Tipos de prueba de caja blanca

Halcyon Securities is making the Offers for and on behalf of the Offeror in compliance with the Takeovers Code on the following basis:

Share Offer

For every Offer Share . . . HK$0.158 in cash The Offer Shares to be acquired under the Share Offer shall be fully paid and free from all liens, charges, encumbrances, right of pre-emption and any other third party rights of any nature and together with all rights attaching to them as at the date of the Joint Announcement or subsequently becoming attached to them, including the rights to receive in full all dividends and distributions, if any, declared, made or paid on or after the date of the Joint Announcement.

Option Offer

For cancellation of each Share Option (whether vested or not and other than those already held by the Offeror and parties acting in concert

with it) with exercise price at HK$0.444 . . . HK$0.001 in cash Pursuant to Rule 13 of the Takeovers Code, the offer price for cancellation of each share option should normally represent the difference between the exercise price of the respective share options and the offer price for shares. As the exercise price of each of the Share Options is HK$0.444, which is above the Share Offer Price, the Option Offer Price for cancellation of each Share Option is nominal.

The Option Offer is subject to and conditional upon the Share Offer becoming unconditional. Acceptance of the Option Offer by the Independent Optionholders will result in the cancellation of their Share Options and all rights attached thereto with effect from the date on which the Option Offer is made, being the date of the Joint Announcement.

As at the Latest Practicable Date, there were 66,221,654 Share Options of which 10,986,486 and 8,789,189 Share Options are held by Mr. Cheng Chi Ming, Brian and Mr.

Tsang On Yip, Patrick (being parties acting in concert with the Offeror) respectively and therefore 46,445,979 Share Options are subject to the Option Offer.

As noted from the “Letter from the Board” in the Composite Document, the Share Options were granted on 25 April 2014 with exercisable period from 25 July 2014 to 24 April 2020. The exercise price of each Share Option is HK$0.444. As at the Latest Practicable Date, save as disclosed above, the Company had no other outstanding options, warrants, derivatives or securities convertible or exchangeable into Shares.

33

LETTER FROM VEDA CAPITAL

According to Practice Note 6 titled “Appropriate offers for convertibles or warrants under Rule 13 and calculation of ‘see-through’ price” issued by the SFC, the see-through value of each option would be the difference between the offer price for each ordinary share and the exercise price of each option. The Share Offer Price of each Offer Share is HK$0.158. As the exercise price of each of the Share Options is HK$0.444, all Share Options are out-of-money. In respect of the out-of-money options, the exercise prices of these Share Options are higher than the Share Offer Price and thus the “see-through” price of the out-of-money option is zero. For the out-of-money Share Options, the “see-through”

price is zero while their Option Offer Price is of a nominal value, we consider that the terms of the Option Offer are fair and reasonable so far as the Independent Optionholders are concerned.

Your attention is drawn to the further terms of the Offers, including procedures for acceptance, settlement and the acceptance period, as set out in Appendix I to the Composite Document and the Forms of Acceptance.

The Share Offer Price

The Share Offer Price of HK$0.158 per Offer Share represents:

(i) the closing price of HK$0.158 per Share as quoted on the Stock Exchange on the Last Trading Day;

(ii) a premium of approximately 2.60% over the average of the closing prices of the Shares as quoted on the Stock Exchange for the 5 trading days up to and including the Last Trading Day of approximately HK$0.154 per Share;

(iii) a premium of approximately 1.28% over the average of the closing prices of the Shares as quoted on the Stock Exchange for the 10 trading days up to and including the Last Trading Day of approximately HK$0.156 per Share;

(iv) a discount of approximately 0.63% to the closing price of HK$0.159 per Share as quoted on the Stock Exchange on the Latest Practicable Date; and

(v) a discount of approximately 36.80% to the unaudited consolidated net asset value attributable to equity shareholders of the Company of approximately HK$0.250 per Share as at 30 September 2015 (based on the unaudited accounts of the Company as at 30 September 2015 and the number of Shares in issue as at the Latest Practicable Date).

34

LETTER FROM VEDA CAPITAL

In order to assess the fairness and reasonableness of the Share Offer Price, we have conducted the following analysis:

(a) Historical performance of the Shares Share Price

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

Source: Bloomberg Note:

Trading in the Shares was suspended from 21 December 2015 to 31 December 2015 (both days inclusive) pending the publication of the Joint Announcement in relation to the Offers. For details, please refer to the Joint Announcement.

We have reviewed the movements in the closing price of the Shares for the period commencing from 18 December 2014, being the 12-month period prior to the Last Trading Day 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 and the Offers.

The chart above represents the daily movement in the closing prices of the Shares against the Share Offer Price during the Review Period.

35

LETTER FROM VEDA CAPITAL

(i) Pre Joint Announcement Period

Prior to the release of the Joint Announcement on 31 December 2015, the lowest and highest closing price of the Shares during the Review Period were HK$0.152 per Share recorded on 11 December 2015 and 14 December 2015 and HK$0.415 per Share recorded on 29 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 is HK$0.267 per Share. The Share Offer Price of HK$0.158 per Share represents (i) a premium of approximately 3.95% from the lowest closing price; (ii) a discount of approximately 61.93% from the highest closing price; and (iii) a discount of approximately 40.82% from the average daily closing price during the Review Period before the release of the Joint Announcement.

