This Composite Document Is Important and Requires Your Immediate Attention

THIS COMPOSITE DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this Composite Document and the accompanying Form of Acceptance or as to the action you should take, 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 Daiwa Associate Holdings Limited, you should at once hand this Composite Document, the accompanying Form of Acceptance and the enclosed proxy form to the purchaser(s) or the transferee(s), or to the licensed securities dealer or registered institution in securities or other agent through whom the sale was effected for transmission to the purchaser(s) or transferee(s). Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this Composite Document and the accompanying Form of Acceptance, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance on the whole or any part of the contents of this Composite Document and the accompanying Form of Acceptance. This Composite Document should be read in conjunction with the accompanying Form of Acceptance, the contents of which form part of the terms and conditions of the Share Offer contained in this Composite Document.

ASIA-IO ACQUISITION FUND, L.P. DAIWA ASSOCIATE HOLDINGS LIMITED (A Cayman Islands exempted limited partnership) 台和商事控股有限公司 * (Incorporated in Bermuda with limited liability) (Stock code: 1037)

COMPOSITE DOCUMENT IN RELATION TO MANDATORY UNCONDITIONAL CASH OFFER BY

FOR AND ON BEHALF OF ASIA-IO ACQUISITION FUND, L.P. TO ACQUIRE ALL THE ISSUED SHARES OF DAIWA ASSOCIATE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY ASIA-IO ACQUISITION FUND, L.P. AND PARTIES ACTING IN CONCERT WITH IT)

Financial Adviser to Asia-IO Acquisition Financial Adviser to Daiwa Associate Fund, L.P. Holdings Limited

Independent Financial Adviser to the Independent Board Committee

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed “Definitions” in this Composite Document. A letter from Huatai containing, among other things, details of the terms and conditions of the Share Offer is set out on pages 7 to 18 of this Composite Document. A letter from the Board is set out on pages 19 to 23 of this Composite Document. A letter from the Independent Board Committee is set out on page 24 of this Composite Document. A letter from the Independent Financial Adviser containing its recommendation and advice to the Independent Board Committee is set out on pages 25 to 44 of this Composite Document. The procedures for acceptance and settlement of the Share Offer are set out in Appendix I to this Composite Document and in the accompanying Form of Acceptance. Acceptances of the Share Offer should be received by the Registrar by no later than 4:00 p.m. on Monday, 23 November 2015 or such later time and/or date as the Offeror may determine and announce with the consent of the Executive, in accordance with the Takeovers Code. Persons including, without limitation, custodians, nominees and trustees, who would, or otherwise intend to, forward this Composite Document and/or the accompanying Form of Acceptance to any jurisdiction outside Hong Kong should read the details in this regard which are contained in the section headed “Overseas Shareholders” in Appendix I to this Composite Document before taking any action. It is the responsibility of any person wishing to accept the Share Offer to satisfy himself, herself or itself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required and the compliance with other necessary formalities or legal requirements. Each such person is advised to seek professional advice on deciding whether to accept the Share Offer. The English text of this Composite Document shall prevail over the Chinese text in case of any inconsistency. 2 November 2015 * For identification purpose only Contents

Page

Expected Timetable ...... ii

Definitions ...... 1

Letter from Huatai ...... 7

Letter from the Board ...... 19

Letter from the Independent Board Committee ...... 24

Letter from the Independent Financial Adviser ...... 25

Appendix I — Further Terms of the Share Offer and Procedures for Acceptance ...... I-1

Appendix II — Financial Information of the Group ...... II-1

Appendix III — Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on Unaudited Pro Forma Financial Information III-1

Appendix IV — General Information of the Offeror ...... IV-1

Appendix V — General Information of the Company ...... V-1

— i — Expected Timetable

Below is an indicative timetable showing the key dates of the relevant events(1):

Event Time and Date 2015

Despatch date of this Composite Document and the accompanying Form of Acceptance and the commencement date of the Share Offer(2) . . . 2 November

Latest time and date for acceptance of the Share Offer(3) ...... by 4:00 p.m., on 23 November

Share Offer Closing Date ...... 23 November

Announcement of the results of the Share Offer to be published on the website of the Stock Exchange(4) ...... by 7:00 p.m., on 23 November

Latest date of posting of remittances for the amounts due under the Share Offer in respect of valid acceptances received under the Share Offer(2) & (5) ...... 2 December

Notes:

1. Dates and deadlines stated in this Composite Document for events in the timetable above are indicative only and may be extended or varied. Any changes to the expected timetable will be jointly announced by the Offeror and the Company as appropriate. All times and dates refer to Hong Kong local time.

2. The Share Offer, which is unconditional in all respects, is made on the date of posting of this Composite Document, and is capable of acceptance on and from 2 November 2015 until the Closing Date. Acceptances of the Share Offer shall be irrevocable and not capable of being withdrawn, except in the circumstances set out in the section headed “4. Right of Withdrawal” in Appendix I to this Composite Document.

3. The Share Offer will be closed at 4:00 p.m. on the Closing Date of the Share Offer unless the Offeror revises or extends the Share Offer in accordance with the Takeovers Code.

4. An announcement will be jointly issued by the Offeror and the Company through the website of the Stock Exchange by 7:00 p.m. on the Closing Date stating the results of the Share Offer and whether the Share Offer has been revised or extended. In the event that the Offeror decides that the Share Offer will remain open, the announcement will state the next closing date of the Share Offer or that the Share Offer will remain open until further notice. In the latter case, at least 14 days’ notice in writing will be given, before the Share Offer is closed, to those Share Offer Shareholders who have not accepted the Share Offer.

5. Remittances in respect of the cash consideration (after deducting the seller’s ad valorem stamp duty in respect of acceptances of the Share Offer) payable for the Offer Shares tendered under the Share Offer will be posted to the accepting Share Offer Shareholders by ordinary post at their own risk as soon as possible, but in any event within seven (7) Business Days of the date of receipt by the Registrar of duly completed Form of Acceptance and all the relevant documents of title to render the acceptance by such Shareholders respectively under the Share Offer complete and valid in accordance with Note 1 to Rule 30.2.

Acceptance of the Share Offer shall be irrevocable and not capable of being withdrawn, except in the circumstances set out in the section headed “4. RIGHT OF WITHDRAWAL” in Appendix I to this Composite Document.

If there is a tropical cyclone warning signal number 8 or above, or a black rainstorm warning:

(a) in force in Hong Kong at any local time before 12:00 noon but no longer in force after 12:00 noon on the latest date for acceptance of the Share Offer and the latest date for posting of remittances for the amounts due under the Share Offer in respect of valid acceptances, the latest time for acceptance of the Share Offer and the posting of remittances will remain at 4:00 p.m. on the same Business Day; or

(b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the latest date for acceptance of the Share Offer and the latest date for posting of remittances for the amounts due under the Share Offer in respect of valid acceptances, the latest time for acceptance of the Share Offer and the posting of remittances 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..

— ii — Definitions

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

“acting in concert” has the same meaning ascribed to it under the Takeovers Code

“Asia-IO Holdings BVI” Asia-IO Holdings Limited, a company incorporated in the BVI with limited liability and controlled by Mr. Denis Tik Yang Tse

“Asia-IO Holdings BVI the subscription agreement dated 29 April 2015 entered into Subscription Agreement” between the Company and Asia-IO Holdings BVI in relation to the subscription for 43,439,139 Subscription Shares

“Asia-IO Holdings Cayman” Asia-IO Holdings Limited, an exempted limited liability company incorporated in the Cayman Islands and controlled by Mr. Denis Tik Yang Tse

“associate” has the same meaning ascribed to it under the Listing Rules

“Bermuda” the Islands of Bermuda

“Board” the board of Directors

“Business Day(s)” a day on which the banks are open for business in Hong Kong, other than Saturdays, Sundays and public holidays and/or a day on which the Stock Exchange is open for the transaction of business (as defined under the Takeovers Code)

“BVI” the British Virgin Islands

“CCASS” the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

“Circular” the circular issued by the Company on 30 September 2015 containing, among other things, details of the Sale and Purchase Agreement, the Disposal Agreement, the Subscription Agreements and the Special Dividend

“Closing Date” the closing date of the Share Offer, which falls on 23 November 2015, being 21 days after the date on which this Composite Document is posted, or such other later date revised or extended by the Offeror, with the consent of the Executive, in accordance with the Takeovers Code

“Company” Daiwa Associate Holdings Limited, a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange with the stock code 1037

— 1 — Definitions

“Composite Document” this composite offer and response document jointly issued by the Offeror and the Company in relation to the Share Offer

“Consideration per Sale Share” the consideration of approximately HK$1.144 per Sale Share under the Sale and Purchase Agreement

“Director(s)” the director(s) of the Company, from time to time

“Disposal” the disposal of the entire issued share capital of the Disposal Company pursuant to the Disposal Agreement

“Disposal Agreement” the sale and purchase agreement dated 29 April 2015 (as supplemented by the supplemental agreement dated 27 July 2015) entered into between the Company as vendor and the Disposal Purchaser as purchaser in respect of the Disposal

“Disposal Completion” the completion of the Disposal Agreement in accordance with the terms and conditions therein

“Executive” Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

“Form of Acceptance” the form(s) of acceptance and transfer in respect of the Share Offer accompanying this Composite Document

“Group” the Company and its subsidiaries

“Hong Kong” the Hong Kong Special Administrative Region of the PRC

“Huatai” Huatai Financial Holdings (Hong Kong) Limited, a licensed corporation to carry out type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, being the financial adviser to the Offeror

“Huatai Principal Investment” Huatai Principal Investment I Limited, being one of the Subscribers, a company incorporated in the BVI with limited liability and beneficially owned by Huatai

“Huatai Principal Investment the subscription agreement dated 29 April 2015 entered Subscription Agreement” into between the Company and Huatai Principal Investment in relation to the subscription of 36,861,972 Subscription Shares

“Independent Board the independent committee of the Board comprising all Committee” the independent non-executive Directors, namely Dr. Barry John Buttifant, Mr. Choi Yuk Fan and Dr. Liu Ngai Wing, which has been established by the Company to make recommendations to the Share Offer Shareholders in respect of whether the Share Offer is fair and reasonable for acceptance or not

— 2 — Definitions

“Independent Financial Adviser” Messis Capital Limited, the independent financial adviser, or “Messis Capital” appointed by the Independent Board Committee to advise the Independent Board Committee to make recommendation to the Share Offer Shareholders in respect of whether the Share Offer is fair and reasonable for acceptance or not

“Investec” Investec Capital Asia Limited, a licensed corporation to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (assets management) regulated activities under the SFO, being the financial adviser to the Company

“Joint Announcement” the announcement dated 7 August 2015 jointly issued by the Company and the Offeror in relation to, among others, the Sale and Purchase Agreement, the Special Deal, the Disposal Agreement, the Special Dividend, the Subscription Agreements and the Share Offer

“Last Trading Day” 29 April 2015, being the last trading day for the Shares immediately prior to the suspension in the trading of the Shares on the Stock Exchange pending the publication of the Joint Announcement

“Latest Practicable Date” 30 October 2015, being the latest practicable date prior to the printing of this Composite Document for ascertaining certain information contained herein

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“MOU” the memorandum of understanding dated the MOU Date entered into between Mr. Lau, Ms. Chan and Asia-IO Holdings BVI in relation to the possible sale and purchase of all or part of the Shares held by the Selling Shareholders

“MOU Announcement” the announcement dated 13 February 2015 issued by the Company in relation to the entering into of the MOU for the possible sale and purchase of all or part of the Shares held by the Selling Shareholders

“MOU Date” 12 February 2015

“Mr. Lau” Mr. Lau Tak Wan, an executive Director, the president of the Company, and one of the Selling Shareholders

“Ms. Chan” Ms. Chan Yuen Mei, Pinky, an executive Director, the spouse of Mr. Lau, and one of the Selling Shareholders

“Offer Period” the period commencing from 13 February 2015, being the date of the Company’s announcement made pursuant to Rule 3.7 of the Takeovers Code in relation to the entering into of the MOU, to the Closing Date

— 3 — Definitions

“Offer Share(s)” all the Share(s) in issue, other than those Shares already owned or agreed to be acquired by the Offeror and parties acting in concert with it

“Offeror” Asia-IO Acquisition Fund, L.P., a Cayman Islands exempted limited partnership

“Offeror Subscription the subscription agreement dated 29 April 2015 entered Agreement” into between the Company and the Offeror in relation to the subscription for 144,698,889 Subscription Shares

“Overseas Shareholders” Shareholder(s) whose addresses, as shown on the register of members of the Company, are outside Hong Kong

“PRC” the People’s Republic of China, for the purpose of this Composite Document, excluding Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan

“Proposed Directors” Mr. John Lap Shun Hui, Mr. Mark Yi-Pin Chien, Mr. Denis Tik Yang Tse, Mr. James Young Sang Ryu, Mr. Stephen Tin Lok Tang, Mr. Laurie Kan and Mr. Timothy Chen, further details of which are set out in the section headed “Proposed Change of Board Composition” in the “Letter from Huatai” in this Composite Document

“Record Date” 27 October 2015, being the date for determining the entitlements of the Shareholders to the Special Dividend

“Registrar” Tricor Abacus Limited, the Hong Kong branch share registrar and transfer office of the Company, being the agent to receive the Form of Acceptance under the Share Offer

“Relevant Period” the period from 12 August 2014, being the start date of the six month period preceding the commencement of the Offer Period, up to and including the Latest Practicable Date

“Sale and Purchase the conditional sale and purchase agreement dated 29 April Agreement” 2015 (as supplemented by the Supplemental Agreement) entered into between the Selling Shareholders and the Offeror in respect of the Sale Shares as amended by the Supplemental Agreement

“Sale and Purchase the completion of the sale and purchase of the Sale Shares Completion” pursuant to the Sale and Purchase Agreement

“Sale Shares” an aggregate of 241,221,529 Shares under the Sale and Purchase Agreement

— 4 — Definitions

“Selling Shareholders” Mr. Lau, Ms. Chan, China Capital Holdings Investment Limited and Leading Trade Limited, holding in aggregate 241,221,529 Shares (representing approximately 55.17% of the existing issued capital of the Company immediately prior to the Sale and Purchase Completion)

“SFC” the Securities and Futures Commission

“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time

“Shareholder(s)” holder(s) of Shares

“Shares” the ordinary shares of HK$0.10 each in the share capital of the Company

“Share Offer” the mandatory unconditional cash offer to be made by Huatai for and on behalf of the Offeror for all the Offer Shares pursuant to Rule 26.1 of the Takeovers Code

“Share Offer Completion” the completion of the Share Offer

“Share Offer Price” the price at which the Share Offer will be made, being HK$1.144 per Share

“Share Offer Shareholders” Shareholders other than the Offeror and parties acting in concert with it

“Special Dividend” the declaration of dividend in the amount of HK$0.23 per Share to the Shareholders on the Record Date as approved by the Shareholders at the special general meeting held on 19 October 2015

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“Subscribers” the Offeror, Asia-IO Holdings BVI and Huatai Principal Investment

“Subscription” the subscription for the Subscription Shares by the Subscribers pursuant to the Subscription Agreements

“Subscription Agreements” the Offeror Subscription Agreement, the Asia-IO Holdings BVI Subscription Agreement and the Huatai Principal Investment Subscription Agreement

“Subscription Completion” completion of the Subscription pursuant to the Subscription Agreements

“Subscription Price” the subscription price of HK$1.144 per Subscription Share

— 5 — Definitions

“Subscription Shares” a total of 225,000,000 new Shares to be subscribed by the Subscribers and issued by the Company at the Subscription Price

“Supplemental Agreement” the supplemental sale and purchase agreement entered into between Mr. Lau, for and on behalf of the Selling Shareholders, and the Offeror on 22 September 2015 to amend certain terms of the Sale and Purchase Agreement

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers

“Trading Day” a day on which the Stock Exchange is open for trading in Hong Kong

“HK$” Hong Kong dollars, the lawful currency of Hong Kong

“US$” United States dollars, the lawful currency of United States

“%” per cent.

# The English transliteration of the Chinese names in this Composite Document, where indicated, is included for information only, and should not be regarded as the official English names of such Chinese names.

— 6 — LETTER FROM HUATAI

2 November 2015

To the Share Offer Shareholders

Dear Sir or Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY HUATAI FINANCIAL HOLDINGS (HONG KONG) LIMITED FOR AND ON BEHALF OF ASIA-IO ACQUISITION FUND, L.P. TO ACQUIRE ALL THE ISSUED SHARES OF DAIWA ASSOCIATE HOLDINGS LIMITED (OTHER THAN THOSE SHARES ALREADY OWNED OR AGREED TO BE ACQUIRED BY ASIA-IO ACQUISITION FUND, L.P. AND PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

On 7 August 2015, the Company and the Offeror jointly announced, among other things, that:

(i) on 29 April 2015, the Selling Shareholders and the Offeror entered into the Sale and Purchase Agreement, pursuant to which the Selling Shareholders conditionally agreed to sell or procure the sale of the Sale Shares (being an aggregate of 241,221,529 Shares) as (direct or indirect) beneficial owners, and the Offeror conditionally agreed to acquire, the Sale Shares at a consideration of HK$1.144 per Sale Share; and

(ii) on 29 April 2015, the Company and the Subscribers entered into the Subscription Agreements pursuant to which the Company conditionally agreed to issue, and the Subscribers conditionally agreed to subscribe, in cash, for a total of 225,000,000 new Shares at the Subscription Price of HK$1.144 per Share for an aggregate consideration of approximately HK$257.4 million.

The Sale and Purchase Completion and the Subscription Completion took place on 29 October 2015 and were announced on the same date by the Company. The Offeror and parties acting in concert with it became the owner of 466,221,529 Shares or 70.40% of the enlarged share capital of the Company and, accordingly, the Offeror is required to make the Share Offer for all the issued Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) under Rule 26.1 of the Takeovers Code. Huatai, on behalf of the Offeror, is making the Share Offer.

— 7 — LETTER FROM HUATAI

This letter forms part of this Composite Document which sets out, among other things, the principal terms of the Share Offer, the information on the Offeror and the Offeror’s intention on the Company. Further details of the Share Offer are also set out in Appendix I to this Composite Document and the accompanying Form of Acceptance. Your attention is also drawn to the “Letter from the Board”, the “Letter from the Independent Board Committee” containing its recommendation to the Share Offer Shareholders in respect of the Share Offer, and the “Letter from the Independent Financial Adviser” containing its recommendation to the Independent Board Committee in respect of the Share Offer in this Composite Document.

THE Share OFFER

Principal terms of the Share Offer

Huatai, on behalf of the Offeror, is making the Share Offer for all issued Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) on the following basis:

For each Offer Share ...... HK$1.144 in cash

The Share Offer Price is the same as the purchase price per Sale Share under the Share and Purchase Agreement.

The Share Offer will be unconditional in all respects and will not be conditional upon acceptances being received in respect of a minimum number of Shares or any other conditions.

The Shares to be acquired under the Share Offer will be fully paid, free from all liens, charges and encumbrances.

Value of the Share Offer

As at the Latest Practicable Date, there were 662,239,448 Shares in issue and there were no outstanding options, warrants, derivatives or convertibles which may confer any rights to the holder(s) thereof to subscribe for, convert or exchange into Shares.

Based on the Share Offer Price of HK$1.144 per Offer Share and 662,239,448 Shares in issue as at the Latest Practicable Date, the entire issued share capital of the Company is valued at approximately HK$757.6 million.

As the Offeror and parties acting in concert with it own 466,221,529 Shares immediately after the Share and Purchase Completion and the Subscription Completion, the total number of issued Shares subject to the Share Offer will be 196,017,919 Shares.

In the event that the Share Offer is accepted in full, the maximum aggregate amount payable by the Offeror under the Share Offer will be approximately HK$224.2 million.

— 8 — LETTER FROM HUATAI

Offer Price

The Share Offer Price of HK$1.144 per Offer Share represents:

• a discount of approximately 74.12% to the closing price of the Shares of HK$4.42 per Share as quoted on the Stock Exchange on the Last Trading Day;

• a discount of approximately 72.70% to the ex-dividend closing price of HK$4.19 per Share as quoted on the Stock Exchange on the Last Trading Day after taking into account the Special Dividend of HK$0.23 per Share declared;

• a discount of approximately 71.11% to the average closing price of the Shares of approximately HK$3.96 per Share for the last 5 consecutive Trading Days up to and including the Last Trading Day;

• a discount of approximately 69.33% to the ex-dividend average closing price of approximately HK$3.73 per Share for the last 5 consecutive Trading Days up to and including the Last Trading Day after taking into account the Special Dividend of HK$0.23 per Share declared;

• a discount of approximately 69.74% to the average closing price of the Shares of approximately HK$3.78 per Share for the last 10 consecutive Trading Days up to and including the Last Trading Day;

• a discount of approximately 67.77% to the ex-dividend average closing price of approximately HK$3.55 per Share for the last 10 consecutive Trading Days up to and including the Last Trading Day after taking into account the Special Dividend of HK$0.23 per Share declared;

• a discount of approximately 54.42% to the average closing price of the Shares of approximately HK$2.51 per Share for the last 30 consecutive Trading Days up to and including the Last Trading Day;

• a discount of approximately 49.82% to the ex-dividend average closing price of approximately HK$2.28 per Share for the last 30 consecutive Trading Days up to and including the Last Trading Day after taking into account the Special Dividend of HK$0.23 per Share declared;

• a discount of approximately 13.33% to the closing price of the Shares of approximately HK$1.32 per Share on the MOU Date;

• a premium of approximately 4.95% over the ex-dividend closing price of HK$1.09 per Share on the MOU Date after taking into account the Special Dividend of HK$0.23 per Share declared;

• a discount of approximately 70.29% to the closing price of the Shares of approximately HK$3.85 per Share on the Latest Practicable Date;

• a discount of approximately 68.40% to the ex-dividend closing price of HK$3.62 per Share on the Latest Practicable Date after taking into account the Special Dividend of HK$0.23 per Share declared;

— 9 — LETTER FROM HUATAI

• a premium of approximately 308.57% over the audited net asset value attributable to equity holders as at 31 March 2015 of approximately HK$0.28 per Share based on 662,239,448 Shares in issue as at the Latest Practicable Date; and

• a premium of approximately 2,188.00% over the audited net asset value attributable to equity holders as at 31 March 2015 of approximately HK$0.05 per Share (based on the audited net asset value attributable to equity holders of approximately HK$186.3 million as at 31 March 2015 and 662,239,448 Shares in issue as at the Latest Practicable Date) after deducting the Special Dividend of HK$0.23 per Share declared.

Highest and Lowest Share Prices

During the six-month period preceding the date of the MOU Announcement and the period up to and including the Latest Practicable Date:

(i) the highest closing price of the Shares as quoted on the Stock Exchange was HK$4.75 on 28 April 2015; and

(ii) the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.66 on 12 August 2014.

Payment

Payment in cash in respect of acceptances of the Share Offer will be made as soon as possible but in any event within seven (7) Business Days after the date on which the duly completed acceptances of the Share Offer and the relevant documents of title in respect of such acceptances are received by the Offeror or its agent to render each such acceptance complete and valid and in accordance with Note 1 to Rule 30.2 of the Takeovers Code.

Compulsory Acquisition

The Offeror does not intend to avail itself of any powers of compulsory acquisition of any Shares outstanding after the close of the Share Offer.

Effect of Accepting the Share Offer

The Share Offer is unconditional. By accepting the Share Offer, the Share Offer Shareholders will sell their Shares to the Offeror free from all encumbrances whatsoever and together with all rights accruing or attaching to them including, without limitation, the right to receive dividends and distributions (but excluding the Special Dividend) recommended, declared, made or paid, if any, on or after the date on which the Share Offer is made. Share Offer Shareholders should note that acceptance of the Share Offer would not have impact on their entitlement to the Special Dividend if they appeared as the registered Shareholders as at the Record Date.

— 10 — LETTER FROM HUATAI

Acceptance of the Share Offer by any Shareholder will be deemed to constitute a warranty by such person that all Shares sold by such person under the Share Offer are free from all encumbrances whatsoever and together with all rights accruing or attaching to them, including, without limitation, the right to receive dividends and distributions (but excluding the Special Dividend) recommended, declared, made or paid, if any, on or after the date on which the Share Offer is made. Acceptances of the Share Offer shall be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code, details of which are set out in the section headed “4. Right of Withdrawal” in Appendix I to this Composite Document.

Overseas Shareholders

The availability of the Share Offer to any Overseas Shareholders may be affected by the applicable laws and regulations of their relevant jurisdictions of residence. The Overseas Shareholders should observe any applicable legal or regulatory requirements and, where necessary, seek legal advice. It is the responsibilities of the Overseas Shareholders who wish to accept the Share Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Share Offer (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due by such Overseas Shareholders in respect of such jurisdictions).

Acceptance of the Share Offer by any such person will be deemed to constitute a warranty by such person that such person is permitted under all applicable laws and regulations to receive and accept the Share Offer and any revision thereof, and such acceptance shall be valid and binding in accordance with all applicable laws and regulations. The Overseas Shareholders are recommended to seek professional advice on deciding whether or not to accept the Share Offer.

As at the Latest Practicable Date, to the best knowledge of the Company and save for those Shareholders whose Shares are held in CCASS, the Company had one Overseas Shareholder holding in total of 400 Shares and having registered address in Singapore. The Share Offer is being made to the Overseas Shareholders (other than the Offeror and parties acting in concert with it).

Hong Kong stamp duty

The seller’s Hong Kong ad valorem stamp duty on acceptances of the Share Offer at a rate of 0.1% (or part thereof) of the consideration payable in respect of the relevant acceptance by the Shareholders or if higher, the market value of the Offer Shares, will be deducted from the amount payable to Shareholders who accept the Share Offer. The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of the relevant Shareholders accepting the Share Offer and pay the buyer’s Hong Kong ad valorem stamp duty in connection with the acceptance of the Share Offer and the transfer of the Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).

— 11 — LETTER FROM HUATAI

DEALINGS IN SECURITIES OF THE COMPANY

The Offeror and parties acting in concert with it have not dealt in the Shares (if applicable, convertible securities, options, warrants or derivatives of the Company) during the six-month period preceding the date of the MOU Announcement and the period up to and including the Latest Practicable Date save for the MOU, the Sale and Purchase Agreement and the Subscription Agreements to which the Offeror or a party acting in concert with it is a party.

INFORMATION ON THE OFFEROR and the Subscribers

Information on the Offeror

The Offeror, Asia-IO Acquisition Fund, L.P., a Cayman Islands exempted limited partnership, is a dedicated private equity fund organised for the specific purpose of investing in a controlling stake of the Company. The general partner of the Offeror is Asia-IO Acquisition GP Limited, a Cayman Islands exempted limited liability company, and the investment advisor of the Offeror is Asia-IO Holdings Cayman, a Cayman Islands exempted limited liability company. Asia-IO Holdings Cayman is a private equity firm that specialises in making private equity investments in Asia on a deal-by-deal basis. Both Asia-IO Holdings Cayman and Asia-IO Acquisition GP Limited are controlled by Mr. Denis Tik Yang Tse, one of the proposed executive Directors as set out in the paragraph headed “Proposed Change of Board Composition” below.

The Offeror has raised capital from a number of anchor limited partners, including FSK Holdings Limited which contributes about 75% of the Offeror’s total commitment. FSK Holdings Limited is a Hong Kong-incorporated joint venture formed and currently indirectly controlled by companies in the IT sector, including (i) Hon Hai Precision Industry Co. Ltd. (incorporated in Taiwan and listed on the Taiwan Stock Exchange); (ii) SK Holdings Co., Ltd. (incorporated in Korea and listed on the Korea Stock Exchange); (iii) Foxconn Technology Company Limited (incorporated in Taiwan and listed on the Taiwan Stock Exchange); and (iv) Pan International Industry Corp. (incorporated in Taiwan and listed on the Taiwan Stock Exchange). The joint venture is to develop solutions and identify strategic opportunities to upgrade the manufacturing competence of the IT manufacturing industry. The remaining limited partners of the Offeror, who in aggregate contribute 25% of the Offeror’s total commitment, comprise high net-worth investors that are non-Hong Kong residents. None of such high net-worth investors holds more than 5% of the limited partnership interest in the Offeror.

The Offeror is also the purchaser in the Sale and Purchase Agreement.

Information on the Subscribers

The Subscribers to the Subscription Shares are (i) the Offeror, (ii) Asia-IO Holdings BVI and (iii) Huatai Principal Investment.

For information on the Offeror, please refer to the section “Information on the Offeror” above.

— 12 — LETTER FROM HUATAI

Asia-IO Holdings BVI is a British Virgin Island private limited company controlled by Mr. Denis Tik Yang Tse which is the investment holding vehicle through which the Offeror’s investment advisor co-invests alongside the Offeror.

Huatai Principal Investment is an investment holding company, wholly owned by Huatai which is a wholly owned subsidiary and overseas business platform of Huatai Securities Co., Ltd., a leading integrated securities group in China, the shares of which are listed on the Stock Exchange and the Shanghai Stock Exchange.

INFORMATION ON THE GROUP

The Company is a company incorporated in Bermuda with limited liability and the Shares are listed on the Main Board of the Stock Exchange. Following the Disposal Completion which took place on 29 October, 2015, the Group is principally engaged in manufacturing and trading of diodes, electronic manufacturing services, and manufacturing of telecom and radio frequency devices, plastic components and wire. Further information on the Group is set out in the “Letter from the Board” in this Composite Document. Financial information of the Group and general information of the Company are set out in Appendices II and V to this Composite Document, respectively.

Financial resources available to the Offeror

The Offeror intends to finance the consideration payable under the Share Offer from its internal resources. Huatai, as the financial adviser to the Offeror, is satisfied that sufficient resources are available to the Offeror to satisfy the amount of funds required for full acceptance of the Share Offer.

Offeror’s intention on the Company

The Offeror considers the Company’s existing business, being primarily the manufacturing capabilities in discrete components, an attractive foundation to build a business, including, among others, the provision of smart manufacturing solutions (“SMS”) that addresses various demands in the value chain of the electronics manufacturing ecosystem. This value proposition is particularly synergistic with the core business of one of the Offeror’s anchor limited partners, which is affiliated with the world’s largest electronics manufacturing services provider. Under the Offeror’s intended business strategy, the Company will target and provide SMS to electronics manufacturers to upgrade their manufacturing lines with the use of “Internet-of-Things” (“loT”) modules. Subject to market and industry conditions and the Offeror’s overall strategic planning, the Offeror intends to leverage the Group’s manufacturing capabilities in diodes and radio frequency modules, and to utilise idle capacity in the SMT production line to develop smart sensor devices and IoT devices to be used in SMS.

