If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer or registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.
If you have sold or transferred all your shares in Rui Kang Pharmaceutical Group Investments Limited (“Company”), you should at once hand this circular and the accompanying form of proxy to the purchaser, the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.
RUI KANG PHARMACEUTICAL GROUP INVESTMENTS LIMITED
銳 康 藥 業 集 團 投 資 有 限 公 司
(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)
(Stock code: 8037)
MAJOR TRANSACTION –
DISPOSAL OF 30% OF THE ISSUED SHARE CAPITAL
OF THE TARGET COMPANY AND THE SALE LOAN
AND
NOTICE OF SPECIAL GENERAL MEETING
A notice convening the special general meeting of the Company to be held at 10:30 a.m. on Monday, 22 February 2016 at Narcissus Room, the Garden Rooms, 2/F, The Royal Garden Hotel, 69 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong is set out on pages SGM-1 and SGM-2 of this circular. A form of proxy for use by the shareholders of the Company at the special general meeting of the Company is enclosed herein.
Whether or not you are able to attend the special general meeting of the Company, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Union Registrars Limited at A18/F., Asia Orient Tower, Town Place, 33 Lockhart Road, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours before the time of the special general meeting of the Company or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the special general meeting of the Company or any adjournment thereof should you so wish, and in such case, the form of proxy previously submitted shall be deemed to be revoked.
This circular will remain on the “Latest Company Announcement” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting and on the website of the Company at http://www.ruikang.com.hk.
CONTENTS
Page
CHARACTERISTICS OF GEM . . . ii
DEFINITIONS . . . 1
LETTER FROM THE BOARD . . . 4
APPENDIX I – FINANCIAL INFORMATION OF THE GROUP . . . I-1
APPENDIX II – GENERAL INFORMATION . . . II-1 NOTICE OF SGM . . . SGM-1
The GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of the GEM mean that it is a market more suited to professional and other sophisticated investors.
Given the emerging nature of companies listed on the GEM, there is a risk that securities traded on the 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 the GEM.
DEFINITIONS
In this circular, unless the context otherwise requires, the following expressions have the following meanings:
“2014 Disposal” disposal of 70% of equity interest in the Target Company by the Vendor as contemplated under the sale and purchase agreement dated 31 December 2014 entered into between the Vendor, Ms. Wang Yan, Mr. Pan Hao Zhe, Mr. Chau Kwan Po and Union Overseas, details of which were disclosed in the announcement of the Company dated 31 December 2014
“Board” the board of Directors
“Business Day(s)” a day (excluding Saturdays, Sunday or public holiday and any day on which a tropical cyclone warning signal no.8 or above is hoisted or remains hoisted between 9:00 a.m. and 12:00 noon and is not lowered at or before 12:00 noon or no which a “Black” rainstorm warning is hoisted or remains in effect between 9:00 a.m. to 12:00 noon and is not discontinued at or before 12:00 noon) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours
“BVI” the British Virgin Islands
“Company” Rui Kang Pharmaceutical Group Investments Limited, a company incorporated in the Cayman Islands and continued in Bermuda with limited liability, the shares of which are listed on GEM “Completion” completion of the disposal of the Sale Shares and the Sale Loan
by the Group in accordance with the terms and conditions of the Disposal Agreement
“Completion Date” within five Business Days after the fulfillment of the Condition or such other date as the Vendor and the Purchaser may agree in writing on which Completion takes place
“Condition” the condition precedent to Completion as set out in the Disposal Agreement
“connected person(s)” has the meaning as ascribed to it under the GEM Listing Rules “Consideration” the consideration of HK$18 million payable by the Purchaser to
“Disposal” the disposal of the Sale Shares and the Sale Loan by the Vendor to the Purchaser pursuant to the terms and conditions of the Disposal Agreement
“Disposal Agreement” the sale and purchase agreement dated 21 December 2015 entered into between the Vendor and the Purchaser in relation to the Disposal
“GEM” the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules” the rules governing the listing of securities on GEM
“Group” the Company and its subsidiaries
“Hong Kong” Hong Kong Special Administrative Region of the PRC
“Independent Third Party(ies)” person(s) independent of the Company and its respective connected persons
“Latest Practicable Date” 29 January 2016, being the latest practicable date prior to the publication of this circular for the purpose of ascertaining certain information contained herein
“Longlife” Longlife Group Holdings Limited, a company incorporated in Hong Kong with limited liability and a direct wholly-owned subsidiary of the Target Company
“Long Stop Date” 1:00 p.m. on 29 February 2016, or such other date as may be agreed between the Vendor and the Purchaser in writing
“PRC” the People’s Republic of China, but for the purpose of this circular, excluding Hong Kong, Macau Special Administrative Region of the People’s Republic of China and Taiwan
“Purchaser” Fuda Ventures Limited, a company incorporated in BVI with limited liability
“Remaining Group” the Group immediately after Completion
“Sale Loan” the entire sum owing by the Target Group to the Vendor as at Completion, which amounted to HK$2,312,185 as at the date of the Disposal Agreement
“Sale Shares” 30 shares of the Target Company, representing 30% of its issued share capital as at Completion
DEFINITIONS
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“SGM” the special general meeting of the Company convened to be held at 10:30 a.m. on Monday, 22 February 2016 at Narcissus Room, the Garden Rooms, 2/F, The Royal Garden Hotel, 69 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong to consider and, if thought fit, approve the Disposal, the notice of which is set out on pages SGM-1 and SGM-2 of this circular
“Share(s)” the ordinary share(s) of HK$0.05 each in the issued share capital of the Company
“Shareholder(s)” the holder(s) of the Share(s)
“Shimalong” 廣州獅馬龍藥業有限公司 (in English, for identification purpose
only, Guangzhou Shimalong Pharmaceutical Co., Ltd.), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Target Company
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Target Company” Magical Bloom Limited, a company incorporated in BVI with limited liability and is directly owned as to 30% by the Vendor as at the date of the Disposal Agreement and prior to Completion “Target Group” collectively, the Target Company and its subsidiaries
“Union Overseas” Union Overseas Holdings Limited, a company which holds 20% of the issued share capital of the Target Company and is wholly-owned by the shareholder of the Purchaser
“Vendor” Icy Snow Limited, a company incorporated in BVI with limited liability and a direct wholly-owned subsidiary of the Company
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
RUI KANG PHARMACEUTICAL GROUP INVESTMENTS LIMITED
銳 康 藥 業 集 團 投 資 有 限 公 司
(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)
(Stock code: 8037)
Executive Directors: Registered office:
Mr. CHEUNG Hung (Chairman) Clarendon House
Mr. LEUNG Pak Hou Anson 2 Church Street
Ms. CHEN Miaoping (Chief Executive Officer) Hamilton HM 11 Bermuda
Independent non-executive Directors:
Mr. YUEN Chun Fai Head office and principal place
Mr. LEUNG Ka Fai of business in Hong Kong:
Mr. HO Fung Shan Bob Room 1213, Tower A
New Mandarin Plaza 14 Science Museum Road Kowloon
Hong Kong 2 February 2016 To the Shareholders
Dear Sir or Madam,
MAJOR TRANSACTION –
DISPOSAL OF 30% OF THE ISSUED SHARE CAPITAL
OF THE TARGET COMPANY AND THE SALE LOAN
INTRODUCTION
Reference is made to the announcement of the Company dated 21 December 2015 in which the Company announced that on 21 December 2015, the Vendor, a direct wholly-owned subsidiary of the Company, and the Purchaser entered into the Disposal Agreement, pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to purchase, the Sale Shares and the Sale Loan at the Consideration of HK$18 million.
