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FORD EAGLE GROUP LTD – First Day of Trading
FORD EAGLE GROUP LIMITED 2 August 2010 The Directors of FORD EAGLE GROUP LIMITED ("the Company" or "Ford Eagle") are pleased to announce that the Company's application for Admission to PLUS-quoted has been approved and that the Company's entire issued share capital of 3,000,000 ordinary shares of £0.10 each has been admitted to trading on PLUS-Quoted today. LISTING DETAILS Sector Classification: Financial Services Principal Activities: Specialised investment and advisory services Corporate Adviser on Application: Axiom Capital Limited Corporate Adviser from Admission: Cairn Financial Advisers LLP Broker from Admission: Alexander David Securities Limited Financial Adviser from Admission: Axiom Capital Limited Shares in issue on Admission: 3,000,000 Ordinary Shares of £0.10 each Admission Price: £ 0.55 Market Capitalisation at Admission £ 1,650,000 PLUS Symbol FEGP ISIN Number KYG362131099 OVERVIEW 1. INTRODUCTION Ford Eagle Group Limited, incorporated in the Cayman Islands on 18 September 2009, with representation in China, Hong Kong, the UK, USA and Japan is a specialized advisory and investment firm. Ford Eagle will provide advice to private companies on restructuring, mergers and acquisitions, as well as structuring and coordinating Initial Public Offerings and listings in major international equity markets, such as the UK, China, Hong Kong and the USA. Ford Eagle's Directors and its senior management have on average over 20 years experience in most areas of corporate finance, asset management and other financial advisory work and have, in addition, held senior management positions in a range of companies. The Directors of Ford Eagle have expertise in a wide range of commercial and industrial sectors and have completed transactions in infrastructure, high technology, consumer goods, natural resources, media and telecommunications, pharmaceuticals and healthcare, commercial and residential property, hotels and leisure companies. 2. BUSINESS OVERVIEW After Admission, Ford Eagle intends to operate two distinct, but related divisions: advisory and investments. Initially, the Company will operate its advisory division. The investment division will only start when the Company has raised sufficient funds for it. ADVISORY The advisory services will be conducted initially in Hong Kong and in Shenzhen, Guangdong Province, PRC and later in other cities in PRC. The Company aims to offer a comprehensive advisory service for companies in China wishing to expand or enhance their presence overseas and for overseas companies wishing to do the same in China. The Directors have identified a number of companies they view as appropriate for an overseas listing, which, in the Directors' opinions, will raise not just their financial profile but also, it is believed, their commercial profile and thus their ability to expand more aggressively into overseas markets. This advisory role includes, assisting companies: * Preparing to list shares on overseas exchanges * Deciding whether listing its shares is an appropriate option * Selecting the stock market to which its shares are best suited * Selecting objectively the optimal combination of necessary professional advisors including: reporting accountants, auditors, stockbrokers, legal advisers, nominated advisers (for London's AIM market), Corporate Advisers (for London's PLUS Markets) and financial advisers for Standard Listings on the LSE * With ongoing reporting requirements overseas * In determining a suitable public relations and investor relations programme * Finding and appraising investment and acquisition opportunities outside China * With introductions to valuable commercial partners in or outside China In addition, the Company may assist overseas companies with establishing a base in China, by means of providing: * Introductions to the best local advisers including legal and financial * Assistance in complying with the local legal and regulatory requirements * Introductions to the important government bodies and individuals * Advice on expansion opportunities in China * Advice on acquisition opportunities in China * Advice on a suitable public relations, brand development and investor relations programme Through its advisory division, Ford Eagle will be able to assist the client company through the process of raising pre-IPO funding all the way through to its eventual listing on a suitable stock exchange. Financial advisory services will be unregulated and any regulated advice will be referred to a company authorised and regulated by the FSA, for advisory services in the UK and the appropriate regulating authorities in other countries for advisory services outside the UK. Ford Eagle will derive income from the advisory role. Typical fees will amount to approximately HK$500,000 (£44,170, based on an exchange rate of HK$11.42 as at 14 May 2010) in cash prior to a company's listing and a further sum of approximately HK$1 million (£88,339) in cash or approximately HK$3 million (£265,018) in shares on listing. Fees to introducers (which may include management and staff of the Company) will be paid from this advisory income and will be up to 30% of the advisory fee. The Directors believe that such commissions are not uncommon in China and Hong Kong. INVESTMENT In respect of its investment policy, the Directors believe that Ford Eagle is quite different from the majority of venture capital or private equity companies currently in China. Ford Eagle will only invest in companies to which it acts as an advisor. In parallel with its advisory activity, Ford Eagle will cover up to 50% of the client companies' listing costs in exchange for shares in these companies at a significant discount to their listing price. The targeted return on the investment side of the business is 3 to 5 times the initial investment. Ford Eagle currently has sufficient working capital to sustain its advisory business alone. After Admission it aims to raise approximately £2 million. Approximately £750,000 of this is expected to be sufficient for the Company to achieve its target for investing in 3 companies in the first twelve months of activity. Moreover, through careful selection of small to medium sized enterprises, Ford Eagle is providing, as a quoted company itself, access to investors to a spread of high growth entrepreneurial companies that otherwise would remain unknown to investors. Ford Eagle is not focusing on any specific industry sectors, but its first four contracted advisory assignments are in the fields of telematics, RFID devices and organic food as well as a loyalty card programme. The Directors believe that these companies have experienced and good management as well as the opportunity to become one of the market leaders in the PRC and elsewhere in their particular commercial sector. TARGET INCOME The target income from each of the four advisory clients is HK$1,500,000 (£132,509) in the first year of providing advisory services. Each listing is targeted to create an aggregate return of HK$3,000,000 (£265,018). Network and Management