It is the intention of the Offeror to recruit five senior management by the end of March 2016 who will take the lead to market and implement the SMS for potential customers and to explore further business opportunities from and collaboration with the Offeror’s anchor limited partners. The Offeror will continue to review the businesses of the Company, including among others, the Group’s relationships with its customers and suppliers, portfolio of products, assets, corporate and organisational structure, capitalization, operations, policies, management and personnel to consider and determine what changes, if any, would be necessary, appropriate or desirable, long term and short term, in order to organise and optimise the businesses and operations of the Company and to integrate the same within the group of the Offeror’s anchor limited partners, subject to compliance

— 13 — LETTER FROM HUATAI with any necessary disclosure and shareholders’ approval requirements under the Listing Rules. Save as disclosed above and in the section headed “Information on the Group” set out in the “Letter from the Board”, the Offeror intends that the Company will continue to operate its businesses in substantially their current state in the 12 months following the Share Offer Completion. Save as in connection with the Offeror’s intention on the Company as set out above and the proposed change of board composition as set out below, the Offeror does not intend nor does it have any existing plans to terminate the employment of any of the employees or other personnel of the Group. Save for the selective capacity expansion and upgrade of production facilities as set out in the section headed “Reasons for the Subscription and use of the Subscription proceeds” below, the Offeror does not have other plans for the redeployment of fixed assets of the Group.

However, the Offeror reserves the right to make such changes that it deems necessary or appropriate to the Company’s businesses and operations to better integrate, generate synergy and achieve enhanced economies of scale with the other business operations of its anchor limited partners’ group. As at the Latest Practicable Date, the Offeror had no definitive proposal. The Offeror and the Company will comply with the relevant disclosure requirements under the Takeovers Code and the Listing Rules for any such changes as and when appropriate.

Reasons for the Subscription and use of the Subscription proceeds

The Offeror plans to build on the competence of the existing business of the Group in discrete component manufacturing to expand into other potential opportunities, including the provision of information technology (“IT”) services (like SMS) that are in demand in the electronics manufacturing value chain. The gross proceeds of the Subscription of approximately HK$257.4 million will primarily be used to strengthen the engineering and managerial teams, increase the working capital base, upgrade the Company’s production and/or service capabilities, and to explore new business opportunities, details of which are set out as follows:

• approximately HK$150 million to build and expand a dedicated team of sales, software development and system implementation professionals to further explore and expand the business opportunities of the Group. It is the intention of the Offeror to hire five senior management by the end of March 2016 who will oversee the operation and lead the fellow programmers, engineers, consultants and technicians to market and implement the SMS for potential customers. It is expected the Group will gradually expand such team to 300 people for project design, development and implementation by the end of 2017;

• approximately HK$80 million to strengthen the general working capital base which includes, among others, sales and marketing expenses for the proposed new SMS services, purchase of inventory and administrative expenses for expanding its offices; and

• the balance of approximately HK$27 million for selective capacity expansion and upgrade of production facilities to accommodate the proposed production of smart sensor devices and “IoT” devices by the business of the Group.

— 14 — LETTER FROM HUATAI

Subject to market and industry conditions and the Offeror’s overall strategic planning, the Offeror intends to leverage the Group’s manufacturing capabilities in diodes and radio frequency modules, and to utilise idle capacity in the SMT production line to develop smart sensor devices and “IoT” devices to be used in SMS. SMS is an IT services business and the current plan is to market such solutions to the leading industrial companies in Asia (particularly electronics manufacturers) for the IT upgrade of their manufacturing processes. Provision of SMS by the Company would primarily demand managerial, consulting, sales and systems engineering personnel to design and implement system integration services for the manufacturer clients. This would rely more on the consultative sales, engineering and process design expertise to integrate self-developed or third-party software/devices. As a result, approximately HK$150 million to be raised from the Subscription is allocated for the recruitment of additional professionals.

Proposed change of Board composition

The Board is currently made up of eight Directors, comprising five executive Directors and three independent non-executive Directors.

It is expected that Mr. Lau and Mr. Fung Wai Ching will remain as executive Directors after the Share Offer Completion, whereas all the other Directors will resign. The Offeror intends to nominate the Proposed Directors to the Board at such time as allowed under the Takeovers Code and any such appointment will be made in compliance with the Takeovers Code and the Listing Rules.

Executive Directors

Mr. John Lap Shun Hui is a veteran entrepreneur in the IT industry. In the mid-1990s, Mr. Hui was one of the founders of technology company eMachines, Inc., which was sold to Gateway Inc. in 2004. In 2006, Mr. Hui acquired the European technology company Packard Bell BV, which was sold to Acer Inc. in 2009, and acquired InFocus, a digital display technology company in 2009. Mr. Hui is also the founder and chairman of Fuhu, Inc., creator of the Nabi Pad and other cloud-served software and products for children. Mr. Hui has an MBA from McMaster University.

Mr. Mark Yi-Pin Chien is a director with Hon Hai Precision Industry Co. Ltd. (“Hon Hai”) and general manager of NPCEBG, a business group within Hon Hai with over US$25 billion annual revenues. Mr. Chien joined Hon Hai in 1991. He studied at Tamkang University.

Mr. Denis Tik Yang Tse is the director of both Asia-IO Holdings BVI and Asia-IO Holdings Cayman. He is most recently Head of Asia-Private Investments with Lockheed Martin Investment Management Company. He has fifteen years of private equity direct and fund investment experience in Asia, having worked with J.H. Whitney, CDIB Capital, and HSBC Private Equity (Asia), where he became the first Kauffman Fellow from an Asian venture firm. Mr. Tse is one of Chief Investment Officer “2014 Forty Under Forty”, and was named one of “Asia’s 25 most influential people in private equity” by Asian Investor in 2013. Mr. Tse has an MBA from INSEAD and a BSc (Hon.) from Northwestern University.

— 15 — LETTER FROM HUATAI

Mr. James Young Sang Ryu is the executive vice president and the head of business development group with SK Holdings Co., Ltd., a leading Korean total IT services provider that offers IT consulting, outsourcing, system integration and system maintenance and repair services since 1991. Mr. Ryu was formerly the senior vice president and head of corporate development Office with SK Telecom. Mr. Ryu graduated with an MBA from University of Washington and has an MS and a BS in Industrial Engineering from Seoul National University.

Independent non-executive Directors

Mr. Stephen Tin Lok Tang is the chief financial officer of Lunar Capital. He has over fourteen years of experience working on private equity and merger and acquisition transactions in the PRC and the Asia Pacific region. Prior to joining Lunar Capital, Stephen was a director with the Deloitte M&A Transaction Services. Stephen began his career at the Financial Services Group at Ernst & Young in Sydney, and subsequently relocated to Hong Kong and Beijing. Mr. Tang received a MCom in Advanced Finance and BCom from the University of New South Wales in Australia. He is a Chartered Accountant of the Institute of Chartered Accountants in Australia, a member of the Hong Kong Institute of Certified Public Accountants.

Mr. Laurie Kan is managing partner and founder of ON Capital, a private equity firm that specialises in investing in China since 2004. Prior to founding ON Capital, Mr. Kan established i100 Corporation in 1999, a start-up incubator that went on to list on the main board of the Hong Kong Stock Exchange. He had also served as president and executive director of Timeless Software, chief operating officer of CDC Corporation, founder of PointCast Asia, and had established Sina.com in Hong Kong. Mr. Kan spent the earlier years of his career successively at Apple Computer, Compaq Computer, and established Microsoft in Hong Kong and China. Mr. Kan graduated in business from Hong Kong Baptist College and from the Stanford Graduate School of Business’ Executive Program for Smaller Companies.

Mr. Timothy Chen is vice-president for business development and strategy at VIA Technologies, a leading innovator of silicon and platform technologies for personal computers. He also serves as technical assistant to the president and chief executive of VIA. Mr. Chen began his career with VIA in 1996 in its Taiwan headquarters, where he managed the sales and marketing offices for Japan and Korea. In addition to his roles at VIA, he holds board and advisory positions at a number of technology companies such as Qifang, OpenMoko, WonderMedia, VIA Telecom, CatchPlay and Fugoo. Mr. Chen is involved in social ventures, social media, premium content providers and core hardware companies at the semiconductor and system level. He is also active as an angel investor. Mr. Chen holds a Bachelor’s degree in engineering from the University of California, Berkeley.

The appointment of Mr. John Lap Shen Hui, Mr. Mark Yi-Pin Chien, Mr. Denis Tik Yang Tse and Mr. James Young Sang Ryu as executive Directors shall become effective on 3 November 2015. Any other changes to the Board will be made in compliance with the Takeovers Code and the Listing Rules.

— 16 — LETTER FROM HUATAI

Maintaining the listing status of the Company

The Offeror intends to continue the listing of the Shares on the Main Board of the Stock Exchange after the close of the Share Offer.

The Stock Exchange has stated that if, at the close of the Share Offer, less than the minimum prescribed percentage applicable to the listed issuer, being 25% of the issued Shares, are held by the public, or if the Stock Exchange believes that:

i. a false market exists or may exist in the trading of the Shares; or

ii. that there are insufficient Shares in public hands to maintain an orderly market; it will consider exercising its discretion to suspend dealings in the Shares.

The Offeror intends the Company to remain listed on the Stock Exchange. The director of the general partner of the Offeror and the new Directors to be appointed to the Board will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Shares.

ACCEPTANCE AND SETTLEMENT

Your attention is drawn to the further details regarding the procedures for acceptance and settlement and acceptance period as set out in Appendix I to this Composite Document and the accompanying Form of Acceptance.

Taxation advice

Share Offer Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting or rejecting the Share Offer. None of the Offeror, parties acting in concert with the Offeror, the Company, Huatai, and their respective ultimate beneficial owners, directors, officers, agents or associates and other persons involved in the Share Offer accepts responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Share Offer.

GENERAL

To ensure equality of treatment of all Share Offer Shareholders, those registered Share Offer Shareholders who hold the Offer Shares as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. It is essential for the beneficial owners of the Offer Shares whose investments are registered in the name of nominees to provide instructions to their nominees of their intention with regard to the Share Offer.

Attention of the Overseas Shareholders is drawn to the paragraph headed “Overseas Shareholders” above in this letter.

— 17 — LETTER FROM HUATAI

All documents and remittance to be sent to the Share Offer Shareholders will be sent to them by ordinary post at their own risk. Such documents and remittances will be sent to the Share Offer Shareholders at their respective addresses as they appear in the register of members of the Company or in the case of joint Share Offer Shareholders, to such Share Offer Shareholder whose name appears first in the register of members of the Company. None of the Offeror, parties acting in concert with the Offeror, the Company, Huatai, Messis Capital, the Registrar, their respective directors, ultimate beneficial owners, officers, agents or associates and other persons involved in the Share Offer will be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof or in connection therewith.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this Composite Document and the accompanying Form of Acceptance.

You are reminded to carefully read the “Letter from the Board”, the “Letter from the Independent Board Committee”, the “Letter from the Independent Financial Adviser” and other information on the Group which are set out in this Composite Document before deciding whether or not to accept the Share Offer.

Yours faithfully, For and on behalf of Huatai Financial Holdings (Hong Kong) Limited Michael Fok Managing Director

— 18 — Letter from the Board

DAIWA ASSOCIATE HOLDINGS LIMITED 台和商事控股有限公司 * (Incorporated in Bermuda with limited liability) (Stock code: 1037)

Board of Directors: Registered Office: Executive: Canon’s Court LAU Tak Wan (President) 22 Victoria Street CHAN Yuen Mei, Pinky (Vice-president) Hamilton HM 12 CHEUNG Wai Ho Bermuda CHONG Wing Kam, James FUNG Wai Ching Head office and principal place of business: Independent non-executive: 11th Floor, Block G Barry John BUTTIFANT East Sun Industrial Centre LIU Ngai Wing 16 Shing Yup Street CHOI Yuk FAN Kwun Tong, Kowloon Hong Kong

2 November 2015

To the Shareholders

Dear Sir or Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY Huatai Financial holdings (hong Kong) Limited FOR AND ON BEHALF OF ASIA-IO ACQUISITION FUND, L.P. TO ACQUIRE ALL THE ISSUED SHARES OF DAIWA ASSOCIATE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED OR AGREED TO BE ACQUIRED BY ASIA-IO ACQUISITION FUND, L.P. AND PARTIES ACTING IN CONCERT WITH IT)

Introduction

References are made to the Joint Announcement, the Circular and the announcement of the Company dated 29 October 2015.

The Sale and Purchase Completion, Disposal Completion and the Subscription Completion took place simultaneously on 29 October 2015.

* For identification purpose only

— 19 — Letter from the Board

Immediately after the Sale and Purchase Completion and the Subscription Completion, the Offeror and parties acting in concert with it became interested in an aggregate of 466,221,529 Shares, representing approximately 70.4% of the entire issued share capital of the Company as at the Latest Practical Date. Accordingly, the Offeror is required to make a mandatory unconditional cash offer for the acquisition of all the issued Shares (other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it) pursuant to Rules 26.1 of the Takeovers Code. As the Offeror and parties acting in concert with it are holding more than 50% of the issued share capital of the Company, the Share Offer is unconditional.

Huatai, being the financial adviser to the Offeror, is making the Share Offer for and on behalf of the Offeror.

The purpose of this Composite Document is to provide you with, inter alia, (i) information relating to the Group and the Share Offer, (ii) the letter from the Independent Board Committee containing its recommendation to the Share Offer Shareholders in respect of the terms of the Share Offer and as to acceptance; and (iii) the letter from the Independent Financial Adviser containing their advice and recommendation to the Independent Board Committee in respect of the terms of the Share Offer and as to acceptance.

A. MANDATORY UNCONDITIONAL CASH OFFER FOR SHARES

The following information about the Share Offer is based on the relevant information set out in the letter from Huatai contained in this Composite Document. The Share Offer is being made by Huatai for and on behalf of the Offeror in compliance with the Takeovers Code on the terms and conditions set out in this Composite Document and in the accompanying Form of Acceptance on the following basis:

For each Offer Share HK$1.144 in cash

The Share Offer Price of HK$1.144 per Offer Share under the Share Offer is the same as (i) the Consideration per Sale Share paid by the Offeror under the Sale and Purchase Agreement; and (ii) the Subscription Price paid by the Subscribers under the Subscription Agreements.

You are advised to refer to the letter from Huatai and Appendix I to this Composite Document for further terms and details of the Share Offer and procedures for acceptance, and the accompanying Form of Acceptance for further details and procedures for acceptance and settlement of the Share Offer.

B. INFORMATION ON THE GROUP

The Company is a company incorporated in Bermuda with limited liability and its Shares are listed on the Main Board of the Stock Exchange.

Following the Disposal Completion which took place on 29 October 2015, the Group is principally engaged in manufacturing and trading of diodes, electronic manufacturing services, and manufacturing of telecom and radio frequency devices, plastic components and wire.

— 20 — Letter from the Board

The Group has been engaged in the manufacturing of telecommunication modules for infrastructures and mobile phone base stations as well as diodes for 20 years. Its current production base is located in the Heyuan factory, which includes approximately 16,500 square meters production floor and approximately 5,200 square meters domicile, and is equipped with the surface mount technology (“SMT”) production lines and semi-automatic assembly lines with about 450 workers. It has been engaged in long term business relationship with its existing major customers, which include global suppliers of electronic component or telecommunication modules (the “Global Customers”). The Group has sold the aforesaid products to these Global Customers for more than 15 years, and received steady and recurrent orders from these Global Customers for the past years.

Going forward, the Group intends to increase the automation facilities of the production and replace old machineries (e.g. old diodes machineries and SMT production lines) by new plant, equipment and technologies. Furthermore, while the top five customers of the Group for the past three years ended 31 March 2015 remained fairly consistent and stable, the Group expects (a) no change to the business scope with these top five customers; and (b) to maintain the similar level of turnover from its existing business operation in the foreseeable future.

Further information in relation to the business plan of the Group is referred to the section headed “Offeror’s intention on the Company” in the letter from Huatai set out in this Composite Document. As set out in the letter from Huatai contained in this Composite Document, the Offeror does not currently intend nor does it have any existing plans to terminate the employment of any of the employees or other personnel of the Company. The Board is aware of the intention of the Offeror in respect of the Company and is willing to render reasonable co-operation to the Offeror which is in the interests of the Company and the Shareholders as a whole.

Financial information of the Group (including such upon the Disposal Completion) is set out in the Appendix II and Appendix III to this Composite Document.

Shareholding structure of the Company

The following table sets out the shareholding structure of the Company as at the Latest Practicable Date:

Approximate Number of % of Shares Shares held in issue

The Offeror 385,920,418 58.28 Asia-IO Holdings BVI (Note) 43,439,139 6.56 Huatai Principal Investment (Note) 36,861,972 5.57

Subtotal of the Offeror and parties acting 466,221,529 70.40 in concert with it Other Shareholders 196,017,919 29.60

Total 662,239,448 100.00

Note: Asia-IO Holdings BVI and Huatai Principal Investment are parties acting in concert with the Offeror under the Takeovers Code.

— 21 — Letter from the Board

C. INFORMATION ON the offeror

Information on the Offeror is referred to the section headed “Information on the Offeror and the Subscribers” in the letter from Huatai set out in this Composite Document.

The Offeror is also the purchaser in the Sale and Purchase Agreement and the Subscriber in the Offeror Subscription Agreement.

D. Proposed change of Board composition

The Board is currently made up of eight Directors, comprising five executive Directors and three independent non-executive Directors.

Details in relation to the proposed change of the Board and particulars of the Proposed Directors are set out in the section headed “Proposed Change of Board Composition” in the letter from Huatai in this Composite Document.

E. MAINTAINING THE LISTING STATUS OF THE COMPANY

i. a false market exists or may exist in the trading of the Shares; or

ii. that there are insufficient Shares in public hands to maintain an orderly market; it will consider exercising its discretion to suspend dealings in the Shares.

As stated in the letter from Huatai set out in this Composite Document, the Offeror intends the Company to remain listed on the Stock Exchange. The director of the general partner of the Offeror and the new Directors to be appointed to the Board will jointly and severally undertake to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Shares.

F. Independent Board Committee and Independent Financial Adviser

The Independent Board Committee comprising all the independent non-executive Directors has been formed to make a recommendation to the Share Offer Shareholders in respect of whether the Share Offer is fair and reasonable for acceptance or not.

Messis Capital has been approved and appointed by the Independent Board Committee to advise the Independent Board Committee to make recommendation to the Share Offer Shareholders in respect of whether the Share Offer is fair and reasonable for acceptance or not pursuant to Rule 2.1 of the Takeovers Code.

— 22 — Letter from the Board

G. Recommendation

The Board (including the Independent Board Committee after taking into account the advice from the Independent Financial Adviser) considers that the terms of the Share Offer are fair and reasonable and in the interests of the Share Offer Shareholders. Accordingly, the Board recommends the Share Offer Shareholders to accept the Share Offer.

In view of the recent surge in the price of the Shares, Share Offer Shareholders who wish to realise their investment in the Group are reminded that they should carefully and closely monitor the market price of the Shares during the Offer Period and consider selling their Shares in the open market during the Offer Period, rather than accepting the Share Offer, if the net proceeds from the sales of such Shares in the open market would exceed the net amount receivable under the Share Offer. In any event, Share Offer Shareholders should note that there is no certainty that the current trading volume and/or current trading price level of the Shares will be sustainable during or after the Offer period of the Share Offer.

H. Additional Information

Your attention is drawn to (i) the letter from the Independent Board Committee set out on page 24 of this Composite Document which contains its views and recommendation to the Share Offer Shareholders in respect of the Share Offer; and (ii) the letter from the Independent Financial Adviser set out on pages 25 to 44 of this Composite Document which contains its views and recommendation to Independent Board Committee in respect of the Share Offer.

Your attention is also drawn to the additional information set out in the appendices to this Composite Document.

Yours faithfully, By Order of the Board Daiwa Associate Holdings Limited LAU Tak Wan President

— 23 — Letter from the Independent Board Committee

Prepared for the purpose of inclusion in this Composite Document, the following is the text of the letter of recommendation from the Independent Board Committee to the Share Offer Shareholders in respect of the whether the Share Offer is fair and reasonable for acceptance or not.

DAIWA ASSOCIATE HOLDINGS LIMITED 台和商事控股有限公司 * (Incorporated in Bermuda with limited liability) (Stock code: 1037)

2 November 2015

To the Share Offer Shareholders

Dear Sir or Madam,

We refer to this Composite Document dated 2 November 2015, of which this letter forms part. Unless specified otherwise, capitalised terms used herein shall have the same meanings as those defined in this Composite Document. We have been appointed to advise the Share Offer Shareholders on whether the Share Offer is fair and reasonable for acceptance or not.

Messis Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee to make recommendation to the Share Offer Shareholders in this regard. Details of their independent advice, together with the principal factors and reasons they have taken into consideration, are set out in the section headed “Letter from the Independent Financial Adviser” in this Composite Document.

We wish to draw your attention to the sections headed “Letter from the Board”, “Letter from Huatai” and the additional information set out in the appendices to this Composite Document for the terms and details of the Share Offer.

Having considered (i) the terms of the Share Offer; and (ii) the advice from Messis Capital and the principal factors taken into account in arriving at its recommendations in respect of the Share Offer, we are of the opinion that the Share Offer is fair and reasonable so far as the Share Offer Shareholders are concerned. Accordingly, we recommend the Share Offer Shareholders to accept the Share Offer.

The following is the full text of the letter from the Independent Financial Adviser which sets out its advice to the Independent Board Committee for inclusion in this Composite Document.

2 November 2015

To: The Independent Board Committee of Daiwa Associate Holdings Limited

Dear Sir/Madam,

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee in respect of the Share Offer, details of which are set out in the Composite Document dated 2 November 2015, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as defined in the Composite Document unless the context otherwise requires.

On 29 April 2015, the Selling Shareholders and the Offeror entered into the Sale and Purchase Agreement, pursuant to which the Selling Shareholders conditionally agreed to sell or procure the sale of the Sale Shares, being an aggregate of 241,221,529 Shares, as (direct or indirect) beneficial owners and the Offeror conditionally agreed to acquire the Sale Shares for a consideration of approximately HK$276.0 million (equivalent to HK$1.144 per Sale Share). The Sale Shares represent approximately 55.17% of the issued share capital of the Company immediately after the Sale and Purchase Completion but before the Subscription Completion. The Supplemental Agreement to the Sale and Purchase Agreement was subsequently entered on 22 September 2015 to alter the completion date and the long stop date for the sale and purchase of the Sale Shares.

— 25 — Letter from the Independent Financial Adviser million, Asia-IO Holdings BVI (an associate of the Offeror) will subscribe for 43,439,139 new Shares for a consideration of approximately HK$49.7 million and Huatai Principal Investment will subscribe for 36,861,972 new Shares for a consideration of approximately HK$42.2 million. Asia-IO Holdings BVI and Huatai Principal Investment are parties acting in concert with the Offeror under the Takeovers Code. The Offeror and parties acting in concert with it will be interested in a total of 466,221,529 Shares, representing approximately 70.40% of the issued share capital of the Company as at the Latest Practicable Date.

As such, the Offeror and parties acting in concert with it are required to make an mandatory unconditional cash offer for all the issued Shares (other than those already owned or agreed to be acquired or subscribed by the Offeror and parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code.

An Independent Board Committee comprising all independent non-executive Directors, namely Dr. Barry John Buttifant, Mr. Choi Yuk Fan and Dr. Liu Ngai Wing, has been formed to advise the Share Offer Shareholders in relation to the terms and conditions of the Share Offer, in particular as to whether or not the Share Offer is fair and reasonable and so to the acceptance of the Share Offer.

We are appointed as the Independent Financial Adviser to advise the Independent Board Committee as to (i) whether the Share Offer is on normal commercial terms and are fair and reasonable so far as the Share Offer Shareholders are concerned; and (ii) whether the Share Offer should be accepted. Our appointment has been approved by the Independent Board Committee.

OUR INDEPENDENCE

During the last two years, there was no previous engagement, or any significant connection, financial or otherwise, with either the Offeror or the Company, or the controlling shareholder(s) of either of them, of a kind reasonably likely to create, or to create the perception of, a conflict of interest or reasonably likely to affect the objectivity of our advice.

Apart from normal professional fees paid or payable to us in connection with this appointment as the Independent Financial Adviser with respect to the Special Deal, the Disposal Agreement, the Subscription Agreement and the Share Offer, no arrangements exist whereby we had received or will receive any fees or benefits from the Company or any other parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider that we are independent pursuant to Rule 13.84 of the Listing Rules and our appointment by the Independent Board Committee is in compliance with Rule 2 of the Takeover Code.

— 26 — Letter from the Independent Financial Adviser

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion to the Independent Board Committee, we have relied on the statements, information, opinions and representations contained or referred to in the Composite Document and the representations made to us by the Directors and the senior management of the Company. We have assumed that all statements, information and representations provided by the Directors and the management of the Company, for which they are solely responsible, are true and accurate at the time when they were provided and continue to be so as at the Latest Practicable Date and the Shareholders will be notified of any material changes to such statements, information, opinions and/or representations as soon as possible in accordance with Rule 9.1 of the Takeovers Code. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Composite Document were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Composite Document, or the reasonableness of the opinions expressed by the Company, its advisers, the Directors and/or the senior management, which have been provided to us.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Composite Document (other than information relating to the Offeror and parties acting in concert with it, the terms of the Offer and the intention of the Offeror in relation to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Composite Document have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Document the omission of which would make any statement contained in the Composite Document, including this letter, incorrect or misleading.

The director of the general partner of the Offeror accepts full responsibility for the accuracy of the information contained in the Composite Document (other than those relating to the Group), and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in the Composite Document (other than opinions expressed by the Group) have been arrived at after due and careful consideration and there are no other facts not contained in the Composite Document, the omission of which would make any statement in the Composite Document misleading.

We consider that we have been provided with sufficient information and have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules and Rule 2 of the Takeovers Code. We have not, however, carried out any independent verification of the information provided, nor have we conducted any independent investigation into the business and affairs of the Group. We have not considered the taxation implication on the Group or the Shareholders as a result of the Share Offer. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Where information in this letter has been extracted from published or otherwise publicly available sources, the sole responsibility of us is to ensure that such information has been correctly and fairly extracted, reproduced or presented from the relevant stated sources and not be used out of context.

— 27 — Letter from the Independent Financial Adviser

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee in relation to the Share Offer, we have considered the principal factors and reasons as set out below:

1. Background of the Share Offer

On 29 April 2015, the Selling Shareholders and the Offeror entered into the Sale and Purchase Agreement, pursuant to which the Selling Shareholders conditionally agreed to sell or procure the sale of the Sale Shares, being an aggregate of 241,221,529 Shares, as (direct or indirect) beneficial owners and the Offeror conditionally agreed to acquire the Sale Shares for a consideration of approximately HK$276.0 million (equivalent to HK$1.144 per Sale Share). The Sale Shares represent approximately 55.17% of the issued share capital of the Company immediately after the Sale and Purchase Completion but before the Subscription Completion. The Supplemental Agreement to the Sale and Purchase Agreement was subsequently entered into on 22 September 2015 to alter the completion date and the long stop date for the sale and purchase of the Sale Shares.

On 29 April 2015, the Company and the Subscribers also entered into the Subscription Agreements pursuant to which the Company conditionally agreed to issue, and the Subscribers conditionally agreed to subscribe, in cash, for a total of 225,000,000 new Shares at the Subscription Price of HK$1.144 per Share, representing a total consideration of approximately HK$257.4 million. Under the Subscription, the Offeror will subscribe for 144,698,889 new Shares for a consideration of approximately HK$165.5 million, Asia-IO Holdings BVI (an associate of the Offeror) will subscribe for 43,439,139 new Shares for a consideration of approximately HK$49.7 million and Huatai Principal Investment will subscribe for 36,861,972 new Shares for a consideration of approximately HK$42.2 million. Asia-IO Holdings BVI and Huatai Principal Investment are parties acting in concert with the Offeror under the Takeovers Code. The Offeror and parties acting in concert with it will be interested in a total of 466,221,529 Shares, representing approximately 70.40% of the issued share capital of the Company as at the Latest Practicable Date.

As such, the Offeror and parties acting in concert with it are required to make a mandatory unconditional cash offer for all the issued Shares (other than those already owned or agreed to be acquired or subscribed by the Offeror and parties acting in concert with it) pursuant to Rule 26.1 of the Takeovers Code.

2. Background information of the Group

(a) Principal business

The Disposal Completion took place on 29 October 2015. Following the Disposal Completion, the Remaining Group continues operating the Remaining Business, being the business segment of electronic products manufacturing of the Group (the “Electronic Products Manufacturing Segment”) which principally involves manufacturing and trading of diodes, electronic manufacturing services, and manufacturing of telecom and radio frequency devices, plastic components and wire.

— 28 — Letter from the Independent Financial Adviser

(b) Historical financial information

Set out below are the highlights of the financial information of the Electronic Products Manufacturing Segment, which represents the Remaining Business, for the three financial years ended 31 March 2015, details of which are extracted from the annual reports of the Company for the financial year ended 31 March 2014 (the “Annual Report 2013/14”) and 31 March 2015 (the “Annual Report 2014/15”).

Table 1: Financial information of the Electronic Products Manufacturing Segment

For the year ended 31 March 2015 2014 2013 HK$ million HK$ million HK$ million (audited) (audited) (audited)

Electronic Products Manufacturing Segment Turnover 132.5 159.1 78.3 Results of reportable segments 3.9 7.3 (0.2)

Table 2: Consolidated statement of financial position of the Electronic Products Manufacturing Segment

As at 31 March 2015 2014 2013 HK$ million HK$ million HK$ million (audited) (audited) (audited)

Electronic Products Manufacturing Segment Segment assets 96.3 102.7 79.5 Segment liabilities 44.0 65.0 38.2

Financial year ended 31 March 2014 vs financial year ended 31 March 2013

According to the Annual Report 2013/14, for the year ended 31 March 2014, the segmental revenue of the Electronic Products Manufacturing Segment increased by approximately 103.2% to approximately HK$159.1 million from that of approximately HK$78.3 million of the prior financial year. The relevant segmental profit for the financial year ended 31 March 2014 was approximately HK$7.3 million, compared to a loss of approximately HK$0.2 million for the financial year ended 31 March 2013. It was stated in the Annual Report 2013/14 that the profitability and efficiency of this segment was further enhanced through efforts of new management team, streamlining of production lines, stronger quality control, logistic and cost control system.

As at 31 March 2014, the Electronic Products Manufacturing Segment recorded segment assets and segment liabilities of approximately HK$102.7 million and HK$65.0 million, respectively.

— 29 — Letter from the Independent Financial Adviser

Financial year ended 31 March 2015 vs financial year ended 31 March 2014

For the year ended 31 March 2015, the segmental revenue of the Electronic Products Manufacturing Segment decreased by approximately 16.7% to approximately HK$132.5 million, down from that of approximately HK159.1 million of the prior financial year. The segmental profit of the electronic products manufacturing decreased by approximately 46.6% from approximately HK$7.3 million in the financial year ended 31 March 2014 to approximately HK$3.9 million in the financial year ended 31 March 2015. As stated in the Annual Report 2014/15, in view of the slowdown of electronic markets and the lengthening of payment from some customers, the Group has applied tighter controls over overdue accounts to minimise credit risk. This policy has led to lower business volumes of the Electronic Products Manufacturing Segment.

