I T : (1) PROPOSAL FOR THE PRIVATISATION OF I.T LIMITED BY THE OFFEROR BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 99 OF THE COMPANIES ACT AND (2) PROPOSED WITHDRAWAL OF LISTING OF I.T LIMITED

March 21, 2021 at 06:21 am EDT

If you are in doubt as to any aspect of the Proposal, this Scheme Document or as to the action to be taken, you should consult a licensed securities dealer or registered institution in securities, a bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold or transferred all your shares in I.T Limited, you should at once hand this Scheme Document and the accompanying forms of proxy to the purchaser or transferee or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this Scheme Document, make no representation as to their accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Scheme Document.

This Scheme Document appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of I.T Limited.

BROOKLYN INVESTMENT LIMITED (Incorporated in Cayman Islands with limited liability)

I.T LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 999)

(1) PROPOSAL FOR THE PRIVATISATION OF

I.T LIMITED BY THE OFFEROR

BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 99 OF THE COMPANIES ACT

AND

(2) PROPOSED WITHDRAWAL OF LISTING OF I.T LIMITED

Financial Adviser to the Offeror

Joint Independent Financial Advisers to the Independent Board Committee

Unless the context otherwise requires, capitalised terms used in this Scheme Document shall have the same meaning as those defined in the section headed "Definitions" of this Scheme Document.

A letter from the Board is set out in Part IV of this Scheme Document. A letter from the Independent Board Committee containing its advice to the Disinterested Shareholders in relation to the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement is set out in Part V of this Scheme Document. A letter from the Joint Independent Financial Advisers containing their advice to the Independent Board Committee in connection with the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement is set out in Part VI of this Scheme Document. The Explanatory Statement is set out in Part VII of this Scheme Document. The actions to be taken by the Shareholders are set out in Part II of this Scheme Document.

Notices convening the Scheme Meeting and the SGM to be held at Basement 1, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Friday, 16 April 2021 at 10:00 a.m. and 10:30 a.m. respectively (or, in the case of the SGM, as soon thereafter as the Scheme Meeting shall have concluded or been adjourned) are set out on pages SM-1 to SM-3 and SGM-1 to SGM-3 of this Scheme Document respectively. Whether or not you are able to attend the Scheme Meeting and/or the SGM or any adjournment thereof in person, if you are a Scheme Shareholder, you are strongly urged to complete and sign the enclosed pink form of proxy in respect of the Scheme Meeting and if you are a Shareholder, you are strongly urged to complete and sign the enclosed white form of proxy in respect of the SGM, in accordance with the instructions printed thereon and to lodge them with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong as soon as possible, but in any event no later than the respective times and dates specified in them respectively. The white form of proxy in respect of the SGM will not be valid if it is not so lodged. In the case of the pink form of proxy in respect of the Scheme Meeting, it may also be handed to the Chairman of the Scheme Meeting (who will have absolute discretion on whether or not to accept it) at the Scheme Meeting if it is not so lodged.

Completion and return of a form of proxy for the Scheme Meeting and/or the SGM will not preclude you from attending and voting in person at the relevant meeting or any adjournment thereof, should you so wish, and, in such event, the relevant form of proxy will be revoked by operation of law.

Given the ever-evolving COVID-19 pandemic and the importance of safeguarding the health and safety of the Shareholders and attendees of the Scheme Meeting and the SGM, the Company will implement precautionary measures at the venue of the Scheme Meeting and the SGM which include but are not limited to:

(i) All shareholders, proxies and other attendees are subject to compulsory body temperature check at the entrance of the venue. Any person with a body temperature of over 37.5 degrees Celsius or has any flu-like symptoms or is otherwise unwell will not be permitted to enter into the venue.
(ii) All attending shareholders, proxies and other attendees are required to submit at the entrance of the venue a completed health declaration form (a copy can be downloaded from the Company's website atwww.ithk. com). Any shareholder, proxy and other attendee who has travelled to areas outside of Hong Kong at any time in the preceding 14 days of the Scheme Meeting and the SGM, or is subject to any compulsory quarantine prescribed by the Department of Health of Hong Kong, or has close contact with confirmed case(s) and/or probable case(s) of COVID-19 patient(s), or lives with or has close contact with any person under home quarantine or self-quarantine in relation to COVID-19 will be denied entry into the venue.
(iii) All shareholders, proxies and other attendees are required to clean their hands with alcohol-based hand sanitizer before entering the venue. All participants must wear a surgical mask and observe good personal hygiene throughout the Scheme Meeting and the SGM.
(iv) Appropriate distance and space will be maintained in the seating plan. As the meeting room is of limited capacity, the Company may have other alternative arrangement at the venue as may be necessary.
(v) The Company will not provide refreshments and will not distribute corporate gifts.
(vi) If any participant declines to comply with any of the abovementioned measures, the Company reserves the right to deny such person to enter into the venue or to request him/her to leave the venue.
(vii) The Company shall follow the latest directions under the Prevention and Control of Disease (Prohibition on Group Gathering) Regulation and implement further precautionary measures as and when necessary.

The Company strongly advises the Scheme Shareholders and Shareholders to appoint the Chairman of the Scheme Meeting and the Chairman of the SGM, respectively, as their proxy to vote on the resolution as an alternative to attending and voting at the Scheme Meeting and SGM in person.

This Scheme Document is issued jointly by the Offeror and the Company. In case of inconsistency, the English language text of this Scheme Document shall prevail over the Chinese language text.

22 March 2021

TABLE OF CONTENTS

Page

PART I - DEFINITIONS ......................................................

PART II - ACTIONS TO BE TAKEN ............................................

PART III - EXPECTED TIMETABLE ...........................................

PART IV - LETTER FROM THE BOARD .......................................

PART V - LETTER FROM THE INDEPENDENT BOARD COMMITTEE .............

1 9 13 15 50

PART VI - LETTER FROM THE JOINT INDEPENDENT

FINANCIAL ADVISERS ...........................................

PART VII - EXPLANATORY STATEMENT ...................................... 127

APPENDIX I - FINANCIAL INFORMATION OF THE GROUP ......................

I-1

APPENDIX II - VALUATION OF THE OTHER OPERATIONS ...................... II-1

APPENDIX III - LETTERS FROM THE JOINT INDEPENDENT FINANCIAL

ADVISERS AND THE AUDITOR ON

UNAUDITED FINANCIAL INFORMATION ....................... III-1

APPENDIX IV - GENERAL INFORMATION ..................................... IV-1

APPENDIX V - SCHEME OF ARRANGEMENT .................................. V-1

APPENDIX VI - TRADING UPDATE ANNOUNCEMENT .......................... VI-1

NOTICE OF SCHEME MEETING ............................................... SM-1

NOTICE OF SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SGM-1

In this Scheme Document, the following expressions have the meanings set out below, unless the context requires otherwise:

"ABS 2000 Trust"	an irrevocable discretionary trust of which HSBCITL is the trustee, and
Chairman (in his personal capacity), CCO (in his personal capacity),
their respective spouses and family members are the beneficiaries
"ABS 2000 Trust Holding	Effective Convey Limited, Fine Honour Limited, Sure Elite Limited,
Companies"	Fresh Start Holdings Limited and Fortune Symbol Limited, which are
directly wholly owned by HSBCITL (on trust for the benefits of
Chairman (in his personal capacity), CCO (in his personal capacity),
their spouses and family members) and which are the direct holders of
the Shares owned by the ABS 2000 Trust
"acting in concert"	has the meaning given to it in the Takeovers Code, and "persons acting
in concert" shall be construed accordingly
"Applicable Laws"	with respect to any person, any laws, rules, regulations, guidelines,
directives, treaties, judgments, decrees, orders or notices of any
Authority that is applicable to such person
"Approvals"	licences, approvals, permits, consents, permissions, clearances and
registrations required by any Authority
"associate"	has the meaning ascribed to it in the Takeovers Code
"Authority"	any relevant government, administrative or regulatory body, or court,
tribunal, arbitrator or governmental agency or authority or department
(including any relevant securities exchange) and whether supranational,
national, regional or local
"Beneficial Owner"	any beneficial owner of the Shares whose Shares are registered in the
name of a Registered Owner other than himself or herself
"Board"	the board of Directors
"Brand Operations"	the Group's business operations relating to A Bathing Ape, AAPE by A
Bathing Ape and associated sub-brands thereof, including Baby Milo,
Milo Stores, BAPY, BAPE Black, and Mr. Bathing Ape
"business day"	a day on which the Stock Exchange is open for the transaction of
business
"Cancellation Price"	the cancellation price of HK$3 per Non-Founder Scheme Share
"CCASS"	the Central Clearing and Settlement System established and operated by
Hong Kong Securities Clearing Company Limited
"CCASS Participant"	a person admitted to participate in CCASS as a participant, including an
Investor Participant
1

"CCO"

Mr. Sham Kin Wai, an executive Director and the chief creative officer of the Company

"Chairman"

Mr. Sham Kar Wai, an executive Director, the chairman of the Board and the chief executive officer of the Company

"Challenge Capital"

Challenge Capital Management Limited, a corporation licensed by the SFC 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

"China Tonghai"

China Tonghai Capital Limited, a corporation licensed by the SFC to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO

"Companies Act"

the Companies Act 1981 of Bermuda

"Company"

I.T Limited, an exempted company incorporated in Bermuda with limited liability, the shares of which are currently listed on the Main Board of the Stock Exchange (stock code: 999)

"Condition(s)"

the condition(s) to the Proposal as set out in the section headed "Conditions of the Proposal" in the letter from the Board in Part IV of this Scheme Document

"Consortium Agreement"

the consortium agreement dated 4 December 2020 entered into between the Joint Offerors, Chairman and CCO (each in his personal capacity as a member of the Founder Group) in connection with the Proposal, the key terms of which are further described in the section headed "Consortium Agreement" in the letter from the Board in Part IV of this Scheme Document

"Court"

the Supreme Court of Bermuda

"CVC"

CVC Asia Pacific Limited, a company incorporated in Hong Kong, and its affiliates together with CVC Capital Partners SICAV-FIS S.A. and its subsidiaries and funds and investment vehicles managed or advised by the aforementioned entities (but excluding, for the avoidance of doubt, portfolio companies in which such funds and investment vehicles hold an interest)

"CVC Capital Partners

Asia V Limited"

"CVC Funds"

the general partner of CVC Funds

CVC Capital Partners Asia V L.P. (96.15%), CVC Capital Partners Investment Asia V L.P. (1.58%) and CVC Capital Partners Asia V Associates L.P. (2.27%) which ultimately own CVC Holdco

"CVC Holdco"

Brooklyn Limited, a company incorporated in Hong Kong with limited liability which is wholly-owned by the CVC Funds

"CVC Network"

CVC Holdco, CVC and CVC Funds

"Director(s)"

the director(s) of the Company

"Disinterested Shareholders"

all of the Scheme Shareholders, excluding any Scheme Shareholders acting in concert with the Offeror (which, for the avoidance of doubt, shall include each member of the Founder Group and any Scheme Shareholder who is interested in or involved in the Joint Offeror Cooperation Arrangement). For the avoidance of doubt, the Disinterested Shareholders include any member of the Morgan Stanley group acting in the capacity of an exempt principal trader or exempt fund manager for the purpose of the Takeovers Code

"EBITDA"

profit before income tax, share of losses of joint ventures, share of profit of an associate, finance income and finance costs, impairment of goodwill, property, furniture and equipment and right-of-use assets, depreciation and amortisation

"Effective Date"

the date on which the Scheme becomes effective in accordance with the Companies Act and the Conditions

"EquityCo"

Brooklyn Company Limited, an exempted company incorporated in the Cayman Islands with limited liability, whose shareholding as at the Latest Practicable Date is detailed in the section headed "Information on the Offeror Group" in the letter from the Board in Part IV of this Scheme Document

"Executive"

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

"exempt fund managers"

"exempt principal traders"

has the meaning ascribed to it in the Takeovers Code has the meaning ascribed to it in the Takeovers Code

"Explanatory Statement"

the explanatory statement in relation to the Scheme, the text of which is set out in Part VII of this Scheme Document

"Founder Cancellation

Consideration"

the consideration to be received by members of the Founder Group holding Founder Scheme Shares for the cancellation of their Founder Scheme Shares under the Scheme, being the crediting of all of the unpaid EquityCo shares held by Founder Holdco (and approximately 13% of unpaid EquityCo shares that Founder Holdco has directed EquityCo to issue to CVC Holdco directly as part of the Joint Offeror Cooperation Arrangement) as being fully paid in an amount equivalent to the aggregate amount of the Cancellation Price per Scheme Share with respect to all the Founder Scheme Shares pursuant to the Joint Offeror Cooperation Arrangement

"Founder Group"

(a) Chairman (in his personal capacity);
(b) CCO (in his personal capacity);
(c) Ms. Sham Sau Han;

PART I
"Founder Holdco"	3WH (BVI) Limited, a company incorporated in the British Virgin
Islands with limited liability and a member of the Founder Group
"Founder Irrevocable	the irrevocable undertakings given by each member of the Founder
Undertakings"	Group in respect of the Founder Scheme Shares held by them as
described in the section headed "Founder Irrevocable Undertakings" in
the letter from the Board in Part IV of this Scheme Document
"Founder Scheme Shares"	the Scheme Shares held by the Founder Group
"Framework Agreement"	the restructuring framework agreement dated 30 January 2021 signed
between the Joint Offerors, Chairman, CCO (each in his personal
capacity as a member of the Founder Group) and EquityCo, the key
terms of which are further described in the section headed "Key terms of
the Framework Agreement" in the letter from the Board in Part IV of
this Scheme Document
"Group"	the Company and its subsidiaries
"HK$"	Hong Kong dollars, the lawful currency of Hong Kong
"HKSCC Nominees"	HKSCC Nominees Limited
"Hong Kong"	the Hong Kong Special Administrative Region of the People's Republic
of China
"HSBCITL"	HSBC International Trustee Limited, a company incorporated in the
Cayman Islands with limited liability
"Implementation	the agreement entered into between the Offeror and the Company on 5
Agreement"	December 2020 pursuant to which the parties have agreed to pursue the
Proposal, the key terms of which are further described in the section
headed "Implementation Agreement" in the letter from the Board in Part
IV of this Scheme Document
"Independent Board	the independent board committee of the Company comprising the
Committee"	following independent non-executive Directors: Dr. Wong Tin Yau,
Kelvin, JP; Mr. Francis Goutenmacher; and Mr. Tsang Hin Fun,
Anthony
"Interim Results	the announcement of the Company dated 29 October 2020 relating to its
Announcement"	interim results for the six months ended 31 August 2020
4

(d) Ms. Sham Sau Wai;
(e) Mr. Fung Yuk Hung;
(f) the ABS 2000 Trust Holding Companies; and
(g) Founder Holdco

"Investor Participant"

a person admitted to participate in CCASS as an investor participant

"Joint Announcement"

the joint announcement dated 6 December 2020 jointly issued by the Offeror and the Company

"Joint Independent Financial

Advisers"

Challenge Capital and China Tonghai, being the joint independent financial advisers to advise the Independent Board Committee on the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement

"Joint Offeror Cooperation

Arrangement"

"Joint Offerors"

(a) the cancellation of the Founder Scheme Shares in consideration for the Founder Cancellation Consideration;
(b) the entry by the relevant members of the Founder Group, CVC Holdco and/or EquityCo into the Consortium Agreement and the Shareholders' Agreement; and
(c) the transactions in connection with the Restructuring (being the restructuring of the Group and the Offeror Group (as applicable) pursuant to: (a) the Framework Agreement (which terminated and superseded the Restructuring Term Sheet); (b) the implementing agreements relating to asset or share transfers, transitional or long-term services and alternative arrangements in relation to the Restructuring; and (c) the Refinancing Documents)

Founder Group and CVC Holdco, and a "Joint Offeror" means each of them

"Last Trading Date"

30 November 2020, being the last day on which Shares were traded on the Stock Exchange prior to the publication of the Joint Announcement

"Latest Practicable Date"

19 March 2021, being the latest practicable date prior to the date of this Scheme Document for the purpose of ascertaining certain information contained in this Scheme Document

"Listing Rules"

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

"Long Stop Date"

30 August 2021 (or any other date as may be agreed by the Offeror and the Company and as permitted by the Executive)

"Meeting Record Date"

Friday, 16 April 2021, or such other date to be announced to the Shareholders, being the record date for the purposes of determining the entitlement of Scheme Shareholders to attend and vote at the Scheme Meeting and the entitlement of Shareholders to attend and vote at the SGM

"Morgan Stanley"

Morgan Stanley Asia Limited, a company incorporated in Hong Kong with limited liability and licensed under the SFO to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 5 (advising on futures contracts), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities, and the financial adviser to the Offeror in connection with the Proposal

"Non-Founder Scheme

Shareholders"

the registered holders of the Non-Founder Scheme Shares

"Non-Founder Scheme Shares" the Scheme Shares which are not held by the Founder Group

"offer period"

has the meaning ascribed to it in the Takeovers Code, which commenced on 6 December 2020

"Offeror"

Brooklyn Investment Limited, an exempted company incorporated in the Cayman Islands with limited liability, which is wholly-owned by EquityCo

"Offeror Group"

EquityCo, the Offeror and the Offeror's subsidiaries (which will include the Group upon the Scheme becoming effective)

"Other CCASS Participant"

a broker, custodian, nominee or other relevant person who is, or has deposited Shares with, a CCASS Participant

"Other Operations"

all the other operations of the Group other than the Brand Operations prior to completion of the Restructuring

"PRC"

the People's Republic of China, but for the purpose of this Scheme Document, excluding Hong Kong, the Macau Special Administrative Region and Taiwan

"Pre-Condition"

the pre-condition to the making of the Proposal and the implementation of the Scheme, being the SAMR issuing a notice approving the Proposal and the Scheme, or the statutory clearance period specified by the SAMR pursuant to the PRC Anti-Monopoly Law, including any extension of such period, having elapsed and no objection having been raised or qualifications or requirements imposed by the SAMR in relation to the Proposal or the Scheme

"Pre-Condition Long

Stop Date"

the date which is 180 days after the date of the Joint Announcement (or any other date as may be agreed by the Offeror and the Company and as permitted by the Executive)

"Proposal"

the proposal for the privatisation of the Company by the Offeror by way of the Scheme, on the terms and subject to the conditions as described in this Scheme Document

"Record Date"

Wednesday, 28 April 2021, or such other date to be announced to the Shareholders, being the record date for the purposes of determining the entitlements of the Non-Founder Scheme Shareholders to the Cancellation Price under the Scheme (whereas the members of the Founder Group holding Founder Scheme Shares will receive the Founder Cancellation Consideration under the Scheme pursuant to the Joint Offeror Cooperation Arrangement)

"Refinancing Documents"

the debt commitment letter issued by BNP Paribas and Standard Chartered Bank (Hong Kong) Limited to the Offeror on 6 December 2020 in connection with the Restructuring, and any financing, security or ancillary documents proposed to be entered into pursuant to the commitment letter, the details of which are further set out in the section headed "Information relating to the Brand Operations" in the letter from the Board in Part IV of this Scheme Document

"Refinancing Proceeds"

the total amount of loan to be drawn down by the entities dedicated to the Brand Operations under the five-year term loan facility pursuant to the Refinancing Documents (being up to HK$1.8 billion)

"Registered Owner"

any person (including, without limitation, a nominee, trustee, depositary or any other authorised custodian or third party) whose name is entered in the register of members of the Company as a holder of the Shares

"Relevant Period"

the period commencing from 6 June 2020, being the date falling six months prior to 6 December 2020, being the commencement date of the offer period, up to and including the Latest Practicable Date

"Restructuring"

the restructuring of the Group and the Offeror Group (as applicable) which commenced after the date of the Joint Announcement and to be effected and completed after the Effective Date, such that: (a) the Group will separate its currently co-mingled Brand Operations and Other Operations; and (b) EquityCo will continue to own the Brand Operations, and Founder Holdco will own the Other Operations

"Restructuring Term Sheet"

the Restructuring term sheet dated 5 December 2020 signed between the Joint Offerors, Chairman, CCO (each in his personal capacity as a member of the Founder Group) and EquityCo, which has been terminated and superseded by the Framework Agreement

"SAMR"

The State Administration for Market Regulation of the PRC

"Scheme"

the scheme of arrangement between the Company and the Scheme Shareholders under section 99 of the Companies Act involving, among other things, the cancellation of all of the Scheme Shares

"Scheme Document"

"Scheme Meeting"

this composite scheme document (which contains, among other things, further details of the Proposal), the accompanying proxy forms and notices of the Scheme Meeting and the SGM, despatched by the Offeror and the Company to all Shareholders as required by the Takeovers Code the meeting of the Scheme Shareholders to be convened at the direction of the Court at Basement 1, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong on Friday, 16 April 2021 at 10:00 a.m., at which the Scheme (with or without modification) will be voted upon, or any adjournment thereof

"Scheme Shareholders"

the registered holders of the Non-Founder Scheme Shares and the Founder Scheme Shares as at the Record Date

"Scheme Shares"

the Shares in issue on the Record Date

PART I	DEFINITIONS
"SFC"	the Securities and Futures Commission of Hong Kong
"SFO"	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
Kong)
"SGM"	the special general meeting of the Company to be convened at Basement
1, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong
Kong, Hong Kong on Friday, 16 April 2021 at 10:30 a.m. (or
immediately after the conclusion or adjournment of the Scheme
Meeting) for the purposes of passing all necessary resolutions for,
among other things, the implementation of the Scheme or any
adjournment thereof
"Share(s)"	the ordinary share(s) of HK$0.10 each in the share capital of the
Company
"Shareholder(s)"	the registered holder(s) of the Shares
"Shareholders' Agreement"	the shareholders' agreement dated 5 December 2020 entered into
between Chairman, CCO (each in his personal capacity as a member of
the Founder Group), the Joint Offerors and EquityCo, (as amended by
the deed of amendment relating to the Shareholders' Agreement dated
19 March 2021 entered into between the same parties), the key terms of
which are further described in the section headed "Shareholders'
Agreement" in the letter from the Board in Part IV of this Scheme
Document
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Takeovers Code"	the Hong Kong Code on Takeovers and Mergers
"Trading Update	the announcement dated 26 February 2021 issued by the Company in
Announcement"	relation to the unaudited third quarter trading update for the three
months ended 30 November 2020
"US" or "United States"	the United States of America
"Valuation"	the fair value of 49.35% equity interest of the Other Operations as at 31
December 2020 as stated in the valuation report issued by the Valuer
"Valuer"	Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an
independent valuer
"%"	per cent

All references in this Scheme Document to times and dates are references to Hong Kong times and dates, except as otherwise specified and other than references to the expected date of the Court hearing of the petition for the sanction of the Scheme and the Effective Date, which are the relevant dates in Bermuda. For reference only, Bermuda time is 11 hours behind Hong Kong time as at the date of this Scheme

Document.

ACTIONS TO BE TAKEN BY SHAREHOLDERS

For the purposes of determining the entitlement of the Scheme Shareholders to attend and vote at the Scheme Meeting and the SGM, the register of members of the Company will be closed from Tuesday, 13 April 2021 to Friday, 16 April 2021 (both dates inclusive). In order to qualify to vote at the Scheme Meeting and the SGM, all transfers of share ownership accompanied by the relevant share certificates must be lodged with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong before 4:30 p.m. on Monday, 12 April 2021. A subsequent purchaser of Shares will need to obtain a proxy form from the transferor if he or she wishes to attend or vote at the Scheme Meeting or the SGM.

A pink form of proxy for use at the Scheme Meeting and a white form of proxy for use at the SGM are enclosed with this Scheme Document.

Whether or not you are able to attend the Scheme Meeting and/or the SGM or any adjournment thereof in person, if you are a Scheme Shareholder, you are strongly urged to complete and sign the enclosed pink form of proxy in respect of the Scheme Meeting, and if you are a Shareholder, you are strongly urged to complete and sign the enclosed white form of proxy in respect of the SGM, in accordance with the instructions printed thereon, and to lodge them at the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

In order to be valid, the pink form of proxy for use at the Scheme Meeting should be lodged no later than 10:00 a.m. on Wednesday, 14 April 2021, which is 48 hours before the time appointed for holding the Scheme Meeting or any adjournment thereof. The pink form of proxy may also be handed to the Chairman of the Scheme Meeting (who will have absolute discretion on whether or not to accept it) at the Scheme Meeting. The white form of proxy for use at the SGM should be lodged no later than 10:30 a.m. on Wednesday, 14 April 2021, which is 48 hours before the time appointed for holding the SGM or any adjournment thereof, failing which it will not be valid. Please note that Friday, 2 April 2021 to Tuesday, 6 April 2021 are not working days in Hong Kong and the offices of Computershare Hong Kong Investor Services Limited will not be open on these days for physical delivery of forms of proxy.

The completion and return of a form of proxy for the Scheme Meeting and/or the SGM will not preclude you from attending and voting in person at the relevant meeting or any adjournment thereof should you so wish, and, in such event, the relevant form of proxy will be revoked by operation of law.

If you do not appoint a proxy and you do not attend and vote at the Scheme Meeting and/or the SGM, you will still be bound by the outcome of the Scheme Meeting and/or the SGM if, among other things, the resolutions are passed by the requisite majorities of the Scheme Shareholders or the Disinterested Shareholders (as the case may be). You are therefore strongly urged to attend and vote at the Scheme Meeting and/or the SGM in person or by proxy.

Voting at the Scheme Meeting and the SGM will be taken by poll as required under the Listing Rules and the Takeovers Code.

The Company and the Offeror will make an announcement in relation to the results of the Scheme Meeting and the SGM on Friday, 16 April 2021 by no later than 7:00 p.m. and, if all the resolutions are passed at those meetings, further announcements will be made in relation to, among other things, the results of the hearing of the petition for the sanction of the Scheme by the Court and, if the Scheme is sanctioned, the Record Date, the Effective Date and the date of withdrawal of listing of Shares from the Stock Exchange in accordance with the requirements of the Takeovers Code and the Listing Rules.

ACTIONS TO BE TAKEN BY BENEFICIAL OWNERS WHOSE SHARES ARE HELD BY A REGISTERED OWNER OR DEPOSITED IN CCASS

No person shall be recognised by the Company as holding any Shares on trust.

If you are a Beneficial Owner whose Shares are registered in the name of a nominee, trustee, depositary or any other authorised custodian or third party, you should contact such Registered Owner to give instructions to and/or to make arrangements with such Registered Owner as to the manner in which the Shares beneficially owned by you should be voted at the Scheme Meeting and/or the SGM.

If you are a Beneficial Owner who wishes to attend the Scheme Meeting and/or the SGM personally, you should:

(a) contact the Registered Owner directly to make the appropriate arrangements with the Registered Owner to enable you to attend and vote at the Scheme Meeting and/or the SGM and, for such purpose, the Registered Owner may appoint you as its proxy; or
(b) arrange for some or all of the Shares registered in the name of the Registered Owner to be transferred into your own name, if you wish to vote (in person or by proxy) at the Scheme Meeting and/or the SGM.

The appointment of a proxy by the Registered Owner at the Scheme Meeting and/or the SGM shall be in accordance with all relevant provisions in the bye-laws of the Company.

In the case of the appointment of a proxy by the Registered Owner, the relevant forms of proxy shall be completed and signed by the Registered Owner and shall be lodged in the manner and no later than the latest time for lodging the relevant forms of proxy as more particularly set out in this Scheme Document.

The completion and return of a form of proxy for the Scheme Meeting and/or the SGM will not preclude the Registered Owner from attending and voting in person at the relevant meeting or any adjournment thereof should he/she/it so wish, and, in such event, the relevant form of proxy will be revoked by operation of law.

Instructions to and/or arrangements with the Registered Owner should be given or made in advance of the relevant latest time for the lodgement of the forms of proxy in respect of the Scheme Meeting and/ or the SGM in order to provide the Registered Owner with sufficient time to complete his/her/its forms of proxy accurately and to submit them by the deadline. To the extent that any Registered Owner requires instructions from or arrangements to be made with any Beneficial Owner at a particular date or time in advance of the relevant latest time for the lodgement of the forms of proxy in respect of the Scheme Meeting and the SGM, such Beneficial Owner should comply with the requirements of such Registered Owner.

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered under the name of HKSCC Nominees, you must, unless you are an Investor Participant, contact your broker, custodian, nominee or other relevant person who is, or has, in turn, deposited such Shares with, a CCASS Participant regarding voting instructions to be given to such persons. The procedure for voting in respect of the Scheme by the Investor Participants and the Other CCASS Participants with respect to Shares registered under the name of HKSCC Nominees shall be in accordance with the "General Rules of CCASS" and the "CCASS Operational Procedures" in effect from time to time.

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered under the name of the HKSCC Nominees, you may also elect to become a Registered Owner, and thereby have the right to attend and vote (in person or by proxy) at the Scheme Meeting (if you are a Scheme Shareholder) and the SGM (as a Shareholder). You can become a Registered Owner by withdrawing some or all of your Shares from CCASS and arranging for such Shares to be transferred and registered in your own name. For withdrawal of Shares from CCASS and registration thereof, you will be required to pay to CCASS a withdrawal fee per board lot withdrawn, a registration fee for each share certificate issued, stamp duty on each transfer instrument and, if your Shares are held through a financial intermediary, any other relevant fees charged by your financial intermediary. You should contact your broker, custodian, nominee or other relevant person in advance of the latest time for lodging transfers of the Shares into your name so as to qualify to attend and vote at the Scheme Meeting and SGM, in order to provide such broker, custodian, nominee or other relevant person with sufficient time to withdraw the Shares from CCASS and register them in your name.

Only Scheme Shareholders whose Scheme Shares are registered in their own names in the register of members of the Company on the Meeting Record Date will be counted as members of the Company for the purpose of calculating whether or not a majority in number of members of the Company have approved the Scheme at the Scheme Meeting under section 99 of the Companies Act. In accordance with the direction from the Court, HKSCC Nominees will be counted as one Scheme Shareholder and may vote for or against the Scheme according to the majority of voting instructions it receives. Beneficial Owners who wish to individually vote or be counted for such purposes should make arrangements to be registered as a member of the Company in their own name prior to the Meeting Record Date.

EXERCISE YOUR RIGHT TO VOTEIF YOU ARE A SHAREHOLDER OR A BENEFICIAL OWNER, YOU ARE STRONGLY URGED TO EXERCISE YOUR RIGHT TO VOTE OR GIVE INSTRUCTIONS TO THE RELEVANT REGISTERED OWNER TO VOTE IN PERSON OR BY PROXY AT THE SCHEME MEETING AND/OR AT THE SGM.