The Company currently has representative offices in Newcastle, UK, Hong Kong and Shenzhen, China. It has direct representatives in New York and Tokyo. The Company is able to offer clients a comprehensive range of services, as described above. Senior management will be travelling to the markets they are involved in, whilst retaining a core team in Hong Kong and China. Ford Eagle may also arrange for management of companies in China to visit the UK, Europe, the USA and elsewhere, if required. Other Activities Ford Eagle will draw on both its own international network and that of the Directors to encourage overseas companies to establish or expand an existing presence in China. It will do this through making such companies aware of opportunities available, particularly in southern China, including any grants, tax and other incentives available. The Directors believe attractive opportunities exist in many sectors, including alternative energy, high technology, research and development, natural resources, general manufacturing, leisure including hotels, restaurants, theme parks, pharmaceuticals and healthcare and financial services. Ford Eagle is developing a springboard from its bases in southern China and Hong Kong. It intends to focus on enabling companies from China to expand overseas and to attract overseas companies that wish to establish a base and expand in southern China. 3. INVESTMENT PHILOSOPHY It is widely recognized that China currently enjoys one of the highest economic growth rates in the world and is likely to continue to do so for the foreseeable future. Ford Eagle is targeting what it believes to be one of the most dynamic sectors of that economy, namely the small to mid size business sector or SMEs. SMEs account for much of China's GDP, but the Directors believe that accessing the most successful of these has so far eluded most Western investors. With that end in mind, Ford Eagle has made it a policy not to focus on Beijing and Shanghai but on other less well known cities in China, where they believe they will be able to identify opportunities that are less promoted than in the two biggest cities. With over 270 cities of over 1 million inhabitants, the Directors believe that China offers an excellent opportunity. The founders of Ford Eagle have devoted many years to building relationships with key entrepreneurs and businessmen in those cities, which has enabled them to identify what they believe to be the most promising opportunities across a wide range of business sectors. Ford Eagle has identified a number of companies with the characteristics it views as most important for future success:- * A strong, motivated management team with a proven track record; * Strong financial record and real growth prospects; * Proven business model and strong commercial position; * Verifiable and protected intellectual property; * High growth sector or high growth market; * Ability to be the dominant player in its niche; and * Adequate corporate governance. The above list is not comprehensive, but these characteristics are shared for the most part by all the companies which Ford Eagle intends to advise and to invest in. THE Company The management of the Company has up to now provided advice to private corporations and government entities on privatization, restructuring, mergers and acquisitions, as well as structuring and coordinating Initial Public Offerings in major international equity markets, such as China, Hong Kong, USA and UK. The Directors' network of experienced advisers covers many markets. With senior representatives already in place in New York and Tokyo, the Company intends to embark on a further strengthening of its network. The Directors and the senior representatives have expertise in a wide range of commercial and industrial sectors and have between them completed transactions in infrastructure, high technology, financial services, environmental engineering, consumer goods, natural resources, media and telecommunications, pharmaceuticals and healthcare, commercial and residential property, hotels and leisure companies. Management will also focus on identifying and securing investors from overseas to participate in China's rapidly growing economy, both institutional and corporate, as well as assisting companies from China to invest or acquire companies overseas. 4. DIRECTORS AND REPRESENTATIVES The Board currently comprises seven Directors, brief biographies of whom are set out below. Further details of the Directors' directorships both current and in the past five years are set out below. Nicholas LITTLEWOOD, 53, Chairman Nicholas began working with Jack Law in early 2008, having recently sold his interest in Global Carbon Capital Limited, a Hong Kong based company developing greenhouse gas reduction projects in south east Asia. As its Chief Executive Officer, he was responsible for developing a large landfill methane to electricity project in the region near Manila as well as forming joint ventures and assessing numerous environmental projects in China. He is now the Executive Chairman of Ford Eagle. This followed a career of over twenty years as an investment banker in New York, London and Paris including stints at Samuel Montagu, Lehman Brothers, Kuhn Loeb and Banque Paribas. His roles covered everything from IPOs, mergers and acquisitions, privatization and general corporate finance in a wide range of sectors; his first involvement in southeast Asia dates back over 25 years. Prior to joining Global Carbon Capital, he managed his own corporate finance business for 4 years advising high growth mid-sized companies. He has served as a director of several listed and private international companies. Nicholas completed the International Finance program at DnC in Oslo and holds an M.A. from Oxford University following studies in Paris. He currently divides his time between China and London. Wing Tak Jack LAW (ACA, FCPA), 56, Chief Executive Officer Jack founded his Hong Kong based corporate finance activities in 1990 following a highly successful career first as a Chartered Accountant in the UK and in Hong Kong and subsequently as a senior company director of both private and listed companies in Hong Kong, the UK, Singapore, USA and China. Jack was an executive director of Compass Pacific Holdings Limited, Smart Rich Holdings Limited, Star Telecom Holdings Limited, Chung Wah Shipbuilding and Heavy Engineering Holdings Limited and Bolton Company (International) Limited. His early career was in accountancy and management consultancy with Ribchesters, Chartered Accountants in the UK and Ernst & Whinney and Arthur Andersen in Hong Kong. He is a graduate of Newcastle University, a Member of the Institute of Chartered Accountants in England and Wales and a Fellow Member of the Hong Kong Institute of Certified Public accountants. Jack is currently the Chief Executive Officer of Ford Eagle, a partner in Ribchesters, a firm of Chartered Accountants in the UK and an independent non-executive director of a listed company in Hong Kong. He is fluent in English, Cantonese and Mandarin. Wing Sang Wilson HUI (MBA, FCPA, ICSA, HKICS), 