KADA TECHNOLOGY HOLDINGS LTD 
By THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. It contains the notice of a General Meeting of Shareholders of the Company to be held at the offices of Proton Invest Holdings Ltd., 7 Floor, 10 Block Shenzhen Software Park Keji Middle 2nd Road, Nanshan District, Shenzhen, Guangdong, P.R. China 518000 at 3p.m. on 27 March 2014. If you are in any doubt about the contents of this document or about what action to take, you are recommended immediately to seek your own independent professional advice from your stockbroker, solicitor, accountant or other financial adviser duly authorised under the Financial Services and Markets Act 2000 ("FSMA") who specialises in advising upon investments in shares and other securities, if you are resident in the United Kingdom, or if not, from another appropriately authorised independent professional adviser.
This document does not constitute, or form part of, any offer or invitation to issue, or any solicitation of any offer to subscribe for, any Ordinary Shares.
Copies of this document will be available free of charge until 27 March 2014 at the Company's registered office at Clarendon House, 2 Church Street, Hamilton HM11, Bermuda during normal business hours (Saturdays, Sundays and public holidays excepted) and on the Company's website (www.kada-ir.com).
If you have sold or otherwise transferred all of your Ordinary Shares in Kada Technology Holdings Limited, please forward this document together with the accompanying Form of Proxy / Form of Direction at once to the purchaser or transferee or the bank, stockbroker or other agent through whom the sale or transfer was effected, for onward delivery to the purchaser or transferee. If you have sold or otherwise transferred part only of your holding of Ordinary Shares in Kada Technology Holdings Limited, please retain this document and the accompanying Form of Proxy / Form of Direction and contact the bank, stockbroker or other agent through whom the sale or transfer was effected.
KADA TECHNOLOGY HOLDINGS LIMITED(Incorporated in Bermuda with registered number 44225)
Proposed cancellation of admission to trading of Ordinary Shares on AIM and Notice of General MeetingYou are recommended to read the whole of this document but your attention is drawn, in particular, to the letter to Shareholders from the Chairman of Kada Technology Holdings Limited which is set out on page 5 of this document. This letter explains the background to and reasons for the Delisting and the Resolution and contains a recommendation that you vote in favour of the Resolution to be proposed at the General Meeting.
Notice of a General Meeting of Kada Technology Holdings Limited to be held at the offices of Proton Invest Holdings Ltd., 7
Floor, 10 Block Shenzhen Software Park Keji Middle 2nd Road, Nanshan District, Shenzhen, Guangdong, P.R. China 518000 on
27 March 2014at 3 p.m. is set out at the end of this document. Shareholders will find enclosed a Form of Proxy / Form of Direction for use at the General Meeting. The Form of Proxy / Form of Direction should be completed, signed and returned to the Company's Registrars, Share Registrars Limited, in accordance with the instructions printed on it as soon as possible and, in any event, so as to be received no later than 6pm. on 18 March 2014. The completion and return of a Form of Proxy / Form of Direction will not affect your right to attend and vote in person at the General Meeting or any adjournment thereof, if you wish to do so.
lt is proposed that application will be made to the London Stock Exchange for cancellation of trading o n AlM of the Ordinary
Shares. Subject to the passing of Resolution in the Notice, it is expected that the Delisting will take effect at 8 a.m. on 3 Aprii
2014.
CONTENTS
Page
Expected Timetable of Principal Events 2
Definitions 3
Letter from the Chairman 5
Notice of General Meeting of the Company 8
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Despatch of this document (and Forms of Proxy / Forms of Direction)
to Shareholders 4 March 2014
Latest time and date for receipt of Forms of Direction / Proxies 6 p.m. on 18 March 2014
General Meeting 3 p.m. on 27 March 2014
Last day of dealings in Ordinary Shares on AIM 3 April 2014
Delisting takes effect 8a.m. on 4 April 2014
All of the times referred to in this document refer to London time.
