WLS Holdings Limited - Proxy Solicitation & Information Statement 2015

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 WLS Holdings Limited (“ Company ”), you should at once hand this circular with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

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

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.

**WLS Holdings Limited 滙隆控股有限公司[*]**

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 8021)

(I) PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATES; AND

(II) NOTICE OF SGM

Placing Agent

==> picture [38 x 49] intentionally omitted <==

A notice convening the SGM to be held at 12:00 noon on 18 November 2015 at Rooms 1001-1006, 10th Floor, Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Aberdeen, Hong Kong is set out on pages SGM-1 to SGM-4 of this circular. Whether or not you intend to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time scheduled for the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending or voting in person at the SGM or any adjournment thereof should you so wish.

This circular will remain on the “Latest Company Announcement” page of the GEM website at www.hkgem.com for at least seven days from the date of its posting and on the website of the Company at www.wls.com.hk.

27 October 2015

For identification purpose only

CHARACTERISTICS OF GEM

GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

– i –

CONTENTS

		Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		6
(I)	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
(II)	New AC Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
(III)	Underwritten Placing and Best Effort Placing . . . . . . . . . . . . . . . . . .	14
(IV)	Business development of the Group . . . . . . . . . . . . . . . . . . . . . . . . .	34
(V)	Fund raising activities of the Company in the 12 months
	immediately preceding the Latest Practicable Date . . . . . . . . . . . .	37
(VI)	Effects on shareholding structure of the Company . . . . . . . . . . . . . .	38
(VII)	SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	42
(VIII) Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		43
(IX)	Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		SGM-1

– ii –

DEFINITIONS

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

“AC Subscription Shares”
1,920,000,000 new Shares
“AC Completion”
completion of the New AC Subscription
“AC Completion Date”
the third Business Day after the last outstanding condition precedent specified in the New AC Subscription Agreement (other than those condition(s) precedent which could only be fulfilled upon AC Completion) shall have been fulfilled (or such other date as may be agreed by the Company and Avant Capital in writing)
“AC Specific Mandate”
the specific mandate for the allotment and issue of the AC Subscription Shares to be granted to the Directors at the SGM
“acting in concert”
has the meaning as ascribed to it in the Takeovers Code
“associate”
has the meaning as ascribed to it under the GEM Listing Rules
“Avant Capital”
Avant Capital Management (HK) Limited, a corporation licensed under the SFO (Chapter 571 of the Laws of Hong Kong) to carry out type 4 (advising on securities) and type 9 (asset management) regulated activities, being the subscriber under the New AC Subscription Agreement
“Avant Fund”
a fund managed by Avant Capital, which held 252,000,000 Shares as at the Latest Practicable Date
“Best Effort Placing”
the proposed offer by way of private placing of the Best Effort Placing Shares by or on behalf of the Placing Agent, on a best effort basis, for subscription by the Placees on the terms and subject to the conditions set out in the Best Effort Placing Agreement
“Best Effort Placing Agreement”
the conditional placing agreement entered into between the Company and the Placing Agent dated 17 August 2015 in relation to the Best Effort Placing

– 1 –

DEFINITIONS

“Best Effort Placing Shares”
“BEP Specific Mandate”
“Board”
“Business Day”
“Company”
“connected person”
“Director(s)”
“Framework Agreement”
“GEM”
“GEM Listing Rules”
“Group”
“Hong Kong”
a maximum of 5,400,000,000 new Shares to be placed pursuant to the Best Effort Placing Agreement and each a “Best Effort Placing Share”
the specific mandate for the allotment and issue of the Best Effort Placing Shares to be granted to the Directors at the SGM
the board of Directors
a day (excluding a Saturday, Sunday or public holiday and any day on which a tropical cyclone warning signal no. 8 or above is hoisted or remains hoisted between 9:00 a.m. and 12:00 noon and is not lowered at or before 12:00 noon or on which a “black” rainstorm warning signal is hoisted or remains in effect between 9:00 a.m. and 12:00 noon and is not discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours
WLS Holdings Limited, a company incorporated in the Cayman Islands and continued in Bermuda with limited liability, the issued Shares of which are listed on GEM
has the meaning ascribed thereto in the GEM Listing Rules
the director(s) of the Company
the legally binding framework subscription agreement dated 19 June 2015 and entered into between the Company and, among others, Avant Capital in relation to the possible issue of Shares by the Company
the Growth Enterprise Market of the Stock Exchange
the Rules Governing the Listing of Securities on GEM
the Company and its subsidiaries

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

– 2 –

DEFINITIONS

“Independent Third Party”
“Last Trading Day”
“Latest Practicable Date”
“New AC Subscription”
“New AC Subscription Agreement”
“PRC”
“Placees”
“Placing Agent”
“Placing Agreements”
“Placing Price”
“Placing Shares”
third party independent of, and not connected with, the Company and its connected persons and their respective associates
3 August 2015, being the date of the last full trading day prior to the date of the New AC Subscription Agreement
22 October 2015, being the latest practicable date before the printing of this circular for the purpose of ascertaining certain information contained herein
the subscription for the AC Subscription Shares by Avant Capital pursuant to the terms of the New AC Subscription Agreement
the subscription agreement entered into between the Company (as issuer) and Avant Capital (as subscriber) dated 12 August 2015 in relation to the New AC Subscription
the People’s Republic of China, which for the purpose of this circular, excludes Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan
the individuals, corporate, institutional investors or other investors to be procured by or on behalf of the Placing Agent under the Underwritten Placing or (as the case may be) the Best Effort Placing
Black Marble Securities Limited, a licensed corporation to carry out type 1 regulated activity (dealing in securities) under the SFO
collectively, Underwritten Placing Agreement and Best Effort Placing Agreement
HK$0.06875 per Underwritten Placing Share or Best Effort Placing Share (as the case may be)
collectively, the Underwritten Placing Shares and the Best Effort Placing Shares

– 3 –

DEFINITIONS

“Possible Fund Raising Exercise”
“SFO”
“SGM”
“Share(s)”
“Shareholder(s)”
“Stock Exchange”
“Subscription Price”
“Takeovers Code”

the issue of not less than 360,000,000 and not more than 5,760,000,000 Shares which might be proposed by the Company at such price being not less than the Subscription Price whether by way of subscription by other party or by way of placing of new Shares to independent investors provided that (i) none of the investors shall be connected persons of the Company or any of their respective associates; (ii) all investors shall be independent from and not acting in concert with Avant Capital and parties acting in concert with it; and (iii) none of the investors, together with parties acting in concert with it, will hold 20% or more of the issued share capital of the Company upon completion of such issue of Shares

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
a special general meeting of the Company convened to be held at 12:00 noon on 18 November 2015 at Rooms 1001-1006, 10th Floor, Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Aberdeen, Hong Kong to consider and, if thought fit, approve, among other matters, the terms of the New AC Subscription Agreement, the Underwritten Placing Agreement and the Best Effort Placing Agreement and the allotment and issue of the AC Subscription Shares, the Underwritten Placing Shares and the Best Effort Placing Shares by the Company and the transactions contemplated thereunder (including the grant of the AC Specific Mandate, the UP Specific Mandate and the BEP Specific Mandate)
ordinary share(s) of HK$0.01 each in the share capital of the Company
holder(s) of the Share(s)
The Stock Exchange of Hong Kong Limited
the subscription price of HK$0.06875 per AC Subscription Share
the Code on Takeovers and Mergers of Hong Kong

– 4 –

DEFINITIONS

“Underwritten Placing”
“Underwritten Placing Agreement”
“Underwritten Placing Shares”
“UP Specific Mandate”
“HK$”
“%”

the offer by way of private placing of the Underwritten Placing Shares by or on behalf of the Placing Agent for subscription by the Placee(s), failing which, by the Placing Agent itself, on the terms and subject to the conditions set out in the Underwritten Placing Agreement

the conditional placing agreement entered into between the Company and the Placing Agent dated 17 August 2015 in relation to the Underwritten Placing
360,000,000 new Shares to be placed pursuant to the Underwritten Placing Agreement and each an “Underwritten Placing Share”
the specific mandate for the allotment and issue of the Underwritten Placing Shares to be granted to the Directors at the SGM
Hong Kong dollars, the lawful currency of Hong Kong
per cent.

– 5 –

LETTER FROM THE BOARD

**WLS Holdings Limited 滙隆控股有限公司[*]**

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 8021)

Executive Directors: Dr. So Yu Shing (Chairman) Mr. Kong Kam Wang (Chief Executive Officer) Ms. Lai Yuen Mei, Rebecca Mr. So Wang Chun, Edmond Mr. Ng Tang Mr. Yuen Chun Fai

Independent non-executive Directors: Mr. Law Man Sang Mr. Chan Ngai Sang, Kenny Mr. Ong Chi King

Registered office: Clarendon House 2 Church Street Hamilton HM 11, Bermuda

Head office and principal place of business in Hong Kong: Rooms 1001-1006 10th Floor, Tower A Southmark 11 Yip Hing Street Wong Chuk Hang Aberdeen Hong Kong

27 October 2015

To the Shareholders

Dear Sir/Madam

PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATES

(I) INTRODUCTION

Reference is made to (i) the announcements of the Company dated 12 August 2015 and 13 August 2015 in relation to, among other things, the New AC Subscription and (ii) the announcement of the Company dated 18 August 2015 in relation to the Underwritten Placing and the Best Effort Placing.

The purpose of this circular is to provide you with further details of the New AC Subscription, the Underwritten Placing and the Best Effort Placing, and to give you notice of the SGM.

For identification purpose only

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LETTER FROM THE BOARD

(II) NEW AC SUBSCRIPTION

(1) New AC Subscription Agreement

The principal terms of the New AC Subscription Agreement are set out below:

Date

12 August 2015

Parties

(i) The Company (as issuer); and
(ii) Avant Capital (as subscriber).

Background information of Avant Capital

Avant Capital is a company incorporated in Hong Kong with limited liability. As advised by Avant Capital, it is an investment advisory and asset management company licensed under the SFO to carry out type 4 (advising on securities) and type 9 (asset management) regulated activities in Hong Kong.

As advised by Avant Capital, it has a professional management team who have years of investment and equity research experience. Avant Capital was founded by Mr. Jook Chun Kui, Raymond (“ Mr. Jook ”), the managing director and chief investment officer of Avant Capital. As represented by Mr. Jook, he has 14 years of research and analyst experience with various international investment banks and has in-depth knowledge and expertise in investments in small and medium size listed issuers in Hong Kong. Mr. Jook has been a CFA charterholder since 1996 and he holds a Master of Business Administration Degree from the University of British Columbian, Canada, a Master of Science Degree in actuarial science and a Bachelor of Arts Degree in Statistics from the University of Wisconsin of the United States. Including Mr. Jook, the management team of Avant Capital comprises of professionals who have over 20 years of investment and equity research experience.