IF YOU WISH TO BE COUNTED INDIVIDUALLY IN THE CALCULATION OF THE "MAJORITY IN NUMBER" REQUIREMENT AT THE SCHEME MEETING, YOU SHOULD MAKE ARRANGEMENTS TO BECOME A REGISTERED OWNER OF SOME OR ALL OF YOUR SHARES. IF YOU KEEP ANY SHARES IN A SHARE LENDING PROGRAMME, YOU ARE STRONGLY URGED TO RECALL ANY OUTSTANDING SHARES ON LOAN TO AVOID MARKET PARTICIPANTS USING BORROWED STOCK TO VOTE.

IF YOU ARE A BENEFICIAL OWNER WHOSE SHARES ARE DEPOSITED IN CCASS, THE OFFEROR AND THE COMPANY ENCOURAGE YOU TO PROVIDE HKSCC NOMINEES WITH INSTRUCTIONS OR MAKE ARRANGEMENTS WITH HKSCC NOMINEES IN RELATION TO THE MANNER IN WHICH THOSE SHARES SHOULD BE VOTED AT THE SCHEME MEETING AND/OR AT THE SGM WITHOUT DELAY AND/OR WITHDRAWN FROM CCASS AND TRANSFERRED INTO YOUR OWN NAME (AS DETAILED IN THE SECTION "ACTIONS TO BE TAKEN - ACTIONS TO BE TAKEN BY BENEFICIAL OWNERS WHOSE SHARES ARE HELD BY A REGISTERED OWNER OR DEPOSITED IN CCASS" ABOVE).

IF YOU ARE A REGISTERED OWNER HOLDING SHARES ON BEHALF OF BENEFICIAL OWNERS, YOU SHOULD INFORM THE RELEVANT BENEFICIAL OWNERS ABOUT THE IMPORTANCE OF EXERCISING THEIR RIGHT TO VOTE. YOU SHOULD ALSO REMIND THE RELEVANT BENEFICIAL OWNERS THAT IF THEY WISH TO BE COUNTED INDIVIDUALLY IN THE CALCULATION OF THE "MAJORITY IN NUMBER" REQUIREMENT AT THE SCHEME MEETING, THEY SHOULD MAKE ARRANGEMENTS TO BECOME A REGISTERED OWNER OF SOME OR ALL OF THEIR SHARES.

IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD CONSULT YOUR LICENSED SECURITIES DEALER OR REGISTERED INSTITUTION IN SECURITIES, BANK MANAGER, SOLICITOR, PROFESSIONAL ACCOUNTANT OR OTHER

PROFESSIONAL ADVISER.

The timetable set out below is indicative only and is subject to change. Any changes to the timetable will be jointly announced by the Offeror and the Company. Unless otherwise specified, all times and dates refer to Hong Kong local dates and times.

Hong Kong time

(unless otherwise specified)

Date of despatch of this Scheme Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 22 March 2021

Latest time for lodging transfers of Shares in order to become entitled to vote at the

Scheme Meeting and the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Monday, 12 April 2021

Register of members of the Company closed for determining entitlements of the Scheme Shareholders to attend and vote at the Scheme Meeting and entitlements of the Shareholders to attend and vote at the SGM (Note 1) . . . . . . . . . . . . . . . . Tuesday, 13 April 2021 to

Friday, 16 April 2021 (both days inclusive)

Latest time for lodging pink forms of proxy in respect of the Scheme Meeting (Note 2) . . . . . . . . . . . . . . . 10:00 a.m. on Wednesday, 14 April 2021

(or alternatively to be handed to the chairman of the Scheme Meeting)

Latest time for lodging white forms of proxy in respect of the SGM (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . 10:30 a.m. on Wednesday, 14 April 2021

MeetingRecordDate ................................................ Friday,16April2021

Scheme Meeting (Note 3) .................................. 10:00a.m.onFriday,16April2021

SGM (Note 3) ........................................... 10:30a.m.onFriday,16April2021

(or immediately after the conclusion or adjournment of the Scheme Meeting)

Announcement of the results of theSchemeMeetingandtheSGM .................................... nolaterthan7:00p.m.

on Friday, 16 April 2021

Expected last time for trading of Shares

on the Stock Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Tuesday, 20 April 2021

Latest time for lodging transfers of Shares in order to

qualify for entitlements under the Scheme . . . . . . . . . . . . . . . . . . 4:30 p.m. on Thursday, 22 April 2021

Register of members of the Company closed for determining entitlements under the Scheme (Note 4) . . . . . . . . . . . . from Friday, 23 April 2021 onwards

Court hearing of the petition for the sanctionoftheScheme ............................................ Monday,26April2021

(Bermuda time)Announcement of (1) the results of the Court hearing for the petition for the sanction of the Scheme; (2) the expected Effective Date; and (3) the expected date of withdrawal of listing of the Shares on the Stock Exchange . . . . . . . . . . . . . . . . . . at or before 8:30 a.m.

on Tuesday, 27 April 2021

RecordDate ................................................... Wednesday,28April2021

Effective Date (Note 5) ........................................... Wednesday,28April2021

(Bermuda time)

Announcement of (1) the Effective Date; and

(2) the withdrawal of listing of the Shares on theStockExchange ............................................ Wednesday,28April2021

Withdrawal of listing of Shares on the Stock Exchange becomes effective (Note 6) . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 30 April 2021

Cheques for the cash payment under the Scheme to be despatched (Note 7) ................................... onorbeforeFriday,7May2021

Notes:

1. The register of members of the Company will be closed during such period for the purposes of determining the entitlement of the Scheme Shareholders to attend and vote at the Scheme Meeting and the entitlement of the Shareholders to attend and vote at the SGM. This book closure period is not for determining entitlements under the Scheme.
2. The pink form of proxy in respect of the Scheme Meeting and the white form of proxy in respect of the SGM should be completed and signed in accordance with the instructions respectively printed thereon and lodged with the Company's Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183
Queen's Road East, Wanchai, Hong Kong, as soon as possible, but in any event no later than the respective times and dates specified in them respectively. The white form of proxy in respect of the SGM will not be valid if it is not so lodged. In the case of the pink form of proxy in respect of the Scheme Meeting, it may also be handed to the Chairman of the Scheme Meeting (who will have absolute discretion on whether or not to accept it) at the Scheme Meeting if it is not so lodged. The completion and return of a form of proxy for the Scheme Meeting or the SGM will not preclude a Scheme Shareholder or a Shareholder, respectively, from attending and voting in person at the relevant meeting or any adjournment thereof and, in such event, the relevant form of proxy will be revoked by operation of law.
3. The Scheme Meeting and the SGM will be held at Basement 1, Regal Hongkong Hotel, 88 Yee Wo Street, Causeway Bay, Hong Kong at the times and dates specified above. Please refer to the notice of the Scheme Meeting and the notice of the SGM as set out in pages SM-1 to SM-3 and pages SGM-1 to SGM-3, respectively, of this Scheme Document.
4. The register of members of the Company will be closed during such period for the purposes of determining the entitlements of the Scheme Shareholders under the Scheme.
5. The Scheme will become effective upon all the Conditions to the Proposal as set out in the section headed "Conditions of the Proposal" in the letter from the Board in Part IV of this Scheme Document having been fulfilled or waived (as applicable).
6. If the Proposal becomes unconditional and the Scheme becomes effective, it is expected that the listing of the Shares on the
Stock Exchange will be withdrawn at 9:00 a.m. on Friday, 30 April 2021.
7. Cheques for cash entitlements to the Scheme Shareholders under the Scheme will be despatched by ordinary post at the risk of the recipients to their registered addresses shown in the register of members of the Company within seven business days of the Effective Date.

I.T LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 999)

Executive Directors: Sham Kar Wai Sham Kin Wai Chan Wai Kwan

Independent Non-Executive Directors: Francis Goutenmacher

Wong Tin Yau, Kelvin, JP Tsang Hin Fun, Anthony

To the Shareholders

Dear Sir or Madam,

Registered office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal Place of Business: 31/F, Tower A

Southmark

11 Yip Hing Street Wong Chuk Hang Hong Kong

22 March 2021

(1) PROPOSAL FOR THE PRIVATISATION

I.T LIMITED BY THE OFFEROR

BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 99 OF THE COMPANIES ACT AND

(2) PROPOSED WITHDRAWAL OF LISTING OF I.T LIMITED

INTRODUCTION

On 6 December 2020, the Offeror and the Company jointly announced that the Offeror and the Company have entered into the Implementation Agreement, pursuant to which the parties have agreed to use all reasonable endeavours to implement the Proposal to privatise the Company by way of a scheme of arrangement under section 99 of the Companies Act, subject to the Pre-Condition and the Conditions being fulfilled or waived, as applicable. On 19 January 2021, the Pre-Condition had been satisfied.

If the Scheme is approved and implemented:

(a) the Founder Scheme Shares held by the Founder Group will be cancelled in consideration for the Founder Cancellation Consideration pursuant to the Joint Offeror Cooperation Arrangement;

(b)all Non-Founder Scheme Shares will be cancelled in consideration for the Cancellation Price of HK$3 per Non-Founder Scheme Share which shall be paid in cash;

(c) new Shares corresponding to the cancelled Scheme Shares will be issued to the Offeror, credited as fully paid, such that the Company will become wholly-owned directly by the Offeror; and
(d) the listing of the Shares on the Stock Exchange will be withdrawn with effect immediately following the Effective Date.

The purpose of this Scheme Document is to provide you with further information regarding the Proposal (in particular, the Scheme and the Joint Offeror Cooperation Arrangement) and to give you notice of the Scheme Meeting and of the SGM (together with proxy forms in relation thereto). Your attention is also drawn to (i) the letter from the Independent Board Committee set out in Part V of this Scheme Document; (ii) the letter from the Joint Independent Financial Advisers set out in Part VI of this Scheme Document; (iii) the Explanatory Statement set out in Part VII of this Scheme Document; and (iv) the Scheme set out in Appendix V headed "Scheme of Arrangement" to this Scheme Document.

TERMS OF THE PROPOSAL

The Board has, upon the satisfaction of the Pre-Condition, put forward the Proposal. Upon the fulfilment of the Conditions and the Scheme becoming effective, all Scheme Shares will be cancelled and:

(a) for cancellation of the Founder Scheme Shares, Founder Holdco will be entitled to receive the crediting as being fully paid of all of its approximately 50.65% unpaid EquityCo shares (and approximately 13% of unpaid EquityCo shares that Founder Holdco has directed EquityCo to issue to CVC Holdco directly as part of the Joint Offeror Cooperation Arrangement as detailed in the section headed "Joint Offeror Cooperation Arrangement" below, including, amongst others, the "share adjustment" arrangement as set out in further details in paragraph (k) of the section headed "Shareholders' Agreement" below and the arrangements described in the section headed "Restructuring" below); and
(b) for cancellation of the Non-Founder Scheme Shares, the Non-Founder Scheme Shareholders will be entitled to receive the Cancellation Price of HK$3 per Non-Founder Scheme Share in cash.

In compliance with Rule 20.1(a) of the Takeovers Code, upon the Scheme becoming effective, the consideration for cancellation of the Founder Scheme Shares and Non-Founder Scheme Shares will be paid to the Scheme Shareholders whose names appear in the register of members of the Company on the Record Date as soon as possible, but in any event within seven business days following the Effective Date.

Cancellation Price per Non-Founder Scheme Share

The Cancellation Price of HK$3 per Non-Founder Scheme Share represents:

(a) a premium of approximately 7.5% over the closing price of HK$2.790 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

(b) a premium of approximately 54.6% over the closing price of HK$1.940 per Share as quoted on the Stock Exchange on the Last Trading Date;
(c) a premium of approximately 84.7% over the average closing price of approximately HK$1.624 per Share as quoted on the Stock Exchange for the 5 trading days up to and including the Last Trading Date;

(d) a premium of approximately 135.5% over the average closing price of approximately HK$1.274 per Share as quoted on the Stock Exchange for the 30 trading days up to and including the Last Trading Date;
(e) a premium of approximately 162.4% over the average closing price of approximately HK$1.143 per Share as quoted on the Stock Exchange for the 60 trading days up to and including the Last Trading Date;
(f) a premium of approximately 173.0% over the average closing price of approximately HK$1.099 per Share as quoted on the Stock Exchange for the 90 trading days up to and including the Last Trading Date;
(g) a premium of approximately 170.4% over the average closing price of approximately HK$1.109 per Share as quoted on the Stock Exchange for the 120 trading days up to and including the Last Trading Date;
(h) a premium of approximately 156.7% over the average closing price of approximately HK$1.169 per Share as quoted on the Stock Exchange for the 180 trading days up to and including the Last Trading Date;
(i) a premium of approximately 51.8% to the audited consolidated net asset value attributable to Shareholders per Share of approximately HK$1.977 as at 29 February 2020; and
(j) a premium of approximately 73.1% to the unaudited consolidated net asset value attributable to Shareholders per Share of approximately HK$1.733 as at 31 August 2020, which is calculated by the sum of the Company's total issued share capital of HK$119.58 million and total reserves of HK$1,953.07 million (which are based on the financial information disclosed in the Interim Results Announcement), divided by the total number of outstanding Shares of 1,195,797,307 as at 31 August 2020.

The Offeror will not increase the Cancellation Price and does not reserve the right to do so. Shareholders and potential investors should be aware that, following the making of this statement, the Offeror will not be allowed to increase the Cancellation Price.

Highest and lowest prices

During the Relevant Period, the highest closing price of the Shares as quoted on the Stock Exchange was HK$2.870 on 4 February and 2 February 2021, and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$0.960 on 8 September 2020, 7 September 2020 and 10 August 2020.

Basis for determining the Cancellation Price

The Cancellation Price has been determined on a commercial basis after taking into account, among other things, the challenging operating environment facing the Group, the significant investment required to reinvigorate the financial performance of the Group, financial performance of the Group, recent and historic traded prices of the Shares, and with reference to other privatisation transactions in Hong Kong in recent years.

Dividend payment by the Company

As at the Latest Practicable Date, the Company had not declared any dividend which remained unpaid. The Company does not intend to declare and/or pay any dividend before the Effective Date or the date on which the Scheme is not approved, or the Proposal otherwise lapses (as the case may be). For the avoidance of doubt, the Cancellation Price does not include any dividend that may be declared by the Company (subject to the approval of the Shareholders) prior to the Effective Date and the Cancellation Price will not be affected or reduced by the Shareholders' entitlement to such dividend (if any).

Events following the Scheme becoming effective

On the basis of the number of Scheme Shares in issue as at the Latest Practicable Date, if the Conditions are fulfilled or waived (as applicable) and upon the Scheme becoming effective:

(a) all of the Scheme Shares will be cancelled;
(b) contemporaneously with the cancellation of the Scheme Shares, the Company will issue to the Offeror such number of new Shares as is equal to the number of Scheme Shares cancelled such that the issued share capital of the Company will be maintained at the amount in issue immediately prior to the cancellation of the Scheme Shares. The reserve created in the books of accounts of the Company as a result of the cancellation of the Scheme Shares will be applied in paying up in full at par the new Shares so issued, credited as fully paid; and
(c) the listing of the Shares on the Stock Exchange will be withdrawn pursuant to Rule 6.15(2) of the Listing Rules.

Assuming that the Scheme becomes effective on 28 April 2021, cheques for cash entitlements under the Scheme will be despatched as soon as possible, but in any event within seven business days following the Effective Date and accordingly, the cheques are expected to be despatched on or before 7 May 2021. Cheques shall be despatched by ordinary post at the risk of the addressees and none of the Offeror, any Joint Offeror, the Company, Morgan Stanley, any Joint Independent Financial Advisers and the Company's Hong Kong branch share registrar and their respective directors, employees, officers, agents, advisers, associates and affiliates and any other persons involved in the Proposal shall be responsible for any loss or delay in the despatch of the same.

CONFIRMATION OF FINANCIAL RESOURCES

The Proposal involves making an offer to cancel all of the Non-Founder Scheme Shares, in exchange for the Cancellation Price of HK$3 per Non-Founder Scheme Share in cash.

Taking into account that the Founder Scheme Shares will be cancelled in consideration for the Founder Cancellation Consideration, the total amount of cash required to implement the Proposal in full will be approximately HK$1,305,593,229. The Offeror proposes to finance the consideration payable under the Scheme with a combination of existing fund facilities available to and/or equity commitment from the CVC Funds.

Morgan Stanley, the financial adviser to the Offeror, is satisfied that sufficient financial resources are available to the Offeror for satisfying in full its payment obligations in respect of the cash consideration payable under the Proposal.

PRE-CONDITION TO THE PROPOSAL AND THE SCHEME

The making of the Proposal was, and the implementation of the Scheme had been, subject to the satisfaction of the non-waivable Pre-Condition (being the SAMR issuing a notice approving the Proposal and the Scheme, or the statutory clearance period specified by the SAMR pursuant to the PRC Anti-Monopoly Law, including any extension of such period, having elapsed and no objection having been raised or qualifications or requirements imposed by the SAMR in relation to the Proposal or the Scheme) on or prior to the Pre-Condition Long Stop Date. On 19 January 2021, the Pre-Condition had been satisfied.

CONDITIONS OF THE PROPOSAL

The Proposal and the Scheme will only become effective and binding on the Company and all of the Shareholders if the following Conditions are fulfilled or waived (as applicable):

(a) the approval of the Scheme (by way of poll) by a majority in number of the Scheme Shareholders present and voting at the Scheme Meeting, representing not less than 75% in value of those Scheme Shares that are voted either in person or by proxy by the Scheme Shareholders at the Scheme Meeting (the Founder Group having provided an undertaking to the Court to agree to and be bound by the Scheme and to receive the Founder Cancellation Consideration in consideration for cancellation of their Founder Scheme Shares under the Scheme - see the section headed "Founder Irrevocable Undertakings" below);
(b) the approval of the Scheme (by way of poll) by at least 75% of the votes attaching to the Scheme Shares held by the Disinterested Shareholders that are voted either in person or by proxy at the Scheme Meeting, provided that the number of votes cast against the resolution to approve the Scheme is not more than 10% of the votes attaching to all of the Scheme Shares held by the Disinterested Shareholders;
(c) the passing by the Shareholders at the SGM of (i) a special resolution to approve any reduction of the issued share capital of the Company by the cancellation of the Scheme Shares; and (ii) an ordinary resolution to apply the reserve created by the cancellation of the Scheme Shares to simultaneously restore the issued share capital of the Company by the allotment and issue to the Offeror of such number of new Shares (credited as fully paid) as is equal to the number of the Scheme Shares cancelled;
(d) the sanction of the Scheme (with or without modification) by the Court and the delivery to the Registrar of Companies in Bermuda of a copy of the order of the Court for registration;
(e) compliance with the procedural requirements and conditions, if any, under section 46(2) of the Companies Act in relation to any reduction of the issued share capital of the Company;
(f) in relation to the Joint Offeror Cooperation Arrangement: (i) the receipt of an opinion from the Joint Independent Financial Advisers to the Independent Board Committee confirming that the Joint Offeror Cooperation Arrangement is fair and reasonable as far as the Disinterested Shareholders are concerned; (ii) the passing of an ordinary resolution by the Disinterested Shareholders at the SGM to approve the Joint Offeror Cooperation Arrangement; and (iii) the grant of consent under Note 3 to Rule 25 of the Takeovers Code from the Executive to the Joint Offeror Cooperation Arrangement;

(g) all Approvals which are: (i) required in connection with the Proposal by Applicable Laws or any licences, permits or contractual obligations of the Company; and (ii) material in the context of the Group (taken as a whole), having been obtained (or, as the case may be, completed) and remaining in full force and effect without modification up to and as at the Effective Date;
(h) no Authority in any jurisdiction having taken or instituted any action, proceeding, suit, investigation or enquiry (or enacted or proposed, and there not continuing to be outstanding, any statute, regulation, demand or order), in each case, which would make the Proposal void, unenforceable, illegal or impracticable (or which would impose any material and adverse conditions or obligations with respect to the Proposal);
(i) all Applicable Laws having been complied with and no legal or regulatory requirement having been imposed by any Authority which is not expressly provided for, or is in addition to the requirements expressly provided for, in the Applicable Laws in connection with the Proposal which are material in the context of the Group (taken as a whole), in each case up to and as at the Effective Date;
(j) since the date of the Joint Announcement, there having been no material adverse change to the business, financial or trading position of the Group, each taken as a whole; and
(k) save in connection with the implementation of the Proposal, the listing of the Company on the Stock Exchange not having been withdrawn, and no indication having been received from the Executive and/or the Stock Exchange, to the effect that the listing of the Shares on the Stock Exchange is or is likely to be withdrawn.

The Conditions in paragraphs (a) to (i) (inclusive) above are not waivable. The Offeror reserves the right to waive all or any of the Conditions in paragraphs (j) to (k) (inclusive) above in whole or in part. The Company does not have the right to waive any of the Conditions. All of the above Conditions must be fulfilled or waived, as applicable, on or before the Long Stop Date, failing which the Proposal and the Scheme will lapse.

Pursuant to Note 2 to Rule 30.1 of the Takeovers Code, the Offeror may only invoke any or all of the Conditions as a basis for not proceeding with the Proposal if the circumstances which give rise to the right to invoke such Condition are of material significance to the Offeror in the context of the Proposal.

As at the Latest Practicable Date, other than pursuant to the Pre-Condition and the Conditions in paragraphs (a) to (f) (inclusive) above, the Offeror and the Company were not aware of any circumstances which may result in any of the Conditions in paragraphs (g) to (i) (inclusive) above not being satisfied. As at the Latest Practicable Date and based on the information available to the Offeror, other than pursuant to the Pre-Condition and the Conditions in paragraphs (a) to (f) (inclusive) above, the Offeror was also not aware of any other Approvals which are required as set out in the Condition in paragraph (g) above.

As at the Latest Practicable Date, the Pre-Condition had been satisfied, all Conditions were subject to fulfilment (unless otherwise waived, where applicable) and none of the Conditions had been satisfied or waived.

If the Conditions are satisfied or validly waived (as applicable), the Scheme will be binding on all of the Shareholders, irrespective of whether or not they attended or voted at the Scheme Meeting or the SGM.

An announcement will be made by the Company and the Offeror in relation to the results of the Scheme Meeting and the SGM on 16 April 2021 by no later than 7:00 p.m. and, if all the resolutions are passed at those meetings, further announcements will be made in relation to, among other things, the results of the hearing of the petition for the sanction of the Scheme by the Court, the Effective Date and the date of withdrawal of listing of Shares from the Stock Exchange in accordance with the requirements of the Takeovers Code and the Listing Rules.

Warning: Shareholders and potential investors should be aware that the Proposal is subject to the Conditions being fulfilled or waived, as applicable, and therefore the Proposal may or may not be implemented. Shareholders and potential investors should therefore exercise caution when dealing in the securities of the Company. Persons who are in doubt as to the action they should take should consult their stockbroker, bank manager, solicitor or other professional advisers.

FOUNDER IRREVOCABLE UNDERTAKINGS

On 5 December 2020, each member of the Founder Group gave an irrevocable undertaking in favour of the Offeror and CVC Holdco being the other Joint Offeror:

(a) to agree to and assist in implementing the cancellation of the Founder Scheme Shares held by them in consideration for the Founder Cancellation Consideration;
(b) to provide undertakings to the Court to agree to and be bound by the Scheme and to receive the Founder Cancellation Consideration in consideration for cancellation of their Founder Scheme Shares under the Scheme;
(c) to the extent permitted by Applicable Laws (including the Takeovers Code), to vote any Shares held by them in favour of any resolutions proposed at the SGM to implement the Scheme or which are necessary for the Scheme to become effective; and
(d) not to: (i) dispose of any interest in any Shares held by them; (ii) accept any other offer to acquire such Shares; or (iii) vote in favour of any resolution which is proposed in competition with the Scheme, until the Scheme becomes effective, lapses or is withdrawn.

The Founder Irrevocable Undertakings will be terminated if the Scheme is not approved or the Proposal otherwise lapses or is withdrawn.

As at the Latest Practicable Date, other than the Founder Irrevocable Undertakings, neither the Offeror nor any party acting in concert with it had received any irrevocable commitment to vote for or against the Proposal.

ARRANGEMENTS MATERIAL TO THE PROPOSAL

Implementation Agreement

On 5 December 2020, the Offeror and the Company entered into the Implementation Agreement, pursuant to which the parties have agreed to use all reasonable endeavours to do all such things within their power to implement the Proposal and cooperate to obtain all Approvals required in connection with the Proposal.

Under the Implementation Agreement, the Company has undertaken to the Offeror to: (a) use all reasonable endeavours to implement the Scheme; and (b) procure that, prior to the earlier of the Effective Date and termination of the Implementation Agreement, unless otherwise approved by the Shareholders in a general meeting in accordance with Rule 4 of the Takeovers Code, the Group shall not take certain actions, including (amongst others): (i) carrying on its business other than in the ordinary and usual course; (ii) issuing, authorising or proposing the issue of any securities or making any change to its share capital, other than in respect of a wholly-owned member of the Group or pursuant to the terms of any shareholders' agreement governing any member of the Group; (iii) in respect of the Company only, recommending, proposing, declaring, paying or making any bonus issue, dividend or other distribution; (iv) entering into any merger or acquiring or disposing of any material assets; (v) incurring any indebtedness or creating any encumbrance, other than in the ordinary and usual course of business; (vi) creating or agreeing to create any encumbrance over its business or any asset except in the ordinary and usual course of business of the Group; or (vii) transferring or assigning to any third party any intellectual property which it owns or has the right of use as at the date of the Implementation Agreement as well as any other intellectual property which it subsequently acquires or obtains the right of use of.

The Company has further undertaken, amongst other things, that it will not, and will procure that no member of the Group shall, directly or indirectly (a) solicit, encourage, or otherwise seek to procure the submission of proposals, indications of interests or offers of any kind which are reasonably likely to lead to an alternative offer from any person other than the Offeror; and (b) enter into, or participate in, any discussions or negotiations (other than responding to unsolicited enquiries) with any such person in relation to an alternative offer or provide any due diligence information on the Company and the Group to any third party in connection therewith, save to the extent that, based on the written advice of external legal counsel: (i) the Board reasonably considers that they are likely to be in breach of their directors' duties or statutory duties not to do so; or (ii) they are required to do so under Rule 6 of the Takeovers Code or other Applicable Laws.

Nothing in the Implementation Agreement is intended to prevent or deprive: (a) the Shareholders from having the opportunity to consider; or (b) the Company from considering, in each case, any unsolicited alternative offers, proposals or transactions in respect of, or for, the issued ordinary share capital or assets or undertakings (whether the whole or a substantial part) of the Company or the Group from any person other than the Offeror.

The Implementation Agreement will be terminated if the Scheme is not approved or the Proposal otherwise lapses or is withdrawn.

Joint Offeror Cooperation Arrangement

As part of the Proposal, the relevant members of the Founder Group, CVC Holdco, EquityCo and/ or the Offeror entered into the following Joint Offeror Cooperation Arrangement:

(a) Consortium Agreement;
(b) Shareholders' Agreement; and
(c) transactions in connection with the Restructuring (being the restructuring of the Group and the Offeror Group (as applicable) pursuant to: (a) the Framework Agreement (which terminated and superseded the Restructuring Term Sheet); (b) the implementing agreements relating to asset or share transfers, transitional or long-term services and alternative arrangements in relation to the Restructuring; and (c) the Refinancing Documents).

As the Joint Offeror Cooperation Arrangement (being: (a) the cancellation of the Founder Scheme Shares in consideration for the Founder Cancellation Consideration pursuant to the Joint Offeror Cooperation Arrangement; (b) the entry by the relevant members of the Founder Group, CVC Holdco and/or EquityCo into the Consortium Agreement and Shareholders' Agreement; and (c) the transactions in connection with the Restructuring) is not offered to all Shareholders (and is only offered to the members of the Founder Group, such that, after the Effective Date and the completion of the Restructuring, the Founder Group may continue to retain management control over, contribute to, participate in potential distributions of, and potentially benefit from a non-guaranteed increase in value of the Offeror Group, while at the same time bearing the risk of a potential fall in value, potential losses, or potential streams of negative cash flows of, or potential need for additional capital injection into the Offeror Group, resulting from undesirable performance or adverse market conditions, amongst other factors), the Joint Offeror Cooperation Arrangement requires the consent of the Executive under Note 3 to Rule 25 of the Takeovers Code.

The Offeror has made an application for consent from the Executive to the Joint Offeror Cooperation Arrangement conditional on (a) the Joint Independent Financial Advisers to the Independent Board Committee confirming that the Joint Offeror Cooperation Arrangement is fair and reasonable as far as the Disinterested Shareholders are concerned; and (b) the passing of an ordinary resolution by the Disinterested Shareholders at the SGM to approve the Joint Offeror Cooperation Arrangement.

The Proposal and the Scheme are therefore subject to:

(a) the receipt of an opinion from the Joint Independent Financial Advisers to the Independent

Board Committee confirming that the Joint Offeror Cooperation Arrangement is fair and reasonable as far as the Disinterested Shareholders are concerned;

(b) the passing of an ordinary resolution by the Disinterested Shareholders at the SGM to approve the Joint Offeror Cooperation Arrangement; and
(c) the grant of consent from the Executive to the Joint Offeror Cooperation Arrangement, which will be conditional on satisfaction of the matters in paragraphs (a) and (b) above.

The Joint Independent Financial Advisers have stated in the letter from the Joint Independent Financial Advisers that they consider that the terms of the Proposal, including the Scheme and the Joint Offeror Cooperation Arrangement, are fair and reasonable so far as the Disinterested Shareholders are concerned. Accordingly, the Joint Independent Financial Advisers have advised the Independent Board Committee to recommend the Disinterested Shareholders to vote in favour of the Scheme at the Scheme Meeting and the Joint Offeror Cooperation Arrangement at the SGM. Please refer to the full text of the letter from the Joint Independent Financial Advisers as set out in Part VI of this Scheme Document. If the Joint Offeror Cooperation Arrangement is not approved by the Disinterested Shareholders at the SGM, the Joint Offeror Cooperation Arrangement will not be implemented, and the Scheme will not proceed.

Consortium Agreement

On 4 December 2020, Chairman, CCO (each in his personal capacity as a member of the Founder Group), and the Joint Offerors entered into the Consortium Agreement, pursuant to which the parties have agreed to conduct and implement the Proposal in consultation with one another and for EquityCo to have the shareholding structure as further described in the section headed "Information on the Offeror Group" below.

The Consortium Agreement will be terminated if the Scheme is not approved or the Proposal otherwise lapses or is withdrawn.

