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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 you should take, you should consult your licensed securities dealer
or registered institution in securities, a bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Unlimited Creativity Holdings Limited, you should at once hand this circular together
with the enclosed proxy form to the purchaser or the transferee or to the bank manager, licensed securities dealer or registered institution in
securities or other agent through whom the sale was effected for transmission to the purchaser or the transferee.
This circular appears for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of
the Company.
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company
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.
UNLIMITED CREATIVITY HOLDINGS LIMITED
無限創意控股有限公司
(Continued in Bermuda with limited liability)
(Stock Code: 8079)
PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE (5)
RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD
ON THE RECORD DATE AT HK$0.08 PER RIGHTS SHARE;
CHANGE IN BOARD LOT SIZE
AND
NOTICE OF SPECIAL GENERAL MEETING
Financial Adviser to the Company
Underwriter to the Rights Issue
Independent Financial Adviser
Nuada Limited
Corporate Finance Advisory
Unit 1805-08, 18/F, New Victory House
93-103 Wing Lok Street
Sheung Wan, Hong Kong
香港上環永樂街93-103號
樹福商業大廈18樓1805-08室
Capitalised terms used in this cover page shall have the same meanings as those defined in this circular.
A letter from the Board is set out on pages 11 to 29 of this circular. A letter of advice from the Independent Financial Adviser to the
Independent Board Committee and the Independent Shareholders is set out on pages 31 to 50 of this circular. The recommendation of the
Independent Board Committee to the Independent Shareholders is set out on page 30 of this circular.
A notice convening the SGM to be held at 7/F., Zung Fu Industrial Building, 1067 King’s Road, Quarry Bay, Hong Kong on Tuesday, 25
November 2014 at 10:00 a.m. is set out on pages 67 to 69 of this circular. A proxy form for use at the SGM is enclosed. Whether or not you
intend to attend the SGM, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon
and return the same to the branch share registrar of the Company in Hong Kong, Tricor Standard 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 appointed for the holding of the
SGM or any adjournment thereof. Completion and return of the proxy form shall not preclude you from attending and voting in person at the
SGM or any adjournment thereof should you so desire.
Shareholders and potential investors should note that the Rights Issue is conditional upon the Underwriting Agreement having
become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof.
Accordingly, the Rights Issue may or may not proceed.
The Shares will be dealt in on an ex-rights basis from Wednesday, 3 December 2014. Dealings in the Rights Shares in the nil-paid
form will take place from Monday, 15 December 2014 to Monday, 22 December 2014 (both dates inclusive). If the conditions of the
Rights Issue are not fulfilled or the Underwriting Agreement is terminated, the Rights Issue will not proceed. Any Shareholders or
other persons contemplating selling or purchasing Shares and/or Rights Shares in their nil-paid form who are in any doubt about
their position are recommended to consult their professional advisers. Any Shareholders or other persons dealing in Shares up to
the date on which all the conditions to which the Rights Issue is subject are fulfilled (and the date on which the Underwriter’s right
of termination of the Underwriting Agreement ceases) and any persons dealing in the nil-paid Rights Shares during the period from
Monday, 15 December 2014 to Monday, 22 December 2014 (both dates inclusive) will accordingly bear the risk that the Rights Issue
may not become unconditional and may not proceed.
10 November 2014
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 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
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Termination of the Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Appendix I
– Financial information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Appendix II – Unaudited pro forma financial information of the Group . . . . . . . . . . . . . . . 53
Appendix III – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ii
DEFINITIONS
In this circular, the following expressions shall have the following meanings unless the context
indicates otherwise:
“Able Rich”
Able Rich Consultants Limited, a company incorporated in Hong
Kong with limited liability, which is wholly-owned by Rich Treasure
“acting in concert”
has the meaning ascribed thereto under the Takeovers Code
“Announcement”
the announcement of the Company dated 10 October 2014 in relation
to the Rights Issue and Change in Board Lot Size
“associate(s)”
has the meaning ascribed thereto under the GEM Listing Rules
“Board”
the board of Directors
“Business Day”
a day (other than a Saturday, Sunday and public holiday) on which
licensed banks are generally open for business throughout their
normal business hours in Hong Kong
“CCASS”
the Central Clearing and Settlement System established and operated
by HKSCC
“Change in Board Lot Size”
the proposed change in board lot size of the Shares for trading on the
Stock Exchange from 20,000 Shares to 35,000 Shares
“China 3D”
China 3D Digital Entertainment Limited, a company incorporated
in Bermuda with limited liability and the issued shares of which
are listed on GEM (stock code: 8078), which is owned as to
approximately 3.38% by the Company and approximately 0.03% by
Mr. Shiu Stephen Junior
“Company”
Unlimited Creativity Holdings Limited, a company continued in
Bermuda with limited liability and the issue Shares of which are
listed on the GEM
“Director(s)”
director(s) of the Company
“GEM”
the Growth Enterprise Market operated by the Stock Exchange
“GEM Listing Rules”
the Rules Governing the Listing of Securities on GEM
“Group”
the Company and its subsidiaries
“Heavenly Blaze”
Heavenly Blaze Limited, a company incorporated in Hong Kong
with limited liability, which is owned as to 50% by Mr. Stephen Shiu
Junior (son of Mr. Shiu) and 50% by Ms. Chen Min (wife of Mr.
Stephen Shiu Junior)
1
DEFINITIONS
“HKSCC”
Hong Kong Securities Clearing Company Limited
“HK$”
Hong Kong dollar, the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC
“Independent Board Committee”
an independent committee of the Board (comprising Dr. Siu
Yim Kwan, Sidney, Mr. Kam Tik Lun and Mr. Lau Gar Hung,
Christopher, being all of the independent non-executive Directors)
established to advise the Independent Shareholders on the fairness
and reasonableness of the Rights Issue
“Independent Financial Adviser”
Nuada Limited, a corporation licensed under the SFO to conduct type
6 (advise on corporate finance) regulated activity as defined under
the SFO, being the independent financial adviser to the Independent
Board Committee and the Independent Shareholders
“Independent Shareholder(s)”
Shareholders other than Able Rich, Mr. Shiu and their respective
associates and who are required to abstain from voting in respect
thereto at the SGM pursuant to the GEM Listing Rules
“Independent Third Party(ies)”
third parties independent of and not connected with the Directors,
chief executive and substantial Shareholders of the Company or any
of its subsidiaries, or any of their respective associates
“Irrevocable Undertakings”
the irrevocable undertakings dated 10 October 2014 given by each
of Able Rich, Mr. Shiu, China 3D, New Smart, Ms. Siu York
Chee, Heavenly Blaze and Mr. Leung Ge On Andy in favour of the
Company and the Underwriter, details of which are set out in the
section headed “Irrevocable Undertakings” in this circular
“Last Trading Day”
10 October 2014, being the date of the Underwriting Agreement,
which is a Stock Exchange trading day
“Latest Practicable Date”
7 November 2014, being the latest practicable date prior to the
printing of this circular for ascertaining certain information contained
herein
“Latest Time for Acceptance”
4:00 p.m. on Tuesday, 30 December 2014, or such later time or date
as may be agreed between the Underwriter and the Company in
writing, being the latest time for acceptance of, and payment for, the
Rights Shares as described in the Prospectus Documents
“Listing Committee”
has the meaning ascribed thereto in the GEM Listing Rules
“Macau SAR”
The Macau Special Administrative Region of the PRC
2
DEFINITIONS
”Mr. Shiu”
Mr. Shiu Yeuk Yuen, an existing Shareholder, an executive Director
and the chairman of the Company, the trustee and sole director of
Rich Treasure
“New Smart”
New Smart International Creation Limited, a company incorporated
in Hong Kong with limited liability, which is wholly-owned by China
3D
“Non-Qualifying Shareholders”
those Overseas Shareholders whom the Directors, based on
legal advice provided by the Company’s legal advisers, consider
it necessary or expedient not to offer the Rights Issue to such
Shareholders on account either of legal restrictions under the laws of
the relevant place or the requirements of the relevant regulatory body
or stock exchange in that place
“Open Offer”
the open offer of 503,358,524 offer shares at the subscription price of
HK$0.10 per offer share conducted by the Company and completed in
February 2014
“Overseas Shareholder(s)”
Shareholder(s) whose name(s) appear(s) on the register of members
of the Company at the close of business on the Record Date and
whose address(es) as shown on such register is (are) outside Hong
Kong
“PAL(s)”
the renounceable provisional allotment letter(s) proposed to be issued
to the Qualifying Shareholders in connection with the Rights Issue
“Posting Date”
Thursday, 11 December 2014 or such other date as the Underwriter
may agree in writing with the Company, as the date of despatch of
the Prospectus Documents to the Qualifying Shareholders or the
Prospectus for information only (as the case may be) to the NonQualifying Shareholders
“PRC”
the People’s Republic of China
“Prospectus”
the prospectus to be despatched to the Shareholders containing details
of the Rights Issue
“Prospectus Documents”
the Prospectus and PAL(s)
“Qualifying Shareholders”
Shareholders, other than the Non-Qualifying Shareholders, whose
name(s) appear on the register of members of the Company at the
close of business on the Record Date
“Record Date”
Tuesday, 9 December 2014 (or such other date as the Underwriter
may agree in writing with the Company), as the date by reference to
which entitlements to the Rights Issue are expected to be determined
3
DEFINITIONS
“Registrar”
the branch share registrar of the Company in Hong Kong, being
Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s
Road East, Hong Kong
“Rich Treasure”
Rich Treasure Group Limited, a company incorporated in the British
Virgin Islands, which is wholly-owned by Mr. Shiu on trust for
certain family members of Mr. Shiu
“Rights Issue”
the proposed issue of the Rights Shares by way of rights issue to the
Qualifying Shareholders for subscription at the Subscription Price on
the terms and subject to the conditions set out in the Underwriting
Agreement and the Prospectus Documents
“Rights Shares”
the 1,572,995,385 Shares to be issued and allotted under the Rights
Issue
“Settlement Date”
Tuesday, 6 January 2015, being the fourth Business Day following
the Latest Time for Acceptance (or such other date as the Underwriter
and the Company may agree in writing)
“SFC”
the Securities and Futures Commission of Hong Kong
“SFO”
The Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong)
“SGM”
the special general meeting of the Company to be convened for the
Shareholders to consider and, if thought fit, approve the Rights Issue
and transactions contemplated under the Underwriting Agreement
“Share(s)”
ordinary share(s) of HK$0.01 each in the share capital of the
Company
“Shareholder(s)”
the holder(s) of issued Share(s)
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Subscription Price”
HK$0.08 per Rights Share
“Takeovers Code”
the Code on Takeovers and Mergers of SFC
“Underwriter”
Kingston Securities Limited, a licensed corporation to carryout
business in type 1 (dealing in securities) regulated activity under SFO
“Underwriting Agreement”
the underwriting agreement dated 10 October 2014 entered into
between the Company and the Underwriter in relation to the
underwriting arrangement in respect of the Rights Issue
4
DEFINITIONS
“Underwritten Shares”
all the Rights Shares (other than the Rights Shares that will be
provisionally allotted to the relevant Shareholders pursuant to the
Irrevocable Undertakings) which are fully underwritten by the
Underwriter on the terms and subject to the conditions set out in the
Underwriting Agreement
“Untaken Shares”
those (if any) of the Underwritten Shares for which duly completed
PAL (accompanied by cheques or banker’s cashier order for the full
amount payable on application which are honoured on first or, at
the option of the Company, subsequent presentation) have not been
lodged for acceptance, or received, as the case may be, on or before
Latest Time for Acceptance
“%” or “per cent.”
percentage or per centum
5
EXPECTED TIMETABLE
The expected timetable of the proposed Rights Issue and Change in Board Lot Size is as follow:
Event
(Hong Kong time)
Latest time for return of proxy form for the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Sunday,
(not less than 48 hours before the SGM)
23 November 2014
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Tuesday, 25 November 2014
Announcement of results of the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 25 November 2014
First day for free exchange of existing share . . . . . . . . . . . . . . . . . . . . . . Wednesday, 26 November 2014
certificates in board lot of 20,000 Shares
each for new share certificates in board
lot of 35,000 Shares each
Last day of dealings in the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 2 December 2014
on a cum-rights basis
First day of dealings in Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 3 December 2014
on an ex-rights basis
Latest time for lodging transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Thursday,
in order to be qualified for the Rights Issue
4 December 2014
Register of members of the Company closes . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 5 December 2014 to
to determine the eligibility of the Rights Issue
Tuesday, 9 December 2014
(both dates inclusive)
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 9 December 2014
Last day for trading of the Shares in board . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 9 December 2014
lot of 20,000 Shares in the original counter
Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . Wednesday, 10 December 2014
Effective date of change in board lot size . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 10 December 2014
from 20,000 Shares to 35,000 Shares
First day of parallel trading in the Shares . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 10 December 2014
(in board lot of 20,000 Shares each and
board lot of 35,000 Shares each)
Original counter for trading in the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Wednesday,
in board lot of 20,000 Shares each becomes
10 December 2014
counter for trading in the Shares in board
lot of 35,000 Shares each
6
EXPECTED TIMETABLE
Event
(Hong Kong time)
Temporary counter for trading in the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Wednesday,
in board lot of 20,000 Shares each opens
10 December 2014
Designated brokers starts to stand in the . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Wednesday,
market to provide matching services
10 December 2014
for sale and purchase of odd lots of Shares
Expected date of despatch of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 11 December 2014
Documents
First day of dealings in the nil-paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 15 December 2014
Rights Shares
Latest time for splitting of the nil-paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Wednesday,
Rights Shares
17 December 2014
Last day of dealings in the nil-paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 22 December 2014
Rights Shares
Latest time for acceptance of and . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday,
payment for the Rights Shares
30 December 2014
Last day of parallel trading in the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 2 January 2015
(in board lot of 20,000 Shares each and
board lot of 35,000 Shares each)
Temporary counter for trading in the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday,
in board lot of 20,000 Shares each closes
2 January 2015
Designated brokers ceases to stand in the market . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday,
to provide matching services for sale and
2 January 2015
purchase of odd lots of shares
Last day for free exchange of existing share . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 6 January 2015
certificates in board lot of 20,000 Shares
each for new share certificates in board
lot of 35,000 Shares each
Latest time for the Rights Issue to . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 6 January 2015
become unconditional
Announcement of results of acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 7 January 2015
of the Rights Issue
7
EXPECTED TIMETABLE
Event
(Hong Kong time)
Certificates for the fully-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 8 January 2015
expected to be despatched on or before
Commencement of dealings in fully-paid . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 9 January 2015
Rights Shares
All times and dates in this circular refer to Hong Kong local times and dates. Dates or deadlines
specified in expected timetable above are indicative only and may be extended or varied by the Company.
Any changes to the expected timetable will be published or notified to the Shareholders as and when
appropriate.
EFFECT OF BAD WEATHER ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT
FOR THE RIGHTS SHARES
The latest time for acceptance of and payment for the Rights Shares will be postponed if there is:
•
a tropical cyclone warning signal number 8 or above, or
•
a “black” rainstorm warning
(i) in force in Hong Kong at any local time before 12:00 noon and no longer in force after
12:00 noon on Tuesday, 30 December 2014. Instead, the latest time for acceptance of
and payment for the Rights Shares will be extended to 5:00 p.m. on the same business
day;
(ii)
in force in Hong Kong at any local lime between 12:00 noon and 4:00 p.m. on
Tuesday, 30 December 2014. Instead, the latest time of acceptance of and payment
for the Rights Shares will be rescheduled to 4:00 p.m. on the following business day
which does not have either of those warnings in force at any time between 9:00 a.m.
and 4:00 p.m..
If the latest time for acceptance of and payment for the Rights Shares does not take place at the
Latest Time for Acceptance, the dates mentioned in the section headed “Expected Timetable” in this
circular may be affected. The Company will notify Shareholders by way of announcements on any change
to the expected timetable as soon as practicable.
8
TERMINATION OF THE UNDERWRITING AGREEMENT
If, prior to 4:00 p.m. on the Settlement Date:
(i)
(ii)
in the absolute opinion of the Underwriter, the success of the Rights Issue would be
materially and adversely affected by:
(a)
the introduction of any new law or regulation or any change in existing law or
regulation (or the judicial interpretation thereof) or other occurrence of any nature
whatsoever which may in the absolute opinion of the Underwriter materially and
adversely affect the business or the financial or trading position of the Group as a
whole or is materially adverse in the context of the Rights Issue; or
(b)
the occurrence of any local, national or international event or change (whether or
not forming part of a series of events or changes occurring or continuing before,
and/or after the date of the Underwriting Agreement) of a political, military, financial,
economic or other nature, or in the nature of any local, national or international
outbreak or escalation of hostilities or armed conflict, or affecting local securities
markets which may, in the absolute opinion of the Underwriter materially and
adversely affect the business or the financial or trading position or prospects of the
Group as a whole; or
(c)
any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion,
epidemic, terrorism, strike or lock-out which would, in the absolute opinion of the
Underwriter materially and adversely affect the business or the financial or trading
position or prospects of the Group as a whole; or
any material adverse change in market conditions (including without limitation, a change in
fiscal or monetary policy, or foreign exchange or currency markets, suspension or restriction
of trading in securities, and a change in currency conditions for the purpose of this clause
includes a change in the system under which the value of the Hong Kong currency is pegged
with that of the currency of the United States of America) occurs which in the absolute
opinion of the Underwriter makes it inexpedient or in advisable to proceed with the Rights
Issue; or
(iii) the Prospectus when published contains information (either as to business prospects or the
condition of the Group or as to its compliance with any laws or the GEM Listing Rules or
any applicable regulations) which has not prior to the date hereof been publicly announced
or published by the Company and which may in the absolute opinion of the Underwriter be
material to the Group as a whole upon completion of the Rights Issue and is likely to affect
materially and adversely the success of the Rights Issue,
the Underwriter shall be entitled by notice in writing to the Company, served prior to 4:00 p.m. on
the Settlement Date, to terminate the Underwriting Agreement.