To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the Latest Practicable Date, (i) each of Avant Capital and its ultimate beneficial owner was an Independent Third Party; and (ii) Avant Fund, a fund managed by Avant Capital, held 252,000,000 Shares.

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LETTER FROM THE BOARD

AC Subscription Shares and Possible Fund Raising Exercise

Pursuant to the New AC Subscription Agreement, the Company had conditionally agreed to allot and issue, and Avant Capital had conditionally agreed to subscribe for, the AC Subscription Shares at the Subscription Price.

Completion of the New AC Subscription is subject to a number of conditions precedent set out in the paragraph headed “Conditions precedent to the New AC Subscription” below. Two of such conditions are (1) the Company having entered into agreement(s) relating to the Possible Fund Raising Exercise for the issue of not less than 360,000,000 new Shares and not more than 5,760,000,000 new Shares and (2) the completion of such Possible Fund Raising Exercise. These two conditions are not capable of being waived.

These two conditions are built in the New AC Subscription Agreement because it is not the intention of Avant Capital to hold 30% or more of the issued share capital of the Company upon AC Completion. In addition, the Company was also contemplating to carry out additional fund raising exercises to raise fund for its business expansion. Therefore, these two conditions were agreed by the Company and Avant Capital and set out in the New AC Subscription Agreement.

Subsequent to the entering into of the New AC Subscription Agreement, on 17 August 2015, the Company entered into the Underwritten Placing Agreement for the placing of, on the fully underwritten basis, 360,000,000 new Shares and the Best Effort Placing Agreement for the placing of, on a best effort basis, a maximum of 5,400,000,000 new Shares. Therefore, the first condition as mentioned above was satisfied on 17 August 2015.

Further details of the Underwritten Placing Agreement and the Best Effort Placing Agreement are set out in this circular below.

The AC Subscription Shares to be allotted and issued under the New AC Subscription Agreement represent:

(i) approximately 37.74% of the issued share capital of the Company as at the Latest Practicable Date;
(ii) approximately 15.04% of the issued share capital of the Company as enlarged by the allotment and issue of the Shares under the New AC Subscription Agreement and the Possible Fund Raising Exercise (assuming the maximum number of Shares are issued under the Possible Fund Raising Exercise) and approximately 26.06% of the issued share capital of the Company as enlarged by the allotment and issue of the Shares under the New AC Subscription Agreement and the Possible Fund Raising Exercise (assuming the minimum number of Shares are issued under the Possible Fund Raising Exercise); and

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LETTER FROM THE BOARD

(iii) taking into account the 252,000,000 Shares held by Avant Fund as at the Latest Practicable Date, Avant Capital, together with parties acting in concert with it, will hold approximately 17.01% of the issued share capital of the Company upon the allotment and issue of the Shares under the New AC Subscription Agreement and the Possible Fund Raising Exercise (assuming the maximum number of Shares are issued under the Possible Fund Raising Exercise) and approximately 29.48% of the issued share capital of the Company as enlarged by the allotment and issue of the Shares under the New AC Subscription Agreement and the Possible Fund Raising Exercise (assuming the minimum number of Shares are issued under the Possible Fund Raising Exercise).

The dilution effect of the New AC Subscription to the existing Shareholders will be approximately 27.40% (assuming there would be no change in the issued share capital of the Company from the Latest Practicable Date to the date of AC Completion).

Subscription Price

The Subscription Price of HK$0.06875 per AC Subscription Share, which was agreed upon by the parties at the time when the Framework Agreement was entered into, represents:

(i) a discount of approximately 75.88% to the closing price of HK$0.285 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 84.72% to the closing price of HK$0.450 per Share as quoted on the Stock Exchange on the Last Trading Day;
(iii) a discount of approximately 85.34% to the average closing price of HK$0.469 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day; and
(iv) a discount of approximately 86.46% to the average closing price of HK$0.508 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day.

As at 30 April 2015, the audited consolidated net asset value of the Group (“ Audited NAV ”) amounted to approximately HK$298,226,000 with 635,887,634 shares of the Company of HK$0.2 each in issue. Based on the Audited NAV and taking into account of the issue of bonus shares by the Company of 4,451,213,438 Shares on 3 July 2015, the Subscription Price

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LETTER FROM THE BOARD

represents a premium of approximately 17.32% over the theoretical consolidated net asset value per Share of approximately HK$0.0586 (based on 5,087,101,072 Shares in issue as at the Latest Practicable Date).

The Subscription Price was arrived at after arm’s length negotiation between the Company and Avant Capital after taking into account of the capital needs of the Group for further expansion of business and the financial position of the Group, especially the fact that the Group recorded a net loss attributable to Shareholders of approximately HK$7.73 million for the year ended 30 April 2015.

Although the Subscription Price represented a deep discount to trading price of the Shares, the Directors consider that the terms and conditions of the New AC Subscription Agreement (including the Subscription Price) are fair and reasonable and are in the interests of the Company and the Shareholders as a whole for the reasons that:

(i) The Subscription Price represented a premium of approximately 17.32% over the theoretical consolidated net asset value per Share as mentioned above.
(ii) The Company is in need of new fund for the expansion of its business, further details of which are set out in the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds” below.
(iii) The New AC Subscription will allow the Group to strengthen its capital base with an improved gearing ratio to a relatively manageable level. With a larger capital base and improved gearing ratio, the Directors believe that the Group will be in a stronger financial position and provided with greater flexibility to undertake its various business ventures.
(iv) The New AC Subscription, if completed, would improve the financial position of the Group as the New AC Subscription will lead to (i) an increase of the net assets of the Group; and (ii) a decrease of the gearing ratio of the Group. For illustration purposes only and without taking into account the Underwritten Placing and the Best Effort Placing, the New AC Subscription, if completed, will increase the net assets of the Group by approximately HK$131.16 million to approximately HK$433.07 million (assuming there is no other change of the net assets of the Group from 31 July 2015 to AC Completion). In addition, the gearing ratio of the Group, calculated on the basis of the Group’s total borrowings and obligations under finance leases divided by equity attributable to owners of the Company, will also decrease substantially from approximately 17.4% as at 31 July 2015 to

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LETTER FROM THE BOARD

approximately 11.9% as at the AC Completion Date (assuming there is no other change to the factors affecting gearing ratio of the Group from 31 July 2015 to AC Completion).

The aggregate Subscription Price will be payable by Avant Capital in cash upon the AC Completion.

Conditions precedent to the New AC Subscription

The AC Completion is subject to the following conditions being satisfied:

(i) the Company having entered into an agreement or agreement(s) in respect of the Possible Fund Raising Exercise within 90 days after the date of the New AC Subscription Agreement;
(ii) the passing of the ordinary resolution(s) by the Shareholders (to the extent they are not restricted and are entitled to vote on such resolution) at the SGM approving the New AC Subscription Agreement and the allotment and issue of the AC Subscription Shares by the Company (including the AC Specific Mandate);
(iii) the Stock Exchange granting the approval for the listing of, and permission to deal in, the AC Subscription Shares, and such approval not being revoked;
(iv) the compliance with the applicable requirements under the GEM Listing Rules by the Company;
(v) all necessary consents, approvals, authorisations, waivers, or grant in accordance with any applicable laws, regulations or the respective articles of association or, where applicable, the bye-laws, to be obtained on the part of Avant Capital and its shareholder or on the part of the Company in respect of the New AC Subscription and the transactions contemplated thereunder having been obtained; and
(vi) completion of the Possible Fund Raising Exercise having taken place in accordance with its terms.

None of the conditions specified above is capable of being waived by any of the parties to the New AC Subscription Agreement.

If condition (i) set out above has not been satisfied at or before 5:00 p.m. on the 90th day after the date of the New AC Subscription Agreement or the other conditions set out above have not been satisfied at or before 4:00 p.m. on the day falling 90 days after the date of the SGM (“ AC Long Stop Date ”), the

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LETTER FROM THE BOARD

New AC Subscription Agreement shall cease and determine (save and except clauses in relation to confidentiality and restriction on announcements and other miscellaneous matters which shall continue to have full force and effect) and none of the parties shall have any claim against the other in relation thereto (save for in respect of any antecedent breach by any party under the New AC Subscription Agreement).

When negotiating the terms of the New AC Subscription Agreement, the Directors expected more time was needed for the Possible Fund Raising Exercise to complete. Therefore, the AC Long Stop Date was set at 90 days after the SGM such that sufficient time was provided for the completion of the Possible Fund Raising Exercise, i.e. condition (vi) set out above. It is current intention of the Company that AC Completion will take place simultaneously with or shortly after the completion of the Underwritten Placing and the Best Effort Placing which is expected to take place by the end of December 2015.

On 17 August 2015, the Company entered into the Underwritten Placing Agreement and the Best Effort Placing Agreement, and accordingly, condition (i) as set out above was satisfied.

Since AC Completion is subject to the fulfilment of the conditions as set out above, the New AC Subscription may or may not proceed. Shareholders and potential investors of the Company are reminded to exercise caution when dealing in the Shares.

AC Completion

AC Completion shall take place at 5:00 p.m. on the AC Completion Date.

Non-disposal undertaking

Avant Capital has undertaken to the Company that it shall not, and shall procure that none of the companies controlled by it or nominees or trustees holding in trust for it will, during the period commencing from the AC Completion Date and ending on the last day of the 3-month period therefrom (“ Lock-up Period ”), offer, pledge, charge, sell, contract to sell, create any encumbrances over, or otherwise transfer or dispose of (nor enter into any agreement (whether oral or in writing) to, either directly or indirectly, conditionally or unconditionally), the AC Subscription Shares without the prior written consent of the Company. Unless with the prior consent of the Company, during the 21-month period following the expiry of the Lock-up Period, for each calendar month, Avant Capital shall be entitled to transfer or dispose of such number of the AC Subscription Shares directly or indirectly owned by it representing one-twenty-first (1/21) thereof (rounded down to the nearest whole number) on an accumulative basis.

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LETTER FROM THE BOARD

As the Subscription Price is in a discount to the recent trading price of the Shares, the Company has requested and Avant Capital has agreed to have restriction on the disposal of the AC Subscription Shares. The purposes of restricting the disposal of the AC Subscription Shares by Avant Capital in a way set out above are to ensure an orderly marketing of Shares in the market after AC Completion and to secure a long term relationship with Avant Capital as a strategic investor of the Company.

Ranking of the AC Subscription Shares

The AC Subscription Shares, when fully paid and allotted and issued, will rank pari passu in all respects among themselves and with the Shares in issue on the date of allotment and issue of the AC Subscription Shares.

Mandate to issue the AC Subscription Shares

The AC Subscription Shares will be issued under the AC Specific Mandate to be sought by the Directors at the SGM.