Shareholders' Agreement

On 5 December 2020, Chairman, CCO (each in his personal capacity as a member of the Founder Group), the Joint Offerors and EquityCo entered into the Shareholders' Agreement in respect of the governance of the Offeror Group, which is intended to take full effect upon the Scheme becoming effective. On 19 March 2021, the same parties entered into a deed of amendment relating to the Shareholders' Agreement. A summary of the key terms of the Shareholders' Agreement (as amended by the deed of amendment) is set out below:

(a) Board composition. Founder Holdco shall have the right to appoint three directors on the board of EquityCo, and CVC Holdco shall have the right to appoint two directors.
(b) Voting rights. Ordinary shares, class A preference shares and class B preference shares in EquityCo will be voting, and each share will carry one vote.
(c) Dividend rights. Each preference share will have a cumulative non-cash coupon at the rate of 10% per annum. No dividend on any ordinary share shall be declared unless the accrued interest on the preference shares is fully settled. EquityCo shall, as soon as practicable after the Effective Date and in any event prior to CVC Holdco's exit from EquityCo, declare and pay in cash to CVC Holdco, as a holder of class B preference shares, prior to and in preference to the dividend rights of any other EquityCo shareholder, an additional preferred dividend of HK$800,000,000 (so long as the Offeror Group's balance sheet and debt financing terms and the applicable law permit such distribution, including through a dividend re-capitalisation, whereby EquityCo could borrow money to fund such preferred dividend payment together with any existing cash resources of the Offeror Group). While the timing of the declaration and payment of such additional preferred dividend to CVC Holdco through cash distribution is uncertain, in any event, CVC Holdco will be entitled to the economic benefits of such additional preferred dividend in its various exit scenarios. Please refer to the section headed "Consideration for transferring CVC Holdco's 49.35% indirect interest in the Other Operations to Founder Holdco" on pages 32-36 below for further analysis of CVC Holdco's right to the HK$800 million preferred dividend.
(d) Reserved matters. EquityCo board will be responsible for the overall direction, supervision and management of the Offeror Group, subject to minority protection reserved matters over which CVC Holdco shall have a veto right. Such reserved matters include, among others, amendment of constitutional documents and share capital, liquidation and winding up of any company of the Offeror Group, approval of the business plan and annual budget, appointment of auditors and senior management of the Offeror Group, change of business scope, any material borrowings, mergers, investments, acquisitions, disposals, granting of any material guarantees other than provided in the business plan, entering into or settling any material dispute, and entering into any material related party transactions.
(e) Pre-emption rights. Each shareholder shall have pre-emption rights to participate in any issuance of new shares by EquityCo.
(f) Transfer restriction. Other than with the prior written consent of CVC Holdco, Chairman, CCO (each in his personal capacity) and Founder Holdco shall not, subject to customary exceptions, transfer their or its EquityCo shares to third parties during the term of the Shareholders' Agreement.
(g) Non-compete and non-solicit. Founder Holdco, Chairman, CCO (each in his personal capacity) and their affiliates shall not, other than carrying on the Other Operations, compete with the Brand Operation, and shall not solicit the employment of the senior managers of the Offeror Group, subject to customary exceptions.

(h) Liquidation preference. In case of a liquidation event (including, with respect to the Offeror Group, any liquidation, share sale resulting in Founder Holdco losing control, or sale of all or substantially all of the assets), ahead of holders of other classes of shares, holders of class B preference shares shall be entitled to (i) participate in such liquidation event, or (ii) be paid by EquityCo, in respect of holders of class B preference shares, an amount no less than the sum of its investment amount and all accrued and unpaid dividend (including the HK$800 million preferred dividend).
(i) Conversion rights. Each preference share of EquityCo shall be automatically converted into ordinary shares immediately prior to the consummation of any initial public offering of EquityCo based on a conversion formula which, with respect to CVC Holdco as a holder of class B preference shares, factors in the sum of CVC Holdco's initial investment amount and all accrued and unpaid dividends entitled to be received by CVC Holdco (including the HK$800 million preferred dividend) towards CVC Holdco's entitlement under its conversion right.
(j) Exit. Shareholders of EquityCo endeavour to procure that EquityCo shall consummate a qualified initial public offering (being a fully marketed public offering of EquityCo shares on the stock exchanges in Hong Kong, Tokyo, New York or other internationally reputable stock exchanges as EquityCo shareholders may agree) or a trade sale (being the sale of EquityCo shares held by CVC Holdco to a third party buyer at an acceptable valuation to CVC Holdco) within approximately three to five years after the Effective Date, through which shareholders may exit from EquityCo. CVC Holdco has the right (but not the obligation) to exit ahead of other shareholders. CVC Holdco has the right to, in its absolute discretion, decide whether and when to pursue a qualified initial public offering or a trade sale if CVC Holdco has not exited from EquityCo five years from the Effective Date. In relation to the potential qualified initial public offering, as at the Latest Practicable Date, the shareholders of EquityCo had not agreed on any expected offer price or post-market valuation, or the method of listing.
(k) Share adjustment. If the net money-on-money return achieved by CVC Holdco through its future exits from EquityCo (calculated based on CVC Holdco's net return amount and investment amount) is in the range from 3.2 times to 3.5 times, up to approximately 13% of EquityCo shares (which were initially issued and credited to CVC Holdco as fully paid at the direction of Founder Holdco around the time of the Joint Announcement and the Effective Date respectively, and, as at the Effective Date, amounts to approximately HK$465 million economic value as further elaborated in the section headed "Restructuring" below, and the future value of which at the time of CVC Holdco's future exits may change and is uncertain as at the Latest Practicable Date) will be proportionally returned to Founder Holdco upon CVC Holdco's future exits from EquityCo in accordance with a gradual scale. There is no certainty as to CVC Holdco's future exit return nor any guarantee that such share adjustment will eventually take place.
(l) Preferred dividend sharing. After taking into account the share adjustment as described above, if the net money-on-money return achieved by CVC Holdco upon its future exits from EquityCo is greater than 3.5 times, CVC Holdco will share with Founder Holdco up to 63.5% of its preferred dividend actually received by CVC Holdco from EquityCo (to the extent that CVC Holdco's net money-on-money return remains above 3.5 times). There is no certainty as to CVC Holdco's future exit return nor any guarantee that such preferred dividend sharing will eventually take place.

(m) Additional upside sharing. After taking into account the share adjustment and the preferred dividend sharing as described above, if the net money-on-money return achieved by CVC Holdco through its future exits from EquityCo still exceeds 3.5 times, CVC Holdco will share with Founder Holdco an additional cash amount equal to approximately 15% of CVC Holdco's net return that is in excess of 3.5 times. There is no certainty as to CVC Holdco's future exit return nor any guarantee that such additional upside sharing will eventually take place.
(n) Termination. The Shareholders' Agreement shall terminate (i) by the parties' written agreement, (ii) with respect to a shareholder, if that shareholder holds less than 10% EquityCo shares, (iii) upon a qualified initial public offering, and (iv) upon all EquityCo shares being held by one person.

Restructuring

Key terms of the Framework Agreement

The Framework Agreement is the governing and guiding document for the Restructuring transactions. It reflects the principles and key terms of the Restructuring Term Sheet, and includes more detailed implementing provisions to effect the key terms agreed in the Restructuring Term Sheet. Pursuant to the Framework Agreement, parties have agreed to:

(a) procure the implementation of the Restructuring, the process of which commenced promptly after the date of the Joint Announcement and is intended to be substantially completed within a short period of time after the Effective Date;
(b) procure the establishment of new Group entities dedicated for the Brand Operations which are required to effect the Restructuring;
(c) procure that necessary legally binding intra-group documents, implementing asset and share transfers conditional on and taking effect after the Effective Date (unless otherwise agreed between the parties) are entered into as soon as practicable after the new Group entities described in paragraph (b) above are set up, in order to separate the Group's co-mingled Brand Operations and the Other Operations by intra-group separation and transfer of the Brand Operations' identified employees, inventory, other tangible and fixed assets, lease agreements, other third-party contracts, intellectual properties, information technology infrastructure, data and cash from the co-mingled Group entities to selected or newly established Group entities dedicated to the Brand Operations. In this regard, the following types of agreement will be entered into:

(i)intra-group asset transfer agreement, an agreed form template of which has been attached to the Framework Agreement, which will be used for the transfer of an agreed list of identified assets of the Brand Operations including inventories, stores, and other fixed assets and includes customary provisions relating to completion mechanism, liability apportionment, and further assurance obligations on the same terms and principles as set out in the Framework Agreement;

(ii) intra-group share transfer agreement, an agreed form template of which has been attached to the Framework Agreement, which will be used for the transfer of shares in four Group entities dedicated for the Brand Operations and includes customary provisions relating to completion mechanism, and fundamental warranties on title and capacity to be given by the transferor to the relevant transferee;
(iii) intra-group intellectual property assignment deed, an agreed form template of which has been attached to the Framework Agreement, which will be used for the transfer and assignment of an agreed list of identified intellectual property rights of the Brand Operations (including trade-marks, registered designs, registered copyright and domain names) and includes customary provisions relating to the assignment of ancillary rights (such as rights to apply for or defend the trademarks), warranties relating to title, no encumbrances and non-infringement of third party rights, undertakings, and indemnities to be given by the relevant transferor to the relevant transferee and further assurance obligations;
(iv) intra-group transfer of an agreed lists of employees from the Other Operations to the Brand Operations on substantially the same terms as they are currently employed; and
(v) intra-group transfer (by novation, split or renegotiation) of an agreed list of commercial contracts and leases entered into with third parties from the Other Operations to the Brand Operations on substantially the same terms as their current terms.

Pursuant to the Framework Agreement, the parties agreed that upon the completion of the Restructuring: (i) the Brand Operations will be allocated with sufficient cash of the Group to support its operations (being HK$126 million as at the end of March 2021 and additional cash generated or received by the Brand Operations afterwards); (ii) the Other Operations will be allocated with the remaining cash of the Group other than those allocated to the Brand Operations (capped at HK$1.3 billion immediately upon completion of the Restructuring); and (iii) the Refinancing Proceeds (being up to HK$1.8 billion) to be borrowed by the entities dedicated to the Brand Operations pursuant to the Refinancing Documents (together with the cash reserves of the Group and proceeds of an interest-free shareholders' loan which may be provided by CVC Holdco to the Offeror Group and be allocated to the Other Operations) pursuant to the Framework Agreement) will be passed on to the Other Operations (as consideration for transfer of the assets, shares and intellectual properties of the Brand Operations as further described in the paragraph immediately below) to repay and discharge all the existing borrowings of the Group (being approximately HK$2 billion as at 31 October 2020 and approximately HK$1.8 billion as at 31 January 2021) so that the Other Operations would have no external debt. Please refer to the sections headed "Valuation of the Other Operations", "Financial Information of the Other Operations", "Information relating to the Brand Operations" and "Information relating to the Other

Operations" on pages 36-39 below for further information of the Brand Operations and the Other Operations. Please refer to the section headed "Information relating to the Brand Operations" on pages 37-38 below for further details of the Refinancing Documents. Under the valuation report set out in Appendix II to this Scheme Document, the Valuer has taken into account the cash and cash equivalents of HK$1.3 billion and nil interests bearing debt of the Other Operations immediately upon completion of the Restructuring after allocating the cash of the Group and Refinancing Proceeds pursuant to the above arrangement under the Framework Agreement in arriving at its valuation of the 49.35% equity interest in the Other Operations.

In connection with the debt refinancing arrangement pursuant to the Framework Agreement, the parties agreed that the total amount of consideration payable by the entities dedicated to the Brand Operations to the entities dedicated to the Other Operations for the intra-group transfers of the assets, shares and intellectual properties of the Brand Operations pursuant to the Framework Agreement as described in this paragraph (c) will be the total amount of the Refinancing Proceeds (being up to HK$1.8 billion).

After implementing asset and share transfers, cash allocation and debt refinancing steps pursuant to the Framework Agreement as described in this paragraph (c):

(i) entities dedicated to the Brand Operations will use the Refinancing Proceeds to purchase the assets, shares and intellectual properties of the Brand Operations pursuant to the Framework Agreement, to complete the separation of the Brand Operations and the Other Operations;
(ii) entities dedicated to the Other Operations will use the Refinancing Proceeds received from the Brand Operations (together with the cash reserves of the Group and an interest-free shareholders' loan which may be provided by CVC Holdco to the Offeror Group pursuant to the Framework Agreement for up to HK$126 million plus applicable costs relating to the Refinancing Documents and be allocated to the Other Operations) to repay the Group's external bank debt borrowed by the entities dedicated to the Other Operations (being approximately HK$2 billion as at 31 October 2020 and approximately HK$1.8 billion as at 31 January 2021) and associated costs;
(iii) the transactions under steps (i) and (ii) above will happen simultaneously; and
(iv) after allocating all cash and Refinancing Proceeds of the Group pursuant to the Framework Agreement, immediately upon completion of the Restructuring, the Other Operations will have remaining cash of the Group other than those allocated to the Brand Operations (capped at HK$1.3 billion) and no external bank debt.

If it is not possible for any particular asset or contract transfers to be completed within a short period of time after the Effective Date (for reasons such as restrictions under applicable laws or failure to receive any third-party consent), then transitional alternative contractual arrangements, conditional on and taking effect after the Effective Date, shall be put in place, such that the Brand Operations may enjoy the equivalent arrangements relating to the relevant assets or contracts before or after completion of the Restructuring, pending transfers of the relevant asset or contract on the terms as disclosed in this paragraph (c). Parties will minimise as much as possible the need to enter into any alternative arrangement, which serves as fallback arrangements where the intended transfers pursuant to the Framework Agreement cannot be completed in time. The alternative arrangements will be implemented based on or consistent with the material terms of the relevant transfers as disclosed in this paragraph (c) or material terms of the transitional services agreements as disclosed in paragraph (d) immediately below; and

(d)procure that the Brand Operations and the Other Operations enter into:

(i) transitional services agreements, key terms of which are summarised as follows:
Service scope/subject matter
provision of services by the Other Operations to the Brand Operations relating to IT (including e-commerce), logistics, design support, administration and operations support and facilities services and other areas where transitional services are required;
Tenure
a period of six to twelve months with an early termination right by the relevant service recipient;
Service Levels
on equivalent services standards as provided to the services recipient as during the twelve month period prior to completion of the Restructuring; and
Pricing/Pricing Policy
charged by the relevant service provider on a monthly basis at actual costs of the services with no mark-up.
(ii) long-term services agreements, key terms of which are summarised as follows:

Service scope/subject matter

long-term trading arrangement between the Brand Operations and the Other Operations, being (i) consignment or similar agreements for the sale of the Brand Operations products (i.e. fashion apparel and accessories bearing the trademarks of the Brand Operations) in the online and offline multi-branded channels of the Other Operations (or vice versa); (ii) facility services agreement for provision of services by the Other Operations to the Brand Operations relating to conference rooms, pantries and utilities in the PRC; and/or (iii) property and facility services for provision of services by the Other Operations to the Brand Operations relating to office premises in Taiwan to be provided by the Other Operations to the Brand Operations;

Tenure

the facility and property services will be provided for the duration of the relevant lease, with an early termination right by the relevant service recipient. The duration for other long-term services will depend on future business needs;

Service Levels

on equivalent services standards as provided to the services recipient as during the twelve month period prior to completion of the Restructuring for the facility and property services. The service levels for other long-term services will depend on future business needs; and

Pricing/Pricing Policy

the facility and property services will be charged by the relevant service provider on a monthly basis at actual costs of the services with no mark-up. The pricing for other long-term services will be determined based on market price and arm's length commercial negotiations, and on terms no more favorable than the terms available to and/or from any independent third-party service provider providing similar services in the relevant local market. Each time when a long-term agreement is entered into, the service recipient will compare the rate offered by the Brand Operations or the Other Operations (as the case may be) with the market rates charged by other independent third-party service providers in the relevant local market, and the prices to be charged by the Brand Operations or the Other Operations (as the case may be) under any long-term services will be within the range of the market rate charged by other independent third-party service providers in the relevant local market.

As at the Latest Practicable Date, the new Group entities and each of their branches dedicated to the Brand Operations required to effect the Restructuring are in the process of being set up and such new Group entities and their branches will be substantially set up by the end of April 2021 (subject to potential delays in certain locations). As at the Latest Practicable Date, whilst communications relating to the Restructuring are being carried out within the Group and with the Brand Operations' third-party contract counterparties, other than the Restructuring Term Sheet and the Framework Agreement (which terminated and superseded the Restructuring Term Sheet), no definitive implementing documents to implement and effect the transfers of Brand Operations' asset and shares, any alternative arrangement, the transitional or long-term services arrangements pursuant to the Framework Agreement had been signed. It is anticipated that such definitive implementing documents may be signed before, on or within a short period after the Effective Date, pursuant to and in accordance with the terms of the Framework Agreement.

There will be no change in the material terms of the Framework Agreement or the material terms of such definitive implementing documents relating to the Restructuring as disclosed in this section headed "Restructuring" between the Latest Practicable Date and the completion of the Restructuring. Pursuant to the Framework Agreement, to the extent that any definitive documents implementing the intra-group transfers of the assets and shares of the Brand Operations are signed before the Effective Date, such definitive agreements will be conditional upon and will only take effect after the Effective Date (unless otherwise agreed between the parties). Pursuant to the Implementation Agreement and the Consortium Agreement, any costs incurred relating to the Restructuring (together with any costs incurred relating to the Scheme and the other parts of the Joint Offeror Cooperation Arrangement) will be borne by the Offeror and ultimately be shared by the Joint Offerors, regardless of whether the Scheme becomes effective, lapses or is withdrawn.

Furthermore, under the Framework Agreement:

(a)the Founder Group members have warranted to CVC Holdco that: (i) they have the requisite power and authority to enter into and perform the binding obligations under the Framework Agreement and the related implementing documents; and (ii) assets or shares of the Brand Operations being transferred pursuant to the Framework Agreement are validly owned by the relevant transferor without encumbrance, and are sufficient for the operation of the

Brand Operations; and

(b)the parties have agreed that, with respect to liabilities incurred in connection with the relevant Brand Operations' assets being transferred pursuant to the Framework Agreement, the transferor shall be responsible, and shall indemnify the transferee, for the liabilities incurred before and up to the date of the relevant transfer, and the transferee shall be responsible, and shall indemnify the transferor, for the liabilities incurred after the date of the relevant transfer.

After the Scheme becomes effective, CVC Holdco will have a 49.35% indirect interest in the Other Operations (as part of the Offeror Group). After the Brand Operations and the Other Operations are effectively separated after the Effective Date, under the Framework Agreement, CVC Holdco has agreed to transfer or procure the transfer of its 49.35% indirect interest in the Other Operations to Founder Holdco in accordance with the steps set out in the Framework Agreement, the key transaction steps being (i) the transfer by the Company of all of its shares in the holding company of the Other Operations to Founder Holdco in consideration for the issue by Founder Holdco of a promissory note for the amount of HK$10 million to the Company (together with other quantifiable and non-quantifiable consideration as set out in the section headed "Consideration for transferring CVC Holdco's 49.35% indirect interest in the Other Operations to Founder Holdco") immediately below on pages 32 to 36); (ii) the distribution or assignment of such promissory note from the Company to the Offeror and then to EquityCo; and (iii) the buy-back by EquityCo from Founder Holdco of EquityCo shares representing HK$10 million of EquityCo's share capital, payable by setting off against the promissory note of HK$10 million owed by Founder Holdco to EquityCo.

EquityCo's share capital structure as at the Latest Practicable Date is set out below. EquityCo's share capital structure as at the Latest Practicable Date will remain unchanged as at the Effective Date and immediately prior to the completion of the Restructuring.

Number of	Number of
Number of	Class A	Class B	Amount of the
Ordinary	Preference	Preference	total share	% of the total
Shares	Shares	Shares	capital (HK$)	share capital
Founder Holdco	5,015,008	1,811,864,043	0	1,816,879,051	50.65%
CVC Holdco	5,012,945	0	1,765,499,925	1,770,512,870	49.35%
Total	10,027,953	1,811,864,043	1,765,499,925	3,587,391,921	100%
31

The Restructuring steps for transfer of the CVC Holdco's 49.35% indirect interest in the Other Operations to Founder Holdco will reduce EquityCo's total share capital and EquityCo's share capital attributable to Founder Holdco by HK$10 million, respectively. Accordingly, immediately upon completion of these Restructuring steps, EquityCo's share capital structure will be as follows:

Number of	Number of
Number of	Class A	Class B	Amount of the
Ordinary	Preference	Preference	total share	% of the total
Shares	Shares	Shares	capital (HK$)	share capital
Founder Holdco	4,987,055	1,801,891,996	0	1,806,879,051	50.51%
CVC Holdco	5,012,945	0	1,765,499,925	1,770,512,870	49.49%
Total	10,000,000	1,801,891,996	1,765,499,925	3,577,391,921	100%

Consideration for transferring CVC Holdco's 49.35% indirect interest in the Other Operations to Founder Holdco

Having taken into account the Other Operations' financial condition, lease liabilities and other cash requirements for operating and reviving its business, the consideration for the transfer of CVC Holdco's 49.35% indirect interest in the Other Operations to Founder Holdco includes, amongst others, the following:

(a)by directing EquityCo to credit as fully paid approximately 13% EquityCo shares to CVC Holdco (which were issued by EquityCo to CVC Holdco on an unpaid basis before the date of the Joint Announcement) at the Effective Date, Founder Holdco is deemed to have been passed to CVC Holdco approximately HK$465 million economic value (being approximately 13% of EquityCo's total share capital of HK$3,587,391,921 as at the Effective Date, as further disclosed in the section headed "Information on the Offeror Group" on page 44 below).

As disclosed in the section headed "Shareholding Structure of the Company and Effect of the Proposal" on pages 40-43 below, as at the Latest Practicable Date, the Founder Scheme Shares represent approximately 63.61% of the total Shares. Pursuant to the terms of the Proposal, in consideration of cancelling the Founder Scheme Shares (representing approximately 63.61% of the total Shares), Founder Holdco will only receive approximately 50.65% EquityCo shares as part of the Founder Cancellation Consideration. The economic value of the remaining approximately 13% EquityCo shares (equivalent to approximately HK$465 million in economic value as at the Effective Date) is deemed to have been passed to CVC Holdco as at the Effective Date as part of the Joint Offeror Cooperation Arrangement and as part of the consideration for the disposal of CVC Holdco's 49.35% indirect interests in the Other Operations to Founder Holdco.

Pursuant to the terms of the Shareholders' Agreement, all or part of such 13% EquityCo shares issued to CVC Holdco at the direction of Founder Holdco are subject to potential adjustment and may be transferred to Founder Holdco for nil consideration upon CVC Holdco's future exits from EquityCo through a qualified initial public offering or a trade sale years after the Effective Date as part of the incentivisation arrangement offered by CVC Holdco to the Founder Group who will continue to retain management control over, contribute its expertise and skills and drive the future value creation of the Offeror Group (consisting of the Brand Operations only after completion of the Restructuring) under the Joint Offeror Cooperation Arrangement. Under the Shareholders' Agreement, CVC Holdco will only transfer all or some of such 13% EquityCo shares it holds to Founder Holdco based on a gradual scale (with the percentage of share adjustment corresponding to the net return achieved by CVC Holdco through its future exits) as set out in the Shareholders' Agreement in the event that the net money-on-money return achieved by CVC Holdco through its future exits from EquityCo is from 3.2 times to 3.5 times. In the event that the net money-on-money return achieved by CVC Holdco through its future exits from EquityCo is below 3.2 times, no EquityCo shares will be transferred to Founder Holdco under the share adjustment arrangement.

There is no certainty as to whether, when or how CVC Holdco will exit from EquityCo, future return that can be actually achieved by CVC Holdco through its future exits, the value of the 13% EquityCo shares at the time of CVC Holdco's future exits, nor any guarantee that any such share adjustment will actually take place. Please refer to paragraphs (j) and (k) under the section headed "Shareholders' Agreement" on pages 24 to 26 above for further details;

(b)

by agreeing that CVC Holdco's class B preference shares in EquityCo will have a right to HK$800 million of preferred dividend (and the conversion rights and liquidation preference which will factor in CVC Holdco's entitlement to any unpaid HK$800 million preferred dividend), Founder Holdco is deemed to have given up and passed to CVC Holdco approximately HK$405 million economic value (being the right to the pro rata dividend in EquityCo that Founder Holdco has given up to CVC Holdco).

Pursuant to the terms of the Shareholders' Agreement and as further elaborated in the paragraphs immediately below, Founder Holdco is deemed to have given up and passed to CVC Holdco HK$405 million in economic value by giving CVC Holdco (i) a right to receive HK$800 million of preferred dividend in cash as soon as practicable after the Effective Date and in any event prior to CVC Holdco's exit from EquityCo. Notwithstanding CVC Holdco's entitlement and EquityCo's contractual obligation to declare and pay CVC Holdco such HK$800 million preferred dividend in cash prior to CVC Holdco's exit from EquityCo under the Shareholders' Agreement, the timing of the payment of the HK$800 million preferred dividend to CVC Holdco through cash distribution is uncertain. However, CVC Holdco's right to such HK$800 million preferred dividend is not subject to any expiry date before CVC Holdco's exit from EquityCo, and ranks prior to dividend rights of any other EquityCo shareholder; (ii) a conversion right which allows CVC Holdco to convert its class B preference shares in EquityCo into ordinary shares of EquityCo (which factors in the value equivalent to any unpaid HK$800 million preferred dividend) at the time of an initial public offering of EquityCo (which may or may not happen, as further elaborated in the paragraphs immediately below); and (iii) a right to receive a lump sum payment (which includes value equivalent to any unpaid HK$800 million preferred dividend) in case of a liquidation event (which may or may not happen and is subject to prior written consent or affirmative vote of CVC Holdco as holder of EquityCo class B preference shares as a reserved matter, and include any liquidation, winding-up or dissolution of EquityCo, share sale resulting in Founder Holdco losing control, or sale of all or substantially all of the assets of EquityCo or any of its subsidiaries).

Under the Shareholders' Agreement, CVC Holdco's right to such HK$800 million of preferred dividend (i) is a binding contractual obligation on EquityCo, Founder Holdco, Chairman, and CCO (each in his personal capacity as a member of the Founder Group), (ii) is not subject to any other approval or veto rights by any other EquityCo shareholders, Chairman or CCO, (iii) is not subject to any time limitation or expiry date before CVC Holdco exits from EquityCo, and (iv) ranks prior and in preference to dividend rights of any other EquityCo shareholder. EquityCo and each EquityCo shareholder are contractually obligated to do all things to procure and enable the cash distribution of the HK$800 million preferred dividend to CVC Holdco. Such HK$800 million preferred dividend shall be declared and paid to CVC Holdco as soon as practicable and in any event prior to CVC Holdco's exit from EquityCo so long as the Offeror Group's balance sheet, debt financing terms and applicable laws permit such distribution (which can be achieved through methods such as effecting a dividend re-capitalisation, whereby EquityCo could borrow money to fund such preferred dividend payment together with existing cash resources of the Offeror Group). The HK$800 million amount of the preferred dividend was reached as part of the commercial agreement between the Joint Offerors, factoring in what parties agreed was an appropriate value which forms one element of the overall consideration for transferring CVC Holdco's 49.35% indirect interest in the Other Operations to Founder Holdco.

Notwithstanding CVC Holdco's entitlement to the HK$800 million preferred dividend and EquityCo's contractual obligation to declare and pay CVC Holdco such HK$800 million preferred dividend in cash prior to CVC Holdco's exit from EquityCo under the Shareholders' Agreement, the timing for the full payment of the HK$800 million preferred dividend to CVC Holdco through cash distribution is uncertain. However, to the extent any HK$800 million preferred dividend is not fully paid to CVC Holdco through cash distribution, CVC Holdco can still enjoy the economic benefits of such HK$800 million preferred dividend on the basis that, pursuant to the terms of the Shareholders' Agreement:

(i) CVC Holdco's right to the HK$800 million preferred dividend is not subject to any time limitation or expiry date and CVC Holdco can demand EquityCo to declare and pay such HK$800 million preferred dividend to CVC Holdco pursuant to the terms of the Shareholders' Agreement any time before CVC Holdco exits from EquityCo;
(ii) immediately prior to the consummation of any initial public offering of EquityCo, all EquityCo class B preference shares held by CVC Holdco shall be converted into ordinary shares of EquityCo based on a conversion formula which factors in the sum of CVC Holdco's initial investment amount and all accrued and unpaid dividend entitlements to be received by CVC Holdco (including the HK$800 million preferred dividend) (as a consequence, Founder Holdco would be entitled to less, and CVC Holdco would be entitled to additional ordinary shares of EquityCo at the time of the initial public offering (equivalent to HK$800 million in value (or part thereof)) if the HK$800 million preferred dividend had not been fully paid at the time). There is no assurance on whether CVC Holdco will exit from EquityCo through initial public offering or when any initial public offering can take place. However, in the event that CVC Holdco has not exited from EquityCo five years from the Effective Date, CVC Holdco has the right to decide (in any event no later than 12 years from the Effective Date), in its absolute discretion, whether and when EquityCo shall pursue a qualified initial public offering or a trade sale;
(iii) in the event there is a liquidation event (which may or may not happen and is subject to prior written consent or affirmative vote of CVC Holdco as holder of EquityCo class B preference shares as a reserved matter and include any liquidation, winding-up or dissolution of the EquityCo, as well as share sale resulting in Founder Holdco losing control, or sale of all or substantially all of the assets of EquityCo or

any of its subsidiaries), CVC Holdco shall, from available proceeds, ahead of other EquityCo shareholders holding other classes of shares, be entitled to be paid by EquityCo an amount no less than the sum of CVC Holdco's initial investment amount and all accrued and unpaid dividend entitlements (including the HK$800 million preferred dividend). Whether CVC Holdco can be paid with the full amount of the HK$800 million preferred dividend in case of a liquidation event depends on the value of total assets and/or available proceeds of EquityCo upon a liquidation event. Shareholders and potential investors should be aware that if the Offeror Group becomes insolvent and is liquidated, wound up or dissolved without sufficient residual assets to settle any unpaid preferred dividend contractually entitled to be received by CVC Holdco, there is a possibility that CVC Holdco may enjoy economic benefits of less than HK$800 million;

(iv) parties agree that before CVC Holdco undertakes any trade sale (being the sale of EquityCo shares held by CVC Holdco to a third party buyer at an acceptable valuation to CVC Holdco) to effect its exit, the HK$800 million preferred dividend must be first paid to CVC Holdco in full. If CVC Holdco has not been paid the HK$800 million preferred dividend in cash, CVC Holdco could elect to either (a) remain in EquityCo until it is first paid the HK$800 million cash preferred dividend (using existing cash resources of the Offeror Group or by way of dividend re-capitalisation) and then exit by way of a trade sale; or (b) exit and enjoy its economic benefits of HK$800 million through its conversion rights upon an initial public offering as detailed in paragraph (ii) above or the liquidation preference payment in the case of liquidation event as detailed in paragraph (iii) above; and
(v) EquityCo shareholders agree to endeavor to procure that EquityCo shall consummate a qualified initial public offering or a trade sale within three to five years after the Effective Date and that CVC Holdco has a right to exit ahead of and in priority to any other EquityCo shareholders through such qualified initial public offering or the trade sale. In the event that CVC Holdco has not exited from EquityCo five years from the Effective Date, CVC Holdco has the right to decide, in its absolute discretion, whether and when EquityCo shall pursue a qualified initial public offering or a trade sale. Founder Holdco and EquityCo shall cooperate with CVC Holdco to consummate the qualified initial public offering or trade sale. As a company ultimately backed and controlled by a private equity fund, CVC Holdco has agreed to dispose all of its EquityCo shares and exit from EquityCo either through a qualified initial public offering or a trade sale within a reasonable period of time and in any event no later than 12 years from the Effective Date. Pursuant to the terms of the Shareholders' Agreement, EquityCo is contractually obligated to declare and pay to CVC Holdco the HK$800 million preferred dividend in cash prior to CVC Holdco's exit. As set out in paragraph (iv) above, the parties agree that before CVC Holdco exits through a trade sale, the HK$800 million preferred dividend must be first paid to CVC Holdco in full. As set out in paragraph (ii) above, in the event of an initial public offering, CVC Holdco will be entitled to the economic benefit of the HK$800 million preferred dividend through its conversion right.
Please refer to paragraphs (c) and (l) under the section headed "Shareholders' Agreement" on pages 24 to 26 above for further details;

(c)Founder Holdco settling the HK$10 million nominal equity purchase price for the transfer of the Other Operations from the Offeror Group to Founder Holdco by setting off against the consideration of EquityCo's repurchase of Founder Holdco's EquityCo shares representing HK$10 million EquityCo's share capital. Please refer to the section headed "Key terms of the Framework Agreement" above for further details of those transaction steps; and

(d)Founder Holdco agreeing, as part of the terms of the broader Joint Offeror Cooperation Arrangement, to pass to CVC Holdco certain rights, including liquidation preference, exit preference and minority protection reserved matters in EquityCo, and subjecting Founder Holdco's EquityCo shares to transfer restrictions. Please refer to the section headed "Shareholders' Agreement" above for further details.

