history, development and reorganisation

15 Pages·2016·0.14 MB·English

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HISTORY, DEVELOPMENT AND REORGANISATION
HISTORY AND DEVELOPMENT
Corporate Development
The Group is principally engaged in the provision of fitting-out and renovation (including
alteration and addition) contracting services for Hong Kong premises. Our history can be traced back to
2008 when our founder, Mr. Chan, our executive Director, chairman and chief executive officer,
together with three Independent Third Parties, established Aeso Limited in Hong Kong, with a view to
providing high quality contracting services to newly built and existing premises of corporate clients in
Hong Kong.
Mr. Chan has nearly 19 years of experience in the building and construction industry, and had
significant experience with various surveying and construction companies. For further details on
background and the relevant experience of Mr. Chan, please refer to “Directors and Senior
Management” in this document.
In February 2009, Aeso Limited became wholly-owned by Mr. Chan, please refer to “History,
Development and Reorganisation – Corporate history” below in this section for further details.
Throughout the years, we have built our reputation in the industry as a contracting service provider
which offers value-added services to cater for our clients’ specification and satisfaction, which the
Directors consider critical to our success and fostering a close relationship with our clients. Please refer
to “Business – Competitive strengths” in this document for further details.
Pre-[REDACTED] Investment
Pursuant to the Subscription Agreements entered into among W & Q Investment, Acropolis
Limited and the Company, W & Q Investment agreed to invest in the Group by subscribing 4,900
Shares for an aggregate consideration of HK$19,913,600. Following the Pre-[REDACTED]
Investment, the Company was beneficially owned as to 51% and 49% by Acropolis Limited and W
& Q Investment, respectively.
Background of the pre-[REDACTED] investor
W & Q Investment is a BVI business company incorporated in the BVI with limited liability on
29 January 2016 and Mr. Liu is the sole ultimate beneficial owner of W & Q Investment as at the
Latest Practicable Date. To the best knowledge and belief of the Directors after reasonable enquiry, W
& Q Investment is an investment holding company set up solely for the purpose of investment in the
Company and was not involved in other investment or any business that competes or may compete with
our business as at the Latest Practicable Date.
Mr. Liu is one of the Controlling Shareholders and a director of W & Q Investment. He is an
Independent Third Party (other than his beneficial interest in the shareholding interest in the Group).
Mr. Liu obtained a bachelor’s degree of business administration with double major in management of
organisations and finance from The Hong Kong University of Science and Technology in Hong Kong.
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HISTORY, DEVELOPMENT AND REORGANISATION
Mr. Liu has experience in the banking and finance industry and actively participates in investment in
different industries in Asia through his investment arms. Mr. Liu has been a certified financial risk
manager of Global Association of Risk Professionals since 2012. He first started his career in the
finance industry as a futures trader in the trading division at GHUT (Hong Kong) Limited, a
proprietary trading firm. He has been a licensed person for type 1 (dealing in securities), type 2
(dealing in futures contracts) and type 7 (providing automated trading services) regulated activities
under the SFO serving at Morgan Stanley Asia Limited and Morgan Stanley Hong Kong Securities
Limited, and was a senior director of Asia Bankers Club. With his experience in the banking and
finance industry, Mr. Liu set up his own investment business in late 2013 with his own financial
resources with a view to focusing on long-term investment projects, including but not limited to, listed
equities and pre-IPO investments. He currently manages his investment portfolio through Parlay Family
Investment (HK) Limited and he is also the sole ultimate beneficial owner of this company. As at the
Latest Practicable Date, Mr. Liu’s investment portfolios include investment in listed equity securities in
Hong Kong as well as investment in a company that holds a minority stake in a Myanmar company
operating underwriting business for the Yangon Stock Exchange. In addition, Mr. Liu, through Praetor
Capital Limited and he is also the sole ultimate beneficial owner of this company, is also engaging in
provision of consultancy services on business development for overseas private companies, including
advising on type of business structures, assisting in incorporation or set up of Hong Kong companies,
locating suitable office premises and opening of bank accounts, and advising on organisational
structure and finance management.