Concerning the high closing price of the Shares in April 2015, we noted that on 15 April 2015, the Company issued an announcement that ALBA Integrated Waste Solutions (Hong Kong) Limited, a joint venture of the Group, agreed to design, construct, operate and maintain a waste electrical and electronic equipment (the “WEEE”) treatment plant, and an ancillary collection network to collect and recycle WEEE for a period of 10 years commencing from the operation of the treatment plant. The estimated awarded sum including capital value and total operation fee is approximately HK$1,727 million. As advised by the Company, the construction of the treatment plant will be rescheduled to commence in the first quarter of 2016. This new waste treatment business might have a positive effect on the business development of the Company.

Also, we have reviewed and compared the Share price movement with the Hang Seng Index (the “HSI”) movement for the period from 15 April 2015 to December 2015.

We noted that, apart from the drop on 20 April 2015, the HSI had risen from 27,619 on 15 April 2015 to the peak of 28,443 on 28 April 2015 while the Share price also rose to the peak of HK$0.415 on 29 April 2015 which followed a similar pattern as the trend of HSI. After the HSI reached the peak, the HSI continued to drop to approximately 20,584 on 7 September 2015 due to the weak market sentiment and the Share price also followed the same declining trend of the HSI and the Share price started from HK$0.39 on 30 April 2015 to HK$0.158 on 4 September 2015.

From September 2015 to December 2015, the HSI hovered in a range of approximately 20,500 to 22,500 and the Share price had a similar movement that it hovered at a range between HK$0.152 and HK$0.202 in the same period of time.

Given the abovementioned, we believe that the movement of the closing price of the Shares immediately before the publication of the Joint Announcement was mainly aligned with the market conditions.

36

LETTER FROM VEDA CAPITAL

(ii) Post Joint Announcement Period

At the request of the Company, trading in the Shares was suspended from 21 December 2015 to 31 December 2015 (both days inclusive) pending the publication of the Joint Announcement. Following the resumption of trading of Shares on 4 January 2016, the closing price of the Shares increased by approximately 17.09% to HK$0.185 per Share on 4 January 2016 (being the first trading day after the publication of the Joint Announcement) as compared to that of HK$0.158 per Share on the Last Trading Day. We have enquired with the Directors regarding the possible reasons for the increase in the Share price immediately after the publication of the Joint Announcement and were advised that save for the Offers, they were not aware of any other matters which might have impact on the Share price. Therefore, we believe that the surge in the closing prices of the Shares immediately after the release of the Joint Announcement was probably due to market reaction towards the Change in Control. Nevertheless, during the period from 4 January 2016 to the Latest Practicable Date (the “Post Joint Announcement Period”), the closing price of the Shares demonstrated a downward trend since the release of the Joint Announcement from HK$0.185 per Share on 4 January 2016 and then hovered at a level slightly above and close to the Share Offer Price of HK$0.158. The closing price of the Shares was HK$0.159 per Share on the Latest Practicable Date, representing a drop of approximately 14.1% as compared to the highest closing price of the Shares during the Post Joint Announcement Period. We also note that during the Post Joint Announcement Period, the HSI decreased from 21,327 as at 4 January 2016 to 19,683 as at the Latest Practicable Date, representing a decrease of approximately 7.7%. Thus, we believe that the movement of the closing price of the Shares during the Post Joint Announcement Period was mainly aligned with the market conditions.

Based on “Global Economics Prospects” published by the World Bank Group (the

“WBG”) (http://www.worldbank.org/en/research) in January 2016, the upturn in 2016 and 2017 is projected to be shallower than previously anticipated. Weakening prospects are most visible among key commodity exporters, pointing to a significantly lower contribution to global growth than in the past. China’s gradual slowdown and rebalancing continues.

Deteriorating growth prospects for developing countries have been accompanied by weakening global trade, capital flows, and commodity prices. As stated in the report, the global business environment is deteriorating and becoming volatile and especially for China, the growth rate of the country has decreased to a new low level.

37

LETTER FROM VEDA CAPITAL

Liquidity of the Shares

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

Source: Bloomberg Note:

Trading in the Shares was suspended from 21 December 2015 to 31 December 2015 (both days inclusive) pending the publication of the Joint Announcement in relation to the Offers. For details, please refer to the Joint Announcement.

38

39

LETTER FROM VEDA CAPITAL

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 excludes any trading day on which trading of the Shares on the Stock Exchange was suspended for the whole trading day.