As at 31 March 2015, the Electronic Products Manufacturing Segment recorded segment assets and segment liabilities of approximately HK$96.3 million and HK$44.0 million, respectively.

3. Prospect and outlook of the Group

As stated in the section headed “Letter from Huatai” contained in the Composite Document, the Offeror considers the Company’s Remaining Business, being primarily the manufacturing capabilities in discrete components, an attractive foundation to build a business, including, among others, the provision of smart manufacturing solutions (“SMS”) that addresses various demands in the value chain of the electronics manufacturing ecosystem. This value proposition is particularly synergistic with the core business of one of the Offeror’s anchor limited partners, which is affiliated with the world’s largest electronics manufacturing services provider. Under the Offeror’s intended business strategy, the Company will target and provide SMS to electronics manufacturers to upgrade their manufacturing lines with the use of “Internet-of-Things” (“IoT”) modules. Subject to market and industry conditions and the Offeror’s overall strategic planning, the Offeror intends to leverage the Remaining Group’s manufacturing capabilities in diodes and radio frequency modules, and to utilise idle capacity in the SMT production line to develop smart sensor devices and IoT devices to be used in SMS. For further details, please refer to the section headed “Offeror’s intention on the Company” set out in the “Letter from Huatai” to the Composite Document.

We have researched on the information from the public domain with respect to the development trend worldwide of the use of IT solutions in manufacturing process, also known as smart manufacturing. According to a report on advanced sensors, controls, and platforms for manufacturing (the “ASCPM Report”) published by the Advanced Manufacturing Office of the U.S. Department of Energy, a cabinet-level department of the government of the US that we consider reliable, in October 2014 which analyses the use of the IT solutions in manufacturing process, the application of IT solutions in manufacturing process aims to improve the efficiency, process flow and product quality for manufacturing. The ASCPM Report states that advancements in, among other things, information technologies and data analytics could provide unprecedented capabilities at an economical level.

— 30 — Letter from the Independent Financial Adviser

In December 2014, the Chief Scientific Adviser of the UK Government Office for Science published a report on IoT, a system for smart manufacturing (the “IoT Report”). The IoT Report summarises the views of leading consultants worldwide on the development of IoT. Based on the IoT Report, according to McKinsey, IoT has the potential to add US$6.2 trillion to the global economy by 2025, while other consultants estimate US$1.9 trillion to US$14.4 trillion of global economic value added by 2020. Approximately 25% of global manufacturers are already using IoT technologies, and it is anticipated to grow to over 80% by 2025, leading to a potential global economic uplift of US$2.3 trillion in manufacturing alone.

Based on our research, we noted that the Advanced Manufacturing Office of the U.S. Department of Energy and the UK Government Office for Science are official bodies funded by the respective government which are dedicated to, among other things, research on and promote the regional and worldwide development on industrial technology. Having considered the government background of the aforesaid bodies, we consider that such official bodies and their reports as mentioned above are reliable and authoritative, and such reports are representative for our assessment of the worldwide trend of the application of IT solutions in manufacturing and the business prospectus of the Remaining Group in this regard.

Based on the foregoing, we consider that the application of IT solutions in manufacturing is the global trend and there is considerable potential in demand from the manufacturing market for such IT solutions, including the smart sensor devices and IoT devices to be developed and marketed by the Remaining Group. Notwithstanding the aforesaid, such venture into the development and provision of IT solutions for manufacturing is also subject to uncertainties, including but not limited to (i) uncertainties as to the results of research and development of the IT solutions; (ii) uncertainties as to the profitability of such IT solutions being developed; (iii) competitive landscape of such sector; and (iv) nature of the sector that is subject to ongoing technological changes which may require continuous spending on research and development. As such, we are of the view that the outlook of the Group, considering the Offeror’s intention of venturing into the area of IT solutions for manufacturing, is uncertain.

4. Principal terms of the Share Offer

For each Offer Share...... HK$1.144 in cash

The Share Offer Price is the same as the purchase price per Sale Share under the Share and Purchase Agreement.

The Share Offer will be unconditional in all respects and will not be conditional upon acceptances being received in respect of a minimum number of Shares or any other conditions.

The Shares to be acquired under the Share Offer will be fully paid, free from all liens, charges and encumbrances.

— 31 — Letter from the Independent Financial Adviser

The Share Offer Price

The Share Offer Price of HK$1.144 per Share represents:

• a discount of approximately 74.12% to the closing price of the Shares of HK$4.42 per Share as quoted on the Stock Exchange on the Last Trading Day;

• a discount of approximately 71.11% to the average closing price of the Shares of approximately HK$3.96 per Share for the last 5 consecutive Trading Days up to and including the Last Trading Day;

• a discount of approximately 69.74% to the average closing price of the Shares of approximately HK$3.78 per Share for the last 10 consecutive Trading Days up to and including the Last Trading Day;

• a discount of approximately 54.42% to the average closing price of the Shares of approximately HK$2.51 per Share for the last 30 consecutive Trading Days up to and including the Last Trading Day;

• a discount of approximately 13.33% to the closing price of the Shares of approximately HK$1.32 per Share on the MOU Date;

• a premium of approximately 4.95% to the ex-dividend closing price of HK$1.09 per Share on the MOU Date after taking into account the Special Dividend of HK$0.23 per Share declared;

• a discount of approximately 70.28% to the closing price of the Shares of approximately HK$3.85 per Share on the Latest Practicable Date;

— 32 — Letter from the Independent Financial Adviser

• a premium of approximately 124.31% over the net asset value attributable to equity holders of the Remaining Group as at 31 March 2015 of approximately HK$0.51 per Share (based on the net asset value attributable to equity holders of the Remaining Group of approximately HK$336.8 million as at 31 March 2015 with reference to the unaudited pro forma financial information of the Remaining Group as contained in Appendix III to the Circular dated 30 September 2015 and 662,239,448 Shares in issue as at the Latest Practicable Date), after taking into account the payment of Special Dividend and completion of the Subscription Agreement.

5. Historical performance of the Shares

5.1 Share Price

The chart of daily closing price of the Shares during the Review Period (as defined below) is as follows:

Daily closing prices of the Shares during the Review Period

Share price (HK$)

5 Trading suspension 4.5 pending the publication of the Joint Announcement 4 3.5 3 2.5 2 1.5 1 0.5 0

13/2/201413/3/201413/4/201413/5/201413/6/201413/7/201413/8/201413/9/2014 13/1/201513/2/201513/3/201513/4/201513/5/201513/6/201513/7/201513/8/201513/9/2015 13/10/201413/11/201413/12/2014 13/10/2015 Date Share Offer Price Closing price

Source: website of the Stock Exchange (http://www.hkex.com.hk)

Notes: Trading in the Shares was suspended from 30 April 2015 to 7 August 2015 (both days inclusive) pending the publication of the Joint Announcement.

We have reviewed the movements in the closing price of the Shares for the period commencing from 13 February 2014, being the 12-month period prior to the date of the MOU Announcement and up to and including the Latest Practicable Date (the “Review Period”). We consider that the length of the Review Period to be reasonably long enough to illustrate the relationship between the historical trend of the closing price of the Shares. The chart above represents the daily movement in the closing prices of the Shares against the Share Offer Price during the Review Period.

— 33 — Letter from the Independent Financial Adviser

Prior the release of the Joint Announcement on 7 August 2015, the lowest and highest closing price of the Shares during the Review Period were HK$0.43 per Share recorded on 9 May 2014 and HK$4.75 per Share recorded on 28 April 2015 respectively, as quoted on the Stock Exchange. The average daily closing price of the Shares during the Review Period before the release of the Joint Announcement was approximately HK$0.92 per Share. The Share Offer Price of HK$1.144 per Share represents (i) a premium of approximately 166.1% from the lowest closing price; (ii) a discount of approximately 75.9% from the highest closing price; and (iii) a premium of approximately 24.4% from the average daily closing price during the Review Period before the release of the Joint Announcement.

During the period from 13 February 2014 to 24 November 2014, the closing price of the Share gradually increased from HK$0.50 per Share to HK$0.72 per Share. The closing price of the Shares then surged from HK$0.74 per Share on 25 November 2014 to HK$1.20 per Share on 26 November 2014, before dropping to HK$0.89 on 27 November 2014. According to an announcement issued by the Company on 26 November 2014 (the “First Announcement”), Mr. Lau was approached by several intermediaries about the possible sale of his shareholding interest in the Company. According to the First Announcement, those approaches were only preliminary discussions and no further negotiation had been carried out and no agreement or memorandum had been entered into by Mr. Lau. Save as disclosed in the First Announcement, the Company was not aware of any other matters which resulted in the increases in price of the Share on that day.

On 28 November 2014, the Company published the Interim Results 2014/15 with respect to the financial results for the six months ended 30 September 2014. According to the Interim Results 2014/15, the revenue decreased from approximately HK$315.3 million for the six months ended 30 September 2013 to approximately HK$287.2 million for the six months ended 30 September 2014, representing a decrease of approximately 8.9%, while the profit for the period decreased from approximately HK$3.1 million for the six months ended 30 September 2013 to approximately HK$1.5 million for the six months ended 30 September 2014, representing a decrease of approximately 51.6%. Notwithstanding the weakening interim results, following the announcement of the Interim Result 2014/15, the closing price of the Shares increased from HK$0.98 per Share on 28 November 2014 to HK$1.41 per Share on 19 March 2015.

The closing price of the Shares then surged from HK$1.41 per Share on 19 March 2015 to HK$2.00 per Share on 25 March 2015 and reached the highest of HK$4.75 per Share on 28 April 2015, before the trading of the Share was suspended from 30 April 2015 to 7 August 2015. During the said period, the closing price of the Shares increased by approximately 49.0% to HK$3.8 per Share on 17 April 2015 from HK$2.55 per Share on 16 April 2015. According to the announcement of the Company dated 17 April 2015, save as disclosed in the announcements of the Company dated 13 February 2015, 13 March 2015 and 30 March 2015, respectively, regarding the entering into of the MOU dated 12 February 2015 between Mr. Lau and his associates with the potential purchaser in relation to a possible sale and purchase of the shares of the Company, the Board is not aware of any reasons for the price movement.

— 34 — Letter from the Independent Financial Adviser

On the basis of the financial performance of the Group as reflected in the Interim Results 2014/15, we believe that the surge in the closing price of the Shares after the First Announcement published on 26 November 2014 and the announcement of Interim Results 2014/15 on 28 November 2014 did not reflect the fundamentals of the Company and the Share price during such period, i.e. from 28 November 2014 to the Latest Practicable Date, the share price movement during which was affected by market speculation in our view, does not serve a fair and meaningful indicator for assessing the Share Offer Price, while the historical prices of the Shares since the beginning of the Review Period until prior to the release of the First Announcement more appropriately reflect the fundamentals of the Group.

In view of the surge in the Share price of the Group, Share Offer Shareholders who wish to realise their investment in the Group are reminded that they should carefully and closely monitor the market price of the Shares during the Offer Period and consider selling their Shares in the open market during the Offer Period, rather than accepting the Share Offer, if the net proceeds from the sales of such Shares in the open market would exceed the net amount receivable under the Share Offer.

5.2 Liquidity of the Shares

The chart of daily trading volume of the Shares during the Review Period is as follows:

Daily trading volume of the Shares during the Review Period

Trading volume (Shares)

40,000,000

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

1/8/20141/9/2014 1/8/2014 1/1/20151/2/20151/3/20151/4/20151/5/20151/6/20151/7/20151/8/20151/9/2015 1/10/2014 1/12/2014 1/10/2015 Date

Source: website of the Stock Exchange (http://www.hkex.com.hk)

Notes: Trading in the Shares was suspended from 30 April 2015 to 7 August 2015 (both days inclusive) pending the publication of the Joint Announcement.

— 35 — Letter from the Independent Financial Adviser

A table showing the average daily volume of the Shares per month and the respective percentages of the average daily trading volume as compared to the total number of issued Shares and total number of issued Shares held by public Shareholders respectively during the Review Period is as follows:

Number Percentage of trading of average Approximate days with daily trading Total Number of average no turnover volume to monthly trading daily (excluding total number trading days in the trading suspension of shares in volume month volume period) issue (in number of (days) (in number of (days) (Approximate shares) shares) %) (Note 1) (Note 2)

2014 August 44,844,733 21 2,135,463 0 0.49% September 30,767,238 21 1,465,107 0 0.34% October 35,149,660 21 1,673,793 0 0.38% November 179,264,101 20 8,963,205 0 2.05% December 69,413,332 21 3,305,397 0 0.76%

2015 January 52,900,172 21 2,519,056 0 0.58% February 51,386,212 17 3,022,718 0 0.69% March 210,365,294 22 9,562,059 0 2.19% April 187,870,192 18 10,437,233 0 2.39% May N/A N/A N/A N/A N/A June N/A N/A N/A N/A N/A July N/A N/A N/A N/A N/A August 107,950,304 16 6,746,894 0 1.54% September 32,166,766 20 1,608,338 0 0.37% October (up to and including the Latest Practicable Date) (Note 3) 42,054,500 20 2,102,725 0 0.48%

Source: website of the Stock Exchange (http://www.hkex.com.hk)

Notes:

1. Average daily trading volume is calculated by dividing the total trading volume for the month/period by the number of trading days during the month/period which exclude any trading day on which trading of the Shares on the Stock Exchange was suspended for the whole trading day (i.e. from 30 April 2015 to 7 August 2015 pending the publication of the Joint Announcement).

2. Based on the number of Shares in issue as at the end of the respective month end.

3. The Review Period commenced on 1 August 2014 and ended on the Latest Practicable Date.

— 36 — Letter from the Independent Financial Adviser

The average daily trading volume of the Shares per month during the Review Period ranged from approximately 0.34% in September 2014 to 2.39% in April 2015 of the total number of issued Shares as at the end of the respective month. Given that the trading volume of the Shares has been generally thin during the Review Period, it is uncertain as to whether there would be sufficient liquidity in the Shares for the Share Offer Shareholders to dispose of a significant number of the Shares in the open market without depressing the Share price. Accordingly, the market trading price of the Shares may not necessarily reflect the proceeds that the Share Offer Shareholders can receive by the disposal of their Shares in the open market. Therefore, we are of the view that the Share Offer represents an opportunity for the Share Offer Shareholders, particularly for those who hold a large volume of the Shares, to dispose of part or all of their Shares at the Share Offer Price if they so wish to.

5.3 Comparables analysis

For the purpose of assessing the fairness and reasonableness of the Share Offer Price of HK$1.144 per Offer Share, we have applied price-to-earning (the “P/E Ratio”) and price-to-book ratio (the “P/B Ratio”) in our analysis, being the two of the most commonly adopted valuation ratios for evaluating the value of a company. As the Group would have still recorded an unaudited pro forma consolidated loss for the year of approximately HK$6.5 million for the year ended 31 March 2015 as if the Disposal had been completed on 1 April 2014 with reference to the unaudited pro forma financial information of the Remaining Group as contained in the Appendix III to the Circular dated 30 September 2015, no earning figure is available for the calculation of the P/E Ratio of the Group taking into account the effect of the Disposal and therefore, the P/E Ratio is considered not applicable, and the P/B Ratio has been used instead in our analysis.

Both P/E and P/B Ratios measure historical financial performance and the Remaining Business of the Group was mainly focused on manufacturing and trading of electronic components before the Sale and Purchase Completion and the Disposal Completion. On the other hand, the Remaining Business will be continued after the Share Offer Completion and continue to contribute to the financial results of the Remaining Group, while the development of SMS (such as smart sensor devices and IoT devices) leveraging on the Remaining Group’s idle capacity as intended by the Offeror will take time, and is subject to uncertainties as to marketability and profitability as discussed in the paragraph headed “3. Prospect and outlook of the Group” above and accordingly, as to contribution to the financial results of the Remaining Group. As a result of the foregoing, we have identified the companies (the “Comparables”) which (i) principally involved manufacturing and trading of electronic components; and (ii) have their shares listed on the Stock Exchange. Based on these criteria, we identified 4 Comparables. The Comparables represent a complete and an exhaustive list of companies meeting the aforementioned criteria as identified by us. We consider that while the Remaining Group and the Comparables are not closely similar in terms of, among others, financial performance, financial position, market capitalisation and the nature and use of the electronic components manufactured by the Comparables are not identical to those of the Remaining Group, the supply and demand of the electronic components, and therefore the fundamentals of such companies engaged in the manufacturing and trading of electronic components,

— 37 — Letter from the Independent Financial Adviser are in general affected by similar factors including, but not limited to, prices of raw materials as well as demand from end users, i.e. electronic product manufacturers and market demand for and consumption of electronic products. We noted that the electronic components manufactured by the Remaining Group and the Comparables are generally used in consumer electronics/communication electronic devices, the demand of which are in our view generally affected by both worldwide consumer sentiment. On the other hand, we noted that the raw materials for manufacturing such electronic components generally include metals with high conductivity, semi-metals and insulating materials. While the composition and amount of such raw materials as required by the Remaining Group and the Comparables are different, their cost of sales and accordingly the profitability are affected by the general price trend of such raw materials. We consider that the market would take into account the aforesaid business factors specific to manufacturers of electronic components in valuing such companies. Based on the foregoing, we consider the Comparables as fair and representative Comparables, the analysis of which is useful for assessing the fairness and reasonableness of the Share Offer Price. The following table sets out the P/B Ratio of the Comparables based on their respective closing prices as at the Latest Practicable Date and their latest published financial information:

Net asset Market value capitalisation attributable as at the to the Latest shareholders Practicable of the Company (Stock code) Principal business Date company PB Ratio (Note 1) (Note 2) (HK$ million) (HK$ million) (times)

Capxon International (i) manufacture and sale of 249.1 805.6 0.31 Electronic Company capacitors; and (ii) manufacture Limited (469) (Note 3) and sale of aluminum foils mainly in the PRC

Mega Medical Technology Manufacture of and trading in 1,989.6 570.9 3.49 Limited (876) electronic components in the PRC and Hong Kong Datronix Holdings Limited Manufacturing and trading of 467.2 728.6 0.64 (889) electronic components in both Hong Kong and oversea markets Man Yue Technology Manufacturing, selling and 405.3 1,513.9 0.27 Holdings Limited (894) distribution of electronic components mainly in the PRC, Taiwan and Hong Kong Average 1.18 Median 0.48 Maximum 3.49 Minimum 0.27 The Share Offer 757.6 336.8 2.25 (Note 4) (Note 5)

Source: website of the Stock Exchange (http://www.hkex.com.hk)

— 38 — Letter from the Independent Financial Adviser

Notes:

1. Unless otherwise specified, market capitalisation is calculated based on their respective closing price per share as quoted on the Stock Exchange on the Latest Practicable Date and their issued share capital.

2. Unless otherwise specified, net asset value attributable to the owners of the company refers to the latest published accounts.

3. The profit after tax and net asset value attributable to the owners of company was quoted in RMB. For illustrative purpose only, translation of RMB into HK$ has been made at the exchange rate of approximately RMB1 = HK$1.25.

4. Market capitalisation as at the Latest Practicable Date of the Share Offer is calculated based on the Share Offer Price of HK$1.144 and the number of Shares as at the Latest Practicable Date.

5. The net asset value attributable to the owners of Company used for comparison was based on the total equity of the Remaining Group as at 31 March 2015 of approximately HK$336.8 million with reference to the unaudited pro forma financial information of the Remaining Group as contained in the Appendix III to the Circular of the Company dated 30 September 2015, taking into account the effect of the Disposal, the Special Dividend and the Subscription.

As illustrated in the table set out above, the P/B Ratios of the Comparables ranged from approximately 0.27 times to approximately 3.49 times, with an average and median of approximately 1.18 times and 0.48 time respectively. The P/B ratio of the Company implied by the Share Offer Price (the “Implied P/B”) is approximately 2.25 times which is within the range and approximates to the average of the P/B Ratios of the Comparables. As such, we consider the Share Offer Price, with reference to the Implied P/B Ratio, is fair and reasonable given the current market valuation of the Comparables.

In view of that the Offeror intends to develop SMS business leveraging on the Remaining Group’s idle capacity following the Share Offer Completion, we have tried to identify and have enquired with the Company if there is any listed companies on the Stock Exchange which are engaged in business that is similar to SMS business for comparison purpose. Nonetheless, based on the result of our enquiry with the Company and to the best of our knowledge and as far as we are aware of, being our exhaustive means, as at the Latest Practicable Date, we were not able to identify such companies listed on the Stock Exchange.

6. Background and intention of the Offeror

Background of the Offeror

The Offeror, Asia-IO Acquisition Fund, L.P., a Cayman Islands exempted limited partnership, is a dedicated private equity fund organised for the specific purpose of investing in a controlling stake of the Company. The general partner of the Offeror is Asia-IO Acquisition GP Limited, a Cayman Islands exempted limited liability company, and the investment advisor of the Offeror is Asia-IO Holdings Cayman, a Cayman Islands exempted limited liability company. Asia-IO Holdings Cayman is a private equity firm that specialises in making private equity investments in Asia on a deal-by- deal basis. Both Asia-IO Holdings Cayman and Asia-IO Acquisition GP Limited are controlled by Mr. Denis Tik Yang Tse, one of the proposed executive Directors as set out in the paragraph headed “Proposed Change of Board Composition” below.

— 39 — Letter from the Independent Financial Adviser

The Offeror is also the purchaser in the Sale and Purchase Agreement and the Subscriber in the Offeror Subscription Agreement.

Intention of the Offeror

The Offeror considers the Company’s Remaining Business, being primarily the manufacturing capabilities in discrete components, an attractive foundation to build a business, including, among others, the provision of SMS that addresses various demands in the value chain of the electronics manufacturing ecosystem. This value proposition is particularly synergistic with the core business of one of the Offeror’s anchor limited partners, which is affiliated with the world’s largest electronics manufacturing services provider. Under the Offeror’s intended business strategy, the Company will target and provide SMS to electronics manufacturers to upgrade their manufacturing lines with the use of IoT modules. Subject to market and industry conditions and the Offeror’s overall strategic planning, the Offeror intends to leverage the Remaining Group’s manufacturing capabilities in diodes and radio frequency modules, and to utilise idle capacity in the SMT production line to develop smart sensor devices and IoT devices to be used in SMS. As discussed in the paragraph headed “3. Prospect and Outlook of the Group” above, the aforesaid information on the Group’s remaining Business is subject to uncertainties, including but not limited to (i) uncertainties as to the results of research and development of the IT solutions; (ii) uncertainties as to the profitability of such IT solutions being developed; (iii) competitive landscape of such sector; and (iv) nature of the sector that is subject to ongoing technological changes which may require continuous spending on research and development.

It is the intention of the Offeror to recruit five senior management by the end of March 2016 who will take the lead to market and implement the SMS for potential customers and to explore further business opportunities from and collaboration with the Offeror’s anchor limited partners. The Offeror will continue to review the businesses of the Company, including among others, the Group’s relationships with its customers and suppliers, portfolio of products, assets, corporate and organisational structure, capitalisation, operations, policies, management and personnel to consider and determine what changes, if any, would be necessary, appropriate or desirable, long term and short term, in order to organise and optimise

— 40 — Letter from the Independent Financial Adviser the businesses and operations of the Company and to integrate the same within the group of the Offeror’s anchor limited partners, subject to compliance with any necessary disclosure and shareholders’ approval requirements under the Listing Rules. The Offeror intends that the Company will continue to operate its businesses in substantially their current state in the 12 months following the Share Offer Completion. Save as in connection with the Offeror’s intention regarding the Company as set out above and the proposed change of board composition as set out below, the Offeror does not currently intend nor does it have any existing plans to terminate the employment of any of the employees or other personnel of the Company.

Proposed Change of Board Composition

The Board is currently made up of eight Directors, comprising five executive Directors and three independent non-executive Directors.

It is expected that Mr. Lau and Mr. Fung Wai Ching will remain as executive Directors after the Share Offer Completion, whereas all the other Directors will resign. The Offeror intends to nominate seven new Directors to the Board including the following at the earliest time as allowed under the Takeovers Code and any such appointment will be made in compliance with the Takeovers Code and the Listing Rules.

Executive Directors

Mr. John Lap Shun Hui is a veteran entrepreneur in the IT industry. In the mid- 1990s, Mr. Hui was one of the founders of technology company eMachines, Inc., which was sold to Gateway Inc. in 2004. In 2006, Mr. Hui acquired the European technology company Packard Bell BV, which was sold to Acer Inc. in 2009, and acquired InFocus, a digital display technology company in 2009. Mr. Hui is also the founder and chairman of Fuhu, Inc., creator of the Nabi Pad and other cloud-served software and products for children. Mr. Hui has an MBA from McMaster University.

— 41 — Letter from the Independent Financial Adviser

Whitney, CDIB Capital, and HSBC Private Equity (Asia), where he became the first Kauffman Fellow from an Asian venture firm. Mr. Tse is one of Chief Investment Officer “2014 Forty Under Forty”, and was named one of “Asia’ 25 most influential people in private equity” by Asian Investor in 2013. Mr. Tse has an MBA from INSEAD and a BSc (Hon.) from Northwestern University.

Independent non-executive Directors

— 42 — Letter from the Independent Financial Adviser

As mentioned above, it is expected that Mr. Lau and Mr. Fung Wai Ching will remain as executive Directors after the Share Offer Completion, whereas all the other Directors will resign. The Offeror intends to nominate seven new Directors to the Board. For further details, please refer to the paragraphs headed “Proposed Change of Board Composition — Executive Directors” and “Proposed Change of Board Composition — Independent non-executive Directors” above. Notwithstanding some Directors have various experience and expertise in the IT industry, it is uncertain that the proposed changes of the Board would bring positive impact to the existing business of the Group and its performance.

RECOMMENDATION

Having considered the abovementioned principal factors and reasons for the Share Offer, in particular that:

(a) the Share Offer Price is higher than historical prices of the Shares during the Review Period prior to the release of the First Announcement published on 28 November 2014, a period of which we consider more appropriately reflecting the fundamentals of the Group, whereas the historical prices of the Shares after the First Announcement published on 26 November 2014 and the announcement of Interim Results 2014/15 published on 28 November 2014, i.e. from 28 November 2014 to the Latest Practicable Date, did not reflect the fundamentals of the Company, the share price movement during which was affected by market speculation in our view as analysed in the paragraphs headed “Historical performance of the Shares” above;

(b) the segmental revenue and the segmental profit of the Electronic Products Manufacturing Segment decreased by approximately 16.7% and 46.6% respectively from the year ended 31 March 2014 to the year ended 31 March 2015;

(c) the Implied P/B Ratio of approximately 2.25 times is within the range and is higher than the average of the P/B Ratio of the Comparables;

(d) the trading volume of the Shares has been generally thin during the Review Period and the Share Offer provides an opportunity for the Share Offer Shareholders to realise their investment at the Share Offer Price without exerting a downward impact on the Share price;

(e) the application of IT solutions in manufacturing is the global trend and there is considerable potential in demand from the manufacturing market for such IT solutions, including the smart sensor devices and IoT devices to be developed and marketed by the Remaining Group as mentioned above, but such venture into the development and provision of IT solutions for manufacturing is subject to uncertainties;

— 43 — Letter from the Independent Financial Adviser

(f) it is uncertain that the proposed changes of the Board would bring positive impact to the existing business of the Group and its performance, notwithstanding some Directors have various experience and expertise in the IT industry; and

(g) a premium of approximately 124.3% over the net asset value attributable to equity holders of the Remaining Group as at 31 March 2015 of approximately HK$0.51 per Share, taken into account of the payment of Special Dividend and completion of the Subscription Agreement.

we are of the opinion that the terms of the Share Offer are fair and reasonable so far as the Share Offer Shareholders are concerned and we recommend the Independent Board Committee to advise the Share Offer Shareholders to, and we recommend the Share Offer Shareholders to, accept the Share Offer.

Yours faithfully, For and on behalf of Messis Capital Limited

Robert Siu Managing Director

Note: Mr. Robert Siu is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Messis Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has over 15 years of experience in corporate finance industry.

— 44 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

1. PROCEDURES FOR ACCEPTANCE

To accept the Share Offer, you should complete and sign the accompanying Form of Acceptance in accordance with the instructions printed thereon, which form part of the terms of the Share Offer.

(a) If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in your name, and you wish to accept the Share Offer, you must send the duly completed and signed Form of Acceptance together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) by post or by hand, to the Registrar, Tricor Abacus Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, in any event not later than 4:00 p.m. on Monday, 23 November 2015 or such later time and/or date as the Offeror may determine and announce in accordance with the Takeovers Code.

(b) If the Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Share Offer in respect of your holding of Shares (whether in full or in part), you must either:

(i) lodge your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, and with instructions authorising it to accept the Share Offer on your behalf and requesting it to deliver the Form of Acceptance duly completed together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

(ii) arrange for the Shares to be registered in your name by the Company through the Registrar, and deliver the Form of Acceptance duly completed and signed together with the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

(iii) if your Shares have been lodged with your licensed securities dealer/ registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Share Offer on your behalf on or before the deadline set out by HKSCC Nominees Limited. In order to meet the deadline set out by HKSCC Nominees Limited, you should check with your licensed securities dealer/registered institution in securities/custodian bank for the timing on the processing of your instruction, and submit your instruction to your licensed securities dealer/ registered institution in securities/custodian bank as required by them; or

— I-1 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

(iv) if your Shares have been lodged with your investor participant’s account maintained with CCASS, give your instruction via the CCASS Phone System or CCASS Internet System on or before the deadline set by HKSCC Nominees Limited.

(c) If the Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Share(s) is/are not readily available and/or is/are lost, as the case may be, and you wish to accept the Share Offer in respect of your Share(s), the Form of Acceptance should nevertheless be completed and delivered to the Registrar together with a letter stating that you have lost one or more of your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Registrar as soon as possible thereafter. If you have lost your Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title, you should also write to the Registrar a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.

(d) If you have lodged transfer(s) of any of your Share(s) for registration in your name and have not yet received your Share certificate(s), and you wish to accept the Share Offer in respect of your Share(s), you should nevertheless complete and sign the Form of Acceptance and deliver it to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable authority to the Offeror and/or Huatai or their respective agent(s) to collect from the Company or the Registrar on your behalf the relevant Share certificate(s) when issued and to deliver such Share certificate(s) to the Registrar on your behalf and to authorise and instruct the Registrar to hold such Share certificate(s), subject to the terms and conditions of the Share Offer, as if it was/they were delivered to the Registrar with the Form of Acceptance.

(e) Acceptance of the Share Offer will be treated as valid only if the completed Form of Acceptance in accordance with Note 1 to Rule 30.2 of the Takeovers Code, is received by the Registrar by no later than 4:00 p.m. on the Closing Date (or such later time and/or date as the Offeror may determine and announce with the consent of the Executive in accordance with the Takeovers Code) and the Registrar has recorded the acceptance and any relevant documents required by the Takeovers Code have been so received, and is:

(i) accompanied by the relevant Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if those Share certificate(s) is/ are not in your name, such other documents in order to establish your right to become the registered holder of the relevant Share(s); or

— I-2 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

(ii) from a registered Shareholder or his personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to Share(s) which is/are not taken into account under another sub-paragraph of this paragraph (f)); or

(iii) certified by the Registrar or the Stock Exchange. If the Form of Acceptance is executed by a person other than the registered Shareholder, appropriate documentary evidence of authority (e.g. grant of probate or certified copy of a power of attorney) to the satisfaction of the Registrar must be produced.