Save as disclosed in this document, Mr. Liu and W & Q Investment do not have any other
relationship, whether present or past, with the Group, the Directors, the senior management of the
Group, any connected persons of the Company and any of their respective associates. The subscription
of the Shares by W & Q Investment as stated above was not financed directly or indirectly by
connected persons of the Company nor the Group.
Details of the Pre-[REDACTED] Investment
Name of the investor : W & Q Investment
Number of Shares acquired by the : 4,900 Shares allotted and issued on 8 April 2016
investor under the Subscription
Agreements
Total consideration : HK$19,913,600 in cash (Bank immediate transfer from
Mr. Liu’s personal bank account to the Company’s
designated account)
Final payment date : Last settled on 8 April 2016
Date of completion of the Share : 8 April 2016
allotment under the Subscription
Agreements
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Number of Shares and percentage : [REDACTED] Shares, representing [REDACTED]% of
of shareholding held by the the total issued shares of the Company
investor upon the
[REDACTED]
Cost per Share paid by the : Approximately HK$[REDACTED] (representing a
investor (taking into account the discount of approximately [REDACTED]% to the mid-
Capitalisation Issue) point of the indicative range of the [REDACTED])
Use of proceeds : Applied towards the Reorganisation, settlement of part of
the [REDACTED] expenses, business development,
working capital and other corporate purposes of the
Group and the proceeds have been fully utilised as at the
Latest Practicable Date and approximately HK$10.7
million out of the proceeds from the Pre-[REDACTED]
Investment has been used to settle part of the
[REDACTED] expenses.
Lock-up of the investment made : Such lock-up period as required by the Stock Exchange,
as part of the terms of the 180 days or such other period to be agreed by the
Subscription Agreements Company, the Sponsor and W & Q Investment, whichever
is the longest
Each of Mr. Liu and W & Q Investment has undertaken
to the Company a further lock-up of the Shares held by
him/it for a period of two years upon the [REDACTED].
Please refer to “Relationship with the Controlling
Shareholders – Voluntary lock-up undertaking by the
Controlling Shareholders” in this document for further
details.
Public float : All Shares held by W & Q Investment will not be
considered as part of the public float for the purposes of
Rule 11.23 of the GEM Listing Rules as W & Q
Investment will remain as a Controlling Shareholder
immediately upon [REDACTED]
Special rights granted to the : W & Q Investment is entitled to nominate two Directors.
investors As such, W & Q Investment recommended and the Board
appointed Miss. Zhang Qi and Mr. Law Wing Kit as non-
executive Directors on 8 April 2016 and 29 April 2016,
respectively
It is provided under the Subscription Agreements that all
special rights granted to W & Q Investment shall cease
automatically upon [REDACTED]
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HISTORY, DEVELOPMENT AND REORGANISATION
Share-based payment : The Pre-[REDACTED] Investment is not in the form of
share-based payment
Basis of determination of the consideration
The consideration of the Pre-[REDACTED] Investment was arrived after arm’s length
negotiation between the parties with reference to, among other things, the following factors:
(i) the audited net profit after tax for the years ended 31 March 2014 and 2015 of Aeso
Limited;
(ii) the development trend of the industry and market where the Group is operating in and the
growth potential, business expansion and future prospect of the Group;
(iii) the pricing of recent pre-[REDACTED] investments in companies listed on the GEM and
the investment risks assumed by Mr. Liu in investing in an unlisted company;
(iv) the existing client base of the Group which includes Hong Kong listed property
developers, a renowned local retailer, an international retail brand and a government
authority;
(v) the corporate culture, business management style as well as the expertise of the senior
management of the Group;
(vi) the strategic benefits brought by Mr. Liu to the Group as stated in the below paragraphs;
and
(vii) the Group’s plan for the [REDACTED] became more concrete and the expenses in
relation to the [REDACTED].
