest in the share capital of Jumbo Wealth International Limited (“ Jumbo Wealth ”) to the Purchaser and (ii) the assignment of a shareholder loan due from Jumbo Wealth to the Company as at the date of completion of the Sale and Purchase Agreement and from the Company to the Purchaser (a copy of the Sale and Purchase Agreement is marked “A” and produced to this meeting and signed by the chairman of the meeting for identification purposes) and the transactions contemplated thereunder be and are hereby ratified, confirmed and approved; and

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NOTICE OF SPECIAL GENERAL MEETING

(b) any one or more of the directors be and is/are hereby authorised to do all such acts and things and execute all such documents (in case of execution of documents under seal, to do so by any two directors of the Company or any director of the Company together with the secretary of the Company) and to take such steps which he/they may consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the Sale and Purchase Agreement and the transactions contemplated thereunder.”

By order of the Board REX Global Entertainment Holdings Limited Wong King Shiu, Daniel Executive Director

Hong Kong, 23 December 2014

As at the date of this notice, the executive directors of the Company are Mr. Wong King Shiu, Daniel and Mr. Lee Kuang Yeu; the non-executive directors of the Company are Mr. Ma Kwok Hung, Warren and Mr. Chow Siu Ngor; and the independent non-executive directors of the Company are Mr. Wong Hoi Kuen, Mr. Chan Chi Yuen and Mr. Hung Hing Man.

Notes:

Any shareholder entitled to attend and vote at the Meeting shall be entitled to appoint another person as his proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company. A shareholder who is the holder of two or more Shares may appoint more than one proxy to attend and vote on the same occasion.
Where there are joint registered holders of any Share(s), any one of such joint holders may attend and vote at the Meeting, either in person or by proxy in respect of such Share(s) as if he/she were solely entitled thereto, but if more than one of such joint holders are present at the Meeting or any adjourned meeting thereof (as the case may be), the more senior shall alone be entitled to vote, whether in person or by proxy. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
In order to be valid, a form of proxy in the prescribed form together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for holding the Meeting.
Completion and return of the form of proxy will not preclude members from attending and voting at the Meeting or any adjourned meeting thereof (as the case may be) should they so wish and in such event, the form of proxy shall be deemed to be revoked.

– 70 –

AI assistant

WH Group Limited — Proxy Solicitation & Information Statement 2014

49096_rns_2014-12-22_e089a799-fe9f-404a-8e98-7ef85034923d.pdf

VERY SUBSTANTIAL DISPOSAL AND NOTICE OF SPECIAL GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

VERY SUBSTANTIAL DISPOSAL AND NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

SALE AND PURCHASE AGREEMENT

LETTER FROM THE BOARD

The Debts and the Shareholder Loan:

LETTER FROM THE BOARD

Forfeiture and refund of the Deposit:

Conditions Precedent:

LETTER FROM THE BOARD

Completion:

GROUP STRUCTURE

LETTER FROM THE BOARD

INFORMATION RELATING TO THE PURCHASER

INFORMATION RELATING TO THE DISPOSAL GROUP

LETTER FROM THE BOARD

Unaudited consolidated financial information of the Disposal Group

LETTER FROM THE BOARD

FINANCIAL EFFECT OF THE DISPOSAL

LETTER FROM THE BOARD

REASONS AND BENEFITS FOR ENTERING INTO THE SALE AND PURCHASE AGREEMENT AND USE OF PROCEEDS

LETTER FROM THE BOARD

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INFORMATION RELATING TO THE GROUP AND THE REMAINING GROUP

Entertainment and Gaming Business

LETTER FROM THE BOARD

Property Business

Gamma Ray Irradiation Services

LETTER FROM THE BOARD

Resources Business

Other Operation

LISTING RULES IMPLICATIONS

LETTER FROM THE BOARD

RECOMMENDATION

ADDITIONAL INFORMATION

Yours faithfully

FINANCIAL INFORMATION OF THE GROUP

1. THREE YEARS' SUMMARY OF FINANCIAL RESULTS

2. STATEMENT OF INDEBTEDNESS AND CONTINGENT LIABILITIES AS AT 31 OCTOBER 2014

Borrowings

Banking Guarantee and Facilities

Contingent Liabilities

3. WORKING CAPITAL

4. MATERIAL ADVERSE CHANGE

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

Entertainment and Gaming Business

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Property Business

Gamma Ray Irradiation Services

Resources Business

6. MANAGEMENT DISCUSSION AND ANALYSIS OF THE REMAINING GROUP

FOR THE YEAR ENDED 31 MARCH 2012

The Remaining Group’s liquidity and financial resources

The Remaining Group’s borrowings

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

The Remaining Group’s currency and interest rate

Segmental information and significant investments held and their performance in the Remaining Group

Gamma Ray Irradiation Services

Property Development, Rental and Sales

Trading of Building Materials and Provision of Renovation Services

Securities Trading and Investment

Material acquisitions and disposals of subsidiaries

Employee and emolument policy

Future plans for material investments or capital assets

FOR THE YEAR ENDED 31 MARCH 2013

The Remaining Group’s liquidity and financial resources

The Remaining Group’s borrowings

The Remaining Group’s currency and interest rate

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