Each item of consideration described in paragraphs (a) to (d) immediately above represents in aggregate all quantifiable consideration (totaling up to approximately HK$880 million, being the sum of (i) approximately HK$465 million economic value as further described in paragraph (a) immediately above; (ii) up to approximately HK$405 million as further described in paragraph (b) immediately above; and (iii) approximately HK$10 million as further described in paragraph (c) immediately above) and non-quantifiable consideration (as described in paragraph (d) immediately above and set out in further details in this section headed "Joint Offeror Cooperation Arrangement") for CVC Holdco to transfer its 49.35% indirect interest in the Other Operations to Founder Holdco.

The Joint Offerors have agreed to undertake the Restructuring as a part of the broader Joint Offeror Cooperation Arrangement package, rather than as a standalone transaction.

Valuation of the Other Operations

Based on the valuation report of the Other Operations prepared by the Valuer set out in Appendix II headed "Valuation of the Other Operations" to this Scheme Document, the valuation of 49.35% equity interest in the Other Operations amounted to approximately HK$730.9 million as at 31 December 2020.

As set out in the valuation report, the valuation of the Other Operations was made by the Valuer using the market approach based on the assumptions that: (a) there will be no material change in the existing political, legal, technological, fiscal or economic conditions, which might adversely affect the business of the Other Operations; (b) the Other Operations on a standalone basis would have the similar level of such cost structure as the allocation by the Company of the shared corporate head office (including regional head offices) costs and warehouse costs between the Other Operations and the Brand Operations in preparation of the financial information of the Other Operations for the twelve months ended 31 December 2020; (c) the operational and contractual terms stipulated in the relevant contracts and agreements will be honored; (d) the facilities and systems proposed are sufficient for future expansion in order to realise the growth potential of the business and maintain a competitive edge; (e) the Valuer has assumed the accuracy of the financial and operational information of Other Operations provided by the Company and has relied to a considerable extent on such information in arriving at its opinion of value; and (f) there are no hidden or unexpected conditions (such as natural disaster, war, government intervention, major change in management, etc.) associated with the asset valued that might adversely affect the reported value. For further details, please refer to the section headed "Major Assumptions" in the Valuation of the Other Operations in Appendix II to this Scheme Document.

The valuation of 49.35% equity interest in the Other Operations has taken into account the cash and cash equivalents of HK$1.3 billion and nil interests bearing debt of the Other Operations immediately upon completion of the Restructuring after allocating all cash and Refinancing Proceeds of the Group pursuant to the Framework Agreement. For further details, please refer to the section headed "Key terms of the Framework Agreement" on pages 26-32 above and the section headed "Calculation of Valuation Result" in the Valuation of the Other Operations in Appendix II to this Scheme Document.

Financial Information of the Other Operations

The unaudited EBITDA with adjustment of impairment charge of the Other Operations for the twelve months ended 31 December 2020 was HK$454,546,000.

The unaudited EBITDA of the Other Operations for the twelve months ended 31 December 2020 has been prepared by the Directors based on the unaudited financial information of the Group for the twelve months ended 31 December 2020 and on a basis consistent in all material respects with the accounting policies adopted by the Directors and used in the preparation of the consolidated financial statements of the Group for the year ended 29 February 2020 and the unaudited condensed consolidated interim financial information of the Group for the six months ended 31 August 2020 (being the latest published financial statements of the Group).

As the unaudited EBITDA of the Other Operations for the twelve months ended 31 December 2020 is for a completed period which has already ended, no assumption is involved in its computation. However, the Group has not historically recharged corporate head office costs comprised in the operating expenses including but not limited to management information, accounting and financial reporting, treasury, taxation, cash management, employee benefit administration, payroll and professional services to any of its underlying operations. As a result, an allocation has been made of the amounts of shared corporate head office costs between the Other Operations and the Brand Operations, based on various methods including the usage of the services, headcounts and size of the relevant operations. These costs were affected by the arrangements that existed in the Group and are not necessarily representative of the position that may prevail in the future.

Pursuant to Rule 10 of the Takeovers Code, the unaudited EBITDA of the Other Operations for the twelve months ended 31 December 2020 constitutes a profit forecast and must be reported on by the Company's financial adviser and its auditors or consultant accountants in accordance with the Takeovers Code. The unaudited EBITDA of the Other Operations for the twelve months ended 31 December 2020 has been reported on by PricewaterhouseCoopers, the auditor of the Company, and the Joint Independent Financial Advisers. PricewaterhouseCoopers has reported that, so far as the accounting policies and calculations are concerned, the unaudited EBITDA of the Other Operations for the twelve months ended 31 December 2020 has been properly compiled in accordance with the bases adopted by the Directors and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the audited consolidated financial statements of the Group for the year ended 29 February 2020 and the unaudited condensed consolidated interim financial information of the Group for the six months ended 31 August 2020. The Joint Independent Financial Advisers are of the opinion that the unaudited EBITDA of the Other Operations for the twelve months ended 31 December 2020 has been compiled with due care and consideration.

Your attention is drawn to the letters issued by the Joint Independent Financial Advisers and PricewaterhouseCoopers as set out in Appendix III headed "Letters from the Joint Independent Financial Advisers and the Auditor on Unaudited Financial Information" to this Scheme Document.

Information relating to the Brand Operations

Upon completion of the Restructuring, the Brand Operations will mainly include the Group's operations of design, sourcing, and sale of streetwear products bearing self-owned A Bathing Ape, AAPE by A Bathing Ape brands and associated sub-brands thereof, including, without limitation Baby Milo, Milo Stores, BAPY, BAPE Black, and Mr. Bathing Ape. Unless otherwise agreed between the Joint Offerors, based on the scope of the Brand Operations as at the Latest Practicable Date, it is anticipated that upon completion of the Restructuring, (a) the Brand Operations will have leased stores, employees, assets, intellectual properties, and contractual relationships that are dedicated to the Brand Operations (the details of which are set out in the agreed lists of entities, assets, contracts, leases, employees, data and intellectual properties of the Brand Operations as annexed to the Framework Agreement), and sufficient cash to support its operations (being HK$126 million as at the end of March 2021 and additional cash generated or received by the Brand Operations afterwards); and (b) the external bank debt of the Group borrowed by the entities dedicated for the Other Operations (being approximately HK$2 billion as at 31 October 2020 and approximately HK$1.8 billion as at 31 January 2021) will be fully repaid using (i) the Refinancing Proceeds (being up to HK$1.8 billion), (ii) the Group's existing cash reserves, and (iii) any shareholders loan made under the Framework Agreement (including an interest-freeshareholder loan which may be provided by CVC Holdco to the Offeror Group pursuant to the Framework Agreement for up to an amount equivalent to the sum of HK$126 million plus applicable costs relating to the Refinancing Documents and be allocated to the Other Operations).

In connection with the Restructuring, BNP Paribas and Standard Chartered Bank (Hong Kong) Limited have issued a debt commitment letter to the Offeror on 6 December 2020 relating to a five-year term loan facility for up to approximately HK$1,800,000,000 and a revolving credit facility for up to approximately HK$200,000,000. It is proposed that the Refinancing Proceeds (being up to approximately HK$1,800,000,000 under the five-year term loan facility) and the proceeds under the revolving credit facility (being up to approximately HK$200,000,000) will be used (a) to purchase the assets, shares and intellectual properties of the Brand Operations as described in the section headed "Key Terms of the Framework Agreement" above; (b) simultaneously with (a), to ultimately repay the Group's external bank debt borrowed by the entities dedicated to the Other Operations (being approximately HK$2 billion as at 31 October 2020 and approximately HK$1.8 billion as at 31 January 2021), together with Group's existing cash reserves and shareholders' loan under the Framework Agreement; (c) to finance the costs incurred by the Group relating to the Restructuring; and (d) for general corporate and operational purposes. It is also proposed that, under the Refinancing Documents: (a) conditions precedent to draw-down will include, amongst others, the Scheme becoming effective, and completion of most of the Restructuring steps (subject to ongoing transitional arrangements); (b) the borrower for the term loan facility will be a Group entity dedicated to the Brand Operations after the Effective Date and the borrowers for the revolving facility may include the Offeror and other Group entities dedicated to the Brand Operations after the Effective Date; and (c) after the Effective Date and draw-down, the facilities under the Refinancing Documents will be guaranteed by certain Group entities dedicated to the Brand Operations and secured against shares and assets of the Group entities dedicated to the Brand Operations. As part of the security package, upon draw-down under the Refinancing Documents after the Effective Date, the Offeror will become one of the guarantors under the Refinancing Documents and the shares of the Offeror owned by EquityCo will be subject to an equitable share mortgage in favour of BNP Paribas and Standard Chartered Bank (Hong Kong) Limited and other potential syndication refinancing lenders. For further details, please refer to the section headed "Reasons for and Benefits of the Proposal" in the Explanatory Statement in Part VI of this Scheme Document.

Information relating to the Other Operations

Upon completion of the Restructuring, the Other Operations will mainly consist of the retail operations for the sale and distribution of garments bearing third-party owned brands (such as Off-White, Acne Studios, Comme des Garcons, and Fred Perry) and over 10 self-owned brands (such as: CHOCOOLATE). Unless otherwise agreed between the Joint Offerors, based on the scope of the Other Operations as at the Latest Practicable Date, it is anticipated that, upon completion of the Restructuring:

(a)the Other Operations will have:

(i) around 600 leased stores in Hong Kong, the PRC, Macau and Taiwan, selling multi-branded fashion wear and accessories;
(ii) more than 6,000 employees (working as senior management, store managers, store sales personnel, designers, merchandisers, human resources, finance and administrative personnel);
(iii) over 10 self-owned brands (including :CHOCOOLATE, Izzue, fingercroxx, b+ab, 5cm, under garden, tout à coup, aftermaths, ccaabb, greenishpink, overprotection, blockait, MINI CREAM, and MUSIUM DIV);

(iv) real properties (including office units and car parks in Hong Kong and a warehouse under construction in the PRC);
(v) inventory, fixed assets and contractual relationships that are needed for the operation of the Other Operations (with third-party brand licensors, manufacturers, landlords, or franchisees);
(vi) the remaining cash of the Group other than those allocated to the Brand Operations (capped at HK$1.3 billion for the Other Operations immediately upon completion of the Restructuring); and

(b)

the external bank debt of the Group borrowed by the entities dedicated for the Other Operations (being approximately HK$2 billion as at 31 October 2020 and approximately HK$1.8 billion as at 31 January 2021) will be fully repaid using the Refinancing Proceeds (being up to HK$1.8 billion), the Group's existing cash reserves, any shareholders' loan made under the Framework Agreement (including an interest-free shareholders' loan which may be provided by CVC Holdco to the Offeror Group pursuant to the Framework Agreement for up to an amount equivalent to the sum of HK$126 million plus applicable costs relating to the Refinancing Documents and be allocated to the Other Operations).

Reasons for the Restructuring

As further explained in the sections headed "Reasons for and Benefits of the Proposal" and "The Offeror's Intention Regarding the Group" in the Explanatory Statement in Part VII of this Scheme Document, the Joint Offerors and the Offeror plan to implement the Restructuring and contribute financial and operational resources to the Group in order to reinvigorate growth over a long period through online infrastructure expansion, selective branding, implementing location strategies and exploring new business opportunities. Together with a shared ambition to uncover potential for the Brand Operations, a partnership between the Founder Group and CVC Holdco will provide the optimal structure and platform for both sides to unleash their respective strengths in realising the common objective to create long-term value for the Brand Operations while allowing Founder Holdco to take necessary steps to revive the Other Operations.

Other arrangements

As at the Latest Practicable Date:

(a)save for the Proposal, the Scheme, the Joint Offeror Cooperation Arrangement (being (A) the cancellation of the Founder Scheme Shares in consideration for the Founder Cancellation Consideration; (B) the entry by the relevant members of the Founder Group, CVC Holdco and/or EquityCo into the Consortium Agreement and Shareholders' Agreement; and (C) the transactions in connection with the Restructuring (being the restructuring of the Group and the Offeror Group (as applicable) pursuant to: (a) the Framework Agreement (which terminated and superseded the Restructuring Term Sheet); (b) the implementing agreements relating to asset or share transfers, transitional or long-term services and alternative arrangements in relation to the Restructuring; and (c) the Refinancing Documents)), the Founder Irrevocable Undertakings and the Implementation Agreement, there was no agreement or arrangement (whether by way of option, indemnity or otherwise) in relation to the Shares or shares of EquityCo or the Offeror or any party acting in concert with it which might be material to the Proposal;

(b) there was no agreement or arrangement to which the Offeror or any party acting in concert with it is a party which relates to circumstances in which the Offeror may or may not invoke or seek to invoke a Condition to the Proposal;
(c) save for the Founder Irrevocable Undertakings, neither the Offeror nor any party acting in concert with it had received any irrevocable commitment to vote for or against the Proposal; and
(d) save for the Founder Irrevocable Undertakings and the Joint Offeror Cooperation Arrangement as disclosed in the section headed "Arrangements Material to the Proposal" above, there was no special deal between: (i) any Shareholder; and (ii) either (A) the Offeror or any party acting in concert with it (including the Founder Group and the CVC Network); or (B) the Company or the Company's subsidiaries or associated companies.

SHAREHOLDING STRUCTURE OF THE COMPANY AND EFFECT OF THE PROPOSAL

As at the Latest Practicable Date:

(a) the issued share capital of the Company comprised 1,195,797,307 Shares;
(b) as detailed below, the Founder Group legally or beneficially owned, controlled or had direction over a total of 760,599,564 Shares, representing approximately 63.61% of the total Shares;
(c) CVC Holdco did not legally or beneficially own, control or have direction over any Shares;
(d) the Offeror did not legally or beneficially own, control or have direction over any Shares;
(e) Morgan Stanley, being a concert party of the Offeror, did not legally or beneficially own, control or have direction over any Shares (except those Shares which may be held in its capacity as an exempt principal trader or exempt fund manager for the purpose of the Takeovers Code);
(f) save as disclosed in paragraph (b) above and in the table below, neither the Offeror nor any party acting in concert with it legally or beneficially owned, controlled or had direction over any Shares;
(g) neither the Offeror nor any party acting in concert with it had entered into any outstanding derivative in respect of the securities in the Company;
(h) neither the Offeror nor any party acting in concert with it had borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company; and
(i) the Disinterested Shareholders legally or beneficially owned, controlled or had direction over a total of 435,197,743 Shares, representing approximately 36.39% of the total Shares.

The Founder Scheme Shares will be cancelled in consideration for the Founder Cancellation Consideration pursuant to the Joint Offeror Cooperation Arrangement. All Non-Founder Scheme Shares (being a total of 435,197,743 Shares representing approximately 36.39% of the total Shares) will be cancelled in consideration for the Cancellation Price in cash upon the Scheme becoming effective.

The table below sets out the shareholding structure of the Company as at the Latest Practicable Date and immediately following implementation of the Proposal, assuming that there is no other change in the shareholding of the Company before the Effective Date.

As at theShareholder

Latest Practicable DateImmediately upon the Scheme becoming effective

Number of	Approximate %	Number of	Approximate %
Shares	of total Shares	Shares	of total Shares
(A) Joint Offerors
(A1) Founder Group
ABS 2000 Trust (1)	698,564,441	58.42%	-	-
Mr. Sham Kar Wai (2)	6,834,000	0.57%	-	-
Mr. Sham Kin Wai (3)	6,834,000	0.57%	-	-
Ms. Sham Sau Han (4)(6)	39,743,941	3.32%	-	-
Ms. Sham Sau Wai (4)	7,692,985	0.64%	-	-
Mr. Fung Yuk Hung (4)	930,197	0.08%	-	-
(A2) CVC Holdco	-	-	-	-
(A3) Offeror	-	-	1,195,797,307	100%
(A)Sub-total = (A1)+(A2)+(A3)	760,599,564	63.61%	1,195,797,307	100%
(B) Concert parties of the Offeror (5)	-	-	-	-
(C) Disinterested Shareholders	435,197,743	36.39%	-	-
TOTAL (A)+(B)+(C)	1,195,797,307	100%	1,195,797,307	100%
41

Note (1):

Mr. Sham Kar Wai, Mr. Sham Kin Wai, their spouses and family members are beneficiaries of the ABS 2000 Trust, which is an irrevocable discretionary trust of which HSBCITL is the trustee. Amongst the ABS 2000 Trust Holding Companies, Fine Honour Limited, Fortune Symbol Limited, Fresh Start Holdings Limited and Sure Elite Limited are wholly-owned subsidiaries of Effective Convey Limited. Effective Convey Limited is wholly-owned by Dynamic Vitality Limited, which is in turn wholly-owned by HSBCITL as a trustee of the ABS 2000 Trust (on trust for the benefit of its beneficiaries). Each of Mr. Sham Kar Wai, Mr. Sham Kin Wai, their spouses and family members is therefore deemed to be interested in the interests of the ABS2000 Trust Holding Companies in the Company.

Note (2):

Mr. Sham Kar Wai is an executive Director, Chairman of the Board and the chief executive officer of the Company.

Note (3):

Mr. Sham Kin Wai is an executive Director and the chief creative officer of the Company.

Note (4):

Ms. Sham Sau Han and Ms. Sham Sau Wai are sisters to Mr. Sham Kar Wai and Mr. Sham Kin Wai. Mr. Fung Yuk Hung is brother-in-law to Mr. Sham Kar Wai and Mr. Sham Kin Wai.

Note (5):

Morgan Stanley is the financial adviser to the Offeror in relation to the Proposal. Accordingly, Morgan Stanley and relevant members of the Morgan Stanley group which hold Shares on their own account or on a discretionary managed basis are presumed to be acting in concert with the Offeror in relation to the Company in accordance with class 5 of the definition of "acting in concert" under the Takeovers Code (except in respect of the Shares held by exempt principal traders or exempt fund managers).

Note (6):

The shareholding percentage in the table is subject to rounding adjustment.

The chart below sets out the illustrative shareholding structure of the Company as at the Latest Practicable Date:

Bene ciaries of the Trust 100%

ABS 2000 Trust (HSBCITL as trustee)

The chart below sets out the illustrative shareholding structure of the Company immediately upon the Scheme becoming effective:

EquityCo

100%

Offeror

100%

Company

INFORMATION ON THE GROUP

The Company is an exempted company incorporated in Bermuda with limited liability, the shares of which have been listed on the Stock Exchange since March 2005 with the stock code 999. The Group is principally engaged in the design, sourcing and sale of fashion wear and accessories.

Your attention is drawn to Appendix I headed "Financial Information of the Group" and Appendix IV headed "General Information" to this Scheme Document.

INFORMATION ON THE OFFEROR GROUP

Each of EquityCo and the Offeror is an exempted company incorporated in the Cayman Islands with limited liability and set up for the implementation of the Proposal. The Offeror is wholly-owned by EquityCo (a company incorporated in the Cayman Islands with limited liability).

As at the Latest Practicable Date:

(a) EquityCo had three classes of shares: ordinary shares, class A preference shares and class B preference shares, with the following breakdown.

Number of	Number of	Amount of
Number of	Class A	Class B	the total	% of the
Ordinary	Preference	Preference	share capital	total share
Shares	Shares	Shares	(HK$)	capital
Founder Holdco	5,015,008	1,811,864,043	0	1,816,879,051	50.65%
CVC Holdco	5,012,945	0	1,765,499,925	1,770,512,870	49.35%
Total	10,027,953	1,811,864,043	1,765,499,925	3,587,391,921	100%

Further details of the terms and conditions of EquityCo's ordinary shares, class A preference shares and class B preference shares upon the Effective Date are further described in the section headed "Shareholders' Agreement" above.

For EquityCo's share capital structure immediately upon completion of the Restructuring, please refer to the section headed "Restructuring" above.

(b)The board of each of EquityCo and the Offeror comprised Mr. Sham Kar Wai and Mr. Yann Jiang.

Further details of Mr. Sham Kar Wai are further described in the section headed "Information on the Founder Group" below.

Mr. Yann Jiang is a director and member of the CVC greater China and regional team, based in Hong Kong. Prior to joining CVC, Mr. Jiang worked at Caisse de Dépôt et Placement du Québec in its direct private equity team in Singapore, COTY Inc. in its investment team based in Geneva, and previously at Morgan Stanley in Paris as an investment banking professional. Mr. Jiang holds a master's degree in management from HEC Paris (Grande

Ecole).

The chart below sets out the illustrative shareholding structure of the Offeror as at the Latest Practicable Date:

ABS 2000 Trust

(HSBCITL as trustee)

100%

Dynamic Vitality Limited

(BVI)

100%

Effective Convey Limited

(BVI)

92.17%

CVC Funds

CVC Holdco 49.35%EquityCo

100%

Offeror

INFORMATION ON THE FOUNDER GROUP

The Founder Group comprises Mr. Sham Kar Wai, Mr. Sham Kin Wai, Ms. Sham Sau Han, Ms. Sham Sau Wai, Mr. Fung Yuk Hung, Founder Holdco and the ABS 2000 Trust Holding Companies.

(a) Both Mr. Sham Kar Wai and Mr. Sham Kin Wai founded the Group in 1988 and have more than 30 years of experience in the fashion retail industry.
Mr. Sham Kar Wai is an executive Director, Chairman of the Board and the chief executive officer of the Company. He is responsible for the overall management and strategic development of the Group. He has established an extensive network of contacts with international design houses.
Mr. Sham Kin Wai is an executive Director and the chief creative officer of the Company. CCO's principal focus has been on merchandising and product design for the Company and is responsible for the creative and aesthetic aspects of the Group's businesses.
(b) Founder Holdco is a company incorporated in the British Virgin Islands with limited liability and set up for the implementation of the Proposal. As at the Latest Practicable Date, Founder Holdco was owned as to 92.17% by Effective Convey Limited, a wholly-owned subsidiary of Dynamic Vitality Limited, which was in turn wholly-owned by HSBCITL (as trustee for ABS 2000 Trust on trust for the benefit of Mr. Sham Kar Wai, Mr. Sham Kin Wai, their spouses and family members), 0.90% by Mr. Sham Kar Wai, 0.90% by Mr. Sham Kin Wai, 5.02% by Ms. Sham Sau Han and 1.00% by Ms. Sham Sau Wai. As at the Latest Practicable Date, the directors of Founder Holdco were Mr. Sham Kar Wai and Ms. Sham Sau Han.

(c) The ABS 2000 Trust Holding Companies are directly or indirectly wholly owned by HSBCITL (on trust for the benefits of Mr. Sham Kar Wai, Mr. Sham Kin Wai, their spouses and family members).
(d) Ms. Sham Sau Han and Ms. Sham Sau Wai are sisters to Mr. Sham Kar Wai and Mr. Sham Kin Wai. Mr. Fung Yuk Hung is brother-in-law to Mr. Sham Kar Wai and Mr. Sham Kin Wai.

INFORMATION ON THE CVC NETWORK

The CVC Network comprises CVC Holdco, CVC and CVC Funds.

(a) CVC Holdco is an exempted company incorporated in Hong Kong with limited liability and set up for the implementation of the Proposal. CVC Holdco is ultimately wholly-owned by CVC Funds. CVC Holdco is an independent third party and is not connected with and is not a person acting in concert with the Company or its subsidiaries or any connected persons of the Company (other than members of the Founder Group).
(b) CVC is a leading private equity and investment advisory firm. Founded in 1981, CVC today has a network of 23 offices and approximately 550 employees throughout Europe, Asia and the US. To date, CVC has secured commitments of more than US$160 billion from some of the world's leading institutional investors across its private equity strategies. In total, CVC currently manages over US$117 billion of assets. Today, funds managed or advised by CVC are invested in over 90 companies worldwide, employing approximately 450,000 people in numerous countries. Together, these companies have combined annual sales of over US$100 billion. For more information, please visitwww.cvc.com.
(c) CVC Funds are widely held among a large number of investors, including pension funds, sovereign wealth funds, financial institutions and various other partners.
(d) CVC Capital Partners Asia V Limited is the general partner of CVC Funds. CVC Capital Partners Asia V Limited is ultimately controlled by CVC Capital Partners SICAV-FIS S.A.

REASONS FOR AND BENEFITS OF THE PROPOSAL

Your attention is drawn to the section headed "Reasons for and Benefits of the Proposal" in the Explanatory Statement in Part VII of this Scheme Document.

THE OFFEROR'S INTENTION REGARDING THE GROUP

Your attention is drawn to the section headed "The Offeror's Intention Regarding the Group" in the Explanatory Statement in Part VII of this Scheme Document.

The Board is aware of and welcomes the Offeror's intention regarding the Group as set out in the section headed "The Offeror's Intention Regarding the Group" in the Explanatory Statement in Part VII of this Scheme Document.

FINANCIAL ADVISER

The Offeror has appointed Morgan Stanley as its financial adviser in connection with the Proposal.

INDEPENDENT BOARD COMMITTEE AND JOINT INDEPENDENT FINANCIAL ADVISERS

An Independent Board Committee, which comprises the following independent non-executive Directors: Dr. Wong Tin Yau, Kelvin, JP; Mr. Francis Goutenmacher; and Mr. Tsang Hin Fun, Anthony, has been established by the Board on 4 December 2020 to make a recommendation to the Disinterested Shareholders as to whether (a) the terms of the Proposal, and in particular the Scheme and the Joint Offeror Cooperation Arrangement, are fair and reasonable to the Disinterested Shareholders; and (b) to vote in favour of the Scheme at the Scheme Meeting and the Joint Offeror Cooperation Arrangement at the SGM.

The Joint Independent Financial Advisers have been appointed by the Company with the approval of the Independent Board Committee to advise the Independent Board Committee on the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement. The full text of the letter from the Joint Independent Financial Advisers is set out in Part VI of this Scheme Document.

WITHDRAWAL OF LISTING OF THE SHARES

Upon the Scheme becoming effective, all Scheme Shares will be cancelled (with the equivalent number of new Shares being contemporaneously issued and credited as fully paid to the Offeror) and the share certificates for the Scheme Shares will thereafter cease to have effect as documents or evidence of title. The Company will make an application for the listing of the Shares to be withdrawn from the Stock Exchange in accordance with Rule 6.15(2) of the Listing Rules, with effect immediately following the Effective Date at 9:00 a.m. on Friday, 30 April 2021.

The Scheme Shareholders will be notified by way of an announcement of the dates of the last day for dealing in the Shares and the day on which the Scheme and the withdrawal of the listing of the Shares on the Stock Exchange will become effective.

IF THE SCHEME IS NOT APPROVED OR THE PROPOSAL LAPSES

Subject to the requirements of the Takeovers Code, the Scheme will lapse if any of the Conditions has not been fulfilled or waived, as applicable, on or before the Long Stop Date. If the Scheme is not approved or the Proposal otherwise lapses, the listing of the Shares on the Stock Exchange will not be withdrawn.

If the Scheme is not approved or the Proposal otherwise lapses, there are restrictions under the Takeovers Code on making subsequent offers, to the effect that neither the Offeror nor any person who acted in concert with it in the course of the Proposal (nor any person who is subsequently acting in concert with any of them) may, within 12 months from the date on which the Scheme is not approved or the Proposal otherwise lapses, announce an offer or possible offer for the Company, except with the consent of the Executive.

In the event that proposed privatisation of the Company by the Offeror is not successful, the Company will continue to explore options to refinance the existing indebtedness of the Group and carry on its existing businesses of design, sourcing and sale of fashion wear and accessories.

OVERSEAS SHAREHOLDERS

The making and implementation of the Proposal to Scheme Shareholders who are not resident in Hong Kong may be affected by the Applicable Laws of the relevant jurisdictions. Any Scheme Shareholders who are not resident in Hong Kong should inform themselves about and observe any applicable legal and regulatory requirements in their own jurisdictions.

It is the responsibility of any overseas Scheme Shareholders wishing to take any action in relation to the Proposal to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, compliance with the necessary formalities and the payment of any issue, transfer or other taxes due from such shareholder in such jurisdiction.

Any acceptance by the Scheme Shareholders will be deemed to constitute a representation and warranty from such persons to the Offeror and the Company and their respective advisers, including Morgan Stanley, the financial adviser to the Offeror, that those laws and regulatory requirements have been complied with. If you are in doubt as to your position, you should consult your professional advisers.