The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if
prior to 4:00 p.m. on the Settlement Date any material breach of any of the representations, warranties or
undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter.
9
TERMINATION OF THE UNDERWRITING AGREEMENT
Any such notice shall be served by the Underwriter prior to 4:00 p.m. on the Settlement Date.
If prior to 4:00 p.m. on the Settlement Date, any such notice as referred to above is given by any of
the Underwriter, the obligations of all parties under the Underwriting Agreement shall terminate forthwith
and no party shall have any claim against any other party for costs, damages, compensation or otherwise
save for any antecedent breaches.
10
LETTER FROM THE BOARD
UNLIMITED CREATIVITY HOLDINGS LIMITED
無限創意控股有限公司
(Continued in Bermuda with limited liability)
(Stock Code: 8079)
Executive Directors:
Registered office:
Mr. Shiu Yeuk Yuen
Canon’s Court,
Mr. Leung Ge On Andy
22 Victoria Street,
Hamilton HM 12,
Independent non-executive Directors:Bermuda
Dr. Siu Yim Kwan, Sidney, S.B.St.J.
Mr. Kam Tik Lun, CPA, ACCA, LL.M (ICFL)
Head office and principal place of
Mr. Lau Gar Hung, Christopher, Bsc. in Mathematics Business in Hong Kong:
7th Floor
Zung Fu Industrial Building
1067 King’s Road
Quarry Bay, Hong Kong
10 November 2014
To the Shareholders,
Dear Sir or Madam,
PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE (5)
RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD
ON THE RECORD DATE AT HK$0.08 PER RIGHTS SHARE;
CHANGE IN BOARD LOT SIZE
AND
NOTICE OF SPECIAL GENERAL MEETING
INTRODUCTION
Reference is made to the Announcement in relation to, among other things, the proposed Rights
Issue and Change in Board Lot Size.
The Independent Board Committee has been formed to advise the Independent Shareholders in
respect of the Rights Issue, and the Independent Financial Adviser has been appointed to advise the
Independent Board Committee and the Independent Shareholders in this regard.
The purpose of this circular is to provide you, among other things, (i) further details of the
Rights Issue; (ii) a letter of recommendation from the Independent Board Committee to the Independent
Shareholders in respect of the Rights Issue; (iii) a letter of advice from the Independent Financial Adviser
to the Independent Board Committee and the Independent Shareholders on the Rights Issue; and (iv)
a notice of the SGM to be convened for the purpose of considering and, if thought fit, approving the
Underwriting Agreement, the Rights Issues and the transactions contemplated thereunder.
11
LETTER FROM THE BOARD
PROPOSED RIGHTS ISSUE
ISSUE STATISTICS
Basis of the Rights Issue
:
Five (5) Rights Shares for every two (2) existing
Shares held on the Record Date
Subscription Price
:
HK$0.08 per Rights Share
Number of Shares in issue
as at the Latest Practicable Date
:
629,198,155 Shares
Number of Rights Shares
:
1,572,995,385 Rights Shares (assuming no new
Share being issued and no Share being repurchased
by the Company on or before the Record Date)
Enlarged issued share capital of the Company upon
completion of the Rights Issue
:
2,202,193,540 Shares
Subject to the Irrevocable Undertakings and the terms and conditions of the Underwriting
Agreement, the Rights Issue will be fully underwritten by the Underwriter. As at the Latest Practicable
Date, the Company does not have any other derivatives, options, warrants and conversion rights or other
similar rights which are convertible or exchangeable into Shares.
Assuming that no new Share being issued and no Share being repurchased by the Company on or
before the Record Date, the total number of 1,572,995,385 Rights Shares represents:
(i)
250% of the Company’s existing issued share capital as at the Latest Practicable Date; and
(ii)
approximately 71.43% of the Company’s issued share capital as enlarged by the issue of the
Rights Shares.
Irrevocable Undertakings
As at the Latest Practicable Date, (i) Able Rich, which is wholly owned by Mr. Shiu, together
with Mr. Shiu are interested in 228,770,325 Shares; (ii) China 3D is interested in 80,854,500 Shares;
(iii) New Smart is interested in 5,155,500 Shares; (iv) Ms. Siu York Chee, who is the sister of Mr. Shiu,
is interested in 63,609 Shares; (v) Heavenly Blaze is interested in 127,140 Shares; and (vi) Mr. Leung
Ge On Andy, who is a Director, is interested in 63,000 Shares respectively. Pursuant to the Irrevocable
Undertakings, each of Able Rich, Mr. Shiu, China 3D, New Smart, Ms. Siu York Chee, Heavenly Blaze
and Mr. Leung Ge On Andy has irrevocably undertaken in favour of the Company and the Underwriter,
inter alia, that each of them will accept and pay for in full or procure the acceptance of and payment in full
by its associates or nominees for the Right Shares provisionally allotted to each of them under the Rights
Issue prior to the Latest Time for Acceptance.
Save as disclosed above, the Board had not received any information or irrevocable undertakings
from any Shareholder(s) of their intention to take up their assured entitlements under the Rights Issue.
12
LETTER FROM THE BOARD
Subscription Price
The Subscription Price of HK$0.08 per Rights Share is payable in full upon acceptance and on
application. The Subscription Price represents:
(i)
a discount of approximately 51.52% to the closing price of HK$0.165 per Share as quoted on
the Stock Exchange on the Last Trading Day;
(ii)
a discount of approximately 50.31% to the average closing price of approximately HK$0.161
per Share for the last five consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 23.08% to the theoretical ex-rights price of approximately
HK$0.104 per Share, calculated based on the closing price of HK$0.165 per Share as quoted
on the Stock Exchange on the Last Trading Day;
(iv)
a discount of approximately 37.98% to the closing price of HK$0.129 per Share as quoted on
the Stock Exchange on the Latest Practicable Date;
(v)
a discount of approximately 14.89% to the theoretical ex-rights price of approximately
HK$0.094 per Share based on the closing price of HK$0.129 per Share as quoted on the
Stock Exchange on the Latest Practicable Date; and
(vi) a discount of approximately 81.26% to the net asset value per Share of approximately
HK$0.427 based on the latest audited net asset value attributable to owners of the Company
as at 31 March 2014 of approximately HK$268.44 million and the number of Shares in issue
as at the Latest Practicable Date of 629,198,155 Shares.
Basis of determining the Subscription Price
The determination of the Subscription Price and subscription ratio was a commercial decision
made by the Company after arm’s length negotiation between the Company and the Underwriter with
reference to the prevailing market price of the Shares. After the completion of the Open Offer which
provided a good opportunity for the Company to expand its money lending business, the market price of
the Shares was on an ascending trend from February 2014 up to the date of the Announcement. In order
to increase the attractiveness of the Rights Issue, the Directors consider that the discount to the market
price of the Shares would encourage the Shareholders to participate in the Rights Issue and accordingly
maintain their shareholdings in the Company and participate in the future development of the Group. In
view of the prevailing market conditions of the capital market in Hong Kong and the benefits of the Rights
Issue as detailed in the paragraph headed “Reasons for and benefits of the Rights Issue and intended
use of proceeds” below, the Directors consider that the terms of the Rights Issue and the discount of the
Subscription Price are fair and reasonable and in the interests of the Group and the Shareholders as a
whole.
Qualifying Shareholders
The Rights Issue is only available to the Qualifying Shareholders. The Company will send (i) the
Prospectus Documents to the Qualifying Shareholders; and (ii) the Prospectus to the Non-Qualifying
Shareholders for information purposes only, but no PAL will be sent to the Non-Qualifying Shareholders.
13
LETTER FROM THE BOARD
To qualify for the Rights Issue, a Shareholder must:
(i)
be registered as a member of the Company at the close of business on the Record Date; and
(ii)
not be a Non-Qualifying Shareholder.
In order to be registered as members of the Company at the close of business on the Record Date,
owners of the Shares must lodge any transfers of the Shares (together with the relevant share certificates)
with the Registrar, being Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East,
Hong Kong for registration no later than 4:30 p.m. on Thursday, 4 December 2014. It is expected that the
last day of dealings in the Shares on a cum-right basis is Tuesday, 2 December 2014 and the Shares will
be dealt with on an ex-rights basis from Wednesday, 3 December 2014.
Investors whose Shares are held by their nominee(s) (including HKSCC) and who would like
to have their names registered on the register of members of the Company, must lodge all necessary
documents with the Registrar for completion of the relevant registration by 4:30 p.m. on Thursday,
4 December 2014.
Closure of Register of Member
The register of members of the Company will be closed from Friday, 5 December 2014 to Tuesday,
9 December 2014, both dates inclusive, to determine the eligibility of the Rights Issue. No transfer of
Shares will be registered during this period.
Rights of Overseas Shareholders
The Prospectus Documents are not intended to be registered under the applicable securities
legislation of any jurisdiction other than Hong Kong.
As at the Latest Practicable Date and according to the register of members of the Company, there
was one Overseas Shareholder with registered address located in Macau SAR. Based on the advices
provided by the legal advisers on the laws of Macau SAR, the offering of the Rights Shares by the
Company to its Shareholders with registered addresses in Macau SAR pursuant to the Rights Issue is
not subject to any regulatory requirements or procedures in Macau SAR. It would be lawful and will
not contravene laws of Macau SAR or regulation for the Company to offer the Rights Shares to those
Shareholders with registered addresses in Macau SAR, even though the Prospectus Documents will
not be registered in Macau SAR. Therefore, the Directors have decided to extend the Rights Issue to
such Overseas Shareholder with registered addresses located in Macau SAR as shown on the register of
members of the Company as at the Record Date. Accordingly, there was no Non-Qualifying Shareholder
as at the Latest Practicable Date.
In compliance with the necessary requirements of the GEM Listing Rules, the Company will
continue to make enquiries regarding the feasibility of extending the Rights Issue to the Overseas
Shareholders (if any). If, based on legal advice, the Directors consider that it is necessary or expedient not
to offer the Rights Shares to the Overseas Shareholders on account either of the legal restrictions under
the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in
that place, the Rights Issue will not be available to such Overseas Shareholders. Further information in
this connection will be set out in the Prospectus Documents containing, among other things, details of
the Rights Issue, to be despatched to the Qualifying Shareholders on the Posting Date. The Company will
send copies of the Prospectus to the Non-Qualifying Shareholders for their information only, but will not
send any PAL to them on the Posting Date.
14
LETTER FROM THE BOARD
Arrangements will be made for the Rights Shares which would otherwise have been provisionally
allotted to the Non-Qualifying Shareholders to be sold in the market in their nil-paid form as soon as
practicable after dealings in the nil-paid Rights Shares commence if a premium (net of expenses) can be
obtained. The proceeds of such sale, less expenses, of more than HK$100 will be paid pro rata to the NonQualifying Shareholders. The Company will retain individual amounts of HK$100 or less for the benefits
of the Company. Any unsold entitlement of the Non-Qualifying Shareholders, together with any Rights
Shares provisionally allotted but not accepted by the Qualifying Shareholders or otherwise not subscribed
for by transferees of nil-paid Rights Shares, will be taken up by the Underwriter.
Overseas Shareholders should note that they may or may not be entitled to the Rights Issue,
subject to the results of enquiries made by the Directors pursuant to Rule 17.41 of the GEM Listing
Rules. Accordingly, Overseas Shareholders should exercise caution when dealing in the Shares.
Basis of Provisional Allotment
The basis of the provisional allotment shall be five (5) Rights Shares for every two (2) existing
Shares held on the Record Date, being 1,572,995,385 Rights Shares (assuming no new Share being issued
and no Share being repurchased by the Company on or before the Record Date). Application for all or
any part of a Qualifying Shareholder’s provisional allotment should be made by completing the PAL and
lodging the same with a remittance for the Rights Shares being applied for by no later than the Latest
Time for Acceptance.
Fractions of Rights Shares (if any)
Fractional entitlements to the Rights Shares will not be issued to the Qualifying Shareholders but
will be aggregated and sold in the market in their nil-paid form as soon as practicable after dealings in
the nil-paid Rights Shares commence if a premium can be obtained. The net proceeds, after deduction
of related expenses arising from such sale, will be retained for the benefit of the Company. Any unsold
fractional entitlements to the Rights Shares will be taken up by the Underwriter.
No application for excess Rights Shares
After arm’s length negotiation with the Underwriter, the Board has decided that the Qualifying
Shareholders will not be entitled to subscribe for any Rights Shares in excess of their respective assured
entitlements. Given that each Qualifying Shareholder will be given equal and fair opportunity to
participate in the Rights Issue, the Board considers that it will put in additional effort and costs (estimated
to be HK$200,000 to HK$500,000) to administer the excess application procedures. Any Rights Shares
not taken up by the Qualifying Shareholders or otherwise not subscribed for by transferees of nil-paid
Rights Shares, and any unsold entitlements of the Non-Qualifying Shareholders will be taken up by the
Underwriter pursuant to the terms of the Underwriting Agreement. Shareholders and investors should
consult their professional advisers if they are in any doubt as to their status.
Status of the Rights Shares
The Rights Shares, when fully paid, allotted and issued, will rank pari passu in all respects among
themselves and with the existing Shares then in issue. Holders of fully-paid Rights Shares will be entitled
to receive all future dividends and distributions which are declared, made or paid after the date of the
allotment of the fully-paid Rights Shares.
15
LETTER FROM THE BOARD
Certificates of the Rights Shares
Subject to the fulfillment of the conditions of the Rights Issue, certificates for all fully-paid Rights
Shares are expected to be posted to those entitled thereto by ordinary post at their own risk on or before
Thursday, 8 January 2015.
Application for Listing
The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and
permission to deal in, the Rights Shares in both their nil-paid and fully-paid forms to be allotted and
issued pursuant to the Rights Issue.
No part of the securities of the Company is listed or dealt in or on which listing or permission to
deal is being or is proposed to be sought on any other stock exchange.
Subject to the granting of the listing of, and permission to deal in, the Rights Shares (in both
their nil-paid and fully-paid forms) on the Stock Exchange, the Rights Shares (in both their nil-paid and
fully-paid forms) will be accepted as eligible securities by HKSCC for deposit, clearance and settlement
in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in each of
their nil-paid and fully-paid forms on the Stock Exchange or such other dates as determined by HKSCC.
Settlement of transactions between participants of the Stock Exchange on any trading day is required
to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject
to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. The
Shareholders and investors should seek the advice of their stockbroker or other professional adviser for
details of those settlement arrangements and how such arrangements will affect their rights and interests.
All necessary arrangements will be made to enable the Rights Shares (in both their nil-paid and
fully-paid forms) to be admitted into CCASS.
Dealings in the Rights Shares in both their nil-paid and fully-paid forms (both in the proposed
new board lot size of 35,000 Shares each) which are registered in the branch register of members of
the Company in Hong Kong will be subject to the payment of stamp duty, Stock Exchange trading fee,
transaction levy, investor compensation levy or any other applicable fees and charges in Hong Kong.
Taxation
Qualifying Shareholders are recommended to consult their professional advisers if they are in any
doubt as to the tax implications of the subscription of, or holding or disposal of, or dealings in the Rights
Shares in both their nil-paid and fully-paid forms and, as regards the Non-Qualifying Shareholders (if
any), their receipt of the net proceeds of sale of the Rights Shares otherwise falling to be issued to them
under the Rights Issue under the laws of jurisdictions in which they are liable to taxation. It is emphasised
that none of the Company, the Directors or any other parties involved in the Rights Issue accepts
responsibility for any tax effects on, or liabilities of any person resulting from the subscription, purchase,
holding or disposal of, or dealing in the Rights Shares in both their nil-paid and fully-paid forms.
16
LETTER FROM THE BOARD
Conditions of the Rights Issue
The Rights Issue is conditional upon the following conditions being fulfilled or waived (as
appropriate):
(i)
the passing of all the necessary resolution(s) by the Board to approve the Underwriting
Agreement (including the Rights Issue and the transactions contemplated thereunder);
(ii)
the passing of the necessary resolutions(s) at the SGM to approve the Underwriting
Agreement and the Rights Issue and the transactions contemplated thereunder (including but
not limited to the allotment and issue of the Rights Shares) by the Independent Shareholders;
(iii) the delivery to the Stock Exchange for authorisation and the registration by and filing with
the Registrar of Companies in Hong Kong of one copy of each of the Prospectus Documents
and otherwise in accordance with the GEM Listing Rules and the Companies (Winding Up
and Miscellaneous Provisions) Ordinance not later than the Posting Date;
(iv)
the posting of copies of the Prospectus Documents to the Qualifying Shareholders;
(v)
compliance with and performance by the Company of certain undertakings and obligations
under the terms of the Underwriting Agreement;
(vi) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to
allotment) the listing of, and permission to deal in, the Rights Shares in their nil-paid and
fully-paid forms and such listings and permission to deal not having been withdrawn or
revoked by no later than the first day of their dealings on the Stock Exchange;
(vii) the Shares remaining listed on the Stock Exchange at all times prior to the Settlement Date
and the listing of the Shares not having been withdrawn or the trading of the Shares not
having been suspended for a consecutive period of more than 5 trading days;
(viii) the Underwriting Agreement not being terminated by the Underwriter pursuant to the terms
thereof; and
(ix) the compliance by the relevant Shareholders under the Irrevocable Undertakings given in
favour of the Company and the Underwriter from the date of the Irrevocable Undertakings up
to the Latest Time for Acceptance.
The conditions set out above (other than conditions (v) and (vii) which can only be waived by the
Underwriter in whole or in part) are incapable of being waived. In the event that the above conditions
(i), (ii), (iii) and (iv) have not been satisfied on or before the Posting Date or in the event that the above
conditions (v), (vi), (vii), (viii) and (ix) have not satisfied and/or waived by the Underwriter in whole or
in part (as the case may be) on or before 4:00 p.m. on the Settlement Date or such other time and date
as specified therein (or, in each case, such later date as the Underwriter and the Company may agree in
writing), the Underwriting Agreement shall terminate and all liabilities of the parties to the Underwriting
Agreement shall cease and determine and neither party shall have any claim against the other, save for any
antecedent breaches.