(f) No acknowledgement of receipt of any Form of Acceptance, Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

2. ACCEPTANCE PERIOD AND REVISIONS

(a) Unless the Share Offer has previously been extended, with the consent of the Executive, in accordance with the Takeovers Code, the Form of Acceptance must be received by 4:00 p.m. on Monday, 23 November 2015 in accordance with the instructions printed on the relevant Form of Acceptance, and the Share Offer will be closed on Monday, 23 November 2015.

(b) If the Share Offer is extended or revised, the announcement of such extension or revision shall state the next Closing Date or that the Share Offer will remain open until further notice. For the latter case, at least 14 days’ notice in writing will be given to the Shareholders who have not accepted the Share Offer before the Share Offer is closed, and an announcement in respect thereof shall be released.

If the Offeror revises the terms of the Share Offer, the Shareholders whether or not they have already accepted the Share Offer will be entitled to accept the revised Share Offer under the revised terms. The revised Share Offer must be kept open for at least 14 days following the date on which the revised composite document is posted.

(c) If the Closing Date is extended, any reference in this Composite Document and the Form of Acceptance to the Closing Date shall, except where the context otherwise requires, be deemed to refer to the Closing Date so extended.

— I-3 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

3. ANNOUNCEMENTS

(a) By 6:00 p.m. on the Closing Date (or such later time and/or date as the Executive may in exceptional circumstances permit), the Offeror must inform the Executive and the Stock Exchange of their decision in relation to the revision or extension of the Share Offer. The Offeror must post an announcement on the Stock Exchange’s website by 7:00 p.m. on the Closing Date stating, amongst other information required under Rule 19.1 of the Takeovers Code, whether the Share Offer has been revised or extended. The announcement will state the total number of Shares:

(i) for which acceptances of the Share Offer has been received;

(ii) held, controlled or directed by the Offeror or persons acting in concert with it before the Offer Period; and

(iii) acquired or agreed to be acquired during the Offer Period by the Offeror and persons acting in concert with it.

The announcement must include details of any relevant securities (as defined in the Takeovers Code) in the Company which the Offeror or any person acting in concert with it has borrowed or lent, save for any borrowed shares which have been either on-lent or sold. The announcement must also specify the percentages of the issued share capital of the Company and the percentages of voting rights of the Company represented by these numbers of Shares.

(b) In computing the total number of Shares represented by acceptances, only valid acceptances that are complete and in good order and satisfy the acceptance conditions set out in paragraph 1 of this Appendix and which have been received by the Registrar or the Company (as the case may be) no later than 4:00 p.m. on the Closing Date, being the latest time and date for acceptance of the Share Offer, shall be included.

(c) As required under the Takeovers Code, all announcements in relation to the Share Offer must be made in accordance with the requirement of the Listing Rules. All announcements in relation to the Share Offer will be published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.daiwahk.com.

4. RIGHT OF WITHDRAWAL

(a) Acceptance of the Share Offer tendered by the Share Offer Shareholders shall be irrevocable and cannot be withdrawn, except in the circumstances set out in (b) below or in compliance with Rule 17 of the Takeovers Code.

(b) If the Offeror is unable to comply with the requirements set out in the paragraph headed “3. ANNOUNCEMENTS” above, the Executive may require that the Share Offer Shareholders, who have tendered acceptances to the Share Offer to be granted a right of withdrawal on terms that are acceptable to the Executive until the requirements set out in that paragraph are met.

— I-4 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

In such case, when the Share Offer Shareholder(s) withdraw(s) the acceptances, the Offeror shall, as soon as possible but in any event within seven (7) Business Days thereof, return by ordinary post the Share certificate(s) and/or transfer receipt(s) and/or other document(s) of title lodged with the Form of Acceptance to the relevant Share Offer Shareholders at their own risks.

5. SETTLEMENT OF THE SHARE OFFER

Provided that a valid Form of Acceptance and the relevant Share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the relevant Shares as required by Note 1 to Rule 30.2 of the Takeovers Code are complete and in good order and in all respects and have been received by the Registrar before the close of the Share Offer, a cheque for the amount due to each of the Shareholders who accept the Share Offer less seller’s ad valorem stamp duty in respect of the Share Offer Shares tendered by him/her/ it under the Share Offer will be despatched to such Shareholder by ordinary post at his/ her/its own risk as soon as possible but in any event within seven (7) Business Days of the date on which the duly completed acceptances of the Share Offer and the relevant documents of title in respect of such acceptances are received by the Registrar to render each such acceptance complete and valid.

Settlement of the consideration to which any accepting Share Offer Shareholders is entitled under the Share Offer will be implemented in full in accordance with the terms of the Share Offer (save with respect to the payment of seller’s ad valorem stamp duty), without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such accepting Share Offer Shareholders.

6. OVERSEAS ShareHOLDERS

The Share Offer will be made available to all the Share Offer Shareholders, including the Overseas Shareholders. The availability of the Share Offer to any Overseas Shareholders may be affected by the applicable laws and regulations of their relevant jurisdictions of residence. Overseas Shareholders should observe any applicable legal and regulatory requirements and, where necessary, consult their own professional advisers. It is the responsibilities of the Overseas Shareholders who wish to accept the Share Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Share Offer (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due by such Overseas Shareholders in respect of such jurisdictions).

— I-5 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

7. NOMINEE REGISTRATION

To ensure equality of treatment of all Shareholders, those Shareholders who hold Shares as nominee on behalf of more than one beneficial owner should, as far as practicable, treat the holding of such beneficial owner separately. It is essential for the beneficial owners of the Shares whose investments are registered in the names of nominees to provide instructions to their nominees of their intentions with regard to the Share Offer.

8. STAMP DUTY AND OTHER FEES

The seller’s Hong Kong ad valorem stamp duty on acceptances of the Share Offer (or part thereof) at a rate of 0.1% of the consideration payable in respect of the relevant acceptances by the Shareholders, or if higher, the market value of the Offer Shares subject to such acceptance, will be deducted from the amount payable to those relevant Shareholders who accept the Share Offer.

The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of the relevant Shareholders who accept the Share Offer and pay the buyer’s Hong Kong ad valorem stamp duty in connection with the acceptances of the Share Offer and the transfers of the Offer Shares in accordance with the Stamp Duty Ordinance (Chapter 117 of the Laws of Hong Kong).

9. TAXATION

Share Offer Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the taxation implications of accepting or rejecting the Share Offer. None of the Offeror, parties acting in concert with the Offeror, Huatai, the Company, and their respective ultimate beneficial owners, directors, officers, advisers, agents or associates or any other person involved in the Share Offer accepts responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Share Offer.

10. GENERAL

(a) All communications, notices, Form of Acceptance, Share certificate(s), transfer receipt(s), other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to settle the consideration payable under the Share Offer to be delivered by or sent to or from the Share Offer Shareholders will be delivered by or sent to or from them, or their designated agents, by ordinary post at their own risk, and none of the Offeror, parties acting in concert with the Offeror, the Company and any of their respective directors nor the Registrar or other parties involved in the Share Offer or any of their respective agents accepts any liability for any loss in postage or any other liabilities that may arise as a result thereof.

— I-6 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

(b) The provisions set out in the Form of Acceptance form part of the terms and conditions of the Share Offer.

(c) The accidental omission to despatch this Composite Document and/or Form of Acceptance or any of them to any person to whom the Share Offer are made will not invalidate the Share Offer in any way.

(d) The Share Offer is, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong.

(e) Due execution of the Forms of Acceptance will constitute an authority to the Offeror, Huatai, or such person or persons as the Offeror may direct to complete, amend and execute any document on behalf of the person or persons accepting the Share Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as it may direct, the Shares in respect of which such person or persons has/ have accepted the Share Offer.

(f) By accepting the Share Offer, the Share Offer Shareholders will sell their Shares to the Offeror free from all encumbrances whatsoever and together with all rights accruing or attaching to them including, without limitation, the right to receive dividends and distributions (but excluding the Special Dividend) recommended, declared, made or paid, if any, on or after the date of which the Share Offer is made. The making of the Share Offer to a person with a registered address in a jurisdiction outside Hong Kong may be affected by the applicable laws of the relevant jurisdiction. Overseas Shareholders with registered addresses in jurisdictions outside Hong Kong should inform themselves about and observe any applicable legal requirements in their own jurisdictions.

(g) Acceptance of the Share Offer by any nominee will be deemed to constitute a warranty by such nominee to the Offeror that the number of Shares in respect of which it is indicated in the Form of Acceptance is the aggregate number of Shares held by such nominee for such beneficial owner who is accepting the Share Offer.

(h) Reference to the Share Offer in this Composite Document and in the Form of Acceptance shall include any extension or revision thereof.

(i) All acceptances, instructions, authorities and undertakings given by the Share Offer Shareholders in the Form of Acceptance shall be irrevocable except as permitted under the Takeovers Code.

— I-7 — Appendix I Further Terms of the Share Offer And Procedures for Acceptance

(j) In making their decision, the Share Offer Shareholders, in addition to considering the information contained in the “Letter from Huatai”, “Letter from the Board’, “Letter from the Independent Board Committee” and “Letter from the Independent Financial Adviser” as set out in this Composite Document, must rely on their own examination of the Offeror, the Group and the terms of the Share Offer, including the merits and risks involved. The contents of this Composite Document, including any general advice or recommendation contained herein together with the Form of Acceptance, shall not be construed as any legal or business advice on the part of the Offeror, Huatai and the Company and their respective ultimate beneficial owners. The Share Offer Shareholders should consult their own professional advisers for professional advice.

(k) The English text of this Composite Document and the Form of Acceptance shall prevail over their respective Chinese text for the purpose of interpretation.

— I-8 — Appendix II Financial Information of the Group

I. Financial Information of the Group

1. FINANCIAL SUMMARY OF THE GROUP

The following is a summary of the financial information of the Group for each of the three years ended 31 March 2013, 2014 and 2015 as extracted from the relevant annual reports of the Company.

The auditor’s reports as set out in the Company’s annual reports for each of the three years ended 31 March 2013, 2014 and 2015 were unqualified. The Group had no items which are exceptional because of size, nature or incidence for each of the three years ended 31 March 2013, 2014 and 2015.

Summarised Consolidated Income Statement

2015 2014 2013 HK$’000 HK$’000 HK$’000 (Audited) (Restated) Note 2 and 3 Note 1 and 3 Continuing operations

Revenue 531,126 618,300 547,916 Gross profit 64,526 87,763 68,719 Operating (loss)/profit (29,240) 8,826 16,710 (Loss)/profit before income tax (30,024) 7,419 15,832 (Loss)/profit for the year from continuing operations (39,724) 4,994 13,904 Income tax expense (9,700) (2,425) (1,928) Discontinued operations

(Loss)/profit for the year from discontinued operations — 3,181 (184,646) (Loss)/profit for the year (39,724) 8,175 (170,742)

Attributable to: Equity holders of the Company — continuing operations (39,724) 4,994 13,904 — discontinued operations — 3,181 (184,912) (39,724) 8,175 (171,008)

Non-controlling interests-discontinued operations — — 266 — — (170,742)

Dividend 21,862 — — (Loss)/earnings per share for (loss)/profit attributable to equity holders of the Company during the year Basic and diluted Continuing operations HK(9.09) cents HK1.20 cents HK3.81 cents Discontinued operations N/A HK0.76 cents HK(50.64) cents

Dividend per Share HK5 cents — —

Notes: 1. The financial information for the year ended 31 March 2014 was restated due to a retrospective change in accounting policy on the measurement basis of investment properties from the year ended 31 March 2015, details of which are set out in the 2015 Annual Report.

— II-1 — Appendix II Financial Information of the Group

2. The financial information for the year ended 31 March 2013 was extracted from the Company’s 2013 Annual Report and was not restated for the change in accounting policy as described in Note 1 above. There was no requirement to present a restated comparative consolidated income statement for the year ended 31 March 2013 in the Company’s consolidated financial statements for the year ended 31 March 2015 as a result of the change in accounting policy as described in Note 1 above. In addition, there is no significant difference in the fair value of investment properties as at 1 April 2012 and 31 March 2013.

3. The Group adopted cost model as the measurement basis for its properties classified as property, plant and equipment during the years ended 31 March 2013 and 2014, which was changed to the revaluation model with effect from 1 April 2014 and prospective application is required under Hong Kong Accounting Standard 16 “Property, Plant and Equipment”. Accordingly, there is a difference in measurement basis of these properties before and after 1 April 2014 as a result of the actual accounting policies adopted historically for the preparation of the Group’s consolidated financial statements for each of the years ended 31 March 2013, 2014 and 2015. If the Group had adopted the revaluation model with effect from 1 April 2012, the additional depreciation charge for the years ended 31 March 2013 and 31 March 2014 would have been approximately HK$746,000 and HK$506,000 respectively with corresponding reduction in income tax expense of approximately HK$123,000 and HK$83,000 respectively. In addition, the gain on disposal of properties of HK$17,529,000 during the year ended 31 March 2013 which was previously included in the consolidated income statement would have been recognised in retained earnings instead due to the change in accounting policy.

2. AUDITED FINANCIAL INFORMATION OF THE GROUP FOR THE YEAR ENDED 31 March 2015

The following audited financial information of the Group for the year ended 31 March 2015 is extracted from the annual report of the Company 2014 – 2015.

Consolidated Income Statement For the year ended 31 March 2015

2015 2014 Note HK$’000 HK$’000 (Restated)

Continuing operations

Revenue 5 531,126 618,300

Cost of sales 8 (466,600) (530,537)

Gross profit 64,526 87,763

Other income 6 2,298 3,042

Selling and distribution expenses 8 (13,448) (12,901)

General and administrative expenses 8 (85,371) (68,001)

Gains/(losses) on disposals of land use rights, investment properties and property, plant and equipment 27,139 (41)

Fair value losses on investment properties (26) (1,107)

Impairment loss on goodwill (22,559) —

Other (losses)/gains, net 7 (1,799) 71

Operating (loss)/profit (29,240) 8,826

Finance income 10 1,321 942

Finance costs 10 (2,105) (2,349)

— II-2 — Appendix II Financial Information of the Group

2015 2014 Note HK$’000 HK$’000 (Restated)

(Loss)/profit before income tax (30,024) 7,419

Income tax expense 11 (9,700) (2,425)

(Loss)/profit for the year from continuing operations (39,724) 4,994

Discontinued operations

Profit for the year from discontinued operations 34 — 3,181

(Loss)/profit for the year (39,724) 8,175

Attributable to: Equity holders of the Company — continuing operations (39,724) 4,994 — discontinued operations — 3,181

(39,724) 8,175

(Loss)/earnings per share for (loss)/profit attributable to equity holders of the Company during the year

Basic and diluted 15 Continuing operations HK(9.09) cents HK1.20 cents Discontinued operations N/A HK0.76 cents

Details of dividends payable to equity holders of the Company are set out in Note 38.

— II-3 — Appendix II Financial Information of the Group

Consolidated Statement of Comprehensive Income For the year ended 31 March 2015

2015 2014 HK$’000 HK$’000 (Restated)

Comprehensive (loss)/income:

(Loss)/profit for the year (39,724) 8,175

Other comprehensive income/(loss):

Items that may be reclassified to profit or loss

Currency translation differences (9,041) (5,378)

Fair value gain on available-for-sale financial assets 143 331

Revaluation gain on land and buildings, net of tax 17,163 —

Other comprehensive income/(loss) for the year, net of tax 8,265 (5,047)

Total comprehensive (loss)/income for the year (31,459) 3,128

Total comprehensive (loss)/income attributable to: Equity holders of the Company — continuing operations (31,459) (53) — discontinued operations — 3,181

(31,459) 3,128

— II-4 — Appendix II Financial Information of the Group

Consolidated Balance Sheet As at 31 March 2015

As at As at 31 March 1 April 2015 2014 2013 Note HK$’000 HK$’000 HK$’000 (Restated) (Restated)

ASSETS Non-current assets Goodwill 16 — 25,901 28,201 Property, plant and equipment 17 39,546 72,916 76,500 Investment properties 18 3,540 54,459 55,566 Land use rights 19 2,092 5,082 5,208 Available-for-sale financial assets 22 14,088 15,467 15,136 Deferred income tax assets 30 115 241 — Other long-term assets 20 3,564 972 1,073

62,945 175,038 181,684

Current assets Inventories 23 116,250 115,478 98,031 Trade and notes receivables 24 92,286 96,424 95,198 Prepayments, deposits and other receivables 25 11,396 11,961 19,287 Tax recoverable 1,049 — — Cash and cash equivalents 26 71,669 55,533 60,160

292,650 279,396 272,676

Total assets 355,595 454,434 454,360

EQUITY Capital and reserves attributable to equity holders of the Company Share capital 31 43,724 43,724 39,424 Share premium — 233,196 225,514 Reserves 32 142,577 (37,298) (40,426)

186,301 239,622 224,512 Non-controlling interests 215 215 215

Total equity 186,516 239,837 224,727

— II-5 — Appendix II Financial Information of the Group

As at As at 31 March 1 April 2015 2014 2013 Note HK$’000 HK$’000 HK$’000 (Restated) (Restated)

LIABILITIES Non-current liabilities Deferred income tax liabilities 30 12,311 4,159 4,194 Borrowings — — 321

12,311 4,159 4,515

Current liabilities Borrowings 27 74,805 105,528 113,947 Trade payables 28 57,930 84,436 65,425 Accruals and other payables 29 24,033 18,043 44,256 Tax payable — 2,431 1,490

156,768 210,438 225,118

Total liabilities 169,079 214,597 229,633

Total equity and liabilities 355,595 454,434 454,360

Net current assets 135,882 68,958 47,558

Total assets less current liabilities 198,827 243,996 229,242

— II-6 — Appendix II Financial Information of the Group

Balance Sheet As at 31 March 2015

2015 2014 Note HK$’000 HK$’000

ASSETS Non-current assets Investments in subsidiaries 37 44,715 44,715 Amounts due from subsidiaries 37, 39(b) 118,884 140,542

163,599 185,257

Current assets Prepayments 25 112 141 Cash and cash equivalents 26 469 182

581 323

Total assets 164,180 185,580

EQUITY Capital and reserves attributable to equity holders of the Company Share capital 31 43,724 43,724 Share premium 32(b) — 233,196 Reserves 32(b) 119,599 (91,641)

Total equity 163,323 185,279

LIABILITIES Current liabilities Accruals and other payables 29 857 301

857 301

Total equity and liabilities 164,180 185,580

Net current (liabilities)/assets (276) 22

Total assets less current liabilities 163,323 185,279

— II-7 — Appendix II Financial Information of the Group

Consolidated Statement of Changes in Equity For the year ended 31 March 2015

Attributable to equity holders of the Company Non- Share Share controlling Total capital premium Reserves Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 31) (Note 32)

At 1 April 2014, as previously reported 43,724 233,196 (48,952) 227,968 215 228,183 Changes in accounting policies (Note 2.1(d)) — — 11,654 11,654 — 11,654

At 1 April 2014, as restated 43,724 233,196 (37,298) 239,622 215 239,837

Comprehensive loss: Loss for the year — — (39,724) (39,724) — (39,724)

Other comprehensive income/(loss): Currency translation differences — — (9,041) (9,041) — (9,041) Revaluation gain on land and buildings, net of tax — — 17,163 17,163 — 17,163 Fair value gain on available-for-sale financial assets — — 143 143 — 143

Total other comprehensive income — — 8,265 8,265 — 8,265

Total comprehensive loss — — (31,459) (31,459) — (31,459)

Transaction with owners: Reduction of share premium (Note 32) — (233,196) 233,196 — — — Dividend (Note 38) — — (21,862) (21,862) — (21,862)

— (233,196) 211,334 (21,862) — (21,862)

At 31 March 2015 43,724 — 142,577 186,301 215 186,516

— II-8 — Appendix II Financial Information of the Group

At 1 April 2013, as previously reported 39,424 225,514 (52,247) 212,691 215 212,906 Changes in accounting policies (Note 2.1(d)) — — 11,821 11,821 — 11,821

At 1 April 2013, as restated 39,424 225,514 (40,426) 224,512 215 224,727

Comprehensive income: Profit for the year — — 8,175 8,175 — 8,175

Other comprehensive (loss)/income: Currency translation differences — — (5,378) (5,378) — (5,378) Fair value gain on available-for-sale financial assets — — 331 331 — 331

Total other comprehensive loss — — (5,047) (5,047) — (5,047)

Total comprehensive income — — 3,128 3,128 — 3,128

Transaction with owners: Issuance of new shares (Note 31) 4,300 7,682 — 11,982 — 11,982

At 31 March 2014 43,724 233,196 (37,298) 239,622 215 239,837

— II-9 — Appendix II Financial Information of the Group

Consolidated Statement of Cash Flows For the year ended 31 March 2015

2015 2014 Note HK$’000 HK$’000

Cash flows from operating activities Cash (used in)/generated from operations 33(a) (41,980) 5,997 Interest paid (2,105) (2,349) Interest received 1,321 942 Income tax paid (4,672) (1,760)

Net cash (used in)/generated from operating activities (47,436) 2,830

Cash flows from investing activities Purchases of property, plant and equipment (2,859) (4,224) Purchase of land use right (2,112) — Proceeds from disposal of land use rights, investment properties and property, plant and equipment 33(b) 126,693 114 Addition to investment properties (36) — Settlement of retention arrangement in respect of disposed subsidiaries — (5,694)

Net cash generated from/(used in) investing activities 121,686 (9,804)

Cash flows from financing activities Net proceeds from issue and placing of shares — 11,982 Dividend paid to shareholders (21,862) — New bank borrowings 170,288 254,037 Repayment of bank borrowings (203,701) (265,987) Payment of capital element of finance lease obligations — (321)

Net cash used in financing activities (55,275) (289)

Net increase/(decrease) in cash, cash equivalents and bank overdrafts 18,975 (7,263)

Cash, cash equivalents and bank overdrafts at 1 April 52,002 60,160

Effect of foreign exchange rate change on cash and cash equivalents, net (1,998) (895)

Cash, cash equivalents and bank overdrafts at 31 March 68,979 52,002

— II-10 — Appendix II Financial Information of the Group

Notes to the Consolidated Financial Statements 31 March 2015

1. General information

Daiwa Associate Holdings Limited (the “Company”) is a limited liability company incorporated in Bermuda on 3 February 1994 as an exempted company under Companies Act 1981 of Bermuda. The address of its registered office is Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda. The shares of the Company have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 14 April 1994.

The Company and its subsidiaries (together, the “Group”) are principally engaged in the electronic components distribution, electronic products manufacturing, and the personal computer products distribution.

These financial statements are presented in Hong Kong dollars, unless otherwise stated. These financial statements have been approved for issue by the Company’s Board of Directors on 30 June 2015.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, investment properties and land and buildings classified as property, plant and equipment, which are carried at fair value.

The consolidated financial statements are prepared in accordance with the applicable requirements of the predecessor Companies Ordinance (Cap. 32) for this financial year and the comparative period.

The preparation of financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

(a) Effect of adopting interpretation and amendments to existing standards

The following interpretation and amendments to existing standards are relevant to the Group’s operations and mandatory for its accounting periods beginning on or after 1 April 2014:

• HKAS 36 (Amendment) “Impairment of assets” • HKFRS 10, HKFRS 12 and “Investment entities” HKAS 27 (2011) (Amendment) • HKFRIC 21 “Levies”

The adoption of these interpretation and amendments to standards did not have any significant impact on the results and financial position of the Group.

— II-11 — Appendix II Financial Information of the Group

(b) Standards and amendments to existing standards that are not yet effective and have not been early adopted by the Group

The following published standards and amendments to existing standards are mandatory for the Group’s accounting periods beginning on or after 1 April 2015 and have not been early adopted by the Group:

• HKAS 19 (2011) (Amendment) “Defined benefit plans: employee contributions”1;

• HKFRSs (Amendment) “Annual improvements to HKFRS 2010–2012 Cycle”1; • HKFRSs (Amendment) “Annual improvements to HKFRS 2011–2013 Cycle”1;

• HKFRSs (Amendment) “Annual improvements to HKFRS 2012–2014 Cycle”2; • HKFRS 10 and HKAS 28 (Amendment) “Sale or contribution of assets between an investor and its associate or joint venture”2; • HKFRS 11 (Amendment) “Accounting for acquisitions of interests in joint operations”2; • HKAS 16 and HKAS 38 (Amendment) “Clarification of acceptable methods of depreciation and amortisation”2; • HKAS 16 and HKAS 41 (Amendment) “Agriculture: bearer plants”2; • HKAS 27 (Amendment) “Equity method in separate financial statements”2; • HKFRS 14 “Regulatory deferral accounts”2; and • HKFRS 15 “Revenue from contracts with customers”3.

1 Effective for annual periods beginning on or after 1 July 2014

2 Effective for annual periods beginning on or after 1 January 2016

3 Effective for annual periods beginning on or after 1 January 2017

Management is in the process of making an assessment of the impact of these new standards and amendments to existing standards and is not yet in a position to state whether they will have a significant impact on the Group’s results and financial position.

(c) In addition, the disclosure requirements of the new Hong Kong Companies Ordinance (Cap. 622) for an overseas incorporated company listed in Hong Kong will become effective for the Company’s financial year ending 31 March 2016 under the Hong Kong Listing Rules. The Group is in the process of making an assessment of expected impact of the changes. So far it has concluded that the impact is unlikely to be significant and only the presentation and the disclosure of information in the consolidated financial statements will be affected.

(d) Changes in accounting policies

Measurement basis of investment properties

In previous years, the Group’s investment properties were measured using the cost model in the consolidated financial statements. With effect from 1 April 2014, the Group revised its accounting policy in respect of investment properties from the use of cost model to the fair value model under HKAS 40. In addition, land use rights in relation to investment properties previously classified as prepayments are reclassified as part of the investment properties as if they are finance leases. All investment properties are then carried at fair value based on valuations by external independent valuers. All subsequent changes in fair value of investment properties are recognised in profit or loss. These changes were made to enhance the relevancy of financial data to the users of the consolidated financial statements.

This change in accounting policy has been accounted for retrospectively and the comparative figures for prior periods have been restated.

— II-12 — Appendix II Financial Information of the Group

Measurement basis of land and buildings classified as property, plant and equipment

In previous years, the Group’s land and buildings were measured using the cost model in the consolidated financial statements. With effect from 1 April 2014, the Group revised its accounting policy in respect of land and buildings from the use of cost model to the revaluation model under HKAS 16, under which these assets are carried at fair value based on valuations by external independent valuers. Any land use rights associated with buildings classified as property, plant and equipment continued to be accounted for as prepayments. Accordingly, any subsequent increase in the fair values of land and buildings classified as property, plant and equipment is recognised in other comprehensive income, whereas any such decrease is recognised in profit or loss to the extent such decrease exceeds the credit previously recognised in equity. These changes to reflect the fair value of the land and buildings were made to enhance the relevancy of financial data to the users of the consolidated financial statements.

This change in accounting policy has been accounted for prospectively as a revaluation at the date of change.

Effect of adoption

The effect of adoption of these changes in accounting policies is set out below:

As at 31 March As at 1 April 2015 2014 2013 HK$’000 HK$’000 HK$’000

Consolidated balance sheet Increase in investment properties (Note 18) 3,090 19,868 20,202 Increase in deferred income tax liabilities (Note 30) 3,959 3,886 3,941 Increase in property, plant and equipment (Note 17) 20,536 — — Increase in retained profits/decrease in accumulated losses 1,760 11,654 11,821 Increase in property revaluation reserve 16,621 — — Decrease in land use rights (Note 19) (744) (4,328) (4,440)

For the year ended 31 March 2015 2014 HK$’000 HK$’000

Consolidated income statement Decrease in income tax expense 3,298 55 Increase in fair value loss on investment properties (26) (1,107) Decrease in depreciation and amortisation — 885 Decrease in gains on disposals of buildings, investment properties and land use rights (13,708) — Decrease in basic earnings per share (HK cents) (0.26) (0.04)

Balances as at 1 April 2013 impacted by the changes in accounting policies described above are further disclosed in the relevant notes to the consolidated financial statements, whereas no additional disclosures are made in respect of other balances as they are unaffected.

— II-13 — Appendix II Financial Information of the Group

2.2 Subsidiaries

(a) Consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

(i) Business combinations

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

(ii) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions — that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(iii) Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(b) Separate financial statements

Investments in subsidiaries are accounted for at cost less impairment, if any. Cost also includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

— II-14 — Appendix II Financial Information of the Group

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investment in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the impairment in the income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s consolidated financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Gain or losses on dilution of equity interest in associates are recognised in the income statement.

2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive directors that make strategic decisions.

2.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Hong Kong dollar (“HK$”), which is the Company’s functional and the Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within “finance income” or “finance costs”. All foreign exchange gains and losses are presented in the income statement within “other (losses)/gains, net”.

Translation differences on non-monetary financial assets, such as equities classified as available-for-sale, are included in other comprehensive income. Translation differences on non- monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.

— II-15 — Appendix II Financial Information of the Group

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

2.5 Investment properties

Investment property, principally comprising land and buildings, is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Group. It also includes properties that are being constructed or developed for future use as investment properties. Land held under operating leases are accounted for as investment properties when the rest of the definition of an investment property is met. In such cases, the operating leases concerned are accounted for as if they were finance leases. Investment property is initially measured at cost, including related transaction costs and where applicable borrowing costs. After initial recognition, investment properties are carried at fair value, representing open market value determined at each reporting date by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If the information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Changes in fair values are recorded in the income statement as part of a valuation gain or loss in ‘fair value losses on investment properties’.

2.6 Land use rights

Land use rights are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Cost mainly represents consideration paid for the rights to use the land on which various plant and buildings are situated for a prescribed period from the date the respective rights were granted. Amortisation of land use rights is calculated on a straight-line basis over the period of leases.

2.7 Property, plant and equipment

Effective 1 April 2014, land and buildings held for use in the production or supply of good or services, or for administrative purposes are stated at their revalued amount, being the fair value on the basis of their existing use at the date of revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses, if any. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the end of the reporting period.

Any revaluation increase arising on revaluation of land and buildings is recognised in other comprehensive income and accumulated in property revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in net carrying amount arising on revaluation of an asset is recognised in profit or loss to the extent that it exceeds the balance, if any, on the property revaluation reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to retained profits/ (accumulated losses).