42, Finance Director Wilson has been a Director, the Chief Financial Officer, Qualified Accountant and Company Secretary of Hybrid Kinetic Group Ltd (formerly known as Far East Golden Resources Company Limited, a Hong Kong listed company) since September 2007. He holds a Master's degree in Business Administration from University of Surrey and a Master's degree in Professional Accounting and Information System from City University of Hong Kong. He is an associate member of Institute of Chartered Secretaries and Administrators, Hong Kong Institute of Company Secretaries and Hong Kong Institute of Certified Public Accountants. He possesses more than 15 years of experience in accounting, finance and corporate management. Wilson was appointed the Finance Director of the Company in January 2010. Chi Ming Wallace TSE, 49, Director, Business Development Wallace began working with Jack Law in 2008 after a wide ranging entrepreneurial career. He was one of the first Hong Kong based businessmen to be involved in China as it opened up in the 1980s. His career has involved him in the pharmaceutical and healthcare sector as well as the retail, restaurant and leisure sectors and, more recently in media, telecoms and other high technology. Wallace has well over 10 years senior management experience. He managed, while at YHY Food Products Limited a chain of 42 restaurants with over 1,500 employees. He has been the in-flight media representative for Shanghai Airlines. He has worked extensively in the medical field, having devised and built brands for many new product launches including TCM, western medicines, health food and environmentally friendly products. Through PharmaCare Ltd., and Wisecare Ltd, he pioneered smart cards linking networks of clinics and for the HydroYoga program, he obtained sponsorship from Zurich Insurance. He was instrumental in developing and positioning products which facilitated the listing of Cheung Kong BioTech. Prior to that Wallace was with Century Marketing Company in Shenzhen Wallace brings his expertise in brand marketing and positioning, marketing and sales and senior management experience to enhance the clients of Ford Eagle's businesses. He is fluent in English, Cantonese and Mandarin. Dr. Man Sang Eric TSANG (LLB, MBA, PhD), 48, Non-Executive Director Eric has worked in the financial industry for about 20 years. His work covered insurance, pension schemes, private equities, mutual funds and asset management with corporations such as Manulife, ING and two private equity companies in Hong Kong and China. At the same time, he was a part-time consultant in regional offices of Chinese insurance companies as they initialized their agency distribution force. Prior to the financial sector, he was a partner in a management consulting firm, being particularly active in the Hong Kong-China transitions of manufacturing industry companies. In 2006, he became active in Islamic Finance with a well-known Chinese Muslim family in Hong Kong. Eric was also active in the non-profit sector, especially societies working towards economic development in China. He holds LLB, MBA and PhD degrees. Andrew PAWLEY, 46, Non-Executive Director Andrew is a British Barrister based in Hong Kong. He is an experienced corporate financier and has professional experience gained with firms in Belgium, Spain, Italy and Hong Kong. His résumé includes periods of Managing Director EMEA of M&A International Inc and Director of Corporate Finance at Baker Tilly Hong Kong. He now runs his own consulting firm, Andrew Pawley Associates Limited, offering management consultancy, business development and corporate advisory services in Greater China but with a focus on Hong Kong and Singapore. He speaks fluent Italian and French, reasonable Spanish and some Cantonese. Garry Alides WILLINGE, 60, Non-Executive Director Garry is a Fellow of the Australian Institute of Company Directors and a Fellow of the Hong Kong Institute of Directors. He is also an Adjunct Professor with the Curtin Business School at Curtin University of Technology. His academic qualifications are a Bachelor of Science from the University of Melbourne, Graduate Diploma of Applied Finance and Investment from the Securities Institute of Australia and a Graduate Diploma of Corporate Governance from the University of New England / Australian Institute of Company Directors. He also graduated from the INSEAD Asian International Executive Program in 2004. Garry is an experienced company director in public listed, unlisted and not for profit companies in Australia, London and Hong Kong for over 10 years. He is currently an Independent Non-Executive Director of China Properties Group Limited and JF Household Furnishings Limited, both listed on the Hong Kong Exchange Main Board. Prior to starting his management services firm Cbridge Limited in Hong Kong in 2005, he served 30 years, mostly in senior executive roles, with IBM Corporation. His last role at IBM was Director of Global Services for IBM China/Hong Kong Limited. In addition, the Company has representatives (who are not on the Board) in New York and Tokyo, as follows: James C. CANTALINI (MBA) - New York Representative James has had a successful International career as an Investment Banker for over 25 years including his last role as Head of the Industrial Investment Banking Division for UBS in the United States. He also ran his own firm which raised funding for new companies, restructured overextended companies, advised International companies entering the U.S. market and completed two of the largest privatizations in Poland in the early 90s. He established the International Mortgages Securities business at First Boston, which became a global market leader. He also worked at Lehman Brothers in the Investment Banking Department where he managed Initial Public Offerings as well as financial advisory projects in the United States; and at Bankers Trust Co. Subsequently, he raised $27 million of venture capital from the International shareholders while he was Chief Executive Officer of Gist Communications, Inc. that created the first Internet based TV guide. It sold software products to cable and satellite companies and created a mobile phone guide, which could send recording requests to PVRs. Currently he is President of Torsted Advisors that provides strategic and financial advice to International and U.S. companies in high growth situations to assess markets, competition and business models globally. He holds an A.B. degree in History from Holy Cross College, an M.A. (3e Lic.) degree in International Economics from Universite de Louvain (Belgium) and an MBA degree from the University of Chicago. Stephen P. WIDLAK (MBA) - Tokyo Representative Stephen has worked in financial related positions for over 25 years, initially as a Japanese securities analyst with Drexel Burnham Lambert, then as a fund manager with Waddell and Reed's United International Growth Mutual Fund. For the following eight years he was in institutional brokerage with several major international firms, including Baring Securities, Dresdner Securities and Nomura Securities. In 1995 he started Turret