As at the Latest Practicable Date, condition (i) above has been fulfilled.
17
LETTER FROM THE BOARD
Underwriting Agreement
Date
:
10 October 2014 (after trading hours)
Underwriter
:
Kingston Securities Limited
Total number of Rights Shares
:
1,572,995,385 Rights Shares (assuming no new
Share being issued and no Share being repurchased
by the Company on or before the Record Date)
Total number of :
Underwritten Shares
785,410,205 Rights Shares (having taken into
account the Irrevocable Undertakings and on
the basis that no new Share being issued, and no
Share being repurchased, on or before the Record
Date), being the total number of Rights Shares less
787,585,180 Rights Shares that Able Rich, Mr. Shiu,
China 3D, New Smart, Ms. Siu York Chee, Heavenly
Blaze and Mr. Leung Ge On Andy have undertaken
to will accept and pay for in full or procure the
acceptance of and payment in full by its associates or
nominees pursuant to the Irrevocable Undertakings.
Underwriting commission
Payable by the Company to the Underwriter at 2.5%
of the aggregate Subscription Price in respect of the
Underwritten Shares. The commission rates were
determined after arms’ length negotiations between
the Company and the Underwriter with reference to,
among other things, the scale of the Rights Issue and
the market rate, and the Board considers (excluding
the independent non-executive Directors who will
give their view on the Rights Issue after taking into
account the advice of the independent financial
adviser) that the underwriting commission rate is fair
and reasonable and in the interests of the Company
and the Shareholders as a whole.
:
Pursuant to the Underwriting Agreement, the Underwriter shall not subscribe, for its own account,
for such number of Untaken Shares which will result in the shareholding of it and parties acting in
concert (within the meaning of the Takeovers Code) with it in the Company to exceed 19.9% of the
voting rights of the Company upon the completion of the Rights Issue. The Underwriter shall also use its
best endeavours to ensure that each of the subscribers or sub-underwriter(s) of the Underwritten Shares
procured by it (i) shall be an Independent Third Party and, not acting in concert (within the meaning of
the Takeovers Code) with and not connected with the Company, any of the Directors or chief executive of
the Company or substantial Shareholders or their respective associates; and (ii) save for the Underwriter
itself and its associates, shall not, together with any party acting in concert (within the meaning of the
Takeovers Code) with it, hold 10.0% or more of the voting rights of the Company upon completion of the
Rights Issue.
18
LETTER FROM THE BOARD
On 7 November 2014, the Underwriter has entered into sub-underwriting agreements/subscription
agreements with four sub-underwriters/subscribers to sub-underwrite/subscribe for an aggregate of
350,000,000 Underwritten Shares (representing approximately 15.89% of the enlarged share capital of
the Company immediately after completion of the Rights Issue (the “Enlarged Capital”)). The four subunderwriters/subscribers are Independent Third Parties and not acting in concert (within the meaning of
the Takeovers Code) with and not connected with the Company, any of the Directors or chief executive
of the Company or substantial Shareholders or their respective associates. Of the four sub-underwriters/
subscribers, three of which have each procured to subscribe for 100,000,000 Underwritten Shares (each
representing approximately 4.54% of the Enlarged Capital) and the remaining one of which has procured
to subscribe for 50,000,000 Underwritten Shares (representing approximately 2.27% of the Enlarged
Capital).
According to the sub-underwriting arrangements above, it is expected that none of the subunderwriters/subscribers will become a substantial Shareholder immediately after the completion of
the Rights Issue. In the event any of the sub-underwriters/subscribers above becomes a substantial
Shareholder after completion of the Rights Issue, further announcement will be made by the Company.
Termination of the Underwriting Agreement
If, prior to 4:00 p.m. on the Settlement Date:
(i)
in the absolute opinion of the Underwriter, the success of the Rights Issue would be
materially and adversely affected by:
(a)
the introduction of any new law or regulation or any change in existing law or
regulation (or the judicial interpretation thereof) or other occurrence of any nature
whatsoever which may in the absolute opinion of the Underwriter materially and
adversely affect the business or the financial or trading position of the Group as a
whole or is materially adverse in the context of the Rights Issue; or
(b)
the occurrence of any local, national or international event or change (whether or
not forming part of a series of events or changes occurring or continuing before,
and/or after the date of the Underwriting Agreement) of a political, military, financial,
economic or other nature, or in the nature of any local, national or international
outbreak or escalation of hostilities or armed conflict, or affecting local securities
markets which may, in the absolute opinion of the Underwriter materially and
adversely affect the business or the financial or trading position or prospects of the
Group as a whole; or
(c)
any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion,
epidemic, terrorism, strike or lock-out which would, in the absolute opinion of the
Underwriter materially and adversely affect the business or the financial or trading
position or prospects of the Group as a whole; or
19
LETTER FROM THE BOARD
(ii)
any material adverse change in market conditions (including without limitation, a change in
fiscal or monetary policy, or foreign exchange or currency markets, suspension or restriction
of trading in securities, and a change in currency conditions for the purpose of this clause
includes a change in the system under which the value of the Hong Kong currency is pegged
with that of the currency of the United States of America) occurs which in the absolute
opinion of the Underwriter makes it inexpedient or in advisable to proceed with the Rights
Issue; or
(iii) the Prospectus when published contains information (either as to business prospects or the
condition of the Group or as to its compliance with any laws or the GEM Listing Rules or
any applicable regulations) which has not prior to the date hereof been publicly announced
or published by the Company and which may in the absolute opinion of the Underwriter be
material to the Group as a whole upon completion of the Rights Issue and is likely to affect
materially and adversely the success of the Rights Issue,
the Underwriter shall be entitled by notice in writing to the Company, served prior to 4:00 p.m. on
the Settlement Date, to terminate the Underwriting Agreement.
The Underwriter shall be entitled by notice in writing to rescind the Underwriting Agreement if
prior to 4:00 p.m. on the Settlement Date any material breach of any of the representations, warranties or
undertakings contained in the Underwriting Agreement comes to the knowledge of the Underwriter.
Any such notice shall be served by the Underwriter prior to 4:00 p.m. on the Settlement Date.
If prior to 4:00 p.m. on the Settlement Date, any such notice as referred to above is given by any of
the Underwriter, the obligations of all parties under the Underwriting Agreement shall terminate forthwith
and no party shall have any claim against any other party for costs, damages, compensation or otherwise
save for any antecedent breaches.
20
LETTER FROM THE BOARD
Shareholding structure of the Company in respect of the Rights Issue
Set out below is the shareholding structure of the Company immediately before and after
completion of the Rights Issue (Assuming there is no new Share being issued and no Share being
repurchased by the Company on or before the Record Date):
Immediately after completion of the Rights Issue
Assuming no Qualifying
Shareholders take up
Assuming all Qualifying
their respective entitlements
Shareholders take up
under the Rights Issue
As at the Latest
their respective entitlements
(save for those under
Shareholders
Practicable Date
under the Rights Issue
the Irrevocable Undertakings)
No. of Shares
Approx. %
No. of Shares
Approx. %
No. of Shares
Approx. %
Mr. Shiu and/or Able Rich (Note 1)
228,770,325
36.36800,696,135
36.36800,696,135
36.36
China 3D (Note 2)
80,854,500
12.85282,990,750
12.85282,990,750
12.85
New Smart (Note 3)
5,155,500
0.8218,044,250
0.8218,044,250
0.82
Heavenly Blaze (Note 4)
127,140 0.02444,990 0.02444,990 0.02
Ms. Siu York Chee (Note 5) 63,609 0.01222,629 0.01222,629 0.01
Mr. Leung Kwok Kui (Note 6) 20.00 70.00 20.00
Mr. Siu Yeuk Bik, Amy (Note 7) 270.00 920.00 270.00
Ms. Hau Lai Mei (Note 8)
160.00 560.00 160.00
Mr. Leung Ge On Andy (Note 9)
63,000 0.01220,500 0.01220,500 0.01
Underwriter and sub-underwriters/
subscribers procured by the
Underwriter (Note 10)
10.00 10.00
785,410,20635.66
Other public Shareholders
314,164,035
49.93
1,099,574,130
49.93
314,164,035
14.27
Total
629,198,155
100.002,202,193,540
100.002,202,193,540
100.00
Notes:
1.
Able Rich is wholly-owned by Rich Treasure, of which Mr. Shiu is the sole director and shareholder holding it on
trust for certain family members. Mr. Shiu is an executive Director and the chairman of the Company. For ease of
reference, the shareholding of Able Rich and Mr. Shiu are consolidated together for reference.
2.
China 3D is owned as to approximately 3.38% by the Company and approximately 0.03% by Shiu Stephen Junior,
the son of Mr. Shiu.
3.
New Smart is a wholly-owned subsidiary of China 3D.
4.
Heavenly Blaze is beneficially owned as to (i) 50% by Mr. Shiu Stephen Junior, son of Mr. Shiu and (ii) 50% by
Ms. Chen Min, spouse of Mr. Shiu Stephen Junior.
5.
Ms. Siu York Chee is the sister of Mr. Shiu and the director of certain subsidiaries of the Company.
6.
Mr. Leung Kwok Kui is the spouse of Ms. Siu York Chee, brother-in-law of Mr. Shiu, and the director of certain
subsidiaries of the Company.
7.
Ms. Siu Yeuk Bik, Amy is the sister of Mr. Shiu.
21
LETTER FROM THE BOARD
8.
Ms. Hau Lai Mei is the spouse of Mr. Shiu.
9.
Mr. Leung Ge On Andy is an executive Director.
10.
Pursuant to the Underwriting Agreement, the Underwriter shall not subscribe, for its own account, for such number
of Untaken Shares which will result in the shareholding of it and parties acting in concert (within the meaning of the
Takeovers Code) with it in the Company to exceed 19.9% of the voting rights of the Company upon the completion
of the Rights Issue. The Underwriter shall also use its best endeavours to ensure that each of the subscribers or subunderwriter(s) of the Underwritten Shares procured by it (i) shall be an Independent Third Party of, not acting in
concert (within the meaning of the Takeovers Code) with and not connected with the Company, any of the Directors
or chief executive of the Company or substantial Shareholders or their respective associates; and (ii) save for the
Underwriter itself and its associates, shall not, together with any party acting in concert (within the meaning of the
Takeovers Code) with it, hold 10.0% or more of the voting rights of the Company upon completion of the Rights
Issue.
On 7 November 2014, the Underwriter has entered into sub-underwriting agreements/subscription agreements with
four sub-underwriters/subscribers to sub-underwrite/subscribe for an aggregate of 350,000,000 Underwritten Shares
(representing approximately 15.89% of the enlarged share capital of the Company immediately after completion of
the Rights Issue (the “Enlarged Capital”)). The four sub-underwriters/subscribers are Independent Third Parties
and not acting in concert (within the meaning of the Takeovers Code) with and not connected with the Company,
any of the Directors or chief executive of the Company or substantial Shareholders or their respective associates. Of
the four sub-underwriters/subscribers, three of which have each procured to subscribe for 100,000,000 Underwritten
Shares (each representing approximately 4.54% of the Enlarged Capital) and the remaining one of which has
procured to subscribe for 50,000,000 Underwritten Shares (representing approximately 2.27% of the Enlarged
Capital).
According to the sub-underwriting arrangements above, it is expected that none of the sub-underwriters/subscribers
will become a substantial Shareholder immediately after the completion of the Rights Issue. In the event any of the
sub-underwriters/subscribers above becomes a substantial Shareholder after completion of the Rights Issue, further
announcement will be made by the Company.
WARNING OF THE RISKS OF DEALING IN THE SHARES AND THE NIL-PAID RIGHTS
SHARES
Shareholders and potential investors should note that the Rights Issue are conditional upon the
Underwriting Agreement having become unconditional and the Underwriter not having terminated
the Underwriting Agreement in accordance with the terms thereof. Accordingly, the Rights Issue
may or may not proceed.
The Shares will be dealt in on an ex-rights basis from Wednesday, 3 December 2014. Dealings in
the Rights Shares in the nil-paid form will take place from Monday, 15 December 2014 to Monday,
22 December 2014 (both dates inclusive). If the conditions of the Rights Issue are not fulfilled or
the Underwriting Agreement is terminated, the Rights Issue will not proceed. Any Shareholders
or other persons contemplating selling or purchasing Shares and/or Rights Shares in their nilpaid form who are in any doubt about their position are recommended to consult their professional
advisers. Any Shareholders or other persons dealing in Shares up to the date on which all the
conditions to which the Rights Issue is subject are fulfilled (and the date on which the Underwriter’s
right of termination of the Underwriting Agreement ceases) and any persons dealing in the nilpaid Rights Shares during the period from Monday, 15 December 2014 to Monday, 22 December
2014 (both dates inclusive) will accordingly bear the risk that the Rights Issue may not become
unconditional and may not proceed.
22
LETTER FROM THE BOARD
REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND INTENDED USE OF PROCEEDS
After actively participating in the money lending business for more than two years, the company
has built a solid client base of more than 1,000 clients. For the financial year ended 31 March 2014,
the turnover for the money lending business of the Company was approximately HK$33.3 million,
representing an increase of approximately 57.3% when compared with the continuing operations in 2013.
After the completion of the Open Offer, the Company used part of the proceeds from the Open
Offer for expanding its money lending business. As the money lending business continues to show
satisfactory turnover and profit to the Group, the Company intends to further expand its money lending
business. As disclosed in the annual report of the Company for the year ended 31 March 2014, the
cash and cash equivalent of the Group as at 31 March 2014 was approximately HK$11.6 million and
the average net cash used in operation activities was approximately HK$9.0 million per month (based
on the net cash used in operating activities of approximately HK$108.6 million for the year ended 31
March 2014). To expand the money lending business by increasing the amount of loans and advances
to customers to generate more loan interests, sufficient cash resources is required. Having considered
the cash position of the Company, the Directors are of the view that additional funding is necessary so
as to maintain a reasonable cash and bank balance for the healthy operation of the Company and not to
limit the expansion of its money lending business. The Board considers that the Rights Issue represents
an opportunity for the Company to develop its money lending business and enhance its working capital.
In addition to the money lending business, the Company also intends to put more efforts on its retail
business and/or medicine store, such as promotion, advertising, acquiring or setting up one or two retail
stores. As at the Latest Practicable Date, the Group was still identifying suitable location(s) or acquisition
opportunities for the said retail stores and no suitable location has been found yet. In the event that the
Group could not identify any suitable location to expand its retail business and/or medicine store, the
proceeds reserved for the development of retail business and/or medicine store will be allocated to the
money lending business.
The Board has also considered other fund raising alternatives before resolving to the Rights Issue,
including but not limited to bank borrowings and share placement. In the view that borrowings would
result in additional interest burden and higher gearing ratio of the Group; and share placement may
necessarily dilute the shareholding in the Company of the existing Shareholders, the Board considers
raising funds by way of the Rights Issue is more cost effective and efficient. The Board is aware of
the absence of arrangement for excess application, the dilution impact of the Rights Issue and also
the aggregate dilution impact after taking into account of the completion of the Open Offer. Having
considered that (i) the Rights Issue can provide an opportunity for the Company to further expand its
money lending business which satisfactory turnovers were continuously recorded; (ii) all the Qualifying
Shareholders are offered an equal opportunity to participate in the enlargement of the capital base of the
Company; and (iii) the Rights Issue enables the Qualifying Shareholders to maintain their proportionate
interests in the Company and continue to participate in the future development of the Company should
they wish to do so, the Board is of the view that the Right Issue is fair and reasonable and in the best
interests of the Company and its Shareholders as a whole. However, those Qualifying Shareholders who
do not take up the Rights Shares to which they are entitled should note that their shareholdings in the
Company will be diluted.
23
LETTER FROM THE BOARD
The net proceeds from the Rights Issue are expected to be approximately HK$123.1 million
(assuming no new Share being issued and no Share being repurchased by the Company on or before
the Record Date), which will be used as to (i) approximately HK$74.1 million for expanding its money
lending business; (ii) as to approximately HK$29 million for expanding its retail business and/or medicine
store; and (iii) the remaining of approximately HK$20 million for general working capital of the Group.
The usage of the general working capital includes the administrative expenses (such as salaries, office
rentals and professional fees, etc.) in a total of approximately HK$2 million per month.
BUSINESS REVIEW AND TRADING PROSPECT OF THE GROUP
The Company is principally engaged in money lending business, property investment, financial
instruments, retail business, medicine store and quoted shares investment in Hong Kong.
As mentioned in the annual report of the Company for the year ended 31 March 2014, the Group
recorded a turnover of approximately HK$37.9 million, representing an increase of approximately 64.7%
when compared with the continuing operations in last year. Loss attributable to owners of the Company
for the year ended 31 March 2014 was approximately HK$12.3 million, representing a decrease of
approximately 65.1% when compared with the financial year 2013. The total assets and liabilities of the
Group as at 31 March 2014 was approximately HK$290 million and HK$21.8 million respectively. The
cash and cash equivalent of the Group as at 31 March 2014 was approximately HK$11.6 million.