The purpose of this circular is to provide you with, among other things, further information on the Disposal, the Disposal Agreement and the transactions contemplated thereunder and other information as required under the GEM Listing Rules together with a notice of the SGM and a form of proxy.
LETTER FROM THE BOARD
THE DISPOSAL AGREEMENT
The principal terms of the Disposal Agreement are set out below:
Date
21 December 2015
Parties
Vendor: Icy Snow Limited Purchaser: Fuda Ventures Limited
As at the Latest Practicable Date, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, (i) the principal activity of the Purchaser is investment holding; (ii) the ultimate beneficial owner of the Purchaser is a shareholder of Union Overseas, which directly holds 20% of the issued share capital of the Target Company, and Union Overseas acquired such 20% of equity interests in the Target Company from the Vendor on 31 December 2014, details of the 2014 Disposal were disclosed in the announcement of the Company dated 31 December 2014; and (iii) the Purchaser and its ultimate beneficial owner are Independent Third Parties.
Assets to be disposed of
The Vendor has conditionally agreed to sell and the Purchaser has conditionally agreed to purchase the Sale Shares and the Sale Loan free from all encumbrances. The Sale Shares represent 30% of the issued share capital of the Target Company. As at the date of the Disposal Agreement, the Sale Loan amounted to HK$2,312,185. The Sale Loan will represent the entire amount that the Target Group owes to the Remaining Group as at Completion. It is expected that the amount of the Sale Loan will not be materially different before Completion. Further particulars of the Target Company and the Target Group are set out in section headed “Information of the Target Group” below.
Consideration
The Consideration is HK$18 million, which shall be satisfied by the Purchaser to the Vendor in cash on the Completion Date.
The Consideration was arrived at after arm’s length negotiations between the Vendor and the Purchaser after taking into consideration (i) the face value of the Sale Loan of HK$2,312,185; and (ii) the unaudited consolidated net profit after taxation of the Target Group for the year ended 31 December 2014 taking into account a price-to-earnings ratio (“P/E Ratio”) of multiple of approximately 7.
As the Target Group recorded growth in revenue and net profit for the year ended 31 December 2014, the Directors consider it is appropriate to determine the Consideration using the P/E Ratio. In order to identify the benchmark P/E Ratio as a reference for the determination of the Consideration, the Company attempted to identify the P/E Ratio of companies listed on the Stock Exchange with business similar to that of the Target Group. Since 90% of the revenue of the Target Group was generated from the sale/distribution of medicated oil products, the Company intended to identify other listed companies on the Stock Exchange with principal activities of sale/distribution of medicated oil products and recorded net profit in the latest financial year. Based on the above selection criteria, the Company identified an exhaustive list of one listed company, Pak Fah Yeow International Limited (stock code: 239) (the “Comparable Company”), which matches the criteria of having a majority (i.e. over 90%) of the revenue of the Comparable Company generated from the sale/distribution of medicated oil products and recording profit in the latest financial year. The Company also noted that there were some other listed companies on the Stock Exchange engaged in sale/distribution of medicated oil products. However, according to their latest published audited financial information, the revenues generated from sale/distribution of medicated oil products of those companies were included in those of other businesses and the percentage of the revenue solely generated from their sale/distribution of medicated oil products business was unable to be extracted.
The Company is of the view that although there is only one Comparable Company, it is a meaningful and appropriate reference for the Company to determine the benchmark P/E Ratio by using the P/E Ratio of the Comparable Company as (i) the business of the Comparable Company is almost the same as that of the Target Group; and (ii) over 90% of the revenue of the Comparable Company was generated from the sale/distribution of medicated oil products which is the same as that of the Target Group. In addition, the Company is of the view that, although there is only one Comparable Company, it is not reasonable to relax the aforesaid selection criteria, such as including other listed companies on the Stock Exchange engaging in sale and distribution of traditional Chinese medicine (other than medicated oil products) in the determination of the benchmark P/E Ratio as the business of those listed companies is not the same as that of the Target Group, the P/E Ratio represented by those companies would be misleading and inappropriate. Based on the aforesaid, the Company is of the view that the P/E Ratio of the Comparable Company is sufficient, fair and representative for the Company to determine the benchmark P/E Ratio. The Consideration representing a P/E Ratio of approximately 7 times to 30% of the net profit of the Target Group for the year ended 31 December 2014 was determined with reference to the P/E Ratio of the Comparable Company, being approximately 9.15 times based on its closing price per share on 18 December 2015 and its profit after taxation for the latest financial year, and taking into account a discount rate of 25% for lack of marketability (details of the reason for using a 25% discount rate is stated below).