All other property, plant and equipment and land and building prior to 1 April 2014 are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

— II-16 — Appendix II Financial Information of the Group

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Land classified as finance lease commences amortisation from the time when the land interest becomes available for its intended use. Amortisation of land classified as finance lease and depreciation of other assets are calculated using the straight-line method to allocate their cost to their residual values, where applicable, over their estimated useful lives, as follows:

Land classified as finance lease Over the lease terms

Buildings 50 years

Plant and machinery Straight line 6 to 7 years

Leasehold improvements, furniture, fixtures and equipment Straight line 5 to 10 years

Motor vehicles Straight line 5 years

Moulds and tooling Straight line 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Construction-in-progress represents buildings, plant and machinery under construction or pending installation and is stated at cost. Cost includes the costs of construction of buildings, the costs of plant and machinery, installation, testing and other direct costs. No depreciation is made on construction-in- progress until such time as the relevant assets are completed and ready for intended use. When the assets concerned are brought into use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated above.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.9).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘gains/(losses) on disposals of land use rights, investment properties and property, plant and equipment’ in the income statement.

2.8 Intangible assets

(a) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(b) Club debenture

Club debenture represents golf club membership and is stated at cost less impairment, if any.

— II-17 — Appendix II Financial Information of the Group

2.9 Impairment of non-financial assets

Assets that have an indefinite useful life, for example, goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.10 Financial assets

(a) Classification

The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise “trade and notes receivables”, “deposits and other receivables” and “cash and cash equivalents” in the balance sheet (Notes 2.14 and 2.15).

(iii) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months at the end of the reporting period.

(b) Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within ‘other (losses)/gains, net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the Group’s right to receive payments is established.

— II-18 — Appendix II Financial Information of the Group

Changes in the fair value of monetary and non-monetary securities classified as available-for- sale are recognised in other comprehensive income.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustment recognised in equity is included in the income statement as “other (losses)/gains, net”.

Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the income statement as part of other income when the Group’s right to receive payments is established.

2.11 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

2.12 Impairment of financial assets

(a) Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the income statement.

(b) Assets classified as available-for-sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.

For debt securities, if any such evidence exists the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the income statement.

— II-19 — Appendix II Financial Information of the Group

For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

2.13 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined by using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14 Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.15 Cash and cash equivalents

In the statement of cash flow, cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.

2.16 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.17 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables, other payables and accruals are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables, other payables and accruals are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.18 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

2.19 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

— II-20 — Appendix II Financial Information of the Group

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.20 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting period in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill, the deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries and an associate, except for deferred tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries and an associate only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is legally enforceable rights to offset current income tax assets against current income tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balance on a net basis.

2.21 Employee benefits

(a) Pension obligations

The Group participates in various defined contribution retirement benefit plans which are available to all relevant employees. These plans are generally funded through payments to schemes established by government or trustee-administered funds. A defined contribution plan is a pension plan under which the Group pays contributions on a mandatory, contractual or voluntary basis into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefit relating to employee service in the current and prior periods.

— II-21 — Appendix II Financial Information of the Group

All contributions to pension plans are fully and immediately vested and the Group had no unvested benefits available to reduce its future contributions.

(b) Bonus plan

The expected cost of bonus payments is recognised as a liability when the Group has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made. Liabilities of bonus plan are expected to be settled within twelve months and are measured at the amounts expected to be paid when they are settled.

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of reporting period.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

2.22 Provisions

Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense within “finance costs” in the income statement.

2.23 Leases (as the lessee)

(a) Finance leases

Leases of property, plant and equipment that substantially transfer to the Group all the risks and rewards of ownership of assets are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased assets and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current liabilities, where appropriate. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

(b) Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the lease periods.

2.24 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities, as described below. The Group bases its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

— II-22 — Appendix II Financial Information of the Group

(a) Sales of goods

Sales of goods are recognised when a group entity has delivered products to the customer, the customer has accepted the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products and collectivity of the related receivables is reasonably assured.

(b) Interest income

Interest income is recognised using the effective interest method.

Rental income under operating leases is recognised on a straight-line basis over the term of the lease.

2.25 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s and the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders or directors, where appropriate.

2.26 Discontinued operations

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which represents a separate major line of business or geographic area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale.

When an operation is classified as discontinued, a single amount is presented in the income statement, which comprises the post-tax profit or loss of the discontinued operation and the post-tax gain or loss recognised on the measurement to fair value less costs to sell, or on the disposal, of the assets or disposal group constituting the discontinued operation.

3. Financial risk management

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, and cash flow and fair value interest-rate risks), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

Management regularly monitors the financial risks of the Group. The use of derivative financial instruments to hedge certain risk exposures is governed by the Group’s policies approved by the Board of Directors of the Company. The Group would occasionally enter into certain forward foreign exchange contracts to manage its exchange risks. The Group does not use derivative financial instruments for speculative purposes.

(a) Market risk

(i) Foreign exchange risk

The Group mainly operates in Hong Kong, Mainland China and Canada with most of the transactions settled in United States dollars (“US$”), HK$, Chinese Renminbi (“RMB”) and Canadian dollars (“CAD”). Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. The Group is exposed to foreign exchange risk from various currencies, primarily with respect to US$, CAD and RMB. Since the HK$ is pegged to the US$, management are of the opinion that the exchange rate risk exposure arising from US$ with respect to HK$ is insignificant.

— II-23 — Appendix II Financial Information of the Group

Management has a policy to require group companies to manage their foreign exchange risk against their functional currencies. It mainly includes managing the exposures arising from sales and purchases made by the relevant group companies in currencies other than their own functional currencies. The Group also manages its foreign exchange risk by performing regular reviews of the Group’s net foreign exchange exposures and would consider the use of foreign exchange contracts to manage its foreign exchange risks, where appropriate. As at 31 March 2015, the Group did not have any outstanding foreign exchange contracts.

As at 31 March 2015, certain of the Group’s receivables, cash and bank balances and trade payables were denominated in foreign currencies, details of which have been disclosed in the respective notes to these consolidated financial statements.

At 31 March 2015, if the HK$ had weakened/strengthened by 5% against the RMB, with all other variables held constant, post-tax loss (2014: post-tax profit) for the year would have been approximately HK$1,370,000 lower/higher (2014: HK$1,012,000 higher/lower), mainly as a result of foreign exchange gains/losses on translation of RMB-denominated financial assets and liabilities.

At 31 March 2015, if the CAD had weakened/strengthened by 5% against the HK$, with all other variables held constant, post-tax loss (2014: post-tax profit) for the year would have been approximately HK$327,000 higher/lower (2014: HK$898,000 lower/higher), main as result of foreign exchange losses/gains on translation of CAD-denominated financial assets and liabilities.

(ii) Price risk

The Group is exposed to securities price risk as the securities investments held by the Group are classified as available-for-sale financial assets in the balance sheet as at 31 March 2015. Balance of securities investments are relatively insignificant to the Group and the directors are of the view that there is no significant resulting price risk. The Group is not exposed to commodity price risk.

(iii) Cash flow and fair value interest-rate risk

The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group has no significant interest-bearing assets except for the cash at banks, details of which are disclosed in Note 26. The Group’s exposure to changes in interest rates is mainly attributable to its bank borrowings, details of which are disclosed in Note 27. Borrowings carried at floating rates expose the Group to cash flow interest rate risk. The Group has not used any interest rate swaps to hedge its exposure to interest rate risk.

As at 31 March 2015, if the interest rates on borrowings had been 50 basis points higher/ lower, with all other variables held constant, post-tax loss (2014: post-tax profit) for the year would have been HK$127,000 higher/lower (2014: HK$162,000 lower/higher), mainly as a result of higher/lower interest expense on floating rate borrowings. Interest rate risk in relation to the Group’s key management insurance contract is set out in Note 22.

(b) Credit risk

The Group has no significant concentrations of credit risk. The carrying amounts of cash at banks, trade and notes receivables, deposits and other receivables included in the consolidated balance sheet represent the Group’s maximum exposure to credit risk in relation to its financial assets.

The majority of the Group’s cash at banks are deposited in major financial institutions located in Hong Kong, Mainland China and Canada, which management believes are of high credit quality. Management does not expect any losses arising from non-performance by these counterparties.

The Group also has policies in place to ensure that sale of products are made to customers with an appropriate credit history and the Group performs periodic credit evaluations of its customers. Normally the Group does not require collaterals from trade debtors. The Group also occasionally enters into credit insurance arrangement to minimise its exposures to credit risks.

— II-24 — Appendix II Financial Information of the Group

Management makes periodic collective assessment as well as individual assessment on the recoverability of trade and other receivables based on historical payment records, the length of the overdue period, the financial strength of the trade and other debtors, the relevant credit insurance coverage and whether there are any disputes with the relevant debtors. The Group’s historical experience in collection of trade and other receivables falls within the recorded allowances and directors are of the opinion that adequate provision for uncollectible receivables has been made in these financial statements.

Prudent liquidity management implies maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities.

The Group’s primary cash requirements have been for additions of and upgrades on property, plant and equipment, settlement of borrowings, payment for trade and other payables and payment for operating expenses. The Group mainly finances its working capital requirements through a combination of internal resources and bank borrowings, as necessary.

The Group’s policy is to regularly monitor current and expected liquidity requirements to ensure it maintains sufficient cash and cash equivalents and adequate amount of committed credit facilities to meet its liquidity requirements in the short and long term.

Taking into account the repayment on demand clauses on bank borrowings, all of the Group’s financial liabilities as at 31 March 2015 were due for settlement contractually within 12 months, with their contractual undiscounted cash flows approximated their respective carrying amounts.

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, including interest payments computed using contractual rates, based on the earliest date on which the Group can be required to pay. For the purpose of maturity analysis, the maturity date of term loans with a repayment on demand clause is based on agreed scheduled repayments set out in the loan agreement, disregarding the repayment on demand clauses.

Within Between Between Over 1 year 1 and 2 years 2 and 5 years 5 years HK$’000 HK$’000 HK$’000 HK$’000

Group At 31 March 2015 Borrowings 65,688 755 11,496 — Trade payables 57,930 — — — Accruals and other payables 22,491 — — —

At 31 March 2014 Borrowings 89,381 6,064 9,816 1,695 Trade payables 84,436 — — — Accruals and other payables 15,688 — — —

As at 31 March 2015 and 2014, all of the Group’s financial liabilities are due for settlement contractually within 12 months.

3.2 Fair value estimation

As at 31 March 2015 and 2014, all the resulting fair value estimates on the available-for-sale financial assets, land and buildings and investment properties are made according to the fair value measurement hierarchy under HKFRS 7.

— II-25 — Appendix II Financial Information of the Group

The different levels of fair value measurements are defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The following table shows fair value measurement hierarchy to which the Group’s available-for-sale financial assets, land and buildings and investment properties are measured at fair value as at 31 March 2015 and 2014:

2015 2014 HK$’000 HK$’000 (Restated)

Level 1 Equity listed securities classified as available-for-sale financial assets 451 308

Level 3 Key management insurance contract classified as available-for-sale financial assets 13,637 15,159 Land and buildings 26,630 — Investment properties 3,540 54,459

43,807 69,618

There were no transfers between levels 1, 2 and 3 during the year.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the- counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to estimate the fair value of an instrument are observable, the instrument is included in level 2.

Further details of available-for-sale financial assets classified within level 3 of fair value hierarchy are set out in Note 22.

The Group’s land and buildings and investment properties are measured at fair value. Refer to Note 17 for disclosure of land and buildings and Notes 18 for disclosure of investment properties.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

The carrying amounts of the Group’s current financial assets, including cash and cash equivalents, trade and notes receivables, deposits and other receivables, and the Group’s current financial liabilities including trade payables, accruals and other payables, and borrowings, approximate their fair values due to their short maturities.

— II-26 — Appendix II Financial Information of the Group

3.3 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group manages the capital structure and makes adjustments to it in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, return capital to shareholders, issue new shares or obtain new bank borrowings.

The Group also monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as “equity”, as shown in the consolidated balance sheet, plus net debt.

The table below analyses the Group’s capital structure as at 31 March 2015 and 2014:

2015 2014 HK$’000 HK$’000 (Restated)

Total borrowings (Note 27) 74,805 105,528 Less: Cash and cash equivalents (Note 26) (71,669) (55,533)

Net debt 3,136 49,995 Total equity 186,516 239,837

Total capital 189,652 289,832

Gearing ratio 2% 17%

The optimal capital structure is regularly assessed by the Group with reference to the availability of committed facilities, the financing costs involved and availability of bank balances.

As at 31 March 2015, total banking facilities made available to the Group amounted to approximately HK$163,238,000 (2014:HK$155,708,000), of which approximately HK$74,805,000 (2014: HK$105,528,000) were utilised by the Group.

4. Critical accounting estimates and assumptions

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.8. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations required the use of estimates (Note 16).

— II-27 — Appendix II Financial Information of the Group

(b) Estimated impairment of other non-financial assets

Other non-financial assets including property, plant and equipment, intangible assets and land use rights are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of recoverable amount, which is based on the best information available. The Group derives the required cash flow estimates from historical experience and internal business plans. To determine recoverable amount, the Group uses cash flow estimates discounted at an appropriate discount rate, quoted market prices when available and independent appraisals, as appropriate. Details of impairment assessment performed in relation to property, plant and equipment are set out in Note 17.

Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market condition and the historical experience of manufacturing and selling products of similar nature. It could change significantly as a result of changes in customer taste and competitor actions in response to severe industry cycle. Management reassesses these estimates at the end of each reporting period.

(d) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences would impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

5. Revenue and segment information

Group 2015 2014 HK$’000 HK$’000

Continuing operations Turnover Sales of goods 531,126 618,300

Segment information

The Group is principally engaged in the electronic components distribution, electronic products manufacturing, and personal computer products distribution.

The chief operating decision maker has been identified as the executive directors (collectively referred to as the “CODM”) that make strategic decisions. The CODM reviews the internal reporting of the Company and its subsidiaries in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

The CODM considers the business from the perspective of the nature of operations and the type of products, including the “Electronic Components Distribution”, “Electronic Products Manufacturing” and “Personal Computer Products Distribution”.

Each of the Group’s operating segments represents a strategic business unit that is managed by the respective business unit leaders. Inter-segment transactions are entered into under the normal commercial terms and conditions that would normally be available to unrelated third parties. CODM assesses the performance of the operating segments based on a measure of profit before income tax. Other information provided to the CODM is measured in a manner consistent with that in the consolidated financial statements.

Assets of reportable segments exclude deferred income tax assets, available-for-sale financial assets and corporate assets (mainly including certain corporate properties and equipment and corporate cash and bank balances), all of which are managed on a central basis. Liabilities of reportable segments exclude current and deferred income tax liabilities, corporate borrowings and other corporate liabilities. These are part of the reconciliation to total balance sheet assets and liabilities.

— II-28 — Appendix II Financial Information of the Group

Year ended 31 March 2015 Personal Electronic Electronic Computer Components Products Products Distribution Manufacturing Distribution Unallocated Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Turnover Sales of goods 163,741 132,525 234,860 — 531,126

Results of reportable segments (8,076) 3,939 (18,733) — (22,870)

A reconciliation of results of reportable segments to loss for the year is as follows:

Results of reportable segments (22,870) Unallocated income (Note (a)) 27,139 Unallocated expenses (Note (b)) (33,509)

Operating loss (29,240) Finance costs — net (784)

Loss before income tax (30,024) Income tax expense (9,700)

Loss for the year (39,724)

Other segment information: Capital expenditure 237 842 153 3,775 5,007 Depreciation of property, plant and equipment 162 4,643 247 1,573 6,625 Gains on disposals of land use rights, investment properties and property, plant and equipment — — — 27,139 27,139 Amortisation of land use rights — — — 94 94 Provision for impairment of trade receivables 1,206 — 115 — 1,321 Impairment losses of goodwill (Note 16) — — 22,559 — 22,559 Impairment losses of property, plant and equipment (Note 17) 438 — 288 — 726 Provision for impairment of inventories 2,038 843 — — 2,881

Notes:

(a) Unallocated income during the year represents gain from disposal of investment properties, land use rights, and buildings classified as property, plant and equipment.

(b) Unallocated expenses mainly include salaries, depreciation, legal and professional fees, other taxes in relation to disposal of properties and other operating expenses incurred at corporate level.

— II-29 — Appendix II Financial Information of the Group

As at 31 March 2015 Personal Electronic Electronic Computer Components Products Products Distribution Manufacturing Distribution Total HK$’000 HK$’000 HK$’000 HK$’000

Segment assets Segment assets 94,270 96,253 105,691 296,214

Deferred income tax assets 115 Available-for-sale financial assets 14,088 Other unallocated assets (Note (a)) 45,178

Total assets per consolidated balance sheet 355,595

Segment liabilities Segment liabilities 55,589 43,957 39,871 139,417

Deferred income tax liabilities 12,311 Other unallocated liabilities (Note (b)) 17,351

Total liabilities per consolidated balance sheet 169,079

Notes:

(a) As at 31 March 2015, other unallocated assets mainly included land and buildings in respect of all factory and office premises, and cash and cash equivalents for corporate usage. Depreciation charge in respect of factory premises utilised is included in the related segment results.

(b) As at 31 March 2015, other unallocated liabilities mainly included corporate borrowings.

— II-30 — Appendix II Financial Information of the Group

Year ended 31 March 2014 (Restated) Personal Electronic Electronic Computer Components Products Products Distribution Manufacturing Distribution Unallocated Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Turnover Sales of goods 176,993 159,062 282,245 — 618,300

Results of reportable segments 2,406 7,308 6,909 — 16,623

A reconciliation of results of reportable segments to profit for the year is as follows:

Results of reportable segments 16,623 Unallocated income 14,270 Unallocated expenses (Note (a)) (22,067)

Operating profit 8,826 Finance costs — net (1,407)

Profit before income tax 7,419 Income tax expense (2,425)

Profit for the year 4,994

Other segment information: Capital expenditure 377 1,811 267 1,769 4,224 Depreciation of property, plant and equipment 99 4,289 171 3,008 7,567 Losses on disposals of land use rights, investment properties and property, plant and equipment 24 — — 17 41 Amortisation of land use rights — — — 126 126 Provision for impairment of trade receivables 259 — 68 — 327 Provision for impairment of inventories — — 1,392 — 1,392

Note (a):

Unallocated expenses mainly include salaries, depreciation, and other operating expenses incurred at corporate level.

— II-31 — Appendix II Financial Information of the Group

As at 31 March 2014 (Restated) Personal Electronic Electronic Computer Components Products Products Distribution Manufacturing Distribution Total HK$’000 HK$’000 HK$’000 HK$’000

Segment assets Goodwill — — 25,901 25,901 Other segment assets 104,327 102,723 74,139 281,189

104,327 102,723 100,040 307,090

Deferred income tax assets 241 Available-for-sale financial assets 15,467 Other unallocated assets (Note (a)) 131,636

Total assets per consolidated balance sheet 454,434

Segment liabilities Segment liabilities 73,078 64,959 39,108 177,145

Tax payable 2,431 Deferred income tax liabilities 4,159 Other unallocated liabilities (Note (b)) 30,862

Total liabilities per consolidated balance sheet 214,597

Notes:

(a) As at 31 March 2014, other unallocated assets mainly included land and buildings in respect of all factory and office premises, and cash and cash equivalents for corporate usage related to continuing operations. Depreciation charge in respect of factory premises is included in the related segment results.

(b) As at 31 March 2014, other unallocated liabilities mainly included corporate borrowings. Liabilities related to discontinued operations mainly included outstanding borrowings and trade payables.

The entity is domiciled in Hong Kong. The revenue from external customers attributable to Hong Kong and other locations (on the basis of customers’ locations) is analysed as follows:

Revenue from external customers 2015 2014 HK$’000 HK$’000

Hong Kong 77,190 87,970 Mainland China 143,642 131,472 North America 274,632 285,554 Europe 29,832 101,701 Other Asian countries 5,830 11,603

531,126 618,300

Revenue of approximately HK$68,331,000 (2014: HK$63,474,000) are derived from a single external customer.

At 31 March 2015, the total non-current assets other than goodwill, available-for-sale financial assets, other long-term assets and deferred income tax assets (there are no employment benefit assets) located in Hong Kong are approximately HK$25,339,000 (2014: HK$8,079,000), and the total non-current assets located in other locations (mainly in Mainland China and Canada) amounted to approximately HK$19,839,000 (2014: HK$124,378,000).

— II-32 — Appendix II Financial Information of the Group

6. Other income

2015 2014 HK$’000 HK$’000

Rental income 2,070 2,005 Others 228 1,037

2,298 3,042

7. Other (losses)/gains, net

2015 2014 HK$’000 HK$’000

Net exchange (losses)/gains (110) 71 Impairment loss on available-for-salefinancial assets (1,522) — Others (167) —

(1,799) 71

8. Expenses by nature

2015 2014 HK$’000 HK$’000 (Restated)

Changes in inventories of finished goods and work-in-progress 2,172 (9,676) Trading merchandise sold, and raw materials and consumables used 447,278 514,994 Provision for impairment of inventories 2,881 1,392 Auditor’s remuneration 1,992 1,840 Amortisation of land use rights 94 126 Depreciation 6,625 7,567 Provision for impairment of trade receivables (included in general and administrative expenses) 1,321 327 Impairment of property, plant and equipment 726 — Employment benefit expenses (including directors’ emoluments) (Note 9) 64,622 61,900 Operating lease rental in respect of land and buildings 7,288 7,280 Travelling and office expenses 15,813 12,718 Transportation expenses 6,551 5,641 Advertising expenses 192 214 Repairs and maintenance expenses 2,276 1,211 Other expenses 5,588 5,905

565,419 611,439

Representing: Cost of sales 466,600 530,537 Selling and distribution expenses 13,448 12,901 General and administrative expenses 85,371 68,001

565,419 611,439

— II-33 — Appendix II Financial Information of the Group

9. Employment benefit expenses

Employment benefit expenses, including directors’ emoluments, consist of:

2015 2014 HK$’000 HK$’000

Wages, salaries and allowances 56,926 54,306 Bonuses 2,033 2,317 Pension costs — defined contribution plans 3,241 2,968 Welfare, benefits and others 2,422 2,309

64,622 61,900

10. Finance costs – net

2015 2014 HK$’000 HK$’000

Interest income from bank deposits 1,321 942

Interest expense on bank loans which contain a repayment on demand clause (2,105) (2,306) Interest expense on other borrowings — (37) Interest element of finance leases — (6)

(2,105) (2,349)

Finance costs — net (784) (1,407)

11. Income tax expense

The Company is exempted from taxation in Bermuda. Hong Kong profits tax has been provided for at the rate of 16.5% (2014: 16.5%) on the estimated assessable profits arising in or derived from Hong Kong. Group companies established and operating in Mainland China are subject to PRC corporate income tax at the rate of 25% (2014: 25%). Companies established and operating in Canada are subject to Canadian income tax at rates ranging from 26.0% to 26.5% (2014: 26.0% to 26.5%). A group company established and operating in Macao is exempted from Macao Complementary Tax under the Article 12 of Decree-Law No. 58/99/M issued by Macao Government.

2015 2014 HK$’000 HK$’000 (Restated)

Current taxation — Hong Kong profits tax 56 664 — PRC corporate income tax 3,931 170 — Canadian income tax 874 1,867

Over-provision in prior years (230) — Deferred taxation relating to the origination and reversal of temporary differences (Note 30) 5,069 (276)

9,700 2,425

— II-34 — Appendix II Financial Information of the Group

The taxation on the Group’s (loss)/profit before income tax differs from the theoretical amount that would arise using the Hong Kong profits tax rate as follows:

2015 2014 HK$’000 HK$’000 (Restated)

(Loss)/profit before income tax (30,024) 7,419

Calculated at taxation rate of 16.5% (2014: 16.5%) (4,954) 1,224 Effect of different tax rate 1,057 1,140 Income not subject to tax (443) (353) Expenses not deductible 531 128 Tax losses not recognised 2,072 906 Utilisation of previously unrecognised tax losses (118) (711) Over-provision in prior years (230) — Capital gain tax on disposal of property 3,500 — Withholding tax (Note) 8,171 — Others 114 91

Taxation charge 9,700 2,425

Note:

During the year ended 31 March 2015, withholding tax is provided for at a rate of 25% under the relevant Canadian tax regulations as a result of the planned distribution of dividends from subsidiaries incorporated in Canada. The unremitted retained earnings of these subsidiaries were intended to be reinvested as at 31 March 2014.

12. Directors’, chief executive’s and senior management’s emoluments

(a) Directors’ and chief executive’s emoluments

The remuneration of each of the directors of the Company for the year ended 31 March 2015 is set out below:

Contribution Salaries to retirement and Discretionary benefit Name of Director Fees allowances bonuses scheme Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors Mr LAU Tak Wan (chief executive) — 3,419 — 158 3,577 Ms CHAN Yuen Mei, Pinky — 1,168 — 54 1,222 Mr CHEUNG Wai Ho — 770 — 37 807 Mr CHONG Wing Kim, James — 864 — 18 882 Mr FUNG Wai Ching — 609 — 28 637

Independent non-executive directors Dr Barry John BUTTIFANT 100 — — — 100 Dr LIU Ngai Wing 75 — — — 75 Mr CHOI Yuk Fan 50 — — — 50

225 6,830 — 295 7,350

— II-35 — Appendix II Financial Information of the Group

The remuneration of each of the directors of the Company for the year ended 31 March 2014 is set out below:

Contribution Salaries to retirement and Discretionary benefit Name of Director Fees allowances bonuses scheme Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directors Mr LAU Tak Wan (chief executive) — 3,156 — 145 3,301 Ms CHAN Yuen Mei, Pinky — 1,078 — 49 1,127 Mr WAN Chor Fai (Note 1) — 525 — 12 537 Mr CHEUNG Wai Ho — 754 50 35 839 Mr CHONG Wing Kim, James (Note 2) — 618 — 10 628 Mr FUNG Wai Ching (Note 2) — 429 — 19 448

Independent non-executive directors Dr Barry John BUTTIFANT 100 — — — 100 Dr LIU Ngai Wing 75 — — — 75 Mr CHOI Yuk Fan 50 — — — 50

225 6,560 50 270 7,105

Note 1: Resigned as an executive director on 1 September 2013.

Note 2: Appointed as an executive director on 23 July 2013.

No director waived any emoluments during the year (2014: Nil). No emolument was paid to any directors as inducement to join or as compensation for loss of office during the year (2014: Nil). No director has been granted or has exercised any share option during the year (2014: Nil).

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year are the executive directors whose emoluments are reflected in the analysis presented above.

13. Pension schemes

Hong Kong

The Group has two defined contribution pension schemes, the retirement scheme organised under the Hong Kong Occupational Retirement Schemes Ordinance (“ORSO Scheme”) and the Mandatory Provident Fund Scheme (“MPF Scheme”), for its employees in Hong Kong. The assets of the ORSO Scheme and the MPF Scheme are held separately from those of the Group under independently administered funds.

Under the ORSO Scheme, the Group and each of its employees make monthly contribution to the scheme of approximately 5% respectively, of the employees’ salary. The unvested benefits of employees who have terminated employment are utilised by the Group to reduce its future contributions. As at 31 March 2015 and 2014, the Group did not have significant unvested benefits.

Under the MPF Scheme, each of the Group and its employees makes monthly contributions to the scheme at 5% of the employee’s relevant income, as defined in the Mandatory Provident Fund Scheme Ordinance. Both the Group’s and the employee’s contributions are subjected to a cap of HK$1,250 per month prior to 1 June 2014 and HK$1,500 per month thereafter, with contributions beyond these amounts being voluntary. The contributions are fully and immediately vested in the employees.

Mainland China

As stipulated by rules and regulations in Mainland China, the Group contributes to state-sponsored retirement plans for its relevant employees in Mainland China. The Group and its relevant employees make monthly contributions to the plans at the respective statutory rates on the relevant income (comprising salaries, allowances and bonus). The Group has no further obligations for the actual payment of post- retirement benefits beyond its contributions. The state-sponsored retirement plans are responsible for the entire post-retirement benefits payable to retired employees.

— II-36 — Appendix II Financial Information of the Group

Canada

The Group is required to make monthly contribution to the National Canada Pension Plan (“CPP”) in respect of its employees in Canada based on the relevant employees’ salaries, with the exceptions of certain excluded employment and benefits, at a rate 4.95% (2014: 4.95%) of the employees’ salaries subject to a maximum annual pensionable earnings of HK$365,000 (equivalent to CAD53,600) (2014: HK$387,000 (equivalent to CAD52,500)).

14. Loss attributable to equity holders of the Company

The loss attributable to equity holders of the Company is dealt with in the financial statements of the Company to the extent of approximately HK$94,000 (2014: HK$332,000).

15. (Loss)/earnings per share

(a) Basic

Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

2015 2014 HK$’000 HK$’000 (Restated)

(Loss)/profit attributable to equity holders of the Company (39,724) 8,175

Excluding: Profit from discontinued operations attributable to equity holders of the Company — (3,181)

(Loss)/profit from continuing operations attributable to equity holders of the Company (39,724) 4,994

2015 2014 (Restated)

Weighted average number of ordinary shares in issue (’000) 437,239 416,152

Basic (loss)/earnings per share (rounded to HK cents per share) — Continuing operations (9.09) 1.20 — Discontinued operations — 0.76

(9.09) 1.96

(b) Diluted

Dilutive (loss)/earnings per share is of the same amount as the basic (loss)/earnings per share as there were no potential dilutive ordinary shares outstanding during the year.

— II-37 — Appendix II Financial Information of the Group

16. Goodwill

2015 2014 HK$’000 HK$’000

Cost Beginning of the year 25,901 28,201 Exchange differences (3,342) (2,300) Provision for impairment (22,559) —

End of the year — 25,901

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units identified according to operating segment. As at 31 March 2014 and during the year ended 31 March 2015, all the goodwill is allocated to the “Personal computers products distribution” segment in Canada.

The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill might be impaired. For the purpose of impairment review, the recoverable amount of goodwill is determined based on the higher of value-in-use and fair value less costs of disposal calculations. These calculations use cash flow projections based on the annual financial budgets approved by management for the purpose of impairment review covering a five-year period. Cash flows beyond the five-year period are extrapolated according to a constant-growth assumption. The impairment test resulted in the impairment of goodwill of HK$22,559,000 and property, plant and equipment of HK$288,000 (Note 17) of the personal computer products distribution segment.

The key factors used for value-in-use calculations are as follows:

Canada operations 2015 2014

Gross margin 9.3% 9.5% Growth rate 0% 1.7% to 2.7% Discount rate (pre-tax) 18.9% 16.7%

The budgeted growth rate and gross margin were determined by management based on past performance and its expectation for market development. The annual discount rate is before tax and reflects market assessments of the time value and the specific risks relating to the relevant segment. Management has considered the above factors and valuation and has also taken into account the business plan going forward. The provision for impairment made during the year mainly results from the significant decline in the personal computer products market in North America starting from the second half of the financial year which continues subsequent to the year end. Management is of the view that the declined level of sales is not temporary and has included such factor in devising its annual financial budgets. Judgment is required to determine key factors adopted in the cash flow projections and the changes to key factors can significantly affect these cash flow projections. The extent of impairment provision could be affected if there is a decrease in discount rate by more than 0.5%, or an increase in gross margin by more than 0.1%, or an increase in growth rate by more than 0.2%.