Among the four business segments of the Group, namely money lending business, property
investment, securities and bonds investment and retail business, money lending business continues to
provide the largest contribution of approximately HK$33.3 million to the total turnover of the Group. The
profit from this segment for the two years ended 31 March 2014 and 2013 are approximately HK$14.7
million and HK$11.5 million respectively. The total amount of loans and advances to customers for the
two years ended 31 March 2014 and 2013 are approximately HK$208.0 million and HK$110.8 million
respectively. The default rate (calculated based on the total bad debts and the total amount of loans and
advances to customers during the financial year) for the two years ended 31 March 2014 and 2013 are
approximately 1.13% and 6.37% respectively. With a wide solid client base, a satisfactory profit was also
brought from this segment. In March 2013, one of the group’s subsidiaries became a TransUnion member,
who enables the company to obtain credit report in accordance with the Code of Practice on Consumer
Credit Data issued by the Office of the Privacy Commissioner for Personal Data, Hong Kong. By virtues
of the report, it enables the Company to make informed, reliable and objective decisions so as to approve
loans efficiently, staying informed about our clients’ credit status as well as alerting signs of potential
fraud. As money lending business was proved to bring to the Group satisfactory turnover and profit, the
Group will continue actively develop this business. The Company intends to expand this business segment
by continuing to provide loans to corporate and individual customers such as car loans and mortgage
loans. Customers of this segment are principally sourced from cold calls to customers by consultant
agents, walk-in customers and advertising via various websites, etc.
For the property investment business, the rental income generated from the investment properties
continued providing steady income to the Group. The turnover of this business segment for the year ended
31 March 2014 was approximately HK$0.7 million, representing an increase of approximately 28.4%
when compared with the financial year 2013. Forward looking, in view of the land supply continues to be
scarce in Hong Kong, the Company continues to be optimistic about the property market in Hong Kong
and believes that this business segment will continue to provide revenue and benefits in the long-term to
the Group and the Shareholders as a whole.
24
LETTER FROM THE BOARD
For securities and bonds investments, an amount of approximately HK$12.9 million has been
recorded as loss reclassified from equity to profit or loss upon disposal of available for sale financial
assets. In view of the volatility of the global economic environment, driven by the European sovereign
debt crises and the economic downturn in the United States continues in the financial year 2014, the
Company will take more conservative step to invest in securities and bonds investment. The Company will
also continue to closely monitor the relevant risk and control. Focus will be placed on corporate bonds
with good credit rating. The investments will be held for short-to-medium term trading purpose.
For the retail business of the Group, the turnover of this segment for the year ended 31 March
2014 was approximately HK$3.9 million, being 197.7% increased from 2013. The Group will continue to
monitor the operation and develop new market in order to increase the turnover and market share.
The Group will continue to look for ways to further improve its existing business and explore new
investment opportunities to broaden the business scope of the Group with the ultimate goal to maximise
the return to Shareholders.
RISK FACTORS
Shareholders and prospective investors should be aware that the Group is exposed to certain degree
of potential risks which include, but are not limited to, the followings:
Credit risk in money lending business
Credit risk refers to the risk that the borrowers or counterparties may default on their payment
obligations due to the Group. These obligations arise from the Group’s lending and investment activities.
Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial
assets as shown on the face of the statement of financial positions in the annual report of the Company
for the year ended 31 March 2014. The Company mainly provides mortgage loans and personal loans
to customers. Securities are required for all mortgage loans and some of the personal loans which are
considered based on the amount of loan and the credit history of customers. None of the financial assets of
the Group are secured by collateral or other credit enhancements except for loans and advances.
In order to minimize the credit risk, the Group has established policies and systems for the
monitoring and control of credit risk. The management has delegated different divisions responsible for
determination of credit limits, credit approvals and other monitoring processes to ensure that followup action is taken to recover overdue debts. In addition, management reviews the recoverable amount of
loans and advances individually and collectively at each reporting date to ensure that adequate provision
for impairment are made for irrecoverable amounts.
Moreover, one of the Group’s subsidiaries became a TransUnion member, who enables the
company to obtain credit report in accordance with the Code of Practice on Consumer Credit Data issued
by the Office of the Privacy Commissioner for Personal Data, Hong Kong. By virtues of the report, it
enables the Company to make informed, reliable and objective decisions so as to approve loans efficiently,
staying informed about our clients’ credit status as well as alerting signs of potential fraud. In this regard,
management considers that the Group’s credit risk is significantly reduced.
25
LETTER FROM THE BOARD
Risk relating to competition in the retail business and medicine store
The retail business and medicine store are under vigorous competition throughout Hong Kong.
Increased competition could result in price reduction, reduced profit margins and loss of market share, any
of which could adversely affect the Group’s operation results.
In addition, the capital expenditure, economical changes in the business, additional costs to be
incurred for the contingency plans, foreseeable changes in the customer base and the market requirement
in the products, market competitors, possible political, cultural or environmental changes and any possible
changing elements. In the event that the Group’s management is unable to manage the aforesaid, the
Group’s profitability might be adversely affected.
The Company will continue to source goods from various suppliers at reasonable cost and keep the
competitiveness of its retail and medicine stores by increasing the types of goods and selling the goods at
a more attractive price according to the prevailing market conditions.
The Group depends on its key executives and personnel
The money-lending business, retail business and operation of medicine store are a people-oriented
business with a strong emphasis attached to the capability and efforts of the management team. The
Group’s performance depends, to a significant extent, on the continued service of its key executive
personnel who provide expertise and client network to the Group. If the Group is unable to attract, retain
and motivate the necessary executive personnel, the Group’s business, operation and financial conditions
may be adversely affected. To retain good employees in the Group as well as to hire potential talents, the
Group will continue to review the remuneration packages of the employees based on their qualification
and experience and the prevailing market conditions.
FUND RAISING ACTIVITIES OF THE COMPANY IN THE PAST TWELVE MONTHS
Save as disclosed below, the Company has not conducted any other fund raising exercise in the past
twelve months immediately prior to the date of the Announcement.
Date of initial
announcement
Event
Net proceeds
Intended use of net proceeds
22 November 2013
Open Offer
Approximately
HK$48.3 million
(i) As to approximately HK$38.7 million for
expanding its money lending business; and
(ii) the remaining of approximately HK$9.6
million for general working capital and/or
for the development of the Group’s
business.
26
Actual use of net
proceeds as at the
Latest Practicable Date
Used as intended as to (i)
approximately HK$38.7
million for expanding its
money lending business;
and (ii) the remaining of
approximately HK$9.6
million for general
working capital
LETTER FROM THE BOARD
IMPLICATIONS UNDER THE GEM LISTING RULES
In accordance with Rule 10.29(1) of the GEM Listing Rules, the Rights Issue must be made
conditional on approval by Independent Shareholders by way of poll at the SGM on which any controlling
Shareholders (as defined in the GEM Listing Rules) and their associates or, where there are no controlling
Shareholders, the Directors (excluding independent non-executive Directors) and the chief executive of
the Company and their respective associates shall abstain from voting in favour of the Rights Issue. As
at the Latest Practicable Date, Able Rich, which is wholly owned by Mr. Shiu, together with Mr. Shiu
are interested in 228,770,325 Shares, representing approximately 36.36% of the issued share capital
of the Company, hence a controlling Shareholder. Able Rich and Mr. Shiu (as an executive Director
and the chairman of the Company), and their respective associates will therefore be required to abstain
from voting in favour of the resolution(s) approving the Rights Issue and the transactions contemplated
thereunder at the SGM.
Save as disclosed above, as at the Latest Practicable Date, none of the Shareholders are required to
abstain from voting on the resolutions relating the Rights Issue at the SGM.
PROPOSED CHANGE IN BOARD LOT SIZE
The Board proposes that, subject to the approval of the Rights Issue by the Independent
Shareholders at the SGM, the board lot size of the Shares for trading on the Stock Exchange will be
changed from 20,000 Shares to 35,000 Shares with effect from 9:00 a.m. on Wednesday, 10 December
2014. The change in board lot size will not result in any change in the relative rights of the Shareholders.
The Board is of the opinion that the change in board lot size is in the interests of the Company and its
Shareholders as a whole.
Based on the theoretical ex-rights price of approximately HK$0.094 per Share (calculated based on
the closing price of HK$0.129 per Share as quoted on the Stock Exchange on the Latest Practicable Date),
the market value of each existing board lot is HK$1,880 and the estimated market value of each proposed
new board lot is HK$3,290.
To alleviate the difficulties in trading odd lots of the Shares arising from the change in board
lot size of the Shares, the Company has appointed Kingston Securities Limited as an agent to provide
matching services to the Shareholders who wish to top up or sell their holdings of odd lots of the Shares
during the period from 9:00 a.m. on Wednesday, 10 December 2014 to 4:00 p.m. on Friday, 2 January
2015 (both dates inclusive). Holders of the Shares in odd lots represented by the existing share certificates
for the Shares who wish to take advantage of this facility either to dispose of their odd lots of the Shares
or to top up their odd lots to a full new board lot may directly or through their broker contact Ms. Rosita
Kiu of Kingston Securities Limited at Suite 2801, 28th Floor, One International Finance Centre, 1
Harbour View Street, Central, Hong Kong (telephone: (852) 2298 6215 and facsimile: (852) 2295 0682)
during such period. Holders of the Shares in odd lots should note that successful matching of the sale and
purchase of odd lots of the Shares is not guaranteed. The Shareholders are recommended to consult their
professional advisers if they are in doubt about the above facility.
27
LETTER FROM THE BOARD
Shareholders may submit their existing share certificates of Shares in existing board lot(s) of
20,000 Shares (in brown colour) (the “Existing Share Certificates”) to the Registrar during the period
between Wednesday, 26 November 2014 and Tuesday, 6 January 2015 to exchange, at the expense of the
Company, for new share certificates of the Shares in new board lot(s) of 35,000 Shares (in red colour) (the
“New Share Certificates”). Thereafter, Existing Share Certificates will be accepted for exchange only
on payment of a fee of HK$2.50 (or such other amount as may from time to time be allowed by the Stock
Exchange) for each New Share Certificate or each Existing Share Certificate submitted for cancellation,
whichever the number of certificates involved is higher. The Existing Share Certificates will continue to
be good evidence of legal title and valid for delivery, trading and settlement purposes.
Subject to the approval of the Rights Issue by the Independent Shareholders at the SGM, with effect
from 9:00 a.m. on Wednesday, 10 December 2014, the Shares (including the Rights Shares to be issued
under the Rights Issue) will be traded in board lot of 35,000 Shares and any new certificate of the Shares
will be issued in new board lot size of 35,000 Shares (except for odd lots or where the Shareholder(s)
otherwise instruct(s)). Save and except for the change in the number of Shares for each board lot and
the colour of the certificates, New Share Certificates will have the same format as the Existing Share
Certificates.
GENERAL
The Independent Board Committee comprising Dr. Siu Yim Kwan, Sidney, Mr. Kam Tik Lun
and Mr. Lau Gar Hung, Christopher has been formed to make recommendations to the Independent
Shareholders in respect of the Rights Issue. An Independent Financial Adviser has been appointed to
advise the Independent Board Committee and the Independent Shareholders in this regard.
SGM
The notice convening the SGM is set out on pages 67 to 69 of this circular. The SGM will be
convened at 7/F., Zung Fu Industrial Building, 1067 King’s Road, Quarry Bay, Kong Kong on Tuesday,
25 November 2014 for the purpose of, considering and, if thought fit, approving the Rights Issue and the
transactions contemplated under the Underwriting Agreement.
A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the SGM
in person, please complete the accompanying form of proxy in accordance with the instructions printed
thereon and return the same to the Company’s branch share registrar, Tricor Standard Limited at Level 22,
Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not less than
48 hours before the time appointed for the holding of the SGM. Completion and return of a form of proxy
will not preclude you from attending and voting in person at the SGM or any adjournment thereof should
you so wish.
28
LETTER FROM THE BOARD
RECOMMENDATION
You are advised to read carefully the letter from the Independent Board Committee and the letter
from the Independent Financial Adviser set out on page 30 and pages 31 to 50 respectively of this circular.
The Independent Board Committee, having taken into account the advice of the Independent
Financial Adviser, considers that the terms of the Rights Issue are fair and reasonable so far as the
Independent Shareholders are concerned and the Rights Issue are in the interests of the Company and the
Shareholders as a whole. Accordingly, the Independent Board Committee recommends the Independent
Shareholders to vote in favour of the proposed resolution approving the Rights Issue at the SGM.
Accordingly, the Directors believe that the terms of the Rights Issue are fair and reasonable and
in the interests of the Group and the Shareholders as a whole, therefore, the Directors recommend the
Independent Shareholders to vote in favour of the proposed resolution approving the Rights Issue at the
SGM.
ADDITIONAL INFORMATION
Your attention is drawn to the additional information set out in the appendix to this circular. In case
of any inconsistency between the English and Chinese versions of this circular, the English version will
prevail.
By order of the Board
Unlimited Creativity Holdings Limited
Shiu Yuek Yuen
Chairman
29
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
UNLIMITED CREATIVITY HOLDINGS LIMITED
無限創意控股有限公司
(Continued in Bermuda with limited liability)
(Stock Code: 8079)
10 November 2014
To the Independent Shareholders,
Dear Sir or Madam,
PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE (5)
RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD
ON THE RECORD DATE AT HK$0.08 PER RIGHTS SHARE
We refer to the circular of the Company dated 10 November 2014 of which this letter forms part.
Unless the context specifies otherwise, capitalized terms used herein have the same meanings as defined
in this circular.
We have been appointed by the Company as the Independent Board Committee to advise the
Independent Shareholders as to whether the terms of the Rights Issue are fair and reasonable insofar as the
Independent Shareholders are concerned. The Independent Financial Adviser has been appointed to advise
the Independent Shareholders and the Independent Board Committee in this respect.
Having taken into account the principal reasons and factors considered by, and the advice of the
Independent Financial Adviser as set out in its letter of advice to the Independent Shareholders and the
Independent Board Committee on pages 31 to 50 of this circular, we are of the opinion that the Rights
Issue are in the interests of the Company and the Shareholders as a whole and the terms of the Rights
Issue are fair and reasonable insofar as the Company and the Shareholders are concerned. Accordingly, we
recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the
SGM to approve the Rights Issue.
Yours faithfully,
For and on behalf of
the Independent Board Committee
Independent Non-executive Directors
Dr. Siu Yim Kwan, Sidney
Mr. Kam Tik Lun
Mr. Lau Gar Hung, Christopher
30
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
The following is the text of the letter of advice to the Independent Board Committee and the
Independent Shareholders from Nuada Limited dated 10 November 2014 in relation to the Rights Issue for
the purpose of inclusion in this circular.
Nuada Limited
Unit 1805-08,
18/F, New18/F
Victory House
Unit 1805-08,
OfficePlus
@Sheung Wan
93-103 Wing
Lok Street
93-103
Wing
Lok Street
Sheung Wan,
Hong
Kong
Sheung
Wan,
Hong
Kong
香港上環永樂街93-103號
香港上環永樂街93-103號
樹福商業大廈18樓1805-08室
協成行上環中心18樓1805-08室
Corporate Finance Advisory
10 November 2014
To the Independent Board Committee
and the Independent Shareholders of
Unlimited Creativity Holdings Limited
Dear Sirs,
PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE (5)
RIGHTS SHARES FOR EVERY TWO (2) EXISTING SHARES HELD
ON THE RECORD DATE AT HK$0.08 PER RIGHTS SHARE
INTRODUCTION
We refer to our appointment to advise the Independent Board Committee and the Independent
Shareholders in respect of the terms of the Rights Issue, details of which are set out in the section
headed “Letter from the Board” (the “Letter”) in the Company’s circular dated 10 November 2014 (the
“Circular”) to the Shareholders, of which this letter forms part. Our appointment as the Independent
Financial Adviser has been approved by the Independent Board Committee. Terms used in this letter shall
have the same meanings as defined in the Circular unless the context requires otherwise.
On 10 October 2014, the Company announced, among other things, that it proposed to raise
approximately HK$125.8 million, before expenses, by issuing 1,572,995,385 Rights Shares to the
Qualifying Shareholders at the subscription price of HK$0.08 per Rights Share. The nil-paid Rights Shares
will be provisionally allotted to the Qualifying Shareholders on the basis of five (5) Rights Shares for
every two (2) existing Shares held on the Record Date. Qualifying Shareholders are not entitled to apply
for any Rights Shares not taken up in excess of their respective entitlements under the Rights Issue.
As the Rights Issue will result in an increase in Company’s issued share capital by more than 50%,
pursuant to Rule 10.29(1) of the GEM Listing Rules, the Rights Issue is conditional on, among other
things, the approval by the Shareholders at the SGM on which any controlling Shareholders and their
associates or, where there are no controlling Shareholders, the Directors (excluding the independent nonexecutive Directors) and the chief executive of the Company and their respective associates shall abstain
from voting in favour of the Rights Issue.
31
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As at the Latest Practicable Date, Able Rich, which is wholly owned by Mr. Shiu, together with Mr.
Shiu are interested in 228,770,325 Shares, representing approximately 36.36% of the issued share capital
of the Company, hence a controlling Shareholder. Able Rich and Mr. Shiu (as an executive Director
and the chairman of the Company) and their respective associates will therefore be required to abstain
from voting in favour of the resolution(s) approving the Rights Issue and the transactions contemplated
thereunder at the SGM.
The Rights Issue is conditional on, among other things, the relevant resolutions being approved
by the Independent Shareholders at the SGM. An independent board committee comprising all the
independent non-executive Directors will be established by the Company to advise the Independent
Shareholders as to whether the terms of the Rights Issue are fair and reasonable and as to voting in respect
thereof at the SGM.
Our role as the independent financial adviser is to (i) give our independent opinion to the
Independent Board Committee and the Independent Shareholders as to whether the Rights Issue are
fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the
Company and the Shareholders as a whole; and (ii) advise the Independent Shareholders on how to vote in
relation to (i) above.
Nuada Limited is independent of and not connected with any members of the Group or any of
their substantial shareholders, directors or chief executives, or any of their respective associates, and is
accordingly qualified to give an independent advice in respect of the Rights Issue.