As the shares of the Target Group are not listed on any stock exchanges and there is lack of open market for the transfer of the shares of the Target Group, the marketability of the equity interest of the Target Group would be affected. The Company made reference to a paper named “Discount for Lack of Marketability – Job Aid for IRS Valuation Professionals” (the “Paper”) published by Internal Revenue Service, which is a government agency under the Department of the Treasury of the United States federal government, in September 2009, and noted that the common discount rate used for lack of marketability is approximately 35%. As stated in the Paper, the Paper serves as a reference and provides information for the valuation analysts when considering the discount rate of the lack of marketability. Although the Paper is conducted for the United States market, given that (i) there is no widely used empirical study conducted on lack of marketability discount for private companies in Hong Kong or the PRC and (ii) the stock market system of the United States is similar to that of Hong Kong where both of their stocks can be freely traded in an open market, the Company considers that the Paper is an appropriate reference in determining the discount rate for lack of marketability. With reference to the suggested discount rates as stated in the Paper and after arm’s length negotiations between the Company and the Purchaser, a
LETTER FROM THE BOARD
discount rate of 25% on the P/E Ratio of the Comparable Company was determined. The Company is of the view that the aforesaid 25% discount rate is favorable to the Company as it is below the common discount suggested by the Paper. As stated in the previous paragraph, the Directors consider that the P/E Ratio of the Target Group is a fair basis to determine the Consideration. In addition to the P/E Ratio analysis as stated above, the Company considers that the Consideration is fair and reasonable as it represents a premium of approximately 209.8% over the aggregate value of 30% (being the percentage of the interest of the Company in the Target Group represented by the Sale Shares) of the unaudited consolidated net asset value of the Target Group (i.e. approximately HK$3.51 million) and the face value of the Sale Loan (i.e. approximately HK$2.3 million). As such, based on the above analysis, the Directors consider that the Consideration is fair and reasonable.
Reference is made to the announcement of the Company dated 31 December 2014 in relation to the 2014 Disposal. The Purchaser’s ultimate beneficial owner is also the ultimate beneficial owner of one of the purchasers (i.e. Union Overseas) in the 2014 Disposal. The consideration for the 2014 Disposal was determined taking into account (i) the sale shares of the 2014 Disposal representing a majority stake in the Target Group; (ii) the established distribution network of pharmaceutical and medical products of the Target Group covering various locations in the PRC; and (iii) the Target Group had obtained the Good Supply Practice certification (藥品經營質量管理規範認證証書) in the year of 2014 for trading and distributing pharmaceutical products in the PRC.
As the Target Group recorded a net loss of approximately HK$4.0 million for the year ended 31 December 2013 and a turnaround to a net profit of approximately HK$8.7 million for the year ended 31 December 2014, the Company and the Purchaser consider the P/E Ratio is more appropriate to determine the Consideration and adopted the basis as stated above in determining the Consideration which is different from that in determining the consideration for the 2014 Disposal.
Condition precedent
Completion is conditional upon the fulfillment of the Vendor having obtained all necessary consents and approvals in relation to the Disposal (including but not limited to the Shareholders having approved the necessary resolution regarding the Disposal at the special general meeting of the Company).
The above Condition is not capable of being waived by the Vendor or the Purchaser.
If the Condition has not been satisfied by the Long Stop Date, the Disposal Agreement shall cease and terminate (save and except for the clauses relating to, among others, confidentiality, notice, fees and expenses and governing laws which shall continue to have full force and effect) and no party shall have any obligations and liabilities thereunder save for any antecedent breaches of the terms thereof.
Completion
Completion shall take place on the Completion Date which shall fall within five Business Days after the fulfillment of the Condition or such other date as the Vendor and the Purchaser may agree in writing.
The Target Company, through its wholly-owned subsidiaries, is principally engaged in sale of prescription drugs and medical equipment through hospitals and wholesale of over-the-counter (“OTC”) drugs and medicated oil products through pharmacies in the PRC.
Set out below is the shareholding structure of the Target Group as at the Latest Practicable Date: Target Company
(BVI) (Note 1)
Longlife (Hong Kong)
(Note 2)
Shimalong (PRC) (Note 3)
100%
100%
Notes:
The principal activity(ies) of the above respective company is/(are): 1. investment holding
2. investment holding
3. sale of prescription drugs and medical equipment through hospitals and wholesale of OTC drugs and medicated oil products through pharmacies in the PRC
LETTER FROM THE BOARD
The following are certain unaudited consolidated financial information of the Target Group for the year ended 31 December 2014 and unaudited combined financial information of the Target Group for the year ended 31 December 2013:
For the For the year ended year ended 31 December 2014 31 December 2013
HK$’000 HK$’000 (Note)
Turnover 57,247 18,652
Profit/(loss) before taxation 9,323 (3,956)
Profit/(loss) after taxation 8,733 (3,956)
Note: As the Target Company was incorporated in the BVI on 8 July 2014, the financial information of the Target Group for the year ended 31 December 2013 only includes Longlife and Shimalong.
As at 30 September 2015, the unaudited consolidated total asset value and unaudited consolidated net asset value of the Target Group were approximately HK$35.3 million and HK$11.7 million respectively. As at 30 September 2015, the Group recorded goodwill of approximately HK$3.54 million in relation to the interest of the Group in the Target Group in its consolidated accounts.
As at the Latest Practicable Date, the Company, through the Vendor, held 30% of the issued share capital of the Target Company. Upon Completion, the Group will cease to hold any equity interest in each member of the Target Group and each member of the Target Group will cease to be an associate of the Group.
REASONS FOR AND BENEFITS OF THE DISPOSAL
The Group is principally engaged in (i) manufacture, research and development, sale and distribution of consumer cosmetics, health related and pharmaceutical products, health supplement wine, dental materials and equipment in the PRC and Hong Kong; (ii) provision of medical laboratory testing services and health check services in Hong Kong; and (iii) trading of securities in Hong Kong.
The Directors have been constantly scrutinising the businesses of the Group in order to increase the competiveness of and strengthen the financial position of the Group. As a key exclusive distribution agreement of the Target Group for the right of distribution of certain medicated oil products, which generated over 90% of the Target Group’s revenue for the nine months ended 30 September 2015, will expire on 31 December 2018 and the Group is not in control of the Target Group, which is an associate of the Group, the Directors are uncertain as to whether such exclusive distribution agreement can be renewed on terms that are acceptable or favourable to the Target Group or at all. As such, the profitability
Having considered (i) the uncertainty of the return and profitability of the Target Group in the future as stated above; (ii) the keen competition in the medicated oil products business in the PRC; and (iii) the intention of the Group to allocate more resources in the businesses of manufacture and sale of health related and pharmaceutical products in the PRC and Hong Kong and development of medical laboratory testing services and health check services in Hong Kong, the Directors are of the view that the Disposal, if materialises, represents an opportunity for the Company to realise its investment in the Target Group so as to enable the Group to re-allocate more financial resources in the aforementioned businesses of the Group.