Technologies, an IT solutions provider. As CFO, he was instrumental in setting up Turret's Labs in Barbados and Bangalore, India. In 2002 he joined Claremont Capital, a Japanese holding company and also became Managing Director of Jomo Twisted Thread, a public company listed on the Second Section of the Tokyo Stock Exchange and obtained new capital for the restructured company. Since that time he has consulted several companies on doing business in Japan, and acted as an advisor to a fund investing in Japanese IPOs. He holds an MA in Asian Politics from The Ohio State University, an MBA from the Stern School of Business at New York University and a BA from Canisius College in Buffalo, NY. The directorships of the Directors currently held and held over the 5 years preceding the date of this announcement (other than of the Company and its subsidiaries) are as follows: Director Current directorships Past directorships Nicholas Littlewood Ford Eagle Capital Limited Global Carbon Capital (HK) Limited Ford Eagle Capital Limited Oilworld Energy Limited (UK) QST Agency (UK) Limited Best Winner Holdings Limited Charity Arts Broadcasting Limited Fortunate Capital Limited (UK) C.A.B. BEEON TV Limited(1) Fortunate Capital Limited (HK) Ford Eagle Capital (Group) Limited Wing Jack Tak Law Ford Eagle Capital Limited Most King Limited (HK) (HK) Far East Golden Resources Ford Eagle Capital Limited Group Limited (Listed in (UK) Hong Kong) Hollyhill Limited (BVI) China Railway Logistic Limited Listed in Hong Fortunate Capital Limited Kong (Listed in Hong Kong) (HK) G-Resources Group Limited Fortunate Capital Limited (Listed in Hong Kong) (UK) Advance Link Investment Limited Wang Sing International Holdings Group Limited, Listed in Hong Kong (Cayman Islands) Best Winner Holdings Ltd. (HK) Mutual City Holdings Limited (HK) Ford Eagle Capital (Group) Limited (HK) Larry Sanan Superior Organic Agricultural Research Centre Limited (HK) Larry Tech-BIA Science Research Centre Limited (HK) Larry Sanan Environmental Research Centre Limited (HK) Lary Deruitang Bio Tech Medical Research Centre Limited (HK) Sanan Superior Organic Agricultural Technology Limited (HK) Deruitang Bio Tech Limited (HK) Wing Sang Wilson Hui Hybrid Kinetic Group China Financial Industry Limited (incorporated in Investment Fund Limited Bermuda and listed in Hong (incorporated in the Kong) Cayman Islands and listed in Hong Kong; name changed Far East Golden Resources to National Investment Investment Limited (Hong Fund Limited) Kong) Yeagiaro E-Commerces Far East Golden Resources Investment Holdings Biotech Group Limited Limited (Hong Kong) (Cayman Island) Yeagiaro E-Commerces (Hong Far East Golden Resources Kong) Biotech Company Limited (Hong Kong) Yeagiaro Group Limited (Cayman Islands) Hybrid Kinetic Holdings Limited (Hong Kong) Compass Pacific Capital Limited (Hong Kong) Global Gold Trading Limited (Hong Kong) Golden Resources Shipping Holdings Limited (Hong Kong) Hybrid Kinetic Motors Group Limited (Hong Kong) Bluebell Fields Limited (BVI) United Kam Wah Development Limited (Hong Kong) Yaohan Whimsy Co., Limited (Hong Kong) Parkwell (Hong Kong) Limited (Hong Kong) China Pacific Aircraft Limited (Hong Kong) Asia Credit Guarantee Company Limited (Hong Kong) Chi Ming Wallace Tse(2) None None Man Sang Eric Tsang King Union Consultants None Limited Intercontinental Asset Management Limited China Law Research Association Limited MBH Int'l Holdings Limited Andrew Pawley Andrew Pawley Associates None Limited Garry Alides Willinge Stochastic Simulation China Medical and Bio Limited Science Limited (3) JF Household Furnishings Canton Property Investment Limited Limited (4) CBridge Limited Asia Resources Holdings Limited Optimiser Propriety Limited Coonara Superannuation Services Limited Coolabah Limited Coolabah 1 Limited China Properties Group Limited Junglebrolly Limited 1. The company was dissolved in 2009 as a dormant company. 2. Mr Tse declared himself voluntarily bankrupt and on 30 January 2003 a bankruptcy order was made against him by the Hong Kong High Court. The bankruptcy was subsequently discharged on 30 January 2007, evidenced by a certificate of discharge issued by the same court on 9 October 2007. 3. Mr Willinge was never notified in writing, but understands that a provisional liquidator was appointed on 3 December 2008. The current status is unknown to Mr Willinge. 4. On 14 August 2009, Mr Willinge received a letter from Corporate Advisory Services Limited advising that a Provisional Liquidator had been appointed, requesting all company documents in his possession. He mailed the information 19 August 2009. The status of the company was unknown to him as at 21 March 2010. 5. REASONS FOR THE ADMISSION TO PLUS The Directors believe that the benefits of the Admission include: * Raising the Company's profile in its industry sector; * The ability to raise capital in the future; * The ability to attract potential merger and acquisition interest; * As PLUS admissions or other listings may be recommended to clients, there is logic in the Company being a PLUS quoted company; and * Incentivisation of management and shareholders. 6. LOCK-IN ARRANGEMENTS On Admission, the following Locked-In Persons, being the directors and founders of the Company will be interested in 2,068,000 Ordinary Shares which together represent 69% of the Issued Ordinary Share Capital. Ordinary Shares % Best Winner Holdings Limited 1,050,000 35.0 Advance Link Investment Limited 270,000 9.0 Wing Tak Jack Law 290,000 9.7 Chi Ming Wallace Tse 267,500 8.9 Nicholas Littlewood 113,500 3.8 Wing Sang Wilson Hui 77,000 2.6 TOTAL 2,068,000 69.0 The Locked-In Persons have each undertaken that, save in limited circumstances or otherwise with the prior written consent of Company's Corporate Adviser and PLUS, they will not (and will procure, in so far as they are able, that any person with whom they are connected as per definition in this document) during a period of twelve months from the start of trading on PLUS, dispose of any interest in the Ordinary Shares held by them. 7. SIGNIFICANT RISKS General Risks PLUS Membership The Company's proposed admission to the PLUS-quoted Market is entirely at the discretion of PLUS. The Ordinary Shares are not presently listed or traded on any stock exchange. Lack of investment capital The ability of the Company to make investments, which forms part of the Company's business plan, will be determined by the level of subscription in the Company at future fundraisings. Liquidity of Ordinary Shares and volatility of their price Prospective investors should be aware that the value of any investment in the Company may go down as well as up. Investors may therefore realise less than their original investment and could lose their entire investment. Furthermore, an investment in shares that are traded on PLUS is likely to carry a higher risk than investments in shares listed on the Official List. The market value of an investment in the Company may not necessarily accurately reflect its underlying value. Although the Ordinary Shares are proposed to be quoted on PLUS, this should not be taken as implying that