2. Based on 4,822,334,000 Shares in issue as at the Latest Practicable Date.

3. Based on 1,774,082,165 Shares held by public Shareholders as at the Latest Practicable Date.

4. The Review Period commenced on 18 December 2014.

5. The Review Period ended on the Latest Practicable Date.

6. Trading of the Shares was suspended from 21 December 2015 to 31 December 2015 during the Review Period.

The average daily trading volume of the Shares per month during the Review Period was ranging from approximately 0.02% in November 2015 and December 2015 to 0.98% in April 2015 of the total number of issued Shares as at the Latest Practicable Date. If only Shares held by public Shareholders, i.e. the free float, are considered in calculating the percentage of average daily trading volume of the Shares per month during the Review Period, the percentage was ranging from approximately 0.04% in December 2015 to 2.65% in April 2015.

The average daily trading volume during the period from 4 January 2016 to the Latest Practicable Date was 5,700,014 Shares, representing 0.12% of the Shares in issue as at the Latest Practicable Date and 0.32% of the Shares held by public Shareholders. Such percentages were higher in January 2016 following the publication of the Joint Announcement and such higher trading volume may not be sustainable. Accordingly, the Independent Shareholders may find it difficult to dispose of a large volume of Shares in the open market in a short period of time without exerting downward pressure on the price of the Shares. Therefore, the Share Offer provides a viable alternative exit for the Independent Shareholders, particularly for those who hold a large volume of Shares, to realise their investments in the Company.

The average daily trading volume of Shares during the Review Period was generally thin.

The average daily trading volume during the Review Period was 10,059,725 Shares, representing approximately 0.21% of the total number of Shares in issue.

Despite the fact that the closing price of the Shares generally exceeds the Share Offer Price, given (i) the recent price level of the Shares in the Post Joint Announcement Period demonstrated a decreasing trend; (ii) the weakening economic environment and the decreasing trend of the HSI;

(iii) that the trading volume of the Shares fluctuated and was generally thin during the Review Period and thus it is uncertain as to whether there would be sufficient liquidity in the Shares for the Independent 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 Independent Shareholders can receive by the disposal of their Shares in the open market; and (iv) the uncertainty associated with the financial performance and prospects of the Group as discussed in the section headed “Prospects and outlook of the Group” above, we are of the view that the Share Offer represents an opportunity for the Independent Shareholders, particularly for those who hold a large volume of the Shares, to dispose

40

LETTER FROM VEDA CAPITAL

of part or all of their Shares at the Share Offer Price if they so wish to. The Independent Shareholders who wish to realize their investment in the Group are reminded that they should carefully and closely monitor the market price of the Shares during the Offer Period.

(b) Comparable analysis

In order to further assess the fairness and reasonableness of the Share Offer Price, we have considered three commonly adopted approaches in evaluation of a company, namely price-to earning ratio (the “PER”), dividend yield and price-to-book ratio (the “PBR”), which are commonly adopted trading multiple analyses. Given the Group was loss-making for the years ended 31 March 2014 and 31 March 2015 and no dividend were distributed for the years ended 31 March 2014 and 31 March 2015, we consider PER and dividend yield are not applicable.

Having considered the above and taking into account the loss-making position and business nature of the Group, we considered that the PBR would be the most appropriate and relevant approach. We also consider that using the net asset value of the Group as the basis of determination of the Share Offer is a fair reference.

Based on the Share Offer Price of HK$0.158 per Offer Share and the total number of issued Shares of 4,822,334,000 as at the Latest Practicable Date, the Company is valued at approximately HK$761,928,772. The P/B Ratio of the Company implied by the Share Offer Price is approximately 0.63 times (the “Implied P/B Ratio”) based on the equity attributable to equity Shareholders of the Company of approximately HK$1,203,742,000 as at 30 September 2015.

We have attempted to identify the comparable companies which are (i) listed on the Stock Exchange; (ii) principally engaged in same or similar business as the Group i.e. sales of recovered paper and tissue paper, provision of confidential materials destruction services and sales of waste materials; and (iii) with comparable scale of size with the Group. However, based on our selection criteria, only one comparable company can be identified. In this regard, we have extended the selection criteria of the comparable companies to those which are principally engaged in manufacturing and trading of paper and/or paper products, which are similar to the principal businesses of the Group, and six comparable companies (the “Comparables”) are identified, which are exhaustive under our selection criteria. Details of our analysis are listed below:

41

Manufacture and sale of corrugated board, corrugated paper-based

923 the Company Trading of recovered paper and materials, trading of tissue paper

42

LETTER FROM VEDA CAPITAL

Notes:

1. The P/B ratios of the Comparable are calculated based on the market capitalisation of the respective Comparables as at the Latest Practicable Date divided by the net assets attributable to equity holders of the respective Comparables as extracted from their respective latest published annual or interim results.

2. For the purpose of this table, the translation of RMB into HK$ is based on the average exchange rate of RMB1.00 to HK$1.18 for the purpose of illustration only.

As illustrated in the table above, the P/B Ratios of the Comparables ranged from approximately 0.1 times to approximately 1.16 times, with an average of approximately 0.55 times.

The Implied P/B Ratio of approximately 0.63 times lies within range of the P/B Ratios of the Comparables and the Implied P/B Ratio lies even above the average of the Comparables, hence we are of the view that the Share Offer Price is fair and reasonable.

5. Background and intention of the Offeror