— II-38 — Appendix II Financial Information of the Group

17. Property, plant and equipment

Leasehold improvements, furniture, Land and Plant and fixtures and Motor Moulds and Construction- buildings machinery equipment vehicles tooling in-progress Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Year ended 31 March 2014 Opening net book amount 55,180 11,151 6,847 2,870 142 310 76,500 Exchange differences (56) — (26) (4) — — (86) Transfer 310 — — — — (310) — Additions 1,500 1,275 1,136 205 108 — 4,224 Disposals — (13) (107) (35) — — (155) Depreciation (1,895) (3,216) (1,611) (725) (120) — (7,567)

Closing net book amount 55,039 9,197 6,239 2,311 130 — 72,916

At 31 March 2014 Cost 61,323 108,196 41,395 6,364 24,337 — 241,615 Accumulated depreciation and impairment (6,284) (98,999) (35,156) (4,053) (24,207) — (168,699)

Net book amount 55,039 9,197 6,239 2,311 130 — 72,916

An analysis of cost or valuation At cost 55,039 9,197 6,239 2,311 130 — 72,916 At valuation — — — — — — —

55,039 9,197 6,239 2,311 130 — 72,916

Leasehold improvements, furniture, Land and Plant and fixtures and Motor Moulds and buildings machinery equipment vehicles tooling Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Year ended 31 March 2015 Opening net book amount 55,039 9,197 6,239 2,311 130 72,916 Exchange differences (123) — (37) (4) — (164) Revaluation (Note 2.1(d)) 20,536 — — — — 20,536 Additions 1,240 1,050 569 — — 2,859 Impairment — — (703) (23) — (726) Disposals (48,654) — (268) (328) — (49,250) Depreciation (1,408) (2,822) (1,646) (673) (76) (6,625)

Closing net book amount 26,630 7,425 4,154 1,283 54 39,546

At 31 March 2015 Cost 26,630 109,246 41,449 3,978 24,337 205,640 Accumulated depreciation and impairment — (101,821) (37,295) (2,695) (24,283) (166,094)

Net book amount 26,630 7,425 4,154 1,283 54 39,546

An analysis of cost or valuation At cost — 7,425 4,154 1,283 54 12,916 At valuation 26,630 — — — — 26,630

26,630 7,425 4,154 1,283 54 39,546

— II-39 — Appendix II Financial Information of the Group

(a) Net book value of the land and buildings is analysed as follows:

2015 2014 HK$’000 HK$’000

Land and buildings held in Hong Kong on: Leases of between 10 and 50 years 24,900 5,076

Buildings held outside Hong Kong on: Leases of between 10 and 50 years 1,730 49,963

26,630 55,039

If the Group’s land and buildings were stated on historical cost basis, the amounts would be as follows:

2015 2014 HK$’000 HK$’000

Cost 10,002 61,323 Accumulated depreciation (3,366) (6,284)

Net book amount 6,636 55,039

Depreciation incurred during the year is attributable to the following:

2015 2014 HK$’000 HK$’000

Cost of sales 2,560 2,987 General and administrative expenses 4,065 4,580

Total depreciation 6,625 7,567

(b) With effect from 1 April 2014, the Group revised its accounting policy in respect of the measurement basis of land and buildings from the cost model to the revaluation model in accordance with HKAS 16 (Note 2.1 (d)), under which those assets are carried at fair value based on valuation by the independent valuer.

An independent valuation of the Group’s land and buildings was performed by an independent valuer, Roma Appraisals Limited, to determine the fair value of the land and buildings as at 31 March 2015. The revaluation gains or losses are included in other comprehensive income.

All land and buildings carried at fair value, by valuation method, involved one or more of the significant inputs not based on observable market data, and are classified as level 3 fair value measurement hierarchy accordingly.

There were no transfers between Levels 1, 2 and 3 during the year.

Fair value measurements using significant unobservable inputs (Level 3)

Hong Kong China Canada Total HK$’000 HK$’000 HK$’000 HK$’000

At 1 April 2014 5,076 49,351 612 55,039 Revaluation 19,723 315 498 20,536 Depreciation (699) (600) (109) (1,408) Addition 800 440 — 1,240 Disposal — (48,654) — (48,654) Exchange difference — (102) (21) (123)

At 31 March 2015 24,900 750 980 26,630

— II-40 — Appendix II Financial Information of the Group

Valuation Processes

The fair value of the Group’s land and buildings at 31 March 2015 are appraised by an independent professionally qualified valuer who hold a recognised relevant professional qualification and have recent experience in the locations and segments of the land and buildings valued. For all land and buildings, their current use equates to the highest and best use.

Valuation techniques

The valuations were based on direct comparison approach which largely used observable inputs (e.g. market rent, yield, etc.) and taking into account the rental value per square meter arrived at with adjustments on level, size, location and quality of the properties.

Information about fair value measurements using significant unobservable inputs (Level 3)

Range of Fair value at Valuation unobservable Description 31 March 2015 Technique Unobservable inputs inputs Unit price per HK$ (Note) square meter

Office units — 24,900,000 Direct Degree of 6,100 - 36,000 Hong Kong comparison adjustment factors

Office units — 980,000 Direct Degree of 8,100 Canada comparison adjustment factors

Office units — 750,000 Direct Degree of 8,200 China comparison adjustment factors

Note:

Degree of adjustment factors directly affects the unit price per square meter.

(c) During the year, the entire balances of property, plant and equipment other than land and buildings of the personal computer products distribution segment (HK$288,000) (Note 16) and the electronic component distribution segment (HK$438,000) were impaired due to the declining performance of these segments.

In addition, impairment review on the property, plant and equipment of HK$11,167,000 under the Electronic Products Manufacturing segment is performed by management. For the purpose of the review, the recoverable amount of the related assets are determined based on value-in-use calculation which uses cash flow projection based on the annual financial budget approved by management. Cash flows beyond the annual period are extrapolated according to a constant-growth assumption covering a five-year period which in aggregate represents the remaining useful lives of major machinery and equipment. The key factors used for value-in-use calculations included gross margin of 15.5% (2014: 19.0%), growth rate of 0% (2014: 2.6%) and discount rate of 15.0% (2014: 15.0%).

The budgeted gross margin was determined by management based on past performance and its expectation for market development. The annual discount rate is before tax and reflects market assessments of the time value and the specific risks relating to the relevant segment. Judgment is required to determine key factors adopted in the cash flow projections. The impairment test is sensitive to changes in assumptions; consequently, any adverse change in key assumptions would, in isolation, cause an impairment loss to be recognised. If there is a decrease in gross margin by more than 1.5%, or a decrease in revenue by more than 5%, or an increase in discount rate (pre-tax) by more than 4%, the carrying value would equal the recoverable amounts.

— II-41 — Appendix II Financial Information of the Group

18. Investment properties

Movements were:

HK$’000 (Restated)

Year ended 31 March 2014 Opening net book amount, as previously reported 35,364 Change in accounting policy (Note 2.1(d)) 20,202

Opening net book amount, as restated 55,566 Fair value losses on revaluation of investment properties (1,107)

Closing net book amount, as restated 54,459

Year ended 31 March 2015 Opening net book amount, as previously reported 34,591 Change in accounting policy (Note 2.1(d)) 19,868

Opening net book amount, as restated 54,459 Addition 36 Fair value losses on revaluation of investment properties (26) Disposal (50,929)

Closing net book amount 3,540

Net book value of investment properties is analysed as follows:

2015 2014 2013 HK$’000 HK$’000 HK$’000 (Restated) (Restated)

Investment properties held outside Hong Kong on: Leases of between 10 and 50 years 3,540 53,349 54,456 Leases of over 50 years — 1,110 1,110

3,540 54,459 55,566

The periods of operating leases whereby the Group lease out its investments properties range from 12 months to 24 months.

As at 31 March 2015, the fair values of the Group’s investment properties were estimated by independent firm of professional valuers on an open market basis. The valuation was arrived at by reference to market evidence of transaction prices for similar properties in the same locations and conditions.

An independent valuation of the Group’s investment properties was performed by an independent valuer, Roma Appraisals Limited, to determine the fair value of the investment properties as at 31 March 2015 and 2014. The revaluation gains or losses is included in ‘fair value losses on investment properties’ in consolidated income statement.

All investment properties carried at fair value, by valuation method with one or more of the significant inputs is not based on observable market data and classified as level 3 in fair value measurement.

There were no transfers between Levels 1, 2 and 3 during the year.

Valuation processes

The Group’s investment properties were valued at 31 March 2015 and 2014 by an independent professionally qualified valuers who hold a recognised relevant professional qualification and have recent experience in the locations and segments of the investment properties valued. For all investment properties, their current use equates to the highest and best use.

— II-42 — Appendix II Financial Information of the Group

Valuation techniques

Valuations based on direct comparison approach largely uses observable inputs (e.g. market rent, yield, etc.) and take into account the rental value per square meter arrived at with adjustments on level, size, location and quality of the properties.

Analytical trending method of valuation is based on estimate of the value of properties as of 31 March 2015, with time adjustments using appropriate price indices to derive the values of the property as of the designated valuation dates.

There were no changes to these valuation techniques during the year.

Information about fair value measurements using significant unobservable inputs (Level 3)

Range of Fair value at Valuation unobservable Description 31 March 2015 Technique Unobservable inputs inputs Unit price per HK$ square meter

Office units — 3,540,000 Direct Degree of 8,200 — 11,000 China comparison adjustment factors

Range of Fair value at Valuation unobservable Description 31 March 2014 Technique Unobservable inputs inputs Unit price per HK$ (Note) square meter

Office units — 1,110,000 Direct Degree of 11,000 Guangzhou comparison adjustment factors

Office units — 2,420,000 Analytical Index adjusting factor 8,200 Shanghai trending method

Factory — China 50,929,000 Cost Age adjustment 840 — 1,100 (Buildings)

Direct Degree of 150 Comparison adjustment factors (Land)

Note:

These inputs directly affect the unit price per square meter.

— II-43 — Appendix II Financial Information of the Group

19. Land use rights

The Group’s interests in land use rights represent prepaid operating lease payments and their net book amounts are analysed as follows:

2015 2014 HK$’000 HK$’000 (Restated)

Year ended 31 March Opening net book amount, as previously reported 9,410 9,648 Change in accounting policy (Note 2.1(d)) (4,328) (4,440)

Opening net book amount, as restated 5,082 5,208 Addition 2,112 — Amortisation (94) (126) Disposal (5,008) —

Closing net book amount 2,092 5,082

At 31 March Cost 2,112 6,359 Accumulated amortisation (20) (1,277)

Net book amount 2,092 5,082

Geographical analysis:

2015 2014 2013 HK$’000 HK$’000 HK$’000 (Restated) (Restated)

Outside Hong Kong, held on: Leases of between 10 and 50 years 2,092 5,082 5,208

As at 31 March 2015, the remaining period of unexpired land use rights in the PRC ranged from 28 to 50 years.

20. Other long-term assets

Group 2015 2014 HK$’000 HK$’000

Club debentures 540 710 Deposits 209 262 Prepaid rental expenses 2,815 —

3,564 972

— II-44 — Appendix II Financial Information of the Group

21. Interest in an associated company

Group 2015 2014 HK$’000 HK$’000

Cost 2,519 2,519 Provision for impairment (2,519) (2,519)

Net book amount — —

Details of the associated company, which is a limited liability company established and operating in Japan, are as follows:

Issued and fully Percentage of Name paid up capital equity interest held Principal activities

Daiwa Sound Company YEN23,400,000 47% Trading and manufacturing Limited of speaker elements and components

The interest in an associated company had been fully impaired due to its continuous loss suffered in recent years.

22. Available-for-sale financial assets

Available-for-sale financial assets include the following:

Group 2015 2014 HK$’000 HK$’000

Listed securities: Equity securities — Hong Kong, denominated in HK$ 451 308

Key management insurance: Fair value of the insurance contract, denominated in US$ 13,637 15,159

14,088 15,467

Market value of listed securities 451 308

The key management insurance is pledged as collateral for the Group’s borrowings amounting to approximately HK$12,153,000 (2014: HK$12,907,000) (Note 27).

Discounted cash flow approach is adopted in the fair value measurement of the Group’s key management insurance contract, with the significant unobservable inputs used being the crediting rating of 4.4% per annum which is adopted as the discount rate, and the expected death benefits being estimated at 80% of cost of insurance. Significant changes in these unobservable inputs in isolation would result in a significant change in fair value measurement.

— II-45 — Appendix II Financial Information of the Group

The following table presents the changes in level 3 instruments for the year ended 31 March 2015 and 2014:

2015 2014 HK$’000 HK$’000

Beginning of the year 15,159 14,808 Fair value gain — 351 Impairment loss (1,522) —

End of the year 13,637 15,159

Changes in unrealised gains or losses for the year included in other comprehensive income or loss at the end of the year — 351

23. Inventories

Group 2015 2014 HK$’000 HK$’000

Trading merchandise 68,848 68,455 Raw materials 61,570 56,138 Work-in-progress 15,001 14,017 Finished goods 21,523 24,679

Inventories — gross 166,942 163,289 Provision for impairment (50,692) (47,811)

Inventories — net 116,250 115,478

Notes:

(i) The cost of inventories recognised as expenses and included in cost of sales amounted to HK$449,450,000 (2014: HK$505,318,000).

(ii) During the year, no inventories have been written off. During the year ended 31 March 2014, inventories amounting to HK$2,498,000 were written off.

(iii) Movement in the provision for inventories is as follows:

Group 2015 2014 HK$’000 HK$’000

At 1 April 47,811 48,917 Provision for inventory impairment 2,881 1,392 Write-off against provision — (2,498)

At 31 March 50,692 47,811

— II-46 — Appendix II Financial Information of the Group

24. Trade and notes receivables

Group 2015 2014 HK$’000 HK$’000

Trade receivables 103,531 110,842 Less: provision for impairment (22,715) (21,476)

80,816 89,366 Notes receivable 11,470 7,058

92,286 96,424

Notes:

(a) The carrying amounts of the Group’s trade receivables are denominated in the following currencies:

Group 2015 2014 HK$’000 HK$’000

HK$ 18,913 13,005 RMB 35,226 31,810 US$ 35,977 45,647 CAD 13,415 20,380

103,531 110,842

The carrying amounts of trade receivables approximate their fair values.

There is no concentration of credit risk with respect to trade receivables as customer base is widely dispersed.

(b) Majority of the Group’s sales are made with credit terms generally ranging from 30 days to 90 days. The ageing analysis of trade receivables by the dates on which the relevant sales were made is as follows:

Group 2015 2014 HK$’000 HK$’000

Less than 60 days 66,591 65,065 60 days to 120 days 12,049 20,494 Over 120 days 24,891 25,283

103,531 110,842

At 31 March 2015, trade receivables of approximately HK$21,847,000 (2014: HK$23,541,000) were past due but not considered to be impaired because these mainly relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables by the days of overdue repayment is as follows:

Group 2015 2014 HK$’000 HK$’000

Less than 60 days 12,049 19,652 60 days to 120 days 7,838 1,495 Over 120 days 1,960 2,394

21,847 23,541

— II-47 — Appendix II Financial Information of the Group

The credit quality of trade receivables neither past due nor impaired has been assessed by reference to historical information about the counterparty default rates and taking into account the credit insurance coverage. The existing counterparties do not have significant defaults in the past.

At 31 March 2015, trade receivables of approximately HK$22,715,000 (2014: HK$21,476,000) were impaired and fully provided for. The individually impaired receivables mainly relate to customers who are in unexpected difficult economic situations.

Group 2015 2014 HK$’000 HK$’000

At 1 April 21,476 22,075 Provision for impairment of trade receivables 1,321 327 Receivables written off during the year as uncollectable (82) (926)

At 31 March 22,715 21,476

(d) Notes receivable

The carrying amounts of notes receivable approximate their fair values due to their short maturity. As at 31 March 2015, all the notes receivable represent bank acceptance notes issued by third parties with average maturity of within 180 days (2014: 180 days), which are denominated in RMB.

25. Prepayments, deposits and other receivables

Group Company 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000

Prepayments 9,985 10,366 112 141 Rental deposits 63 63 — — Other receivables 1,348 1,532 — —

11,396 11,961 112 141

As at 31 March 2015 and 2014, prepayments mainly represented payment in advance to suppliers for the purchase of inventories and prepaid rental expenses.

— II-48 — Appendix II Financial Information of the Group

26. Cash and cash equivalents

Group Company 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000

Cash at banks 71,309 55,328 469 182 Cash on hand 360 205 — —

71,669 55,533 469 182

Cash, cash equivalents and bank overdrafts include the following for the purposes of the statement of cash flows:

Group 2015 2014 HK$’000 HK$’000

Cash and cash equivalents 71,669 55,533 Bank overdrafts (Note 27) (2,690) (3,531)

Cash and cash equivalents 68,979 52,002

Cash and cash equivalents are denominated in the following currencies:

Group Company 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000

HK$ 14,813 19,751 469 182 RMB 36,860 8,171 — — US$ 4,303 11,052 — — CAD 15,657 16,381 — — Others 36 178 — —

71,669 55,533 469 182

Cash at banks earns interest either at floating rates based on daily bank deposit rates or fixed rates determined at deposit dates. The Group’s cash and bank balances denominated in RMB are deposited with banks in Mainland China or Hong Kong. The conversion of these RMB-denominated balances into foreign currencies in Mainland China and the remittance of funds out of Mainland China is subject to the rules and regulations of foreign exchange control promulgated by the Government of the People’s Republic of China.

27. Borrowings

Group 2015 2014 HK$’000 HK$’000

Current Bank overdrafts (Note 26) 2,690 3,531 Short-term bank borrowings 10,000 5,000 Trust receipts bank loans 44,771 66,706 Portion of bank borrowings repayable within one year 5,934 12,944 Portion of bank borrowings due for repayment after one year which contains a repayment on demand clause 11,410 17,347

Total 74,805 105,528

— II-49 — Appendix II Financial Information of the Group

As at 31 March 2015, bank borrowings of approximately HK$11,410,000 (2014: HK$17,347,000) due for repayment after one year are subject to repayment on demand clause and, accordingly, has been classified as current liabilities.

Disregarding the repayment on demand clauses, the maturity of borrowings is as follows:

Group 2015 2014 HK$’000 HK$’000

Within 1 year, with reference to the repayment schedule 63,395 88,181 Between 1 and 2 years 748 5,937 Between 2 and 5 years 10,662 9,730 Over 5 years — 1,680

74,805 105,528

The carrying amounts of the borrowings are denominated in the following currencies:

Group 2015 2014 HK$’000 HK$’000

HK$ 27,028 59,544 US$ 45,087 42,453 CAD 2,690 3,531

74,805 105,528

The Group’s borrowings are all subject to floating interest rate and the weighted average effective interest rates at the balance sheet date are as follows:

2015 2014 HK$ US$ CAD HK$ US$ CAD

Trust receipt bank loans 2.31% 2.35% — 2.45% 2.20% — Borrowings 2.24% 0.75% — 2.32% 0.88% — Bank overdrafts — — 3.75% — — 3.75%

Except for the Group’s borrowings of approximately HK$12,153,000 (2014: HK$12,907,000) secured by the key management insurance contract (Note 22), all other borrowings are unsecured.

As at 31 March 2015 and 2014, the carrying amounts of borrowings approximate their fair values.

28. Trade payables

The majority of the suppliers grant credit period ranging from 30 to 60 days.

The ageing analysis of trade payables is as follows:

Group 2015 2014 HK$’000 HK$’000

Less than 60 days 47,269 70,737 60 days to 120 days 10,506 10,187 Over 120 days 155 3,512

57,930 84,436

— II-50 — Appendix II Financial Information of the Group

Trade payables are denominated in the following currencies:

Group 2015 2014 HK$’000 HK$’000

HK$ 4,806 7,450 RMB 16,238 12,991 US$ 30,070 54,860 CAD 6,816 9,135

57,930 84,436

29. Accruals and other payables

Group Company 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000

Accrued salaries and bonuses 6,565 5,645 — — Receipts in advance 1,542 2,355 — — Accrued operating expenses 9,722 5,496 857 301 Payables relating to retention arrangement for disposal of subsidiaries — 2,293 — — Other tax payables 4,501 1,485 — — Other payables 1,703 769 — —

24,033 18,043 857 301

30. Deferred income tax

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current income tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The balances shown in the consolidated balance sheet are, after appropriate offsetting, as follows:

Group 2015 2014 HK$’000 HK$’000 (Restated)

Deferred income tax assets 115 241 Deferred income tax liabilities (12,311) (4,159)

Net deferred income tax liabilities (12,196) (3,918)

The movement in net deferred income tax is as follows:

Group 2015 2014 HK$’000 HK$’000 (Restated)

Beginning of the year (3,918) (4,194)

(Charged)/credited to the income statement (Note 11) (5,069) 276 Charged to property revaluation reserve (3,209) —

End of the year (12,196) (3,918)

— II-51 — Appendix II Financial Information of the Group

The movement in deferred tax assets and liabilities prior to offsetting of balances within the same taxation jurisdiction is as follows:

Deferred tax assets

Tax losses 2015 2014 HK$’000 HK$’000

Beginning of the year 241 6

(Charged)/credited to the income statement (126) 235

End of the year 115 241

Deferred tax liabilities

2015 Accelerated Revaluation Withholding tax gain of tax depreciation properties Total HK$’000 HK$’000 HK$’000 HK$’000

At 1 April, as previously reported — 273 — 273 Change in accounting policy (Note 2.1(d)) — — 3,886 3,886

At 1 April, as restated — 273 3,886 4,159 Charged/(credited) to the income statement 8,171 (236) (2,992) 4,943 Charged to revaluation reserve — — 3,209 3,209

At 31 March 8,171 37 4,103 12,311

2014 Accelerated Revaluation Withholding tax gain of tax depreciation properties Total HK$’000 HK$’000 HK$’000 HK$’000

At 1 April, as previously reported — 259 — 259 Change in accounting policy (Note 2.1(d)) — — 3,941 3,941

At 1 April, as restated — 259 3,941 4,200 Charged/(credited) to the income statement — 14 (55) (41)

At 31 March — 273 3,886 4,159

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Group did not recognise deferred income tax assets of approximately HK$40,371,000 (2014: HK$44,280,000) in respect of accumulated losses amounting to approximately HK$237,554,000 (2014: HK$193,867,000) that can be carried forward against future taxable income. As at 31 March 2015, accumulated tax loss amounting to approximately HK$181,390,000 are expiring in 2015 to 2019 (2014: approximately HK$144,615,000, expiring in 2014 to 2018), while the remaining amounts can be carried forward indefinitely to offset against future taxable income.

Deferred income tax liabilities of HK$283,000 (2014: HK$8,266,000) have not been recognised for withholding tax in relation to the unremitted earnings of certain subsidiaries established in the PRC and other countries. These amounts are expected to be reinvested. As at 31 March 2015, the Group had unremitted earnings totaling HK$2,829,000 (2014: HK$35,416,000), of which HK$2,829,000 (2014: HK$3,920,000) and Nil (2014: HK$31,496,000) were attributable to the Group’s subsidiaries established in the PRC and Canada respectively.

— II-52 — Appendix II Financial Information of the Group

31. Share capital

2015 2014 Number of Nominal Number of Nominal shares value shares value ’000 HK$’000 ’000 HK$’000

Authorised: Ordinary shares of HK$0.10 each 1,000,000 1,000,000 1,000,000 1,000,000

No. of shares HK$

Ordinary shares issued and fully paid: As at 1 April 2013 394,238 39,424 Placing of news shares (Note) 43,000 4,300

As at 31 March 2014 and 2015 437,238 43,724

Note:

On 27 September 2013, the Company completed a placing of 43,000,000 new shares at the placing price of HK$0.29 per share. The gross proceeds received by the Company from the placing were approximately HK$12,470,000, among which HK$4,300,000 was credited to the share capital account and the balance of HK$7,682,000 (net of professional fees of HK$488,000) was credited to the share premium account.

32. Reserves

(a) Group

Available- for-sale financial (Accumulated Capital Capital Statutory assets Property losses)/ reserve redemption Exchange reserve revaluation revaluation retained (Note (i)) reserve reserve (Note (ii)) reserve reserve earnings Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 April 2014, as previously reported 41,201 1,402 (3,991) 90 243 — (87,897) (48,952) Changes in accounting policies (Note 2.1(d)) — — — — — — 11,654 11,654

At 1 April 2014, as restated 41,201 1,402 (3,991) 90 243 — (76,243) (37,298) Loss for the year — — — — — — (39,724) (39,724) Dividend (Note 38) — — — — — — (21,862) (21,862) Reduction of share premium (Note 32(b)(ii)) — — — — — — 233,196 233,196 Fair value gain on available-for-sale financial assets — — — — 143 — — 143 Revaluation gain on land and buildings, net of tax — — — — — 17,163 — 17,163 Currency translation differences — — (9,041) — — — — (9,041)

At 31 March 2015 41,201 1,402 (13,032) 90 386 17,163 95,367 142,577

— II-53 — Appendix II Financial Information of the Group

Other financial (Accumulated Capital Capital Statutory assets losses)/ reserve redemption Exchange reserve revaluation retained (Note (i)) reserve reserve (Note (ii)) reserve earnings Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 April 2013, as previously reported 41,201 1,402 1,387 90 (88) (96,239) (52,247) Changes in accounting policies (Note 2.1(d)) — — — — — 11,821 11,821

At 1 April 2013, as restated 41,201 1,402 1,387 90 (88) (84,418) (40,426) Profit for the year, as restated — — — — — 8,175 8,175 Currency translation differences — — (5,378) — — — (5,378) Fair value gain on available-for-sale financial assets — — — — 331 — 331

At 31 March 2014, as restated 41,201 1,402 (3,991) 90 243 (76,243) (37,298)

Notes:

(i) Capital reserve of the Group represents the difference between the nominal amount of the share capital issued by the Company and the nominal amount of the share capital of the subsidiaries transferred to the Company pursuant to a group reorganisation in 1994, and the credit of HK$51,594,000 from share capital as a result of a reduction of the Company’s share capital taken place during the year ended 31 March 2000.

(ii) Statutory reserve of a subsidiary in Mainland China can be utilised to offset future losses or increase the capital of the subsidiary.

(b) Company

Capital Capital redemption reserve Accumulated reserve (Note (i)) losses Total HK$’000 HK$’000 HK$’000 HK$’000

At 1 April 2014 1,402 72,309 (165,352) (91,641) Reduction of share premium (Note (ii)) — — 233,196 233,196 Dividend (Note 38) — — (21,862) (21,862) Loss for the year — — (94) (94)

At 31 March 2015 1,402 72,309 45,888 119,599

At 1 April 2013 1,402 72,309 (165,020) (91,309) Loss for the year — — (332) (332)

At 31 March 2014 1,402 72,309 (165,352) (91,641)

Notes:

(i) The capital reserve of the Company represents the difference between the nominal amount of the Company’s shares issued in exchange for the issued ordinary shares of Daiwa BVI Limited and the value of net assets of its underlying subsidiaries pursuant to a group reorganisation in 1994, plus the credit of HK$51,594,000 from share capital as a result of a reduction of the Company’s share capital took place during the year ended 31 March 2000.

Under the Companies Act 1981 of Bermuda, capital reserve is distributable to shareholders, subject to the condition that the Company cannot declare or pay a dividend, or make a distribution out of capital reserve if (i) it is, or after the payment be, unable to pay its liabilities as they become due, or (ii) the realisable value of its assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium account.

(ii) On the Company’s annual general meeting held on 12 September 2014, the reduction of share premium of HK$233,196,000 for offsetting against the Company’s accumulated losses was approved by the Company’s shareholders.

— II-54 — Appendix II Financial Information of the Group

33. Consolidated statement of cash flows

(a) Reconciliation of (loss)/profit (before income tax to cash (used in)/generated from operations:

2015 2014 HK$’000 HK$’000 (Restated)

(Loss)/profit before income tax including discontinued operations (30,024) 10,600 Adjustments for: Interest income (1,321) (942) Interest expense 2,105 2,349 Depreciation and amortisation 6,719 7,693 Impairment of goodwill 22,559 — Impairment of trade receivables 1,321 327 Impairment of property, plant and equipment 726 — Provision for impairment of inventories 2,881 1,392 Fair value losses on investment properties 26 1,107 Impairment loss on available-for-sale financial assets 1,522 — (Gains)/losses on disposals of land use rights, investment properties and property, plant and equipment (27,139) 41 Adjustments upon final settlement of retention arrangement in relation to disposed subsidiaries — (3,181)

(20,625) 19,386 Changes in working capital: Inventories (3,653) (30,313) Trade and notes receivables 2,817 (2,455) Prepayments, deposits and other receivables 3,606 6,700 Trade payables (29,885) 15,446 Accruals and other payables 5,760 (2,767)

Cash (used in)/generated from operations (41,980) 5,997

(b) In the consolidated statement of cash flows, proceeds from disposals of land use rights, investment properties and property, plant and equipment comprise:

2015 2014 HK$’000 HK$’000

Net book amount 105,187 155 Prepaid rental expenses (Note) (5,633) — Net gains/(losses) on disposals of land use rights, investment properties and property, plant and equipment 27,139 (41)

Proceeds from disposals of land use rights, investment properties and property, plant and equipment 126,693 114

Note:

Pursuant to the sale and purchase agreement in relation to the disposal of properties, the Group is entitled to occupy certain portion of the disposed properties free of rental charges and management fee for a period of 36 months from the date of disposal. The rental value of such occupancy is recognised as prepaid rental expenses and would be amortised to the income statement over the rent- free period on a straight-line basis.

— II-55 — Appendix II Financial Information of the Group

34. Discontinued operations

During the year ended 31 March 2013, the Group disposed of its entire equity interest in a disposal group principally involving in the distribution of electronic components to an independent third party at a total cash consideration of approximately HK$63,168,000. The disposal group was classified as discontinued operations. The entire profit from discontinued operations during the year ended 31 March 2014 represented the adjustment in relation to the final settlement arrangement stipulated in the sale and purchase agreement for the disposed subsidiaries.

35. Financial instruments by category

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Group

2015 Available- for-sale financial Loans and Financial assets assets receivables Total HK$’000 HK$’000 HK$’000

Available-for-sale financial assets 14,088 — 14,088 Trade and notes receivables — 92,286 92,286 Deposits and other receivables — 1,620 1,620 Cash and cash equivalents — 71,669 71,669

14,088 165,575 179,663

2015 Financial liabilities at amortised Financial liabilities cost Total HK$’000 HK$’000

Trade payables 57,930 57,930 Borrowings 74,805 74,805 Accruals and other payables 22,491 22,491

155,226 155,226

2014 Available- for-sale financial Loans and Financial assets assets receivables Total HK$’000 HK$’000 HK$’000

Available-for-sale financial assets 15,467 — 15,467 Trade and notes receivables — 96,424 96,424 Deposits and other receivables — 1,857 1,857 Cash and cash equivalents — 55,533 55,533

15,467 153,814 169,281

— II-56 — Appendix II Financial Information of the Group

2014 Financial liabilities at amortised Financial liabilities cost Total HK$’000 HK$’000

Trade payables 84,436 84,436 Borrowings 105,528 105,528 Accruals and other payables 15,688 15,688

205,652 205,652

Company

2015 2014 HK$’000 HK$’000

Financial assets — loans and receivables Cash and cash equivalents 469 182

Financial liabilities at amortised cost Accruals and other payables 857 301

36. Commitments and contingencies

At 31 March 2015 and 2014, the future aggregate minimum lease payments in respect of land and buildings under non-cancellable operating leases were as follows:

Group 2015 2014 HK$’000 HK$’000

Not later than one year 3,523 3,620 Later than one year and not later than three years 6,527 9,191

10,050 12,811

Generally, the Group’s operating leases are for terms of one to three years.