there will be a liquid market in these securities. An investment in these securities may thus be difficult to realise. The market for shares in smaller companies are less liquid than for larger companies. The Ordinary Shares may not be suitable as a short-term investment. Consequently, the Ordinary Shares may be difficult to buy and sell and the price may be subject to greater fluctuations than shares of larger companies. There can be no guarantee that the Company will achieve its investment objectives or that its investments will achieve returns to justify the initial valuation, or that the Ordinary Shares or Warrants will be able to achieve a higher valuation in the future, or if achieved, that such valuation will be maintained. The Ordinary Shares are not listed or traded on any stock exchange. An investment in the Ordinary Shares may thus be difficult to realise. The value of the Ordinary Shares may go down as well as up. Investors may therefore realise less than their original investment, or sustain a total loss of their investment. Continued membership of the PLUS Market is entirely at the discretion of PLUS. Any changes to the regulatory environment, in particular the PLUS Rules regarding companies such as the Company, could for example, affect the ability of the Company to maintain a trading facility on the PLUS Market. Realisation of investment Prospective investors should be aware that following the Admission, the Ordinary Shares will be traded on the PLUS-quoted market which is regulated by PLUS Markets plc, a recognised investment exchange. The PLUS-quoted market is not a regulated market under EU financial services law. As such, it may become difficult for an investor to realise his/her investment or to obtain reliable information about either the value of an investment in the Company or the extent of the risks to which an investment in the Company may be exposed. Working capital requirements The Directors consider that the current capital and financial resources will provide the Company with adequate development and working capital to implement its current advisory business plan for 12 months from the date of Admission. The Company may wish to raise further funds in the future for working and expansion capital, and to pursue the investment side of its business plan. There is no guarantee that the then prevailing market conditions will allow for such fundraising or that new investors will be prepared to subscribe for the Ordinary Shares. Any additional equity financing is likely to be dilutive to Shareholders. Fee income The Company's strategy is based in part on helping client companies achieve listings and IPOs in major international equity markets. Fee structures for such transactions will typically include an element (often the majority of the fee) that is conditional on successful completion of the transaction. The Company faces the risk, particularly in the current volatile times, that planned listings and IPOs may not successfully complete. In such situations, the Company may not receive the contingent element of the fees. Dividends There is no certainty that the Company will generate sufficient distributable profits to be able to pay a dividend. Suitability An investment in the Company involves a high degree of risk and may not be suitable for all recipients of this document. Prospective investors are advised to consult a person authorised by the FSA before making their decision and are reminded that the price at which investors may realise their Ordinary Shares and the timing of any disposal of them may be influenced by a large number of factors, some specific to the Company and its proposed operations, and some which may affect the sector in which the Company operates and generally. These factors could include the performance of the Company's operations, large purchases or sales of Ordinary Shares in the Company, liquidity or absence of liquidity in the Ordinary Shares, legislative or regulatory changes relating to the business of the Company, general economic conditions and the risks, economic, political and generally in respect of a business operating in the PRC. Competition There is no certainty that the Company will be able to sustain an advantage or that competition will not develop and prevent or delay the realisation of the Company's plans, and such competition may have significantly greater financial resources than the Company. Dependence on key personnel The Company's future success will also depend, inter alia, on its current directors, its management team and international representatives. The retention of their services or the services of any future management team cannot be guaranteed. The Company's ability to be a successful and profitable company depends to a significant extent on the continued service of its personnel. The loss of service of one or more of these key employees could materially and adversely affect the Company's business and prospects. The Directors believe that the growth and future success of the Company's business will depend in large part on the Company's continued ability to attract, motivate and retain highly-skilled personnel. The Company may not be successful in doing so as the competition for qualified personnel in the area of the Company's operations is intense. Legal and regulation risks Various laws, regulations and taxes may affect the Company's ability to conduct business in its chosen sphere of operation. New or amended laws, rules, regulations or ordinances could require significant unanticipated expenditures or impose restrictions on the development of the Company's business. Such laws, rules, regulations or ordinances may also adversely affect the Company's ability to operate its business. Achievement of strategic aims The value of an investment in the Company is dependent upon the Company achieving its strategic aim. Whilst the Directors are optimistic about the prospects for the Company there is no certainty that the Company's business will be capable of achieving the anticipated revenues or growth. The Company's future operating results will be highly dependent upon how well it manages the planned expansion strategy. This growth and expansion could place significant strain on the Company's limited managerial, financial and other resources. Currency fluctuations The Company operates in different currency jurisdictions and currency fluctuations may adversely affect the revenue and profits of the Company and individual companies. Tax The Company trades in different jurisdictions and each jurisdiction has its own tax regulations and may affect the net profits in the Company and the Company. Each investor should seek independent tax advice. Legal system The laws and regulations in China, Cayman and Hong Kong are different to those in the UK. The application of the laws of those jurisdictions may have a different outcome to the application of UK law in respect of the Company's operations or any legal issues that arise. Risks Associated with the Business Strategy and funding The success of the Company depends largely upon the expertise of the current Directors and on the