(2) Reasons for and benefits of the New AC Subscription

The Directors consider that the New AC Subscription represented a good opportunity for the Company to raise funds to strengthen its capital base, to improve its financial position for the Company’s future development and expansion. For further details of the Company’s future development and expansion, please refer to paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds” below.

(3) Future intention of Avant Capital regarding the Group after AC Completion

To the best of the Directors’ information, knowledge and belief after due enquiry with Avant Capital, Avant Capital intends to assist the Group to develop the new asset management business by giving guidance and advice to the Group on the investment targets and strategies. Please refer to paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds” below for further details.

Save as disclosed above, although Avant Capital will become the Company’s single largest Shareholder after AC Completion, to the best knowledge, information and belief of the Directors, as at the Latest Practicable Date, (a) Avant Capital had not entered into any agreement, arrangements, understandings or negotiations and had no intention in relation to the (i) changing of the Board composition and scope of businesses (including investment in new businesses/assets, and disposing/downsizing/terminating the Company’s existing businesses) and (ii) holding of 30% or more of the shareholding of the Company.

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LETTER FROM THE BOARD

(4) Use of proceeds from the New AC Subscription

The aggregate gross proceeds of the subscription of the AC Subscription Shares will be HK$132.00 million and the aggregate net proceeds, after deduction of related expenses, are estimated to be approximately HK$131.16 million, representing a net issue price of approximately HK$0.06831 per AC Subscription Share.

It is intended that the aggregate net proceeds from the New AC Subscription will be used by the Company as to (i) approximately HK$120.00 million for the development and expansion of its money-lending business; and (ii) the remaining balance of approximately HK$11.16 million for the general working capital of the Group. Please refer to the paragraph headed “(III) Underwriting Placing and Best Effort Placing – (3) Reasons for the Underwriting Placing, the Best Effort Placing and use of proceeds” below for further details of the analysis of the prospects of the money lending business of the Group.

(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING

(1) Underwritten Placing Agreement

The principal terms of the Underwritten Placing Agreement are set out below:

Date

17 August 2015 (after trading hours)

Issuer

The Company

Placing Agent

Black Marble Securities Limited

The Placing Agent conditionally agreed to procure, as placing agent of the Company, the Placees to subscribe, failing which, the Placing Agent itself will subscribe, for 360,000,000 Underwritten Placing Shares. The Placing Agent will receive a placing commission of 1.5% of the aggregate Placing Price for the Underwritten Placing Shares. Such placing commission was arrived at after arm’s length negotiations between the Company and the Placing Agent under normal commercial terms and with reference to the prevailing market condition.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the Latest Practicable Date, the Placing Agent and its ultimate beneficial owners were Independent Third Parties.

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LETTER FROM THE BOARD

Placees

The Underwritten Placing Shares are to be placed to not less than six Placees, who and whose ultimate beneficial owners (where appropriate), shall be (i) Independent Third Parties and (ii) independent from and not acting in concert with Avant Capital. The Placing Agent had undertaken that none of the Placees would, immediately upon completion of the Underwritten Placing, together with parties acting in concert with it, be holding 20% or more of the issued share capital of the Company as at completion of the Underwritten Placing.

Placing Price

The Placing Price of HK$0.06875 per Underwritten Placing Share represents:

(i) a discount of approximately 75.88% to the closing price of HK$0.285 per Share as quoted on the Stock Exchange on the Latest Practicable Date;
(ii) a discount of approximately 82.14% to the closing price of HK$0.3850 per Share as quoted on the Stock Exchange on 17 August 2015, being the date of the Underwritten Placing Agreement or the Best Effort Placing Agreement (as the case may be);
(iii) a discount of approximately 84.86% to the average closing price of approximately HK$0.454 per Share as quoted on the Stock Exchange for the last five consecutive trading days of the Shares immediately prior to the date of the Underwritten Placing Agreement or the Best Effort Placing Agreement (as the case may be); and
(iv) a discount of approximately 85.37% to the average closing price of approximately HK$0.470 per Share as quoted on the Stock Exchange for the last ten consecutive trading days of the Shares immediately prior to the date of the Underwritten Placing Agreement or the Best Effort Placing Agreement (as the case may be).

The Placing Price was determined after arm’s length negotiations between the Company and the Placing Agent with reference to the subscription price of the New AC Subscription and also after taking into account of the capital needs of the Group for further expansion of business and the financial position of the Group, especially the fact that the Group recorded a net loss attributable to Shareholders of approximately HK$7.73 million for the year ended 30 April 2015.

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LETTER FROM THE BOARD

Although the Placing Price represented a deep discount to trading price of the Shares, the Directors consider that the Placing Price is fair and reasonable and is in the interests of the Company and the Shareholders as a whole for the reasons that:

(i) The Placing Price represented a premium of approximately 17.32% over the theoretical consolidated net asset value per Share as mentioned above.
(ii) The Company is in need of new fund for the expansion of its business, further details of which are set out in the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds” below.
(iii) The Underwritten Placing and the Best Effort Placing will allow the Group to strengthen its capital base with an improved gearing ratio to a relatively manageable level. With a larger capital base and improved gearing ratio, the Directors believe that the Group will be in a stronger financial position and provided with greater flexibility to undertake its various business ventures.
(iv) The Underwritten Placing and the Best Effort Placing, if completed, would improve the financial position of the Group as the Underwritten Placing and the Best Effort Placing will lead to (i) an increase of the net assets of the Group; and (ii) a decrease of the gearing ratio of the Group. For illustration purposes only and without taking into account the New AC Subscription, the Underwritten Placing and the Best Effort Placing, if completed, will increase the net assets of the Group by approximately HK$389.22 million to approximately HK$691.13 million (assuming there is no other change of the net assets of the Group from 31 July 2015 to completion of the Underwritten Placing and the Best Effort Placing). In addition, the gearing ratio of the Group, calculated on the basis of the Group’s total borrowings and obligations under finance leases divided by equity attributable to owners of the Company, will also decrease substantially from approximately 17.4% as at 31 July 2015 to approximately 7.3% as at the date of completion of the Underwritten Placing and the Best Effort Placing (assuming there is no other change to the factors affecting the gearing ratio of the Group from the Latest Practicable Date to completion of the Underwritten Placing and the Best Effort Placing).

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LETTER FROM THE BOARD

The Group had approached several other placing agents but only the Placing Agent indicated interest and negotiated with the Company. The Directors are of the view that the terms agreed by the Placing Agent were favourable and viable, which met the Company’s needs and expectations, especially that the Placing Agent agreed to place the Shares with a 6-month lock up period. Therefore, the Placing Agent was chosen for the Underwritten Placing and the Best Effort Placing.

The Directors consider that the terms of the Underwritten Placing Agreement (including the Placing Price and the placing commission) are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

The gross proceeds from the Underwritten Placing will be HK$24.75 million and the net proceeds will be approximately HK$23.96 million (after deduction of commission and other expenses of the Underwritten Placing). On such basis, the net issue price will be approximately HK$0.0666 per Underwritten Placing Share.

Underwritten Placing Shares

The 360,000,000 Underwritten Placing Shares represent (i) approximately 7.08% of the existing issued share capital of the Company as at the Latest Practicable Date; (ii) approximately 6.61% of the existing issued share capital of the Company as enlarged by the Underwritten Placing (assuming there will not be any change in the issued share capital of the Company from the Latest Practicable Date to the date of completion of the Underwritten Placing); and (iii) approximately 3.32% of the existing issued share capital of the Company as enlarged by the Underwritten Placing and the Best Effort Placing (assuming the maximum number of the Best Effort Placing Shares are placed). The aggregate nominal value of the Underwritten Placing Shares under the Underwritten Placing will be HK$3,600,000.

Ranking of the Underwritten Placing Shares

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

Conditions of the Underwritten Placing

Completion of the Underwritten Placing is conditional upon:

(i) the Stock Exchange granting the listing of, and permission to deal in, all of the Underwritten Placing Shares; and
(ii) the UP Specific Mandate being obtained at the SGM.

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LETTER FROM THE BOARD

Each of the Company and the Placing Agent shall use their respective best efforts to procure the satisfaction of the above conditions prior to 4:00 p.m. on the day falling 30 days after the date of the SGM (“ Placing Long Stop Date ”). If the above conditions are not satisfied by the Placing Long Stop Date, all obligations of the Placing Agent and of the Company under the Underwritten Placing Agreement shall cease and determine and neither the Placing Agent nor the Company shall have any claim against the other in relation to the Underwritten Placing Agreement (save in respect of any antecedent breach of any obligation thereunder).

Completion

Completion of the Underwritten Placing shall take place within five Business Days after the fulfillment of all the above conditions or on such other date as the Company and the Placing Agent may agree in writing.

Mandate to issue the Underwritten Placing Shares

The Underwritten Placing Shares proposed to be issued under the Underwritten Placing Agreement will be issued pursuant to the UP Specific Mandate to be obtained at the SGM.

Force majeure

The Placing Agent reserves its right to terminate the Underwritten Placing Agreement by notice in writing to the Company at any time up to 8:00 a.m. on the date of completion of the Underwritten Placing if, in the reasonable opinion of the Placing Agent, after consultation with the Company:

(i) there is any change in national, international, financial, exchange control, political, economic conditions in Hong Kong which in the reasonable opinion of the Placing Agent would be materially adverse in the consummation of the Underwritten Placing; or
(ii) there is any breach of the warranties, representations and undertakings given by the Company in the Underwritten Placing Agreement and such breach is considered by the Placing Agent on reasonable grounds to be material in the context of the Underwritten Placing; or
(iii) there is any material change (whether or not forming part of a series of changes) in market conditions which in the reasonable opinion of the Placing Agent would materially and prejudicially affect the Underwritten Placing or makes it inadvisable or inexpedient for the Underwritten Placing to proceed; or

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LETTER FROM THE BOARD

(iv) any statement contained in all announcements, circulars, interim and annual reports issued by the Company to the Stock Exchange and/or the Shareholders since the publication of the announcement of the Company relating to the annual results of the Company for the year ended 30 April 2015 has become or been discovered to be untrue, incorrect or misleading in any material respect which in the opinion of the Placing Agent would be materially adverse in the consummation of the Underwritten Placing.

To the best knowledge of the Directors, the Directors were not aware of the occurrence of any of such events as at the Latest Practicable Date.

Non-disposal undertaking

The Underwritten Placing Shares will be offered to the Placees subject to the terms of the deed of non-disposal undertaking to be executed by each Placee upon completion of the Underwritten Placing, pursuant to which each Placee shall undertake in favour of the Company that it shall not (nor enter into any agreement (whether oral or in writing) to), either directly or indirectly, conditionally or unconditionally, during the period commencing on the date of allotment and issue of the Underwritten Placing Shares and ending on the last day of the six-month period therefrom, offer, pledge, charge, sell, contract to sell, create any encumbrances over, or otherwise transfer or dispose of the Underwritten Placing Shares it subscribed pursuant to the Underwritten Placing without the prior written consent of the Company.