BASIS OF OUR OPINION
In formulating our opinion to the Independent Board Committee and the Independent Shareholders,
we have relied on the accuracy of the statements, information, opinions and representations contained
or referred to in the Circular and the information and representations provided to us by the Company,
the Directors and the management of the Company. We have no reason to believe that any information
and representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are
we aware of any material facts the omission of which would render the information provided and the
representations made to us untrue, inaccurate or misleading. We have assumed that all information,
representations and opinions contained or referred to in the Circular, which have been provided by the
Company, the Directors and the management of the Company and for which they are solely and wholly
responsible, were true and accurate at the time when they were made and continue to be true up to the
Latest Practicable Date and should there be any material changes after the despatch of the Circular,
Shareholders would be notified as soon as possible.
32
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
The Directors have jointly and severally accepted full responsibility for the accuracy of the
information contained in the Circular and have confirmed in the Circular, having made all reasonable
inquiries, that to the best of their knowledge, opinion expressed in the Circular have been arrived at
after due and careful consideration and there are no other facts the omission of which would make any
statement in the Circular misleading. We consider that we have been provided with sufficient information
to reach an informed view and to provide a reasonable basis for our opinion. We have not, however,
conducted any independent in-depth investigation into the business and affairs of the Group.
We have not considered the tax consequences on the Qualifying Shareholders arising from the
subscription for, holding of or dealing in the Rights Shares or otherwise, since these are particular to their
own circumstances. We will not accept responsibility for any tax effect on, or liabilities of, any person
resulting from the subscription for, holding of or dealing in the Rights Shares or the exercise of any rights
attaching thereto or otherwise. In particular, Qualifying Shareholders subject to overseas taxes or Hong
Kong taxation on securities dealings should consider their own tax positions with regard to the Rights
Issue and, if in any doubt, should consult their own professional advisers.
This letter is issued for the information for the Independent Board Committee and the Independent
Shareholders solely in connection with their consideration of the Rights Issue and, except for its inclusion
in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any
other purposes, without our prior written consent.
PRINCIPAL FACTORS AND REASONS CONSIDERED
In arriving at our recommendation in relation to the Rights Issue, we have considered the following
principal factors and reasons:
1.
Business background of the Group
(a)
Financial results of the Group
The Company is principally engaged in money lending business, property investment,
financial instruments, retail business, medicine store and quoted shares investment in Hong Kong.
The table below summarised the annual financial results of the Group for the year ended
31 March 2014 as extracted from the annual report 2014 of the Company dated 27 June 2014 (the
“2014 Annual Report”), and the quarterly financial results of the Group for the three months ended
30 June 2014 as extracted from the 2014/15 first quarterly report of the Company dated 14 August
2014.
33
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Revenue
Retails services income
Rental income from
Investment properties
Money lending
For the year ended
For the three months
31 March
ended 30 June
2014201320142013
HK$’000HK$’000HK$’000HK$’000
(audited) (audited)(unaudited)(unaudited)
3,948
1,326
451
490
705549176185
33,27721,15312,593 5,920
37,93023,02813,220 6,595
Profit/(loss) and total
comprehensive income/
(loss) attributable to the
shareholders of the Company
(8,217)
(49,698)
9,634
10,252
The total revenue of the Group for the year ended 31 March 2014 was approximately
HK$37.9 million, representing an increase of approximately 64.7% from the revenue of HK$23
million generated last year. However, the Group recorded a loss attributable to the Shareholders
of approximately HK$8.2 million for the year ended 31 March 2014. As reflected in the 2014
Annual Report, such loss was due to (i) the volatility of the global economic environment, driven
by the European sovereign debt crises and the economic downturn in the United States continues
in the year ended 31 March 2014, and thus (ii) the loss in securities investments, where investment
revaluation reserve reclassified from equity to loss upon disposal of available-for-sale financial
assets recorded an amount of approximately HK$12.9 million, compared with the gain in securities
in the financial year ended 31 March 2013 which amounted to HK$46,000.
As stated in the annual report 2013 of the Company dated 27 June 2013, the Group has
been developing retail business since June 2012. The Group’s current retail office in Taikoo was
opened in January 2013 for the purpose of catering on-line sales and its on-line shopping service in
Hong Kong under the website address of http://commune.server239.com is for the sales of grocery
products (including frozen seafood, personal care products, stationeries, electrical appliances and
etc.) to the public. The revenue from the retail business grew at a rate of approximately 197.74%
in the year ended 31 March 2014. As stated in the 2014 Annual Report, the Group will continue to
monitor the operation and develop new market in order to increase the turnover and market share.
The rental income generated from the two investment properties, comprising a residential unit in
Diamond Hill and an industrial property in Chai Wan respectively, continued to provide steady
income to the Group. The revenue of this business segment for the year ended 31 March 2014 was
approximately HK$0.7 million with a 28.4% increase from 2013. According to an announcement
dated 29 May 2014, Thailand (HK) Plastic Surgery Service Limited, an indirect wholly-owned
subsidiary of the Company, entered a provisional sale and purchase agreement with an Independent
Third Party regarding the disposal of the industrial property in Chai Wan at a cash consideration
of HK$19.35 million. The assignment had been completed on 14 July 2014. Also, according to
an announcement dated 4 September 2014, Perfect Top Corporation Limited, an indirect wholly34
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
owned subsidiary of the Company, entered a provisional sale and purchase agreement with an
Independent Third Party regarding the disposal of the residential property in Diamond Hill at
a cash consideration of HK$6 million. The assignment is expected to take place on or before 5
January 2015. According to the announcements regarding the disposals, given that the recent
property market in Hong Kong has been very buoyant and the value of the Property has appreciated
significantly, the Directors consider that it is in the interests of the Company and its Shareholders
to dispose of the Property capitalizing on favourable market conditions to realise capital gain and
enhance the working capital of the Group.
As more resources have been placed in money lending business, revenue from this segment
has increased to approximately HK$33.3 million in the year ended 31 March 2014, contributing
to approximately 87.6% of total revenue, and become the main source of income of the Group in
that financial year. Although the business was only started less than four years ago in 2010, it has
been experiencing continuous double-digit growth since then, in particular a revenue growth of
approximately 57.3% in the year ended 31 March 2014.
(b)
Business development of the Group
To further expand the sources of income, the Group has actively enhanced the expansion of
its money lending business segment which generated satisfactory revenue and profit. The Group
intends to expand this segment by continuing to provide loans, such as mortgage loans and car
loans, to corporate and individual customers. These customers are principally sourced from walkin customers, advertising via various websites and cold calls to customers by consultant agents
etc. According to the 2014 Annual Report, the amount lent out by the Group was around HK$218
million as at 31 March 2014 and more than 1,000 clients have been served.
However, credit risk, the risk that the borrowers or counterparties may default on their
payment obligations due to the Group arising from the Group’s lending and investment activities, is
involved in the money lending business. According to the Letter, the maximum credit risk exposure
of financial assets is the carrying amount of the financial assets as shown on the face of the
statement of financial positions in the 2014 Annual Report. Securities are required for all mortgage
loans and some of the personal loans which are considered based on the amount of loan and the
credit history of customers.
According to the Management, the Group has established policies and systems for the
monitoring and control of credit risk so as to minimize the credit risk. The Management has
delegated different divisions responsible for determination of credit limits, credit approvals and
other monitoring processes to ensure that follow-up action is taken to recover overdue debts.
Moreover, the Management reviews the recoverable amount of loans and advances individually and
collectively at each reporting date to ensure that adequate provision for impairment are made for
irrecoverable amounts.
35
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
In addition, as stated in the 2014 Annual Report, one of the Group’s subsidiaries, namely
Yvonne Credit Services, became a TransUnion member in March 2013, which allows the Group
to obtain credit report in accordance with the Code of Practice on Consumer Credit Data issued by
the Office of the Privacy Commissioner for Personal Data, Hong Kong. The credit report provides
reliable and objective information for the Company to approve loans efficiently, stay informed
about clients’ credit status and also beware signs of potential fraud. In this regard, the Management
considers that the Group’s credit risk is significantly reduced.
(c)Prospects
As advised by the Directors, the Group has all along been exploring various business
development opportunities to broaden the business scope to increase the source of income.
According to the Company, the money lending business mainly consists of two types of
loans, namely: mortgage loans and personal loans. According to the Management, the major
source of revenue of the money lending business segment is mortgage loans, of which the revenue
amounts to approximately HK$29.91 million in the year ended 31 March 2014, contributing to
approximately 89.88% of the total revenue of the segment. The growth of mortgage loan has
been significant too, with a approximately 83.61% growth in the year ended 31 March 2013 and
a approximately 97.76% growth in the year ended 31 March 2014. The total profit of the segment
amounts to approximately HK$14.73 million in the year ended 31 March 2014, a approximately
28.56% growth from approximately HK$11.46 million in the last period.
From the company website of Euromonitor International, an independent company focuses
on strategy research for consumer markets, factors like uncertainty in the property market and
consistently low interest rates seemed to dampen demand for credit in 2013. On the other hand,
Hong Kong Monetary Authority’s Half-Yearly Monetary and Financial Stability Report released
on 25 September 2014 (the “HKMA Report”) shows some statistics of the loans of all authorized
institutions, which are either licensed banks, restricted licence banks or deposit-taking companies,
as defined by the Hong Kong Monetary Authority. According to HKMA Report, the household
loans (consisting of mortgages loans, credit card loans and other loans for private purposes) of all
authorized institutions has been growing and grew at a relatively faster pace of approximately 4.6%
in the first half of 2014, compared with approximately 3.3% and approximately 3.8% growth in
second half and first half of 2013 respectively. Particularly, the mortgage loans, which accounts for
a major proportion of household loans, has experienced positive half-yearly growth and the growth
was approximately 3.1% in the first half of 2014. As mortgage loans is the main source of revenue
in the money lending business with a growth rate of approximately 83.61%, it may reflects that
the Group has been outperforming other authorized institutions in terms of the growth of mortgage
loans revenue, and there is still potential for this type of household loans. We understood from
the management of the Group that the Company does not expect its mortgage loan business will
be adversely affected because its target customers are those in the second/third mortgage market
who would like to obtain financing through re-mortgages of their existing properties; therefore,
unfavourable uncertainty in the property market may not directly impact on the relevant lending
business of the Group.
36
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
According to the 2014 Annual Report, the total amount of loans and advances to customers
for the two years ended 31 March 2014 and 2013 are approximately HK$208.0 million and
HK$110.8 million respectively. Meanwhile, the total bad debt, being the sum of uncollectible
amounts written off and loans and advances to customers directly written off in current year minus
the recovery of loans and advances to customers directly written off in previous years, for the two
years ended 31 March 2014 and 2013 are approximately HK$2.35 million and HK$7.06 million
respectively. Accordingly, the default rate, which is the ratio of total bad debts to the total amount
of loans and advances to customers during the financial year, for the two years ended 31 March
2014 and 2013 are approximately 1.13% and 6.37% respectively. This could be a possible sign of
better credit risk management of the Group for the year ended 31 March 2014.
We also attempted to compare the default ratio of all the loans of the Group with that of
other money lenders but there are no available statistics. Therefore, to review the default rate, we
use the default rate of credit card lending for illustration but it should be noted that it may not be
accurate to directly compare the two default rates as they are referring to different kinds of loans.
According to the credit card lending survey results published by Hong Kong Monetary
Authority quarterly, the total annual charge-off amount of credit card summed up to approximately
HK$2,109 million in 2013 and the total card receivables was approximately HK$118 billion.
Accordingly, the default rate is approximately 1.79%. Although the default rate of approximately
1.13% of the Group is lower than the default rate of the market, which might be interpreted as a
sign of good credit risk management, we consider that the nature of the credit card lending and
mortgage and personal loans are different and therefore the default rate of credit lending results
serves as a general market reference only.
(d)
Our View
Taking into consideration: (i) although the Group still made a loss for the year ended 31
March 2014, the loss is substantially smaller than that for the year ended 31 March 2013; (ii) the
Group has been putting more resources to expand its money lending business which results in a
growth of approximately 57.3% for the year ended 31 March 2014; (iii) the Group’s growth of the
mortgage loan amount, the main source of revenue of the money lending business, was faster than
that of all authorized institutions for the year ended 31 March 2014; (iv) the Group has established
different policies and systems to reduce credit risk, resulting in the drop of decreasing default
rate from approximately 6.37% for the year ended 31 March 2013 to approximately 1.13% for the
year ended 31 March 2014; and (v) the default rate of all loans of the Group is in line with that of
credit card lending of surveyed institution, we are of the view that it is reasonable for the Company
to maintain a strong capital base and obtain funding for its business development and business
operations through the Right Issue. Accordingly, we concur with the Board’s view that the Right
Issue is in the interest of the Company and Shareholders as a whole.
37
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
2.
Reasons for and benefits of the Rights Issue and intended use of proceeds
The Directors believe that the Rights Issue is in the best interest of the Group and the Shareholders
as a whole and it would enable the Group to develop its money lending business and enhance its working
capital. The Rights Issue would also enable the Qualifying Shareholders to maintain their respective pro
rata shareholding interest in the Group and participate in the future growth and development of the Group
by participating in the Rights Issue.
According to the 2014 Annual Report, as at 31 March 2014, the Group’s cash and cash equivalents
amounted to approximately HK$11.6 million and the average net cash used in operation activities
was approximately HK$9.0 million per month (based on the net cash used in operating activities of
approximately HK$108.6 million for the year ended 31 March 2014). We are advised that if the Group
would like to further expand its money lending business by increasing the amount of loans and advances
to customers to generate more loan interests, it will have difficulty to make such amount of loans and
advances to a level that would be around or exceeded the available internal resources in cash and bank
balances of the Group and at the same time to maintain a reasonable cash and bank balances for healthy
operation. Having considered the cash position of the Company, an additional funding may be needed so
as to maintain a reasonable cash and bank balance for the healthy operation of the Company and not to
limit the growth of its money lending business.
In addition to the money lending business, as disclosed in the Letter, the Company also intends to
put more efforts on its retail business and/or medicine store, such as promotion, advertising, acquiring
or setting up one to two retail stores. As at the Latest Practicable Date, the Group was still identifying
suitable location(s) or acquisition opportunities for the said retail stores and no suitable location has been
found yet. In the event that the Group could not identify any suitable location to expand its retail business
and/or medicine store, the proceeds reserved for the development of retail business and/or medicine store
will be allocated to the money lending business.
The estimated gross proceeds from the Rights Shares will be approximately HK$125.8 million and
the estimated net proceeds of the Rights Issue will be approximately HK$123.1 million. The Company
intends to use the net proceeds from the Rights Issue as to approximately HK$74.1 million for expanding
its money lending business; (ii) as to approximately HK$29 million for expanding its retail business and/
or medicine store; and (iii) the remaining of approximately HK$20 million for general working capital
of the Group. The usage of the general working capital includes the administrative expenses (such as
salaries, office rentals and professional fees) in a total of approximately HK$2 million per month.
The estimated expenses in relation to the Rights Issue, including underwriting commission,
financial, legal and other professional expenses, of approximately HK$2.7 million, will be borne by the
Company.
38
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
The Board has considered other fund raising alternatives before resolving to the Rights Issue,
including but not limited to bank borrowings and share placement, and are of the view that the Rights
Issue represent the best option available to the Group since:
(i)
bank borrowings would result in additional interest burden and higher gearing ratio of the
Group;
(ii)
share placement would only be available to certain placees who were not necessarily the
existing Shareholders and would dilute their shareholding in the Company;
(iii) the Rights Issue allows the Qualifying Shareholders equal opportunity to maintain their
respective pro-rata provisional shareholdings in the Company and hence avoids dilution, and
participate in the future growth opportunity and development of the Company; and
(iv) the Rights Issue allows the Qualifying Shareholders who decide not to take up their
entitlements under the Rights Issue to sell the nil-paid Rights Shares in the market for
economic benefits.
The table below shows the fund raising exercises of the Company in the past 12 months preceding
the date of the Announcement:
Date of
announcement
Fund raising
Activity
Net proceeds
raised
22 November
2013
Approximately
Open offer on
HK$48.3 million
the basis of
four (4) Offer
Shares for every
one (1) Share
at HK$0.10 per
Offer Share
Proposed use of
the net proceeds
(i) As to
approximately
HK$38.7 million
for expanding its
money lending
business; and (ii)
the remaining of
approximately
HK$9.6 million for
general working
capital and/or for
the development
of the Group’s
business.
Actual use of
the net proceeds
as at the Latest
Practicable Date
Used as intended as
to (i)approximately
HK$38.7 million
for expanding its
money lending
business; and (ii)
the remaining of
approximately
HK$9.6 million for
general working
capital
Based on the above table, we note that the proceeds from the fund raising exercise of the Company
in the past 12 months from the date of the Announcement was and will be used as planned.
39
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Taking into account that:
(i)
the Rights Issue will enable the Group to enlarge the capital base and strengthen the financial
position of the Group so that the Group could broaden its source of income and further
develop its existing business;
(ii)
the existing cash and bank balance of the Group will not be sufficient for further expansion
and development of the money lending business, retail business and/or medicine store;
(iii) bank borrowing will incur additional interest burden to the Group;
(iv) any share placement without first offering the existing Shareholders the opportunity to
participate in the Company’s equity raising exercise would result in dilution of shareholding
of the existing Shareholders;
(v)
the Rights Issue will enable the Shareholders to maintain their respective pro rata
shareholdings in the Company; and
(vi) the proceeds from the fund raising exercise of the Company in the past 12 months from the
date of the Announcement was and will be used as planned;
we are of the view that the Rights Issue represents the most commercial viable options considered by the
Company and the fund raising by way of the Rights Issue is fair and reasonable and in the interests of the
Company and the Independent Shareholders as a whole.
3.
Principal terms of the Rights Issue
Basis of the Rights Issue
The Company proposed to allot and issue 1,572,995,385 Rights Shares at the subscription
price of HK$0.08 per Rights Share, on the basis of five (5) Rights Shares for every two (2) existing
Shares held by the Qualifying Shareholders on the Record Date. Qualifying Shareholders will not
be entitled to subscribe for any Rights Shares in excess of their respective assured entitlements.