The Directors expect that the Disposal will not have material impact on the earnings of the Company as the Target Group has not been consolidated into the financial statements of the Company by virtue of it being a 30% interest owned associate of the Group. It is estimated that upon Completion, the Company will record (i) an increase in total assets of approximately HK$8.64 million, being the difference between the Consideration less the face value of the Sale Loan, and the interest of the Group in the Target Group as an associate of approximately HK$7.05 million as at 30 September 2015; and (ii) no effect on its total liabilities. As such, the Group is expected to record a net gain of approximately HK$8.64 million from the Disposal. The actual amount of gain or loss and the financial effect as a result of the Disposal to be recorded by the Company will be subject to the review and final audit by the auditors of the Company.
The Company intends to use the net proceeds from the Disposal for the general working capital of the Group and/or future development of the Group’s businesses and/or funding any potential acquisitions if opportunities arise.
The terms of the Disposal Agreement were determined after arm’s length negotiations between the parties thereto. Having considered the reasons for and benefits of the Disposal as mentioned above, the Directors are of the view that the terms of the Disposal Agreement are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.
GEM LISTING RULES IMPLICATION
As certain relevant percentage ratios (as defined under the GEM Listing Rules) in respect of the Disposal are more than 5% but all are less than 25%, the Disposal constitutes a discloseable transaction for the Company under the GEM Listing Rules and is subject to the notification and announcement requirements under Chapter 19 of the GEM Listing Rules.
As certain relevant percentage ratios (as defined under the GEM Listing Rules) in respect of the Disposal in aggregate with the 2014 Disposal are more than 25% but all are less than 75%, the Disposal in aggregate with the 2014 Disposal constitute a major transaction for the Company under the GEM Listing Rules and are subject to the reporting, announcement and shareholders’ approval requirements under Chapter 19 of the GEM Listing Rules.
Completion is subject to the satisfaction of the Condition and therefore may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.
LETTER FROM THE BOARD
THE SGM
The SGM will be convened for the purpose of considering and, if thought fit, approving, among other things, the Disposal. A notice convening the SGM to be held at 10:30 a.m. on Monday, 22 February 2016 at Narcissus Room, the Garden Rooms, 2/F, The Royal Garden Hotel, 69 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong is set out on pages SGM-1 and SGM-2 of this circular.
In compliance with the GEM Listing Rules, the resolution as set out in the notice of SGM will be voted on by way of poll at the SGM. To the best of the knowledge, information and belief of the Directors having made all reasonable enquiries, no Shareholder has a material interest in the Disposal. As such, no Shareholder is required to abstain from voting on the resolution to be proposed at the SGM.
A form of proxy for use at the SGM is enclosed. Whether or not you intend to attend the SGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return the same to the branch share registrar and transfer office of the Company in Hong Kong, Union Registrars Limited at A18/F., Asia Orient Tower, Town Place, 33 Lockhart Road, Wanchai, 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 form of proxy shall not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so desire.
RECOMMENDATION
The Directors consider that the Disposal is fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the resolution as set out in the notice of SGM.
ADDITIONAL INFORMATION
Your attention is drawn to the additional information set out in the appendices to this circular. Yours faithfully
By order of the Board
Rui Kang Pharmaceutical Group Investments Limited LEUNG Pak Hou Anson
1. INDEBTEDNESS STATEMENT
As at the close of business on 31 December 2015, being the latest practicable date for the purpose of this statement of indebtedness prior to the publication of this circular, the Remaining Group has pledged its financial assets at fair value through profit or loss which are approximately HK$54.8 million to secure margin financing facilities obtained from regulated securities dealers. Cash deposits amounting to approximately HK$29.5 million are also pledged to secure the margin accounts and margin payables of approximately HK$2.5 million are incurred by the Remaining Group as at 31 December 2015.
Save as disclosed above, apart from intra-group liabilities and normal accounts payable in the ordinary course of business of the Remaining Group, the Remaining Group did not have any other outstanding bank or other borrowings, mortgages, charges, debentures or other loan capital, bank overdrafts, loans or other similar indebtedness, guarantee, liabilities under acceptances (other than normal trade bills), acceptance credits, hire purchase or other finance lease commitments or other contingent liabilities.
The Directors have confirmed that there has been no material change in the indebtedness and contingent liabilities of the Remaining Group since 31 December 2015 up to the Latest Practicable Date.
2. WORKING CAPITAL
The Directors are of the opinion that, after taking into account the internal financial resources presently available to the Remaining Group and the effect of the Disposal, in the absence of unforeseeable circumstances, the Remaining Group has sufficient working capital for its present requirements that is for at least the next twelve months following the date of this circular.
3. MATERIAL ADVERSE CHANGE
As disclosed in the announcement of the Company dated 8 January 2016, the Group is expected to continue to record loss for the year ended 31 December 2015 and such loss was mainly attributable to (i) the write-off of certain property, plant and equipment of approximately HK$7.4 million for the year ended 31 December 2015; and (ii) the increasing pressure on the cost of sales, including labour costs and raw materials costs, and the decrease in the selling price for certain products due to fierce competition in the PRC, which have led a decrease in the gross profit margin.
As at the Latest Practicable Date, save as disclosed in the announcement of the Company dated 8 January 2016, the Directors were not aware of any material adverse change in the financial position or trading position of the Group since 31 December 2014, being the date to which the latest published audited financial statements of the Group were made up.
4. FINANCIAL AND BUSINESS PROSPECTS
Looking forward, due to high pressure of labour costs and raw materials costs, the health related and pharmaceutical products and the consumer cosmetic industry in the PRC are facing plenty of challenges. The Group will adopt the “Tap New Resources and Economise on Expenditure” strategies.
APPENDIX I
FINANCIAL INFORMATION OF THE GROUP
The Remaining Group will implement cost-saving strategies in order to minimise the impact of the increasing production costs in the health related and pharmaceutical products segments and the Company will continue to exercise due diligence and identify appropriate investment opportunities according to its investment strategies in securities trading business by investing in listed securities with potential returns. The Remaining Group will continue to strengthen the health related and pharmaceutical products business through (i) expanding the wholesales channel and the Internet online sales in Hong Kong and the PRC; (ii) introducing new health related products in order to enlarge the products lists; (iii) acquiring companies engaging in the provision of medical laboratory testing services and health check services; and (iv) developing and manufacturing new health related and pharmaceutical products through the factory held by 貴陽舒美達製藥廠有限公司 (in English, for identification purpose only, Guiyang Shu Mei Da Pharmaceutical Co., Ltd.) (“Guiyang Shu Mei Da”).