Your attention is also drawn to the section headed "Overseas Shareholders" in the Explanatory Statement in Part VII of this Scheme Document.

TAXATION ADVICE

Scheme 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 Proposal. It is emphasised that none of the Offeror, persons acting in concert with the Offeror, the Company, Morgan Stanley or any of their respective directors, officers or associates or any other person involved in the Proposal accepts responsibility (other than in respect of themselves, if applicable) for any taxation effects on, or liabilities of, any other persons as a result of their acceptance or rejection of the Proposal.

Your attention is also drawn to the section headed "Taxation Advice" in the Explanatory Statement in Part VII of this Scheme Document.

REGISTRATION AND PAYMENT

Your attention is drawn to the section headed "Registration and Payment" in the Explanatory Statement in Part VII of this Scheme Document.

ACTIONS TO BE TAKEN

The actions which you are required to take in relation to the Proposal are set out in Part II of this Scheme Document headed "Actions to be Taken".

SCHEME MEETING AND SGM

For the purpose of exercising your right to vote at the Scheme Meeting and/or the SGM, you are requested to read carefully the section headed "Scheme Meeting and SGM" in the Explanatory Statement in Part VII of this Scheme Document, Part II of this Scheme Document headed "Actions to be Taken", and the notices of the Scheme Meeting and the SGM on pages SM-1 to SM-3 and pages SGM-1 to SGM-3, respectively, of this Scheme Document.

RECOMMENDATION

Your attention is drawn to the recommendation of the Joint Independent Financial Advisers to the Independent Board Committee in respect of the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement as set out in the letter from the Joint Independent Financial Advisers in Part VI of this Scheme Document. Your attention is also drawn to the recommendation of the Independent Board Committee in respect of the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement as set out in the letter from the Independent Board Committee in Part V of this Scheme Document.

FURTHER INFORMATION

You are urged to read carefully the letter from the Independent Board Committee as set out in Part V of this Scheme Document, the letter from the Joint Independent Financial Advisers as set out in Part VI of this Scheme Document, the Explanatory Statement as set out in Part VII of this Scheme Document, the appendices to this Scheme Document, the notice of the Scheme Meeting as set out on pages SM-1 to SM-3 of this Scheme Document and the notice of the SGM as set out on pages SGM-1 to SGM-3 of this Scheme Document. In addition, a pink form of proxy in respect of the Scheme Meeting and a white form of proxy in respect of the SGM are enclosed with this Scheme Document.

By order of the Board of

I.T Limited

Sham Kar Wai

Chairman

I.T LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 999)

22 March 2021

To the Disinterested Shareholders

Dear Sir or Madam,

(1) PROPOSAL FOR THE PRIVATISATION

I.T LIMITED BY THE OFFEROR

BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 99 OF THE COMPANIES ACT AND

(2) PROPOSED WITHDRAWAL OF LISTING OF I.T LIMITED

Reference is made to the announcement dated 6 December 2020 jointly issued by the Offeror and the Company in relation to the Proposal and the scheme document dated 22 March 2021 jointly issued by the Offeror and the Company in relation to the Proposal (the "Scheme Document"), the latter of which this letter forms part. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as those defined in the Scheme Document.

We have been appointed by the Board as the Independent Board Committee to make a recommendation to the Disinterested Shareholders as to whether (a) the terms of the Proposal, and in particular the Scheme and the Joint Offeror Cooperation Arrangement, are fair and reasonable to the Disinterested Shareholders; and (b) to vote in favour of the Scheme at the Scheme Meeting and the Joint Offeror Cooperation Arrangement at the SGM. Details of the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement are set out in the letter from the Board and the Explanatory Statement of the Scheme Document.

Challenge Capital and China Tonghai, the Joint Independent Financial Advisers, have been appointed by the Company with our approval, to advise us on the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement. The details of their advice and the principal factors taken into consideration in arriving at their advice are set out in the letter from the Joint Independent Financial Advisers in the Scheme Document.

In the letter from the Joint Independent Financial Advisers as set out in the Scheme Document, the Joint Independent Financial Advisers state that they consider that the terms of the Proposal, including the Scheme and the Joint Offeror Cooperation Arrangement, are fair and reasonable so far as the Disinterested Shareholders are concerned, and advise the Independent Board Committee to recommend the Disinterested Shareholders to vote in favour of the Scheme at the Scheme Meeting and the Joint Offeror Cooperation Arrangement at the SGM.

The Independent Board Committee, having considered the terms of the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement, and having taken into account the advice of the Joint Independent Financial Advisers, and in particular the factors, reasons and recommendations as set out in its letter, considers that the terms of the Proposal, the Scheme and the Joint Offeror Cooperation Arrangement are fair and reasonable as far as the Disinterested Shareholders are concerned.

Accordingly, the Independent Board Committee recommends:

(1) at the Scheme Meeting, the Disinterested Shareholders to vote in favour of the Scheme;
(2) at the SGM,
- (a) the Shareholders to vote in favour of:
  - (i) the special resolution to approve any reduction of the issued share capital of the Company by the cancellation of the Scheme Shares; and
  - (ii) the ordinary resolution to approve the application of the reserve created by the cancellation of the Scheme Shares to contemporaneously maintain the issued share capital of the Company by allotting and issuing to the Offeror such number of new Shares (credited as fully paid) as is equal to the number of the Scheme Shares cancelled and the authorisation of the directors of the Company to do all acts and things considered by them to be necessary or desirable in connection with the implementation of the Scheme; and
- (b) the Disinterested Shareholders to vote in favour of the ordinary resolution to approve the Joint Offeror Cooperation Arrangement which constitutes a special deal under Rule 25 of the Takeovers Code.

The Independent Board Committee draws the attention of the Disinterested Shareholders to (i) the letter from the Board as set out in the Scheme Document; (ii) the letter from the Joint Independent Financial Advisers, which sets out the principal factors taken into consideration in arriving at their advice to the Independent Board Committee, as set out in the Scheme Document; and (iii) the Explanatory Statement as set out in the Scheme Document.

Yours faithfully, Independent Board Committee

Mr. Francis Goutenmacher	Dr. Wong Tin Yau, Kelvin, JP	Mr. Tsang Hin Fun, Anthony
Independent	Independent	Independent
Non-Executive Director	Non-Executive Director	Non-Executive Director
51

The following is the full text of a letter of advice from Challenge Capital and China Tonghai, the Joint Independent Financial Advisers to the Independent Board Committees, for the purpose of incorporation into the Scheme Document.

22 March 2021

To the Independent Board Committee

Dear Sirs,

(1) PROPOSAL FOR THE PRIVATISATION OF

I.T LIMITED

BY THE OFFEROR BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 99 OF THE COMPANIES ACT

AND

(2) PROPOSED WITHDRAWAL OF LISTING OF I.T LIMITED

INTRODUCTION

We refer to our appointment as the joint independent financial advisers to the Independent Board Committee in respect of the Proposal, details of which are set out in the Scheme Document dated 22 March 2021 jointly issued by the Company and the Offeror in relation to the Proposal, of which this letter forms part. Capitalised terms used in this letter shall have the same meanings as those defined in the Scheme Document unless the context otherwise requires.

The Independent Board Committee consists of all independent non-executive Directors, namely Dr. Wong Tin Yau, Kelvin, JP; Mr. Francis Goutenmacher; and Mr. Tsang Hin Fun, Anthony. The Independent Board Committee has been established to make a recommendation to the Disinterested Shareholders as to whether: (a) the terms of the Proposal including the Scheme and the Joint Offeror Cooperation Arrangement, are fair and reasonable so far as the Disinterested Shareholders are concerned; and (b) to vote in favour of the Scheme at the Scheme Meeting and the Joint Offeror Cooperation Arrangement at the SGM. The Independent Board Committee has approved our appointment as the Joint Independent Financial Advisers in respect of the Proposal. As the Joint Independent Financial Advisers, our role is to give an independent opinion to the Independent Board Committee in such regard.

Each of Challenge Capital and China Tonghai is not associated with the Company, the Offeror, their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them. Apart from normal professional fees paid or payable to us in connection with this engagement, no other arrangement exists whereby we will receive any fees or benefits from the Company, the Offeror, their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them. Accordingly, we are considered eligible to give an independent opinion to the Independent Board Committee.

BASIS OF OUR OPINION

In formulating our opinion and advice, we have relied on (a) the information, facts and representations contained or referred to in the Scheme Document; (b) the information, facts and representation supplied or provided by the Company, the Directors and the management of the Group; (c) the opinions expressed by and the representations of the Directors and the management of the Group; and (d) our review of relevant public information. We have assumed that all the information and facts provided and representations and beliefs, intentions and opinions expressed to us or contained or referred to in the Scheme Document are true, accurate and complete in all respects as at the Latest Practicable Date and may be relied upon. We have also assumed that all statements contained and information, facts and representations made to us or referred to in the Scheme Document were true at the time they were made and continue to be true up to the time of the Scheme Meeting and SGM and all statements of belief, intentions and opinions of the Directors and the management of the Group and those as set out or referred to in the Scheme Document were reasonably made after due and careful enquiry. We have no reason to doubt the truth, accuracy and completeness of such information, representations, beliefs, opinions and intentions provided to us by the Directors and the management of the Group. We have also sought and received confirmation from the Company that no material facts have been withheld or omitted from the information provided to us and referred to in the Scheme Document and that all information or facts provided or representations or beliefs, opinions or intentions provided to us by any of the Directors and the management of the Company are true, accurate, complete and not misleading in all respects which have been made after due and careful enquiry at the time they were made and continued to be so until the Scheme Meeting and SGM.

The Scheme Shareholders will be informed by the Company and us as soon as practicable if there is any material change to the information disclosed in the Scheme Document during the offer period, in which case we will consider whether it is necessary to revise our opinion and inform the Independent Board Committee and the Disinterested Shareholders accordingly.

We consider that we have reviewed sufficient information currently available to reach an informed view so as to provide a reasonable basis for our opinion regarding the terms of the Proposal. We have not, however, carried out any independent verification of the information provided, representations made or opinions expressed by the Directors and the management of the Group, nor have we conducted any form of in-depth investigation into the business, affairs, operations, financial position or future prospects of the Company or any of its respective subsidiaries and associates.

We have not considered the tax and regulatory implications on the Disinterested Shareholders as a result of the Proposal, if implemented, since these are particular to their individual circumstances. In particular, the Disinterested Shareholders who are overseas residents or subject to overseas taxation or Hong Kong taxation on securities dealings should consider their own tax position and, if in any doubt, should consult their own professional advisers.

PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSAL

On 6 December 2020, the Offeror and the Company jointly announced that they had entered into the Implementation Agreement on 5 December 2020, pursuant to which the parties had agreed to use all reasonable endeavours to implement the Proposal to privatise the Company by way of a scheme of arrangement under section 99 of the Companies Act. Subject to the satisfaction of the Pre-Condition (being the SAMR issuing a notice approving the Proposal and the Scheme, or the statutory clearance period specified by the SAMR pursuant to the PRC Anti-Monopoly Law, including any extension of such period, having elapsed and no objection having been raised or qualifications or requirements imposed by the SAMR in relation to the Proposal or the Scheme), the Proposal will be made. On 19 January 2021, the Pre-Condition was satisfied.

Subject to the fulfilment or waiver (as applicable) of the Conditions, the proposed privatisation of the Company will be implemented by way of the Scheme.

(a)Terms of the Proposal

If the Proposal is approved and implemented:

(i) the Founder Scheme Shares held by the Founder Group will be cancelled in consideration for the Founder Cancellation Consideration pursuant to the Joint Offeror Cooperation Arrangement;

(ii) all Non-Founder Scheme Shares will be cancelled in consideration for the Cancellation Price of HK$3 per Non-Founder Scheme Share, which shall be paid in cash;
(iii) new Shares will be issued to the Offeror, credited as fully paid, such that the Company will become wholly-owned directly by the Offeror; and
(iv) the listing of the Shares on the Stock Exchange will be withdrawn with effect immediately following the Effective Date.

Based on the Cancellation Price and the number of Shares in issue as at the Latest Practicable Date, the Proposal valued 100% equity interest in the Company at approximately HK$3,587,391,921.

The Disinterested Shareholders should note that as stated in the "Letter from the Board" in the Scheme Document, the Cancellation Price will not be increased and the Offeror does not reserve the right to do so. If the Scheme is not approved or the Proposal otherwise lapses, neither the Offeror nor any person who acted in concert with it in the course of the Proposal (nor any person who is subsequently acting in concert with any of them) may, within 12 months from the date on which the Scheme is not approved or the Proposal otherwise lapses, announce an offer or possible offer for the Company, except with the consent of the Executive.

(b)Conditions of the Proposal

The Proposal is, and the Scheme will become effective and binding on the Company and all the Shareholders, subject to the fulfilment or waiver (as applicable) of, among other things, the following Conditions.

(i) the approval of the Scheme (by way of poll) by a majority in number of the Scheme Shareholders present and voting at the Scheme Meeting, representing not less than 75% in value of those Scheme Shares that are voted either in person or by proxy by the Scheme Shareholders at the Scheme Meeting (the Founder Group having provided an undertaking to the Court to agree to and be bound by the Scheme and to receive the Founder Cancellation Consideration in consideration for cancellation of its Founder Scheme Shares under the Scheme);
(ii) the approval of the Scheme (by way of poll) by at least 75% of the votes attaching to the Scheme Shares held by the Disinterested Shareholders (being all Scheme Shareholders, other than those acting in concert with the Offeror) that are voted either in person or by proxy at the Scheme Meeting, provided that the number of votes cast against the resolution to approve the Scheme is not more than 10% of the votes attaching to all of the Scheme Shares held by the Disinterested Shareholders;
(iii) the passing by the Shareholders at the SGM of: (a) a special resolution to approve any reduction of the issued share capital of the Company by the cancellation of the Scheme Shares; and (b) an ordinary resolution to apply the reserve created by the cancellation of the

Scheme Shares to simultaneously restore the issued share capital of the Company by the allotment and issue to the Offeror of such number of new Shares (credited as fully paid) as is equal to the number of the Scheme Shares cancelled;

(iv) the sanction of the Scheme (with or without modification) by the Court and the delivery to the Registrar of Companies in Bermuda of a copy of the order of the Court for registration;

(v) compliance with the procedural requirements and conditions, if any, under section 46(2) of the Companies Act in relation to any reduction of the issued share capital of the Company;
(vi) in relation to the Joint Offeror Cooperation Arrangement: (i) the receipt of an opinion from the Independent Financial Adviser to the Independent Board Committee confirming that the Joint Offeror Cooperation Arrangement is fair and reasonable as far as the Disinterested Shareholders are concerned; (ii) the passing of an ordinary resolution by the Disinterested Shareholders at the SGM to approve the Joint Offeror Cooperation Arrangement; and (iii) the grant of consent under Note 3 to Rule 25 of the Takeovers Code from the Executive to the Joint Offeror Cooperation Arrangement;
(vii) all Approvals which are: (i) required in connection with the Proposal by Applicable Laws or any licences, permits or contractual obligations of the Company; and (ii) material in the context of the Group (taken as a whole), having been obtained (or, as the case may be, completed) and remaining in full force and effect without modification up to and as at the Effective Date;
(viii) no Authority in any jurisdiction having taken or instituted any action, proceeding, suit, investigation or enquiry (or enacted or proposed, and there not continuing to be outstanding, any statute, regulation, demand or order), in each case, which would make the Proposal void, unenforceable, illegal or impracticable (or which would impose any material and adverse conditions or obligations with respect to the Proposal);
(ix) all Applicable Laws having been complied with and no legal or regulatory requirement having been imposed by any Authority which is not expressly provided for, or is in addition to the requirements expressly provided for, in the Applicable Laws in connection with the Proposal which are material in the context of the Group (taken as a whole), in each case up to and as at the Effective Date;
(x) since the date of the Joint Announcement, there having been no material adverse change to the business, financial or trading position of the Group, each taken as a whole; and
(xi) save in connection with the implementation of the Proposal, the listing of the Company on the Stock Exchange not having been withdrawn, and no indication having been received from the Executive and/or the Stock Exchange to the effect that the listing of the Shares on the Stock Exchange is or is likely to be withdrawn.

The Conditions in paragraphs (i) to (ix) (inclusive) above are not waivable. The Offeror reserves the right to waive all or any of the Conditions in paragraphs (x) to (xi) (inclusive) above in whole or in part. The Company does not have the right to waive any of the Conditions. All of the Conditions must be fulfilled or waived, as applicable, on or before the Long Stop Date, failing which the Proposal and the Scheme will lapse. For details of the other Conditions, please refer to the section headed "5. Conditions of the Proposal" in "Part VII Explanatory Statement" of the Scheme Document.

As at the Latest Practicable Date, none of the Conditions had been satisfied or waived.

(c)Founder irrevocable undertakings

On 5 December 2020, each member of the Founder Group gave an irrevocable undertaking in favour of the Offeror and CVC Holdco (being the other Joint Offeror):

(i) to agree to and assist in implementing the cancellation of the Founder Scheme Shares held by them in consideration for the Founder Cancellation Consideration;
(ii) to provide undertakings to the Court to agree to and be bound by the Scheme and to receive the Founder Cancellation Consideration in consideration for cancellation of their Founder Scheme Shares under the Scheme;
(iii) to the extent permitted by Applicable Laws (including the Takeovers Code), to vote any Shares held by them in favour of any resolutions proposed at the SGM to implement the Scheme or which are necessary for the Scheme to become effective; and
(iv) not to: (a) dispose of any interest in any Shares held by them; (b) accept any other offer to acquire such Shares; or (c) vote in favour of any resolution which is proposed in competition with the Scheme, until the Scheme becomes effective, lapses or is withdrawn.

The Founder Irrevocable Undertakings will be terminated if the Scheme is not approved or the Proposal otherwise lapses or is withdrawn.

(d)Arrangements material to the Proposal

(i)Implementation AgreementOn 5 December 2020, the Offeror and the Company entered into the Implementation Agreement, pursuant to which the Company has undertaken to the Offeror to: (a) use all reasonable endeavours to implement the Scheme; and (b) procure that, prior to the earlier of the Effective Date and termination of the Implementation Agreement, unless otherwise approved by the Shareholders in a general meeting in accordance with Rule 4 of the Takeovers Code, the Group shall not take certain actions, details of which are set out in the section headed "7. Arrangements Material to the Proposal" in "Part VII Explanatory Statement" in the Scheme Document.

In addition, the Company has further undertaken, among other things, that it will not, and will procure that no member of the Group shall, directly or indirectly:

(a) solicit, encourage, or otherwise seek to procure the submission of proposals, indications of interests or offers of any kind which are reasonably likely to lead to an alternative offer from any person other than the Offeror; and
(b) enter into, or participate in, any discussions or negotiations (other than responding to unsolicited enquiries) with any such person in relation to an alternative offer or provide any due diligence information on the Company and the Group to any third party in connection therewith, save to the extent that, based on the written advice of external legal counsel: (i) the Board reasonably considers that they are likely to be in breach of their directors' duties or statutory duties not to do so; or (ii) they are required to do so under Rule 6 of the Takeovers Code or other Applicable Laws.

The Implementation Agreement will be terminated if the Scheme is not approved or the Proposal otherwise lapses or is withdrawn.

(ii)

Joint Offeror Cooperation Arrangement

As part of the Proposal, the relevant members of the Founder Group, CVC Holdco and/or EquityCo entered into the following Joint Offeror Cooperation Arrangement:

(a) Consortium Agreement;
(b) Shareholders' Agreement; and
(c) Transactions in connection with the Restructuring (being the restructuring of the Group and the Offeror Group (as applicable) pursuant to: (a) the Framework Agreement (which terminated and superseded the Restructuring Term Sheet); (b) the implementing agreements relating to asset or share transfers, transitional or long-term services and alternative arrangements in relation to the Restructuring; and (c) the Refinancing Documents.

The Joint Offeror Cooperation Arrangement governs the cooperation between the Founder Group and CVC Holdco. Further details of the Joint Offeror Cooperation Arrangement are set out in the section headed "8. Joint Offeror Cooperation Arrangement" below.

(e)

Expected timetable of the Proposal

The indicative timetable for the Proposal is set out in "Expected Timetable" in the Scheme Document. Further announcement will be made by the Offeror and the Company if there is any change to the timetable.

In compliance with Rule 20.1(a) of the Takeovers Code, upon the Scheme becoming effective, the consideration for cancellation of the Non-Founder Scheme Shares will be paid to the Non-Founder Scheme Shareholders as soon as possible, but in any event within seven business days (as defined in the Takeovers Code) following the Effective Date.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion and recommendation with regard to the Proposal, we have taken into account the following principal factors and reasons:

Background information of the Group

The Company is a company incorporated in Bermuda with limited liability, the shares of which have been listed on the Stock Exchange since March 2005. The Group is principally engaged in the design, sourcing and sales of fashion wear and accessories. The Group positions itself as a fashion trendsetter. The Company has established joint ventures with French Connection, Zadig & Voltaire,

Camper, Galeries Lafayette, Kenzo and Simone Rocha.

The Group offers a wide range of fashion apparel and accessories with different fashion concepts at various retail price points that target at different customer groups. It carries apparel and accessories from over 300 established and up-and-coming international designer's brands and over 10 in-house brands and licensed brands. In-house brands include A Bathing Ape, AAPE, izzue, b+ab, 5cm, fingercroxx, :CHOCOOLATE, MUSIUM DIV., and Venilla suite. Licensed brands include Off-White, Acne Studios, Comme des Garcons, Fred Perry, as know as de Rue, MLB and X-Large. The in-house brand segment provided the Group with the largest revenue contribution, amounting to an average of approximately 60.2% of the retail sales for the three years ended 29 February 2020 whereas the international brand segment and the licensed brand segment contributed about an average of approximately 39.1% and approximately 0.7% of retail sales for the three years ended 29 February 2020, respectively.

PRC and Hong Kong are the major markets of the Group. PRC is the largest market of the Group, which accounted for approximately 46.6% and 48.6% of the Group's turnover for the years ended 28

February 2019 ("FY18/19") and 29 February 2020 ("FY19/20"), respectively. Hong Kong and Macau accounted for approximately 38.8% and 33.9% of the Group's turnover for FY18/19 and FY19/20, respectively. Japan and the US accounted for approximately 13.0% and 15.7% of the Group's turnover for FY18/19 and FY19/20, respectively. For the six months ended 31 August 2020 ("1H FY20/21"), PRC, Hong Kong and Macau, and Japan and the US accounted for approximately 58.5%, 26.7% and 13.0% of the Group's turnover, respectively.

As at 31 August 2020, the Group had 797 self-managed stores and 22 franchised stores. Set out below is the breakdown of the number of stores and sales footage of gross area (in square feet) by I.T store (multi brand store) and other store and by geographic region:

Self-managed	Franchised
31	29	28	31	29	28
August % (Note)	February % (Note)	February % (Note)	August % (Note)	February % (Note)	February % (Note)
2020	2020	2019	2020	2020	2019

Greater China:

Hong Kong

I.T

- Number of stores	172	21.6	189	22.1	215	24.9	-	-	-	-	-	-
- Sales footage	451,490	20.2	522,892	21.6	534,825	21.9	-	-	-	-	-	-
Others
- Number of stores	5	0.6	5	0.6	6	0.7	-	-	-	-	-	-
- Sales footage	5,038	0.2	5,038	0.2	6,280	0.3	-	-	-	-	-	-
Hong Kong sub-total
- Number of stores	177	22.2	194	22.7	221	25.6	-	-	-	-	-	-
- Sales footage	456,528	20.4	527,930	21.8	541,105	22.1	-	-	-	-	-	-
PRC
I.T
- Number of stores	510	64.0	537	62.8	532	61.6	5	22.7	9	29.0	23	46.9
- Sales footage	1,595,008	71.3	1,671,913	69.0	1,697,612	69.5	6,273	26.5	11,072	37.0	27,578	47.1
Others
- Number of stores	46	5.8	59	6.9	50	5.8	-	-	-	-	-	-
- Sales footage	54,738	2.4	89,027	3.7	76,804	3.1	-	-	-	-	-	-
PRC sub-total
- Number of stores	556	69.8	596	69.7	582	67.4	5	22.7	9	29.0	23	46.9
- Sales footage	1,649,746	73.7	1,760,940	72.7	1,774,416	72.6	6,273	26.5	11,072	37.0	27,578	47.1
58

Self-managed 29

Franchised 29

August % (Note) February % (Note) February % (Note)August % (Note) February % (Note) February % (Note)

2020

2019

2020

2019

Taiwan

- Number of stores	22	2.8	24	2.8	22	2.5	-	-	-	-	-	-
- Sales footage	33,920	1.5	35,466	1.5	33,160	1.4	-	-	-	-	-	-
Macau
I.T
- Number of stores	11	1.4	11	1.3	13	1.5	-	-	-	-	-	-
- Sales footage	35,793	1.6	35,793	1.5	38,241	1.6	-	-	-	-	-	-
Others
- Number of stores	1	0.1	1	0.1	1	0.1	-	-	-	-	-	-
- Sales footage	1,998	0.1	1,998	0.1	1,998	0.1	-	-	-	-	-	-
Macau sub-total
- Number of stores	12	1.5	12	1.4	14	1.6	-	-	-	-	-	-
- Sales footage	37,791	1.7	37,791	1.6	40,239	1.6	-	-	-	-	-	-
Overseas:
Japan
- Number of stores	26	3.3	25	2.9	22	2.5	-	-	-	-	-	-
- Sales footage	47,663	2.1	47,446	2.0	44,728	1.8	-	-	-	-	-	-
US
- Number of stores	4	0.5	4	0.5	3	0.3	-	-	-	-	-	-
- Sales footage	12,017	0.5	12,017	0.5	10,595	0.4	-	-	-	-	-	-
Japan and US sub-total
- Number of stores	30	3.8	29	3.4	25	2.9	-	-	-	-	-	-
- Sales footage	59,680	2.7	59,463	2.5	55,323	2.3	-	-	-	-	-	-
Other countries sub-total
- Number of stores	-	-	-	-	-	-	17	77.3	22	71.0	26	53.1
- Sales footage	-	-	-	-	-	-	17,440	73.5	18,859	63.0	30,943	52.9
Total
- Number of stores	797	100.0	855	100.0	864	100.0	22	100.0	31	100.0	49	100.0
- Sales footage	2,237,665	100.0	2,421,590	100.0	2,444,243	100.0	23,713	100.0	29,931	100.0	58,521	100.0

Note:

Represented the approximate percentage over the respective total number of stores or sales footage

Overall comments

As shown in the above table, PRC and Hong Kong are major markets of the Group in terms of sales footage. PRC and Hong Kong accounted for approximately 74.1% and 20.1% of total sales footage as at 31 August 2020. The majority of the Group's stores are I.T stores which are multi-brand stores.

The overall number of stores and sales footage remained at similar level as at 28 February 2019 (total store count: 913; total sales footage: 2,502,764 square feet) and 29 February 2020 (total store count: 886; total sales footage: 2,451,521 square feet).

The total number of all stores decreased from 886 as at 29 February 2020 to 819 as at 31 August 2020. The total sales footage of all stores also decreased from 2,451,521 square feet as at 29 February 2020 to 2,261,378 square feet as at 31 August 2020. The decreases were primarily attributable to the decreases in number of stores and sales footage in both PRC and Hong Kong. This was in line with theGroup's strategy to control costs in response to the difficult trading environment as disclosed in the interim report for the six months ended 31 August 2020 (the "2020/2021 Interim Report"). Such measures included a comprehensive review of the Group's retail store portfolio and closures of certain loss-making retail locations.

Financial information of the Group (a) Financial performance

(i)The following table sets out selective information of the consolidated statements of profit or loss and other comprehensive income of the Group for FY18/19, FY19/20, the six months ended 31 August 2019 ("1H FY19/20") and 1H FY20/21, as extracted from the annual report for the year ended 29 February 2020 of the Company (the

"2019/2020 Annual Report") and the 2020/2021 Interim Report:


Turnover	2,734,698	4,015,362
Changes	(31.9%)	(1.2%)
Cost of sales	(1,241,498)	(1,520,262)
Gross profit	1,493,200	2,495,100
Gross profit margin	54.6%	62.1%
Operating (loss)/profit	(223,534)	144,679
(Loss)/profit before taxation	(291,641)	67,282
Income tax expense	(45,434)	(138,453)
(Loss)/profit for the year/
period	(337,075)	(71,171)
(Loss)/profit attributable to
the Shareholders	(337,265)	(71,958)
(Loss)/earnings per Share
(HK$)	(0.282)	(0.060)
Dividend per Share (HK$)	-	-

For the year	For the year
For the six months	ended 29	ended 28
ended 31 August	February	February
2020 2019	2020	2019
HK$'000 HK$'000	HK$'000	HK$'000
(unaudited) (unaudited)	(audited)	(audited)
7,719,378	8,832,157
(12.6%)	5.4%
(2,955,674)	(3,192,446)
4,733,704	5,639,711
61.3%	63.9%
(380,056)	753,614
(548,341)	707,792
(197,429)	(263,647)
(745,770)	444,145
(747,254)	442,599
(0.625)	0.370
-	0.180

(ii)The following table sets out further information in respect of the Group's financial performance for FY18/19, FY19/20, 1H FY19/20 and 1H FY20/21, as extracted from the 2019/2020 Annual Report and the 2020/2021 Interim Report:

For the year ended 29	For the year ended 28
February	February
2020	2019	2020	2019
% over total	% over total	% over total	% over total
HK$'000 turnover	HK$'000 turnover	HK$'000 turnover	HK$'000 turnover
(unaudited)	(unaudited)	(audited)	(audited)

For the six months ended 31 August

Turnover

Hong Kong and Macau Same-store sales growth Gross profit margin

PRC

728,995 (48.9%) 47.8% 1,600,039

26.7%

1,480,955

36.9%

2,620,158

33.9% 3,424,832 38.8%

(5.8%) 58.7%

(23.2%) 2.4%

57.7% 62.5%

Same-store sales growth Gross profit margin

Japan and the US Same-store sales growth Gross profit margin

(9.3%) 55.3% 355,680 - (note)

58.5% 1,870,218 5.9% 61.3%

46.6%

3,751,430

48.6% 4,122,541 46.7%

(5.3%) 1.7%

60.1% 62.1%

13.0%

607,256 - (note)

15.1% 1,209,238 - (note)

15.7% 1,152,738 13.0% - (note)

Other

Total turnover

60.7% 49,984 2,734,698

1.8% 100.0%

70.8% 56,933 4,015,362

70.0% 71.2%

1.4% 100.0%

138,552 1.8% 132,046 1.5%

7,719,378 100.0% 8,832,157 100.0%

Segment (loss)/profit Hong Kong and Macau PRC

Japan and the US Other

(414,329) 104,822 68,151 17,822

(153,671) 29,627 253,790 14,933

(671,718) 12,609 (236,443) 229,105 482,856 474,858 45,249 37,042

Operating (loss)/profit

(223,534)

144,679

(380,056) 753,614

Note:

Not available.