Company's international representatives and together their ability to identify suitable investment opportunities and implement the Company's strategy. As part of its corporate strategy in buying into projects the Company may well acquire shares in quoted companies where the market price may be volatile and may therefore be difficult to realise due to a potentially illiquid market. Investments in companies carry a high risk and these may be even more difficult to value and realise. Share market conditions may affect the ultimate value of the Company's share price regardless of future operating performance, and the market price of the Ordinary Shares may not reflect the underlying value of the assets of the Company. The Company The value of an investment in the Company is largely dependent upon the Company achieving its strategic aim. Whilst the Directors are optimistic about the prospects for the Company, there is no certainty that the businesses in which the Company invests will be capable of achieving the anticipated revenues or growth. This growth and expansion could place significant strain on the Company's current managerial, financial and other resources. The Company will operate in developing markets and as such the maintenance of its professional reputation and quality and maintenance of its services is vital to the continued success of its businesses. The Company's future revenues are inherently difficult to forecast as the Company relies on the ability to secure new contracts to generate much of its revenue. Companies in which the Company proposes to invest are, or may be, PLUS-quoted companies. The risks as regards to PLUS-quoted securities, share price volatility and liquidity, which are set out above in relation to the Company's securities, apply equally in respect of those investments. Major shareholder Wing Tak Jack Law currently has an interest directly or indirectly in approximately 53.67% of the Issued Ordinary Share Capital. As a result of this, Jack Law has a significant influence on all matters requiring shareholder approval. The concentration of ownership may affect the liquidity, or market price, of the Ordinary Shares. Risk of damage to reputation and negative publicity The Company's ability to attract further investment and to attract new business is dependent on the Company maintaining a good reputation. The Company is vulnerable to adverse market perception as it operates in an industry where a high level of integrity and client trust is paramount. Any perceived, actual or alleged mismanagement, fraud or failure to satisfy the Company's responsibilities to its clients, or the negative publicity resulting from such activities or the allegation by a third party of such activities (whether well founded or not) associated with the Company, could have a material adverse effect on the financial condition, results or operations of the Company. In addition, following the downturn in the equity markets and the resulting heightened consumer and media interest in the financial services industry, any future negative publicity (whether well founded or not) associated with the business or operations of the Company could result in reputational damage and could have a material adverse effect on the financial condition, results or operations of the Company. Inadequacy of systems and controls The Company's ability to maintain operational and financial controls depends, in part, on the efficient and uninterrupted operation of its management information systems, including its computer systems and specifically the servers that manage the operation of the payment system platforms specific to the Company's business. There can be no assurance that these systems will function as required. Furthermore, there can be no guarantee that if the Company increases in size, its systems, including its information technology systems, will be able to be upgraded appropriately or in a timely manner, so as to function as and when required by the greater demands of a larger business. Any damage to, failure of or inability to upgrade its management information systems appropriately, could result in interruptions to the Company's financial controls and client services. Such interruption could have a material adverse effect on the financial condition, results or operations of the Company. Dependence on third party service providers The Company is likely to be reliant upon third party service providers for certain aspects of its businesses. Any interruption or deterioration in the performance of these third party service providers could impair the timing and quality of the Company's services. In addition, if the contracts with any of these third party service providers are terminated, the Company may not find replacement outsource providers on a timely basis or on equivalent terms. The occurrence of any of these events could impact upon the Company's reputation and have a material adverse effect on the financial condition, results or operations of the Company. Litigation Legal proceedings, with or without merit, may arise from time to time in the course of the Company's business. The Directors cannot preclude litigation being brought against the Company and any litigation brought against the Company could have a material adverse effect on the financial condition, results or operations of the Company. The Company's business may be materially adversely affected if the Company and/or its employees or agents are found not to have met the appropriate standard of care or exercised their discretion or authority in a prudent or appropriate manner in accordance with accepted standards. Although the Company maintains insurance in respect of such risks, there is no guarantee that any insurance in place will cover all, or any part, of any liability incurred by the Company in any such circumstances. Employee misconduct The Company runs the risk that employee misconduct could occur from time to time. Misconduct by employees could include, without limitation, binding the Company to transactions that exceed authorised limits or present unacceptable risks, or hiding unauthorised or unsuccessful transactions from the Company, which, in either case, may result in unknown or unmanaged risks or losses to the Company. Employee misconduct could also involve improper use of confidential information, which could result in regulatory sanctions and substantial reputational harm. It is not always possible to prevent or detect employee misconduct and the precautions which the Company takes to prevent and detect this activity (including ongoing training and review processes and authorising only certain personnel to carry out certain actions on behalf of the Company) may not be effective in detecting employee misconduct in all cases. In addition, as the Company grows, such precautions may need to be updated and/or expanded to increase their effectiveness. Failure to do so, or to do so in a timely fashion, may lead to such precautions becoming ineffective, or less effective, against the risks against which it is intended they mitigate. Misconduct may also occur from time to time on the part