In order to expand the source of income, the Remaining Group has participated in money lending business. As disclosed in the annual report of the Company for the year ended 31 December 2014, one of the subsidiaries of the Company has obtained a money lenders license granted by the licensing court in Hong Kong on 3 March 2015 pursuant to the Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong) to carry on its money lending business in Hong Kong.
The Company has adopted money lending policy and relevant procedure manual to minimise the possibility in default of the borrowers, i.e. the credit risk. To ensure the identity and creditability of the potential clients, background checking and due diligence (if applicable) will be conducted by the Company on potential customers. With the increased market demands of the micro-financing business in Hong Kong, the Company has raised HK$20 million through the rights issue, which was completed on 18 September 2015, for the money lending business. The money lending business commenced in the fourth quarter of 2015.
On 14 November 2014, the Company and China Wah Yan Healthcare Limited (formerly known as China Renji Medical Group Limited, stock code: 648) (“Wah Yan Health”) entered into a subscription agreement pursuant to which the Company conditionally agreed to allot and issue 257,812,500 subscription shares at the subscription price of HK$0.128 per subscription share to Wah Yan Health (“WY Subscription”). The completion of the WY Subscription took place on 23 January 2015. Details of the WY Subscription are disclosed in the announcements of the Company dated 14 November 2014 and 23 January 2015 and the circular of the Company dated 24 December 2014.
In view of the business nature of Wah Yan Health and its subsidiaries which are also related to healthcare industry, the Directors consider that the WY Subscription was a strategic cooperation between the Remaining Group and Wah Yan Health and its subsidiaries which set ground for future business cooperation if opportunity arises which will be beneficial to the business strategy and development of the Remaining Group. On 26 February 2015, Silver Wisdom Development Limited (“Silver Wisdom”), a wholly-owned subsidiary of the Company entered into the subscription agreement with New Health Elite International Limited (“New Health”), a direct wholly-owned subsidiary of Wah Yan Health, pursuant to which, Silver Wisdom conditionally agreed to subscribe for, and New Health conditionally
2015. It is expected that the NH Subscription will enable the Remaining Group to diversify its business and revenue sources into the provision of health management and well-being services, which is the principal business activities of New Health. The Directors consider that both the WY Subscription and the NH Subscription will allow the Remaining Group and Wah Yan Health to explore more opportunities for potential business cooperation in the future in order to take advantage of its own expertise and introduce new income stream to the Remaining Group.
On 18 September 2015, Fair Brilliant Group Limited (“Fair Brilliant”), an indirect wholly-owned subsidiary of the Company, as the purchaser and two Independent Third Parties as the vendors entered into a sale and purchase agreement, pursuant to which Fair Brilliant conditionally agreed to purchase, and the vendors conditionally agreed to sell (i) 1,000 issued shares of Asia Molecular Diagnostics Limited (trading as CompuScreen Medical Diagnostics Centre) (“Asia Molecular”), representing 100% of its issued share capital, and (ii) the aggregate amount of loans owed by Asia Molecular to the vendors, at a total consideration of approximately HK$1.87 million, further details of which are set out in the announcement of the Company dated 18 September 2015. The completion of such acquisition took place on 2 October 2015.
On 18 September 2015, Fair Brilliant as the purchaser and an Independent Third Party as the vendor entered into a sale and purchase agreement, pursuant to which Fair Brilliant conditionally agreed to purchase, and the vendor conditionally agreed to sell (i) 1 issued share capital of DVF Holdco (Cayman) Limited (“DVF Holdco”), representing 100% of its issued share capital, and (ii) the aggregate amount of loan owed by a subsidiary of DVF Holdco to the vendor, at a total consideration of HK$103 million, further details of which are set out in the announcements of the Company dated 18 September 2015 and 13 November 2015 and the circular of the Company dated 25 November 2015. The completion of such acquisition took place on 16 December 2015.
The Directors believe that the above acquisitions will provide synergistic effect to the Group’s existing business by leveraging its expertise, enlarging its customer base, broadening its income source alongside with developing its existing businesses, and thus leading to a more comprehensive development in the Company’s healthcare related business.
On 17 December 2015, the Company as the vendor and a connected person of the Company at subsidiary level as the purchaser entered into a sale and purchase agreement, pursuant to which the Company conditionally agreed to sell, and the purchaser conditionally agreed to purchase 101 issued share capital of Wallfaith Company Limited (“Wallfaith”), representing its entire issued share capital, at a consideration of HK$15 million, further details of which are set out in the announcement of the Company dated 17 December 2015 and the circular of the Company dated 15 January 2016. As at the Latest Practable Date, completion of such disposal had not yet taken place.
The Directors have been constantly scrutinising the current business of the Group in order to increase the competiveness and strengthen the financial performance of the Group. The Directors will also continue to look for and identify potential acquisition projects in relation to (i) the health related and pharmaceutical product business and (ii) medical laboratory testing services and health check services with an aim of bringing better returns for the investors.
APPENDIX II
GENERAL INFORMATION
1. 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. DISCLOSURE OF INTERESTS BY DIRECTORS
Save as disclosed below, as at the Latest Practicable Date, none of the Directors nor the chief executive of the Company has any interest or short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meanings of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which any such Director or chief executive is taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required, pursuant to 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.
Long positions in the underlying Shares – share options granted
Name of Director
Nature of
interest Date of grant Exercise period
Exercise price per Share Total underlying Shares Approximate % in the Company’s issued share capital as at the Latest Practicable
Date
HK$ (Note)
Mr. Cheung Hung Beneficial owner
28 August 2014
1 January 2015 to 31 December 2016
0.6337 679,081 0.052
Mr. Leung Pak Hou Anson
Beneficial owner
28 August 2014
1 January 2015 to 31 December 2016
0.6337 679,081 0.052
Ms. Chen Miaoping Beneficial owner
28 August 2014
1 January 2015 to 31 December 2016
3. INTERESTS OF SUBSTANTIAL SHAREHOLDERS
Save as disclosed below, as at the Latest Practicable Date, so far as was known to any Director, there was no other person who had interest or a short position in the Shares, underlying Shares or debenture of the Company which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO and section 336 of the SFO or, who were expected, directly or indirectly, to be interested in 10% or more of the issued voting shares of any other member of the Remaining Group.
Long positions in Shares and underlying Shares
Approximate % in the Company’s issued share capital as at the Latest Name Nature of interest No. of Shares held Practicable Date
(Note)
Wah Yan Health Beneficial owner 257,812,500 19.62
Note: The percentage of shareholding is calculated based on the number of the total issued share capital of the Company as at the Latest Practicable Date, i.e. 1,313,973,500 Shares.