Hong Kong and Macau

FY18/19 and FY19/20

In FY19/20, turnover in the Hong Kong and Macau segment decreased by approximately 23.5% to approximately HK$2,620.2 million while it contributed approximately 33.9% towards the Group's total turnover (FY18/19: approximately 38.8%). The decline was primarily attributable to a reduction in the store distribution network in Hong Kong and negative comparable-store-sales-growth as a result of multiple factors including social instability and the outbreak of COVID-19.

It is noted that the Group has implemented multiple measures to control costs in response to the difficult business environment. These measures have included a comprehensive review of the Group's retail store portfolio, leading to renegotiation and exits of certain loss-making retail locations while selectively opening new ones. A net closure of 27 stores in Hong Kong and Macau segment was recorded for FY19/20. Savings were also achieved in other costs such as staff costs and marketing expenses.

Gross profit margin decreased to approximately 57.7% in FY19/20 (FY18/19: approximately 62.5%). This decline in gross profit margin was primarily due to an increase in discount related activities to boost sales volume and reduce inventory amidst the difficult business environment.

Impairment of property, furniture and equipment and right-of-use assets amounted to approximately HK$44.3 million and HK$199.3 million in FY19/20 respectively, while there was a reversal of impairment of property, furniture and equipment of approximately HK$3.3 million for FY18/19.

As a result of the above, an operating loss of approximately HK$671.7 million was recorded for the Hong Kong and Macau segment in FY19/20 (FY18/19: operating profit of approximately HK$12.6 million).

1H FY19/20 and 1H FY20/21

Turnover in the Hong Kong and Macau segment decreased by approximately 50.8% to approximately HK$729.0 million while the segment contributed approximately 26.7% towards the Group's total turnover (1H FY19/20: approximately 36.9%). Retail sales also decreased by approximately 50.9% to HK$719.2 million. Comparable-store-sales-growth registered a decline of approximately 48.9% (1H FY19/20: a decrease of approximately 5.8%). The decrease in turnover was principally attributable to a reduction in the store distribution network in Hong Kong and negative comparable-store-sales-growth. Additionally, stores in this segment were either temporarily closed or operated with reduced opening hours in 1H FY20/21 due to COVID-19 pandemic. Irrespective of the gradual reopening of stores, demand remained significantly subdued in Hong Kong and Macau. As advised by the management of the Group, this was mainly due to the weak consumer sentiment in uncertain economic environment and the substantial decline in inbound tourism as a result of travel restrictions imposed by governments.

Other income increased by approximately 200.6% to approximately HK$101.5 million in 1H FY20/21 from approximately HK$33.8 million in 1H FY19/20 mainly due to the income from the subsidies granted under the Anti-Epidemic Fund by the Hong Kong Government, namely (i) the Employment Support Scheme, which amounted to approximately HK$49.0 million, for the use of paying wages of employees from June to August 2020; and (ii) the Retail Sector Subsidy Scheme amounted to approximately HK$4.7 million, for subsidising retail stores' operations.

Gross profit margin decreased to approximately 47.8% (1H FY19/20: approximately 58.7%). This decline in gross profit margin was primarily the result of an increase in discount related activities with the objective of boosting sales volume amidst the challenging operational environment.

Impairment of property, furniture and equipment and right-of-use assets amounted to approximately HK$28.4 million and HK$139.9 million for 1H FY20/21 respectively, while impairment of property, furniture and equipment and right-of-use assets for 1H FY19/20 amounted to approximately HK$1.6 million and HK$11.7 million respectively.

As a result of the above, an operating loss of approximately HK$414.3 million was recorded for the Hong Kong and Macau segment for 1H FY20/21 (1H FY19/20: operating loss of approximately HK$153.7 million).

PRC

FY18/19 and FY19/20

Turnover of PRC operations decreased by approximately 9.0% to approximately HK$3,751.4 million which contributed towards approximately 48.6% of the Group's total turnover (FY18/19: approximately 46.7%). The sales declined substantially in January and February 2020 in a market environment defined by temporary store closures and travel restrictions in several cities of the country due to the outbreak of COVID-19.

Gross profit margin decreased by approximately 2.0% to approximately 60.1%, principally due to the extra discount-related promotions that were offered in FY19/20 with the objective of boosting sales volume.

Impairment of property, furniture and equipment, right-of-use assets and goodwill amounted to approximately HK$23.2 million, HK$115.1 million and HK$231.5 million in FY19/20 respectively, while there was a reversal of impairment of property, furniture and equipment of approximately HK$0.7 million in FY18/19.

As a result of the above, an operating loss amounting to approximately HK$236.4 million was recorded for the PRC segment in FY19/20 (FY18/19: operating profit of approximately HK$229.1 million).

1H FY19/20 and 1H FY20/21

Turnover of PRC operations decreased by approximately 14.4% from approximately HK$1,870.2 million to approximately HK$1,600.0 million in 1H FY20/21, which contributed towards approximately 58.5% of the Group's total turnover in 1H FY20/21 (1H FY19/20: approximately 46.6%). Such increase in the contribution to the Group's total turnover in 1H FY20/21 was primarily due to the decrease in turnover of approximately 50.8% from approximately HK$1,481.0 million to approximately HK$729.0 million in the Group's Hong Kong and Macau operations that dragged down the Hong Kong and Macau segment's contribution in 1H FY20/21.

As disclosed in the 2020/2021 Interim Report, although e-commerce sales have seen significant growth for PRC operations, which, based on the information provided by the management of the Group, for 1H FY19/20 and 1H FY20/21, the breakdown for PRC's e-commerce sales grew by approximately 90.3% to approximately HK$398.9 million in 1H FY20/21 compared to 1H FY19/20, this growth was not sufficient to compensate for the sales losses of approximately HK$465.3 million in 1H FY20/21 compared to 1H FY19/20 incurred by retail stores in this segment as a result of temporary closure or reduced operating hours, which reflected the various health-related and travel restrictions under COVID-19. As discussed with the management of the Group, the Group will continue to deploy resources in development of digital channels which is in line with the Group's strategy in e-commerce development since 2019 as disclosed in the 2020/2021 Interim Report. Total retail sales decreased by approximately 14.9% to approximately HK$1,580.3 million, with comparable-store-sales registering a negative growth rate of approximately 9.3% (1H FY19/20: positive growth rate of approximately 5.9%).

Gross profit margin decreased by approximately 6.0% to approximately 55.3%, principally due to the extra discount-related promotions that were offered during the period. In response to the unprecedented situation, the Group has aggressively implemented cost reduction initiatives across different levels of the business, including cuts in marketing and other discretionary expense items, to mitigate the impact of the pandemic.

Impairment of property, furniture and equipment and right-of-use assets amounted to approximately HK$14.0 million and HK$18.3 million in 1H FY20/21 respectively, while impairment of property, furniture and equipment, right-of-use assets and goodwill amounted to approximately HK$19.4 million, HK$53.8 million and HK$46.8 million for 1H FY19/20 respectively.

As a result of the above, an operating profit amounting to approximately HK$104.8 million was recorded for the PRC segment in 1H FY20/21 (1H FY19/20: operating profit of approximately HK$29.6 million).

Japan and US

For FY18/19 and FY19/20

Turnover for the Japan and US segment increased by approximately 4.9% to approximately HK$1,209.2 million amidst a challenging operational environment. Sales in this segment contributed approximately 15.7% of the Group's total turnover (FY18/19: approximately 13.0%). The unique brand collections in these regions, namely A Bathing Ape and its subsidiary lines, have proven to be resilient in an economic environment disrupted by several negative macroeconomic factors. In particular, the Group added a total of four "A Bathing Ape" and "AAPE" stores in Tokyo and Osaka, Japan and Miami, the US in FY19/20.

Gross profit margin slightly decreased to approximately 70.0% (FY18/19: approximately 71.2%) while operating profit increased by approximately 1.7% to approximately HK$482.9 million.

1H FY19/20 and 1H FY20/21

The Japan and US segment, which accounted for approximately 13.0% of the Group's total turnover in 1H FY20/21 (1H FY19/20: approximately 15.1%), has had to navigate the same difficult pandemic-implicated business environment. Turnover of the Japan and US segment decreased by approximately 41.4% to approximately HK$355.7 million while gross profit margin decreased by approximately 10.1% to approximately 60.7% for 1H FY20/21 (1H FY19/20: approximately 70.8%). It is noted that the Group was extending the presence of "A Bathing Ape" and "AAPE" brands globally, both online and offline. The segment profit declined by approximately 73.1% from approximately HK$ 253.8 million in 1H FY19/20 to approximately HK$ 68.2 million in 1H FY20/21.

The Group

For FY18/19 and FY19/20

Turnover of the Group declined by approximately 12.6% to approximately HK$7,719.4 million in FY19/20 (FY18/19: approximately HK$8,832.2 million).

Gross profit decreased by approximately 16.1% and gross profit margin decreased by approximately 2.6% mainly due to the extra discount activities that were offered in FY19/20. These were caused by multiple macro factors, such as the Sino-US trade dispute, regional social events and the outbreak of COVID-19 at the beginning of 2020, placed significant downward pressure on the retail environment and consumer sentiment in many of the Group's operating regions. Although the Group's initial strategy was to focus on full-price sales and reduce discount-driven promotions in order to secure gross profit margin, inevitably the Group had to increase mark-downs to boost sales volume amidst an incredibly difficult operating environment.

Total operating costs as a percentage of sales increased to approximately 63.5% (FY18/19: approximately 55.8%). This was predominately due to the impact of the sales decline and the non-cash impairment provision.

The Group recorded operating loss amounted to approximately HK$380.1 million in FY19/20, with the decrease being principally due to the pressure from gross profit decline and the non-cash impairment provision.

In FY19/20, non-cash impairment provision on property, furniture and equipment, right-of-use assets and goodwill amounted to approximately HK$67.5 million, HK$314.4 million and HK$231.5 million respectively while a reversal of impairment provision on property, plant and equipment of approximately HK$4.0 million was recorded for FY18/19. The aforesaid impairment provision was recognised to reflect the decrease in value of the assets as of the year-end date in particular for the PRC segment and the Hong Kong and Macau segment.

Finance costs increased from approximately HK$42.9 million in FY18/19 to approximately HK$154.8 million in FY19/20 mainly arising from interest expenses on lease liabilities following the Group's first adoption of "Hong Kong Financial Reporting Standard ("HKFRS") 16 Leases" in FY19/20.

As a result of the above, net loss of the Group amounting to approximately HK$745.8 million was recorded in FY19/20 (FY18/19: net profit of approximately HK$444.1 million).

1H FY19/20 and 1H FY20/21

Turnover of the Group declined by approximately 31.9% to approximately HK$2,734.7 million in 1H FY19/20 (1H FY18/19: approximately HK$4,015.4 million). The sales contribution from e-commerce has increased to approximately 25% in 1H FY20/21 compared to approximately 9% in 1H FY19/20 resulting from the Group's effort to redirect the customer flow to digital channels including its own e-commerce channel and via third-party online marketplaces through online promotional campaigns, as some of the Group's stores were temporarily closed and with travel restrictions in place during 1H FY20/21, as disclosed in the 2020/2021 Interim Report.

Gross profit margin decreased by approximately 7.5% to approximately 54.6%, which was principally due to the extra discount activities that were offered in 1H FY20/21.

The pandemic had a significant negative impact on the assessment of the Group's non-financial assets and impact on the results of 1H FY20/21. Consequently, the Group recognised non-cash impairment on non-financial assets, being provision for impairment of property, furniture and equipment and right-of-use assets of approximately HK$200.7 million in 1H FY20/21. The Group has aggressively implemented cost control measures across all regions and all levels to mitigate the negative impact of COVID-19 situation, total operating costs as a percentage of sales increased to approximately 66.3% in 1H FY20/21 (1H FY19/20: approximately 57.6%) as a result of the considerable decline in sales.

As a result of the above, the Group's operating loss in 1H FY20/21 amounted to approximately HK$223.5 million, which was principally due to the pressure from turnover and gross profit decline.

Net loss of the Group amounted to approximately HK$337.1 million in 1H FY20/21 (1H FY19/20: net loss of approximately HK$71.2 million), which was mainly attributable to the segment loss of approximately HK$414.3 million for the Hong Kong and Macau segment.

(b)Financial position

The following table sets out the consolidated statement of financial position of the Group asat 28 February 2019, 29 February 2020 and 31 August 2020, as extracted from the 2019/2020 Annual Report and the 2020/2021 Interim Report:

As at 31	As at 29	As at 28
August	February	February
2020	2020	2019
HK$'000	HK$'000	HK$'000
Notes	(unaudited)	(audited)	(audited)
Non-current assets
Land use rights	-	-	38,631
Property, furniture and equipment	(i)	1,109,629	1,161,391	954,964
Right-of-use assets	(ii)	1,622,228	1,900,465	-
Intangible assets	92,054	91,169	321,948
Investments in and loans to joint
ventures	114,336	121,303	167,879
Investment in associate	439,977	441,879	-
Rental deposits	222,966	271,172	346,422
Prepayments for non-current
assets	41,149	21,236	52,672
Deferred income tax assets	153,693	137,517	110,037
Total non-current assets	3,796,031	4,146,132	1,992,843
Current assets
Inventories	(iii)	1,522,266	1,722,110	1,538,037
Trade and other receivables	213,552	218,006	300,171
Amounts due from joint ventures	71,563	33,765	132,311
Amount due from an associate	-	272	-
Rental deposits, prepayments, and
other deposits	267,548	284,573	379,256
Current income tax recoverable	2,728	2,474	1,989
Cash and cash equivalents	(iv)	1,566,870	1,456,807	1,771,957
Total current assets	3,644,527	3,718,007	4,123,721
Current liabilities
Borrowings	(v)	576,037	463,290	505,995
Trade payables	416,432	491,317	414,120
Accruals and other payables	438,681	469,974	680,339
Contract liabilities	44,212	37,844	21,922
Lease liabilities	(vi)	856,276	958,142	-
Derivative financial instruments	-	-	11,003
Amounts due to joint ventures	8,255	26,840	24,165
Amount due to an associate	1,071	-	-
Current income tax liabilities	113,097	81,593	78,327
Total current liabilities	2,454,061	2,529,000	1,735,871
66
As at 31	As at 29	As at 28
August	February	February
2020	2020	2019
HK$'000	HK$'000	HK$'000
Notes	(unaudited)	(audited)	(audited)
Non-current liabilities
Borrowings	(v)	1,432,546	1,463,928	653,981
Lease liabilities	(vi)	1,407,502	1,440,713	-
Accruals	6,367	6,163	6,125
Derivative financial instruments	13,146	4,145	1,773
Deferred income tax liabilities	50,705	52,621	67,294
Total non-current liabilities	2,910,266	2,967,570	729,173
Equity
Share capital	119,580	119,580	119,580
Reserves	1,953,069	2,244,153	3,528,701
Non-controlling interests	3,582	3,836	3,239
Total equity	2,076,231	2,367,569	3,651,520
Net asset value per Share (HK$)	1.74	1.98	3.05
67

Notes:

Major assets

As at 31 August 2020, the major assets of the Group comprised property, furniture and equipment of approximately HK$1,109.6 million, right-of-use assets of approximately HK$1,622.2 million, inventories of approximately HK$1,522.3 million and cash and cash equivalents of approximately HK$1,566.9 million.

(i) Property, furniture and equipment
As at 29 February 2020, property, furniture and equipment amounted to approximately HK$1,161.4 million and were mainly consisted of leasehold improvements of approximately HK$480.0 million, construction in progress of approximately HK$361.1 million and land and buildings of approximately HK$208.1 million while property, furniture and equipment amounted to approximately HK$1,109.6 million as at 31 August 2020. As a result of the impairment tests, the Group recognised an impairment of the property, furniture and equipment of approximately HK$42.4 million and HK$67.5 million during 1H FY20/21 and FY19/20 respectively.
(ii) Right-of-use assets
Right-of-use assets represent a lessee's right to use the underlying leased assets. The Company adopted the "HKFRS 16 Leases" for annual periods beginning on or after 1 March 2019.
Upon adoption of "HKFRS 16 Leases", operating lease rental of premises under "Hong Kong Accounting Standard ("HKAS") 17 Leases" is no longer incurred. Instead, depreciation of right-of-use assets and finance costs associated with lease liabilities are recognised in the statement of profit or loss. Right-of-use assets are subject to impairment tests.
31 August 2020 and 29 February 2020
As at 31 August 2020, right-of-use assets represented properties leases of approximately HK$1,586.2 million (29 February 2020: approximately HK$1,864.6 million) and the land use rights located in the PRC of approximately HK$36.0 million (29 February 2020: approximately HK$35.9 million).
28 February 2019
Prior to the adoption of "HKFRS 16 Leases" by the Company, operating leases are not required to be recognised as assets.
(iii) Inventories
Inventories are merchandise stock of fashion wear and accessories for resale. As at 28 February 2019, 29 February 2020 and 31 August 2020, inventories amounted to approximately HK$1,538.0 million, HK$1,722.1 million and HK$1,522.3 million respectively.

In FY18/19, FY19/20 and 1H FY20/21, the cost of inventories was recognised as an expense and included in cost of sales amounting to approximately HK$3,127.2 million, HK$2,882.6 million and HK$1,186.7 million respectively. Provision for write-downs of inventories to net realisable value amounted to approximately HK$14.5 million, HK$56.9 million and HK$18.1 million in FY18/19, FY19/20 and 1H FY20/21, respectively.

Set out below are the inventory turnover for the six months ended 31 August 2019 and 31 August 2020 respectively, as well as for the two years ended 29 February 2020:

31 August	31 August	29 February	28 February
2020	2019	2020	2019
Inventory turnover (days) (Note)	240	191	199	168
Note:

Inventory turnover is calculated based on the average of the inventories at the beginning and at the end of the year/period divided by cost of sales times number of days during the year/period.

29 February 2020 and 28 February 2019

The average inventory turnover cycle of the Group increased by 31 days for FY18/19 to 199 days for FY19/20. According to the 2019/2020 Annual Report, the decline in inventory turnover efficiency was resulted from temporary store closures and weaker sales performance in several of the Group's operating regions as a result of negative macroeconomic conditions and the outbreak of COVID-19.

31 August 2020 and 31 August 2019

The average inventory turnover days further increased by 41 days from 191 days for 1H FY19/20 to 240 days for 1H FY20/21. According to the 2020/2021 Interim Report, there were rapid adjustments to stock ordering and the Group was able to reduce the stock-in-trade. However, there was still an oversupply of spring/summer merchandise as a result of the substantial drop in consumer demand during the pandemic. The Group has taken forceful actions to manage the rapid changes in customer behaviour and the decrease in demand caused by COVID-19. This was reflected in many parts of the business, including areas such as inventory purchasing, rents, advertising and promotions.

(iv)

Cash and cash equivalents

Cash and cash equivalents amounted to approximately HK$1,772.0 million as at 28 February 2019 and decreased by approximately 17.8% to HK$1,456.8 million as at 29 February 2020, while increased by approximately 7.6% to HK$1,566.9 million as at 31 August 2020.

Major liabilities

As at 31 August 2020, the major liabilities of the Group were total borrowings of approximately HK$2,008.6 million and total lease liabilities of approximately HK$2,263.8 million.

(v) Borrowings

Borrowings are bank borrowings which bear interest at floating rates. The bank borrowings are principally denominated in Hong Kong dollar. As at 28 February 2019, 29 February 2020 and 31 August 2020, total borrowings of the Group amounted to approximately HK$1,160.0 million, HK$1,927.2 million and HK$2,008.6 million, respectively.

As at 31 August 2020, the Group had aggregate banking facilities of approximately HK$3,347.3 million at floating rate for overdrafts, term loans, revolving loans and trade financing, of which approximately HK$1,247.2 million was unutilised on the same date. These facilities were mainly secured by corporate guarantees provided by the Company and certain subsidiaries as well as pledges of land and buildings.

Set out below is the net debt/net cash position and net debt to equity ratio as at 28 February 2019, 29

February 2020 and 31 August 2020:

31 August	29 February	28 February
2020	2020	2019
(Net debt)/net cash (HK$ million) (Note 1)	(441.7)	(470.4)	612.0
Debt to equity ratio (%) (Note 2)	205.8	182.7	31.8
Notes:

1. Represented cash and cash equivalents less total borrowings.
2. Represented total debt divided by total equity.

Net debt is defined as total debts less cash and cash equivalents. The Group turned from a net cash position of approximately HK$612.0 million as at 28 February 2019 to a net debt position as at 29 February 2020 and 31 August 2020 of approximately HK$470.4 million and HK$441.7 million respectively, which were primarily due to the increase in total borrowings of the Group, amounted to approximately HK$1,927.2 million and HK$2,008.6 million while cash and cash equivalents amounted to approximately HK$1,456.8 million and HK$1,566.9 million, respectively. Total debt to equity ratio increased from approximately 31.8% for FY18/19 to approximately 182.7% and 205.8% for FY19/20 and 1H FY20/21 respectively mainly due to the impact of the adoption of "HKFRS 16 Leases" on 1 March 2019 and increase in bank borrowings.

As set out in Appendix I to the Scheme Document, as at 31 December 2020, being the latest practicable date for the purpose of ascertaining the indebtedness of the Group had prior to the date of the Scheme Document, the Group current bank borrowings of approximately HK$429.2 million and non-current bank borrowings of approximately HK$1,418.6 million.

(vi) Lease liabilities
The Group has adopted "HKFRS 16 Leases" since 1 March 2019. As at 1 March 2019, 29 February 2020 and 31 August 2020, total lease liabilities amounted to approximately HK$2,444.3 million, HK$2,398.9 million and HK$2,263.8 million, representing the leases which had previously been classified as 'operating leases' under the principles of "HKAS 17 Leases". Lease liabilities are measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate.

(c)The latest trading update

On 26 February 2021, the Company issued an announcement in respect of the trading update for the three months and nine months ended 30 November 2020 (the "Trading Update"). Pursuant to Rule 10 of the Takeovers Code, the unaudited gross profit margins for the three months and nine months ended 30 November 2020 as disclosed in the Trading Update constitute a profit estimate which have been reported on by PricewaterhouseCoopers, the auditor of the Company, and us, details of which are set out in Appendix VI "Trading Update Announcement" to the Scheme Document.

The following unaudited financial information of the Group is extracted from the Trading Update:

Same-store-sales-growth (in their respective local currencies) - key operating markets:

Hong Kong and Macau

PRC

Japan and the US

Gross profit margin (Note) - key operating markets:

ended

Nine months
ended
30 November	YoY change	30 November	YoY change
2020	(points)	2020	(points)
Hong Kong and Macau	56.4%	(2.2%)	50.8%	(7.9%)
PRC	61.7%	0.2%	57.8%	(3.6%)
Japan and the US	62.8%	(6.7%)	61.5%	(8.9%)
Group	61.1%	(1.2%)	57.1%	(5.1%)

Three months

Three months ended	Nine months ended
30 November 2020	30 November 2020
Year-on-year
("YoY") change	YoY change
(23.5%)	(42.0%)
5.1%	(3.9%)
(36.8%)	(48.0%)

Note:

Gross profit margin represents the gross profit divided by the revenue for the respective periods.

As shown above, other than the slight YoY growth for PRC operations of approximately 5.1% for the three months ended 30 November 2020, all operating segments recorded negative YoY same-store-sales-growth for the three months and nine months ended 30 November 2020. As stated in the Trading Update, the Group's sales performance was severely impacted by the COVID-19 situation over the period. The decline in same-store-sales-growth in most markets was primarily a result of COVID-19 related restrictions and the decline in inbound tourism. The PRC segment has seen positive same-store-sales growth in the third quarter of the financial year ending

28 February 2021 after a gradual recovery from the public health crisis during the period.

In terms of gross profit margins, all operating segments recorded YoY decreases for the three months and nine months ended 30 November 2020 (except for the slight year-on-year increase of approximately 0.2% in gross profit margin for PRC operations for the three months ended 30 November 2020), which was principally due to the extra discount-related promotions that were offered during the period to boost sales.

As stated in the Trading Update, that the Group recognised non-cash impairment of non-financial assets of approximately HK$119.8 million for the Hong Kong and Macau segment in its unaudited consolidated management accounts for the three months ended 30 November 2020 as a result of the overall market conditions caused by the COVID-19 pandemic and its continuous adverse impact on the short-term to long-term economy. Together with the non-cash impairment of non-financial assets of approximately HK$200.7 million recognised in 1H FY20/21, the Group recognised non-cash impairment of non-financial assets of approximately HK$320.5 million in total for the nine months ended 30 November 2020. No such impairments were recognised for the three months ended 30 November 2019.

Overall comments

The Group's recent operating and financial performance was adversely affected primarily by the COVID-19 pandemic. The Group's turnover decreased by approximately 12.6% to approximately HK$7,719.4 million from FY18/19 to FY19/20 and decreased by approximately 31.9% to approximately HK$2,734.7 million from IH FY19/20 to 1H FY20/21. Besides, there was a reduction in the number of self-managed stores by approximately 8.4% from 864 as at 28 February 2019 to 797 as at 31 August 2020, and franchised stores from 49 as at 28 February 2019 to 22 as at 31 August 2020. The aforesaid factors have ultimately led to the substantial decline in the Group's turnover.

PRC and Hong Kong operations are major revenue contributors of the Group. In FY19/20, both of the PRC segment and the Hong Kong and Macau segment incurred losses. In 1H FY20/21, the PRC operations recorded segment profit which partially offset the loss incurred from the Hong Kong and Macau segment. Japan and US operations recorded segment profit in FY19/20. However, the Japan and US segment's profit plunged by approximately 73.1% in 1H FY20/21 as compared to that of 1H FY19/20. The deterioration of the financial performance of the Group in FY19/20 and 1H FY20/21 was primarily attributable to the substantial losses incurred from Hong Kong and Macau operations in FY19/20 and 1H FY20/21. The Hong Kong and Macau segment registered negative same-store-sales growth rate of approximately 23.5% for the three months ended 30 November 2020 on YoY basis.

The Group has implemented measures to control costs. However, the savings in operating costs were not sufficient to offset the decline in sales and gross profit margin. In addition, the Group has recognised a significant amount of impairment provision on property, furniture and equipment, and right-of-use assets.

As a result, the Group recorded loss attributable to the Shareholders of approximately HK$747.3 million and approximately HK$337.3 million in FY19/20 and 1H FY20/21 respectively in contrast to profit attributable to the Shareholders of approximately HK$442.6 million in FY18/19. The Group has issued six announcements of profit warning since 21 August 2019. The Group did not declare any dividend for FY19/20.

The financial position of the Group was also affected by the deterioration of the financial performance. The Group turned from a net cash position of approximately HK$612.0 million as at 28 February 2019 to a net debt position as at 29 February 2020 and 31 August 2020 of approximately HK$470.4 million and HK$442.6 million respectively, primarily due to the increase in total borrowings, from approximately HK$1,160.0 million as at 28 February 2019 to approximately HK$1,927.2 million as at 29 February 2020 and approximately HK$2,008.6 million as at 31 August 2020.

Reasons for and benefits of the Proposal and intention regarding the Group

Based on the Explanatory Statement, it is expected that the Proposal can achieve a number of objectives and benefits as set out below:

(a)For the Company: a proposal to facilitate a necessary transformation of the business amid challenging market conditions alongside a highly accomplished partner. In light of change of consumer preference to online shopping in the retail industry, the Company has undertaken restructuring efforts to reposition its businesses and improve its competitive advantage

Structural shifts in the retail industry: The past few years have been unprecedentedly challenging for the Company and the fashion retail industry as a whole. The development of e-commerce platforms, the adoption of offline to online sales channels, and new online direct-to-consumer brands have caused customers to gradually shift their preferences from shopping in physical outlets to shopping online. As a result, customers are more regularly bypassing physical retailers and purchasing directly online.

These developments have impacted the competitive position and financial performance of the Company, which predominantly derives its sales from physical retail store channels. In 1H FY20/21, physical retail sales still contributed approximately 75% of the Company's total sales. While the Company has adopted online strategies and intends to continue to develop these online strategies in the next several years, the implementation of these strategies to date, including the development of e-commerce channels on its websites and other third-party platforms (such as Alibaba's Tmall and participating in Double 11 Festival campaigns), has been unable to offset a decline in sales from its physical retail outlets of the Group (comprising the Brand Operations and the Other Operations with both operating physical retail outlets). In 1H FY20/21, despite a growth of approximately 97.9% in online sales from the corresponding period in 2019, online sales growth was unable to offset the decline in sales from retail stores, and the total turnover of the Group, decreased by approximately 31.9% from the corresponding period in 2019. This followed the Group's annual net loss in FY19/20 of approximately HK$745.8 million.

Deteriorating operating environment: Aside from structural changes to the industry, consumer spending has sharply declined in several key markets. The outbreak of COVID-19 has significantly impacted the Company's business performance across multiple regions. The Group operates in three key markets, namely Hong Kong and Macau (approximately 26.7% of total sales for 1H FY20/21), PRC (approximately 58.5% of total sales for 1H FY20/21), Japan and US (approximately 13.0% of total sales for 1H FY20/21). A large part of the Group's sales in Hong Kong and Japan are derived from inbound tourism, which has seen a sharp decline due to the pandemic and stringent travel restrictions. In particular, inbound tourism to Hong Kong has plunged during 2020, with arrivals during the year declining by approximately 93.6% to an extremely low level. Hong Kong's Gross Domestic Product ("GDP") for 2020 contracted by approximately 6.1% in real terms compared to 2019.

In Japan, inbound visitor arrivals declined by approximately 87.1% during 2020 from a year earlier, which also affected the Group's sales performance in Japan. Against the backdrop of global travel recovery being highly uncertain which was evidenced by the recent capacity reduction in some of the major airlines, the Company foresees a long and challenging journey ahead until a full restoration of consumer confidence and normal inbound tourism arrivals across most regions where the Company operates.

As disclosed in the Trading Update, in the three months ended 30 November 2020, the Group recorded a same-store-sales decline of approximately 23.5% in the Hong Kong and Macau segment and a decline of approximately 36.8% in the Japan and US segment compared to the corresponding period in 2019.