Strategic benefits to the Group
The Directors believe that Mr. Liu, as a shareholder of the Company, will bring the following
strategic benefits to the Company, both in the short and long term:
(i) offering advice to the Group in preparation for the [REDACTED]. Mr. Liu, based on his
experience gained from other investments, together with his investment team was involved
in the [REDACTED] application process and provided assistance during the preparation
of listing related documents, such as reviewing the document disclosure, in particular for
the Pre-[REDACTED] Investment and involving in the discussion of the [REDACTED]
timetable based on the advice from the professional parties engaged by the Company for
the [REDACTED].
(ii) providing immediate funding for the [REDACTED] expenses and additional working
capital for the Group’s operations. Since the Company had decided to proceed with the
[REDACTED] prior to the Pre-[REDACTED] Investment which would involve
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HISTORY, DEVELOPMENT AND REORGANISATION
substantial capital outlay during the [REDACTED] process, it would have to have funded
the [REDACTED] expenses by internal funding and/or available banking facilities which
would have imposed pressure on the finances of the Group absorbing part of the Group’s
working capital for on-going project execution or undertaking new projects. As such, the
Company considers that the proceeds from the Pre-[REDACTED] Investment would
provide immediate funding for [REDACTED] that enable the Group to opt to obtain
surety bonds at a lower cost. As at the Latest Practicable Date, HK$10.7 million and
HK$6.2 million of the proceeds from the Pre-[REDACTED] Investment has been used to
settle part of the [REDACTED] expenses and the deposit for the provision of a surety
bond, respectively. Please refer to “Business – Business strategies – 1. Further developing
the Group’s contracting business – Enhancing our financing capabilities to undertake more
projects” in this document for the details on obtaining a surety bond from a bank and an
insurance company.
(iii) providing advice on optimising the existing banking and loan facilities arrangement of the
Group. The Group currently relies on certain banking and factoring facilities to fund its
business operation and project execution. Given Mr. Liu’s knowledge and experience in
finance and investment, he, together with his investment team, has provided analysis and
advice on optimising the banking and loan facilities arrangement of the Group. Further,
Mr. Liu also assisted the Group to explore other banking facilities with similar or better
terms and conditions based on his own banking connections.
(iv) Assisting in expanding our business and broadening our client base by introducing new
potential clients to the Group. Mr. Liu has also provided business expansion advice to the
Group, including assisting the Company to gain more exposure and enhance brand
awareness to promote the Group with an aim to broaden the Group’s client base.
Reasons for the Pre-[REDACTED] Investment
The Group formed the intention to list on the Stock Exchange in October 2015 and commenced
its preparation for the [REDACTED] before the Pre-[REDACTED] Investment. Mr. Liu was
introduced to the Group through the Sponsor and he decided to invest in the Group because he was
attracted by our growth potential and prospects. Mr. Chan accepted, on behalf of the Company, the
offer made by Mr. Liu in March 2016 at such a significant dilution of his equity interests in the
Company, after his consideration, among other things, of (i) our cashflow and financial position to fund
the [REDACTED] expenses and to undertake new and on-going projects simultaneously based on the
reasons as stipulated in “Business – Reasons for and Benefits of the [REDACTED] and the
[REDACTED]” in this document; (ii) the terms of the Pre-[REDACTED] Investment including the
absence of any special rights (other than the right to nominate directors), exit option or profit
guarantee; and (iii) the strategic benefits to be brought by Mr. Liu to the Group under the Pre-
[REDACTED] Investment. As such, the Directors believe that the Pre-[REDACTED] Investment is
beneficial to the Group as whole.
The Company will retain the Directors recommended by W & Q Investment in the Group after
[REDACTED] in light of their contribution to the Group and such Directors would be subject to the
retirement and re-appointment requirements under the Articles of Association and relevant GEM
Listing Rules.