The 1,572,995,385 Rights Shares represents 250% of the existing issued share capital of the
Company as at the Latest Practicable Date and approximately 71.43% of the issued share capital of
the Company as enlarged by the issue of the Rights Shares.
The Rights Shares, when fully paid, allotted and issued, will rank pari passu in all respects
among themselves and with the existing Shares then in issue. Holders of fully-paid Rights Shares
will be entitled to receive all future dividends and distributions which are declared, made or paid
after the date of the allotment of the fully-paid Rights Shares. Dealings in the Rights Shares
will be subject to payment of stamp duty, Stock Exchange trading fee, transaction levy, investor
compensation levy or any other applicable fees and charges in Hong Kong.
40
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As at the Latest Practicable Date, (i) Able Rich, which is wholly owned by Mr. Shiu,
together with Mr. Shiu are interested in 228,770,325 Shares; (ii) China 3D is interested in
80,854,500 Shares; (iii) New Smart is interested in 5,155,500 Shares; (iv) Ms. Siu York Chee,
who is the sister of Mr. Shiu, is interested in 63,609 Shares; (v) Heavenly Blaze is interested in
127,140 Shares; and (vi) Mr. Leung Ge On Andy, who is a Director, is interested in 63,000 Shares
respectively. Pursuant to the Irrevocable Undertakings, each of Able Rich, Mr. Shiu, China 3D,
New Smart, Ms. Siu York Chee, Heavenly Blaze and Mr. Leung Ge On Andy has irrevocably
undertaken in favour of the Company and the Underwriter, inter alia, that each of them will accept
and pay for in full or procure the acceptance of and payment in full by its associates or nominees
for the Right Shares provisionally allotted to each of them under the Rights Issue prior to the Latest
Time for Acceptance.
The Rights Issue is fully underwritten in the following manner:
1.
the total number of Underwritten Shares is 785,410,205 Rights Shares (having taken
into account the Irrevocable Undertakings and on the basis that no new Share being
issued, and no Share being repurchased, on or before the Record Date), being the
total number of Rights Shares less 787,585,180 Rights Shares that Able Rich, Mr.
Shiu, China 3D, New Smart, Ms. Siu York Chee, Heavenly Blaze and Mr. Leung
Ge On Andy have undertaken to accept and pay for in full or procure the acceptance
of and payment in full by its associates or nominees pursuant to the Irrevocable
Undertakings;
2.
pursuant to the Underwriting Agreement, the Underwriter shall not subscribe, for its
own account, for such number of Untaken Shares which will result in the shareholding
of it and parties acting in concert (within the meaning of the Takeovers Code) with
it in the Company to exceed 19.9% of the voting rights of the Company upon the
completion of the Rights Issue. The Underwriter shall also use its best endeavours
to ensure that each of the subscribers or sub-underwriter(s) of the Underwritten
Shares procured by it (i) shall be an Independent Third Party and, not acting in
concert (within the meaning of the Takeovers Code) with and not connected with
the Company, any of the Directors or chief executive of the Company or substantial
Shareholders or their respective associates; and (ii) save for the Underwriter itself
and its associates, shall not, together with any party acting in concert (within the
meaning of the Takeovers Code) with it, hold 10.0% or more of the voting rights of
the Company upon completion of the Rights Issue.
Basis of Determining the Subscription Price
The subscription price per Rights Share is HK$0.08 per Rights Share, payable in full on
acceptance. The Subscription Price represents:
(i)
a discount of approximately 51.52% to the closing price of HK$0.165 per Share as
quoted on the Stock Exchange on the Last Trading Day;
41
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
(ii)
a discount of approximately 50.31% to the average closing price of approximately
HK$0.161 per Share for the last five consecutive trading days up to and including the
Last Trading Day;
(iii) a discount of approximately 51.54% to the average closing price of approximately
HK$0.1651 per Share for the last ten consecutive trading days up to and including the
Last Trading Day;
(iv) a discount of approximately 37.98% to the closing price of HK$0.129 per Share as
quoted on the Stock Exchange on the Last Practicable Date;
(v)
a discount of approximately 14.89% to the theoretical ex-rights price of approximately
HK$0.094 per Share after the Rights Issue, calculated based on the closing price of
HK$0.129 per Share as quoted on the Stock Exchange on the Last Practicable Day;
and
(vi)
a discount of approximately 81.26% to the net asset value per Share of approximately
HK$0.427 based on the latest audited net asset value attributable to owners of the
Company as at 31 March 2014 of approximately HK$268.44 million and the number
of Shares in issue as at the Latest Practicable Date of 629,198,155 Shares.
In order to assess the fairness and reasonableness of the Subscription Price, we have
reviewed the trading price of the Shares for the period from 10 October 2013, being the 12-month
period prior to the date of the Underwriting Agreement, up to and including the Latest Practicable
Date (the “Review Period”). However, please note that trading of the Shares was suspended on 22
October 2013 and from 19 November 2013 to 22 November 2013. The chart below illustrates the
closing price of the Shares versus the subscription price of HK$0.08 during the Review Period:
0.20
0.15
0.10
0.05
Source: the website of the Stock Exchange
42
2014-10-10
2014-9-10
2014-8-10
2014-7-10
2014-6-10
2014-5-10
2014-4-10
2014-3-10
2014-2-10
2014-1-10
2013-12-10
Subscription price HK$0.08
2013-11-10
0.00
2013-10-10
Share Price HK$
0.25
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As shown in the above chart, we note that the highest closing price and lowest closing price
of the Shares were HK$0.231 on 14 August 2014 and HK$0.101 on 30 April 2014 respectively. The
subscription price of HK$0.08 is lower than all the daily closing prices of the Shares during the
Review Period, representing a discount of approximately 65.37% and 20.79% to such highest and
lowest closing prices of the Shares during the Review Period.
As set out in the Letter, the determination of the Subscription Price and subscription ratio
was a commercial decision made by the Company after arm’s length negotiation between the
Company and the Underwriter with reference to the prevailing market price of the Shares.
The Directors consider that the discount to the market price of the Share would encourage
the Shareholders to participate in the Rights Issue and accordingly maintain their shareholdings in
the Company and participate in the future development of the Group as detailed in the paragraph
headed “Reasons for and benefits of the Rights Issue and intended use of proceeds” above.
Assuming the amount of fund raising maintains at approximately HK$123.1 million, in the
event that the subscription ratio was set at lesser proportion (such as one Rights Share for one
Share), the subscription price of any rights issue would have to be higher than the Subscription
Price and such discount of the Subscription Price to the prevailing market price of the Share cannot
be maintained and available to the Qualifying Shareholders.
Given the past price performance of the Shares and the need to increase the attractiveness of
the Rights Shares to the Qualifying Shareholders and the Underwriters, the Directors consider that
the proposed discount of the Subscription Price to the prevailing market price of the Company is
appropriate.
43
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
We have also reviewed the trading volume in respect of the Shares since October 2013 up to
the Last Trading Day as illustrated in the table below:
Average daily
Month
trading volume
2013
October
November
December
% of average
daily trading
volume to the
total number of
Share (Note 1)
662,3480.53%
1,340,8841.07%
834,4320.66%
2014
January
February
March
April
May
June
July
August
September
October (Note 2)
5,994,3194.76%
12,761,9352.03%
10,341,7751.64%
3,024,6190.48%
3,345,1610.53%
1,646,3390.26%
2,916,5910.46%
6,993,2541.11%
2,089,8190.33%
737,8000.12%
Source: the website of the Stock Exchange
Notes:
1.
Calculated based on (i) 125,839,631 Shares in issue before the completion of the Open Offer in February
for October 2013 to January 2014; and (ii) 629,198,155 Shares in issue as at the Latest Practicable Date for
February 2014 to October 2014.
2.
Represents trading volume for the period from 3 October 2014 to the Last Trading Date.
As illustrated in the table above, the trading volume of the Shares during the Review Period
is relatively low, with the highest average daily trading volume amounted to 5,994,319 Shares
recorded in January 2014, representing approximately 4.76% of the total number of Shares in issue
before the completion of the Open Offer in February.
We have also attempted to review all the rights issues announced by the companies listed
on the Stock Exchange in the three calendar months prior to and up to the date of the Underwriting
Agreement and identified 18 rights issues announced in these three months (the “Rights Issue
Comparable(s)”). However, given their different business nature, past financial performance as
well as funding requirements, we consider these rights issues cannot constitute a close reference
with the Rights Issue, but just a market general reference for the recent market practice in relation
to the issue prices under other rights issues as compared to the relevant prevailing market share
price.
44
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Since the selected period of 3 months (i) represented the recent structure of rights issues as
accepted by the other equity underwriters in Hong Kong; and (ii) can allow the Shareholders to
have general understanding in other circumstances of the rights issue transactions, we consider that
the selected period is adequate.
Details regarding the Rights Issue Comparables are set out below:
Initial
announcement Company
Stock code
Premium/
Premium/ (Discount)
(Discount) to the
to closing theoretical
Basis of
price on last ex-rights
entitlement trading day price
(Note 1)
(Note 1)
Excess
application Underwriting Maximum
(Y/N)
commission dilution
(%)
(Note 2)
29-Sep-14
Tonly Electronics 1249
Holdings Limited
1 for 2
(20.93)
(15.00)
Y
0
33.33%
22-Sep-14
Agile Property 3383
Holdings Limited
1 for 5
(31.15)
(27.40)
Y
1.75
16.67%
18-Sep-14
First Credit
Finance Group
Limited
3 for 1
(78.00)
(47.00)
N
2.50
75.00%
5-Sep-14
Easyknit
616
Enterprises
Holdings Limited
8 for 1
(80.80)
(32.00)
Y
1.00
88.89%
3-Sep-14
Yuexiu Property 123
Company Limited
33 for 100
(25.15)
(20.38)
Y
2.00
24.81%
3-Sep-14
Bright Smart
Securities &
Commodities
Group Limited
1428
1 for 2
(27.54)
(20.00)
Y
2.50
33.33%
2-Sep-14
1172
Midas
International
Holdings Limited
1 for 2
(46.80)
(37.10)
Y
2.50
33.33%
27-Aug-14
Country Garden 2007
Holdings
Company Limited
1 for 15
(30.90)
(29.60)
Y
1.75
6.25%
27-Aug-14
Cheong Ming
Investments
Limited
1 for 4
(13.00)
(10.70)
Y
2.00
20.00%
8215
1196
45
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Premium/
(Discount)
to closing
Basis of
price on last
entitlement trading day
(Note 1)
Premium/
(Discount)
to the
theoretical
ex-rights
price
(Note 1)
Excess
application Underwriting Maximum
(Y/N)
commission dilution
(%)
(Note 2)
Initial
announcement Company
Stock code
25-Aug-14
Venturepharm
Laboratories
Limited
8225
3 for 2
(71.42)
(50.00)
Y
0
60.00%
20-Aug-14
Rui Kang
Pharmaceutical
Group
Investments
Limited
8037
1 for 2
(19.60)
(13.98)
N
2.50
33.33%
18-Aug-14
Guotai Junan
1788
International
Holdings Limited
1 for 5
(9.56)
(8.15)
Y
0
16.67%
18-Aug-14
China Yunnan Tin 263
Minerals Group
Company Limited
9 for 1
(65.22)
(14.57)
Y
3.00
90.00%
17-Aug-14
China Renji
Medicial Group
Limited
648
1 for 2
(52.60)
(42.60)
N
4.00
33.33%
12-Aug-14
China New
Economy Fund
Limited
80
1 for 2
(36.36)
(27.59)
N
2.50
33.33%
11-Aug-14
South East Group 726
Limited
8 for 1
(71.43)
(21.88)
Y
2.50
88.89%
8-Aug-14
SMI Culture
2366
Group Holdings
Limited
8 for 1
(83.33)
(35.66)
Y
4.50
88.89%
13-Jul-14
China Gamma
Group Limited
1 for 2
(59.76)
(49.74)
Y
1.00
33.33%
Maximum
(83.33)
(50.00)
4.5
Minimum
(9.56)
(8.15)
0
Mean
(45.75)
(27.96)
2
164
46
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Notes:
1.
Based on the figures disclosed in the initial announcement of the Rights Issue Comparables respectively.
2.
Maximum dilution effect of each rights issue is calculated as: (number of rights shares to be issued under
the basis of entitlement)/(number of existing shares held for the entitlement for the rights shares under the
basis of entitlement + number of rights shares to be issued under the basis of entitlement) x 100%).
As shown on the above list of the Rights Issue Comparables, the issue prices of most of the
Rights Issue Comparables are set at discounts to relevant market price, ranging from a discount of
approximately 9.56% to approximately 83.33%, with an average discount of approximately 45.75%.
The discount represented by the Subscription Price to the closing price of the Shares on the Last
Trading Day of approximately 51.52% is within the range of discounts and close to the average
discount of the Rights Issue Comparables. Considering that (i) as a general market reference, the
discount represented by the Subscription Price to the closing price of the Shares on the Last Trading
Day is within the range of discounts of the Rights Issue Comparables; and (ii) the Subscription
Price was a commercial decision made by the Company after arm’s length negotiation between the
Company and the Underwriter, we consider that the Subscription Price is fair and reasonable.
Having considered that (i) the Rights Issue will enable the Group to enlarge the capital
base and strengthen the financial position of the Group so that the Group could broaden its source
of income and further develop its existing business; (ii) the Rights Issue represents the most
commercial viable, fair and reasonable option considered by the Company; (iii) the past price
performance of the Shares in the Review Period, we consider it is inevitable for the Company to
set the Subscription Price at a discount so as to increase the attractiveness of the Rights Issue to
the Qualifying Shareholders and to induce the Underwriters to participate the underwriting of the
Rights Issue; (iv) the relatively low trading volume of the Shares; (v) as a general market reference,
the discount of the Subscription Price to the closing price of the Shares on the Last Trading Day is
within the range of discounts of the Rights Issue Comparables; and (vi) all Qualifying Shareholders
are offered an equal opportunity to participate in the Rights Issue and to maintain their respective
pro rata shareholdings in the Company, we are of the opinion and concur with the Directors that
the discounts of the Subscription Price as compared to the recent market prices of the Shares would
encourage Shareholders to participate in the Rights Shares and that the Subscription Price is fair
and reasonable so far as the Independent Shareholders are concerned and is in the interests of the
Shareholders and the Company as a whole.
Underwriting Commission
The commission rates were determined after arms’ length negotiations between the Company
and the Underwriter. As shown on the above list of the Rights Issue Comparables, we note that the
underwriting commissions of the Rights Issue Comparables were ranged from nil to 4.5% for the
right issues. Given the 2.5% underwriting commission accords with the market rate, we consider
that the underwriting commission of the Underwriting Agreement is fair and reasonable.
47
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Excess Application
After arm’s length negotiation with the Underwriter, the Board has decided that the
Qualifying Shareholders will not be entitled to subscribe for any Rights Shares in excess of their
respective assured entitlements. Given that each Qualifying Shareholder will be given equal and
fair opportunity to participate in the Rights Issue, the Board considers that it will put in additional
effort and costs (estimated to be HK$200,000 to HK$500,000) to administer the excess application
procedures. Any Rights Shares not taken up by the Qualifying Shareholders or otherwise not
subscribed for by transferees of nil-paid Rights Shares, and any unsold entitlements of the
Non-Qualifying Shareholders will be taken up by the Underwriter pursuant to the terms of the
Underwriting Agreement.
We consider that the absence of the excess application arrangement may not be desirable
from the point of view of those Qualifying Shareholders who wish to take up additional Rights
Shares in excess of their assured entitlements. However, we consider that the aforesaid should
be balanced against the fact that (i) the Subscription Price is set at a discount to the prevailing
market price of the Shares which provides reasonable incentives to all the Qualifying Shareholders
who are positive about the future development of the Company to take up their respective assured
entitlement of the Rights Shares and participate in the Rights Issue; (ii) the Qualifying Shareholders
have the first right to decide whether to accept the Rights Issue; and (iii) the absence of excess
application would avoid additional effort and costs to administer the excess application procedures.
As such, it is reasonable to expect that the majority of the Qualifying Shareholders who are
positive about the prospects of the Company will apply for the Rights Shares and the Rights Shares
available for excess application will be minimal.
In view of the above, although it is beneficial to have excess application for the Qualifying
Shareholders who wish to take up additional Rights Shares, we consider that the Rights Issue has
already enable the Qualifying Shareholders to maintain their pro rate interests in the Company
should they so wish by applying the Rights Shares according to their shareholding in the Company,
which we consider to be fair and reasonable. Therefore, the absence of the excess application
arrangement is acceptable.
4.
Potential dilution effect on the shareholding interests of the Independent Shareholders
Upon completion of the Rights Issue, 1,572,995,385 Rights Shares will be issued. Qualifying
Shareholders who elect to subscribe for in full their assured entitlements under the Rights Issue will retain
their current shareholding in the Company. Qualifying Shareholders who do not elect to subscribe for in
full their assured entitlements under the Rights Issue will be diluted after completion of the Rights Issue
by a maximum of approximately 71.43%. Taking into account the Open Offer which issued 503,358,524
offer shares, Qualifying Shareholders who do not elect to subscribe for in full their assured entitlements
under either the Open Offer or the Rights Issue will be diluted by a maximum of approximately 94.29%.
48
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
However, we consider such scenario of maximum dilution is unlikely to occur since it assumes
that (i) the Independent Shareholders have voted in favour of the Rights Issue at the SGM; but (ii) no
Qualifying Shareholder other than Able Rich, Mr. Shiu, China 3D, New Smart, Ms. Siu York Chee,
Heavenly Blaze and Mr. Leung Ge On Andy would take up their provisional entitlements under the Rights
Issue, which is a complete misalignment between the voting behaviour of the Independent Shareholders in
favour of the Rights Issue and their non-subscription for the Rights Issue.