The Group did not have other significant commitments at 31 March 2015 and 2014.

As at 31 March 2015 and 2014, the Company did not have any significant commitments.

As at 31 March 2015, the Group and the Company have no significant contingent liabilities.

37. Investments in and amounts due from subsidiaries — Company

2015 2014 HK$’000 HK$’000

Unlisted shares/investments, at cost 44,715 44,715

Amounts due from subsidiaries 318,884 340,542 Less: provision for impairment (200,000) (200,000)

118,884 140,542

— II-57 — Appendix II Financial Information of the Group

Particulars of significant subsidiaries are as follows:

Percentage Place of of equity incorporation/ Principal place Issued and interest held Company establishment of operation fully paid up capital as at 31 March Type of legal entity Principal activities 2015 2014

Interests held directly

Daiwa BVI Limited British Virgin Islands British Virgin Islands US$10,000 100% 100% Limited liability company Investment holding

Interests held indirectly

Daiwa Associate Limited British Virgin Islands Hong Kong US$2 100% 100% Limited liability company Investment holding

Elite Century Holdings Limited British Virgin Islands Hong Kong US$10,000 100% 100% Limited liability company Investment holding

Cypress Electronics Limited Hong Kong Hong Kong HK$2 100% 100% Limited liability company Manufacturing of electronic products

Daiwa Associate (H.K.) Limited Hong Kong Hong Kong Ordinary shares of 100% 100% Limited liability company Provision of management and HK$100; and Non- administrative service to voting deferred shares group companies of HK$3,000,000 (Note (ii))

Daiwa Manufacturing Limited Hong Kong Hong Kong HK$4 100% 100% Limited liability company Manufacturing of electronic products

Vastpoint Imtec Electronics Hong Kong Hong Kong HK$100 100% 100% Limited liability company Distribution of electronic Limited components

(Beijing Daiwa Vastpoint Mainland China Mainland China Registered and paid 100% 100% Wholly foreign-owned Distribution of electronic Electronics Technology up capital of enterprise components Limited) RMB800,000

(China Faith Electronics (Heyuan) Mainland China Mainland China Registered and paid up 100% 100% Wholly foreign-owned Manufacturing of electronic Limited) capital US$1,200,000 enterprise products

(Daiwa Electronics (Heyuan) Mainland China Mainland China Registered and paid 100% 100% Wholly foreign-owned Manufacturing of electronic Company Limited) up capital of enterprise products US$3,600,000

(Daiwa (Zhaoqing) Electronics Mainland China Mainland China Registered and paid 100% 100% Wholly foreign-owned Manufacturing of electronic Industrial Limited) up capital of enterprise products US$3,384,000

(Unity Industrial (Heyuan) Mainland China Mainland China Registered and paid 100% 100% Wholly foreign-owned Manufacture of electric wires Limited) up capital of enterprise US$2,050,000

(Vastpoint Imtec Electronics Mainland China Mainland China Registered and paid 100% 100% Wholly foreign-owned Distribution of electronic (Shenzhen) Limited) up capital of enterprise components HK$2,000,000

Vastpoint Imtec Electronics Mainland China Mainland China Registered and paid up 100% 100% Wholly foreign-owned Distribution of electronic (Shanghai) Ltd. capital of US$300,000 enterprise components

Daiwa Distribution (B.C.) Inc. British Columbia, Canada CAD300,000 100% 100% Limited liability company Sales and distribution of Canada computer and electronic products

Daiwa Distribution (Ontario) Inc. Ontario, Canada Canada CAD700,000 100% 100% Limited liability company Sales and distribution of computer and electronic products

Daiwa Holdings Inc. Ontario, Canada Canada CAD223,015 100% 100% Limited liability company Investment holding

— II-58 — Appendix II Financial Information of the Group

Notes:

(i) The above list includes the subsidiaries of the Company which, in the opinion of the Company’s directors and the Group’s management, principally contributed the results or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would result in particulars of excessive length.

(ii) The non-voting deferred shares have no voting rights, and are not entitled to any distributions upon winding up unless a sum of HK$100,000 billion has been distributed to the holders of ordinary shares.

(iii) None of the subsidiaries had any loan capital in issue at any time during the years ended 31 March 2015 and 2014.

(iv) The English names of the group companies incorporated in Mainland China represent the best effort by the directors in translating its Chinese name as they do not have official English names.

38. Dividends

During the year, the Company declared and paid a special dividend of HK 5 cents per share totalling approximately HK$21,862,000. No final dividend was proposed by the Company’s directors for the year ended 31 March 2015.

During the year ended 31 March 2014, no dividends were declared and paid by the Company.

39. Related party transactions

As at 31 March 2015, Leading Trade Limited and China Capital Holdings Investment Limited owned 17.42% (2014: 17.42%) and 30.64% (2014: 30.64%) of the Company’s shares, respectively. These companies are under the control of the Company’s directors, Mr. Lau Tak Wan and Ms. Chan Yuen Mei, Pinky, who are collectively regarded as the ultimate controlling parties.

Parties are considered to be related to the Group if the Group or any member of its key management personnel or their close family members has the ability, directly or indirectly, to exercise significant influence over the parties in making financial and operating decisions, or vice versa, or where the Group and the parties are subject to common significant influence. Related parties may be individuals or entities.

The following is a summary of significant related party transactions entered into in the ordinary course of business between the Group and its related parties and the balances arising from related party transactions in addition to the related party information shown elsewhere in the financial statements.

(a) Transactions with related parties

Group 2015 2014 Note HK$’000 HK$’000

Operating lease rental paid to 361 Alden Inc. (i) 1,139 1,331

Note:

(i) 361 Alden Inc. is beneficially owned by Mr Lau Tak Wan and Ms Chan Yuen Mei, Pinky, directors of the Company. Operating lease rental expense is determined at rate mutually agreed between the parties.

— II-59 — Appendix II Financial Information of the Group

(b) Balances with related parties

Company 2015 2014 Note HK$’000 HK$’000

Amounts due from subsidiaries (Note 37) (i) 118,884 140,542

Note:

(i) The amounts due from subsidiaries are unsecured and non-interest bearing, and have no fixed terms of repayment. These amounts are denominated in HK$.

Group 2015 2014 HK$’000 HK$’000

Salaries and allowances 6,830 6,972 Bonuses — 50 Pension costs — defined contribution plans 295 283

7,125 7,305

40. Events subsequent to the balance sheet date

On 29 April 2015, Mr. Lau Tak Wan, Ms. Chan Yuen Mei, Pinky, together with the entities controlled by them entered into a conditional sale and purchase agreement with a third party to dispose of their entire equity interest in the Company representing 55.17% of the Company’s shares at a consideration of approximately HK$275,957,000.

On the same date, an entity controlled by Mr. Lau entered into a sale and purchase agreement with the Company in respect of the disposal of the Group’s business of distribution of electronic components and computer products, and certain property holding entities. These two agreements are inter-conditional to each other. The whole arrangement is still subject to approval from independent shareholders and the relevant regulatory bodies.

— II-60 — Appendix II Financial Information of the Group

II. Indebtedness

Statement of Indebtedness

Borrowings

At the close of business on 31 August 2015, being the latest practicable date for the purpose of this statement of indebtedness prior to the printing of this Composite Document, the Group has outstanding borrowings of approximately HK$68,492,000, details of which are set out as follows:

HK$’000

Trust receipt bank loans 46,234 Short term bank borrowings 10,000 Other bank borrowings 12,258

68,492

As at 31 August 2015, except for a bank borrowing amount to approximately HK$11,835,000 which is secured by certain available-for-sale financial assets, all borrowings are unsecured.

Contingent liabilities

At the close of business on 31 August 2015, the Group did not have any significant contingent liabilities.

Save as aforesaid, at the close of business on 31 August 2015, the Group did not have any outstanding loan capital, bank overdrafts, loans, mortgages, charges or other similar indebtedness, or hire purchase of financial lease commitments, liabilities under acceptances or acceptance credits, guarantees or other material contingent liabilities.

III. MATERIAL CHANGE

Save for the Disposal, the distribution of the Special Dividend and the Subscription, the Directors were not aware of any material change in the financial or trading position of the Group since 31 March 2015, the date to which the latest audited consolidated financial statements of the Group were made up, up to and including the Latest Practicable Date.

IV. FINANCIAL AND TRADING PROSPECTS

Upon the Disposal Completion, the Group is principally engaged in manufacturing and trading of diodes, electronic manufacturing services, and manufacturing of telecom and radio frequency devices, plastic components and wire. Please refer to the section headed “Information on the Group” set out in the letter from the Board for further details about the aforementioned business development plan of the Group.

— II-61 — Appendix II Financial Information of the Group

V. MANAGEMENT DISCUSSION AND ANALYSIS OF THE GROUP

The management discussion and analysis of the Group for the three years ended 31 March 2015 are set out in the following. Further pro forma financial information of the Group upon Disposal Completion can be referred to Appendix III to this Composite Document:

(i) For the year ended 31 March 2015

Overview

During the year ended 31 March 2015, the Group was primarily made up of the electronic products manufacturing segment. In view of the slowdown of electronic markets and the lengthening of payment from some customers, the Group had applied tighter control over overdue accounts to minimise credit risk from less creditable customers. This policy has led to a lower business volume with those customers. The operation of the non-profit making speaker box business unit was also ceased. The Group re-engineered the operation of its factory to enable to a more efficient production flow. Besides replacing labor efforts with automation machinery, the management team also improved the efficiency by introducing new production process and a tighter control of logistics expenses. Focus was placed on the professional production of telecommunication modules in mobile phone infrastructures as well as the production and assembly for industrial and commercial purpose electronics products. The plant is equipped with surface-mount technology production lines with nitrogen filled reflow furnaces and precision quality assurance equipment in antistatic clean room. As set out in the published annual report of the Company for the year ended 31 March 2015, the relevant segmental revenue was approximately HK$132.5 million, a slight decrease of approximately HK$26.6 million from HK$159.1 million from 2014, with a segmental profit of approximately HK$3.9 million (2014: approximately HK$7.3 million).

Liquidity and financial resources

As at 31 March 2015, the Group had cash and cash equivalents of approximately HK$18.6 million and total borrowings of approximately HK$23.6 million, of which the short term portion and long term portion were approximately HK$23.6 million and HK$nil, respectively. The gearing ratio, which is defined as total borrowings after netting off cash and cash equivalents (net debt), to total capital (being total equity plus net debt) was approximately 0.07. The liquidity ratio of current assets over current liabilities, was approximately 2.21 as at 31 March 2015.

Exchange rate exposure

— II-62 — Appendix II Financial Information of the Group

HIBOR rate or London LIBOR rate. As substantial part of trade payables and bank borrowings were denominated in Hong Kong and US dollars, the exchange rate risk of the Group is not expected to be material. The Group did not use derivative financial instruments for speculative purpose.

Significant investments, material acquisitions and disposals

On 21 August 2014, the Group entered into an agreement for the disposal of a subsidiary and its assets of industrial park at Hi-tech Industrial Zone at Heyuan, Guangdong Province for a cash consideration of approximately HK$126.1 million and a rent-free occupation of certain portion of the factory for a period of 36 months from the date of disposal. Details of which are set out in the circular of the Company dated 24 September 2014. Save as disclosed, the Group had no material acquisition and disposal during the year ended 31 March 2015.

Contingent liabilities and capital commitment

As at 31 March 2015, the Group had no significant contingent liabilities or capital commitment.

Pledge of assets

There were no material charges on the assets of the Group as at 31 March 2015.

Employees and emolument policy

As at 31 March 2015, the Group employed approximately 470 employees. The Group’s remuneration policy is in line with the prevailing market practices and is determined on the basis of performance and experience of the individuals. Sales personnel are remunerated by salaries and incentives in accordance with the achievement of their sales target. General staff are offered year-end discretionary bonuses, which are based on the divisional performance and individual appraisals. The Group also provides a Mandatory Provident Fund or ORSO Scheme and medical benefits to all Hong Kong employees.

Future plans for material investments, new businesses, acquisitions and disposals of capital assets

Please refer to the section headed “Information on the Group” set out in the letter from the Board for further details about the aforementioned business development plan of the Group.

— II-63 — Appendix II Financial Information of the Group

(ii) For the year ended 31 March 2014

Overview

During the year ended 31 March 2014, the Group was primarily made up of the electronic products manufacturing segment. In this respect, through efforts of new management team, streamlining of production lines, stronger quality control, logistic and cost control system, the profitability and efficiency of this segment was further enhanced. Focus was placed in the professional production of telecommunication modules in infrastructures as well as assembly for industrial and commercial purpose products. The relevant plant is equipped with high speed SMT production lines with nitrogen filled reflow furnaces and precision quality assurance equipment in antistatic clean room. As set out in the published annual report of the Company for the year ended 31 March 2014, the relevant segmental revenue was approximately HK$159.1 million, an notable increase of approximately HK$80.8 million from approximately HK$78.3 million from 2013, with a segmental profit of approximately HK$7.3 million (2013: approximately HK$0.2 million loss).

Liquidity and financial resources

As at 31 March 2014, the Group had cash and cash equivalents of approximately HK$16.4 million and total borrowings of approximately HK$34.1 million, of which the short term portion and long term portion were approximately HK$34.1 million and HK$nil, respectively. The gearing ratio, which is defined as total borrowings after netting off cash and cash equivalents (net debt), to total capital (being total equity plus net debt) was approximately 0.22. The liquidity ratio of current assets over current liabilities, was approximately 1.49 as at 31 March 2014.

On 27 September 2013, the Group completed a placing of 43,000,000 new Shares at the placing price of HK$0.29 per Share. The gross proceeds received by the Group from the placing were HK$12,470,000, among which HK$4,300,000 was credited to the share capital account and the balance of HK$7,682,000 (net of professional fees of HK$488,000) was credited to the share premium account.

Exchange rate exposure

Borrowings were mostly denominated in Hong Kong dollars and US dollars. The Group’s cash and cash equivalents were denominated in Hong Kong dollars, US dollars and Renminbi. The Group matched the payments and receipts of foreign currency arising from routine purchases and sales to control and minimise the financial costs and exchange rate risk. Most of the Group’s borrowings were interest bearing at floating rates which were based on the HIBOR rate or London LIBOR rate. As substantial part of trade payables and bank borrowings were denominated in Hong Kong and US dollars, the exchange rate risk of the Group is not expected to be material. The Group did not use derivative financial instruments for speculative purpose.

— II-64 — Appendix II Financial Information of the Group

Significant investments, material acquisitions and disposals

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

Contingent liabilities and capital commitment

As at 31 March 2014, the Group had no significant contingent liabilities or capital commitment.

Pledge of assets

There were no material charges on the assets of the Group as at 31 March 2014.

Employees and emolument policy

As at 31 March 2014, the Group employed approximately 630 employees. The Group’s remuneration policy is in line with the prevailing market practices and is determined on the basis of performance and experience of the individuals. Sales personnel are remunerated by salaries and incentives in accordance with the achievement of their sales target. General staff are offered year-end discretionary bonuses, which are based on the divisional performance and individual appraisals. The Group also provides a Mandatory Provident Fund or ORSO Scheme and medical benefits to all Hong Kong employees.

Future plans for material investments, new businesses, acquisitions and disposals of capital assets

There was no specific plan for material investments, new businesses, acquisitions and disposals of material capital assets as at 31 March 2014.

(iii) For the year ended 31 March 2013

Overview

During the year ended 31 March 2013, the Group was primarily made up of the contract electronic manufacturing services segment. In this respect, the Group was engaged in the professional production of telecommunication modules in mobile phone base stations, radar parts and electronic modules in automobiles as well as printed circuit board assembly for industrial purpose products. The electronic manufacturing services plant is equipped with high speed SMT production lines with nitrogen filled reflow furnaces, precise solder paste screen printer, etc. Process reliability can be ensured by the inhouse RoHS Scanning Systems and X-Ray Inspection Machine and antistatic clear room. As set out in the published annual report of the Company for the year ended 31 March 2013, the relevant segmental revenue was approximately HK$78.3 million with a segmental loss of approximately HK$0.2 million.

— II-65 — Appendix II Financial Information of the Group

Liquidity and financial resources

As at 31 March 2013, the Group had cash and cash equivalents of approximately HK$6.4 million and total borrowings of approximately HK$36.0 million, of which the short term portion and long term portion were approximately HK$36.0 million and HK$nil, respectively. The gearing ratio, which is defined as total borrowings after netting off cash and cash equivalents (net debt), to total capital (being total equity plus net debt) was approximately 0.43. The liquidity ratio of current assets over current liabilities, was approximately 0.79 as at 31 March 2013.

Exchange rate exposure

Significant investments, material acquisitions and disposals

On 23 November 2012, the Group entered into an agreement for the disposal of subsidiaries in electronics components distribution segment for approximately HK$67.3 million. Details of which are set out in the circular of the Company dated 31 December 2012. In addition, on 17 July 2012, the Company entered into an agreement to dispose certain property in Kwun Tong for approximately HK$20.5 million. Details of which are set out in the announcement of the Company dated 19 July 2012. Save as disclosed, the Group had no material acquisition and disposal during the year ended 31 March 2013.

Contingent liabilities and capital commitment

As at 31 March 2013, the Group had no significant contingent liabilities or capital commitment.

Pledge of assets

There were no material charges on the assets of the Group as at 31 March 2013.

— II-66 — Appendix II Financial Information of the Group

Employees and emolument policy

As at 31 March 2013, the Group employed approximately 620 employees. The Group’s remuneration policy is in line with the prevailing market practices and is determined on the basis of performance and experience of the individuals. Sales personnel are remunerated by salaries and incentives in accordance with the achievement of their sales target. General staff are offered year-end discretionary bonuses, which are based on the divisional performance and individual appraisals. The Group also provides a Mandatory Provident Fund or the retirement scheme organised under the Hong Kong Occupational Retirement Schemes Ordinance (the “ORSO Scheme”) and medical benefits to all Hong Kong employees.

Future plans for material investments, new businesses, acquisitions and disposals of capital assets

There was no specific plan for material investments, new businesses, acquisitions and disposals of material capital assets as at 31 March 2013.

— II-67 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

Reproduced below are (i) the unaudited pro forma financial information of the Group upon the Disposal Completion (i.e. the Remaining Group), and the text of the report from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong in respect of the unaudited pro forma financial information of the Remaining Group (i.e. the Group upon the Disposal Completion), which is set out in Appendix III to the Circular; and (ii) the report from Messis Capital Limited in respect of the unaudited pro forma financial information of the Remaining Group (i.e. the Group upon the Disposal Completion), which is set out in Appendix IV to the Circular. Capitalised terms used in this appendix shall have the same meanings as those defined in the Circular.

Page references included in this appendix, the reproduced unaudited pro forma financial information of the Group upon the Disposal Completion (i.e. the Remaining Group) and the text of the respective reports from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong and from Messis Capitals Limited in respect of the unaudited pro forma financial information of the Remaining Group (i.e. the Group upon the Disposal Completion) set forth below refer to the pages in such unaudited pro forma financial information of the Group upon the Disposal Completion (i.e. Remaining Group) as appeared in the Circular. This Circular is not incorporated by reference herein and does not form part of this Composite Document.

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP

Bases

The unaudited pro forma financial information (the “Unaudited Pro Forma Financial Information”) presented below is prepared to illustrate (a) the financial position of the Remaining Group as if the Disposal had been completed on 31 March 2015; and (b) the results and cash flows of the Remaining Group for the year ended 31 March 2015 as if the Disposal had been completed on 1 April 2014. The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only and because of its hypothetical nature, it may not purport to represent the true picture of the financial position of the Remaining Group as at 31 March 2015 or at any future date had the Disposal been completed on 31 March 2015 or the results and cash flows of the Remaining Group for the year ended 31 March 2015 or for any future period had the Disposal been completed on 1 April 2014.

The Unaudited Pro Forma Financial Information is prepared by the directors based on the audited consolidated balance sheet of the Group as at 31 March 2015, the audited consolidated income statement, the audited consolidated statement of comprehensive income and the audited consolidated statement of cash flows of the Group for the year ended 31 March 2015 extracted from the audited consolidated financial statements of the Group for the year ended 31 March 2015 as set out in the 2015 annual report of the Company, and the Unaudited Financial Information of the Disposal Group set out in Appendix II after giving effect to the pro forma adjustments described in the notes as set out on pages III-8 to III-10 to this circular and is prepared in accordance with Rules 4.29 and 14.68(2)(a)(ii) of the Listing Rules.

— III-1 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

1. Unaudited Pro Forma Consolidated Balance Sheet of the Remaining Group

Unaudited pro forma consolidated balance sheet of the Remaining The Group Group as at as at 31 March 31 March 2015 Pro forma adjustments 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note 1 Note 2 Notes 3 & 9 Note 4 Note 5 Note 6(i)

ASSETS

Non-current assets Property, plant and equipment 39,546 (29,295) — — — — 10,251 Investment properties 3,540 (3,540) — — — — — Land use rights 2,092 (2,092) — — — — — Available-for-sale financial assets 14,088 (14,088) — — — — — Deferred income tax assets 115 (115) — — — — — Other long-term assets 3,564 (209) — — — — 3,355

62,945 (49,339) — — — — 13,606

Current assets Inventories 116,250 (56,285) — — — — 59,965 Trade and notes receivables 92,286 (75,387) — — — — 16,899 Prepayments, deposits and other receivables 11,396 (3,677) — — — — 7,719 Tax recoverable 1,049 (1,049) — — — — — Cash and cash equivalents 71,669 (53,032) 123,223 (100,565) 257,400 — 298,695

292,650 (189,430) 123,223 (100,565) 257,400 — 383,278

Total assets 355,595 (238,769) 123,223 (100,565) 257,400 — 396,884

EQUITY Capital and reserves attributable to equity holders of the Company Share capital 43,724 — — — 22,500 — 66,224 Share premium — — — — 234,900 — 234,900 Reserves 142,577 (123,223) 123,223 (100,565) — (6,367) 35,645

186,301 (123,223) 123,223 (100,565) 257,400 (6,367) 336,769 Non-controlling interests 215 (215) — — — — —

Total equity 186,516 (123,438) 123,223 (100,565) 257,400 (6,367) 336,769

— III-2 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

LIABILITIES Non-current liabilities Deferred income tax liabilities 12,311 (12,311) — — — — —

Current liabilities Borrowings 74,805 (51,243) — — — — 23,562 Trade payables 57,930 (42,038) — — — — 15,892 Accruals and other payables 24,033 (16,689) — — — 5,500 12,844 Amount due to the Disposal Group — 6,950 — — — — 6,950 Tax payable — — — — — 867 867

156,768 (103,020) — — — 6,367 60,115

Total liabilities 169,079 (115,331) — — — 6,367 60,115

Total equity and liabilities 355,595 (238,769) 123,223 (100,565) 257,400 — 396,884

Net current assets 135,882 (86,410) 123,223 (100,565) 257,400 (6,367) 323,163

Total assets less current liabilities 198,827 (135,749) 123,223 (100,565) 257,400 (6,367) 336,769

— III-3 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

2. Unaudited Pro Forma Consolidated Income Statement of the Remaining Group

Unaudited pro forma consolidated income statement of the The Group Remaining for the year Group for the ended year ended 31 March 31 March 2015 Pro forma adjustments 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note 1 Note 6(ii) Note 8 Note 9

Revenue 531,126 — (400,816) — 130,310 Cost of sales (466,600) — 360,154 — (106,446)

Gross profit 64,526 — (40,662) — 23,864 Other income 2,298 — (2,259) — 39 Selling and distribution expenses (13,448) — 8,919 — (4,529) General and administrative expenses (85,371) (5,500) 70,137 — (20,734) Gains on disposals of land use rights, investment properties, and property, plant and equipment 27,139 — (27,139) — — Loss on disposal of subsidiaries — — — (3,991) (3,991) Fair value loss on investment properties (26) — 26 — — Impairment loss on goodwill (22,559) — 22,559 — — Other (losses)/gains, net (1,799) — 1,744 — (55)

Operating (loss)/profit (29,240) (5,500) 33,325 (3,991) (5,406) Finance income 1,321 — (1,138) — 183 Finance costs (2,105) — 1,317 — (788)

(Loss)/profit before income tax (30,024) (5,500) 33,504 (3,991) (6,011) Income tax expense (9,700) (867) 10,123 — (444)

(Loss)/profit for the year attributable to equity holders of the Company (39,724) (6,367) 43,627 (3,991) (6,455)

— III-4 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

3. Unaudited Pro Forma Consolidated Statement of Comprehensive Income of the Remaining Group

Unaudited pro forma consolidated statement of comprehensive income of the Remaining The Group for Group for the the year ended year ended 31 March 2015 Pro forma adjustments 31 March 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Note 1 Note 6(ii) Note 8 Note 9

Comprehensive (loss)/income (Loss)/profit for the year (39,724) (6,367) 43,627 (3,991) (6,455)

Other comprehensive income/ (loss) Items that may be reclassified to profit or loss: Currency translation differences (9,041) — 9,041 — — Fair value gain on available-for- sale financial assets 143 — (143) — —

Items that will not be subsequently reclassified to profit or loss: Revaluation gain of land and buildings, net of tax 17,163 — (17,163) — —

Other comprehensive income/ (loss) for the year, net of tax 8,265 — (8,265) — —

Total comprehensive (loss)/ income for the year (31,459) (6,367) 35,362 (3,991) (6,455)

— III-5 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

4. Unaudited Pro Forma Consolidated Statement of Cash Flows of the Remaining Group

Unaudited pro forma consolidated statement of cash flows of the The Group Remaining for the year Group for the ended year ended 31 March 31 March 2015 Pro forma adjustments 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Notes 6(iii) Note 1 Note 3 Note 4 Note 5 Note 8 & 9

Cash flows from operating activities Loss before income tax (30,024) — — — 33,504 (9,491) (6,011)

Adjustments for: Interest income (1,321) — — — 1,138 — (183) Finance costs 2,105 — — — (1,317) — 788 Amortisation of land use rights 94 — — — (94) — — Depreciation 6,625 — — — (1,982) — 4,643 Provision for impairment of inventories 2,881 — — — (2,881) — — Impairment of trade receivables 1,321 — — — — — 1,321 Impairment of goodwill 22,559 — — — (22,559) — — Impairment of property, plant and equipment 726 — — — (726) — — Loss on disposal of subsidiaries — — — — — 3,991 3,991 Gain on disposal of land use rights, investment properties and property, plant and equipment (27,139) — — — 27,139 — — Fair value loss on investment properties 26 — — — (26) — — Impairment loss on available-for sale financial assets 1,522 — — — (1,522) — —

Operating loss before working capital changes (20,625) — — — 30,674 (5,500) 4,549

— III-6 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

Changes in working capital: Inventories (3,653) — — — (1,743) — (5,396) Trade and notes receivables 2,817 — — — (1,654) — 1,163 Prepayments, deposits and other receivables 3,606 — — — (832) — 2,774 Trade payables (29,885) — — — 15,678 — (14,207) Accruals and other payables 5,760 — — — (1,969) 5,500 9,291

Cash used in operations (41,980) — — — 40,154 — (1,826) Interest paid (2,105) — — — 1,317 — (788) Interest received 1,321 — — — (1,138) — 183 Income tax paid (4,672) — — — 4,460 — (212)

Net cash used in operating activities (47,436) — — — 44,793 — (2,643)

Cash flows from investing activities Purchases of property, plant and equipment (2,859) — — — 1,242 — (1,617) Purchase of land use rights (2,112) — — — 2,112 — — Proceeds from disposal of land use rights, investment properties and property, plant and equipment 126,693 — — — (126,693) — — Addition to investment properties (36) — — — 36 — — Proceeds from disposal of subsidiaries — 158,585 — — — — 158,585

Net cash generated from investing activities 121,686 158,585 — — (123,303) — 156,968

— III-7 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

Cash flows from financing activities Net proceeds from issuance and placing of shares — — — 257,400 — — 257,400 Repayment from the Disposal Group — — — — 42,316 — 42,316 Dividend paid (21,862) — (100,565) — — — (122,427) Proceeds from bank borrowings 170,288 — — — (77,010) — 93,278 Repayment of bank borrowings (203,701) — — — 96,500 — (107,201)

Net cash (used in)/generated from financing activities (55,275) — (100,565) 257,400 61,806 — 163,366

Net increase in cash, cash equivalents and bank overdrafts 18,975 158,585 (100,565) 257,400 (16,704) — 317,691

Cash, cash equivalents and bank overdrafts at 1 April 52,002 — — — (35,637) — 16,365

Effect of foreign exchange rate change on cash and cash equivalents, net (1,998) — — — 1,998 — —

Cash, cash equivalents and bank overdrafts at 31 March 68,979 158,585 (100,565) 257,400 (50,343) — 334,056

Notes:

1. The respective amounts are extracted from the audited consolidated balance sheet of the Group as at 31 March 2015, and the audited consolidated income statement, the audited consolidated statement of comprehensive income and audited consolidated statement of cash flows of the Group for the year then ended, as set out in the published annual report of the Company for the year ended 31 March 2015.

2. These adjustments represent the exclusion of the assets and liabilities of the Disposal Group assuming the Disposal had taken place on 31 March 2015. The balances have been extracted from the unaudited financial information of the Disposal Group as at 31 March 2015, as set forth in Appendix II to this Circular.

Amount due to the Disposal Group represents balance previously eliminated upon the preparation of the Group’s consolidated financial statements for the year ended 31 March 2015. — III-8 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

3. In the unaudited pro forma consolidated balance sheet, the adjustment represents the estimated consideration received in cash for the Disposal of HK$123.2 million. Pursuant to the Disposal Agreement, the amount of consideration is subject to adjustment with reference to the net asset value of the Disposal Group as of the Completion Accounts Date. Net asset value attributable to non- controlling interest has been excluded for the purpose of pro forma adjustment in determining the estimated consideration.

In the unaudited pro forma consolidated statement of cash flows, the adjustment represents the estimated consideration received in cash for the Disposal of HK$158.6 million which is equal to the net asset value of the Disposal Group as of 1 April 2014 as if the Disposal had been completed on that date.

4. The adjustment represents the proposed Special Dividend paid to the shareholders on the Record Date in cash of HK$100.6 million at HK$0.23 per share in respect of the Company’s 437,239,448 ordinary shares in issue as of 31 March 2015.