As the Placing Price is in a discount to the recent trading price of the Shares, the Company has requested and the Placing Agent has agreed to place the Placing Shares with restriction on the disposal. The purposes of restricting the disposal of the Placing Shares are to ensure an orderly marketing of Shares in the market after completion.

(2) Best Effort Placing Agreement

Date

17 August 2015 (after trading hours)

Issuer

The Company

Placing Agent

Black Marble Securities Limited

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LETTER FROM THE BOARD

The Placing Agent conditionally agreed to procure, on a best effort basis, as placing agent of the Company, the Placees to subscribe for a maximum of 5,400,000,000 Best Effort Placing Shares. The Placing Agent will receive a placing commission of 1.5% of the aggregate Placing Price for the Best Effort Placing Shares successfully placed by the Placing Agent. Such placing commission was arrived at after arm’s length negotiations between the Company and the Placing Agent under normal commercial terms and with reference to the prevailing market condition.

Placees

The Best Effort Placing Shares are to be placed to not less than six Placees, who and whose ultimate beneficial owners (where appropriate), shall be (i) Independent Third Parties and (ii) independent from and not acting in concert with Avant Capital. The Placing Agent had undertaken that none of the Placees would, immediately upon completion of the Best Effort Placing, together with parties acting in concert with it, be holding 20% or more of the issued share capital of the Company as at completion of the Best Effort Placing.

Placing Price

The Placing Price per Best Effort Placing Share is the same as the Placing Price per Underwritten Placing Share. Please refer to the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (1) Underwritten Placing Agreement – Placing Price” above for an analysis of the Placing Price.

The Directors consider that the terms of the Best Effort Placing Agreement (including the Placing Price and the placing commission) are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

Assuming the maximum number of the Best Effort Placing Shares has been placed, the gross proceeds from the Best Effort Placing will be HK$371.25 million and the net proceeds will be approximately HK$365.26 million (after deduction of commission and other expenses of the Best Effort Placing). On such basis, the net issue price will be approximately HK$0.0676 per Best Effort Placing Share.

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LETTER FROM THE BOARD

Best Effort Placing Shares

The maximum number of 5,400,000,000 Best Effort Placing Shares represent (i) approximately 106.15% of the existing issued share capital of the Company as at the Latest Practicable Date; (ii) approximately 51.49% of the existing issued share capital of the Company as enlarged by the Best Effort Placing (assuming the maximum number of the Best Effort Placing Shares are placed); and (iii) approximately 49.78% of the existing issued share capital of the Company as enlarged by the Underwritten Placing and the Best Effort Placing (assuming the maximum number of the Best Effort Placing Shares are placed). The aggregate nominal value of the Best Effort Placing Shares under the Best Effort Placing will be HK$54,000,000.

Ranking of the Best Effort Placing Shares

The Best Effort Placing Shares will rank, upon issue, pari passu in all respects with the Shares in issue as at the date of allotment and issue of the Best Effort Placing Shares.

Conditions of the Best Effort Placing

Completion of the Best Effort Placing is conditional upon:

(i) the Stock Exchange granting the listing of, and permission to deal in, all of the Best Effort Placing Shares; and
(ii) the BEP Specific Mandate being obtained at the SGM.

Each of the Company and the Placing Agent shall use their respective best efforts to procure the satisfaction of the above conditions prior to the Placing Long Stop Date. If the above conditions are not satisfied by the Placing Long Stop Date, all obligations of the Placing Agent and of the Company under the Best Effort Placing Agreement shall cease and determine and neither the Placing Agent nor the Company shall have any claim against the other in relation to the Best Effort Placing Agreement (save in respect of any antecedent breach of any obligation thereunder).

Completion

Completion of the Best Effort Placing shall take place within five Business Days after the fulfillment of all the above conditions or on such other date as the Company and the Placing Agent may agree in writing.

Mandate to issue the Best Effort Placing Shares

The Best Effort Placing Shares proposed to be issued under the Best Effort Placing Agreement will be issued pursuant to the BEP Specific Mandate to be obtained at the SGM.

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LETTER FROM THE BOARD

Force majeure

The Placing Agent reserves its right to terminate the Best Effort Placing Agreement by notice in writing to the Company at any time up to 8:00 a.m. on the date of completion of the Best Effort Placing if, in the reasonable opinion of the Placing Agent, after consultation with the Company:

(i) there is any change in national, international, financial, exchange control, political, economic conditions in Hong Kong which in the reasonable opinion of the Placing Agent would be materially adverse in the consummation of the Best Effort Placing; or
(ii) there is any breach of the warranties, representations and undertakings given by the Company in the Best Effort Placing Agreement and such breach is considered by the Placing Agent on reasonable grounds to be material in the context of the Best Effort Placing; or
(iii) there is any material change (whether or not forming part of a series of changes) in market conditions which in the reasonable opinion of the Placing Agent would materially and prejudicially affect the Best Effort Placing or makes it inadvisable or inexpedient for the Best Effort Placing to proceed; or
(iv) any statement contained in all announcements, circulars, interim and annual reports issued by the Company to the Stock Exchange and/or the Shareholders since the publication of the announcement of the Company relating to the annual results of the Company for the year ended 30 April 2015 has become or been discovered to be untrue, incorrect or misleading in any material respect which in the opinion of the Placing Agent would be materially adverse in the consummation of the Best Effort Placing.

To the best knowledge of the Directors, the Directors were not aware of the occurrence of any of such events as at the Latest Practicable Date.

Non-disposal undertaking

The Best Effort Placing Shares will be offered to the Placees subject to the terms of the deed of non-disposal undertaking to be executed by each Placee upon completion of the Best Effort Placing, pursuant to which each Placee shall undertake in favour of the Company that it shall not (nor enter into any agreement (whether oral or in writing) to), either directly or indirectly, conditionally or unconditionally, during the period commencing on the date of allotment and issue of the Best Effort Placing Shares and ending on the last day of the six-month period therefrom, offer, pledge, charge, sell, contract to sell, create any encumbrances over, or otherwise transfer or dispose of the Best Effort Placing Shares it subscribed pursuant to the Best Effort Placing without the prior written consent of the Company.

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LETTER FROM THE BOARD

For the rationale of such non-disposal undertaking, please refer to the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (1) Underwritten Placing Agreement – Non-disposal undertaking” above.

Since completion of each of the Underwritten Placing and the Best Effort Placing is subject to the fulfilment of the conditions as set out in the Underwritten Placing Agreement and the Best Effort Placing Agreement respectively, the Underwritten Placing and/or the Best Effort Placing may or may not proceed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares.

(3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds

As at the Latest Practicable Date, the Company had bank balances and cash of approximately HK$57 million, among which approximately HK$51 million was the unutilised proceeds from the placing of new Shares completed in March 2015 and have been allocated for specific uses. The remaining balance of bank balances and cash is set aside for a revolving loan facility of HK$20 million granted to an independent third party for one year from May 2015, as disclosed in the announcement of the Company dated 28 May 2015.

As to the unutlised net proceeds of approximately HK$51 million from the Company’s placing completed in March 2015:

Approximately HK$25.00 million was originally allocated for the purchase of factory unit for warehouse storage purpose. As at the Latest Practicable Date, the management had not identified a suitable factory at a reasonable price in the market. As the management expects that the property market might cool down to a certain extent in the near future, the management decides to wait until early 2016 for the purchase of the factory in order to maximise the return for the Group.
Approximately HK$13.00 million was allocated for expansion of design and fitting out services of the Group. Such proceeds were intended to be used mainly towards the acquisition of a new showroom or workshop. As at the Latest Practicable Date, the management was still looking for suitable premises and expected that such proceeds would be fully utilised by the end of 2016.

– The remaining unutilised net proceeds will be used towards repayment of bank loans and other loans. The maturity of trade related bank loans ranges from 90 days to 120 days. The mortgage loan and term loan will mature in 2022 and 2023 respectively. The estimated interest expenses of these bank loans to be incurred until maturity is approximately HK$2.8 million. As the interest rate is low at the moment, the Company will repay its loans according to the respective loan schedules. If the interest

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rate increases in the future, the Company will consider early repayment to avoid extra interest burden.

All of the aforesaid unutilised net proceeds are expected to be fully utilised by the end of 2016.

The dilution effect of the Underwritten Placing to the existing Shareholders will be approximately 6.61% (assuming there would be no change in the issued share capital of the Company from the Latest Practicable Date to the date of completion of the Underwritten Placing) and the dilution effect of the Best Effort Placing to the existing Shareholders will be approximately 51.49% (assuming the maximum number of the Best Effort Placing Shares are placed). The dilution effect of the New AC Subscription, the Underwritten Placing and the Best Effort Placing on an aggregated basis will be approximately 60.15% (assuming all the Best Effort Placing Shares are placed and there is no other change in the shareholding structure of the Company before the issue of the AC Subscription Shares, the Underwritten Placing Shares and the Best Effort Placing Shares).

Despite the dilution impact, the Company still considers that the Underwritten Placing, the Best Effort Placing and the New AC Subscription are fair and reasonable and in the best interests of Shareholders due to the following reasons:

(i) Given the recent volatility in the Hong Kong stock market and the downward trading price trend of the Shares in the two months before the signing of the New AC Subscription Agreement, the Underwritten Placing Agreement and the Best Effort Placing Agreement, a relatively deep discount is necessary in order to maintain attractiveness of the Underwritten Placing, the Best Effort Placing and the New AC Subscription.
(ii) The Company will be required to put in additional effort and costs to administer the rights issue or open offer procedures, which is not cost effective from the perspective of the Company given the tight cash position of the Group.
(iii) Although the Underwritten Placing, the Best Effort Placing and the New AC Subscription have an inherent dilutive nature, they are subject to Shareholders’ approval.

The Directors had considered alternative financing means, such as debt financing, rights issue or open offer. However, in view of the amount required for the intended uses, debt financing will result in additional interest burden, significant increase in gearing ratio of the Group and subject the Group to repayment obligations. Rights issue and open offer are less effective in terms of time and cost and securing underwriter(s) for a rights issue and/or an open offer exercise would also be difficult. Given the proposed fund-raising scale of the Company, shareholders’ approval will also likely be required under pre-emptive issues (such

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as rights issue and open offer). However, the documentation involved in a pre-emptive issue is more complicated, given that it will involve preparation and issue of prospectus and appointment of reporting accountants to report on unaudited pro forma financial information to be included in the prospectus. As such, preparation time of pre-emptive issues will be longer as compared to placing and subscription. In addition, pre-emptive issues also involve a lengthy acceptance process by the Shareholders and investors which will involve handling of application forms and excess applications. Assuming Shareholders’ approval is obtained, the Company estimates that the Placing will be completed within 30 days as compared with pre-emptive issues which will require around 1.5 to 2 months to complete.