Despite the dilution effect by the Right Issue of a maximum of approximately 71.43%, or 94.29%
taking into consideration the Open Offer, having taken into account: (i) the Rights Issue will enable the
Group to enlarge the capital base and strengthen the financial position of the Group so that the Group
could broaden its source of income and further develop its existing business; (ii) the Rights Issue is on the
basis that all Qualifying Shareholders have been offered the same opportunity to maintain their respective
pro rata interests in the Company and allows the Qualifying Shareholders to participate in the growth of
the Company; (iii) the inherent dilutive nature of Rights Issue in general if the existing Shareholder did
not take up his/her/its entitlements under the Rights Issue; and (iv) the discount of the Subscription Price
(including the subscription Ratio) was necessary to encourage the Qualifying Shareholders to participate
the Rights Issue, and is reasonable as compared with other Rights Issue Comparables, we consider the
possible dilution effect on the Independent Shareholders to be acceptable.
5.
Financial effects of the Rights Issue
Net tangible asset
According to the unaudited pro forma financial information of the Group (the “Pro Forma
Financial Information”) set out in Appendix II to the Circular, the unaudited consolidated net
tangible assets of the Group attributable to owners of the Company was approximately HK$268.4
million as at 31 March 2014. The unaudited pro forma adjusted consolidated net tangible assets
of the Group attributable to owners of the Company would increase to approximately HK$391.5
million as at 31 March 2014 after the Rights Issue.
Upon completion of the Rights Issue, the unaudited pro forma adjusted consolidated net
tangible assets per Share would decrease from approximately HK$0.43 to approximately HK$0.18.
RECOMMENDATION
Taking into account the factors and reasons as mentioned under the section headed “Principal
factors and reasons considered” above, which include:
(i)
the Rights Issue will enable the Group to enlarge the capital base and strengthen the financial
position of the Group so that the Group could broaden its source of income and further
develop its existing business;
(ii)
the Rights Issue is the most viable fund raising method as compared to the bank borrowing
and the share placement of new Shares;
49
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
(iii) the discount of the Subscription Price to the market price is necessary to encourage the
Qualifying Shareholders to participate the Rights Issue and is reasonable as compared with
other Rights Issue Comparables;
(iv) the Rights Issue is on the basis that all Qualifying Shareholders have been offered the same
opportunity to maintain their respective pro rata interests in the Company; and
(v)
the underwriting commission of the Rights Issue is fair and reasonable,
we consider that, despite the inherent dilution effect to the Qualifying Shareholders who do not participate
the Rights Issue, the Rights Issue and the Underwriting Agreement are fair and reasonable so far as
the Independent Shareholders are concerned and the Rights Issue and the entering of the Underwriting
Agreement are in the interests of the Company and the Independent Shareholders as a whole. We,
therefore, would advise the Independent Board Committee to recommend to the Independent Shareholders
and advise the Independent Shareholders to vote in favour of the resolution to approve the Rights Issue
and the Underwriting Agreement to be proposed at the SGM.
Yours faithfully,
For and on behalf of
Nuada Limited
Kevin Chan
Director
Mr. Kevin Chan is a person licensed under the SFO to carry out type 6 (advising on corporate
finance) regulated activities under the SFO and regarded as a responsible officer of Nuada Limited and
has over 15 years of experience in corporate finance industry.
50
APPENDIX I
1.
FINANCIAL INFORMATION OF THE GROUP
SUMMARY OF FINANCIAL INFORMATION
The financial information of the Group for the three years ended 31 March 2014 and 2013 and 2012
are disclosed in the annual reports of the Company for the years ended 31 March 2014 (pages 25 to 110)
and 2013 (pages 22 to 104) and 2012 (pages 21 to 88) respectively. All the above reports of the Company
have been published on the website of the Stock Exchange (http://www.hkexnews.hk) and the website of
the Company (http://www.ulcreativity.com).
2.
INDEBTEDNESS STATEMENT
As at the close of business on 30 September 2014 (being the latest practicable date for the
purpose of this indebtedness statement prior to the printing of this circular), the Group had outstanding
indebtedness denominated in Hong Kong dollars of approximately HK$36.4 million, which comprised
of secured bank loan of US$2.1 million (equivalent to approximately HK$16.3 million), secured loan
of HK$0.3 million from a security company, unsecured loan of approximately HK$7.0 million from
independent third parties, unsecured loans of HK$12.2 million from related parties and obligations under
finance lease of approximately HK$0.6 million.
Banking guarantee and facilities
As at 30 September 2014, a fixed deposit of HK$678,600 had been pledged to a bank as a security
for a banking guarantee issued for a 3-year tenancy agreement jointly entered into between Wit Way
Enterprise Limited, as the landlord, and Top Euro Limited, an indirect wholly-owned subsidiary of the
Company and Mark Glory International Enterprise Limited, an indirect wholly-owned subsidiary of China
3D, both as tenants, in relation to lease of an office premises at 7/F., Zung Fu Industrial Building, 1067
King’s Road, Quarry Bay, Hong Kong.
Power In Investments Limited, an indirect wholly owned subsidiary of the Group, has been granted
a banking facility of US$3 million (equivalent to approximately HK$23.3 million). As at 30 September
2014, an amount of US$2.1 million (equivalent to approximately HK$16.3 million) as included in the
above indebtedness, had been utilised for subscription of Allianz Income and Growth Fund.
Contingent liabilities
The above-mentioned 3-year tenancy agreement was signed on 9 October 2012 and commenced on
1 November 2012 with a monthly rental of HK$220,000 inclusive of management charges (equivalent to
HK$2,640,000 per annum), but exclusive of government rates and all other outgoings.
The rent, government rates and all outgoings of the office premises shall be paid by the tenants in
equal share. If either party fails to fulfill their leasing obligations under the agreement, the other party will
obligate to pay the other party’s outstanding contingent rental liability amounting to HK$1,320,000 per
annum. The taking-up of the contingent rental liability constitutes a provision of financial assistance under
the GEM Listing Rules.
51
APPENDIX I
FINANCIAL INFORMATION OF THE GROUP
Save as aforesaid and apart from intra-group liabilities and normal trade and other payables,
the Group did not, at as the close of business on 30 September 2014, have any mortgage, charges,
debt securities issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar
indebtedness, liabilities under acceptances or acceptance credits, hire purchase or finance lease
commitments, guarantees or other material contingent liabilities.
Save as disclosed above, the Directors have confirmed that there have been no material changes in
the indebtedness and contingent liabilities of the Group since 30 September 2014, up to and including the
Latest Practicable Date.
3.
WORKING CAPITAL
The Directors are of the opinion that, after taking into account the existing cash and bank balances
and other internal resources available and also the estimated net proceeds from the Rights Issue, the Group
has sufficient working capital for its present requirements and for at least 12 months from the date of this
circular in the absence of unforeseen circumstances.
4.
MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the
financial position or trading position of the Group since 31 March 2014, being the date to which the latest
published audited financial statements of the Group was made up.
52
APPENDIX II
A.
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP
Unaudited Pro Forma Statement of Adjusted Consolidated Net Tangible Assets of the Group
The following is an unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group attributable to the owners of the Company (the “Unaudited Pro Forma Financial Information”)
prepared in accordance with paragraph 31 of Chapter 7 of the GEM Listing Rules and is set out to
illustrate the effect of the proposed Rights Issue on the consolidated net tangible assets of the Group
attributable to the owners of the Company as if the proposed Rights Issue had been completed on 31
March 2014.
The Unaudited Pro Forma Financial Information is prepared for illustrative purpose only, based on
the judgements, estimates and assumptions for the directors of the Company, and because of its nature, it
may not give a true picture of the financial position of the Group on the completion of the proposed Rights
Issue.
The Unaudited Pro Forma Financial Information is prepared based on the audited consolidated net
assets of the Group attributable to the owners of the Company as at 31 March 2014, as extracted from the
published annual report of the Group as of 31 March 2014 and the adjustments described below.
Unaudited
Unaudited
pro forma
pro forma
adjusted
adjusted
consolidated
consolidated
net tangible
net tangible
Audited
assets of the
assets of the
Audited
consolidated
Group upon
Group upon
consolidated
net tangible completion of completion of
net assets of
assets of the Rights Issue the Rights Issue
the Group
the Group
attributable
attributable
attributable attributable of
to the
to the
to the owners the Company
Estimated
owners of
owners of
of the Company
per Share
net proceeds the Company
the Company
as at
as at
from the
as at per Share as at
31 March 2014 31 March 2014
Rights Issue 31 March 2014 31 March 2014
HK$’000 HK$HK$’000HK$’000 HK$
(Note 2)
(Note 3)
(Note 4)
(Note 5)
(Note 6)
Issue of Rights Shares based on
1,572,995,385 Rights Shares
at subscription price of HK$0.08
per Rights Share (Note 1)
268,439
0.43123,100391,539
53
0.18
APPENDIX II
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP
Notes:
1.
The Rights Issue of 1,572,995,385 Rights Shares is calculated on the basis of five Rights Shares for every two
existing Shares held on the Record Date. It is based on 629,198,155 shares in issue as at 31 March 2014.
2.
The audited consolidated net assets of the Group attributable to the owners of the Company as at 31 March 2014 is
extracted from the published audited report of the Group for the year ended 31 March 2014.
3.
The calculation of consolidated net tangible assets of the Group attributable to the owners of the Company per share
is based on 629,198,155 shares in issue as at 31 March 2014.
4.
The estimated net proceeds from the Rights Issue are calculated based on of 1,572,995,385 Rights Shares to be
issued at the subscription price of HK$0.08 per Rights Share and after deduction of the estimated related expenses
which are directly attributable to the Rights Issue of approximately HK$2,700,000.
5.
No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of the Group to
reflect any trading results or other transactions of the Group entered into subsequent to 31 March 2014.
6.
The unaudited pro forma adjusted consolidated net tangible assets of the Group attributable to the owners of the
Company per Share immediately after completion of the Rights Issue is calculated based on 2,202,193,540 Shares
which comprise 629,198,155 Shares in issue at at 31 March 2014 and 1,572,995,385 Rights Shares expected to be
issued on the completion of the Rights Issue.
54
APPENDIX II
B.
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP
ACCOUNTANTS’ REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following is the text of a report received from the independent reporting accountants, Ting Ho
Kwan & Chan CPA Limited, Certified Public Accountants, Hong Kong, prepared for the sole purpose
of incorporation in this circular, in respect of the unaudited pro forma financial information of the
Company.
丁何關陳會計師事務所有限公司
TING HO KWAN & CHAN CPA LIMITED
9/F., Tung Ning Building, 249-253 Des Voeux Road C, Hong Kong
香港德輔道中249-253號東寧大廈九樓
10 November 2014
The Board of Directors
Unlimited Creativity Holdings Limited
7th Floor, Zung Fu Industrial Building
1067 King’s Road
Quarry Bay, Hong Kong
Dear Sirs
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
TO THE DIRECTORS OF UNLIMITED CREATIVITY HOLDINGS LIMITED
We have completed our assurance engagement to report on the compilation of unaudited pro
forma financial information of Unlimited Creativity Holdings Limited (the “Company”) and its
subsidiaries (collectively the “Group”) by the directors for illustrative purposes only. The unaudited pro
forma financial information consists of the unaudited pro forma statement of adjusted consolidated net
tangible assets of the Group as at 31 March 2014 and related notes (the “Unaudited Pro Forma Financial
Information”) as set out in Appendix II to the circular issued by the Company dated 10 November 2014
(the “Circular”). The applicable criteria on the basis of which the directors have compiled the Unaudited
Pro Forma Financial Information are described in Appendix II to the Circular.
The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate
the impact of the proposed issue of 1,572,995,385 shares of the Company at a price of HK$0.08 each on
the basis of five rights shares for every two existing shares held (“Proposed Rights Issue”) on the Group’s
financial position as at 31 March 2014 as if the Proposed Rights Issue had taken place at 31 March
2014. As part of this process, information about the Group’s financial position has been extracted by the
directors from the Group’s financial statements for the year ended 31 March 2014, on which an audit
report has been published.
55
APPENDIX II
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP
Directors’ Responsibility for the Unaudited Pro Forma Financial Information
The directors are responsible for compiling the Unaudited Pro Forma Financial Information
in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on the Growth
Enterprise Market of The Stock Exchange of Hong Kong Limited (the “GEM Rules”) and with reference
to Accounting Guideline Preparation of Pro Forma Financial Information for Inclusion in Investment
Circulars (“AG 7”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the GEM Rules, on
the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any
responsibility for any reports previously given by us on any financial information used in the compilation
of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were
addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements
(“HKSAE”) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information Included in a Prospectus, issued by the HKICPA. This standard requires that the reporting
accountant comply with ethical requirements and plan and perform procedures to obtain reasonable
assurance about whether the directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 7.31 of the GEM Rules and with reference to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial
Information, nor have we, in the course of this engagement, performed an audit or review of the financial
information used in compiling the Unaudited Pro Forma Financial Information.
The purpose of Unaudited Pro Forma Financial Information included in the Circular is solely to
illustrate the impact of a significant event or transaction on unadjusted financial information of the Group
as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes
of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or
transaction at 31 March 2014 would have been as presented.
A reasonable assurance engagement to report on whether the Unaudited Pro Forma Financial
Information has been properly compiled on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the directors in the compilation of the
Unaudited Pro Forma Financial Information provide a reasonable basis for presenting the significant
effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about
whether:
•
The related pro forma adjustments give appropriate effect to those criteria; and
•
The Unaudited Pro Forma Financial Information reflects the proper application of those
adjustments to the unadjusted financial information.
56
APPENDIX II
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP
The procedures selected depend on the reporting accountant’s judgment, having regard to the
reporting accountant’s understanding of the nature of the Group, the event or transaction in respect of
which the Unaudited Pro Forma Financial Information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma
Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion:
(a)
the Unaudited Pro Forma Financial Information has been properly compiled on the basis
stated;
(b)
such basis is consistent with the accounting policies of the Group; and
(c)
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial
Information as disclosed pursuant to paragraph 7.31(1) of the GEM Rules.
TING HO KWAN & CHAN CPA LIMITED
Certified Public Accountants
WONG KAM CHUEN
Practising Certificate Number P06175
Hong Kong
57
APPENDIX III
1.
GENERAL INFORMATION
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 Company. The Directors, having made all reasonable enquiries, confirm
that to the best of their knowledge and belief the information contained in this circular is accurate and
complete in all material respects and not misleading or deceptive, and there are no other matters the
omission of which would make any statement herein or this circular misleading.
2.
SHARE CAPITAL
(I)
Share capital of the Company as at the Latest Practicable Date:
Authorised:
30,000,000,000
HK$
Shares
300,000,000.00
Issued and fully paid:
629,198,155
(II)
HK$
Shares
6,291,981.55
Share capital of the Company immediately after completion of the Rights Issue (assuming no
further issue of new Shares or repurchase of Shares on or before the Record Date):
Authorised:
30,000,000,000
HK$
Shares
300,000,000.00
Issued and fully paid:
629,198,155
1,572,995,385
HK$
Shares as at Latest Practicable Date
Rights Shares to be issued pursuant to the Rights Issue
6,291,981.55
15,729,953.85
2,202,193,540
Shares following the completion of the Rights Issue
22,021,935.40
All the existing Shares in issue are fully-paid and rank pari passu in all respects including all rights
as to dividends, voting and return of capital. The Rights Shares (when allotted, issued and fully-paid) will
rank pari passu in all respects with the Shares in issue on the date of allotment and issue of the Rights
Shares. Holders of the Rights Shares in their fully-paid form will be entitled to receive all future dividends
and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights
Shares.
58
APPENDIX III
GENERAL INFORMATION
No part of the share capital or any other securities of the Company is listed or dealt in on any stock
exchange other than the Stock Exchange and no application is being made or is currently proposed or
sought for the Shares or Rights Shares or any other securities of the Company to be listed or dealt in on
any other stock exchange.
As at the Latest Practicable Date, the Company did not have any outstanding warrants, options or
securities convertible into Shares.
As at the Latest Practicable Date, there was no arrangement under which future dividends are
waived or agreed to be waived.
As at the Latest Practicable Date, no share or loan capital of the Company or any of its subsidiaries
had been put under option, or agreed conditionally or unconditionally to be put under option.
3.
DISCLOSURE OF INTERESTS BY DIRECTORS
Save as disclosed below, as at the Latest Practicable Date, none of the Directors and chief executive
of the Company had any interests or short positions in the shares, underlying shares and debentures of
the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which
were required (i) to be notified to the Company and the Stock Exchange pursuant to the Divisions 7
and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to
have under such provisions of the SFO); or (ii) pursuant to section 352 of the SFO, to be entered in the
register referred to therein; or (iii) pursuant to the rules 5.46 to 5.67 of the GEM Listing Rules relating to
securities transactions by directors, to be notified to the Company and the Stock Exchange.
Approximate
percentage of
the issued
Personal
Family
Other
share capital
Name
Interests
Interests
Interests
Total
of the Company
Mr. Shiu
10,136,200
Mr. Leung Ge On, Andy
16218,634,125228,770,341
(note 1)
(note 2)
63,000
–
–
63,000
36.36%
0.01%
Notes:
1.
16 shares are held by Ms. Hau Lai Mei, the spouse of Mr. Shiu.
2.
218,634,125 Shares are held by Able Rich, a wholly-owned subsidiary of Rich Treasure, of which Mr. Shiu is the
sole director and shareholder of Rich Treasure.
59
APPENDIX III
4.
GENERAL INFORMATION
INTERESTS OF SUBSTANTIAL SHAREHOLDERS
As at the Latest Practicable Date, so far as is known to the Directors or chief executives of the
Company, the following person (other than a Director or chief executives of the Company) had interests or
short positions in the shares or underlying shares which would fall to be disclosed to the Company under
the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in
10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances
at general meetings of any member of the Group.