of the Directors. The Company maintains insurance, but there can be no guarantee that any loss suffered by the Company would be adequately covered by such insurance, particularly in the event of employee or Proposed Director's misconduct. Loss of key personnel The Company's development and prospects are dependent upon the continued services and performance of its senior management and other key personnel. The loss of the services of any of the senior management or key personnel may have an adverse impact on the Company. While the Directors are not presently aware of any reasons to lead to contracts being terminated at their expiry, there can be no guarantee that such terminations will not occur in the future. Such terminations could have an adverse material effect upon the Company's revenues and earnings. Other operational risks The Company's projects may be adversely affected by risks outside the control of the Company including labour unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions or other catastrophes, epidemics or quarantine restrictions. Competition The Directors intend to continue to invest in product development and growth of the business however the Company may face significant competition, including from domestic and overseas competitors who have greater capital and other resources than the Company and may be able to provide better services or adopt more aggressive pricing strategies. There is no assurance that the Company will be able to compete successfully in such a marketplace. Company operating performance The results of Company's operations may fluctuate, and it may not be able to achieve revenue growth and profitability in the future because the Company's results are influenced by a number of factors, many of which are beyond the Company's control. If the Company does not realise sufficient revenue levels to sustain profitability, it may require additional financing, which may or may not be available. The Company's growth and profitability may be reliant in the future on its ability to access capital for further development. Additional equity fundraising on the capital markets may be dilutive for existing Shareholders, and debt-based funding may bind the Company to onerous covenants and curb its operating activities. Inability to access funding may result in a curtailment of the scale of the Company's business. Risks relating to the PRC The Company is exposed to significant risk due to policy change in China. The business of the investee companies will need to comply with the laws and regulation promulgated by the PRC government from time to time. The implementation and enforcement of such laws and regulations could have a significant impact on the business outlook and operation of the investee companies. Changes in government policies The private equity sector in the PRC is subject to the policies which are implemented by the PRC government from time to time. These policies may have a material impact on the entire or a certain part of the private equity sector and in turn, on the Company's investee companies. If the business of the Company's investee companies should become subject to any new form of government control, there could be a material adverse effect on the business and operating results of the Company's investee companies. Economic considerations The PRC has a long history of being a planned economy and is subject to annual, five and ten year plans formulated by the PRC government. In recent years, the PRC government has introduced economic reforms aimed at transforming the PRC economy from a planned economy into a market economy with socialist characteristics. These economic reforms should allow greater utilisation of market forces in the allocation of resources and greater autonomy for enterprises in their operations. However, many rules and regulations implemented by the PRC government in such economic reforms are still at an early stage of development and further refinements and amendments are necessary to enable the economic system to develop into a more sophisticated form. In addition, the economy of the PRC differs from the economies of other countries in many respects including governmental involvement, level of development, growth rate, controls on foreign exchange and allocation of resources. The economy of the PRC has experienced significant growth in the past twenty years but growth has been uneven both geographically and among various sectors of the economy. Economic growth has been accompanied by a period of high inflation. The PRC government has implemented various measures from time to time to control inflation and restrain the rate of economic growth. Some of these measures may have a negative affect on the Company's clients and potential investments. For example, the operating results of the Company's clients and potential investments and its financial position may be adversely affected by changes in the rates or methods of taxation and imposition of additional restrictions on currency conversion and remittances abroad. The PRC economy has experienced high growth over the last few years, due to political and economic liberalisation, which has led to an increased level of domestic consumer spending. However, a downturn in the performance of the PRC economy may lead to a decline in this spending which could adversely affect the financial performance of the Company. Political and social considerations The PRC has been undergoing a series of political reforms, particularly since 1978. The Directors expect that such reforms will continue. Such reforms have in the past resulted in significant economic growth and social progress. However, there is no assurance that any future reform policy of the PRC government will be effective. The Group's business may be affected by such future reforms or lack of them. Political relations between the international community and China The relationship between China and the rest of the international community may change over time. Change in political conditions in China may lead to less liberal or less business friendly investment policies by the governments of China or may prevent the Company from directing or appointing the management of such companies. Changes in political conditions in China may also lead to the implementation of embargoes or economic sanctions by developed countries against Chinese companies or companies doing business in China, which in turn could compel investee companies to prematurely terminate their business arrangements, or require the Company to sell its investments at less than fair market value or prevent the repatriation of the sale proceeds from any termination or dissolution of the Company's business arrangements. State ownership Although in recent years the government of the PRC has implemented economic reforms and reduced state ownership and established better corporate governance in business enterprises, a substantial portion of productive assets in the PRC are still owned by the government of the PRC. In addition, the government of the PRC continues to play a significant role in regulating industry by imposing industrial