Also, pre-emptive issues will inevitably be more costly than placing and subscription given that additional professional fees of approximately HK$400,000 will be incurred for appointing reporting accountants, obtaining legal advice in connection with the pre-emptive issues, such as the feasibility of extending pre-emptive issues to overseas Shareholders and engaging other professional parties. Furthermore, based on the research conducted by the Group, the average underwriting commission rate of rights issue or open offer is about 3%, which is double of the placing commission of 1.5% under the Underwritten Placing and the Best Effort Placing. There is also no commission involved in the New AC Subscription.

Therefore, taking into account the time and expenses required, the Directors thus consider the choice of placing and subscription over debt financing, rights issue or open offer to be in the interests of the Company and the Shareholders as a whole.

The Directors are of the view that the Underwritten Placing and the Best Effort Placing can strengthen the financial position of the Group and provide working capital to the Group to meet any future development and obligations. The Underwritten Placing and the Best Effort Placing also represent good opportunities to broaden the shareholders’ base and the capital base of the Company. The Directors consider that each of the Underwritten Placing and the Best Effort Placing is in the interest of the Company and the Shareholders as a whole.

As disclosed above, the net proceeds from the Underwritten Placing are estimated to be approximately HK$23.96 million and the maximum net proceeds from the Best Effort Placing are estimated to be approximately HK$365.26 million.

Assuming completion of both the Underwritten Placing and the Best Effort Placing shall take place, the maximum aggregate net proceeds is estimated to be approximately HK$389.22 million and is expected to be applied in the following manners:

(i) approximately HK$180.00 million for the development and expansion of the Group’s money-lending business;

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(ii) approximately HK$180.00 million for the investment of the Group in the businesses of, including but not limited to, financial and securities markets, construction and ancillary services sectors; and
(iii) the remaining balance of approximately HK$29.22 million for the general working capital of the Group.

Further details of the estimated use of net proceeds from the New AC Subscription, the Underwritten Placing and the Best Effort Placing are set out below.

(i) Approximately HK$300.00 million for the development and expansion of the Group’s money lending business

Money lending business has been one of the recent business focuses of the Group. Since the commencement of money lending business in May 2015 and up to the Latest Practicable Date, the loan interest income and net profit generated by this segment amounted to approximately HK$1.43 million and approximately HK$1.33 million respectively. The fund of approximately HK$30.00 million raised from a placing of 540,000,000 new shares of the Company pursuant to a specific mandate granted to the Directors by the Shareholders at the special general meeting of the Company held on 5 March 2015 and allocated for money lending business has already been utilised in full. As disclosed in the annual reports of the Company for the three years ended 30 April 2015, the Group recorded a net loss in the past three financial years. For the year ended 30 April 2015, all of the business segments of the Group recorded a loss except the segment of fitting out services for construction and building work. Therefore, comparing to the overall financial performance of the Group in the past, the management of the Group believes that the money lending business has brought satisfactory turnover and profit to the Group despite that it is still at an infant stage of development. Accordingly, the Company considers that it is in the interests of the Company and Shareholders to expand the money lending business and devote more financial resources to this business. In view of the recent implementation of certain restrictive measures by the Hong Kong Monetary Authority in relation to the provision of lending by banks, the Board believes this presents positive business opportunities to licensed money lenders and considers that the Group should capture such opportunities by capital funding by means of issue of new Shares.

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As at the Latest Practicable Date, the loan portfolio of the money lending business of the Group was as follows:

Date of loan				Interest
agreement	Borrower	Type of loan	Loan amount	rate
7 May 2015	Independent	Term loan	$18,000,000	8%
	Third Party
28 May 2015	Independent	Revolving loan	a maximum of	8%
	Third Party	facility	$20,000,000
25 July 2015	Independent	Term loan	$18,000,000	8%
	Third Party
11 September	Independent	Term loan	$10,000,000	8.5%
2015	Third Party

The customers of the Group’s money-lending business include individual, private and listed companies. The Group was approached by the customers through referrals from its business network and connections.

In setting the interest, maturity and other terms prior to granting a loan, the Group will review the financial strength, purpose of borrowing, and repayment ability of a borrower to ensure that the borrower has sound financial repayment ability. In assessing the credit profile of each borrower, a number of factors which will influence their default probability, such as financial profile, business prospects and management, macroeconomic development, industrial and sovereign risk, and historical performance of a borrower will be analysed. Where necessary after assessment, the Group will require the borrower to provide security and/or guarantee for the loan.

Gold Medal Hong Kong Limited (“ Gold Medal ”), an indirect wholly-owned subsidiary of the Company, is a holder of the money lenders licence under the Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong). The previous loans granted by Gold Medal were handled by the directors of Gold Medal, namely Mr. Yuen Chun Fai (“ Mr. Yuen ”) and Mr. So Wang Chun, Edmond (“ Mr. So ”), who have gained the relevant experiences in handling and managing money lending business. Mr. Yuen has been an executive Director since 5 September 2014 and is responsible for overseeing and monitoring the corporate exercises and accounting and finance functions of the Group. He has over 13 years’ experiences in the field of financial reporting, financial management and audit experience in Hong Kong, China, Malaysia and Singapore. Mr. Yuen is a fellow of the Association of Chartered Certified Accountants and is also a certified public accountant of the Hong Kong Institute of Certified Public Accountants. He had also served as a director of other companies listed on the main board or GEM of the Stock Exchange and the ACE Market in Malaysia. Mr. So joined the Group in 2012

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and has served as an executive Director from 17 March 2014. Mr. So gained experience in corporate finance, initial public offerings and other financial advisory services by working for a year in a corporate advisory firm which provided advisory services to PRC and Hong Kong based companies. Thus, the Directors are of the view that the Company has sufficient expertise and personnel in operating money lending business.

The risks involved in the money lending business include (i) insufficient funds to finance the operations or expansion plans; (ii) inadequate collateral or guarantees securing the loan to cover the loan receivables; and (iii) inability to effectively manage default risk of the loans and/or failure to maintain a low impaired loan ratio, which may have a material adverse impact on the business, results of operations and financial condition of the Group. The Group will actively manage the risks by scrutinising the potential borrowers’ credit profiles, adhering to the Group’s credit policies and operation manual and closely monitoring loan defaults from time to time.

In the coming one year, the Group targets to lend an aggregate amount of approximately HK$300 million, of HK$10 million to HK$40 million for each loan, with interest rates ranging from 8% to 15%. On such basis and assuming the term of the loans is one year, an annual interest income of HK$24 million to HK$45 million will be generated. Although the Group has not entered into any legal binding agreements with borrowers as at the Latest Practicable Date except those stated in the loan portfolio above, the Group has been constantly approached by potential borrowers. During August to September 2015, the Group had been approached by five potential individual borrowers, who were independent third parties. The size of the loans requested by such potential borrowers ranged from HK$6 million to HK$40 million. Assuming the Group has sufficient funds, the Directors estimated that (i) by the end of December 2015, the Group could enter into legally binding agreements with three potential borrowers, for loans of an amount of approximately HK$40 million, HK$35 million and HK$10 million respectively, with interest rates ranging from 8.5% to 11%, for a term of two years; (ii) in January 2016, the Group could lend HK$20 million to an existing borrower under the existing revolving loan facility (as indicated in the loan portfolio above) and approximately HK$50 million to new potential borrowers; (iii) from February 2016 to June 2016, the Group could lend approximately HK$30 million to new potential borrowers every month. On such basis, the Directors estimated that the HK$300 million net proceeds allocated for the money lending business could be fully applied by mid-2016. The Directors therefore consider the money lending business is very promising and able to generate better returns to the Shareholders.

In order to source more customers for the money lending business, after the completion of the New AC Subscription, the Underwritten Placing and the Best Effort Placing, the Group will actively approach parties in its existing business and social network by contacting them through emails, phone conversations and physical meetings to promote its money lending business.

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To better coordinate efforts in this aspect, the Group has compiled a list of potential borrowers. Currently, 20 potential independent third parties have been identified and added onto the list. The list and the portfolio of the potential borrowers will be sent to the Directors monthly for their review and will be updated from time to time.

As money lending is a capital intensive business, strong cash flow and financial capability are fundamental factors for its successful operation. Quick turnover and the immediate availability of funding in the money lending business requires the availability of a significant amount of cash and liquidity since often times borrowers are in urgent need of the loan. Therefore, the Group has allocated a significant amount of the proceeds from the New AC Subscription, the Underwritten Placing and the Best Effort Placing to the money lending business.

(ii) Approximately HK$180.00 million for the investment of the Group in the businesses of, including but not limited to, financial and securities markets, construction and ancillary services sectors

The Group has recorded a net loss in the past three consecutive financial years. In particular, some of its business segments (i.e. scaffolding services for construction and buildings work, management contracting services for construction and buildings work, and gondolas, parapet railings, access equipment installation and maintenance services) do not have satisfactory performance and have been making loss in the past years. In order to seek the best return for the Shareholders, the Board intends to diversify the business of the Group with an objective to broadening the source of income of the Group and thus achieving better financial performance.

The HK$180.00 million net proceeds are expected to be applied in the following manner:

(a) approximately HK$50.00 million for construction businesses

Details of the proposed investment

As at the Latest Practicable Date, the Group had identified one potential construction project for investment. The potential project involves the construction of residential units on a plot of land in the New Territories. It is estimated that such construction project, if proceeds, will be completed by the end of 2018.

A joint venture model will be adopted for the investment of the construction project. The Group may consider to hold the majority stake of the construction project, and invite other independent investors to cooperate in the project. The Directors expect that the initial phase of investment for the project will require approximately HK100 million, being the cost of the land.

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The Company expects that the construction expenditure will be financed by construction loans.

Reasons for the proposed investment

The construction and ancillary services sector is highly relevant to the existing businesses of the Group including scaffolding services, fitting out services, management contracting services and gondolas, parapet railings and access equipment and maintenance services. Investment in the construction and ancillary services sector can allow the Group to achieve synergy with its existing businesses and maximise returns to Shareholders as the construction business can generate more demand for the Group’s scaffolding services and the Company can save money and time in bidding the contracts for its scaffolding business.

Risks associated with the proposed investment

Possible risks facing this business plan include (i) a shortage of manpower and the aging of skilled construction workers across the entire industry, resulting in higher labour costs; (ii) relatively high initial capital requirement; and (iii) fierce competition from local and overseas competitors in the industry. However, benefitting from the growing demand for infrastructure and real estate construction over the near-term due to increasing population and the housing shortage in Hong Kong, the Group is cautiously optimistic about the prospects of this sector. With most of the executive Directors having many years of experiences and wide network in the construction and scaffolding industry, the Group definitely has the expertise and competitive advantage in managing investments in this sector.