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HISTORY, DEVELOPMENT AND REORGANISATION
Mr. Liu, being one of the Controlling Shareholders, decided not to hold a directorship position in
the Company in order to focus on his other investment businesses. However, there is nothing comes to
the Company’s attention that Mr. Liu is a shadow director of the Company, given that (i) W & Q
Investment is only entitled to appoint two Directors, namely Miss. Zhang Qi and Mr. Law Wing Kit
under the Subscription Agreements, which do not form the majority of the Board (no matter including
or excluding independent non-executive Directors) and such director nomination right will cease to be
effective upon [REDACTED]; (ii) the Company has no existing corporate governance structure which
allows Mr. Liu to assume a status and function of a director so as to make himself responsible as if he
were a Director; (iii) Mr. Liu did not and will not attend any meetings of the Board and each of the
Directors confirms that he or she, in the capacity of a Director, is not accustomed to act on Mr. Liu’s
instructions or directions; and (iv) Mr. Liu is not a person in accordance with whose directions or
instructions the directors, or a majority of the directors, of the Company are accustomed to act.
Although Miss. Zhang Qi and Mr. Law Wing Kit were nominated by W & Q Investment as
Directors of the Company pursuant to the Subscription Agreements, they, under common law and
statutory duties under relevant company laws, owe a fiduciary duty and a duty of care and skill to the
Company and should act within the best interests of the Company, in good faith, and honestly.
Moreover, according to Rule 2.06 of the GEM Listing Rules, all Directors (including Miss. Zhang Qi
and Mr. Law Wing Kit) should act in the interest of all Shareholders as a whole, particularly where the
public represents only a minority of the Shareholders. In addition, the Directors shall owe a duty to
(including, without limitation) (i) exercise independent judgment; (ii) act in accordance with the powers
set out in the Company’s constitutional documents; (iii) promote the success of the Company for the
benefit of all its shareholders; (iv) exercise reasonable care, skill and diligence; and (v) avoid conflicts
of interest. The foregoing expressly regulates that by law Miss. Zhang Qi and Mr. Law Wing Kit, being
the Directors, shall act within the best interests of the Company, in good faith, and honestly and take
into account the interests of all Shareholders as a whole. They shall not only represent the interest of W
& Q Investment on the Board at present or after [REDACTED].
Save as the aforesaid directorships, Mr. Liu and W & Q Investment are not involved in the
appointment and nominations of other Directors (including the independent non-executive Directors),
as well as the management and daily operations of the Group. Also, the board composition and decision
making of the Company and Aeso Limited remained to be under the control of Mr. Chan during the
Track Record Period and up to the Latest Practicable Date. The control of the Group has not changed
since W & Q Investment became a Controlling Shareholder on 8 April 2016 due to the following
factors:
(i) At Shareholder level. Mr. Chan has been the only beneficial owner of the Company and
all other members of the Group since their respective incorporation prior to the Pre-
[REDACTED] Investment (including the full financial year immediately preceding the
date of this document). Notwithstanding the Pre-[REDACTED] Investment which was
completed on 8 April 2016, Mr. Chan continued to be the beneficial owner and the
majority shareholder of the Company, owning 51% of the total issued share capital of the
Company through Acropolis Limited which is wholly-owned by Mr. Chan and he should
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HISTORY, DEVELOPMENT AND REORGANISATION
be viewed as the controlling shareholder capable of exerting management influence over
the management in the Group during Track Record Period and up to the date of this
document. As such, there has been no change in control of the Company at the
Shareholder level.