policies. The future earnings of potential investments could be affected if a PRC government were to reverse recent trends and impose restrictions which affect (directly or indirectly) the businesses of investee companies. Expansion risks There are also potential risks associated with rapid economic growth of the magnitude China is experiencing at the date of this document. Business infrastructure, including logistics and supply chains, human resources and training, competition for real estate and locations, among others, may create bottlenecks for business growth, thereby delaying an investee company's ability to achieve its projections and consequently reducing the value of the investment into it. It is not possible for financial projections, upon which the Company's investment decisions are made, to account for all factors that may affect the ability of an investee company to grow its business as planned. Access to financing Access to conventional financing for private companies in China, such as commercial bank lending, is limited. Investee companies may need to raise additional financing for working capital and capital expenditures in order to grow their businesses, which in the absence of access to conventional financing, may lead to the issuing of further equity in such companies which may dilute the Company's investment and reduce its capital value. Uninsured losses The relatively undeveloped insurance market in China may mean there is a risk of financial losses which cannot be insured or are too expensive to insure. In the event that an investee company incurs a loss that is not fully covered by insurance, the value of the Company's investment may decrease. Legal considerations The PRC legal system is relatively new, and the PRC government is still in the process of developing a comprehensive system of laws. Since 1979, many laws and regulations dealing with economic matters with respect to general and foreign investments have been promulgated in the PRC. In 1982, the PRC National People's Congress amended the PRC constitution to attract foreign investment and to safeguard the "lawful rights and interests" of foreign investors in the PRC. Since then, the trend of legislation has been to enhance the protection afforded to various forms of foreign investment in the PRC. However, despite significant improvements in its legal system, there may still be difficulties in obtaining swift and equitable enforcement of rights or in obtaining enforcement of a judgment by a court of another jurisdiction. This creates additional uncertainties as to the outcome of litigation. In particular, the following uncertainties may affect the Group's operations and its profitability: i. substantial uncertainties regarding the interpretation and application of PRC laws and regulations; ii. new laws may be applied retrospectively; iii. there may be a requirement to obtain new licences, permits or approvals and there is no guarantee that these may be obtained; iv. the PRC government has broad discretion in dealing with violations of law and regulations, including levying fines, revoking business and other licences and requiring actions necessary for compliance; v. the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all; and vi. in the PRC, transactions are often subject to government approval for their effectiveness. Failure to obtain such approval may lead to the Group being unable to carry out specific business transactions and/or contractual obligations, and may further subject the Group to penalties imposed by the PRC law. Foreign exchange controls Foreign exchange transactions in the PRC (including the repatriation of investment returns and capital) continue to be subject to foreign exchange controls of the State Administration Bureau of Foreign Exchange of the PRC. Currently companies incorporated in the PRC may repatriate profits and dividends to their foreign shareholders; no governmental approval is required to repatriate profits and dividends out of the PRC. Capital may also be repatriated after the capital decrease has been approved by the relevant authorities. However, there is the risk that this permission may not always be forthcoming and that in the event any investee company fails to obtain the required permission, capital will not be repatriated. Any relaxation or abolition of exchange controls, may give rise to capital outflows from China which could, among other things, adversely affect the strength of the Renminbi and the availability and cost of funding in China and could give rise to higher interest rates, thereby adversely affecting the greater Chinese economy and correspondingly adversely affecting investee companies. Risks relating to the Ordinary Shares Cayman Islands company law The Company is an exempted company incorporated in the Cayman Islands under the Companies Law. There are a number of differences between the corporate structure of the Company and that of a public limited company incorporated in England under the UK Companies Act 2006. As a result, the rights of the Shareholders will be governed by the laws of the Cayman Islands and the Memorandum and Articles. The laws of the Cayman Islands relating to the protection of the interests of minority Shareholders differ in some respects from those established under statutes or judicial precedent in existence in England. Such differences may mean that the Company's minority shareholders may have less protection than they would have under the laws of England and Wales. In particular, the City Code will not apply to the Company and accordingly, any takeover of the Company will be unregulated by the UK takeover authorities. In particular, there is no equivalent obligation under Cayman Islands law to Rule 9 of the Takeover Code. As a result, there is no obligation on any person or persons acting in concert who acquires an interest in securities which carry 30 per cent. or more of the voting rights of the Company, or who acquire any further voting rights at a time when they hold at least 30 per cent. but no more than 50 per cent. of the voting rights of the Company, to make an offer to acquire the remainder of the securities in the Company. The Companies Law provides that a company acquiring 90 per cent. or more of the issued share capital of a Cayman Islands company pursuant to a scheme or contract may compulsorily acquire the remaining 10 per cent. from dissenting shareholders. CONTACT DETAILS For further information, please contact: Ford Eagle Group Ltd Nicholas Littlewood, Executive Chairman +44 7813 623 558 (UK) +852 6140 1214 (HK) Cairn Financial Advisers LLP - Corporate Adviser Simon Sacerdoti + 44 20 7148 7904 Alexander David Securities Limited - Broker David Scott +44 20 7448 9830 Axiom Capital Ltd - Financial Adviser David Sinclair or Kobus Huisamen +44 20 8455 0011 A copy of the Admission Document is available from Axiom Capital Ltd; Roman House, 296 Golders Green Road, London, NW11 9PT, or from [email protected] The Directors of Ford Eagle Group Limited take responsibility for the content of this announcement. END
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