Dates set against events that are expected to occur after the expected date of the General Meeting assume that the General Meeting is not adjourned and that the Resolution is passed at the General Meeting.
All of these times and dates are subject to change at the Company's discretion. In the event of any change, the revised times and dates will be notified to Shareholders by an announcement through a Regulatory Information Service.
IMPORTANT NOTICE
This document and the accompanying Form of Proxy / Form of Direction have been prepared for the purposes of complying with Bermudan Law and the AIM Rules and information disclosed in them may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside Bermuda.
The statements contained in this document are made as at the date of this document, unless some othe r time is specified in relation to them, and service of this document should not give rise to any implication that there has been no change in the facts or opinions set out in this document since such date. Nothing contained in this document should be deemed to be a forecast, projection or estimate of the future financial performance of the Company except if otherwise stated.
The Directors, whose names appear on page 5 of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit
anything likely to affect the import of such information.
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DEFINITIONS
The following definitions apply throughout this document and the Form of Proxy unless the context requires otherwise:
"Act" the Companies Act 2006;
"Admission" the admission of the Ordinary Shares to trading on AIM;
"AIM" the AIM market operated by the London Stock Exchange;
"AIM Rules" the AIM Rules for Companies published by the London Stock
Exchange from time to time;
Don't think we reference auditors
"Board" or "Directors" the board of directors of the Company whose names and offices are set out on page 5 of this document;
"Business Day" means a day other than a day which is a Saturday, a Sunday or public holiday in England;
"certificated" or "in where a security is not held in uncertificated form (i.e. not in
certificated form" CREST);
"Circular" this document;
"Company" or "KADA" Kada Technology holdings Limited, a company registered in Bermuda with company number 44225 and whose registered office is at Clarendon House, 2 Church Street, Hamilton, Bermuda;
"CREST" a relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations);
"CREST Regulations" the Uncertificated Securities Regulations 2001 No. 3755, as amended from time to time;
"Delisting" the proposed cancellation of admission of the Ordinary Shares to trading on AIM;
"Form of Proxy" the form of proxy enclosed with this document for use by
Shareholders in connection with the General Meeting;
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"Form of Direction" the form of direction enclosed with this document for use by Shareholders holding their shares as depository interests in connection with the General Meeting;
"General Meeting" the general meeting of the Company convened for 3 p.m.. on 27
March 2014 (or any adjournment thereof), notice of which is set out at the end of this document;
"London Stock London Stock Exchange plc;
Exchange"
"Notice" the notice of General Meeting enclosed with this document;
"Ordinary Shares" or ordinary shares of US$0.10 each in the capital of the Company;
"Shares"
"Registrars" the Company's registrars, Capita Registrars (Guernsey) Limited, Mont Crevelt House, Bulwer Avenue, St Sampson, Guernsey, GY2
4LH, Channel Islands;
"Regulatory Information any of the services approved by the London Stock Exchange plc for
Service" the distribution of AIM announcements and included within the list maintained on the website of the London Stock Exchange;
"Resolution" the resolution to be proposed at the General Meeting as set out in the Notice;
"Shareholders" holders of Ordinary Shares and the term "Shareholder" shall mean
any one of them;
"uncertificated" or "in Ordinary Shares which are recorded on the register of members of
uncertified form" the Company as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST;
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(Incorporated in Bermuda with registered number 44225)
Directors Registered Office
Ivor Shrago (Non-Executive Chairman) He Xuebo (Chief Executive Officer)
Zhang Luoping (Chief Technology Officer) Xin Jian (Non-executive Director)
Clarendon House,
2 Church Street
Hamilton HM11
Bermuda
4 March 2014
Dear Shareholder,
The Company announced today that it intends to seek Shareholders' approval to cancel the
Admission of its Ordinary Shares to trading on AIM.