The Directors would like to emphasise that the Group may or may not proceed with such investment as negotiation was still in progress as at the Latest Practicable Date. If such investment materialises, the net proceeds allocated for such purpose are expected to be fully utilised by the end of March 2016. If such investment does not materialise, the Group will continue to look for other construction projects, which will adopt a similar investment model involving joint ventures.

(b) approximately HK$70.00 million for asset management

Details of the proposed investment

The Company will target at blue chip stocks as well as stocks with relatively small market capitalisation on the GEM as well as the main board of the Stock Exchange. The Company will

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LETTER FROM THE BOARD

seek to diversify its listed securities portfolio to lower the risks and focus on listed securities with history of dividends and capital gains to maximise returns to the Shareholders. The Directors expected that the annual return from the listed securities investment (after deducting the transaction costs) would be 10% to 30%. The new asset management business segment is expected to start operation in December 2015 and the HK$70.00 million net proceeds allocated for such purpose is expected to be fully utilised by February 2016.

Reasons for the proposed investment

The Directors believe that the Group can leverage on the expertise of Avant Capital to set up its own asset management team. To better manage the new listed securities investment activities, the Company is also looking to hire new personnel with asset management experiences and licensed under the SFO to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities. The new personnel will be the head of the new asset management department of the Company and will make investment decisions in this regard after seeking approval from the Investment Committee (as defined below). In the long run, provided that the Company has suitable personnel and the necessary licenses, the Company might develop its own asset management business and open up another income stream for the Group.

Risks associated with the proposed investment

Shareholders should note that investment in listed securities is directly affected by the inherent risks associated with the securities markets, such as market volatility and fluctuations in the trading volume and price. It is also subject to general economic and political conditions, such as macroeconomic and monetary policies. Turmoil in the financial markets, a downturn in general economic conditions or other risks associated with securities trading could affect the value and return of certain financial assets. As a result of these risks, the Group’s income and operating results may be subject to significant fluctuations.

The performance of securities trading business is also determined by the Group’s investment decisions and judgments based on assessment of existing and future market conditions. The Company will closely monitor the market value and financial performance of the securities portfolio, and actively adjust such portfolio and allocate assets based on market conditions and internal risk management guidelines. However, investment

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LETTER FROM THE BOARD

decisions are a matter of judgment, which involves management discretion and assumptions. If the decision-making process fails to effectively minimise losses while capturing gains, this business segment may not achieve the investment returns the Group anticipates, and the Group could even suffer material losses.

Details of the proposed investment

As at the Latest Practicable Date, the Group was undergoing negotiation with an Independent Third Party (“ JV Partner ”) for investing in the development of a centralised payment system for a major trade city in the PRC (“ Payment System Project ”). The trade city is one of the largest wholesale and logistics areas in the PRC. Commission will be charged for every transaction completed through the centralised payment system, which will be the main source of revenue generated by the Payment System Project.

A joint venture model will be adopted for the investment of the Payment System Project. The Group may consider to hold a minority stake in this project, and cooperate with the local government and other independent investors in the project. If the Payment System Project materialises, the investment amount for the Group will be approximately HK$60 million.

The Directors would like to emphasise that the Group may or may not proceed with such investment as negotiation was still in progress as at the Latest Practicable Date. If such investment materialises, the net proceeds allocated for such purpose are expected to be fully utilised by the end of March 2016. If such investment does not materialise, the Group will continue to look for other non-listed companies’ securities investment opportunities.

Reasons for the proposed investment

The Directors has reviewed the investment proposal, including the industry overview, business model, strengths and experience of the joint venture partners, and considered that there is growth potential in the development of centralised payment system in the PRC and the potential return of the investment is attractive to the Group.

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LETTER FROM THE BOARD

With the introduction of Avant Capital as a strategic investor of the Company, the Company believes that it could benefit from their experiences and expertise in the financial and securities market. The Investment Committee (as defined below) will have regular meetings with the management of Avant Capital for seeking their advice before making any decisions on investment in the financial and securities markets sector. Avant Capital will also help the Company in developing the existing businesses and exploring new business opportunities by connecting the Company with its own business network.

The Group would like to emphasise that its investment will not be limited to the financial and securities markets, construction and ancillary services sectors. Should targets in other sectors with good prospects and investment returns be identified, the Group will also consider investment in other sectors. In selecting investment targets, the Directors will take into account factors including but not limited to (a) the management of the target, including their skills and experiences; (b) the future prospect and the extent of growth of the industry; and (c) the financial track records of the target company.

The Directors noted that sufficient capital is required as target companies often look at the financial health of their investors. Deposits or earnest money are often required at the initial stage. If the Company does not have the necessary financial resources, it might lose valuable investment opportunities easily.

To identify investment targets, the Company has set up an investment committee (“ Investment Committee ”), whose responsibility is to look for new business opportunities to expand the Group’s scope of business. The Investment Committee consists of Mr. Yuen, Mr. So and Mr. Ng Tang (“ Mr. Ng ”). Mr. Ng has been an executive Director since 16 April 2014. Mr. Ng has over twenty years of corporate management experience in the PRC and Hong Kong and has more than ten years of extensive experience in the management and capital operation of listed companies in Hong Kong. Mr. Ng has served on the boards of various listed companies in Hong Kong. For the background and experiences of Mr. Yuen and Mr. So, please refer to the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds – (i) Approximately HK$300.00 million for the development and expansion of the Group’s money lending business” above. The target industries of acquisition are chosen based on market intelligence that the Directors gathered from their own analysis of the business and development of the Group. Although the Company had not carried out any formal feasibility studies on the targeted new industries, the Company will conduct detailed due diligence on the acquisition/investment targets before any investment decision is made. The Directors expected that such targets will be acquired from independent third parties.

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LETTER FROM THE BOARD

(iii) Approximately HK$40.38 million for the general working capital of the Group

Together with approximately HK$11.16 million allocated from the net proceeds of the New AC Subscription, the Company has allocated a total of approximately HK$40.38 million net proceeds to general working capital of the Group in the coming one year, which is intended to be utilised as to (a) approximately HK$11.00 million for the purchase of raw materials for the segment of scaffolding services for construction and buildings work; (b) approximately HK$17.00 million for the salaries and wages for the employees of the Group; (c) approximately HK$1.50 million for the rental and rates expenses of the Group; (d) approximately HK$4.00 million for the legal and professional fees incurred and to be incurred by the Group; and (e) approximately HK$6.88 million for other administrative expenses of the Group.

Due to the needs and opportunities facing the Group as set out above, the Company has not considered scaling down the fund raising exercises. The Group would also like to reiterate that the Best Effort Placing is based on a best effort basis but not underwritten. The net proceeds of the Best Effort Placing are calculated based on the assumption that all of the Best Effort Placing Shares are placed. If the Placing Agent is unable to place all of the Best Effort Placing Shares, the amount of net proceeds will decrease and the Company will reduce the net proceeds allocated to the intended uses (i) and (ii) above in proportion while the net proceeds allocated to intended use (iii) above will remain unchanged.

(IV) BUSINESS DEVELOPMENT OF THE GROUP

The Group is principally engaged in the provision of scaffolding and fitting out services, management contracting services, and other services for construction and buildings work and money lending business.

(1) Existing business segments

Scaffolding services for construction and buildings work

The Hong Kong Government’s policy of increasing the overall real estate supply and active encouragement of infrastructure construction led to intensified competition in the scaffolding sector during the year ended 30 April 2015 (“ FY2015 ”), which contributed to lower profit margins throughout the industry as well as in the Group’s related business segments. A shortage of manpower and the aging of skilled construction workers have been the primary concerns across the entire industry, resulting in higher labour costs and adversely impacting the financial performance of the Group’s scaffolding

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LETTER FROM THE BOARD

services segment. During FY2015, the Group adopted a more prudent approach in acquiring new projects in order to minimise the negative impacts of rising labour costs.

During FY2015, the Group won 12 new contracts amounting to approximately HK$83,900,000.

In view of the loss-making record of the scaffolding services business segment, the Directors expected the Company would scale down its investment in such segment in the future. It is expected that the Group will not put in additional financial resources to develop this business segment in the coming years and this business segment will be operated by its own internally generated cashflows.

Fitting out services for construction and buildings work

During FY2015, the Group established a new 51%-owned subsidiary, Sense Key Design Holdings Limited, which provides interior design services for residential properties in Hong Kong. It had begun contributing satisfactory revenue for the Group with high profit margins and had secured 12 new fitting out and interior design contracts during FY2015. The Directors consider this segment to be a new solid growth driver in the future. The Group aims to provide fitting out services targeting commercial institutions and luxurious residential end-users. The fitting out services division has a team of professional designers with over 10 years’ experience and reputation in the industry.

In view of the sanguine market outlook, the Group intends to earmark more resources, focusing on the development of this segment. It is expected that the Group will finance this business segment through a combination of internally generated cash flows, bank borrowings and/or equity financing.

Management contracting services for construction and buildings work

During FY2015, the management contracting services business segment won a contract to supply and install glass re-inforced concrete (GRC) panels for the Mass Transit Railway Express Rail Link in Shek Kong, New Territories. Such project was progressing on schedule as at the Latest Practicable Date.

In view of the loss-making record of the management contracting services business segment, the Directors expected the Company would scale down its investment in such segment in the future. It is expected that the Group will not put in additional financial resources to develop this business segment in the coming years and this business segment will be operated by its own internally generated cashflows.

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LETTER FROM THE BOARD

Gondolas, parapet railings, access equipment installation and maintenance services

During FY2015, since the Group’s then fleet of temporary gondolas was close to being fully utilised, the Group purchased an additional 20 temporary gondolas. The contract for the supply and installation of a building maintenance unit at the HKU Station of the Mass Transit Railway together with the testing and commissioning process was completed as planned. In the future, the Group planned to implement a prudent strategy for purchasing additional temporary gondolas due to the lack of skilled equipment operators in the market.

In view of the loss-making record of this business segment, the Directors expected the Company would scale down its investment in such segment in the future. It is expected that the Group will not put in additional financial resources to develop this business segment in the coming years and this business segment will be operated by its own internally generated cashflows.

Money lending

For details of the money lending segment, please refer to the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds – (i) Approximately HK$300.00 million for the development and expansion of the Group’s money lending business” above.

(2) Proposed new business segments

For details of the proposed new business segments, please refer to the paragraph headed “(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING – (3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds – (ii) Approximately HK$180.00 million for the investment of the Group in the businesses of, including but not limited to, financial and securities markets, construction and ancillary services sectors” above.

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LETTER FROM THE BOARD

(V) FUND RAISING ACTIVITIES OF THE COMPANY IN THE 12 MONTHS IMMEDIATELY PRECEDING THE LATEST PRACTICABLE DATE

Apart from the fund raising activities mentioned below, the Company had not raised any other fund in the past 12 months immediately preceding the Latest Practicable Date.