5. The adjustment represents the estimated aggregate cash proceeds of HK$257.4 million received from the Offeror, Asia-IO Holdings BVI and Huatai Principal Investment as a result of their subscription of 144,698,889, 43,439,139 and 36,861,972 new shares (being 225,000,000 new shares in total with a par value of HK$0.1 per share) of the Company, respectively, each at a subscription price of HK$1.144 per share, pursuant to the Subscription Agreements. Of the total proceeds received, HK$22.5 million is credited to share capital account and the remaining amount of HK$234.9 million is credited to the share premium account.

6. (i) In the unaudited pro forma consolidated balance sheet, these adjustments represent the estimated expenses of approximately HK$5.5 million directly attributable to the Disposal and the estimated income tax liabilities of approximately HK$0.9 million arising from the Disposal, as if the Disposal had been completed on 31 March 2015.

(ii) In the unaudited pro forma consolidated income statement and the unaudited pro forma consolidated statement of comprehensive income, these adjustments represent the estimated expenses of approximately HK$5.5 million directly attributable to the Disposal and the estimated income tax liabilities of approximately HK$0.9 million arising from the Disposal, as if the Disposal had been completed on 1 April 2014.

(iii) In the unaudited pro forma consolidated statement of cash flows, the estimated direct expenses and income tax liabilities for the Disposal as referred above have been assumed as not yet paid, and are recorded as accruals and tax payable respectively.

7. Apart from Notes 2, 3, 4, 5 and 6(i) above, no other adjustment has been made to the unaudited pro forma consolidated balance sheet to reflect any trading results or other transactions of the Group entered into subsequent to 31 March 2015, including the fair value changes of the investment properties, if any.

— III-9 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

8. These adjustments represent the exclusion of the operating results and cash flows of the Disposal Group for the year ended 31 March 2015 as if the Disposal had been completed on 1 April 2014. The amounts have been extracted from the unaudited financial information of the Disposal Group for the year ended 31 March 2015 as set forth in Appendix II to this Circular.

Rental income of the Disposal Group received from the Remaining Group was classified as other income, and represents rental expense of the Remaining Group classified within its general and administrative expenses.

9. The adjustment represents the estimated loss on disposal assuming the Disposal had taken place on 1 April 2014 or 31 March 2015.

Disposal taken place on 1 April 2014 31 March 2015 HK$’000 HK$’000

Estimated consideration for the Disposal (Note 3) 158,585 123,223 Add: Non-controlling interest 215 215 Less: Carrying amount of net assets of the Disposal Group as at 1 April 2014/31 March 2015 (158,800) (123,438)

Estimated gain on disposal before the release of exchange reserve attributable to the Disposal Group — — Release of exchange reserve attributable to the Disposal Group as at 1 April 2014/31 March 2015 (3,991) (13,032)

Estimated loss on disposal (3,991) (13,032)

The estimated loss on disposal is calculated as the difference between the estimated consideration for the Disposal, the carrying amount of the Disposal Group as at the respective date, the release of exchange reserve in relation to the Disposal.

The financial effects of the Disposal are to be determined based on the consideration and the carrying amount of net assets of the Disposal Group as at the completion date and are therefore subject to change upon the Disposal Completion.

10. Apart from notes 3, 4, 5, 6(ii), 6(iii), 8 and 9 above, no other adjustment has been made to the unaudited pro forma consolidated income statement, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows to reflect any trading results or other transactions of the Group entered into subsequent to 1 April 2014.

11. The above adjustments are not expected to have a continuing effect on the unaudited pro forma consolidated income statement, the unaudited pro forma consolidated statement of comprehensive income and the unaudited pro forma consolidated statement of cash flows of the Remaining Group.

— III-10 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

B. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP by PricewaterhouseCoopers

The following is the text of a report received from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of incorporation in this circular.

Independent Reporting Accountant’s Assurance Report on the Compilation of Unaudited Pro Forma Financial Information Included in a Circular

To the Directors of Daiwa Associate Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of Daiwa Associate Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) excluding Daiwa BVI Limited and its subsidiaries (the “Disposal Group”) (collectively the “Remaining Group”) by the directors for illustrative purposes only. The unaudited pro forma financial information of the Remaining Group consists of the unaudited pro forma consolidated balance sheet as at 31 March 2015, the unaudited pro forma consolidated income statement for the year ended 31 March 2015, the unaudited pro forma consolidated statement of comprehensive income for the year ended 31 March 2015, the unaudited pro forma consolidated statement of cash flows for the year ended 31 March 2015, and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages III-1 to III-10 of the Company’s circular dated 30 September 2015 (the “Circular”) in connection with the proposed disposal of the Disposal Group by the Company the proposed declaration of special dividend by the Company and the proposed, subscription of new shares in the Company (the “Transaction”). The applicable criteria on the basis of which the directors have compiled the Unaudited Pro Forma Financial Information are described on page III-1.

The Unaudited Pro Forma Financial Information has been compiled by the directors to illustrate the impact of the Transaction on the Group’s financial position as at 31 March 2015 and its financial performance and cash flows for the year ended 31 March 2015 as if the Transaction had taken place at 31 March 2015 and 1 April 2014, respectively. As part of this process, information about the Group’s financial position, financial performance and cash flows has been extracted by the directors from the Group’s financial statements for the year ended 31 March 2015, on which an audit report has been published.

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

— III-11 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules and Rule 10 of the Code on Takeovers and Mergers in Hong Kong, on the Unaudited Pro Forma Financial Information and the unaudited pro forma consolidated loss of the Remaining Group for the year and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

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

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the 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 a circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity 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 Transaction at 31 March 2015 and at 1 April 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:

— III-12 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

• The related pro forma adjustments give appropriate effect to those criteria; and

• The Unaudited Pro Forma Financial Information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of the company, 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 by the directors of the Company on the basis stated;

(b) such basis is consistent with the accounting policies of the Group;

(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules; and

(d) so far as the accounting policies and calculations are concerned, we are satisfied that the unaudited pro forma consolidated loss of the Remaining Group for the year has been properly compiled on the basis set out under the heading “Bases” on page III-1 of the Circular, and is presented on a basis consistent, in all material respects, with the accounting policies adopted by the Group in preparing the consolidated financial statements of the Group for the year ended 31 March 2015.

PricewaterhouseCoopers Certified Public Accountants Hong Kong, 30 September 2015

— III-13 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

C. REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP BY MESSI CAPITAL LIMITED

The following is the text of a report received from Messis Capital Limited, addressed to the Directors and prepared for the sole purpose of inclusion in this circular.

30 September 2015

The Directors Daiwa Associate Holdings Limited (the “Company”) 11th Floor, Block G East Sun Industrial Centre 16 Shing Yip Street Kwun Tong, Kowloon Hong Kong

Dear Sirs,

We refer to the circular issued by the Company dated 30 September 2015 (the “Circular”), of which this letter forms part. Capitalised terms used herein have the same meanings as defined in the Circular unless otherwise stated.

We refer to the unaudited pro forma consolidated income statement of the Remaining Group as at 31 March 2015 as contained in the unaudited pro forma financial information of the Remaining Group (the “Unaudited Pro Forma Financial Information”) set out in section A of Appendix III to the Circular. We have discussed with the Directors the bases of preparation of the unaudited pro forma loss for the year attributable to equity holders of the Remaining Group as at 31 March 2015. We have also considered the report (the “Pro forma Report”) issued by PricewaterhouseCoopers, the reporting accountant of the Company, relating to the Unaudited Pro Forma Financial Information which include the unaudited pro forma loss for the year attributable to equity holders of the Remaining Group as at 31 March 2015 as set out in section B of Appendix III to the Circular. PricewaterhouseCoopers is satisfied that as far as the accounting policies and calculations are concerned (a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated on pages from III-1 to III-13 in the Pro forma Report; (b) such bases are consistent with the accounting policies adopted by the Group; and (c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Based on the above, we are satisfied that the disclosure relating to the unaudited pro forma loss for the year attributable to equity holders of the Remaining Group as at 31 March 2015 included in the Unaudited Pro Forma Financial Information, for which the Directors are solely responsible, has been made with due care and careful consideration.

— III-14 — APPENDIX III Unaudited Pro Forma Financial Information of the Group and Letters from the Reporting Accountant and the Independent Financial Adviser on UNAUDITED PRO FORMA FINANCIAL INFORMATION

For the purpose of this letter, we have relied on and assumed the accuracy and completeness of all information provided to us and/or discussed with the Group. We have not assumed any responsibility for independently verifying the accuracy and completeness of such information or undertaken any independent evaluation or appraisal of any of the assets or liabilities of the Group. Save as provided in this letter, we do not express any other opinion or views on the Unaudited Pro Forma Financial Information. The Board remains solely responsible for the Unaudited Pro Forma Financial Information.

This letter is provided to the Company solely for the purpose of complying with Note 1(c) to Rules 10.1 and 10.2 and Rule 10.4 of the Takeovers Code and not for any other purpose. We do not accept any responsibility to any person(s), other than the Company, in respect of, arising out of, or in connection with this letter.

Your faithfully, For and on behalf of Messis Capital Limited Robert Siu Managing Director

— III-15 — Appendix IV general Information of the offeror

1. RESPONSIBILITY STATEMENT

The information contained in this Composite Document relating to the Offeror and its intentions has been supplied by the Offeror.

The director of the general partner of the Offeror accepts full responsibility for the accuracy of the information (other than that relating to the Group, the Selling Shareholders, their associates and parties acting in concert with any of them (other than the Offeror)) contained in this Composite Document, and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Group, the Selling Shareholders, their associates and parties acting in concert with any of them (other than the Offeror)) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading.

2. MARKET PRICES

The table below shows the closing prices of the Shares quoted on the Stock Exchange on (i) the last Business Day of each of the calendar months during the Relevant Period; (ii) the last Business Day immediately preceding the date of the MOU Announcement ; (iii) the Last Trading Day; and (iv) the Latest Practicable Date.

Closing price Date per Share HK$

29 August 2014 0.77 30 September 2014 0.78 31 October 2014 0.86 28 November 2014 0.98 31 December 2014 0.97 30 January 2015 1.15 12 February 2015 (being the last Business Day immediately preceding the date of the MOU Announcement) 1.32 27 February 2015 1.23 31 March 2015 1.90 29 April 2015 (being the Last Trading Day) 4.42 30 April 2015 NA (Note) 29 May 2015 NA (Note) 30 June 2015 NA (Note) 31 July 2015 NA (Note) 31 August 2015 1.94 30 September 2015 3.00 30 October 2015 (being the Latest Practicable Date) 3.85

Note: Price not available due to suspension of trading

— IV-1 — Appendix IV general Information of the offeror

During the Relevant Period:

(i) the highest closing price of the Shares as quoted on the Stock Exchange was HK$4.75 per Share on 28 April 2015; and

(ii) the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.66 per Share on 12 August 2014.

3. DISCLOSURE OF INTERESTS

Disclosure of interests of the Offeror and parties acting in concert with it

As at the Latest Practicable Date (after the Sale and Purchase Completion and the Subscription Completion having taken place), the Offeror and parties acting in concert with it were interested in 466,221,529 Shares, representing approximately 70.40% of the entire issued share capital of the Company as at the Latest Practicable Date. Save as disclosed in this paragraph, none of the Offeror and parties acting in concert with it hold, or control or has direction over any other interest in Shares, options, warrants, derivatives or securities which are convertible into Shares of the Company as at the Latest Practicable Date.

As at the Latest Practicable Date, no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or with any party acting in concert with the Offeror and there was no agreement, arrangement for or understanding for any transfer, charge or pledge of Shares acquired pursuant to the Share Offer to any other person.

4. DEALINGS IN SECURITIES OF THE COMPANY

During the Relevant Period:

(i) None of the Offeror and parties acting in concert with it and their respective directors had dealt for value in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into Shares.

(ii) No person who had any arrangements of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any party acting in concert with the Offeror had dealt for value in the Shares or any convertible securities, warrants, options or derivatives in respect of any Shares.

5. INTERESTS IN THE COMPANY AND OTHER ARRANGEMENTS IN CONNECTION WITH THE Share OFFER

As at the Latest Practicable Date:

(i) save for the acquisition of Shares pursuant to the Sale and Purchase Agreement and the subscription of Shares pursuant to the Subscription Agreements, none of the Offeror and/or parties acting in concert with it owned or had control or direction over any voting rights or rights over the Shares, convertible securities, warrants, options of the Company or any derivatives in respect of such securities;

— IV-2 — Appendix IV general Information of the offeror

(ii) there was no outstanding derivative in respect of the securities in the Company entered into by the Offeror nor any person acting in concert with it;

(iii) there were no persons who owned or controlled any Shares or any convertible securities, warrants, options or derivatives in respect of any Shares who had, prior to the posting of this Composite Document, irrevocably committed themselves to accept or reject the Share Offer;

(iv) no benefit (other than statutory compensation) was or would be given to any Directors as compensation for loss of office or otherwise in connection with the Share Offer;

(v) none of the Offeror or any party acting in concert with it or associate of the Offeror had any arrangement with any other person of the kind (whether by way of option, indemnity, or otherwise) referred to in Note 8 to Rule 22 of the Takeovers Code;

(vi) none of the Offeror or any party acting in concert with it had borrowed or lent any Shares, convertible securities, warrants, options or derivatives of the Company;

(vii) save for the Sale and Purchase Agreement and the Subscription Agreements, there was no agreement, arrangement or understanding (including any compensation arrangement) between the Offeror or parties acting in concert with it and any Director, recent Director, Shareholder or recent Shareholder which had any connection with or dependence upon the Share Offer;

(viii) save for the Sale and Purchase Agreement and the Subscription Agreements, there was no agreement or arrangement to which the Offeror and/or parties acting in concert with it was a party which related to the circumstances in which the Offeror may or may not invoke or seek to invoke a pre-condition or condition to the Share Offer; and

(ix) there was no agreement, arrangement or understanding that any securities of the Company, acquired in pursuance of the Share Offer would be transferred, charged or pledged to any other persons.

6. QUALIFICATIONS AND CONSENT OF EXPERT

The following are the qualifications of the expert whose letter/opinions is/are contained in this Composite Document:

Name Qualifications

Huatai Financial Holdings A licensed corporation to carry out Type 1 (dealing (Hong Kong) Limited in securities), Type 2 (dealing in future contracts), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) activities under the SFO

— IV-3 — Appendix IV general Information of the offeror

The above expert has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion herein of its advice, letter and/or the references to its name, in the form and context in which it appears.

Save for 36,861,972 Shares subscribed under the Huatai Principal Investment Subscription Agreement and held by the same as at the Latest Practicable Date, the above expert did not have any shareholding, direct or indirect, in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group, nor did it have any direct or indirect interest in any assets which had been, since 31 March 2015, being the date of the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

7. MATERIAL CONTRACTS

The following contracts have been entered into by the Offeror and its parties acting in concert which are or may be material:

(a) the Sale and Purchase Agreement; and

(b) the Subscription Agreements.

8. MISCELLANEOUS

(a) The Offeror, Asia-IO Acquisition Fund, L.P., a Cayman Islands exempted limited partnership, is a dedicated private equity fund organised for the specific purpose of investing in a controlling stake of the Company. The general partner of the Offeror is Asia-IO Acquisition GP Limited, a Cayman Islands exempted limited liability company, and the investment advisor of the Offeror is Asia-IO Holdings Cayman, a Cayman Islands exempted limited liability company. Asia- IO Holdings Cayman is a private equity firm that specialises in making private equity investments in Asia on a deal-by-deal basis. Both Asia-IO Holdings Cayman and Asia-IO Acquisition GP Limited are controlled by Mr. Denis Tik Yang Tse who is the sole director of each of Asia-IO Holdings Cayman and Aisa- IO Acquisition GP Limited (for information on Mr. Tse, please refer to the section headed “Letter from Huatai — Proposed Change of Board Composition” in this Composite Document). The registered address of each of (i) the Offeror (ii) Asia- IO Holdings Cayman and (iii) Asia-IO Acquisition GP Limited is C/o Intertrust Corporate Services (Cayman) Limited, 10 Elgin Avenue, George Town, Grand Cayman KY-1-9005 Cayman Islands. The address of Mr. Denis Tik Yang Tse is 21/F, The Center, 99 Queen’s Road Central, Hong Kong.

(b) The Subscribers are (i) the Offeror, (ii) Asia-IO Holdings BVI and (iii) Huatai Principal Investment.

— IV-4 — Appendix IV general Information of the offeror

(c) Asia-IO Holdings BVI is a British Virgin Island private limited company controlled by Mr. Denis Tik Yang Tse which is the investment holding vehicle through which the Offeror’s investment advisor co-invests alongside the Offeror. The registered address of Asia-IO Holdings BVI is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands.

(d) Huatai Principal Investment is an investment holding company, wholly owned by Huatai which is a wholly owned subsidiary and overseas business platform of Huatai Securities Co., Ltd., the shares of which are listed on the Stock Exchange and the Shanghai Stock Exchange. The registered address of the Huatai Principal Investment is OMC Chambers, Wickhams Cay, 1, Road Town, Tortola, British Virgin Islands.

(e) The registered office of Huatai is situated at Room 5808-12, 58/F, The Center, 99 Queen’s Road Central, Hong Kong.

(f) The English text of this Composite Document and the Forms of Acceptance shall prevail over their respective Chinese texts in the case of inconsistency.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection on (i) the website of the SFC (www.sfc.hk) and (ii) the website of the Company (www.daiwahk.com) during the period from the date of this Composite Document onwards for as long as the Share Offer remains open for acceptance:

(a) the memorandum and articles of association of Asia-IO Holdings BVI;

(b) the memorandum and articles of association of Huatai Principal Investment;

(d) the written consent from the experts referred to in the paragraph headed ‘‘6. Qualifications and Consent of Expert’’ in this Appendix; and

(e) the material contracts referred to under the paragraph headed ‘‘7. Material Contracts’’ in this Appendix.

— IV-5 — Appendix V General information of the Company

1. RESPONSIBILITY STATEMENT

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this Composite Document have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company as at the Latest Practicable Date are as follows:

Authorised: HK$

1,000,000,000 Shares 100,000,000

Issued and fully paid or credited as fully paid:

662,239,448 Shares 66,223,944.80

All the Shares currently in issue rank pari passu in all respects with each other, including in particular, as to dividends, voting rights and capital. No part of the share capital of the Company is listed or dealt in on any stock exchange other than the Stock Exchange.

Save for the 225,000,000 new Shares issued under the Subscription Agreement, no Shares have been issued since 31 March 2015, being the date to which the latest published audited consolidated financial statements of the Group were made up, and up to the Latest Practicable Date.

As at the Latest Practicable Date, the Company did not have any outstanding options, warrants or other securities carrying rights of conversion into or exchange or subscription for Shares.

3. DISCLOSURE OF INTERESTS

(1) Interests and short positions the Directors and the chief executive of the Company in the securities of the Company and its associated corporations

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of the Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the

— V-1 — Appendix V General information of the Company

SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules, were as follows:

(a) Long positions in the Shares

Shares in issue Personal Corporate Other Total Approximate Name of Directors interests interests interests interests percentage

Mr. Cheung Wai Ho 57,033 — — 57,033 0.01% Mr. Tse Dik Yang (“Mr. Tse”) (note) — 429,359,557 — 429,359,557 64.83%

Note:

Mr. Tse is being proposed to be the executive Director by the Offeror. Given that 385,920,418 Shares were beneficially owned by the Offeror whose general partner is Asia-IO Acquisition GP Limited; 43,439,139 Shares were beneficially owned by Asia-IO Holdings BVI. Each of Asia-IO Acquisition GP Limited and Asia-IO Holdings BVI is beneficially owned as to 100% and 95% respectively by Mr. Tse, who is deemed to be interested in the Shares held by Asia-IO Acquisition GP Limited and Asia-IO Holding BVI.

(b) Long position in shares of associated corporations of the Company

As at the Latest Practicable Date, none of the Directors nor the chief executive of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) where 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 they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers contained in the Listing Rules.

(2) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO and substantial Shareholders

So far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, the following persons (not being Directors or chief executive of the Company) had, or were deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or who were 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:

— V-2 — Appendix V General information of the Company

Long Position in the Shares

Approximate percentage or Number or attributable attributable percentage of number of Nature of shareholding Name of Shareholder Shares held interests (%)

The Offeror (note 1) 385,920,418 Beneficial 58.28 interests

Asia-IO Holdings BVI (note 2) 43,439,139 Beneficial 6.56 interests

Huatai Principal Investment (note 3) 36,861,972 Beneficial 5.57 interests

Notes:

1. 385,920,418 Shares were beneficially held by the Offeror whose general partner is Asia-IO Acquisition GP Limited which, in turn, is controlled by Mr. Tse.

2. 43,439,139 Shares were beneficially held by Asia-IO Holdings BVI which is controlled by Mr. Tse.

3. 36,861,972 Shares were beneficially held by Huatai Principal Investment, the entire issued share capital of which is beneficially owned by Huatai Principal Investment Group Limited, which is, in turn, owned by Huatai Financial Holdings (Hong Kong) Limited, the financial adviser to the Offeror. Huatai Financial Holdings (Hong Kong) Limited, is ultimately owned by Huatai Securities Co., Ltd.. Each of Huatai Principal Investment Group Limited, Huatai Financial Holdings (Hong Kong) Limited, and Huatai Securities Co., Ltd. is deemed interested in those 36,861,972 Shares.

Save as disclosed above, as at the Latest Practicable Date, the Directors and the chief executive of the Company were not aware of any other person (other than the Directors and the chief executive of the Company) who had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange 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.

4. ADDITIONAL DISCLOSURE OF INTERESTS AND DEALINGS IN SECURITIES

During the Relevant Period and as at the Latest Practicable Date save for the acquisition of 6,500,000 Shares by Mr. Lau on 18 August 2014 at HK$0.558 per Share,

(a) the Company did not hold, nor had dealt for value in any shares, convertible securities, warrants, options or derivatives of the Offeror;

(b) neither the Company nor any of the Directors had dealt for value in the shares of the Offeror or any convertible securities, warrants, options or derivatives in respect of any shares of the Offeror; and

— V-3 — Appendix V General information of the Company

(c) no person who had any arrangements of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any parties acting in concert with it had dealt for value in the Shares or any convertible securities, warrants, options or derivatives in respect of any Shares.

(d) save as disclosed in the paragraph headed “3. Disclosure of interest” in this appendix, none of the Directors was interested in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) and had no dealings in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code);

(e) none of (i) the subsidiaries of the Company; (ii) the pension fund of the Company or of any of its subsidiaries; nor (iii) any adviser to the Company (as specified in class (2) of the definition of “associate “under the Takeovers Code), had any interest in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) and/or had dealt in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code);

(f) no person had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Company or with any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of “associate” under the Takeovers Code;

(g) no securities of the Company were managed on a discretionary basis by any fund managers connected with the Company, nor did any such fund managers deal in any securities of the Company;

(h) Mr. Cheung Wai Ho, being the only Director who has interest in 57,033 Shares, has expressed his intention, in respect of his own beneficial shareholdings in the Company, to reject the Share Offer;

(i) no Shares or securities of the Company had been borrowed or lent by any of the Directors or any person acting in concert with the Directors or by the Company;

(j) no benefit (other than statutory compensation) had been given or will be given to any Directors as compensation for loss of office or otherwise in connection with the Share Offer;

(k) there was no agreement or arrangement between any of the Directors and any other person which was conditional or dependent on the outcome of the Share Offer or otherwise connected with the Share Offer;

(l) there was no material contract entered into by the Offeror or any party acting in concert with it in which any Director had a material personal interest; and

(m) no agreement, arrangement or understanding (including any compensation arrangement) existed between (i) the Offeror or any party acting in concert with it; and (ii) any Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependence upon the Share Offer.

— V-4 — Appendix V General information of the Company

5. DIRECTORS’ SERVICE CONTRACTS

Save for

(i) a service agreement dated 12 September 2014 and entered into, among others, the Company and Mr. Lau, in relation to the appointment of Mr. Lau as the president and director of the Company and the Group for a term of 3 years for the annual remuneration of HK$3,978,000 and an incentive of 3.5% of the consolidated profit of the Group after tax, interest, amortisation and depreciations and each of the Company and Mr. Lau may serve a six-month advance notice in writing to terminate the said service agreement after the first anniversary thereof;

(ii) a service agreement dated 12 September 2014 and entered into, among others, the Company and Ms. Chan, in relation to the appointment of Ms. Chan as the director of the Company and the Group for a term of 3 years for the annual remuneration of HK$1,077,600 and each of the Company and Ms. Chan may serve a six-month advance notice in writing to terminate the said service agreement after the first anniversary thereof;

(iii) a service agreement dated 23 July 2013 and entered into, among others, the Company and Chong Wing Kam, James, an executive Director, in relation to the appointment of Mr. Chong as a director of the Company and the Group for a term of 3 years for the annual remuneration of HK$626,160 and each of the Company and Mr. Chong may serve a six-month advance notice in writing to terminate the said service agreement after the first anniversary thereof;

(iv) a service agreement dated 27 March 2013 and entered into, among others, the Company and Cheung Wai Ho, an executive Director, in relation to the appointment of Mr. Cheung as a director of the Company and the Group for a term of 3 years for the annual remuneration of HK$696,000 and each of the Company and Mr. Cheung may serve a six-month advance notice in writing to terminate the said service agreement after the first anniversary thereof; and

(v) a service agreement dated 23 July 2013 and entered into, among others, the Company and Fung Wai Ching, an executive Director, in relation to the appointment of Mr. Fung as a director of the Company and the Group for a term of 3 years for the annual remuneration of HK$540,000 and each of the Company and Mr. Fung may serve a six-month advance notice in writing to terminate the said service agreement after the first anniversary thereof,

as at the Latest Practicable Date, none of the Directors or the Proposed Directors had any existing or proposed service contract with any member of the Group or associated companies (i) which is not determinable by the Company within one year without payment of compensation, other than statutory compensation; (ii) which (including both continuous and fixed term contracts) had been entered into or amended within six months prior to the commencement of the Offer Period (i.e. 13 February 2015); (iii) which were continuous contracts with a notice period of 12 months or more; or (iv) which were fixed term contracts with more than 12 months to run irrespective of the notice period. Save for Mr. Lau, none of the Directors had any variable pay pursuant to the respective service agreements as at the Latest Practicable Date.

— V-5 — Appendix V General information of the Company

6. EXPERTs AND CONSENTs

The following are the qualifications of the experts who have given opinions or advice which are contained in this Composite Document:

Name Qualification

Investec a licensed corporation to carry out type 1 (dealing in securities), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (assets management) regulated activities under the SFO

Messis Capital a licensed corporation under the SFO to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities

Each of the above experts has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion therein a copy of its advice and/or references to its name and logo in the form and context in which they respectively appear.

As at the Latest Practicable Date, each of the above experts had no shareholding, direct or indirect, in any member of the Group nor 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, none of the above experts had any direct or indirect interests in any assets which have been, since 31 March 2015, being the date to which the latest published audited accounts of the Group were made up, acquired or disposed of by or leased to or proposed to be acquired or disposed of by or leased to any member of the Group.

7. Claims and LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries were engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance was known to the Directors to be pending or threatened by or against any member of the Group.

— V-6 — Appendix V General information of the Company

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 preceding the date of the MOU Announcement and are or may be material:

(a) the Disposal Agreement (including the supplemental agreement dated 27 July 2015);

(b) the Subscription Agreements;

(c) the agreement dated 21 August 2014 and entered into amongst Advance Creative Technology Limited, Daiwa Associate Limited (“DAL”), and Daiwa Associate (China) Limited (all are the wholly-owned subsidiaries of the Company), as vendors, Daiwa Trading (Guangdong) Limited (“DT”) (a wholly- owned subsidiary of the Company) as target and issuer, the Company as vendors’ guarantor, Vision Best Holdings Limited as purchaser, and Blue Sky Telecommunication Limited (“Blue Sky”) as subscriber in relation to (i) the proposed disposal of 98 shares in DT and all obligations, indebtedness and liabilities due, owing or incurred by DT to the vendors at the consideration of RMB100,000,000; and (ii) the subscription for 94 shares in DT by DAL and 2 shares in DT by Blue Sky at the aggregate subscription price of HK$2 and RMB2,000,000 respectively; and

(d) the conditional placing agreement dated 27 August 2013 entered into between the Company as issuer and Kingston Securities Limited as placing agent in relation to the successful placing of 43,000,000 Shares at the placing price of HK$0.29 per Share and the Company should pay the placing agent a commission fee of 2.5% of the aggregated amount equal to the placing price multiplied by the actual number of placing shares being placed out. In this connection, the Company paid approximately HK$361,750 in total as the placement commission.

9. MISCELLANEOUS

(a) The registered office the Company is located at Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda and the head office and principal place of business in Hong Kong is at 11th Floor, Block G, East Sun Industrial Centre, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.

(b) The branch share registrar and transfer office of the Company in Hong Kong is Tricor Abacus Ltd. at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

(c) The company secretary of the Company is Mr. Man Wai Chuen (“Mr. Man”). Mr. Man is a fellow member of both the Association of Chartered Certified Accountants and the Hong Kong Institute of Chartered Secretaries. Mr. Man is also an associate member of the Hong Kong Institute of Certified Public Accountants.

(d) As at the Latest Practicable Date, to the best knowledge of the Company and save for those Shareholders whose Shares were held in CCASS, the Company had one Overseas Shareholder holding in total of 400 Shares and having the address at Singapore.

— V-7 — Appendix V General information of the Company

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection (i) at the head office of the Company at 11th Floor, Block G, East Sun Industrial Centre, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong during normal business hours (except for Saturdays and public holidays); (ii) on the SFC’s website at http://www.sfc.hk; and (iii) on the Company’s website at http://www.daiwahk.com from the date of this Composite Document up to and including the Closing Date:

(a) the memorandum of association of the Company and the by-laws of the Company;

(b) the letter from the Independent Board Committee to the Share Offer Shareholders, the text of which is set out in section headed “Letter from the Independent Board Committee” of this Composite Document;

(c) the letter of advice from the Independent Financial Adviser to the Independent Board Committee, the text of which is set out in the section headed “Letter from the Independent Financial Adviser” of this Composite Document;

(d) the annual reports of the Company for the two financial years ended 31 March 2014 and 31 March 2015;

(e) this Composite Document;

(f) the reports from PricewaterhouseCoopers and Messis Capital, respectively, on the unaudited pro forma financial information on the Group upon the Disposal Completion (i.e. Remaining Group) as at and for the financial year ended 31 March 2015, the text of which is referred in Appendix III to this Composite Document;

(g) the service contracts referred to in paragraph headed “5. Directors’ service contracts” in this Appendix V;

(h) copies of the material contracts referred to in the paragraph headed “8. Material contracts” in this Appendix V; and

(i) the written consents of the experts referred to in the paragraph headed “6. Experts and consents” in this Appendix V.

— V-8 —