The PRC retail apparel market is mainly driven by domestic consumption and the Group recorded a modest recovery in the three months ended 30 November 2020, where its same-store-sales increased by approximately 5.1% compared to the corresponding period in 2019 as disclosed in the Trading Update. However, growth in PRC was unable to offset the Group's sluggish recovery in the other key markets where the Group operates.

Ongoing ability to finance: Although the Company has implemented several short-term measures to temporarily counter the impact of economic headwinds, the Company also recognises that the shift of consumer preferences and an elaborate reduction of global tourism will have a lasting impact. Consequently, the Company's business performance and overall market sentiment towards traditional brick-and-mortar retail business model have affected the Company's ability to procure steady and long-term financing. In view of bankruptcy or bankruptcy protection filings of retail brands such as J.C. Penney Co. and Brooks Brothers Group Inc. and Topshop-owner Arcadia Group in 2020, commercial banks have generally taken a more prudent approach towards refinancing retail businesses. As of 31 August 2020, the Company had approximately HK$2.0 billion of credit facilities and approximately HK$1.6 billion of cash and equivalents. Approximately HK$1.7 billion of these credit facilities will become due by the end of 2022, of which a total of approximately HK$455 million will become due by the end of April 2021. Various anti-epidemic government assistance programmes in Hong Kong, including the Employee Support Scheme for subsidising the payment of wages to employees (which ended in November 2020) and the Retail Sector Subsidy Scheme (which provided the Group with a one-off subsidy for its retail stores), served as a temporary buffer to cushion the recent adverse impacts from macro challenges. However, in the near term as these loans mature, it is uncertain whether the Company would be able to roll over or secure new long-term financing with similar terms and conditions. The limited trading liquidity and depressed share price have also impacted the Company's ability to seek equity financing in the public market without causing a significant dilution to the incumbent shareholders of the Company.

The Company believes that the Restructuring would allow the Brand Operations, with better cash generative capabilities, to surface as a more feasible borrower to secure long-term financing; while preserving sufficient cash for the Other Operations to weather through the retail headwind, before a potentially successful turn-around in the future. The Brand Operations was more feasible to secure long-term bank financing than the Group, primarily because that after Restructuring, the loans extended by the banks to the Brand Operations will be ring-fenced from Other Operations, which have significant Hong Kong retail exposure, and are currently running at an operating loss and negative cash flow. In the section headed "Information relating to the Brand Operations" in the letter from the Board in Part IV of the Scheme Document, on 6 December 2020, the Offeror secured a debt commitment from BNP Paribas and Standard Chartered Bank (Hong Kong) Limited relating to a five-year term loan facility for up to approximately HK$1,800,000,000 and a revolving credit facility for up to approximately HK$200,000,000. The facilities are available to the Company subject to the Scheme becoming effective and the completion of the Restructuring, and would allow the Company to repay all of its existing borrowings that are coming due in the next 20 months. This would reduce short-term pressure to repay debt so that the Brand Operations and the Other Operations can focus on business transformation over the medium term. Such refinancing would not have been otherwise available to the Company if it does not implement the Scheme and complete the Restructuring. The magnitude of the Restructuring would also have been difficult to orchestrate under a publicly listed setting as the Company would be subject to various regulatory and financial reporting obligations and pressure from share price reactions.

CVC Network's credibility and track record in business turnaround as well as its long-term relationship with commercial banks were instrumental in securing the recent five-year debt commitment from commercial banks relating to a term loan facility for up to approximately HK$1,800,000,000 and a revolving credit facility for up to approximately HK$200,000,000 for refinancing the existing external bank debt of the Group and for the Brand Operations. The drawdown of credit facilities under the Refinancing Document will be conditional upon, amongst others, (a) the Scheme becoming effective, and (b) completion of most of the Restructuring steps (subject to ongoing transitional arrangements). The Company believes that it would be highly unlikely for the Company to refinance its sizeable debt on its own without having CVC Network as a partner for the Restructuring.

Evaluation of viable options: The Founder Group had been evaluating strategic options with respect to its large exposure to the Company on an ongoing basis and remains committed to the long-term prospects of the Company. The Founder Group, as the controlling shareholder of the Company, had considered a number of alternatives, including but not limited to spin-off and listing of the Brand Operations, or a minority stake sale of the Brand Operations. These alternatives faced various practical limitations from regulatory and commercial standpoints such as competition between Brand Operations and Other Operations and the listing viability of the Other Operations after spin-off and these alternatives do not resolve the immediate concern to secure a long-term refinancing. Consequently, the Founder Group considers privatisation with a partner followed by the Restructuring as the most viable option to return value to the Shareholders at a significant premium over historical trading prices and the consolidated net asset value attributable to Shareholders per Share as at 31 August 2020, while resolving the Company's most imminent financing needs.

Financial and operational resources from CVC Network: The Founder Group considers the partnership with CVC Holdco, ultimately owned by CVC Funds being a leading global long-term strategic financial investor with efficiency optimisation capabilities and a synergetic brand portfolio, to be advantageous. CVC Network contributed to the Company's financial resources by assisting the Company to secure long-term financing. In addition to financial resources, CVC Network will also bring in valuable operational resources with CVC Funds as a significant minority shareholder. In particular, CVC Network's strong track record in managing brand and retail companies such as Samsonite, Formula 1, Breitling and MAP Active, a seasoned global advisory board with comprehensive experience in the retail industry, and its extensive global network will all be operational resources that will be instrumental to the growth and value creation of the Brand Operations.

The Joint Offerors plan to implement the Restructuring and contribute financial and operational resources to the Group in order to reinvigorate growth over a long period through online infrastructure expansion, selective branding, implementing location strategies and exploring new business opportunities. Together with a shared ambition to uncover potential for the Brand Operations, a partnership between the Company and CVC Network will provide the optimal structure and platform for both sides to unleash their respective strengths in realising the common objective to create long-term values for the Brand Operations while allowing the Founder Holdco to take the necessary steps to revive the Other Operations.

The Company's transformation will involve execution, market and financial risks and the associated benefits (if any) will require a long time to materialise. The Offeror believes that such changes, if successful, may bolster the long-term competitiveness of the Company, but they can be more effectively implemented if the Company is privatised and operated away from the public market without ongoing pressures of short-term business performance or the pressure arising from the near-term refinancing needs.

(b)For Scheme Shareholders: an attractive opportunity to realise their investment at a premium

In light of the challenging market environment and the execution, market and financial risks in implementing a strategic transformation, the Proposal provides an attractive opportunity for the Non-Founder Scheme Shareholders to monetise their Shares at a premium to historical trading prices. The Cancellation Price of HK$3 for each Non-Founder Scheme Share represents a premium of approximately 54.6% over the closing price of HK$1.940 per Share as quoted on the Stock Exchange on the Last Trading Date, and a premium of approximately 135.5% and 173.0% over the average closing price of approximately HK$1.274 and HK$1.099 per Share for 30 and 90 trading days up to and including the Last Trading Date, a premium of approximately 7.5% over the closing price of HK$2.79 per Share as quoted on the Latest Practicable Date, a premium of approximately 51.8% to the audited consolidated net asset value attributable to Shareholders per Share of approximately HK$1.977 as at 29 February 2020 and a premium of approximately 73.1% to the unaudited consolidated net asset value attributable to Shareholders per Share of approximately HK$1.733 as at 31 August 2020, respectively.

The average daily trading volume of the Shares for the twelve months up to and including the Last Trading Date was approximately 961,361 Shares per day, representing only approximately 0.08% of the issued Shares as at the Last Trading Date. This low level of trading liquidity of the Shares makes it difficult for the Shareholders to sell their shareholdings in large volume on the secondary market without adversely affecting Share price.

The Proposal provides the Non-Founder Scheme Shareholders with an opportunity to immediately realise their investment in the Company for cash amid the tremendous market uncertainty without taking on the risks facing the retail industry in key markets including Hong Kong and Macau as well as Japan and the US, and the uncertainty over the Group's restructuring of its retail operations and its imminent refinancing needs as described above.

Overall comments

As disclosed in the section headed "2. Financial information of the Group" above, we note that the Group's financial performance has been deteriorating since 1H FY19/20 and severely affected by, among other things, the social instability in Hong Kong in the second half of 2019 and subsequently followed by the outbreak of COVID-19. In particular, turnover decreased by approximately 12.6% to approximately HK$7,719.4 million from 28 February 2019 to 29 February 2020 and decreased by approximately 31.9% to approximately HK$2,734.7 million from 1H FY19/20 to 1H FY20/21. The business environment in which the Group operated has been adversely affected by the outbreak of COVID-19 which has further aggravated a difficult operational environment.

In the midst of the COVID-19 pandemic, consumers' spending enthusiasm was affected and inbound tourism in several of the Group's principal operating markets such as Hong Kong, Macau and Japan experienced a sharp decline due to the travel restrictions and quarantine measures imposed by governments. As a result, these have adversely impacted the Group's sales performance.

It is difficult to predict the full impact of COVID-19 pandemic on the economic activities around the globe and the challenges to the retail industry brought by the gradual shift of consumer preference to shop online. COVID-19 pandemic and the change in consumer behaviour will continue to weigh on the retail sector.

As disclosed in the 2020/2021 Interim Report, the Group has accelerated the pace of the digital development from 2019 through their own e-commerce channel and via third-party online marketplaces, focusing on redirecting the customer flow to digital channels through online promotional campaigns. It is noted that e-commerce sales registered a growth rate of approximately 97.9% and sales contribution from e-commerce sales increased to approximately 25% of the total turnover in 1H FY20/21 as compared to 1H FY19/20, however the growth was not sufficient to compensate for the sales losses of approximately HK$465.3 million in 1H FY20/21 compared to 1H FY19/20 incurred by the Group's retail stores. The overall turnover of the Group decreased by approximately 31.9% from approximately HK$4,015.4 million in 1H FY19/20 to approximately HK$2,734.7 million in 1H FY20/21.

As a result, the Group has also taken forceful actions to manage the rapid changes in consumer behaviour and the decrease in demand caused by COVID-19. This was reflected in many parts of the business, including areas such as inventory purchasing, rents, advertising and promotions. The Group has also undertaken a comprehensive review of the shop portfolio, further optimising and integrating the sales channels. However, the savings in operating costs were not sufficient to offset the decline in sales and gross profit margin and hence the Group incurred losses.

The Joint Offerors plan to contribute financial and operational resources to the Company in order to reinvigorate growth over a long period through online infrastructure expansion, selective branding, implementing location strategies and exploring new business opportunities. The transformation will involve execution, market and financial risks. Given the uncertain economic and business outlook, it will require time to materialise the associated benefits, if successful. Such proposed transformation may involve equity fundraising and/or disposal of assets. As a listed company, this would be subject to disclosure and shareholders' approval requirements under the Listing Rules, leading to increased timing and uncertainty in the execution of the plans.

The Group has accelerated the pace of digital development. A significant growth in online sales was recorded in 1H FY20/21 as compared to 1H FY20/21. While the Company has adopted online strategies and intends to continue to develop these online strategies in the next several years, the online sales growth as a result of the implementation of these strategies to date, including the development of e-commerce channels on its websites and other third-party platforms, was not sufficient to offset the drop in sales of retail stores and the Group's total turnover decreased by approximately 31.9% in 1H FY20/21 as compared to 1H FY19/20. The adoption of online strategies were to be implemented alongside with the Group's existing strategy in the operations of retail stores, and would require time for business transformation to resume long-term sustainable growth of the Group. As at 31 August 2020, the Group had a total number of 819 retail stores (please refer to the section headed "1. Background information of the Group" for details). Besides, the Group's transformation to cope with the changes in consumer behaviour and pattern from time to time will involve risks, uncertainties and require adjustments from time to time.

In light of the above and in particular (i) the challenges to the retail industry brought by the gradual shift of consumer preference to shop online would continue to weigh on the Group's sales performance, the Group intends to continue to develop its online strategies to cope with the on-going changes in consumer behaviour and pattern that require prompt action. It is noted that the online sales grew significantly for 1H FY20/21 as compared to 1H FY19/20. However the online sales growth could not offset the drop in sales of retail stores in 1H FY20/21. The online sales may or may not be sufficient to cover the drop in sales of retail stores in the long term; (ii) despite the global economy is gradually recovering, COVID-19 pandemic is expected to continue to bring volatility and uncertainties to the economy in the near future as elaborated in the section headed "4. Industry overview and outlook" below; and (iii) the Group's transformation to cope with the change in consumer behaviour will involve significant risks and uncertainties and require adjustments from time to time, we believe that the on-going changes in consumer behaviour will continue to weigh on the Group's operational and financialperformance in the near future given that the Group had a total number of 819 physical retail stores as at 31 August 2020 and the transformation may or may not be successful. We are of the view that the Proposal and the Scheme are in the interest of the Disinterested Shareholders.

Industry overview and outlook

The Group's business and financial performance is affected by the local economic activities of its operating markets.

(a)	PRC
(i)	Economy
The table below sets out PRC's real GDP (Real GDP is defined as the nominal GDP after

adjusting for any price changes attributable to either inflation or deflation) growth for the years/ periods indicated:

2020

YoY growth	2017	2018	2019	Q1	Q2	Q3	Q4	Full year
Real GDP	6.8%	6.6%	6.1%	(6.8%)	3.2%	4.9%	6.5%	2.3%

Source: National Bureau of Statistic of China

PRC's real GDP grew at approximately 6.8%, 6.6% and 6.1% YoY in 2017, 2018 and 2019 respectively, showing a slowdown in growth. During the first quarter of 2020, real GDP has contracted by approximately 6.8% for the first time in history in four decades due to the ongoing COVID-19 pandemic, whereby PRC has implemented shutdowns and quarantines to limit human contact as it sought to contain disruptions caused by COVID-19 to economic activities.

PRC registered a YoY growth of real GDP of approximately 2.3% in 2020 as COVID-19 eased in the remaining quarters of 2020.

(ii)Retail industry

2020

YoY growth

2017

2018

2019

Full year

Garments, footwear, hats and knitwear sales

7.8%

8.0%

2.9%

(32.2%)

(19.6%)

(12.4%)

7.0%

(6.6%)

Source: National Bureau of Statistic of China

With reference to the data above, retail sales for garments, footwear, hats and knitwear increased by approximately 7.8% and 8.0% in 2017 and 2018 respectively, while in 2019 the growth slowed down and recorded an increase of approximately 2.9%.

It is noted that COVID-19 outbreak significantly shifted and halted some consumption. Retailers were affected to various degrees and traditional sales and distribution channels, such as offline retail stores were temporarily closed. In particular, retails sales for garments, footwear, hats and knitwear recorded a YoY drop by approximately 32.2%. The decreases were mainly due to the outbreak of COVID-19.

The decreasing trend in the total retail sales of garments, footwear, hats and knitwear continued to the second and third quarters of 2020, although have narrowed. Retail sales of garments, footwear, hats and knitwear of PRC registered a YoY growth in the fourth quarter of 2020. Overall, for 2020, retail sales of garments, footwear, hats and knitwear have recorded a YoY decline of approximately 6.6%.

(b)

Hong Kong

(i)EconomyThe following table sets out Hong Kong's real GDP growth and growth in private consumption expenditure in real terms, for the years/quarters indicated:

2020
YoY growth	2017	2018	2019	Q1	Q2	Q3	Q4	Full year
Real GDP	3.8%	2.8%	(1.2%)	(9.1%)	(9.0%)	(3.6%)	(3.0%)	(6.1%)

Source: Census and Statistics Department of Hong Kong

As shown in the table above, Hong Kong economy as measured by the real GDP recorded a

YoY negative growth rate of approximately 1.2% in 2019, whereas positive growth rate of approximately 3.8% and 2.8% were recorded in 2017 and 2018, respectively. The YoY negative growth rate in 2019 was primarily caused by softening global economic growth, elevated US-China trade tensions, the local social instability dealt a heavy blow to economic sentiment and consumption- and tourism-related activities, according to the "2019 Economic Background and 2020 Prospects" published in February 2020 prepared by the Hong Kong government. The YoY real GDP negative growth in the first quarter of 2020 further decreased to approximately 9.1%. The YoY real GDP negative growth rates were approximately 9.0% and 3.6% in the second and third quarters of 2020, respectively. For 2020 full year, the YoY real GDP negative growth registered a negative 6.1%.

(ii)Tourism

Inbound tourism is one of the main drivers of the Group's business in Hong Kong.

Set out below is the total number of visitor arrivals and relevant selective information as

extracted from the website of Hong Kong Tourism Board.

2017

2018	2019	2020
Total visitor arrivals (million)	58.5	65.1	55.9	3.6
By country
- PRC	44.4	51.0	43.8	2.7
- Other	14.0	14.1	12.1	0.9
Per capita spending of overnight visitors	HK$6,443	HK$6,614	HK$5,818	-Note
Total tourism expenditure associated to	HK$296.7	HK$328.2	HK$256.2	-Note
inbound tourism	billion	billion	billion
Source: Hong Kong Tourism Board
Note: Not available

With reference to the data for visitors' arrivals in Hong Kong above, the total visitor arrivals in 2018 increased by approximately 11.4% to approximately 65.1 million. Such growth in 2018 was reversed as the local social incidents in 2019 have taken a heavy toll on Hong Kong's tourism industry and the overall visitor arrivals dropped by approximately 14.2% to approximately 55.9 million in 2019. Total tourism expenditure associated to inbound tourism and per capita spending of overnight visitors also decreased by approximately 22.7% and 12.0% respectively in 2019, as opposed to the increases of approximately 2.7% for inbound tourism and approximately 10.6% for per capita spending of overnight visitors in 2018.

While the number of PRC arrivals decreased by approximately 14.2% in 2019 as opposed to an increase of approximately 14.8% in 2018, the PRC continued to be the largest visitor source market of Hong Kong, accounting for approximately 76.0% in 2017, 78.3% in 2018 and 78.3% in 2019 of the total arrivals. On the other hand, visitor arrivals from non-PRC markets also declined by approximately 14.0% in 2019, as opposed to a slight increase of approximately 0.6% in 2018.

With reference to the latest public information of tourists' arrivals for 2020, the decreasing trend continued whereby the number of visitors' arrivals dropped by approximately 93.2% to approximately 3.6 million, of which visitors from PRC dropped by approximately 93.5% to approximately 2.7 million (accounted for 75% of total visitors), on a YoY basis, due to travel restrictions.

(iii)Retail industry

2020

Value of retail sales (HK$ million)

2017

2018

2019

Full Q4 year note

Clothing, footwear and allied products

YoY growth

58,401 0.18%

62,303 6.7%

53,508 8,043
(14.1%) (54.1%)

7,740 (46.7%)

6,866 (33.7%)

8,882 (19.8%)

31,548 (41.0%)

Source: Census and Statistics Department of Hong Kong

Note: Provisional figure

According to the Census and Statistics Department of Hong Kong, the value of retail sales of clothing, footwear and allied products increased by approximately 6.7% from approximately HK$58.4 billion in 2017 to approximately HK$62.3 billion in 2018. However, the decreasing trend started since 2019 whereby the value of retail sales of clothing, footwear and allied products decreased by approximately 14.1% from approximately HK$62.3 billion in 2018 to approximately HK$53.5 billion in 2019. For 2020, the value of retail sales of all retail sales of clothing, footwear and allied products decreased by approximately 41.0% to approximately HK$31.5 billion compared to previous year.

(c)

Macau

2020
YoY growth	2017	2018	2019	Q1	Q2	Q3	Q4	Full year
Real GDP	9.1%	4.7%	(4.7%)	(48.7%)	(67.8%)	(63.8%)	-Note 1	-Note 1
Retail sales of adult's
clothing note 2	12.6%	16.7%	(12.5%)	(52.9%)	(71.2%)	(65.4%)	(29.7%)	(53.3%)

Source: Statistics and Census Service, Government of Macau Special Administrative Region

PART VI	LETTER FROM THE JOINT INDEPENDENT FINANCIAL ADVISERS
Notes:
1.	Not available.
2.	The most relevant category to the business of the Group in our view.

As shown in the table above, economy of Macau as measured by the real GDP recorded a YoY growth rate from approximately 9.1% in 2017 to approximately 4.7%% in 2018, while a decline of approximately 4.7% was recorded in 2019. Macau's economy was mainly driven by services industry and was severely hit amid the epidemic with a substantial decline in total demand. In the first quarter of 2020, Macau's economy shrank by approximately 48.7% YoY owing to the epidemic of COVID-19 which significantly dampened global economic activity and recorded a further decline of approximately 67.8% and 63.8% in the second and third quarters of 2020 respectively. Likewise, in terms of retail sales of adult's clothing, a YoY growth of approximately 12.6% and 16.7% was recorded in 2017 and 2018 respectively, while from 2019 onwards to the first, second, third and fourth quarter of 2020, declines of approximately 12.5%, 52.9%, 71.2%, 65.4% and 29.7% were recorded, respectively, owing to the COVID-19 outbreak where travel restrictions have been imposed. The retail sales of adult's clothing for 2020 registered a YoY decline of approximately 53.3%.

(d)Japan

2020

YoY growth

2017

2018

2019

Real GDP

1.5%

0.6%

0.3%

(1.8%)

(10.2%)

(5.8%)

-Note

Source: Economic and Social Research Institute Cabinet Office, Government of Japan

Note: Not available.

As shown in the table above, the economy of Japan as measured by the real GDP recorded a decline in YoY growth rate from approximately 1.5% in 2017 to approximately 0.6% and 0.3% in 2018 and 2019 respectively. A YoY negative growth rate in real GDP was recorded in each of the first three quarters of 2020.

(e)US

(i)Economy

2020

YoY growth

2017

2018

2019

Q4 Full year

Real GDP

Private consumption expenditure

2.3% 2.6%

3.0% 2.7%

2.3% 2.5%

0.3% 0.2%

(9.0%)

(2.8%)

(2.5%) (3.5%)
(10.2%)
(2.8%)
(2.6%) (3.9%)

Source: Bureau of Economic Analysis, US Department of Commerce

As shown in the table above, economy of the US as measured by the real GDP recorded a decline in YoY growth rate from approximately 3.0% in 2018 to approximately 2.3% in 2019. A YoY growth rate of approximately 0.3% was recorded in the first quarter of 2020 followed by a negative YoY growth rate of approximately 9.0%, 2.8% and 2.5% for the second, third and fourth quarter of 2020 which was in part due to the response to the spread of COVID-19. US registered a negative YoY growth rate in GDP of approximately 3.5% in 2020.

As opposed to the YoY growth rate of approximately 2.7% and 2.5% in 2018 and 2019 respectively, private consumption recorded a slight YoY growth rate of approximately 0.2% in the first quarter of 2020 followed by a YoY negative growth rate of approximately 10.2%, 2.8% and 2.6% in the second, third and fourth quarter of 2020 respectively. US registered a negative YoY growth rate in private consumption expenditure of approximately 3.9% in 2020.

(f)

Global economic outlook

YoY growth	2020e	2021p	2022p
Real GDP	(4.3%)	4.0%	3.8%
Source: World Bank

COVID-19 pandemic has caused major disruptions in the global economy. Economic activity has been hit by reduced personal interaction and uncertainties about the post-pandemic economic landscape and policies has discouraged investment and hence the economy. As with previous economic crises, the pandemic is expected to leave adverse effects on global economic activities and per capita incomes.

According to the "Global Economic Prospects Report" published by the World Bank in January 2021, COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is expected to contract sharply by approximately 4.3% in 2020, much worse than the 2008-09 financial crisis. Beyond the uncertainties associated with potential future waves of COVID-19 infections, as descended on Europe and the US in late 2020, COVID-19 pandemic has put many developing countries and emerging markets in a precarious financial position and the full recovery of the world's economy remained uncertain in the near term. Although the global economy is emerging from the collapse triggered by the pandemic, the recovery is projected to be subdued. Global economic output is expected to expand approximately 4% in 2021 but still remain more than 5% below its pre-pandemic trend. Though vaccines are being rolled out, it is widely acknowledged that it may take a while for herd immunity.

Overall comments

Since 2019, the economic environment of the operating markets of the Group has been severely affected by, among other things, the US-China trade tensions and COVID-19 pandemic, causing major and continuous disruptions to economic activities and heavily affected global tourism and consumption-related sectors.

Based on the available historical data of the retail industry as presented above, PRC registered a YoY growth in the relevant sub-category of retail sales in the fourth quarter of 2020 amid the easing of the COVID-19 pandemic, while Hong Kong and Macau continued to register YoY decline of retail sales in the fourth quarter of 2020. Although the global economy is gradually recovering from the adverse impacts emerging from the collapse triggered by the pandemic, the recovery is projected to be subdued. The full recovery of the world's economy remains uncertain in the near term.

On 27 February 2021, the Centers for Disease Control and Prevention, a national public health institute in the US, stated that the recent spread of mutations of the coronavirus are more easily transmitted and potentially more deadly, which have raised concerns.

According to the National Institute of Allergy and Infectious Diseases of US, coronavirus herd immunity is considered to occur when at least two-thirds of a population are immune to the virus. As such, the timeline for having the pandemic under control would depend on how quickly people around the world are vaccinated.

The roll-out of vaccines around the world bring hope to an end to the threat of the pandemic. However, in view of the mutations of the coronavirus and the time required to inoculate the population to achieve herd immunity, measures to combat any new outbreak would affect the pace of the economic recovery. As such, the COVID-19 pandemic is expected to continue to bring volatility and uncertainties to the economy and to the Group (including the Branded Operations and Other Operations) in the near term.

Information on the Offeror Group, the Founder Group and the CVC Network

(a)

Information on the Offeror Group

EquityCo has three classes of shares: ordinary shares, class A preference shares and class B preference shares. Upon completion of the Restructuring, EquityCo will be owned as to 50.65% and 49.35% by Founder Holdco and CVC Holdco respectively. Founder Holdco will own all class A preference shares whereas CVC Holdco will own all class B preference shares of EquityCo.

Charts illustrate the shareholding structure of the Company (including the shareholding structure of the Founder Group and CVC Holdco) are set out in the section headed "10. Information on the Offeror Group" in "Part VII. - Explanatory Statement" in the Scheme Document.

(b)Information on the Founder Group

The Founder Group comprises Mr. Sham Kar Wai, Mr. Sham Kin Wai, Ms. Sham Sau Han, Ms. Sham Sau Wai, Mr. Fung Yuk Hung, Founder Holdco and the ABS 2000 Trust Holding Companies.

Mr. Sham Kar Wai and Mr. Sham Kin Wai founded the Group in 1988. Mr. Sham Kar Wai is an executive Director, Chairman of the Board and the chief executive officer of the Company. Mr. Sham Kin Wai is an executive Director and chief creative officer of the Company.

Details of the other members of the Founder Group are set out in the section headed "11. Information on the Founder Group" in "Part VII. - Explanatory Statement" of the Scheme Document.

(c)Information on the CVC Network

The CVC Network comprises CVC Holdco, CVC and CVC Funds.

i. CVC Holdco is set up for the implementation of the Proposal. CVC Holdco is ultimately wholly-owned by the CVC Funds. CVC Holdco is an independent third party and is not connected with and is not a person acting in concert with the Company or its subsidiaries or any connected persons of the Company (other than members of the Founder Group);
ii. CVC is a leading private equity and investment advisory firm. Founded in 1981, CVC today has a network of 23 offices and approximately 550 employees throughout Europe, Asia and the US. To date, CVC has secured commitments of more than US$120 billion from some of the world's leading institutional investors across its private equity strategies. In total, CVC currently manages over US$82 billion of assets. Today, funds managed or advised by CVC are invested in over 80 companies worldwide, employing approximately 400,000 people in numerous countries. Together, these companies have combined annual sales of over US$92 billion.

iii.

CVC Funds are widely held among a large number of investors, including pension funds, sovereign wealth funds, financial institutions and various other partners.

Trading volume of the Shares

The table below sets out the average daily trading volume of the Shares for each month or period and the percentages of the daily traded volume and the public float of the Shares to each of the total issued Shares and the public float from 1 January 2019 to the Latest Practicable Date.

Approximate	Approximately
Average Daily	% of average	% of average
Trading	daily trading	daily trading
Volume	volume to total	volume to the
(Shares)	issued Shares	public float
(Note 1)	(Note 2)
2019
January	5,883,334	0.49%	1.40%
February	4,705,100	0.39%	1.12%
March	6,812,516	0.57%	1.62%
April	3,788,621	0.32%	0.90%
May	5,618,425	0.47%	1.34%
June	6,117,856	0.51%	1.46%
July	8,715,671	0.73%	2.08%
August	8,664,058	0.72%	2.07%
September	5,764,769	0.48%	1.38%
October	4,820,078	0.40%	1.15%
November	11,353,367	0.95%	2.71%
December	14,990,429	1.25%	3.58%
2020
January	6,454,613	0.54%	1.54%
February	3,759,935	0.31%	0.90%
March	8,952,774	0.75%	2.14%
April	7,064,213	0.59%	1.69%
May	25,681,803	2.15%	6.13%
June	65,959,056	5.52%	15.75%
July	15,318,028	1.28%	3.66%
August	11,024,327	0.92%	2.63%
September	7,436,297	0.62%	1.78%
October	5,596,000	0.47%	1.34%
November	3,081,905	0.26%	0.74%
December	7,369,216	0.62%	1.76%
2021
January	2,000,880	0.17%	0.48%
February	1,360,660	0.11%	0.32%
From 1 March to the Latest Practicable Date	868,269	0.07%	0.20%
Average: 2 January 2019 to the Latest
Practicable Date	949,508	0.08%	0.22%
Source: Bloomberg

PART VI	LETTER FROM THE JOINT INDEPENDENT FINANCIAL ADVISERS
Notes:
1.	Based on the number of total issued Shares as at each month end or the Latest Practicable Date.
2.	Based on the number of Shares held by the public as at each month end or the Latest Practicable Date as extracted
from Bloomberg

As illustrated above, the average daily trading volume of the Shares during 2019 and 2020 represented (i) approximately 0.61% and 1.17% of the total issued Shares and (ii) approximately 1.73% and 3.34% of the issued Shares held by the public, respectively.

The average daily trading volume of the Shares from 2 January 2019 to the Latest Practicable Date represented approximately 0.08% and 0.22% of the total issued Shares and the Shares held by the public, respectively.

Overall comments

Given the low liquidity of the Shares, it is difficult for the Disinterested Shareholders to sell their shareholdings in large volume without adversly affecting the Share price. The Scheme represents an opportunity for the Non-Founder Scheme Shareholders to exit at the fixed Cancellation Price which is substantially above the market prices prior to the issue of the Joint Announcement.