(ii) At Board level. The Board consisted of four Directors as at the Latest Practicable Date, of
which two were nominated by Acropolis Limited (including Mr. Chan) and two were
nominated by W & Q Investment. According to the articles of association currently
adopted by the Company, questions arising, unless otherwise specified, at any meeting of
the Board shall be decided by a majority of votes, and Mr. Chan, being the chairman of
the Board, has a second or casting vote in the case of an equality of votes. In addition, the
number of Directors which W & Q Investment is entitled to nominate is limited to two
pursuant to the Subscription Agreements, whereas Acropolis Limited, as the majority
shareholder of the Company, may nominate and appoint additional Directors to the
Company by passing an ordinary resolution in accordance with the Company’s
constitutional documents. As such, Mr. Chan through Acropolis Limited is in a position
to control the composition of a majority of the Board and there has been no change in
control of the Company at the Board level.
(iii) At subsidiary level. The Company has two subsidiaries, namely Aeschylus Limited and
Aeso Limited. Mr. Chan is the only director of Aeschylus Limited and Aeso Limited,
respectively. Neither Mr. Liu nor W & Q Investment has any right to nominate or appoint
directors to the board of directors of the subsidiaries of the Company. All decision-making
power and authority at the subsidiary level are still with Mr. Chan. As such, there has
been no change in control of the Company at the subsidiary level, except the change in
shareholders under the Reorganisation.
(iv) At day-to-day management level. Mr. Chan, being the founder of the Group and the
executive director of Aeso Limited, is responsible for the overall strategic development,
management of the Group and managing client relationship and business marketing. The
majority of the senior management of the Company has been with the Group since 2008
and none of the senior management members is nominated or appointed by W & Q
Investment. In addition, the two non-executive Directors nominated by W & Q Investment
only undertake consultative role in matters concerning the Group at the Board level and
not day-to-day management of the Group, so W & Q Investment is not involved in the
daily operations nor management of the Group. As such, there has been no change in
control of the Company at the day-to-day management level.
As W & Q Investment will remain as a Controlling Shareholder after the [REDACTED] Date, it
is subject to the lock-up applicable restrictions of Rules 13.15 to 13.20 of the GEM Listing Rules and
the Shares held by W & Q Investment are not considered as part of the public float for the purpose of
Rule 11.23 of the GEM Listing Rules.
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HISTORY, DEVELOPMENT AND REORGANISATION
On the above basis, the Sponsor is of the view that the terms of the Pre-[REDACTED]
Investment are under normal commercial terms and confirmed that the Pre-[REDACTED] Investment
is in compliance with the Guidance Letters HKEx-GL29-12 and HKEx-GL43-12 (updated in July
2013) issued by the Stock Exchange since the consideration under the Pre-[REDACTED] Investment
was settled on 8 April 2016, which was more than 28 clear days before the date of the first submission
of the [REDACTED] application to the Stock Exchange in relation to the [REDACTED].
Save as disclosed above, there is no other side agreements, arrangements, understanding or
undertakings between Mr. Chan, Acropolis Limited, Mr. Liu and/or W & Q Investment in connection
with the Pre-[REDACTED] Investment.
BUSINESS MILESTONES
The following sets forth the significant milestones in the Group’s history:
Year Event
2008 Aeso Limited was incorporated as a limited company in Hong Kong and
commenced business in providing fitting-out and renovation (including
alteration and addition) contracting services in Hong Kong
As our first project, we acted as a contractor for a member of a well
known property company group, to undertake renovation work for the
yacht and country club and existing premises of a four-star hotel in Hong
Kong
2009 We acted as a contractor for a Hong Kong listed property developer under
the same well known property company group to undertake fitting-out
work for a club house of its new residential development in Tsuen Wan,
Hong Kong
2010 We acted as a contractor for a Hong Kong listed property developer to
undertake fitting-out work for common lobby areas and various parts of
flat units in respect of its new residential development in Wan Chai, Hong
Kong
We provided renovation contracting services to a renowned deluxe local
jewellery and watch company with interior design service for its retail
flagship store located in Tsimshatsui, Hong Kong of approximately 7,800
sq.ft.