4. SERVICE CONTRACT
As the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than statutory compensation)).
5. 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.
6. COMPETING INTERESTS
As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors or their respective close associates had any business or interest 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 which would be required to be disclosed under Rule 11.04 of the GEM Listing Rules.
7. DIRECTORS’ INTEREST IN CONTRACTS AND ASSETS
As at the Latest Practicable Date, none of the Directors was materially interested in any subsisting contract or arrangement subsisting 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 December 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.
APPENDIX II
GENERAL INFORMATION
8. MATERIAL CONTRACTS
The following contracts (not being contracts in the ordinary course of business) have been entered into by the members of the Group within the two years immediately preceding the date of this circular are or may be material:
(a) the placing agreement dated 20 June 2014 entered into between the Company as the issuer and Trinity Finance Investment Limited (“Trinity”) as the placing agent, pursuant to which the Company conditionally agreed to place, through Trinity, on a best endeavours basis, up to 111,000,000 new shares, to not less than six placees, at a price of HK$0.18 per placing share, further details of which are set out in the announcement of the Company dated 20 June 2014;
(b) the equity transfer agreement dated 18 August 2014 entered into between Goldcore Holdings Limited (an indirect wholly-owned subsidiary of the Company) (“Goldcore”) as the purchaser and Mr. Zhu Rui Sheng (“Mr. Zhu”) and Mr. Huang Yu Dong (“Mr. Huang”) as the vendors, pursuant to which Goldcore conditionally agreed to acquire, and Mr. Zhu and Mr. Huang conditionally agreed to sell an aggregate of 51% equity interest in Guiyang Shu Mei Da at an aggregate consideration of RMB25,500,000, further details of which are set out in the announcement of the Company dated 18 August 2014;
(c) the underwriting agreement dated 20 August 2014 entered into between the Company and Kingston Securities Limited in relation to the underwriting arrangement in respect of the proposed issue of 335,208,000 new shares by way of rights issue on the basis of one new share for every two existing shares to the qualifying shareholders held on a record date at a price of HK$0.16 per new share, further details of which are set out in the announcement of the Company dated 20 August 2014 and the prospectus of the Company dated 19 September 2014; (d) the subscription agreement dated 14 November 2014 entered into between the Company and
Wah Yan Health pursuant to which Wah Yan Health conditionally agreed to subscribe for, and the Company conditionally agreed to allot and issue, 257,812,500 subscription shares at the subscription price of HK$0.128 per subscription share, further details of which are set out in the announcement of the Company dated 14 November 2014 and the circular of the Company dated 24 December 2014;
(e) the sale and purchase agreement dated 31 December 2014 entered into between the Vendor as the vendor and Ms. Wang Yan, Mr. Pan Hao Zhe, Mr. Chau Kwan Po and Union Overseas as the purchasers, pursuant to which the Vendor conditionally agreed to sell and the aforementioned purchasers conditionally agreed to purchase an aggregate of 70 ordinary shares in the share capital of the Target Company, representing 70% of its issued share capital, at an aggregate cash consideration of HK$12.6 million, further details of which are set out in the announcement of the Company dated 31 December 2014;
(f) the subscription agreement dated 26 February 2015 entered into between Silver Wisdom as the subscriber and New Health as the issuer, pursuant to which Silver Wisdom conditionally agreed to subscribe for, and New Health conditionally agreed to allot and issue, 23 new shares of New Health upon completion of the subscription, representing 23% of the issued share capital of New Health (“NH Subscription Shares”) as enlarged by the allotment and
issue of NH Subscription Shares, at the cash consideration of HK$4.83 million, further details of which are set out in the announcement of the Company dated 26 February 2015; (g) the option deed dated 26 February 2015 entered into between Choice Elite Holdings Limited
(a company wholly-owned by Mr. Chan Ka Chung) (the “Call Option Holder”), Mr. Chan Ka Chung (as the guarantor of the Call Option Holder) and Silver Wisdom, pursuant to which (i) the Call Option Holder agreed to grant the put option to Silver Wisdom to require the Call Option Holder to acquire all of the option shares (being the NH Subscription Shares) and all the sums that New Health and its subsidiaries owe to Silver Wisdom as at the date on which the put option granted by the Call Option Holder to Silver Wisdom is exercised at the put option exercise price upon the exercise of the put option during the exercise period; and (ii) the Subscriber also agreed to grant the call option to the Call Option Holder to require Silver Wisdom to dispose of all of the option shares and all the sums that New Health and its subsidiaries owe to Silver Wisdom as at the date on which the call option granted by the Call Option Holder to Silver Wisdom is exercised at the call option exercise price upon the exercise of the call option during the exercise period, further details of which are set out in the announcement of the Company dated 26 February 2015; (h) the underwriting agreement dated 11 June 2015 and the supplemental underwriting
agreement dated 9 July 2015 entered into between the Company and Gransing Securities Co., Limited in relation to the underwriting arrangement in respect of the proposed issue of 1,010,749,200 new Shares by way of rights issue on the basis of four new Shares for every one existing Share to the qualifying shareholders held on a record date at a price of HK$0.18 per new Share, further details of which are set out in the announcements of the Company dated 11 June 2015 and 10 July 2015, the circular of the Company dated 27 July 2015 and the prospectus of the Company dated 26 August 2015;
(i) the sale and purchase agreement dated 18 September 2015 entered into between Fair Brilliant as the purchaser and Mr. Ng Kam Cheung Stephen and Ms. Foo Wye Chan Marie as the vendors, pursuant to which Fair Brilliant conditionally agreed to purchase, and the vendors conditionally agreed to sell (i) 1,000 issued shares of Asia Molecular, representing its entire issued share capital, and (ii) the aggregate amount of loans owed by Asia Molecular to the vendors, at a total consideration of approximately HK$1.87 million, further details of which are set out in the announcement of the Company dated 18 September 2015;
APPENDIX II
GENERAL INFORMATION
(j) the sale and purchase agreement dated 18 September 2015 and the supplemental sale and purchase agreement dated 13 November 2015 entered into between Fair Brilliant as the purchaser and Deep Value Financing Fund as the vendor, pursuant to which Fair Brilliant conditionally agreed to purchase, and the vendor conditionally agreed to sell (i) 1 issued share capital of DVF Holdco, representing its entire issued share capital, and (ii) the aggregate amount of loan owed by a subsidiary of DVF Holdco to the vendor, at a total consideration of HK$103 million, further details of which are set out in the announcements of the Company dated 18 September 2015 and 13 November 2015 and the circular of the Company dated 25 November 2015;