This letter sets out the background to and reasons for the Delisting and the reasons why the Directors believe that this is in the best interests of the Company and its Shareholders as a whole and to seek your approval to the Resolution set out in the Notice. The Notice is set out on page 8 of this document. Having disclosed to the Company their interests in Ordinary Shares and their intentions with regard to their individual holdings of Ordinary Shares, the Directors also include a unanimous recommendation to Shareholders to vote in favour of the Resolution approving the Delisting.
Having recently undertaken a review of both the advantages (such as ability to raise new funds on AIM and the Company's enhanced profile as a listed Company) and disadvantages (such as cost and management time) of maintaining Admission of the Ordinary Shares to trading on AIM, the Directors have concluded that it is no longer in the best interests of the Company or its Shareholders to maintain the Admission.
As stated in our trading update on 14 February 2014, the Company finds itself in a difficult trading position as debt facilities have become more restricted meaning working capital is at a premium. This has materially affected the Company's ability to write new business. The management believe that the cost and management time involved in maintaining a listing are not helpful to the Company
in its current situation. In addition, the Board feel there is little prospect of raising funds in the UK
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given its current situation and the lack of interest in smaller Chinese businesses at this time. The
Directors have concluded that the costs of the Company's admission to AIM outweigh the benefits.
Pursuant to AIM Rule 41, the Delisting can only be effected by the Company after securing a resolution of Shareholders in a general meeting passed by a requisite majority, being not less than
75 per cent. of the votes cast by Shareholders (in person or by proxy). Under the AIM Rules, the
Delisting can only take place after the expiry of a period of twenty Business Days from the date on which notice of the Delisting is given. In addition, a period of at least five Business Days following the Shareholder approval of the Delisting is required before the Delisting may be put into effect.
The Company has notified the London Stock Exchange of the proposed Delisting. In the event that Shareholders approve the Resolution approving the Delisting, it is anticipated that the trading in the Ordinary Shares on AIM will cease at close of business on 3 April 2014 with the Delisting taking effect at 8am on 4 April 2014.
The principal effect of the Delisting is that cancellation in the trading of the Ordinary Shares on AIM would be to substantially reduce the liquidity and marketability of Shares. In addition, there would be no public stock market in the UK on which Shareholders can trade their Ordinary Shares, and the Company would no longer be required to comply with the AIM Rules. The Company's CREST facility will be cancelled and, although the Ordinary Shares will remain transferable, they will cease to be transferable through CREST. Instead, Shareholders who hold Ordinary Shares in CREST will receive share certificates.
Immediately following the Delisting, there will be no formal trading facility for dealings to take place in Ordinary Shares and no price for them will be publicly quoted. It is not the Board's intention to implement any form of dealing facility to enable trades in the Ordinary Shares to occur.
The Company issued its unaudited interim financial statements for the period ended 30 June 2013 on 30 September 2013.
The Company issued a further trading update on 14 February 2014 which highlighted the challenges in the Solutions Package business and margin pressure in the Electronic Components business. Working capital has continued to be an issue for the business and the Group has felt the force of an increasingly difficult debt market in China during the final months of 2013 and the beginning of
2014. Each of KADA's major lenders has sought to re-negotiate its lending terms with the Company.
This is a similar situation to those being experienced by a number of our competitors. This uncertainty over the Company's future availability of debt has materially affected the Company's results in 2013 and its ability to write new business in 2014. The lack of working capital has in turn affected the Company's ability to roll out new products such as the media kiosk project that it had
hoped would be a major source of new revenue and higher margins during 2014.
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In the short term the Company continues to focus on cash collection and re-negotiating its debt facilities. This will materially affect the Company's profitability during the first six months of 2014 and potentially beyond.
Set out at the end of this document is the Notice convening the General Meeting of the Company to be held at the offices of Proton Invest Holdings Ltd., 7 Floor, 10 Block Shenzhen Software Park Keji Middle 2nd Road, Nanshan District, Shenzhen, Guangdong, P.R. China 518000 at which the Resolution will be put to Shareholders.