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2011 We acted as a contractor for a member of Hong Kong listed property
developer to undertake renovation and alteration and addition work for its
existing mega shopping mall in Hong Kong
We acted as a contractor for a member of Hong Kong well established
property developer to undertake fitting-out work on show-flats of its new
residential development located in Mid-levels West, Hong Kong
We provided renovation contracting services to the first public utility and
one of the largest energy suppliers in Hong Kong with rebranding and
interior design service for its new chain of customer service centres in
Hong Kong
2012 We acted as a contractor for a Hong Kong government authority to
undertake renovation work for its information centre located in the second
tallest building in Hong Kong
We were awarded the China’s Most Successful Design Awards in a
design competition organised by Successful Design Organisation
(www.SuccessfulDesign.org) for two of our projects with interior design
service provided by us for one of the largest energy suppliers in Hong
Kong
2013 We acted as a contractor for a renowned international coffee brand to
undertake fitting-out work for its retail store located in the shopping mall
in the second tallest building in Hong Kong
2014 We were awarded a project with contract sum of HK$77.0 million to
undertake renovation work for the common area of existing premises
located in the third tallest building in Hong Kong
2015 We were invited by the same Hong Kong government authority to provide
contracting services for renovation work for its general office area,
including reception, meeting room, theaters, lift lobby and corridors,
located in the second tallest building in Hong Kong
2016 We were admitted to the tenderers lists of 12 listed property developers,
four of which are constituent stocks of the Hang Seng Index
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HISTORY, DEVELOPMENT AND REORGANISATION
CORPORATE HISTORY
The following is a brief corporate history of the establishment and major changes in the
shareholdings of the Company and its subsidiaries.
The Company
The Company, being the ultimate holding company of the Group, was incorporated in the
Cayman Islands as an exempted company with limited liability on 10 December 2015. As at the date of
its incorporation, the Company had an authorised share capital of US$50,000 divided into 50,000
shares of par value of US$1.00 each, of which one fully paid Share was allotted and issued to Harneys
Services (Cayman) Limited at par, being the initial subscriber. On 14 December 2015, the one Share
held by the initial subscriber was transferred to Mr. Chan at par. Mr. Chan then transferred the one
Share to Acropolis Limited at par on 5 February 2016. On 21 March 2016, 5,099 Shares were allotted
and issued to Acropolis Limited at par.
On 8 April 2016, 4,900 Shares were allotted and issued to W & Q Investment for an aggregate
consideration of HK$19,913,600 pursuant to the Subscription Agreements, details of which are set out
in “History, Development and Reorganisation – Pre-[REDACTED] Investment” above in this section.
After the aforesaid allotments, the Company was beneficially owned as to 5,100 Shares and 4,900
Shares by Acropolis Limited and W & Q Investment, respectively.
The Company underwent a subdivision of shares on 23 June 2016 whereby each of the existing
issued and unissued ordinary Shares of par value of US$1.00 each was subdivided into 100 ordinary
Shares of par value of US$0.01 each, and such subdivided Shares shall carry the same rights with each
other, such that after the subdivision, the authorized share capital of the Company became US$50,000
divided into 5,000,000 Shares of par value of US$0.01 each, and the issued share capital of the
Company became US$10,000 divided into 1,000,000 Shares of par value of US$0.01 each.
Each of the abovementioned allotment and transfer was properly and legally completed and
settled.
Aeschylus Limited
Aeschylus Limited was incorporated in the BVI as a BVI business company with limited liability
on 16 December 2015. Aeschylus Limited is an investment holding company and it did not and had not
carried on any business activities since its incorporation and up to the Latest Practicable Date.
As at the date of its incorporation, Aeschylus Limited was authorised to issue a maximum of
50,000 shares of a single class with no par value, of which one ordinary share with no par value was
allotted and issued to Mr. Chan. On 5 February 2016, the one ordinary share held by Mr. Chan was
transferred to the Company. After the aforesaid transfer, Aeschylus Limited has become a direct
wholly-owned subsidiary of the Company.
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