(k) the subscription deed dated 18 September 2015 entered into between Fair Brilliant as the issuer and Mr. Wong Sou Him Lawrence as the subscriber, pursuant to which Fair Brilliant conditionally agreed to issue and allot, and subscriber conditionally agreed to purchase 3 new shares of Fair Brilliant, representing 3% of the issued share capital of Fair Brilliant upon the completion, at the subscription price of HK$3.138 million, further details of which are set out in the announcement of the Company dated 18 September 2015;
(l) the sale and purchase agreement dated 17 December 2015 entered into between the Company as the vendor and Mr. Yang Shunfeng as the purchaser, pursuant to which the Company conditionally agreed to sell, and the purchaser conditionally agreed to purchase 101 issued shares of Wallfaith, representing its entire issued share capital, at a total consideration of HK$15 million, further details of which are set out in the announcement of the Company dated 17 December 2015 and the circular of the Company dated 15 January 2016;
(m) the Disposal Agreement;
(n) the placing agreement dated 21 December 2015 entered into between the Company as the issuer and Convoy Securities Limited (“Convoy”) as the placing agent, pursuant to which the Company conditionally agreed to place, through Convoy, on an undertaken basis, up to 50,537,000 new Shares, to not less than six placees, at a price of HK$0.10 per placing Share, details of which are set out in the announcements of the Company dated 21 December 2015 and 31 December 2015;
(o) the conditional subscription agreement dated 15 January 2016 entered into between the Company as the issuer and Hang Fat Ginseng International Limited as the subscriber in connection with the issue by the Company and subscription, at the principal amount of the convertible notes in cash, by Hang Fat Ginseng International Limited of the convertible notes in the principal amount of HK$43.34 million, which are convertible into up to 197,000,000 shares of HK$0.10 each of the Company at the initial conversion price of HK$0.22 per share (subject to adjustments), details of which are set out in the announcement of the Company dated 15 January 2016;
(p) the sale and purchase agreement dated 28 January 2016 entered into between Exquisite Beauty Holding Limited, an indirect wholly-owned subsidiary of the Company, as the purchaser and Mr. Yip Hai Tak as the vendor in connection with the sale and purchase of 2,541 issued shares of Ultimate Synergy Limited, representing approximately 27.80% of its issued share capital, at a consideration of HK$27.951 million (subject to downward adjustments), details of which are set out in the announcement of the Company dated 28 January 2016; and
(q) the sale and purchase agreement dated 28 January 2016 entered into between Dynasty Well Limited, a direct wholly-owned subsidiary of the Company, as the vendor and Mr. Jiang Lin as the purchaser in connection with the sale and purchase of (i) one issued share of Allied View International Limited, representing its entire issued share capital, and (ii) the entire sum owing by Allied View International Limited to Dynasty Well Limited at an aggregate consideration of HK$13.6 million, details of which are set out in the announcement of the Company dated 28 January 2016.
9. AUDIT COMMITTEE
An audit committee of the Board (“Audit Committee”) was established with written terms of reference in compliance with the Rules 5.28 and 5.29 of the GEM Listing Rules and Code Provision C.3.3. The Audit Committee must consist of a minimum of three members, all of whom must be non-executive Directors, at least one of whom must have appropriate professional qualification or accounting or related financial management expertise. Mr. Yuen Chun Fai is the chairman of the Audit Committee whilst Mr. Leung Ka Fai and Mr. Ho Fung Shan Bob are members of the Audit Committee. The principal duties of the Audit Committee is to review the Company’s consolidated financial statements, annual results, annual reports, interim reports and quarterly reports and to advise and comment thereon to the Board. The Audit Committee is also responsible for reviewing and supervising the Group’s financial reporting, risk management and internal control procedures.
The profile of each member of the Audit Committee is set out below:
Mr. Yuen Chun Fai (“Mr. Yuen”), aged 36, was appointed as an independent non-executive
Director on 30 June 2014. Mr. Yuen has over 13 years of experiences in the field of financial reporting, financial management and audit experience in Hong Kong, the PRC, Malaysia and Singapore. Mr. Yuen was an executive director of Cybertowers Berhad (stock code: 0022. KL), a company listed in the ACE Market in Malaysia, from April 2012 to June 2013, and was appointed as a non-independent non-executive director of Cybertowers Berhad, from June 2013 to February 2014. Mr. Yuen has been acting as an independent non-executive director of Ping Shan Tea Group Limited, a company whose shares are listed on the Main Board of the Stock Exchange (stock code: 364) since 31 July 2014. Mr. Yuen is currently the company secretary and an executive director of WLS Holdings Limited, a company whose shares are listed on the GEM (stock code: 8021).
Mr. Yuen holds a Bachelor of Science in accounting and finance awarded by The London School of Economics and Political Science in 2002. Mr. Yuen is a fellow member of the Association of Chartered Certified Accountants and is also a certified public accountant of the Hong Kong Institute of Certified Public Accountants.
APPENDIX II
GENERAL INFORMATION
Mr. Leung Ka Fai (“Mr. Leung KF”), aged 37, has been an independent non-executive Director
since 26 June 2013. Mr. Leung KF was employed by a law firm in Hong Kong as the community service manager. He also worked in Beta Field Capital Limited as a business director from December 2011 to February 2012 and he has worked as the China Business director in Beta Field Capital Limited since April 2013.
Mr. Leung KF has been a district council member of Sha Tin District Council since 2008. Mr. Leung KF has also been a committee member of Yunfu City of the Chinese People’s Political Consultative Conference (中國人民政治協商會議雲浮市委員會) in the PRC since January 2013. Mr. Leung KF is currently a member of Sha Tin District of Fight Crime Committee (沙田區撲滅罪行 委員會), a vice-chairman of Sha Tin East District in New Territories East Region of District Scout Council of Scout Association of Hong Kong (香港童軍總會新界東地域沙田東區區務委員會). Mr. Leung KF has been a director of Hong Kong Association For The Development of Western China Limited (香港中國西部發展促進會有限公司) since 2011.
Mr. Leung KF graduated from Upper Iowa University in December 2005. Mr. Leung KF holds a Master of Arts degree in Chinese Language and Literature from The Hong Kong Polytechnic University in October 2008, a Postgraduate Diploma in Education (Teaching in Chinese) from Hong Kong Baptist University in November 2012 and a Master of Arts degree in Sociology from The Chinese University of Hong Kong in November 2014.