Evaluation of the Cancellation Price

(a)

Comparison of the Cancellation Price to closing prices and net asset value

The Cancellation Price of HK$3 per Non-Founder Scheme Share represents:

• a premium of approximately 54.6% over the closing price of HK$1.940 per Share as quoted on the Stock Exchange on the Last Trading Date;
• a premium of approximately 84.7% over the average closing price of approximately HK$1.624 per Share as quoted on the Stock Exchange for the five trading days up to and including the Last Trading Date;
• a premium of approximately 135.5% over the average closing price of approximately HK$1.274 per Share as quoted on the Stock Exchange for the 30 trading days up to and including the Last Trading Date;
• a premium of approximately 162.4% over the average closing price of approximately HK$1.143 per Share as quoted on the Stock Exchange for the 60 trading days up to and including the Last Trading Date;
• a premium of approximately 173.0% over the average closing price of approximately HK$1.099 per Share as quoted on the Stock Exchange for the 90 trading days up to and including the Last Trading Date;
• a premium of approximately 170.4% over the average closing price of approximately HK$1.109 per Share as quoted on the Stock Exchange for the 120 trading days up to and including the Last Trading Date;
• a premium of approximately 156.7% over the average closing price of approximately HK$1.169 per Share as quoted on the Stock Exchange for the 180 trading days up to and including the Last Trading Date;

• a premium of approximately 7.5% over the closing price of approximately HK$2.79 per Share as quoted on the Stock Exchange as at the Latest Practicable Date; and
• a premium of approximately 51.8% to the audited consolidated net asset value attributable to Shareholders per Share of approximately HK$1.977 as at 29 February 2020; and
• a premium of approximately 73.1% to the unaudited consolidated net asset value attributable to the Shareholders per Share of approximately HK$1.733 as at 31 August 2020, which is calculated by the sum of the Company's total issued share capital of HK$119.58 million and total reserves of HK$1,953.07 million (which are based on the financial information disclosed in the Interim Results Announcement), divided by the total number of outstanding Shares of 1,195,797,307 as at 31 August 2020.

(b)

Analysis of historical Share price performance

The charts below illustrates (i) the daily closing price of the Shares and (ii) the relative daily closing Share price performance, as quoted on the Stock Exchange and against the Hang Seng Index respectively from 1 January 2019 and up to the Latest Practicable Date.

Historical Share price performance

HK$

31,000

28,500

26,000

23,500

21,000

18,500

16,000

Share priceHang Seng Index

Source: Website of the Stock Exchange

Notes:

Extracts of profit warning announcements issued by the Company are set out below:

Date of announcement

1. 21 August 2019
2. 9 April 2020
3. 25 May 2020
4. 30 July 2020
5. 4 August 2020
6. 27 October 2020

Indicated financial performance

The Group may record a net loss for the six months ending 31 August 2019 as compared to a net profit for the six months ended 31 August 2018.

It is expected that the Group will incur net loss attributable to the Shareholders of not less than HK$300 million for the year ended 29 February 2020.

Supplemental announcement for the negative impacts and the impairment provision of goodwill, property, furniture and equipment and right-of-use assets made in the fourth quarter of the year ended 29 February 2020, the Group's net loss attributable to the Shareholders is expected to be not less than HK$700 million.

The Group incurred a net loss in the first quarter of the year ending 28 February 2021 as compared to a net profit in the first quarter of the year ended 29 February 2020.

It is expected that the Group will incur a net loss of not less than HK$100 million in the three months ended 31 May 2020 as compared to a net profit of HK$34 million in the three months ended 31 May 2019.

It is expected that the Group will record a net loss of not less than HK$300 million for the six months ended 31 August 2020 as compared to a net loss of HK$71 million in the six months ended 31 August 2019.

Relative Share price performance against the Hang Seng Index

Last Trading Date

Share priceHang Seng Index

Source: Website of the Stock ExchangeNote:

The closing Share price and Hang Seng Index as at 2 January 2019 have been rebased to 100 for ease of comparison

With reference to the chart for the relative Share price performance against the Hang Seng Index above, since 2 January 2019 and up to the Last Trading Date, the Share price displayed a downward trend and underperformed the Hang Seng Index.

With reference to the chart for the historical Share price performance and the Hang Seng Index above, from 2 January 2019 to 26 April 2019, Hang Seng Index was on an upward trend and reached the day closing at 30,082 points while the closing price of the Shares dropped from HK$4.09 on 2 January 2019 to HK$3.77 on 26 April 2019.

The Share performance at the beginning of our review period was traded by investors with reference to, among other things, the interim results of the Group for the six months ended 31 August 2018, the then latest financial performance reference of the Group, being a profit for the period of approximately HK$113.4 million.

From 29 April 2019 to 18 December 2019, Hang Seng Index had day closing fluctuated between 25,281 points and 29,363 points, while the closing Share price continued to drop from HK$3.95 to HK$1.74. During the period, the Company issued a profit warning announcement on 21 August 2019 relating to the anticipated loss incurred in 1H FY 19/20 caused by various geopolitical and macroeconomic challenges such as the Sino-US trade tensions and the social instability in Hong Kong, which the Group offered extra discounts to increase sales and reduce inventory leading to a decline in gross profit margin and earnings in several operating regions such as Hong Kong and PRC.

Since 17 January 2020 and up to the Last Trading Date, the Hang Seng Index had day closing fluctuated between 21,696 points and 27,960 points. The Hang Seng Index reached the lowest closing point of the year on 17 March 2020 and day closing constantly below 27,701 points, being the one-year average prior to the outbreak of COVID-19 with the first Hong Kong confirmed case on 23 January 2020. Notwithstanding the increasing trend of the Hang Seng Index starting from the second quarter of 2020, the Share price continued to drop and reached a closing price of HK$0.96 on 8 September 2020 and remained sluggish compared to the Hang Seng Index for the rest of 2020 until the Last Trading Date.

We note that the Share price was on an upward trend prior to the Last Trading Date and with closing price fluctuated between HK$1.12 on 28 October 2020 (being the first trading day after the issue of the profit warning announcement on 27 October 2020) and HK$1.94 on 30 November 2020 (being the Last Trading Date), represented an increase of approximately 73.2%. The Share price outperformed the market trend whereby the Hang Seng Index with day closing fluctuated between 24,107 points and 26,895 points during the same period, represented an increase of approximately 11.6%. During the period, the Company did not issue any announcement. As advised by the management of the Group, the Company cannot ascertain the reason for such increase in Share prices that outperformed the Hang Seng Index against the backdrop of deterioration of financial performance.

The Share price closed at HK$1.94 on the Last Trading Date and further surged by approximately 44.8% to HK$2.81 on 7 December 2020, being the first trading day following the Joint Announcement.

We note that the Shares were traded below the Cancellation Price of HK$3 for over 16 months from 25 July 2019 to the Last Trading Date. During the period, the Shares were traded between closing prices of HK$0.96 and HK$2.93, with an average closing price of approximately HK$1.60, representing a discount of approximately 87.5% to the Cancellation Price. We note that the Group issued six profit warning announcements during the period. As such, we believe that the Share price performance was largely affected by the adverse changes in financial performance of the Group, details of which are set out above in the section headed "2. Financial information of the Group".

From 7 December 2020 to the Latest Practicable Date, the Shares were traded between closing prices of HK$2.73 and HK$2.89, with an average of closing price of approximately HK$2.80, representing a discount of approximately 6.7% to the Cancellation Price. The Shares closed at HK$2.79 as at the Latest Practicable Date.

Overall comments

Overall there was a downward trend of the Share price from 18 January 2019 until late October 2020 whereby the Share price dropped significantly during the said period with closing price from approximately HK$4.28 on 18 January 2019 as the highest to HK$0.96 as the lowest on 10 August 2020 during the said period.

We note that the Group issued six profit warning announcements during the period under review. As such, we believe that the Share price performance was largely affected by the adverse changes in financial performance of the Group. Despite the issue of the profit warning announcement on 27 October 2020, the Share price was on an upward trend and surged by approximately 73.2% from 28 October 2020 to the Last Trading Date, being 30 November 2020. As advised by the management of the Group, the Company cannot ascertain the reason for such increase in Share prices.

We consider the further surge in Share prices after the issue of the Joint Announcement was primarily driven by the announcement of the Proposal, in particular, the Cancellation Price of HK$3 per Scheme Share. The Scheme Shareholders should note that the prevailing Share prices may not be sustained if the Scheme is not approved or the Proposal otherwise lapses.

(c)Comparable companies analysis

In assessing the fairness and reasonableness of the Cancellation Price, we have identified companies listed on the main board of the Stock Exchange which (i) derived over 50% of their revenue from sales of apparel; (ii) derived over 50% of their revenue from PRC and/or Hong Kong in their respective latest financial years; (iii) had a market capitalisation of up to HK$5 billion on the Last Trading Date; and (iv) no change in controlling shareholder in the most recent financial year as the share prices may be distorted due to market perception as a result of change in controlling shareholder. We have identified 10 companies which are considered to be comparable companies (the "Comparable Companies"). These Comparable Companies represent an exhaustive list of comparable companies satisfying the above selection criteria.

We have considered commonly-used benchmarks in valuing a business. As the Group was loss-making based on the latest published results, price to earnings ratio is not applicable. We consider that enterprise value to earnings before interest, tax, depreciation and amortisation ("EBITDA") multiple ("EV/EBITDA") is an appropriate benchmark for valuing the Company. As the value of the Group depends on it earnings and operating performance but not its asset base, a price to book value ratio is not considered to be an appropriate valuation benchmark.

The table below illustrates the EV/EBITDA Ratio of the Comparable Companies based on their respective financial information as derived from their respective latest published financial statements and the closing share prices of the Comparable Companies on the Last Trading Date.

Market capitalisation as at the Last

Company	Stock code	Trading Date	EV/EBITDA
(Note 1)
(HK$ million)	(times)
JNBY Design Limited	3306	4,596	4.5
Mulsanne Group Holding Limited	1817	3,886	14.8
Giordano International Limited	709	1,862	2.1
Cabbeen Fashion Limited	2030	1,852	5.6
Goldlion Holdings Limited	533	1,532	3.2
ENM Holdings Limited	128	1,073	(Note 2)
Forward Fashion (International) Holdings
Company Limited	2528	496	3.1
Trinity Limited	891	360	0.2
Bauhaus International (Holdings) Limited	483	215	1.8
Moiselle International Holdings Limited	130	81	0.8
Maximum	14.8
Minimum	0.2
Average	4.0
Median	3.1
The Company	3,587	5.1
(Note 3)	(Note 3)

Source:	Bloomberg
Notes:
1.	EV represents the market capitalisation as at the Last Trading Date plus total interest-bearing liabilities and total
lease liabilities less cash and cash equivalents of the respective Comparable Companies based on their respective
latest published financial statement; EBITDA represents trailing 12 months EBITDA and adjusted by the
impairment of goodwill, right-of-use assets and property, plant and equipment.
2.	Not applicable as loss before interests, taxes, depreciation and amortisation
3.	Based on the Cancellation price of HK$3.

Despite the scale of operations, geographical mix of markets or prospects may not be the same or even different from the Group, we consider that the Comparable Companies are representative and appropriate for comparison purpose as they are all fashion retailers and their major markets are in PRC and/or Hong Kong.

The EV/EBITDA ratio for the Company as implied by the Cancellation Price was 5.1 times, which was higher than the average and median of the EV/EBITDA of the Comparable Companies of 4.0 times and 3.1 times respectively.

Privatisation precedents

(d)

The table below shows a comparison of the Proposal to successful privatisation proposals of companies engaging in the retail sector listed on the main board of the Stock Exchange announced since 1 January 2018 up to the Last Trading Date (the " Successful Privatisation Precedents "), which represents an exhaustive list of privatisation proposals based on the aforesaid criteria. The table sets out the premiums of cancellation price over the relevant last trading date, 5 day, 30 day, 60 day, 90 day and 180 day periods' average share prices (up to and including the last trading days), which illustrate the ranges of premium over the prevailing share prices of the Successful Privatisation Precedents that were considered acceptable by their shareholders. We consider that the Successful Privatisation Precedents are the relevant companies to the Proposal given that they operate in the same sector.

Premium of cancellation price over closing price/average closing price prior to the privatisation proposal

Last 180 trading days

Last 90 trading days

50.1% 32.2%
45.8% 49.9%
53.2% 48.6%
26.5% 21.9%
53.2% 49.9%
26.5% 21.9%
43.9% 38.2%
47.9% 40.4%
173.0% 156.7%Last 60 trading days

62.7%

45.2%

55.4%

30.3%

62.7% 30.3% 48.4% 50.3% 162.4%

Last 30 trading days

82.2%

49.2%

56.8%

29.4%

82.2% 29.4% 54.4% 53.0% 135.5%

Last 5 trading days

91.3%

51.6%

67.9%

12.0%

91.3% 12.0% 55.7% 59.8% 84.7%

Last trading day

91.8%

50.2%

63.1%

10.0%

91.8% 10.0% 53.8% 56.7% 54.6%

Principal business

Fashion retail, brand management and

Market capitalisation as at the

Stock code Last Trading Date

(HK$ million)

237 distribution
Design, manufacturing and retail of
1,513 ladies' and men's fashion garments
2,778 Operation of a chain of hypermarkets
Operation of department stores and
2,232 supermarkets
Maximum Minimum Average Median

647

589

1700

121

Company

Joyce Boutique Group Limited

Portico International Holdings Limited

Springland International Holdings LimitedC.P. Lotus Corporation

Date of announcement

Apparel retailers

12-Dec-19

07-Jun-18

Other retailers

01-Nov-19

18-Jun-19

The Successful Privatisation PrecedentsThe Proposal

Source: Bloomberg and website of the Stock Exchange

As the Group is a fashion retailer and the Group's value is not based on its asset base, the comparison of the premium of the Cancellation Price over the Group's unaudited consolidated net asset value attributable to Shareholders per Share as at 31 August 2020 of approximately 73.1% with the premium/discount of cancellation price over/to the net asset value of the respective Successful Privatisation Precedents is not considered to be appropriate.

The premium as represented by the Cancellation Price was approximately 84.7% over the average closing price of the Shares for the period of five trading days up to and including the Last Trading Date, which was within the range and higher than the median of approximately 59.8% of those of the Successful Privatisation Precedents. It is noted that the Share price was on an upward trend and there was a surge in mid-November 2021 prior to the Last Trading Date. As advised by the management of the Group, the Company cannot ascertain the reason for such increase in Share prices that outperformed the Hang Seng Index against the backdrop of the deterioration of the Group's financial performance. Please refer to the sub-section headed "7. Evaluation of the Cancellation Price (b) Analysis of historical Share price performance" for more details.

The premiums as represented by the Cancellation Price were approximately 135.5%, 162.4%, 173.0% and 156.7%, over the average closing prices of the Shares for the periods of 30, 60, 90 and 180 trading days up to and including the Last Trading Date, respectively, which were higher than the respective maximum premium of those of the Successful Privatisation Precedents.

Overall comments

After considering the following factors:

(a) the closing prices of the Shares were below the Cancellation Price for over 16 consecutive months from 25 July 2019 to the Last Trading Date;

(b) the EV/EBITDA ratio of the Company as implied by the Cancellation Price was approximately 5.1 times, which was higher than the average and median of the EV/EBITDA ratio of the Comparable Companies on the Last Trading Date of approximately 4.0 times and 3.1 times respectively; and
(c) The premium as represented by the Cancellation Price was approximately 84.7% over the average closing price of the Shares for the five trading days up to and including the Last Trading Date, which was within the range and higher than the average of approximately 55.7% and median of approximately 59.8% of those of the Successful Privatisation Precedents. The premiums as represented by the Cancellation Price were approximately 135.5%, 162.4%, 173.0% and 156.7% over the average closing prices of the Shares for the periods of 30, 60, 90 and 180 trading days up to and including the Last Trading Date, respectively, which were more than the respective maximum premium of those of the Successful Privatisation Precedents,

we consider that the Cancellation Price is fair and reasonable.

The Offeror's intention regarding the Group

As explained in the Explanatory Statement in Part VII of the Scheme Document, the Joint Offerors and the Offeror plan to implement the Restructuring and contribute financial and operational resources to the Group in order to reinvigorate growth over a long period through online infrastructure expansion, selective branding, implementing location strategies and exploring new business opportunities. Together with a shared ambition to uncover potential for the Brand Operations, a partnership between the Company and the CVC Network will provide the optimal structure and platform for both sides to unleash their respective strengths in realising the common objective to create long-term values for the Brand Operations while providing Founder Holdco leeway to take the necessary steps to revive the Other Operations.

As part of the Restructuring:

(a) the Offeror intends to separate (or procure that the alternative contractual arrangements are entered into to separate the economic benefits relating to) the employees, inventory, other tangible or fixed assets, lease agreements, other third party contracts, intellectual properties, information technology infrastructure, data, cash or receivables, debt or payables, and other assets and liabilities of the Group into two parts, being the Brand Operations and the Other Operations; and
(b) upon completion of the separation described in paragraph (a) above, the Offeror intends to continue to operate the existing business of the Brand Operations of the Group, while transferring the existing business of the Other Operations of the Group to the Founder Holdco as part of the Restructuring. The Brand Operations and the Other Operations may also enter into (i) transitional services agreements relating to logistics, e-commerce, office premises and IT systems or other areas where transitional services are required, and (ii) long-term agreements relating to trading between the Brand Operations and the Other Operations, including, consignment or similar agreements for the sale of the Brand Operations' products in the Other Operations' channels (or vice versa), facility services agreement for conference rooms, pantries and utilities in the PRC, and/or property and facility services for office premises in Taiwan, each conditional on and taking effect after the Effective Date. Transitional services agreements will be entered into for a period of six to twelve months with an early termination right by the relevant service recipient. Transitional services and long-term facility and property services will be charged by the relevant service provider on a monthly basis at actual costs of the services with no mark-ups. The pricing for other long-term services will be determined based on market price and arm's length commercial negotiation and on terms no more favorable than the terms available to and/or from any independent third-party service provider providing similar services in the relevant local market.
The Offeror does not have any plan to make significant changes to the continued employment of the employees of the Group as a result of the implementation of the Proposal, except for staff movements which are part of the normal conduct of business and separation and redeployment of the Group's employees by the Brand Operations and the Other Operations upon which the Group's employees dedicated to the Brand Operations will continue to be employed by entities dedicated to the Brand Operations and the Group's employees dedicated to the Other Operations will continue to be employed by the Group's entities dedicated to the Other Operations.

As disclosed in the section headed "9. Joint Offeror Cooperation Agreement" below, shareholders of EquityCo (being the Joint Offerors) endeavour to procure that EquityCo consummates a qualified initial public offering (being a fully marketed public offering of EquityCo shares on the stock exchanges in Hong Kong, Tokyo, New York or other internationally reputable stock exchanges as the EquityCo shareholders may agree) or a trade sale (being the sale of EquityCo shares held by CVC Holdco to a third party buyer at an acceptable valuation to CVC Holdco) within approximately three to five years after the Effective Date, through which EquityCo shareholders (being the Joint Offerors) may exit from EquityCo. CVC Holdco has the right to decide (in any event no later than 12 years from the Effective Date), in its absolute discretion, as to whether and when to pursue a qualified initial public offering or a trade sale if CVC Holdco has not exited from EquityCo five years from the Effective Date. CVC Holdco has the right (but not the obligation) to exit ahead of other shareholders. In relation to the potential qualified initial public offering, as at the Latest Practicable Date, the shareholders of EquityCo had not agreed on any expected offer price or post-market valuation, or the method of listing.

As disclosed in the section headed "2. Financial Information of the Group" above, the recent operating and financial performance of the Group was adversely affected primarily by the COVID-19 pandemic with substantial decline in turnover and the Group turned from a net cash position as at 28 February 2019 to a net debt position as at 29 February 2020 and 31 August 2020, primarily due to the increase in total borrowings. As stated in the Trading Update, other than the slight YoY growth for PRC operations for the three months ended 30 November 2020, all operating segments recorded negative YoY same-store-sales-growth for the three months and nine months ended 30 November 2020, which was due to the severe impacts on the Group's sales performance brought by the COVID-19 situation with related restrictions in place and the decline in inbound tourism over the period. As disclosed in the section headed "4. Industry Overview and Outlook" above, the full recovery of the world's economy remains uncertain in the near term as the mutations of the coronavirus and the time required to inoculate the population to achieve herd immunity is uncertain. The COVID-19 pandemic is expected to continue to bring volatility and uncertainties to the economy and to the Group (including the Brand Operations and the Other Operations).

The Joint Offerors and the Offeror intend to implement the Restructuring and contribute financial and operational resources to the Group in order to reinvigorate growth over a long period through online infrastructure expansion, selective branding, implementing location strategies and exploring new business opportunities. It is noted that the Restructuring would allow the Brand Operations, which have significant Hong Kong retail exposure and are currently running at an operating loss and negative cash with better cash generative capabilities, to surface as a more feasible borrower to secure long-term financing subject to the Scheme becoming effective and the completion of the Restructuring owing to CVC Network's credibility, track record in business turnaround and long-term relationship with commercial banks, while preserving sufficient cash for the Other Operations to weather through the retail headwind for the purpose of seeking a potential turnaround in the future. The Founder Group's partnership with CVC Holdco, which is ultimately owned by CVC Funds, a leading global long-term strategic financial investor with strong track record in managing brand and retail companies and its extensive global network, will be valuable resources that is expected to be an important factor to the growth and value creation of the Brand Operations in facilitating the ultimate intention of the Offeror, if successful.

Having considered the aforesaid, we consider that the Group (including the Brand Operations and the Other Operations) with the support of CVC will be in a better position to cope with the challenging operating environment than on a standalone basis.

Joint Offeror Cooperation Arrangement

(a)

Key terms of the Joint Offeror Cooperation Arrangement

As part of the Proposal, the relevant members of the Founder Group, CVC Holdco, EquityCo and/or the Offeror entered into the following Joint Offeror Cooperation Arrangement:

(i)	Consortium Agreement;
(ii)	Shareholders' Agreement; and
(iii)	transactions in connection with the Restructuring (being the restructuring of the Group and
the Offeror Group (as applicable) pursuant to: (a) the Framework Agreement (which
terminated and superseded the Restructuring Term Sheet); (b) the implementing agreements
relating to asset or share transfers, transitional or long-term services and alternative
arrangements in relation to the Restructuring; and (c) the Refinancing Documents).
(i)	Consortium Agreement
On 4 December 2020, Chairman, CCO (each in his personal capacity as a member of the

Founder Group), and the Joint Offerors entered into the Consortium Agreement, pursuant to which the parties have agreed to conduct and implement the Proposal in consultation with one another and for EquityCo to have the shareholding structure as further described in the section headed "5. Information on the Offeror Group, the Founder Group and the CVC Network" above. The Consortium Agreement will be terminated if the Scheme is not approved or the Proposal otherwise lapses or is withdrawn.

(ii)Shareholders' Agreement

On 5 December 2020, Chairman, CCO (each in his personal capacity as a member of theFounder Group), the Joint Offerors and EquityCo entered into the Shareholders' Agreement in respect of the governance of the Offeror Group, which is intended to take full effect upon the Scheme becoming effective. On 19 March 2021, the same parties entered into a deed of amendment relating to the Shareholders' Agreement. Set out below are key terms of the Shareholders' Agreement (as amended by the deed of amendment):

• Board composition. Founder Holdco shall have the right to appoint three directors on the board of EquityCo, and CVC Holdco shall have the right to appoint two directors.
• Voting rights. Ordinary shares, class A preference shares and class B preference shares in EquityCo will have voting rights, and each share will carry one vote.
• Dividend rights. Each preference share will have a cumulative non-cash coupon at the rate of 10% per annum. No dividend on any ordinary share shall be declared unless the accrued interest on the preference shares is fully settled. EquityCo shall, as soon as practicable after the Effective Date and in any event prior to CVC Holdco's exit from EquityCo, declare and pay in cash to CVC Holdco (as a holder of class B preference shares), prior to and in preference to the dividend rights of any other EquityCo shareholder, an additional preferred dividend of up to HK$800 million (so long as the Offeror Group's balance sheet, debt financing terms and the applicable law permit such distribution (including through a dividend re-capitalisation)). There is no guarantee that such additional preferred dividend will be declared and paid in full, whereby EquityCo could borrow money to fund such preferred dividend payment together with any existing cash resources of the Offeror Group. While the timing of the declaration and payment of such additional preferred dividend to CVC Holdco through cash distribution is uncertain, in any event, CVC Holdco will be entitled to the economic benefits of such additional preferred dividend in its various exit scenarios.

• Reserved matters. EquityCo board will be responsible for the overall direction, supervision and management of the Offeror Group, subject to minority protection reserved matters over which CVC Holdco shall have a veto right. Such reserved matters include, among others, amendment of constitutional documents and share capital, liquidation and winding up of any company of the Offeror Group, approval of business plan and annual budget, appointment of auditors and senior management of the Offeror Group, change of business scope, any material borrowings, mergers, investments, acquisitions, disposals, granting of any material guarantees other than provided in the business plan, entering into or settling any material dispute, and entering into any material related party transactions.
• Pre-emption rights. Each shareholder shall have pre-emption rights to participate in any issuance of new shares by EquityCo.
• Transfer restriction. Other than with the prior written consent of CVC Holdco, Chairman, CCO (each in his personal capacity) and Founder Holdco shall not, subject to customary exceptions, transfer their or its EquityCo shares to third parties during the term of the Shareholders' Agreement.
• Non-compete and non-solicit. Founder Holdco, Chairman, CCO (each in his personal capacity) and their affiliates shall not, other than carrying on the Other Operations, compete with the Brand Operation, and shall not solicit the employment of the senior managers of the Offeror Group, subject to customary exceptions.
• Liquidation preference. In case of a liquidation event (including, with respect to the Offeror Group, any liquidation, share sale resulting in Founder Holdco losing control, or sale of all or substantially all of the assets), ahead of holders of other classes of shares, holders of class B preference shares shall be entitled to (i) participate in such liquidation event, or (ii) be paid by EquityCo, in respect of holders of class B preference shares, an amount no less than the sum of its investment amount and all accrued and unpaid dividend (including the HK$800 million of preferred dividend).
• Conversion rights. Each preference share of EquityCo shall be automatically converted into ordinary shares immediately prior to the consummation of any initial public offering of EquityCo based on a conversion formula which, with respect to CVC Holdco as a holder of class B preference shares, factors in the sum of CVC Holdco's initial investment amount and all accrued and unpaid dividends entitled to be received by CVC Holdco (including the HK$800 million of preferred dividend) towards CVC Holdco's entitlement under its conversion right.
• Exit. Shareholders of EquityCo endeavour to procure that EquityCo shall consummate a qualified initial public offering (being a fully marketed public offering of EquityCo shares on the stock exchanges in Hong Kong, Tokyo, New York or other internationally reputable stock exchanges as the EquityCo shareholders may agree) or a trade sale in approximately three to five years after the Effective Date, through which shareholders may exit from EquityCo. CVC Holdco has the right (but not the obligation) to exit ahead of other shareholders. CVC Holdco has the right to, in its absolute discretion, decide whether and when to pursue a qualified initial public offering or a trade sale if CVC Holdco has not exited from EquityCo five years from the Effective Date. In relation to the potential qualified initial public offering, as at the Latest Practicable Date, the shareholders of EquityCo had not agreed on any expected offer price or post-market valuation, or the method of listing.

• Share adjustment. If the net money-on-money return achieved by CVC Holdco through its future exits from EquityCo (calculated based on CVC Holdco's net return amount and investment amount) is in the range from 3.2 times to 3.5 times, up to approximately 13% of EquityCo shares (which were initially issued and credited to CVC Holdco as fully paid at the direction of Founder Holdco around the time of the Joint Announcement and the Effective Date respectively, and, as at the Effective Date, amounts to approximately HK$465 million economic value and the future value of which at the time of CVC Holdco's future exits may change and is uncertain as at the Latest Practicable Date) will be proportionally returned to Founder Holdco for nil consideration upon CVC Holdco's future exits from EquityCo in accordance with a gradual scale. There is no certainty as to CVC Holdco's future exit return nor any guarantee that such share adjustment will eventually take place.
• Preferred dividend sharing. After taking into account the share adjustment as described above, if the net money-on-money return achieved by CVC Holdco upon its future exits from EquityCo is greater than 3.5 times, CVC Holdco will share with Founder Holdco up to 63.5% of its preferred dividend actually received by CVC Holdco from EquityCo (to the extent that CVC Holdco's net money-on-money return remains above 3.5 times). There is no certainty as to CVC Holdco's future exit return nor any guarantee that such preferred dividend sharing will eventually take place.
• Additional upside sharing. After taking into account the share adjustment and the preferred dividend sharing as described above, if the net money-on-money return achieved by CVC Holdco through its future exits from EquityCo still exceeds 3.5 times, CVC Holdco will share with Founder Holdco an additional cash amount equal to approximately 15% of CVC Holdco's net return that is in excess of 3.5 times. There is no certainty as to CVC Holdco's future exit return nor any guarantee that such additional upside sharing will eventually take place.
• Termination. The Shareholders' Agreement shall terminate (i) by the parties' written agreement, (ii) with respect to a shareholder, if that shareholder holds less than 10% EquityCo shares, (iii) upon a qualified initial public offering, and (iv) upon all EquityCo shares being held by one person.

(iii)

Transactions in connection with the Restructuring (being the restructuring of the Group and the Offeror Group (as applicable) pursuant to: (a) the Framework Agreement (which terminated and superseded the Restructuring Term Sheet); (b) the implementing agreements relating to asset or share transfers, transitional or long-term services and alternative arrangements in relation to the Restructuring; and (c) the Refinancing Documents)

On 5 December 2020, Chairman, CCO (each in his personal capacity as a member of theFounder Group), the Joint Offerors and EquityCo entered into a legally binding Restructuring Term Sheet. In accordance with the Restructuring Term Sheet, on 30 January 2021, Chairman, CCO (each in his personal capacity as a member of the Founder Group), the Joint Offerors and EquityCo entered into the Framework Agreement, which terminated and superseded the Restructuring Term Sheet. The Framework Agreement is the governing and guiding document for the Restructuring transactions. It reflects the principles and key terms of the Restructuring Term Sheet, and includes more detailed implementing provisions to effect the key terms agreed in the Restructuring Term Sheet. Pursuant to the Framework Agreement, the parties have agreed to:

(a) procure the implementation of the Restructuring, the process of which commenced promptly after the date of the Joint Announcement and is intended to be substantially completed within a short period of time after the Effective Date;
(b) procure the establishment of new Group entities dedicated for the Brand Operations which are required to effect the Restructuring;

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I T : (1) PROPOSAL FOR THE PRIVATISATION OF I.T LIMITED BY THE OFFEROR BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 99 OF THE COMPANIES ACT AND (2) PROPOSED WITHDRAWAL OF LISTING OF I.T LIMITED

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