Approximate
percentage of
Number of
the issued
Long position/
Shares
share capital
Name of Shareholder
Capacity
short position
interested of the Company
Able Rich
Beneficial owner
Notes
Long position
218,634,125
34.75%
1
Rich Treasure
Interest in controlled
corporation
Long position
218,634,125
34.75%
1
The Underwriter
Long position
785,410,206
35.66%
2
Galaxy Sky Investments Interest in controlled
Limited corporation
Long position
785,410,206
35.66%
2
Kingston Capital Asia
Interest in controlled
Limited corporation
Long position
785,410,206
35.66%
2
Kingston Financial
Interest in controlled
Group Limited corporation
Long position
785,410,206
35.66%
2
Active Dynamic Limited Interest in controlled
corporation
Long position
785,410,206
35.66%
2
Ms. Chu Yuet Wah
Interest in controlled
corporation
Long position
785,410,206
35.66%
2
Beneficial owner
Notes:
1.
218,634,125 Shares are held by Able Rich, a wholly-owned subsidiary of Rich Treasure, of which Mr. Shiu is the
sole director and shareholder of Rich Treasure.
2.
The total of 785,410,206 Shares include (i) 1 ordinary Share; and (ii) 785,410,205 Rights Shares which the
Underwriter is interested under the Underwriting Agreement on the assumption of no acceptance by the Qualifying
Shareholders under the Rights Issue. The Underwriter is a wholly-owned subsidiary of Galaxy Sky Investments
Limited, which is wholly owned by Kingston Capital Asia Limited. Kingston Capital Asia Limited is wholly owned
by Kingston Financial Group Limited. Active Dynamic Limited owns 42.90% interest in Kingston Financial Group
Limited. Ms. Chu Yuet Wah owns 100% interest in Active Dynamic Limited.
60
APPENDIX III
5.
GENERAL INFORMATION
SERVICE CONTRACT
As the Latest Practicable Date, none of the Directors had any existing or proposed service contract
with any member of the Group which does not expire or is not terminable by such member of the Group
within one year without payment of compensation (other than statutory compensation).
6.LITIGATION
As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief,
the Group was not engaged in any litigation, arbitration or claim of material importance and no litigation,
arbitration or claim of material importance is known to the Directors to be pending or threatened by or
against any member of the Group.
7.
COMPETING INTERESTS
As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their
respective associates had any interest in any business which competes or may compete, either directly
or indirectly, with the business of the Group or has or may have any other conflicts of interest with the
Group pursuant to the GEM Listing Rules.
8.
DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS
As at the Latest Practicable Date, none of the Directors were materially interested in any subsisting
contract or arrangement which is significant in relation to the business of the Group. As at the Latest
Practicable Date, none of the Directors had any direct or indirect interest in any assets which have been,
since 31 March 2014, being the date to which the latest published audited accounts of the Group were
made up, acquired or disposed of by, or leased to any member of the Group, or were proposed to be
acquired or disposed of, or leased to any member of the Group.
9.
EXPERTS AND CONSENTS
The following is the qualification of the experts who have given their opinions and advice which
are contained or referred to in this circular:
NameQualification
Nuada Limited
A corporation licensed to carry on type 6 (advising on corporate
finance) regulated activities under the SFO
Ting Ho Kwan & Chan CPA Limited
Certified Public Accountants
As at the Latest Practicable Date, the experts above have given and have not withdrawn their
written consent to the issue of this circular with the inclusion herein of their respective report and/or
letter and/or summary of valuations and/or opinion (as the case may be), and/or the references to its name
included in the form and context in which it is respectively included.
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APPENDIX III
GENERAL INFORMATION
As of the Latest Practicable Date, the experts above were not beneficially interested in the share
capital of any member of the Group nor did it has any right (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe for securities in any member of the Group.
As at the Latest Practicable Date, the experts above did not have any direct or indirect interest in
any assets which have been acquired, or disposed of by, or leased to any member of the Group, or are
proposed to be acquired, or disposed of by, or leased to any member of the Group since 31 March 2014
(the date to which the latest published audited consolidated financial statements of the Group were made
up).
10. MATERIAL CONTRACTS
The following contracts (not being contracts entered into in the ordinary course of business)
were entered into by the members of the Group within two years immediately preceding the date of this
circular, which are or may be material:
1.
the Underwriting Agreement;
2.
Underwriting agreement date 18 November 2013 (as supplemented by a side letter dated 12
December 2013) entered into between the Company, Able Rich and the Underwriter (both as
underwriter) in relation to the Open Offer;
3.
Supplemental placing agreement dated 26 July 2013 entered into between the Company
and FT Securities Limited in relation to the amendment to the placing period of the placing
referred to in paragraph 4 below;
4.
Placing agreement dated 24 July 2013 entered into between the Company and FT Securities
Limited (as placing agent) in relation to the placing of a maximum of 20,960,000 new Shares
at the placing price of HK$0.225 each. Gross and net proceeds from such placing were
approximately HK$4.71 million and HK$4.49 million respectively;
5.
Agreement dated 7 January 2013 entered into between Top Euro Limited as the seller (an
indirect wholly-owned subsidiary of the Company) and Sure Power Limited as the purchaser
(an independent third party) in relation to disposal of a property located at 1st Floor and 2nd
Floor, Morrison Plaza, No. 9 Morrison Hill Road, Wanchai, Hong Kong together with the
External Wall Area I, External Wall Area II and External Wall Area III for a consideration of
HK$74,000,000.
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APPENDIX III
11.
GENERAL INFORMATION
CORPORATE INFORMATION AND PARTIES INVOLVED
Registered Office
Canon’s Court
22 Victoria Street
Hamilton HM 12
Bermuda
Headquarters and principal place
of business in Hong Kong and
office address of all Directors
7th Floor
Zung Fu Industrial Building
1067 King’s Road
Quarry Bay, Hong Kong
Authorised representative
Mr. Shiu Yeuk Yuen
7th Floor
Zung Fu Industrial Building
1067 King’s Road
Quarry Bay, Hong Kong
Mr. Leung Ge On Andy
7th Floor
Zung Fu Industrial Building
1067 King’s Road
Quarry Bay, Hong Kong
Executive Directors
Mr. Shiu Yeuk Yuen
Mr. Leung Ge On Andy
Independent non-executive Directors
Dr. Siu Yim Kwan, Sidney
Mr. Kam Tik Lun
Mr. Lau Gar Hung, Christopher
Company secretary
Mr. To Chi,
Compliance officer
Mr. Leung Ge On, Andy
CPA, FCCA
Principal share registrar and
Appleby Management (Bermuda) Ltd
transfer office in Bermuda
Canon’s Court
22 Victoria Street
Hamilton HM 12
Bermuda
Branch share registrar and
transfer office in Hong Kong
Tricor Standard Limited
Level 22, Hopewell Centre
183 Queen’s Road East,
Hong Kong
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APPENDIX III
12.
GENERAL INFORMATION
Principal Banker
Bank of China (Hong Kong) Limited
409-415 Hennessy Road, Wanchai
Hong Kong
DBS Bank (Hong Kong) Limited
16th Floor, The Center
99 Queen’s Road Central
Hong Kong
Legal advisor as to Hong Kong
Laws (in relation to the Rights
Issue)
JunHe Law Offices
Suite 3701-10, 37th Floor
Jardine House, 1 Connaught Place
Central, Hong Kong
Underwriter
Kingston Securities Limited
Suite 2801
28th Floor, One IFC
1 Harbour View Street
Central, Hong Kong
Financial adviser to the Company
Kingston Corporate Finance Limited
Suite 2801
28th Floor, One IFC
1 Harbour View Street
Central, Hong Kong
Reporting accountants
Ting Ho Kwan & Chan CPA Limited
Certified Public Accountants (Practising)
9th Floor,
Tung Ning Building
249-253 Des Voeux Road Central
Hong Kong
PROFILES OF DIRECTORS
Executive Directors
Mr. Shiu Yeuk Yuen (“Mr. Shiu”), aged 64, is the executive director since December
2010 and appointed as the Chairman of the Group in January 2011. Mr. Shiu has over 36 years’
experience in the ceramic tile and marble and granite products industry and over 10 year’s
experience in securities investment.
Mr. Shiu was one of the founders and has been the executive director of Companion Building
Material International Holdings Limited (together with its subsidiaries, the “CBMI Group”,
currently known as Pacific Century Premium Developments Ltd, stock code: 432), a company
listed on The Stock Exchange of Hong Kong Limited, for the period from September 1993 to
January 2002 during which he was responsible for the development of the CBMI Group’s corporate
strategies.
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APPENDIX III
GENERAL INFORMATION
Mr. Leung Ge On, Andy (“Mr. Leung”), aged 45, is the executive director of the
Company. Mr. Leung joined the Group since 2005 and was appointed as an executive director in
December 2010. Mr. Leung obtained a Bachelor of Arts degree in Economics at York University
in Canada. Mr. Leung has extensive experience in business development, operation and marketing
management. Mr. Leung is the nephew of Mr. Shiu.
Independent Non-executive Directors
Dr. Siu Yim Kwan, Sidney (“Dr. Siu”), S.B.St.J., aged 67, was appointed as an independent
non-executive director in December 2004 and a member of the Audit Committee of the Company.
Dr. Siu is also the independent non-executive director of Wang On Group Limited, a listed
company in Hong Kong since November 1993.
Dr. Siu is a director of The Association of The Directors & Former Directors of Pok Oi
Hospital Limited which is a non-profitable association and providing community services in Hong
Kong.
Dr. Siu is also a director and general vice-president of The Hong Kong Taekwondo
Association Limited, a sport and non-profitable association in Hong Kong and also an executive
member of a number of charitable organisations and sports associations.
Mr. Kam Tik Lun (“Mr. Kam”), CPA, ACCA, LL.M (ICFL), aged 38, joined the
Company in March 2012. Mr. Kam is the Chairman of the Audit Committee of the Company.
Mr. Kam holds a Bachelor of Commerce from Concordia University, Canada and a Postgraduate
Diploma in International Corporate and Financial Law from The University of Wolverhampton,
UK and a Master of Laws in International Corporate and Financial Law from The University of
Wolverhampton, UK. He is a member of The Hong Kong Institute of Certified Public Accountants
and The Association of Chartered Certified Accountants. Mr. Kam has over 10 years of experience
in the financial markets. He has vast experience in providing pre-IPO consultancy, business
valuation services, financial analysis and corporate advisory. Mr. Kam is also an independent nonexecutive director of China 3D Digital Entertainment Limited, a company listed on the GEM Board
of Stock Exchange.
Mr. Lau Gar Hung, Christopher (“Mr. Lau”), Bsc, in Mathematics, aged 38, joined
the Company in July 2014. Mr. Lau holds a Bachelor of Science degree, Major in Mathematics
(with Honours) from The Chinese University of Hong Kong. Mr. Lau has years of experience in
international consulting firms, specialising in providing retirement benefits advice and financial
analysis to leading financial institutions and large conglomerates in Hong Kong and Asia.
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APPENDIX III
GENERAL INFORMATION
13.EXPENSES
The expenses in connection with the Rights Issue, including underwriting commission, printing,
registration, legal and accounting fees, are estimated to be approximately HK$2.70 million and will be
payable by the Company.
14.MISCELLANEOUS
15.
(i)
As at the Latest Practicable Date, there was no restriction affecting the remittance of profits
or repatriation of capital of the Company into Hong Kong from outside of Hong Kong and
the Group has no exposure to foreign exchange liabilities.
(ii)
The English text of this circular shall prevail over the Chinese text in case of any
inconsistency.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the principal office in Hong
Kong of the Company at 7/F., Zung Fu Industrial Building, 1067 King’s Road, Quarry Bay, Hong Kong
during normal business hours on any weekday (except Saturdays, Sundays and public holidays), from the
date of this circular up to and including the date of the SGM:
(i)
this circular;
(ii)
the memorandum of continuance and bye-laws of the Company;
(iii) the first quarterly report of the Company for the three months ended 30 June 2014 and the
annual reports of the Company for the three financial years ended 31 March 2014;
(iv) the written consents as referred to in the paragraph headed “Experts and Consents” in this
Appendix;
(v)
the material contracts as referred to in this paragraph headed “Material Contracts” in this
Appendix;
(vi) the unaudited pro forma financial information of the Group, the text of which is set out in
Appendix II to this circular;
(vii) the letter from Ting Ho Kwan & Chan CPA Limited in respect of the unaudited pro forma
financial information of the Group, the text of which is set out in Appendix II of this
circular;
(viii) the letter from the Independent Board Committee, the text of which is set out on page 30 of
this circular; and
(ix) the letter of advice from the Independent Financial Adviser, the text of which is set out on
pages 31 to 50 of this circular.
66
NOTICE OF SGM
UNLIMITED CREATIVITY HOLDINGS LIMITED
無限創意控股有限公司
(Continued in Bermuda with limited liability)
(Stock Code: 8079)
NOTICE OF SPECIAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that a special general meeting (the “SGM”) of Unlimited
Creativity Holdings Limited (the “Company”) will be held at 7th Floor, Zung Fu Industrial Building,
1067 King’s Road, Quarry Bay, Hong Kong on Tuesday, 25 November 2014 at 10:00 a.m. for the
purposes of considering and, if thought fit, passing with or without modification, the following resolutions
of the Company:
ORDINARY RESOLUTIONS
1.“THAT
(a)
subject to the conditional upon fulfilment of the conditions of the Underwriting Agreement
(as defined below), the Rights Issue (as defined below) and the transactions contemplated
thereunder be and are hereby approved;
For the purpose of this resolution, “Rights Issue” means the proposed issue by way of
rights issue of 1,572,995,385 Shares (the “Rights Shares”) at a subscription price of
HK$0.08 per Rights Share to the qualifying shareholders (the “Qualifying Shareholders”)
of the Company whose names appear on the date by reference to which entitlement under
the Rights Issue will be determined (other than those shareholders (the “Non-Qualifying
Shareholders”) with registered addresses outside Hong Kong whom the Directors, after
making relevant enquiry, consider their exclusion from the Rights Issue to be necessary or
expedient on account either of the legal restrictions under the laws of the relevant place or
the requirements of the relevant regulatory body or stock exchange in that place) on the basis
of five (5) Rights Shares for every two (2) existing Shares then held and otherwise pursuant
to and subject to the fulfilment of the conditions set out in the underwriting agreement (the
“Underwriting Agreement” including all supplemental agreements relating thereto) (a
copy of which have been produced to the SGM marked “A” and signed by the chairman of
the SGM for the purpose of identification) dated 10 October 2014 and made between the
Company and Kingston Securities Limited (“Kingston Securities”) as the underwriter (the
“Underwriter”);
(b)
any Directors be and is hereby authorised to allot and issue the Rights Shares (in their
nil-paid form and fully-paid form) pursuant to and in connection with the Rights Issue
notwithstanding the same may be offered, allotted or issued otherwise than pro rata to the
Qualifying Shareholders and, in particular, the Directors be and are hereby authorised to
make such exclusions or other arrangements in relation to fractional entitlements and/or
Non-Qualifying Shareholders as they deem necessary, desirable or expedient having regard
to any restrictions or obligations under the bye-laws of the Company or the laws of, or
the rules and regulations of any recognised regulatory body or any stock exchange in, any
territory outside Hong Kong;
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NOTICE OF SGM
(c)
the entering into the Underwriting Agreement and the transactions contemplated thereunder
(including but not limited to the arrangements for taking up of the unsubscribed Rights
Shares, if any, by the Underwriter and/or such subscriber(s) to be procured by the
Underwriter and the absence of excess application arrangement) be and are hereby approved,
confirmed and ratified; and
(d)
any Director be and is hereby authorised to sign and execute such documents, instruments
and agreements and to do all such acts or things deemed by him/he/them to be incidental
to, ancillary to or in connection with the matters contemplated under the Underwriting
Agreement, the Rights Issue as he may in his absolute discretion consider necessary,
desirable or expedient to give effect to the Underwriting Agreement, the Rights Issue and
the issue of the Rights Shares and the implementation of all transactions contemplated
thereunder, including but not limited to the issue and allotment of Rights Shares and to agree
with such variation, amendment or waiver as, in the opinion of the Directors, in the interests
of the Company and its shareholders as a whole.”
On behalf of the Board
Unlimited Creativity Holdings Limited
Shiu Yeuk Yuen
Chairman
Hong Kong, 10 November 2014
Principal Place of Business:
7th Floor, Zung Fu Industrial Building
1067 King’s Road
Quarry Bay, Hong Kong
Notes:
1.
A form of proxy for use at the Meeting is enclosed herewith.
2.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in
writing or, if the appointor is a corporation, either under its seal or under the hand of any officer or attorney duly authorised.
3.
Any shareholder of the Company entitled to attend and vote at the Meeting convened by the above notice shall be entitled to
appoint another person as his proxy to attend and vote instead of him. A proxy need not be a shareholder of the Company.
4.
In order to be valid, the form of proxy, together with the power of attorney or other authority (if any) under which it is
signed, or a certified copy of such power of attorney or authority, must be deposited at the Company’s branch share registrar
in Hong Kong, Tricor Standard Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not
less than 48 hours before the time appointed for holding of the above Meeting or any adjournment thereof (as the case may
be).
5.
Completion and return of the form of proxy will not preclude a shareholder of the Company from attending and voting in
person at the Meeting convened or at any adjourned meeting (as the case may be) and in such event, the form of proxy will
be deemed to be revoked.
68
NOTICE OF SGM
6.
Where there are joint holders of any share of the Company, any one of such joint holders may vote, either in person or by
proxy, in respect of such share as if he/she were solely entitled thereto, but if more than one of such joint holders are present
at the Meeting, whether in person or by proxy, priority shall be determined by the order in which the names stand on the
register of members of the Company in respect of the joint holding.
7.
The directors of the Company as at the date of this notice are Mr. Shiu Yeuk Yuen and Mr. Leung Ge On Andy, being
executive Directors, Dr. Siu Yim Kwan, Sidney, Mr. Kam Tik Lun and Mr. Lau Gar Hung, Christopher, being independent
non-executive Directors.
69