Mr. Ho Fung Shan Bob (“Mr. Ho”), aged 33, was appointed as an independent non-executive
Director on 14 October 2014. From May 2006 to October 2009, Mr. Ho worked in Winterhur Life (Hong Kong) Limited, which was re-branded as AXA Wealth Management (HK) Limited (“AXA”) in 2007, and his last position with AXA was assistant manager. Mr. Ho has been a career representative unit manager of AIA International Limited since November 2009. Mr. Ho is currently a director of each of AWM Investment Consultancy Limited and Ling Yuen Ju Company Limited.
Mr. Ho graduated from the City University of Hong Kong in November 2006 and obtained a Bachelor of Business Administration in Marketing.
10. MISCELLANEOUS
(a) The registered office of the Company is at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
(b) The head office and principal place of business of the Company in Hong Kong is at Room 1213, Tower A, New Mandarin Plaza, 14 Science Museum Road, Kowloon, Hong Kong. (c) The company secretary of the Company is Mr. Lei Kin Keong, who is a certified public
11. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. on any Business Day up to and including the date of the SGM at the principal place of business of the Company in Hong Kong at Room 1213, Tower A, New Mandarin Plaza, 14 Science Museum Road, Kowloon, Hong Kong:
(a) the memorandum of continuance and the bye-laws of the Company;
(b) the annual reports of the Company for the year ended 30 September 2012, for the fifteen months ended 31 December 2013 and for the year ended 31 December 2014;
(c) the interim report of the Company for the six months ended 30 June 2015;
(d) the material contracts referred to in the section headed “8. MATERIAL CONTRACTS” in this Appendix; and
(e) a copy of each circular issued pursuant to the requirements set out in Chapter 19 and/or Chapter 20 of the GEM Listing Rules which has been issued since 31 December 2014, being the date of the latest published audited accounts, including this circular.
NOTICE OF SGM
RUI KANG PHARMACEUTICAL GROUP INVESTMENTS LIMITED
銳 康 藥 業 集 團 投 資 有 限 公 司
(Incorporated in the Cayman Islands and continued in Bermuda with limited liability)
(Stock code: 8037)
NOTICE OF SPECIAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that a special general meeting (“Meeting”) of Rui Kang
Pharmaceutical Group Investments Limited (“Company”) will be held at 10:30 a.m. on Monday, 22 February 2016 at Narcissus Room, the Garden Rooms, 2/F, The Royal Garden Hotel, 69 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong to consider and, if thought fit, pass the following resolution as an ordinary resolution of the Company:
ORDINARY RESOLUTION “THAT:
(a) the disposal (“Disposal”) of (i) 30% of the issued share capital of Magical Bloom Limited (“Target”) and (ii) the entire sum owing by the Target and its subsidiaries to Icy Snow Limited as at completion of the Disposal as contemplated under the sale and purchase agreement dated 21 December 2015 (“Disposal Agreement”, a copy of the Disposal Agreement is marked “A” and signed by the chairman of the Meeting for identification purpose has been tabled at the Meeting) entered into between Icy Snow Limited, as the vendor and Fuda Ventures Limited as the purchaser in relation to the Disposal (as set out in the circular of the Company dated 2 February 2016 (“Circular”), a copy of which is marked “B” and signed by the chairman of the Meeting for identification purpose has been tabled at the Meeting) be and is hereby approved, confirmed and ratified and the Disposal and all other transactions contemplated under the Disposal Agreement be and are hereby approved; and
(b) the board of directors of the Company (“Board”) or a duly authorised committee of the Board be and is authorised to do all such acts and things, to sign and execute such documents or agreements or deed on behalf of the Company and to do such other things and to take all such actions as it considers necessary, appropriate, desirable or expedient for the purposes of giving effect to or in connection with the Disposal, the Disposal Agreement and all transactions contemplated thereunder and to agree to such variation, amendments or waiver or matters relating thereto (excluding any variation, amendments or waiver of such
documents or any terms thereof, which are fundamentally and materially different from those as provided for in the Disposal Agreement and which shall be subject to approval of the shareholders of the Company) as is in the opinion of the Board or a duly authorised committee thereof, in the interest of the Company and its shareholders as a whole.”
By order of the Board
Rui Kang Pharmaceutical Group Investments Limited LEUNG Pak Hou Anson
Executive Director Hong Kong, 2 February 2016
Registered office: Head office and principal place of
Clarendon House business in Hong Kong:
2 Church Street Room 1213, Tower A
Hamilton HM 11 New Mandarin Plaza
Bermuda 14 Science Museum Road
Kowloon Hong Kong
As at the date of this notice, the directors of the Company (“Directors”) are as follows: Executive Directors:
Mr. CHEUNG Hung (Chairman) Mr. LEUNG Pak Hou Anson
Ms. CHEN Miaoping (Chief Executive Officer) Independent non-executive Directors:
Mr. YUEN Chun Fai Mr. LEUNG Ka Fai Mr. HO Fung Shan Bob
Notes:
1. A member of the Company who is entitled to attend and vote at the Meeting convened by this notice is entitled to appoint one or more proxies to attend the Meeting and vote on his/her/its behalf. A member who is the holder of two or more shares may appoint more than one proxy to represent him/her/it and to attend and vote in his/her/its stead at the Meeting. A proxy needs not be a member of the Company but must attend the Meeting in person to represent the member of the Company. 2. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his/her/its attorney duly
authorised in writing, or if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.
3. In order to be valid, a form of proxy and the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power or authority, must be deposited with the Company’s branch share registrar and transfer office in Hong Kong, Union Registrars Limited at A18/F., Asia Orient Tower, Town Place, 33 Lockhart Road, Wanchai, Hong Kong, in accordance with the instructions printed thereon not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof. The completion and return of the form of proxy will not preclude a member of the Company from attending and voting in person at the Meeting or any adjournment thereof if he/she/it so wishes. In that event, his/her/its form of proxy previously submitted will be deemed to be revoked.
4. In the case of joint holders of a share, any one of such joint holders may vote, either in person or by proxy, in respect of such share as if he/she/it was solely entitled thereto; but if more than one of such joint holders are present at the Meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.
5. In compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market on The Stock Exchange of Hong Kong Limited, resolution to be proposed at the Meeting convened by this notice will be voted on by way of poll.