6. Recommendation For the reasons set out above, particularly in paragraph 2, the Directors believe that the proposed Delisting is in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolution at the General Meeting. 7. Action to be taken
You will find enclosed with this document a Form of Proxy for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, you are requested to complete the Form of Proxy / Form of Direction attached in accordance with the instructions printed and return it to the Registrars as soon as possible and, in any event, so that it is received no later than 6 pm on 18
March 2014. Completion and return of a Form of Proxy / Form of Direction will not preclude you
from attending the General Meeting and voting in person, should you wish to do so. Yours faithfully,
Ivor Shrago
Non-Executive Chairman
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(Incorporated in Bermuda with registered number 44225)
NOTICE OF GENERAL MEETING
Notice is hereby given that a General Meeting of Kada Technology Holdings Limited (the "Company") will be held at the offices of Proton Invest Holdings Ltd., 7 Floor, 10 Block Shenzhen Software Park Keji Middle 2nd Road, Nanshan District, Shenzhen, Guangdong, P.R. China 518000 at 3pm on 27
March 2014 to consider and, if thought fit, to pass the following resolution which will be proposed as a special resolution:
1. THAT the admission of the Company's ordinary shares of US$0.10 penny each to trading on AIM be cancelled in accordance with Rule 41 of the AIM Rules for Companies (the "Delisting") and that the directors of the Company be and are hereby authorised to take all steps which are necessary or desirable in order to effect the Delisting.
By order of the Board
Ivor Shrago
Non-executive Chairman
4 March 2014
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Notes:
1. Pursuant to Regulation 41 of the CREST Regulations, only those members registered on the Company's register of members at 6 pm on 18 March 2014 or, if this General Meeting is adjourned, 48 hours prior to the adjourned General Meeting, shall be entitled to attend and vote at the General Meeting. Changes to entries on the relevant register of members after that time shall be disregarded in determining the rights of any person to attend or vote at the General Meeting.
2. A member of the Company at the time set out in note 1 above is entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at the General Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
3. A proxy does not need to be a member of the Company but must attend the General Meeting to represent you.
Details of how to appoint the Chairman of the General Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If no voting indication is given on your form of proxy, your proxy will vote, or abstain from voting at his or her discretion.
4. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first-named being the most senior).
5. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different Ordinary Shares. You may not appoint more than one proxy to exercise rights attached to any one Ordinary Share.
6. To appoint a proxy the form must be completed and signed sent or delivered to Company's Registrars, Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL, and received by Share Registrars no later than 6 pm on 18 March 2014 or, if this Meeting is adjourned, 48 hours before the time set for the adjourned meeting, shall be entitled to attend and vote at the Meeting in respect of the number of shares registered in their name at that time.
7. In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form.
8. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
9. To appoint a proxy you may use the Form of Proxy enclosed with this Notice of General Meeting. To be valid, the Form of Proxy or Form of Direction, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of the same, must be deposited by 6 p.m. on 18 March 2014 at the Company's registrars, Share Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey GU9 7LL.
Completion of the Form of Proxy will not prevent you from attending and voting in person.
10. The memorandum and the articles of association of the Company are available for inspection on the Company's website: www.kada-ir.comand (during usual business hours on any weekday (Saturdays, Sundays and public holidays excluded)) at the registered office of the Company, Clarendon House, 2 Church Street, Hamilton HM11, Bermuda from the date of this Notice and will be available for inspection at the General Meeting.
11. These notes are qualified in their entirety by the contents of the Company's articles of association.
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Action to be taken:
You are asked to complete the attached Form of Proxy and return it, together with any power of attorney or other authority under which it is signed or a notarially certified or office copy thereof, to Share Registrars Limited, Suite E, First Floor, 9 Lion and La mb Yard, Farnham, Surrey GU9 7LL so asta arrive no later than 6 p.m. an 18 March 2014.
Completion of the Form of Proxy or appointment of a proxy through CREST does not prevent you from attending an d voting in perso n.
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