Date of	Fund raising			Actual use of net proceeds as at	Actual use of net proceeds as at
announcement	activity	Intended use of net proceeds		the Latest Practicable Date
21 January 2015	Placing of	The aggregate net proceeds of		The	aggregate net proceeds of
and 27 March	540,000,000 new	approximately HK$159.76 million		HK$108.76 million have been used
2015	shares pursuant	was intended to be used as follows:		as follows:
	to the specific
	mandate	(i)	Approximately HK$30.00	(i)	approximately HK$17.00
	granted to the		million for repayment of		million has been utilised for
	Directors by the		bank loans and other loans;		repayment of bank loans and
	Shareholders at				other loans;
	the special	(ii)	Approximately HK$33.00
	general meeting		million for repayment of the	(ii)	approximately HK$31.78
	of the Company		convertible bonds and the		million has been utilised for
	held on 5 March		payment of interest accrued		repayment of the convertible
	2015		thereon;		bonds and the payment of
					interest accrued thereon, and
		(iii)	Approximately HK$30.00		remaining balance of
			million for financing the		approximately HK$1.22
			development of the money		million has been reallocated
			lending business;		as general working capital of
					the Group;
		(iv)	Approximately HK$25.00
			million for purchase of	(iii)	approximately HK$30.00
			factory unit for warehouse		million has been utilised for
			storage purpose;		financing the money lending
					business;
		(v)	Approximately HK$17.00
			million for expansion of	(iv)	approximately HK$4.00
			design and fitting out		million has been utilised for
			services of the Group; and		expansion of design and
					fitting out services of the
		(vi)	the remaining balance of		Group; and
			approximately HK$24.76
			million for general working	(v)	approximately HK$25.98
			capital of the Group.		million has been applied as
					general working capital of
					the Group.
				The	remaining balance of
				approximately HK$51.00 million
				has not been utilised and remains
				in	the bank for intended use.

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LETTER FROM THE BOARD

Date of	Fund raising		Actual use of net proceeds as at
announcement	activity	Intended use of net proceeds	the Latest Practicable Date
21 October 2014	Issue of 79,900,000	The aggregate net proceeds of	All of the net proceeds have been
and 31 October	new shares	approximately HK$13.99 million	used as intended.
2014	under a general	were intended to be used to finance
	mandate	the subscription of shares of AP
	granted to the	Assets Limited.
	Directors by the
	Shareholders at
	the annual
	general meeting
	of the Company
	held on 28
	August 2014

(VI) EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

To the best of the Directors’ knowledge, information and belief after having made all reasonable enquires, the following tables illustrate the existing shareholding structure of the Company and the effects on the shareholding structure of the Company.

Scenario 1: Assuming the New AC Subscription does not take place

(i) Upon completion of the Underwritten Placing (assuming there is no other change in the shareholding structure of the Company before the issue of the Underwritten Placing Shares);
(ii) upon completion of the Best Effort Placing (assuming all the Best Effort Placing Shares are placed and there is no other change in the shareholding structure of the Company before the issue of the Best Effort Placing Shares); and

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LETTER FROM THE BOARD

(iii) upon completion of the Underwritten Placing and the Best Effort Placing (assuming all the Best Effort Placing Shares are placed and there is no other change in the shareholding structure of the Company before the issue of the Underwritten Placing Shares and the Best Effort Placing Shares),

the shareholding structure of the Company will be as follows.

Shareholders Directors: Dr. So Yu Shing Mr. Kong Kam Wang Ms. Lai Yuen Mei, Rebecca Mr. So Wang Chun, Edmond Mr. Ng Tang Placees of Underwritten Placing Placees of Best Effort Placing Other public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 3,320,000 0.07 1,778,000 0.03 3,320,000 0.07 800,000 0.02 5,536,000 0.11 – – – – 5,072,347,072 99.71 5,087,101,072 100.00	(i) Upon completion of the Underwritten Placing Number of Shares Approximate % 3,320,000 0.06 1,778,000 0.03 3,320,000 0.06 800,000 0.01 5,536,000 0.10 360,000,000 6.61 – – 5,072,347,072 93.12 5,447,101,072 100.00	(ii) Upon completion of the Best Effort Placing Number of Shares Approximate % 3,320,000 0.03 1,778,000 0.02 3,320,000 0.03 800,000 0.01 5,536,000 0.05 – – 5,400,000,000 51.49 5,072,347,072 48.37 10,487,101,072 100.00	(iii) Upon completion of the Underwritten Placing and the Best Effort Placing Number of Shares Approximate % 3,320,000 0.03 1,778,000 0.02 3,320,000 0.03 800,000 0.01 5,536,000 0.05 360,000,000 3.32 5,400,000,000 49.78 5,072,347,072 46.76 10,847,101,072 100.00	(iii) Upon completion of the Underwritten Placing and the Best Effort Placing Number of Shares Approximate % 3,320,000 0.03 1,778,000 0.02 3,320,000 0.03 800,000 0.01 5,536,000 0.05 360,000,000 3.32 5,400,000,000 49.78 5,072,347,072 46.76 10,847,101,072 100.00
					100.00

Note: Percentage figures may not add up to 100 per cent due to rounding.

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LETTER FROM THE BOARD

The aggregate maximum number of 5,760,000,000 Placing Shares to be placed under the Underwritten Placing and the Best Effort Placing represent (i) approximately 113.23% of the existing issued share capital of the Company as at the Latest Practicable Date; and (ii) approximately 53.10% of the existing issued share capital of the Company as enlarged by the Underwritten Placing and the Best Effort Placing (assuming all the Best Effort Placing Shares are placed and there is no other change in the shareholding structure of the Company before the issue of the Underwritten Placing Shares and the Best Effort Placing Shares).

Scenario 2: Assuming the New AC Subscription takes place

(i) Upon the AC Completion and the completion of the Underwritten Placing (assuming there is no other change in the shareholding structure of the Company before the issue of the AC Subscription Shares and the Underwritten Placing Shares);
(ii) upon the AC Completion and the completion of the Best Effort Placing (assuming all the Best Effort Placing Shares are placed and there is no other change in the shareholding structure of the Company before the issue of the AC Subscription Shares and the Best Effort Placing Shares); and

– 40 –

LETTER FROM THE BOARD

(iii) upon the AC completion and the completion of each of the Underwritten Placing and the Best Effort Placing (assuming all the Best Effort Placing Shares are placed and there is no other change in the shareholding structure of the Company before the issue of the AC Subscription Shares, the Underwritten Placing Shares and the Best Effort Placing Shares),

the shareholding structure of the Company will be as follows.

Shareholders Directors: Dr. So Yu Shing Mr. Kong Kam Wang Ms. Lai Yuen Mei, Rebecca Mr. So Wang Chun, Edmond Mr. Ng Tang Avant Capital and parties acting in concert with it_(Note 1)_ Placees of Underwritten Placing Placees of Best Effort Placing Other public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate % 3,320,000 0.07 1,778,000 0.03 3,320,000 0.07 800,000 0.02 5,536,000 0.11 252,000,000 4.95 – – – – 4,820,347,072 94.76 5,087,101,072 100.00	(i) Upon the AC Completion and completion of the Underwritten Placing Number of Shares Approximate % 3,320,000 0.05 1,778,000 0.02 3,320,000 0.05 800,000 0.01 5,536,000 0.08 2,172,000,000 29.48 360,000,000 4.89 – – 4,820,347,072 65.43 7,367,101,072 100.00	(ii) Upon the AC Completion and completion of the Best Effort Placing Number of Shares Approximate % 3,320,000 0.03 1,778,000 0.01 3,320,000 0.03 800,000 0.01 5,536,000 0.04 2,172,000,000 17.51 – – 5,400,000,000 43.52 4,820,347,072 38.85 12,407,101,072 100.00	(iii) Upon the AC Completion and completion of the Underwritten Placing and the Best Effort Placing Number of Shares Approximate % 3,320,000 0.03 1,778,000 0.01 3,320,000 0.03 800,000 0.01 5,536,000 0.04 2,172,000,000 17.01 360,000,000 2.82 5,400,000,000 42.30 4,820,347,072 37.76 12,767,101,072 100.00	(iii) Upon the AC Completion and completion of the Underwritten Placing and the Best Effort Placing Number of Shares Approximate % 3,320,000 0.03 1,778,000 0.01 3,320,000 0.03 800,000 0.01 5,536,000 0.04 2,172,000,000 17.01 360,000,000 2.82 5,400,000,000 42.30 4,820,347,072 37.76 12,767,101,072 100.00
					100.00

Notes:

To the best knowledge, information and belief of the Directors, Avant Fund, which is a fund managed by Avant Capital, held 252,000,000 Shares as at the Latest Practicable Date.
Percentage figures may not add up to 100 per cent due to rounding.

– 41 –

LETTER FROM THE BOARD

(VII) SGM

The AC Subscription Shares, the Underwritten Placing Shares and the Best Effort Placing Shares will be issued under the AC Specific Mandate, the UP Specific Mandate and the BEP Specific Mandate respectively to be obtained from the Shareholders and therefore each of the New AC Subscription, the Underwritten Placing and the Best Effort Placing will be subject to Shareholders’ approval. The SGM will be held at 12:00 noon on 18 November 2015 at Rooms 1001-1006, 10th Floor, Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Aberdeen, Hong Kong for the purposes of considering and, if thought fit, approving each of the New AC Subscription Agreement, the Underwritten Placing Agreement and the Best Effort Placing Agreement and granting the AC Specific Mandate, the UP Specific Mandate and the BEP Specific Mandate to allot and issue the AC Subscription Shares, the Underwritten Placing Shares and the Best Effort Placing Shares respectively.

To the best knowledge and belief of the Directors, as at the Latest Practicable Date, save for the 252,000,000 Shares held by Avant Fund, Avant Capital and its associates did not hold any Shares in the Company. Accordingly, Avant Capital and its associates shall abstain from voting at the resolution to be proposed at the SGM in relation to the New AC Subscription Agreement and the transactions contemplated thereunder. To the best knowledge and belief of the Directors, as at the Latest Practicable Date, save as disclosed above, no other Shareholders had a material interest in the New AC Subscription Agreement and the transactions contemplated thereunder and are required to abstain from voting at the SGM in respect of the resolution relating to the New AC Subscription.

Also, completion of the New AC Subscription is conditional upon, among other things, the issue of not less than 360,000,000 new Shares and not more than 5,760,000,000 Shares as contemplated under the Underwritten Placing and/or the Best Effort Placing. Accordingly, Avant Capital and its associates shall abstain from voting at the resolutions to be proposed at the SGM in relation to the Underwritten Placing Agreement, the Best Effort Placing Agreement and the transactions contemplated thereunder. To the best knowledge and belief of the Directors, as at the Latest Practicable Date, save as disclosed above, no other Shareholders had a material interest in the Underwritten Placing Agreement, the Best Effort Placing Agreement and the transactions contemplated thereunder and are required to abstain from voting at the SGM in respect of the resolutions relating to the Underwritten Placing and the Best Effort Placing.

Application will be made to the Stock Exchange for the listing of, and permission to deal in, the AC Subscription Shares, the Underwritten Placing Shares and the Best Effort Placing Shares.

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LETTER FROM THE BOARD

Whether or not you intend to attend the SGM, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible but in any event not less than 48 hours before the time scheduled for the SGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending or voting in person at the SGM or any adjourned meeting thereof should you so wish.

(VIII) RESPONSIBILITY STATEMENT

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

(IX) RECOMMENDATION

The Directors are of the opinion that the New AC Subscription, the Underwritten Placing and the Best Effort Placing and the terms of the New AC Subscription Agreement, the Underwritten Placing Agreement and the Best Effort Placing Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that all Shareholders to vote in favour of all the resolutions to be proposed at the SGM.

On behalf of the Board WLS Holdings Limited So Yu Shing Chairman

– 43 –

NOTICE OF SGM

**WLS Holdings Limited 滙隆控股有限公司[*]**

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)

(Stock Code: 8021)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that a special general meeting (“ SGM ”) of the shareholders of WLS Holdings Limited (“ Company ”) will be held at 12:00 noon on 18 November 2015 at Rooms 1001-1006, 10th Floor, Tower A, Southmark, 11 Yip Hing Street, Wong Chuk Hang, Aberdeen, Hong Kong for the purposes of considering and, if thought fit, passing (with or without amendments), the following resolutions of the Company:

ORDINARY RESOLUTIONS

“ THAT
(a) the New AC Subscription Agreement (as defined in, the principal terms of which are summarised in, the circular (“ Circular ”) of the Company dated 27 October 2015, a copy of which has been produced to the SGM marked “A” and signed by the chairman of the SGM for the purpose of identification) and all the transactions contemplated thereunder (including the allotment and issue of the AC Subscription Shares (as defined in the Circular) pursuant thereto) be and are hereby approved;
(b) the directors of the Company be and are hereby specifically authorised to allot and issue the AC Subscription Shares (as defined in the Circular) in accordance with the terms of the New AC Subscription Agreement; and
(c) any one director of the Company be and is hereby authorised to sign, execute, perfect, deliver and do all such documents, deeds, acts, matters and things, as the case may be in his or her discretion consider necessary, desirable or expedient to give effect to the New AC Subscription Agreement and all the transactions contemplated thereunder (including the allotment and issue of the AC Subscription Shares pursuant thereto) and to agree to such variation, amendment or waiver as are, in the opinion of such director of the Company, in the interest of the Company provided that such variation, amendment or waiver shall not be fundamentally different from the terms as provided in the New AC Subscription Agreement.”

For identification purpose only

– SGM-1 –

NOTICE OF SGM

“ THAT
(a) the Underwritten Placing Agreement (as defined in, the principal terms of which are summarised in, the circular (“ Circular ”) of the Company dated 27 October 2015, a copy of which has been produced to the SGM marked “B” and signed by the chairman of the SGM for the purpose of identification) and all the transactions contemplated thereunder (including the allotment and issue of the Underwritten Placing Shares (as defined in the Circular) pursuant thereto) be and are hereby approved;
(b) the directors of the Company be and are hereby specifically authorised to allot and issue the Underwritten Placing Shares (as defined in the Circular) in accordance with the terms of the Underwritten Placing Agreement; and
(c) any one director of the Company be and is hereby authorised to sign, execute, perfect, deliver and do all such documents, deeds, acts, matters and things, as the case may be in his or her discretion consider necessary, desirable or expedient to give effect to the Underwritten Placing Agreement and all the transactions contemplated thereunder (including the allotment and issue of the Underwritten Placing Shares pursuant thereto) and to agree to such variation, amendment or waiver as are, in the opinion of such director of the Company, in the interest of the Company provided that such variation, amendment or waiver shall not be fundamentally different from the terms as provided in the Underwritten Placing Agreement.”

“ THAT

(a) the Best Effort Placing Agreement (as defined in, the principal terms of which are summarised in, the circular (“ Circular ”) of the Company dated 27 October 2015, a copy of which has been produced to the SGM marked “C” and signed by the chairman of the SGM for the purpose of identification) and all the transactions contemplated thereunder (including the allotment and issue of the Best Effort Placing Shares (as defined in the Circular) pursuant thereto) be and are hereby approved;
(b) the directors of the Company be and are hereby specifically authorised to allot and issue the Best Effort Placing Shares (as defined in the Circular) in accordance with the terms of the Best Effort Placing Agreement; and
(c) any one director of the Company be and is hereby authorised to sign, execute, perfect, deliver and do all such documents, deeds, acts, matters and things, as the case may be in his or her discretion consider necessary, desirable or expedient to give effect to the Best Effort Placing

– SGM-2 –

NOTICE OF SGM

Agreement and all the transactions contemplated thereunder (including the allotment and issue of the Best Effort Placing Shares pursuant thereto) and to agree to such variation, amendment or waiver as are, in the opinion of such director of the Company, in the interest of the Company provided that such variation, amendment or waiver shall not be fundamentally different from the terms as provided in the Best Effort Placing Agreement.”

On behalf of the Board WLS Holdings Limited So Yu Shing Chairman

Hong Kong, 27 October 2015

Registered office: Head office and principal place of Clarendon House business in Hong Kong: 2 Church Street Rooms 1001-1006 Hamilton HM 11, Bermuda 10th Floor, Tower A Southmark 11 Yip Hing Street Wong Chuk Hang Aberdeen Hong Kong

Notes:

Any shareholder of the Company entitled to attend and vote at the SGM shall be entitled to appoint another person as his/her/its proxy to attend and vote instead of him/her/it. A shareholder who is the holder of two or more shares may appoint more than one proxy(ies) to represent him/her/it and vote on his/her/its behalf. A proxy needs not to be a shareholder of the Company.
In order to be valid, a form of proxy together with the power of attorney or other authority (if any) under which it is signed, or a certified copy thereof, must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time appointed for the SGM (or any adjournment thereof).
Completion and delivery of a form of proxy shall not preclude a shareholder of the Company from attending and voting in person at the SGM, and in such event, such form of proxy shall be deemed to be revoked.
Where there are joint holders of any shares, any one of such joint holder may vote, either in person or by proxy, in respect of such shares as if he/she/it was solely entitled thereto; but if more than one of such joint holders be present at the SGM, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and 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 such joint holding.
Any voting at the SGM shall be taken by poll.
The form of proxy shall be signed by the shareholder of the Company or his/her attorney duly authorised in writing or, in the case of a corporation, must be either executed under its seal or under the hand of an officer, attorney or other person authorised to sign the same.

– SGM-3 –

NOTICE OF SGM

This notice, for which the directors of the Company (“ Directors ”) collectively and individually accept full responsibility, includes particulars given in the compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market (“ GEM ”) of The Stock Exchange of Hong Kong Limited 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 notice 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 notice misleading.

As at the date of this notice, the Board comprises Dr. So Yu Shing (Chairman and Executive Director), Mr. Kong Kam Wang (Executive Director and Chief Executive Officer), Ms. Lai Yuen Mei, Rebecca (Executive Director), Mr. So Wang Chun, Edmond (Executive Director), Mr. Ng Tang (Executive Director), Mr. Yuen Chun Fai (Executive Director), Mr. Law Man Sang (Independent Non-executive Director), Mr. Chan Ngai Sang, Kenny (Independent Non-executive Director) and Mr. Ong Chi King (Independent Non-executive Director).

This notice will remain on the GEM’s website at www.hkgem.com on the “Latest Company Announcements” page for at least seven days from the day of its posting and on the website of the Company at www.wls.com.hk.

– SGM-4 –

AI assistant

WLS Holdings Limited — Proxy Solicitation & Information Statement 2015

51219_rns_2015-10-26_afbea645-3336-451f-bde2-0fbc0ef6e8dc.pdf

WLS Holdings Limited 滙隆控股有限公司[*]

(Stock Code: 8021)

(I) PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATES; AND

(II) NOTICE OF SGM

Placing Agent

DEFINITIONS

WLS Holdings Limited 滙隆控股有限公司[*]

(Stock Code: 8021)

To the Shareholders

PROPOSED ISSUE OF NEW SHARES UNDER SPECIFIC MANDATES

(I) INTRODUCTION

(II) NEW AC SUBSCRIPTION

(1) New AC Subscription Agreement

Subscription Price

Conditions precedent to the New AC Subscription

AC Completion

Non-disposal undertaking

Ranking of the AC Subscription Shares

Mandate to issue the AC Subscription Shares

(2) Reasons for and benefits of the New AC Subscription

(3) Future intention of Avant Capital regarding the Group after AC Completion

(4) Use of proceeds from the New AC Subscription

(III) UNDERWRITTEN PLACING AND BEST EFFORT PLACING

(1) Underwritten Placing Agreement

Date

Placees

Placing Price

Underwritten Placing Shares

Ranking of the Underwritten Placing Shares

Conditions of the Underwritten Placing

Completion

Mandate to issue the Underwritten Placing Shares

Force majeure

Non-disposal undertaking

(2) Best Effort Placing Agreement

Placees

Placing Price

Best Effort Placing Shares

Ranking of the Best Effort Placing Shares

Conditions of the Best Effort Placing

Completion

Mandate to issue the Best Effort Placing Shares

Force majeure

Non-disposal undertaking

(3) Reasons for the Underwritten Placing, the Best Effort Placing and use of proceeds

Reasons for the proposed investment

Risks associated with the proposed investment

(b) approximately HK$70.00 million for asset management

Details of the proposed investment

Reasons for the proposed investment

Risks associated with the proposed investment

Details of the proposed investment

Reasons for the proposed investment

(IV) BUSINESS DEVELOPMENT OF THE GROUP

(1) Existing business segments

Fitting out services for construction and buildings work

Management contracting services for construction and buildings work

(2) Proposed new business segments

(V) FUND RAISING ACTIVITIES OF THE COMPANY IN THE 12 MONTHS IMMEDIATELY PRECEDING THE LATEST PRACTICABLE DATE

(VI) EFFECTS ON SHAREHOLDING STRUCTURE OF THE COMPANY

Scenario 1: Assuming the New AC Subscription does not take place

LETTER FROM THE BOARD

Scenario 2: Assuming the New AC Subscription takes place

(VII) SGM

(VIII) RESPONSIBILITY STATEMENT

(IX) RECOMMENDATION

WLS Holdings Limited 滙隆控股有限公司[*]

(Stock Code: 8021)

NOTICE OF SPECIAL GENERAL MEETING

ORDINARY RESOLUTIONS

“ THAT

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